i will be continuing to add on the weakness >> let me see your smile you made jim palmer's day. >> there is a right price for everything >> give me quick >> qualcomm. >> seas, seas. >> thank you so much for watching "power lunch" starts now. >> i'm melissa lee rally on stocks rallying on strong earnings, wall street tries to put last week's sell-off in the rear view mirror plus, o canada, our neighbors to the north of us, set to legalize recreational marijuana tomorrow, which u.s. companies stand to gain the most? stick around to find out retail the amazon effect in the state of health care in america. a rare exclusive with the ceo walgreens ahead. "power lunch" begins right now [ music playing welcome to "power lunch.

i'm courtney reagan. round session highs, the dow is on track for the best gains in a month. a slew of strong earnings from j & j goldman driving today's action today's rally is helping the small caps the russell 2,000 out of territories. biotech on track for the best day since july a judge approved elon musk's settlement wal-mart is higher more on that ahead dominos pizza taking a hit on disappointing sales and twilio shrinking, they're buying technology firm send grid for $2 billion. here's what else is happening at this hour. reports that uber may go public next year. that is double uber's valuation

during a fundraiser round two months ago meantime the "wall street journal" reporting uber rival lyft hired drivers for the 2019 ipo. maybe they will see who gets there first. rates, they are rising there is a labor shortage. home builders are feeling slightly more optimistic thanks to falling lumber prices the latest data could add more pressure to raise wages in this very tight labor market. court. >> a big rally on wall street. last week's fierce wiped out by earnings today good afternoon, bob. >> hello, courtney for the moment, the markets are choosing to emphasize the positive rather than the negative but the negatives haven't gone away let me show you three things moving the markets in what matters today. number one, a terrific record jobs opening out there the market was up around 10:00

eastern time, vix back to 18 it was approaching 28 last week. that's a big factor. a little less earnings out there. finally, strong earnings, boy, did we have a terrific roster of earnings, take a look. goldman beating expectations, morgan stanley, johnson & johnson raised their full guidance a moment. the numbers were good. this time they're buying on those good numbers take a look at what's happening here we have a great starting only 8% of the s&p 88% are beating on earnings, normally 65% beef. look at that earnings growth, 25%. this will be the second or third depends on how you look at it. revenue growth 8.1%. i think that may be the key to moving the markets forward here. not that there are no worries. merrill lynch have the reports

out. i love watching this it's a good barometer of what the managers are worried about the fed and tightening is moving up now they're getting more concerned about. that should we be more concerned about the fed and tight inning what's going on? a lot of people are talking about what will offset that fear of higher interest rates out there. remember we had february we had tax cuts. everyone said the economy is getting better eventually after the initial move up for rates, market cut down on the tax cuts now the question is, could revenue growth offset those fears of higher interest rates it's been great. we have been 7 or 8% and will get it in the fourth quarter as well and will probably get it in 2019 if you have costs going up, higher interest rates, as they go up 2%, 3%, if your revenue growth is up 7 or 8%, you will not have a compression if your

margins. if you are 1% and your costs are up 2 or 3%, now you are in deep trouble the bulls are reporting that strong revenue, look at signs we might be able to handle the higher costs that are out there. for today, guys, melissa, the emphasis is all on the positive, thanks to you. the head of the world's biggest money manager weighing in on these moves. leslie >> hey, melissa, this, of course, is larry fink, the chairman and ceo, now mansion a whopping $6.4 trillion in assets so they're able to see how investors are moving their money and why as showcased by the firm's third quarter earnings this morning contractor on "squawk box," they talked about de-risking in the quarter specifically from the index funds, which saw $30 billion of outflows from institutions >> we saw huge movements from supplies, from a lot of churn. it was just i think the marks are showing that, but investors

are confused i was disappointed in our net flows, but very explainable by some large de-risking. >> specifically, he saw investors go from equities to fixed income or cash he noted several large hedge funds shutting down, while he didn't mention specifics in repeat weeks we talked about the high fuel and several others that have been shutting down and even before last week's sell-off in market volatilities, he says, investors have become more nervous, companies are experiencing margin pressures because of modest inflationary pressures. >> there is a huge commentary that we're at peak earnings, that earnings can only get worse. which we can all debate that we believe we have a couple more good quarters in earnings. >> regardless of whether we're at peak earnings fichg says the markets are cheaper -- fink says the markets

are cheaper than in january. >> you would think that the stock would do better in an environment like this, but it's really a story for black rock, specifically about the race to the bottom >> with black rock, in particular, their m-o has been it doesn't matter if etfs go in a commission-free environment. one could make the argument it could be better for black rock >> if they get the flows >> in the quarter, it was index funds in particular that struggled. that's not something you are used to seeing with black rock earnings >> thanks. black rock's ceo is fairly bullish on the mark. they are sounding the alarm there is more pain to come for investors. >> let's go back to the real narrative we had all year, which is this is a rolling bear market we're into the last phase. okay u.s. stocks, u.s. growth stocks

in particular. small cap stocks are finally getting it i think another 10% in that space, that may be 15 in some of the names could be it. >> that could take us down to 2600 if it gets really nasty >> another 10, 15% is there more pain to come let's bring in larry blazer, co-founder adviser and chief strategist for b. reilly fbr larry, we just heard from leslie with what larry fink says, what numbers are you risking, moving out of equities and fixed income in cash. morgan stanley, are they right or do you think today is the day we should be paying attention to and the bulls have it right? >> a little anxiety is a good thing when it's well played. i'll admit over the last few weeks i was getting concerned. we have a laundry list of markets. you have china trade issues, rising rates, you have

concentrated expensive tech valuations, a real concern composition of the market. all of these issues hitting the market at a time where optimistic was running as a peak then as i thought about it, i came to my senses. i realize, hey, we may not be in a bear market. maybe we're in a mid-life crisis market in a mid-life crisis, people do irrational thing they do it at inopportune times. they usually regret them later on >> that goes into the nasdaq 100, into the s&p, that handful of names, which ignoring all the good things going on in the economy, when everybody ran for the exits at the same moment that's precisely what we don't want to do here. i'll tell you, when i walk my kids to school in the morning, my kids say, dad, you seem down. why the concern? >> i'm worried about the market. maybe we'll add a little gold here my daughter says if international markets are so

cheap. if emerging markets. >> all your kids, geeze, you can take them to work and mind your.forbe you >> that's good advice. you no what, they were right on the money here it's been an opportune time to revamp the portfolios. maybe he's right the tech markets are at risk. some of the tech names are becoming value names here. i think we want to take a step back look at the economy around us. you can't find a person to mix a washing machine right now. >> all right where do you stand mid-life crisis or end of the cycle kind of feeling here >> right let's just frame that up as a market question, not a personal question >> okay. >> i think right now we're at a point in time, where we should get used to volatility 2017 set a record for the lack of vol estimate. i think 2018, vol estimate probably normalizes. we had a little down draft in february first week in february, we were down >> that shocked us we hadn't seen it a while. i think the same thing is

