Skip to main content

tv   Power Lunch  CNBC  March 23, 2015 1:00pm-3:01pm EDT

1:00 pm
toyota. i still like ford. i like what's coming out as we look forward and some of the activity that we saw this past week. i think this is a stock that's on the rise. >> all right. stocks near historic highs again going for the first back to back gains since february as we said some three hours to go and michael lewis is coming up on power lunch right now. >> good afternoon, everyone. welcome to a relatively special edition of power lunch. michael lewis has become one of this generation's most influential writers. probably author of the best nonfiction i've read in the last 25 years. you know the books. liars poker, big short, blind side money ball. perhaps none sparked a firestorm on wall street the way flash boys did. >> welcome back. >> thanks for having me. i wasn't sure you were going to have me back after last time
1:01 pm
sfwloosh we love having you here. we like fireworks. i'm not promising we're going to have any today. you have just written a new afterward. as i read that which is really a history of where we've come since the book came out about a year ago, i sense that you seem a little more agitated a little more disturbed, a little more angry. is that fair? >> no i don't think i feel more angry. i feel -- you know i feel like i've seen this movie before. the response to the book was very similar to the response to "money ball," i had this main character who was a disrupter in his industry who was holding up a mirror in the industry and the picture that he revealed wasn't flattering. there was a lot of anger in response to the book.
1:02 pm
that's naturally agitating. you can't really -- that's true. it is agitating to me in the middle of a firestorm, but i basically have been pleased with how the book has been received. i mean i like -- to the extent it's been read as opposed to been just a totem for controversy, people have seen it for what it is. it's a story about a group of people who are inside the stock market who discover something is really wrong and set about trying to fix it which is not that unusual a story in other sectors of our economy, but it's an unusual story on wall street. >> the book certainly sparked controversy you didn't write it to be controversial, did you? >> i didn't. if you had told me nothing more than the bare facts of the case you had told me that the predatory activity was going on in the stock market or high frequency traders enjoy this
1:03 pm
advantage over eared investors and were exploiting it i wouldn't have any interest at all. it would have been one more nepharius wall street story. what's interesting is these guys that were trying to fix the problem. why they jumped that way rather than the other way? why when they saw a hole in the market rather than seeing it as an opportunity to exploit for profit, let's instead plug the hole and fix the system. that interested me. it was -- i thought it was kind of an inspiring story. >> your books are also about characters and developing those characters. >> do you think high frequency trading is unfair inherently? >> i think the way the market is
1:04 pm
structured, it is unfair. wronk, for example -- >> certain individuals take advantage of those holes that you describe. >> i don't think -- i think that -- put it this way. this is maybe a better way to put it. so there is half the market is high frequency trading. half the trades are high frequency trading and are involved. when i read the exchange that -- which is structured to create a level playing field between high frequency traders and everyone else, they still are 18% to 20% of the market. it looks to me like in a fair marketplace high frequency trading still exists, and it would be one-fifth rather than -- to distinguish it between good hft and bad, no
1:05 pm
reporter could get to the bottom of that to figure out who the good guys are and who is benign and who is toxic? >> right. >> let's go back and look at some of the -- part of which you played in and brad katsiama and the head of bats a man named bill o'brien who was sitting there tangled. let's take a look. >> michael and brad shame on both of you for falsely accusing literally thousands of people and possibly scaring millions of investors in an effort to promote a business model. >> do you think the markets are rigged? >> i think it's really hard to put a word on it. >> you said it in the book. that's when i knew the markets were rigged. it's disgusting that you are trying to parse your words now. you can't say that. >> you are quoted that way in the book. >> let's walk through. >> do you believe it or not because you said it. >> let me walk you through an example. >> it's a yes or no question. do you believe it or not? >> i believe the markets are rigged. >> there you go.
