judge. i think we're going to get sloppy here, going to pop. have a good oversold rally and you want to buy the retest >> good stuff. good having you as well. >> metlife bought it during the show. >> mastercard, watch for earnings to show how the consumer is doing. >> joseph? >> paypal. a handsome man over there waiting. >> have a good rest of the day that is tyler mathisen and "power lunch" begins now. >> thanks, scott i'm melissa lee. the s&p has last more than $2 trillion in market value in the month of october, alone. is this a routine selloff or are we headed for a bigger rout? from brazil to germany to china, global headlines are dominating overseas markets. a rundown of what you need to know and what it means for your money. a big bet. the nhl signing a new gambling deal with mgm. we'll hear from the gm and commissioner straight ahead. streaming giant. ear n we're not talking about netflix. we're talking about twitch the video game streaming and billions of dollars at stake "power lunch" starts right now

and welcome, everybody, to "power lunch," which, indeed, does begin right now i'm tyler mathisen stocks are in rally mode but sort of halfway. they're off their session highs. the dow had been up more than 300 points, gains today, though, for the major after averages industrials up 357 n57 now if they finish with gains, we haven't seen much of that in the month of october dow and s&p in positive territory for 2018 all 11 s&p 500 sectors are higher financials and real estate right there. within financials, fifth third they're fifth third. regents, bbt, those are your leaders. ishs ibm announced a deal to buy redhat redhat up 45% on that news netflix, amazon, alphabet, in the red losing their morning gains. netflix evaporated a gain of

nearly 3%. melissa? >> and tyler, we are joined today by our good friend, michelle caruso-cabrera, now a cnbc contributor it's great to have you back here. >> always a pleasure to be here. >> welcome back to "power lunch. she'll be here with us for the entire two hours we got a lot to talk about with her. first i want to get more on why this market rally has faded. bob pisani is at the new york stock exchange bob, once again, tech is under pressure. >> reporter: tech and industrials, particularly. yes, melissa let's take a look, we're still up, but we're well off of the highs and three groups, three sectors, in particular, take a look tech started fading, oh, about 10:30, going into 11:00. just before the european close same with communications services industrials as well. however, banks have held up very well today and health care, two big groups, also held up very well as far as what's fading, if you take a look, the faang stocks started fading early on. there's amazon there was talk about that new uk tax on digital services, that came out late morning.

i think that may have had something to do with some of the fade there semis were up initially, but fairly weak right out of the board. most of the big names like nvid nvidia, amd, slightly down intel and micron slightly on the upside mix there. aerospace weak all doi loay lon. remember the indonesian crash that had a boeing plane, may have something to do with the general weak ps ness inner era. some of the most beaten up na s names, automotive stocks like ford and gm and the home building and home-related names like masco, lennar, home depot on the upside. that's encouraging because these groups are the most deeply oversold i mentioned this morning that virtually nothing in the automobiles or building products or small bank sector is over its 200-day moving average this was something that was done this morning and that's a pretty oversold sector right there so if you don't get a bounce in automobiles and building

products, with nothing over a 200 day moving average in the whole sector, you're going to be in trouble what that's why i'm somewhat encouraged by today's vote melissa, i would note the light volume is a cause for concern. nobody is buying hand over fist down here, sort of sideways right now. back to you. >> robert, thank you very much is today's market fade a bad sign for stocks? mike santoli joins us now with an analysis. mike >> reporter: tyler, yeah, i wouldn't say it's a great sign, although it's very characteristic of a wounded market you've had brutal and sustained selloffs i think all rallies are suspect at first and you expect these fades. but i think the bigger issue here is whether we're experiencing just kind of a p pervasive correction in the markets within a longer-term uptrend or if the uptrend, itself, is being tested. here from the 2016, february 2016 lows, which was gthe end of a stealth bear market, you cracked below the very kind of

simply drawn uptrend line and people are wondering if something has changed in the economy. and essentially with the widespread damage that's happened so i do think as bob said, market is deeply oversold. more than half the stocks in the s&p 1500, spans large to small cap, are down at least 20% coming into this week. it does show you we have something like one of those deeply depressed moments like we did in february of 2016, where this has just been a lot of carnage and, therefore, the makings of a very strong bounce. to me, it's going to be about the character of that next rally. how strong it is whether you have followthrough buying is it really an economic message being september by tnt by the mt is this a growth scare and have to have the fed blink or have more numbers come through, before somebody says wait a second, there's nothing wrong with the economy going into 2019 we're on the edge, whether this is something more routine or something bigger. >> should investors be worried

the market can't sustain a strong full-day rally? jack is founding partner and cio, mike aroni is chief investment strategist with state street global which has $2.7 trillion in assets under management michael, you heard there are the makings of a strong bouns at play in the market do you agree with that and if so, why? >> i do agree with that. i do think once we get past the midterm elections i'm expecting the markets to rally in november and december i think the earnings are strong. i think monetary policy is fill pretty easy. fiscal policy should continue to support this market. i expect that the market will rally into the year end. >> does the outcome of the elections matter or it's just getting the elections behind and we can move forward knowing which party controls the house and senate? >> i think the importance of the election are where does the legislative agenda go from here? and what happens with trade? so my expectations is regardless of the midterm elections

outcome, we're likely to see a negotiated deal, a kind of outlines of a deal between the u.s. and china by year's end and i think that will help give the markets confidence to move higher into next year. >> you know, jack, mike was highlighting the fact that the markets seem to be really wrestling with the notion that there could be an economic slowdown here, that the evidence from the conference calls may put that question mark there in terms of the earnings growth picture. is that what you're thinking i mean, what -- how so far, i mean, we're got through earnings season yet, we're through the bulk of them what's your takeaway >> yeah, i think that two things, one is i do tend to agree with michael on this, at least short-term move, that history shows that, you know, after the midterms we do get a pop in november/december i think we have a little bit of tailwind there longer term, you're right, i think it looks like q2 at the 4.2% is the best we're going to see for a while, essentially we're beating a 2% or 3% donkey

into a 4.2% racehorse. it's just not sustainable. i think the other thing is, we're ending this extremely accommodative monetary policy worldwide. and we started, obviously, were the fed, that is now moving to the ecb. they're not going to be printing money and buying securities after december and shortly after that, japan, too. so i think as we move to policy normalization, that's going to create a headwind. so i think it's probably just part of a natural correction i don't expect the economy to fall off a cliff i don't expect the market to fall off a cliff but ido think that we have to grapple with those headwinds and, you know, we'll just hunker down and move forward. >> michelle, i want to bring you into the conversation. you heard michael say, hopefully, that he is optimistic that the outlines of a trade deal with china could come out of the g20 meeting at the end of next month when xi and trump sit

down you feel that optimistic >> no. i'm pretty skeptical i mean, we have seen some signs from china that they're willing to give on certain things like when they talk about reducing the tariffs on cars, that's a good sign, but there's so much about china's business model you know, their vision of where the country needs to go. that is very involved with things that the administration's very concerned about theft of intellectual property. >> technology transfer. >> tech bnolonology transfer. state intervention into major enterprises there. i don't know that they can do undo those things quickly, mentally, physically, et cetera. i don't know how you get to a trade deal i hope he's right. it would be good for everyone. the chinese, included. >> jump in. >> i think this trade thing is actually step one. i think we're engaged china directly then we're going to canvas and try to convince our trading partners to do similar trade tariffs with china to really isolate them.

