vertex, biogeneral, bristol-myers which gets an upgrade over ubs and some others leading the charge after such a miserable performance by the biotech index yesterday. that's it for "squawk alley" on this tuesday. let's get to headquarters and "the half." ♪ >> thanks very much. let's meet our starting line-up. joe is here along with stephanie, josh brown, and pete. our game plan looks like this. biotech battleground. the valiant shares getting smacked in the settingor's big slide, is this hedge fund hotel about to crumble? we're going to ask a top analyst. the bullish professor with carl icon warning of more pain for investors. what is jeremy seagull think is ahead for the markets? we ask the professor live coming up. we do begin with the markets, and my conversation with billionaire investor carl icahn. warning, with that new video that danger is ahead and taking particular issue with corporate

earnings. >> instead of taking the money that they can borrow and really investing in a lot of capital, new machinery, new equipment in their workers, to make them more productive, what they do with the money is almost perverse. they just go in and buy another company to show the analysts on wall street their earnings are going up, so their stock will go up, and it's financial engineering at its height. >> well, one thing icahn is apparently not worried about? his largest holding, apple. he said in a phone interview with me that he is sticking with that stock, revealing that the size of the position there is the same it's been. icahn telling me he thinks the stock is still under valued, but acknowledges that a broader market slide could hurt shares in the near term. i also asked icahn why he has built large stakes in the minor freeport and both have suffered mightily. icahn saying he bought freeport because he thinks copper prices will recover in a couple of

years. he says he looixz likes shanier's contracts, and in fact, just last night he filed a new 13d revealing an even bigger stake in the exporter. icahn admitted while is he more hedged than he has been in years, he is probably still a little bit more long than he is short. we spoke about china too with icahn saying china can take care of itself, but that things could be worse before they get better there. lastly, we spoke about another asset he is taking stock in, donald trump. icahn telling me trump has resonated with the middle class, he is the outsider washington needs, and that mr. trump in icahn's words, has a chance to win, though he did laughingly dismitts the notion that he is ready to be his treasury secretary should he win the white house. there's a lot to go off here. people have wondered if icahn is so bearish on the market, what's he doing in freeport? with relatively big stakes. he gives us a little more

clarity on what he sees there, among other things. what's your take? >> well, my take is that awful the things that mr. irahn raised, but i think he does a good job of pointing out a couple of key concepts spshg the area i found most interesting was the buy-back area because, as an active shareholder, that's been a big part of his playbook over the last few years. buybacks are what have made a lot of the ideas he has been invested in and all of us have been invested and work. quite frinkly, buybacks have probably added about one-fifth of the earnings growth that we've had in the s&p since the beginning of the era, and so if on one hand you're saying let's get off zero, let's raise rates because we're creating bubbles, then, yes, on the other hand you've got to come to terms with the fact that borrowing to buy back shares is going to wane and with it a lot of the the earnings growth we've all benefitted from. i think it's an important decision, and i'm glad he did

it. >> freeport in many ways has been the poster child of the below surface bare market stocks. it was down 70% from its highs at the time we started talking about this issue almost every day. wondering when the overall market would start reflecting what the underlying market was already telling us. >> so freeport is all about china, right? we know what's going on in china. i think it's interesting, number one, that this is a stock picker's market, and he is finding stocks that he likes. the supply is not nearly as great over the long-term. i just don't fn i would go with this one. he is going to have to have a lot of patience for the long-term. >> i think he is willing to have that. by virtue of the comments he

made to me that copper prices will recover. not tomorrow. not next week or next month. in a couple of years. at the time i asked him stocks down 70%. what are you doing? well, that's why i like it. that's why i like it. to your point, is looking at a stock that he thinks has some long-term value to it, swroe, that's been beaten down a lot, and then there's -- >> it's very interesting. you are getting a lot of people to come on the network, and i know at the end of the year everybody is talking about how passive envesting was back once again. everything that carl icahn has done this year, and his video comes out today and there's a lot of good content in it, but this is a man who has been talking since the beginning of the year about the concerns and the high yield market. >> you see that for freeport

