that's about 2.5%. >> 30 bucks on an $1100 stock, yeah >> zion hit $51 stock, banking stock of course. they're buying the 55 calls, aggressively i jumped on that one during the show today >> good stuff. thank you. thanks for watching. that does it for us. "power lunch" starts now i'm melissa lee. rising rates and the risk to the rally surging yields fueling fear and anxiety what is the tipping point for investors? we'll debate that straight ahead. and less than one month away from the crucial midterm elections. wh facebook getting into the smart speaker market to battle amazon and google with all the hacking and privacy stories swirling, is this the exact wrong time for them to be jumping in "power lunch" starts right now.

>> i'm going to welcome you to "power lunch" as well. i'm courtney reagan. a red day on wall street the dow down triple digits but well off session lows. it was down 230 points earlier today. at this point, we're off 169 points with the dow jones industrial average the nasdaq is the one that gets slammed the most down another 1.6% with the composite right now. down about 4% since wednesday. and tech continues to be the worst performing s&p 500 sector. the interest rate sensitive sectors are higher as you might imagine. real estate, consumer staples and utilities, all up more than 1% tyler? >> thank you very much, court. the markets are down again today. this has been a rather pronounced slide, the likes of which we haven't seen in some months nowhere near the levels of the sell-off that we had seen over the past couple of days. nevertheless, bob by sapisani i covering this day. >> there say lot of confusion down here, a little bit of a

transition time here, higher rates since the close on wednesday, generally translated to tech stocks down. interest rate sensitive have not been responding in that direction. look at the big movers today tech as you heard from courtney on the downside. yet again utilities and reits and consumer staples, the dow laggards, look here, it is largely in the big cap tech and big cap industrial names microsoft, apple, cisco, all down, boeing down a little bit as you can see there i think it is important to note that the defensive names in the dow are up across the board. this has been going on ever since the close on wednesday when we saw your walgreens, coke, pfizer, verizon, outperforming the market here. i emphasize, you think interest rate sensitive, rates up, got to go down, you don't have to the economy is so strong look at the reits. well tower, in the health care

business avalon, the apartment business storage business, psa, and then the spg, that's the big company that is involved in all of the publicly traded malls around the united states. those areas are not doing that bad for the economy. they can raise the rents potentially. nothing near 52 week low in fact, take a look utilities doing fairly well. eas, we have a new high, 52-week high in a utility right now. a lot of these not happening exactly the intuitive way you might think. back to you. >> bob, thank you. bob pisani at what point will bond yields be high enough to serve as a less risky option? mike santelli joins us with that hi, mike. >> it is hard to know if there is actually one threshold level of bond yields that is going to make investors feel as if that is worthy of pivoting away from stocks into bonds. it is much more of a continuum

one thing you can say with this lift in bond yields is that, there was a saying that stocks are the new bonds, if you want a yield, you had to buy stocks and collect dividends. right now, treasury securities all the way down to one month exceed the yield, the dividend yield on the s&p 500 that story is no longer the case bonds are the new bonds. the idea that 3.2% is going to create a wholesale shift, i don't think it makes a lot of sense. it depends on somebody's expectations for equity returns in the coming ten years. a lot of models with valuations where they are, say maybe we're good for mid to high single digit s&p 500 returns, total returns including dividends. that would be maybe an optimistic case. in that case, maybe 3.2% for a safe, you know, income where you're not risking your principle is going to start to look good. i personally don't think this is mainly the reason that higher yields impact stock prices i think it is leverage funds that basically have a higher

cost of holding positions. that happens first and then valuations in general get capped out as well as you have corporate bond yields also go up and make debt more expensive. all this stuff is in the mix i think, by the way, guys, if the bond market were open today, good chance yields would be lower based on what the interest rate sensitive sectors of the market are doing. >> the point that bonds are the new bonds, we're seeing a bid to the sectors that have been seen as bond proxies, utilities and consumer staple stocks what do you think the message of the market is for those sectors and what is that telling us? >> for one thing, you have seen the spike in volatility. it looks like the mark set in an unstable position, short-term now. i think there is a safety bid. it wouldn't surprise me if this phase to the upside may be as close to running its course. so that's why i feel like if the bond market in the u.s. were open today, we might see a little retracement lower in bond

yields and maybe that's waiting for us tomorrow. >> that's an important point to make bond market is closed for columbus day thanks let's drill down more on what that tipping point could be for investors in the rising rate environment. we're going to bring in jeff carbon, managing partner with cornerstone financial partners and kirk hartman, global chief investment officer with wells fargo asset management jeff, mike talked about, went through a number of points there. 3.2% may not be the tipping point. is there a certain yield that you're watching where it could be the tipping point we do need to be more worried about what that is signaling for the broader market >> that would be the 100,000, 100 million, i don't know what question that could be that's what we're all looking at, to find out what is the tipping point to start to have the overall effect where earnings could start to get impacted 3.2, 3.23 is not in my view

where it is. as we start getting closer to 3.3, 3.75, we could see a little impact towards earnings. however, i don't think we're there yet and i don't think we'll get there right away. >> kirk, on friday, bob pisani was going through a number of reasons that yields are rising, saying it is okay, they're doing so for the right reasons, things are good, corporate earnings are strong and the economy is strong, the fed is doing what it should to make sure we don't overheat can we exist in an environment where rates can rise and equities can as well >> i think the thing to watch is the credit markets credit markets have been doing extremely well this year credit spreads are tight i think the thing to watch is with the impact of a rising interest rate, especially on the short end of the curve, what is that going to do to the credit markets to the consumer and to the institutional market in terms of the cost of borrowing. >> picking up on that point, at

what point do investors need to really start paying attention to things like debt to equity you know, things that when interest rates were low it didn't make a difference maybe we need to be concerned about leverage balance sheets and the ability to pay off that debt >> no question there is a lot of leverage in the system i think that, you know, on both the consumer side and on the borrowing side you have to be careful. the other thing i think you can't forget is the amount of money that is in the system because of the tax cuts. and the other thing i think that is very interesting is you have a restrictive fed in the u.s. while you still have accommodation overseas, which explains the strong dollar a lot of different contrarian forces going on and we'll see what happens in the credit markets. >> so, jeff, it seems to me that what is getting teed up here is a tussle between rising rates and rising corporate profits who wins

>> i still believe we're putting a little bit of a baseball analogy together and say i think a lot of folks think we're in the top of the ninth i think we're in the sixth inning you do have -- we have strong gdp, strong earnings yet some of it coming from tax reform we have strong consumer confidence, people are spending, buying cars, and what not. i think there is a strong economic fundamental economic backdrop that we have just been running down this last two weeks, this yellow brick road of, you know, tariffs, trade and interest rates that once earnings season kicks off, i think we'll have another strong earnings season. i think when manufacturing comes out, we'll see it come in strong and high i think the fundamentals of this market will show that the stock and the equity market still has more room to run and don't -- certainly want to be invested. there is also a disparity between the u.s. market and the international markets now. if you have a diversified

portfolio, 60/40, you're so -- most of the time you're going to be -- you look at your returns now saying where are my -- i'm missing something. and that's because of the underperformance in international, the bond market where the u.s. market is the only sector doing really well. >> gentlemen, we'll leave it there. may be in the sixth inning we'll see what happens. >> let's hope -- go yankees, right? >> that's kind of my thought and jeff, thank you as well. we appreciate it and now to julia boorstin with a news alert on disney. >> tyler, disney announcing a new organizational structure for its media networks business, conditional upon closing the 21st century fox acquisition and notable it is making two executives in charge of big parts of this media network business peter rice, who had been president of 21st century fox is becoming chairman of walt disney television and co-chair of disney media networks.