to, you know, essentially, you know, back them into a corner so to speak i think this is unfortunately phase one of a longer-term effort. >> michael, you get the last word here. you can talk about the trade point or something that was in my notes, where you point out that you expect modest fiscal stimulus globally to help support stock prices at least, quote, a little while longer explain that, and explain what you mean by a little while >> right quickly, on the trade front, i think both china and the u.s. can't afford a protracted trade war and i think both the u.s. economy and the chinese economy are slowing, albeit slowly i think that's going to get them to the table in terms of fiscal policy, tie le tyler, what's fascinating is this is becoming a global phenomenon italy, spain, france, china is even taking on fiscal policy i think what will happen is toward the second hatlf of next year, as the economy is slowing

and monetary policy is tightening and earnings are also decelerating, you're likely to see republicans and democrats find peace and love and start to put forward another fiscal policy package into a national election year in it 2020 and i think that will help support stock prices >> peace and love between democrats and republicans. >> optimistic. >> that's a hopeful thought, michael. >> thank you very much we appreciate it michael aroni and jack ablin thanks for your time. shares of the u.s. automakers are rallying today. china may cut its tariff on imported vehicles. phil lebeau has all the details. phil >> really, what's driving this, me melissa, the fact china is looking at a proposed cut in sales tax of its vehicles, vehicles sold within the country of china they would cut it in half and knock it down to basically 5%. this would impact about 70% of the vehicles sold in china why? look at this market. it's slowing down. sales in september down 11.6%.

let's look at the two largest automakers in terms of sales in china. start first with volkswagen. it sells 40% of its vehicles in china. it would certainly benefit from a sales cut in that country. and then you have general motors its bids usiness in china is th largest of all the markets in the world. don't forget general motors reports earnings on wednesday morning. separate from the china story, take a look at ford. ford upgraded earlier today by goldman sachs. moving it to a buy rating with a price target of $12. the impetus here is the focus on the cadence of new vehicles coming out from ford and finally, tesla, the reason this stock continues to move higher, an interview over in the uk with one of the principals from bailey gifford, which is the largest shareholder of tesla, indicated they'd be willing to put more money into tesla, another vote of confidence for elon musk. guys, back to you. >> all right thank you very much, phil. coming up, angela merkel sets a date for her exit from the top spot of germany. after many, many years there meanwhile, brazil electing right-wing jair bolsonaro as its

new president. what these changes internationally might mean for the united states. . plus we are watching the markets. stocks are higher. they are, however, off their session highs. financials the best performing group for a change regional banks leading the way "power lunch" will be right back ♪ ♪ ♪ ♪

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♪ time now for the power rundown. in honor of the return of michelle caruso-cabrera we're going to take you around the globe. our first topic in the power rundown. far-right candidate jair bolsonaro elected president of brazil, rejection of the left wing workers party that ran braz brazil he's been seen as pro-business, right. >> he could be potentially transformational for brazil. his would-be finance minister studied at the university of chicago. it's the first time i think in modern history you hear a platform that's about increasing market forces in brazil, reducing the role of government in a lot of the businesses they have there keep in mind, he's very, very controversial. he has said some awful things about gays that should not be repeated and what is astounding about

that fact is 29% of gays in brazil voted for him, anyway they said they were going to do that why? because people in brazil are so frustrated with rampant crime, with horrendous economy, the worst recession they've ever seen so it's really been -- this is an incredible moment for brazil. we're going to see how it works out. the social issues are one thing. the economic issues are also very -- >> former military guy >> former military guy longtime member of congress. doesn't have a real party, though, so it's not clear he can actually execute once he's in power. this is the closest thing we've seen to a mandate to move away from government intervention. >> it's interesting to see the sell the news reaction, run up to the election, selling off in today's session. in some of the notes today that i've read, one of them said that his pledges to liberalize the economy have been recent and vague. and that the finance minister who you mentioned, at the university of chicago, is inexperienced. >> so, yes, and yes. absolutely but we have to wait and see,

compared to what you know would have happened if haddad had won which would have been more of the same for the last more than a dozen years. right? more government intervention more government spending more government subsidies. lack of reform in the pension system all right. next big topic, this is a big one, german chancellor angela merkel will step down as leader of her party and will not seek re-election in 2021. already there's extrapolations being made to how strong will the european union be if one of the leaders of it, the person who's been seen as holding it together, steps aside? >> yeah, i take issue that she holds it together. does she actually cause it to fall apart with her decision to let in a million migrants >> yeah. >> right >> definitely. >> look, i think it's not saying anything that anybody doesn't know already that she stayed too long at the party, right she went won too many elections. she believed her press that she was the bastion of the global world order, blah, blah, blah, blah she did something very

undemocratic when she made the decision about migrants that had ripple effects -- >> across europe. >> -- all across europe. they're struggling with it today. what it mean s in terms of investors, i dmoent. i think it does raise the the question about the exte torrentite -- >> is there an heir apparent in the party? >> we don't know what party is going to rise. is it going it be the far right? the alternative for deutscheland going to see a centrist party rise up? it's going to be hard to say she's going to try to stay in power until the end of her official term though she's not in charge of the party anymore that's not typical for her. >> we had the euro fall and go higher dax finishing higher on the day. if you're to believe she was the person holding the euro together and it could be closer to it falling apart, you would think germany wouldn't see that reaction. >> yeah, no, i agree and i've watched the year roeurt recently it doesn't act like it fears very much. it doesn't even fear italy right

now which i would argue the budget showdown that they're having is much more problematic for the existence of the euro. so the euro trades fine, it trades lower but it doesn't trade like it's the market's worried about it going away. the e wiww, the etf that trk the mexican stock indexes on track for the worst day of 2016, this comes as the u.s. dollar at the highest level against the peso since judge we have a report from the president of mexico he's going to abandon the plans to build a brand-new airport. >> yes . >> which, by the way, is the third of the way already done. >> what? >> they were deep into this. they already spent $5 billion. they borrowed $6 billion it was an extremely controversial airport. the news, they had a vote over the weekend and the mexican people, it was nonbinding referendum they voted no against the new airport. that's because the incoming president had been very, very negative about it. he said it was full of corruption et cetera. now he says he's going to stick by their decision. mexico city needs a new airport. it's super congested

they got to either fix the old one, expand it or do something here, but it's a lot of money under the bridge so to speak, and if you don't have a good airport, your city can't grow and your country can't grow as fast as it could be. >> is that why the -- >> that's what i think so. >> declines in the etf >> i think yes. >> mischelle, thank you. michelle caruso-cabrera. if you had over six in last night's senators/golden knights game, you won. the knights taking it 4-3 in overtime the nhl hoping to score big with sports betting it signed a deal with mgm. we're going to hear from the company's ceo and the league's commissioner next. and blame it on boeing that stock taking a big chunk out of the dow's gains down $13 right now much more on the markets when "power lunch" returns.

