and in the meantime, both asset classes going up this year, it is pretty unique period that we're in. >> you saw where you were a year and a half ago on equities. i agree with jeff gundlach. >> good stuff. thank you for being here. see you the rest of this week. that does it for us. "power" starts now. all right, thank you very much, scott. happy monday, everybody. here's what's on your power menu now. important guidance for your money from some of the biggest names in the business. you just heard them on "halftime." what they say are your best ideas right now. counting down to the third and final presidential debate, early voting under way, by the way in many key states. we have the early read on the race. and tesla delaying its mysterious new product announcement, elon musk saying he needs a few more days to refine it. so what could it be? we have some theories as "power lunch" starts right now. ♪ get out of my dreams

get into my car ♪ and, brian, i need a few more days until we get ready for this day's "power lunch." we don't have the luxury. welcome, everybody. "power lunch" sails on at 1:00 p.m. eastern every day. i'm tyler mathisen. stocks lower now, but holding steady, off about 42 points on the dow. four, almost five for the nasdaq. and 3.75 for the s&p 500. energy, the worst performing sector. telecom and utilities at the top of the charts right now. earnings the big focus this week. it is a big week of them for investors, ton of big names set to report. and two at sort of either end of the technology spectrum. netflix, video, obvious, new media, and ibm, old tech. they're out after the bell today. check out those stocks ahead of the numbers. netflix down about 1.5%. ibm, basically flat. seema? >> hello, tyler. i'm seema mody.

here is what else is happening at this hour. americans hitting the road, the transportation department says motorists logged 285 million miles on u.s. roads in august. that's the most ever for the month, up 3.5% from a year ago. a shake-up at mcdonald's, the wall street journal reporting more senior executives are expected to leave this week. and the caterpillar ceo will retire from the company next year and will be replaced with jim appleby. >> see you back here at the desk in a second. if you watched "halftime report," we hope you did, you heard some of the biggest names on wall street weighing in on the markets, and also the election. hedge fund manager david tepper saying, quote, the risk for stocks is more to the downside. he's also holding a lot of cash right now. and there are conflicting views from the fed on rates. let's chat more about the markets with adam parker, chief u.s. equity strategist with morgan stanley. scott wapner with us as well to recap a big show to start a big week.

adam, is there anything you heard or saw from mr. tepper, icahn or mr. gundlach that you fundamentally agree or disagree with? >> well, i didn't see the prior segment, i apologize. all those people are a lot smarter and richer than i am, so i'm sure what they said makes a lot of sense. i have a long-term view that is constructive on equities, so i can see some short-term concerns around maybe slowing discretionary it spend or choppiness in terms of the soft patch heading into the election in terms of u.s. consumer participation. but medium to long-term, i'm pretty constructive on u.s. equities. >> scott wapner bounding over from the "halftime" desk. big show to start the big week. >> sprinting. >> literally sprinting. i thought it was interesting how josh brown and adam, stay with us, wrapped it up, saying the stock guy is kind of negative on stocks. the bond guy is kind of negative on bonds. what was your takeaway? >> i think pretty much that. you don't hear from david tepper all that often.

he's a market mover. interesting to get his point of view on where he sees the fed and the election seems to be the real big uncertainty for at least tepper himself, though you heard gundlach say i don't think the election matters either way. that either, you know, donald trump or hillary clinton are going to -- they're going to get fiscal stimulus or whatever. so i thought that was an interesting point of view. i think tepper made it kind of obvious without saying that he was short bonds. >> he said i'm not long. >> but definitely said, we'll listen to a bite now, here is what he said about the stock market. >> levels being fairly fully valued market, with margins that may be under pressure because of wages and now the dollar seems to be getting strong again. so it is a difficult environment. it is, you know, environment that, you know, it probably would be okay, not great returns, but okay, and then you

are have to deal with the election and what the outcome of the election. and depending on the outcome of the election, you know, the market can move different ways. so i think, you know, generally speaking, you know, pretty cautious on the market, not outright bearish on the market. >> you said it, holding a lot of cash. waiting to see how things shake out, but also saying at the same time, look, you know, i'm an optimistic guy. markets have a tendency to go up. it sounds as though he's waiting for maybe a better opportunity once gets some clarity. >> don't the comments from tepper and icahn, scott, touch on a fundamental debate that investors and american citizens are facing. can you focus solely on the economic policies that donald trump is pledging and overlook the extreme rhetoric that we're also getting from him? >> it is a tough environment to invest in. if you watch every poll, which, you know, they come out every day, or thereabouts, certainly

seems, it is tough to get an idea of where you think things will shake out. it is not just a top of the ticket issue at this point as well. you have to sort of consider how the down stream races are going to shake out, especially after this, if you want to call it a fracture or whatever you think it is in the republican party, following the events of -- >> i would argue it is more of a bottom race than a top race. i think adam parker is still with us, we're not trying to run you over here, but, you know, i think the house and the senate are going to be more vital to the stock market than the president. >> which didn't seem to be as much in play as they seem to be today. it is hard to get a read on that. >> adam, what do you think? >> look, i -- i try to invest and give investment advice beyond the next few weeks here. and i agree that the senate and house composition matter a lot. what you get from the equity market is a little more than 2% dividend yield, about 2.3% net buyback.

when people say the market has been flat, they mean the s&p, not the dividend. the dividend, that helps in the low bond environment. so i get about 4% to 4.5%. earnings expectations are zero. i have a call for the low expectations. i think that's pretty good relative to most other assets in the world. i think there is areas i like within the market that i think can do well that are mispriced beyond the election. so we're set up in the portfolio, you know, sort of independent of what happens two or three weeks now. we're set up to outperform as we look out to 3, 6, 12 months. >> i want to come back to you in a minute. first, scott, apart from the times when carl icahn wanted to know what kind of bachelor parties you went to and what kind of locker rooms you were hanging out in, i thought one of the interesting points he made was about the regulatory apparatus. and his concern that an enhanced regulatory regime, which would be a clinton win, would be dangerous to capitalism. >> he has said and he said it on

the stage at delivering alpha, now he particularly took on the epa there, but one of the reasons why he supports donald trump, he thinks that trump would get rid of a lot of the regulations on a number of different industries, right. we're here talking about on a daily basis wells fargo and the banks and some of the regulations that exist there, but he's taking on the epa and i do want to play a sound bite, if i may, of carl icahn, who i think it is fair to say maybe sounded a little more resigned to the fact that maybe his guy wasn't going to win, although he's still not giving up hope, and who knows, because i don't know what polls, you know, after the brexit thing you can listen to anymore. so you don't know. but here's what he said about his support for donald trump. >> i'm not here to say he's running a campaign the way i would run it. i think obviously a lot of people have said it and i've said it too, he should stick to

the issues, stick to them and stick to them. the issues he has are really good. what donald is going to do for this country i think is break that logjam in congress. you can't keep on with the status quo the way it is going where you need fiscal stimulus. i think the federal reserve and bernanke and everyone along the federal reserve since it has been there said that and you're not getting fiscal stimulus you need at this time. so i think donald would do that. being that said, maybe hillary will also do it and get it done. but i don't think as much. >> maybe that's why jeffrey gundlach said the outcome of the election is not going to matter maybe as much as everybody is so fixated over. i don't know. >> i would agree with that. it is not a sexy thing to say. >> whatever it is. >> adam, how much do you think regulatory overreach is holding the economy back? >> i mean, look, it is hard to