1:06 pm
>> i also think you're a part of the rigging. if you want to do this let's do this. >> i think he is outrageous. i think he is part of the problem. >> we reached out to bats for a comment one year later. their only comment was we have no comment. does that surprise you at all, michael, that they would have no comment and more to the point do you still believe that the markets are rigged? do you in any sense regret using those kinds of terms in the past? >> i do believe the markets are rigged. i think it's not a bad description. the only reason i regret the word is that it's used in a way that overshadows everything else. it distracts. my biggest complaint about the response to the book -- and this is going to -- this is going to sound disingenuous, but it's absolutely true -- is the book generated this instant controversy, so once it became this object of controversy, it
1:07 pm
didn't get read for what it was. it got seen as this provocation. i stumbled across what i thought was a fantastic story, a narrative that carved out of wall street, and i wanted to tell that story as best as possible about these characters and it was a side show that it generated the controversy it did. i can see why it did, but it wasn't central to my motivation for writing the book. >> is the complexity of the marketplace with all of the different exchanges and the dark pools and the various places people can trade, is it something that ate to be fairly simple? is it the very complexity that creates the opportunity for exploitation on behalf of the people who have high frequency trade? you said very clearly a moment ago, high frequency trading in and of itself is not the problem here. it's how it is used. you got no problem with people who got fast computers.
1:08 pm
it's just how they're used and what they pay some of those transaction sites to be able to do. >> i think it's generally true that complexity is the new owe paft in the financial markets. it's the way bad behavior gets disguise and it gets made very complicated. complexity was at the root of the financial crisis. it was like nobody understood. that's why that was allowed happen. it's not a healthy thing for the society that it does not understand how its stock market works. >> do regulators understand it? >> you have to ask them. it's not clear to me from what they say publically that they do, but have i to believe they're informed, and it does seem that regulators are conflicted, conflicted partly because they are -- i mean i think it's fair to say captured by the industry. >> a lot of regulators go to work for the industry. >> right.
1:09 pm
>> including mr. chilton who is at the cftc. >> true. i'm going to decline -- i may just hit the overhead. i think the subject of the stock market right now is so complicated i think i would -- we're t would not surprise me to learn that within the s.e.c. they're arguing with each other about how it actually works. >> right. >> i don't think there's a clear picture. i think this man has drawn the clearest picture i've seen of how it works, which is why it interested me. >> we're going to come back and pick up with you in just a minute. you've been nodding, but first i want to bring in bob pos ani. how has high frequency changed over where you sit from the past year and how well has iex done the exchange that michael talked about had in his book and that brad helped found? bob pasani been looking into
1:10 pm
it? >> mr. lewis's book has generated a lot of debate over high frequency chairman although chairwoman mary jo white said they're not rigged and she said high frequency trading is not unlawful insider trading. another former regulator has strongly disagreed with the characterization that high frequency traders engage in legalized front running. >> this book is not based upon fact, and when they start throwing around things like front running, you know i'm a former regulator. we looked at these guys all the time. not just hft's but all traders in the market and the investment advisor's act section 206 describes what front running is, and it cannot be done by hft traders. it's just a big lie. i don't mind debating issues but it has to be based on the facts, guys. >> in january his wife created ab equity market structure advisory committee to advise the s.e.c. on what if any, changes need to be made in market
1:11 pm
structure. it's scheduled meet for the first time in may. on the enforcement front, there's been several investigations announced in the last year including from the fbi, the u.s. tel attorney general's office, the new york attorney general's office, and the s.e.c. there have been several fines against exchanges as well. the exchange direct edge now part of baps was fined in december 2014 for failing to follow rules regarding disclosure of how it handles order types. perhaps the most high profile case, the new york attorney general, is currently embroiled in a dispute with barclay's over the way it has managed its dark pool alleging that bank did not tell traders about the presence of high frequency traders in their pool. there have been very few active movement against high frequency firms or individuals themselves. this may be because of the difficulty of proving intent art data isn't sufficiently robust to demonstrate abuse. now, the sec is trying to remedy that. there are proposals out now for a consolidated audit trail that
1:12 pm
would allow regulators to track not only the trades that get executed, but also all of the bids and asks that traders eventually cancel. that database eventually would be huge. it may be several years before we see that one. one rule that will likely be adopted very soon, the sec is trying to require high frequency traders to register with the s.e.c. this seems like a no brainer. if high frequency traders are such a big part of the trading process, why doesn't the s.e.c. know much about them? this could be implemented later this year. as for iex, it's been a very busy year for brad and his company. the company raised $75 million in financing from investors last year and it's seeking to become an official stock exchange. now, it is roughly 1% of the trading volume. that may seem small, but that makes them the fourth largest dark pool after chris suisse ubs and deutsche bank. quite an achievement. finally, it's been unfortunate in my opinion that most of this debate has been about high frequency traders and whether the market is rigged or not. i think the real focus should be
1:13 pm
on the very strange relationships that have developed between brokers and dark pools and exchanges at high frequency traders that has led to the markets being excessively complex and potentially error-prone. back to you. >> bob, thank you very much. michael is still with us and also to react iex is co-founder and ceo brad. brad, wblg. good to have you with us. >> thanks for having me. >> do you bristle at all when he characterizes your business as a dark pool? that sounds dark and poolish. >> i think it's one of the biproducts of being a start-up. we started this with our own money. we ran out of that money pretty quickly. it took ace long time to get funding, and when we raised our first amount of capital, the only thing we could afford to be was an alternative trade system or a dark pool. i think everyone has to start somewhere. that's where we started. you know we did raise a big round of funds last year and are in the process of looking to become a full-fledged stock market. >> are you seeing more and more
1:14 pm
volume and business from companies, business houses small houses come to you because they want to avoid -- >> we have a simple market. our rules are transparent. we use technology to protect borders that are sent to our market. as a result, we have a large following on the buy side. you know, retail brokers interactive brokers are connected, but most of our support has come from the brokers.
