it's only 2,000 a bottle no, i don't. never, ever. >> bring a bottle next time. >> that's $40 an ounce i mean -- >> this is what i like okay when the wolves bite you know how politically correct i am >> it's good to see you. thank you for being here thanks for being here. >> tell mario the knicks need that williamson kid from duke. here is what is on the menu. not basketball talk. we are one hour away from the ed fed's decision on interest rates. what will mr. powell and company say about the pace of rate hikes and what will it mean for your portfolio? and the mouse house on deck. disney set to report results after the bell we'll tell you what to watch and how to trade it ahead of the numbers. >> plus, wynn's big warning. wynn turning into a loss it has investors running from

the sector what is ahead and should you steer clear of the casinos we'll tell you why consumers are suddenly questioning why buying a home is a good investment. that and more as power lunch begins right now welcome to power life. a mixed picture on wall street the fourth day of gains. the s&p is off by four points and the nasdaq composite is down 30 financials and consumer discretionary are leading. utilities and energies lagging wall greens, verizon, and jpmorgan and patter pillar leading. l brands higher after raising the outlook. the same stores jumped dr. horton on the red in the revenue miss, and oil in the

red. the etf that tracks this sector, xle, down nearly 10% in a month. let's go to dom with a look at how far we've come from the october lows and what's moving us there >> con tes have a, great points about the market action. remember for the subpoena subpoena the broader markets, we've seen broader moves that have gotten back half at least, if not more of the losses we've sustained since record highs down through the turmoil lows in october. if you look at the s&p 500 j, right here in this area we fell by around 11% only to rally up by around 8% from those levels there. we've gotten back a good chunk of the losses. on the nasdaq composite, we're seeing the moves from the record highs we saw here all the way down to the october lows we were down around 15% on an intraday basis all of a sudden we've gotten back around 9% from the lows there.

with the nasdaq and s&p, more than half of those losses, recouped we'll see if the momentum can stay to the up side. what got us here materials and consumer discretionary. we're using that to represent them it's the best performing sectors since the lows we saw earlier on during the month of october, the crisis areas the utilitieutilities, all 11 so the up side. still, 2 % gains for the utilities the lagger >> less than an our to go before the decision on fed rates. no change expected this time what will the fed say about the future that's what the markets are watching steve is with us >> yes the federal reserve meeting amid political pressure not to hike rates from the president and some in markets. some here out cnbc have been insisting the fed not raise rates. it was never going to do it this

time it is likely going to signal that at the next meeting in december it will hike rates. it would also probably signal a strong economy and market. it won't change the outlook very much and say inflation is at, near, and or around the 2% target. here's some of the commentary that's out there over at pantheon zero real rates won't slow the labor market, but the lack of an immediate inflation threat means the fed can run a while longer with the illusion but over at keyon, they say the fed would be wise to pause in 2019 absent clear evidence of higher inflation rate. much higher rates might needlessly increase recession risk that's what some people are concerned about. but the market is pricing in a hike in december there you can see it's over 80%. most of the numbers here are contract highs for probabilities for rate hikes

another quarter point hike said to be coming in march or planned to be coming in march, and then the next one after that, the second one in september. what we see in our fed survey is a debate about whether there are two or three rate hikes next year a couple quick notes there's going to be a tweak to the interest on excess reserves. could be a tweak the folks at jeffreys saying it could happen with that being lowered a little bit that's a problem the fed has had in hitting their exact target. and just a bit of in a stnostal, this coming december is the regularly scheduled one and jay powell changed the regime. there will be a press conference after every meeting beginning in 2019 back to you. >> thank you very much stay right there we'll bring in a couple of market experts into the conversation to weigh in on the fed's impact on the markets. david cats, chief investment officer with matrix asset advisers and ron is director and

managing partner with rdm. gentlemen, welcome one and all ron, let me start by asking you what do you see for the rest of the year and what do you think the impact of higher rates moving into 2019 on stock prices and the economy? >> well, i tell you, tyler, if we just take a second to look at the way back machine, you'll find that the average correction of 10 to 20% lasts about four months going down and five months coming back the worst part is they come back with a vengeance in the beginning. we're not timing we haven't timed we haven't gone to cash. we don't see a recession, so that allocation equity is fully allocated. be tactical. we don't own real estate we don't own utilities we didn't make the switch from amazon to procter and gamble and find ourselves wondering what we do at our procter & gamble

stock. there will be bumps in the road. there's always reason to be concerned. most viewers can't remember what the worries were that caused the last 10 % decline. remembering the last person that last the presidency before trump. >> yeah. >> we're in it we think it's good no recession keep going be tactical. but keep your allegation fully invested. >> david, how about you? what do you think the effect of higher rates as we move into 2019 higher rates and slower profit growth could mean for the overall market and individual sectors. >> we think the president and the administration is sort of directed the world to look at interest rates and the fed raising rates. we don't think that's a problem. we think it's very, very manageable we think the biggest problem and there are concerns, it's on tariffs and trade and china. if you look at this last quarter's earnings season, about 30% of the companies talked about tariffs and trade in china as the reason that they're a little bit more cautious in their outlook.

not one company outside of a housing stock said anything about rising interest rates. when we look at the world, we're comfortable with the fed raising rates. we're at full employment inflation could be out there we think the fed is doing right. we think if the administration makes any sort of positive progress with china, we think the economy would be in great shape and the markets would be in good shape. that's the thing we watch out for most, not the fed right now. >> and steve, how much have companies already priced in this idea that the fed is going to raise rights and the difference between whether there's two or three next year? >> you know, i think that's a great question i want to pick up what david said and maybe a little bit of old rumsfeld comment there's the known unknowns and the unknowns unknowns. if you're investing right now without knowing the fed is going to raise rates next year, you're not paying attention f. if you're investing right now with the understanding that earnings growth are going to slow if only because the initial effect of

the tax cut in a year over year basis is going away, you're not paying attention and if you're investing not understanding that growth is going to slow because of the initial impulse of the tax cut, you're not paying attack those are the things we know david had a nice list of the unknown unknowns the effect of tariffs. i would probably add we don't know quite how much growth we're going to show. 3% or 2 .5% range or even right back down. those are the three things you should not be surprised about in 2019 >> so i wonder, we talk about the idea that most of the people we speak to here think that it's going to be trade and tariffs. the fed is an uncertainty out there. i guess maybe on balance, ron, and i'll throw this out to you, if we know those are the unknowns, the variables, what goes on investor's shopping lists if we have all that uncertainty still? you're telling us to buy the

market what exactly are the types of companies we should be looking at that can get us through even all of this uncertainty with a trade, tariffs, fed, everything else >> okay. so don, it's a great idea. what you got to do is you got to be tactical. you have to understand that technology is here to stay there are better technologies and not deals come up. things come up ibm we think with their purchase of red hat is going to be a turn for ibm. but at a 5% dividend, you can hang on through some pain. so there are definitely tactical, as i said, no utilities. there's no -- we don't own real estate those are things affected. and we're at best, i would say in our allegations about 15% nono non-u. non-u.s. most of those are major companies. stay in the u.s. stay where you think you can ride it out. be tactical and look for deals we think black stone, the company, lots of m&a going on out there.

