to 120 >> industrials, i presume? >> i like it xl i, i'm in >> josh, you have a different final trade? >> i would, here's what i want to say you will see big bounces any time the market does what it's just done. down 11% don't get overly excited >> thank you very much, guys, "power lunch" starts right now [ music playing . >> and welcome to a very special edition of "power lunch. i'm mellissa lee along with tyler mathieson. there is so much at stake for investors at wall street >> indeed, there is. cnbc has full coverage we will drill down on every angle. michelle caruso cabrero on the river. we have election meddling, steve leishman on the economic polls

versus the political polls >> of course, it all comes back to one burning question. what does it all mean for your money? with that, let's begin with bob pisani on the floor of the new york stock exchange him hello, bob. >> hello, mel hills sa -- mellissa in this market the market suddenly goes up when everybody thinks it will be dull and boring going into the election that's what happened today another rally! we have moved 500 points since the bottom ibm has been a total surprise to everybody. who thought ibm all of a sudden would move back 8% in the last two-and-a-half days. that's been a big mover. then we have caterpillar a whole bunch of industrials moving up, caterpillar and boeing are up 3, 4% since then mcdonald's noted a historic high. it's moved about 4% since friday another consumer name, coca-cola

up 4% since friday so a lot of surprises here people are expecting a dull, boring market. it's not happening right now meantime, i'm very skeptical about the story. suddenly in the fourth quarter, we will get a rally. yes, it's happened there are a lot of things, remember the markets have not gone up because we have nod hat gridlock we had the tax cuts going through. now we are supposed to get gridlock i don't understand that. i don't think the tax cuts will be made permanent if the democrats are in charge of the house. i think the deficits will matter again to a lat of republicans. >> that will make stimulus spending a lot more difficult. remember, this isn't going to change the trade tensions. that's likely going to continue. rates will likely keep rising. i think this is a different environment. just be a little skeptical about everything will be great if we get gridlock going in washington >> robert, let's zero in on

exactly what is at stake in the mid-term elections they are crucial, because the balance of power in government, basically, the legislative branch could change. eamon javers is covering that story for us it all boils down to the house, which is where the real flip many people think could happen >> that's right the president over in the executive branch will be watching tonight on television really the whole character of the second two years of his presidential presidency are at stake. they think there could be a change of control. democrats need a pickup of net 23 seats in the house of representatives to make that happen in the senate, the number of seats they need to pick up is actually smaller they need a net gain of two. because so many democratic senators are running in red states, states the president won the last time around, the expectation is this could be a 77 climb for the democrats tonight.

>> and the democrats have to defend more seats, don't they? in rougher states, like missouri, like indiana, like montana, like north dakota >> so that's some of the reasons we think the democrats will have a tougher time in the senate we have to bring a big dose of this expectations can be out of whack. one this inc. to watch for the state of georgia, the governor's race there stacy abrams and brian kevin -- kemp you see stacy abams there in georgia. >> that could be a bellweather for how the night will be for the democrats. it's been a hard fought battle she could be the first female african governor in the history of the country it's been a very hard fought race a lot of emotions on both sides. >> that might give you a sense, if they're able to call that early, how things will go through the evening.

>>ee mon eamon, we will be watching this. >> cnbc contributor michelle caruso ka brcabrero. john, where do we start here, which ways will you be watching this closely >> well, the house is less of a mystery as indicated than the senate strategists on both parties tell me they expect democrats to get more than the seats they need, probably more than 30 seats. in the senate the challenge is you have a whole slew of races that are extremely close if they nall in one direction or the other, republicans could gain several states or democrats could take the majority. i will be looking in particular at missouri and indiana. those are critical seats to hold on to, claire mccaskill in missouri running in those red states, eamon referred to, joe

donelly in indiana they need to keep both of those to regain any shot in the senate >> the fact that republicans gave up the senate >> that would be a real upset. >> absolutely. >> yeah. >> michelle. >> i'm going to say, i was going to use 2016 as my model. eamon highlighted the surprise nobody had >> nobody knows nothing. >> my god is democrats don't do nearly as well as they thought there was a chance they could have at one point. right? that would be the general rule i'd say if you look at the betting odds in london where you can put money down, they suggest the republicans have a one in three chance of holding both the senate and the house, which is a much better shot still doesn't mean they believe it will happen there is a lot of doubt. i'm just fought convinceed that this blue wave that they talked about for so long is actually -- >> going to materialize.

>> mellissa, legislatively say the democrats capture the house and the senate and there is a blue wave, ultimately the president is not going to sign anything they send him they will not have a lot of power even if they have a big win tonight the way they will get power is through the subpoena power if they take over the house and the democratic committee can subpoena all kind of documents that's the way >> one other the congressional review act, which has been used by the republican controlled senate and house to roll back piles of regulation, if they lose in the house, then you lose that tool which has been so effective. >> let's go down the path of what consensus and the panel here seems to think consensus. if maxine waters becomes the head it can mean something when it comes to subpoena power when it

comes to the president and his taxes. >> this goes into eamon's comment on the political aspects. there is the political and policy aspects politically, a democratic control of either the house or senate will be very difficult for the administration the end for the banking industry because there are going to be reams of congressional oversight hearings so big bank ceos are going to have a permanent chair at the witness table in front of maxine waters the treasury department will be pulled up. the banking regulator will be pulled up for hearings all the time however on the legislator, the policy side, there is little to no chance for the democrats to push through whatever the agenda is, a kind of anti-bank re-regulatory agenda that's not going to happen so from my perspective, i think it's actually going back to what bob pisani was talking about why is gridlock good because the regulatory agenda

stays in place the banking regulators are in place. they are not going anywhere. they have been confirmed to four year plus terms. so as they continue to grind through the trump administration's regulatory agenda, there is really not a lot democrats on the hill can do michelle was mentioning the congressional review act it might be able to pass a house on the resolution to overturn some banking regulations probably not going anywhere in the senate it's definitely not going to be signed by the president, which would be a requirement so when i look at the political aspects of it. yeah, it's not great for the banking industry headline risk is going to increase when i look at policy risk, i'm not that worried i think the deregulatory narrative, excuse me, stays in place. >> and mellissa, one other point to what brian just mentioned, there is not anonymity among democrat even if they take over the senate and the house sharod brown of ohio a populist

senator would take over the banking committee. he told me last week, he's not interested in breaking up the banks and reimposing stiegle even if you had control, sharod brown said his principle thing is protecting further rollbacks of dodd-frank. >> in terms of the other legislative efforts to come, brian, where would you rank infrastructure i mean, if there is a divided house in senate. is that actually good for inf infrastructure >> we have been talking about infrastructure and the possibility of bipartisanship to the obama administration it has increased because of the president's background and construction but i have been a skeptic on infrastructure from the day he was inaugurated. i remain a skeptic on infrastructure i don't see a bipartisan

passway. it's a kum baya thing. democrats can't agree on what the fundings are, what it should look like. everybody will sing from the hymnal great. i'm pretty skeptical on an infrastructure bill being passed >> that's true and the devil is always in the details in all of this but the one thing politicians can agree on they like spending money >> yes >> ultimately, there is a chance for an infrastructure bill >> that will be the only thing >> however, we have trillion dollar deficits. i think it will be very difficult to expand the level of those deficits, especially in the senate if republicans keep control. >> trade, michelle, what do you think? increasing chance of a passing the new nafta with a divide house and senate or more difficult? >> hard to know because, remember, democrats into this election, into the presidential election were actually anti-all

