>> citi's overdone as way. joe terranova. >> pepsi don't like the product but i like the stock >> don't like the product but you like the stock >> yes >> semi-endorsement. >> i don't like the coke product either -- >> tyler mathisen, you're a good-looking man zblim ready to roll. >> that does it for us "power lunch" with tyler and the gang next. i'm melissa lee. stocks sliding as we head into a make or break week for investors. nearly a third of the companies in the s&p 500 set to report earnings will it be enough to fuel stocks higher and could the fed hit the pause button on rate hikes after december hasbro getting hammered today. showers of the toymaker sinking on the back of weak results. where the stock goes from here as we head into crucial holiday season rising rates in housing. a warning. a 5% mortgage is the line in the sand before the economy really gets hurt. we'll take a deeper dive "power lunch" starts now

welcome, everybody, to "power lunch." i'm tyler mathisen in a great mood after washington won a big football game yesterday. another volatile day on wall street the dow moving between triple-digit gains and triple-digit losses. down more than 200 points at its low. the s&p 500 and nasdaq still have not been able to post back-to-back games this month. and the russell 2000, small caps and dow transports, they are mired in correction territory. commodities under pressure today. natural gas prices, lowest level since mid october. we really kind of still are in mid october, aren't we check out three stock movers intel higher on an upgrade fiat chrysler rallying the aw automaker selling it auto parts unit for just under $7 billion. and polaris on track for its best day since early march the ceo saying he is pressing suppliers to absorb increased costs because of steel and aluminum tariffs

melissa? >> as you had mentioned, stocks are lower today but we're not seeing a massive sell-off right now as we have over the past couple weeks has the selling pressure abated? bob pisani's at the new york stock exchange i guess bob it depends on where you're looking because financials are under some real pressure today >> they're just acting like death. and the industrials aren't either and energy's kind of weak. i'd say the jury's out about whether the selling is over. i can show you some signs to look for but just look at the s&p 500. art cash and i have been joking all day the problem with the stock market is it opens every day the last four or five trading sessions we open generally on the up side and then we just fade going into the european close maybe it's the europeans' fault. but this has been a pattern now and it's happened again today. sectors, we've had a nice little tailwind from emerging markets, china up 4%. retailers acting better. tech generally is up although off the lows but energy's been bad. i want to show you some of these bank stocks. we've got some 52-week lows and some major regional banks like fifth third, key corp., state

street's down. aig. these stocks act terribly in the last few weeks energy's been weak halliburton had good earnings but the stock's near a 52-week low. industrials, caterpillar 52-week low. other big names, rockwell collins, united reynolds 52-week low. sealed air also down 52-week dow du pont. 52-week lows these are largely on margin pressures and to extent on tariff issues. when are we going to get some kind of bounce here? just short term there's a couple things to look for first off is lighter volume. we started seeing that toward the end of last week a pickup in short-term indicators like ten-day moving average only a quarter of the market is above its ten-day moving average that's a little better than the middle of last week. still kind of on the weak side less volatility in general vix curve flattening the vix still hovering around 20 needs to get down to 18, 17. that'll go toward a more normal vix curve where the cash contract is a lower price than

the futures contracts that are a few months out that's still not happening yet although it has been a little flatter. guys, back to you. >> robert, thank you very much this is of course the busiest week of earnings it kicks off today with a third of both the dow and s&p 500. they will post results this week including 66 companies in the s&p 500 on that big day of thursday including amazon, alphabet, conoco phillips and our parent comcast at the same time the great debate rages on about whether the fed should continue raising interest rates blackrock's rick reeder, who oversees nearly $2 trillion in bond assets for the world's largest money manager, weighed in this morning on "squawk box." >> i think you have a dynamic part of why the fed is going to pause, i think you go into december and i think you're going to pause-s we moved rates up if you've got a mortgage rate that hits 5% you're talking about tangible the fed is going to pause. and if you don't this uncertainty about where's the neutral rate and where left to go markets hate uncertainty. >> we've heard that one before,

haven't we let's bring in victoria fernandez, chief market strategist with cross-mark global investments and brian jacobson, multiasset strategist with wells fargo asset management lady and gentlemen, thank you very much for being with us. victoria, what do you think? do you think there will be a pause after a hike in december and if so why and for how long >> i do think there's going to be a pause from the fed but i don't think it will be in december i anticipate we'll have the move in december. that's about 80% priced in when you look at futures. i think they will go ahead and move two times in the beginning of the year next year in 2019. if things continue on the path they're on we've had some strong fundamentals come out. we have gdp coming out this week if we get a 3 handle which it seems like we probably will that's good strength moving forward. we have earnings this week, obviously a ton of earnings coming out we've got about 87% so far that have reported that are meeting or beating their bottom line

if we continue to have some momentum i think we'll see the fed keep moving. i don't think they want to give the appearance they're backing down from any kind of pressure from the administration. and remember, february is the biggest month we get refunds coming in, tax refunds sought consumer will probably remain strong and allow the fed to keep raising rates. >> brian, victoria says no pause after december, maybe a couple of hikes early in the first half of next year, presumably march, maybe june what do you think? >> i think they might actually make a pause in march. so they're likely going to hike in december. but my big concern is that the fed is going to likely hike in december despite seeing some rolling over in the economic data not to say that it's going into a recession or negative growth but a slowdown in growth enough that this might make them want to pause because of the uncertainty around what is the neutral rate, what are the effects of the higher rates. before you were mentioning with rick ryder what he was talking

about with mortgage rates being 5%, the headwind there it's not just 5% that's not a magical number. every basis point counts but i am concerned about the persistent weakness that we're seeing in housing and what sort of effect higher rates are having on the interest rate sensitive sectors of the economy including autos and other durable goods. so maybe that's not necessarily going to all manifest itself immediately or in the fourth quarter but i think you're going to see early signs of slowing in some of those more interest rate sensitive sectors of the economy which will make them want to take a pause come march just to see if the economy can get its footing again. >> so victoria, if it's all engines go for the next three rate hikes or so in the next let's say six months or so, does that mean that you're positive on the markets or not positive on the markets because there's two ways of looking at it. either that this indicates that there is very strong economic growth head and/or that the economic growth is all right but the consumer and businesses will continue to face headwinds

as we had mentioned it's not just a 5% mortgage but with shorter-term rates moving higher it's credit card payments, auto payments, student loan payments, all sorts of consumer payments become much more expensive at the same time as corporations dealing with higher input costs which you've heard so far during earnings season. >> you're absolutely right, melissa. i'm not saying there aren't headwinds in the economy i absolutely think we do have headwinds. brian's named those. you have named those as well when it comes to debt we are looking at credit card delinquencies. i think that can be a canary in the coal mine as far as the debt goes but we also have to look and see that households have really deleveraged. debt to income has come down even though some of the credit cards are going p as far as interest rates go or the housing's going up as far as interest rates go the actual level of debt has come down. so houses are in a better position than they were. but we also have to look and see that there is some tailwind going through this economy i don't think we're off to the

races. we've had a little pullback. that gives us room to breathe. and that allows companies to report their earnings. we can have some strong growth from there and the consumer is doing well if you look at the retail sales, the control group, that annualized number was at 3.4%. that's just a little bit down from where we were last quarter when we had a 4.2% gdp i still think there's some strength that can move but yes, we definitely have uncertainties with tariffs and trades things going on in china there's obviously some headwinds we have to face. >> brian, let me change the conversation just quickly for a final answer we've talked about interest rates. let's talk about the election. i had a friend ask me at an event over the weekend whether i thought the markets were discounting the results from the midterms, and i said i think far more important is that they're discounting concerns over trade and interest rates where do the elections fit into the investment calculus if at all? >> i think one of the key messages is that an individual should not let their politics affect their portfolios.

i think that we've seen again and again, whether it was the election with president obama or with president trump, if you let your personal politics interfere with your portfolio you've probably lost quite a bit of money by doing that. and going into the midterms i think it's a very similar thing. it's more about the policy that's are going to be implemented and really looking at things. it's probably just going to be gridlock no matter what you have as a result of it. so you get the status quo. and that ain't too bad >> thank you very much victoria, we appreciate it victoria's with crossmark global investments. brian jacobsen with wells fargo. shares of cbs under pressure today. its search for ceo take a new turn dick parsons the interim chairman brought on after les moonves was ousted is stepping down for health reasons. julia boorstin joins us now with the fallout. julia. >> reporter: melissa, cbs shares losing over a percent today as the company that's already been through so much upheaval undergoes more changes richard parsons leaves the role as interim chairman, is replaced by take two ceo strauss zellnik.

