tv Power Lunch CNBC August 22, 2016 1:00pm-3:01pm EDT
intrexon, pete and i spoke about it for unusual activity last week. it hit 30.50 today, took at least half my position off. >> i smell rotisserie chicken, we got to get out of here. that does it for "halftime report." i'll see you on "power lunch." it begins right now. all right, folks, melissa, thank you very much. rest up, melissa, over the next hour, get ready for that 2:00 p.m. hour "power lunch" when you will rejoin us. welcome everybody. i'm tyler mathisen. thanks for joining us. here is what's on the menu for "power lunch" this day. it has been five years, five years since tim cook took over at apple. we will break down his performance straight ahead. trump's comeback plan, are skeptical members of the gop ready now to back the new and improved donald trump? and, ben herr bombs, another black eye for paramount at the struggling box office this summer. we'll explore that as "power lunch" starts right now.
and i'm brian sullivan. crude oil falling again, and that seems to be hurting your investments today. the dow is down, not a lot, you can see 15 points, crude oil though is down 2.5%. many in the market not only watching oil but also looking ahead to janet yellen's big speech later on this week. and of course we're going to let you know everything you need to know about that coming up. michelle. hey, brian. i'm michelle caruso-cabrera, here's what else is happening at this hour. shares of dunkin brands up more than 2% tracking their best day since july 14. automobile driving in the united states hitting a record 1.5 trillion miles logged in the first six months of 2016. that's up more than 3% from a year ago. ralph lauren now joining speedo in dropping sponsorship of olympic gold medalist ryan lochte after he admitted to lying about being held up at gunpoint in rio. lot to get through this hour. going to start with the markets though. market that no one seems to be
trying to beat anymore. instead, investors rushing into market etfs. let's get straight to mike santoli at the nyse. >> hi, michelle. actually, this has been a trend that's been rolling for a while. the public has not been that e nam mored. bank of america estimates more than $900 billion has gone into index funds including etfs since 2009. that compares to about $600 billion coming out of actively managed funds that actually try to beat the market. this obviously is really exacerbated a trend of fuer and fuer managers have new money to go out and seek those fresh ideas. it's creating also a little bit of an argument out there that maybe the tide is about to turn in favor of active management. as we know it's been very hard for active managers to beat this market. fewer than 20% of large cap stock managers beat the market in the latest year. it looks more like 15% in the
last ten years. the public seems to basically say why bother paying up for active management when it doesn't seem to work. and you have these other trends of hedge funds being in retreat. so the contrarians out there are trying to argue that this is in fact when basically the tailwind will return to those investors that try to pick stocks individually. there is a counterpoint to this, michelle, and i think it's actually very interesting, which is perhaps it's the weakest active managers that are being forced to essentially shut down or do less when money flows away. and it's only the skilled ones, the ones with the great records, the ones with the better process that are staying in the game, plus the indexers, which means the market could theoretically become even harder to beat over time. i will add also one final note, which is it's usually in downturns, corrections, bear markets that active management shines. so perhaps it's just a cyclical thing where once a bull market's been rolling for a while people say why pay more, i'll just ride the index. >> mike, thank you very much. so are index funds the way to go
for investors as the fed preps the market for a possible rate hike later this year. janet yellen of course speaking out at the jackson hole conference on friday. let's bring in tim ang, chief investment officer at clearbrook global advisors, and joe tanies, strategist at bessimer trust. tim, what do you think? it's hard to argue with the success investment funds have had in beating active managers. >> sure. >> so shouldn't they be -- why shouldn't they be the core holding in most people's portfolios? >> well, index funds have been very popular over the past year plus as statistics show. 85% of active managers have not been able to beat the indices on a cost basis. but it's been driven by central bank policy. when you have liquidity driving the markets, investors don't differentiate in regards to valuations. what they care about is getting exposure to particular asset class. so because of that you've had higher correlations amongst equities, stocks, industry
groups within essentially the stock markets. the etfs have been the right way to go. >> we began, you know, joe, this year as i recall with a lot of chatter about how this was going to be the year that the stock pickers were able to beat the index funds. because this is a stock picker's market. you're just not going to be able to ride the indexes anymore. hasn't turned out that way. and it hasn't turned out that way in some downturns as well. >> well, i think you have to ask yourself what's really driven markets over the past year. you know, if you look year-to-date while earnings for the s&p 500 outside of energy have been relatively flat, the s&p 500's up about 6.5%, 7%, suggesting this really has been a multiple expansion driven rally. i think in that type of an environment beta certainly serves you well. and i think the proliferation of etfs has made it so much easier for investors to gain access to them. what you have to ask yourself in this environment where we are in the business cycle given the
expectation for volatility to rise, should you now consider moving a little bit more into active. >> tim, i listened to everything you said. you're an active manager, right? >> well, we invest in active management. >> right, right. nothing you said convinced me that i shouldn't do anything but etfs. >> so active management today as you're starting to see some liquidity coming back, what you're seeing today is correlations breaking down amongst industry groups. so the first time, michelle, the past couple years we've actually seen active management, particularly even in large cap, small cap and emerging markets actually outperform over the past six weeks by substantial 400 to 500 basis point ver sis indices. first clue we've seen breakdown in correlations across industry groups that finally we're seeing the ben fikefits from active management. >> so now would be the time even though it hasn't worked in the last couple years because of the fed? >> yeah, particularly if you
have central bank policies varied where the fed is going to issue interest rates versus bank of japan, et cetera, yes, you're going to see that. you're also seeing sector rotation, something we haven't seen before. you have a lot of utilities essentially move the markets, become overvalued. now you see rotations into health care, into technology, information technology. >> joe, a lot of big themes here. i just want to know how to make some money. what looks cheap to you? >> yeah, well, what looks cheap to us i think when you look at the equity markets broadly speaking, it's difficult to find an area that looks cheap. but i will say in this type of an environment considering where we are in the cycle, it makes sense to move a little more towards quality companies focusing on the individual companies as opposed to sectors. and of course focusing more on alpha as opposed to beta considering the rally that we've had. within the u.s. i think we lean a little bit more towards consumption-related stocks. if you think about the household sector and how healthy it is, we want to be able to participate and enjoy the benefits of a healthy consumer balance sheet.
>> tim, quick thought. you like some mlps, tell me which ones and why? >> we like tortoise. tortoise has come down. typically has a low correlation versus oil prices. we went as high as 80% correlation. typically trades at 30. it also is dominated mostly by storage with a guess. so it should not be correlated to oil prices. and has a yield about 4.5%. >> tortoise sounds exciting, right? >> yeah. >> it's not just a shell company. >> oh, you are on. >> eight minutes in. >> only took eight minutes. >> i'm done for the week. >> even quicker than ryan lochte losing -- >> he's here all week, folks. >> tim, thank you very much. go to powerlunch.cnbc right now, do not hesitate to see how joe's playing this year's presidential election. biotech bankers certainly not taking the summer off because there's a huge deal in the pharma industry today.