these trade agreements as well right? extremely difficult to know. bernie sanders was against gpp right? and forced hillary clinton to back away from the tpp so i'm not convinced the trade dynamics changes all that much >> it's much more difficult. >> against china >> brian says more difficult as well >> yeah. absolutely >> we will leave it there, guys. brian gardner, eamonafters tyler. >> meantime the bond market ten-year notes up for auction. rick santelli tracking the action at the cme. yesterday was not good how about today, rick? >> yesterday was good, today was strange. i gave it a b as in boy. it was a good auction. we have two reopenings this is the initial first offering but here's where it gets a little peculiar. 3.209 was the yield, indeed, that was lower on the one inssse

market that's all good. 73.8 indirect. >> that is off the charts powerful the best since february 11th and among the highest i've ever seen here's writ gets weird, direct fitters, what are they pensions, primary dealers, insurers, banks, governments, 1.2. 1.2. i have a database going back to 2002, i could not find a lower number than that indeed, that was a low number. that was the reason the grade was taken off. primary dealers take 25% but all in all, on pricing and on the indirect, it was a stellar action "b" for boy tomorrow we finish up with 30-year bonds. back to you. coming up, more on the mid-terms and your money we will look at the key issues affecting the stockmarket and stocks are higher today. are they ready to rally no matter what happens? and the first polls close in less than five hours now

so stay tuned to "power lunch" for everything y noueed to know. we take you to election day. we'll be right back.

>> welcome back, everybody, to "power lunch" it is an election day the dow is on pace with the fifth gains. they may be small. gains they are they focus squarely on the

mid-terms and what is safe for the investors and ba are the issues facing the market beyond the election welcome to both of you mona, i'm begin with you you say that it is a time to play both offense and defence in the markets simultaneously how do i do that what does it translate to? >> generally speaking, we have a fed very much in play. in that environment you ultimately get into a slowing economy situation. when we say offense and defense, we still want to have the growth sectors. what comes to mind is technology, in particular, also some of the energy that's sold off a bit. we think the supply demands are stronger still the defensive side is staples and health care. in a slowing economy people will need health care

these are sectors that can do well >> i'm not going to buy paper talls. >> they will have extra toilet paper. john, how does that sound to you? >> yes, i agree with the fundamental also mona described. i really believe investors should focus on some of the seasonal tail winds. we hit a low last week and then we had three back-to-back days of 1% historically following 12 months returns and having three consecond different days similar to october 11 and february '16 12 months returns are in excess of 10% 86 to the strong fundamentals, we see solid seasonal tail winds behind this. >> when i hear those kind of historical patterns, i begin to sort of go, is that an accident or is there a reason for that? it is, it could happen that way.

>> right, when it happens 18 times since 1950 the 18 mid-term years is something i think we should pay attention to when you look at history, more often than not as you spoke to the previous guest in the earlier segment, the president loses what, the sitting president loses 28 seats on average? >> mm-hmm. >> and to prime the pump if you will for the next presidential election, you typically see investors discounting an approach, but either way the fourth quarter of the mid-term year and then the first half of the next calendar year tends to be the three strongest quarters in the 16-quarter presidential cycles as investors discount that future growth >> that seems to tell me, at least, you want to buy the whole market the s&p 500 mona when you talk about the bar bell approach, buying offense and defense, that is a basket that reflects the entire market. does it matter who wins the

election having one end of the bar bell out perform the other end of the bar bell? >> generally speaking a republican sweep, which is not a high probability scenario is a pro growth scenario. we may get issues like tax reform on the table and infrastructure potentially we may get low growth deregulation so that scenario we want to focus on the low side of the bar bell in this scenario, the gridlock, which we've discussed, where really a lot of the economic agenda is in place tax reforms, some of the trade policies, we want to continue focusing on the other side of the economy, a fed in play, rising rates that's where the offense and defense comes into play. >> theoretically, john, gridlock means whatever pro growth agenda will remain in place that's sort of reading this glass half full in terms of the gridlock scenario. in terms of stocks, that a decent scenario so investor

versus clarity there >> i think clarity is key. you don't want the pendulum to swing one way or the other consensus believes at that point you start to see similar to what mona said a balanced approach or bar bell approach. on one side of the ledger we will be focusing on value, financials, industrials, infrastructure, for example, on the other side we will look at health care for some defensive care as well >> we thank you very much >> thank you, guys >> thank you coming up, we look at individual stocks making big moves. the old saying in politics it's the economy, stupid, how the economy is playing into these mid-terms. "power lunch" will be right back i know you want to leave me for schwab, but before you do that, you should meet our newest team member, tecky. i'm tecky. i can do it all. go ahead, ask it a question.

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welcome back to "power lunch" checking the big movers, booking holdings formerly known as priceline, higher today, although it missed on earnings investors are focusing on a stronger than expected performance. it beat on earnings, revenue is weaker than expected lastly, semantics -- symantec has interest in acquiring a cyber security firm. most weeks, a major factor in

the elections, why this year is the party in power at risk of lo losing the house of representatives? power and politics next on "power lunch." the world is alive as you can see, this time of the year is so much more than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,000 credit on select models now during the season of audi sales event.

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let's get a check on the marks at this hour stocks are pushing higher on this election day the nasdaq moving further from correction territory trying for its first gain in three days it is higher by 33 points the action is in the commodities market crude oil is shrinking down from a bear on its most recent high ibm, caterpillar, boeing leaving and the mylan and nasdaq 100 check out shares surging on amazon web services. now let's go to seema mody >> a trade, though names like killray and chron os and cap my

can get growth they have four different level of legal status. tilray says michigan is considering recreational marijuana legalization investors will be watching the fa fate of attorney general jeff sessions after the mid-terms who has been a vocal opponent of legalization. let's go to sue herrera for your cnbc headlines. >> thank you very much here's what's happening at this hour firefighters in the prince city of marseilles says they have found a second body in the collapsed building ruins yesterday. 100 officers and 80 firefighters searched through the night searching for survivors. officials say 70 people still remain missing. the remains of a national guard soldier and utah mayor killed in afghanistan over the weekend arrived in the united states overnight a dignified transfer of 39-year-old brent taylor's

remains took place at dover av in delaware. they are expected to return to utah later on this week. a new study out of har vashd suggests eating nuts every day can help keep off that extra weight the key is substituting them for less healthy snacks and only eating about a handful. meg ryan and tom hanks will reunite on the big screen when "sleepless in seattle" returns to the screen for a two-day only special event. each screening will include a new introduction by ryan and producer gary foster can't wait for that that's the news at this hour back to you. >> thank you very much. we have been getting a lot of polling data in the days and weeks up to this election. but there are differences between political and economic polls. hi, steve. >> we will figure out today which one wins it is politics versus the economy when it comes to these mid-term elections

do you ever take a look at some polls out there. one shows the democrats with a 7% lead, in what they call the generic ballots. >> that asks americans, which part do you want to lead congress but there is another poll. it's the unemployment rate it's a poll of 60,000 americans. they report a 3.7 report unemployment rate, one of the lowest we've had since 1969. how about some more polls. our all america survey of voters around the country show a 41% approval rating for donald trump overall. but 51% when it comes to the economy. we asked another question, what do you think of donald trump's temperament? 58% said they have concern about the temperament. all of that said confidence. our own indicators michigan, the conference board at or near all time highs. so it's politics versus the economy. now, we asked this question in our fed survey what do you think will happen?

