>> thank you >> talk to you again soon. >> thanks a lot. >> that's carl icahn joining us on the halftime report a quick look at the market dow is back in the green there's a lot of focus everybody is focussed on what continues to happen with the nasdaq and the sell off in technology nasdaq under pressure. power lunch picks up the story now. thank you. welcome, everybody to "power lunch" here is what is on the menu for a very busy monday the fangs have a cavity after showing signs of life on friday, they're getting hit again. should you as an investors stay away or is now the time maybe to nibble a little bit? plus secretary of state pompeo on his way to meet with the king of saudi arabia this as the country denies it has any knowledge of what happened to the missing journalist khashoggi what impact could a strained relationship between the two nations have on the world economy and specifically on oil?

fidelity gets into the crypto world will it breathe new life into a market that's had a rough ride this year? "power lunch" starts now welcome to power lunch >> right now the nasdaq is leading the decline to the dow and s&p 500 to end higher. it would be a second straight gain for both of the indices some stocks tracking for you on the move. bank of america lower despite an earnings beat. harris corp. and l3 higher after a merger and ralph lauren getting an upgrade at jpmorgan. now to bob on the floor of the new york stock exchange. hi, bob. >> hello lower volume today lower volatility that's good news

tech is lower. well off their lows. look at the sectors we're talking about. surprise in energy veiled threats from the saudis over the weekend about oil up. oil is not moving that much and neither is the energy market industrials and consumer staples leading. we've seen that last week. tech, a weakness here, but well off the lows let me show you the major names. a big call from goldman sachs on apple saying the slowdown in china was raising risk for them. a call on netflix that cut their 12-month price target. reflected the contraction of broader internet multiples partly on rising rates here's a call on rates you'll hear more about that if this continues nvid nvidia, sysco down broadcom acting better in the middle of the day. is the selling over? that's what people care about. we saw last week what we call the momentum traders, ctas,

these guys who mostly adjust their portfolios depending on volatility and risk conditions that were big sellers. the retail guys were mostly buyers we saw a lot of movement from the funds for the moment it appears to be over. who knows? also a lot of issues about how attractive with prices down on bonds, bonds were against stocks certainly that was also an issue. what was driving the rates higher simple there were some people who had inflation expectations we saw it on the ism services report other people pointed to the fed reducing the balance show and the tariff wars. there are a lot of people, foreigners out there, china and japan own a trillion dollars each of sovereign debt i think the important thing is a lot of potential reasons for driving rates higher for some reason all last week 1/2, all of those concerns came together. back to you. >> thanks, bob you've been a busy man over the past week. i'm sure your busy day will

continue stocks seesaw between gains and losses goldman sachs says a sell off is just about over and it's time to get back into growth stocks. are they right let's bring in senior global strategist at wells fargo, and also president and chief investment officer at boston investors. i'm sure you've seen the headlines about where we are right now from goldman sachs over the last week or so have the fundamentals changed when you're looking at the u.s. economy and what's going on with corporations what is your outlook right now and has it changed over the last week >> our opinion has not changed we're looking for 2 .9% gdp and slightly higher inflation. i think that really what's going on here, you really have to break this down into a couple of basic concepts we're later in the cycle people get worried about the

fed. they're worried about the fed possibly making a mistake here especially after jay powell's enthusiastic economic comments he made. they're also worried about global growth and the imf, not that you want to base your trading on what the imf is projecting the imf lowered their growth rate for the global economy. so global growth, the fed, we think those are really two of the biggest risks that are out there, and we've really had some issues with that lately. i think that's really what sparked the selloff. mike, today is a bit of a quieter day. bob said volume is low volatility is lower. bonds selling off the still yield. the ten-year is 10.1359. where do we go from here more volatility could be introduced to the market what's your advice to clients? >> there's a lot of reasons to be worried

that's part of our job that's what we do every day, make sure we look at the things that could be a problem. between trading and tariffs and higher interest rates, the elections are coming up. i tend to agree with scott i think the nuance there is that we've seen the u.s. become more attract iverelative to international and emerging markets. the u.s. has been the best house in a decent neighborhood for a while. i think it's become the better house in a lousier neighborhood. that's what's changed our opinion. the way to attack a problem like this, most folks have made a lot of money in the fang stocks and in all the corollaries and the baby fangs and so on i think the way you think about the handling of a portfolio, at least have you have anything longer, a time frame longer than high frequently trading maybe or at least a couple of months is to say let me get rid of the stuff i'm not that happy with. things i have longer term questions about.

and potentially add a little bit to some opportunities that you feel that you researched and your understanding of the companies have said i have a good three to five that's how we're thinking about our portfolios let's strengthen them and take advantage of weakness and get the stuff we really want to own. >> scott, let me turn back to you. carl icahn just a few moments ago saying it's time to be cautious in the market you say the bull market is not over, but my question is is the dominance of the high growth stocks over, and are we turning to a time where value shares may shine? >> i think that what the story is is from time to time when you're later in the cycle and there's a little more inflation and a little more growth and the fed is hiking rates, you're going to have some bouts of value outperformance, but i think overall those would be pretty brief now, we like financials, but things like consumer discretionary and technology,

those have led the charge, obviously. and growth has dramatically outperformed value we would argue that the next time growth will perform consistently is probably when you're halfway through the next recession which we don't see over the course of the next 15, 18 months. i think that's a low probability. we would argue that value could outperform here a little bit we're leaning still toward growth we like industrials. we like consumer discretionary we like health care. we also have been telling our clients we don't want them to get defensive. things like utilities, we want to lean toward the sectors that are going to benefit like financials which i forgot to mention, that are going to benefit from a continuation of the recovery >> i didn't quite get where you are. you seem to lean bullish yet you say if you want to add to your portfolio in any position, it's a three to five year view.

from now to three years, let's say, what should you put in your portfolio if anything, or is this the time to sit back and wait and see what happens? >> specifically what we're doing is doing a gradual and slow rotation out of some of the highest flaying names we've had. the large cap growth index has outperformed small cap index has outpmped these things don't continue forever, although it feels that way with all the things that make the stocks appealing. that's not an undiscovered story. we're being selective about rotating into value names. keeping our valuation of our overall portfolio within reasonable bounds and not getting carried away with the long-term growth story although we still like it. we think it's very valuable. this is not a time to get shaken out of this market i think people who sell now will be making a mistake. we have terrific earnings growth and a strong u.s. economy. we have just all the basic

fundamentals that are not going to, i don't think, let this market fall. and stocks on 2019 earnings are less than 16 times this is not an expensive market no matter what a cyclicly adjusted e p/e may tell you. this is not an pensive market. thank you both as volatility continues among the major indices there are opportunities in the global markets -- or aren't there we are joined by ben i want to key off a snippet from a goldman sachs report on apple. it's a rival on the street, but this is interesting and it's moving the stock they're saying they see a deterioration in the macro china data that's leading them to be concerned about apple's unit shipments in the third quarter i'm wondering is that the sort

of mentality when it comes to assessing what's going on in china, certainly we've seen the shanghai composite have a difficult year, and it continues with the u.s. market slump is that the right way to be reading what is going on in china? >> well, i think you have to focus on the bigger picture in china which is that you have a long-term secular deceleration in that economy. it's been the better part of three decades growing close to 10%. now it's on the other side of that and decelerating. you have that which is not -- you shouldn't be confused and shouldn't invest on a tactical horizon based on that. in the near term, i also think growth can be a little bit misleading so you have to take into account the fact that policy in china is actively leaning against cyclical weakness you might see. while it's true you've seen a slowdown in a cyclical fashion, above and beyond that trend,