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the nhl the laters sports league to embrace gambling the league announcing a deal with mgm this morning. eric chemi joins us now with the details. eric >> reporter: that's right, hey, guys so we're here in midtown, manhattan, at nhl headquarters nhl and mgm doing the first official sports betting partnership of the nhl of course, you remember, mgm, they did a similar deal with the nba. in this deal with the national hockey league, they will get exclusive data, the ability to use the league marks, team logos. they'll also be able to mark themselves the mgm casino, the mgm resorts, to the league's fans this is a multifaceted deal that goes beyond just sports betting. a lot of people will remember, though, gary bettman had been

very outspoken about mixing the nhl and sports gambling. he has changed his tune, though, very rapidly, after the supreme court decision i asked him about that earlier today. >> this is actually a recognition of what the state of the world is and it's an opportunity for us to engage our fans in new and different ways and maybe attract some new fans. the supreme court ruled, we have to adjust. >> reporter: what's interesting, though, about the mgm deal, just like they did with the nba, the same thing is going to apply here at the nhl. it's not an exclusive deal the nhl, they can do the same exact deal with mgm's competitors, with other sports books, other casinos mgm chairman and ceo said he wasn't that concerned about it and actually just isn't worried about the komcompetition. here's what he said earlier. >> we feel access is everything. so we never entered intoexcusety fan engagement, creating a great

fan platform and just like a great hockey team, you know, mgm wants to win on the ice. i like our chances against our competitors. >> reporter: murren made the point that 70% of the company's revenues are not gambling. it's their entertainment, hotel, the shows, the restaurants all that other stuff within gambling, sports betting is a small portion of that the idea is get people in the door, get them trusting this is the place if you want to belt on nhl, do it with mgm then spend money on everything else that's part of our business of course, this nhl deal is a league-wide deal it doesn't prevent teams like the new jersey devils, for example, new jersey's got legalized sports betting they can do their oecwn deal lie the devils just did. you're going to see the beginning, this is not the end, this is the beginning of these partnerships at the league-wide level then team-by-team around the country. back to you guys. >> all right, eric, thank you. eric chemi. coming up, a closer look at the obstacles for women in the workforce. and solutions to close the gap. plus, another wild day for

stocks what looked like a big rally early on has been slowly fading. tired of these big swings. should you just park your money in muni bonds? boring but may be effective. that's next on "power lunch. how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online. hey, what are you guys doing here? we're voya. we stay with you to and through retirement. 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.

warning, california. a handful of billionaires have spent over $70 million on campaigns to undermine our public schools. and electing a former wall street banker named marshall tuck to superintendent of public instruction is all a part of the billionaires' plan to take money away from neighborhood public schools and give it to their corporate charter schools. that's why tony thurmond is the only candidate endorsed by classroom teachers for superintendent

of public instruction. because keeping our kids safe and improving our neighborhood public schools is always tony's top priority. with pg&e in the sierras. and i'm an arborist since the onset of the drought, more than 129 million trees have died in california. pg&e prunes and removes over a million trees every year to ensure that hazardous trees can't impact power lines. and since the onset of the drought we've doubled our efforts. i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future.

zblmpbts . tell lehello, everyone, i's here herera a suicide bomber blew himself up on a busy tunis avenue killing herself and wounding others. there were no other deaths there were numerous ambulances arriving to take the wounded to hospitals. bad weather lashing the whole italian peninsula. with floods and rivers overflowing in the north four men died when a mudslide suddenly hit a villa in the southern calabria region weather conditions were expected to worsen unfortunately as the day progressed. and food labels here at home may soon carry a warning if a product contains sesame. the fda announcing it's considering adding sesame as an allergen on packaged foods the agency says while sesame allergies are rare, it can still be deadly. and hundreds of the world's

best scrabble players competed over the weekend in the world's championship in london it came down to american jesse day, who's on the left, and new zealander nigel richards richards, a three-time champ going in, and he had basically beat day by a score of 575-452 the big word that did it for him, zonular that scored him 100 points and it means a small space or a small zone that's the news update at this hour melissa, i'll send it back to you. >> you know exactly what i was going to ask, sue. thank you. >> well, i had to look it up because i didn't know. so there you go. >> not many people do. sue, thanks. sue herera let's take a look at the markets ri s right now, stocks e come off session highs the dow had been up by 350 points at the highs. right now we're up by 59 61 points there. s&p 500 up by 15 the nasdaq, that turned into a negative territory when we saw netflix and amazon roll over in the 11:00 hour. the nasdaq now down by 13 points good day for retail, fossil,

macy's, under armour, elle brands, nordstrom, popping 5%. much more straight ahead airline stocks are moving higher led by stocks of americanairlines tyler? >> thank you very much. stocks selling off since the last fed meeting with the dow down more than 6%. projercted one more hike befored end of the year and three in 2019 one area that does not do well in a rising rate environment are municipal bonds. joining us from the schwab impact conference, peter hayes, chief investment officer and head of blackrock's municipal bond group lead portfolio manager for the morningstar five star rated blackrock strategic muni opportunities fund there you see its returns over one, three, and five years peter, good to have you with us. >> hi there, tyler, how are you? >> you know, munis, we began the segment by saying they don't do terribly well in a rising interest rate environment but do better than lots of other types of bopnds, right they have this time, too

>> yeah, that's a great point. it's been a little bit of a bad news/good news scenario this year for fixed income. bad news is returns are largely negative for most indices. maybe the exception of high-yield muni and high-yield taxable. the good news is munis are outperforming. think about taxes and nature of the income great hedge against equity risk. oftentimes it's talked about as a way to outperform in rising rate environments and see that this year. that's exact lly happened. the muni index broadly down 100 basis points, 1% treasury index down about 2% investment grade corporates down over 3%. they definitely are outperforming. it's a great point. >> so let me ask a question that has always nagged at me. that is if i'm inclined to buy a bond, a municipal bond in particular, am i better off and i don't intend to trade the bond, am i better off buying an individual security and just clipping the coupon, or

investing in a managed fund? give me the advantages of each approach >> yeah, that's a very good question, andst it a question we get asked quite often. it's a little -- i think it's a two-approach answer. one is that it's a bit of a style difference so some investors like the permanence and definition of owning a bond. knowing it's going to mature at par and they'll get their coupon so they're not as sensitive to swings and volatility or prices. >> right. >> the other is to some degree the fact that are you maximizing your opportunities in an active portfolio, you can actually maximizedislocations. for instance, we've recently seen a selloff in high-yield muni, that's a good time to usually put money to work and also take advantage of certain strategies to hedge against interest rates going up that you normally wouldn't be able to do by buying an individual bond so there's some pros and cons to each i think it really comes down a bit to style difference, and also liquidity

somebody who buys a bond and clips a coupon, they don't typically need the liquidity as where in a mutual fund or some type of other active management vehicle, you have to have that liquidity. >> peter, it's michelle caruso-cabrera here joining as a contribu contributor. in full disclosure, i have new york state muni bonds. people who live in the state buy them, invest in them because it helps them reduce the taxes they're going to pay a follow-on to tie lore's question, i look at the selloff and i think, well, am i going to be okay? i'm going to hold them to mat e maturi maturity, i mean, are they going to pay me back, am i going to get everything i put into them one. and is it good enough they're going to help me at least keep pace with inflation or beat inflation? >> that goes down a path a little bit of credit quality obviously, when you look at historical default rates in the muni market, they're very, very low. in fact, when they do, recovery rates are much higher than the taxable market you need to know what you own and understand so very, no defaults on the aaa spectrum of the market, as you

move to the a-rated revenue space, there have been some defau defaults it's a function of how much credit risk are you willing to take versus how much income are you going to get are you going to get compensated, excuse me, for that risk or not? i would say in general, again, munis have a very good history, very good track record with credit and that's the key question to getting your money back and you live with market volatility, but do you get that back that's a question of credit. you know, further down you go if you own an individual high-yield muni bond, higher risk of default, but the further up you go in the ratings spectrum, the less risk of default and the more certain you are to get that principlepeter, i have a muni 1 question why are munis effective in states with high taxes particularly those adversely impacted by s.a.l.t. changes like the states we all live in here on this anchor desk >> yeah, i would say, you know, one thing we are seeing clearly is that repeal of s.a.l.t., $10,000 cap, and the repeal of the state and local tax, it has

increased demand, in fact, when you look at a place like california with a top rate in the state of 13%, tax rate, lot of demand, spreads have gone, compressed dramatically. less issuance in california this year so we've definitely seen the impacts of the demand. i would say we're seeing that to some degree in new york. in places like new jersey and connecticut, not as much issuance there as you see in cal and new york so spreads have compressed and it's interesting because that's in complete contrast to the credit profile of those two states so i think you are seeing a tremendous amount of demand as a result of s.a.l.t. it's one of the few ways you can still keep what you earn. >> all right peter, thank you very much peter hayes with blackrock >> thanks for having me. appreciate it. to the bond market now rick santelli is tracking all the action at the cme. hi, rick. >> reporter: hi. you know, we did have some buying pressure last week, pushing rates down a bit, but we are hovering solid as you see on this two-day chart 311, 310 is an area traders are paying close attention to.