1:15 pm
>> advantages shouldn't be able to be purchased. fast technology and fast data. it should really be about investing, understanding companies, and building a very diverse market. that's what we're looking to do. most of all it's about fairness and i think that's kind of our key tenant. >> as you look back over the past year what has surprised you the most about the reaction on wall street among regulators -- you testified -- >> yep. >> -- among regulators congress, and so forth? what has surprised you the most and have you received a lot of hate mail, a lot of nasty tweets, what? >> any time you say things, there will be people that aren't happy. i agree with what bob said prior. there was this real kind of intrinsic laser-like focus on high frequency trading when in
1:16 pm
reality it was the system overall. it was about dark pools and hft and brokers and exchanges, and, you know, really at iex, i feel too like i got way too much credit in a way. iex is a team of people. we have people from across the industry, parts of the system. people that worked at exchanges and big banks and hft regulators, and when we came together, we kind of painted a picture of the market that we believe was not set up in the best interests of traditional investors. ultimately, fast and slow traders were not meeting on fair terms. >> so what we were talking about a moment ago, complexity is one of the things you say your place is simple and complexity is one of the things. >> there have been. >> but relatively few.
1:17 pm
>> i think, you know when you look at the cases that are being enforced a lot of them come from this position of fiduciary. you have a higher level of responsibility than when you don't have any, and i think in the case of high frequency trading firms, they don't have clients. they're proprietary traders. if you look at how to attack this problem, you start at the inside and look for people that have more fiduciary responsibilities and then you work your way out. it's not surprising the way that these cases are being investigated. i think it's actually the sensible way to do it. >> whey found shocking was what was legal. not what was illegal. it never occurred to me that law breaking was going on. what was shocking was the system was structured in this legalized front running going on.
1:18 pm
>> if that's the case then it's quite possible no one will be prosecuted, but the system needs to be fixed. >> one of the things in the afterward that you wrote and in the ""vanity fair"" piece, which brought it home in a way, who gets hurt by this? who -- i know who is benefitting. who gets hurt? >> it's a tax on investment dollars. >> how big a tax? >> this is a great question. so this is one of the things that iex enabled. once you eliminate the scalp, it's to see the size. i talked to one of the country's biggest mutual fund managers and -- because they had been trying to estimate the size of the scalp was. how much they -- how much it cost them to trade off iex as opposed to on iex, how much the market moved against them because it anticipated their
1:19 pm
orders and it was a firm that did $80 billion in stocks last year, and their estimate was it cost them $240 million. it's a little less than one-third of 1%. stla that was the big. >> the big. so it's -- the number is not trivial. i mean -- and this is not -- >> that's one firm. >> it's one firm managing the savings of ordinary people. firefighters teachers unions. >> pensions. endowments. >> it's a tax on those savings. it's -- i wouldn't be comfortable saying from one firm's analysis that that's the number. clearly it's a number -- there's a number and it's not trivial. weesh going to take a pause. michael is going to stick around, and we're going to continue our conversation and broaden it out. we'll be back with more after this. ♪
1:20 pm
50ir7g9sz d, had a passion. my whole life i wanted to teach myself to build computers. i wanted to build these things for free. i just wanted to do it for the world and you know when you want something, that's what you do the best. ♪ ♪ hello. i am technology that is changing investing forever. i am a fully automated investment advisory service. i can help you choose the right portfolio. monitor it. and even rebalance it. i've been called innovative. revolutionary. and just plain smart. i'd blush at the compliment if i could. but i can't. so. i won't. say hello at intelligent.schwab.com
