twitter. how about twitter? any takers >> no. >> why >> its a huge day, docket that. tesla quarter i have no reason to say this, i don't trust the quarter, but twitter is just not my kind of thing. >> thank you so much for watching as well. "power lunch" starts now. i'm melissa lee. stocks rallying back is the bull run still intact and where are the buying opportunities opening up you've got questions, we've got answers. one defensive play that is hot right now, consumer staples, this group on pace for a fifth straight month of gains for the first time in nine years, should you get in at these levels we'll tell you. plus the number of homes under contract falling from a year ago and new home sales are tanking with rates on the rise. has housing hit a peak "power lunch" starts right now.

and welcome, everybody to, "power lunch." i'm tyler mathisen. let's talk about stocks and they are recovering a big chunk of those titanic losses from yesterday. the dow up for the first time in four. the s&p up for the first time in seven. both are once again positive for the year ever so slightly. the nasdaq rallying the most today up more than 2.5% right now. despite those gains, the nasdaq does remain in correct territory down about 10% from its most recent high. still on track for its biggest monthly declines since november of 2008. the russell 2000 small caps and the dow transports rallying today but also they are mired in correction territory. tesla among the stocks fueling the nasdaq 100 at this hour. microsoft and intel leading the dow right now. melissa? >> let's get straight to what is driving the action at this hour. bob pisani is following the money from the new york stock exchange. dominic chu with the scorecard

on this very busy day. julia boorstin taking a deep life. diana olick on the home front but we kick it off with bob at the nyse. >> reporter: hello, melissa. we've got something unusual happening today. take a look at the s&p 500. we haven't had a significant sell program come through at all today. that's a little unusual given what's going on in the last couple of weeks. why the buying why we getting this bounce today? two things. first we are dramatically oversold in 40% of the s&p 500. i'm talking industrials, materials, banks, energy. we're to standard deviations away from where we normally are in trading activities. we mentioned that vix. its much higher than the futures. that has been for a week now. that's unusual. we talk about this pain trade. what would give the greatest number of pain to the most traders? the pain trade is higher and

that's exactly what's happening today. a lot of traders positioning for the market to go down but the market goes up and that causes the greatest amount of pain. we got to get financials acting better. bob, why can't they move at all? the banks have been terrible since the earnings reports. s&p's down. the confusion on the bank front. look at zion. tuesday was up 4%, today its up 3%. you make sense of that and this was all of the regional banks are doing this. you can put up fifth third. the same thing happens with that. this is what causes traders' heads to spin. up 2%, down 4%, up 3%. that is not a pattern or fundamental trading going on. that's just a lot of people trading the stock in and out depending on what the momentum is. you get these ctas that are out there trading momentum every day certainly not on fundamentals and everybody is trying to get a dras on what the fundamentals

are. >> the biggest day of earning season, nearly 70 of the s&p 500 companies report either before or after the bell. it is a good time now to check on where we stand and dominic chu has -- will take us now inside the numbers. >> around 40% of the s&p 500 have reported their results and as we think about this earnings day playing out, we've got 39 results coming out this morning of that busy earnings day like you said. according to data from refin tiff they're tracking all of these earnings, beats and misses, that sort of thing, among those 39 stocks, 33 of them have actually come out with earnings beat. that's a good sign there. the vast majority have done pretty well in their earnings. on the revenue side of things, its a little less robust but still, 20 companies there of those 39 have reported revenue beats there. that's something to watch. today's trade. as for how that shapes into the bigger picture, how earning season is shaping up.

198 reports. blended earnings, that's the realized earning we've already gotten but the analyzed estimates, we could see about 23.6% earnings per share growth. that's a very good number. on the revenue side of things, that blended revenue number will come in as well at around plus 7.6 mr. and mrs. as we talk about the earning season overall, it is one where we're seeing a predominant feel of positivity, however the market reactions have since not been all that great. we will watch what's happening. of those companies reporting so far, 82% have beaten estimates and about 60% have beaten revenue ones. back over to you guys. >> thank you. let's drill down to specific reports with our earnings squad. julia boorstin is looking at media. >> reporter: let's start first off with cars because tesla and ford are lifting all of the auto

stocks higher. tesla reporting a surprise profit. and that has lifted shares substantially and as result you've got a number of analysts who are raising their price targets for tesla. jpmorgan boosting it up to 2.25, consumer edge up to 350. the average price target up $10 to $315 and when you look at the autos, you have to look at ford because its popping today after reporting slightly better than expected earnings yesterday and a little bit of reassurance for wall street that the company will provide more details regarding its restructuring plans in the weeks and months to come. on the airline side, the reason we're here in dallas is because we're focusing on american airlines third quarter earnings. the company met expectations. its fuel costs up 42.6%. we're seeing this with all of the airlines. higher fuel costs. how are they able to offset that and what is the outlook? we'll be sitting down with doug parker, ceo of american airlines

exclusively on cnbc to talk not only about the third quarter but also his outlook for the fourth quarter and 2019. back to you. >> thank you. shares of twitter, they are up right now best day in a year. julia, what are the markets loving about this? >> tyler, twitter shares are up about 14% on a top and bottom line beat. the company reporting earnings of 21 cents per share, 7 cents better than expected on better than expected revenue of $758 million. that top and bottom line beat out weighing declining monthly active users. those numbers falling more than expected to 326 million but the company warning about another mid-single digit decline and monthly users coming in the fourth quarter. switching over to comcast, those shares gaining nearly 4% today after also beating expectations on the top and bottom line. investors responding to better than expected growth in broadband subscribers with video subscribers declining much less than expected. coming up after the bell, we'll

hear from snap. analysts expect the company to lose about 14 cents a share that's right in line with a year ago while revenue is expected to grow 36%. the big question is whether the company will continue last quarter's user declines. analysts projectsing that snapchat will lose another 2 million daily users to land at 186 million so that is the number to watch. >> it seems that there's been a real change in our twitter's viewed because just last quarter we also saw a slow down in monthly active users. we saw the shares down about 20% on the back of that, here we are, its a different story. >> twitter has really been judged on that monthly active user number. what's changed, i think, in the past quarter we've heard a lot of warnings from ceo jack dorsey about how they're focusing on cleaning up the platform and how that will entail losing a certain number of monthly active users but he stressed repeatedly on the call today that its all for the long-term health of the company so its worth having that short-term pain. their revenue far outperforms. they're able to grow their ad

business. >> thank you. more fed speaks today. steve liesman is here with the details. >> not just any fed speaker, he is the new vice chairman. this is his first speech on monetary policy. he's the kind of right hand policy man to powell here and the vice chairman saying rate hikes are likely appropriate but there is a twist here, melissa. work with me for a minute here. i'll tell you the normal stuff he said. monetary policy is still accommodated. melissa's yawning. fed policy should aim to sustain the expansion. now here we go. he says the number of hikes in 2019 depends on growth, employment and inflation and let me give you what we call maybe the formula here. he's going to do -- he would support more hikes than he expects in 2019 now if there's strong growth, strong jobs and it comes with a, quote, material rise in inflation.

if you get the other way end, fewer hikes than expected, strong growth and jobs, but stable inflation, then he wouldn't do more hikes than he expects. the trouble with this -- we don't know what's expected. we don't know where he is. i haven't had a chance to talk to him yet. maybe he'll publicly say what his expectation is. we don't know. he says the labor market, unlike others perhaps in the fed, may not be as tight as previously thought which means there's scope for the job market to strengthen further without generating inflation. he notes the past two expansions did not lead to higher inflation and then check out this quote. he says, the traditional indicators of cost-push price pressure are not flashing reed right now. he's cool with what's been happening and on the issue of the recent selloff in the market. the central banks do need to take account in the change of the financial condition. i want to show you the last

estimate of gdp we have going into tomorrow's report. 3.3 is the number. up 0.1%. we're still forecasting 3% for the fourth quarter after a 4.2 in the second quarter. so strong growth is the expectation to close out the year. >> but growth's slowing a little bit. >> the 4.2 is never sustainable. if we can hold on to three, one should be very happy. >> i'll join you in that. >> threes a good number. >> thank you. he called the correction and now he says the selling isn't quite done yet. morgan stanley mike wilson on halftime just a few minutes ago weighing in on where we are in this choppy market. >> there's been a lot of damage now. i would argue 80% of its probably done at this point. i would argue from a price level standpoint we still think 2450, 2,500 would be a very good entry point for the s&p 500 and we probably get there sometime in the next four to eight weeks.