if you look at the notion of credit differentiation, which is what you're discussing is the topic with michelle for the last 45 minutes, let's look at the gtef it is trading at the lowest levels since november of 2016. so basically call it two years and if you look at the lqd, you see a much wider dynamic of effect there because the hyg at least a little juicier that's the high yield. if you go the investment grade that this etf represents, it's hovering the lowest level since the fall of 2013 so, yes, when the best of breed, meaning the best quality sovereign like u.s. treasury yields are moving up, it gives a lot of other possibilities and credit becomes a bigger issue. finally, the dollar index, you can see we are very close right now to breaking that august top which would give us a 17-month high again keep a very close eye on 96.70 in the dollar index. tyler, back to you. >> all right, sir, thaunk you very much. eight out of ten women in

the entertainment industry says there are obstacles preventing women from advancing in the workplace and more than half of men agree. that is according to a new cnbc and linkedin closing the gap survey so what are the solutions? and how can we close the gap julia boorstin joins us now from los angeles. julia? >> reporter: tyler, over 1,000 people working the entertainment industry took part in this survey and they painted a dim outlook for equality in leadership in this space now, about one-third of women and less than half of men say men and women are equally likely to become leaders in their industry what's the biggest issue holding women back in hollywood? about half of both men and women say it's an unsupportive or biased corporate culture followed by lack of leadership and mentorship respondents say it's important for leaders to speak out about the importance of diversity and inclusion in the workplace they also say it's important to be aware of diversity in recruiting and casting one company producing content about, for, and by women, is reese witherspoon's "hello

sunshine" striking show deals with amazon, apple, and as well as hulu, hbo and abc the ceo of the company, sarah hardin, believes media giants will embrace the value of female pe perspectives. >> i think the best companies will realize their economic futures, that they need to bring women into office at all levels of their companies >> reporter: you can find more from our study with linkedin including data on perceptions of pay and promotion gaps on cnbc.com/closingthegap back over to you >> all right, julia, thank you very much. julia boorstin in los angeles. well, the countdown is on to the almighty holiday shopping season and this year, along with lots of spending, we could see a lot of hiring. courtney reagan has more courtn courtney >> hi, there retailers began hiring for the holidays as early as june this year and the perks are getting a little more creative as the fight for available labor is tighter than it's been in almost 50 years how's it going so far?

i've got the progress report mi uonpor nccongp "weluh.

♪ with unemployment rate near record throes, retailers need to beef up their staff for the holidays and finding it increasingly difficult to find those workers. so they're getting create if courtney reagan always creative joins us now >> always. got to jazz it up a little bit the retail sector looking for more than 704,000 seasonal workers. the most in at least four holiday seasons according to job placement and coaching firm, challenger gray, and christmas with the unemployment rate at a nearly 50-year low, retailers are adding creative perks. jcpenney seasonal workers are eligible to win one of 8 $5,000

prize packages for vacations and product bundles including diamond earrings, kayaks they also get a 25% shopping discount jcpenney says applications are actually above last year adding it's well on our way to filling those 39,000 holiday jobs. target is doing drawings for 5 $500 gift cards and matching charitable donations this year the retailer said it's ahead of last year for seasonal hires the ceo expects to fill all 120,000 seasonal jobs. kohl's offering 35% discounts on certain days to employees but it's advertising that it's doing that this year kohl's started hiring in june, increased total hires by 80% between july and early september. macy's holiday workers are eligible for the same bonus program as year-round employees. now, amazon says it will hire into early december but may not have to because 48 hours after announcing it will pay a minimum wage of $15 an hour, amazon got 70,000 applications.

and the week following, more applications came in than all of august now, they're looking for about 100,000 employees, amazon is that's 20,000 less than the last 2 years, though, which is also interesting. >> it these are temporary jobs when do they end typically right at jan 1st >> they'll go through january for the most part. there's no sort of hard start and hard end to a lot of these holiday hirings. >> they furlough as they -- the demand slackens. >> they do >> a lot of them, up to a third, stick around and become full-time employees. retailers have been looking for full-time help as well. >> fantastic. >> stick around, courtney. national retail federation projects holiday retail sales this year to total up to $720 billion. increase of 4.8% from 2017 can consumers ride the strong economy past higher interest rates and tariff concerns to meet spending expectations joining us, liz dunn, founder and ceo of proforma. liz, welcome. >> thanks for having me. >> you think the consumer will come through though we've seen the stock market volatility, questions about economic growth? >> i think the consumer will

come through i don't think it will benefit every retailer quequally. to courtney's point, the wage pressure, upward wage pressure as well as the very, very tight labor market, very good news for the consumer. >> which retailers would benefit the most >> i like target kohl's i think ulta, lulu and tjx what i'm looking at is companies that have strong momentum, you know, sort of wind at their back assortments that are right for the holiday. as well as, you know, valuations that aren't too far out of the range. >> what does a christmas without toys "r" us mean >> i think it's good news for everyone that could possibly sell toys so you've heard target -- >> so amazon, target, walmart, owl of them. >> yeah. i think they put a lot of money into chasing the category. walmart and category both have target is out saying there's $ $100 billion up for grabs, not just from toys "r" us but retailers that have gone out of business and closed stores.

>> the shrinking footprint of sears means what >> that's good news for both the soft side and the hardline side of retail. on the soft line side, macy's has good overlap with sears and tjx has strong overlap on the hardline side, i think you're looking at more home depot as being the biggest opportunity as well as walmart. >> are consumers going to see higher prices because of the tariffs? is that fed through already or no >> yeah, i think we start to see it in the holiday. certainly they mitigated if to the extent that they can the 10% tariff inclorease is gog to impact some to the extent they can mitigate it, they are next year we absolutely see it and that's a real test of consumer strength. >> liz, it seems like everyone thinks it's going to be a strong holiday season is there a particular theme you're looking for, besides the names that you called out? i mean, in general, is it who can get you the package there the fastest in two days for the cheapest amount? what's the message of this holiday season >> right consumers always care about price and so that doesn't change, but convenience is more

and more important and i think what we've seen from some of the winning retailers is an ability to invest in these multichannel offerings, invest in convenience, to gain customer -- gain market share and so target, one of the reasons i like is it just because they built so much loyalty in terms of their shipping options they're saying free shipping through the holiday, which gives them the best positioning for an omnichannel retailer i think it's those companies that have positioned to serve the customer however she wants to shop. >> this feels like the first time in a long time that we have a gangbusters christmas. am i right on that we haven't seen these big projections in a very, very long time >> yeah. many companies and industry observers are saying it's the best market in ten years which is making some people feel a little nervous i think some of the skittishness in the market. >> maybe it's a peak, in other words. right? maybe next year isn't as good when you're looking at gains of 5% or 6% according to some. >> yeah. it feels a little choppy the companies that i'm focused on still have the momentum

