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tv   Closing Bell  CNBC  March 2, 2015 3:00pm-5:01pm EST

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state. >> i calculated he's actually richer than almost all the millionaires, not billionaires combined. >> and he's given over $28 billion to charity. >> not knocking it. >> who bothers me is the top of this list has a majority of nonself made millionaires. the waltons, the kochs. the top of the list is not changing much. >> i'll see you tonight on "fast." "closing bell" is up next. welcome to "the closing bell," everybody. i'm kelly evans on this monday which could be a historic one. maybe it already has been down here at the new york stock exchange. >> took 15 years but the nasdaq finally did top the 5,000 mark although it's trading below that level right now. it was a milestone kind of a day and we've been waiting and waiting and there was that slow creep to get there. >> we're only four points away from it now.
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we'll see if we make another go to close above that level. and we're going to get the outlook for stocks in general with famed hedge fund manager stanley druckenmiller. he's been shorting ibm for whitequite a while. we touch on a wide range of issues. >> i bet talking a little bit about the fed. >> auto little bit little bit. >> you don't hear from him that often so it's even better. take a look at the markets. dow is up by 122 points. there's the nasdaq as kelly said, about 4.5 points back below the 5,000 level, but it was a historic day earlier in the day over at the nasdaq and that's where we see it is right now. the s&p 500 is up just shy of nine points. time now for our "closing bell" exchange with darren wolfburg margie patel from wells fargo fund management jeff killburg from kkm financial, joe tannous
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and our own rick santelli. joe, what should we be thinking about this day? should we be celebrating or fearing it? >> i wouldn't necessarily be fearing it. i think it's nice to see the nasdaq hit the record levels. the last time we were there, of course valuations were just in the completely different ball game. that tells me at least fundamentals specifically looking at the nasdaq look a lot better. >> darren what about you? is nasdaq 5,000 a significant number or is there something else that's grabbing your attention? >> i kind of wish that nasdaq 5,000 would come and go so we could talk about something else. i think the crude market is something interesting. you're seeing brent fall back into more in line where wti is. i do think this market is going higher. i think that with the fed whether it's june or september, there's a lot of runway for us to continue to march higher and whether it's a grind or a fast move, i think ultimately we're going higher near term. >> what were you saying darren about oil, just to be clear?
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>> sure. so brent crude is at $60, wti is at around $50. there was a dislocation there. you're seeing brent crude come back in today as a result of progress with iran. that would provide more supply to the brent market so prices have come down as a result of that today, but, again, all those factors are positive for the u.s. consumer and positive for the u.s. market by and large. >> jeff the notes tell me you're cautious why? why caution? >> well i'd be remiss if i didn't say nasdaq 5,000 for all those college campus viewers out there but i am cautious. look at the month of february. it was a very very sneaky february. one of the best months on the stock market we've had since october 2011. so right now, i know i have rickster backing me up in chicago, but the bond market over my shoulder is telling a different narrative despite the fact we're seeing yields rise a little bit. we are seeing two different narratives so it's time to be cautious. >> what narrative is the bond market telling you killburg?
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all the bond market is telling you is the fed is still engaged as much as they ever have been. >> it's been six years and the 10-year is at 2%? are you kidding me? it's 2015. this lower for longer -- >> come on killer. he's right. judge is right. judge is right. we've been engaged now for 6 3/4 years. when the heck are we going to get married? that's how engaged we've been. >> but in all seriousness, rick -- >> we haven't seen the shoe hit the ground. >> the whole point -- look why are we talking about 5,000 today on the nasdaq? why do we continue to talk about interest rates -- >> because of the fed's long engagement. >> the one word you need to focus on there is fed, fed, right, rick? >> exactly. boy, you know what? i'm agreeing with everybody today. today is the eighth day in history that we've ever traded above 5,000, but out of these eight times, only two have closed above 5,000. of course, until eight is now. all the other dates are march of 2000. i'll tell you something
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fascinating. warren buffett was on and we were all mesmerized but we missed something important. at 8:30 eastern when we saw january spending it was down 0.2. you have to go back to the first quarter of '09 to find negative back-to-back spending numbers. it's all about income and spending. we used to say jobs jobs jobs. but whatever the quality of the jobs is it's hard to discern. what isn't hard to discern is that there is a problem, houston. that if we are creating jobs either we're not doing it in the right areas, the money is not enough or the workforce is too small but we need the numbers to upon higher. >> margie some people looked at the savings rate and said maybe there was some wacky winter thing going on and we'll get more spending. what's your view? >> i think we'll get more spending. i think the lower oil prices are giving a gift to consumers. this cycle is not driven by
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leverage. so i think the economy is slow growing but sustainable. so that's really a pretty good outcome for the markets. >> margie what do you think about nasdaq 5,000 as a round number. what, if anything does it mean to you? >> it doesn't signify anything except the last time it was there compared to now the quality of the market the quality of the economy is much much better and so i think it shows we're ready to go higher. i don't think it says we're at a frothy peak ready to have a big correction. >> i think the point i'm trying to make is that all around the world you have markets flush with liquidity. it's a liquidity driven rally. nothing until the fed signals and definitively raises interest rates for that first time and maybe for a substantial period after that does anything begin to change. so why have a different view on the market than we've had for the last few years? >> i wouldn't necessarily take a different view on the markets that than we've had over the past few years. i certainly believe the economic
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backdrop is in a good place. i think markets can continue to move higher although i would certainly temper expectations. one of the key differences between what we're seeing now and what we've had is this die veshg verging monetary policy. >> let's talk a little bit again, jeff about interest rates and what's going on here. we have a situation now and i think it was jpmorgan or somebody talking about this earlier, where you have unemployment falling around the world, inflation starting to stop falling despite the drop in oil prices and some question about whether the supply side of the economy is the problem. in other words, are we going to start to see inflation moving up, unemployment coming down but fundamentally a weaker longer term struck fur for the u.s. and maybe for the world economy? >> great question but i don't think we see inflation anytime soon. it's not on the horizon. bill gross even illuminated the fact that this behavior that's been allowed by the fed -- and the fed, let's be clear, the fed is more confused than anybody. last week they're flexibility.
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they're just as confused. right now in interest rate environment has produced more buybacks and less cap ex. spending in general was reflected in the ism number. >> a lot of people have been upset about the fact that financial engineering has trumped mechanical engineering, if you will. >> isn't that in part what alan greenspan told you -- >> that's exactly what we were talking about. the entire narrative is shifting from one in which demand is the problem to maybe, maybe one in which the supply side is more of a problem. how do you spur investment 20 30-year building programs whether it's on the public or private side? >> well, i think the issue is as warren buffett outlined this morning and many have talked about. when the financial engineering as we've just discussed becomes tantamount to investing in the type of economy that's going to generate tangible jobs other than shuffling paper around you're not going to get the growth, you're not going to get the vel lossity -- >> boom there it is. >> you're not going to get what
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the government measures in inflation. was that you, darren? who is saying boom? >> that was me in chicago. >> sorry, darren go ahead. >> yeah. i would add one thing. i think there was a comment earlier with regard to inflation is starting to turn. i think that's a very important concept because disinflation has really dragged gdp lower across the world. the fact that you're starting to see inflation turn in europe in china, all of those factors, in the u.s. all those factors will contribute to higher growth which may get us off this financial engineering kind of mode that we've been in and actually get into some cap ex and that's actually why i think as you start to get the inflation propagating through the marketplace can really start to drive us higher. >> play off of that then margie. where is the best place to be within this market right now? what areas? what sector would you be betting on best? >> i think the industrials are a great sector because capital expenditures away from oil is
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really quite strong, maybe 5% or 6%. stronger than gdp. i think consumer discretionary and health care will continue be a good place. still has a lot of growth ahead of it. >> all right. thank you to all. >> thanks. >> we'll talk to all of you soon, we know that. bertha coombs has been in the middle of the action at the nasdaq all day long up in midtown manhattan. bertha, what do you think? we got there and we fell back a little bit. what happens now? >> i think we could close there if we continue to see this momentum. it would be only the third time ever if we close above 5,000 that the nasdaq reaches that level. you know everyone keeps talking about how different this nasdaq 5,000 is from 15 years ago. it really isn't your father's nasdaq 5k. everyone is talking about how the valuations have come down. the nasdaq 100 has a valuation of about 18 forward pe compared to the s&p's which is at about 16.