i'll invest right aside of steve schwartzman any day. there are places you can go, but we think financials, technology and health care are probably the premier places to be and there may be some pain >> and there may be some pain. speaking of pain, qualcomm is one of your picks, david you say it's been a house of pain and it's one to buy while holding one's nose why? >> well, basically qualcomm disappointed last night. the stock is getting beaten up tonight. if you have a 6 to 12 month time line, we think things are going to start to go right managers know the shareholders are disgusted with them. they either get their act together or something bad is going to happen. basically the stock is about 15% dressed earnings they're buying the heck out of the stock. we think at some point you'll get a resolution with apple. 5 g is a qualcomm play buy the stock, hold your nose, a year from now you'll be happy.

there are other things, things like schlumberger, e-bay, good earnings you never know what's going to happen on a macro level, but you can buy good business at attractive prices. >> thank you all appreciate it. >> sure. shares of disney basically flat over the past three years as the stock has been clawing its way back from a big drop cause bid concerns over a decrease in espn subscribers have markets moved through that issue? everything you'll need to know before disney's big report and don't wait until the last minute to do your christmas shopping, and you don't even have to wait until black friday. we'll tell you which season are offering big deals right now stick withpor "welunch" we'll be back after this break only half the story?

at t. rowe price our experts go beyond the numbers to examine investment opportunities firsthand. like e-commerce spurring cardboard demand. the pursuit of allergy-free peanuts. and mobile payment reaching new markets. this is strategic investing. because your investments deserve the full story. t.rowe price. invest with confidence.

magic. that's the magic kingdom on the wall investors are hoping for magic when disney reports earnings after the closiing bell we'll be watching for streaming plans. walt disney will launch an ott service soon will they do that? number two, fox. what's going to come of that recently acquired batch of fox

assets and finally, espn. always the top of analyst's minds or it was at one point is it still there? was there growth in the espn plus service joining us now to break it down is brett harris with gabelli brett, there was a time not long ago, five, six seven years, when we were talking about espn, subscriber growth or lack thereof. have we moved on from there now and is there other stuff we should be scrutinizing more? >> no. i think the operating performance of the company is going to be front and center in addition to the things you brought up earlier the subscriber landscape, the pace of traditional declines and subscribers for traditional services it's going to be front and center espn still generates about 5 billion of the $17 billion of

ebita from espn. paid subscriber growth and advertising are a part of the call that being said, we'll talk about the fox transaction. when does it close does it close? how are -- what's the pace of us getting chinese approval for that deal as well as looking forward into the direct consumer potential launches you mentioned the disney, perhaps it's called disney play that should launch in the back half of 2019 as well as espn plus it's out there today brett, these are not huge revenue generators it's the future. we're learning comcast might start its over over the top service. how much are we going to track the subscriber numbers and is hulu a big deal given the disney fox assets acquisition because now they'll own two-thirds of it by the time it's done. >> on the direct consumer product, it's too early to talk

about subscribers. they just launched espn plus and the consumer product or the entertainment product they expect to launch won't be launched until the end of 2019 they need to close the fox deal before they put that product together and start marketing it. it is a little bit too early to talk about the subscribers associated with that that being said, the costs associated with launching them will be front and center the cost associated with launching these two products are going to be a drag somewhat on 2019 ebitebita. hulu does matter they'll own 60%. what happens after they close on the fox deal uncertain. i don't think comcast wants to give up their stake in hulu at this point this will be a focus on the call >> how much competitive pressure is this putting on companies like disney to ramp up the content game >> there's a tremendous amount

of competition in the video side you have over the top incumbents like netflix and amazon spending 8 billion for netflix. there have been 30 different over the top services launched in the last three years. the video marketplace is much more competitive than it used to be and traditional linear entertainment channels have followed suit. the number of scripted originals launched that are broadcast every year has gone from something like 250 to 500 over the last five years. so yes, the landscape is getting much, much more competitive. really because it's much easier for entrance to access the market ten years ago if you wanted to start a traditional cable channel, it would be difficult now all you need to do is have access to the internet which is -- everybody can get, which is why we've seen such a large growth of these entrants. >> yeah. and look at youtube and how many people are millionaires based on blogging that way in front of a

camera >> maybe i misheard you, brett, but you sounded a little bit equivocal or it sounded like you were holding out the possibility that the fax deal might not close. i assume you think it will close. >> oh -- >> and when will that begin to start to show up in disney's numbers? >> we expect the deal to close disney has said essentially it should close in the first half of 2019. everybody is waiting on regulatory approval from china given some of the issues between china and the u.s. on the trade side, i think there's some concern about -- or there's perhaps some risk of not getting that approval. that being said, there's been speculation early last week that china was getting close. we think it will happen. but there's definitely some -- i don't want to say skepticism, but there's some hesitation. it's not 100% done >> i was going to say and we haven't even talked about the theme parks yet. we'll have to leave it there thank you brett for your

thoughts on disney over there as well and today at 4 p.m. eastern, don't miss a first on cnbc interview with bob iger coming up on the closing bell a must watch interview there all right. coming up, black friday is -- i hate to say this it's two weeks from tomorrow are you kidding me two major retailers already rolling out their deals. we have the latest to get you in the holiday spirit oh, no, you won't. plus we are eagerly awaiting the latest decision from the federal reserve. it's coming in a little more than a half hour stay tuned to "power lchun" for the news as it happens

shoppers have plenty of time until christmas. 46 days, 10 hours and 35 minutes and 01 seconds several stores won't even wait to roll out big deals. kourtney has deals i think it's too soon. but whatever >> come on where's your holiday spirit? well, walmart and best buy are the two latest retailers to give us their plans for black friday. really it's thanksgiving walmart is going to offer the door buster deals online for the earliest time at 10:00 p.m. wednesday, before thanksgiving that's just online in store, they'll stick with the 6:00 start time for the door busters. they also want to add to the experience they're going to invite you to come in and have coffee, cookies, starting at 4:00.

get fuel for that shopping remember, most walmart stores are open 24 hours but the door busters start at 6:00. best buy's deals are going to start at 5:00 p.m. on thanksgiving day both online and in stores. the same time for them and best buy is joining both target and amazon in waiving the minimum threshold for free shipping through the holiday walmart is sticking with the $35 minimum threshold for free shipping walmart wants to make that thanksgiving black friday trip easier they're going to have leek localized maps on the apps you know where the door busters are. they'll color code the departments. associates wearing vests and balloons different features to make it easy and throughout the season walmart is going to have associates in different areas at the store. not at the traditional checkouts. you can do that too, but you can check out anywhere in the store to make it faster and easier

walmart and best buy are offering some of the door buster deals online today they're just the latest to do so target and kohl's have done it with their black friday preview sale the season has begun >> how would it work in a walmart to check out with an associate there who is standing in the aisle are they going to scan the items in my cart or what >> the mobile devices, same thing at target as well. sort of act as a mobile checkout, if you will. walmart said it's designed for the bigger items, things like tvs that are just kind of hard and bulky to get through the register it's really meant for a smaller load, not necessarily your whole grocery i'm. i'm not sure they're going to turn you away, but that's what it's meant for fast, agile for bulkier items. >> court nikourtney, we have tha spirit >> i'm going to look for mine. >> we'll leave them alone. thank you for that update.