dana walden, ceo of fox tv group, is now going to be chairman of disney television studios and abc entertainment. john landgraph continuing in his role there and gary nell serving as chairman of national geographic partners ben sherwood who is co-chair of disney media networks, he is going to be on his way out he'll be remaining in his current role during the transition period until the acquisition closes so more clarity in terms of how those fox executives will be taking over more responsibilities as those two companies merge. >> interesting moves thank you very much. president trump is set to speak in 20 minutes. he is in orlando to address the international association of police chiefs. it comes following a big win for him, of course, over the weekend, on the supreme court. eamon javers is live at the white house. >> the president landed in orlando just a few minutes ago and we're told that he did have

that conversation with rod rosenstein that we all had been anticipating the president here in this speech is expected to take something of a victory lap in terms of brett kavanaugh being confirmed for the supreme court over the weekend the president saying, on the way out the door here at the white house this morning, some very tough criticism of democrats and their role in this process here is what he said >> i thought that the way they conducted themselves, the way they dealt with a high level, brilliant, going to be a great justice of the supreme court, the way they really tortured him and his family, i thought it was a disgrace i thought -- i thought it was one of the most disgraceful performances i've ever seen. >> and despite all that speculation about whether the president would or would not fire rod rosenstein, it looks like the white house aide told reporters that rosenstein has

his job even after that 30 minute conversation that the two men had on air force one in the flight down to florida the president just before leaving said that he likes rod rosenstein, has come to know him over time and has no intention of firing him. so looks like rod rosenstein's job is secure now for the time being. back over to you. >> thank you the financial stocks have been all over the map this year. what about the big banks saying about serving interest rates what it means for them in the short-term and the long-term. breaking news in the past few minutes. a big data breach at google. all the details and the fallout. see the stock down by more than 2% most kids today will have jobs that don't exist yet. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions?

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over to josh lipton with breaking news. in the past few minutes on the breach at google, josh, what is the latest here as stock has just off session lows. >> so this is big breaking news here out of google the company did not disclose a security breach to its google plus social network because it feared regulation. this according to a new report just out from the wall street journal. reporters there citing documents, people briefed on the incident check out alphabet stock in the red in today's trade so apparently there was this

software glitch, it gave outside developers access to the private profile data of hundreds of thousands of google plus users between 2015 and march 2018. google's legal and policy staff apparently again and according to the journal did warn that disclosing the incident was going to likely trigger regulatory interest and invite comparisons like we saw with facebook's leak of user information with cambridge analytica. chief executive sandra pachai reportedly briefed on the plan not to notify users after the internal committee reached that decision the journal saying the company has no evidence that any outside developers actually didn't misuse the data, but acknowledges it has no way of knowing for sure what happens now, companies plan to announce this sweeping set of data privacy measures that will include permanently shutting down all consumer functionality of google plus google says up to 500,000 google plus accounts were potentially affected i'll bring you that response if and when we get it back to you.

>> josh, thanks. as courtney mentioned, google shares sitting around session lows now, down by 2.5% or so what does this breach mean for the company? joining us now on the cnbc news line is gene munster great to have you with us. >> hey, melissa. >> it seems the problem is not the breach itself, it is the choice, the decision to not disclose the breach because of fear of regulatory backlash. how do they explain away this? >> i have no idea. this is a classic example of a cover-up bigger than the crime keeping contacts that google plus' small amount of users, but compared to facebook at 2.2 billion, but as you said, that is really not the issue here the issue here is the small pattern, i'll leave it at that, for now. of the company with internal efforts to try to downplay privacy concerns there was the capital hill hearing that they downplayed the person that they were going to

send ultimately the senators opted not to hear that person. but this seems kind of consistent with something more internal to google it also begs the question how often do these type of leaks happen and this case, josh mentioned, a few hundred thousand people impacted google didn't see any misuse of it they felt it didn't meet some criteria to be exposed so at the end of the day, i think that there is going to have to be somewhat of a reckoning here for google to come clean with how they are approaching the data privacy topic. >> i hate to make the comparison to cambridge analytica, but that's the last sort of breach that had an impact, major impact on this group of stops in trying to examine whether or not this is a similar sort of story, gene, back then when cambridge analytica happened, the facebook polls would say it didn't have an impact on the model, that the earnings

estimates won't be revised down because of cambridge analytica some people are saying about this, about google plus, a small line-item in the business. it is a bigger impact not necessarily quantifiable how do you try to plug this in and digest what this will mean for the stock? >> it is true that google is a different animal when it comes to privacy specifically as google's primary engine is search and that's 98 plus percent of revenue. search is a user generated, you go and input your search topics. so not a privacy around that per se so i would agree that this does not have an input. not only because of the concept of how small google plus is, but also the concept that google generally doesn't rely heavily on private data to make money. so i think that that is true, so i think the impact, potential negative impact on this is far less than what we saw with cambridge analytica and facebook that said, there is something

now worth greater scrutiny on how companies are handling privacy, data, device usage, all of that, and this really plays, it is a negative cycle, surprised the stock is not down more because i think this is something that a company needs to -- there has been a small pattern here they need to address. even though does not have -- >> you don't -- basically, what i'm hearing here, you don't cut them any slack for their explanation, which is, number one, they didn't know exactly which users were affected by this number two, there was no evidence that this software glitch led to any misuse by some malefactor and third, there was nothing that either a user or a developer could do to address the glitch it all had to be taken care of internally by google that's their three points of defense. you just don't give them any slack for that >> i don't give them slack because i think that they have

this -- i'm just -- it is recent in the last month as they have been trying to downplay their exposure to the whole privacy topic. and so that, i think, this in and of itself, if they had gone to capitol hill and given a road map, i would have not thought of it as significant. but i do feel like the company overall has to give people a broader sense of -- you're right, i'm not cutting them some slack. >> my words, not yours, you think they have been on a high horse about this and as a result of that, you don't give them slack? >> exactly >> all right >> fantastic. >> gene, doesn't this just give google another sort of black eye and among the tech companies in general, as they're looking to washington, and having to answer a lot of questions about potential regulation or privacy concerns, this definitely does not help their cause >> if it is true and the journal

does great reporting, if it is true that -- one of the reasons why they didn't want to a fifth reason they didn't want to say anything is because they would have -- they didn't want the extra scrutiny on that, that back fires in an example like this now, it is almost certain we're going to have more interest level from regulators around this so i think this is more of a -- really gets back to the core of how google thinks about privacy and maintaining that and their disclosures around anything that happens related to their users >> thank you very much, gene really appreciate you calling in gene munster, luke ventures founder. the threat of raising rates is taking stocks down again. what does it mean for the big banks as they get ready for their earnings season. stick around we'll tell you coming up next.