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so it's not really pricing in that much growth. and part of the reason why is that while you still have tech drivers like today, the chip stocks are definitely powering the rally today. when you look at the all-time highs, you get some of the chip names like nxp with its deal today for free scale semi-conductor and, of course intuit at all-time highs. it's tax season. look at walgreens, boots alliance. used to be over on the big board. now it's here. you have a health care name part of the nasdaq 100, and then comcast, of course, which was one of the original nasdaq 100 members still here and still moving forward with all-time highs. a much more diverse company in itself. not just cable, content now, also technology. so it's hard to say that this is just tech because technology is now so much more integrated into our overall economy. and interesting thing today is we're watching the nasdaq break out to these new highs, and apple isn't. apple, of course has been the
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biggest driver in terms of the nasdaq large caps contributing the largest upside move but it's kind of holding here and that's one of the things that some technicians are looking at. when you look at overall new highs among the major indexes, they're making fewer of them these days which has some folks saying maybe we'll see a little bit of a cooling off. we might be stretched, but most folks are saying this nasdaq 5,000, unlike your father's 15 years ago, this one has legs. back to you. >> bertha coombs up at the nasdaq. going to be an interesting and action-packed hour for her going into the close. the dow is up 125. the nasdaq look at this we're about to hit 4,999. there we go. things couldn't get any closer to what she just laid out. >> we'll make another run at 5,000 before it's all said and done. up next a survivor from the dotcom crash 15 years ago tells us what he thinks of the nasdaq revisiting that milestone. razor fish co-founder craig
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co-nar ek on what's different. >> and then later stanley druckenmiller joining us to give us his two cents on nasdaq 5,000 and also where he sees the broader markets in the u.s. heading next. >> he may give us his 20 cents. he has a lot to say. i'm louis, and i quit smoking with chantix. quitting smoking is a challenge and it's a lot easier to go into a fight when you've got somebody that's got your back. having chantix as a partner made it more successful. along with support, chantix (varenicline) is proven to help people quit smoking. chantix helped reduce my urge to smoke. some people had changes in behavior, thinking or mood hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. some people had seizures while taking chantix. if you have any of these stop chantix and call your doctor right away. tell your doctor about any history of mental health problems, which could get worse while taking chantix or history of seizures. don't take chantix if you've had a serious allergic or skin reaction to it. if you develop these stop chantix and see your doctor right away as some can be life-threatening. tell your doctor if you have a history
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>> he may give us his 20 cents.
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welcome back. the nasdaq today traded above 5,000. we haven't seen that since 2000. the question is will it close there? all that attention, meanwhile, drawing some attention away from what otherwise is a pretty good day on wall street. markets up half a percent despite the ism/pmi number coming in soft. despite consumer spending coming in soft and despite oil under pressure. >> dow is like saying, hey, don't forget about me. nasdaq 5,000 generating all the buzz, even across the atlantic at the mobile world congress in barcelona. seema mody has been hobnobbing with tech ceos. pretty bright mood over there? >> hi scott and kelly. yeah listen nasdaq 5k grabbing headlines not just in the u.s. but here in europe as well. some of the international leaders i have been speaking to say the nasdaq is in some ways
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used as a barometer to measure general interest in tech. when you're looking at the nasdaq trading at the 15-year high breaking 5,000 this morning, leaders saying that indicates this growing appetite for tech and that has a positive impact scott and kelly, on european tech companies as it makes it easier to raise funds as they can point to some of the success stories like facebook and apple, but the bigger concern the bigger question is does nationalsdaq breaking 5,000 mean we're in a tech bubble. bill mcdermott this morning said no. the former ceo of apple told me we're headed much higher. >> i think it's totally realistic to think that some day we're going to have a nasdaq 10,000. so i don't think the bubble is nasdaq 5,000. i think we're just at the beginning of something even bigger than anything we've ever seen with the worldwide web.
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>> maybe no bubble in the public market but the private market is telling us a very different story given the valuations we're seeing in silicon value. uber at $40 billion, snapchat at $19 billion. investor from silicon valley are looking overseas for opportunities, specifically here in europe. in fact, european venture capital investment guys last year reached its highest level since the dotcom boom. forget all those concerns about deflation and sluggish growth in europe. investors looking for opportunity here in the private market. >> all right, thank you so much. >> thank you. >> our next guest experienced the changes in the tech industry first hand. >> yes. joining us in a cnbc exclusive is craig can narkanarick. >> thank you for having me. >> you were in the middle of it all, the ups, the downs, going
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public, being in the middle of a "60 minutes" interview and all of that. what are your thoughts on revisiting this benchmark today? >> you know first of all, thanks for reminding me of the good times and the bad, but, you know, i think people have been saying this all day. it's exciting to see us back at these levels and in some ways it's just a blip. you know it's a nice sort of target and a place where we can sit and reflect, but i think everyone has agreed this is not the way it was 15 years ago, and that we're going much higher. >> you think there are some real concerns in the late stage private market though? >> yeah. >> when you look at some of the valuations? >> absolutely. in 1999 and 2000 ipos and going public were really the only opportunity for people to make significant money, to make significant -- to have significant exits. these days you're seeing private valuations being, you know, as seema just mentioned, $40 billion for uber there's a lot of private valuations i think are huge and that's different, right? because companies now have this
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alternative of just looking for private funding the entire way through. >> on the public side of it why do you so casually confidently say we're going higher on the nasdaq? >> people have been saying it all day long. the pe ratios are completely different than the way they were 15 years ago. the companies we're talking about like apple are much more sophisticated. you know steve jobs was barely out of apple in 2000 but i think also there's a difference in the way people are investing now. in '99 and 2000 investing in ipos and hoping for a 600% return in one day was commonplace. it was expected. and so you had individual investors heading to this gold rush of ipos and day trading, which i just don't think we see anymore. so the market is in some ways more professional and less speculative than it was 15 years ago. >> did you ever think we'd get back to 5,000? >> i did. i didn't know if it was going to take 15 years or 20 years. and, you know, 5,000 is interesting.
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i'm curious about 7,000 which is where i feel the next real level is because if you take inflation into account, then 5,000 is really not at the same level as it was 15 years ago. >> interesting. look, in the same right, you've got a new business called mouth. you're looking to raise funding from time to time. is it more difficult to try and raise funding in the current environment than it was back then do you think or when you look at some of the late stage private valuations it would suggest that, you know for some people it's maybe easier than ever. i don't know what your take would be on that. >> i think that the late stage funding is very easy but the early stage funding is much more difficult than it ever was because even though there's an enormous amount of money out there to be invested and a ton of venture capital, the choices that these companies have that the vcs have are also almost infinite. there are so many startups so many great companies out there that the vcs and the private
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investors are having real solid financial criteria for investing rather than just sort of expecting that these companies are going to do great because they have a great brand or they have a lot of website visitors. >> and as we look at the nasdaq sitting above 5,000, if that's not a level that worries you, craig, in terms of ex sesscessesexcesses what, if anything is. >> 5,000 is a nice level and there are certainly individual companies that probably are overvalued, but as a whole the composite looks really strong. i think what we will see is things will slow down a little bit. look this run up took what three, four years and the previous one took about 12 months. so it's already moving at a slower pace than it was back in 2000. i think we'll start to see the slowdown and head up to 7,000 in the next couple years. >> wow. what companies are you most excited about that are on the public markets now? i'm not going to let you shamelessly plug mouth. >> we're not public.
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i'm excited about the disrupting companies. i like anything that has to do with alternative energy i like tesla. there are a lot of strong companies, but even in the technology sector apple still is strong has a lot of growth opportunities. i think twitter as it starts to shift its model and add more video is going to be strong growth. there's a lot of places where people can invest. >> are you guys at mouth working on bringing the shipping costs down? >> we absolutely are, and, you know, i brought you some goodies, but we're in a different studio today so we'll have to get them over to you another time. >> well i have heard. >> as long as you're covering the cost of the shipping. >> exactly. from my good friend scott here. thank you so much for joining us. a good person to walk down memory lane with today. 35 minutes to go into the close. and records across the board here. records for the dow, scott, as you mentioned. it's the s&p which is hugging that 5,000 mark right now. we're looking to see if it can close above that level for the first time in 15 years.