everyo typically october and november are great sometitimes for the ss we've seen a pullback in the retail names in the broader market so i think there are some opportunities. >> are we going to see bankruptcies out of this season and from whom? . >> well, i don't want to go on record -- >> it's going to be make or break for some >> it's a period of haves and have nots. one of the things that's exacerbating some issues with weak retailers is they can't invest, right? they can't afford to invest. all the incumbent retailers that have turned things around are seeing massive amounts of investment if you're on the ropes, you can't afford to, you know -- >> your stores look dumpier. >> your stores look dumpier. and your offerings are weaker. you can't do buy online, pick up in store. >> what did you make of amazon's somewhat soft forecast for the fourth quarter >> yeah. i think, i mean -- >> were you surprised? >> their business has definitely slowed down. if you think about all the ing t

driving e-commerce growth. 30%, 40%, it -- they're getting better at executing in, you know, digital business and so i think that's -- >> others are getting better at competing with amazon. >> i think so. >> and that is what -- that's a that's how you attribute the fact that they were quite conservative on their go forward numbers? >> i think that makes sense. i just know from my own personal shopping and shopping of those that i talk to that target and walmart and kohl's are very much contenders for the holiday shoppi shopping dollars, even though they're planning to make the purchases online >> free two-day shipping with no membership, walmart really becomes, in many cases, cheaper. >> everyday staples. >> it really does. the internet, of course, always price transparent and as these retailers have built up their supply chain capabilities and invested billions of dollars, they're catching up to amazon. maybe not the only game in town,

i don't think amazon will do poorly certainly, but a little more competition this year >> thanks for having me. amazon, speaking of amazon, the purchase of twitch 4.5 years ago is looking like a deal but amazon's rivals not taking it lying down how the heotr big tech firms are trying to compete. that is coming up on "power lunch. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. the meeting of the executive finance committee

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right now at this very moment watching people play video games on amazon's twitch streaming service and the people they are watching are big stars, even if you never heard of them. josh lipton joins us now in person >> this is one of the biggest gaming events. it happened last weekend and we were there tens of thousands of gamers coming together in san jose, california it is called twitchcon and hosted by amazon-owned twitch. fans were there to meet professional, rock star gamers ninja rakes in, how does this

sound, tyler, more than $500,000 a month now on twitch. >> a month >> a month >> people also watched contests like fortnite battle royale and watch other people play video games in realtime. big-time ed advertisers for twih >> intel, hp who advertise on twitch because they want to get access to our millennial audience patronage. it's a model where they subscribe to stream this channel or buy digital goods and it's really about the audience helping the streamer earn a living on twitch >> in other words, big brands and audience donations have

become essential to twitch's business twitch isn't alone alphabet, microsoft, facebook and twitter all also now trying to capitalize on this market, too doesn't have to be one winner here, though, that there are room for multiple competing platforms and certainly enough content to go around this year more than 45 billion hours with a b of video game content will be streamed across all platforms according to super data research. >> the guy with the blue hair. because he wins prizes and that's the prize money or that he gets part of the advertising. >> it's interesting. he is winning big prize pools. a lot of money online. twitch's business model, if michelle is a fan, you can give money directly to some of the superstars and twitch takes a portion of that. >> also sponsorships >> exactly these are when you were there, i have to tell you, this was like, these are lebron and steph curry and the durantes of this world

>> see how many twitter followers they have. thanks >> you got it. we comb through to find all the companies that mention tariffs. is a trade war having a big ime impact on the economy? a deal to buy red hat and a big week of data for companies working on drugs to treat depression we're looking at the stocks that could be big movers. second hour of "power lunch" starts after this. nt to know wht i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet.

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welcome to hour number two of power lunch i'm it tyler mathisen. glad you could join us on a busy monday as we bring this rocky month of october to a none too soon close here's what's on the menu. investors dumping earnings winners at the fastest pace in seven years. what does it mean for the markets as we hit the halfway point of the earning season? and the tariff tally we go through 220 earnings reports to see how worried corporations are about tariffs and their potential impact on future earnings and growth the results may surprise you and general electric set to report tomorrow and the big one is under the big focus of the dividend will the company maintain it

cut it, scrap it altogether and we'll get you set up for those important results right now as "power lunch" resumes. welcome to power lunch, i'm melissa lee. the dow higher more than 350 points the nasdaq had been up by 1.8% we saw that roll over some time before noon and the nasdaq composite down by 11 points. weighing on the nasdaq, amazon electronic arts and act vision and netflix also a loser rally more than 3% in earlier trading. when that rolled over along with amazon, that's when we saw the composite move to the red. defense stocks deep in the red boeing lockheed moving to the down side and casino stocks not winners. caesar's that stock is down 11% in the past week check out shares of the automakers higher across the board after

china announced it may consider cutting tariffs on imported passenger vehicles so, that sent shares of gm, ford, fiat chrysler to the outside. bob pisani at the new york stock exchange >> take a look at the sectors. two groups have done well throughout the day those are banks and financials in general and health care has held up well but, tech, communications services and industrials have faired differently tech led early on. very quickly started selling off. same with communication services and industrials. just let me show you amazon. the poster child that bailout in england introducing tax on digital services that was released this morning. i think that may have taken a little wind out of the sails but you see it's recovering a little bit meantime, one sector that is doing well amazon is lagging but its competitors are doing really well

retailers high all throughout the day. macy's, dillard's and department stores do well see the chico's they've also been strong, too news on china helping autos, but in general, the most beaten up sectors that we have seen recently are autos and the home builder stocks or anything building related and generally throughout most of the day, auto stocks and building-related stuff has done fairly well it's been positive all throughout the day that's very encouraging to see the two most beaten up groups, home building and autos having some people at least picking on the bottom guys, back to you. >> all right, bob, thanks. bob pisani still with us for the second hour of "power lunch" michelle caruso-cabrera stocks way off today's highs once again able to hold on to a big rally. something we've seen frequently in the last month. what is that telling us about the health of this rally

derivative strategist and samantha, global market strategist with jpmorgan julian, i'll start with you. we see weakness in technology and the broader markets feel the pain here. what's going on here is this the tilt to value over growth that's going on >> yeah, we think it is a process. it really started around labor day. it's ongoing we think it has further to run perhaps into the end of the year if you think about it, you know, the headline risk certainly works against tech data concerns certainly coming into the election concerns there. it is, still, again, this environment where the yields are comfortably above 3% and if that continues to be on course, that is a headwind for higher multiple names we don't think it needs to be a market killer in the final analysis we've done a lot of work on this the transition can happen. it's not normally smooth but we do think stocks can end up going higher.