mcmoran. i like what he is doing. he is putting some cash that he probably had taken out of the market over the last couple of months out into work. he manages his risk. active management is back, and i think carl icon validates exactly why i think that's the better strategy. >> pete, you know, people talk all the time and larry kudlow is famous for saying, you know, earnings are the mother's milk of stocks. >> comment, first of all. >> the most interesting thing is, first of all, carl, as you were just indicating is talking about financial engineering, and that's exactly what he basically forced upon the apple board, tim cook and although rest of these guys. hey, look, start doing something with all this cash work, right? that was exactly what came out of all of that. that's actually worked out relatively well, i would say,

for apple. i think in terms of freeport mcmoran what stands out most for me right now is where have we seen absolutely the names that have been absolutely torched to the down side? it's been freeport mcmoran. it's been u.s. steel and throw in shaneer. every one of them falling off a cliff. now, if you look at both u.s. steel and freeport mcmoran, you're talking about stocks that are trading around $10 or underneath $10. when he says, hey, look, this is an option for the future, i think the most important thing that kwarl was talking about there, scott, was we talk daily and weekly and monthly, but we're talking years when carl is talking about what he is looking for here. he is talking about a recovery. he is taking talking about an energy recovery. he is talking about basically the copper recovery and china roer. if you listen to caterpillar and you start looking around and you look at the pmi recently at the lowest level that is we've seen in months or years even, when you start to take a look at a lot of these types of data that are out there, this will be multi-year type trades, i think, and that's what people have to

understand. do you have the patience for that? >> at the same time so, you know, icahn calls out corporate earnings. we've been asking the question certainly on this program almost daily that, you know, knowing that earnings must be too high, expectations for 2016, well, goldman sachs today cuts their earnings expectations for 2016 for the s&p to $120. okay. they bring their earnings expectations down. where should the market be trading then relative to that? they say 17 1/2 times. market should be at 2,100 next year. meager returns is what david costan, the chief market strategist at goldman sachs is looking for next year. how do you play the market tiaa kraft portfolio manager with trillions of dollars under management. how do you play the market in that? >> exactly what he is saying. u.s. centric, high quality companies, good cash return. those are companies that will do quite well in this environment. so far actually we've seen a

bunch of companies that have reported like general mills, like auto zone, like car max, like red hat and adobe. they've done quite well. they're either leaders in their space, they're quality companies, and those are the kinds of names that are going to do better when this market recovers. now, i don't know if that's in the next week or two or month or whatever, but i do know that people will return to the companies that can deliver in the good times and in the bad times. that's the way we're playing it. >> josh, focus on u.s. sales, costan says. s focus on firms returning cash to shareholders. >> to stephanie's point, that's a trade that's been working out all year. if you were to divide up the s&p, look at the companies that derived 50% of their sales or more from overseas. there's a significant underperformance thatsdz more of a market mood renk than anything else. when the market is making new

highs, everyone is raising their targets, and then when the market breaks down is in a correction, everybody is bringing them back down to earth. a lot of that is massaging that year-end target to get it closer to where it is right now so it looks less foolish three months from now now. i'm not sure there's a lot of signal here. stloot future course of interest rates, joe, will play a factor into where some of the targets are as part of the conversation i had with carl. he said the fed should absolutely have raidsed rates six months ago. now they may have backed themselves into a corner. the trajectory of rates is going to factor into earnings estimates perhaps, what the dollar does as it relates to earnings, and then where the stock market trades relative to all that. >> and i think it's going to factor in most importantly, for the u.s. dollar and what's the impact as the federal reserve makes the token rate hike and you have the bank of japan possibly at the end of the month conducting qe3? in asia, india last night lowered rates. australia, lowering rates. the chinese, continuing to have