parsons formerly ceo of time warner and chairman of citigroup was appointed as interim chairman of cbs less than a month ago to bring stability, lead the search for a permanent ceo. zellnik, who was just named to cbs's board in early september along with five other directors, does have deep ties to media before he founded video game giant take two he ran music publisher bmg entertainment and was president of 20th century fox as well as running investment firm zellnik media capital. now his first order of business is confirming a permanent ceo for cbs. the front-runner is cbs's interim ceo joe ianello who last week made some bold management changes including appointing a chief creative officer to complement his strengths, potentiali solidify his leadership position. we'll have to see how zelnick handles this next phase and how new leadership approaches potential m&a for cbs. >> thanks very much, julia boorstin

coming um, president trump says the possibility of the fed raising rates too fast too far is the biggest threat to the economy. do ceos agree with him we'll have the results in a big survey coming up plus, no fun and games for the toymakers today. hasbro lower after earnings. mattel falling in sympathy how bad is the loss of toys "r" us and how is it hurting these companies? that's next on "power. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.

shares of hasbro down about 4% today after it reported disappointing earnings how much is the toys "r" us liquidation hurting that toymaker courtney reagan here with the details. i assume quite a bit >> it is quite a bit that liquidation started in march and they're still really feeling it hasbro disappoints for third quarter profit and revenue pointing the finger at that now liquidated toys "r" us for its troubles around the world really the toymaker ceo had previously suggested the toys "r" us pain may be gone by the second half of the year. that did not turn out to be the case hasbro was able to recapture about a third of the lost toys "r" us business in the u.s. and canada during the quarter. still the region's revenue fell 7% the toymaker is selling into more retailers in some cases they're smaller. that also means shipping in smaller batches, on different skenlds, often closer to holidays they're not holding on to it and storing it as long but international sales are even

worse. down 24% europe was down 29%. asia both of these areas also hit from the loss of the toys "r" us business and the changing consumer landscape and trends there. that's been an issue for a while. hasbro announced a new global restructuring including laying off up to 10% of employees around the world to address the toys "r" us issue and others hasbro's ceo now expects the toys "r" us disruption to continue for a few more quarters analysts had said, look, this is going to be painful, we think most of the share will be recaptured but it's going to take some time sort of reminiscent of what we saw in some cases when the sports authority liquidation happened >> is hasbro much more reliant on toys "r" us than mattel >> they're fairly close. but it was a really big retailer and another big difference is they were able to keep that merchandise on hand in advance and longer while some other retailers want it just ahead of the holidays, they don't want to store it in advance. even though many of them are

amping up their footprint and their shelf space quite frankly. >> this was something that was obviously on the horizon and planable but i don't know that you could lose that scale of a retailer and not have it really affect you. >> that's true and i think we knew that bankruptcy could be a problem. but i think even the folks at toys "r" us really didn't think liquidation was 100% going to happen and it really, really impacted the industry >> stick around, court let's talk more about hasbro and the toymakers in general joining us is jamie caps, the analyst at morningstar jamie, great to have you with us you heard bits and pieces of our conversation with courtney here, and i'm just wondering in terms of hasbro's positioning is it more that it didn't plan for the liquidation of toys "r" us is it that it missed on a lot of toy trends what's a fundamental problem if they're able to work through toys "r" us is their major problem gone >> so i think the main problem is that toys "r" us didn't expect a liquidation of toys "r" us i think toys "r" us expected

there would be a successful reorganization and continue to probably order inventory in such a way that it would be a going concern. obviously the cash flow profile did not support that end game. it did wind up being a liquidation. sought duration of sort of the down trend has been a little longer than originally anticipated. and hasbro held out on the call that largely the big problem with toys "r" us is what it's going to look like in france and spain under new ownership and then what's happening with asia as well and that toys "r" us business because that's been a pretty good business for them in the past and there's no real end game tied up in that right now >> what happens in the u.s. in terms of filling that void >> i think in the u.s. they have to find other vendors that can take that. courtney talked a little about this in her segment in saying that the logistics costs change a little bit people want less inventory they want it closer to point of sale versus toys "r" us, where they would sort of frontload

that inventory ahead of the season and they'd be able to take those shipments and hold them longer from hasbro, from mattel so i think it's going to take a little bit long er to work that and find the right channels to reach the consumers properly but i don't think that inventory sale opportunity is lost permanently. >> is there any trade policy risk to any of the toymakers >> i think some of the risk is really just in what is made overseas and how it gets here. but remember, hasbro and mattel both make roughly -- or sell roughly half or more of their toys internationally so you don't have the same sort of exposure as if you're making everything overseas and bringing it to the u.s. as you do if you are making it overseas and sending it overseas. so i think there's a little bit of a hedge there for them. >> jaime, there's been trouble for hasbro and some of the toymakers in europe for some time beyond the toys russ issue.

can you explain sort of your theory about how that gets fixed if it does and when? what's going on over there in europe with those changing consumer trends that these toymakers are fighting through >> i think historically it's been a much more fragmented industry there are a lot more local players that they're competing against. and understanding the distribution network in a market that is not local or not your domestic market always tends to be a little more difficult and so i think that plays into it as well and then obviously the overarching theme across many of the toymakers, and if you look at some of the data across the industry, is that there is an increased portion of the wallet going to video games and other sort of digital channels away from traditional toys. but hasbro has been able to pivot in the past. their games business languished early in the decade. they were able to pivot and turn that around. and i don't think they are resting on their laurels at this point. they are trying to pivot the business to cater to evolving demands, and i think that's

something that they are nimble enough to do >> jaime, thanks for your time we do appreciate it. >> thank you >> jaime katz of morningstar and done miss hasbro ceo brian goldner tonight on "mad money. that's at 6:00 p.m. right after of course "fast money" at 5:00 courtney, thanks >> thanks, courtney. interest rates, they're moving higher mortgages taken along for the ride is 5% on a 30-year fixed mortgage something to worry about? that we will discuss next. and as we head to break, take a look at the stock that is contributing the most to the dow's losses today united health, goldman sachs, united technologies. those are the three that are "power lunch" will be right back

we opened our doors with 70-megawatts, 35 mules, and an ice plant. but we brought power to the people- redefining what that meant from one era to the next. over 90 years later we continue to build as one of the nation's largest investors in infrastructure. we don't just help power the american dream. we're part of it. this is our era. this is america's energy era. nextera energy

cramer saying this morning, "we're going to see more and more bad earnings because 5% mortgage is the end. that is the line in the sand diana olick joins us more with the impact of rising rates hi, di >> hi, ty. it's the combination of rising mortgage rates and overheated home price that's have slammed affordability. take a look at rising home prices in the past two years, passing the last price peak from the housing boom, all because of the supply shortage. now the price gains are starting to shrink, but that was before rates jumped affordability had already been hitting a wall rising rates will now put even

more pressure on prices as 5% is the new normal on the 30-year fixed. so on a $300,000 loan a 5% rate versus 4% on an average a year ago is about $180 more on that monthly payment. for some buyers that's going to be a problem but the new chief over at the mortgage bankers association points to other factors. >> well, of course i'm concerned but i'm optimistic because the economy is so strong that millennials are out buying houses and the demand for house's really high. >> now, we get three more important housing data points this week. mortgage applications and new home sales wednesday and then pending home sales thursday new and pending sales will be the most important ones to watch because they count signed contracts in september and rates started to jump only in september. so they will be the first real solid reaction from buyers as to higher rates >> what about the rates for home equity lines a lot of people use money from home equity to finance all kinds

of purchases from renovations to just everyday things >> home equity lines are a bit different. they've been close to 6% going back six months or a year. that i higher because they're riskier. so people are already used to higher rates those shouldn't change that much. >> thank you very much, diana olick. >> jim cramer isn't the only one worried about higher rates president trump has been warning about it too >> i think the fed is making a mistake. they're so tight i think the fed has gone crazy >> are ceos as worried about the fed as the president is? up nextht e results of the new ceo survey their biggest fears revealed next on "power lunch." the nature of a virus is to change. move. mutate.