pfizer paying $14 billion to grab a fast growing prostate cancer drug. meg tirrell is here with more on the deal of the day, maybe the week. >> maybe the summer. although investors are hoping there's more to come. pfizer today winning the battle for medivation paying $81.50 a share in cash for about a total of $14 billion for medivation. that's a 21% premium to where medivation closed on friday, but of course a lot more than where medivation was trading earlier this year when french drugmaker sanofi put it into play with a bid of around $52.50. so paying quite a bit more than that today for pfizer. they say that's going to add about 5 cents to earnings in the year to come. so for $14 billion what does pfizer get? what's up? >> no, finish, i get it. >> so there's an improved drug approved for prostate cancer, it's more than $2 billion revenue drug pfizer will split with the japanese drugmaker, also two cancer drugs in the pipeline people are excited
about being tested for breast cancer and other cancers. and then the second one is an m immuno-oncology. >> do you have any good explanation for why the premium is so much bigger. the french company comes in several months ago $52. these guys are coming in above $80. that's huge. why is pfizer willing to pay so much more? are those cancer drugs that much more important to them? >> well, they are important to them. this is an important area for pfizer. and the other answer i think is it was a competitive process in addition to we know that sanofi was at the table. it's been reported that celljean, gilead and merck were also interested. that could have driven the price up. pfizer may have been under pressure to get a deal done after trying to buy a couple and showing it's doubling down in the innovative products area and in cancer. >> sanofi could have in theory paid more based on their tax structure, right? pfizer is here in the united states. sanofi could have done an inversion, which meant they
would have had financial synergies which they could have paid even more if they wanted to visa vee u.s. company, right? >> yeah, that's a good question. trying to accomplish with allergan deal invert does have a lower tax base. buying a u.s. asset using u.s. cash to do that, that's a great question. questions on the conference call of pfizer today said this isn't going to effect 2016 guidance, but what's it going to do to 2017 tax rate? they said they'd update us. >> seems medivation's board played it pretty well. >> they sure did. >> i would be super happy as a shareholder. >> $30 a share or roughly that. >> yeah. exactly. >> thanks, meg. >> thank you. all right. it has been five years since tim cook took over as ceo of apple. stock's more than doubled in that time up 100% plus. should investors be cheering or screaming? why are so many people negative after the stock is up 100%? we'll debate next. plus, 77 days until the election, donald trump's new strategy, is it turning the tide
for his gop critics? not for republican and former congressman christopher, why he's voting for hillary straight ahead. for decades, iestors have used a 60/40 stock and bondodel, with little in alternatives. yet alternativ can tap opportunities that traditional aets can' aneven though they're called alternatis, they're tually designed to help meet very aditional goals. that's why invesco believes people shld look past conventional models and make alternatives a core part of their portfolios.
stock. under cook's watch apple is up more than 100%. total return to shareholder, so stock appreciation plus dividends clocking in at 121%. as for the top line apple enjoyed revenue growth of 113% through its fiscal year ending september 2015. in the three quarters since then though revenue growth has dropped an average of 8% on a quarterly basis. turning to products, cook scored a home run with that iphone 6, which drove big jumps in revenue growth from 7% in fiscal year 2014 to 28% in 2015. as for the watch, analysts say it has to be decoupled from the phone to prove a real hit long term. rbc estimates apple so far has sold 14 million watches, generating $5 billion in sales. cook does remain confident about the ipad whenever we speak, especially its role in that workplace, though that product does now account for just about 12% of total sales.
and finally, beyond devices cook we know has worked hard to expand the company's services business, so mobile payments and music and the app store in the past year services revenue has jumped to some $23 billion, next year cook says that business will be the size of a fortune 100 company. of course apple is still dependent for now on that flagship product, the iphone. some do argue it is in trouble long term. they'll point to increasingly saturated markets and longer replacement cycles. others like piper's gene munster are betting cook is going to expand and enrich that device with new technology like augmented reality. guys, back to you. >> josh, thank you very much. so, apple's stock has basically doubled in the past five years. not a bad investment. but if you're splitting hairs, and of course we will, apple's return is only fractionally better than the overall market, 25% worse than microsoft, and about half the return of google over the same five-year period. and did you know that since the
apple watch launched, not was announced but launched, that's tim cook's only new product line, apple shares are down 13%. let's bring in jason weir, apple shareholder and ceo of -- and steven managing director at ubs. there's a doubling over five years is a pretty good investment no matter who's running the ship. but compared to the other tech names it's underperformed. are you disappointed in apple's performance? >> i would say the recent history, yes. i mean, i think even cook would probably admit that they overestimated the demand for the recent success. but, look, overall i give him a b-plus even though you could argue it's probably incomplete. we have yet to see the innovation they're working in the labs. but he's kept a lot of the core principles jobs put in place in terms of a functional organization that's focused on customer experience. the north star of creating the best product possible. and also apple is a very different company today obviously than four or five
years ago. he's had to deal with the fbi situation moving into china and india, shareholders, you know, demanding dividends and buybacks, which jobs didn't have to deal with at the time. so i give him a pretty high mark. but the incomplete is for the innovation we have yet to see. >> yeah, the innovation, steven, we have yet to see. that was my point about the watch statistic is that really it's only tim cook's new product line as a ceo. obviously he was there and he was involved in a lot of different things. but when you look at what they have created, not what they're living on but what they've created, it has been, i think, fair to say underwhelming in the innovation category. >> i think it's been und underwhelming on the hardware sigh, which is of course where they make their temoney. the technology is not there to get the watch away from the phone yet. where i think they've done a good job is on the services side, we call it the platform side where apple's created a horizontal platform with open operation programming and interfaces that incent third parties. jobs was initially against the
app store at first, and then he was convinced to do it. but there's no doubt that they monetize through hardware. so whether it's a car, virtual reality, better watch sales, we need to see that over the next two to three years. >> so, jason, how do you grade tim cook's first five years? and how concerning to you is the year over year decline in revenues? or the quarter-to-quarter decline in revenues? >> so our grade is about an a-minus. you know, if mcdonald's didn't already have the mcdouble, they should name a sandwich after this guy. if you look at earnings, operating cash flow, stock price during his tenure, everything is doubled. r & d as a percentage of sales has doubled. so they're really trying to get that innovation, you know, going again and make sure that they have some solid products for the future. but in addition, you know, looking at the products that they've launched, iphone 6 was a big win, looking at the deal they inked with china mobile post steve jobs, that was a big deal getting into china. he's looking toward india now,
which is going to be big. looking at the apple watch, you know, there's certainly the jury still out on that, we're more optimistic i think than the street on the watch. but he's introduced his first new product category and so far we think it's done pretty well. in addition one of the things we've talked about a couple times on the product is the software side of the business, the app and software portion becoming a larger portion of revenues. it's up 10x, they eventually might hit the software multiple if we continue down this path. >> the company would like that. is that then your view of why you're holding onto it? i see you've got the firm owns roughly 150,000 shares for clients. in theory you could have put that money somewhere else like a google and gotten even better performance. are you satisfied you kept the money there? and are you keeping it there because you think finally there will be multiple expansion for apple where it has traded cheap to the market for so very long? >> that's one of the legs of the stool to our thesis. you know, multiple expansion
because it is cheap, because they are growing faster than the market. and there are some quarters like the last couple of quarters where they haven't been. and we recognize that. we've talked about that at nauseam. apple, they still have the cachet, they still have the products and services and they have everything in place we think they can continue to grow faster than the market at large. and because it's cheap there is the multiple expansion story and also call option on new innovation down the road. >> so, steve, is apple judged by a different standard? >> i think given the size of the company to some degree it is. obviously it had to slow. and i think the big change in the last few years and under tim cook is the shift in shareholders, from growth to value. and the value folks may not be quite as concerned about the fact iphones are down this particular quarter, probably more concerned about cash flow, dividend, stock buyback and so forth. so i think that's a big shift. and i think we're just finally at the end of that shift in the value hands, which probably augers better for the stock going forward. >> all right, guys, thank you so
much. great to have you with us. up next, ships, shoes and energy, the good, the bad and the ugly is next. jobs disappear?goaying it's what tion debt could do to our economy. if we don't solve debt problem 19 trilln and growing money for programs like ecation will shrink. 19intere on e debts,g will be r third largest federal program. bad formall businesses. e goodews? there's still time for a solution. ask the candidates for a plan to secure our future.
oh hey john, i'm connecng ourras are you ing? so we can share r amazing trading knowledge. that's a great idea, but why don't you just go tois where you can she stragies, ideas, even actual trade with market professionals and thousands of other trars? know. your brain told my brain mmm, beberry fore you told my face. tap into the knowledge of other traders on thinkorswim. on at td ameritrade. welcome back to "power lunch." i'm seema mody. a bold call from blackrock's investment team just today upgrading emerging market equities to overweight saying stable u.s. dollar, economic reform momentum and improving corporate fundamentals, specifically earnings, will help
drive this asset class. this despite this year's 15% run in emerging market equities. blackrock sees further room to run for inflows given reasonable valuations and light investor positioning the team also highlighting the outperformance in chinese equities despite weak economic data. china up about 9% over the past three months. michelle. all right, seema, thank you. time now for the good, the bad and the ugly. about 20%, the u.s. chipmaker close to being bought by a japanese electronics firm in a $3 billion deal. which means we might see that ticker retired, isil, not sure anybody will pick it up any time soon. on to the bad, marathon oil, following a big drop in oil prices today, an ugly day for u.s. auto parts networks. shares down about 16%. company says certain stockholders may sell up to 12 million shares. tyler. thank you, michelle. he's changing his tone, but is he changing the minds of
♪ for cades, inveors hased 60/4 with little in alternatives. yet alternates can tap opportunities that traditional assets can't. and en though they're call alternatives, they're actually designed to help meet very traditional goals. that'shy invesco thebelieves pple shoulded to look past convential models and make alternatives a cor. look pasttranslion?l models odbye 60/40, hello 50//20.