>> so is he right? is 80% of the damage done? is the bottom coming in the next four to eight weeks? let's bring in tony roth and randy warren. you guys come at this from different perspectives. tony, you say buy the dip just as in february and randy, you say buy protection. i'll start with randy. why are you a little more defensive here and what kind of protection should i be buying? >> its pretty simple. the global economy really has a cavity at this point and people don't know whether to pull it or to just do a root canal but the bottom line is, cavities don't just go away. they tend to get worse. we're a little worried about where the market's been. the last couple times i've been on your show i've been saying we're worried and it doesn't help to talk about, oh, is it going into recession or isn't it shouldn't the investor have some -- something that they can do about this situation? and what we're saying they need

to do is, they need to buy some protection, a volatility strategy that can protect you on the downside while still allowing you to make money on the upside if things snap back. >> are you talking options, randy? >> no. there's strategies out there that -- some might use options. we have one that uses options that we use for our investors and, you know, the options can actually make money when the market goes down and so they act as a buffer. traditionally bonds have been that buffer for the last 50 years, but its not 1974 any more and mr. powell is acting kind of like it is and interest rates are going up in anticipation of a recession which is going to cause a recession if things keep going in this direction. so we think investors need to reach out and they need to look for alternative investments like this kind of volatility strategy or some other alternatives. >> let me turn to tony and get your opinion there. you say its time to nibble if

not jump in and buy the dip. >> our assessment -- thanks for having me. the assessment of the overall domestic and global economies is different. so we look at the environment and we see a pretty strong economy domestically. we look at manufacturing, nonmanufacturing, ism, various data and we're still near cyclical highs. i'll give you an interesting statistic. its a little bit complicated but bear with me. when we see a one standard deviation the research shows that when he we see that increase the volatility and we don't go into a recession within the next year, okay, we're not forecasting a recession. there's a 92% chance that the equity market will be up at least 20% from the bottom of that volatility spike. and so, given that there's no recession, given we're at 15 forward multiple levels now, given the draw down in equity levels, given that we think that the rate environment continues

to accommodate us, we're not concerned about growth right now. growth is still pretty good at 3 plus percent, the risk factor is around tariffs and trade. if you take that out of the equation, we have a very rosy picture for investors. you put tariffs in its a wild card. >> tony, thank you very much. tony roth and randy warren, we appreciate your time. randy's with warren financial service. stocks are bouncing back today but they're still nowhere near recovering from the losses of yesterday and so far this month. the market's do continue to worry about trade, the global economy, interest rates. up next, a ceo well positioned to weigh in on those topics, rich fain of royal caribbean joins us next.

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shares of royal caribbean under pressure right now as you see the company lowering its future guidance and will hear from the company ceo in just a

minute. let's get the details on the earnings report from seema modi. >> the shares are down about 1%. royal caribbean earnings beat the street by a penny. it did narrow its outlook for the full year citing the stronger dollar and higher fuel prices. 2019 bookings are up, a sign that consumers are already starting to consider their vacation plans for next year. analysts say one of the main risks is higher fuel costs as it will effect the cruise operators margin and reduce the discretionary income of its key clientele. shares up but lower by 7% this year. >> stick around. richard fain the chairman, ceo of royal caribbean. thank you for joining us. >> hi, and thank you for having me back. great to be here. >> i want to get some more color on the fourth quarter guide. what is the main driver of this? some analysts are saying that it

could be everything combined from seas to fuels to bonus color? >> we kept our guidance unchanged. we're looking into one of the strongest periods we've ever had, frankly this is a good time to be in the cruise business and especially its a good time to be at royal caribbean. we narrowed our guidance so we kept the midpoint the same and said we will still make it with all the things that are going on. not withstand having some headwinds from foreign exchange and fuel, so the business is very powerful. frankly to me, overcoming fuel and foreign exchange shows how strong we're doing. >> i understand that you're saying that you've narrowed the guidance. the take on wall street that it was a lower fourth quarter guide than what they had expected and as you know, richard, its all about expectations on the street. so can you give us the color behind what the difference is between what you're guiding to

and what wall street had been expecting? >> well, i think there was -- timing differences, so we did better in the third quarter, slightly less than they were expecting in the fourth quarter, but our forward outlook hasn't changed at all and, in fact, since the beginning of the year we've overcome $115 million worth of headwinds from foreign exchange in fuel and still raised our guidance overall. there may be a timing difference, but our business remains absolutely on track and i think there was a lot of focus on 2019. we're not ready to give numbers for 2019, but we were very positive about the outlook and we feel very positive about the outlook. >> richard, one recurring theme over the past couple of quarters has been higher costs especially related to fuel prices. what are you planning to do with higher cost going forward? can you absorb it or will you have to pass it on the consumer by raising the price to book a cruise >> well, we have been overcoming

it and i expect that we will continue to do so. we -- we have -- first of all, the best way to control our costs on fuel is to use less energy and that's good for the environment and its good for our bottom line and we've been very successful at it. our energy consumption is better than our competitors and we keep improving it and for me that's actually quite good. but the other thing we have to do is continue to outperform in terms of satisfying our customers and generating a higher revenue to deal with higher fuel cost and higher foreign exchange and so far that formula's working very well for us. >> as you look into 2019, richard, where do bookings stand? how do they compare? >> thank you for that question, because bookings compare very nicely. in every quarter of next year we are ahead on volume and we are ahead on rate.

we are booked further out than we normally are and so the combination of that means, we have more assurance about what's going to happen and we have less than we otherwise would've had to sell. so having less inventory that we have to be able to sell and having higher prices on what we have sold all goes well for 2019. >> all right, richard, will leave it there. great to see you. >> thank you. big day for the broader markets but these former hot stocks are getting crushed today. align, amd, grub hub, we'll tell you what's sending those lower. is it a buy now? "power lunch" will be right back.