happening right now. i think one of the things to key on here, though, is all of the things that are being professed to be the reasons we sold off starting about a week ago have come back in so whether it's the yield that went from 3 to 3 and a quarter that's at 3-16 >> that stabilized the dollar has a 94 table right now. wti had a 75 hand him. 76 hand him a 71 handle right now the vix has pulled in ten handles right now. so i think a lot of things we are hyperventilating about last week are calming down this week. right in the head of earnings week we will hear from companies. they will report right when their stocks and indices are sitting at the port level. i think that's a better place to be i think right now the mark is in a much better place than a week ago. two star earnings. >> gentleman, thank you both for

joining us larry glazeer and art hogan from b. rhymely the dow retired by almost 400 points. >> we will get larry's kids on next time. to the bond market, rick santelli is tracking all the action at the cme. hey, rick. >> hi. if you look at the month, it tells you everything you need to know basically, we've come off our high close of the year 323 we've gone sideways. this could be the fourth day in a row, we settle in a closing rate you pick 315, 316 if you look at a two-day dollar index, we have been spending a lot of time thinking how traders think 95 is technically significant. look at the way it dropped most likely cell stocks. it didn't come back the dollar index is where market closes of course, we pay attention to those inter-day moves. can you see how it's hovering right around that 95 level finally, you know the dead ends for brexit is coming up. europe has a lot of issues,

preparing election merkel in germany seem to be weakening, economy and politically. look at this chart starting on august 1st of the euro versus the pouvenltd brbound. br pound /* -- pound. back to the game >> thanks, rick. strong earnings soothing the market today united health and johnson & johnson reporting results. 27 of the 30 dow stocks are higher at this point and speaking of going higher, there are stocks that have been soaring. have they gotten too high? can it spark another leg higher? more marijuana funds and a look at industry coming up on "power lunch. the meeting of the executive finance committee is now in session. and... adjourned. business loans for eligible card members up to fifty thousand dollars, decided in as little as 60 seconds.

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this type of plan lets you say "yes" to any doctor or hospital that accepts medicare patients. do you accept medicare patients? i sure do! so call unitedhealthcare today and ask for your free decision guide. oh, and happy birthday... or retirement... in advance. welcome back to "power bun u lunch. i'm courtney reagan. lower today marijuana stocks have been on fire recently, cannabis growth of more than 400% in a year tilray is up 50% both companies are based in canada, which is legalizing recreational marijuana today is canada the land of opportunity for u.s. companies to spark growth in the marijuana

market >> reporter: hi there, it's a good question. while some american companies are tapping into the opportunity, other domestic brands they the u.s. federal laws are a buzz kill because they can't import or export the product. in order to do business in canada, u.s. companies have to form partnerships across the border the big winner could be constellation brands, and also molson coors has a venture with an abopatapathecary group and also other companies lowell brands, its ce is telling us he is talking to a number of canadian companies on a u.s. distribution network many are worried about losing our. terror te-- terra tech has take

out an ad in the "wall street journal" reminding president trump to go legal. >> thank you very much, aditi. >> joining us now is director. >> i think when people think of the pure play cannabis stock i want to talk u touch on those first -- owe touch on those first? how do we grasp a canopy growth in >> certainly the valuation paradigm is a little challenging. it is common to see projections in a staples category that looks anything like the cannabis industry what you are taking is a $7 billion market and over time converting that to legal sales that's not going to happen in a

straight line. but it does suggest you will see very strong, double and triple digit compound annual growth rates over the next five years so from a valuation standpoint, we think that has to be factored into a methodology, we have to use sales multiple and apply a factor to account for that sales growth >> so when you say a $7 billion mark elicit currently, that means use of marijuana as opposed to it being used as an ingredient in say a beauty cream or soda, but that $7 billion market may be a status number now. we're not accounting for in that dlur $7 billion market. >> really, that $7 billion elicited on the market market really only addresses one of four, if not five verticals. you know that's what we constitute adult supplement for alcohol.

to your point there is another vertical which would be beauty and newt try suit cals -- nutriceuticales and animal health as well >> so if it's going to be used as a replacement, let's say for aspirin or ibuprofen, from a pharmaceutical stand point there is a push-pull to that they may benefit with new products but also may lose because it's replacing other productsle currently on the market so is the best way at the end of the day to be invested into the suppliers of the actual ingredients? >> yeah. and in canada right now, all the suppliers are vertically integrated that's a function of cannabis growth or tilray, they're cultivating the cannabis, processing it. either selling it as a whole flower or pre-rolled joint

over time, they will be sab tracting the distill lat and layering on intellectual property served by clinical trials to make a true pharmaceutical use case for those products >> vivienne, you cover tilray and you have an outperform on all three, if i'm an investor and want to know which one will give me the best bang for my buck, lou do i go into will tern fundamentals of this relatively new market in. >> certainly, constellation strand the best in class beer company selling core are na and modello across the states. in terms of pure play stocks canopy growth is our top pick. >> vivienne, let's say cannabis use increases recreationally, what happens to beer, what happens to spirits what happens to snack foods?

is there an ancillary effect >> what we have been arguing about two years now, we think alcohol and cannabis are substitutes. we think the beer is most exposed. while cannabis is growing if popularity with every age cohort and consumer demographic, it tends to show outside popularity with younger men and so that is your quote beer drinker. >> vivienne, great to see you. thank you for your time. shares of microsoft among those helping to boost the dow today the stock up more than 100,000 percent making its co-founders, bill gates and tall billionaires up next the life and legacy of paul allen who passed away at the age of 65.

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battle hodgekins disease and he channelled his fortune and energy into technology media companies, space exploration, museums, building up seem's lake union district and, of course, buying the seattle seahawks and the portland australia blazers you know he gave more than $2 billion to charity over his lifetime and is likely to give much more than that since he was a sign tore the gates-buffet giving pledge promising to give most of his $20 billion fortune. he had no children and as a result as a result can ing /* /- owe vulcan inc. may pass to his sister his trophies, his yacht octopus around fleet of private jets and 15-plus mansions scattered from mercer island in seattle and london and france might be sold. all those proceeds all going to

charity. leaving the world a much better place because of him >> the charitable world will be richer if they sell the sports prematures he combot the blazers in '88 for $70 million. >> that i have a value now of 1.3 become the seahawks for $194 million in 1996. they're said to be worth about $2.5 billion so if they go through with those sales, boy, his favorite causes are going to get quite a winfall perhaps. >> reporter: they certainly will it's not unheard of. you think about who could buy those. you think about maybe bomber who is worth $43 billion he could be a bidder for the seahawks yes, a lot of those causes from the environment, education to the arts he's likely, he was a very good financial planner. he's likely ar set up income streams and proceeds to go to those causes

so yet a lot of good will come out of that. it turns out he was a good investor certainly with his sports teams >> among everything else, not surprising there robert, thank you. >> thank you, guys. up next, a closer look at the new kid on the dow walgreens boots joins the index at the end of june up next, we talk about retail the consumer and "power lunch" we'll be right back.