hi everybody. i'm sue herera. here's your cnbc news yaup date for this hour. the justice department considering its options after a federal judge in texas blocked the obama administration's new transgender rules in school bathrooms. under the directive students would have been allowed to use locker rooms and bathrooms consistent with their chosen gender identity. the boston area surveying the damage from a rare tornado. the national weather service confirming it touched down in concord, massachusetts this morning. the twister damaging nearly 40 homes. no injuries though were reported. now that the games are over, cleanup begins. crews were working overnight to collect garbage around the olympic venues. the area kind of eerily quiet following 16 days of tourists and parties and big crowds. and krikey, the search is on
for three high school students. the prank was caught by security cameras. no word on where the crocodiles came from. that would not be a good way to start your morning walking into that. that's the news update this hour. back to you, brian. >> i got three things to say about that very quickly. >> yes. >> number one, that's the most australian prank of all time. number two, apparently nobody in australia wears shirts. and number three, i hope that when they threw the crocodiles in there somebody yelled, hey, what have you done d. >> oh, stop it. >> i don't practice this. >> i just heard the story for the first time just now. >> everything -- >> and to have three thoughts like that in succession. that's actually quite impressive. >> actually, thank you, sue. >> you're welcome, guys. >> actually, sue's the only one i like here. let's get a check on your markets right now if you can. >> i'm flattered. >> you shouldn't be.
let's get a check on your markets. not a whole lot going on. the dow's 45 points to the downside. oil down over 2%. that's probably going to be hurting most things, although apple is the worst performing stock in the dow right now. chevron down as well. and if you're wondering, and you might be, the single best performing stock in the s&p 500 this month is net app, up 30%. i threw that in there just as an added benefit. >> what's the best performing stock in the s&p this month so far, what do you say? >> net app. and then you walk off. check on bonds. this is your bond report for a monday. and you can take a look at the numbers just as well as i can. yields coming down just a bit as the price goes up. if rick santelli were here, he'd regale us with stories about how the yield has stayed in the 150 to 160 range for about 11 years -- no, not quite that long. >> feels like it. >> feels like it. look at that 30-year bond.
you want to borrow at 30 years at 2.2%. that's a good number. >> yeah, it is, mortgages. >> so there you go, bond price higher, yields a little lower. trump's new campaign manager kellyanne conway on "squawk box" this morning. she told cnbc the race for the presidency is far from over. >> people feel really energized. there's great momentum. and i think we'll look back at these last two weeks and people will say those were terrible two weeks of the trump campaign. that's true, we had a rough two weeks. it helps us to be down a little, lights a fire under us, but i think we'll look back and say why in the world didn't hillary clinton's campaign totally put us away in those two weeks. they put her in hiding. they made a grievous error by not traveling to deliver speeches to troops, scarcity benefits hillary clinton. if you don't see her, you forget she's running too and you think this entire election is a referendum on donald trump. >> not everyone is convinced by the new on message donald trump. let's bring in chris for shays,
republican and former congressman for connecticut. he's penned an op-ed entitled, why i'm voting for hillary clinton. sir, good to have you here. >> thank you. >> so donald trump didn't convince you this week with his speeches that a lot of members of the gop thought were better? >> he lost me a long time ago. you know, the new donald trump isn't any different than the old donald trump. there's nothing that i would like about him as president. >> you don't like his plans for the economy versus hillary clinton's plans? >> well, you know, his plans mean nothing because, i mean, he says one thing and does something else. frin for instance, he thinks everything should be made in the united states, yet i'm wearing a tie, a donald trump tie made in china. he's talking about how folks here are going to be sent back home that are undocumented, now he's talking maybe he won't do it. he's all over the place.
>> i see in your notes the concern he would allow countries to have nuclear weapons? >> he did. he said maybe other countries should be allowed to have them. maybe we won't be there for japan or some of our other allies. what does that mean? it means if they're not going to be there for them, then they're going to have to find their own ability to protect themselves. >> i guess that one just struck me because critics of hillary clinton would say she's part of the reason why it is that iran now we've codified they can have nuclear power and many critics believe they will have nuclear weapons. >> that would be stiff to blame her for that. >> why? she was secretary of state. >> it goes back a long ways. it goes back many, many presidential races. it goes back when i was in congress as well. what are we going to do? are we going to attack iran? what are we going to do? they did something that i wouldn't have recommended. they've negotiated an agreement. this president has. i think i still would have the embargo on. but, you know, there are so many issues that we're having to deal with. >> explain something to me
though, congressman, kellyanne brought up this morning, she said after that tough two weeks she was surprised that hillary clinton hadn't wiped the floor, that donald trump actually when you look at the numbers she doesn't get much above 41% at all. >> well -- >> should she have done better? >> well, first off, if donald trump is going to continue to stumble, why get in his way? why not just have people look at him? it was a very bad two weeks for donald trump. but if you're asking me is hillary clinton perfect, absolutely not. i don't think donald trump has any moral foundation. and i think hillary's shaky. i think she sometimes pushes things to the edge and gets herself in trouble. i would have loved it if said having the e-mails on a private server was a mistake, i wish i hadn't done it and lived up to it a long time ago. the stories still keep coming. so, you know, i'm not one of her strongest advisors, but she's strong, she's tough, she knows world leaders, she knows the
white house, she knows congress. and the most important thing to me is that she wants government to work again. she's willing to work with republicans, democrats, unaffiliates. >> yeah. >> that is the most important thing right now. >> congressman, it's brian sullivan. two questions, number one, is that really a trump tie? >> that is really a trump tie. >> did you buy that for this interview? >> no, i bought it -- >> for his last interview. >> -- i love this tie. i bought it a long time ago before he was even in the race. but it is made in china. >> there you go. >> but you bought it because you liked it. >> i love it. it's a great tie. >> it's a nice tie. we all like your tie. >> tyler, michelle and yourself probably get the same question all the time, which is how did we get here? how did we end up with these wo candidates? >> with one you said no moral foundation and the other has a shaky moral foundation. >> exactly. i want to be clear, it seems like very qualified men and women all over the country, we meet them every day here on
cnbc, ceos, leaders, whatever, they say hell no i would never run for office. why are we here? >> it's easy for me to explain. basically you have the american people are in the center of the political spectrum, the bell curve's slightly right. congress is a u. you have a lot of people on the left, a lot of people on the right. the way we've written our districts, designed our districts, we have very partisan members in congress. you have talk show hosts that have shaped how the republican does its message. i mean, give me a break, anne coulter tells republicans what they should be, hannity tells us what we should be. it's a system that needs an injection of a third party, frankly. >> who would you like to have voted for? ideally. >> my first choice was john kasich. my second was john kasich. my third was john kasich. but having said that, i think hillary will be a very good president. i really do. >> what do you worry about with her? >> what i worry about is that
she doesn't have people around her who said we're not going to do this, hillary. i used as a member of congress i used what i called my community meeting test. if i couldn't explain it in a community meeting comfortably, then we didn't do it. >> i don't understand. that's what you're most worried about? you're not worried about her increasing view, her move to the left, her increasing view that government is the answer, that there should be higher taxes, that government creates jobs, that she's now going to get deeply involved in education funding, go even further with health care, none of those things bother you? what many believe is an anti-growth agenda? >> well, it is that part would be anti-growth. and i am for growth. now, ask me if i think she's going to do all those things in an environment where you have compromise, where you have compromise, you don't get the extremes of your positions. and i think republicans will get something, democrats will get something. and i think the result will be a
good four years. >> do you think -- are you worried, congressman, as a republican that the republicans may lose congress because of trump? could they lose the senate? >> oh, of course. >> could rob portman and a few others who are on the edge go down and flip the senate because of donald trump? >> oh, definitely because of donald trump. i mean, this is a man that if you don't say nice things about him lashes out at you. so he'll criticize very good republicans just because they haven't said donald trump is wonderful. >> all right, sir, well, november 8th. >> keep the faith. >> i like the tie. >> thank you. >> i bet donald does too. representative christopher shays. >> people love the tie, but what they don't like is ben herr the movie. the latest big blockbuster to bomb. what it says about the state of the summer box office, not much. we're back after this. ♪
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"ben herr" bombed at the box office this weekend. another failure in a litany of disappointing sequels and remakes this summer. what exactly is going on at the box office? julia boorstin is joining us from l.a. how big of a bust was "ben herr"? >> it was a very big bust grossed $11 million at the box office which means huge loss for paramount and mgm which spent $100 million on production and tens of millions of dollars more on marketing. now, this is more bad news for viacom's paramount after teenage mutant ninja turtles as well as zoolander, calling paramounts problems truly shocking. he predicts the studio could lose $350 million this year. this is a year with the biggest gap between studio leaders and laggards this century. paramount and sony both have just 7% share of the box office. that's compared to disney's 27%. now, disappointments from
paramount and sony are dragging down the summer box office below last year's while the year-to-date box office is actually up 5%. so what's going on here? well, blockbusters are less concentrated in the summer than they used to be with "star wars" the force awakens and fox's "dead pool" outperforming this winter and warner brothers releasing bat man v. superman in march. there's also sequel fatigue with 17 this summer compared to 11 sequels and remakes last year and 13 the year before. with more original content available to stream from home, the bar is of course higher than ever to get people to a theater. talk of a bad movie spreads like wildfire thanks to social media. guys. >> julia, thank you very much. stick around as we continue to discuss what's wrong at the box office. joining us now is daniel lorea, managing editor at boxoffice.com. daniel, what's been happening in movies, or not happening? >> well, it's been a tough year definitely seasonally, right?