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♪ ♪ (buzzing) gather new insights, leave your data protected on-site, and put it all to work with ai. the ibm cloud. the cloud for smarter business. the overall markets are moving higher but there are some disasters du jour to tell you about. the first align technology, the maker of the inadvisi line dental product. fourth quarter guidance well below the street's estimate. the stock was at $397 a share on october 1st. you see it there now at 227. amd and other former taking it on the chin. amd misses on revenue and finally grubhub, all the numbers were better than expected, but analysts point out an increase in marketing spending that could

hurt forward earnings as the reason. the stock is moving lower by 9% right now. the nasdaq 100 bouncing back today but still down nearly 8% in just the past month. is there opportunity in the tech rack that's next. american airlines doug parker joins us. his stock is flying high today but what kind of turbulence is he looking out for. that's next on "power lunch." finally. you're still here? come on, denise. we're voya! we stay with you to and through retirement... with solutions to help provide income throughout. i get that voya is with me through retirement, i'm just surprised it means in my kitchen. oh. so, that means no breakfast? i said there might be breakfast. i was really looking forward to breakfast. i know... voya. helping you to and through retirement.

hi, everybody. i'm sue herera. here's your cnbc news update for this hour. a north korean official calling on the u.s. to lift sanctions against his country immediately. the official from the country's ministry of foreign affairs making the comments at a defense forum in china. >> the united states should keep in mind that both leaders of the dprk and the u.s. recognize that the mutual the denuclearization of korean peninsula in singapore lift immediately the sanctions and the hindrance to the confidence building. a man accused of killing two people at a kroger's in kentucky

has been ordered to be held on $5 million bond. the 51-year-old was arraigned today and given a public defender. the judge ruling that bush is a danger to the community. and venezuelan president calling vice president pence a crazy extremist for the comments pence made about the migrant caravan traveling through mexico. the group was financed by venezuela. he did not provide any evidence. you're up to date. that's the news this hour. >> thank you. let's get a check on the rally. the dow is up for the first time in four sessions. it is up by 4% right now. s&p adding 43 on the day. the s&p is up for the first time in seven sessions. both are positive for the year once again. the nasdaq, though, today the big winner compared to yesterday. today is up by 2.5% despite these gains, it remains in correction territory down 10% from its most recent high. tech the best performing sector

today. up almost 3%. tyler? >> shares of american airlines rising 8% today after the company's earnings report, but it is still down 37% so far this year. phil lebeau standingby with th company's ceo and a "power lunch" exclusive interview. phil, over to you. >> doug parker, ceo of american airlines, they just talked about the performance in the third quarter. the stock getting a bit of a pop today. when you look back on this quarter, a lot of people will focus on jet fuel, what are you focused on >> that's a big part of it. our earnings are down for the quarter almost $500 million and 750 million increase in fuel price alone. the cost of fuel clearly is driven our earnings down year over year, but we know that our job is to make sure that fuel prices do what they do and we need to make sure that we give the right return to our investors. the other part of the story is

revenue performance, while revenues are strong and demand is strong, we need to continue to work to make sure that we're doing everything we can to cover the cost, the higher cost of fuel. >> you had an analyst meeting about a year ago and you know this question is coming where you said to one of the analysts, our stock is going to be at $60 by november of next year. november of 2018, its nowhere close to $60. you made the bet for a bottle of wine. when you look at how the stock is being viewed by the street right now. do you feel like you're unfairly being criticized for the lack of growth in revenue relative to your peers >> it was a fun bet with an analyst who's turning 60 in november. we got really close. we were like 59.5. i'm probably going to owe him that bottle of wine. but that's okay. maybe we'll do 61 by 61. nonetheless, our industry is still feels under appreciated by the street. that's ours to fix. its not a complaint.

the history of this business hasn't been, you know, one where people expect real rates of returns. i think we built the business and can do that now. we need to prove it over cycles. any way, we always are pretty bullish in our stock but at these levels we're incredibly bullish. >> how do you get that growth in revenue particular when it comes to customer upgrades you said we can do better, how do you do better in terms of getting customers to say i'll pay more to move up to premium economy? >> by delivering products that customers are willing to pay for which is what we're doing. introduction of premium economy throughout our fleet is yet another level of service. in between the main cabin product and the first class product, there's real demand for internationally, so we know that will work. and also today its happening. we can do a better job of making it easier for our customers to see and to purchase. >> i'm not trying to get you to talk about your competitors, but everyone looks at you guys and say why are they not growing

passenger revenues as quickly as delta or united? >> a good part of that is where we fly. we have a huge presence in latin america which hasn't been as strong as other parts of the world. that's not all. one of the things we've come out four years ago -- that's opportunity for us. they had the ability that we don't yet have to -- for customers to be able to purchase this in channels other than their own websites, for example. something we'll have in 2019. >> reporter: jet fuel, what's your outlook i know its hard to predict where its going to go. do you feel the volatility that you've seen in the past when we've gone through these cycles? >> it seems volatile. this run-up in the last, you know, ten, 11 months have nearly doubled. that's volatility and falling off as it just has in the last week. its definitely volatile. that's not for us to try and

predict where its going to go. its one of our large cost components. we need to make sure that we're being able to pass that along. >> reporter: doug parker, ceo of american airlines on a day when the stock gets a much welcome, 8% pop following third quarter earnings. back to you. >> thank you very much. we welcome scott wapner who will join us for the rest of "power lunch." good to have you. >> thank you for having me at the lunch table. >> we don't serve lunch. >> i found that out the hard way. >> twitter shares are soaring more than 13% today on its strong earnings beat. microsoft rallying on its results. tech stocks bouncing after an october filled with plenty of carnage. this after losing nearly 11% this month through yesterday's close. the chip stocks fueling those declines. so is the tech wreck over or close to being over or is there more pain ahead? let's bring in scott kessler. good to see you.

>> good to see you skorks the. >> take twitter, first. you have a hold. you're not buying in to it. >> you know, scott, not really. melissa alluded to the fact that we were negative on the stock earlier in the year and that was when the stock was in the 40s, it came down to the 30s and even the 20s. where we sit right now, the core was good. i think people were really encouraged by the revenue growth and profitability but there's still some cleanup issues related to maus, daus, as much as they went up 9% were the lowest they've been in some time and we still think there are some outstanding questions related to the name here. >> the street seems to be given twitter the benefit of the doubt, though that they're doing the right thing, whether its purging fake accounts, sacrificing users, if you will to do the greater good to make the service better, why aren't you willing to give that company the benefit? >> yeah. so i think that's a fair point, right, the benefit of the doubt.

i think they're entitled to it on some level given that, you know, when you hear the cfo earlier talk about health being a priority for the company in terms of, you know, calling users that shouldn't be on the platform, i think that's constructive, but i think when you look at where the company is and their opportunity to grow over the longer term, we definitely see some issues there and honestly, we think the stock is just fully valued here. it is not as compelling as some other names that we see in the market. >> facebook, for one, you've got a buy rating on facebook. why do you give that more of the benefit of the doubt than twitter when it seems like the potential troubles that facebook has and the cost associated with those troubles is really unquantifiable for all intents and purposes >> that's a good point. i think a lot of it really can be answered in one word and that's valuation. facebook right now is essentially trading in a market multiple and we think a lot of bad news is already in the

stock. so if they can deliver anything above, you know, what i think are pretty muted expectations, i think that the stock has the opportunity to materially increase right here. keep in mind, this was a quarter ago a stock that was well over $200, now its under $150. the earnings outlook, sure, it isn't as great as it was but its still pretty solid and we like to risk/reward going into results. >> not much love for microsoft. i thought it was a great report. why not? >> you're right. it was a great report, scott. if you look at the continuing revenue growth acceleration or the beat on eps, this is a really strong set of results from the company, but from a valuation perspective, it just does not look compelling to us right now. i think it trades at kind of a mid-20s multiple. you're looking at i think normalized revenue growth

probably in the low teens. to us its a great company and they're executing well but the stock just isn't compelling at this point. >> how long have you had a hold on it? >> too long. -- >> in other words, you miss it had. >> we did. those things are going to happen. >> yeah. i hear you and your price target, though, you raise it this morning is still $3 lower than where the stock's trading right now. >> the stock obviously has had a good day today and you know what, we never would have expected that stock to join the company years ago would have really resulted in the transformation that we've seen and all you have to do is look at the top line growth which was really far in excess of what we were expecting. >> scott, thank you. >> thanks a lot. coming up, the latest read on housing that has a crucial part of the american economy grappling with rising interest rates. is 5% on the 30 year really going to crush the housing market are we already at peak house sng

and -- housing. microsoft, intel, visa, cisco, those are leading the gains there. "power lunch" is back in t. wo

big bounce back for stocks as you saw there as interest rates rise we continue to watch the impact it is having on the economy and housing in particular. today we got pending home sales the most up-to-date report on how higher rates are affecting buyers. diana olick has the numbers for us. hi hi, diana. >> reporter: hi, scott. pending home sales gained -- so buyers outshopping during the month and figuring out if they can afford the home at today's higher mortgage rates.