an easy monetary policy. the rest of the world -- and add in i think europe over the next couple of days as paul richard highlighted in a note, europe is going to have to talk down the euro again. that means the dollar is going to rise once again. that means stephanie and josh's strategy is perfect in the sense of focussing on the u.s., but the dollar really is going to be your guide for the remainder of the year. >> yeah. i wonder if the story you'll start hearing again between now and the end of the we're and then significantly in the next year is that the better opportunities for your money are outside the u.s. perhaps. given what india cutting rates as joe says. more qe perhaps coming in in europe. japan and -- >> it's a time frame question, though. >> in the next -- >> like everything else, right? >> for the next three months, are you going to score if are you throwing money at asia? probably not. you could. but when you talk about as stocks come down, something called expected returns, actually increase, so if your strategy is a five to ten year

one, then what you are probably doing on your fall rebalance is you're adding to the worst places in the market, and you'll probably do better than if you just chase whatever is working last week. >> well, as i mentioned to you guys, you know, icahn said he thinks stocks could go down a lot more. what happened in positive gains, we are now negative, i should say, for the major averages. at least the dow is negative by 23 points. there's a look at the wall i was just looking at. s&p is barely positive, and the nasdaq has gone negative by a couple of points as well. coming up, he has been calling for dow 20,000 and a fed rate hike, but with the fed staying put, turmoil in the markets. is he sticking with his bullish call, or does jeremy seagull seem more trouble ahead? he is the famed finance professor at the wharton school. he will join us in a little bit. valiant shares at the center of the biotech collapse. down 17% this week. one analyst putting a buy on the stock, though. a very, very big price target, which he will defend next.

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for the extra activities that for most kids are a normal part of growing up. not everyone can be a foster parent... ...but anyone can help a foster child. >> welcome back to beatdown. among them very wellent that's under fire. a new research shoet noet by a noted short selling weighing nor

on the stock today. there it is down to the levels, but still. the analyst -- $290 price target. she's live today from new york city. it's good to talk to you today. >> nice to talk to you as well. >> i don't know if your stomach is turning or anything because of what's happening in the stock this week, but are you still sticking with the buy and the 290? >> yes, we are. you know, a lot of it happened while we were initiating and performing for this sort of commentary for a while. we came up with a price target some fear the headline noise could get louder, and that's the criticism that's been levied about drug prices over the last week or so. i counted -- according to the citron note, which i referenced at the top of the show, this short seller research note, they're more than 30 drugs that

they call into question here. they call valiant the ultimate abuser whether it comes to drug pricing, listing 31 that have increased their prices between 90% and 2,000%. what's the issue here? >> okay. so i have been through that list, and i think that, you know, we have to kind of look at the operation between the products that matter and the ones that don't. a lot of the products on that list are generics. price increases with generic products which there's a shortage are very common, and, you know, i do want to make a point that the government has subpoenaed 14 generic companies for their price increases, and no stock reacted the way valeant's reacted. second, if we look at what's meaningful, two of them, you know, account for less than 4% of revenues. the other two are really generics. again, where the -- you know,

it's common practice. if you go back, the price increases are not a driver of the business models unlike the report suggests, and i think more important is to look at the future and what products are going to drive the business going forward. had he say imminent danger of an overvalued balance sheet and where it will implode sooner rather than later. this is a company often referred to by critics as a roll-up, one that needs to do deals to keep the growth going. the ceo himself has admitted they'll continue to do deals. i call your attention to what's taking place in the high yield market. if the ability to issue junk debt to finance deals goes away, isn't this exactly the kind of

company that could be most impacted from that? we were opposed to the deal for numerous reasons. mainly because we thaul allagan was an excellent company and should have been left alone. we're happy it went to activist. here's the thing. what we have learned -- we did extensive due diligence on valeant as part of our initiation, and what we have learned is that they're not -- the expertise or their kind of core competence isn't m&a. their core competence is the ability to allocate capital where, you know -- to products that provide the most shareholder value. you know, it just so happens to be m&a right now and maybe over the last couple of years, but this is a company that is, you know, willing to evolve and will