today, life-changing technology from abbott is helping hunt them down at their source. because the faster we can identify new viruses, the faster we can get to stopping them. the most personal technology,

is technology with the power to change your life. life. to the fullest. hello, everyone. i'm sue herera here's your cnbc news update for this hour. british prime minister theresa may telling lawmakers that a divorce deal with the european union is 95% complete. this as she pleads for support on the brexit deal >> and this progress in the last

three weeks builds on the areas where we have already reached agreement on citizens' rights, on the financial settlementish on the implementation period, and in northern ireland agreement on the preservation of the particular rights for uk and irish citizens >> hundreds of people camping out overnight to see president trump when he comes to texas to support president ted cruz lines covered an entire houston city block across from the toyota center. the trump campaign is setting up large screens so that those that don't get in can watch the president's speech and kellogg says its honey smacks cereal will soon be back on store shelves next month. the cereal had been recalled in june because of a salmonella outbreak linked to it, which sickened more than 100 people in 36 states. the cereal boxes will be clearly marked with "new recipe" on it you are up to date that's the news update at this hour back to you. >> new recipe. that's really a euphemism. no salmonella.

thanks let's get a check on the markets. it's been a volatile day the dow swinging between triple-digit gains and loss. the dow was down 200 points at its low. it is now down by 132. the s&p 500's now down by about 10 and the nasdaq composite is higher that's up about 26 the nasdaq, though, is having its worst month since january 2016 tech and consumer discretionary are the best performing s&p 500 sectors today. consumer staples, real estate, utilities the biggest laggards and biotech, that is getting whacked again. on pace for its fourth straight down day gilead, celgene leading the declines one stock bucking the trend, loxo oncology. we've got a "power lunch" exclusive coming up with the ceo in the next hour >> what are ceos most worried about? dominick chu has the results of a ceo survey that might back up some of the president's claims about interest rates >> it's only a tick lo lower, tyler but it does represent the

lower levels for ceo confidence in 2018. the survey asks hundreds of ceos across america to respond and they span a wide array of different size businesses across very different industries. now, ceo confidence in business conditions one year from now hit a peak around january of the year and has been trending lower since. according to the survey, fears about the threat of rising interest rates are a key factor behind the drop in optimism. other fears include rising inflation as well as whether we're near the end of the economic cycle or not. from a bigger picture perspective macrowise it's the smaller and mid-size company ceos that are relatively less optimistic meanwhile, large company ceos are the most confident in the future even though their overall level of confidence is lower than the beginning of the year you can see that playing out in the markets given the recent yut performance of the s&p 500 versus the russell 2000 snaul cap index on a sector or

industry level in a surprising result it's ceos tied to construction that seem to be the most optimistic flying a bit in the face of recent weakness in home builder and material stocks professional services is showing the least optimism and maybe no surprise, tyler, that it's tech and communications services ceos that have some of the biggest drops in confidence which seems to be certainly playing out in the market action for those types of stocks as of late it will be a trend to keep an eye on as the earnings season plays out. back over to you, tyler. >> dominick, thank you more on rising interest rates with steve awedland, president and ceo of the conference board and a cnbc contributor you heard what dom just said confidence is still pretty good. let's stipulate that but it is down from where it was. why? >> i think the primary worry here sirnt rates the fed funds rate stands at 2 1/4. they have come out and said they're going to tighten even more the predictions are between another 100 or 150 basis points

in the next six quarters and remember, this is at the same time when they've said they need to work down the $4 trillion balance sheet that they have so there's sort of a double whammy in there from a tightening perspective now, the bank ceos and financial institution ceos are okay with this because this will make them more money but anyone who's borrowing, especially mid-size businesses and smaller businesses, could be hurt from the borrowing costs. and of course the housing market could be impacted by mortgage rat rates. we're sitting here with a goldilocks economy and no one wants this to be damaged by the increase in interest rates >> but is the fed doing what it ought to be doing at this point in the cycle with an economy that is clicking as you say in kind of a goldilocks manner and the fed saying it wants to get back to what are in its view more normalized interest rates after a period of incredible loose money? >> well, it's a good question, tyler. their target is 2% inflation and

over the past year we've only had a little bit higher than that, 2.3% you know, these things don't happen linearly. they just took the last interest rate increase last month really a few weeks ago that takes a quarter or two to work its way into the market and see what really happens from there. sought fear is at some point if they keep pushing on thing they're going to slay the goose that laid the golden egg by derailing it the other thing is inflation itself is caused by of course a lot of things including labor rates but in this case borrowing rates impact inflation so you could have this downward spiral as the interest rates go up and borrowing costs go up, creating more inflation and then it just devolves this is what people are worried about. they're saying it's a little higher than the fed target anyone flation but this is a really good placing to >> so what are ceos doing in response, steve? if they're concerned the fed is all in on december plus three to four more hikes later in 2019 are they pairing back on

spending are they hesitant about expanding? are they hesitant about passing on wage increases to employees what's the response? >> it's a good question, melissa, because that they always do is they look at the cost of borrowing. they look at the cost of money every investment from here on in has to factor in some estimate of that cost and if it's going to be 100 basis points higher that means the hurdles for payouts are thatch higher which means it's going to be less investment so this is why i think ceos are saying we don't need to be quite as harsh here or quite as bearish on the interest rates and you hear of course the politicians getting involved, which of course they always do but the point is you don't want to derail this economy so therefore, you've got to take this tightening both on the balance sheet side and the interest rate side and account >> do you see a smidge maybe, a smidge, steve, of hypocrisy among those who a couple of years ago were highly, highly

critical of the fed for what they saw as a too loose monetary policy and saying that that was reckless and irresponsible and now some of those same people are saying, you know, you're getting sort of reckless and irresponsible by tightening. >> well, i think that the recklessness part of it was coming more from the financial institutions who were actually hurt by the lower interest rates. but you know, look, they're trying to get to a goldilocks economy and stay there and nobody knows exactly how to do that remember also, the other fear here we haven't talked about is the cost of u.s. debt. we're sitting here at over $20 trillion of u.s. debt. some of those rates are only fixed out a year so as we roll over into higher rates, the deficit and the debt levels also worsen, which is not an insignificant fear here in the economy. >> where do china tariffs rank on the list of ceo concerns,

stephen? i'm just curious where that ranks in relationship to fear of the fed derailing this golden goose economy. >> it ranks relatively low a lot of people have their supply chains that originate in china. and of course that's a worry and you see now manufacturers starting to move jobs around and some of them going to vietnam or some other areas but in terms of the u.s. economy, only 5% of our imports are accounted for going into china. these kinds of trade talks don't really impact the u.s. gdp from this end i think for the most part they think this is all negotiations they think we'll get to some kind of deal down the road and they do agree that we need to be tougher on china, especially from an i.p. perspective. >> steve, always great to see you. steve odland with the conference board. new details expected soon on the killing of saudi journalist jamal khashoggi. will the results of the investigation force the u.s. to back away from saudi arabia?

what could that mean for defense companies? we'll have that story next on "power lunch."

saudi arabia says its investment conference will go on this week even though many big names have pulled out because of the killing of the journalist jamal khashoggi. hedley gamble joins us now live

from riyadh. hedley >> reporter: good evening, tyler. we're less than 24 hours away from the start of this davos in the desert, this future investment initiative. it was really the dream of the crown prince and frankly, saudi officials are still struggling to come up with a convincing narrative as to just what happened to saudi journalist jamal khashoggi let's listen in to what the foreign minister had to say yesterday. >> we discovered that he was killed in the consulate. we don't know in terms of details how. we don't know where the body is. the public prosecutor then put out orders to detain 18 individuals for questioning and possibly facing trial. and the king also dismissed a number of senior officials in this area. this is the first step of a long journey. we are determined to uncover every stone. we are determined to find out all the facts. >> reporter: that was saudi arabia's foreign minister adel al-jubeir. really a lot of questions

remaining to be answered and just a couple of hours later his statement seemed to be clarified by a saudi government official coming out in a reuters article and essentially saying there were still a lot of questions unanswered and mr. khashoggi's body had been rolled up in a carpet and disposed of by an associate. a lost questions still remaining over what exactly happened in the istanbul consulate we're expecting remarks from president erdogan of turkey tomorrow he said he's going to expose the naked truth of what actually happened there in the last couple of weeks in terms of the investigation and exactly what happened inside the consulate. in the last few hours as well a lot of developments in terms of new video being released we've seen a lot of information being leaked to turkish media over the last several days in particular this new video purporting to show mr. khashoggi's body double leaving the consulate through the back door, someone dressed in his clothing. a lot of questions the saudis haven't come out and addressed those new developments specifically but then we heard over the last hour or so that a website for the future investment initiative, for this davos in the desert, had to be shut down as well because it had been