quantify that. i know a lot of people are very worried about it. it impacted the financial sector, banking sector, health care, et cetera. i tend to have a view that i was at a speech many years ago where bill bennett said, you know, i take my dog to the beach every day, we watch the sunrise and i just don't give my dog credit for it. i tend to believe that economics cycle is kind of moving a little bit independently of who is in office and so therefore it is really hard to measure what the political influences on the stock market, you know, it can really vary. my sense is interest rates cycle and economic cycles, you know, can kind of deviate from which party is in control and you can show that over time. i think it is harder to measure. >> one of -- my final thought here, adam, broad word that kept come up, cautious, cautious, cautious. >> and heard at delivering alpha. >> are you cautious on stocks, cautious on bonds, cautious, gundlach said cautious on all asset categories. >> yeah, look, i mean, so i don't know what -- how people

are positioned, other people you're talking about. i feel for me -- >> you just raised your target for the s&p. >> yeah, couple of months ago. maybe if you're one of the experts you just had on and used to 30%, you know, keg, midsingle return looks pretty pumped. if you look at government bonds, what you're getting with corporate bonds, i think u.s. equities look like good risk reward. i got on my side good total yield, i good a good relative valuation versus other asset classes, 72% of all stocks that trade 100 million bucks a day are more in the u.s., liquidity premium people will continue to want to pay for and cautious positioning if you look at morgan stanley sort of prime brokerage units content, how people are positioned in the options market, surveys, et cetera, you got a combination of fundamentals, liquidity position that u.s. equity is pretty attractive. >> in terms of where to find

growth, you're advising comments to buy biotech despite the regulation that hillary clinton is proposing on drug pricing in general. why are you bullish on this sector? >> first of all, you've been able to fade rhetoric around it, drug pricing in prior elections i would say. look, the logic is this. biotech trades the same multiples on cash low and earnings as pharma. despite superior growth rate, more assumptions about the pipeline and most people don't realize ricky goldwasser showed that a lot of the pharma companies have taken more aggressive pricing on their products in biotech. i have a much more onerous assumptions and i like that kind of favor biotech over pharma pair trade quite a bit. i think it is mispriced. get beyond the election, people look where can i get way faster growth for similar multiples in the market and biotech, likely a lot of deals, will be an area that will outperform i think quite a lot over the next two or three years. >> adam, thank you very much. scott, thank you very much. >> take care, guys. >> nice to be with you, adam. scott. actually nice to be with you too, scott.

>> we're calling this "halftime overtime". >> i'll be back with you. >> the acronym for that is hot. >> it is. >> halftime overtime. >> sums me up. >> don't forget to tune into "halftime" all this week, all-star lineup, jamie dinan, mark lasry, keith meister, rich pzena, barry rosenstein and robert kraft, nice game yesterday to celebrate. >> before we let you go, can you ask bob kraft one question on behalf of my family. when did tom brady get all metro? >> metro? >> the fashion sense. >> the fashion sense, after the game yesterday. >> when hasn't he been? >> good point. >> he's everything. >> he's stylish, perhaps. gentlemen, moving on. a big announcement from pepsico this morning. the company is planning to cut calories and in many beverages. sara eisen sat down for an exclusive interview with the

chairman and ceo. a lot was mentioned by the chairman and ceo. this global ambition to cut down on sugar and salt, but is it a little too late? has that consumer who is more health conscious already switched to other brands? >> no, pepsi has been all over this trend and now it is doubling down. the goals laid out today are aggressive. it is a response to both consumers eating healthier and increased regulatory pressures to cut salt and sugar, to fight obesity. specifically pepsico says two thirds of the beverages will have no more than 100 calories from added sugars per 12 ounces by 2025. and just for perspective, beverage digest publication says it is now about 40% of the beverage portfolio. so there is work to do here. and, of course, there are risks, costs for one, and it has to taste good. here is an example of that challenge that the pepsico ceo talked about when talking about another goal that she set today. listen. >> in the case of saturated fat, that was a challenge because

people love fried snacks. so we had to really invest in technology to reduce the saturated fat levels. it has taken us a while. now two things. we have frying snacks in heart healthy oils and significant technology breakthrough now commercially being adopted in china which is a new frying technique, which actually reduces saturated fat levels by about 20% and increases capacity of machine by 25%. so very excited about that. >> it is hard to find a direct comparison to what some of pepsico's competitors are doing on this front. certainly pepsi has been moving away from carbonated soft drinks and cola at the same time when coca-cola is doubling down on it. and in terms of snacks, remember, pepsico is talking about the frito lay business. it is cutting back sodium and saturated fats by 10% by 2020. companies are really setting their own targets here when it

comes to the ingredients. pepsico stock is up 7% this year. outperforming those other two companies, for instance, on stronger results. and today we got a snapshot of how the company wants to keep it up, big picture view when it comes to health concerns in the future. brian? >> sara eisen, thank you very much. well, the clock keeps ticking on the election. just 21 days to go until election day. i think i speak for america when i say thank goodness. but early voting already under way in many key states and we have got the early read on the race just for you, america straight ahead. when you're on h, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business.

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welcome back. 21 days to go until the election and where do the candidates stand right now? john harwood has the latest poll numbers live from washington. hi, john. >> hey there. let's talk about the state of the race because we have a new nbc wall street journal poll out this weekend and it shows hillary clinton with an 11-point lead over donald trump with likely voters. 48 for clinton, 37 for trump, 7 for johnson, 2 for jill stein. that's a large lead. some people will say, well, i heard other polls have a different margin and that is true. let's look at a couple of other polls that came out over the weekend. washington post abc poll had a 4 point margin in clinton's favor. the george washington university battleground poll had an 8 point

margin. ours had an 11 point ratheren. that's why people tend to rely on averaging polls together. why do they do that? each poll has a margin for error and one out of 20 could be way off. so you average them, you reduce the possibility that you're off. but if you look at the averages that are kept by leading organizations, those don't match. the new york times polling average has hillary clinton ahead by five. the real clear politics average, widely quoted, has her up by a little more than six points. the huffington post average has her up by eight points. now, what are the sources of variance in polls and the things that make it hard and harder than it has been in the past to poll accurately. people have become so consistent in their voting patterns that if you get more republicans or more democrats in your sample, you're going to change the bottom line result of the poll. second is dealing with response rates. fewer people are willing to

answer the phone for pollsters. that makes it difficult and costlier to do polls. and research has shown that if you're not feeling good about your candidate, you may be less like through participate in a poll. that could be weighing down donald trump's numbers down now. finally, the big question mark is who is going to vote. how do you model turnout? what share of the african-american vote is going to be cast? what share of the latino vote is going to be comprised in the final electorate. all those things are uncertain. you can't say for sure. and it is why there is -- people have to deal with a little bit of variance in polls because that's the nature of the beast. and i will say, just before i came on the air, monmouth university just came out with a national poll that had a 12-point margin. one tick larger than ours, 50 for hillary clinton, 38 for donald trump. >> when you saw that margin in the wall street journal/nbc news poll, were you surprised?