evolve when required. for example, you know, the report that you mentioned brings up low r & d, et cetera. if valeant felt there were products that needed to be funded, they would not hesitate to fund these. that was something that gave us confidence in the management team because, you know, we had a perception about them before we started looking at them that, you know, this is a roll-up, and we spent four months digging into this, and, you know, had to challenge every assumption that we kind of made. >> good conversation. i'm glad we had it on this program. thank you so much. the analyst with nomura. want to stick with biotrek and bring in our next guest who is also bullish on the space itself. has two picks he says are good values. jeff jonas runs the cabeli welfare and trust. good to see you again. joins us on the set. what do you make of what's taking place in biotech is the party over? >> i think the massive health

care index is down 17% over the last week and a half wroosh the broader health care index is down 11%. it's mostly on the political driven fear where a number of these drug companies were taking abusive increases, and that got picked up now by hillary clinton, and she put out some proposals, and they've been echoed by bernie sanders. >> let's be fair. that may be responsible for what's gone on in the last week or so. these stocks had already come down quite significantly well before hillary clinton got on twitter. >> and i think there's been just a little bit of momentum leaving this sector. now that we've annualized health care reform and a lot of the gains that have come. there has been a sense that health care is slowing down. i actually think the fundamentals are still strong and that it will perform well. >> so, jeff, you have been involved with the space for a while, as have i, and i think one of the things that maybe would be helpful to remind investors is this is supposed to be a volatile sector. if you look at the.

>> it intent about half the time -- isn't that the source of its eventual upside is the fact that it can be this volatile, and that's when you want to start looking at these names? >> yeah. i think that's true. there's been all this talk about a bubble in biotech. i think that might have been true for some of the small and medium stage firms that are still not producing revenue, not producing profits, but a lot of the larger cap biotech names are actually quite cheap. >> yeah. jeff, this morning jim cramer used the term source of funds, and he is absolutely correct when you are looking at the biotech space. how much of the selloff that we're seeing right now is nothing more than source of funds, not about fundamentals, and at what point can the biotech space overcome the selling pressure that we're seeing in the broad market? >> a lot of funds and a lot of sources. go ahead. answer the question. >> i think there's been the mentality of sell the winners, and up until about six weeks ago health care was still up significantly more than the

market. even today wul it's down less. over three or five-year period, health care has really beaten the market significantly. i think there has been a lot of profit taking, a lot of sell the winners mentality going on here, and, again, i think just as we get back to maybe some of the political uncertainty dying down, i think that's when the market could kind of find stability and maybe start to grow again. >> i'm sorry. >> i was going to say it's a long campaign season that's just really getting started. if the drumbeat keeps going this topic, the stock that we just talked about, valeant, maybe some in your own universe, could have a stock price issue. could you give us a top pick or two? i notice that gilead is on your top picks list. that factors straight into the drug pricing debate, does it not? >> well, you know, we -- we're value investors, first of all. we've only dipped our toe into the biotech space over the last several months. i think, first of all, at under nine times earnings it's extremely cheap, and, second of all, the hepatitis c medicine

that they brought to market is a huge advance. it's got over 95% cure rate versus about 60% before. i got a lot fewer side effects. it might -- the headline price might cost more, but the price per cure is pretty much in line with the previous therapies. >> quick. >> i was going to ask you about m&a given that the stocks have pulled back so significantly, so quickly. do you think that speeds up m&a, and then to the gilead question, when are they going to use up that $15 billion that they've got? what would you like to see them do? who would they buy, and who makes the most sense? >> yeah. i mean, first of all, gilead will be buying back their own stock, and they've issued a dividend earlier this year as well. some of it will go back to the shareholders, and i would like to see them build out their medium to late stage pipeline. hepatitis c will be big for two or three more years at least. it is going to plateau and probably start to decline at some point down the road. thief been very smart acquirers in the past, and i trust them to find something good going forward. >> good to talk to you.