it's been a rip roaring rebound for stocks the dow is up 6% is the october selloff now behind us? all systems go for the stock market plus a major part of elon musk's settlement with the sec is kicking in today tesla naming a new chairman of the board. will the new chair really be able to reign inlosk en mu we'll have that story after the break. what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives,

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here's your gupdate for thi hour two buses slammed head on and killed at least 47 people in a rural road in zimbabwe 80 others were injured and taken to the hospital. brian kemp is resigning at georgia's secretary of state as he claims victory in the contest for governor nbc character rising his contest

with stacey abrams as too close to call. >> in addition to having the right team, you need energy and focus. that is why effective 11:59 a.m. today i'm stepping down as secretary of state the fda approved a new version of a mist to treat mild cases of asthma. it's the only over the counter meter dose inhaler over the market it is expected to hit store shelves early next year. that's the cnbc news update at this hour. this is a switch isn't it? how does it feel doing a news update >> great >> good. let's get a check on the markets. stocks are in the wait and see mode as we count down to the fed decision the dow jones industrial is flat s&p down about 10 points let's look at some of today's earnings movers.

roku sinking after a net loss for the holiday quarter. party city moving lower as eps misses by $0.10. on the flip side flip adviser soaring as eps was way above consensus. >> thank you so much for that. the markets have recovered nicely from the october chaos. does that mean all the bad news is out of the way and the rally is back on mike is at the new york stock exchange and can we say, mike, the al clear signal has been made >> you know, dom, i wish you could. i don't know that you can ever purely say it's all clear, but i do think right now you have to be mindful of how much progress has been made in a short period of time and where it's brought the market look at a chart of the s&p 500 year to date we nosed above this yesterday. you see a few different peaks earlier and also earlier in october where this was a spot that repelledrallies capped the market for a little while. doesn't mean it's going to

happen again it's a logical place to pause. we retained about 60% of the losses to october 29th that's also a place where the market might take a breather it's been a broad rally. we have seasonal strength. you rescued the technical charts a little bit because it came up above the 200-day average. and the long term up trend maybe is tack intact can it be that easy? everybody is on script that basically after the midterms we are up and away. unclear if the market is going to accommodate that. treasury yields being where they are and if the fed and trajectory of earnings next year was bothering the market a month and a half ago, those things are ready to be head winds if the market refocuses you could say it was a pretty good low on october 9th, but we're not going straight up from here >> all right let's add steve to the conversation he's with director of institutional sales. he's a fast money trader

>> look at that. fast money trader. >> i'm going to do fast money tonight for the first time will you be there? >> oh, my god, no. i'll be there tomorrow night >> i don't know. you got to tell these guys to be gentle with me tonight will you >> melissa gave me the night off tonight, but i'll make sure i text somebody and use dangerek jeter hands. >> tell me what you're seeing in the markets in the wake of, in light of the midterm elections, and what you think lies ahead. >> well, the midterms were a big speed bump for the marketplace as mike just said, everyone thinks we're off to the races. i think you're going to see maybe a harder tone out of donald trump as far as china is considered if he -- he had no reason to be soft or derek jeter hands concerning president xi going into year end. now that once the midterms are over obviously g-20 is another speed

bump but i think you're going to see more ret rhetorirhetoric, more and a catalyst to the overall argument we're running into serious resistance as mike pointed out >> so trade, you think is going to be an overhang heading into 2019 and maybe through 2019? >> i think trade and the fed are both going to be the overhangs we've already witnessed. but we've got the 50-day at 28.30 and the s&p, the 10-day at 28.20 and the 28.16 level mike was talking act from october that's exactly what we stopped yesterday. i'm sure you noticed that. 2815 people are programming their algorithms or systemic risk tolerance with the market and levels i mentioned. >> the stock bond relationship during that whole selloff, you didn't have a huge bid in treasuries yields didn't come down that

much now they're back up. the question is whether they're going to nudge above the highs with oil down, you would normally expect to see easing off of treasury needle and other factors. maybe if treasury yields are peeking, it relieves the evaluation after the fed you have to reassess >> i think one other point mike has been diligent about making things that ruls happen historically have not happened this year. so if you see the midterm, typically, if you see the midterms were supposed to run into year end, maybe we don't get that run into year end like we've all -- me included, have been looking for >> now, mike, i want to throw this back to you for a while now you and i both have been and many others in our building, talking about this idea that we saw some signs, small ones, of this kind of mini rotation happening between growth and value stocks. we're kind of seeing that unwind just a tad bit right now is there anything we can glean about the price action for certain types of stocks that may

tell us maybe the market is intact >> action for action the last sel days, it's been the old leadership that got picked up. you had a bigger move in the nasdaq stocks. it wasn't the beaten up stuff. just yesterday's rally that got picked up. to me, i think it's an unlikely scenario that the bull market continues from here and you have an ongoing elegant rotation out of the dominant growth stocks and into value stocks. i think if it happens, it's a more stressed environment and maybe the market has to chop around lower for a while i don't think you've seen the evidence of a lasting rotation that's going to endure for a while, at least not yet. >> dom, you saw the home builders do better and autos when fang took a break once fang gets the groove back, you see it back off. we cannot make new highs above the s&p 500 if we don't get the

participation. you're not going to have the autos and housing pull that heavy load >> all right we have to leave it there. there . >> he's always right here. he's always watching and he'll be watching you tonight on "fast money" >> and mike, thanks, guys. tesla naming an independent board chair as part of the settlement with the s.e.c. phil has that story with more right now. >> tyler, this is the new chairwoman for tesla robyn denholm. you may not be familiar with her, but they know her at tesla. she's been on the board of directors since 2014 currently the cfo of tellstra, but she'll be leaving to take a full time position at tesla. formerly a toyota executive.

as for elon musk, this is part of the agreement he made with the s.e.c. as well as tesla made with the s.e.c. that he would give up the chairmanship role for at least the next three years. he says that he is excited about the possibility in looking forward to working with robyn. you can be sure he factored into this decision in terms of her being picked to be the new chairman or chairwoman at tesla. shares over the last three months, what's interesting is though the stock is trading at 351, for a brief moment it was at 357 it was at 367 -- 356.77, when elon musk put out his private tweet. for a moment, it was back up to that level today they still need two more independent directors. back to you. >> phil, thank you very much speaking of tesla, do not miss investor ron baron tomorrow

morning. he's one of tesla's biggest bulls saying it could be a trillion dollar company. >> with a t. >> apple sized by 2030 >> all right to the bond market rick santelli tracking the action from the floor of the cme group out there. rick >> everybody excited about 20 minutes, we'll have the fed decision even though many may not expect any rate decision, it's always exciting, and the markets actually have had interesting movement it's all agent the short end versus the long end. if you look at the longer end, tens are down two. 30s are down two tens minus twos for two weeks. opened it up since the last meeting and you can clearly see we're only within three basis points of where we started it's been a long journey even more extreme. if you take the 30 year versus the ten year, the two week chart and zoom it out to the last fed

meeting, you see the real issue is the short end keeps powering ahead. that's important and it gives us a sentiment of investors of the fed and their future plans embedded, the short end is going to remain firm and the dollar index always going into the fed meetingto have a reaction. it popped off the midterm lows it's up three quarters of a cent from that level. back to you. >> all right rick, thank you. while they say the house always wins this casino is getting clobbered today. wynn resorts plummeting. down 40% this year coming up we'll talk to an analyst whose price target is 80% higher than the current price. ♪ ♪ move to the enterprise-grade cloud