yesterday we saw a steep drop in contracts on newly built homes. those homes come at a price premium and builders aren't just not lowering prices yet. the gains for existing homes delivered across the nation with the south losing ground probably due to the hurricanes, but the west gaining as more supply hit the market. now the realtor's economy economist says more supply is helping. back to you. >> stay where you are. let's bring in our friend, wharton school professor, susan, good toe sue. you say we're at peak housing, what does that mean and how did we get here? >> we're at peak housing supply, construction is still at lows. we're near recession lows in terms of our long run history on construction starts and i don't see them going up significantly from here either in the multi-family or the single

family. so we're peak in that sense. housing prices still have room to grow, however, and their probably going to continue to grow faster than -- than cpi, which is -- we're not a peak there and that, of course raises affordability. >> which hurts affordability obviously when you have prices going up and you have interest rates going up. why is construction so low if everybody is talking about the inventory issues that the market has? you would think that it would be moving higher. >> you would think and the answer is cost. cost, cost, cost. the cost of land particularly and regulation. where the demand is where the costs are high and so its just simply hard to get that product out at the price points which would be affordable and we are seeing on the luxury end that there is some easing off on prices, but not at the entry level. their the demand exceeds supply. >> diana

>> reporter: but susan, i have to wonder, you talk about there being more price increases on the horizon. we have supplies of new built homes at a seven month supply. which is an oversupply. that's why construction is slowing down also, the cost that you talk about, but how can prices continue to go higher if you have such a supply of newly built homes and you have affordability issues in the existing home market >> you're right on the market. on the high end, i think we'll see some easing. but overall housing prices are continuing on their way up because of the mismatch. the supply is not where the demand is and that's middle market. >> have we tilted in the favorite of landlords? >> yes. the millennials are at that point where its buy now or will see very different market than in earlier periods there. we have a surge of millennials at 31, 32 and home ownership is usually in their sights. they still want to be homeowners, but with these

higher prices particularly in the affordable range, its hard. >> but eventually they'll find a way, right, and so that would put a floor under prices i'm guessing >> exactly. that's where the demand is coming. right there. >> yeah, yeah. what do you think is the pain point for mortgage rates where it really begins to pinch or have we -- have we already hit it is 5% the number >> we're not at a pain point yet. 5% believe it or not is 100 basis points higher than last year. its not historic high. this is still within the range of affordable, but if this keeps going, we are going to see people going to the side lines and right now there are people coming in just as diana said who are saying, we're fearful of those rates going up. at some point we'll see more lock in folks, less inventory on the market because people are just going to hold on to those lower historic rates if rates keep their march going up. >> susan, from washington today.

thank you very much. diana, thank you as well. while the markets have been selling off, consumer staples have been holding on. in just the past week that sector is up nearly 3% while the over all s&p 500 is down 2.5%. so has steady become sexy? we'll answer that question when "power lunch" returns. at bairdr 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.

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what a difference a day makes. the dow is now up 397 points a gain of 1.6% compare that to the 608-point decline that we saw in yesterday's session. no surprise, microsoft and visa among the leading gainers on the dow today, after posting better than expected earnings procter & gamble, coca cola, among those losing on the dow. actually, though, consumer staple stocks, they have been one of the biggest safety trades during the selloff the sector was on pace for its fifth straight month of gains. that hasn't happened since 2009. p&g helping fuel those gains it's on pace for its best month since august 2014, still more than half of its components are still in correction territory. where should investors look to find the best value? let's find out with nick modi, consumer staples analyst at rbc capital markets. good to have you with us. >> good to be here. >> procter & gamble had good

numbers. a procter & gamble, clorox, kimberly clark, trading above market multiples right now should we be paying above market multiples for the makers of face cream, toilet paper, and tissues? >> well, it depends on the company, so from a sector-wide basis, i agree, i think there's some valuations maybe you want to stay away from given some of the fundamentals i'd have to say the u.s. consumer is really being a nice boost to some of the companies in terms of their top line we saw that from procter but there are companies out there that i still think have value. right? and they have optically high multiples but they have very high growth rates. i'm talking about monster. constellation brands estee lauder which has a lot of exposure in china. wait until next week, they're going to have a very good quarter. it there are opportunities out there. >> how about the companies that are stables of brands, like the kimberlys, the procter &disinte

generic competition. >> coca cola is the only big cap name we're recommending. you talked a lot on your show about how much coca cola changed. that's the one we like look, p&g, i think you have to give them credit, for the first time in seven years they're gaining share again. so they should all of us that even a big company can deal with disruption right? you just -- it takes some time and takes some money that's what they're going. >> you got currency worries, tariffs, margin pressures. one or two companies withstand that better than some of the others >> yeah, so the companies you want to dieal with, for instance estee lauder doesn't getti impacted by the tariff they're not bringing components into the u.s. and selling them there's a company that's hedged on that. you think about a company like constellation brands, they don't have much currency exposure. it's primarily a u.s. central company. >> isn't estee, though, selling into china and other parts o asia

indirectly if china is slowing or the trade war gets worst between the united states and china, couldn't that indirectly impact a company like estee? >> it could. that's what the stock retrenched quite a bit on that concern. as we've done our work, what we're finding is there's a cultural phenomenon on skin care in china and estee is riding that wave. when they report next week, you're going to see a very, very healthy skin chair frare franch. some companies in china have sold off but have good numbers in china and sold back up. that's what i expect with estee next week. >> why are the big aggregators of brands less favorably positioned in your view than some of these other companies? >> i, you know, tyler, i don't know if it's aggregate or brand model. i think it's big company syndrome you know, a lot of companies get too big. their infrastructures get too unwieldly. they can't manage nimbly they lose focus on the local markets. they try to central everything, manage everything centrally. we're starting to see companies make these changes now for instance, p&g is over the

next one to two years i would reckon they'll spend a lot more of their resources in the local markets like china, brazil, the philippines, versus trying to allocate aef allocate everything from cincinnati that's a business model change i think they'll go through that will help them compete more effectively. >> what do you think of when you hear people say consumer staples are safety trades? >> well, they are. we saw that yesterday. today, they're not, obviously because it's a risk-on environment, so safety trades, look, thatey have yield. their cash flows are a lot less volatile many consumer staple companies are not that levered in a rising interest rate environment, yes, the yield trade goes away. they're not exposed fundame fundamental fundamentally. they're still safety trades. quite frankly, they're levered moat to t most to the consumer versus utilities and reits the consumer is doing very well now. >> do they have pricing power, still, do you think? it >> depends on the company. for instance, coca cola, absolutely, they put in pricing. price elasticity are lower than

expected tobacco companies, another example. >> nik, great to see you. >> thank you. >> that call was for you, by the way. >> rbc capital markets. all right. coming up, the great rate debate is president trump right is the fed raising rates too far too fast and killing the economy? or is the fed right and jay powell needs to stick to his plan we got that. plus we'll get you ready for the big market-moving earnings due out after the bell including amazon and gglooe. the second hour of "power" is two minutes away

welcome back to the second hour of "power lunch." i'm tyler mathisen here is what is on the menu. a big rally on the busiest earnings day of this earnings season and it isn't over yet amazon, alphabet, chipotle, intel, snap, and more. they are industrial on top to report their profits and losses by the end of the day. and they have the trades ahead of those results plus, jim cramer says the president pland fed chief are bh wrong about the same thing that would be the strength of the u.s. economy who's right here we will debate it. and home builders have been crushed this year as you way well know, down 25%. the number one analyst on the street says now, now, now, is the time to buy, buy, buy, upgrading a, yes, slew of names.