you're also seeing monetary policy ease. you're seeing fiscal policy pick up and so i don't think growth in china is really the best measure, because you're going to see you have all this stimulus in the pipeline to pick it up. i think when we extrapolate from that into the broader emerging markets view, you have to be agile here right now we're sitting at neutral, kind of waiting on the sidelines as lots of the negative news and tighter financial conditions roll through. it's not impossible to imagine a scenario between the combination of china's stability and their growth outlook, financial condition stabilizing, some better news on trade, the dollar you have to have a lot of things happen to go right but i think you'd want to be on watch for those things to turn before jumping back into em. >> so you're cautious on em. cautious also on china and this doesn't make you worried, i guess the question i

was asking you was effectively does this make you concerned about u.s. corporate earnings, the fallout from china it seems like investors are saying we're the best house in the whole neighborhood right now. our guests in the previous segment said that. can we still believe that even if there is some signs of weakness >> yeah. i think you'd be best off having a slight tilt toward the u.s. right now. i mean, we think about that in sort of two ways one over the course of the cycle, and everything, it's unambiguous. we're somewhere in the late phase of this expansion that the u.s. is your defensive ballist against the end of the cycle even though last week the u.s. didn't outperform because of the nature of the shock coming out of the u.s., when it matters, and i think when the big growth shock hits at the end of this cycle, that's the market that's going to outperform. and then, of course, you have earnings and the fact that as we look at the high frequency data and

what's flowing through what should be an okay earnings season, you're looking at that and saying this is where the action is in terms of earnings and growth it's a good way at the moment to play offense and defense we've been leaning into that as a way of funding a bit of a tilt into equities into the imploebl asset portfolios we're neutral em, and where we're underweight to some extent is europe. we see a narrow path for european equities outperforms. i'm not sure which house on the block the u.s. is, but we like it for right now >> if i'm on the sidelines and i'm a retail investors and i want to know when the optimal moment to start threading money into emerging markets, what would we look for? >> the fortunate thing for investors like those is that em tends to have very pronounced and persistent market cycles that's because you go from a sishs cycle where financial conditions are tightening and

people are pulling their money out. growth is plummeting hence financial conditions tighten. you have a vicious psych thcyclt turns into a virtuous cycle. i think you probably want to see evidence of that vicious cycle transitioning away before you jump in, but the good news is that if you are going to err, err on the side of being late. that's a persistent phenomenon >> don't worry about missing the first pennies? >> exactly >> all right ben. thank you. coming up, the latest on the investigation into the disappearance and suspected murder of journalist khashoggi can the saudis be trusted to investigate a crime they're accused of committing. and the fang stocks being kicked in the teeth. is this a short-term flbalack or is tech falling out of favor

ron! soh really? going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab.

schwab, a modern approach to wealth management.

president trump saying mike pompeo is heading to saudi arabia to discuss the disappearance of journalist khashoggi. more companies are pulling out of events in the region. jamie dimon saying they will not attend the davos in the desert today a turkish team entered the

area to search it. that's a cleaning staff heading in before that investigation let's get more on this and bring in admiral james, a former nato supreme commander. >> we appreciate you being here, admiral. as we look at this developing story, what is the potential that this really gets inflamed >> i think it's significant. but let's kind of start with the investigation. we need to go at this kind of from the inside out, tyler that's to say we need to understand what u.s. intelligence has determined. what we have factually based on our intercepts we're going to need to compare notes with our nato ally, turkey who will be going through that consulate. these are knowable, factual pieces of data when we put all that together, then we go to the saudis and the

kingdom and try and get some answers for this thing if we don't get answers as to what happened, this could get very inflamed and who is the winner iran they will continue to press across the entire region and the potential for instability rises. >> i get on thin ice when i talk about stuff like signal intercepts and things like that. presumably we have some signal intelligence the turks seem to have the same. i asked earlier what are the odds this gets inflamed? secondly, what are the odds that this all dissipates in some fog of confusion and denial? >> i'd say it's really about 50/50 both ways. but as we see more confrontation of the kingdom and secretary pompeo going over is a good move on the part of the trump administration we can't just let this go. that doesn't mean that we're going to end up absolutely

shattering this vital relationship with the wing dom, but we're going to have to have some answers before we take next steps which could include some level of sanctions that's the path that gets us down in flames we'll know a lot more in the next five or six days. >> admiral, we thank you very much we hope you'll come back and join us as this -- you're going to stay with us? i believe you're going to stay with us as we're going to transition for a moment to hadley gamble, our correspondent covering this story for us from saudi arabia hadley >> reporter: as you guys have mentioned, secretary of state mike pompeo on his way to riyadh we expect him to be here tomorrow morning in the almost ten years i've been covering this region, i have yet to have seen a u.s. saudi relations at such a critical point i think it's interesting that over the last 24 hours we've heard so much from the saudi government in the terms of statements essentially coming back out and pushing back against comments we

heard from president trump about potential retaliatory measures they said if anything happens in terms of an escalation, they're prepared to escalate on their side as well we heard them coming out as well and talking about the fact that they say they have nothing to do with the disappearance and potential death of khashoggi it's interesting you have this much movement in the last 24 hours. it does speak to the fact that this relationship is under serious pressure we do know the king had the chance to speak with president trump earlier today and he issued a firm denial of any involvement to the president at the same time a lot of folks on the ground telling me they're deeply concerned with what's been going on. >> hadley, thank you very much we appreciate your report. if we can, we're going to jump back to the admiral. i believe you were getting to the point as we had hadley jump in talking about the relationship between the united states and saudi arabia. president trump saying they could face severe punishment based on what may or may not come out of all this

what could we expect what type of economic ripple effects could we be looking at saudi arabia is involved in a number of western companies and investments. >> indeed. and we need to bear in mind it's not just king salman the driver in the area is the king prince. i met with him several time. it's a force in this he and jared kushner are quite close. that's another communications channel that's being used in addition to the president to the king, and secretary pompeo to the king in terms of sanctions, hadley, they could start as diplomatic we could expel the saudi ambassador we could call him for an explanation to come to foggy bottom economically we could move against saudi companies doing business with u.s. firms we could sanction other companies doing business with the kingdom.

there are military things that could be done. we could withdraw our support for the saudi efforts in yemen i want to emphasize we are a ways away from even having that conversation we've got to get through a legitimate investigation first but that's kind of the range of sanctions that could be out there. >> and obviously congress has a vote and a voice in all of this. it isn't merely the executive branch here. the president has said on several occasions to bear in mind the idea that there is a large order, really these are letters of intent from saudi arabia to buy more than $100 billion worth of american military technology and hardware and that that is an important variable in this conversation. could you put that kind of business deal up against the context of this kind of human

rights matter? >> i can, and in particular, the congress will. and we've already seen not only democrats coming out very harshly against the kingdom. but even republicans senator marco rubio from my home state of florida making some very strong comments again, everything predicated on an investigation, but i would say that the problem going after a big deal like that, leaving aside the economic issues, tyler, and jobs to the points the president made, it's the military interaction if they do not buy u.s. equipment, they'll end up buying russian or chinese equipment we'll lose inner operatability with them again. who's the winner it's iran. we need to keep all those factors, economic, political, human rights, military, together as we analyze this very difficult situation. it's going to be a hard week or

so for the trump administration. i don't think it's a stretch to say this is the first true foreign policy crisis of the administration >> very interesting. and as you clearly sketch, this is really three dimensional chess being played james, former supreme allied commander at nato, thank you as always >> my pleasure 5% on 30-year mortgage might be scary to some of you. as we discovered on friday, it's still a pretty good deal especially to people who bought their first home many years ago as i did is that 5% number enough to scare off the current crop of prospective home buyers? that's coming up plus add sears to the retailbone yard. the iconic chain filing for bankruptcy today will it be like toys "r" us and eventually close for good? "power lunch" resumes after this these techs in a lab.