>> even with this transition, samantha, one is to believe that we are seeing a move to value, it's not lifting value across the board and we're still seeing some difficulty in industrials, although we're seeing increased participation amongst financials how should we think about where you go in value? >> i think it's safe to say that the market has not been great. to your point, exactly we, too, are saying take profit from growth and reality to value. we still like financials and we've been saying it since the beginning of the year, not the most amazing performing sector but the stock and buy back are coming back. health care which is a little more defensive, we like that sector right now and that's something else >> huge deal ibm buying red hat massive number sometimes when those events happen you think, oh, that's really good when the it's a good sign for the market and some people think it is the sign of a market top is there a broader message in this announcement today? >> yeah, so, that psychology, if

you look at the history of buybacks, they tend to peak concurrent to market peaks this one in and of itself, i think you can say that this deal has been talked about for a number of years and maybe you have waited until the price is quite high but in general, this doesn't seem to be what we call sort of a bell ringer. what it is more of an acknowledgment of is that cash used for buy backs solely for the most part, you know, isn't necessarily the cure all for a stock price. >> we had a fair number of people on our air over the last couple of weeks suggesting that while the bull market have a little longer to run, the operative word there is little and that as we get into the middle of 2019 as there will be more interest rate hikes, we presume, and as some of the fastest growth in corporate earnings may be behind us, that the market may come. did you see that coming in 2019

or 2020? >> i think it's very possible. i think because everyone is calling a recession in 2020 means it's not going to happen in 2020. >> could be sooner, could be later. >> could be sooner, could be later. when there is consensus, that seems when it is not to happen the light switch mentality of on and off and dimmers and dials. doing things to the portfolio and doing it in subtle ways and not making any big ways. >> what are you dimming? >> for example, decreasing credit risk. right. i know it was always credit risk over interest rate risk. take another look at duration and go up quality over the board. putting money to work but in a way that is a lot more balanced and not these big calls one way or the other >> julian, you said we're setting up for a potentially vigorous rally despite all the volatility part of it, we had a number of conversations in which you have thrown into question a december rate hike by the fed is that a key ingredient to this forecast of a big risk rally at

year end >> not specifically year end, but let's take between now and year end and then 2019 from our point of view, the deeply oversold nature of the last several weeks combined with skepticism that there hasn't been enough fear seen in the market we would argue that that's not correct. people shouldn't be looking at the big spike in february was about the death of short volatility product that's already gone. to us the nasdaq and the russell 2000 are showing true signs of fear that, we think, is a positive but looking longer term, there isn't, in our view, a comfort that the market will get to at some point that earnings growth in midsingle digits is going to be okay. we're not there right now. that having been said, the problem is that there are two chances possibly mistakes. either the fed goes too far because, as we see it, there is no inflation and they haven't had -- there's no real wage

pressure, yes, it's anecdotal in some areas but not across the board. why are you raising interest rates as aggressively as you are right now particularly when you have eight chances to do it next year and then, of course, the other half of it, we are starting to see whether it's through commentary or multiple compression itself, the effect of the trade war to think that that wasn't going to be the case was naive it's here. >> all right thank you, both. julian and samantha. well, a big deal in the tech world today. we have been talking about it just now ibm buying red hat for 160 million bucks a share. as a result, ibm will pause share repurchases in 2020 and 2021 a move that ceo being prudent about the company debt level. both ceos joined "squawk box" this morning and described why it makes sense right now >> all about resetting the cloud landscape and this is to create

the number one company that will be the number one hybrid cloud provider this is how they move the remaining 80% of their work to the cloud. you have to be hybrid, you have to be able to handle multiple clouds, you have to be open technologies, you have to do multi-cloud management and that's what we can do. >> ibm is down on the news and has underperformed big this year down about 20% red hat shares are up to the deal price, so there is some skepticism that perhaps someone could come in and make another bid. >> eye-popping number. when i looked at this y thought, core business isn't growing fast enough and look at the shiny ball over here, please listen to agaginny this morningd figure what a hybrid car is and now what a hybrid cloud is >> investors seem to want something different out of ibm they don't seem to want this at all. right. >> the stocks off 3% would be worse, i think.

>> 63% premium is a pretty high price out of ibm without the support of buy backs. buy backer of its own stock in the past decade, you have to wonder where the support is for the stock at this point. big questions around this deal let's turn to the transports they are higher today, but still down 12% from the record and down 11% in just a month frank holland here now with a look at what is holding the transports back. >> tyler, transportation stocks may be the most deeply impacted by rising fuel costs those record highs you are just talking about, those were just over a month ago a big reason for the declines. a weakness in airline stocks big names taking a real beating as they struggle to reassure investors they can absorb the rising fuel prices southwest down 21% this month and a beat on revenues this latest report and management expressed a lot of concern about rising costs american airlines down more than 19%. missing on revenues last week,

jet blue down more than 15%. united the exception far outperforming the group. down less than 4%. the airline even able to raise their earnings guidance for the year shipping giants u.p.s. and fedex, well, they're also falling into bear market territory. down more than 20% from their recent record highs in late january. ubs reporting a sharp drop citing industry-wide pressures high fuel costs and unresolved trade issues between china and the u.s. remember, transports posted solid games throughout the summer into mid-september. that due to strong economic data and a much different story in october amid the broader market down turn and weak earnings reports among a number of components >> frank, thanks. coming up, the trump of the tropics. he was just elected brazil's new president and look at the controversial new leader and what it means going forward. plus, is a dividend cut

coming at general electric what to expect straight ahead. the trump economy as good as it gets or is the best yet to come we'll debate that as we head to break a look at the markets. s&p 500 righnoseiolot w ssn ws "power lunch" back in two.

brazilian stocks outperformed in the run up to the last election this past weekend. tracks brazilian stocks soaring 8% in october while the spy, basically the index here in the u.s. is down 8%. now that the largest economy and brazilian stocks continue to rally or will investors now sell on the news? daniel osorio his firm advisors lawyers firms on politics. daniel, welcome back nice to have you here. you know, the country brazil just had gone through under prior leadership, deficits ballooning and percentage of gdp going to pensions really higher. do you expect this trump-like stock market bounce to continue?

>> well, my brazilian friends tell me, brazilian friends and colleagues, brazil is not for beginners. particularly not far from easy this election has been a contentious election in brazil the last 27 years and the congressman before that and the armed services racist comments and really lacking some levels of stability that brazilian politics was accustomed to but here we are what they have done in the last 16 years this is a rejection. >> what is his in platform that the markets like so much >> i think it's hard to differentiate does the market

like him or does the market just feel relief that the pt is not at the helm, again >> he does have this university of chicago guide who is saying all the right things who is going to be a finance minister, right? >> a grown up, orthodox economist, university of chicago ph.d. and a financier and it looks like he's going to be running all his economic matters. but, you know, come decisions that, yes, you are part of the cabinet now. >> what happens to state-owned enterprises and fiscal policy? >> that is one of the great debates in brazil. what happens to petro products, which is critical. you know, i think brazil finds itself in this crisis of who is brazil brazil continues to be the country of tomorrow, but we never get to tomorrow. what is going to happen with petro? >> what do you think will happen >> i think inclinations of trying to privatize more of it and then going to be a very powerful union that is not going

to want them >> i hear skepticism in everything you say but perhaps this guy or his team is saying all the right things that the markets like, but execution could be tough and after a massive outperformance, why would you buy into that today? >> right you know, i think my knee-jerk reaction is to see what happens. if he fills this cabinet with retired generals then be concerned, be afraid if he doesn't and he takes a more orthodox approach to the economy, then maybe getting along brazilian stocks and brazilian stability is a way -- >> but right now you're not invested either way. >> waiting to see what this man does and what he starts in the administration in january of next year. >> always great to have you. we want to bring your attention to the markets right now. stocks are near session lows the dow losing a 350-point gain. got a headline crossing now just now that the u.s. is preparing to announce by early december tariffs on all remaining chinese

imports. this would happen if talks next month fail to calm the trade war. on the dow we're down by 57 points and s&p 500 still holding on to the green up by 2 and nasdaq continues its losses down by 51 points. coming up, pharmaceutical stocks on the move as two new depression drugs and what it odins for the companies prucg them and the industry. that's next. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work.