he'll tell us why and which ones have the most upside as "power lunch" resumes right now. and welcome to fx "power lunch. i'm melissa lee. stocks near session highs. the dow and s&p 500 are back in positive territory for the year the dow is up by 1.5%. a gain of 374 points s&p higher by 47 or 1.8% consumer discretionary and technology are leading today utilities, the only sector lower. and the communications sector, that is on pace for its first positive day in six, led by shares of twitter. those shares are on pace for their best day in a year after better than expected inin eedee. ford and tesla, giving a lift to the entire auto sector gain in tesla up

also jumping, amazon and alp alphab alphabet, leading the earnings after the bell tonight the two biotech stocks, alexeon among the biggest winners. >> thanks so much. i'm scott wapner we're halfway through the busiest day of earnings season so far with names set to report. we have full-team coverage bob pisani at the new york stock exchange on what's fueling this big rally. deirdre bosa watchi ining amazon josh lipton looking ahead to alphabet and kate rogers checking in on chipotle bob, we kick it off with you first. >> why are we getting a bounce today? a combination of oversold conditions and good earnings today. why the bounce number one, i think most importantly, we have not seen any midday sell programs where all of a sudden out of nowhere, people start dumping a lot of stock in the market. hasn't happened today for whatever reason. i think more importantly, though, we have been dramatically oversold in about 40% of the s&p 500 industrials, materials, banks, and energy two standard deviations away

from the normal trading patterns in the last couple weeks, by that i mean straight down and it doesn't always go straight down. it stops eventually. that's happening today another important fact to look at is the vix cu the front month vix, cash vix, 25, 26 last couple days, down to 23 still above the futures. that rarely happens and goes on now for more than a week that usually ends and that's exactly what we're seeing today. a little bit of compression in the vix. the other important thing is just a great run of earnings today. i want to highlight the tech earnings not just microsoft, but xylinx, strong concern teradine strong. even twitter on the strong side. so good run of tech earnings whirlpool, when is the last time whirlpool raised their earnings? it was july of 2016. stock's been nowhere but down. $160 earlier in the year now $110 finally good news. maybe a bottom forming in

whirlpool. time a stock to watch going into the close, i vote for microsoft. it's been a perfect track for the market today used to be a good bellwether in general. look for microsoft as goes microsoft i think goes the rest of the market for the day. guys, back to you. >> robert, thank you very much we turn now to the economy a big debate brewing now about just how strong things really are. our jim cramer telling the "mad money" faithful both the fed and the president are wrong here and that they are wrong about the same thing they both think the economy is red hot. the data we have gotten over the past few weeks, and the earnings reports paint a different picture. so says mr. cramer steve liesman joins us now with a closer look at that. so where are we? >> jimmy doesn't care who you are, he'll take you on it doesn't really matter. >> fed chief, president. >> president mr. universe >> better watch out, be you next. >> here's the deal as i see it for what it's worth. economic data has remained pretty hot, at least through the just completed third quarter looking at 3.3% growth we'll get that number tomorrow morning.

most economists see another three handle on this, the fourth quarter. the impact on tariffs on companies and the overall economy clouds the outlook we had several ceos on cnbc today, struggling to see their way through those clouds >> the recent tariffs have caused us to accelerate those conversations and look what we can do both from a supply chain efficiency, you know, at the end of the day, we think a lot of the things that are coming our way are addressable and we can address them through operational efficiencies through managing our business. >> and through moving things out of china is that what you're saying >> we move suppliers all around. we'll move things out of china we were in the works of doing that before these works came into play. >> that's from the yeti ceo. some companies we hear stories of higher prices, dire stories of dmothose who can't afford to make their products anymore there were comme there are comments about companies that are just adapting

>> that is a concern what wefr se've seen so far is hasn't -- consumption. it changed trade flow. fewer soybeans going off the west coast to asia, more going off the gulf coast to latin america and south america. trade flows are changing a bit we'll have to wait and see of course, not a big fan of tariffs, they are a thax on the economy. >> the fed's beige book replete with negative talks asht tari s tariffs. reuters counted it up. they found the word, tariff, mentioned 186 times in the beige book since donald trump became president. only twice under president obama. >> there's also a mention in the beige book yesterday from the philly fed saying a lot of industrial players that they have tracking there's pull forward in terms of demand, they expect a slow down. >> some of the good numbers we're talking about are going to be pumped up that way. think that's for sure true

you had some such from the tax cut pulled forward some of that into 2017 some of that might have helped as well. look, i long maintained we are going to be very lucky to up the growth numbers to 2.5%. 3% is probably too hot a runway for the economy. and it does complicate fed policy here in a way that's not clear. because they raise prices, but also can reduce growth so if you're a company, and you're getting your stuff from china at "x" price and all of a sudden it's 2x or "x" times .25 i guess is the right way to think about it, it changes things you may slow down your production idle resources causes recessio recessions. >> you have mester tomorrow morning. >> yes 8:00. >> that's big. >> her outlook for policy. we had one today say it's at least full steam ahead to neutral. then we'll figure out where inflation is in growth next

year. >> yeah. on that note, please stick around, steve. for more on the great rate debate, whether the fed is right on the economy, and on the right track, let's also bring in diane swank, chief economist with grant thornton and peter is the chief investment officer, he's a cnbc contributor good to have you both with us. diane, to you first, what should the fed do >> i think it's about foregone conclusion, they will raise rates in december and should do that they're affirming the strength of the u.s. economy and only lifting their foot off the gas they're not hitting the brake yet. their job here, we're in a marathon we now got the second longest expansion of the post-world war ii period. their job is to pace us. they're the coach trying to pace us and not when we were sprinting as we are in this year, i agree with steve that 3% plus growth is is not sustainable and might be pulling growth forward still they have to react to that that's where they're at in reaction mode. there's a growing consensus, i think, within the fed that they might feel they're now behind the curve on inflation in part

because of what steve mentioned that tariffs are stagflationary. the hardest of all areas to be. >> is it possible, peter, the fed's missing the boat, they don't fully understand how tough tariffs can be we're hearing it from ceo after ceo after ceo. think the fed's paying enough attention to that? >> well, to that pioint, it's a growth drag but on the other hand it's this inflationary situation as diane said, it's stagflationary, creating a much more difficult situation for the fed. here we are in this tenth year of this expansion and the fed funds rate on a real basis is only zero. historically, above the rite of inflation. so tariffs are going to slow things interest rates are going to slow certainly the housing and auto industry even further. but at the same time, create this bid under the rate of inflation that a tight labor market potentially can only enhance.