14% say the gop retakens both houses, 79% say the democrats takes the house, gop the senate and 7% say the democrats take both houseles. that's the odds on opinion from our fed survey participant there is a lot at play here. we have the political consideration and also the economical >> gdp 3.5%. wages rising, dig deeper into what's at stake for the trump economy in the mid-terms i want to come back to something, a point you made earlier. when i look at the number that says 80% possibility that the democrats take control of the house. >> that remind me of 80% possibility that hillary clinton is going to take control of the white house. it didn't turn out that way. has polling changed in two years at all to reflect the fact that most pollsters got it so blatantly brazenly wrong two years ago. >> absolutely.

i think that's why so many of them say there are so many tossup states. they're terrified of taking a stand. they have been doing this a long time the scottish referendum is too close to call. no it wasn't the greek referendum was too close to call guess what, no it wasn't >> are the polls wrong then? are they not reliable? >> yes, can you do so many things, weight things in a different way and they are terrified of making a huge mistake. so they come up with too close to call. >> when it comes to the last elections, since we were talking about that, is there this disparity of what people feel on the political side versus what they feel on the economy >> we had some of that, and we asked this, 50% of the country is concerned with donald trump's temperament and like what he's doing with the economy i know our producer does not want us to have a geeky discussion about the polls let me stand up for my rather in

the polling business an point out the polls last week nationally were pretty darn close. hillary did win the popular election i do not believe polls, pardon me, can account for to the electoral college split. some of the 80% is an extrapolation off the polls, themselves and it's even harder now, few think of back in 2016, they were solving for a binary, clinton or trump. now they're solving for i don't know what the exponential is of 500 seats in congress and the senate it's almost impossible it's almost what i did, take the generic and the pieces will fall into place >> why hasn't it been more about the economy? >> you see the reports, paul ryan called up trump and said, please, please, talk about the economy. thank god he's not running on the record of the economy, because he might really -- and

here's the thing, i mean, who's the smartest about really getting the vote out and driving an election? it's been donald trump he's chosen to focus on other things like immigration, the caravan, et cetera, instead of the economy. we all think, oh, that's not so smart. i don't know, we haven't been all that smart through this whole thing. that's the conventional wisdom >> i have two theories first the tax cut does not poll well people tend to think it benefitted the wealthy corporation and do not report seeing it show up in their pockets. that's one thing i think the other thing is, i heard someone mention this morning, it's a decent explanation, i'll go with it when someone is working the way it's working, when things are going badly, i don't want to ever doubt donald trump's political instinct he felt he needed something else other than the economy to win this election. he was fighting an uphill battle he is still fighting an uphill

battle he decided the economy was not enough >> it was going to energize his base >> the economy is doing more than just working. it's working pretty well the talking point of the great jobs report we had last week, that had not come up at all these rallies. it's just mind blowing to me that that is not something that is touted. the 28% return on the stockmarket since he was elected the greatest since eisenhower. do these things not poll well? you guys out there all have jobs >> they poll extraordinarily well that's why we wrote, when our poll came out about a month ago, we think there is not this blue wave, it's very hard in the absence of arecession to have think a wave election. >> are you earning more? is your 401k bigger? are you feeling more secure in your job >> yes, yes, yes >> and it's yes, yes, and yes, so there's a lot of argument that says, well, you don't change horses in mid-stream if

it's going that way and, yet, the concensus is that the congress is going to flip or the house. >> i think we are seeing the effects of the economy it's dulling an opposition vote. maybe somebody motivated to come out is less mate voted to come out, it's pouring out in the state today. are you going to get up there and try to vote against the president right now? they're doing so well economically >> maybe not >> i think it's a double for the republicans also on the economics. i don't hear a response by the democrats to the better economic data i don't hear them saying, well, you are do okay here we can do better for you here. i don't hear that. it struck me they're not running more on it >> that said the president mentioned it quite a bit it doesn't seem it's the number one issue. >> when it comes to the democratic party, i will be interested to see, what lessons they come out of it an arm has

gone very far to the left, very progressive on their economic policy and yet a lot of centrists, former military and key races are playing much more than within the 40 yesterday line as you men like to use, that was the football references, and -- >> let's find an opera metaphor? can we >> the fat lady sings. >> but let's see who wins ultimately is it the progressives the ce centri centrists and what does that tell the democratic party in the presidential race. >> here's what i thought, if the democrats don't take one of two houses, there is a serious problem with that party. then i thought, wait a second, if one election determines whether or not there is a very serious problem with that party, i this i there is a serious problem with that party. >> that they really need to recast themselves as more of a national party and not more of a party where you know like 90% of its voters can drive within a mile of saltwater.

>> as you look back to 2016, i think the fundamental difference was that the gop and mr. trump had a message. they had a message and they had a candidate to carry it. the democrats right now it seems to me have a fuzzy message and no candidate >> or an anti-message. which is not a message >> or not candidate to carry it. number two, i will say one thing about donald trump i never seen a guy with more stamina. the guy goes out there and delivers he has been on the road, man, he's got energy. >> tweeting like crazy >> rally after rally >> you may like it you may hate it. but he rolls out the crowds. he's got high energy he has high energy >> he plays to win, right? all the way. >> from a journalist standpoint, he doesn't mind making things up a lot of the things the president says and the way he's cast the issues are brought from thin air and that's an issue that i think the democrats have to deal with they have to think about are

they willing to go as far as the president? to hear the president tell the story of the obama economic years, there was no growth at all. nafx, there was 2% growth, which we can have a debate was it substandard but it wasn't zero >> all right we sham see. people are voting. i got to go vote later >> i did already >> all right today is the day facebook has been waiting two years for will it be better in stopping manipulation and fake news we'll tell you what the company did on the eve of election day and we will talk from an expert about the fraudulent activity he is seeing. at nt on "power lunch.

see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade facebook is saying it blocked 115 accounts from the fbi about a tip leading to a foreign entity

julia boorstin joins us. >> reporter: this effort is yet another effort to manipulate voters that comes ahead to protect facebook from manipulation on its platform two years ago. this latest, facebook blocked 85 instagram accounts engaged in coordinated inauthentic behavior this has been less than two weeks ago. they found and shut down 82 pages through an account linked to iran. facebook says, quote, given that we are only one day away from the important elections in the u.s., we want people to understand the efforts we have taken. we visited a war room that targets voter suppression and manipulation this year the company is doubling its security team to 20,000 people. but facebook does continue to draw fire, they have identified a dozen ad campaigns in which energy and insurance industries amassed the fact that they were paying for political messages.

though facebook requires political ads to quote accurately represent the name of the entity or person responsible, it doesn't actually check those names listed back over to you >> thank you julia boorstin in los angeles. all big tech efforts, how much misinformation is still spread about our elections? let's bring in a co-founder of guardian ai a group focused on protecting groups from misinformation in cyber attacks. brent, thank you for joining us. we appreciate it up found a lot of misinformation being spread it's not just the days leading up to the election this started six months ago? >> yeah. mellissa, we went back and tried to identify any potential election interference this fall. when we searched for a bunch of different themes, we mentioned voter fraud had consistent patterns of activity going back three years. can you look at the visuals on the report it almost looks like a heart

beat pattern beating consistently when we looked at those accounts, there were strange things they weren't seeming like bots, they had emojis, all of them were surging all of a sudden six months ago or most of them 15 days ago what i mean they would go from having no mentions or replies to all of a sudden getting 10,000 or 20,000 mentions in a day. and every day going forward. so when we put this together, we saw these accounts started amplifying each other. they were surge late and have been surging in the leadup to the election the thing that stood out for us was that it's not about bots or not. some of these accounts are human. this kind of a pointed is it appears the real americans are getting caught up in these patterns of coordinated influence to spread these narratives. >> so when i go -- explain this to me as a neophyte at using