this builder in a hardhat... ...the welders and electricians who do all of that. the diner staffed up 'cause they all needed lunch. teachers... doctors... jobs grew a bunch. what started with one job spread all around. because each job in energy creates many more in this town. energy lives here.

whooo! want to get a move on your next vacation? tripadvisor now lets you book over a hundred thousand tours, attractions, and experiences in destinations around the world! like new orleans! from cooking classes, to airboat tours, tripadvisor makes it easy to find and book amazing things to do. and you can cancel most bookings up to 24 hours in advance for a full refund. so your whole trip... will be smooth sailing! read reviews check hotel prices book things to do tripadvisor

now to the bond market tracking the market. rick is a busy man hi >> absolutely. the wings are unchanged. the two-year and 30-year unchanged. everything sticky. look at a one week of 30s. twos, fives, sevens. all similar. what are you supposed to see in this chart in january when ten-year note

yields rocketed up 47 basis points stock markets stuck with it. every basis point. look what happened at the end of august we decoupled and then when we had the big rise up over 311 to 3.23 the stock market moved down we have to watch this divergence and see if we push yields sideways or stocks regain. the dollar index, one week you can see we're bouncing at the door of 95 early august traders putting a lot of importance on the 95 level. looks like it's not going to be able to hold we'll keep track of where it closes tyler, back to you. >> all right thank you very much. the rising bond yields recently have sent mortgage rates higher the 30-year fixed is above 5 is that putting a chill in the market we are joined now for more

>> reporter: a few thousand market bankers meeting there's a new ceo. the ceos of fanny and freddie are leaving, and the conserve or the is getting a new leader in january. it could bring big reform. there's more uncertainty over how the housing market will react to interest rates over 5%. we've seen the refinance market dry up leading to layoffs. as lenders try to get more business, they're offering more risky loans. while the gses are the same, they are concerned about others. >> the broader market under pressure is doing what markets do they're getting a little more risk appetite oriented everyone know it overcorrected conservative it's unclear if it's just undoing that or it's going to get too much into it we'll see that it's not clear what's happened yet. >> there is definitely the feeling that as rates go up home prices will moderate

there was not a lot of concern among leaders here i spoke with about the recent changes to state and local tax deductions most said it will likely soften the high end of the market in new york and new jersey and other high-priced areas which we're already seeing >> thank you coming up. after a glimmer of hope, tech taking a beating again what's behind the sell off and are there any bargains out there? >> and dominos on deck to report earnings will they gea ost bot and deliver a beat "power lunch "is back in two obvious.

sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances.

♪ monitor their blood glucose every day. which means they have to stop. and stick their fingers. repeatedly. today, life-changing technology from abbott makes it possible to track glucose levels. without drawing a drop of blood, again and again. the most personal technology, is technology with the power to change your life.

life. to the fullest. here's your news update at this hour. turkish and saudi investigators begin a joint inspection of the saudi consulate in istanbul will khashoggi was last seen alive nearly two weeks ago the kingdom has called allegations that it killed khashoggi as baseless. the british prime minister

theresa may telling parliament the uk and european union are not far apart in brexit negotiations and the deal remain achievable >> first we have made real progress in recent weeks on both withdrawal agreement and the political declaration on our future relationship. i want to pay tribute to both negotiating teams for the many hours of hard work that have got us to this point northern california's biggest yuletity shut off power to prevent wildfires pacific gas and electric announcing the plans after their power lines were blamed for causing some of the state's most destructive wildfires. thank you, scott appreciate it. the nasdaq is off the lows of the session at least right now. we still have a mixed market broadly. down about .2% for the nasdaq composite. if you take the chart back, you can see the nasdaq is down

nearly 7% in one month some of the usual suspects are dragging it lower. dominic as more. >> kourtney, within the s&p 500 on a broader basis, it is the technology consumer discretionary and communications services sectors that are three of the worst performers just month to date in october alone we're still not even halfway to that point yet but still, it gives you a sense of how the leadership has developed. we picked out three stocks to give you an idea of how that leadership is developing apple, first of all, one of the poster children stocks for the rally higher since the highs were down around 6 % from those levels on an intraday basis. at these levels here, we're hovering right around that 5046 day moving average for apple shares that will be something to watch as the day progresses. another one to see here is what's happening with consumer discretionary. amazon specifically.

those shares, you can see here by around 14 % since the recent highs as well. and again, this is something that we're watching only because it has become indicative of the momentum stock trade out there we'll watch the levels as well and to end things off with the communications services stock. netflix. this has been one that's seen a deeper pullback. since the highs we've seen here, we're down around 21% from those levels right now in this area right here, we've bounced off the 200-day moving average as we talk about the levels to watch, these tech, consumer discretionary and communications services stocks will be ones we use as sentiment gauges for the rally or another leg lower going forward. >> dominic, thank you. let's dig deeper into one of the names, apple and a possible slowdown of the economy and demand in china. joining us is tom, senior research analyst at da davidson. tom, good to have you with us. goldman sachs is worried about

china. are you? >> basically if you think of the single largest risk to apple shares, it's definitely china. it's two-fold. one, a prolonged trade war between the u.s. and china and number two, about 20% of apple's revenue comes from consumers in china buying their products i do think china poses the single largest risk to apple stock today. >> what do you think the unit volume out of china will be? how will the numbers change if the worst case in china of economic and consumer slow down e vench waits. >> the good news for apple is if you look at their new lineup of iphones, the average selling price points are higher than the highest they've ever had from a unit standpoint, generally speaking, apple could have flat unit growth on a year

over year basis and the higher average selling prices will have them well positioned china, the extent you see productionist behavior or sum consumers buying from local manufacturers, you could see a mid single digit pullback in unit growth which could have a negative impact on their unisales for 20% of their total reven revenue. >> they're saying according to their note about a 15% year on year decline in the third quarter out of china, and that would be, of course, virtually unheard of considering the third quarter is the seasonally strong season for apple there's no way the worst case scenario is down 15% is a real scenario >> yes, i would argue that 15% decline does seem to be overly concerning, and i don't think that would be -- i think, again, midsingle digit decline is mor

likely, and again, we have to monitor the continued trade war between the u.s. and china to try to gauge the risk going forward. >> that was sort of my next question what do you think the chances are? are you modelling at all for china to potentially interfere in the supply chain? and then have that be a ripple effect and impact what we buy and the prices we pay here in the united states? >> so, i would argue that that could be favorable for apple if you look at any manufacturer or any consumer tech company using china to the extent the chinese government devalues the currency, that could soften the blow of tariffs. to the extent the chinese government officers subsidies to manufacturers, that could soften the tariffs. if you look at the last round of tariffs, i think apple and others can manage a 10% tariff increase if the government decided to put a tariff on everything out of china. that said, 25% i think would be