welcome back to "power lunch. a check on the markets right now the dow is up 431 points good for a gain of 1.7% the s&p 500 is up 48 points. all this following a lot of upbeat earnings here as for the individual movers we're watching for you, united health, visa and microsoft are fueling the gains. let's go to sue herrera for the latest news headlines. >> thank you, melissa. evacuations are under way in central texas as flood waters radio iz to dangerous levels 8-to-12 inches of rain falling

in just the past 24 hours. all of the dam's flood gates are opened officials warning anyone living within a quarter mile of the lana river to get out immediately. new research says bariatric surgery may reduce the threat of heart problems in patients with type ii diabetes and are severely obese those who had the surgery were 40% less likely to have a heart attack or a stroke within five years than those who did not. russian prime minister medvedev meeting in moscow to discuss trade and oengss medvedev praising egypt in the middle east and affect. and down under, prince harry and wife meghan markle visiting the sydney opera house the first appearance since her pregnancy news after word they greeted thousands of fans who waitt outside to see them. that's the news update this

hour i'll send it back to you, guys >> thank you have been much, sue, herbertappreciate it. walmart holds an annual investor day they will innovate and move faster than it has the one or two years to adapt to the consumer guidance of indian e-commerce marketplace flip cards as expected it will be a drag on earnings for the current fiscal year and next year. u.s. online sales expected to grow next year >> that is a deceleration from this year's forecast for 40% growth on tariffs, chief financial officer says the goal is always to be the low-priced leader, that it never wants to raise prices he says it's possible prices may have to be raised in some circumstances, but the plan is to manage any higher cost in a way that makes sense for both customers and investors. warmmart finds ways to save main

by changing to led light bulbs in stores and $20 million a year for a new floor wax. it's sturdier, they save money on the fume for the buffers, too. >> floor wax wow. the little things really add up. any commentary on the impacts, potentially tariffs? >> they did talk about that. they're still looking at it. they remind us two-thirds they sold in the u.s. they bought from the u.s., remember they have such a good grocery business in some circumstance, they may have to priraise prices they didn't tell us how much or when. let's go to timer mathieson at the new york stock exchange today along with the ceo of walgreens boots alines tyler. >> reporter: thank you very much, scott. i'm here with steph no passena the ceo of walgreens boots alliance we're good to have you here. you're going to start in our

net-net festivities which take place in 25 minutes. you will be on stage talking with your cfo. we will talk about the relationship in the corner office then. for now, the business. the sales were up i think something like 11% and my basic question is, how much of that growth was organic to the businesses that you have and how much of it was acquired and came along with the acquisition of the rite aid stores >> i thought most have gotten, of course we had a component acquisition most of it was organic. in reality, mostly due to the special visa, so we are growing quite nicely in that category you though >> in a typical warm greens store i walk in, it's x thousand feet.

how much comes out of the pharmacy and out of the front of the store where there is beauty products and skin care and potato chips >> i would say roughly about 70% comes from the pharmacy and the rest from the front of the stores, but we also want to say in the front of the stores, we have a certain products which are -- >> certainly, yes. i mean, anal guegesics and so f. >> these products are quite important. >> so is pharmacy growing faster than the store give me some numbers >> in our stores, yes, even because we have gone to the front of the store so we have changed our marketing policy we have skewed our attention

towards health and beauty products and you know in our stores, we are undergoing a transformation which will change completely in the face and so in a few years. and so, we are more and more ofocusing on health care >> you have done acquisitions. your company was borne of acquisitions your competitor here in the united states has done a big acquisition of aetna they are rebranding and refashioning themselves. do you feel in this changing environment of retail the need to do a transformative acquisition? you had talks with amerisource bergen they didn't eventuate. do you feel a transformation to compete? >> i don't feel the need of this, indeed i see the opportunity of doing this as a way of going there is not the only way of

going. you can grow through your inventions, to where you don't have to invest a lot of capital and can you distract a lot of value. but, of course, we are not against a deal, a transformation or a deal, but these must come at the right price because it's not easy to increase earnings per share today when it is so cheap. but the real value creation is not on earnings per share. >> it's when debt is so cheap but it's getting more expensive. >> and things will change of time you know, there are sides where it is cheap and the price of old potential targets are going up allally and the time where you

can afford to buy a lot of nice things >> and the other thing that is not as cheap as it used to be is labor. how much have rising labor costs affected you do you feel they are are a head wind towards profitability and second are you able to find the workers you need to people the stores >> let's say that it is true that the label is growing, but remember that for a pharmacy, on the whole, if people have a moment and it's a good deal, because they will spend more money. so i don't see >> what you pay out, you get a little back? >> exactly so i don't see this as a problem. i see something really good. >> when we were talking right before we came on camera, i said to you, how's britain? and you laughed. why? >> because i am still laughing because it's very difficult to

understand what is happening you know, i am a european and i am quite surprised to see this in europe. i was very surprised at the time of brexit. i'm still surprised they have not sold the - >> hurting your business hurting your business? >> in business i believe as in uk we are mainly pharmacy. it will be very relatively different. we will suffer, but the less than the other businesses, steph no, thank you -- they're applauding you stefano >> thank you very much >> stephano pesoina, the ceo of walgreens alliance list stay we are tame.

cnbc obtained and audio recording. >> addressing employees at the company's headquarters in illinois after filing for bankruptcy, which happened yesterday. lampert rarely speaks publicly >> i believe back then that master change was coming to retail w. mastish change comes massive opportunity. if the world of retail was going to be stable, it would have been much more difficult to create something different. there would be no amazon, just a larger wal-mart there and would not have been the opportunity for sear's to break from the pack once again and change the face of retailing as it always had in the past. as we all know, we haven't capitalized on this opportunity the way i would have liked instead of growth and investment, we have faced restructuring. >> lampert also said we have to quote take what we have learned and fight another day.

request itself the bankruptcy filing is for reorganization there are skeptics that believe that is not going to be possible and liquidation could be a possibility from all of this >> in his view, it sound like there is hope. >> he is fightingb tryi trying l on to that hope. >> this is a sad reality of what many people saw as inevitable. >> keen off the interview with icahn yesterday, he said he was looking into k-mart bonds, which would be head scratching if you believe the company was kaput. if you believe there is potentially a hope >> it may be worth taking a shot at you never know he will take a look, if nothing else a big market today, tech leading the way the dow hitting sex highs about right now. leading the s&p 3500 >> that one right there. adobe and advanced micro alexion and regeneron and on the insurer front from united health