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>> find out which stocks can carry the nasdaq to its next milestone. wall street's top money pros are naming names. you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds would go with a merging markets. it's a masterpiece. thanks. clearly you are type e. you made it phil. welcome home. now what's our strategy with the fondue? diversifying your portfolio? e*trade gives you the tools and resources to get it right. are you type e*?
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you're looking for a place for your life to happen. zillow 35 minutes to go. we're looking to see if the nasdaq closes above 5,000. meanwhile, the dow and the s&p also having a pretty strong session, scott. >> many movers today, and dominic chu is tracking all of them. hey, dom. >> so scott, kelly, in honor of that nasdaq 5,000 milestone we
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will focus on the bigger stories among the big caps in that index. to the green side of the screen let's kick it off with nxp semi-conductor surges to the tune of 17% after the dutch chip company agreed to buy free scale for close to $20 billion. they are key providers of mike chips for use in the car industry. google is now a buy. it used to be a hold. the target price now 650 bucks. it used to be $580. they like some of the renewed product momentum and valuation. shares of warehouse retailer costco also back in the news. the company has decided to partner with citibank and visa to provide its next co-branded card for exclusive use in its stores. the new agreement takes effect starting april 1st 2016. it replaces the agreement costco had with american express.
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and a quick mention of cisco systems. as the computer network trading company rose to the highest levels we've seen. some green movers for the nasdaq composite. >> a lot to keep our eyes on. it took 15 years but the nasdaq is back from the bubble but will the index keep heading higher as we just discussed or are we going to see a repeat of the bubble bursting? let's talk to a couple money managers about how they are looking at things. >> joining us can kevin kelley from ri caan capital, ryan jacob is well. chairman and cio of jacob asset management. kevin, to you first, what do you make of 5,000 here? it's funny listening to dom chu run through the day's movers. a name like cisco, for example, is not even back to half of -- it's about half of what it was at the peak of the boom. >> right, but the nasdaq 5,000 going into 5,000 has grown from a growth value -- growth stock into value. so if you look at a lot of the names, they're trading at a lot
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lower pes and they have great cash on the balance sheet. dom mentioned going. . 16% of their market cap is in cash. they can deploy that wherever they want whether that's overseas buy back shares. >> google got upgraded late in the day. just a quick check since you mentioned it. it's up 2%. >> i'm chuckling a little bit because people are saying it's not your father's nasdaq. in a way it is it's your grandfather's nasdaq. these are a names that are a little steadier and have matured and have businesses behind them. >> look at the biggest biotech in the index. it's gilead sciences. it's trading at under 11 times pe and it just implemented a dividend, and so 1.66%. >> but it's not the biggest ones we really need to focus on correct. the valuation story really gets interesting the smaller you get in the nasdaq. frankly, for even some of the private companies that haven't made it there yet, do you have concerns about any of the activity, the multiples, the
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kinds of businesses you see there? >> well, on the large cap index, obviously we're talking about a market cap weighted index. a lot of growth we saw last year starting this year is in the largest companies. apple is now almost 10% of the nasdaq which is astounding. we started to down shift a bit. we're seeing better opportunities in the small and midcap space. we're seeing better valuations relative to the growth potential. we tend to focus more on companies growing maybe 20%, 30%, even 40%-plus and valuations down there are not very extended versus those runways. >> ryan it's funny. you know kevin here mentions a couple biotech stocks that he likes. if anything, people are looking at the nasdaq and the march to 5,000 and questioning whether biotech is the real place that's overvalued. what are your thoughts? >> well you can make an argument. it's definitely been the best performing sector for the last several years. it's amazing how much it is encompassing more and more of the nasdaq. technology today is less than
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half of the index. but i think the real story is last year was a very difficult year for a lot of money managers because, you know, you had a very thin layer of the top companies and the top indexes deliver all the performance, and we think this year we will see a bit of a reversion. as the economy is improving, investors' risk appetite may increase. valuations are more reasonable. we think it's a good combination. >> do you want to address, kevin, this notion of whether biotech is overvalued. two of your stocks are biotechs. >> yes, so biotext are doing exceptionally well. celgene is seeing sales double by 2020. janet yellen said they were overvalued. if you think the market is overvalued and nasdaq is overvalued, there is an etf where you can capture that volatility. it sells options against it on a monthly basis and spitz it out to shareholders. 10.4% yield last year alone. >> is it yours? >> yeah it is. we actually issued it. if you think things are getting
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toppy, you can get -- >> the qyld? >> qyld. >> what lessons have you learned from the dotcom period and its aftermath? >> it's been 15 years, which is pretty incredible. you know i think people have to understand that that whole boom period was really the dawn of the internet as we know it today, and people realize how pervasive and how revolutionary it really was. not only from a consumer personal basis but also for businesses. so what spawned from that period were a lot of companies that actually are lasting and doing well today. i do think a lot of the overheated speculation is happening on the private side. a lot of these companies are waiting as long as possible before going public. i think a lot of private players are taking a lot more risk that we as public players had to do back in the late '90s. >> do you have a last thought? >> yeah. so the last thought is that it's probably the best index you can have out there. s&p is not growing at all.
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sales growth isn't earning. if you look at the growth of the nasdaq, it's actually growing at 15 times. so it's a great valuation. i mean it doesn't have energy. it doesn't have utilities. it's in the name growing here and abroad. if you look at the s&p 500 you're getting a 17.7 pe. if you look at the nasdaq 13000, 19 and you're getting the growth. >> technology, consumer services and health care. that's the nasdaq today. >> am mazon, starbucks, netflix. >> netflix has been the biggest gainer in the nasdaq 100. >> a story you can believe in. >> amazon has had a great run over the last couple months as well. thanks. >> kevin kelley and ryan jacob. much more to come on "closing bell" including that interview with stanley druckenmiller speaking with us exclusively next hour. >> first, here is sue herera with a cnbc business news update. hi, sue. >> here is what's happening this hour. morgan stanley in talks with the new york attorney general to
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settle legacy subprime mortgage allegations. that's according to reuters. the settlement would be separate from the $2.6 billion deal announced last week. u.s. travelers visiting cuba can buy items using a mastercard credit card. the company lifting its restrictions on sunday. the move comes as the obama administration eases trade restrictions with cuba. new york city's 1.1 million public school students are being allowed to take their cell phones to school for the first time since 2006. mayor bill de blasio lifting that ban which was imposed by michael bloomberg. and from shark tank to sharknado. nba owner and tv most mark cuban is set to play the president of the nights in "snarkharknado 3." anne coulter will play the vice president. and one question is whether "sharknado 4, 5, and 6" will be far behind?
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the big story is the nasdaq is now back above 5,000 for the first time in some 15 years. hard to believe that in 2002 it fell as low as 1,114. >> at the time it wasn't clear whether it would go the way of japan's nikkei after it collapsed during its own real estate and credit crisis and now we know the end of the story, at least we know the next chapter. >> it has been one heck of a comeback. >> speaking of comebacks, the airline industry posting gains up 33%. >> can the momentum continue. joining us is a john rainy, chief financial officer of united continental holdings. he's ringing the closing bell in 30 minutes time. welcome. >> great to be here. >> it's been a renewed period for certainly airline investors as the dynamics have changed i guess in part to guys like you.
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>> it really has. fourn 2014 was a really good year for us. we dushled our earnings. we had three quarters of record earnings for that quarter. we launched a share buyback program and our stock went up almost 80%. so it's a good trend we're seeing and 2015 could be even better. >> it seems a great period for you because of the low fuel costs, because you still have an improving economy, more people traveling. what can you do to increase capacity? how much investment are we talking about to potentially bring more seats online and maybe even bring down fare costs longer term? >> well there really are certain impediments to increasing capacity too much right now. if you were going to buy a new airplane today it would take 18 months to be able to take delivery of that. and investors -- that's actually one of the key things on their mind is because they recognize that a lot of what has improved this industry is what we call capacity display where supply has not outstripped demand.