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next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab. how are higher rates affecting the banks? wilford ross joining us from the nyse >> so banks as we all know benefit when rates are in the process of rising. as opposed to a high level of rates outright why? because as rates rise, they pass on the benefits to save us slower than they charge borrowers for the increase they also prefer a steeper curve because they tend to lend to borrowers against longer and therefore higher rates and take from savers against shorter and therefore lower rates. having had a rate hike in june

and seen rising and steepening yield curves since, banks are set to benefit when they report later this week. goldman sachs' says we expect interest margins to expand from higher short and long rates. now, that said, as we get late in the rate hiking cycle and competition hops up, it becomes harder for banks to pass -- to keep the gains from the rate increases. for q3, goldman sachs has the amount of rate pass through to customers, and it is up 13 percentage points on q 2 deposit beaters for traditional of big banks remains low with sticky deposits. it is the online players that are really bidding up rates for those deposits valuations, attractive since 2012 large cap banks traded at 80% of the pe level of the s&p 500. today, they trade at 65% of that

level. that said, there are areas of concern for investors including the pace of loan growth, expected to continue to be tepid around 2% when banks report this week and that hasn't really picked up since the start of the year as expected due to things like strong growth. guys >> got it. financials in focus. fears about the impact of rising rates, yields and how high could the yields go from here and how low could stocks go. deep dive into the charts. and less than a month to go until the midterms, president trump set to take a victory lap this hour following the supreme court win. what this new conservative leaning court means for wall street and business.

cnbc news update is sponsored by comcast business, beyond fast. >> hello, everybody. i'm sue herera here is your cnbc news update for this hour. president trump just finished a meeting on air force one with

deputy attorney general rod rosenstein ahead of the flight to orlando, he told reporters at the white house he had no plans to fire the deputy attorney general. >> we're going to be talking we'll be talking on the plane. i actually have a good relationship other than there has been no collusion, folks no collusion and but i have a very good relationship we'll see. i don't hear you no, i don't. no >> a new policy, american airlines could leave more coach passengers stranded after delays or canceled flights. the carrier is telling agents to avoid rebooking economy customers on other airlines with a few exceptions like. flying to a wedding. speaking of weddings, barbara bush, daughter of george w. bush, got married this weekend in kennebunkport, maine. the 36-year-old married 37-year-old screenwriter craig coin on the bush family compound the former president escorted

his daughter down the aisle. you're up to date. that's the news update this hour melissa, back to you. >> thank you major indices down for the third straight day the biggest loser continues to be tech and the nasdaq, down more than 4% in the past week. let's got the take on this tech slump and more joining us is kenny paul cary. great to have you with us. is tech being used as an atm is this the start of a bigger rotation >> it is being used for now. a lot of the tech names have been momentum names. a lot of the money is not committed. it is goes with the flow as tech really outperformed this year, a lot of people jumped on. so when the market gets a little bit antsy, money immediately as you can see, comes out of tech mostly because it is so outperformed the rest of the market that it is easy to take money. those names like apple and amazon and facebook, it is easy to take money out of the names and that's exactly what you see

happening. i do not think necessarily it is the beginning of a much larger breakdown. i think the market will test a little lower it will find some support. look, nasdaq is now through both the short-term and intermediate term support levels, s&p 500 is not and the dow hasn't breached the 50 day yet the broader market is -- it feels better, tech is going to come under some pressure people use it to reallocate cash. >> we have been pointing to the gains and the s&p 500 and the nasdaq and saying it is the momentum of f.a.n.g. in reality, the f.a.n.g. plus index is in correction territory. this say group of stocks that hasn't seen 52 week highs in about a month. can the market go higher unless there is a real change in leadership have we seen the chutes of the change in leadership so far with the falloff in f.a.n.g.? >> no, so i don't necessarily think the market will go higher. i also don't think it is going to crash the f.a.n.g. names and the nasdaq names might get a little

weaker as we just discussed. the broader market, the s&p and the dow will find some support we need to see a change in leadership, financials rise to the top. i think you'll start to see that as wolf just pointed out in the prior segment that once we start getting earnings coming out of the banks and people see the banks are doing better, i think that will add stability to the market and you'll see the broader market stabilize and maybe churn for a little bit until tech repairs itself. it does need to work through that i don't think it is the beginning of a larger sell-off. >> let me just put out in front of you the idea we heard a lot of, and that is that interest rates are going up for the right reasons. does that matter i heard a lot of people trying to explain away the threat that rising rates may pose to stocks. and it is all for the right reasons. >> it is funny, you can say that rates are going up for the right reason, the economy is strong. unemployment is low. until therefore that's good. you can also use those same arguments, the reverse way and say, the economy is strong and

unemployment is low. so therefore you have to watch out for inflation. they'll have to raise rates even faster than they are i think the second argument is what is really kind of been spooking the market over the last couple of days. people sense it is going to go up faster and the fed is going to find itself behind the eight ball and have to -- have to move faster i don't think that's the case at all. slow and steady wins the race. i think inflation is sub 2%. i don't think there is upward pressure on wages yet. i think rates are going up for the right reason >> kenny, good it see you, thanks president trump is in orlando at this hour getting ready to speak moments from now and with midterms just a month away, he will surely be touting his wins the jobless rate at the lowest level in nearly 50 years, stocks down today, but still near record highs the economy booming, a wave of deregulation and now two conservative supreme court justices his appointment there joining us to discuss the political context are jared

bernstein with the center on budget and privacy policies and jim petakouthis. if the democrats capture the house, what does it do to the trump agenda and to the possibility of second tax reform plan, what does it do to the possibility of infrastructure spending, more stimulus? >> yeah, i mean, i think that's an interesting outcome we know the president has wanted to do infrastructure the joke is there has been a lot of infrastructure weeks and those weeks tend to be about anything but infrastructure. if the democrats take the house, they're going to want to do something other than investing in the president that might be a big trillion dollar infrastructure plan that the -- that the president might find very appealing and considering that nobody in washington cares about paying for things anymore, that is

something i can see actually happening and see maybe some compromise, republicans, maybe trump gets some wall money or an extension of the individual tax cuts, i can see something, a very big thing happening and maybe that's infrastructure. >> what do you think, jared? the democrats do not -- would not own the surface seem to be of a mind if this happens and they take the house, would not be of a mind to give mr. trump any more wins at all under any circumstances even if it is something they actually liked, like spending on infrastructure. >> i think that is unfortunately a very realistic assessment of where house democrats are at some of the numbers back up that confiden confidence i read a statistic, only three times since the u.s. is civil war has the president's party not lost seats in the midter election so very likely that they'll lose seats.