>> yes. it feels a little bit high to me. >> to me too. >> and, again, we -- we talked about partisan balance. in our poll, when we apply the criteria that we're now using to determine who is a likely voter and they're different than they have been in past years because we found that previous measures didn't adequately capture it, we have a democratic advantage of 11 points in terms of self-identified democrats and republicans turning out to vote. i don't believe that there is going to be an 11-point democratic advantage on election day. in 2012, believe it was six points in favor of the democrats. democrats will be ahead, but the question is how much will be ahead and we're, i think, on the far end of that scale in this particular poll. >> john, thanks very much. >> nearly a million and a half americans have already cast their votes in the 2016 election. and election watchers are carefully monitoring early

voting and registration data for clues to the state of the race. state by state. we're joined by michael mcdonald, associate professor of political science at the university of florida. he's also worked as a consultant for the u.s. election assistance commission. welcome. good to have you with us. tell us what you are finding as you analyze the early voting trends. and i gather what gives you the strongest signals for which way the race may go is when the early voting trends and polling data line up. what is it showing? >> yeah, you need to, if you were just watching that, you know, clip that -- that tape from john harwood and keep it around, because it was an excellent primer on how polls work. and what we see with the early vote, the early vote is confirming what the polling show. but below the national numbers, this is very important, we're seeing an evenness across the state. so along the atlantic seaboard, in places like north carolina

and virginia and florida, the early voting numbers are suggesting and the polling numbers as well that clinton will outperform obama in the critical battleground states. however, in the midwest -- >> outperform what he did in 2012? >> absolutely. but in the midwest, when we look at places like iowa and ohio and i think there may be some general weakness here, and another states once we get more data, what we're seeing is that trump may outperform romney and so if there is going to be a pathway for victory to donald trump, it most likely is going to go through the midwest. >> in the midwestern states does trump outperform hillary clinton? will he flip iowa, will he flip ohio, which he must do to win? >> i think there is a very good chance that he will flip iowa. there is -- it is very close in ohio at the moment. but there is real weakness among democrats. democrats as far as i can tell looking at the early vote,

they're just not epp enthused abo about voting. >> michael, what i find interesting is the number or the percentage of women requesting absentee ballots peeked to their highest level in early october. given the revelations, the allegations of sexual assault and donald trump, has that pushed more women to vote or get their voice out there? >> well, we could actually see this in the early voting data. we don't have a lot of data, i don't, from many states. but i do have individual level data by gender in north carolina and in georgia. and so what i can see from those data is that the week following that first debate, after the machado controversy, we saw an up tick in the number of women requesting absentee ballots. that makes sense. requests are -- have to go through the mail, they'll be somewhat of a trailing indicator of where the election stands. but it was only a very small

blip if we think about it. 5,000 or so in each of the states of women that were requesting ballots. that's a drop in the bucket to the overall turnout. and then after that week, the numbers recited back to the levels that they were prior. so, yes, a temporary blip it was very interesting to see it, but i don't know if that's going to carry through all the way to election day. >> i don't want to blow this who whole segment to smith reasons, but can re read into who is requesting an absentee ballot. it may be lilt military, lean m conservative, is there something we can read into who these people are which may skew the way we look at it? >> as i just implied, we have some individual level data and we can look at voters characteristics on the voter files to see whether or not if they are in a party registration state, which party they're registered with -- >> who are they. tell us who the average absentee

voter is. >> it changes throughout the cycle. right now, we're seeing typically more republicans voting because if there is a choice of voting by mail, in person, or election day, republicans tend to vote by mail. democrats tend to vote in person. and then election day is somewhere in between those two numbers. and so right now we're generally seeing republicans in places like north carolina and in florida, they're registered republicans voting at higher rates than democrats. but not doing it at the same rate that they did in 2012. there is some good news for the democrats there. >> michael mcdonald from the university of florida. michael, thank you very much. >> you're welcome. why a ballot initiative to try to curb drug price increases may actually have the opposite effect. hello, government. we're going to explain. all ahead. first, it has been a bad week for clowns and a worse week for anybody who is afraid of clowns. companies are now taking aim at our clown invasion. we'll tell you what they're doing coming up.

you work at ge? yeah, i do. you guys are working on some pretty big stuff over there, right? like a new language for crazy-big, world-changing machines. well, not me specifically. i work on the industrial side. so i build the world-changing machines. i get it. you can't talk because it's super high-level. no, i actually do build the machines. blink if what you're doing involves encrypted data transfer. wait, what? wowwww... wow? what wow? there is no wow.

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iraqi civilians have been warned to stay indoors but many of the villagers are said to be welcoming the troops as they advance. two separate blasts today at the world's biggest chemicals complex in germany. basf says two people have been killed, two more are missing, and at least six more are reported injured. the explosions happened during work open a pipeline route for transporting raw chemicals for shipping. nearby residents were told to close their windows to keep out smoke. the entire complex has been shut down until further notice. target is pulling some creepy clown masks from many stores in response to the growing reports of clown threats across the country. the company did not say if the decision would affect all of its stores. clown costumes for children, clown suits and apparently those sexy clown costumes, whatever that is, are still available. and a big celebration for a little panda in shanghai. peanut is 100 days old. the cub is the first born at the

shanghai pan why protection and research centers. officials say that the baby is growing very well and has four new teeth. and the cutest little face in the whole entire world. that's the cnbc news update this hour. seema, back to you. >> the cutest. great panda to follow on instagram, great panda. >> exactly. just doesn't get any cuter. >> the best -- we know the best panda is the panda express at all airports. >> oh, stop. >> not sure about that. >> thank you for that, brian. he's a cutie pie. >> i'm the sexy clown costume is still being sold. >> i don't though what that is. but -- >> oxymoron. >> i've never seen one of those. anyway, back to you guys. >> thanks, sue. >> sure. the rate to bid goes on. we have new headlines from the federal reserve today, the highlights ahead. plus, whether the fed moves on rates or not, what moves if any should you be making with your money right now? we have $242 billion of advice

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welcome back to "power lunch." federal reserve vice chairman stanley fisher speaking a short while ago at the economic club

of new york. steve liesman has the highlights. >> can i ask that they roll baby panda video to cover this? fed chair stan fisher was in new york, gave a speech, warning of the dangers of low interest rates, saying they could lead to greater financial instability, and to longer deeper recessions. >> low interest rates make the economy more vulnerable to adverse shocks that could put it into recession. operating close to the effective lower bound limits, the room for central banks to combat recessions using their conventional policy tool. that is by cutting the policy interest rate. >> fisher said the evidence so far doesn't show heightened threats of financial stability, but comments ring hawkish particularly after fed chair janet yellen on friday spoke about the possibility of running a high pressured economy with perhaps lower unemployment rates. fisher for his part said the fed was at or near its inflation

targets. here is the reasons, productivity and labor force growth, aging population, weak investment, weak foreign growth. he added it all up, saying rates are lower by 3 percentage points or 300 basis points from the combination of all those factors and those are not in the fed's control. again, that argues a little hawkish in the sense that we can't raise them for that reason, so therefore maybe policy shouldn't be that -- >> i love what he said because i don't think personally that demographics has been dug into enough as a rational for slow growth. what do you think? >> i think it is something -- i talk a lot about and part of it is it is the silly political season and everybody wants to blame this policy or that policy. >> we're blaming too many old people. >> i'll tell you how you blame -- >> how many pandas? >> you start talking -- you start talking about policies that should be combatting the aging of the population, for

example, immigration, the visa programs, those sorts of things will be things -- greater education for younger people, and in fact one of the things that economists are talking about is making a workplace that is more amenable to older folks, keep them in the workforce. you're right. demographics is destiny in a way that a lot of investors, economists and politicians do not take enough into account. >> steve, thank you so much. as a rate debate wages on, two big hedge fund managers tell cnbc they are increasingly worried about the markets. tepper is light on stocks, heavy on cash. and does not see much upside from here. while not outright bearish. let's get to our next guest, to see if he agrees. joe amato, president and ceo with a quarter trillion dollars under management. joe, great to have you here. a cautious tone from the two

influential hedge fund managers. do you subscribe to that view and how is that changed your mind set as an investor? >> we share that caution. picking up on the prior discussion that you were having, we think there are a number of structural head winds to growth. demographics being one of them. but you combine that with too much leverage which may have shifted over time, too much capacity, fueled by levered growth in the emerging markets and then add to this i might say anti-globalization trend that is really pressuring what has been 70 years of policies that have promoted the free movement of goods, services and capital and now seeing that reverse and these are all head winds to growth, which leads us to share that caution. >> is it possible there are just so many boomers retiring that no matter what, any politician, they can promise they're going to walk on water, that any regulatory hurdles they can kill, whatever it is, that it won't matter that much, that slow growth is here for a while, simply because the majority of the population is aging out of the workforce.