twitter, which i assume most of this activity you are tracking is taking place. if i were to put in #voter fraud, i might be led to places where the content is fundament ally fake news >> yes so if you were just to go to twitter i think it's changed over the last two days over the last two years. if you search for voter fraud or election fraud, the man voter i.d. -- demand voter i.d., you would see tweets from the accounts active and coordinating over three years >> that ability to colonize that #and effect what people think about it and log on to these conspiracies or overblown reports of voter fraud, that's a consistent thing so that was really troubling to us the other things we saw is they weren't tweeting about voter fraud, they were tweeting about

qanon or false flag megabomber or the caravan crimes something that has been troubling is these accounts have not been tweeting about voter fraud but using conspiracy theories in the claim into the leadup to the election and speaking to more calls for violence in the belief that millions of americans will vote illegally. seeing that surge in rawi raw activity and possible voter fraud and violence, that was trouble to us and wanted us to issue this report early and get it out to the public. >> what have you done in response when you find these accounts, do you report them to twitter are these accounts no longer active did you find bots or specific actors >> we focused not specifically on who was behind it or the bot or not question. these are important questions. i think the research and media community has been stuck on the bot or not questions >> that kept us from seeing

evolving changing influence tactics in looking at the actual coordination so that was kind of our starting point was to see what was actually happening now we don't know who is behind it what we do know is there were growing, scaling narratives behind claims that this election will be stolen and millions of illegal immigrants or people from the caravan crisis will be voting today we are concerned that the anger and the calls to violence that these networks are amplifying will effect not just today but what happens tomorrow and the rest of the days after the election >> how would you rate facebook and twitter's responses to what you have found, brett? facebook's got a war room, twitter is active in trying to shut down accounts as well are they doing well or is this a whack-a-mole situation where the bad guys will find ways around the quote/unquote good guys however they're

developing to shut these accounts down? >> you know, i would say that we, everyone basically agrees that we've all got to do better on this, the platforms, researchers, et cetera but what this showed us is seeing how subtle these campaigns have moved on, it's not just bots retweeting other bots it's complicated it's nuance. i evades detection methods it actually gives some empathy in the situation these platforms are in however, i think seeing how fast the bad actors are moving and how quickly they're changing their technique, it's clear that, you know, despite all the panels and researchers and books, we're not doing enough. this requires a whole of response of society in order to address this problem and i think the thing that i hope our findings and others highlight is really an opening for platforms to collaborate more with the public and for the public to also understand the difficult situation that these

platforms are in >> brett, thank you for your time >> and oil prices falling once again today. down more than 17% in just a month. and that is sending energy stocks lower as well up more than 11% in that time. but election be a spark that sends those stocks higher key things to watch for, next, on "power lunch. i am a family man.

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crude oil briefly dipping into bear market territory, now down about 20% from its recent high, but could the midterm elections provide a spark to boost oil prices and energy stocks our next guest says you'll want to pay close attention to several gubernatorial races and four particular issues, ballot initiatives in different states. senior vice president and energy analyst at raymond james joining us before the ballot initiatives and the races, why is oil down 20%? >> well, the short answer is inventories have been, you know, leaning bearish the last several weeks. now, keep in mind, we had, you know, seven, eight months of exceptionally bullish inventory data, you know and then in the past four or five weeks, they've been hitting a soft patch

that's transitory, in our view the global oil market is still fundamentally undersupplied. on a full-year basis, it's probably down a million barrels a day, which is, you know, similar to what inventories were down last year we think inventories will continue to fall into 2019 and even 2020, four straight years, which you know, is really unheard of so, it's a very bullish picture for the oil market, but it has hit a soft patch. >> short-term, a soft patch. let's get to some of these you say if you want to understand this election's effect on the energy complex, you have to look down into the weeds into ballot initiatives in various states let's start with one in colorado that people are pointing to as basically a referendum on fracking it would restrict where fracking could take place and i guess the extension is that if it carries in colorado -- and it's close -- it

might ultimately extend to other states >> yeah, it's -- look, there are plenty of states that have pretty strict drilling regulations passed at the legislative level, but this is really the first one that could pass by a popular vote and if it works in colorado, it would set a precedent for other states to at least attempt it. i mean, not -- it's not going to happen in texas or north dakota, but in the more purple states, you could see that conceivably, pennsylvania or something like that you know, colorado is a midsized oil-producing state, about 500,000 barrels a day of production 5% of u.s. oil supply, quite a bit of natural gas, too. this would not directly prevent that production from continuing, but what it would do is essentially, you know, eliminate, just about, future drilling activity. so, it certainly would not grow into the future. >> so, which companies, pavel,

could be most impacted which are the ones that don't have drilling activity already in colorado within the proximity of these various sites who are interested in having drilling activity there >> right so, in colorado, one of the big geological areas, it's called the nia brera, and those include src energy, ticker srci. another operator in the state is noble energy, nbl, more on the large-cap side there are a few others it's not nearly as big a deal for the economic energy as, for example, the permian basin of west texas or the bakken of north dakota but like i said, if it passes, it would just about make it very difficult, if not impossible, to drill in the state in the future. >> all right, we'll have to leave it there pavel from raymond james, we appreciate it. >> thank you.

>> four hours until the first polls close in this crucial election day for the markets and your money next, a top pollster has his final crystal ball predictions we'll also break down scenarios to see which stocks and sectors could be on e thmove "power lunch" is coming right back what am i really being charged? and is it eating into my returns? is my advisor a fiduciary? is he always a fiduciary? a good place to start is with an independent registered investment advisor. as fiduciaries, they live by a simple rule: always act in the best interests of their clients. that's why charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

welcome back, everybody, and welcome to a special edition of "power lunch," "your money, your vote." polls are open across the country in what is described as a potentially historic midterm election with the balance of power in the house and the senate on the line. >> we've got every angle covered for you. our election desk is ready to break down the key issues in the races to watch brian sullivan has a look at the role the economy will play jane wells is breaking down the year of the woman in politics. bob pisani's tracking the market action. >> and since it all comes back to your wallet and the future of your money, we begin with bob pisani at the new york stock exchange hey, bob >> reporter: thanks very much, tyler. we've got a little mini rally going. a lot of people thought it would be boring, the two days going into the elections it's not been bad. 500 points the dow has moved look at the dow. since friday, since the become on friday, that's not bad at 3% or so. take a look at some sectors that are moving, some stocks moving who thought ibm? we thought ibm was given up for

dead it's moved nicely, about 8% since that friday low. caterpillar, mcdonald's at a new historic high. coca-cola is up about 3%, all those stocks moving nicely here. meantime, have you watched oil oil has collapsed! it's down a dollar today, but look at the oil stocks they're not collapsing it's the e&p group you want to watch, a mixed performance these stocks would have been down 2%, 3%, 4% on a normal day. i think it's a good sign, oil down, not selling the emp stocks good sign for the market meantime, everyone's full of happy talk for the fourth quarter, because historically, after the midterms, the market does well no matter who wins s&p's up 8.5% on average and positively almost 90% of the time since world war ii, the s&p is up 15% 12 months later no wonder there's so much happy talk about the fourth quarter. we'll see if the gridlock really is good for the markets because that's the consensus

back to you. >> thank you, bob pisani. the 2018 midterms could make history for several reasons. one is the money spent on it john harwood has more on that. >> it's extraordinary, melissa if you look at this chart of spending in past midterm elections, going straight up to over $5 billion in this election a majority of that for democrats this year. now, if you -- let's see let's go to wall street money. one reason why democrats have gotten a majority of the money is that wall street has flipped. 2014, 62% of wall street's money went to republicans. this year, 52% going to democrats. some of that is backlash against donald trump when you look at who are the industries and the interests that are fueling the democratic party, you've got tech, you've got hollywood, you've got labor, you've got lawyers then when you look at the republican side, they've got oil and gas, old-line manufacturing, retailers, casinos as well all of these are republican core