but what we're seeing as we just heard is it's not a seasonal business anymore. we're talking about a year round release schedule when big movies can come out in february, like "dead pool," or in march like "batman v. superman". >> well, didn't work for "ben herr" in august. >> definitely. we're also seeing the importance at this stage of how the big tent high budget movie you need to have a studio strategy at the boardroom level you're solid. that's something disney has and you see that through acquisitions in the last couple of years. lucas, marvel, pixar, see that with warner brothers in 2013 the first thing he did was able to get batman and "harry potter" series back on track. >> on that note when julia says paramount can lose $350 million even these days that is not chump change. the boardroom could be a bit distracted. how much is the factor they're owned by viacom, which is in the middle of this drama?
>> well, i think that's what you're having. you have the volatile boardroom that you don't have the big budget leadership there that maybe bob iger has been able to have having acquisitions with disney or kevin has had with warner brothers setting the dc movie universe back on track. and that "harry potter" universe back on track after they ended. >> what it seems like is that there's so many remakes and redos, even of movies that aren't that old. they're remaking movies out originally 15 years ago. you wonder -- julia, jump in. you live in the thick of this stuff. i know your husband's a producer. is it just a lack of ideas? or is it that the executives are so scared they're under their desks thinking we're afraid to green light anything new. just redo that turtle movie. >> look, here's the thing, the idea of a remake or a sequel, that's very valuable because it can help break through the clutter. right now there's so much clutter. there's so much content out there not just in movie theaters but also at home. you have new original content
launching from netflix and amazon all the time. so it's very viable either to have a movie star or to have a big familiar brand to help break through the clutter. but what we're seeing this year is just having the star or just having the brand is really not enough. the films have to be really good, they have to get great word of mouth and good critical response. because now you can't just buy a big opening weekend anymore. years ago studios could market so much they could guarantee themselves a big opening weekend because you could get two or three days of the box office before bad word of mouth really started to spread. now that's not the case anymore. >> the original ben hur was, what? charlton heston, so this was another remake? >> yes, tyler. how much of this did they just -- it feels like they're not very nimble. i'm watching the olympics and they're already teasing the "star wars" movie that's coming out in ten months. i mean, are they so stuck in their regimented delivery they
they can't -- >> that might be a big risk, right? right now a movie doesn't have to be a film a hit by itself. it has to be a hit for the next three or four years sustaining narrative universe of three titles. that's the risk we're taking right now. lions gate for example -- >> how much of this -- i know you, brian, watch a lot of tv. you download stuff and watch it. >> well, i'm on a plane half the day. >> yeah, but you watch stuff on netflix at home. >> exactly. bloodlines. >> how much of it is that people aren't motivated to get up off the couch and spend $25 or whatever it is to take a date or a family to the movies because there's so much good stuff on netflix? >> well, when it comes to dollars and cents, thee yat ri kal have been flat, but we're seeing record year at box office. why? the theaterical going through
the airline or sports stadiums went through 10, 15 years ago, diversifying that price point. if you go on airplane you choose how much you want to pay for what type of seat. same thing happening in the movie theaters now. if you want premium seating, cinema dining, there are different ways to enjoy a movie. the industry has done a very good job in finding a way to offer a movie going experience. >> well, that's the theater industry. that's not the producers. that's not the. >> even the big names aren't immune, right? julia. scorcese had a flop -- >> yes, even the biggest names can have flops. but i think that there is something to this idea that the theatrical experience is getting more diversified and fancier, the reason why the movie theater companies have been able to earn more per visitor this year than they have in the past is because they're selling a higher end concessions, getting people to
pay more for fancier seats. i think people do like to go to the movies. the reason why the overall box office is up this year from last year is because people do like to have an occasion to get out of the house and have a trip to the movies and have that communal experience. but it really has to be worth it. either with a great experience movie theater or really awesome movie you want to talk about with all your friends. i just think the bar is much higher. >> all right. thanks, daniel. thanks for joining us. julia, while we have you here, the rio olympics just finishing up. take us inside the numbers, ratings, streaming, profits for our parent company nbc universal. >> okay. well, in terms of the viewership numbers, this is the first time there's been live streaming of this many hours of content. and there's a total of 27.5 million viewers. now, this is coming in at second place. it's second behind london, which had 30.3 million. this time there was a lot more streamed online. in fact, the total stream was 3.3 billion minutes, but live streaming is 2.71 billion minutes.
that's the most for any event ever. if you want to put this in context, all prior olympics combined had 1.48 billion live stream minutes. this is 2.7. so just a massive amount of streaming online. now, the thing though is we have to keep in mind that 27.5 million viewers, that includes all the live streaming and it is down just because fewer people were watching though doesn't mean it's not the most profitable for nbc universal. nbc universal said this is going to be the most profitable olympics. they sold about $1.2 billion worth of ads before the games began. then in the first week or so after the games started they sold another $30 million in advertising. we're expecting to get some more ad numbers out pretty soon. but they shouldn't be taking home more than $120 million in profits. >> i'm confused. explain to me how they arrive at that 27 million viewers. and what does that count? is that just the total number of viewers who are watching nbc network, or what?
>> no, so that is -- that is broadcast cable. and i believe that's the average in terms of -- average it's an average of 27.5 million viewers for the 15 competition nights. so that's the average viewership on any of those 15 nights. and that includes broadcast, cable and digital. and of course there's more availability of this year's games than ever. >> okay. so that's the average daily or nightly viewership across all of the platforms that nbc universal provided. >> exactly. and it's less than what we had in london. >> got it. thank you, julia. most expensive car auctioned just wrapped up in pebble beach. did collectors spend as they used to? robert frank was there. robert. >> michelle, they didn't. the broader classic car market is losing speed, but the top end is still going strong. we're going to show you the most expensive american car ever sold and a ferrari supercar with a $1.6 million paint job coming up after the break.