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that's one of the key questions we get is investors want us to continue that capacity discipline -- >> they'd rather have the higher prices than more seats available. >> can i get your comment on this memo of a week or so ago from united to its pilots raising some safety concerns? i'd like to get you on the record on that and whether there is a safety problem at united airlines. >> there's not a safety problem at all. united has among the very best safety records in the industry, and the mem oep you're alluding to is part of an ongoing continual dialogue we have with our pilots. part of the safety management program we have in place is -- requires this direct and open and recurring information. so this is simply part of a safety program which we're very proud about. >> your spokesperson said at the time that the language used in this memo which raised some safety issues said the language was strong it was stronger than unusual, meant to get the pilots' attention. it would seem to suggest that pilots have potentially not been
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following the guidelines as well as they should have been. >> i wouldn't read into it like that. i think this particular memo was a response to some actions that -- some observations we had, and we wanted to nip this in the bud before it became a trend, and thas part of what good safety management is is proactively addressing that. >> i'm sure one of the key parts of your job is trying to figure out what to do with fuel? do you hedge it, do you not hedge it? talk to us about $50 oil. >> a lot of people don't realize how leveraged we are to the price of oil. and it's been a third of our operating expenses. it's our single largest operating expense. a $1 decrease in the price per barrel is a $100 million decrease in our operating expenses. you can recognize how far it's come down that's a huge tailwind, and the key thing for us is to make sure that we're disciplined with what we do for that.
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and it won't change our plans but it will accelerate the fashion in which we can achieve them whether it's delevering returning cash to shareholders or investing it in our product. and with respect to hedging, it's a bit of a challenge right now because what we've done over the past several years is we've tended to take advantage of a curve that was in backwardation so we could hedge prices lower than the spot price. well, it's contango today. if we wanted to place a hedge in the back half of this year it's $10 higher plus with the volatility of oil, the hedge cost itself has gone up so we'd actually be making -- breaking even if prices were $20 higher than where they are today which is a real challenge from where we sit. >> are you taking them off? >> we've done a couple things. since fuel has begun it's fall last fall, we haven't placed any incremental hedges. we have not wanted to catch a falling knife, and we've actually reversed some of our hedge positions to lock in that loss, to not let it grow any larger, but we're looking for an entry point because we recognize that this is arguably below the
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long-term trend of where oil prices are and we'd like to be able to take advantage of that. >> is it all a capacity issue as to why airfares have remained so high? anybody watching whether you're an investor or just a regular person who doesn't even own the stock but is trying to book an airfare, it's expensive. >> well one of the things that we've seen in the past and the past being 10 to 15 years, is you'd have these periods where prices became too good to pass up, and part of that was people got away from this capacity discipline. to your point, scott, capacity discipline has been good for investors. it's also been good for customers, too though because what airlines have done is taken those profits and reinvested them in the product in things they care about. wi-fi, lie flat seats, things like that that they can have a better spebsexperience. >> you're going big time on wi-fi after lagging. >> we have 80% of our domestic mainline fleet today has wi-fi on it and we have the most wi-fi
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of any -- internationally than any of the domestic carriers. >> almost like the conversation around autos. people are so consumed with what's happening inside the vehicle, it's going to be the differentiating factor. thanks for being here. we will see more coming up in "the closing bell" when united will ring that at 4:00. and it could be one for the records books if the nasdaq closes above 5,000. >> yes, it could be. remember, nasdaq hitting 5,000 today for the first time in 15 years. four points above that level right now. the dow is in record territory, and all-time high right now by about 50 points. that looks pretty good. we'll see what happens in 15 minutes time. >> and then stanley druk n druckenmiller speaking with us exclusively. wait until you hear what's worrying him most about investing right now and the economy. stay tuned.
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that's why ibm created verse. it uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. it continuously learns how you work. and helps you prioritize the people and projects you need to focus on. there's a new way to work and it's made with ibm. bertha coombs is keeping a close eye on the action at the nasdaq today in these final ten minutes of trade. bertha? >> we're seeing momentum in terms of we're near the highs of the session. we're seeing strong volume at the nasdaq. folks seem to be eyeing that number. it would be the third time ever if we close at these levels at the nasdaq.
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chips very much part of the story today. that nxp deal really has the whole chip sector moving higher today. we're seeing a number of new highs. what's interesting is when you look at some of the biggest big caps in the chips that have been here since 2000 like broadcom intel, they have not taken out their all-time highs and that brings me to the index itself the philadelphia semi-conductor index. this is one of the areas that you have seen the lag in the nasdaq. why it hasn't moved up with the rest of the major indices. chips continue to be well below their y2k highs. >> bertha coopsmbs at the nasdaq. >> the dow jones industrial average is now at an all-time high. >> so is the s&p 500. >> nasdaq has only closed above 5,000 twice. >> third time we could be seeing it. but anything could happen in these final minutes of trade. art cashin indicating about $500 million to buy on the close.
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plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. welcome back. there is the picture with less than ten minutes to go. major averages at least the dow and the s&p, are at all-time
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highs. the nasdaq sits above 5,000, crossing that mark today for the first time in 15 years. has only closed above that level twice. we're 7.5 points above it. mary thompson is on the floor with me along with j.j. how is the mood today? >> it's fairly calm. encouraged by reports of the money coming in all the deal flow we had today as well. a little bit of trepidation given that the data hasn't been that good and jobs coming up on friday. but overall i'd say a positive tone. >> j.j. interesting, mary has the mood has been calm. that has some people wondering if people are too complacent. markets keep going up. >> it's unbelievable. we saw vix down a little bit today and it's kind of interesting in the past few employment report weeks we've seen vix rise into the employment report until thursday and then they kill it and then the employment reports comes out
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really, really well. again, when you're at all-time highs, you expect volatility to be lower. one of the really interesting things to see is people always think of like facebook twitter being these high crazy volatility stocks. if you look at where they have been for the last year they're actually at -- facebook is at 3% twitter at 5. even high volatility stocks are seeing compression. >> you got a good read into the psyche of the retail investor. how do you think they think about 5,000? >> i think that they think it's nice but, you know, nothing incredibly special so to speak. i still think the attitude and the reason i think we can continue to go higher is because people sort of still don't believe. they're not diving in. it's more of it went from toe in the water to knee in the water. >> mary as you said the data hasn't been all that great lately but the jobs report as you noted is sort of staring us in the face at the end of the week. >> so i think that's providing a
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little bit of hesitancy. so, of course, you want to see better jobs growth which we have seen over the past couple months. given we've seen spending go down, one of the questions we see being asked is given the decline in gas prices why haven't we seen spending get better and have consumers really changed? and i think it probably speaks to what you were saying as well. you know they're cautious now, a little bit more cautious about the markets. they're not believers because they have been burned a couple times. even with gas prices they're starting to save money. they're paying down debt. they aren't going out and spending. it's a more cautious tone which may give us a little bit more of a longer rally upwards. >> i hope you saved some of your best material because we're going to take a break and come back on the other side and chat a little bit more and see what happens with these markets as we head towards the close over these last five minutes. we're back with the closing countdown. after the break, that gentleman right there and kelly sitting down with billionaire hedge fund titan stan druckenmiller. find out what he's buying what he thinks about the markets, and a whole lot of other things
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who do you work for? your boss? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. welcome back. we're on the floor of the new york stock exchange. it's closing countdown time. let's go right to the boards because that's where the story really is today. dow jones industrial average up a little shy of 1%. 18,282. bottom of your screen the s&p 500, 2,116, that too, is an all-time high, and right now with just a few minutes to go
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the nasdaq which topped 5,000 today for the first time in 15 years, is holding above 5,000. it's only closed there two other times. before falling all the way to 1,148 in 2002. the long road back looks like that right here. i am back with mary thompson and j.j. all right, j.j. now what? now what? how should we be thinking about where we should go from here? >> i think we can still go higher but the mindset has changed. if you look at the volatility in the market as mentioned earlier, it's been very very low levels. i think the rest of this year is going to be a lot more of what we saw january, february combined. up, down, up, down. i still think we grind higher but it's not going to be as smooth a road as it's been in the past and just part of it being so much of the geopolitical situation and as you said we have only been here twice before but this is different because of qe et cetera. not only qe in the u.s. but qe worldwide. so it may end a little differently also. >> i'm glad you brought that up.