>> demographics is a big issue and you can only do so much to control it. steve touched on things from an immigration policy standpoint, which many countries are now fighting. >> japan. >> japan certainly is one of the challenges they have, one of the biggest head winds in the world from a global growth standpoint is japanese. you share that -- look at germany and other parts of europe. >> italy is negative. >> same immigration issue. >> given the backdrop, given the backdrop, how does one allocate capital into the markets now, if this cautious tone is going to exist for many months, is it gold and bonds that will win the race? >> you have to be diversified across asset classes. we could be wrong. so you want exposure to the equity asset class. you use the opportunities of shifts in valuation to tactically move, so back in january, you can take advantage of a big sell-off in equities and if you did that, you would have a quite significant 20% gain through midyear. >> do you want -- is cash your

friend here? you want to raise cash? >> i think many of our portfolio managers keeping more cash than they typically have done and take advantage of what we see as increasing volatility into the marketplace. >> an optimistic side of the demographic shift, how does it look ten years from now. and aren't we supposed to be investing ten years from now? >> that's one of the arguments around emerging markets, they generally x china have a positive demographic outlook and that should fuel increases in growth and productivity. >> you like emerging markets over the s&p 500 now? >> we pulled our exposures back slightly to the u.s. we feel you should have exposure to the u.s. equity markets but we saw some head winds from an earnings standpoint. i think the biggest issue we have in the u.s. is lack of earnings growth. it is five consecutive quarters of decline in earnings per share. this quarter looks like it may be up slightly, maybe flat, which is, you know, so you see this yield driven multiple expansion really drive the market over the last six months.

>> joe, pleasure to have you on. we didn't even talk about the election. you're welcome. >> thanks. to the bond market, rick santelli is at the cme. what is on your radar today? >> we were just listening to people debate stan fisher, the markets debate stan fisher. look at one week of twos. they are definitely in the zone where they seem to be drifting lower. stan fisher didn't impact down three basis points on a two year today. many traders said he was on one hand on the other hand, in guidance, you didn't walk away any smarter and he highlighted issues where things can go wrong but didn't voice any concerns that they can do anything different. if you look at one week of tens, it is kind of thrashing here a bit as well. but here is the money charts. look at june 1st of tens, knock at the door higher. gilts not pushed through higher. year to date dollar index, today, high close to 98.25. that means we're about a penny and a of away on a closing basis of testing the all time high

from the end of january at 99.60. that's the chart most common for traders to be scrutinizing. tyler, brian, back to you. >> rick, thank you very much. if you missed it, tesla delaying its latest product announcement, only by a few days, but does this delay give you any clue as to what this mysterious product might be? we're talking tesla straight ahead. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com.

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welcome back. a lot of talk about tesla today. phil lebeau live with three big headlines. phil in. >> let's start with the first one. a lot of people wondering if there is going to be a product announcement from tesla today. a couple of weeks ago, elon musk said there would be quote/unquote an annncent people were not expecting coming up today. well, yesterday he sent out a tweet saying they need to do a little more refinement on this particular product before they announce it.

remember, when he first said there would be this announcement, he said that it would be a product not expected, the speculation is that it likely has to do with the auto pilot system. we'll find out more about this when it comes up on wednesday. that's the day of the announcement. another piece of news from tesla yesterday, announcing a solar cell partnership deal with panasonic. remember, they already have a partnership with panasonic at the gig factory outlet in california. now this deal contingent on the merger going through. that vote is on november 17th. it comes down to this, panasonic would do some manufacturing at the solar city plant in buffalo. and then tesla would buy those photovoltaic cells for use in power wall and power pack products. and finally, the last piece of news from tesla, germany out with a regulator in germany saying you are going to have to stop using the term auto pilot

when you're advertising that feature in germany. essentially saying that, hey, this might give people a false sense that the vehicle can drive itself, remember, the auto pilot system was just updated last month to make it safer, easier for drivers to use, and adding more redundancy into the system if you will. nhtsa probe of the system, that continues, that's not been resolved yet. those are the three big headlines involving tesla. we'll get the news about the product announcement, that's coming up on wednesday. >> are you going to venture a guess for us, phil? >> well, i told you, the biggest thought out there, if you will, all speculation at this point, is that it is a new development within the auto pilot system. sort of that next level within the auto pilot system. that's pure speculation at this point. typically, brian, when there is a huge announcement, let's say they unveil a new vehicle, they invite the press out to california, they make it a big dog and pony show, usually

happens at night, elon on stage. given they said it will be coming up and it is likely going to be a conference call, not a press conference, i'm not sure where we should expect a vehicle. >> all right, phil lebeau, thank you very much. buffalo rocketing 4-2. bills are good. what does this mean for tesla stock? shares down by 2%. let's bring in brian johnson at barclays. he's an underweight rating on te tesla. they come out with a fancy new auto pilot, will that change your rating from sell to neutral or buy? >> i mean, our rating is based on what we think the long-term value is. even if it succeeds at launching the model 3, given the capital involved and the returns likely as other automakers start early next decade to bring out their own vehicles, that's where we are on valuation. short-term, though, we could upside with this slew of product announcements coming over the next several weeks. >> is there a risk of tesla

crying wolf with all the announcements kind of, musk secretive, gets to the point where you're, like, auto pilot, that's nice. >> one of the measures we like to look at is return on tweet. and, you know -- >> the acronym is rot, probably not ideal. >> it seems to be -- that being said, i think having panasonic on board and helping mitigate some of the capital in the solar business is a good idea. you know, we'll see what they do in auto pilot, one of the more capable. we really love the software side of tesla. so, it is progress. >> to brian's point, is tesla overpromising and underdelivering with these product announcements, and what could really move the needle this time? already looking at shares down 20% so far this year. >> yes, so, a key thing investors will be looking at in the third quarter results is really nongap profitability, gap

profitability, people seem to lost sight that, won't be reporting nongap revenue, cash flows, basic boring metrics. where we think they'll have progress, a lot of it from pushing out a lot of cars in the 3q, we think we're at a point where the market really isn't as hypnotized by the endless product announcement and it is going to look more -- but on the other hand, i think there is enough moving parts in the earnings that there could be parts of it that surprise to the upside, we saw that. >> do you think they're going to need to raise capital or will they raise capital and what would that mean for the stock if they do or they don't? >> we have in our model raising capital in 4q, notwithstanding the tweets from tesla. we know the s-4 says they may raise capital. it would be smart for them to appear to raise capital out of want as opposed it need. but we just think when you look at the amount of capital needed to get model three done, get

giga factory done, when you look at the uncertainty in the market over the next few year, that's why we feel comfortable that 4q is what we think in our models. >> what is your price target on the stock? do you have one? >> $165. >> and it is right now at $193. why aren't you in a sell mode? >> i think when -- the shorts are active in tesla, there are a set of those that are dogmatic long-term shorts and a set who roll in and roll out with the news phone. i think the question on their minds is the news flow between product announcements, maybe some upside surprise somewhere in the earnings announcement around cash flow, perhaps. is this still time to press a long-term short over the next two or three weeks. >> all right. >> brian johnson of barclays, return on tweet, we learn something new today. thank you very much. appreciate it. four stocks in focus today, your daily dose of street talk, that's up on "power lunch."