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shares of wynn resorts lower after a slowdown wynn already down nearly 40% this year. is this a bigger problem for casinos for the rest of the travel and leisure sector? we have harry curtis good to talk to you. another resort with a large exposure in macaw said mirroring what we heard from wynn, it's seeing weakness and predicting that especially in the vip premium segment in macau, does this make you question the asian down pull? >> i don't think so. i think the macau markets are very much tied to the economy in china. the economy in china appears to be softening but it's not softening to such a degree that would explain the

40, 50% loss in market cap we've seen in this sector over the last few months. >> credit squeeze has put a price target of 104 on wynn resorts. you have a price target of 181 what makes you bullish on this company? >> the 181 was based on our estimate of roughly 9% gross gaming revenues for 2019 i think that there has been some slowdown since we issued that estimate and i think that there's been a rush to jump to cut estimates. we've spoken to both wynn, mill koe, mgm over inmacau. we don't think it's as bad as the market seems to be reflecting today and so i think with a little bit of patience, we'll be able to get to a valuation that is still

substantially above where we are today. >> we also heard wynn's ceo talking about the drag that they were seeing in the softening numbers. he tributed it to the uncertainty in asia. do you think we're going to get an impact from the china economy on las vegas >> i think you have in the bacara, space, but you have to be choosey about what company we're talking about. wynn has greater exposure to the high end gaming than mgm mgm's exposure to asian bakra is probably no more than 20 of 3 f their total cash flow. >> there's word if mgm is in the line to buy caesar's do you see that happening? >> i'm on record as not being a

fan of the notion of mgm saying caesar's i like both stocks, but mgm is in a position where it's going to be generating significant cash flow over the next three or four years without having to take on the very complex task of integrating an acquisition like caesars. i think it's nonsense. >> thank you on a call say they we're intent on seeing our acquisitions pay off, the ones we already have rather than looking for the future >> certainly a big story for wynn big loser in the s&p right now we are minutes away from the fed decision on interest rates closely watched by the markets, especially the housing market. mortgage rates hitting a seven-year high. tew big of an impact are rising ras having on the housing market and elsewhere that's next on "power lunch"

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[ready forngs ] christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. mortgage rates rising to a seven-year high. this according to freddie mac, and with the fred already

signaling that more rate hikes are ahead. is that weakening housing demand diana olick will join us from washington with the details. >> reporter: we heard it from the chairman of dr horton in the earnings release this morning. higher home prices and rising rates have impacted affordability and moderated demand for homes that is clearly behind the drop in consumer sentiment in housing. it hit the lowest level in a year in october. that according to a monthly survey from fanny may. attitudes towards buying and selling weakened despite strong confidence in the economy. potential buyers today are worried about rising rates and worried that home prices are so hot they have nowhere to go but down, so buying today may not be the best investment, at least in the short-term now, it's ironic because for the past few years, rising home values have made owning a home incredibly lucrative, and current homeowners are more cash rich today than ever before. more than a quarter of all properties with a mortgage are equity rich. that is the home is worth at least twice the amount of the

mortgage that's the most since adam data solutions started track thg in 2013 for investors in builder stocks, november to february is considered the hope trade historically that is buy early and take advantage of a potentially strong spring housing market well, we'll see if that holds up, if the fed shows any concern in the next ten minutes or so. back to you guys. >> thank you very much we're just moments away from the fed decision what will it say about the economy and future rate hikes? we'll bring it to you, and then our fed panel breaks down what this means for your money. "power lunch" will be right back

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. we are just minutes away from the fed's decision on interest rates the markets right now, let's take a look at the dow, the nasdaq and the s&p 500, shall we there we got them. the industrial is losing little steam, basically flat right now, higher by 7 and a quarter points s&p 500 flattish down 8.5, and nasdaq down a little more, the better part of 1%. let's bring in our panel, sre kumar, david kelly, chief global strategist -- a

strategist everyone nod when i say this, you don't expect the fed to do anything today, right? nod, nod, nod appropriately. so david, what do you expect them to say? >> i think they'll do very little change in the wording also they might add a few words about how wage growth has improved they deliberately don't want to make news. that's why this meeting is today. they would have had this meeting in late october. they wanted to make sure they didn't make news in front of the midterm elections. i think they'll leave their news until december when i think they will raise rates. >> what do you think about the future of interest rate hikes? there's not much inflation out there. oil is going down right now, at least though you can take that out of some inflation measures and so forth the economy's doing well employment picture is good growth and full employment and low inflation. those are kind of what the fed wants. that's what they're getting. why do anything here

>> the reason it is probably too late to do anything, tyler, because they have already increased interest rates eight times since december 2015, and while you talk about the employment doing well, the growth is there, we may have reached a peak for both earnings and as far as the economy is concerned. if growth is slowing during the quarters to come, and the fed is going to increase interest rates in december and three or four more times in 2019, you're going to put the economy into a recession by the end of 2019 or 2020 the question is, yes, it is all very light and bright, but that is the way it is at the top of the mountain before you go steeply down again >> so you'd like to see them take their foot off the monetary brake a little bit as we move into 2019? >> i would like them -- >> this is what they're doing. they're tapping the brakes. >> they are tapping the brake. i would like them to take the foot off the accelerator, but i don't think it is going to help

them very much, tyler, because the damage has been done if you increase rates eight times at the market rate as we talked about recently in your segment earlier is already very high, housing demand is falling off, you're not going to make up for it by not raising on december 19th or in the early part of 2019. >> so i mean, we talked about this idea that we know that the fed is uncertain with regard to how it will view market volatility and everything else, and so amanda, maybe i'll throw this out to you, this idea that we have a fed that is maybe h hamstrung a bit. it's got to raise in december maybe to show its independence, maybe because the economic backdrop and the job market justifies it, but what does that mean, then, for 2019 are we on pace to see maybe three rate hikes there, or is it fewer that's going to be the remedy for the fed going into 2019 >> well, we absolutely believe that the december meeting is live in terms of a rate hike, but our own perspective for 2019

really suggests two rate hikes is really the appropriate number, not three, so a pause earlier or a hike, a pause in the middle and maybe a hike later in the year. it's really important to make the distinction between what the economy can handle and what the markets can handle, and i think if we go three hikes next year the market's really going to struggle with that, going to get really skiddish. >> daid, how david, how do you wage growth here we have this major labor shortage every time i'm out in the field, ceos and managers tell me my biggest problem is finding people to hire how do you put wage growth into this decision? >> i mean, it's nice seeing some wage growth. what we actually need is immigration reform urgently because we're running out of skilled workers. that will slow the economy down anyway getting back to what sri said, the problem is the rates have been too low for too long.