good news? robert frank was there, now he's here thanks to the miracle of air travel. robert, you're saying as big as the numbers were -- >> yeah. >> -- they tell a bit of a sad story. >> not a sad story, just a slight disappointment. and if you look at the numbers those auctions heading up to the concord they were slightly weaker than expected. and this is the tough part, nearly half the cars that were up for auction actually didn't sell. 719 cars sold for a total of $345 million. that's down from last year's $396 million. and this is what's important marks the second year in a row of declining totals there at pebble in monterey. only 56% of the cars up for auction sold, though many could sell in post-auction private deals. now, sales at the very top of the market, those super rare top quality masterpieces, they remain strong with seven cars selling for $10 million or more. let's get to the real cars here, the most expensive car sold that was a 1955 jaguar t-type
roadster sold by sotheby's for $21.8 million. close behind that was a 1939 alpha rameo also sold by sotheby's. ferraris as always dominated the high end with this 1959 ferrari 250 gt for $18.1 million. and they ccheck this out. this just became the most expensive american car ever sold. it's the first shelby cobra ever made by carol shelby, went for $13.5 million. now, sales of younger cars, those are from the 1990s and later, those were especially weak though the first ferraris ever to sell at auction they did pretty well, red one selling for $3.6 million. and the black one only difference here is color, sold for $5.2 million. that's still more than three times the original sale price just two years ago. >> when you did the story about muscle cars being weak. >> yeah. >> part of that was the downturn in oil. >> yeah. >> the rough necks not being able to buy cars. do we have any similar kind of
explanation for the slight weakness here? >> well, a lot sort of the very top did well and carried the bottom. the really weak part was the muscle cars and the folks that the oil patch -- >> got it. >> the corvettes are their favorite car and some of the model corvettes were the weakest this time. so we really saw weakness from the oil patch. >> got it, thank you, robert. >> thank you. tax free holiday shopping, is it doing more harm than good for retailers? there you are. plus, dyis are doing okay. how you can cash in on the home improvement boom still ahead. ♪ there's no one road out there. no one surface... no one speed... no one w of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-ass.
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welcome to "power lunch." i'm michelle caruso-cabrera. here's what's on the "power lunch" menu this hour. nba legend kobe bryant getting into the vc game. is this a sign of a top for venture capital. tax free holiday shopping, does it do more harm than good for retailers? and home remodeling hitting new highs. and the stocks that are riding that boom. second hour of "power lunch" begins right now. welcome everyone. thanks for joining us. i'm tyler mathisen. let's get a check on the markets with two hours left until the closing bell, stocks lower, but
just by a little. they're roughly steady right now. nasdaq trying to avoid its first back-to-back daily losses in nearly two months. there you see the numbers. a slight gain now for nasdaq. the industrials and s&p off very, very fractionally. nat gas surging more than 3% pacing for its best day since july 28, brian. all right, tyler, also in the headlines this hour sin general ta shares up 10%. the u.s. national security panel okaying che okaying chem china $43 billion takeover clearing the way for the biggest foreign acquisition ever by a chinese firm. also today, shares of facebook higher, over the weekend barron's opining facebook shares could rise another 20% from year. and are retail investors finally getting bullish on the stock market? according to bank of america, merrill lynch, asset flows data last two weeks have seen the highest level of inflows into equity funds this year. melissa, let's hope it's not a
buy high, sell low situation. >> we will see. i'm melissa lee. for more on the stock market today, let's get to bob pisani at the new york stock exchange. >> hello, melissa, choppy, indeterminate action. let me show you the s&p 500 today. we opened down 10 points, but within an hour we moved suddenly very quickly up 10 points. and an hour later we moved down 10 points. you see those arrows? if you're not sure what's going on here, that's called air pockets. what happens is you get very light volume and you get some modest buy or sell programs that go through the market and there's not enough on the other side, and, boom, you get an air pocket. the market drops or suddenly the market goes up. don't worry about it. focus on the fundamentals and the fundamentals are in oil, oil down several percentage points affecting some of the big names out there, drillers like transocean, service companies like halliburton, production companies like pioneer. and the big guys, but notice exxon one of the only big companies not to the downside,
often happens that way. exxon doesn't even muf necessarily in relation to oil. sectors, bit of a reversal of the trend we've been seeing, defensive names like utilities and health care doing a bit better. and technology names generally to the downside, consumer staples another defensive name also fractionally to the upside. focus on the longer term trends. we've seen rotation going on. you've seen this for the quarter, tech dominant. banks started strong, moved sideways and now recently getting better. materials and industrials. these are all cyclical plays. at the same time of course we've been seeing those defensive names. your telecom, consumer staples, utilities moving to the downside. that's been the trend so far for the second quarter. today's action notwithstanding. tyler, back to you. >> bob, thank you very much. crude's march to 50 seems to be stalling. analysts say china is ramping up exports and that could be part of the problem today. what's next for oil? kyle cooper has some thoughts. he's with ion energy group.
kyle, has oil gotten a little bit ahead of itself in your view? >> yeah, i certainly think so. the problem being is for the last seven weeks total u.s. petroleum inventories have actually built. that's not the same pace they last year, record bearish inventory type year and more importantly they've actually increased the surplus of the five-year average. look, i'm with the camp that eventually this is going to tighten up, but over the last month it simply hasn't. >> what's going to cause it to tighten up? can it tighten up in a big meaningful way? not to suggest it's been a bad year for oil. it's been a good year. up 20%, 46% in the last six months. to go much more meaningfully higher, does there have to be some production agreement out of opec? >> i think so. and i think that's just going to be unlikely. i just don't think that the saudis while they might have some indicated some shift in sentiment, i just think they're going to be very, very reluctant to give up market share to iran.
iran is still, you know, really exceeded a lot of expectation in their ability to increase output. and i think they're looking to regain share. so, you know, i think it's been a good talk game last week, but i think the real production cuts going to be hard to come by. >> so if it's moved up to -- bumped up against a ceiling the oil price in recent weeks, where do you think the floor is later this year? and how soon do we get there? >> certainly if we don't see a change in this total u.s. inventory trend, i think mid 30s is likely again. i think $26 was way too low. that clearly put the kibosh down. we've seen the rig count tick up, but i think if you got back down to 26, that would just collapse again. and your downward trend would really accelerate again. i think we're in a choppy market mid 30s to 50 until you really see demand kick in. maybe as late as '17 or even into '18.
>> kyle, thanks very much. kyle cooper, we appreciate your time. all right. after criticism for not going, now president obama is heading to louisiana, tomorrow to survey the wreckage from the massive flooding there. 13 people killed and tens of thousands of homes damaged. morgan brennan joins us now with more on the toll of what's happening there. >> yeah, it's still early days but looking at really steep losses. this is now being called the great flood of 2016 after historic flooding submerged neighborhoods in the baton rouge and lafayette areas just over a week ago. at least 13 deaths with tens of thousands more displaced. the relief effort alone according to the red cross will likely top $30 million in what's already being called the worst natural disaster since superstorm sandy in 2012. some areas still under water. there are even report servicing that alligators have infested some of the flood sites, so it will take weeks at least to fully assess the impact here. still already a preliminary report suggesting economic damage could exceed $1.5 billion. and so far we know roughly
60,700 homes sustained some form of damage from this. fema says 106,000 people have filed for federal assistance. but in terms of flood insurance, which is almost entirely underwritten by fema, only about 25,500 claims have been filed. that's because many homes were not in high risk zones and therefore flood insurance was not mandatory. so while 42% of louisiana homes have supplemental policymaking it the third largest market in the u.s. it's less than 13% of those affected by this disaster had coverage. so for many the next disaster you could say is more financial in nature is really just beginning to unfold. and i hate to say this, but we've got more rain in the forecast for the gulf states including louisiana and we are in the thick of hurricane season. not a good situation. >> very tough. morgan, thank you. more on the impact of the floods with donna wolf, former president of the greater baton rouge association of realtors. donna, thanks so much for joining us.
morgan was showing us some really stunning pictures of the damage that's going on. i'm not sure many people are thinking necessarily about the health of the housing market. but you make the parallel to katrina and say the damage could be felt for years from now. >> yes, absolutely it could be. we're not seeing the rush like katrina, and i don't want to compare it with a katrina episode. you know, this is its own event and we're just starting to recover from it. and i think the numbers will be -- the numbers will start to climb. so we won't really know what's happening until it will be definitely a couple more weeks out. >> talk us through the sort of dynamics in the market in a market like this. you say according to the baton rouge chamber of commerce that 110,000 homes are actually gone. that's inventory off the market. but do people want to think about baton rouge? >> you know, the event happened in baton rouge. it happened there are about nine parishes in our area that were affected by it.