more difficult much more difficult to manage for everyone >> you mentioned something earlier that intrigued me. that's the idea that chinese consumers might, if the trade war blossoms, might buy patriotically. they might walk away from american-made products, and at the margins, that could hurt a company like apple >> if you look at 20% of their sales going to chinese consumers, i think that at risk. i think you have to make a distinct here between the trade strategy for the white house for mexico and canada where i would argue is net net effective and getting them to come to the bargaining table i think that remains to be seen on china that may take a longer time. i think that's a big risk for apple. >> in other words, that a my word, not yours, a hard line aggressive posture toward china might be less effective than it turned out to be to the extent that we know if the end results with mexico and canada

right? >> absolutely. >> okay. go ahead >> tom, in terms of the market share in apple, already it's on the decline. isn't that correct if chinese consumers opted to buy patriotically, they're just steepening the decline. it may have a great market share, but it's been losing the share. >> the second largest manufacturer globally, it looks like apple may catch up with the late e round of devices. again, i think that what could be apple's saving grace is if they can have flat unit sales given the materially higher average selling price points you're looking at 999 for the 10s and 1099 for the 10-s max. then they could still be okay. >> all right tom, thank you very much tom is with da davidson. fidelity jumping in with

both feet launching a new company will make it easier for some investors to trade digital 'lndasts wel fi out what it means for the future of crypto stay with "power lunch".

(beeping) experience the lexus rx with advanced safety, standard. lease the 2018 rx 350 for $439 a month for 36 months. experience amazing at your lexus dealer. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today.

we're almost at session highs on the dow jones industrial average up .4 %. s&p 500 up by 5 points and the nasdaq is the one in the red of the three major indices information technology we should note is really the weak sector on the s&p 500 in today's session. no surprise the nad zach composite feeling that the russell, one worth noting. strength among the small caps. this capping off what has been so far a rough month for the small caps russell2000 down 10% in the month of october alone fidelity is launching a company that allows hedge funds and family offices to execute trades on crypto currencies.

this could be good for other companies. here with us is the founder of brian kelly capital. bk, good to see you. >> good to see you >> we saw a spike in bitcoin what is going on with the price action when it's not responding to what would seem like very good news? >> yeah. it is very good news the mechanics of the bitcoin market right now, there is a coin called tether it's backed by u.s. dollars. and are they're having some issues with their bank there are some questions over whether or not you can redeem the tethers for u.s. dollars at this point it's probably resolved, they said it will probably be resolved by tomorrow it caused a spike in bitcoin the news from fidelity is fantastic on the other side. >> so when are we going to see this institutional money flow? that was the mantra. is having the custodial services

the last bare yore to those institutions or is it the institutional mandate that prevents some of the institutions from buying? >> it's not so much the institutional mandate. custody has been a big hurdle and having somebody like fidelity put their stamp on it and say yes, this is a new asset class, and we're going to -- and i believe they said they may have some insurance. that's a step closer now you have yale investing. yale endowment this put everybody on notice in the institutional area you have to have a strategy for investing or a reason why you're not. i would expect over the next three months, six months, you start to see the proverbial herd start to turn in this direction. and i can tell you from the conversations we've had for our crypto hedge fund, that herd is starting to enter this market. >> yale is a good example, but yale is not actually investing in crypto currencies themselves. they're investing in block based chain startups isn't -- when it comes to being

a bitcoin bull, that's not helping the currency >> i believe the fund yale is investing in is 70% crypto, 30% infrastructure plays it is investing in a fund. again, we need new buyers. we need fresh capital coming into this place. the relentless selling over the past year has been painful it appears to be done. we don't have the new buyer yet. that's why we're looking for new avenues of capital >> how long do you think it will be before companies like schwab, vanguard, some of the other big players in retail investing get into this game in a significant way? >> ithink very soon. it would not surprise me if a lot of those companies already have something working in the background i would think it's probably first quarter of 2019. if you're looking at this, a couple different things. one, fidelity is in it remember, some of the startups like a robin hood app, they

launched crypto and got a million users in four days if you're at swab or e-trade and say where are the customers? they're there, they have to offer the customer >> just to be clear are you saying you think it's very close on a number of the firms a number of those firms to be able to offer trading of bitcoin to a retail investor or are you talking to large hedge funds and other ips institutional investors? >> i would expect your traditional retail e*trade, schwab, those type of companies, i would expect quarter 1 2019 they would offer it to their retail investors. >> last question on tether how concerned, i mean, if you had put money into tether believing that you're going to eventually use that money to make a cryptocurrency transaction down the road, should you be concerned that perhaps it doesn't have the u.s. dollar backing that they profess to have? >> i think there's a small, small level of concern you know, i can tell you that i've known the exchanges for a

long time. these exchanges make a lot of money and, you know, so there's a lot of money there but, again, this is a new asset class so if you're a retail investor and you don't understand the mechanics of tether, i wouldn't be investing in it. >> words of wisdom brian, thank you >> it's always good advice, if you don't understand it, don't invest in it it is good advice folks. you get it right here on "power lunch." guls and gob linz and big market selloffs. plus, while poppa john's deals with internal problems, shares of dominos up nearly 50% this year is domino's really capitalizing on its cpetoomtir's distress we'll take that one apart next on "power lunch.

well, the problems that papa john's going to be a boon for other pizza chains domino's reporting tomorrow and kate is at the nasdaq to get us ready for that report. hi. >> analysts are expecting another strong quarter for domino's pizza estimates calling for a dollar .75 on revenues of $7075 million. now, an important factor in

those same-store sales metrics will be whether or not domino's gets and added boost from the ongoing drama at papa john's papa john's fell 10.5 ners july alone so analysts are expecting further declines and say domino's could be poised to benefit. pizza hut has tried to capitalize on papa john's trouble. it ran a promotion earlier in the season inviting customers who may have been dissatisfied with papa john's to join its loyalty club domino's ceo says the company doesn't plan to follow suit with add advertising but it might not have to. "e" research, last year domino's was at 14% of the quick service pizza market compared to pizza hut at 14.2% fouling behind little sees as at 7.2% this year they could make a run with papa john's falling to 6 point phi% and the stock, of course, continues to soar, it's up 45% year-to-date making it one of

the best performers in the space. back to you guys. >> thanks. oil slightly higher, just about 70 bucks a barrel. plus sears, the latest former retail giant closing more stores what are malls going to do with all that empty space the second hour "power lunch" starts right after this. oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade.

♪

i'm melissa lee. cot market's octoberphobia soon give way to a new rally? how much leverage do the saudis have for the oil market? what impact could it have on oil prices and the downfall of an icon after 125 years in business, sears is filing for bankruptcy what happened to this iconic retailer and what lessons can others learn from it "power lunch" starts right now welcome to "power lunch. eye see saw day on wall street, the major indissies swinging by 85 points. s&p higher by 4 points nasdaq composite holding there in the red by just a hair.