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your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life. welcome back to "power lunch" check out msci, for the latest on this jamal khashoggi investigation, let's go to hadley gamble in riyadh. >> reporter: what we seen is the u.s. secretary of state mike pompeo headed out to his dinner with the crown prince of saudi arabia now earlier today, he met briefly with king salman as well as the foreign minister. we understand those

conversations set to script, of course, this is an ongoing operation, they have prepared a report this, of course, as we heard from turkish officials in the last 24 hours saying they have found damaging material when they had had that inspection of the saudi consulate in istanbul. we understand, of course the consulate has left as well and headed ba you can to saudi arabia lots of conversations on the ground of what will exactly be in that report but also impacting what's been happening on the stock market the saudis-to-the dow. it has been a roller coaster ride they were down earlier before some state-related funds intervened and the stock exchange really closing up about a percent. but, of course, this happened yesterday as well. lot of conversations around this people are really wondering, talking to me about their fears of what will happen next in terms of that international interest in saudi arabia, whether or not that's really going to go away as a result of what we see happening over the last several days in particular.

whether or not this will be a long-term impact on saudi markets, certainly in the terms people have in coming to saudi arabia and doing business here, certainly what we seen in the desert as well many more ceos developing out in the last few hours as well as the ceo as well. so a lot of conversations happening on the side lines of mr. pompeo's visit in tefrls of what will happen next. >> hadi gamble in riyadh saudi arabia a hot topic at the economic club of new york today. our andrew ross sorkin sitting down with mr. dillard saying they should not be surprised what they see in the kingdom based on the recent behavior of the saudis >> it's not exactly a surprise it's not a surprise you take 300 people and you basically somewhat torture them and extort them to give you money so you can get out of the ritz carlton jail so why would anybody be surprised? >> here to go deeper on the

story is the u.s. manager of the financial times and jamie ruben the former assistant secretary of state for public affairs. it's good to have you both with us jillian, these ceos were really left no choice, right? >> they certainly have been left with a choice. what is baffling about this whole story the crown prince is often known until recently was being lauded for his you know sophistication and determination to perform modernization, notwithstanding the attention of all those other saudi royals in the ritz carlton last year my colleague points out, what's fascinating is for all the sophistication with which he manipulated the performers in the west the crown prince failed to understand the impact of an action so brutal and brazen. and i think that's really what many fear they are trying to get their heads around right now because they have invested in a lot of reputation and energy into cultivating the saudis,

they've seen $1 billion of fees for wall street banks and since 2010, there have been a lot of business offers, but now they're dealing frankly with the consequence of having mbs and having the rest of the world >> jamie, we just saw andrew ross sorkin there speaking with andrew diller. andrew wrote a pretty thoughtful story today in the new york time's about how difficult these decisions can be because of the ties that these ceos and companies have to the king dom as jill wasn't was just talking about. j.p. morgan has been working with them since the '30s just because this is the right thing to do doesn't mean these are easy decisions for the long term >> that's absolutely right look, what we are seeing is a course correction for decades, the american companies have been working with saudi arabia and understanding they're dealing with a government who's way of doing business completely

differs from the occupation, going back to the days when people used to comment about how thieves get their hands cut off if they steal in the saudi market what's changing, though, is that after 9/11, american politics and business began to affect each other, and, for example, most recently in congress the saudi government lost an effort to stop a piece of legislation that would allow the families of victims to sue them and they fought desperately and the obama administration fought to prevent that suit and congress overruled them. congress is going to overrule the administration again it's probably correct that donald trump will continue with business relatively as usual he'll make some adjustments, but he will lose control of the saudi file now congressman senators like menendez and rubio and others will now be in a position to win majority votes by making adjustments in arms sales by

affecting the u.s./saudi relationship and that's a backlash and that's a backlash for what gillian said because people really thought, some did, anyway, that this was moving in a positive direction when the fundamentals haven't changed that much. >> right gillian, do you think it's lasting or do the very business ties that we've just mentioned, sooner or later these ceos, these corporations are just going to go back to business as usual with the kingdom >> well, that's a great question because, i mean, talking to a number of the companies that are so ostentatiously pulling out. we have on the front page pictures of larry fink, jamie dimon, steve schwartzman the reality is although the ceos are pulling out, the more junior officials are still going or planning to go at the moment that could change. but i've spoken to a number of them and they say as long as steve mnuchin, the treasury secretary is planning to go to riyadh, he hasn't pulled out

yet, it's pretty hard for american businesses to completely walk away from this conference even if they are making a symbolic move of taking their ceo out. something important. if wall street companies or other american businesses completely pull out of this riyadh conference and try to reset their relationship with saudi, what are they going to do about china? because saudi is not the only country in the world who has a bad track record of dealing with journalists and dissenters a government could be jailing a journalist has big ramifications with how american companies are dealing with china right now >> appreciate you both being with us. thank you very much. we'll talk to you again soon also watching the markets, of course, dow is up nearly 500 points it is on track for its best day since april. courtney >> well, coming up, we're about to take you somewhere tv cameras

don't often get to go. brian sullivan is on an oil drilling platform in the gulf of mexico 130 miles off the coast of lisnaouia we'll head to him coming up next and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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an off shore oil drilling platform brian sullivan is there. we found him he's 130 miles off shore on shells olympus oil rig hi, brian. >> reporter: yeah, way out in the gulf of mexico, but not on any kind of a vacation this is unbelievable the ceo of shell telling us this is a big boy's game. everything is big and it's expensive. this is called the olympus platform its sister is over there that's the mars platform they're over $1 billion. we are over 200 feet of the water right here the well goes down 3,000 feet, more than half a mile down into the gulf of mexico and the drilling tower up another couple hundred feet heck, just to get on this platform we came in on the biggest commercial helicopter in the united states. look at that landing, by the way, stuck the landing everything about the off shore world is big and the investment

dollars are starting to come back in a big way, guys. for years after oil collapsed nobody wanted anything to do with the deep water because everything you do out here, i mean, just getting the garbage off is expensive so investment dollars, they didn't collapse but they slowed down dramatically. now that the price of oil, guys, has certainly come back up, shell in a big way, 3 billion over five years, investing a lot. i know it's hard to see. there's a couple of rigs this is a production platform. this is 100,000 barrels a day. put that into context. 2 millions of gallons of gasoline from this platform every day equivalent that one way in the distance, that's actually where they're drilling a new well. so this is producing and drilling that's drilling. a lot of investment, guys. more than 50 different companies. over 15 publicly traded companies are represented on this platform alone. you name it and they're here pretty amazing day way out here

in the middle of the gulf of x mexico. >> brian, i would think the investment ability for companies might be capped because there can only be so many platforms out there or are there >> reporter: no, there are that's a very good question. here's how it works. you get a lease. the leases come up for bid twice a year if you're the high bidder. for years people didn't bid at all or there weren't bidders out there. we had exxon come back to market in august. bhp billiton they have taken a couple of years. you have ten years to develop it three miles wide by three miles long if you don't develop it it goes back to the federal government remember, 12% of all of the oil that goes off this platform is given to the federal government in exchange for the leases that's how the taxpayer actually makes money off the oil platform >> wow fascinating stuff, brian thank you. brian sullivan off the coast of