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the animation says, it is time for street talk. our daily dive into the key wall

street calls of the day. seema picking out two big calls today. what you starting with? >> starting with walgreens, assuming coverage on the stock with a buy rating. the firm citing strong risk reward, market share momentum and valuation as drivers for the call. the analyst also says investors are underappreciating walgreen's fundamental positives. the price on the stock, $95, shares at $78 now. >> stock underappreciated and underloved, down 12% over the past 12 months, not necessarily what walgreens wanted from the deal. stock number two, pnc bank, up to a buy from a hold, few reasons for the upgrade. strong capital levels on a number of big initiatives. about 11% upside, not a lot. it is a bank. >> sweet stock for you, dunkin' brands, raising the price target slightly to $54.

the firm claims the lack of value marketing may leave the company vulnerable to competitors and says the implied return on the stock's up price target is more representative of a sector perform. >> you go out west, more of a winchells. and voodoo doughnuts. >> final stock. elf beauty, ticker elf. all the analyst ratings and target prices are coming out because that block of period is over. kalyn company and sun trust the most bullish. outperform at $32 target. low relative price points and focus on the millennial and multicultural markets. others came out neutral on the stock. the $32 target, 17% upside, and elf stands for eyes, lips and face. >> yeah. >> not the 80s electronic band.

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good afternoon. and welcome back to "power lunch." i'm tyler mathisen. on the menu this hour. depending which poll you believe, the race for the white house is still either very close or hillary clinton will win bigley. why is there such a wide gap in those polls? and billionaire robert johnson will join us to talk about a new partnership in streaming media, talking politics and much more. and at&t reportedly getting into music. verizon buys yahoo!. didn't they just become phone companys? we'll talk about that in the second hour of "power" which begins right now. ♪ changes turn and face the strain ♪ changes ♪

>> welcome back to "power lunch." let's get a quick check on where the markets are, just two hours left in the trading day, major averages are lower across the board. they flirted with positive territory earlier today, but it was when wti dipped below 50 bucks a barrel that we did start sliding for better today. energy stocks the biggest losers on the s&p 500, crude closed above 50 bucks a barrel for the last five sessions. brian sullivan, it is looking like it might close below that for the first time in at least a week. >> kayla, thank you very much. also in your headlines this hour, dakota access says the construction equipment used to build their new pipeline was allegedly burned by protesters. firm saying the ruined equipment cost millions of dollars. omnicare, which was bought by cbs, will pay $28 million fine to settle allegations it received kick backs fromma abbo labs. and residents being told it

stay inside by a chemical plant explosion and keep their windows closed. we talked about david tepper and carl icahn. we didn't get to what jeffrey gundlach said. >> good to get gundlach's opinion on what is happening in interest rates, if we're talking about the stock market and the reaction of what could happen with the fed. he did opine, watching rates back up like everybody else has been saying, that the fed really wants to raise rates in december. you can see that from the long end of the yield curve. but also says he doesn't think that janet yellen really wants to raise rates all that much. that maybe they want to raise in december and he's trying to figure out how investors should be positioned for that. here is what he said. >> i think investors should be in a defensive position. and frankly defensive position has been working since july. and now we're looking carefully at the level we're at right now which is around 2130 on the s&p

500. seems to be a battle royale going on with the market dipping below 2130 but unable to close below that level. i would turn particularly negative if the s&p closed twice below 2130. >> so we also talked to jeffrey gundlach about the election as which we did as well with carl icahn and david tepper. tepper says the election is going to really matter as to how you should be positioned. i thought it was interesting that jeffrey gauundlach says he doesn't think it matters either way. >> i actually don't think the election outcome is really all that important because i think both candidates will be caught up in this trend of fiscal stimulus and supporting fiscal stimulus. and so i really think the bond market is saying that we are headed to a fiscal stimulus pivot. >> okay, so point well taken. maybe you get the initial reaction based on the election

day result. but once things start to settle out, if you get fiscal stimulus like he thinks we will, no matter who is elected president, all will be right in the world. >> he seems to be saying the bond market is politically agnostic, which a lot of people including goldman sachs with say is in the the case. goldman said that if hillary clinton wins the election, there is a 75% chance the fed hikes in december. i think a lot of people think the bond market has become partisan in that way, but he says, no. >> he doesn't like either bonds or stocks, if you heard what he said, you know in the interview, it is, like, i don't like stocks. >> collecting rare albums, art, wine. >> bonds either. >> i think -- who was it today, bank of america or goldman came out with a note saying buy real assets. buy like art, land, cars. >> timber. >> all those who say -- >> pandas. >> the art market has gotten overheated with people talk about real estate. so, yeah, it raises the question

what do you do with your money? this is yet -- we had three guys on today, if you take delivering alpha from a few months ago, you have had one after another of some of the brightest and largest investors be pretty cautious. i'm trying to find one that has come out and say, no, i think it should be buying stocks here. >> that's okay. i think that just being cnbc there is this feeling like you've got to -- something's got to be undervalued and got to put your money somewhere. maybe there are times in history where stocks as a whole are fairly valued and bonds as a whole are fairly valued and gold as a whole is fairly valued. i mo it know it is boring but m we're in one of those times. >> icahn, you kept pressing him saying i haven't seen you tweeting that much, i haven't seen youtaking a big shot at anything in a long time. nobody sees the moment to see i'm in on this company or i'm in on bonds or stocks. it is just a little -- >> i think it is nervous time.

i think that was maybe a -- i don't know who i borrowed, which invest are i borrowed that from. maybe tepper. >> you see investors lack conviction, they have conviction about putting more in cash. we're also not hearing them say put more under your mattress. >> tepper said he's holding a lot of cash. these folks are -- a lot of them are sitting on cash, waiting for some kind of signal that it is okay to be invested. the problem is, the fed's changed the game, it made it much more difficult to game, you don't know what to do, one minute, you know, a couple of people on the fed say we would like to raise rates, a data point comes out, come back and say, well, maybe we're going to wait, that's one difficulty. the election, the polling, the way that's been shaking out makes it more difficult to make a concrete decision. >> i know a hedge fund -- >> good luck -- >> i know a hedge fund who made a fortune in mattresses. buying up and rolling up some of the temper sealies of the world. >> talk about hard assets. >> exactly. forget about under the mattress.

>> stopped assets. >> depends on what your sleep number -- >> scott, thank you. awesome stuff. big tease for this week, coming up, right, a huge guest. >> marc lasry, bob kraft at the end of the week, a bunch of other big guests come down the pike. chanos, miller, rosenstein, meister. >> appointment television, that's for sure. >> hope so. noon eastern. >> thanks, man. >> there is your appointment. >> appreciate the lead. >> thank you, scott. before we get to halftime tomorrow, we have to get to some key tech earnings tonight. kicking off after the bell today with ibm. what should you do with the stock ahead of those results? stan morgan is senior vp and portfolio manager with sinovis trust and keith bachmann an analyst with bmo capital markets a hold rating and a 165 price target on ibm.