that's been the problem. when you talk about mortgage rates hurting the house market, it's because prices have gone up too much because rates were too low. we've got to get the economy off this drug of super easy money it more appropriate interest rates and that's what the fed should have done this earlier on. i still think it's okay to do it now, and i would much rather they tighten. >> i'm going to jump in and toss to steve leaseman. >> no change in the federal funds rate but signaling further rate hikes ahead, saying it expects further gradual increases in the target range will be consistent with its goals. no mention in case you were interested in any of the recent stock market gyrations or the recent rise in interest rates in the market some very slight speak to the economic language. they visaid the labor market wa strengthening. the economic activity was rising

at a strong rate unemployment rates stayed low, household spending grew strongly slight downgrade of business investments saying that it had moderated from the rapid pace of the prior part of the year previously said it had grown strongly inflation same language saying it was near the 2% target. it was a unanimous vote worth noting the first vote by the new san francisco fed president mary daly they said the risks were roughly balanced inflation expectations are little changed, and i think that's just about it, guys it was maybe 30 words difference from the last one because a couple of the names were different and a little bit of change in characterization, but very much the same, keeping rates unchanged. further rate hikes ahead, so you can probably count on one in december. >> was it worth traveling to washington for that, steve >> always worth traveling to washington seeing the fabulous people in the washington, d.c. bureau, too numerous for me to

name, but all of them wonderful. >> sri, i want to come back, i mean, that sounds like pretty much what we expected. >> pretty much so. >> no change, ask virtually no change in the statement. it sounds like you are saying that a recession is all but baked in to begin in late 2019 am i inferring correctly or inferring too much >> you're inferring very correctly, tyler whether it is late 2019 or the first part of 2020 we can quibble about it but i think we are setting the stage for a recession to come within the next 12 to 18 months. that's very much the case. i think they are doing it partly because the fed has ignored global realities the fact that the chinese with respect to debt, with respect to the trade war are going to have a much bigger impact on 2019 than the fed anticipates steve talked about what the fed statement is there is no reference to anything going on in the rest of the world.

the united states is a smaller and smaller part of the world, emerging markets account for 60% of the global gdp. they are still going through a downdraft, and nothing of this seems to matter for the fed. >> let me go around the horn and ask david and amanda in sequence whether you agree with what you heard sri say? david you first. >> recession 2019 into 2020? >> we can absolutely see a slowdown down to about 2% growth i think we would need a shock to put us into recession. i don't think the rest of the world is doing that badly. when we look at pmi indices, there's no disaster going on india is doing extremely well. china is growing a little more slowly we're not seeing a shock to the global economy this is a very stable u.s. economy, very stable global economy. it does take a shock to put this economy into recession we don't quite see that right now. >> amanda same question to you, and i want to bring in something that sri said that david didn't

reference and that is that he thinks the fed may be underestimating the impact of a tariff trade war with china next year will there be a recession late in 2019 or early sort of first quarter of 2020? >> well, we actually think it's a little bit further out, so mid to late 2020 is more likely absent some sort of shock. i think really the key to the cycle from our perspective is something that was called out just a few moments ago in the statement, and that's really, you know, business spending capex. for us that's really the key to the length and timing of the cyc cycle, so it's been noticeably absent over the course of the psych m. we've seen it come on a bit, but it's been in very narrow pockets of the market. to the extent we get it in a big way and a broadening across the market, we think it has the potential to extend the cycle. if we don't start to get it soon, we think the end may be closer than sort of the

consensus thinks. >> amanda please stick around. same with you david and sri. the panel stays intact we want to see how the markets are reacting to this we did see a slight tick higher in the dow on the heels of that report, and now we're drifting marginally negative again. >> reporter: it's been one of those days where we've been either side of unchanged, no real strong move in either direction. the interesting thing is that change in the growth of business fixed in fixed income investment. that is one of the word changes we see in there. some analysts were talking about the facts that jay powell's statements are shorter than the gettysburg address certainly a lot shorter than we have historically seen from the fed. that is one of the things that analysts are watching. that could be a little bit of a telltale sign, maybe they are watching that more closely if businesses continue to be a bit cautious about spending on ca x capex, whether because of trade tariffs coming in and the uncertainty over that, that

might be something that could temper the fed and one of the things folks are watching. overall, though, we are basically seeing things more or less unchanged for much of the day. we've been pretty much fractionally to the downside except in a couple of sectors, financials had been stronger earlier coming into this they tend to have lost a little bit of steam here, but overall pretty much as expected. of course after today we'll always have a press conference following the fed meeting and statement, so that's going to be a game changer back to you. >> bertha, thank you let's get to the bond market and rick santelli. hi, rick. >> reporter: hi, firm as a rock on everything that matters with regard to the fed. the dollar was up about 44, it drifted. now it's up a half a cent. 296, hardly any giveback, five cycle high 308, hardly any givebacks. 10s have been flirting between

322 and 321. same for 30s, hovering about three basis points from its highehig highest yield in over four years. we could say a lot of things about the fed, and there's a lot of debate whether they're moving too fast, taking it too far, overshooting with regard to how much inflation pressure there is, but one thing we can certainly say, the markets, at least at this point with no change on rates after eight increases since december of '15 certainly seem comfortable with the way things are at the moment back to you. >> rick, thank you very much we appreciate it let's return now i guess to our panel, shall we? that's what our plan is. we're all still here final thoughts, sri? >> final thoughts, the fed is on a course to keep increasing interest rates that's the message that we get we will probably find out by november 29th when the minutes are out as to what other decisions they make regarding what rate at which they are going to cut back on the total

portfolio, the balance sheet of the fed, but i think overall i would reiterate what i said before, tyler, that the situation is not going to be changed very much by what the fed does, and that is it is already baked in in terms of the future outlook of the economy, especially when you take on the rest of the world into account is there i want to take on sri on that recession call he may be right, but it takes more than a shock to cause u.s. economy to be in a recession one thing we learned in the 70s, it wasn't only the shock of oil price, it was the fed's policy response, and i think we've had a couple of shocks to the system it's right to think of the tax cuts as a shock that has increased growth, decreased the unemployment rate, but it's the fed's policy response to that that could be the ultimate arbiter about whether or not we have a recession i don't think that's baked in the cake there may be another shock in trade and again, the fed's policy response to that could be the thing that puts us in a

recession. i think that's why the fed next year is going to be a very much, you know, cautious it's going to try to raise rates but not on a preordained course because it wants to know how these shocks are playing through the system i think that's sort of what david was saying, bring the growth rate down to what it it has potential without causing a recession. >> i would agree with a good part of what you said, i think the difference between recession a couple of decades ago and today is the fact that the united states is a smaller and smaller part of the global economy and the fed could make the change 20 years back in terms of whether there was a recession or not, i don't think it has the ability to do that anymore because it is being overrun by circumstances in the rest of the world. >> david, why don't you tie it off for us here, and i ask a question that may mean nothing in the grand scheme of things, but how different will it be next year when every fed meeting is followed by a press

conference >> i don't think it will change much because i think the fed is almost on a preordained course of only raising once a quarter it may add a little to volatility the one thing i will agree with sri on is tariffs. a big trade war is the biggest risk the global economy, and it's also the biggest risk to the u.s. economy, and so really my optimism that we avoid a recession is predicated on the idea that we do a deal with china at some stage over the next few months and we don't ramp up tariffs. if we ramp up tariffs, we may think we're hurting them but we're going to hurt us a lot more. >> amanda, the last word is yours. >> well, i would just say, you know, we think the fundamental backdrop of both the u.s. economy and more so on a global basis is still very strong, and so what happens with the fed in december and even early into 2019 is not likely to bring growth to a screeching halt. we think china is in the early stages of being able to

reaccelerate and reinvigorate their economy and that bodes well for global growth, too. we try not to get too fixated on short-term fed meetings and market moves we think there's a lot of time left on the clock. >> sri thank you very much, david kelly, always great to see you, amanda agati thank you and steve come on back from washington. >> on the way. former wells fargo ceo on today's fed decision and how now house leadership could affect banks. and advancing the trump agenda now that the midterms are in the rearview mirror, a look at what's ahead for trade, immigration, drug prices and more. and amazon shares making a come back, up 10% just this month. are they pcerid for perfection coming into this holiday season? all that and more straight ahead on "power lunch. [ phone rings ] what?!