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if there's something to consider more and more as spring takes hold in a few weeks, the possible fed raise of interest rates gets closer. who knows when it's going to be but it gets closer. >> which speaks to j.j.'s point which we're a little more data dependent and, therefore, a little choppier. everything the fed says fed speeches, beige book coming out, any data we get, the market be will be reacting to that. they'll also see how europe reacts to what they do too. >> do you still think there's a lack of engagement by retail? >> actually i don't. i think retail is engaging a lot differently. it's not just buy a stock or buy a mutual fund. they have also learned with choppiness maybe you get in and out a little more. for our firm and the market overall, derivative use has gone up significantly but in a smart way. >> it's fair to say retail investors are maybe smarter than they've ever been based on experience and the market tools that are available to them. >> there's more education. you have shows like yours every day talking about how to use derivatives in a better way, how
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to use options. it's not a mystery every day. >> good to see you. that's the story on the street. and a big second hour of "the closing bell." stan druckenmiller is coming up in a matter of minutes with kelly and company. >> and welcome to "the closing bell," everybody. i'm kelly evans. drom rool drum roll, please. let's see if we did it. there we go. the nasdaq composite closing today on march 2nd 2015 at 5,008. a comfortable margin of 8 points makes this the third time ever we have closed above 5,000 for that composite. it makes it the first time since those go go bubble days in 2000 we have done it and makes it itself one of the most interesting stories on the investment landscape of the last couple decades. let's take a look at some of the
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other indexes, too. they're vying for attention. the dow up 150 points today, almost 1%. that's good enough for a new record. 12 points on the s&p, guess what? that is good enough for a new record as well. joining me on our panel today to talk about all of this is die ann garnet from clear alternatives, cnbc senior contributor larry kudlow and our very own kayla taushy. welcome to all of you. for more now to that 5k mark joining us is "fast money's" guy adami. great to have you here guy. also melissa lee joining us from the nasdaq this afternoon and mike santoli from yahoo! finance. welcome one and all. larry, i will give you the first word here. nasdaq 5,000. what does it mean to you, to close above this bench mar level? >> it means the economy is still going good. quite unlike 2000. one little difference the fed was tightening like crazy in 2000. the yield curve was inverted steeply in 2000. it had recession written all over it, and the nasdaq is
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probably more sensitive. right now there is no recession in sight, not by a long shot. the fed is going to go slow engineering, entrepreneurship, bye-bye knowbiotech, all of them are going great guns. it's a totally different economic picture and i think this is sustainable. >> biann? >> one of the big differences is the companies in the nasdaq today have business plans that they're executeing on. we have companies with earnings. not only that we have companies with a lot of cash on hand. one of the changes that's happened is the composition of the nasdaq. that's been a key driver. it's not just the u.s. it's global companies. this time it does seem to be remarkably different. >> kayla? >> the statistic that i can't get over is the relative pe multiple then and now. we were over 100 times forward earnings when the nasdaq hit 5,000 15 years ago.
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today we've been between 20 and 30 times earnings depending on which estimates you use, but, kelly, if we were trading the nasdaq at the same multiple today, we'd be talking about nasdaq 30,000. that's according to a barron's piece two weeks ago. that's how different this is. >> that's amazing because it was funny earlier to actually listen to john scully saying i will get interested in bubble talk when the nasdaq is at 10,000 for example. so many people brushing this one off. let's bring the nasdaq into the conversation. melissa lee and guy adami joining us from there. guy, first to you. did you ever think back at the time that we'd be able to come back, to do it, to reclaim that level? >> the short answer is yes. i think we got here faster than i thought but the answer is yes and what does it mean to me? the leadership you're seeing, some of the leadership companies, the semi-conductor index, look what that's done. the leadership out of these companies, with reasonable valuations, and then you have transformative companies like
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the apples. you have company that have reinvented themselves like microsoft. we're here for better reasons i think. >> there's a way, melissa, to look at it flip it on its head and say 15 years. that's what it took. is that a lost decade and a half for people who have grown up been investing in between? >> well, i guess it depends on what you have been investing in because for every stock that burst and didn't come back there were stocks that reinvented themselves as guy put it and done pretty well. in terms of leadership we are in a better place today. take a look at the kinds of companies composing the nasdaq composite right now. they're older and they are larger companies. the number of components back then was 4,800. today it's 2,500. fewer ipos last year certainly than back in 1999 as well. so these are companies that have had longer track records, longer operating histories, and they're here in the composite today. >> and let's bring mike santoli into the convo. a lot of people are saying
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nasdaq 5,000, you have to adjust for inflation and that's basically talking about nasdaq 6,900. to that i would add there are dividends as well. if you want to talk about holding onto that index, what that would have delivered in terms of today's dollars, it's a dividend adjusted value, this includes reinvestment of 5714. that's effectively where we are today. you can get about halfway there by holding onto this index and collecting the dividend. what's your reaction to today's closing high? >> you know honestly i think that the singular extreme nature of the first time we got to nasdaq 5,000 as everybody has been describing not just in valuation, but in the path we took to get there, the index had doubled in the prior year. it really spent almost no time in the vi sinity of 5,000. so almost nobody owns the index so to speak at those levels. that's why to me it's almost not that great a comparison. we can all make ourselves feel better and say we're nowhere near as crazy as we were 15 years ago, it's a much more stable index. the nasdaq looks basically like a slightly spiced up version of
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the overall market as opposed to its own little world as it was then. so i think the question is now, does it make sense for all stocks to be trading at 20 times trailing earnings given everything else that's going on? maybe it does but i don't think we can say we're nowhere near as insane as before and have that be very informative to what it means. >> larry? >> think of it this way though. okay. let me go back. you were at 5,048 march 7th, the year 2000. by the end of the year it was at 2,470. so mike santoli is right. it really wasn't a 5,000 except for maybe a couple of nano seconds. point ymnumber two my fed tightening point. the fed was tightening like crazy in 2000 and they inverted the yield curve in 2000. that was a sure sign -- >> i thought they didn't begin to -- i'm sorry, this was before the 2001 recession hit. >> it was. listen, just that year alone, the fed funds rate went from 6.5% to -- i'm sorry from 5.5% to 6.5%. the 10-year meanwhile dropped
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from 660 to 510. so fed funds going up, 10-year rates going down. >> how many times have we seen that? we saw it then from 2004 to 2015 2007. we're starting to see it now. >> i don't know anything about the short run. i'm just saying right now there is no inverted yield curve and recession and/or recession in sight for several more years. let me just make that plain. that's why i'm not so panicked. i know earnings are being marked down in some corners of these markets. i'm not panicked because there is no recession in sight. >> even if we talk -- it's true. we have no recession. when we talk about earnings getting marked down i think this is really important. between the last 5,000 level in 2000 and today, earnings are up 150%. so the companies that we have in this index are completely different. i think the only reason earnings are starting to have a little bit of a hit is because of the
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strong u.s. dollar. and that's happening because of a robust economy. >> melissa lee? >> you know i don't want to throw water on the party -- >> throw away. >> we just got our party hats on, right? but i think it's also important to note that inflation adjusted the peak for the nasdaq would be 6,900 which is 38% higher from where we are now and you might say, you know what 1234? that's not fair. but we are basically at our inflation adjusted peak so there's a discrepancy between the indices. >> melissa is dead right. i look at that as rather encouraging. that means we have more to go. but let me add one more point which troubles me. regulation. don't forget microsoft was sliced in half by judge jackson in the spring of the year 2000. >> but microsoft is a survivor in all this. they're still number two. >> but we had the browser wars and they were saying microsoft was going to be a monopolist and they wanted to split up the company. that hurt microsoft and the nasdaq completely. really hurt a lot.