louisiana. a big rally right now in the stock market the dow is up more than 430 points is last week's selloff now a distant memory can strong earnings continue we'll hear from netflix after the bell the second hour of "power" is coming up next

i am an independent financial advisor. it's our name on the door. we are accountable to our clients everyday. we have the freedom to build a plan. a porfolio based specifically on their needs. we're fiduciaries, stewards of our clients' money. entrusted to do what's right. it's a mission. a guiding principle our firm lives by. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com i'm courtney ragan here's what's on the "power lunch" menu. the bulls are roaring as earnings beat. is it proof that higher revenues

will offset the fear of higher rates. netflix on tap will they stream up profits or is a second quarter miss more than a blip? blackrock's larry fink says the desirability of housing may be about to drop. is he right? we'll ask the ceo of redfin. and welcome to "power lunch. i'm melissa lee. stocks are in rally mode goldman sachs, united health and johnson & johnson all helping to boost sentiment. slightly off the session highs the dow is at 400 points 444 is a gain up more than 3/4 of a percent s&p 500 looking at the best day since march 26th that's up by almost 50 points. the nasdaq best day since march 26th up 180 points. up 2.4%. we are halfway through what has been a very volatile month so far let's check out where we stand. all three major indices are down

by 3% or more. still the worst month for the dow and the s&p 500 since 2016 for the month. look at that dow, down 3% here utilities the only sector higher, 27 of 30 dow stocks are lower. for more on the markets let's bring in bob pisani at the nyse and rick santelli at the cme bob, start off with you. >> hi, melissa just off the highs, three things moving the market. let's call them all about equal. number one, we got the higher, better jolts report here that doesn't move the market but it did here. record job openings, lower volatility and strong earnings let me show you the s&p early on the morning, 10:00 we have the jobs report, the jolts report. it's not normally a market mover. they are open to the up side that's important number two is the lower volatility take a look at the vix the vix last week was at 28. now today it's below 18. look at the futures krtsd hecon

here that's a sign that they're all calming down the cash contract not nearly as high as it was a few days ago. finally there's the earnings, three of them in the dow dow 30, united health, goldman sachs, johnson & johnson we had morgan stanley, excellent be as well tech's holding on with microsoft the big leader interestingly, consumer staples like coca-cola are the glargd. just want to weigh in on the whole debate on revenues i think it's very important to note that revenue growth is going to be very strong for the next few quarters. we've been getting 8%. a lot of concerns about higher costs. if your costs for anything, for paying expenses overall go up, revenues go up at the same time, that's going to impact the margin that's going to help your margin think of it this way if your costs go up 2% and your revenues are going up 8% a year, that's not margin compression, that's going to help

it's when the opposite occurs that you have a problem. we don't have that problem right now. guys, back to you. >> good stuff, bob thank you very much. bob pisani at the stock exchange rick santelli at the cme rick >> hey, judge. we enter the month of october with a 3.06 yield. this could be the fourth day that ten years close at either 3.15 or 3.16 it's not a dead trade, it's an active trade even if the strength in stocks doesn't seem to have an effect, then again neither did the weakness a week and a half ago if you look at the ten year from april you could really see that every technician is watching to see if we can hold a retracement below 3.11 just that the market doesn't seem to want to go down there. if you think vix, you always think of stocks. there is a vix for treasuries. the first titan you recall was december 2015. so let's look at the volatility in treasuries from that point. and you can see, it is just slowly decreasing. it's now under 3 1/4, but the

important thing is back in the day when there was go go rates, there was much more volatility finally the dollar index, it's like it's fighting for its technic technical life what's so important about that but it really fell apart when it traded under there but it has rebounded. let's see where it goes. judge, back to you >> ricky, good stuff rick santelli in chicago for us. while we've seen rising bond yields of late, our next guest sees the 10-year treasury yield dropping below 3% and thinks the fed raises rate in december. the risk of the recession could grow here to explain is sri kumar welcome back. >> thank you, good to see you, scott. >> do you think the fed is going to make a mistake? >> i think the fed typically makes a mistake every time a recession is created, it's by the fed, scott not only that, after 2008 they excessively eased policy and

that is why we go through this phase of increasing interest rates. if the fed was to follow a more normal policy, more stable policy, we would be in much better shape than what is happening right now. >> what happens if they -- you expect them to hike in december. everybody expects that. >> i do. >> then what, all bets are off >> well, if that happens, then i think we are going to get a two to ten-year yield spread is going to get close to inversion and if that is the case, that is the sure-fired indicator of a recession approximately a year later. it's important to note, scott, that even in the first half of 2008 you had a lot of people come on your channel who said there was no fear of a recision when we were already in a recession and we were just going to fall off the cliff. equities are a poor indicator of economic performance compared with bonds which have had a

stronger track record. >> is the stock correction over? >> i don't think the stock correction is over if you believe the bond market and then again i heard what rick said i basically think that the ten year is going to go below 3% and if it does and as part of the inversion process you have the two-year increase and the ten year come down, then i think you're going to have a negative impact on equities soon thereafter. >> sri, a lot of bulls out there will say, sri, how can this possibly happen with the economy so strong where it is. the corporate bonds so strong, revenue where it is. we are going to be in what is expected to be a very, very strong earnings period so what does that scenario look like on an economic basis? what does that look like through the eyes of corporate america? >> melissa, i think that is happening. the strong corporate performance, the various things that turned out to be very important on the fact of the fact that we have so many years

on easy monetary policy and the big buildup of debt since 2008 clearly they have the tendency, they have the impact of making things look a lot better for quite some time and that is exactly what we are experiencing however, under the powell chairmanship the federal reserve has decided to tighten further and further to normalize rates it's going to be more expensive to get credit. companies can't get credit as easily consumers will have to pay more. housing is going to show signs of weakness as the high prices are not supportable by income levels all of those in turn cause the reversal, and i think in terms even though rick talked about the volatility and the ten year having come down, typically when the yield comes down, it comes down very sharply. just look at june of 2008 and

compare that in terms of the ten year treasury yield. the drop was more than 100 basis points within six months that's the type of volatility you have in the crisis. >> so the stock market selloff that you say is not over yet, sri, is that in anticipation of this what is that in response to then >> the stock market rise recently >> the selloff recently. >> oh, the selloff >> yeah, the one you say is not over yet >> the selloff was clearly in anticipation that the economy could weaken and then you have a temporary reprieve because of the numbers that came through as well as in terms of good corporate earnings numbers that you talked about earlier in the program. those are temporary palliatives. the long-term impact is not off by this long-term development. >> sri, thank you. >> thank you very much, scott. well, the market being