1:21 pm
1:22 pm
the value of a mortgages backed security. flash point is the value of a millie second. you have looked at bubbles and pricing. are we where you sit anywhere close to a bubble in the stock market particularly in nasdaq
1:23 pm
particularly in biotech stocks? >> so the last time i'm on this show, i got in trouble for saying the stock market is rigged. now you want me to say if it's a bubble. how much trouble -- >> as much as you're willing to step into. >> i am really reluctant to prognosticate to predict what the stock market is going to do? if i thought it was a bubble would i have sold my shares. i don't feel -- >> what do you invest in? >> i'm really boring. if things really go bad, is he going to be sitting there with a pile of cash buying up on really good terms. he is my hedge. then, you know how much is in the stock market? that's it. i don't think about it. i try not to think about it at all. i try to focus on making it and not losing it rather than making it in the market. >> you've been writing about wall street. you work there.
1:24 pm
you've been writing in large part almost 25 years ago. >> yes. >> how has the world of wall street changed? what's different? >> the geek advisory taken over is the big thing. the story of flash boys is -- but the -- that's one big change. there was still a -- it was a kind of sense -- a bit of a sense of loyalty. >> is it better that way? >> totally better that way. >> publicly owned companies -- >> i think this free agent model is a disaster. i think the people that -- the best possible way to structure risk taking enterprises is partnerships where the people who are there are on the line
1:25 pm
and on the hook because otherwise they don't -- >> otherwise the risk is born by the shareholders. >> right. >> who are not -- they are investing. >> it creates the wrong incentive. i mourn the loss of the partnership, and i wonder how you get it back. you get it back in a way, but hedge funds -- >> hedge funds are partnerships. >> that's a smart structure. if you lose you really lose. people got rich making really stupid bets. the wig change is a byproduct of the geeks taking over is it is so much more complicated than it was. you cannot explain the stock market to my mother and that's a problem. i could have explained it 25 years ago. >> your next project i hear is in television, but i just want to take note, big short starts filming today. >> today in new orleans. >> in new orleans with a guy named brad pitt. >> steve carrel and ryan gosling
1:26 pm
and christian bale. >> congratulations. good to see you. >> good to see you. >> michael lewis, "flash boys" out in paperback with a new foreward or afterward. we'll be right back.
1:27 pm
1:28 pm
welcome back to "power lunch." an intraday of tens shows you everything you need to know. yes, we're down a couple of basis points but we're exactly
1:29 pm
on two's, five's ten's, 30 estwhen the stock market opened around 9:30 eastern. open the chart up to the spring of 2013 and you see what's important, whether it was april of 2013 or january of this year right around the 160s seems to be the biggest support and in between 186. that, of course was the intraday low -- i'm sorry. october 15th of last year. if are you looking at 2446 hour chart, rates started to gravitate up a bit towards the he wanted of the session. that meant that it was backing in most likely to the move in the euro which continues to be a bit higher over the last several sessions. sarah, back to you. >> higher for the dow and s&p as well. nasdaq lagging behind. coming up war of words over greece's debt problems. we'll talk to michelle carusa cabrera for the latest from greece bhek on "power lunch."
1:30 pm
in new york state, we're reinventing how we do business so businesses can reinvent the world. from pharmaceuticals to 3d prototyping, biotech to clean energy. whether your business is moving, expanding or just getting started... only new york offers you zero taxes for 10 years with startup ny business incubators that partner companies with universities, and venture capital funding for high growth industries. see how new york can grow your business and create jobs. visit ny.gov/business can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long
1:31 pm
you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is can your business deliver?