within the dow, walgreens boots, alliance andesny, apple and cisco are lagging. shake shack, wendy's and starbucks, those are all higher and appropriate here on "power lunch" and some nice movers in the retail space, the container store, ralph lauren, gap, and krorg up more than 2%. for more on today's action, let's go to bab pisani at the new york stock exchange. hi, bob. >> we had a nice rally in the last power, about whun points. some of it a little bit of optimism on brexit but we had a turn around in the technology sector let's look at the dow laggards today. tech was a big laggard you can see some of the leaders. we had comments from goldman about potential effects of china on apple cisco, microsoft a little bit off their lows exxon, cruisely, energy doing

nothing on those veil saudi threats that perhaps they drive up the price of oil if there was any sanctions against them over this journalist investigation. the important thing is the leadership group is looking like it was last week, that's more consumer staple names, proctor and gambles, p&g's have been leaders throughout the day lot of interest in the retail trader, particularly in the last week and a half. hard to tell over the last week and a half but according to schwab, they're pretty healthy their assets are up 12%. this is all about assets under management here. new assets, new money they're taking in up 6%, that's a healthy number and new household, how many new households are they get something 24% more than a year ago. here's something that's very important. you'll hear this from these people, clients. the clients are younger. 53% of the households are under 40 years old why is that important? who cares? because younger clients mean the potential to keep saving money for longer periods of time

a younger client is in a way more valuable than an older client who may eventually start withdrawing money. it's all about assets under management back to you. >> thanks. stocks are trying to erase the losses made. the dow in positive territory. about an hour ago carl credited the fed with the bull market. >> i think the fed is responsible at least partly or a good part for having this bull market happening and, you know, while we all enjoyed this bull market, i sort of disagree with donald there that i think that if you kept these interest rates low -- if you keep them ab normally low, i'm talking against myself, but if you keep them ab normally low, you're only going to pay a big price for that. >> the question remains is the current bull market coming to an end? what will the impact of rising rates be on the markets?

let's bring in the senior equity special live and hugh johnson with hugh johnson advisers good to have you both. hugh, i will start off with you because you have a very aggressive recommendation, that is if your target of your portfolio is 50% equities, you want to be 60% equities. why do you want to be so heavily into equities and so aggressively at this stage of the expansion? >> well, at this stage of the expansion, obviously you have to be a little bit worried. we're at the 116th month mark and that's the longest bull market in history so that makes you edgy but you ask the question does this bull market have further to go and the answer to that in my judgment is very clear, and it does have further to go. the second thing is is that when you think back to what's been going on in the last couple of weekends, two, three weekends, we started this problem, decline in the stock market, we were overvalued about 1.5% overvalued and now we've moved down to a price or level that's about 5%

undervalued with the upside potential now being much greater through 2019 being close to 10%. you don't often get the sort of silver lining behind a dark cloud. now you have one it's from a valuation point of view we've gotten down levels that are very sensible. so i would look at that as an opportunity and an ongoing bull market and i would take advantage of it. that's why i tend to be a little bit more aggressive than most at this stage of the bull market. the correction was really a silver lining in an ongoing bull market. >> grapt, wount, would you agreh this i look at the russell 2000 and think that's been giving me a signal that it's towards the end of the sbangs, the index is down by 9% for the month of october alone. we're losing technology, we haven't picked up the leadership of financials or a lot of others and what has been quote unquote relative leadership hads been healthcare which is a defensive

sector what are the markets telling me? >> we take the view that hugh has as well, which is that this is not the beginning of the end. we've heard it multiple times every, you know, month, quarter, every time volatility rears its ugly head in this last nine years. and in our minds the fed is doing the right thing, so they are normalizing policy the comments that chairman powell had a few weeks ago about being a far way from normal, i think gave marketsa i litt a li of a pause because there are more heights to come and that might spell the end for the equity market. we don't think that's the case. >> why not if he said that. >> why not >> yeah. if he said and people believe there are more hikes to come >> but there have been more hikes to come in the last three years. there's been three years of hikes. so i don't think just because there's more hikes that necessarily means that the

market is going to go south. from our perspective, you look at earnings backdrop of u.s. companies it's been phenomenal so you've had two quarters of 20 plus earnings growth that's more to come for the third quarter. so the backdrop provides a lot of fundamental support from equities from here. >> tell me this, hugh. what kills bull markets? isn't it usually rising -- why, daddy, do bull markets die it's rising rates and recessions, right? and often the two together >> yes, it is. that's right and, yes, the question really is are the level of rates now are they high enough to offset the good news about strong zblerneas >> right >> and the answer to that is interest rates are not that high see me again at the end of 2019 when i think rates will be higher and you'll have a slowdown in the growth rate of earnings then i think the picture will change and then i think i'd

likely -- i'd be likely to answer that question by saying -- >> but -- >> rates are now at a level that offset the good news of rising -- rising earnings at a slower pace. and i think that's when late 2019 early 2020 we're going to see the end of the cycle or the bull market. >> i bet grant wouldn't disagree there is a point at which the rates will get high enough that will start to stifle the market. but hugh and then grant, if i might, won't the market start to discount what you forecast, in other words late 2019 earnings comparisons get tougher, rate of earnings growth slows, interest rates are not six times higher but there might be six more increases between now and then or five or four, but you get a point higher at that -- won't the markets start to signal that six months ahead of time? >> yes yes, it certainly will and you'll start to see it show up in some of the things, kind of things that we've seen happen

over the last three or four weeks. you'll see it in sector performance, defensive sectors will start to perform well over a meaningful period of time. you'll see large cap companies start to outperform small cap companies. all of those things in the credit markets credit spreads will start to open up. you'll see that show up well in advance and you'll see it show up in the financial markets. don't take your eye off the financial markets, it's too important. >> quick thought, what could tie this thing off >> so i think when you look at your point, tyler, about six months in terms of leading expectations, that's certainly true in our minds, inflation is what will drive rates higher in the force the fed's hand we don't see inflation really a concern in the near term unless you see a further acceleration oftariffs put in place on china, by -- >> or oil. >> oil perhaps, but -- >> we haven't seen the impact of the latest round of tariffs on companies. >> it's been quite minimal, right? >> i mean, they've just gone

into effect basically. we'll start hearing about it in this quarter. >> when you look in the first quarter if tariffs go into place as they are expected to with perhaps going up to 25%, maybe that trickles through to inflation data and that could be worrisome for the equity markets. but at this point in time think we're a little bit ahead of ourselves in assuming that's the base case. >> thanks grant and hugh just moments ago, president trump and the first lady were touring some devastation from hurricane michael in lynn haven, florida, let's listen in. >> i've never looked behind here these massive trees are just ripped out of the earth. we've seen mostly water. water can be very damaging and horrible and scary, you know, when you see water rising 14, 15 feet. but nobody's seen anything like this. >> president trump what are you -- >> this is incredible. and the job they've done, first responders, fema, the job they've done is -- this road, five hours ago you couldn't ride on it and today you see the trees are all pushed today we're

having that much of a problem. pretty amazing job have some president trump, what are you going to do to help the people here in lynn haven >> we're going to do a lot and we're doing a lot for florida. we're now going to georgia georgia was hit very hard. but when you look, and i think the governor will tell you we're doing a lot. we are doing more than anybody would have ever done and probably there hasn't been hits like this, not very often they say 50 years ago there was one that had this kind of power 50 years ago that's a long time but we're helping the people and we will always help the people and we're helping your great governor thank you all. we have a news alert on the budget deficit and here's the details >> hey, tyler, that's right. the treasury department is out with the budget results for the full year of 2018. here's the headline for you. the deficit in fy 2018, the treasury department says, was $779 billion that's $113 billion more than in the prior year, but the treasury

department here is emphasizing that it's $70 billion less than forecast in a mid-session review so they're saying it's less than we thought earlier this year and expressed as a percentage of gross domestic product the deficit was 3.9%, 0.4 percentage point higher than the previous years. news on outlays and receipts for fy '18, receipts for the government, $3.3 trillion, outlays $4.1 trillion. when you spend more than you take in, that's where you get the deficit, $779 billion for 2018 >> thank you very much a men javers coming up will democrats gain control of at least one branch of congress and what are the issues of congress that will or will not work in their favor. plus are stocks getting caught up in octoberphobia one of our next guests says yes

and that a turn around could be in their corner. and finally sears had it all going for them until the retail game changed and the company didn't just one of the many things being said about the retailer filing now next what's up for sears and how the bankruptcy could impact the broader sector next. it'll find ! but here's the thing. you don't live on mars. (beep) you build wind turbines. supply car parts to thousands of cities. answer millions of customer calls a year. like this one: no, i didn't order this. it's terrifying. and that's why you work with watson. hello. it knows your industry, protects your insights, and works with tools you already use. that's why it's the best ai for the job.