hacked so a lot of questions as we head into this davos in the desert, guys and frankly, so much bipartisan backlash on capitol hill at this point. a lot of questions remain unanswered and secretary of the treasure steven mnuchin still expected to be here in riyadh. he won't be attending the conference he said so far it's too early to talk about u.s. sanctions. but certainly a lot of questions on the ground for him. guys >> hadley gamble in riyadh thank you. president trump has repeatedly stated his desire not to jeopardize a major arms deal with the saudis saying is it would cost hundreds of thousands of jobs and billions of dollars. morgan brennan joins us now for a look at which u.s. defense companies could be affected. morgan >> hey, melissa. that's right the way to think about this, saudi is the number three buyer of weapons in the world and it gets many of those systems from the u.s. some of the biggest deals that are on the line, you've got chinook helicopters, f-15 fighter jets from boeing missiles and thaad systems and

precision guided munitions from raytheon and abrams tanks sxarmored vehicles from general dynamics which in recent years has also been caught up in saudi-canada tensions. it's going to come down to congress since lawmakers have to approve foreign military sales and since as we've seen in recent years already lawmakers have delayed sales to saudi before due to its involvement in the civil war in yemen now, some analysts think the killing of khashoggi could be the tipping point toward a broader block for now at least but capital alpha partners estimates saudi's still only 5% of sales from major u.s. contractors and still shares of the defense primes they've been hit by all of this over the past month. and while none have commented on any of this so far we do have earnings kicking off tomorrow with lockheed martin and guys, i think the way to think about this, it's really one more factor, one more uncertainty for a group that's been considered richly valued but has been swept up in a

broader industrial group sell-off and for which investors think midterm and longer term over the next couple of years the possibility of a ballooning deficit and potential spending cuts could really matter melissa? >> morgan, thank you morgan brennan for more on what's ahead for the defense sector let's bring in carter copeland the founding partner at mill yos research great to have you with us. >> great to be with us >> saudi makes up about 5% of sales for this group in general, but which companies in your view have more exposure to this area? >> morgan highlighted several of them the 5% of sales is a decent estimate you've got a lot of export sales from raytheon. a lot of export sales from lockheed but the thing i'd remind you of, those sales tend to carry higher margins than the after so although you get 5% of total sales you'd get a number probably closer to double digits in terms of profits. the real question is are you really going to see these sales, these arms deals canceled or just pushed? and then even then if you've got a foreign military sales

contract with the u.s. government the government may not ship the goods to the saudis at some point but you would ship them into government possession. the devil is really in the details when you start talking about this stuff and i think morgan was right in that defense has caught up a little bit on a broader industrial sell-off. so it looks like they're reacting to this but in general i don't think that's the case because most people don't think this will end up biting the fundamentals for these companies. >> this may be a reason to sell a name like maybe a boeing if you wanted to just sort of pick a name out of the hat. because that stock has had quite a nice run over the past 12 months and year to date. but when you take a look at some of the names you that say have more leverage to saudi, lockheed as well as raytheon, they haven't seen the runs that boeing have seen could they in fact in terms of having more down side on the stock side, could they see more pressure because they didn't see that big run-up in the first place and they may actually see the impact here >> i think you've got to separate boeing from the rest of the defense primes at this point because the boeing run has been

all about the commercial aerospace business secular growth and air travel and expansion in their margins that's been a wonderful trade and we think it's far from over but as far as defense goes i'd agree with morgan. this is a group that has a growing list of things to be worried about after several years of these stocks doing nothing but going up and whether that's the budget, whether that's rising interest rates, whether that's the saudi issue as we talk about it or the government earlier pushing on payment terms. this was a sort of teflon group for a number of years. and now the question is can we weigh evaluation of these stocks if we continue to add things to these lists? >> let's talk about the number we've heard tossed about quite liberally of 100-some billion plus in sort of saudi intent to buy military hardware how much of that dollar value would actually ever probably come to pass >> if we were to see some sort

of -- >> no. >> it's a very large number. >> a very large percentage of that would actually happen if nothing -- if there's no move from congress to stop it, of the 110 -- >> yeah. a large percentage now, that number's grossed out for all the various support functions you have along with it the hard part about taking action against a number that large is you've probably got somewhere on the order of 10 to 12 billion dollars of fixed costs in those contracts so when you ask yourself how much fixed cost can the saudi contracts absorb that would otherwise have to be absorbed by the u.s. government, that's a very large number. that's getting up close to 10% of the cost of the hardware or equipment budget for the u.s. government that's an amazing amount of financial benefit that the u.s. military gets by selling those weapons to the saudis. >> all right carter, we're going to leave it there. thank you. >> thanks, melissa >> carter copeland of millios research >> 8 of the 11 s&p sectors are down up next we're going to take a

closer look at consumer staples. that's one of only two, actually three sectors that are higher right now. this month do you need the turn to safety in volatile markets? next on "power lunch." hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.

welcome back i'm julia boorstin with a news alert on facebook. one of the co-founders of oculus, brendan iribe announcing he's leaving the company of course oculus was one of the big acquisitions that facebook made the company buying oculus for $2 billion in 2014. i richlt be's not currently the ceo of oculus. about two years ago he stepped down from the role of ceo to lead the pc-based virtual reality group at the company but this is notable because it comes on the heels of the departures of some other high-profile founders of companies that facebook acquired including what's app and instagram. you see facebook shares trading pretty much flat guys, back over to you >> julia, thank you very much. consumer staples are a bright spot in this volatile market, one of only two sectors up this month. kimberly clark which makes everything from kleenex tissues

to huggies diapers up nearly 3% over the last three months stock, though, down today by 3%. earnings beat but the company warned it would further cut its guidance for the full year jonathan feeney covers timably clark kimberly clark for consumer research. there are no buys on kimberly clark. first time in the building we're glad to have you in the house. >> very excited. >> why are they cutting their estimates for the full year? is it input costs? what is it >> it's a couple things going on input costs and this fragment's retail environment where private label's more important it's harder to get pricing and it's the sudden turn around in international macro fundamentals, particularly currency you have the meaningful exposures in china, south america, which look like a huge bright spot coming into this year and then all of a sudden currencies -- headwind and challenging. that's a difficult whiparound for any management team to manage >> what is telling the true story of the sector, though? procter & gamble which had great

earnings, a great stock reaction, or kimberly clark? i mean, it seemed like -- it seems like night and day here. >> sure. a lot went into both probably procter & gamble something closer to the truth. there's a bigger broader narrative which is leading brands all around the world are going to emerge as winners and as retailers get smarter, use more data while making decisions it's going to be leading brands and private label that win i think there's some concern that kimberly clark's brands, particularly the diaper brand huggies, somewhere in between, has a structural issue as well as some of the -- as retailers look for the leading brand and to emphasize their own product sxl you don't want structural issues in your diapers you definitely do not. that could be a problem. >> touche. >> a new ceo is coming on board. what's that person's biggest challenge? and how will the company change as a result of a new guy >> the biggest challenge is to reorient this company around

brands, to really invest behind the brands, get pricing and positive mix going behind these brands what's been going on this year is a very impressive reduction to sg & a, very impressive cost cutting. let's see where that money invested goes and let's see how it pays off because you can only cut so much. at some point you need to turn that you need to grow gross profit. and that's the single biggest challenge. he's got to do it globally and do it in north america in an environment where at least the book would tell you it's waiting brands -- your number one brands have a real advantage. >> how do they make huggies more atrafrkt how do they win that brand when there are so many other leading brands out there and other competitors at this point? is it just more investment it sounds like more spending >> i think that's part of it, unfortunately. but how about just innovation? i think innovation's always important. >> also spending >> also spending but the number two, three, you name it brands have been growing

is innovation since time immemorial there's plenty of small brands out there gaining share. can you make your number two brand that small brand and bring that energy and differentiation? that's probably his single biggest challenge. >> thank you for coming. jonathan feeney, consumer edge research coming up, your credit score on steroids. what the new ultra fico rating will mean for millions of americans trying to get loans. plus the biggest week of earnings is upon us. roughly 150 of the s&p 500 reporting. will those reports send stocks higher or make them fall further? the second half "power lunch" won't let you down stay with us . so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement.