ready for christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out!

you don't even know where i live... hello! see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. welcome back to "power lunch. the federal reserve moments ago deciding to leave rates unchanged as investors start to look ahead to the committee's december meeting where it's expected to raise interest rates, how much of an impact will the president's rhetoric and the midterm election results have on that decision. our next guest says if the fed does not raise rates, it will be seen as caving to president trump and the market will crash. very harsh words there

let's bring in dick kovacevich, former wells fargo chairman and ce ceo. what is it about the fed and its independence that has you worried so much about it needing to raise rates next month? >> well, the independence of the federal reserve is instrumental to any market economy, and if that ever comes into question, the market is going to react very negatively. and this president continues to do that, and what he doesn't understand that the more he tries to influence the fed by public statements, the less likely he is to influence the fed because the fed has to remain and be perceived as being independent. >> dick, is the fed -- is fed chairman jerome powell, are they doing a good job >> i think they're doing an

excellent job. i think they're being very transparent. they talk in simple language they have rationale for the decisions that they are making i think they're making the right decisions, and i believe that the fed -- because we have a very strong economy, we have very low unemployment, we have reasonably low inflation, that the fed does not need to continue to be accommodative we have it get to the neutral rate where it is neither accommodative or restrictive i believe -- no one knows what that rate is exactly i believe it's somewhere between 3 and 3.5%, and then it can relax perhaps for a while to see which direction they want to go from there, but i think they have to get to the neutral rate in order to be prepared for a possible recession because the higher rates are at the time of the recession, the lower they can make them to stimulate the economy, but also the growth

that we've had demands that we get to the neutral rate. >> the neutral rate, when you refer to the neutral rate as somewhere between 3 and 3.5, you're talking about the fed's fund rate which today is between 2 and 2.25 that would imply at least three, maybe four or five rate hikes until we get to that point >> that's correct. but we may not need that, but i'm just saying if you have to look at it today, i would think it's in that it may be 2.75 as we get closer. that would be my guess if i had to guess today. >> you've been in a business most of your life that wrote a lot of mortgages and did a lot of home equity lines and did a will the of refis and so forth what will those higher rates mean to that part of the banking business, mortgage business, and also to housing? >> well, first of all, mortgage rates today are still very low

relative to historical standards, and many young people who were just in the mortgage business today think they're high because they're a lot higher than they were but historically 7% was considered a reasonable mortgage rate now people worry if it's over 5. what i think people don't understand is that housing prices have been rising at 5% to 6% per year now for the last four or five years a big reason for that is that the fed has kept long-term interest rates below the market. they've interfered with the market, and when you have normally low long-term rates housing prices increase, and vice versa, so i think we're going to see housing prices have already slowed i think they're going to slow further, and so you might pay a higher rate on your mortgage, but you're going to have a lower price for your house it's not going to be as dramatic as i think people think at the moment it takes time for this to

normalize. i think 5% interest, mortgage interest rates are still very low by lhistorical standards. >> can we bring you back to the banking sector overall you ran one of the nation's biggest lenders, can you tell us in your opinion right now given the fact that we have a democratic controlled house of representatives and given the fact that we have the midterm elections behind us, and the uncertainty about the fed and its policies, which represents the bigger risks to the banking environment right now? a democratic controlled house or uncertainty about fed policy going forward? >> well, i guess i don't agree with either one of your premises i don't think there's a lot of uncertainty about fed policy i think they've said they're going to continue to increase interest rates beginning in december and throughout next year, and i think that the -- in terms of the political situation, we're in gridlock, and quite frankly gridlock isn't bad for banks. you know, we don't get a lot of

positive things happening in the banking industry if there's no negative things happening, that's actually pretty good. i think that's where we are. i don't think that -- if the democrats who are in charge of the house want to put more regulation on, the senate is going to say no, and if anyone in the senate wants to have more deregulation, you know, the house is going to say no not much is going to happen. so the action is going to be, if there is any action, it's going to be in government agencies, and they're working on a lot of regulatory items at the moment, and that's where the changes will be made, and i think they will be made in a very rational way. i don't think there's much worry about either one of those situations. >> gridlock good for the banking sector overall, dig kovacevich, former wells fargo chairman and ceo thank you so much. we have a news alert on o c opec lets get to jackie deangelis. >> indeed we do, dow jones

reporting that a saudi government tied think tank is launching a study on a possible opec breakup new pressures on the saudi government coming from washington, coming from president trump. this is as we've seen oil prices fluctuate all the way up wti to around 75, and then now today trading in bear market territory. the think tank's president saying that the study hasn't been triggered by mr. trump's statement but that of course they're looking at this sort of active debate of what would happen if oil demand peaked out and prices went lower, and there was an opec breakup here, so something to watch on a day that we're watching oil trade close to $60 a barrel and potentially move into the five handle. thank you very much. coming up, tesla's new chair robyn denholm will take over elon musk's role at the company board. this as the stock has quietly rallied 40% in the past month. what's next for that company and the stock trading nation is

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welcome back to "power lunch," i'm mike santoli and this is trading nation a new face in the driver's seat at tesla giving the stock a pop. the appointment of robyn denholm as chair taking, before elon musk tweeted funding secured it put the stock back in overdrive. todd gordon with trading analys analysis.com to discuss that this stock has been on another one of its roles it's kind of got up into the higher end of its range. where do you see it heading from here >> it's actually been rather rhythmical you're going to see three main setbacks there's actually a lot of rhyme and rhythm and repetition in this chart if you take a percent drop of the initial decline back here in 2016, 34%. we'll have another serious setback right here this one, 37%.

and then this big one that we've seen when elon musk was taken to task seemed like it was a big vicious selloff, guess what the present was, 36% we're seeing a very clean setback kind of corrective within the trend i think if we hold the bid and i think we will, the 389 high is in jeopardy and we should be able to get up to elon's 420 on the breakout i'm going to play this on the long side. i like the look of the chart. >> mark, you've been bearish on the name they've been showing profits now we have a new chair. changing your mind at all? >> no, i mean, i think tesla's got a great product, but having a great product doesn't mean i want to own your stock two of the biggest issues with tesla have been management stability and you know, elon's been a bit wacky as of late, and we've also seen several key executives move on from the company. i think it's great that there's a new chairman in place for checks and balances but the

choice doesn't ease my concern robyn is a musk loyalist that suggests to me that she might not be the best person to keep him in check. we're still staying away >> all right, it's been a battleground stock here and in the broader markets. thank you very much. for more trading nation, head to our website or follow us on twitter @tradingnation. coming up on plurch"power l" trade, immigration, drug prices, what's ahead for the trump agenda now that the midterms are over and the democrats have control of the house we're going to take a closer look that's coming up next after this break. (vo) 'twas the night before christmas

and all through the house 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. there's magic in the air, on this day, at this time. the world's very much alive at 11:59.