>> how many tenths of a percentage point off of growth will these tariffs shave diane, you go first and then peter, pick it up. >> well, it's right now very little it's something if we get to a full-blown trade war next year, it starts to compound. it's like a snowball at the top of a mountain and by the time it gets to the end, it's a huge basically boulder of a snowball that can crush anything in its path i think that's what we're seeing so this year i don't have it taking anything off of growth. next year can take a couple tenths off growth. by 2020, we start to up the ante on the risk of a recession, if we can get into a full-blown trade war and contagion effects of the second largest economy in the world, china, the tentacles it has globally, what does that mean as it slows down as well? >> peter, do you see it the way diane does >> well, we're seeing a dramatic slowdown in germany. let's use them as an example and they're not necessarily the target of tariffs. they're just caught in the middle i see it slowing more than that. we have to look at indirect effects of the tariffs it's not just the dollar amount

divided by gdp and that's your answer look at all the services industries that cater to manufacturing. they're going to see business slow look at the law firms that are going to see business slow if their manufacturing clients slow down in their economy. i think it has the potential to slow things further. also in terms of confidence, which is also going to affect things and throw in what the fed is doing and other central banks are doing in terms of monetary tightening and unfortunately this perfect storm that is forming that creates this very difficult situation for the fed. but on the question of whether they should raise or not, the bond market can decide whether that's a good decision or not because if they stop at 2% because they want to listen to what trump says, if the long end of the curve is really worried about the inflationary situation, then long rates are going to rise. they're going to tighten for them either way we're going to get a tightening in monetary policy if it the bond market things inflation is a real threat. >> peter, who has more say do you think in what the fed does,

mr. trump or mr. market? the market is saying don't go any more than december, at least let's maybe go december and see what the deal is i always encourage fed members to pay attention to the market and signals it gives >> why is it when fed officials, steve, we've had a bevy speak this week. >> you think >> they dismiss the markets. the markets are the movements of the indices, what's it what corporate america is saying and i indices reflect that sentiment we say the markets i think we mean what corporate america is saying, hearing on earnings conference calls. >> tighter financial conditions. >> i don't think they dismissed the market i think that's a mistake to say that, melissa. i was remind wednesday i wed, in hole one year. the europeans dismissed the market and really missed the

signal that was sent. >> what i think is right to say, melissa, the fed dismisses the temporary vicissitudes of the market the market gyrates around and doesn't send a clear signal. >> remember when we hit the all-time high in the dow remember what the date was october 3rd. which particular level of the dow upon which should the federal reserve set policy the one said october 3rd or the one that's now about 8% or 9% below. in some cases 10% -- >> what happened on october 3rd? what happened on october 3rd powell gave that spooeeech on october 3rd. >> that's the problem. it's one thing to say we should do this or do that another thing to actually set policy when you set policy with a rate that has a long and variable lag, you got to be really careful what exactly is the

signal the market's sending? >> diane, you were trying to get in go ahead. >> yeah, this idea of the market, if you were listening to the market, the complacency that we saw over the last several years and the run-up in the market, if you were the fed you would have wanted to tamp that down and they didn't they were looking at the economy as well as the market. i think it's really important, as steve pointed out, this is a nuance, they do listen to the market the market doesn't decide for them unless the market actually crashes and they have no other way to go. they are trying to pace ourselves. and i think that's really important. the market got ahead of that. >> diane, the market only wants one thing. that's low rates has no means by which it is not even responsible for internalizing the future cost of inflati inflation. that's what the fed does it doesn't necessarily do it right all the time it's part of what the market does, it internalizes that inflation concern. >> that gets back to the issue of the fed's job is to pace us, to get us to a longer marathon,

get more people in the race before the finish line that's their goal. it's not to turn off the economy. >> i also think an important point here, the fed fund rate is at 2% and have a balance sheet of about $4 trillion they're wholly unprepared for any headwinds that may come our way. so i also think that that's a big part of their thinking is that, oh, boy, we need to get this fed funds rate to 3%. get the tools back in the box in case you need to open the -- >> we don't want to be japan. >> that's backwards. >> we got to go. we got to leave it there i promise you we're going to have this conversation again. >> people from the other side, scott, who were screaming for higher rates. >> right, yeah. >> a couple years ago. >> maintained it would be monetary malpractice given the economy that we're currently in. >> a 1% higher gdp percentage point lower on unemployment the fed added exactly one quarter point. >> there aren't many people saying they shouldn't go in december it's like go in december, see what the deal is see what the deal is what's the maharm in that >> dovish statement. we'll see what happens

>> diane, thank you, peter it's the biggest day on the biggest week of earnings season. coming up, we got the trade on tech giants amazon and google and the best performing restaurant stock this year that would be chip pol chipotle. home builders have gotten crushed this year. with many down 30% one says the sector is ready for a rebound. he'll join us to explain why. much more on this market rally. the nasdaq leading the gai, nsup by almost 3% right now lots more "power lunch" still ahead. [ upbeat music ]

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skblvrnlg welcome back take a look at stocks. dow at session highs session highs across the board s&p up 2%. the nasdaq up 3% the nasdaq is where the real is going to be after the bell today. of course, we're leading you ahead to that with amazon and google reporting microsoft setting it all in motion with its great earnings report mcdonald's, intel, visa, cat all big winners today out of the dow. >> we're at the halfway point of the biggest day of earnings season this month. let's bring in our earnings squad. kate rogers with the read on chipotle deirdre bo deirdre, amazon. kate, we kick it off with you. >> analysts looking at eps $2 on revenue. same-store sales projected to increase by 5% as with any restaurant player right now, analysts will be

lookin delivery among the priorities set forth by ceo brian nichol who took over in march this year. the company expects delivery to be available in 2,000 locations by the end of this year. another thing to keep an eye out for is digital growth. q2, sale s 33% and accounted fo 10.3% of the company's total sales. testing pickup windows in some l locations to make it easier to order online or by app and pick unthe food witho up the food without leaving your car. tested out new items like bacon, continuing to innovate moenu offerings. nichols told us they won't stray far from the core ingredients but want to remind people why they love chipotle the stock one of the best performing names in the restaurant space this year, up 45%. >> all right, kate, thank you very much. from tacos to tech amazon earnings are on deck. deirdre bosa has the rode for

that deirdre? >> tyler, amazon is currently having its best day in a year. the stock is popping more than 6% it's really been moving steadily higher over the last half hour or so. this is helping to make up for heavy losses earlier this month. perhaps we're seeing optimism ahead of the third quarter report it's front and center for analysts as the company gears up for the holiday season amazon forecasting operating income between $1.4 and $2.4 billion. analysts are getting nervous about new costs on the horizon starting next month amazon is raising the minimum wage to $15 an hour for all u.s. employees this is a move that morgan stanley thinks could cost $3 billion in 2019 but could be a smart pone politically. shipping costs could go up if a u.s. postal service proposed hike goes forward. jaffrays believes that could add $700 million in expenses next year the street will be looking to amazon's higher margin, faster growing businesses, to see if they can offset some of the

costs so that includes cloud computing, aws also its multibillion dollar ad business and prime membership fees amazon holding on to the gain, up one-third a percent rebounding hard. year to date, the stock is up more than 50%. guys >> deirdre, thank you very much. amazon to alphabet, josh lipton taking a look at what investors are expecting from the search giant. josh >> scott, it had been a very rough month for alphabet can the ceo win back the bulls here here's what we're going to be looking for at the bell. eps of $10.42 on revenue of $34 billion. that would imply increases of 9% and 23%. alphabet higher today. it had been down 10% so far this month. bulls say business looks strong. they say strong demand for search advertising, and robust youtube consumption. also in focus today, traffic costs or tac

payments that google makes to partners such as apple to direct traffic to its properties. the tac rate as a percentage of revenue improved over the last several quarters then there's those regulatory challenges in europe remember, google will start bundling its apps on android phones in response to the eu find what impact, if any, it's going to have on market share? the quarters ahead other areas of interest for our audience, alphabet's china strategy, waymo ramping commercial availability and update on google cloud tyler? >> you know, the "times," "the new york times," that is, out with a new report detailing the culture at the company and how the company has handled accusations of sexual harassment what can you tell us about this? >> yeah, so that is a report, tyler, that the reporters at "the new york times" say they worked on for months and what they're saying here is andy ruben, the father of android, that when he left google, it all seemed fine. there was a nice note from larry page on his departure. what they're reporting is the

reality was very different, in fact, he resigned after his accusation of sexual misconduct which google actually -- which google actually found credible so the "times" says. they still wound up making this $90 million exit package to andy rubin. as you point out, tyler, it's not just rubin they go into the history of issues they had with other execs. for example, david drummond. we reached out to google we'll let you know if and when we get comment back from them, tyler. >> josh, thank you very much josh lipton in a foggy city by the bay. retail, a rebound today, etf, xrt, on pace for its best week since august. will the bounce in raietl last we will debate that and more when we return