helped today by strong bank earnings morgan stanley and goldman sachs reporting better than expected results. wilfred frost has a big bank scorecard. >> hey, sarah. reporting nicely higher. >> morgan stanley writes 15% year over year to 1.5 billion. goldman sachs writes 10% to 2 billion. citi, jpmorgan all saw theirs fall to 10% year over year morgan stanley was driven by ipos morgan stanley tradings also stood out rising 7% year over year that's due to its big tilt towards equity performance while goldman sacks trading was in line it was flat year over year

jpmorgan and bank of america had saw declines in trading. citi had seen gains. now both also have strong cost control and morgan stanley's wealth management division showed impressive growth operating leverage of its margin of 21.7% the single biggest reason why they're performing so well is that both goldman sachs and morgan stanley have underperformed the banking sector coming into earnings year to date. guys. >> thank you, wilf, for that wrapup we want to remind everyone to not to forget to tune in for the interview with david solomon coming up, netflix out with earnings after the bell. one of our next guests says there are four key things he's worried about. he'll tell us what they are. plus, a dire warning on the housing market from the biggest

money manager. the trump administration just proposed something that one analyst said could propose analysts to pull tv ads. s&p sectors in the green "power lunch" is back. 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.

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netflix reporting earnings and down over 13%. the stock is up nearly 3% today in advance of those earnings reports. what can we expect and will they deliver? and if they do can it lead to tech leaning back. tuna, i'm going to start with you. what are your expectations for netflix today after the bell, specifically the revenue and subscriber numbers >> well, i think the -- after last quarter's miss, i think the investor expectations were significantly made it provides a tempered outlook for both domestic and international subscriber group so i do expect that they will exceed, actually, the tempered outlook for subscribers maintaining their trajectory for revenue growth thanks in part to price in power which we expect

will remain kind of the high single low double digit price increases across some of the major international markets. a lot of focus is going to be on the potential impact, you were just talking about it last segment, in terms of the rise in interest rates the company has been accessing the capital market, the debt markets quite often but we're kind of somewhat comforted by the fact that as the company has said, their after tax cost of debt still compares favorably to their cost of equity so all in all, you know, we are expecting another bout of stock volatility following these earnings as investors have somewhat reset expectations but as we look over the next, you know, five years or so i think the longer term secular trends remain intact. that's why we're kind of sticking to our recommendation and kind of using this tech correction as an attractive entry point. again, i want to make the point

that there is a momentum element here and that momentum characteristic of the stock we think remains intact. >> paul, what about you? what are you taking in advance of this. the shares have a value contraction? is that going to continue or is that behind us, moved on going forward from here? what are your expectations and the action you'll take as a result as a tech investor? >> so what i would tell you is i think it's a good, reasonable time to buy the stock. i actually bought some very small starter position at about 3.25, which was the recent low and also the low that it touched at the beginning of august but i'm not as confident as the previous contributor said about what's going to happen in today's. i do believe in the cockroach theory, which is if you go into the bathroom or the kitchen in the middle of the night, you flip on the switch, you see a roach, that's not the only roach. they did miss very badly last

quarter so i do think it's a good long-term buy i wouldn't do anything ahead of the announcement i bought at 3.25 and i want to buy some more but i am not confident that they're going to necessarily beat the numbers in the next hour or two. >> did you say, paul, that it was a starter position have you not had any position in netflix prior to that 3.25 purchase >> that's right. i haven't had it in a number of years. it is telling that i bought a starter position at 3.25 to essentially build a position after we get through today's call. >> the company doesn't really have a history of missing twice in a row how much of tech, overall, paul, is hanging on this report? >> i think it's actually pretty important because what we've seen recently, not just with netflix, but with the major tech, particularly the leadership company's internet space, you have seen a valuation contraction and that could continue but the way i look at it is these tech stocks, because

they're so volatile, always over correct. when these stocks over correct, particularly if they meet my long-term investment themes, i'm a better buyer. >> you are a tech guy. you're a tech guru you think tech has fallen out of favor for longer than people are expecting? it's interesting it should be fully in the tech sector it may be. what i do see maybe not with these stocks >> it's contrarian >> the risks i know you're bullish.

>> the last point, i think netflix. it will be lumped together the question, courtney, in terms of the potential risk factors, it's always going to be a lot of focus on the cash burn we think it could burn potentially well over 1.2, $1.3 billion this quarter and then also the valuation of course which continues to give us pause, but i do -- i made the point that there's some momentum characteristics there. international, you know, growth trajectory is going to be very paramount because i do believe that since we just saw an inflection in terms of international revenues, now beginning to outpace domestic revenues, that's going to be critical in terms of setting the tone and potentially narrowing the margin between international business and the domestic

business almost 200 basis points of margin differential. narrowing that gap is crucial in our view in terms of how we perceive this going forward. >> got it. cost of content is not cheap that's for sure. thank you both coming up, stocks are back in rally mode after last week's big declines the dow best week since april. been up at 400 points. hanging out at 470 there you go, s&p is up by 1 3/4. nasdaq is the tpfoerupouerrm, 2.5% we'll see what happens with netflix. where do we go from here we'll take a look at the chart

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welcome back to "power lunch. i'm mike santoli this is trading nation let's get a check on the markets. the dow, s&p and nasdaq all firmly in rally mode you see the dow and nasdaq up. the major indices on track for the best one day gains since late march what are the levels to watch right now? let's bring in todd gordon, founder of trading analysis.com. todd, obviously we were set up for some kind of a strong bounce we've gotten one

what are the next tests for this market if you're looking at the s&p? >> sure, michael if we could look at the longer turn i want to look at the last two years of the s&p before we drill down into what's happening now this is actually two plus years of the s&p tracking the 200 day moving average i'm usually not one for moving averages i say why be average try to be above average. but what you'll see is we've got a lot of tests of this 200 day simple moving average going back to the summer of '16 there's one, two, three, four, five -- six, right now is the sixth test of the 200 day. we're trying to get below it it has defined the range a lot of these algos a lot of these systems traders they'll buy. you don't need the 200 day to hold there's several over shouts and then the buye erers come in and scoop it up. this is 2018 in the s&p 500. obviously as you can see we are net range bound. it's been a very choppy year

what i'm going to do is take that same concept of the 200 day moving average and kind of break it down into the up trend. what i'm going to do is extend this trend line up what will happen, these programs, these algos will sell as this up trend breaks. what you want to see is how much of this loss right here we will recapture. if you're going to come back, this is going to be now resistance so if you can't pull this level, which is just about 2820 in terms of breaking through, then you're in trouble. so technical traders will look for a recap. if you start to fail, that's a problem. we go back to range lows if we break, then we should be able to move up. it's a big if then if a happens, then do b. c happens, then do c. >> that's less than 1% up from where we're trading. who knows, maybe we'll get that test soon. todd, thank you very much. >> no problem. >> for more trading nation head to our website melissa, back over to you.