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now, one thing here i want to raise this i'm going to second guess my own optimism. i don't like the federal government taking over the internet. >> the net neutrality? >> i think this is a really lousy idea. how that affects the nasdaq i don't know. people smarter than i have to figure this out. but i don't want the u.s. government to treat the internet like it was a 1935 telephone company. >> kayla we're about a week into the fcc -- that ruling if you will, and this now is becoming -- >> one week and a multiyear fight which many expect to be played out in the court system. larry, you're right, we won't be able to see the effects of what the fcc has said and what they have proved last week for years, whether the courts uphold what they've done whether they don't, how that affects cap ex. we won't know for quite some time. >> good news is you're right it's going into the courts. the bad news is whenever the government is on the march, i don't like it.
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>> let me bring in -- >> free market capitalism is the best path to prosperity. >> i think i have heard that before. guy, talk to us we know the landscape, the backdrop what about the next move? >> the next move feels continue to go higher. larry spoke to it and if you ask me and i have said this to you countless times, i am a skeptic in terms of what's going on in our economy, but that doesn't mean the market can't go higher and the market doesn't give you a lot of time to buy the lows or in this case sell the highs. the russell closed above 122, i think it takes us to the next level. the same thing with the s&p and the nasdaq. i want to ask larry one question. he wrote a great piece over the weekend. i think you like what's going on with the fed and i think you're a janet yellen fan but you ended it by saying low inflation, king dollar, they either know what they're doing or it's a miracle. it's one or the other. what do you think? i know you're going to say it's a combination of the two. if you had a pick one, is it a
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miracle? >> i'm actually going to say that the fed has played their hand better than many of us thought they would and the so-called boat loads of money creation never happened, and i think if they let the bonds mature they can get out of this mess without doing any damage. you know what? be careful what you wish for to my republican friends. you know what guy? i say the fed should tighten much later, not sooner. much later, not sooner, because of what you said and i appreciate that. >> we got to go. let me just give mike santoli because you're the one that will leave us mike the very last word on this. do you want to respond to what larry and guy were saying? >> i think they did play their hand very well and i think they're probably more likely to be late in terms of punitive rate increases than early, but what i'm interested in is a lot of people who are very smart saying they're going to do something before september almost just to do it. it seems like that word is being
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transmitted out there, so that's where you're going to have a disagreement among people who think they know what the right course is. so, therefore, maybe in a few months the market has to get a little more volatile to reflect that disagreement but i don't think that's anything cataclysmic. >> mike, thank you for being here. mike santoli from yahoo! finance. melissa and guy will be coming back for more right after this quick break. it took 15 years but nasdaq 5k is back again. should investors though be worried about history repeating itself with another nasdaq bubble? that's coming up. find out if the hedge fund manager stanley druckenmiller thinks this market is getting too expensive. he joins us exclusively in just a few minutes. every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.
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the tech industry clearly helping to propel the nasdaq to 5,000 today. we're back with our panel with melissa lee and guy adami joining the conversation and with disruptive tech researchers lou bassini and david garrity. david, what do you do with the nasdaq now? >> i think with the nasdaq here you continue to own it. granteded, we've had breadth narrowing in terms of this vance. investors are basically moving out of smaller and midcap names toward larger cap names that are well funded and attractively valued. the other thing you have to bare
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in mind is look at what's happened in terms of the global economy and u.s. economy since the lows we had back 15 years. the global economy gdp is up by a factor of 2.7 times. u.s. gdp is up by almost 70%. so clearly for us to get back to where we are right now it goes back to the point that melissa raised earlier. the inflation adjusted high on nasdaq would be 6,900. we're not ep close. >> melissa, actually i was thinking back to your coverage of facebook during that ipo which was probably a low point for the nasdaq i wonder how much has changed now that people are starting to talk about this index being in a way the new benchmark, being where the revenue growth is. is there a sense that the nasdaq here has kind of emerged from all of that victorious? >> i mean it has, kelly. we were talking earlier about the fact that now the nasdaq is comprised of older companies with longer operating histories. these are companies that have been on a private market. a lot of these companies that are coming to public today have
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been on a private market and they're garnering valuations. they're going public with a track record. the question in terms of a bubble could be raised and i know kayla you talked about this in that market prior to ipo. are these companies getting overvalued and is that where the transmission of this sort of bubble attitude has been too? >> you know people used to say the market is getting overheated when my taxi driver starts asking about the stocks he should play in the market but now i'm having my uber driver asking me how he can buy into shares in uber in the company he works for saying there's really no way to participate in the upside of the company that they work for despite the fact that it's worth $41 billion. i mean there, is a lot of money sloshing around in that market. some might argue too much with not enough upside for the retail investor. >> david, you brought up a great point in terms of disruptive technology, and you also talked about the globalization. well, one of the key differences between 2000 and today is really the deflation that we get
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imported to us from having economic agents all around the world. there never would have been an environment where we could have shipped out some of our parts to get done in china and yand and some of the low cost places and certainly i don't think the job loss is true as a function of technology. i think it's really the global economy, all these workers that are now flooding the marketplace. >> to your point though about technology enabling different business models which have productivity associations with them, if we look at the rise in uber, we're talking about the rise of a company which basically is a function of an on demand economy. take surplus labor, finds ways to engage it at the margin. it may not necessarily give full-time jobs which some people are critical -- >> whoa. i hear this all the time automation is bad. may i say how much i disagree with that. >> amen to that. >> technological advance, automation is fabulous. when henry ford blasted off in
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the car business, i'm going to say he created more jobs than we had with the horse and carriage. >> he did it for the simple reason ford said he was going to pay his workers twice the revealing wage so they could buy the product. >> all i'm saying -- yes, yes, we can discuss that. that's a complex thing. it's driving me crazy to think that progress is bad for jobs. i beg your pardon. the whole history of america is that technological advance is great for growth jobs and prosperity. >> amen to that. >> your thoughts. please get in here. >> i think larry is spot on. if we look at the difference in the nasdaq it's emblematic of how pervasive technology is in our everyday life now. unless you're amish, technology impacts so much of what we do from a banking to health care delivery to transportation. look where the big tech players are moving now. they're moving into stodgy industries that we thought were
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left for dead. >> at the same time, guys i think it's worth noting too that the companies that may tout disruptive technologies the solar companies, the teslas of the world, maybe a go pro, these are companies, and guy can speak to this as well, you know, they may have all the hopes of investors, but their stocks haven't really been doing that well of late. >> guy? >> winners and losers. you mentioned technological change, the amish. luddite. i am king -- you talk about king dollar, i'm king luddite. but, larry, yes, productivity technology, absolutely in retrospect leads to great things, but there is a period of time a painful period of time, where people have to sort of re-establish themselves and figure it out. and i think that's -- >> didn't we do that for the last 15 years though? haven't we been in that process for the last 15 years? we've adjusted -- >> it feels as though the last
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few years much more son than the last 15. >> you have a lot of bears. i acknowledge a point, it's a good point guy has made. you have a lot of bears about secular stagnation. you have a lot of bears saying automation is a bad thing. by hook or by crook, there's a gestation period that happens when these new technologies come in and disrupt existing business but my man joseph shumpeter, he passed away in the 1950s but i commune with him on a regular basis. he always said regarding gales of creative destruction, be patient. it will work out over the long run provided that the government doesn't stand in the way. >> the bigger point here is that from an inflation standpoint, all of this is ultimately deflationary, which basically -- >> great point. >> if you go back to monetary policy, the need for the fed to raise interest rates gets pushed further and further out into the future. >> great point. unbelievably great point. that's a nobel prize winning great point right there. >> it sounds like one somebody
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here just made. >> thank you. melissa and guy joining us from the nasdaq. coming up with mel and guy with "fast money" at 5:00. they will have the tech names you need to own. don't miss a moment of that and much more here. we're going to talk more about the nasdaq and get stanley druckenmiller, famous for shorting ib m. so what does he think about warren buffett calling ibm cheap today? find out coming up when we're back in two. what the cloud enables is computing to empower cancer researchers. it used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day. whatever i can do to help compute a cure for cancer, that's what i'd like to do.