you know, we were all ready in a seller's market at the time. our rental inventory was not large even before this happened. i don't know that people are going to all of a sudden decide i'm not going back into my home, i'm not going to, you know, fix my home and live in it. so i don't know that we will -- you know the 110,000 homes that were affected by the flood, they're not a total loss. you know, i think people are going to -- we're recovering. they've gutted them and they're starting to look to rebuild and replace and go back home. >> yeah, how many -- what percentage roughly, do you have any idea, of the houses that have been affected there are going to be reinhabited or are inhabitable? >> you know, once we get -- i'm so glad president obama's coming. you know, we look we're always happy when someone comes and shines the national spotlight on it. there are people that need the assistance right now. you know, as you said earlier
there were a lot of people they weren't in a flood zone, they weren't required to carry flood insurance. so these people, you know, the houses are now being gutted and ready for to rebuild. and these people really need that federal aid in their hand. they need it today so that they can start rebuilding and get their homes ready to be inhabited again. >> you're assuming federal aid even if they don't have flood insurance? is that the point? if you don't have flood insurance, maybe you don't have the money to move back and you're forced to make a choice where you walk away. >> right. and i really hope that doesn't happen. i think there is federal aid for these people that they can get the help to get back into their homes. because, you know, a lot of people can't afford to pay their mortgage and rent and refurbish their house. so i think hopefully we will get the aid that they need and they can get their homes back up and move back into their homes. >> donna, this has been -- this is brian sullivan. it's been a very difficult decade for the state of louisiana. >> it has. >> not only obviously with katrina that's the worst of the
worst, you have this now, we had flooding a few years ago where they had to open up the spillway for the first time since 1937. we're sort of lurching from these disasters to disasters. is anybody talking about long-term solutions here? because i just don't see where the state has the money, unfortunately. >> correct. and the corps of engineers had just redid our flood maps recently. so this was -- but, you know, here's the other side. you take 30 inches of rain in two-day period and you drop it anywhere in the united states, you're going to have an event. so i don't know that it was louisiana-specific that it happened, it just, you know, 30 inches of rain in two days and it happened. and it just happened and happened in louisiana. i don't know what the long-term solution is. you know, we are -- but i will tell you with all the gut wrenching stories, and i promise they are overwhelming and there
are many, the culture of louisiana is alive and well. there are strangers helping strangers. everyone has a family living with them. you know, they're out and they're at costco and they're buying and delivering, so the culture is alive and well in louisiana. and we're trying to rebuild and recover together. >> all right. well, that's a silver lining. donna, thank you. donna wolff. >> thank you for having me. i appreciate it. now to kate kelly with a news alert. >> thanks, melissa. following up on the corvex company we reported on, we had the active manager saying he was going to nominate a new slate of ten directors for williams co board, those employees from his own team at vorvex, a group he regards as place holder while he seeks new independent directors because he believes the company's been intransigent in finding them. here's what the company says,
given the events of the last year it is unfortunate that corvex intends to launch a distracting and costly proxy contest while williams is moving forward with its plan to identify new highly qualified and independent directors. they think that's a step in the right direction, they're taking other steps that have seen the stock react positively in recent months. and they think that the corvex moves are unnecessarily distracting and unfortunate, melissa. looks like we've got the brewings of a big proxy battle here indeed. >> sounds like everybody's digging their heels in at this point, kate. thank you very much, kate kelly. >> thank you. let's get a market flash now with seema mody. >> look at shares of hormel foods upgraded to outperform from neutral at credit suisse. analysts noting the company has a clear path toward volume growth over the next 12 months. they also see plenty of room for positive earnings revisions,
that stock up higher than 2%. melissa. >> thank you very much, seema mody. basketball legend kobe bryant beginning his next chapter unveiling a $100 million venture capital fund. and he came on cnbc today to talk about it. adidi roy has more on this from san francisco. >> reporter: that's right. kobe's been investing in companies with entrepreneur and former ceo jeff stiebl for four years now. the five-time mvp rang the opening bell this morning. [ bell ringing ] bring i can't stibel as the new firm is called will target tech, media and data companies. stibel will focus on financials while bryant work on story telling and saying he'd rather be known for achievements as investor than victories on the court. >> playing basketball, you know, the focus is always on winning. winning championships, winning championships, winning championships. now, championships come and go. there's going to be another team that wins another championship, another player that wins another mvp award, but if you really
want to create something that lasts generations, you have to hech help inspire the next generation. they create something great and that generation will inspire the one behind them. that's when you create something forever. >> among the companies they're investing in scopely, legalzoom which provides online legal services and house canary, a data-driven online real estate platform. as for who he sees as a role model in the business world, bryant said nike ceo mark parker has been a mentor helping him as he launches his second career. guys, back to you. >> thank you so much, aditi. it was interesting to hear kobe talk about the relationship with mark parker, the ceo of nike. he said sometimes he would text mark and right away mark is going to come back with a text with a very detailed answer really applying what he's learned on the court to vc in business. >> i think a lot of people though. >> uh-huh. >> just by habit they'll see somebody like kobe bryant announcing he's into venture capital and he's ringing the bell today and they're thinking, ding, ding, ding, ding, that's
the top of vc. we talked about the top of the vc for so long now. look at the valuations with uber. >> sure. >> he got in when? four years ago actually, like right at the moment when -- >> there's a lot of money in vc now and chasing not a lot of return. >> right. >> we've had -- you know how many ipos we've had in silicon valley in the past nine months? one, twilio, that's it. the idea of venture capital is you invest and get the exit. without the exit -- >> with no off ramp -- >> interesting he did not say that his role model in business was magic johnson. because magic has had a very successful -- >> blazing the trail. >> i think there's a little rivalry there. >> there might be. although i will say one of the greatest vc investors of all-time -- >> was -- >> is ashton kutcher. so celebrities can do well. >> he's been at it for like to a point for more than a decade, i think, right? >> since "that '70s show". >> but not the '70s. >> exactly.
from venture capital to adventure capitalists, premiering tonight. does donald trump's new campaign team need to take away his twitter account? we'll tell you about the latest tweet from the donald. trust me, you got to hear this one to believe it. plus, the other presidential candidate you're not hearing much from, gary johnson, still thinks he can win. he'll explain why next on "power lunch." to buy t
ncht all the talk is about donald trump and hillary clinton, but there's another candidate who hopes to make a surge in the polls. john harwood's latest speak easy is with the libertarian candidate for president gary johnson, john. >> tyler, gary johnson, the libertarian nominee, cuts a distinctive profile. former republican governor, draws votes on the left by advocating the legalization of marijuana, he gets votes on the right from people who can't stomach donald trump. but he breaks from most republicans in saying that manmade climate change is real and can be dealt with by among all things a tax. >> one of the proposals that i think is a very libertarian proposal, and i'm just open to this, is taxing carbon emission that may have the result of being self-regulating. >> so you agree with the people who say the answer is to put a
price on carbon and then the market will take care of it? >> the market will take care of it. i mean, when you look at it from the standpoint of better results, and actually less money to achieve those results, that's what is being professed by a carbon tax. >> now, the key for gary johnson to make an impact on the race is getting to the 15% level in the polls he needs to make the debate stage. he says he's got a shot with a little help from pollsters. >> i do think there's a better than 50% chance that we'll be in the presidential dee baits. if we're not in the presidential debates, hey, no chance of winning. no chance. >> do you accept that the 15% threshold's going to hold? >> i don't have an issue with 15%. but shouldn't the polls include my name on the top line? and shouldn't it be reported top
line? that's my only issue. 15% not an issue. >> let's say you get to 15% and you're in the debates. >> you could win. >> now, gary johnson does have a backup plan in case he doesn't win the election. he says if he's not in the white house he's going to ski 120 days next year and enter a 3,000-mile bike race, guys. >> that would explain why he's dressed the way he was. john, we also -- >> exactly right. >> we also wanted to ask you about the trump campaign because this morning his new campaign manager kellyanne conway was on "squawk box" saying she wanted him to stop fighting with everyone. >> i feel like people expect donald trump to take it on the chin all these criticisms and he's never able to respond in kind. he rarely draws first blood. this is a tennis match, okay? it's just you keep lobbing, lobbing, lobbing, doing aces her way, you don't pick a fight with the ref, you don't boo the crowd, lob, lob, lob, it's so obvious who your opponent is. >> as she was saying that though
about the same time trump was tweeting about our colleagues at msnbc. some day when things calm down i'll tell you the real story of joe and his very insecure long-time girlfrien girlfriend @morningmika. two clowns, he says. john, that doesn't sound like someone who's focused exclusively on attacking hillary clinton. >> michelle, that was a breathtaking juxtaposition. and it just shows that kellyanne conway, just like paul manafort, cannot control donald trump. people talk about a pivot or a reset or whatever. there is no pivot, okay. you have a candidate who is 70 years old and has got a set of characteristics and a set of instincts and a personality type. he's going to show that whatever somebody does in a particular moment whether he -- >> so the two speeches you don't think those represent a pivot? you would totally discount those? >> that represents something that he did. does it change the core of his candidacy? what he's appealing, the nature