>> mike santoli. let's get to seema mody. >> ft is saying that saudi arabia has pulled a planned deal with virgin hyperloop one after richard branson said he would freeze ties with the saudi kingdom until more details were uncovered behind the disappearance of journalist jamal khashoggi. this would potentially be the first apparent sign of retaliation from the saudis to a western executive declining to attend the upcoming fii conference so certainly a development here as we learn more, but we have reached out to the saudis as well as to richard branson and we will get you more details as they come through. courtney >> important news alert there. coming up, the world's biggest money manager sounding the alarm on housing what he said and what impact it could have on the u.s. housing market if true, that's next. as we head to break, take a look at the dow winners united health, visa and microsoft. "power lunch" is back in two

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oh, and happy birthday... or retirement... in advance. hello, everyone. i'm sue herera here's your cnbc news update at this hour. authorities say wisconsin teenager jayme closs who has been missing is not a run away and they think she is in danger. baron county sheriff chris fitzgerald wouldn't divulge why they think that. >> if we think it's key to the case where we need the public's help, we will disseminate that information, but until then our number one goal is to bring jayme home and no amount of information will be given out unless we feel it's appropriate to help. about 20,000 utility customers remain without electricity in northern california after pacific gas and electric cut the power over the weekend. it is the first time the utility

preemptively cut power to prevent sparking wildfires. in pom peii, this marking shows when mount arteuvius erupted. >> you're up to date that's the news update at this hour back to you. >> interesting good time. tomorrow is october 17th thank you, sue. stocks in full rally mode with all three major indices on pace for their best day since march. right now the dow jones industrial is higher for 500 points the nasdaq composite really the outperformer, higher by 2.6% at this point, some big movers on the back of earnings today.

johnson & johnson helping and pharma and consumer units helping on a big beat. the company raising the four year outlook blackrock moving lower as sales growth fell and domino's in the red as u.s. sales disappointed domino's sales down. same as blackrock. the oil markets closing for today. let's go to jackie deangeles. >> crude prices cautious for a second day in a row. not spiking on concerns about u.s./saudi relations and told there's more information or more reason to worry. meantime, a big move higher today in stocks not influencing oil. remember, the equity markets have lately been a directional force in this trade. not right now. tomorrow the eia says the crude inventory build has been strong. u.s. production to rise. that could be a bearish factor to watch for 71.02. >> jackie, thank you well, housing stocks may be sitting near 52-week lows.

new data out this morning showing improvement for the month be of october. blackrock ceo larry fink sounding the alarm on housing on "squawk box" saying the biggest risk that no one wants to talk about is the tax laws and how they changed housing affordability. fink went on to say that a rise in interest rates will impact the desirability of housing. here now to weigh in on all of this is glen with redfin always great to see you. >> great to see you. >> you've been talking about the impact of the tax law on coastal cities for a while so fast forward to today, glen how deep was that impact was it deeper thanyou thought it was when can we expect to see some sort of stabilization in these markets? >> hard to say when we're going to see stabilization i don't think it's just the tax laws it's rising prices, it's slow wage growth and it's rising rates. that has been a perfect storm for the u.s.housing market what the tax laws are doing are really shaking up the snow globe

of where americans live. people are moving from california and other high tax states to places that provide some relief and the reason they're doing that is because they can't write it off anymore on their federal return. >> i guess the question then, another way of asking this is, when we see this migration, the cities to which they migrate, are we seeing prices there continue to rise or is there a stabilization there? >> the prices are definitely stronger than some places they're rising if you look at boise, idaho, nashville, tennessee, places in texas, pittsburgh, detroit, those are the destinations for people who are looking for the next turn in the economy and who are looking for some tax relief. in many cases houses are affordable, traffic is less. folks really are just looking for a place where they can afford to live and what's crazy about the u.s. economy right now is it's going so great and yet people feel so poor. folks who are trying to buy a home are really frustrated they can afford gas, groceries, everything else, just not a place to live.

>> glenn, in april you had said that rising -- higher mortgage rates were not a big deal but that rising prices were. i know that was april and things have changed and rates have moved up >> yeah, you've got me so buyers are definitely shaking it up then they aren't now. i think part of that is because in coastal cities we've seen such a rapid increase in prices and when you couple that with rising rates and also a glut in places like seattle in rental inventory, we've seen people who are looking at buying a house suddenly realize they can pay less in rent and so lots of folks are pulling back we aren't going to know how it's really going to affect the housing market long term until we see next year we're in the kind of funky part of the real estate market. november, december, you can't count on anything, but if there's a strong economy, a roaring stock market, low unemployment, i think people are still going to pay up, just going to be a little harder with tax reform and interest rates being higher, too. >> it sounds good to want to

migrate to a place with lower taxes, but let's not forget that because of the changes in the tax law and the inability to takeadvantage of this salt deduction, state and local income tax, it's hard to sell your house it's not just a buying issue, it's a seller's problem as well. somebody has to buy your house and in these areas where, you know, they're most affected by all of this, i imagine that would slow down some of the migration. >> well, if you're selling a house in l.a. to buy a house in boise, idaho, you're going to come out ahead there's been a shortage that has only recently reversed in the california markets and elsewhere. i do think people come into these states like idaho with funny money where they feel rich looking at 2 and $300,000 houses i think the trend long term is for more americans to move inward those places that new york media types would call fly over are now destinations >> glenn, thank you. >> thank you.

>> glenn kelman of red fin. big rally on the street. the dao soaring 500 points coming up, the trump administration wants pharmaceutical companies to include drug prices in television ads drug companies say it would cause more confusion than transparency the details and the potential impact on the industry is next and with tech leading today's gains, here's a look at some of the biggest movers adobe, amd, paypal, microsoft, intel and salesforce lots more "power lunch" and the market rally coming up

a very big day for the dow jones industrial average dow is up at 500 points. was up at that level falling back albeit slightly big day for the nasdaq as well boy, netflix better hold up its end of the bargain well, the trump administration wants drug companies to include prices in their television ads meg tirrell is live at the nasdaq with the details. meg, this is an interesting one. >> it's super interesting. we've seen these drugs, tv

commercials where people look happy and you hear the long list of the side effects. now the trump administration wants drug companies to have to include the list price of their medicines in those tv commercials. the list price is the price before any discounts, before any insurance kicks in pharmaceutical industry is really against this. actually, hours before the secretary proposed this rule last night pharma came out with its own proposal saying it wants to direct consumers to the websites where they can find price information but not with the list price of the ad themselves they say the list price can be misleading in that nobody really pays the list price. the ahs secretary was on "squawk box" this morning and he took issue with that. here's what he said. >> the problem is almost every single senior under medicare pays the list price or a percent of list price on at least some of their drugs 47% of americans under the age of 65 have a high deductible health plan and during that deductible they're paying the list price i'm not buying the farm ma talking point that list prices