thanks for coming on set. swref jonas with the cabeli funds. pete, have you broader concerns about a space that you have liked for so long? >> well, and specifically, scott, they've actually gone after even some of the big pharma names along the way. it's been everything in health care. not just biotech. you look at where bristol-myers was and merck and all of these names that have been getting sold to the down side. i think it's interesting, though, the etf and lack of liquidity, if you look at the ibb and see 38% short and you see the push to the down side, we can see some of the big air gaps. i know josh has talked about this in temz of the breakdown in the actual charts of some of the these, but the pressure that's been put on these, i think it does create opportunities. i think, jeff, that's sort of what you are alluding to. >> do you like bristol-myers still? you like pfizer? >> yes. i actually sold out of lily the other day in my personal account and got out of some lily because i wanted to put myself back in a position where i had a little less in pharma and more and i bought -- >> i agree with joe, though. your biggest risk here is not the companies themselves. your biggest risk is your fellow shareholders in these stocks.

people have large embedded gains. they've held on for a long time. essentially a lot of the bigger ones had become new high machines, and then once they stopped making new highs, month after month after month, they get eyeballed when somebody has a redemption or when somebody needs to make room for something else. >> i'm not -- that's what gets sold. >> health care was one of the best sectors, and now pulling that, that risk -- it would be very attractive. >> who has produced? if they've produced, can they continue to produce? if you believe that, then this is an opportunity. >> okay. >> you sure? >> very passionate. >> 20 second time-out. >> i was going to say something. no, please. >> it's still down more than 40% in the past month. two wall street firms sticking with their bullish wrout looks. it's part of the calls of the day. you're watching cnbc first in business worldwide.

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>> a lot of focus on stocks. the ten-year note yield hitting a one-month low.

jackie deangeles at the nymex with the futures now crew. >> good afternoon. we're watching yields closely getting closer to 2%, and down on a day where stocks rup. anthony, what is driving momentum in the bond market right now? >> jackie, in the last month of september we've had half the days have been 200 points swings in the equities market. today toad is a perfect example of what's going no the bond markets. you had the equities up 160, almost 200 points. bond yields were lower. as soon as they started coming off the buyers came into the bond market. the yield started heading even lower from there. it's really protection, safe haven against the volatile swings in the equities market. >> bill, we're going to be watching the swrobz report on friday. that could be the next catalyst for the bond market. what do you see happening? >> listen, i see a better than expected payroll report this week. consumer confidence is better than expected. the fed is going to have to keep continuing to reiterate a rate hike. whether they pull the trigger or not, that's what we're going to

hear, and that's going to help support the market. >> coming up, there's a big problem in the markets right now that's driving stocks lower, and it is not global growth worries or the commodity collapse. what is it? well, finance professor jeremy siegel of the wharton school thinks he knows. he will join us with that coming up ahead on the halftime show. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

[extracurricular activitiessands help provide a sense of identity and a path to success. joining the soccer team... getting help with math... going to prom.

i want to learn to swim. it's hard to feel normal... ...when you can't do the normal things. [announceto help, sleep train is collecting donations for the extra activities that for most kids are a normal part of growing up. not everyone can be a foster parent... ...but anyone can help a foster child. i'm sue herrera. here's your cnbc news update this hour. yemen official saz the death toll from yesterday's saudi-led air strike on a wedding party has risen to 131. it is the deadliest single incident since the start of that country's civil war. nearly 2,400 civilians have died since the air strikes began. violence is also escalating along the west bank. video released by israeli police show palestinian use barricaded inside the mosque and throwing firebombs and fireworks at

israeli security forces in jerusalem. keurig is going cold. the brand known for single serve hot beverages unveiling a new machine that lets users make their favorite coke branded drinks. it's expensive. the new machine sells for about $370. each drink costing up to $1.25. ll bean is in boot trouble. demand for the company's hand made duck boots is once again so strong that certain styles are already on back order. it's despite the company hiring 100 new boot makers and adding extra shifts. last year they ended up with 100,000 back ordered duck boots. i guess that's not a bad problem to have in the long run, wraen way. that's the cnbc news update this hour. back to you, scott. >> okay. sue, thank you so much. well, he has been calling for the fed to raise rates, and earlier this year he said we could see do you 20,000 with global growth concerns and a fed that hasn't moved yet. is he just as bullish now? let's welcome back jeremy seagull, the wharton school professor of finance.