welcome back to "power lunch. meet to review two new drugs for depression hi, meg. >> significantly move stocks but even before the advisory committee meetings themselves, releasing documents that shares the medicine under review and these could move stocks, as well expected to be larger and that's because the street is largely bearish due to mixed results in clinical trials. it is development for major depressive disorder. a large market nearly 19 million people in the u.s. have depression and it has a number of treatment options already but it still

needs better ones. only about a third of patients are helped by the first medicine they try jeffries estimates alkermes stock could move and another 10% to 15% on a favorable vote on thursday jeffries sees a downside of 10% on a negative outcome. for sage the expectations are street forward flavor of approval based on clinical trial results any concerns about safety could knock the stock. the safest drug would be the first approved for post-partum depression quite a week ahead for depression drugs >> can this same compound be used to treat other depressive disorders besides post partum? >> there is another one that is very similar to it called sage 217 which is a oral formulation that they're testing in broader forms of depression, as well folks are very excited about that, as well.

coming up, the u.s. economy may be humming along, but could this be as good as it gets the trump administration says the best is yet to come. who's right? we'll tell you, next the cnbc trend tracker data board is brought to you by the cme group.

let's get a check on the markets right now. we have seen them move lower in just the last half hour or so. the dow and nasdaq losing all their early morning gains. down by a quarter of a percent s&p 500 is up by 2 and nasdaq is down by 0.08 or 56 point tech, of course, the big drag. once again, rolling over in earlier trading. take a look at netflix that had been up by about 3% and now off by nearly 4% 4.5% even more dramatic, the move for amazon that stock was up more than a percent at the highs and now down about 5.5%. apple also notable reversals we're watching tech very carefully as we go to this close. hey, sue. >> hey, melissa. hello, everyone.

we begin with the world health organization saying air pollution kills 7 million people a year, including 600,000 children almost all of them are in poor countries in asia and africa with nine out of ten people on the planet breathing in toxic air. >> solutions and those solutions out there we need to call, this is an urgent call to everyone who can provide solutions because we need to scale up dramatically the response to fight air pollution. >> a protest by greek students over education reform suddenly turned violent when they clashed with police outside the parliament building in athens. the incident occurred during a march through the capital. a cashierless store is getting a test run from sam's club the company opening a new location in dallas next month called sam's club now. customers will be able to scan and pay for groceries with an app instead of standing in a checkout line. that's the news update this

hour, melissa, i'll send it back over to you. >> thank you, sue hererherera. a common theme this season how many companies have mentioned tariffs and the impact it had or is expected to have on its bottom line. steve? >> looking at the transcript of earnings calls that happened through friday, cnbc finding 35% of companies mentioning the word and 65% did not. in total, 45 companies or 19%, you could see here, mention it in a negative or in a somewhat negative way we have whirlpool in there, caterpillar, micron, costco. 2% but we're positive carmax, nucor, kansas see illume nm and their customers pulled forward business to beat tariffs 14% mentioning tariffs in a mutual way here's what united technologies said the chairman said i would expect

pricing would also have to increase next year if these tariffs remain in place. it all gets passed on to the consumer in one form or another. and here's harley davidson, a well-known issue with tariffs. in total we now expect to occur 33 to $38 million of increased costs related to tariffs in 2018 in a separate survey out today the national association for business economics finding that 77% of companies say they have not changed their businesses in response that leaves 25% that have and most of those were negative. you can see on the next screen here i have to go over to this side here 13% raised their prices and 10% delayed investment and 14% accelerated and 14% delayed hiring most of the negative tariff reported by goods producers half raising prices 38% delaying investments. back to you. >> all right, steve, thank you very much for those numbers. so, while a slew, a slew of companies are already seeing

negative impact from tariffs, kevin hast, the chairman of the council of economic advisors says the current growth we're seeing is sustainable despite it >> look, folks, we need the fiscal side to start to stimulate because modern policy has done all it can. here we are. we had tax cuts and deregulated and really had the positive impact on the economy that joe and were talking about last fall and i forget, maybe austin was disagreeing with us. but the fact now is we have the growth and can we sustain it i believe i can. >> can we sustain this pace of growth let's bring in greg, chief economic and economic policy journalist and he is a cnbc contributor. greg, let me start with you. is mr. hast right that the level of economic growth now in the

mid- mi mid-threes in the face of accounts >> digging in the numbers, i think the answer is no, at least not yet. we know a lot of the acceleration of the 3% was due to the one-off factors stimulus the ramp up in federal spending, especially in defense sector and a big boost of personal disposable income that consumers are spending that. recovery in oil and gas investment once again, that was simply working past the bust after oil fell below $30 a barrel. the uother point that often get forgetten drop half a percentage point because we were digging further into supplies of labor to deliver that growth that combination can't continue because that unemployment rate would have to go negative. we would need to see some pickup in labor force growth for that to be sustainable. >> what do you say >> yeah, i mean, listen, this is not just some sort of short-term stimulus that you're going to get more by

lowering the corporate tax rate and more business investment and that will lead to higher productivity growth. because there is no way we're going to have sustained 3% growth or anything close to it without factor productivity growth and that is going to take some time, if it happens and that last report wasn't too positive >> it hasn't really happened yet. >> it has not happened yet but the thing is, once it starts happening, it will take a while, i think, for that, for that -- certainly the case with the tax cuts the higher productivity for 15 years to have higher productivity growth. feds raising interest rates and the tariffs creating uncertainty and press that business investment there's some real obstacles there. >> i'm not sure you are able to catch the report on how many companies mention tariffs negatively on conference calls but economic growth and whether we're spending too much mental

energy on whether or not the tariffs are an impact. do you change your mind now? now that you have a fifth of the companies mention on conference calls mention tariffs negatively does that change your mind last week you said effectively they were spending too much time on tariffs we, the media, compared to how much the impact on the economy is >> i am part of the media. i am not putting myself in the criticism. people want to hear about tariffs. the investor base wants to know about tariffs. i remember five or six years ago they would complain about policy uncertainty. i have sympathy when president trump says they try to blame their own mistakes on something else a natural corporate instinct if you had a bad quarter, look for something other than your own actions to explain why it is bad. it's hard to actually get really big numbers on growth from these tariff impacts it's like a pig and a python

it works its way through but the overall economy. china is showing some signs of slowing and china and brazil they all slipped back. the dollar has strength ntened that's a big negative. and if i could add one more thing, in spite of all -- >> a potential of seeing tariffs put on every single stitch of good that we bring in from china. i mean, if these reports are correct, they just cross and move the markets, jimmy. so, at this point, can we have the effect of tariffs on the economy? the unknown is yet to come >> listen, we don't have a lot historically to go off these kind of tariffs. these models, they're kind of like those static analysis budget models. what about the dynamic effect. the dynamic effect, the uncertainty. very difficult to model. two

two, if they stay in place for a long time. i realize if you do a static amount and a huge macro impact as we're seeing in these sort of company reports and the dynamic of the imports could be greater. >> of the two economies between china and the united states, they live off exports far more than we do, right? >> absolutely. but what's the point of that >> that it doesn't necessarily impact the u.s. that much. >> punish them more. or we can't punish the chinese economy. the point is we cannot -- the point is over the longer term, we have a much less efficient economy and over the shorter term, if companies don't want to make an investment decision because they're uncertain, that will undercut the trump tax cuts >> if i could associate myself with what jimmy said over the long run, no question that more protection and it works contrary to the

administration's plan. i don't think there is any dispute. i think the question is, are the tariffs we've seen to date realistically expect a negative for the economy. it's hard to get more than one or two percentage points off gdp growth the numbers are a bit bigger, but not bigger china's biggest problems like ours are domestic. the other point i would make here, if you cut through the clutter, the trade news is getting better since the administration came up with a preliminary agreement to renew the nafta agreement, we've also seen progress with the european union and even talk that the steel tariffs with respect to canada and mexico could come back. the headline risks on tariff is mostly behind us >> all right, gentlemen. >> i think that's true for europe and mexico, i don't think that's the case for china. >> we will leave it there, guys, thank you very much. coming up, general electric on deck with earnings the company set to report tomorrow

will they save the dividend? could they cut it? what does the company's new ceo to say to appease investors? the key things to watch for, next. we want to point out the dow is now down 100 points good for a loss of 0.4%. s&p 500 in the red now on case to close at the lowest level in six months and take a look at facebook, amazon, all near session lows right now.