don't matter the top executive at eli lilly knows the industry farm ma says it can deter patients from taking the medicines. if they see something that costs $10,000 a month might scare them away the rule could infringe on the first amendment rights interestingly though, one analyst argues that it might not be pharma that's the biggest breaker of this rule he argues it could be broadcast networks they may just stop advertising on television. they spent $5.8 billion in 2017 on tv drug ads alone that's quite a big chunk of money potentially coming out of broadcast networks, guys. >> we won't see those happy people sitting in bath tubs overlooking beautiful landscape. >> so deprived. >> thanks, meg. >> oh, darn. >> you'll probably see them on your twitter feed and elsewhere

where the rules won't apply. >> you can see a football game and not see 5,000 ads. >> if you watch it streamed you might see the ads again if you miss it, scott. i'll update more what this means. joining us is david marist great to have you with us. you heard part of our conversation it sounds like if you're a pharmaceutical company, don't advertise on tv. has it been that meaningful for these companies to use tv as their primary outlet as opposed to twitter or some of the newer media? >> i think they're going to keep advertising on tv and the pricing will just go into the same blufr that we're used to hearing, the long list of side effects, the blur that people tune out i do agree with the idea that the people that are most sensitive to the pricing message might be the people that are most vulnerable, the people who can't afford drugs, people on high deductible plans, elderly, anxious. i don't know if this is going to have the effect that the president wants it to have. >> your response, david, is very surprising to me as somebody who covers the drug industry

i would have thought that you would have had, you know, a comment that would have been more in line with pharma's argument that this is not going to be effective. it's going to be taken out of context, this information. it might deter patients from seeking care in the end you're saying pass this regulation because you know what, it won't make a difference no be is going to look at the tiny little fine print of that long list of side effects. >> first of all, if it has any effect, it might be negative also, drug companies aren't going to stop advertising. maybe i shouldn't go get this checked out. hospitals or pharmacies, like when a hospital advertises a new robotics surgery, should they be putting up what the price is for that drug therapy if done early usually saves money. i've been very critical of the industry on how price increases have been done on a wide number of drugs but in this case i

think this might be more of having a win and something that they can point to for elections saying, look, we force drug companies to do something they didn't want to do and in reality the effect of this might be small. >> who, david, in your coverage universe would be most at risk if this actually happened? there are companies in your universe that have high-priced drugs. >> yeah, all of them would be affected usually the companies with the high tech biotech drugs, they might have the biggest shock when something costs a million dollars a year or 500 thousa,000 dollars a year. >> there are other names on the list but there has to be one or two that you're concerned about if this came to fruition however unlikely it is or not. >> well, actar, we don't do any advertising -- i've never seen -- >> you get my point. >> i do get your point it's a high priced drug. a company like allergan could benefit. people don't advertise prices.

the average price of botox is x, that might be a benefit. that's all cash pay also maybe they'd get away with it. i think the super high price and maybe other drug companies which many of those i don't cover being affected the most. some of the companies that have higher cash paying businesses might turn out -- might be a win for them >> david, thank you. appreciate your time today. >> thank you. after nearly a decade of struggling, is the business jet market getting ready to take off? phil lebeau live in orlando, florida, with more hi, phil. >> reporter: it is coming back no doubt about that. there's always been muted optimism that things would take off. they're still working off the inventory that was built up during the recession of 2008 and next year they expect shipments to improve even more when you look at the business jet market you're primarily

looking at north america where the bulk of the shipments go to. we're seeing new shipments from embryare, cessna aviation, north america is where this will be sold they say one thing stands out. improved positioning for corporations >> i think the corporate tax cut is not just a corporate tax cut but i think you bundle together deregulation tax structure changes, corporate tax cuts, all of that stuff has been beneficial it's not just corporate airplane. >> we're seeing the attention to this product we already have sales for crater 600, crater 500. so we're starting to see the momentum for this. not only our customers but new customers. >> as you take a look at shares of general dynamics, the parent company of gulf stream as well as textron, keep in mind that

these companies tend to move more with the defense stock. there is no doubt their commercial -- or business jet aviation business, that whole industry, that will increasingly feedin . >> we are going to go to the floor of the new york stock exchange power lunch is back. dow is up almost 500 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. ♪

frmg welcome back to power lunch. sources saying that the financial times report is inaccurate and not true seasoned that it's business as usual and negotiations are still underway. it was a fluid situation as we learn more we'll bring it to you >> thanks. a huge rally taking place right now. the dow is up by more than 500 points all major averages on pace since

march. art, great to have you with us >> thank you >> a huge rally today, problem solved, right? nothing to be worried about? >> not quite i thought a big celebratory rally based on the jolt data and all time record high and jobs openings and that the rally might continue into the final hour we might get a little rethinking here the other side is that some of those so to build a job. it's not a victory secondarily the situation is not totally cleared. i think as we get into the final hour there may be second thoughts ability t thoughts about the rally if i had to bet that's the way i

would be looking >> if we have good good results from netflix are tech fears behind us? are they going to move forward >> well, that will be key. it was predominantly due to earnings this morning. you get these little cautionary things it will be important i think we are a long way to getting past this and moving on. >> so good news for the stock market are we going back to having some people looking for bad news so it will put the fed on hold? >> it will be very very carefully watched here you know, you get up to about three and a quarter. you pull back. you have a kind of circumstance

trading. you can't eliminate it from the picture. it will be critical to where stocks go. >> great to get your iitnces >> and much more on this market rally next what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary? a good place to start is with an independent registered investment advisor. as fiduciaries, they live by a simple rule: always act in the best interests of their clients. that's why charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

taking a look at the nasdaq. best day since march 26th. we have been talking about this. it will be a referendum on not just technology but in particular high flying tech. it is a group that's off 20% from their highs here. we want to see not only netflix and/or at least meet consensus but also the reaction in the stock will be key. if we see some sort of a selloff of an in-line quarter it will be a real tell for the markets. >> after a miss last time, right? it is a fool me once shame on you if they miss again you'll have people wanting to hit the sell button. it is up a lot >> yes it was faulty forecasting. how did they fix that problem? >> unlikely probably they will miss two times in a row. i have been watching walmart they had investor today.

it is important to point out that the retailer did lower earnings guidance as well as next year but that's because it is baked into that number. otherwise things were the same and we did expect that to come >> all right the dow up 447 thanks for watching power lunch. thanks for being here. >> thanks for having us. >> the bell starts now it is time for the closing bell i is it a sign of more things to come or reckoning on the horizon? >> netflix could be an indicator. will they face a surge in competition or continue to outperform we'll find out when the earnings hit after the bell stocks were covering much of last week's losses we'll tell you which names investors brought on the tips. on watch ahead of tomorrow's