dan, i'll start with you. you're a bull on this stock. it is hard to know whether the bulls in ibm feel that way because you're expecting less of the bad stuff, so less restructuring, lower than expected revenue decline. or if you're expecting any type of organic growth or bigger buyback or bigger dividend. what are you expecting? >> for this quarter, we're looking for a slightly negative growth in revenues and earnings, single digit, but as you move into 2017, you get positive comparisons, looking for 5%, 4% type of growth rates. the way we look at the stock is more of an income free cash flow play. we own in our equity income model. they're generating about $13 in free cash flow and paying a dividend of $5. you got a lot of room in there in the short-term. got a dividend of 3.6%. to kind of drive or hold the stock until they do start to grow with this strategic imperative which i know you talked about before. >> keith, your price target is

the 52 week high for this stock. why do you think it can't break out of that level if it can meet its guidance for this year? >> i think ibm has two sides. the good news for ibm is in fact over the last 12 to 18 months they started to talk about investing for the longer opportunity, and previously the team had talked about cutting costs and buying back stock and lower tax rates. with all that said, even in the last quarter, revenues declined almost 5% if you remove recent acquisitions and so revenues are still declining, call it 3% to 5% on an organic growth rate. and we, similar to the previous comment, we focus on free cash flow as well. and ibm hasn't grown free cash fle for fo flow for four years. if they have $13 billion, that's the third straight year of no growth in cash flow. we think given the current valuation, that probably keeps the stock more or less in check. >> it is about expectations and

the stock is up 12% this year. and as dan mentioned, 3.6% dividend yield. can you afford to be on the sidelines if it keeps performing like that? >> yeah, i think we can. we like the -- what we call the renaissance stories of companies trying to turn themselves around. we like microsoft and oracle more so than ibm. but ibm has to put some points on the board here and we think if revenue growth can get closer to zero, then we reconsider whether we should be constructive, but in fact over the first part of the year, the performance has been fairly weak. the stock has been up on the narrative of opportunity or longer term potential, but they haven't demonstrated that total picture of ibm is moving in the right direction. >> you know, dan, i've been a little critical, not critical of ibm, but i don't necessarily understand what the company is trying to become. ibm reached out to me, they would like to clear that up. dan what is ibm in for the audience out there that may not own the stock but thinking about it, are they a cloud competing

company, a consulting firm, computer services? what is the company in. >> you mentioned big analytics, trying to get into the cloud, they're trying to grow the company. if you look back at the stock and i've known the stock for almost 3 years, we have gone through periods like this before where they go in a valley, they don't grow, this is very similar to me that happened during the 1990s when we had this migration off the main frame over it a current server environment, intel and microsoft and cisco really benefited and then they switched over and did more into services and were able to grow it up again. i think you have to be a little patient and let them see if they can be successful in moving this company over into these areas that you just mentioned. >> very quickly, watson is cool, right? bob dylan and --

>> commercials, yeah. >> can they make money from it? >> you got this battle ship turning in the ocean and can they do it? they have done it in the past. three other times in the situation and they were to pull out of it. like i said, we look at the stock as a dividend play, that eventually can start to perform. i agree with keith and the intermediate term, probably going sideways. but you get paid to wait to see if they can do it. they did it in the past. can they do it again? that's the ibm story. >> we'll get more data points this afternoon. gentlemen, thanks to both of you. dan morgan and keith bachmann. >> thank you very much. a quick programming note, ibm cfo martin schroeter joins "closing bell" today. >> bernie sanders tweeted about the company. the entire biotech industry has been affect as drug prices become an issue in the political campaign including a tweet by hillary clinton last year.

and now focus is turning to a ballot initiative in california that could have a major impact on drug companies. meg tirrell joins us now to explain. >> it is called the california drug price relief act. and support may be gaining steam heading into election day. known as prop 61. it would bar california state agencies from paying more for prescription drugs than the u.s. department of veterans affairs. now the va is allowed to negotiate with drug companies, something that medicare can't do. proponents of the bill say it could save californians more than $5 billion over the next ten years. proponents including senator bernie sander kwh eers who rall support of prop 61 in san francisco on saturday. >> stand up to the greed of the pharmaceutical industry, which is charging us by far the highest prices in the world for prescription drugs while they're making tens of billions of dollars in profit every single year. that's wrong. and what you do here in california will reverberate all over this country. i hope the proposition 61 is

passed. >> shaping up to be the most expensive ballot initiative ever seen in california with more than $100 million in donations, the vast majority of which oppose the measure. some of the biggest opposition funders, big pharma, merck, johnson & johnson and pfizer leading the way. those opposing also include veterans who fear the result wouldn't be lower drug prices for everyone. but higher prices for them. drug companies would respond by eliminating some of the discounts that go to the va and the l.a. times and san francisco chronicle have both weighed in against prop 61 citing potential unintended consequences. it is a hard issue to resist. >> meg, thank you very much. meg tirrell. now to dominic chu for a market flash. >> we're watching shares of chipotle, down between 2% and 3% at this point in the midafternoon. among the worst performing stocks in the s&p 500. now, analysts over at nomurra

lowered their forecast. they say that chipotle's numerous attempts to win back customers and boost sales appear to be falling flat. they report earnings a week from tomorrow. a volatile stock to watch ahead of that number. back over to you. the polls on the presidential race range everywhere from it is a tight race to hillary clinton is getting her old house back. so why are the polls so different? we'll explore that coming up on "power lunch." mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack.

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welcome back. a question nearly everybody seems to have about the election aside from how did we get here is why is there such a discrepancy in the polls? some polls show clinton ahead by a couple of points, others show her up double digits. others show trump ahead. mr. steve liesman, you may not know this, but he's done a lot of polling in his time and economic analysis and joins us now. >> 2007 is when we did our first national poll and i've done it every quarter since then. so we do a national poll and it is a very difficult -- john harwood has been saying it is not a science, it is an art. but let me show you here, three polls offering three different answers on the critical presidential race. consider this, folks, nbc news wall street journal, the one we tend to like here, plus 11 points for clinton. abc washington post, plus four points. l.a. times usc poll has trump up

one point. i'll come back to that in a second. that's an interesting case. let me show you what we're calling here because we like the pun polled pork. >> that's good. >> where, who and -- how many people are polled? the sample is very important. these are aggregated up in -- so, for example, if they come up with only 6% of african-americans in the poll, they take that to 10% to 13% range. when you pop the question, when you do the polling, very important, not only that, but where the actual question is in the poll can make a big difference. finally, one other thing, called margin of error, folks. not margin of perfection, right? so the margin of error plus or minus 3.5%, that's where you're in the 95% confidence level. so you're 95% confident that your error is plus or minus

3.5%, which means that 5% of the time the error can be higher. people may not be registered voters. >> what do you mean? >> exactly. and now i told you about this l.a. times poll. look at this headline from this wonderful story in the upshot earlier, last week. how 119-year-old illinois man is distorting national polling averages. they have a -- a 19-year-old african-american who supported trump and because of this specific way that they did their polls, this man's vote, this man's choice was worth 30 times what the average polling respondent was worth. >> that l.a. times poll that i cited. >> right. exactly. >> that's the poll that appar t apparently he's skewing. because it has trump plus one, it skews the national averages. >> why does he get 30 to -- >> one of the reasons is because this particular poll used very, very narrow demographic bands. we don't do that in the -- in

our poll or the wall street journal poll. we use this 18 to 20, 29 band. they were using 21 to 23. he got scaled up beyond what he should have been. the upside of that is you can get more precise if that happens. outlier like that, it can really hurt. you have to be very careful, margin of error in caps is what you want to think about. >> stick around. we bring in shawn trendy, senior elections analyst for real clear politics. welcome. good to have you with us. to steve's point, how likely is it that these polls are really, really wrong just like the brexit polls were wrong? what is the percentage chance that they are really wrong? >> well, there is a 1 in 20 chance from probability that any individual poll is off. the odds that all of them are off from probability is pretty small. also other types of error that we can't put in probability terms. what he's talking about. the way you set up the poll, the question ordering, we have been

lucky in the united states that we haven't had a catastrophic poll failure like that. but we have seen them overseas. >> so let's talk a little bit about what the polls say in terms of the width of difference. the nbc wall street journal poll has an 11% clinton margin. the washington post abc poll has, what, a 4% clinton lead. if the -- if the margins of error move one way, are they basically -- could they be tied, in other words, you take away four points on the nbc poll, you get down to 7, you add 4 to the washington post poll, you get to 7 or 8. >> right. >> a lot of math. >> that's what we do at real clear politics, we average them. basically create a super sample. and that suggests clinton in the four way race, which doesn't include the l.a. times poll, she's probably up about six points right now. and the state level polling is fairly consistent with that. >> he has what your average says. >> i want to weigh in quickly

with the math that brian was complaining about there. i think, correct me on this, your 11 point lead in the washington journal poll means that clinton could be up four or up 18? is that right? you double the margin of error and then subtract and add it? >> it is actually 1.6 times margin of error. i won't get into the crazy math behind that. she cowboy anywhe she could be anywhere. we're 95% confident -- >> that's what her critics say. >> we're 95% confident the true value is in that band you talked about. >> so let's say the polling average is a 6 percentage point gain, lead, for secretary clinton. 6 percentage point, which is, you know, not all that huge. what about the electoral vote? is it going to be closer than that would suggest?