of his appeal to voters? no, it does not. >> what if that guy shows up every day until november 8th? >> well, if that guy shows up every day until november 8th, that will be different -- a different presentation. i do think that at this point in the campaign american voters have drawn fairly solid conclusions about who hillary clinton is, who donald trump is. >> i'm glad you brought that up because at this point in the campaign kellyanne conway said she doesn't get much above 41%. she hasn't broken through either, necessarily, do you give any credence to her argument either that what was a horrific two weeks for donald trump should have been her moment and maybe she should have capitalized on it? >> well, it's not right to say she's not above 41%. i think her average in the various polling measures is around 45, maybe a little bit over 45. >> but that doesn't defut the
spirit of my question. >> no, i'm agreeing with your question, generally speaking she's not over 50% in the polls, that's an important threshold. she is in some of the battleground states, but, yes, hillary clinton is a flawed candidate. she's got a substantial number of americans, majority of americans who say they can't trust her. but by any measure, and when you look at this nationally as well as in battleground states, donald trump's problems are bigger. can he remediate those problems between now and election day? i think it's hard. i think it's doubtful. you can't say anything's impossible. in a different presentation might benefit him in some way, but still we kind of have a pretty clear picture of who donald trump is. and i don't think kellyanne conway can change who he is. >> all right, john, thanks so much. john harwood in washington. several states are giving sales tax holidays for back to school shoppers. we know it's good for the shoppers, but does it help retailers as well? we got that story coming up on "power lunch." plays throughout)♪
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an alligator pulling 2-year-old lane graves into the water at disney's grand floridian resort in june. the medical examiner ruling it as an accident. but based on the information gathered in the report, officials are now looking into alligator feeding in the area. bill clinton giving more clarity into how his foundation would change if hillary clinton is elected to the white house. in an open letter out today, president clinton said he would step down from the board and no longer raise funds for it. plus, the international work would be transitioned to other organizations. louisiana getting ready for president obama's visit to the flood ravaged areas where at least 13 people have died. the state's democratic governor, john bell edwards, defending the president's decision to delay the trip until tomorrow. president obama was on a summer vacation and had been waiting until the recovery efforts began to visit baton rouge. and ralph lauren announcing it will not renew ryan lochte's
deal. who admitted to fabricating details about being robbed in rio. speedo also announcing they will no longer sponsor him. that's the news update this hour, michelle. back to you. thank you, sue. oil market falling 3%. let's get to jackie deangelis at the nymex for why. >> that's right, big move down in oil prices. but remember after being up 20% in the last two weeks, it's not surprising to see some profit taking here. now, another big piece of this is the dollar index. remember, after the fed it came down close to 94, today it's rebounding a little bit and that will send crude prices a little lower. meantime, september contract that's going off the board at the close today, october is now in focus, our rbob gas down, the anticipation of a little bit more summer before those cooler temperatures come. and the heat turns on. so we're ready thinking about the fall when it comes to nat
gas prices. back over to you. thank you, jackie deangelis. it's back to school shopping season. many states are offering tax free holidays, but do they really help the states? do they help the retailers? courtney reagan is live at a shopping center in stamford, connecticut. hi, court. >> reporter: hi, melissa. so it is tax free week here in connecticut on back to school items under $100. it sounds like a really good deal for consumers and potentially for retailers, but it can be a controversial political issue that some argue does more harm than good. various data points from both retailers and non-partisan economic research groups say that the timing of these holidays more or less just shifts purchasing timing for when shoppers make those back to school purchases. it doesn't necessarily mean that consumers buy more because of the tax savings. though many retailers may up their promotions in line with the timing of the holidays hoping to entice more traffic or to up that transaction size.
report from the institute of taxation and economic policy says the tax free holidays d disproportionately help those with higher incomes, those who can choose to when they're going to buy for back to school if they're not living paycheck to paycheck, and also because they typically spend more, the tax free holiday can benefit them more. and consider also if consumers aren't paying tax, that means states aren't collecting tax revenue. massachusetts in fact has decided to do away with its tax free back to school holiday. it estimates that it costs the state more than $25 million last year in lost tax revenue. and the institute for taxation and economic policy says all 17 states combined that offer these holidays lose $300 million in tax revenue. tyler. >> thank you very much, courtney. home remodeling hitting new highs. how you can cash in on the boom. that's next. what if a company that didn't make cars made plastics that make them lighter?
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around this trend, obviously big names like home depots, lowe's come to mind. but there are many other smaller companies who might benefit from a remodeling boom. let's highlight a few where in your home they may be found and how they have done. these are obviously not all the names, but there are many. right up top you got beacon roofing, right? the name says it all up 13% this year. the windows, where is it? there we go, over there. the back deck, fake wood in that light blue they're up 58% this year. to get in you got to use the door from masonite. how did that look? the floors they're made by armstrong worldwide, drywall sold by continental building products, ji bralter industries, they are more than happy to sell you a mailbox or rain gutter, by the way. even solar mounting tools. that stock, guys, up 45% this year. you can see just parts of your homes that you're not going to
necessarily see at the store but whose stocks have already benefitted. clearly big gains all around. let's talk more about this and bring in analyst with rbc capital markets, we've also got vice president of john burns real estate consulting. his firm put out that bullish forecast on remodeling. bob, very simple question to you. we're seeing these big returns here, but has the money then already been made in the stocks of these companies because smart investors bought ahead of the boom? >> brian, we've been on the show before, one key theme we want to emphasize, the recovery is stronger for longer. and this is great for companies like masco, mohawk, fortune brands, which is so well positioned to capitalize on increased consumer spending, low unemployment, they're the beneficiaries of every healthy economy. we love the visibility on earnings. >> why have the names done so well? >> because this is a long, steady vibrant theme that's going to remain on a very stable
track forward. so we have visibility. we understand what's going on. this is not something which is where we're going to go off the tracks. there's still room to run and the stocks we still see a lot of upside, especially names like masonite or bmch. >> todd, when we see a boom in renovation activity, do we necessarily see a slower market in new construction? does it matter where the demand is coming from? >> yeah, that's a great point. we definitely do. so for the past three years we probably saw 10% growth for new construction revenue for source of business, maybe 5% growth for remodeling and depending on what building product companies exposure was some place in between the two. we think for the next three years through 2019 we're going to see 26% growth in remodeling and 4% growth for new construction. so huge differences. that's a complete reversal. >> so is this trend going to be reliant on continued low interest rates? >> yeah, affordability definitely plays a role.
home price appreciation is super important. one differentiator between this recovery that we have right now versus others for remodeling is we're seeing a lot more higher ticket spend, trade up in projects, maybe fewer remodels per household but worth more at the end. >> you know, bob, when you said you were going to run off the tracks, i thought you said run off the trex. you didn't. >> watch yourself. >> i'm learning from you. >> watch yourself. >> my question was so todd just said he saw maybe 25% revenue increase in remodeling expenditur expenditures. smaller number. is that the more profitable part of their business? >> the psycho into todd's comment is right, we see a shift up with consumers feeling better about the universe. they're not going for that entry level product. they're going to pay more to get luxury in the household. >> what is the business mix on some of these companies here? in other words at 26% growth rate on a smaller part of the business might not be as meaningful as a smaller increase
in the growth rate on something that is the massive part. >> so number one you always want to be repair and remodel because home builders are going to drive a tough bargain. number two, majority of the companies we're talking about drive 75% of their revenues from repair and remodel. so they're in the sweet spot of high profitability and strong growth with good visibility. this story's working. >> todd, what do people do? what's the order of remodeling? what's the most common thing that they do? kitchens and baths, i guess, but what else? what other parts of the market should we be looking at? >> so it depends on which segment's growing. we just put out a piece that brought out with the slowdown in existing home sales, fewer homes for sale means fewer potentially existing home sales. movers spend differently than stayers. if you stay in your home you're going to spend on siding, that's positive. you're not going to spend on decking. we know people spend on decking movers spend 90% more than non-movers, for siding it's the opposite closer to 20% plus, the
other thing i mention people who stay in their home spend at a higher price point. and they usually hire pros. depending on which channel you're looking at, you should see people who do the pro shopping better they should outperform. >> so if your neighbor puts a deck on, they're probably going to move. >> they're moving. they're out of there. >> my neighbor's just redid their deck. >> that's a great cocktail party number 90%. >> yeah. >> my neighbor just redid their deck. >> movers are deckers. >> bob, thank you. >> gentlemen, thank you. appreciate it. by the way, thanks to our team. that was a spectacular graphic. good job everybody. cdc issuing a warning on zika. how concerned should pregnant women in america really be? we're going to talk to a doctor on the front line of zika in miami. she's got 12 patients with zika, next.