at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...

good day, everyone i'm tyler mathisen and here's what's on the menu for a second hour of "power lunch. it is the busiest week of earnings season that kicks off today. the key names to watch we'll tell you what they are that could signal the market's next move. plus china bouncing back big the stock market there rallying more than 4% is it for real and can it last without more government intervention and taking stock of the teens. piper jaffray taking the pulse of teenagers to get their take on tech and more we will break down the stocks that could benefit based on the results of the survey. and loxo oncology up 90% this

year as its cancer drug shows some big promise the ceo joins us ahead as "power lunch" resumes right now welcome to "power lunch. i'm melissa lee. a volatile day on wall street dow falls more than 200 points right now it's down by 123 s&p's down by about 11 the nasdaq composite the only one in the green leading the dow lower today, dow, du pont, american express and goldman sachs. energy stocks, they're falling as oil drops chesapeake range resources big losers as you see there more than 3% losses across the board. regional banks on pace for their third straight down day, nearing a one-year low pnc, bb & t, and suntrust are the laggards there check out the retail ipo that is its first up day in four buck sxl american eagle. they are leading meantime, for more on today's

action let's bring in bob pisani at the new york stock exchange bob. >> some sectors holding up quite well, others just kind of drooping again here. take a look at the sectors melissa's right. retail's leading tech generali has held up very well nice little mid-morning rally in technology stocks. energy, though, not doing very well today we've got some earnings from some key companies they're all to the down side energy in one group and banks the second group take a look at the xlk this is what's holding the market up. techs had a nice little mid-morning rally. the move up. most of the big names in the green as a result of that. but financials they just continue to look like death. i keep emphasizing we're even showing some big names on the 52-week low list including fifth third and key corp we're also seeing some industrial names and material names on the 52-week low list. that includes caterpillar, rockwell collins united rentals dow du pont another one. 52-week low here

how stressed is the market right now? people keep asking me that i see some stress in the stock market but there's certainly no recession out there. credit issues, i don't hear people talking about it. i don't see warning signs on that people ask me about liquidity spreads. still pretty tight to me overall right now there's some stress in the stock market but i don't see big signs of contagion going into other sectors at least not right now guys, back to you. zblob . >> robert, thank you very much it is officially the busiest week of earnings and so far it's been a pretty good season. as of friday 78% of the companies that reported topped estimates and on average earnings have come in 4% above those estimates. with giants like amazon, alphabet, microsoft, boeing all on deck this week how about the next few days be for the market? let's bring in david rainey, portfolio manager of the hennessy funds and brian levitt, senior investment strategist at oppenheimer. david, welcome good to have you here. good to have you in house. from what you've seen so far in the corporate profit reports, how do they rate and how do you

think those profits are going to endure as we move into 2019? >> our thinking is that the economy continues to ramp up its speed and its capacity america's going back to work wages are moving up in a measured and reasonable manner the overall economy's very strong the stock market should follow it over time there will be bumps in the road where it gets a little overvalued and a little undervalued but i think what we're going through right now is just a normal bout of volatility >> brian, what occasioned the bump the market has been going over over the past few weeks >> i mean, look. we've had a very prolonged period of upward gains in stock markets. so it's no surprise to have some bouts of volatility. i think there's a few things holding the market back. we have uncertainty with regards to fed policy. we have uncertainty with regards to trade policy. we have uncertainty with regards to the midterm election. anytime you have policy uncertainty you can create some

volatility in markets. but i think we've got to be really clear this is not what the end of cycles look like the end of cycles for the united states, inflation will be a lot higher than here the fed will be a lot tighter. high-yield spreads will be blowing out. the dollar will be a lot stronger so this type of volatility to be expected, uncertainty around policy but importantly, this is not the end of the cycle >> which kind of sectors do you like, david, since you anticipate the economy will continue to grow and expand? >> we still favor cell towers, which is backed by all the trends in wireless, and auto parts as well as specialty aerospace parts companies. >> auto parts. the auto marksz have been doing horribly this -- >> true. auto parts because as america goes back to work they're willing to spend more on the car and the car they need to get to work and that's why most americans own a car, is to get to work >> brian, are you favorably inclined to growth stocks or value or a little of each?

>> i would still be inclined to growth stocks. i know there's this narrative that the united states -- u.s. growth rate is up significantly and that if the u.s. gets to a new high or sustainable growth quarter over quarter that that's going to unlock some of the value in the market. i view it somewhat differently i think that yes, we have had a nice bump as a result of the stimulus but i'm not so sure that that is sustainable given that we've already really closed the output gap in this country and the job market is already tight. so my view is the lar's been stubbornly strong this year, the fed is raising interest rates. i actually think the u.s. economy starts to moderate into 2019 and in my mind that is an environment where we continue to favor growth when we favor value, the next time we favor value i believe that's going to be at the depths of the recession into that recovery and i think we're a long ways away from that >> brian levitt with oppenheimer, thank you very much david rainey with hennessy, we're grateful for your time >> thank you >> a big bounceback for the shanghai composite today,

jumping 4% for its best day since march of 2016. so what is behind that rebound seema mody's at the nasdaq with more on this story hey, seema >> dramatic rebound for chinese stocks after chinese top officials including its president over the weekend pledged their support for policy efforts to fuel its slowing economy. beijing also unveiled new details behind its proposed income tax cut that the government says will boost household consumption. just one of the several initiatives china has implemented to kickstart growth. in the past month china has lowered its effort to lending. plus it restarted infrastructure projects that had initially been delayed. the country has other economic tools at its disposal including monetary easing and the purchase of etfs to stabilize its stock market chinese stocks have rallied 7% since last thursday, but china's still the worst-performing major global market this year, due in part to trade uncertainty.

that's why a number of investors, while pleased by the verbal intervention by chinese leaders, they're still cautious on the stock market. some are looking to the g20 summit next month and a potential meeting between president xi and president trump for more clarity as to whether we will get a trade deal before the end of the year. melissa? >> all right, see ma thanks seema mody at the nasdaq for us. if the chinese market bottomed out is this a buying snunt let's bring in rob lutz, the president and chief investment officer at cabot wealth management, and michael herson, the eurasia group's china director gentlemen, great you have to with us. michael, i'm going to start out with you in terms of cutting taxes, in terms of sending in the national team, et cetera, all these measures that have been announced friday and monday, will these things last will these things be enduring impacts to the chinese economy that will keep the stock market up >> well, these are largely incremental measures and many of them are really focused on the immediate task of increasing

confidence in the markets. but it's really the policies that we've seen are about having chinese domestic money flow into the stock market more easily in other words, what we haven't seen is really a significant shift in the overall environment here and that environment is marked by two concerns one is the escalating u.s.-china trade dispute and the other is the broader slowdown in china's economy for domestic reasons these are policies that show beijing stepping up to support markets but i think there are questions about how sustainable this is given that we haven't seen a wholesale shift in the overall environment. >> you make it sound like it's turning around the titanic in terms of trying to navigate these icebergs of the slowing economy and the trade war. right, michael whatever they're doing right now to try and bolster confidence, these are like drops in the bucket >> that's right. these are largely incremental moves. and there are some good reasons for that from beijing's perspective what they don't want to do is going down the old road of a massive

stimulus fueled by the banking system that exacerbates china's financial risks. they're not at that stage yet. so they're trying to do as much as they can to boost confidence without increasing those financial risks. that's why you're seeing relatively moderate measures to date >> rob, why do you think china's a good flas to place to be? >> of course the biggest concern with china is the trade war with the united states. there's been a lot of rhetoric i think look at the history, though all of the rest of the world has come to the table and set up a new bargaining agreement i believe china's going to do that as well and once that information comes out i believe the bottom will be in and we'll be on that. will that occur in one month or three months i'm not sure but i think it's fairly soon but the market is pricing in today a real slowdown in china that may not occur they're still growing at 6 1/2%. the data that came out the last couple months is still pretty good 6 1/2% income growth on