whether they flip 24, we'll see. but i think the only scenario that might lead to some light is the one that jimmy cited you know, the house democrats actually have an infrastructure plan it is pretty articulate, detailed, i've seen it, it is public it is a trillion dollar plan over ten year and if they throw $2 billion to trump for a wall and get somewhere with it, it is not implausible i think the best prediction is the one you suggested, tyler, just more gridlock. >> we now have judge kavanaugh confirmed for the supreme court. what do you think this means for markets, for business going forward, 5-4 conservative lean. >> the -- this new court will sort of be more of the last one. a lot of skepticism about

regulation, really reinforce the president's anti-regulatory bent i find it interesting that -- at some point here, there is going to be a democratic president and the democratic agenda is going to be for a lot more intervention in the economy. i see there being more intervention with the tech industry, a thing with google today. and this court is not going to be very favorably disposed we have a deregulatory trend in the country and the court will support it and i see more immediately we end up getting rid of something like this consumer financial protection board, which kavanaugh already probably thinks is unconstitutional i can see that going >> let me respond to that. i actually think that interestingly this congress and president has been probably more interventionist in the economy than a democratic -- would have bon been on trade and taxes. i don't think democrats would have put this much stimulus into an economy closing in on full employment >> you said a trillion dollar

infrastructure plan. i think they're ready to spend. >> i also don't believe they're going to get it. yes, the democrats will put up a ton of stuff in the house. every week you're going to hear about ideas that cost money, but i don't think they're going to get anywhere if i were -- i think in term of the markets, here is what the political outlook is, i think that if democrats take the house, the likelihood of fiscal stimulus fading in late 2019 actually goes up i think republicans kept controlling everything, they might throw some more kind of sugar at the economy once the current system laus starts to fade. >> i think the democrats are -- listen, the new economics being put up by democrats is definitely completely do not matter not until japan levels of debt gdp ratio if democrats can spend, they don't think republicans care at all, they are -- if there is any opportunity for them to spend on infrastructure or anything else, they're going to do it. >> i don't disagree with that. that means that they have to have the senate as well and a

cooperative white house. i think the most realistic outcome is the democrats send up -- house democrats send up lots of spending and gets nowhere in the senate. as far as the court is concerned, they have been conservative on, say, capitol or corporations versus labor and more of that. >> we got to leave it there. jared bernstein and jimmy, thank you, guys. stocks getting hit on fears of rising rates. yields on the benchmark ten year note up 10% in the past month. nasdaq down almost 3% in that time what are the charts saying about reere rates and stocks go from hewe'll break it down coming upn "power lunch."

rising yields pressuring the market today with all three averages in the red. but tech getting hit the hardest. nasdaq is down more than 1%. big tech names like netflix, amazon, alphabet in the red. todd gordon, cnbc contributor, joins us here with the look at the charts todd, has there been any damage to the nasdaq, not just down today, down about 4% over the past week or so. >> sure, sure. the nasdaq has experienced a nice period, a nice run here what you're seeing recently over the last couple of weeks is, one, we have a double top, number one number two, if you extend this trend line, we have lost up trend support. is this catastrophic no but i think a retest of the july and june lows right around the 7,000 mark is in order i am short the nasdaq against the long s&p position we'll talk about. i think there is more short-term pain, but long-term i don't think so. >> you think possibly we could go down about 700 points

where are we now 5% would be 3500, 350 points 50% retracement of a move we have seen since may is not obnoxious. >> you look under the hood, what concerns you the most. the f.a.n.g. plus index, right, that's in correction territory we have haven't seen much leadership from this group in the past more so today we have the cloud stocks joining in, payment stocks joining in. >> google news didn't happen we haven't seen f.a.n.g. mack a new one-month high at all. tech is under a lot of pressure. netflix is really a very poor looking chart, did that on trading nation technology looks to be in trouble. this is the worst, s&p, small caps russell, in a supported area i do think interest rates are really sending ripples through this market. >> let's clear off the screen and look at the next thing we'll look at, that's interest rates that's a big concern of the markets. how much higher can rates go

overnight, we saw the ten-year go above 3.5 that was kind of crazy >> this is a really cool chart, excited to have a conversation with you about this. if you take a survey of investors out there, and ask them, what is the long-standing correlation of stocks in the 30 year bond, what do you think most people would say? >> they would be inversely -- >> i think that's what everybody would say. >> the reality is they're positively correlated. >> positively correlated look at this in blue on the left side is the s&p. on white on the right side here is the 30-year bond. the bond number one, you see they basically go in the same direction. positively correlated. down here, this is the correlation, corr. there is only a few periods where they're negatively correlated like what happened now. this is where an issue starts to come in. let me pull this together real quick. we went negative here in '80s and '90s

saw market volatility. we went negative here in 2000. we stayed negative, came back to unchanged, went back down 2009 and here we go again, we're going negative again with the divergence between bonds and stocks >> what does that tell you bam, bam, bam -- >> i think the exception is inverse relationship between stocks and bonds we're going into the exception period this is the reason we're seeing the volatility. moreover, if we go to the next chart, just the 30-year bond by itself, regardless of how you draw a trend line, on the 30-year bond, we lost uptrend support. this is a 38-year break in uptrends and bonds. >> what does that tell you okay so that means that yields will go higher in your view >> i think if technical analysis is history is any guidance to what is happening in the future, there is a lot of periods where we saw spikes and runs, 2000,

and all of a sudden, we just -- >> i want a bottom line, you see a break higher when it comes to yields and given the negative correlation we see now between what is going on with bonds and -- what do we see for stocks what is the bottom line for the s&p in your view >> can we just flip to -- >> one last line >> s&p is on the side. we're right midline -- >> all of that to tell me the s&p is undecided if we break this, we have problems so can the markets adjust? >> we'll watch that uptrend? >> if we start to break this, the markets don't like this new regime if they do this, we stay technically supported, it would be okay. >> todd, thanks. todd gordon, trading analysis.com tyler? >> thank you very much facebook introducing a new device to help people video chat, but will users be wary of letting facebook into their homes? julia boorstin joins us with more on the device and the

potential privacy issues on this day of privacy issues. julia? >> well, tyler, facebook's voice controlled portal devices will ship early next month. they start at $199 with these devices facebook is focusing on video calling. they calling. they include a smart camera that follows you as you move around the room they are aiming to appeal to the 400 million people who use messenger voice and video chat every month. consumers are ask for the weather or control other smart home devices facebook is partnering with spotify, pandora and amazon and is incorporating facebook watch but not many popular other apps. facebook will be going up against amazon which dominated the first half of the year but facebook's challenge is not just about being a late entry to a crowded market, there are also those privacy concerns facebook says that it is prioritizing privacy and

security there is a cover for the camera. you your ability to turn the microphone and camera off. and facebook says it doesn't listen to or save calls, but we can bet that privacy will be top of mind for consumers when making these purchases >> julia, thank you very much. facebook one of the stocks that moved from the tech sector to the bland nrand new communic services sector. and it is just a few dollars above its $52 low. dominic chu looking at the best and worst performers >> and as we take a look at the communications services sector, it is about relative strength and momentum you up or down. facebook and netflix are some key names. but overall, it has not been performi as up ting up to par. the stocks most above their long term trend lines, take a look at some traditional telecom stocks like century link and verizon. also with discovery

communications, they are trending up. we'll see if that holds for them as for the down side, take a look at some of these stocks because they are the ones that have some of the least relative strength going for it, at least with regard to their longer term averages we are talking about social media names like you mentioned, facebook also twitter. electronic arts for video games as well. so keep an eye on those stocks and it was set up as one of the biggest nights ever of the ufc, but it was the big brawl after the big fight that got most of the attention. was it a win/win for the ufc or a black eye for the sport?

what should have been a great night was marred by an ugly blayo go brawl that took place insided a out of the octobagon eric chemi joining us with the details. >> the way a lot of people see it, any press is good press for the ufc. and whether conor mcgregor won or lost maybe doesn't matter

a source tells me that all occasions suggest that the event broke every existing ufc record with more than 2 million buys. the previous record was 1.6 million buys in on 2016 between mcgregor and nate diaz this fight the biggest pay per view number for any fight that has ever happened without floyd mayweather it brought 20,000 fans and an extra $18 million. mcgregor is expected to take home over $10 million, and meanwhile the nevada state athletic commission says they can withholding the purse pending investigation of the brawl that spilled in to chaos he could receive a lengthy suspension as well but many experts think all of this chatter is good for business more media attention and bigger reason to hold a rematch mcgregor is already selling it tweeting he is looking forward to fighting khabib again and their five year broadcast deal with ufc starting in

january with disney. >> does is this tie back to that event in new york? >> yeah, this event is going on and on >> all right thank you yvery much. nasdaq continues to be hurt the most, rising rates fueling fears, but is the anxiety justified. can highco-exist with higher stock prices. and the second hr ouof "power lunch" begins right after this break. why bother mastering something?