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call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. the cdc warning all pregnant women and their partners to avoid travel to miami-dade county. what about women living in the area? exposure to zika-carrying mosquitos is an everyday risk. let's bring in a doctor at the ground zero for zika in the u.s. joining us right now dr. christine curry with the university of miami. so far she's treated over a dozen pregnant women infected
with zika. doctor, good to have you here. >> thank you so much for having me. >> tell me about the dilemma these women face when they come in. they're pregnant, they're positive for zika and there's no cure for that. what choices do they face? >> it really depends on how far along they are in their pregnancy. in the first and second trimester it's a conversation about if they want to stay pregnant with all of the uncertainties that come with this diagnosis. in the third trimester it's really about preparation, data gathering and helping them to learn what to expect once their baby is born. >> what is that, potentially? >> so we know that a certain proportion of these kids are going to be born with something like microcephaly, calcificat n calcifications of the brain and other birth defects we don't understand yet. we prepare them for unknowns. >> dr. curry, you know miami's incredibly reliant on tourism. and i'm sure that many people across the country are thinking
why would i go if i'm female, if i'm male, maybe i want to get pregnant, maybe i don't, but why take the risk of getting sick at this point? should people be thinking that way about miami? >> so i think the cdc has issued some pretty clear guidance all along. when this was something outside of the u.s. they were very clear that if someone was pregnant or considering pregnancy that nonessential travel should be limited. and they've been really clear with their guidance about these two particular areas of miami-dade that if someone is pregnant or considering pregnancy, nonessential travel should be delayed. >> three quick questions. do we know about the percentages of birth-related problems with women who have zika? that's number one. number two, do you have to be sympt sympt symptomatics with the vivirus, d how long does zika stay in your system once you've been infected by it even if you don't have the
symptoms? >> all right. let me see if i can keep track of all those questions. so the first question, you know, what are the risks or percentages of the baby. so we don't have really clear data. different studies using different methods have given us ranges from 1% up to 30%. and i think it's very mother-specific. and it's a little more specific to the trimester they're infected in. no trimester appears to be safe. >> question two, are you safe if you're not symptomatic? >> we know majority of patients are not going to have symptoms. and some of the patients we've found didn't have any symptoms. so, no, you're not safe necessarily if you feel fine. >> and, third, how long does the virus stay in your system whether you're symptomatic or not so then you're safe to get pregnant? >> uh-huh. so for women who are not pregnant we're finding the virus in their blood for about two weeks after the initialinfection.
for men the virus is staying in their blood similarly about two weeks. the caveat in men is that there have been some studies showing between two months and six months of the virus still being detectable in the semen. and in pregnant women there's increasing data that virus may stay longer than for longer than the two-week interval. >> wow. it's a tough situation as we watch this unfold. we'll have to have you back, doctor, as we see more cases and figure out what happens here. dr. curry joining us from miami. >> thank you so much. don't move because street talk is next. we've just been hearing so much about how you're a digital company, yet here you are building a jet engine. well, ge is digital and industrial.
like peanut butter and jelly. yeah. ham and cheese. cops and robbers. yeah. nachos and karate. ahh. not that one so much. the rest were really good. socks and shoes. ok, ricky... they said a bottle was just a bottle. that no one would ever notice me. but i knew i could be more. that one day, i would make people smile. [woman speaking indistinctly]
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all right. it is time for "street talk." >> stop! high energy. >> recommendations on stocks you need to know about. victor victoria's secret! a buy if a neutral. the analyst says second quarter results have erased concerns about their new promotional impact on the business. she thinks a bottom is in for productivity. a be the toms is in to victor victoria's secret. the stock already been on fire.
25% gain in the past three months. that's some support. >> we had l brands last week. no more catalogs. second stock here, garmin. downgrades it to market perform because the stock had a 43% run here to date. analyst sees the apple watch launch a sentiment head wind. >> wow. the stock to -- if they were smart, they would license blind face can't find my way home as a stock song. oil and gas research firm, loves it. they start coverage with it on the focus list of their firm. they said they check the boxes of qualities investors should want with small cap oil companies. efficient growth. $15 fair value. not a lot of upside on a $14 stock but ways to add two bucks to this with certain fields to give it about $17 or about 20% upside. >> amalco crown. upgraded to a buy rating.
wynn palace. the mass market stabilize in the region and should help as vip accounts for a smaller piece of the business and mgm china with an upgrade as part of this call. >> leaving it there. could not find a small cap. i failed america. >> that's okay, brian. >> thanks, melissa. the ibb up nearly 2% today. some of that no doubt from pfizer's $14 billion buyout. check this out. i had to do a double take. $81.50 per share buyout. this is a $28 stock in february of this year. are good times ahead? i mean, i honestly believe, chad, i don't know in doing this nearly 20 years to remember a stock that was a $28 stock bought 7 months later for $81.50. what if anything does that tell you about the group?
>> it tells you that there is some actual strategic opportunities for large cap mega health care stocks. look. the bio tech industry we believe overall is cheap. we also like the large cap bio tech companies like amgen. they're consistently growing and profitable. not a lot of debt. for amgen, the price -- there was a tremendous amount of head lean risk going into the election. after the election we believe that's going to subside and going to see this whole industry start to rally again. >> you don't hear -- i bought a bio tech stock and owns amgen. thank you. from a technical perspective, how does the chart look on bio techs overall? >> yeah. we agree here. first you have to remember that bio tech's one of the top five performing group and one of the
worst five over the last year so we think the catch-up trade happening over two months is probably set to continue and if we pull up the chart, we'll show you why here. so we can the ibb etf seasons the last -- the highs of last year, we saw a 40% correction into the february lows. from february until late july, ibb spent six months kind of building a base of 240 on the downside, 290 on the upside and then late in july it broke out above this base. that projects up to $340 on the ibb and what's important we saw it retest the breakout point an what was resistance now is support. as long as it's above 290, i think you have to be a buyer here. >> positive chart there and comments on amgen. thank you both very much. we'll have the final thoughts coming up next. you pay your car insurance premium like clockwork.
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after a big deal of pfizer you think who's next? people are watching the parp inhibitors, companies that make those and other cancer treatments an they're rising on the back of that deal. the thinking that they could be future takeout targets and people wondering about the entire space here. >> i found the olympics compelling television. i didn't expect to get hooked on it. i did. wanted to clarify on the ratings point, our expert on ratings here at cnbc said that the 27.2 million viewers was the average amount of viewers watching the average minute of olympics coverage on nbc, nbc sports and nbc digital during the time. that's 27.2 million. prime time. during prime time. down from -- >> there is no average viewer. they're all exceptional. >> oh yeah. certainly watching nbc content. >> yes, exactly. i enjoyed the discussion about dynamic pricing in theaters. we know airplanes, everybody knows there's dynamic pricing an
stadiums and now slowly but surely movie theaters to maximize revenues. >> a viewer said armstrong makes the floors and arm world view makes the wall. thank you, viewer. >> thank you for watching. see you tonight for "fast." >> "closing bell" starts right -- yesterday. back there. hi, everybody. welcome to the "closing bell." i'm kelly evans. >> i'm mike santoli. >> welcome. >> market yo-yo'g. a steady climb higher over a few weeks. look at whether crude short rally is already over. >> merger monday. a boost on the $14 deal of medivation. we'll look at whether other name