let's get a check on the markets right now.

a relatively quiet reaction to the fed decision right now the dow off by about 31 points. the nasdaq you can see here off by just around two-thirds of 1%, about 47 points and the s&p 500 off by about 1/2 of 1% take a look at the two-year treasury yield hitting its highest level in 10.5 years after this fed decision, 2.969%. a number of big earnings movers as well today. look at health care supplier perry go down 14% on pace for its worst year since 2016. the company reporting a net loss in its third quarter earnings. sally beauty holdings on track for its best year since 2013, up by 20% so far today. the beauty retailer rising on higher than expected earnings per share and flat same store sales in the fourth quarter. now let's send it over to bill griffeth who's got a cnbc news

update. we've got news at this hour, president trump visited the supreme court for a ceremony welcoming new justice brett kavanaugh who joined the court last month joining the president was the first lady and mrs. kavanaugh. justice ruth bader ginsburg was absent after fracturing three of her ribs. a norwegian navy shipis at risk of sinking after being rammed by an oil tanker. it was hit in a harbor near bergen, norway eight crew members were injured and the entire crew of 138 was evacuated. the annual cdc tobacco survey shows that approximately 14% of adults smoked cigarettes last year. that's actually the lowest level ever recorded. a decline was also reported among young adults from 13% down to 10% finally, magic 8 ball, pinball, and the card game uno are all the latest inductees to the toy hall of fame

the announcement made this morning in rochester, new york, where the toy museum is located. among the toys that did not make the cut again, tickle me elmo, the american girl dolls, and chutes and ladders my fear is that tickle me elmo is going to become the orlando sipada of the toy hall of fame he took 25 years to get into the baseball hall of fame, and my fear is that tickle me elmo is going to suffer the same fate. >> bill -- i'm contessa by the way. >> i'm sorry >> the magic 8 ball was saying that the outlook is unclear because we have contessa brewer next to us >> i should have set you right up for that one. >> nice, nice. >> there's always next year for tickle me elmo. one of the things that may have been overshadowed in yesterday's presidential press conference was the president talking about oil. he gave himself credit for lower oil prices evidently oil embraced him and said he wants to make sure that those prices stay that way jackie d has more.

hi, jackie. >> oil did embrace him it was certainly a colorful press conference, but one of the things the president mentioned was oil prices and how he watches them very closely. remember, he backed away from harshly imposing the iran sanctions after oil prices spiked he then said implementation would be gradual oil came down significantly. if you want lower oil prices you pump more supply that's what's happening in the united states. we are producing more oil on a daily basis than the russians, than the saudis. think about the impact of that statement for a second and if you ever thought we would be saying that. speaking of the russians and the saudis, their production has been creeping back up. seasonally demand is weak and demand concerns persist when we look at the gridlock potentially coming in washington so a lot of the signs right now pointing to oil going lower from here, one caveat, the dems taking the house, there's a very good chance they're going to make some moves to undo the loose energy policy the

president has implemented. that would mean a little bit of a push for obama-style energy policies that could take these prices back up a little higher it seems like the president is going to put up a good fight >> yeah, you know, the interesting thing about looking at oil is that you have oil producers who want prices to remain somewhat high, and they want demand -- they want to find that sweet spot, yet at the same time you have the president saying let's go lower. let's go lower. >> it's so hard. he really is playing hardball with opec. think about the fact that they're all going to be meeting in abu dhabi ahead of this conference and a lot of people are saying maybe they'll cut do you think that the russians and the saudis are going to sit there and say we're going it cut. we're effectively going to hand over market share to the united states when it's pumping at 11.6 million barrels a day if they do that, think about what kind of precedent they're setting. we always call it a game of chicken. he's playing that game. >> it means more help for emerging markets as well we know how much stress they've

been under. >> one less point when you think about the energy companies, the earnings were good in the third quarter. that's because the average price of oil was around $70 a barrel next quarter when you take that average price down, some of these companies are going to struggle and that has an impact on the markets there's two ways to look at it. >> oil close to 60 right now. >> close to 60. president trump is looking to advance his agenda after the election among his priorities trade, more tax cuts, infrastructure will the put get any bipartisan support for this agenda under a new congress let's bring in douglas holts econ and jared bernstein, a cnbc contributor. the interesting part to me watching those exit polls was how many voters said their primary concern was health care, and we heard the president mentioning this again in his news conference yesterday. let me play it >> hopefully we can all work together next year to continue delivering for the american people, including on economic growth, infrastructure, trade,

lowering the cost of prescription drugs these are some of the things that the democrats do want to work on, and i really believe we'll be able to do that. >> but do the republicans? can they get help from republicans in the senate to pass in a bipartisan way something having to do with health care costs? >> i don't think they're going to do anything terribly significant on the health care front to be honest i think the president is doing the right thing by being open to any ideas that might come up in the democratic caucus in the house. it's hard to imagine something significant that would make it through both the house and the senate be signed by this president. among the reason is the president can do an awful lot through his executive authorities at hhs as he's already done on drug prices on medicare i think it's more likely he'll go that route, address the problems, take the credit, and congress won't play much at all. >> is there political pressure on these lawmakers now at this point, jared if you know health care is the priority and a lot of people are

lumping health care into their economic concerns. they're saying i can't afford prescription drugs, i can't afford my insurance premiums my premiums keep going up at this point is there political pressure on everybody in washington to figure out a system that makes american voters happier with their health care? >> i very much agree with the way you framed up the question this election really made this stuff a kitchen table issue if it wasn't already, and in fact, one of the things we learned is that the medicaid part of the affordable care act of obamacare is just massively expanding now. 37 states. we got three new red states that approved the expansion, and so, yes, i think the message as much as you put it, contessa, the extent to which politicians react to it, doug is exactly right to predict gridlock. however, the president has consistently talked about lowering drug prices and while there's some he can do by executive action, there's a lot more they could do if they decide to get together

legislatively on that. he definitely would find the democrats to be willing partners but you've got a powerful pharmaceutical lobby that's going to be pushing the other way. >> doug, it's dom here, as we talk about the idea that we could see this evolution of congress to be a split one that works to compromise, where are we going to see the action early on in the next legislative agenda being set is it going to be things like health care? is it going to be things like enough is it going to be banking regulation where exactly will we see the action going forward in 2019, at least early on >> i think really there are going to be two kinds of things. early on i think the house democrats have essentially an obligation to lay down their marker as to what they view as the things that are important. those are the big bills that come out of the house and aren't really legislative vehicles in the senate they make the point that democrats need to make, which is look, we got elected that. a's victory for us and this is what we stand for. then they'll turn to things that might have a chance of making it

through the senate and getting signed by the president. those are much smaller in scope and ambition we've seen infrastructure stall repeatedly i don't think it's really going to be that different in this congress, and i think it's important to remember that the president went all in to deliver a republican senate as his firewall, and he's unlikely to turn right around and undercut them when he needs them to confirm judges and his appointments. >> jared i found myself thinking that tuesday marked the end of the midterm election and wednesday the start of the 2020 election and i think that's mostly what people are going to be pointing to talk to me a little bit about the idea that the victory of the democrats for the house is in some way the best thing that could possibly have happened to this president because as he certainly signaled yesterday, he now has someone he can blame if the economy starts to slow, and he can blame the fed as well >> interesting, yeah, i was going to say he's already been laying that on