households retail sales are pretty strong and if you look at opportunities the sell-off has created, companies like aia group, which trades in hong kong, that's the largest insurance company. now trading well below its growth rate and a very high-quality company another one's alibaba. what will happen is people will come in and support these stocks because they're too good growth stories to have them trade in the low -- underneath their growth rates and really sell at these levels so i think china's too big to ignore investors in the u.s. probably have far too little of their portfolios in china today. and the time to do it is when people are sweating, and they're sweating today and they're worried about china. >> they have been sweating in recent months for sure michael, rob sounds relatively sanguine about an exit on the trade dispute that the u.s. and china are in do you share that view or is china digging in for a long fight here >> well, i think his point is

right, that you have to take a long-term view that said, i'm a little bit more pessimistic about the -- especially the outlook over the next year. especially with the u.s.-china dimension right now. investors are looking ahead to the possibility that trump and xi meet at the g20 summit at the end of november. that is a really important opportunity to try to deescalate that said right now, i just don't see the u.s. or beijing really in a position to narrow the gap between the two sides. the trump administration thinks they still have the leverage to hold out for a major deal. china's economy is hurting u.s. markets, u.s. economy still going strong and then you have a broader political climate where both parties are favoring a get tough approach toward china. so i think that there's a risk here that this really drags on into 2019 and that we see further escalations. i'm pessimistic about the outlook on the trade front right now. >> to michael's point, axios did have that report i believe on sunday that president trump

wanted to see the impact, he wanted to wait longer to see the full impact of the tariffs on the chinese economy because he believes that that would give him more leverage. if the g20 summit in argentina comes and goes without any sort of overtures, any sort of progress, would you reevaluate your position? at some point, right you're talking about 8% allocated to china in some of your most aggressive portfolios. it gets to be a pretty painful trade. >> i think -- what i look at is the fundamentals whenever i go to china and i study what's happening over there, i become very impressed with the middle class -- the emerging middle class and the income power that that sector has. i think that's going to out. china needs us as much as we need them. and they both realize that going to war on taxes on each other is not the way to do that we will work this out. i am confident that china will blink and trump will blink too because we both need each other. so i'm very optimistic that's going to happen within several months >> all right thank you both rob lutts of cabot wealth

management and michael hereson from the eurasia group shares of loxo oncology down right now but they were up 3% earlier. the stock is up 90% so far this year you'd like to have one of those, wouldn't you what's surviving the gains the ceo will join us next. plus with only two weeks to go until the midterms, why the russians aren't the only ones we should worry about when it comes to election meddling former nsa director michael rogers tells cnbc exclusively who seles trying to influence american politics and why. and it's the number that are determines how much you pay for many of the loans you get. and now the way that number is calculated is changing what it means for you. coming up. something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year.

right before our eyes, aging is unleashing exponential growth... ...in every industry. are you ready? we are. a-a-r-p is teaming up with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for? whai tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

a huge flood of news was released over the weekend from a cancer research conference in europe and most stocks are moving to the down side. bristol-myers is selling off on concerns it will further lose ground to competitor merck and immuno therapy those are of course new drugs that unleash the immune system to fight cancer. and smaller biotechs are seeing even bigger negative swings. check out clovis s it's also facing increased competition from astrazeneca in ovarian cancer

mirati therapeutics selling off. and adap is for its various therapies. one stock that was bucking the trend earlier today is loxo oncology let's bring in ceo and president dr. josh blanker loxo's stock is up more than 90% year to date and though you're just holding on to flat territory that's pretty good compared to the rest of biotechs who were presenting over the weekend really glowing about the date awe had presented there. what can you tell us about it? >> we provided an update to the data we'd provided in 2017 and we showed that in another cohort of patients treated with our drug called laratrebtanib the response was generally about the same about 3 out of every 4 patients have significant reduction in their tumor size and more importantly perhaps is the fact that once patients do respond they are staying on the drug for an encouraging amount of time. >> you're expecting a decision from the fda on this drug by november 26th i understand you've got a partner in bayer on

the drug one of the interesting challenges about this space is it's a very rare cancer. just a few thousand patients in the united states. how are you expecting to be able to find all of those how is it going with awareness and testing for this kuip of cancer >> we are in this delicate moment in that the fda is doing a review of the safety and efficacy of the drug that it's worthy of approval and can be labeled appropriately. you allude to the right question, though, how do you find patients who have the opportunity to benefit from the drug it's all about testing it's all about having their consumers comprehensively assayed for the precedence a dna abnormality called the trk fusion >> in terms of the glowing analyst reports a lot of them have said the competition has knocked out the competition from roche. in the lingering speculation about potential competition. how do you view this in terms of strengthening your positioning going into a potential fda approval in november >> it wouldn't be appropriate to comment on someone else's data

>> sure. >> but we're very encouraged -- >> it's less effective, bottom line, coming out of this conference that's the takeaway. >> it's really important that fda review the data in the absence of press releases and such they'll have that opportunity perhaps for both data sets we're really encouraged about that the options for patients are what matter. for us anticipating the day when perhaps leratrebtanin stops working we launched a problem called loxo 195 which is a different drug that will pick up the pieces should the other one stop working for patients. it's only phase one but that's something we do is try to focus on what's next for the patient >> meg was a little elliptical in describing the cancer this treats tell me what the cancer is that this treats. how many patients let's say in the united states you expect to maybe be able to reach and then how do you make money if it is a small cohort

>> there's as many as 24 different cancer types this bio marker has been described. but it's rare in any given cancer in the united states there are approximately 2500, maybe as many as 3,000 patients diagnosed every year or i should say who have this cancer >> who have that bio marker in their cancer which could be of any sort >> it could be lung cancer, colon cancer, sarcombas, pediatric cancer but it's there in a very rare percentage in each given category. that's where these tests come in to be important. everybody needs the same comprehensive test to know whether or not this drug could be there for them. but it very much follows the precision oncology or precision medicine model where we're trying to build very well-prescribed selective medicines for selective alterations so we can have a bespoke solution for every patient in the long run. we're not there yet but this hopefully is an encouraging sign of where we can get. >> as you prepare to enter the

market with your first drug, i'm not going to ask you about pricing. but more broadly as you look at what the administration has said about drug pricing recently, some of the actions they've been taking, wanting to include the drug price in the ad for the drugs on tv, how are you feeling about that environment does it make you nervous >> well, thanks for acknowledging our commercial partner bayer, who has final say in matters of pricing. and we don't think mass advertising is the right way to talk about this drug, given how unique and rare the population is but to the larger question of drug pricing we think it's really important to protect two ideas. one idea is to make sure that novel medicines that provide benefits to patients are reimbursed and therefore provide incentives to that next generation of medicines we don't know about today but bio pharma companies all over the world are thinking about committing and risking dollars against. it's really important we have a system that rewards that

the second idea is can there be relief for patients who today are paying unbelievable out-of-pocket expenses just to have their medicines no matter how they're priced oncology pricing will always be to a premium of an antibiotic or a hypertension drug. so there needs to be a mechanism to protect patients from this so-called financial toxicity they face. >> a bigger conversation >> josh, thank you dr. jonk bilenker from loxo. >> chip stocks, nice gains today. amd leading the group, up more than 5%. followed by intel, texas instruments. so are chips a good place to be? trading nation is next

(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.

(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. ♪ welcome back to "power lunch. reuters is reporting that richard branson is quitting as chairman of virgin hyperloop one. the report says mr. branson's reason is the company needs a more active chairman but this does come on the heels of the "financial times" report last week that saudi arabia had terminated a deal with virgin hyperloop one after mr. branson had halted talks about investing in saudi arabia's public investment fund in light of the disappearance of saudi journalist jamal khashoggi now to mike santoli at the new

york stock exchange. >> courtney, thank you very much it is time for trading nation. chipmakers seeing a bounce today. check out names like advanced micro, texas instruments, taiwan semi, and intel all in the green. this after they upgraded intel to a buy semi stocks have gotten crushed this month is this the start of some kind of turnaround? to talk about that we're joined by ari wald of oppenheimer, michael binger of grady investments. how does this group set up they were a leadership sector going into i guess the highs of the nasdaq several months ago, really fallen away how does it appear right now to you? >> we think there's a turn coming for the semis unfortunately, i think that turn is lower looking at the tracking etf, the semiconductor etf, smh, taking a step back, this group has had a terrific run over the last two years and throughout last --