groups and what that money is doing this year, it's buying a lot of communication with voters that has driven up interest in this surge election look at our nbc/"wall street journal" poll. we showed in 201451% just before the election said they were extremely interested in the election this year, 70% say they have the highest level of interest in the election that is presidential election level interest, and that's fueling the heavy turnout, the long lines we see today, the massive early vote and the question is, what is the composition of that early vote is it leaning democrat, as they hope, young people, latinos? or is it simply taking from election day vote traditional voters which would favor the republicans, guys? >> going back, though, john, to how much money is being spent by the financial services industry, it's being spent on democrats, the most in a decade, as i understand part of that, though, is to temper some of the extreme parts of the party, such as maxine waters as well as elizabeth warren, so some of it's sort of a reaction they just don't want those sort of far-left candidates to be

elected. >> well, certainly, wall street does not want far left candidates -- >> it's a tempering aspect to the spending. >> that's right. that's right but if this democratic money buys the house of representatives for the democratic party, maxine waters will be the chairman of that committee. if they win the senate, sherrod brown will be the chairman of the banking committee. so, they may be trying to play and participate and have an influence that way, but caveat emptor, be careful what you buy. >> john, thanks. john harwood. >> and john, it says very colloquially in the teleprompter, john, come on over so, come on over. >> like "the price is right. >> i'm going to walk. >> walking and talking >> back with me at the election desk, michelle caruso-cabrera, eamon javers and larry sabato, director of the university of virginia's center for politics larry, always great to see you what is your polling and your sources, what is your general prediction for the house and senate this year >> yes, we came out, it was our

finals yesterday, and we do rely on private polling, public polling, social media analysis, and the like and we think for the house of representatives that democrats will win control of the house, that they will gain somewhere in the neighborhood of mid-30s seats. they need 23 to take control in the senate, we still think the republicans will hang on and maybe add a seat we've got them adding one, so they would be at 52, instead of their current 51 and of course, the governorships are -- the democrats are practically going to clean up in governorships, especially in the midwest. >> can i add one thing >> surely! of course. >> there is a small chance, like the chance of polling an inside straight in poker, which you can do, but which doesn't happen very often -- there's an inside straight chance that the republicans will hold the house, and there is an inside straight chance that democrats will get 51 seats, which is the minimum they need to control the senate. >> i want to bear down --

>> so, i throw that out there. there you go. >> i want to bear down on a couple of states that i happen to know just because it's my residence, better than i do others one is the house races in virginia, where you have the democrats flipping all of what you call their opportunities to flip, and similarly, new jersey, where i think there are four currently held by republicans that you think will flip to the other side explain why you see that what are the odds that the democrats come up one short there, two short there, and then, because i'm famous for my complex and compound questions, how about menendez in new jersey >> well, i'll answer the easy part last. you know, i've often thought that menendez has borrowed a slogan from that great, old louisiana governors' race between the kkk leader, david duke, and a very crooked democratic governor, edwin edwards. and edwards, looking at duke, said, vote for the crook, it's important.

and so, in a sense, menendez, who, let's face it, has had a lot of problems, he is benefiting from the fact that he's running for re-election as a democrat in a blue state, in basically a blue year, and that should help him win. now, i don't think anybody would be shocked if he were ousted there are some reasons to do it, but we're betting that he gets re-elected as for the house races, in virginia, there are actually four opportunities for democrats, and we think they will win 2-3 they've got one almost in hand there are two others that are at 50/50, so we split it. we figure they'll get one of them and they could easily get the third out of four. in new jersey, it's because there is such a strong democratic sweep in that area -- new york, new jersey, and pennsylvania if you put them together, at a minimum, i think democrats will get seven seats, seven additional seats and anything else is gravy >> larry, it's john harwood.

i've been particularly interested in the seventh district of virginia that district, of course, where eric cantor used to be in the house republican leadership. he was defeated by dave brat in a primary that was a stunning result, nobody expected. now he's got a tough race with abigail spam berger, former cia agent. what are you seeing happening in that race? the polling has been close. >> when eric cantor lost that primary, i was at a chicago airport, and i was convinced my computer was malfunctioning with the returns, because you know, nobody had ever heard of dave brat, and eric cantor was on track to be speaker. and there's a connection, john, because whether they will ever admit it or not, i know personally that some of the eric cantor supporters, financial and otherwise, are helping the democrat, abigail spanberger you know, revenge is a dish best served cold. and they're hoping they can provide the margin of victory for spanberger to defeat brat.

it would be an odd coalition, but then, winning candidates often have odd coalitions. >> larry, it's michelle here good to have you on. that's one of the races i'm most interested in, because when you look at it, we were talking last hour about the democratic party seems to have really moved very far to the left. and yet, you have these races, like you were talking about, former members of the military, former cia agent, they're running much more centrist campaigns. when all is said and done, what do you think the message is going to be for the democrats and from democratic voters, that they want, you know, the more progressive wing of the party, or do they want more centrist people >> i think the message is going to be do what we did in 2018 nominate candidates that fit the state and district because you're absolutely right, in districts that are more middle of the road, more suburban, have voted republican for congress in recent history, the democrats have nominated military veterans and more moderate candidates. that helps them to win

but in very, very liberal places, like that special district in new york that produced a 28-year-old former bartender who's kind of a socialist -- >> kind of >> they'll take somebody like that they'll elect somebody like that so, really, you have to nominate candidates that fit the district, or you're not going to win. you won't get a majority >> let's go to a couple of the governorship races, which you call maybe a democratic, run-the-table kind of scenario, and two stand out to me, one -- and they have both been nasty races. one is in georgia. what do you see happening there? the other is in florida, where a republican incumbent may, may be replaced by the democratic mayor of tallahassee >> in georgia, we think it will go to the runoff so, we were able to whiff there, john and don't tell me that i don't have that right. so, we called it december 4th runoff we'll see what happens tonight but in the florida case, look,

if you do the polling averages, and if you look at the polls that have been taken -- and my god, florida has had more polls, i think, than any other big state -- then gillum would be favored. not favored by much, and this is where my virginia background comes in virginia elected the first african-american governor, douglas wilder, in 1989, but he was supposed to, according to the polls, win by a massive majority it was so close, we had six weeks of recounts, and he ended up winning by 5,000 votes out of almost 2 million cast. there's a little something called the wilder effect some people call it the bradley effect after former los angeles mayor tom bradley, in which people, white people, tell pollsters what they think is the socially acceptable response -- i'm voting for the african-american candidate -- then they go into the polling places, they vote for the white republican, and often come out and tell the exit pollsters that they have just voted for the african-american candidate

so, i don't think you can trust polling in a case like that. we'll see tonight. >> larry, it's eamon javers. let me ask you one that might seem a little bit out of the blue sky, but a corporate question amazon it looks like might be locating its new headquarters in crystal city, virginia as long as we're talking about the politics of virginia, that's a state that's had a tremendous political transformation over the past couple years. what does the addition of another couple thousand tech, high education jobs to northern virginia do to the complexion of that state is that going to change the future of virginia does amazon by that one decision have an impact here electorally? >> well, they do it's going to make northern virginia even bluer than it already is, and it's very, very blue, particularly that inner circle of alexandria and fairfax and so on. that is very, very blue. and it's made all the difference now, you know, tide waters turn bluer, the richmond area incredibly, which was once the

hotbed of conservatism it's now blue. the outer ring of suburbs votes democratic it's because the republican party in this state has moved way too far to the right and nominated people like trump, and they've got somebody running for senate called cory stewart tonight who will be, i think, the former candidate after this evening. but they're just not appealing to the kind of high-tech, high-education workers that are in northern virginia and some of these other places so, virginia is now a purple competitive state, but it's tinged with blue and every year it becomes a little bit bluer. >> vote for the crook because it's important i'm going to take that one away, larry. but also, i want to say, tonight -- >> always voted that way. >> everybody knows that i'm a big virginia fan i'm sitting here with a guy from duke they play tonight. virginia opens tonight larry, we'll vote for duke if you'll vote for virginia tonight. >> i will definitely vote for virginia. >> of course i'll vote for virginia tyler is a big virginia fan. >> you bet. >> the two of us together outweigh you all