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we'll listen. we'll talk. we'll plan. baird. i'm tyler mathison welcome to the second hour of "power lunch." can the bull run survivor these rising interest rates? they are moving up quicker than many expected lately and will china's slide continue if trump's trade war heats up. and what happens to the rest of the emerging markets we will debate that all straight ahead. plus gas prices jumping to almost 3 bucks crude up nearly 25% this year and there are fears that it

could go back to 100 bucks a barrel we'll drill down on the impact for investors. and watching a million plus investment get shredded before your very eyes details of the art auction at sotheby's gone bad or maybe not second hour of "power lunch" starts right now >> and welcome to power lynch. stocks are down, but well off the session lows had been down more than 200 points earlier right now we are looking at a loss of about 1 o00 thdown on t dow. s&p feeling the most pain, down 4% since wednesday but the interest rate sensitive sectors are trading higher real estate, consumer staples rallying more than 1%. >> and stocks off their lows, but lower once again this hour driven by fears of higher interest rates bob pisani is at the new york

stock exchange >> and i'll pick up on melissa's theme there and that is take a look at sectors moving, the underperformance of technology now three days in a row since we saw ten year yields started moving up thursday morning and the outperformance of the bond proxies, utilities, reits and consumer staples if you look at the dow, its very clear tech stocks are the ones giving the dow a little bit of trouble as well as the nasdaq 100. so microsoft, apple and cisco all down there boeing also had a big move up, that is also on the down side. the defensive names part of this is just an old flight to safety, part of this you can understand. coke, merck, verizon, walgreen's all on the positive side we're not getting a lot of high volume on anything but vanguard utilities, big volume in. and value, s&p value, i think we're on the verge again of having that whole value versus growth debate. this time we may be reaching a

tipping point where value finally does outperform, this has not worked in years, but may be reaching that and the reits, the economy is strong, so you have a simon property where big "a" class malls are doing better and you have apartments doing bu better public storage is doing better this is not just an interest rate play, it is an economic play and reits won't be sitting at 52 week lows. and finally utilities also a little better. if rate costs go up, they can always eventually find a way to pass it on aes a 52 week high and which areas of the market are most at risk for higher rates >> so we just spoke about some of them, but as rates rise, a growing number of experts say high yielding sectors could get

hit. jack avalon says there are three areas of the market most vulnerable to rates rising first it is those real estate investment trusts which have an average yield of 4%. he says they look less appealing. and second master limited partnerships which yield an average of 7% historical data actually shows that mlps tend to underperform when rates tick higher third, emerging markets which have already had a challenging year, but higher rates along with the stronger dollar will add even more pressure to economies like india, turkey and argentina, which are sitting on a lot of debt. it is worth pointing out that the emerging market etf is currently at the lowest level since may of 2017. add to that growing concerns around the health of china's economy over the weekend, cutting its reserve requirement ratio just shows you that china is now using more tools in its tool box to help accelerate this expansion, but it seems like a

slowdown is in the cards and this historic record breaking rally, can it survive the rising interest rates? let's bring in greg sarian and michael aroney where he has about 2.7 trillion, yes, well, not he, but they do on assets under management we've had a lot of focus here about the effect of rising interest rates on stocks and the stock market but let me turn it a lot of our viewers have a lot of their money in bonds or bond funds or bond etfs what should they be doing? >> that is a great point and i think that they have as much to be concerned about as equity holders in this environment. if the majority of your fixed income exposure is in the form of mutual funds while the instruments may be fixed, the funds have no maturity dates or defined income streams and if retired investors or

income investors are looking for a certain amount of principal due at certain dart dates or c cash flow, when the bond prices get pushed down, we advocate you have to be in funds short duration, increase your quality but really looking at laddered bonds. it has been a great run in the equity market. this is a time to rebalance, reallocate and look at fixed bonds. >> so when you say laddered bonds, what you are advocating here is that step out, step away from the car, step out of the efts maybe, step out of the funds and buy individual bonds with laddered maturities ac am i understanding? >> that is right because all bonds instruments in the last 20 years have done well when rates go down, those instruments go up. but when rates start to move up, that puts that pressure on the price of those bonds and while

you might be getting more income from those mutual funds, if you have a requirement or a need for a certain amount of principal at certain times, the bond will give you that, the bond fund does not >> michael, let me ask do you agree with what greg just said what should i do with bonds in my portfolio assuming i have a diversified portfolio of stocks and fixed income >> so i would agree with greg, what we do see, investors are shortening their maturities, and they also moving up in quality so i completely agree with that. two other things i would and he will is we do see investors moving from a fixed rate do you know on know -- coupon to a floating rate as the fed continues on this journey to raise or normalize rates, we see those resets get reset at a higher rate and so from that standpoint, we

also see more folks moving in to shorter term cash instruments where now yields are a bit more competitive to where they have been over the last few years so some folks are putting more money in cash as well. >> but as we look and see this bull market continuing, part of the reason that we have seen such a juice up if you will is the corporate earnings groelt h -- growth had been very strong and here we are just about to see a new quarterly report cycle start. so michael, what are you expecting out of the earnings psych dell a cycle and is just that another reason to be positive? >> investors cannot wait for this earnings season to start. and i think that is a bit of this vacuum that we're seeing now. we're hearing about rising tensions with china, hearing about italy trade discussions, kind of the chaos in washington. i think investors are eager to get refocused on earning and they are going to be quite strong so i expect that earnings per share growth will be more than 20% for the third consecutive quarter. both technology and health care

sector returns, although they have been under pressure lately, earnings expectations for those sectors of the market have been rising since june. so there is still a number of reasons to be bhullish about thi market monetary policy is still pretty says fiscal policy continues to be a stimulative. >> all right gentlemen, we appreciate your time today breaking news in just the past hour or so, alphabet shares are lower on reports of a software glitch gave outside developers access to the dats ta -- data of hundreds of thousands of using plus users. the company withholding news of the breach due to fear of immediate regulatory interests the stock is down, but off the session lows it had been down by more than a percent from here. it is now down by 1.3% joining us now to discuss is brent thill, he has a buy rating

on the stock great to have you with us. >> thanks for having me. >> what is the worst case scenario in your view for google and is this worse case scenario -- are you able to plug that into a model? >> no, you can't put this in a model. i don't think many people even know what google plus is this is not well adopted we don't believe that this will be a meaningful financial hit. obviously it is more of a headline hit but if you look just the last two weeks, there are three or four names under the coverage universe that had been breached. so this is something that i think we're all living with in our digital life and clearly the extent of this we think is measured at hundreds of thousands of users is pretty small. so our view is it won't have an impact but you are continuing to see this across the internet industry and software industry it is a major threat and