2018 really for several of the last recent quarters it's been in the process of topping. you can see it in the etf's 200-day moving average that moving average is taking a lower drift. so we think this group is likely to get worse before they get better we see down side risk in this etf to $88 there's a key retracement there of the prior bull. just real quick, to talk about two names, if i was pressed to buy one it would be amd correcting to a rising 200-day the one to stay away from, are stocks that look like skyworks solution below a falling 200-day moving average and breaking support levels as well a lot of stocks in that group look like that >> and amd of course having earnings this week we'll see how that plays out mike, really a call on the sector is a call on just what the semiconductor cycle's going to k like, when it might peak, whether it has peaked and how bad it might get what are your thoughts on that >> yeah. during this cycle i think we are going through a very what i'm going to call a shallow slowdown in the industry that's going to

last into the fourth quarter and the first quarter 2019 i don't think it's going to be a pervasive and i'm not calling for the end of the semiconductor cycle. i think this whole channel checking and inventory checks, it's the most overanalyzed area in the market. so two stocks i like here that have been beaten down to very low levels rin tell are intel and broadcom i like these stocks because they produce a lot of cash. they have a lot of cash. intel has been pushed down because people are worried about their new technology i think you need to buy before, you get in a good yield and it's cheap and i don't think they're going to see a share of and in the long term. broadcom i like a lot. i think it's a mispriced stock people are very worried about their computer associates acquisition. two years from now people are going to look back and say man, i wish i would have bought that stock when it was trading in the 230s because this company has a history of making great acquisitions they've got a very diverse business and they cash flow like crazy. buy intel and buy broadcom

you'll be fine >> two stable chip stocks looking to catch them on the down side. mike, ari, thank you very much for more trading nation head to our website or follow us on twitter @tradingnation now to sue herera for a news look hi, sue. >> nice to see you here's what's happening at this hour, everybody. national security adviser john bolton meeting with top russian officials after president trump declared his intention to pull out of the landmark nuclear weapons treaty bolton met with russia's security council chairman before meeting with russian foreign minister sergei lavrov 18 coal miners remain trapped after an explosion deep underground in eastern china three people were brought to the surface but one died after arriving at a hospital more than 300 people were working inside that mine when the explosion occurred saturday night. a california judge ordered stormy daniels' lawyer michael avenatti to pay $4.85 million to an attorney at his former law firm this because he personally guaranteed a settlement with him

in a lawsuit over back pay avenatti saying that the lawyer, jason frank, owed him and the firm $12 million for fraud and former new york mets player lenny dykstra in court this morning to plead not guilty to possession of cocaine and methamphetamine charges as well as a charge of communicating threats in an incident that occurred with an uber driver he faces up to ten years in prison if he is convicted. you are up to date that's the news update this hour ty, i will send it back to you >> sue, thank you very much. let's get a quick check on the markets right now. the dow had been up more than 117 points in earlier trading. right now as you see it is down 119 points, or about a half percent. the nasdaq is higher by about a fifth of a percent or 12 points, and the s&p kind of in the middle there, down also about .4%, or 12 points. weighing on the dow right now would be dow du pont, goldman sachs and american express

and the home construction etf itb hitting a new one-year low it is now on pace for its fourth straight day of losses pulte group, lennar, tripoint and taylor morrison among the worst performers in the market today. melissa. tyler, coming up, it is not just the russians we should be worried about meddling in the midterm elections. that's according to former nsa director admiral michael rodgers. what he told cnbc's eamon javers exclusively is next. plus, teens and tech stocks. piper jaffray taking the pulse of what teenagers like a look at what stocks could benefit as a result. "power lunch" is back in two when markets get volatile, don't be afraid to admit you that don't know where things are headed when you're uncertain what to do, sitting on the sidelines is not a bad idea sometimes the best trade to kema is no trade at all in other words, don't do something. just sit there

♪ two weeks until the midterms how concerned should we be about election med snlg eamon javers just sat down for an exclusive interview with former nsa director michael rodgers who joins us now with more eamon? >> that's right. michael rodgers is one of the highest-ranking former u.s. intelligence officials out there. the former head of the nsa and also of the u.s. cybercommand we had a wide-ranging conversation just a few minutes ago and i asked him about a number of topics including the saudi explanation for the fate of jamal khashoggi, the saudi journalist here's what he said on that front. >> i do believe that the saudis, you know, elements of the saudi government murdered this individual and now i think the question gets to be so what are we going to do about it what's the saudi role in this? let's talk about how we make sure that there is a level of responsibility and acknowledgment and also perhaps most importantly that this doesn't happen again

these are not the actions that we believe a friend and ally should engage in they're just not we need to convey that very strongly >> we also talked about the upcoming midterm elections the president has suggested that the chinese are attempting to meddle in the 2018 midterm elections. i asked admiral rogers, who was in government as recently as last spring, if the president is right about that here's what he said. >> they're attempting to see them use influence in other things i have not during my time, i did not see them attempt to change outcomes or to try to drive outcomes in the way we saw the russians do. >> so rogers there saying he did not during his time in government see the chinese taking the kind of direct actions to meddle in an election the way he saw the russians do and he emphasized, melissa, that he believes the russians are continuing to try to impact the outcome of the 2018 midterm election he said they're pouring gasoline

on the fire of division that's are already in existence in the u.s. political system, melissa >> we're talking about foreign actors acting directly to meddle in an election we also have the issue of foreign actors or corporations in other countries acting on social media platforms to meddle with the election. did he mention anything about the u.s. government potential role in helping to battle that aspect of meddling >> he did. one of the things he said which i thought was interesting was what americans generally can do when they see this kind of information. he said when you're looking at social media don't just trust one source be a little bit more skeptical about things that you see on social media and be aware that there are foreign governments out there trying to pump this kind of propaganda into the u.s. political system for their own benefit and just make sure that what you're seeing is actually real because there's so much information out there particularly in these last couple of weeks before the election >> fascinating interview eamon, thank you eamon javers piper jaffray out with a new survey called taking stock with

teens. the company speaking with more than 8,000 teenagers in 48 states about which tech products and websites they use most 74% saying their families use amazon prime instagram overtook snap to become the number one social media platform and more than 80% say their next phone will be an iphone. let's take a peek into that survey and to do that we're joined by michael olsen, an analyst at piper jaffray. welcome, michael good to see you. i was struck -- i want to find out who are these 8,000 teens that you talked about. and what their demographic profile was. because 70-some percent, as we said, say their family has a prime membership that feels like a pretty affluent cohort. 82% have an iphone with 86% saying their next phone they expect will be an iphone. that suggests that we're talking to a very affluent group

were we? >> that's a ee questiokey questn 8,500 teens across the country 48 states. it's a mix from a gender perspective it's almost 50-50 male-female and if you look at it from an upper income versus middle income perspective it is mostly middle and upper income. we do think in general the teen demographic is a great one to look at. it gives us a sense for what future spending is going to look like for a lost these individuals that are growing to grow up and have potentially significant income over the next 10 to 50 years that's a very important market to look at >> it seemed to me that there were really -- well, several of these brands really stood out. apple clearly one of them. and netflix was the other. as more and more families go to streaming services as opposed to traditional cable services >> i would agree i think when you look at netflix continues to be at the top of the food chain for online video,

upper 30s, 38% share of online video usage for netflix across this teen demo, and when you look at traditional cable tv as you might imagine, it's lost a bit of share down from 20% in our last survey to 16% youtube's gaining a bit of share, which we're not surprised to see either. we expect that to continue and then for apple we continue to be surprised how they have a huge lead and they just keep growing that lead with 86% intending to buy their next phone will be an iphone. >> what does the survey tell you, if anything, about facebook, michael? and specifically some of the growthier sort of properties within the facebook brand. we know that facebook, the core is slowing but in terms of instagram and what's app is there enough to offset that slowing growth in core facebook? >> you hit it right there that a lot of investors are well aware that core facebook is slowing. and we are seeing in the survey

instagram gaining share. as you mentioned at the beginning it's now the top social platform above snapchat in our survey. we asked teens what platform we would most prefer brands contact them on and 67% said instagram, which was well ahead of snapchat at 43% that could ultimately prove to be the best way to gauge potential for future monetization we definitely feel good about facebook's instagram coming out of the survey. >> as you sit there -- let's say you're an investor and you look at this survey and its results, which of the various companies we've just talked about would be the one that you would say as a result of this survey i'm going to put a little incremental money here first >> well, i think the win didn't talk about yet as much is amazon you mentioned the prime number but when we look at teens who said that amazon is their number one e-commerce site, it was 47%

of teens and the next closest, what wasn't even an e-commerce platform, it was actually nike.com down at 6%. the next closest actual e-xhert platform is ebay at 2% it's an aizz mag story of obviously the big getting bigger here and we think that's a huge potential positive for amazon to continue doing what they're doing on the retail side not to mention what they're doing with aws and advertising. >> fascinating stuff michael olson, thank you michael olson is with piper jafi ray v jaffray. >> investors can get a huge tax break. but not all those zones seem to be catreed equal that's according to a new report we've got the details next ps 3

there's a lot to love about medicare. there's also a lot to know. part a that's your hospital coverage, part b is all the doctor stuff... the most important thing to know? medicare doesn't pay for everything. and guess what that means... yep...you're on the hook for the rest. that's why it's important to consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. a plan like this helps pay for some of what medicare doesn't. so you could end up paying less out of your own pocket. that's nice. and these are the only medicare supplement plans endorsed by aarp. selected for meeting their high standards of quality and service. it feels good to have someone looking out for you. want to find out more?