welcome back to powerch. the big question for the midterms is whether we will see

a blue wave. we have the cnbc all american survey steve. >> maybe not if you look at these results, 800 americans polled across the country, what we see is not necessarily a wave now the democrats may take the house or they could eek out a win in the senate, but look at these numbers. in the generic ballot question, who would you vote for, a democrat or republican, just a six point lead for the democrats. they enjoy typically a bigger number because there are more registered democrats in the country. in this poll there's 2% or 3% more democrats who were polled in this poll and that just happens, that's just the way it happens. but a six point lead is not necessarily a wave in the making, our polsters say and a big part of that is the 70% who are unsure in fact, 4 of 10 independents are still undecided. that's a large number. this election may turn on these independents right here. 4% say they'll vote for an independent candidate. one thing the republicans have going for them is this record

optimism where registering in the survey, 48% of the american public say they are optimistic about the current economy and they think things will get better and that's quite a bit more than we had in december, 2016 and like i said, an all time record for the poll. 30%, only 30% say they're pessimistic now and think thilgs things will get worse. working against the republicans, not terrific numbers on the poll we ask who benefitted from the tax cuts 71% said large corporations benefitted a lot or pretty much the wealthy. 67%. and then we look as we go down, 31% say just the average taxpayers and 22% say me personally looking again at the tariffs, a very divided public on tariffs are these in favor the china tariffs? one-third say yes, one-third say no i like the honesty of people they say they don't know enough.

but when it comes to the impact, 32% say they're good for the u.s. economy and 49% say they are bad for consumer prices. when it comes to these issues, the republicans seem to have this economic optimism on their side, but specific issues, the tax cuts and the tariffs not playing particularly well, guys. >> is there any collar on the percentages or the people behind the percentages, those who are optimistic versus those who are pessimistic? i'm trying to understand who is so pessimistic about this economy who has been firing on all cylinders by all data accounts >> one of the things i've learned over the 11 years i've done this poll is all economic views are filtered through the political prism, which is to say essentially democrats are among the most pessimistic but we have seen increases in optimism when we go down the income scale, we go down the ed skati -- ed skation scale, a lot of those folks have registered optimism than they have in the

past what happens when the house changes hands season democrats and republicans flip but one of the unique aspects right now is see if you can follow this because i have a hard time saying it, but democrats are not as pessimistic now under trump as republicans were under obama they're still pessimistic, but not as much as they were and that's how we get to independents in their net optimism have flipped their signs. they were net negative under obama and they're net positive under trump. that's how you get to these soaring levels i'm quite surprised '. we hit a record. a quarter ago i talked about the record it turned out we could go higher still in america optimism. >> it's ape maysing that democrats are less pessimistic. >> than republicans were back then that's the story i think a lot of them are doing a little bit better than they had been lower jobless rates and somewhat better wages and some of them have lower taxes although not

all. big banks remain in focus with big banks delivering earning beats today. wilfred forecast is the lye woo behind the numbers. >> the earnings look strong, the highest net income number ever no less. analysts disappointed by the loan growth number which was flat year-over-year adding to concerns for the industry as a whole, but loan growth is too sluggish given the strong economic data and the recent tax cut. however there are was more than offset by strong credit quality with provisions only $716 million compared to an expectation for 964 million. and, deposit growth of 4% was also strong, as was the expense control. all helping to deliver that record nii number. now, deposit rates remain low, but the ceo could have been more confident on the call that they will remain that way trading was down 2.5%, but that

was expected and investment banking fees were weak, down 18%, hence the recent leadership changes within that division the ceo saying we can do better in investment banking. overall, there is a fear that banks' earnings may have peaked. jp mortgage's revenue was up 5% year on year but down 2% quarter over quarter for bank of america, up 4% year-over-year, but flat quarter over quarter and when it all comes to valuations, jp morgan remains the most rich. but bank of america isn't too much behind. and that's a reason for some of the share price move today guys. let's continue this discussion and should investors make a big bet on the bank joining us is kenley on. good to have you with us i see that you have raised your price target on citi, cut it on bank of america, left it neutral or -- the same on jp morgan and

wells fargo. take me through the two changes and wye. let's start with bank of america where you cut the price target why? >> especially today. not only the price target but we downgraded the stock from strong guy hold and we think going forward they're going to be a market performer at best. these all three banks are diversified banks, unlike jp morgan, bank of america is not executing in all businesses. and clearly we would look to the weakness in investment banking and trading, commercial lending not that great the strong area is consumer and also efficiency or cost cutting. that's going to level off. so we think bank of america is a hold jp morgan's just diagnosis a much bett - just doing a much better job. >> you raised the price $2, not huge, but significant enough. >> we did. and jp morgan is a buy, citi is

a hold as well and the profile of citi group is very different than jp morgan and bank of america. it's more of a global play they have much more exposure to the emerging markets, mexico, southeast asia for consumer and commercial lending generally what we like to see is a large percentage coming out of the u.s. footprint, 50%, which is jp morgan or bank of america, and europe 0 so with citi you're always playing that risk related to the emerging markets they're doing a pretty good job, but jp morgan and bank of america are expanding strategically with new financial centers and bank branches. hard to believe, but it's true. >> ken, just zeroing in on bank of america, how concerning to you is the loan growth number? i mean, it was declined in balances across the board when you look at home equity, credit, u.s. commercial, direct and i direct consumer. what are they doing wrong? are they losing share to another

bank or is loan growth overall for the sector in jeopardy >> yeah, the key drivers are definitely consumer loans as well as credit cards which generate loans the weak areas that are declining is home mortgages and then also auto loans so i don't think it's anyone thin - any one thing, they don't have the strong franchises that jp morgan has and citi group and credit card. >> looking up to 2019, do you expect that the performance of the banks will finally catch up? theoretically we are in an economic environment which should be completely beneficial to the banks and should see the shares rise and yet they have been a disappointor this whole entire year. it's been a tough trade for bank bulls. >> absolutely. investor sentiment negative. will's comments about the high net interest income, that will continue with the fed increasing three or four more times but the concern really is why

aren't these banks generating higher loan growth in a strong u.s. economy the corporate rates perhaps are -- corporates are flush with cash, but that's the big challenge. currently there's runway as it relates to interest rates, but we need to see generation of loans. >> what has been the problem child for years is wells fargo quick thought. >> we have a sell recommendation there's brand damage there's changes in management at the middle levels. they actually had a pretty good quarter on operating leverag and also the one positive keep wells fargo decent is the fed approved a significant capital return along with the other banks. but i think wells, this is not a one or two-quarter turn, it's going to take time they'll get it right, it's just not going to be in the next six months. >> thank you very much we appreciate it well, coming up the latest on the devastation from

hurricane michael. verizon says the network has suffered a, quote, unprecedented amount of fiber damage the president on the ground right now touring the devastation and meeting with the a le fs. wereivinlorida coming up after this after this