obviously cybersecurity is continuing to take the foremost tension among many of these companies. so we don't expect that this will be a financial impact >> when i heard it was google plus specifically, i thought how many accounts could there possibly have been breached. all ten of them? i'm sort of being flip about this, but obviously it wasn't a big driver for google at all on any level. at the same time, you know, cheg wasn't invited to capitol hill, they didn't show an empty chair where they should have been seated and that is what the problem is alphabet so from that standpoint, there had been many moments in time if they were aware of the breach that they could have said maybe it is time to disclose, maybe we should have disclosed instead of letting it leak out in a "wall street journal" report it shows sort of a lack of embrace of the temperature of

the day where data privacy is very important to americans and to congress. >> no question i think they reviewed it and there are thresholds where they would say this would be material or not. we don't even know what was taken. this sorry just broke, so i think that it is too early to make the call. but i think that they have a pretty good internal system with controls if they thought this was leaking financials or some other sensitive data, they probably would have exposed it lower end, i think that is probably what this is and they chose not to there are many of these issues we never hear of as consumers. and we again -- i don't believe that this will be material to the story. >> so do you cut them slack? >> no, i don't think we will cut them slack we want them to uphold what is best for the end users but again, i think that there are so many incidents like this.

i've worked for major large banks for the last two decades and there are clearly a lot of things that go on internally that don't necessarily get fully disclosed. and again, there are certain threshold requirements so our belief is that they then trigger that >> so the threshold to disclose in other words >> correct and again, this is something that we're all living with across all these companies this credit cord day card data, absolutely disclose right away >> it sort of feels like a store owner who discovers that maybe there is faulty wiring somewhere and they fix it, nothing happened, nothing was damaged, no consumer was touched by it. and so do you disclose that or not? again, i don't want to strain the analogy there, but it has that kind of touch to me i guess. >> i think that the important thing going forward, we think the threshold in terms of what

will have to be disclosed to users, that bar is coming down and so we think over time you will see that -- you are seeing this with gdpr in europe there will be high profile cases where are companies are fined a lot of money and it will lose user confidence so our belief is that what you will see is that bar will lower and it will be all alerted going forward. again, no one willage of google. it helps with what they need so we don't believe that this is material >> all right thank you so much for jumping on the line with us today stocks briefly turned positive boy, you blink you miss it let's take a look at the dow industrials. they are now down just ten points as you see there. just ten points. they were down about 150 when we started all this business. let's look on to the other ones,

shall we i guess not. they are down 7 points and nasdaq down also a little bit today. much more on the impact of rising rates, what they mean for emerging markets and how you should trade them. oil also has been rising is 100 bucks a barrel a possibility in the near future if so, what that would mean fo airline stocks and imagine paying $1.4 million for a painting and then watching as it goes through a paper shredder that actually happened a big hour of "power lunch" stl eailahd. k. on banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here.

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. as you see, the dow trying to stage a we're practically at the flat down headwind to stocks in the u.s. over the past few days and if he wiwe can look at the a day, we can see financials made a surge in just the past half hour or so moving in to positive territory. and the dow and s&p trying to cut the losses we want to focus on the impact on emerging markets, an area that had been hit by fear of higher interest rates.

the country's far right candidate winning the first round of elections and shanghai composite slumping, the government pumping more cash in on to the economy. so what should investors be focused on katherine rooney vera and might be michelle caruso-cabrera are both with us ladies, welcome. michelle, i'm sure you are watching the brazil election very closely does this mean real change for the markets? >> certainly voters hope so. there is another round in three weeks. we'll see if he actually wins. but he would be the most free market candidate that we've seen in brazil for a long time. not him particularly, but he has picked a finance minister he says who has studied at the university of chicago, very, very pro tree mfree markets and would privatize nearly everything that is controlled by the government and that is a lot. and he would cut taxes,

corporate taxes. but saying a lot of things that investors would like which is why you see brazilrallying compared to the others that are falling. >> it feels like we have lived through this before, great hopes of reform. the surge in the markets and then it is disappointing in the end. is there is a trade here >> michelle is right, brazil troughed in the middle of september and we said go long, this is a great story in the inside that anything is better than what we had anything is better than what we had. we have the second round elections coming up. and i would add to her list of what he plans do and that is cutting the public sector in half so we're seeing a lot of up side in terms of market sentiment with regard to brazil and broader emerging markets >> brazil moving up 9% in a week, that is a pretty big move. i understand this candidate could mean lots of change. but is that too far too fast, is that appropriate are you further bullish from here >> if you look at the btat the

etf, we still have further to run. so there was a disproportionate selling over the past year when emerging markets fell out of favor completely my contention however is that in 2019, we'll see an youts performance versus developed markets. so i'm actively recommending our clients to accumulate positions in emerging markets in this fourth quarter of 2018 >> you can't get very much farther from lula, right >> no. >> and this has happened in a quick period of time basically a pent uhe ldulum swi. but if he follows through and he cuts the public sector by half, that cuts a lot of jobs too. >> but the population there is incredibly frustrated because the economy despite all the government intervention has not been good. they lived through the worst recession in decades crime is horrific. the public sector is huge. but it does not work remember the massive protests, people in the streets.

because the buses couldn't get people to work i mean, government is big and yet government doesn't do much for the people there so that is why you are seeing this reaction. >> there is such a big carry too. so i think that finally, finally emerging markets have gotten cheap enough for institutional guys to stick their toes in. so i think that is what is happening, you are seeing flows finally return to the emerging markets. last week epfr flows showed exactly that and i think that that valuation has gotten to the point where that price is justified. and i think guys are going to start to pile into emerging markets going into next year >> is the view on china -- i mean what is your view on china? we saw china shares down about 4% after being closed for a week long holiday and what struck me this notion that the national team, the team that would swoop in and buy chinese equities, they have been largely absent

and that is spooking investors even more. what do you make of this down turn in chinese stocks and the unwillingness of the government to put a put in the market >> well, i think that we have t. if you look at nafta, there was so much aggressive rhetoric against mexico and then we ended up with a renegotiated nafta which isn't too far away from the original nafta it is an update. which is what everyone was expected but had discounted. i would say that we have midterm elections coming up. after that, my bet is that the aggressive rhetoric will diminish quite a bit and the second thing, if china cedes on anything, intellectual property or opening to u.s. car imports, then it is very likely that that jump from 10% to 25% in tariffs that the president is talking about no januaabout for didn't happen. >> china's business model is

under threat from all sides. >> all right we'll leave it there, ladies thank you. the nasdaq selling off for the third straight day on interest rate fears down 1%, but the dow trying to stage a little bit of a comeback. investors are turning to food for comfort meantime campbell, conagra, tyson are all higher and by a substantial amount. rate sensitive utilities are getting a britt ofit of a bid. nearly every stock in that sector is higher so how can you make money off of rising intesert rates? eritrade'. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price.