or right now wider margin than that would suggest? >> well, it will be wider because the electoral margin of error is always -- one of the bren f benefits of the electoral college is it magnifies popular vote victories and this would translate to her winning 340, 350 electoral votes or so. >> that's a big, big margin. >> to tyler's first point, why was the brexit vote, the betting markets had brexit as an 86% unlikelihood going into it. we know it passed. the polls are wrong. why was that so wrong and did that change polling maybe not forever, but for a long time? it couldn't have been more wrong. >> it should change analysis because it was just people didn't want to -- they couldn't conceive of the fact that the british people would vote to leave. people would say -- >> didn't want to admit they were one of those people. >> can i point out the brexit polling was off by about four

points, but darn near the margin of error on that. >> betting odds, people placing financial bets across the city. >> i think the big money, the big london money was saying they're going to stay in. >> 76% -- >> 86% the day off. that they would stay. >> that's right. that's where the betting money was, where was the betting money coming from? >> think about it. the big money was the london institutional establishment. >> if you're sure that the vote is going to be 50 -- >> the little guys were betting -- >> if you're sure it is -- >> shawn, thanks so much. thank you. we'll keep talking. >> i'm not saying don't believe predict it or the betting markets but my point is what steve said. my guess is the people betting on clinton also probably live in the d.c. -- who is on the predicted markets? probably people more in the sort of --

>> the financial center. >> in the financial centers which tend to be on the coast. i'm just saying, i don't know if people in toledo are making bets on -- >> betting markets, not polling. >> we tend to -- >> cite the poll of polls to smooth out all the volatility. >> too many pandas and too many polls. >> you can only make one bet. you can only bet yes or no on this. >> binary. >> that means you have to assign a much larger percentage chance to the probability than you do with the -- >> i'm voting tomorrow. i'm voting tomorrow. >> is that true? >> that is true. >> for the first time? >> i'm going to be traveling for cnbc on election day. so i have my absentee ballot. i vote liesman. >> write him in. when we come back on "power lunch," from disney princesses to drug debates, the good, the bad and the ugly coming up next. at&t owns directv and verizon owns aol and maybe soon will own yahoo!. what do the former phone companies doing, what is their strategy? we'll talk about that coming up. ♪

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welcome back to "power lunch." time for the good, the bad and the ugly. first to the good, hasbro,

better than expected revenue and earnings, a big driver, sales of disney princess dolls. a recent boon, they recently got that contract from mattel. stock is up close to 8% though. on to the bad, netflix is down, down 1%. it is off the lows of the day. the company reports earnings after the bell. we'll have a preview in the next half hour. and ugly day for ptc therapeutics, a repeal for a drug was rejected by the fda, which had given the go ahead to sarepta on a drug to treat the same disease. coming up next on "power lunch," robert johnson, we'll ask him about his new streaming media deal with amc, we'll get his take on politics and much more. stay with us.

. i'm sue herera. here is your cnbc news update at this hour. the florida man convicted of shooting at george zimmerman in a road rage incident has been sentenced to 20 years in prison. matthew epperson was convicted of attempted second degree

murder in september. zimmerman testified epperson followed him flashing his lights and honking his horn and pulled beside zimmerman and shot him. bullet missed. he claims that he was acting in self-defense. zimmerman was acquitted of second degree murder in 2013 in the controversial shooting of trayvon martin. a third day of strikes at two jim beam bourbon production facilities in kentucky. employees say they are overworked amid a nationwide revival of interest in kentucky bourbon. the company and union employees have been meeting since april to discuss a contract that expired in august. thankfully no shortages of bourbon are expected during the strike. meanwhile, pepsi has a timeline for cutting sugar in its drinks. the company says two thirds of its single serve drinks will have 100 or fewer calories by 2025. pepsi owns gatorade and tropicana. they discussed the move earlier on cnbc. >> overall societies are

changing. and consumers are changing their habit because they want to focus a lot more on remaining healthy because they're living longer. they want to remain very healthy for the duration of their lives. >> and tomorrow will be the last state dinner at the white house for the obamas. they are hosting prime minister matteo renzi of italy and who better to create the menu than chef mario batali. the dishes are pretty much a state secret on the menu. but first lady reportedly had a tasting at one of his famous restaurants in new york city. the cooking is already said to have begun. when the menu is released, we will bring it to you as breaking food news. that's the news update at this hour. and we'll do it on "power lunch." what better show to do it on than "power lunch." >> i bet the menu is going to be real good. >> i bet it is. >> italian dinner at the white house. sue, thank you. >> you're welcome. the streaming war is heating up. amc networks and rlj entertainment announcing a new partnership to bring viewers at

home more content via streaming video on demand. let's bring in the two guys who led this new venture, robert johnson, founder and chairman of rlj entertainment and josh sappan, president and ceo of amc networks. welcome to both of you. mr. johnson, you made your career in i would say niche broadcasting. sometimes very large niches. but what you're merging here is acorn, a british, you know, dramas and urban movie channel with amc's property. is the future of streaming, the future of television more niche programming? >> tyler, thank you for having us on. i think you're absolutely right. the future of television is more choices. and as people have more choices, you can target their particular viewing interests. and that's what rle is doing with acorn tv and the movie channel. i see this, tyler, frankly as an

opportunity to do and the technology of over the top streaming and digital transmission what i did with b.e.t. and cable satellite. and having a partner like josh is in the same vein as what i did in having a partner like john malone when i launched b.e.t. to create the still today the preeminent african-american targeted niche, if you will, network, but a niche against some 32 million african-american population of the country. this has significant potential and combining with josh and his creative ability and producing emmy award winning content, it is the best thing for us with both british mysteries and dramas and with urban content. >> so mr. sappen, mr. johnson's laid out a cogent argument there that the future is streaming, the future is niche. i'd like to get your thoughts on that and will you be able to make as much money in that sort

of future of television as you did in the more conventional sort of bundled world where you are part of the carriage on multisystem operating companies platforms. >> right, well, you know, i think bob johnson's track record speaks for itself. entrepreneur of extraordinary merit and accomplishment and vision. and he's done it several times whe before. we think he's doing it right this minute with urban movie channel and with acorn. and it is early days, so we think that bbc america, a channel we operate in conjunction with the bbc and we tv and our independent film distribution company marry potentially over time beautifully with what bob and begal and his team have developed at rlje. we think we're on the verge of streaming 2.0.