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welcome back to "power lunch. the s&p 500 tech sector staging a major turnaround now on pace for its best day since late march. a number of chip stocks actually leading the rebound. intel, micron, nvidia up more than 4%. intel, by the way, set to report earnings after the bell. now let's get to mike santoli with "trading nation." mike >> melissa, thank you very much. here at "trading nation" we're going to take a look at the

retail stocks on a tear today. the xrt, etf on track for its best week since august still the group on pace for its worst month in nearly five years. so, should investors trust this bounce mark tepper is with strategic wealth partners. jina sanchez let's talk about that. so, mark, is the market with the weakness in retail telling us something scary about the consumer or do you think it's overreacting to shorter-term factors here is. >> i think it's overreacting i mean, i expect the surge in retail to continue at the end of the day the strong consumer story hasn't changed at pull if fact, consumer confidence is around its highest level since 2000 so the winners in retail in my opinion are going to be those companies that are evolving with customers' changing needs that have a create experience within the retail space, i've liked nordstrom for quite a while. it's been a great performer. customers want experience now more than anything, just like the starbucks effect you get that at nordstrom.

you buy an item, they don't pass your bag across the counter. they walk around the counter, hand it to you and shake your hand that's experience. their mobile app offers free shipping and returns something even amazon doesn't do that makes it easier for customers to spend more money. that's experience. they're willing to try new things to see how customers respond. you look at their nordstrom local store, which is their very first store that has absolutely no merchandise you show up, they give you some coffee you work with a stylist. and you order some stuff from them so it's a very innovative way for them to attempt to bridge the gap between digital and brick b and mortar, that's experience and a forward p/e of 16, that's reasonable given their growth strategy so we like them. >> gina, obviously won't be too long before we're right in the thick of holiday shopping season maybe the stakes get higher for this group how would approach it now given the bruising the sector has taken but also low unemployment and macro factors? >> we agree the outlook is good and good because of the

consumption outlook. also the other side of that, that means wages will eventually have to grow and they have been growing. and that's going to cut into earnings so we're looking at the retail story, really looking at who can be more robust and keeping the margins up also keeping pace with the higher growth. and the higher sales growth continues to be online 20% versus 15% expected from the bricks and mortar stores so it's still a great story. but i do think you have to be selective. >> all right and, of course, we're going to hear from amazon later to see about their take on the retail world. thanks very much to both of you. for more "trading nation" head to our website or follow us on twitter @tradingnation melissa, back over to you. >> all right, thanks very much mike santoli. next on "power lunch," a big call on the home builderses as sector crushed this year. down 24% the number one analyst on the street says the sun will come out and it's time to buy he'll join us straight ahead. and as we head to break, take a look at the dow winners right now. microsoft on the back of better than expected earnings intel reporting later tonight.

cisco and pfizer lots more "power lunch" still ahead. and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> a double top is a chart formation that suggests an up trend may be ending and ready to reverse. sometimes called an "m" formation because the pattern looks like an "m"s, a double top consists of two well-defined peaks at approximately the same price. traders often view a break of the lowest low in the formation as a bearish signal.

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cnbc news update is sponsored by comcast business. beyond fast. >> all right let's get a look at the markets right now. stocks are rallying. trying to claw back from yesterday's big decline. as you see there, look at those dow industrials. up 470 points. or almost 2% the s&p 500 is up 2.25% or 59. almost 60 points and nasdaq is higher by 3.25%. or 230 points. earnings movers right now in the green, whirlpool jumping as eps beat, and sales jumped visa is higher after a credit card volume jumped 11% and dunkin brands in the green

earnings beat estimates and u.s. sales rose. on the flip side, amd down following weaker than expected guidance equifax in the red and big-time, 14% after a sharp drop in profit wpp on pace for its worst day in more than two decades after a big slowdown in client spending. let's go to sue herera for a news update. >> hello, ty here's what's happening at this hour, everyone thousands of central american migrants spent the night in southern mexico before resuming their journey north to the u.s. border mexican officials estimating the size now at 4,000 to 5,000 and that is less than the 7,000 that were part of the group earlier this week. u.s. troops joining other allied forces in norway as nato kicked off its largest military maneuvers since the cold war some 50,000 troops are taking part >> maritime, suffering the most

important we had since two decades and maybe more than t t that, with 35 ships in my force. 17 total very huge force. very great opportunity of training and french spiderman climber robert taking on one of london's tallest buildings without ropes. it took him an hour to make his way up the 750-foot tower. police kept crowds back. he used only chalk to reach the top. they were also waiting for him when he reached the top, but they declined to comment on whether or not he was arrested it just gives me sweaty palms. i can't even imagine that is the news update at this hour, guys i'll send it back to you >> good it didn't give him sweaty palms. >> exactly >> sue herera. president trump making remarks about drug prices moments ago. me me meg tirrell has been monitoring the remarks. >> they were quick remarks the president starting off by

recounting out he called what he said were a few drug companies earlier this year and encouraging them to reconsider their price increases. he said a few of them did so and they know who they are one of them was pfizer we don't know necessarily who the other ones were who he called trump referring to that as one of the times when he realized the power of the presidency, he could really make companies act in these kinds of ways that preceded an announcemento a new policy proposing under how medicare pays for some drugs these are specifically for medicare part "b" drugs administered in the doctor's office or hospital, not ones you pick up at the pharmacy which are medicare part "d." the biggest ones was regeneron's ilea these are the most recent numbers from the centers for medicaid and medicare services they're proposing tieing payment of those drugs to an international average of what 17 countries similar to the united states in terms of their

economics pay for these medicines. they want to do that because they -- trump has been saying for a long time other countries pay a lot less for their drugs than we do, and if you look at the top 20 medicare part "b" drugs in 2016, from the health and human services department today, $17.2 billion was the medicare part "b" spending compared with the average $9.1 billion from other countries they say on average this should save 30% on what we're paying on these drugs. they're proposing paying 126% of the average in terms of what they reimburse for these drugs pegging it to the international prices. >> would this necessarily mean the drug companies make less money? >> it could. >> not like the stocks are falling on this news i can tell you those prospects amgen is not falling, pardon me -- >> we know that they don't necessarily collect a list price so if this is done by list price, we don't really know if it's going to impact the profitability of the companies >> that's true it's an interesting situation,

as to how this will actually affect drug companies. you're right it's not affecting stocks right now a lot of this had been telegraphed already. a lot f people wewere looking fo come president obama and the president obama tried to change the way we changed for things in medicare part "b," too, and that didn't play out because there was so much opposition from the industry people say doctors and hospitals might not like this, either, because people say there's an incentive for doctors to use higher-priced drugs. the way medicare part "b" drugs are currently paid for, paid for at basically the price of the drug plus 6%. >> thank you >> thank you the oil market closing for the day. jackie deangelis has the details from the cnbc commodity desk. >> hey there, scott. crude oil got a lift today alongside the market optimism pressured in the trade. no break above 68. conocophillips up with earnings that beat on the top and bottom line, saying higher oil prices were helping business. how long are those prices going to say somewhat elevated