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welcome back it is time for trading nation. the rate spike putting pressure on stocks again today. the yield on the u.s. ten year sits at its highest level since 2011 so how should you play the move? the relationship between stock moves and bond yields has not been constant. the interplay kind of changes. how do you read it right now >> yeah, there is a lot of focus

on the leflg level of interest rates and we think the direction is equally if not more important. good for stocks, high in falling a sign of peak growth for potentially an biting is bad for stocks so when equities are corrected against the backdrop of rising interest rates, we view that as a bull market correction that should be bought we saw similar action during the 2013 taper tantrum we saw that in 2016 ahead of the november 2016 u.s. election. and conversely, if you look back at major tops in 2000, 2007, 2015 coinciding with the breakdown in interest rates. so overall a potential -- if we start to see rates move lower in 2019, potential concern. but as it stands now, this is a bullish activity that we're seeing for on equities

>> as it stands now, relatively mild correction if that is what this is happening. and it is a little ironic this concern about rising long term yields because we were recently very concerned about the very flat yield curve which this is somewhat undoing so how do you read that. >> well, i think it is a matter of heads you lose, tails you lose with regard to interest rates. i'll take the other side of what ari suggested. really what we are looking at is if the market stays flat -- rather if the interest rate curve stays flat, are you looking at anemic growth if the interest rates rise, that means higher interest rate expenses, it means an end to the borrowed sheath and buy backe stocks and if you look at the economic cycle, the economic cycle is really going to peak probably in the next six months. so we are looking at probably closer to the end of the expansion of the economic cycle and we'll start in 2019 too slow

not necessarily go negative, but slow and that is -- this isn't actually a good time to be buying stocks. >> well, if in fact the cycle peaks in terms of growth rates in the next six month, maybe the bond market will sniff it out before it happens. thanks for your time today for more trading nation, head to our website or follow us on twitter. now a cnbc news update thanks so much here is what is happening. senate majority leader mitch mcconnell speaking in his home state of kentucky says that senators were literally under assault as they considered the nomination of justice brett kavanaugh. >> i couldn't be prouder of the senate republican conference we were standing up for the presumption of interest in this country when there were a number of democratic senators saying presumption of innocence no longer applies and secondly, we were literally

under assault. >> the driver of the supersized h limousine involved in that crash was not properly licensed. the limo also failed a safety inspection last month and it should not have been on the road this from new york's governor andrew cuomo it is the deadliest transportation accident since 2009 spectacular video of spacex he 's falcon 9 rocket flying through space. the launch took place last night from vandenberg air force base carrying an argentinean satellite into space it was the first time a falcon 9 first stage has landed back at its california launch site you are up-to-date courtney, back to you. appreciate it. oil prices slightly lower today, but still up more than 20% this year we'll get oil's final trades and ask the legendary oil man harold

hamm if we'll see $100 a barrel anytime soon and last week the dow hitting record highs and then it lost more than 500 points but just moments ago, it turned positive if these swings are keeping you up at night, we have a market psychologist about to join us and help you sleep a little better

we have just about 90 minutes until the closing bell and you see the markets trying to stachblg a coge a comeback.dn positive territory we are now up by 17. s&p 500 down by 2. the nasdaq has now paired its losses it had been down by 1.25%. still though tech leading declines followed by communication services as well as health care and check out some of the ones moving the most, workday,

intuitive surgical, tesla, cadence design dragging it lower. oil market closing for the day. let's go to jackie deangelis >> good afternoon. it was a modest move lower for both wti and brent rising rates, lower stocks having a chilling effect on oil prices that is on the demand side but fear on the supply side a keeping them supported there hasn't been anymore clarity on what will happen with iran's supply, but there are reports that the saudis an russians have beenabout boostinr numbers. and national average of gas prices, up 41 cents from this time last year despite oil taking a turn lower today, prices are still up 10% in the past two months and up more than 20% this year

"wall street journal" also pointing out that there has been a spike in bullish bets on brent crude hitting $100 a barrel by january. that would be up about 19% from its current level. but what would it take to get there if we get there? let's bring in harold hamm, founder, chairman and ceo of continental resources. thank you so much for joining us i guess we will start right there, what is your best prediction for the price of wti and for brent, is $100 in the cards at all for either of the two? >> well, good afternoon first of all. and yes, it is good to be with you. i think you said it there when you talked about supply offsetting and keeping these prices in a stable range and that is exactly what we have we're bringing on about a million barrels per year additional supply in this country. so we've had tremendous growth since 2008 until now that all

that growth in the whole market, basically 65% of it has been generated right here in the u.s. so that is what is keeping it in a stable situation relative-wise, we have the cheapest gasoline prices in the world. >> it seems that you probably have the benefit if opec cut production, the u.s. can be right there to sort of step up >> well, that is true. i mean we are stepping up. we have stepped up and that is what is going on, it is all about warzone drilling and the american energy renaissance and what that has done to change the entire world. takes great thing that has occurred and we take full credit for it we need to bring the narrative back to the u.s. and not be talking all about opec

it is about offsetting this new demand with american supply and that's what we're doing. >> one hears a lot of concern about we can produce the oil, we can get it out of the ground, but can we transport it particularly in the permian area to the refineries and places the oil needs to go. walk us through that a bit is that a pressure point in this very otherwise positive supply story? >> every time you bring on a new field, and that is basically what you have even with the permian, an area that has been around a long time, but today with horizontal drilling, you are going through a complete transformation so you need a lot of tech way capacity both for oil and gas. and yeah, that is an issue but it is being corrected. it takes a little bit of time. but people are reversing pipelines. they are doing all the necessary steps basically to get that

product to the market. and it is working. but there is a lot involved. and it takes a bit of time to get it done. within a year or two we'll be there. >> and what about the liquefied natural gas and the tariff that china mass slapped on that when it comes from the u.s. a 10% tariff, so not as bad as potentially it could have been but china is a big buyer of liquefied natural gas, so doesn't that hurt china? >> well, china has been an important market i don't want to down play that at all but they only represent about 4% of the entire amount of lng exports. so it is relatively small. this year that amounts to about 9 bcf. so it is a pretty small number relative-wise. but even with the tariff on there, it is still probably the

best deal i have >> very interesting. well, thank you so much for joining us, mr. hamm appreciate it. we'll have to leave it there today. >> thank you, good to be with you. the fourth quarter is usually a good one for airline stocks, but is a rise in oil prices a threat to that rally? phil lebeau is joining us from chicago. >> it has been a rough day for the airline stocks they paired some of the lots, but if you look at some of the major airline stock obs, ths, t lower in part because of the concerns. people are boarding flights, they are paying on average for a domestic ticket right now about $217 but that is likely to rise as

jet fuel prices move higher. there is a strong correlation between jet fuel prices moving higher and airfares moving guyer as you see with that blue line, that is the airfares moving lower, it is about to cross over with the jet fuel prices and that is where you are likely to see a reversal and perhaps we see higher airfares. delta reports third quarter earnings thursday morning, so it will be interested when we talk with ed bastion to see what he sees for the fourth quarter. because you're right, typically airline stocks move higher in the fall in anticipation of a strong holiday season. but this year could be different because of the higher jet fuel prices >> do you think we'd see a rise in the ticket price as sort of a surcharge first or that they are doing so much nickel and diming when it comes for charging for bags and things like that that there is already an offset built in >> they are more likely to go with the $5 or $10 increments on particular routes, though high

density very popular routes. that is where they will have the strongest pricing power. fuel surcharges, we saw those back when there was a huge spike in oil prices back in that '07/08 time range. the airlines do not like doing that because you get a bit of a backlash in term says what are you doing here they don't like hire airfares either, but it is easier to pass those along on select routes >> all right thanks what to do when you spent more than a million on a work of art and it gets shredded in front of your eyes did the buyer lose all his or r neoray me en more . you do, too, but not in time. hey, no big deal. you've got a good record and liberty mutual won't hold a grudge by raising your rates over one mistake. you hear that, karen? liberty mutual doesn't hold grudges... how mature of them.