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today the nasdaq closed and then crossed i should say and then closed above the 5,000 level for the first time in 15 years. so dominic chu joins us now with a look back at some of the notable milestones. hi, dom. >> how about this? the play-by-play. just the time horizons are interesting in and of themselves. so how about the first time that we were at 1,000 on the nasdaq composite. you can see here we closed above it. that was july of 1995. i was just graduating from high school back then. then you fast forward to what happened 1999, we closed above 3,000 for first time and shortly thereafter in 2010 we got that close above 5,000, march 9th 2000, and then the next day is when we got that record intraday and record closing level, 5,048. then it all went downhill. we went down over the course of the next year year and a half and all of a sudden in 2002 we
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finally bottomed out around the 1,100 level. of course since then 12 years later, then we finally get to november 2013 the first time we got to the 4,000 level. i remember when we first got to those dotcom levels i was in my first job on wall street. it was for a company that doesn't exist anymore as its known. again, so many memories and a lot of people watched these charts and figure out, hey, what was i doing back then? that's what i was doing. for a lot of these milestones, it brings back a lot of memories. >> i can only imagine -- larry, i think i was on the cross country course trying to figure out where to go to college. >> i new mr. dylan. he was jfk's treasury secretary. he was a republican, and by the way, he helped launch the kennedy tax rate cuts. i'm actually writing a book on that subject, and he was a great man, dougen dylan.
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>> mr. kudlow they should buy that book. i can only say that the war berg, dylan reed was owned by ubs so well after that kennedy administering. >> bummer, real bummer. >> up next hedge fund manager stan druckenmiller. but first sue herera with a news update. >> president obama will not be watching israeli prime minister benjamin netanyahu's speech to congress tomorrow. that's according to the white house press secretary josh earnest. the controversial speech was arranged without white house approval. the nfl's salary cap is going up $10 million to $143.28 million for the 2015 season. that's the second straight season the cap has gone up by at least that amount. the nfl's season begins march 10th when free agency begins. something else for bostonians to be steamed about. the city is starting to remove orange cones, milk crates and
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other stuff that residents put out in the street to reserve their parking spaces they've dug out. mayor marty walsh declared an end to the long standing practice at least until the next major storm. a young man in india has entered the givesness book of records. he solved five rubik's cubes in one minute with one hand. it was invented by a hungarian professor back in 1974. pretty impressive. that's the cnbc news update this hour. "closing bell" is back after a quick break.
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idely known founder of duquesne capital says the fed needs to raise rates. he also talked stock picks. given today's big news we began our exclusive conversation with his reaction to the exchange cracking the 5,000 mark. >> by historic fundamental measures, we are extremely high. stock market to gdp which i know is one of mr. buffett's favorite
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measures is probably the highest it's been in the last 100 years with an eight-month exception around the '99-2000 period. we have record margins and we have a dollar that's been strong so you're going to get a headwind there for earnings next year and obviously zero interest rates with all sorts of financial engineering and leverage going on. so stock prices are high by historical measures. having said that we have the most aggressive monetary policy we've had since the founding of the federal reserve in 1913 so stock prices should be high. so if you look at stock prices relative to rates, they're probably exactly where they should be. now, some of the bears will argue, well rates are going to go up. if i believe that fine short bonds. >> you don't believe that then? you don't believe rates are going up? >> they may or they may not.
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what i'm saying is if i thought rates were going up i would short bonds. it's not a reason to short stocks. the reality is if you look at the metrics that historically move stocks for today they're priced appropriately. >> and does that mean -- i guess now we have to go back and talk about when the fed does move or when the fed does raise rates. i know you're still long this market generally speaking but you also think that the fed has to act now, don't you? >> the fed doesn't have to do anything, but i think it would be great if the fed acted now because i think the risk/reward of not acting is all skewed toward acting later greatly increases the risk of the u.s. economy than acting earlier. i know that's the exact opposite of what a lot of fed pundits and others are saying but if we wait, what we've learned at zero rates is the debt which frankly is the reason a lot of the
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people don't want to raise rates, because the debt is too high, the debt is accelerating exactly because we have zero rates. so to me the risk/reward is balanced toward if you go now, you slow down sort of the accelerating geometric rise we're having in corporate debt and i definitely think the markets can handle 25 to 50 basis points. if the fed was ever going to raise rates and not have a it dramatically impact financial conditions, this is a golden opportunity right here right now because there's so much foreign money that i think will be attracted to treasury rates that it will not affect the curve as it traditionally has if the fed starts moving. >> and what if they don't move? what then? >> well i think we'll continue to see what we've seen. corporate debt was $3.5 trillion in 2007 arguably a period many would describe as bubbly. it's $7 trillion now. it's gone from $3.5 trillion to
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$7 trillion. as you know most of that mix has been in more highly leveraged stuff, covenant light loans, high yield. that's where the majority of the rise has been, and if you look at what corporations have been using it for, it's all financial engineering. >> speaking of financial engineering, warren buffett today again was advocating for what ibm is doing. he actually had this to say. >> what we like particularly the company itself is buying its stock as motion of our companies are, you know our interest in the company is just increasing day after day, and if the company is buying it we're not laying out a dollar. if we're buying it we're laying out some money but we're buying it cheaper and i like buying anything -- look around this room, you can see i like buying things cheap. >> what do you make of his comments and his support for ib m despite the financial engineering you have just cited as a concern? >> well i saw the interview with mr. buffett, and the other thing he said is an investor should never let someone else's opinion drive their decision in
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stocks. mr. buffett and i have a different opinion on ibm. i certainly respect his opinion. but i have my own. my guess is looking at the situation, kelly, he thinks ibm's problem is cyclical. i think it's secular, and if you think a company has a secular problem, particularly with sales being lower than they were six years ago when the economy was much worse, the last thing they should be doing is buying back stock. but if it's a cyclical problem, i'm sure it will work out. but the market will ferret this out and one of us will be right and one of us will be wrong. >> what about some of the names you do like here? where do you see value? >> well it's interesting because you mentioned i was long risk. the lion's share if not all of that on a net basis is not in the united states. i have positions in the united states, but net-net because of the valuations we talked about and because i'm encouraged by
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what i'm hearing out of the fed in terms of them tightening, i'm not all that excited about the u.s., but i do have large exposure in japan and europe. both those markets are not only cheaper than the u.s. they have monetary policy that is just on the front end of very very expansive. as you know they're going qe. the one thing we learned in the united states about qe is it definitely inflates financial asset prices. so the majority of my long exposure is in japan and europe not in the united states. you know a few months ago we started buying the i would say global consumer brands. primarily staple in nature like unilever or l'oreal. but recently we've shifted into more cyclical names like volkswagen, bmw, airbus where you get the tailwind of the euro having gone from 140 to 120 which will give them an earnings push in addition to the lower energy, and they are great
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consumer brand names in and of themselves. >> aren't you worried in europe about the possibility of greece leaving the eurozone and causing a cataclysm for the market? >> i'd prefer it didn't happen because if you're long something, you never want an uncertain event to take place, but i actually went into the scare last week or maybe it was two weeks ago of greek exit long, and my thinking was this is totally different than 2011. the banks do not own greek debt to the extent that they did then. there's another factor here with qe just starting. mario draghi can ring fence spain and italy by buying their debt in the open market so i think the comparisons are rm really, really weak to 2011 and given the fear that was in the market and is in the market because of it i think a greek
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exit is totally priced in. >> do you applaud the fed for then what it did to get us to this point? does your concern center around them not now exiting the picture soon enough or do you still think that they have done too much and been too responsible for the run-up in asset prices and that could reverse as they exit the picture? >> i love what the fed did in 2009. i thought it was creative. i thought it was brilliant. i thought the risk/reward was totally on the side of what they did, and they acted with great courage and with great force. certainly qe3 but even for me qe2, i think their job was done and i think what they've done since then is unnecessary. so i do not applaud them for their policy the last two years. i will say that i was greatly encouraged by chair yellen's testimony last week. i know a lot of pundits read it as a dovish. i thought she clearly is putting
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june on the table. whether they go in june or not will be data dependent, but i think we're finally going to be out of this forward guidance game and handholding money managers and giving our next spoon of sugar and it will be up to the data. so i thought i was very encouraged by her testimony. >> and you just heard what stanley druckenmiller's favorite investments are. wait until you find out what his favorite tv show is. cheshg check it out on our web extra with more material including the transcript from that interview. nasdaq 5,000 all the buzz on wall street. is it getting the heat on "the hot list"? we'll find out next. and tomorrow tony robbins teaching us the seven steps to financial freedom. that's right here on "the closing bell." we're back in two. me on. national gives me the control to choose any car in the aisle i want. i could choose you... or i could choose her if i like her more. and i do.