i'm bill griffeth and here is your cdc news update. mike pompeo mike pompeo has departed for saudi arabia to discuss the disappearance of jamal khashoggi with the saudi king it came just hours after president trump talked on the phone with the king who has denied any knowledge about khashoggi disappearance. elsewhere, international crime groups operating in the u.s. are now the targets of a new justice department task force. attorney general jeff sessions made the announcement this morning. >> we are creating a transnational organized crime task force of experienced prosecutors who will coordinate our efforts, develop a plan to take each of these groups off our streets, to defeat them, to dismantle them, to weaken them

in every possible way. and finally as halloween is just around the corner, more people will be celebrating with their pets this year according to retail federation, 31 million people plan to buy a halloween costume for their pet. that's up 4% from a year ago let me just say, i love both of my dogs to pieces, but this year for halloween they are going to be dogs. >> i can't get mine to wear anything he's a cat but he won't do it. he just refuses. >> cats are too cool for school anyway. >> i want to see pictures of your dogs dressed up. >> it's not going to happen. >> thank you. >> thank you. >> appreciate it. coming up, if u.s. sanctions are imposed on saudi arabia, will we be facing an economic disaster that will rock the entire world those are the words from a new op-ed following the asappearance and alleged murder of saudi journalist.

a closer look at whether it could come to that point next.

let's get a check on the markets. the dow losing 106-point gain dipping lower, now down by about 19 points. the nasdaq has been the laggard of the day, continues to be,

down by 43 points, better for .6% lower and the s&p 500 is off by about six points at this moment pot stocks flying high today after one of canada's largest cannabis companies announced it's acquiring a u.s.-based hemp company. it's the first move into the market american, united, jetblue and southwest are all in the green american airlines higher by almost 3.5%. tyler. >> thank you very much. president trump and the first lady visiting florida today. they're touring some of the area's hardest hit by hurricane michael. we're live in lynn haven, florida, with the latest mar anna. >> reporter: the president visiting this community, it's a small city in the gulf about 20,000 people live here.

this is about 20 minutes north of pan map city beach and it's left utterly devastated after this hurricane there's been a lot of talk about panama city, about mexico beach, but these folks here, the mayor tells me more than 80% of the homes are damaged. this scene you see behind me is where the president walked with the first lady along with florida governor rick scott greeting residents who have been left homeless, greeting first responders there's a fema truck over to my left he greelted fema officials because the line has been nonstop of filling out those temporary fema vouchers. the pastor of this community telling me the needs here are catastrophic so the people of lynn haven incredibly grateful for the president's visit but their main message has been please don't forget us. what will happen three weeks from now, three months from now? this was a wind event and the

devastation is so vast across the panhandle and the gulf they don't want the president to forget this city and the area in the comer weeks and months. >> all right thank you. tensions between saudi arabia and the west rising following the disappearance and alleged murder of a prominent saudi journalist how's oil reacting let's check in at the cdc commodity desk >> crude oil shrug u slugging off concerns about this issue over tensions with saudi arabia today to trade pretty much flat in the session closing just a little bit higher. the issue did the saudis have anything to do with jamal khashoggi's disappearance? the saudis saying they're launching ana investigatio launching ana -- an investigation? i will point out, however, that the oil markets have become a little bit more measured in their response to news like this they are taking a wait and see approach at this time, guys. >> thank you, jackie so how at risk is the crude market in the weeks and months

to come? we have the founding partner at again capital. welcome. >> thank you, sir. >> how big are the odds that this issue could really spin out of control and how soon? >> i think the odds of a -- of the saudis taking oil off the market fairly low, but i wouldn't say it's an impossibility. particularly if they get their back up. that's what we saw over the weekend. that the rhetoric flew and it flew really from mohammed bin salman and the prince. he's not this cuddly bear that he's been made out to be over the past months. >> the president apparently has apparently been on the phone with king salman, used the phrase using the possibility that rogue killers were responsible for this is that ultimately -- i asked the admiral an hour or so ago what are the odds that this whole situation that feels so

crystallized right now ultimately disa pates sipates w the saudi government >> that's going to be the off-ramp, it will be some interrogation that went off the rails completely notice that the phraseology from the king by the way that he told the president had he no knowledge of it. there was not a statement that the entire saudi government was ignorant of what was happening here so i think that's careful. so they're trying very hard to get a way out of this, because the stakes are so high, tyler. there's just tons of money involved when you're talking saudi arabia, tons of investment the oil is obviously essential to the global economy. this was a heart attack maker over the weekend when these statements first started coming out. this broke a tabu of 25 year or fwourt 5 year promise from the saudis never to mess with the oil markets again in the aftermath of the 1970 oil shocks that we had. >> it doesn't look good for

saudi arabia even if we may never know exactly what happened, account relationship be repaired are things always going to be different now between saudi arabia and, say, the united states geopolitically? we will always wonder and does that cause some ripple effects that are hard to quantify going forward? >> i think they permanentally scared off a great deal of investment that might have come to the kingdom their efforts to the open up and be more modern and have a better human rights track record just went out the window. and i think it gets bad for all the world leaders when they talk about these moral equivalencies of other journalists being held in other jails and countries none of it's right, but this was a step really too far, bridge too far. and i think it's hard. i think, you know, that their economic conference is probably never to be seen again. >> it's up in sand, basically. we've had so many leaders already drop out without anything being investigated yet.

what do you think happens with the assad did i ipo? it keeps getting pushed off and pushed off and is there a possibility from a u.s. standpoint, a big bank, it's too risky to deal with this? we don't want that political tank deal with the assad did i ipo? >> i've been a nonbeliever that they would ever list, partly because of disclosure issues there's a lot of patron aage still. and i don't know how we could possibly explain that sufficiently in an s-1 public filing. >> meaning bribery >> or just sort of you have an interest in that oilwell thor crown prince has an interest in that sector, too much of that going on for them to pass muster and the mbs, salman, really thought that president trump could ease the listing rules there's just a lot of misplaced understanding about how things really work. >> and two weeks from now the iranian sanctions start to bite hard, right? >> yes and we're already seeing a lot

of that oil come off the market. the mainstream, if you will, oil companies, the other commercial, big global commercial entities, they're not touching this stuff. you're going to hear stories about the iranians smuggling it out, turning off the transresponders on some of their tankers and selling some of their ole on the black market or having it turn up in turkey and be washed. that's a tough act to keep up at the kind of volumes they need to stay sufficient and to keep the market supplied. and we need the saudis to step up and fill the gap. that's why this is the crisis of all chris sees rises and take oe market. >> where does it go. >> 85, 90. >> thank you. coming up, once hailed as the amazon of its time, today filing for bankruptcy, a look at sears' slide and what it means for threile ta sector next going to tell you about exciting plans available to anyone with

medicare. many plans provide broad coverage and still may save you money on monthly premiums and prescription drugs. these are affordable, all-in-one plans that help pay for doctor visits, hospital stays and emergency care. but they also include prescription drug coverage. in fact, last year humana medicare advantage prescription drug plan members saved an estimated $6,900 on average on their prescription costs. call a licensed humana sales agent or go online to find out if you could save on your prescription drugs. this plan delivers coverage for the three things you may care most about; prescription drug coverage, doctor visits, and hospital stays. plus, potential cost savings on your plan premium. humana has a large network of doctors and hospitals. so call us, or go online to find out if your doctor is part of the humana network. ready to learn more? call the number on your screen for this free, fact-filled decision guide.

there's no obligation, just good information. call the toll free number on your screen, now. you'll learn all about a humana medicare advantage plan and how it compares with your plan. with most humana plans, you get coverage for prescription drugs, doctor and hospital visits, and more. all for zero dollar monthly plan premium in most areas. most humana medicare advantage plans even include dental and vision coverage. and, most humana medicare advantage plans include the silver sneakers fitness program at a local fitness center. so call or go online to find out if your doctor is part of humana's large network of doctors and hospitals. and see if a humana medicare advantage plan is the right plan for you. pick up the phone, and call the number on your screen. the call is free. and licensed humana sales agents are standing by. so call now.