jay powell one of the things that are baked into these numbers, and to me this is one of the most important economic outcomes of the midterms is that the fiscal stimulus that's been ongoing due to the tax cuts and the spending all on the deficit is going to start to fade by the end of next year now, if republicans had held everything you might have seen more of that, more deficit spending to juice the economy when the current juice kind of runs out later in 2019, but i don't think you're going to see that right now so yeah, that certainly is a potential dynamic where the president blames the house for not doing more fiscal stimulus once what we have fades. the other thing that i think came out of this is that a couple of democrats in the senate, i'm thinking of maybe sherrod brown, amy klobuchar, they look like they can command rural votes in a way i'm sure a lot of 2020 democrats are thinking about. >> the other thing is minimum wage, and we're going to have to wait and see whether the president who said on the campaign trail that he would

support a $10 federal minimum wage. >> yeah, alternate tuesdays he's for that. >> wanls ages are going to haveg up if these employers find the talent, we're waiting to see whether there's progress on that. >> a quick fact, a state level minimum wage ballot has never failed since 1996. i didn't know that i just learned that. >> and arkansas and missouri just passed theirs in the elections on tuesday pretty significant, too. doug, thank you, appreciate that, jared. nice to see you as always. >> thank you coming up, amazon's big comeback, shares recovering half of their october losses. are they priced to perfection as we head into the holiday shopping season? that's coming up next. as we head out, take a look at the markets right now the dow and the s&p hitting their worst levels of the day. at this point the nasdaq hovering right around the lows on the markets right now the dow off by about 96 points the s&p 18 and the nasdaq down by 66. 'lha me t mkets after this break

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bucks and change on september 4th to close 1530 on october 30th but it may be a november to remember the stock is surging 14% since that low, so is this the start of a bigger rally heading into the holiday shopping season? it is important for online retailers as well. mark, the idea that amazon was one of the leadership stocks of the rally, one of the worst ones in the pullback that is now assuming leadership again, should it be comforting for market bulls out there and certainly for amazon investors >> i think the direct answer to that question is yes it certainly has the cap to lead tech and the market cap to lead retail as well if you're looking for a play off of 4th quarter retail rally, if you're looking for a company that generates the majority of its revenue and profits in the fourth quarter, i got one for you. it's amazon, although it's much less seasonal than it used to be i think that was part of the

problem, when they printed numbers, the revenue guidance was a little disappointing it's a multiyear shift away from being a purely consumer discretionary heavy q 4 company to being a year round kind of staples spending company anyway, we look thes a is the here we don't think it's priced for perfection by any means. >> the value proposition is there. if you liked amazon before, you're going to love it at this price. when you look at your outlook for the company, what is going to be the primary catalyst for investors to want to get into this stock again i mean, we've already seen a nice rise off the lows what's going to propel that move possibly, hypothetically back to record highs >> i think two things, i'll give you a near term point. think about what the key best selling product is going to be this fourth quarter in the holiday season if you came up with a list, we haven't all done that yet, you're probably going to put smart speakers in there, and if that's going to be one of the got to have it gift this is fourth quarter, amazon is going to be one of those companies that's going to win off that that's a small data point near

term bigger thing, what takes the stock higher, the gap up in amazon shares in the first half of this year is because people realized there's an advertising platform here. it's higher margin than the core business i've referred to amazon as the best revenue mix shift story in tech because you've got cloud and advertising now bate going two to three to 4x faster than the core retail business fundamentally you've got this shift up in the margin profile of amazon. you can now think about this company as being a double-digit operating margin company you couldn't have thought that over the last 20 years that i've been covering this company this is the first year in which the hope can finally be realized it won't happen this year, but you can see the path because of this revenue mix shift that's what takes the stock to all time highs. >> i assume you don't believe they're doing the free shipping for basically everything this holiday season is going to make a bit of difference to their bottom line? >> they did disappoint people and myself included in terms of their margin guidance for the

fourth quarter margins always go up, i mean, have always gone up sequentially from q3 to q4, the margins have gone up, operating margins, they guided for margins to come down. you do have this $15 a year increase in what they're paying their employees, shipping costs are rising and there are these initiatives, promotions that the company is running knowing amazon i wouldn't be at all surprised to see them be willing to take down margins if they thought they could get a boost in terms of customer loyalty, more prime customers et cetera. i bet you it's around shipping and them coming out and competing with fedex and ups, i think it's a matter of time before that happens and there will be an investment cycle in front of that. >> thank you so much mark mahaney with rbc. >> disney earnings on deck streaming espn, disney's plans for fox assets all in x.fo everything you need to know ahead of the report. that's next.

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a big earnings report on deck veteran investor said he sees

stock going to 160 over the next two years. our next guest doesn't brian has a cell rating and $95 price target on the stock. the stock about 115 or $116. why are you so down on disney? it is un-american. >> well, you know, the problem with disney, it's not they are not going to right direction it's not they are not building a business that will be already 30 to 50 years. the problem is it will get more expensive to operate if i look at a ten year growth rate over any period of time from early 2000s through the present i get double digit

inflations so you have higher costs not that it's not the right thing to do but it's not a better business where you had a cable channel delivered over, you know, traditional cable infrastructure it just sant better business. >> people are cutting the cord it doesn't work anymore. >> i agree they are doing the right thing they are pushing it more aggressively than competitors. it is a good thing the problem is the math doesn't look so good i think disney is a great business >> how hard is it for you to gauge disney's future performance given the fact they refrain from guidance? >> we are all guessing the good news is you have to

start with a basic premise of how you see the industry evolving >> it is outperform in a bad way. >> exactly >> speaking to the idea of lack of guidance one of the things investors have taken out is that they missed expectations in recent reports >> i mean in some casesthey have given expectations and missed that. i give them credit they are reasonably good in providing more detail than most competitors. i think unfortunately analysts, you know, myself includes some times will miss the mark in terms of anticipating how the

world will evolve. >> thanks for making your case we'll see who is right thank you. >> all right check please is coming up next

♪ whoa! (phone rings) daddy, mommy's on the phone! hi! how are you guys? at&t proudly offers wireless and tv discounts to military, veterans, first responders and their families. visit att.com/hero. all right. we'll talk a little bit about oil here today

saying that he sees oil collapsing he says and maybe on its way down towards the 40s you can see west texas flirting with dipping below $60 a barrel. we are pumping a lot demand is slowing. >> the average gallon of gasoline is $2.73. it is down it is moving lower i would say i paid 8 cents less per gallon so this is helping me out. >> gjim puts a red flag. he says watch out. it might not be as rosy a thought as some people think president trump talk about the sanctions on iran and saying he would apply them but as i understood him in ways that

were -- had sensitivity. >> and sheer big oil you can see it is down 3% on the day. >> restaurant stocks are done well when oil prices fall. >> thank you for watching power lunch. >> the closing bell starts right now. >> good afternoon. a very warm welcome. >> we weigh in ton latest interest rate decision and drop box ceo will both break down their latest earnings reports due soon after the close it has been