he joins us now where he normally is. it's good to see you. >> thank you very much. >> what is your take here as we're sort of feeling like we're in this retest of the lows and wondering where we could stop. >> well, i think the primary reason for what we've seen, you know, i wish the fed had moved. i think the markets sort of told janet yellin, hey, guys, you didn't make us any happier. i think the big picture is that we are in an earnings recession. earnings forecast for 2015 are lower than 10% below what they were in january. reported earnings which is the strictest measure is actually projected to be lower than it was in 2014. now, this is unprecedented outside of a recession period. i think it's the continual hits downgrade in earnings that is really just weighing on this

market. almost no matter where the fed moves in october or december. >> so are you making the case for a bear market? >> no. you know, i -- back in august i said we're going to have a correction. that's the 10 to 15. will the august lows hold? perhaps. even if they don't, i don't see a bear market. i do not see it penetrating 20%. the reason is that interest rates are still very low. take a look at the ten-year today. approaching 2%. the primary reason for the earnings recessions are the collapse in oil prices and the strong dollar. that's not going to repeat itself next year. i'm not saying that they won't stay low, but as long as oil stabilizes in the mid 40s, the dollar stabilizes around 110 on the euro, this will not be a repeat decline in earnings which is what we saw in 2015.

>> some would say we're already in a bear market, though, right? you have hundreds and hundreds of stocks that are down more than -- >> and the biotechs -- well, first of all, i think the russell perhaps just entered into the bear market. the biotech entered into the bear market. that's always the case. there's always going to be segments that are in a bear market when the market is down 13%, 14%, 15%. the defensive sectors, as we know, consumer staples, particularly utilities, and i expect finally people will stop being scared of the fed raising interest rates and looking at some of these dividend paying and value stocks because i think they will be good performers in the next three to six months as everyone finally says, hey, you know what, the fed may be raising rates, but it's not going that high. we're beginning to see that rotation right now. i wouldn't be surprised to see it continue even when the market

recovers. now, as far as dow 20,000 is concerned, probably not this year. i definitely think 2016 we will see it. >> probably? >> obviously, we'll be at 20% increase. i think we're going to go to 18,000, 18,500, which is a good fourth quarter because i think that, you know, we're going to get stability in those markets, but this year is going to be pretty flat in terms of returns overall, and, again, not surprising given the decline in earnings expectations that we experience. >> hey, jeremy, it's josh brown. how are you? >> yes. >> i wanted to present you with an alternative take. here we are essentially in a position where the sector that was the leader for growth over the last five years, health care, way more important than commodities, by the way. about 15% of the s&p versus 7% for materials. now we have that stumbling. what does that say for future leadership? what's going to be the sector

that takes the dow to 20,000? if you can't count on the sector with the highest growth. >> well, i think don't forget, some of those sectors biotechs, had gotten fairly expensive. i mean, that was the big winner, and those are always going to be the ones that falter when you get a correction. i don't think we're seeing -- and you can correct me, a big downgrade of the earnings of, you know, of merck and pfizer and all of these. >> just the multiples. >> it's a question of valuation. i think that what you are going to see is the defensive stocks will be holding their earnings or growing their earnings in 2016 with getting very reasonable p.e. ratios are going to be the ones that are going to lead the fourth quarter growth that i see. >> dr. siegel, it's swroe. you are talking about an earnings recession, and people watching the show think, where would i buy equities?