>> thanks, larry good to see you. and eamon, michelle, john, thank you. coming up, the first polls are closing in less than four hours' time, and markets right now are holding steady, on to gains. the dow is up right now by about 0.4% or 90 points. the nasdaq is up by 26 and the s&p 500 is higher by 10 points where do we go from here a look at what to expect in the fourth quarter and why the booming economy may not be a home run for republicans this election. we are live in toms river, new jersey, with the economic issues top of concern for voters there. do not go anywhere "power lunch" is back in two

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a guy just dropped this off. he-he-he-he. stocks continue to trade higher ahead of today's midterm elections. so, once all the votes have been counted and the results are in, what should be top of mind for investors? what will draw the action to your end dan wantrobski is with janney montgomery scott and kara montgomery with chief investment capital. kara, i'll start with you. you like the financials. you also say a democratic win of the house would be bad for financials how bad would it be? in other words, would you actually change your holdings in your portfolio based on the outcome of the midterms? >> i wouldn't. so you know, the first thing i would say is that i think in a medium to longer term, whoever wins later today is not going to have that much of an impact. i think for financials, if the democrats do a little bit better, we could see a quick step down, because a number of

democratic candidates have been making noise about getting tougher on financials. but i think there are a number of things that over the medium term are going to be positive, things like higher short-term interest rates are going to be positive, positive credit cycle, additional capital would be deployed, dividends to be raised so, i think there are a number of things working in financials' favor, in addition to being much cheaper to the rest of the market. >> that would also outweigh a potential leadership of maxine waters of the house financial services committee, somebody who's been very vocally outspoken against wells fargo, who called for the top executives stepping down, who has been vocal against equifax and has been vocal against donald trump and concealing his tax returns? >> yeah, i do. again, i think there's been a lot of noise about getting tougher on financials, but we've had had nearly ten years of policymakers getting tougher on financials so, as a sector, there's just only so much more that you could really bring out we have capital levels that are among the highest they've ever had. they've been pretty conservative in extending credit.

so, i think even if we start to hear more noise amongst certain democrats about getting tougher, you know, to a certain extent, wells fargo kind of deserved it. they had some really bad practices. but i don't think that necessarily extends to the whole sector. >> dan, does this go to the adage that gridlock is actually good for the markets are you a believer that at the very least, it preserves the status quo, which has been a pro growth status quo for stocks >> yeah, i am a believer i think the statistics surrounding what happens after midterm elections -- so, despite any volatility that we're going to come across today or the next several days as results get decided and analyzed, the statistics are very favorable. i think going back to 1950, 15 out of 17 midterm election years, in the fourth quarter, average returns on the s&p were anywhere from 5% to up to 7% and in fact, the following year following a midterm election year, starting around september into the next june, a median gain on the s&p was around 18%

versus about 5% for non election years. so, i think despite what happens and despite where we are in the market cycle, and certainly, we've seen a lot of volatility more recently, and these election results can play into that, but i think most we're provided a good buying opportunity, once we get past or through the next few days or so. because historically, markets seem to be in good shape, in my opinion. >> all right thank you very much. we're going to leave it there. dan wantrobski of janney montgomery scott and kara murphy. a mixed bag for retail but the group is up 7% since those lows back last month with these three names leading the way -- macy's, ulta and tiffany's. should buy now "trading nation" is next not a creature was stirring, but everywhere else... there are stores open late for shopping and fun as people seek gifts or even give some. not necessarily wrapped with paper and bows, but gifts of kind deeds, hard work and cold toes.

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welcome back to "power lunch. i'm mike santoli, and this is "trading nation. retail on a roll the past couple of weeks the xrt retail etf up 7% since hitting a five-month low in october with a number of names like macy's and tiffany all getting a boost. and this comes, of course, as retail earnings are about to get into full swing. so, what, if anything, would you buy in this space? craig johnson's with piper

jaffray, mike binger is with grady investments. so, mike, strong consumer heading into the holiday season. the stocks have run a little bit, but also, you know, not at their multiyear high so, how much are you playing >> yeah, you know, and the run makes sense. i mean, you think about what's caused this recent sell-off, right? it's been high valuation stocks have sold off. rell, retailers are very reasonably prices. retailers, they don't get caught up in the risk-off, you know, the trade tariff trade at all. they're u.s.-based, so the strong dollar doesn't affect them so, overall, it's a pretty safe defensive sector, i think, where you know -- and consumer data's held up pretty well, where maybe some industrial and housing metrics have kind of fallen off or softened a bit. a couple of names i think you should look at are walmart number one, walmart is executing very well right now. their comps are doing good and i think they're competing much, much better on the online segment versus amazon. and then secondly, i also think you should look at home depot to buy it here. you know, like i said, some

housing data has slipped a little bit i think the stock is way oversold i think you can get double-digit, you know, low double-digit earnings growth for the next few years out of home depot. it's a buy right here. >> so, craig, i think defensive is something that you think makes sense right here does retail as a sector qualify? and then what about within it, in terms of some of the bellwethers? >> you know, mike, right now we are recommending an overweight in the consumer cyclical sector. and as we go back and look at a chart of the xrt, i would just make the observation that it's been a bigger looking base, starting to show some better relative strength against the overall market so, we definitely like what we're seeing there one specific name we'd call out, we agree with mike that walmart looks like a constructive chart, looks like a nice cup and handle pattern forming. looks like we could see up side to about 110, so a total return opportunity here close to 10%, so that's a stock we'd be out buying today >> all right well, maybe it will be a big-box christmas. we'll have to see how the stocks do leading up to the holiday

for more "trading nation," head to our website or follow us on twitter @tradingnation melissa, i'll send it back to you. >> thank you, mike. coming up, you'd think the booming economy would be a winning issue for republicans. a look at why that may not be the case, next now the latest from tradingnation.cnbc.com and a word from our sponsor. >> traders trade stocks when they think they're going lower short interest is used to gauge market sentiment a rising short interest can mean investors are becoming more bearish on a company however, when short interest reaches extreme levels, it can often be a contrary indicator, because traders are often forced to buy back their short stock, and that can drive the stock much higher.