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at ally bank no branches equals great
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rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. welcome back. the nasdaq burning up that key 5,000 level. i have a feeling that's what's on "the hot list." the top stories on the website but let's find out with allen wastler. >> you're right, it was all about nasdaq 5,000 today. leading our pack of coverage right now, comments from bill gross, the noted bond king. he was on our air earlier today. we wrote up his interview. basically he said nasdaq 5,000 might indicate a little bit of a bubble, especially in the tech sector. people are reading up his comments like a storm. we also have an analysis piece touching on some of the same things you have been talking about. why this nasdaq 5,000 is
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different from the last nasdaq 5,000 whereas the last one, a lot of companies didn't have a profit. now they actually have real businesses. so go for that. and then finally we also have a nice little piece with this run up, a few stocks are trading above where they should be according to consensus analyst estimates so there are stocks ready to drop. we have them all listed out. mostly consumer cyclicals and a few tech stocks. >> all right. got to see that list. thank you for now. appreciate it. >> take care. >> to some people it seems like only yesterday when the nasdaq first hit 5,000. one of those people was cnbc contributor and former anchor ran insanaa. up next he joins us to discuss if the good times are back for the nasdaq and what about those glasses? stay tuned. ♪ let the good times roll ♪ ♪ let them knock you around ♪ grind virtually any kind of food waste
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welcome back. today the nasdaq closed above 5,000 for first time in 15 years. let's talk to somebody who has witnessed the rise and fall and now the rise of that index again. joining us is ron insanaa, a cnbc contributor and someone who manned as you saw into break the cnbc anchor desk during the nasdaq's last rise. ron, great to have you. >> thanks kelly. >> and what lessons, what
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perspective can you share with us about the 15 years it's taken to reclaim that level? >> you know in some ways when you have a bubble and a bust and you go back to 1929 the dow hit 381 in september of 1929. it went to 41 by july of 1932 down 90%. and it took 25% for the dow to go to 381 back to 381. this 15 years after what was a truemania for dotcom stocks it's probably appropriate we went through this period. the nasdaq went up 85% in 1999. it's interesting to talked to stan druckenmiller. after russia defaulted and the fed eased in the fall of 1998 summer of 1998 stan told me it was a generational buying opportunity. and it was for 18 months and then the nasdaq peaked out in march of 2000. >> looking to the panel as well as we're reflecting on the
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difference in valuation. i mean i don't know -- i'm tourous if people would cast this as a fundamentally victorious story or a negative one where, wow, look it took 15 years on an inflation adjusted level. we have 2,000 points still to go. >> there is a victory here we haven't touched on yet and the really important victory is going back to the nasdaq days, 30 years old, the index is 30 years old. when the index was started there were really only two indixex to start from. the dow jones, the s&p, maybe russell for small cap. the nasdaq 100 in 1998 made a huge difference. and that became really important. it's both the largest companies in the nasdaq it's u.s. and non-u.s. company that is leave for a tax haven, they're in there, but the other element they added is it has to be a very liquid company and it has to have liquid options. so it became really important, and today the victory is really to nasdaq because so many more
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planned sponsors ie pension funds, are looking to the nasdaq as a way to measure the performance just the snp. >> you know the macros are a lot kircht today. this is a point that i made. >> yeah i want to go through with it again with you. if you look the fed was tithing in in 2000 and the curve inverted big time and you know everything e went down. i am just saying today that i do not see anything like that, and i don't think that the fed would be that aggressive. you know what ron maybe for a couple of more years. >> yeah, i do not disagree with you larry. then it was a couple of years before the feds starting to tighten and there was a pause
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and the fed eased and then as things heated up they start today raise the rate into if year of 2000. they were providing $50 billion to offset the impact of y 2 k. a lot of people for get that stuff. >> i want to go -- >> yeah our passion walked by here as efs leaving the building to remind us of that. >> this is a cool story. y 2 k and everyone was worried that the company was going to break down. >> and that planes were going to fall out of the sky. >> yeah planes falling out of the sky. so green span wakes up on january 21st 2000 and wants to see if it's a problem. he took the cash card and put it into the atm machine and getting the money, so the whole y 2 k
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falls apart and then they comes home and has a massive tightening period and that kills nasdaq snp. >> yeah we had a depression and reseegscession and the feds eased after 9/11. they worried that it was going to get worse. that marked the bottom of the cycle and they started to ease and that lead to the run up into the most resent crisis. this is wildly in the sense that they're talking about the secular moves. that was a move and we have a rebound. we have a different nasdaq and different variabilities that work. >> let's go to the piece of this. where are we in the cycle. is the nasdaq appealing here? >> yeah i don't see why not. the companies here and apple is sellings selling at 17 percent earnings. you have talked about this today.
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there are companies -- and i saw the mouth and those companies did not have it but they were raising capital dm the i po market to add ver fiez -- we have real profits and cash flow -- they mention cnbc in the winter and that's how far we got into the culture. >> yeah i just saw that. >> it was a crap shoot until they put the cash card into the atm. by the way he was in the pg's and slippers and had to change the policies. >> i should have asked him about this on thursday. we will get him back. that's not the end of the discussion. thank you so much. >> thank you for noticing the glasses kelly. thank you so much. >> never looked better. >> you and bill griffin do not age. >> there was a mandated hairpiece in that last shot. >> mine is too.
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kidding. up next the final thoughts and where the market is going from here. ♪ at mfs, we believe in the power of active management. every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.
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we have heard from a number of people on this and we have heard sam on what the feds should be doing. anything on that interview. >> miller is an old friend and smart guy. yes, i think that he was a lot less farrish about the fed than he was in the past. >> you feel that way. >> yeah i wrote almost three years ago and said that the feds buying bonds that there's a trap. it's not going into the money supply. the fed did not work. you know what? that's great. if it had worked we would have 15 percent inflation. now, they're in good shape and they talk and acts hawkish. >> stanley's message and spoke before friday and now we're seeing interest rates edge higher. is this a turn here where the fed begins to raise and
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inflation starting to get -- >> stan said that rates are likely to move 25 to 50 basis points and you we know that it's different with regards to all kinds of crisis going on. one of the things that's important is when the feds begin to raise, there's nothing to say that it needs to move 25 percent of the time. if they want to get up that could be five ten points. we know one thing and she wants to move slowly and not put the economy at ris. kayly brought up some great points. >> yeah it's left to be seen in they will not and goldman calling for a three percent ten year and they're expected to deepen where treasuries are concerned. people are postering for this. the expectation social security that
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s is that it's coming this year. >> i thought bond rates would be three percent now. >> almost everybody. >> i would have been more -- >> yeah. >> i have to tell you and roll the dice again. i would sell bonds. i would not own a bond. >> so does that mean to buy a house with the most you can afford? >> the those out there less the souls. buy and hold some stocks. it's been a long term strategy and i think that it will work gain. >> well, that's words to live by by the way dianne. is there a fundamental basis for this or is it going to come back to continued growth and corporate earnings? >> the economy is growing and i think that we have no inflation in the environment. right now we have an inflation freer free era and the economy is here and it's going continue to
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grow, but at a slower pace. >> i know that you're excited about friday's job reports. >> yeah already counts. >> we're going to get a big piece of it and that does it for us. fast money begins right now. ♪ a historic day for the nasdaq and climbing above 5,000 for the first time in 15 years. we're covering every angle throughout this year. fast money and live from the heart of the action and over looking new york city's time kwar and the traders are here. we will hear from managing partners and the ceo on the tech areas that he is looking to get into right now. plus the top plays to own according to the charts. is not all gains for the nasdaq.

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