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welcome back to "power lunch. a rough year for ge. more than 4% new ceo and big task to turn things around the company comes out with its earnings tomorrow and everyone watching that. morgan brennan especially. she joins us now with what we can expect morgan >> yeah, tyler, probably going to be a noisy quarter. three big things that are in focus for ge we'll get those numbers tomorrow morning. first comment from new ceo larry culp the first outsider to run ge he tock over abruptly at the start of the month a highly respected ceo and expect an early outline of his

plans to accelerate a turn around the details, though, probably won't come until early 2019. that said, number two, guidance. more pain and power means ge will fall short of previous earnings and cash flow guidance. the street had already priced in a miss with 88 cents the current consensus but cash is going to be key, especially since that's already been changing dramatically just over the past two years. that brings us to number three the dividend is culp going to cut or suspend it given the laundry list of charges and issues, a fresh cut under a new ceo might actually be welcomed, though the details are going to matter if we see that shares are widely held for that very payout. bottom line, this may be less about the quarter and more about the future, especially since that stock is down another 35% this year. guys >> morgan, thanks. morgan brennan. could a dividend cut come as a relief to investors who would

rather see that cash reinvested? junian mitchell research analyst at bar clay's. just upgraded the stock to an overweight mid-october basically on the heels of culp's appointment to ge. so, what do you want to see tomorrow >> yeah, i think there's three things that we focus on. one is a clear plan on the power business that's big the earnings of the company of the last two years. we need to hear about restructuring there. second, it would be capital. how much has he look under to the balance sheet and how comfortable is he with the balance sheet and the third would be that june 2018 plan still in tact or is there a broad, strategic reset coming potentially changing the details of that plan they laid out >> how comfortable are you with the balance sheet? >> i think the -- >> it sound like there are some shoes to drop. >> further risks of insurance and also going to see the mortgage business and you have some charges coming from doj and

sec. on the other hand, a ton of industrial assets that could be devested to raise cash to plug those holes at ge capital. i'd also say that culp was known for a consistency cash flow generation and improve the free cash profile of ge industrial. if that happens, people naturally feel much more comfortable about the risks. >> they'll cut the dividend by how much >> we estimate they'll cut the dividend to about a 10 cent run rate next year that is against the current run rate of 48 cents and that's down from the 96 cent dividend. >> what is that in cash? >> sure. that would free up close to 3.5 or 4 billion in free cash. restructuring particularly in the power business. >> what is left of ge in two years? >> sure. under the plan in june and culp was on the board when that plan was laid out would have shrunk the company essentially back towards power

>> health care >> health care under that plan was gone it's quite possible you get a rethink of that june plan, though, particularly that power cash flow is going to be weak for several years. it may make senses to retain health. >> who is buying plans that's the problem, basically, isn't it >> they're in about 40% of power plants globally. so, if you assume the emrnling markets and electricity consumption has some multiplier effect resulting from gdp still. >> you make the point in your note that aviation and health care ge entire enterprise value. does that mean you think that should be the core business in a couple years when they pair down assets, et cetera? >> the move meant to me that investors areassuming that the valuation of all the other businesses and transportation and so on and all that value

gets completely offset by plugging holes at ge capital it tells us that ge capital to a large extent the risk are factored into the current share price. >> the dividend goes to a 10 cent run rate for the year is that because when we had the discussion during the break, ge wants to maintain some kind of dividend so they could stay in certain mutual funds who are dividend payers and put that aside, do you think they should cut the whole thing and preserve as much cash as possible >> having a token dividend makes sense. that removes the risk of force selling by institutions, as well as individual investors and having that kind of dividend costs a few hundred millions dollar as year and their revenue base of well over $100 billion worth maintaining some small degree of dividend >> julian, great to see you. big tech companies targeted by a new tax the nasdaq 100 etf down 110%

today, 11% this month. our next guest says get ready for more pain in tech. what the charts are telling you, next i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

it is more what is called a digital services tax >> that's right. we are in this >> this is not bureau like another for u.s. tech titans it will generate at least 640 in global revenue it is like alphabet and amazon it is expected to raise about 500 million a year this certainly sets a ples dent

they can't be too happy with it. >> it's a targeted sales tax >> he doesn't believe in this stuff. >> and also not the only new that we could see here the eu thinking about new tax on their own here >> yes >> and another reversal. part of the key technical levels to watch to break down the technicals with us what are you looking at today? >> very importantly i think it is easy to say something we always find something at or near market lows. it is probably the most appropriate lens into that world. we have had four days where we have seen some spike here. we need to see more than that. we had 20 of those days in 2015 and 2016 we had about 32 of those days in 2010 we go to the next chart here

i also think what's important here is we are not washed out. we were 10% below in 15 and 16 and 14% below there. we think there is more here. i would be patient i think in particular when we look at tech here on our next picture one of the things we have seen is a three month relative low these are the q's. unlike 17 and 18 when we bounced off of 200 this is a different regime we should respect that if we zoom out and look longer term on our next picture here, this is every draw down in what was the greatest market of all time from 89 through 99. you have eight or nine draw

downs. >> it is not that washed out internally it is above their 200 a moving average. industrials, financials, energies far more washed out we think it is too early to say tech is there. >> what does it mean in terms of which do well? do you want to go into values over growth? >> the group that lead you lower, maybe home builders, industrials are typically the ones that stabilize first. >> yeah. even the most recently like retail acting better it has been there for many many years. we look to what are the weakest groups to show signs of stabilization first. i think it's too early to call it a washout just yet. >> in terms of what we are seeing the nasdaq pull back by about a percent midday

>> i think ultimately down a 15 to 17. >> 15 to 17% from the highs? >> yeah. we are down about 9 or 10. >> are there more levels you're watching >> what we care about is the character. i think it will be really key here what is the character look like? there is leadership that reclaims the risks the bar has not been met for us yet. >> so another 5 to 7%. >> i don't think it is

unrealistic. >> all right down about 156 points right now. dow and s&p back now into negative territory for the year. a flattish year so far power lunch back in 2. -- two

all right. let's give you a quick market check.

the dow down 154 points. right around there the s and p now negative by 9. nasdaq had gone negative as well all of the fang stocks are in the red, facebook, amazon, netflix and alphabet they are all negative right now. >> we had big gains on thursday. all of those are now erased. >> yes back in negative territory for the year >> what have you been up to lately. >> so also making a speech it is helping them with a two day event and speaking engagements and establishing a company. i would like to produce content. >> wow >> and what have you learned

>>. >> lots of trading >> you brought toys. what are these >> my props for check please they are wallets >> chewing gum in merging markets. >> closing bell starts now it is time for closing bell. strong gains at the hope fading throughout the day it is a critical week for apple. we'll speak with who just initiated the stock and says now is the time to buy >> ibm payin