in which corner do you see the trough for that earnings recession? when do we come out of it? >> well, i think -- you know, don't forget, your earnings you usually look the last 12 months. you're always kind of looking at we had a double fall in oil. you know, first in the spring and then in the fall. we had a steady decline in the dow. it's going to take a few quarters for that data, that fall, to get out of the year-to-year comparisons. maybe not in the fourth quarter, but certainly in the first and second quarter. i think we could see some smart increases in the earnings going forward. if you take a look at 2016, i think they are almost too optimistic, but we are looking at 8% to 10% growth in the earnings, and i think if we get some stability in the dollar and oil, we will -- we twenl can see that increase. that could certainly help the stock market in the forthcoming months. >> as we're sitting here watching the ten-year go to 205,

and the prospects of it going below 2%, who is right? that's where the story goes. professor, it's good to have you on again. look forward to having you back soon. professor, swrar my siegel. ten-year worth keepingen eye on. street love for apple, go pro, mcdonald's. does our panel agree, though? that's next. you're watching cnbc, first in business worldwide.

coming up at the top of the hour on "power lunch" flat is the new up. goldman sachs up with a stock market cutting the year-end forecast for the s&p. the four strategy that is you need to get stocks in this market. dow down 10% this year. the s&p down 8%. is this the early stage of a bear market we're staring in the face, or is it a late stage of a bull market still? also, this stock has really been cleaned up this month. while the major averages have struggled in september, this

stock is going higher. we'll tell you which one we're talking about, scott where i. back to you. >> okay. mandy, thank you so much. busy morning for wall street analysts. let's dive into four of the best calls today. first up, tee spite the big tropical in the stock, both citi and bernstein defending their buy ratings, joe, on glencore. the stock of the week. >> i mean, are we really going to do this 2008 style and defend these companies and say go buy them? >> the company was out defending itself today. >> note to companies -- >> go private. >> everybody talks about china all the time. they have a 150 target. sounds like almost every other folks view on the street. >> apple took a big slide. >> they did. >> during the program. >> after you talked to carl.

>> it was right around that time. >> he didn't say anything negative except if the overall market goes down -- apple will probably go down with it. >> google comments as well. same time. new phones coming out. the ceo talking about android. >> stern ag initiated go pro, josh. buy. >> i don't understand what's going on here. another analyst coming out with the buy. nobody wants this stock. it's below. it's 200, it's 50, its 20-day moving average. so long that it has the declining profile, unless you think you know something that everybody else doesn't know, by the way, you don't, i just don't understand why you would want to be in this name right now. you'll have an opportunity when it settles out. in the meantime, it's just a war zone. sfroo all right, steph. mcdonald's. >> haven't talked about it for a while. outperformed over at credit suisse. >> they're trying to reformat a lot of the different parts of the company. >> is it time to start loving it? >> i have liked this stock in the low 90s because that's where

i think you get better yield support. if this analyst is right and his checks are suggesting that these ficks that the ceo has put in place are leading to better same-store sales, that's not in the stock price by any means. i like the story long-term. >> coming up, keurig green mountain down 60% this year. the company hoping for a warm welcome for its new cold drinks machine. we have word from the company ceo coming up. plus, the desk gives their coffee trades, and joe is focused overseas. stay tuned for what's on his radar. you might be missing today. halftime is back after this.

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it's national coffee day. green mountain is hoping it reheat what has been a cold year for that stock. joining us now, our own sarah eisen who had a chance to speak with the ceo. hi, sarah. >> it has been a rough year for the company and shareholders. the stock is down almost 60% in 2015. it has had a stumble with the launch of the 2.0 hot machine. it's had product recalls and now there's skepticism about the cold machine launching today. i did sit down with the ceo and i said, look, investors lost confidence. what you would tell them to win it back? >> it's as strong as ever. the system is as strong as ever. the new keurig cold is the next long term growth engine for the company. here in north america and around the world, but really focused on

north american growth. we have plenty of opportunity. >> so clearly they're betting a lot on the new cold machine. that is launching to day. a few facts about it and why some analysts are skeptical. the pricetag, $300 for the new machine. that doesn't include the 99 cents per pod to make these cold drinks at home. also, soda as we know has been declining in this country for the last decade or so. in term of consumption. but still the company would say it's a $50 billion market. en that is way bigger than the hot market or the coffee market. they want a piece of that. they want to change the way we drink at home. the other take away i had from spending time with this company and getting a demo on how the new cold machine works, press of a button. wait 60 seconds. make your own coke or diet coke. there was a lot of skepticism also back in 2004 when they launched the pod machine. they point to all sorts of negative press reports saying too expensive, people want to brew their own coffee and they