difficult to say seasonal seasonalty kicking in. triggering some of the price declines on the flip side, the market could see a spike on november 4th when sanctions take effect or if the situation with saudi arabia worsens right now investors are tentative. guys >> jackie, thank you jackie deangelis. home builders have not had a very good 2018 so far. kb homes, tri brothers saying the sun will come out let's welcome steven kim, evercore isi senior managing director and head of research. steve, by the way, the number one ranked home builder analyst on the street. steven, great to have you with us. >> thanks for inviting me. >> how should we think about where we find value in this group? is it by the price point of the home, who basically the consumer is >> there's no question that the lower oe eer end of the market stronger than the trade-up side of the market. you're seeing a shift more toward need-based housing, which

is totally fine because the public builders obviously can adjust what they build to where the market is and they have been making that shift toward more need-based housing for the last couple of years. so there's certainly an aspect of that. the biggest part of our call, i would say, is simply a fact call one, which is that in times like this, where things all look very dark, and disappointing, these home building stocks tend to overreact and simply got to a bond out valuation state that historically has been a good buy signal, .8 for those in our group. we believe the book values are quite sol id and therefore think it's a good time to pick up when everyone is panicking. >> theoretically, everything was coming up roses for the consumer wages were rising. the consumer strong. they don't have much debt on their balance sheets compared to years last interest rates remain relatively low. if the home builders couldn't do well in the first nine months of the year, what will make them go

higher at this point >> it's really interesting, very much reverse psychology. the builders for most of this year had what i would call an enemy within the strength that they were seeing in the economy that they were benefiting from was also driving rates higher and so what was happening is that as the rates were moving up, investors were concerned that this was going to put the kibosh on housing. and then over the summer you actually began to see a slowdown brought on by the rates and so people said, uh-oh, here we go it's basically over. and what we're seeing now is that housing has actually started to show some signs of weakening, but only at the higher end of the market the lower end of the market still remains quite strong and, therefore, we think that the concerns that people have been focuseded on at the higher end really i think have driven valuations to a point where they're out of sync with the entry level of the market. that's why we think the valuations look very attractive here. >> stephen, thank you for

phoning in we appreciate it stephen kim of evercore isi. after losing all the 2018 gains the dow and the s&p are both back in the green for the year good goodness just barely, though. what are the technicals telling us about the market's next move? us about the market's next move? that is next on "power lunch." etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. 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.

all right. stocks are moving sharply hi lle following yesterday's big dek klein. is this a rebound rally or more lows ahead what's next. to answer, dan fitzpatrick, president and head technical analyst with stock mark marketmentor.com and doug ramsey, chief investment officer. gentlemen, welcome good to have you with us. >> thanks. >> dan, i'm going to start with you. and i guess one of the charts you've drawn our attention to, the percentage of stocks selling below their 40-day moving average in the s&p 500 tells you what and why >> okay. that's a real short-term indicator, tyler it's really important, it only works at extremes. the rest of the time you're wasting your time by looking at

it, but with literally 90% of all listed stocks trading below their their 40-day moving average, that's such an extreme level, the way i look at it is, it's like a rubber band and it's so stretched that it -- there's only kind of one way for things to go. so i'm looking for a short-term rebound. historically, that's been the case with that particular indicator. this is one of those instances when i look at it and it seems to work like clockwork. >> does today's action feel like that short-term rebound to you >> yeah, it does and, see, here's the thing, though the unknown is how far up are we going to go? because there's so much pain overhead that what i really look at on that indicator is, i don't think there's a whole lot of downside right now and we're talking short term but the way i see it, if amazon prints a good number after the bell, we'll probably get more buying into tomorrow we'll pick up tech and that will

perpetuate the bounce. if they don't, i have no way of knowing, neither does anybody else, if they don't, that's going to be a real problem for the market overall, what we're seeing short term, though, is selling good earnings are not really being rewarded microsoft, boeing, they're up, but they're not exactly screaming these days >> i'll come back to you in just a minute i want to bring doug into the conversation speaking of pain overhead, doug, you say this could be the first -- that what we've gone through from the october 3rd highs in the dow, i believe the s&p, we might be in the first leg of a new bear market and you point to bear markets in lots of markets around the globe >> yeah. i mean, we're just looking at the numbers dispassionately. i mean, you got msci emerging markets down 25% frontier markets down 24%. here's a new one for you, the msci world x-usa index, equal

weighted, down 22% from its high in late january. so, you know, you talk about first leg down i mean, you probably already had a couple of legs down in foreign stocks and even the decline in the u.s. which is sort of in its infancy on a time basis, may be somewhat more advanced on a price basis and this so much reminds me of a bear market that was in force when i got into the business back in 1990 in which the foreign markets were down big. i mean, led by japan in the first half of 1990 somehow, the s&p escaped the damage and eked out a high in july of that year. >> as the -- >> and caught up very quickly at the end. >> as the dow crosses the 500-point barrier, doug, i guess i want to ask you, does, given the health of the u.s. economy, mightnt it be true that the u.s. market ought to be performing markedly better than some of those other markets you cited,

emerging and otherwise >> not just the performance of the u.s. economy, but the profitability levels are ridiculously higher than what you see overseas so i certainly think there's justification for the multiples to be higher i guess the issue is the multiples are higher on far higher margin earnings, but, you know, the question is, have we hit about the best we're going to see on a rate of change basis? >> right. >> in the u.s. economy when i look at some of the stuff populating those daily lists of new lows, i mean, housing and autos, i mean, the banks and the brokers are both almost down 20%. that is not reassuring leadership for the next 12 months. >> very quickly, if i could, dan, you said this may be a short-term bounce. how short is short term in your view and then what happens? real quick >> honestly, i'm looking for the next few days then after that, everything's broken down, so i'm looking for lower prices longer term. >> all right. >> short-term relief, long-term grief. >> all right well, all right. there's the capsule on it.

dan fitzpatrick of stock market -- >> sorry. >> yeah. both of you. i'm ready to go drink. and doug ramsey of the leuthold group. thank you. >> thanks. two tech titans reporting after the bell capping off the busiest day of the earnings season thus far can far. in amazon and google the tech wreck we have seen we'll do it next on power lunch.

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>> welcome back. tech is in the lead. two heavy hitters. amazon set to report after the bell what should investors expect let's bring in michael olson good to see you. >> good afternoon. >> amazon going boo the number what do you expect >> we think it will keep going we feel good about amazon here

basically suggests retail. we feel good about that. we continue to expect it will remain strong. the thing we are most excite about is we think can do 3 to 4 billion and could be bigger than aws from an income standpoint by 2021 >> it is core, cloud, ads. you do have sort of a three headed monster at this point >> that's a good question. it might be above my pay grade if you don't look at it it should be able to outperform other tech names the one thing i would watch out for is there may be commentary related to others coming down a

little bit. >> we expect solid numbers >> you have great expectations as well. why? >> yeah. for google the two key metrics are traffic acquisition costs. it has been rising in some ways far good reason. mobile users are more expensive users for the company to acquire. so adding those users caused an increase we expect it to moderate to some degree this quarter and in the next several quarters. it continues to be solid similarly i would suggest there may be some commentary.

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the nasdaq composite it is really carrying the ball here as we go into one of the busiest after hours earnings session so far this earnings season with a lot of mega caps reporting tonight. >> they really called this correction it is about 80% done he doesn't think it is quite done yet >> maybe after the bells you say it would be a good tell. >> it may be more coming amazon is a big number to watch. >> i think one thing that is note worthy is that consumer

staples, they are still higher on a day like today. even though we are seeing extreme percentage gains we are still seeing that play for the safety, the safety trade worth watching thanks for watching power lunch. >> the closing bell starts right now. it's time for the closing bell everyone. big selloff yesterday. big rebound today. don't forget the final hour of trade has seen so much volatility we have everything you need to watch with one hour left to go it is the busiest day of earnings season. we'll have a full team coverage ready break down numbers as soon as they hit. the nasdaq coming off the worst day in seven years one says now is the time to jump in we'll tell you why he is