call unitedhealthcare insurance company now to request this free decision guide, with aarp medicare supplement plan options to fit your needs. and learn how this type of plan works together with a part d prescription drug plan. here's something else good to know. with a medicare supplement plan, you have freedom. freedom to go with any doctor or hospital that accepts medicare patients. you're not restricted to a network. ever. and if you need to visit a specialist, you'll have a choice there, too. your coverage goes with you, too, anywhere you travel in the country. we have grandkids out of state. they love our long visits. not sure about their parents, though. call unitedhealthcare now to learn more and ask for your free decision guide. want to apply? go ahead, apply. anytime's a good time. remember, the #1 important thing, medicare doesn't pay for everything. a med supp plan could help pay some of what's left.

and this is the only plan of its kind endorsed by aarp. that's the icing on the cake... i love cake. finding the right aarp medicare supplement plan for you could be just a quick call away. so...call. ♪ -6 . welcome back to "power lunch. just last week the treasury department released its plan to get wealthy people to invest money into poorer areas. they're offering huge tax breaks but according to a new report,

not all areas designated as opportunity zones are created equal. ilan mory is live in washington with the details >> reporter: on the one hand you've got places like puerto rico basically the entire island is an opportunity zone and they are clearly in need of fresh investment on the other hand, you've got places like the affluent d.c. suburbs right outside washington the neighborhood where local officials are trying to lure amazon's hq2 that is also an opportunity zone so that report from brookings found that of the 8700 opportunity zones across the country 11% have poverty rates that are actually below the national average college towns like the one around texas a&m and the university of southern california, they also qualify. so the report questions whether this program will really direct money to distressed communities or whether it's just another tax haven for the rich now, the treasury department says that it intentionally gave states a lot of flexibility to choose which neighborhoods make the cut. and supporters argue they have

to strike a balance and look for places that need the investment but also have market potential investors are just now starting to raise money and understand how this program is going to work 2019 will be the real test of whether the cash gets the communities that need it back over to you >> ylan, what role dot states have in determining where their opportunity zones exist? >> so states could choose neighborhoods that had up to 20% poverty rates, and they could look across the state and find areas that have that 20% poverty rate they could nominate up to 25% of those jurisdictions. they then send them over to treasury, which basically approved every single choice the states made. so it was really up to the states to decide where the money was going to flow with & which areas were going to be eligible for those big tax breaks >> ylan, thank you ylan mui in d.c. for us. >> coming up, it's the number that determines your credit worthiness and it's about to change

the fico score about to get a new overhaul a look at what the changes could mean for you, next so they say that some day ai will transform the human race. well, today you're a little busy transforming your call center. dealing with millions of customers a year, like this one. no, i'm pretty sure i didn't order a squirrel playing a guitar. that's why you work with watson. it works with your systems to resolve calls faster and improve customer satisfaction. i detected fraud and helped reassign a new credit card. honey, they're overnighting us a new card. woooo!!! woooo!!! for ai that works with tools you already use, choose watson. hello! the best ai for the job.

fico announcing plans for a new credit scores system that will take into consideration how people manage their money. it could have implications for anyone look to go get a loan we have ted here what are the changes and why do we need another kind of score? >> what in is all about people with sub prime credit and people new to credit. it is kind of a second chance if you will starting the middle of next year people that are denied credit fico will give them the opportunity to look at their bank accounts and see have you had it far long time have you overdrafted other things like that that might give people the ability to raise their score up to 20 points and maybe get into a loan they would not have otherwise qualified for. >> that stuff is not taken into account at all >> no. bank accounts don't account at

all in the score this is the best case right now t. economy is doink well unemployment is low. credit delenquency is low. are people going to get into loans now that are hard to repay in the future? >> don't banks take this into consideration that they will take a broader look or simply just look at that fico score and that's that? >> it depends. for a mortgage they are going to take a wider scope mortgages are an interesting tie-in so many that could have refinanced did it is really the lenders and industry saying let's broaden out a little bit we want a larger scope to lend to a lot that couldn't refinance did. they trying to open up. >> it is to juice up applicants when it is going down. >> that's what is worrisome

about it historically how much money you is not part of your score. it's how you manage your money not how much you let's say people down the road are viewed with more credit worthy >> so in other words is this going to be sort of the court of appeal if you don't succeed you go back and you appeal and they run a second sort of screen and look at your banking history. >> yeah. fico says about 4 million people wloz scores could go up based on this model they say about seven in ten people would be approved >> seven in ten that wouldn't have gotten approval when they go back will get approved? >> that's what they are saying it's fine for people that are new to credit. i have a brother in his mid-20s who had trouble getting a credit card he had a cell phone. i would like to see those things

addressed. some of these might be going a little too far >> it sounds like loosening standards in a more formalized way. >> i think consumers need to realize because they can get one of these loans doesn't mean they should don't qualify under the best case scenario. think what if my income went down a little bit or what if interest rates continue to go up they are 17% now they could be 18% a year from now. >> their borrowing rate would be higher also. >> that's right. we see on the high end credit card rates average about 25% on the low end around 17 >> so if you submit the super they may charge you more than you would if you went through on the first cut >> that's definitely possible. the worst credit score the higher the interest rates. it is important to pay balances in fall. you don't want to be paying 17 to 25% to get rewards.

rewards are great but you have to pay it in full. >> all right thank you. just over an hour until the closing bell we like to turn them into people stocks are trying to make a comeback they are just like people. check please is next you're in the business of helping people. we're in the business of helping you. business loans for eligible card members up to fifty thousand dollars, decided in as little as 60 seconds. the powerful backing of american express. don't do business without it.

i am an independent financial advisor. when i meet a new client, i start by asking questions like: did you understand all the fees you were paying? was your broker a fiduciary? were you satisfied with the attention you were getting? then i explain that being independent gives our firm the freedom to give our clients the attention they deserve. we can put a plan together that makes sense for them. independence lets us do that. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

in 1948... [sfx: bottle sounds on conveyor] one bottle at a time. today, we produce nearly 20 million cases a year. chubb has helped us grow for the past 30 years... they helped us prevent equipment problems during harvest and provided guidance when we started exporting internationally. now we're working with them on cybersecurity. my grandfather taught me to make a wine that over delivers. chubb, over delivers. president trump provided a

little more color on the major tax cut he mentioned over the weekend. he told reporters on the south lawn as he was headed to a campaign event that he will be seeking a 10% tax cut for middle income earners the administration will be seeking a resolution for that but no details on timing just yet. the president also made kmenlts on saudi arabia saying she not satisfied with the investigation of the murder. he said he does want the investment with saudi arabia to continue so the president there making comments just as that financial summit is set to kick off and also getting more color about the tax plan >> it will be a 10% reduction in the rates or what? >> that's what he said a to 10% tax cut unclear how they would go about doing that, what type of mechanism they would use or when

or how they would consider it. congress is debating whether or not to make individual tax cuts available that were included in the current law. >> thanks. >> yeah. our expert in d.c. >> going into the close watch financials, session lows right now as stocks are trying to come off of those lows. >> thanks for joining us >> closing bell is next. it's time for the closing bell another volatile day on wall street on this, the start of the busiest week we'll break down what to expect there. plus seeing the biggest one day in years top analyst says it looks like a mine field we'll tell us what's behind that warning. shake up in the sea sweet at kimberly clark sending that stock sharply low are today. we'll discuss whether it can