say they proved that this technology is a game changer. they feel the same way about cold. though the jury is out on what convenience it has and whether it is more cost effective when can you go to walmart and buy a six-pack of cokes for about $2. we checked online. i asked them about that. i asked them about the competition with soda stream. he said they're presenting something totally different and that is a carbon yats itself and keeps its cold and can you make your family all sorts of different drinks and let them do it themselves. that's what they're banking on. >> thank you so much. great stuff out there today. so, pete, green mountain, starbucks, dunkin' or soda stream? >> starbucks. they have the pricing power. prices for coffee goes up, price for their coffee goes up. they have the greatest pricing model ever. when you look at this company with double digit earnings growth, it's a whole growth story and the expansion possibilities internationally continue to be something that

they can build upon. >> green mountain, dunkin', starbucks, soda? >> i own dunkin' donuts. none of them look great short term. starbucks has a double top. just under $60. i probably not jump until they can get above that. longer term, i think it's a home run. green mountain untouchable. >> starbucks. >> two for starbucks. steph? >> that makes me nervous. we're all into starbucks. i talked about it yesterday. i like the story. mobile order pay is very much in the infancy. and they just nationally rolled that out. i think same-store sales are going to grow 6% to 7% over the next several quarters as a result. if this company of that size can deliver that growth, the stock will hang in in a bad market and go much higher in a good market. >> you picked a winner. year to date, starbucks up 36%. up 48 in one year. under the radar moves you might be missing coming up. josh looking at an oil trade. stick around for that. plus, your game plan for the second half is next. h... steve, me move stuff,

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all right. we're "under the radar." what are you watching? >> china pmi. incredibly important. we've seen a contraction, 49 to 47. they're looking for 49.6. this month has to get above 50 to show the expansion. what happens if it's 49.6 further easing monday tarry initiatives. >> so you're watching japan, too? >> that's at the end of the month. october 30th. i think they come around with qe-3. >> pete? >> i'm looking at the eem. this is -- we watched this thing continually go to the down side. as it's gone there today, it didn't hit the lows of august, we're seeing some october upside call buying. monthly options, huge. 34,000. turned into a spread. 34,000 times. the october 32 1/2 calls. keep an eye on. this maybe we get a little short term left. >> if you think -- >> short term. >> like india, more are going to cut rates. is there going to be a time in

the near future where the merging markets are actually at a buy? >> probably. at some point, yes. i don't know whether or not from the longer term perspective, like i say, why are they going in october a couple weeks out? there's major reason for that. they don't have confidence. this is something that's going to happen over the next couple of months. >> josh? >> ieo. this is energy producer etf. i can't believe i'm saying this out loud. there might be a tradable bottom here. got news is you'll know if you go immediately. take a look at this double bottom. the august 24th low. and now here again. but there is a positive divergence in momentum. the second pain below is rsi. not confirming that low. it's bottoming at a higher level. i think it's worth a shot with the stock loss. >> what is your last thought as we watch the market trying to get a rebound from the big side yesterday? >> i'm watching energy, too. we get a report after the close tonight.

this sector is of ugly machinery stocks that have been taken to the woodshed. we'll see if they can bottom f energy bottoms, i think this group will, too. >> hard to feel good since caterpillar on that space. >> it's very hard. >> we'll follow it. >> indeed it does, scott. thank you very much. welcome to "power lunch." stocks struggling at this hour. the dow was up triple digits earlier. goldman sachs out with the new call on the market. cutting the year end forecast for the s&p 500. we have the four criteria you need to pick stocks now. >> the dow is down about 10% this year so far. the s&p 500 is down 8%. the nasdaq down 4%. so are we looking at the potential early stages of the bear market or just in the late stages of a bull market? >> and call it the