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million. right after the hammer fell, the canvas began sliding through the frame and into shreds. it appears we got banksyed, they say. and shocked on lookers watched raising speculation that the mystery artist himself whose identity still remains unknown might have triggered the device with a remote. banksy later posted a video showing how he secretly built a shredder into the frame years ago in case it was ever sold at auction. which he did not want to have happen he painted the work in 2006. either gave it or sold it directly to the person who then sold it through sotheby's so friday sotheby's says of course it had no knowledge of the plan and that it is in discussions with the buyer or, quote, t eer overt steps. our dealers tell me the piece may not be worth twice as much since it is now one of the most

talked about pieces of art >> and only half shredded. >> that's right. so we don't know if that was the intent >> would banksy have had any access to this frame in that period of time where it belonged to somebody else >> that is the mystery because there had to be a battery in there to activate the shredder he put it in the painting in 2006 which means that the battery or device would have had to last for 12 years so we don't know how or if or when somebody accessed that painting and either put in a battery, tested it or replaced it but i know that banksy never liked working with auction houses so i don't think sotheby's knew but just an incredible stunt and just -- >> and since we don't novembknow banksy, we don't know if he was in the room. >> and somebody took video and somebody had to activate the device who was in the room as well >> so many questions >> wild.

thanks up next, rates are rising and so is fear and anxiety on wall street. so how can steady your nerves, take advantage volatility we'll talk market psychology with dr. doug hirschhorn has exposure to energy infrastructure mlps? think again. it's time to shake up your lineup. the alerian mlp etf can diversify your equity portfolio and add potential income. bring amlp into the game. before investing, consider the fund's investment objectives, risks, charges, and expenses. read the prospectus carefully at alpsfunds.com/amlp on the new sleep number 360 smart bed.

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the wall street fear index known as the vix soaring over the past week as rates rise, so just how much of an impact would rising rates have on investor confidence in the markets? doug herschorn is author of "the trading psychology playbook. doug, welcome. >> thank you. >> rising rates is a circumstance we have not seen in many, many, many years how does that compound the anxiety that individual investors or even professional investors are feeling like >> it definitely heightens the experience because it hasn't happened in a while, but what i tell my clients is this is no different than an emotional response to something that's important as if you were an athlete and it's a big game, big at-bat or fourth and one if you have a plan and you've prepared for the opportunity, then it's just executing that plan, whether the market's having volatile experiences or not. that's actually an opportunity

to execute the plan. >> so if you are ready for this and you've got a plan for it, don't get freaked out. >> well, you're going to get freaked out. you're human. >> yeah. >> the misconception is trying to stop that freaking out experience very similar to a football player or place kicker and i tell them if you're paying attention to the balloons in the background and the noise, you need to tune in to the football. you need to tune in to what you're executing for a trader you're going to experience the emotions, you're human, that's impossible to separate tune in to your process and game plan. >> what if you're not prepared, if you didn't see this coming because we've been, as tyler suggested, a stvery long period very low rates are you entitled to be nervous >> you're entitled to be nervous, but my suggestion would be sit on the sidelines. you don't have to participate in the markets. that's the misconception a feeling of missing out, fomo that people talk about an opportunity sometimes is to disengage from the markets and not do anything.

if you have the game plan and in place to execute it, then participate. if you recognize i'm feeling really anxious, i can't separate that emotion from my decision-making process, then my best advice is sit on the sidelines and do nothing. >> the market has acted in many unexpected ways over the past year i imagine a number of traders made bets that didn't go their way. how do you pull yourself out of that hole especially at a time when volatility is increasing. >> make small trades a common thing i'll hear from successful traders is size down your bets so that the dollar amount is not creating more of an anxiety response. in sports we call it laying down a bunt, putting the bat on the ball that's the same mentality. make small trades, it's in your process, you slowly build up the trades. >> you know, the market is very close to its all-time highs, within hailing distance of it. the past few days have been significant declines and what's interesting here is that not only are stocks going down in

value but bonds are, too, so your safe haven play, which would be to move into bonds, that's a money loser, at least lately as rates rise. >> if you're thinking about hedging your risk on doing other products, then you might have to rethink the strategy oftentimes i tell clients if there's an issue with your trade, deal with that trade. don't create a second or third problem by extending your horizon and hedge off of that risk by decreasing the size or shorting the position. >> doug, great to be with you. >> thank you >> good advice. >> thank you what do you know after being down more than 200 osivts, the dow is now pite. the nasdaq also cutting its big losses we are back in 2 understand all s you were paying? was your broker a fiduciary? were you satisfied with the attention you were getting? then i explain that being independent gives our firm the freedom to give our clients the attention they deserve. we can put a plan together that makes sense for them. independence lets us do that. charles schwab is proud to support more independent

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we have paired our losses. what a couple of differences a couple of hours makes. we started behind the turn around, behind the dow as well as the s&p 500 the turn around in the financials, take a look at the interday chart for the kre which will give you a smattering of banks in the kre no, that's the xlf that is higher by .6 of a percent. all of the banks have gone higher as the session has gone on. >> check please. >> okay. so now on to check please. target announced today that they have this new line, it's called smartly. it's a private label they already have one private label, it's called up and up this new smartly line is 70 products in the essential

category soap, bar soap, paper towels, that kind of thing 70% below the national brand price and they're trying to target millennial, folks that don't care so much about the brand and are interesting in big savings but on individual products i want to save money on paper towels but i don't want to buy 50 rolls by going to costco. i just want one. >> depends what the quality is. >> of course. >> we'll have to see. >> and the packaging. >> the quality and the packaging. i know this. i don't know whether you guys agree with this or not packaging has become more and more important in what you buy. >> sure. >> the beauty of the apple box when you get your new iphone, now everybody's phone comes in a beautiful box. i bought some sheets over the weekend, came in a beautiful box. the boxing and packaging matters. banksy, you're going to be outed as a result of this. i'm telling you. i think they're going to find out who banksy is. >> banksy crony.

>> well, banksy -- >> who the crony is. >> yeah, we'll find out. banksy, i think your days as the anonymous artist may be ending soon fascinating stuff. >> terrific stunt though, wasn't it >> loved it. >> thank you so much for watching "power lunch." >> clo >> "closing bell" starts right now. >> it's time for the "closing bell," i'm wilfred frost at the new york stock exchange. will spiking interest rates end. that's the key question for investors today. the tech sector getting hit hard we have a debate whether it's time to get out of growth. >> i'm sara eisen in for kelly evans. data exposed google shares are under pressure right now after reports of a security flaw in google plus we've got the details for you. plus, hurricane michael heading towards the gulf we'll tell you which oil companies could be impacted. the "closing bell" starts right now. ♪ it's the final