streaming for big audiences, established, wide breadth streaming and now is the time when the channel just for you will emerge and bob's got them. >> josh, the second home for your content, like madmen and breaking bad had been netflix. is this an either/or? will you put your content on acorn instead of netflix or is there room to play in the sand box with a bunch of these companys? >> the latter. we think our content as you mentioned goes to netflix, goes to hulu. hulu is our strongest commercial partner today. most of our shows go to hulu, some number of months after they play on amc on sundance on we tv on ifc and bbc america and those arrangements will continue. we think that there are many options that will occur on the many screens that people can access and so our content will today go to hulu substantially, in the very -- in the long-term

future, who knows, we'll see what the evolution of acorn and umc are along with our other streaming services. >> i guess in this, under the deal, josh does get warrants to buy 50.1% of your company should he wish should rlje shareholders, because you are public, look at this as a takeover? >> no, i think they should look at it as a very strategic alliance with a company that offers great assets to help both companies grow for that matter. urban movie channel could benefit from an association with we tv, which has a strong urban reality programming footprint. josh mentioned acorn tv and bbc america as a natural alliance. and also the fact that in every business that i've created, i've always had strong strategic partners, whether it was john malone with b.e.t. to me, the benefit to the

shareholders is seeing two very visionary companies come together with a very sympathetic arrangement that could benefit all shareholders and i -- it is going to be josh's decision as i said before, we're a publicly traded company, that's amc's decision, but i think for the shareholders, the shareholders will benefit either way. >> let me ask, quick question to both of you, mr. johnson, you first and mr. sappen, has the interest in the election campaign drawn viewers away from your entertainment channels? >> not really. i think the american people look at the election for what it is. it is a decision about who is going to run the country, who can best provide the most important things for the voters, which is the first and foremost national security protection, second of all growth in the economy. and then probably third is bringing this country together to achieve things that are in the best interest of all

americans. but entertainment is always going to be something that people will enjoy because it is part of the cultural fabric of america and the election will be over november 8th, but americans will want to hear a great story, want to be entertained and want to be part of what makes this country from a diversity standpoint great. >> we'll have to leave it there. thank you very much. congratulations on your new deal. robert johnson to you as well. >> thank you, tyler. why are telecom companies like at&t and verizon suddenly buying up companies like directv, aol, yahoo! and maybe at&t getting into the music business? the question we're going to ask coming up is, are verizon and at&t your mother's phone companies anymore? there's no one road out there. no one surface... no one speed... no one way of driving on each and every road. but there is one car that can conquer them all, the mercedes-benz c-class. five driving modes let you customize the steering,

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what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com. at&t reportedly trying to enterritoe enter the music business. trying to make a major deal in order to buy its way into the music industry. you got verizon buying aol and possibly yahoo! depending if that deal goes through. the question is then what are these companies trying to become.

the same companies you thought you knew? let's ask barry stein, an analyst with drexel hamilton and joins us now. question, you see this headline, whether it is true or not, they bought directv. verizon is buying up all these companies. what are they trying to be? they aren't just phone companies anymore. >> well, they start out as telecommunications companies. look at their network assets, the wireless networks, fiber net works, business networks, look at the customer bases, each over 100 million wireless customers, at&t has 25 million video customers. the goal is to leverage that, and to take a page out of facebook's and google's book. >> what do you mean? >> start to sell -- >> these companies are doing this, verizon, to go after google? >> yes. to go after the online advertising. what verizon has is an app called go 90. turn your phone 90 degrees, you can watch it. they'll start to sell more and more advertising on this app. that's what aol was about.

aol brought them very strong advertising algorithm software and that's what yahoo! is about with aol and yahoo! they have 25 platforms. >> you think that strategy will work? >> they won't put google and facebook out of business by any means, but look at 2q, facebook and google did about $25 billion in advertising business and collectively that grew about 27%. if you take a third of that growth, that's a billion dollars a quarter for both at&t and verizon. >> but does that change the reason people bought these stocks? you buy the stocks because they're, you know, i'll be on my phone, i pay them every month, they're basically an annuity, they kick off 4.5 and 4.8% dividend yield respectively, i don't care if they grow, i just want the income. does this change the investing thesis around verizon or at&t? >> it amplifies it. >> what does that mean? >> it means both companies have spent hundreds of billions of dollars investing in network.

that's that these companies have always been about. that's what they're about. they now have hundreds of millions of customers. the goal is to monetize the customers and the way you monetize -- >> can they do it on both stocks buys, holds, what? >> verizon said they'll have flattish earnings, so probably time to come back and buy that. at&t will have very nice earnings growth this year because of the synergy from directv. >> neutral and a buy. >> neutral and a buy. >> barry stein, thank you. >> thank you very much. >> appreciate that. all right. up next, shares of netflix. did you know they're reporting earnings after this? >> i can't wait. >> they're falling ahead of earnings due to a lot of volatility in that stock. but earnings are out after the bell and we'll have what investors are worried about when we come back.

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welcome back to power lunch. netflix getting ready to report

earnings. shares down 12% this year. let's bring in, he raised netflix to buy. turn and burn have been problems for this company. i'm wondering what sort of price target you put on it for this quarter. >> so just to be clear we did not upgrade. it has been a buy rated stock for a while. we just previewed the quarter or maintained the buy. clearly the churn was the driver for last quarter's miss in subscriber growth. we think q 3 is going to be pretty choppy. the price plan is going to hit q 3 harder than any other quarter so our expectation is that q 3 numbers will be choppy and it should mark the trough in

subscriber growth both domestically and internationally. >> they put a lot of focus on the new content that they roll out each quarter as the counter to that turn. in the third quarter we got "stranger things" and then new follow on seasons for marco polo. was that enough to get domestic stocks up in a material way? >> we have two things positive. the negative is the -- we think we are going to see 50% more originals in the third quarter and fourth quarter than we saw in the second quarter. and the other thing is the olympics. the ratings for the olympics were terrible. when management was guided to q 3 they mentioned olympics as head wind. we think the possibility is they weren't as strong as anticipated so we may see tail wind relative to expectations.

>> do you trust ability to handicap the risks? they didn't see credit card transition to chips coming. >> that's a good point. i can tell you out of the 25 internet companies we cover this is by far the highest volatility company and it's extremely hard to channel check. that is true of management. they are in 190 countries. each country is different. they have different liberies for each region. it is hard to try to project it or provide guidance short term. longer term we think this is really the best over the top platform not only in terms of scale but also in terms of just the user experience. longer term we think they have decent visibility in how the business will evolve. short term they don't have as much. >> we keep hearing longer term but we will see at least what

this quarter brought this afternoon. appreciate your time today. >> thank you. >> it's pandemonium and more. check please is up next. [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.

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enjoy your phone! you too. (inner monologue) all right, be cool. you got the amazing new iphone 7 on the house by switching to at&t... what??.... aand you got unlimited data because you have directv?? okay, just a few more steps... door! it's cool get the iphone 7 on us and unlimited data when you switch to at&t and have directv. check please. it is time for check please. stanley fisher remarks earlier during our two hours on air here.

i thought he was as clear as i have heard him about the need for higher interest rates and the likelihood that they will be raised in december. he basically said we don't have any way to fight a recession unless we do raise interest rates and that would make future recessions deeper and longer if we don't start moving back i thought the other thing that played into that was comments by jeff gunlock and saying more fiscal stimulus is coming. that will push interest rates higher. >> i am looking at an article in the journal of health economics which i have never been guilty of reading. i never read it. the journal picked up a story that said if you pay your children to eat their vegetables that the effect can be lasting. it was a study of 8,000 students

at school. they gave them a 25 cents token. 44% increase in consumption and lasted for multiple months. >> i have a 2 year old. i'm not going to comment on parenting. the rule in the sullivan household is you don't get paid for good behavior. it is expected. >> i doint hg money would make a difference for my son. >> it's like six pandas were born. he has a couple of teeth.

i worry that there are too many pandas. this could be a threat to humanity. >> they eat all the bamboo. >> you don't have to pay them to eat bamboo. >> thanks for watching "power lunch." "closing bell" starts right now. >> welcome to "closing bell" i'm kelly evans. >> we'll see the panda and raise you three bears. three big money managers. all voicing their concern about the market's path going forward. we will bring you the comments and talk about what it means for your investments coming up in a little bit. >> earnings could change the market trajectory. all set to release their