welcome back to "power lunch. let's get a check on the markets. stocks are off session highs right now, and actually, they are sinking as we speak. the dow is up by about 28 points, but we had been up triple digits earlier in the session. the s&p 500 is almost flat, up by fewer than two points and the nasdaq composite dipping in and out of negative territory, now down by about four points. let's look at some of the biggest earnings movers. marriott is down with lower

revenue than forecast. they are down 6% elf beauty soaring as it reported strong results and upped the guidance, up a whopping 18.5% and two stocks in the pharma world moving opposite directions eli lilly is lower despite a beat on the top and bottom lines. and mylan up by 19%, eps beat and also the company saw strong sales in emerging markets. now let's head to sue herera for a cnbc news update. here's what's happening at this hour. u.s. mail bomb suspect cesar sayoc has been ordered to be held without bail in his first new york court appearance today. sayoc is accused of sending improvised explosive devices to numerous democrats, critics of president trump and also cnn he faces nearly 50 years in prison if convicted. the u.s. olympic committee is taking steps to revoke their recognition of u.s. gymnastics as the sports governing body this is in the wake of the larry

nassar sexual abuse scandal. nassar, the longtime team doctor, was sentenced in january to as long as 125 years in prison after he pleaded guilty to molesting ten girls a woman was killed and several others injured when a possible tornado moved through middle tennessee overnight you can see that widespread damage in rutherford county, southeast of nashville several crews with the national weather service are on the ground to assess whether, in fact, a tornado did touch down and a shark has killed a 33-year-old man in an island harbor on the great barrier reef, the same area where two tourists were mauled on consecutive days by great whites in september a dangerous place to go diving these days that is the news update this hour ty, back to you. >> i'm not swimming there, sue. >> nope. all righty, the oil market closing for the day and jackie deangelis is at the commodity desk

>> good afternoon, tyler crude hitting bear market territory from its october 3rd intraday high, trading lower at the close here by about 1.5% session low was 61.31, a test of critical support levels. the continued bleeding in the trade coming after the reality of the iran sanctions setting in they're not going to squeeze the country hard right away. the president said it yesterday. he said it was going to be gradual. so, the oil markets are now looking at the big picture they're saying the dollar's strengthening, opec and the u.s. are pumping away, we're in a seasonal slow period, and stocks could be volatile. that's what that selling is happening in the market now. >> jackie, thank you very much. it turns out that the booming economy map not be a home run for republicans this election season. brian sullivan live in toms river, new jersey, with more on that hi, brian. >> reporter: hey, tyler. yeah, listen, it's kind of the tale of two economies. you've got the economy's good, but not good enough for everybody, or the economy is really good, and even if you don't like the president, don't screw it up. those are kind of the two messages here in the third

district of new jersey now, we don't talk a lot about new jersey politics, but this race right here is maybe the most important in new jersey and maybe one of the most important in the country, by the way it is a statistical dead heat across a number of different platforms. kind of cuts like a middle across charlie brown's shirt, across new jersey from burlington county to where we are right near the beach here in ocean county we talked earlier today to both the candidates, andy kim, the democrat who worked in both, by the way, the republican and obama administrations, coming out and saying, it is the economy, but it's not good enough for everybody >> while the stock markets have been doing well, we live in a time when 40% of americans can't handle a $400 emergency. it's understandable right now that people in this district living paycheck to paycheck, not able to make ends meet, worried about prescription drug costs, their rent, their mortgage those are the types of things that we want to make sure we work on. >> reporter: kim is going up against incumbent, republican

tom macarthur of toms river, right here macarthur's message is, hey, even if you don't like the president for whatever, the economy's so good, let's just keep things going. >> sure, there are people in this district that don't like the president's style. i talk to them, too, but they like the direction they like that they're safer and the country is stronger and they're more prosperous and the country is growing -- booming, actually not just growing, but booming. these are bread-and-butter issues that matter to people. >> reporter: you know, tyler, when you're trying to get 23 seats, every seat matters. this district really goes from the wealthy suburbs of morristown near philadelphia, which, by the way, that salt cap -- the state and local tax deduction cap, that's playing hard for andy kim there. and some of the poorer areas here in ocean county we're going to see what happens after today, but the third district, there it goes, is a big one for new jersey and a big one for the country, and we're going to be here in toms river with reaction tomorrow >> all right, brian. thank you very much. a district that goes right across the midsection of the

garden state thanks, bri. so, what are the best case scenarios for advancing the president's agenda on trade, tax cuts, and infrastructure spending stephanie miller is senior vice president of the special situations team at height capital. stephanie, it's great to have you with us. we do want to go through these important policy initiatives and go through what scenarios you see to get these things done so, let's start off with permanent tax cuts, making those tax cuts permanent what are the chances happening in 2018? >> yeah, so, we think under any election scenario, it's going to be really hard for congress, whether controlled by republicans or democrats, to make those individual tax cuts permanent next year. they're going to be faced with a $1 trillion deficit, so they're going to want to try to pay for those. democrats are going to propose increasing the corporate tax rate to make that happen, and republicans are going to propose -- who knows what they're going to propose of how to pay for it, and that's going to be a big problem. in an ideal world, those individual tax cuts would be

made permanent, but it doesn't seem like it will happen next year, and it doesn't need to because they don't expire until 2025. >> if the gop holds the house, which you give a 30% possibility to, you don't think that they're, even under that scenario, you don't think that there could be a tax cut 2.0 >> i think the real issue is what their majority is in the senate and you know, we saw tax reform passed on this really weird vehicle called reconciliation that allows the senators that hold a simple majority in the senate to pass the legislation on their own so, there is an argument that republicans, even if they keep the senate majority and if they maintain the house majority, which is less likely, they could use reconciliation again and pass it. the problem is that fighting within the party about how to pay for it and whether to pay for it and it's just not going to be a unified caucus it was really hard to get tax reform done. >> let's move on to infrastructure, stefanie how does that get done >> infrastructure, the only way we see it getting under is under a divided congress

needs democrats and republicans to kind of hold hands and jump into that pool together and figure out, again, how to pay for it they love the idea of spending money, but how to offset that in this deficit environment's going to be tough. we think they could do it with increased gas taxes at the federal level, but there's no way one party could easily own that again, republicans are going to potentially turn to decreases in spending maybe on nondefense areas of federal policy. democrats will turn to increasing that corporate tax rate, which is something that they continue to oppose, maybe, to pay for it, but the two sides won't be able to come together on those issues. and so, therefore, we think maybe on an increased federal gas tax, they could come to agreement. but again, we only put odds at 30%, even in a divided congress, that they could find agreement there. >> let's move on to trade and the likelihood that the u.s. mca deal, which sounds like a village people song to me, is going to get passed, no matter what happens. >> i couldn't agree more about how it sounds, "ymca" there.

the best chances for the president to get his renegotiated trade deal done is with republicans in control of both chambers, but we still think a divided congress, democrats controlling the house, it will probably be a nancy pelosi/donald trump showdown it will not look easy, but we think they can get it done the real risk is if democrats control both chambers, which is a low-likelihood scenario. trump's going to have a very big battle to wage there trying to convince both chambers to even take the legislation up, let alone approve it. >> you know, when we talk about the china tariffs, we don't talk about the house and the senate, but would that have an impact on what sorts of negotiations actually get done with china, particularly as we head into the all-important g-20 meeting later this month >> it's a great question we get that question from investors all the time a lot of these negotiations with china are really between the two administrations. the role that congress will have, potentially, especially if the house floats, is oversight of the trade negotiators, the

u.s. trade representatives -- trying to remember that acronym -- the ustr could be called in front of congress and others, robert lite hauser's office could be brought in to answer for some of the president's policies, and that would be a distraction, mainly, but hard for congress to do a lot to intervene with how the president and chinese officials' negotiations are going. >> all right, stefanie, thanks for breaking it all down for us. >> thank you coming up, the midterms could have a big impact on one particular sector, and that would be health care we'll take a look at potential winners and losers of the different election outcomes. what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives.