. after about 126 years from ids founding and seven years of losing money, sears fooild files for chapter 11 bankruptcy today. the ceo have been funding operations through a number of complicated engineering maneuvers for years, with you

today's debt payment was too much to cover. lampaert who personally owns 31% of sears shares and whose fund owns 19% is stepping down as ceo. he'll stay chairman. they are both the largest equity and debt holders together. it proposed lowering pits $1.6 billion debt to 1.4 and lower those interest payments but without filing for bankruptcy that didn't work today's bankruptcy is to reorganize many retail restructuring experts are skeptical that it can be done thinking liquidation is more of a likely scenario 68,000 jobs are at risk with this bankruptcy filing how did sears get here what lessons can others learn and could there be a silver line something how much time do we have let's bring in elizabeth dunn, a retail advisory form and charlie hoe shea who is a retail analyst with moodies charlie, i'm going to start with you. i don't believe that you were surprised about today. what do you think is the future

of sears is liquidation only inevitable at this point or is restructuring a reality with a smaller store base of profitable stores >> that's a tough one. and with any retailer when they're in this situation, the end game, if it's a liquidation, is not a positive. i think we all like to see the company survive and there can often be a better recovery if the company actually survives. in the case of sears, that's an open question right now. it just depends on what the creditors want to do and we certainly saw it with toys "r" us is a creditor class pushing for liquidation and that's where we ended up when a lot of folks thought there would be a restructuring with toys "r" us it's a mixed bag right now there air lot of innings left to play with respect to the bankruptcy process i think we have to stand back and wait and see. >> liz, at one point sears had something like 4,061 stores at its peak and now has just about

700 stores clearly it's a lot smaller than it used to be, $53 billion in sales at its peak, now $16.7 billion. but if you are a mall operator or you're one of the tenants around sears, are you really disappointed that they're leaving? and i say that after speaking with a number of folks today, including the ceo of cbl associates, they have shopping centers with malls with sears in them and he said we've recon verted seller of them and one of them gets four 0 five times higher rent than sears what's paying is it a bad thing for the mall >> i don't think it's a bad thing for most malls that sears operates in, to your point higher rent. but also productivity and a bigger draw. i think the days of sears being a bigger tenant that drew traffic into malls are long gone if malls can attract better tenants that will be a draw for consumers, i think that's a win/win, particularly if they're

paying higher rent. >> sears holders lose, what retailers win. >> if you're selling appliances right now, you're -- you're positioned well. so that's best buy, lowe's, home depot. if you look at what's happened to sears market share appliances, it was 40%, now it's less than that it's been siphoned off by those three predominately. on the electronic side, sears has a business, best buy picks up a chunk of that, walmart. the toy business with k-mart and sears both had reasonable toy businesses, that's up in the air as well as the toys "r" us share at that point. but the usual suspects on that front, walmart, amazon, target, kos costco potentially, kohl's potentially. but there are a lot of folks positioned for $11 billion worth of revenues up for grabs. >> it's not going to be as big as a share shift, is it?

>> there's a wide bunch of retailers that will benefit from sears going out of business. i think there is some business to be picked up on the soft land side, both macy's and jc penney's have significant overlap. i think a third of their store bases respectively overlap with sales. you have the off-price retailers. but to the point about the hardlines business, that business has shifted away from the malls and it will likely fall to some of those other retailers mentioned. so i think it's not going to be -- it's not a situation where there are two really strong competitors or one strong competitor and one weak one and the one goes away about the this is a situation where it will lift a lot of tides for retailers. >> charlie, it's been a complicated financial story for some time now and i don't want the viewers to walk away thinking that all retail is doomed that being said, you do have a watch list there are other companies that are potentially close to a bankruptcy filing. who should we be watching?

>> well, we've got including sears we have 20 names on what we consider to be our distress list and that's been a pretty static number for the last year, year and a half we track defaults, not just bankruptcies so if you see a distressed exchange, which is popular among sonser-owned companies, you swap your debt for equity, get an extended maturity, provide some collateral, that's more of what we're used to seeing recently. we've had some high-profile bankruptcies last year, but the distressed exchange is really the m.o. for retailers to get relief now bankruptcy, i think the holiday will be a litmus test. we said the same thing last year we're dealing in a world of retail darwinism right now where the rich are getting richer and the poor are getting weaker and poorer and i think you'll see that continue during the holiday. there will be some retailers that don't make it to the other side once this holiday season is over there's just such acute pressure from the big guys on the smaller retailers. >> thank you very much

appreciate it. and liz, thank you for joining us as well. coming up, cot market's octoberphobia selling soon give way to a new rally our next guest says yes and he'll join us in two minutes to tell us why. so what else is new? how's your mother?

umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

an unsettling start. all of them with losses of 4% of greater right now. a turn around could be in store. this is editor and chief always good to see you >> good afternoon. take us through some of that history. some of the biggest selloffs have come in october >> and then what happened? >> they forgot the tail end of that is october. we have this month that sits at a juncture where things get turned around here the fact that it's sitting there is a time where that's lot of positions. it is after the end of the third

quarter. it is moving things around and getting geared up for the end of the year there is the mutual fund deadline where. >> it is not just voodoo >> to make numbers, to make things look better, to make a judgment >>. >> maybe not as often. there are still people and investment things are still programmed by people who live. one of these patterns continue to persist is the daily patterns jim cramer talking about looking for that >> 2:00 is when the selloffs

really kick in >> yes people still do things you need that diet coke to get you through the afternoon. so human behavior has changed over the years it didn't exist before world war ii with a farming economy. so things do clanghange a bit. we are seeing it persist and exist for us >> what about the fact that elections happen in november it's not far away from october >> we saw some of the last time we had the drops was right around the presidential election prior to it we had some fears of rates going up and other things going on in september with news and that sort of thing we had a big 2% day in september, 2016. after the election on november 7th we had a pop in the market >> all right we'll leave it there

>> thanks for having me. want to take a look at the dow. we are at session highs right he ecpl weavchk ease coming up next

i just got back and it's something i will never forget. i have been dreaming about it. i have never seen it like that

the people are running out of food gas stations aren't open it is a tragedy i have never seen i want us to remember that businesses can't open their doors. they don't have any doors. these are some of the photos that i took. you know, people still don't have cell service. >> i went through the after math and i was struck the same way. street signs were bent you couldn't -- you and i and all of us couldn't bend one of those things it is truly breathtaking >> yeah. it changed my perspective. >> and it will make the feds round. hurricane michael will be no

different. going into the close i continue to watch shares of apple. they are down. goldman sachs a cautious commentary and could it be the canary in the coal mine? >> closing bell right now. it is a new week here on wall street. a brutal bout of selling last week is now the time to buy equities we will debate that. president trump weighing in on saudi arabia >> the king firmly denies any knowledge of it. it sounded to me may they may have been rogue killers. who knows? >>