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welcome back to "power lunch. voting is under way, and for some sectors of the market, there is a lot at stake. health care is one of those issues from drug prices to the future of obamacare, a lot of issues could have a big impact on the sectors so how do you play it? umer area raffat is a biotech analyst. good speaking with you. >> thanks for having me. >> it doesn't seem intuitive on whether investors want democrats.

you know, the ideal scenario would be sort of a blue wave, or if the ideal scenario would be republicans hold on to both chambers, because it seems like drug pricing and bringing drug companies to task is a bipartisan issue >> i would agree with that, but i also would add that it's not like president trump's not doing anything about it at all, right? because what we've seen is he proposed a project blueprint, he's proposing a lot of things on the executive action side so, in a scenario where you end up with different ideas coming out from the democratic side, be it one or both houses, and different ideas from the administration, i wonder if you end up with a stalemate where nothing may actually get done. >> which would actually be the best-case scenario, right, for investors, clearly >> that's exactly right. so, the only intangible thing you have with drug pricing, as we roll into january, is whether president trump will allow big pharma to take the pricing increases or again tweet and make them roll it back like happened a couple months ago. >> in one of the presidential scrums, so to speak, he mentioned that he had called a

number of drug company ceos, they know who they are we know that he's called ken frasier of pfizer. and i'm wondering if you know of who else he has called >> so, ian reid at pfizer is ceo -- >> i'm sorry, yes. >> ian reid at pfizer had a clear exchange with president trump, and the understanding among investors has been that when pfizer proposed the price increases in july time frame, i believe, president trump tweeted, and then there was an agreement of sorts reached where president trump agreed to do something about drug rebates, and in a scenario where nothing's done on rebates, pfizer might put the pricing increases back on in january so, we've seen nothing happen on that side. so, presumably, we're heading in a direction where price increases do get put back on, not only by pfizer, but other pharmas and biotech as well. >> what have you noticed about drug pricing we hear reports that drug prices are still going higher for various key drugs. i mean, do you feel like the industry is, quote/unquote, behaving better under the threat

of action from a republican-controlled house, senate, and white house? >> that's a great question i think over the last three years, while you guys have been reporting on this, i have to admit, the three things have clearly changed. number one, you no longer see 20%, 25% pricing that never happens it's always single digits, number one number two, you're also seeing no multiple price increases a year anymore used to be some in january and again in july. so that's not happening either and third, there's increasingly a lot of pushback at the time drugs get priced at the first place, because that's the time when you can really come in at a high price so you don't need price increases, so there's a lot more discipline there and tying value to what your clinical data is. >> what about the tie-ups of health care providers -- not providers, insurers, and the pharmacy benefit managers, how does that untangle itself under the various scenarios? >> that's a great question so, this has been the biggest

source of confusion for the pharma community, because you have seen certain drugs with high amounts of rebates continue to do better, both on market share as well as versus newer drugs with far better data, only because the drugs with higher price tend to have better market share and better economics for the pbm. so, it ends up in a very gray area with not a lot of clear visibility, and it's an area, in my opinion, even congress hasn't really figured out so, no one's really opened up the books to really understand where the rebates are being kept, where they're being passed on, or are rebates being kept by pbms in other line items that may not necessarily be called rebates? >> umer, thank you very much for you time. >> thank you very much. >> umer raffat of evercore isi. coming up, the year of the woman. a number of women running for higher office and many with the backing of big business. jane wells is live in phoenix with more. hi, jane. >> reporter: hey, tyler. you know, control of the senate could be decided in the west, and we've got a hot one here in arizona. both candidates are women, and

it's gone negative, which can sometimes have negative consequences when you're female. we'll talk about that when we come back. ♪ ♪ (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 ibm cloud. a moment of joy. a source of inspiration. an act of kindness. an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter]

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including two women who are head to head in arizona we are live in phoenix with more, jane >> it is a battle for jeff flake and in 33 of the national races this year this is one of them where both of the major candidates are women the republican candidate is martha mcsally she sang the national anthem and her opponent did the coin toss a rare sign of bipartisan ship it is one of the most important

races. you can see the corp. ral rat donors there no prize to see supporting mcsally. an early polling here and mcsally starting to close the gap campaigning and going negative which often hurts women more than men even though it may be working >> you said it was okay for americans to join the taliban to fight against us >> we are not running against that >> martha had chosen to run a campaign when negative messages that in fact it can hurt her more than a male candidate women are actually sort of held up on a pedestri >> they believe women are supposed to be better than going negative >> we'll see if that still holds.

tonight there are a record 257 women running for the house and senate since in 33 races they running against each other we know 33 women will win and 33 will lose. >> i was a little confused at one of the things that sources said when a female goes negative against another female which female does it hurt more the goer or the recipient in. >> both. if you're the resip gent you have to croweawl out of a bigge hole >> girls should play fair, right? >> we'll see, yeah >> all right interesting. >> looks lovely out there. thanks a lot as we head into the last hour of trading stocks are losing a little bit of steam 90 points higher ton dow it's not insignificant nasdaq up by 13 right now. joining us from the floor of the

new york stock exchange, kenny, take us through what you're seeing in the market these last few days as the dow and other indexes have put together a little bit of a winning streak >> i think the market is telling you what we all expect that we'll end up with a split congress, how much we don't know yet. it may be the reason that we saw the indexes back off a little bit. it may be perceived a as a little bit less bullish. i don't think the mashlgt rket telling us anything we don't x. i think you would see more pressure on the market i think it could see the market takeoff. it is right where we think it should be. it is right where we think the result will be i think the market is going to continue to churn when that happens and then slowly make its way higher >> as you look at what -- let's just take three isolate three

variables here one is interest rates and two is trade and three is the election. which one is the market most -- why don't you just sequence them and order them in terms of which are the most important >> listen, i think today everyone is looking at the election i think in the broader picture interest rates are in the first position i think today you have to put that aside. everybody is focusing on what i will be tonight when everyone starts calling who won and what the makeup will be i think you really have to continue to pay attention to interest rates we talked about that far long time you can say october 3rd made the comments that were either misinterpreted bay large population because he didn't say anything we didn't already know. interest rates continue to be supportive because we know at some point they are going to get restricted

so therefore why the market went into a tail spin is beyond me. one way or the other it tells you that investors and global investors are worried about what fed policy will be and how fast they are going gochto go. >> is this a sell the news event? >> absolutely not. >> it was a buy the news event >> thank you see you soon coming up more on the markets and midterms with the first polls closing in just about three hours omfr now power lunch is back in two minutes.

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t. rowe price. invest with confidence. your money your vote it takes place today we are three hours away. see if you can guess where the first polls close. kentucky it will be an all night event. the last polls close about 1:00 a.m. eastern time in ak achlkt coverage starts at 5:00 a.m. eastern time with a special four-hour edition of squawk box. you can't have too much squawk

box. >> you never can we have markets that are higher but losing steam. he has a fall guy already. he said if democrats win your 401k won't look as good. so either way. >> he already picked out a foil. >> in case it is where it has been >> yes >> we were talking about some of the ballot things in individual states as pertains to energy there are interesting ones a couple we didn't get to is what is on the ballot in washington state it could be the first carbon tax state wide right now that initiative seems to be leading by 51-48 it will be interesting to watch that and also on a ballot in california a potential roll back of some legislative tax

increases on energy in california if that money goes away then the -- excuse me it might be effective. and missouri and utah, michigan and north dakota recreational consumption in adults, those are great data >> closing bell right now. time for the closing bell. america heads to the polls in the midterm elections with wide ranging we will hit all of the ankl angles job growth is booming. unemployment rate at a near 50 year low it may not be enough for republicans to hold the majority the heart of hedge fund country, we'll break down the key race that smart money is