1:32 pm
hello. i'm sue herrera, and here's your cnbc news update for this hour. tunisia's prime minister fired six police commanders, including the head of tourist security
1:33 pm
after a militant attack on the national museum last week in which 20 foreign tourists and visitors were killed. it was the worst attack in more than a decade in that country. todd jones, the former director of the bureau of alcohol, tobacco, and firearms will join the nfl as special council for conduct. he will administer the policy that applies to all nfl employees. this comes on the same day that former nfl player darren sharper was sentenced to nine years in prison for a sexual assault in arizona. it may be spring but try convincing chicagoans of that. the snow is coming down pretty hard during this morning's commute. up to five inches of snow is expected. more than 270 flights were canceled at o'hare airport. an english king will be buried this week. more than 500 years after he was killed in battle. thousands of people line the street in lester england, this morning to view the remains of king richard iii. those remains were discovered under a parking lot in 2012.
1:34 pm
that is your cnbc news update at this hour. back to you, sarah. >> thank you. less than one week after the fomc meeting chair sam fisher is speaking out. our senior economics reporter steve liesman is there live with the highlights. steve, he took some questions. >> yes, he did. i told you at the beginning -- at the last hour that stan fisher, the fed vice chair, said interest rates are likely this year -- he was asked during the q and a, well what month. if it's june or september or some day in between or some date after, it will dpoend the data. he did talk about when asked about the issue of the stronger dollar about manipulation of the exchange rate. here's what he said. >> what is not acceptable is manipulating exchange rates, trying to use that as the sole means of generating growth. that is not happening as far as
1:35 pm
we can tell in our partner countries. >> that seems like a kind of green light for european qe. not really an issue for the fed at this point. now, part of the whole talk both the discussion and in the q & a was about preparing this -- the markets for eventual rise in interest rates. here's how he characterized not the first type but later hikes. >> there is one point which is critical to understand. when we raise the interest rate as we probably will do one day, from zero to 25 -- from zero to 25 from 25 to 50 basis points we will be moving an ultra expansionary monetary policy to an extremely expansionary monetary policy. >> so we have the economist in stitches in the audience there, tyler. that's the stan fisher that a
1:36 pm
lot of people know. kind of a rye humor. that's actually policy. he is saying don't worry, when interest rates start to rise they're going to remain low for a very long time. >> thank you very much. alexis is in berlin today for his first official visit as greek prime minister and his first one-on-one meeting with chancellor angela merkel. our chief financial correspondent is here with that story. hi, michelle. >> one of two key events today. let's start with that one. first, on his first visit to germany as greek prime minister alexis seeking to mend fences with the main bail-out predator during the talks that are happening right now at this minute. they're going on with german chancellor angela merkel. the country desperately needs money. the debt-ridden nation are seeking to halt the downward spiral in relations. we are waiting for them to hold the news conference. it has just started now. it's in greek and in german, so we will bring you the highlights as soon as we see them unfold as
1:37 pm
we speak. they must have just come to the podium. the second big event is mahero droghi testifying in front of the parliament today. it ended up being mostly about greece. it got contentious. it became very clear in this exchange that we're showing you right here with one of the parliament members from portugal that he has really kind of had it. she asked him a very long-winded question and basically she said aren't you blackmailing greece and he began his response by saying let me tell you, i disagree with everything you just said. here's more. >> are we blackmailing greece? well, it's a big reach when you look at the exposure that we have with greece. ecb has 104 billion of exposure to greece. this is equal to 65% of greek gdp, and it's the highest exposure in the euro zone. it's -- whatsoever blackmail is
1:38 pm
this? it's up to you to judge. >> up to you to judge. if are you familiar with central bankers, that's about as emotional as they get. that's incredibly snarky on the part of mario droghi. he has clearly had it. >> here in five minutes we've seen central bankers with humor and central bankers getting emotional. that was a putdown right there, a serious putdown. >> for sure. a serious putdown. it went on. there was more than that. i just gave you one of the big highlights. he is clearly -- they're waiting for greece to come to the table and do something meaningful here. >> michelle, thanks. sarah, back to you. >> love when central bankers get feisty. >> there's a lot of volatility in the energy market. oil is rebounding today. how is the industry positioning itself? the biggest players are meeting right now in new orleans and that's where our jackie deangeles is there live. jackie. >> hi. good afternoon to you, sarah. well, the issue down here what's being discussed is sort of a cash conundrum, institutional investors raising record amounts of money in the
1:39 pm
energy exploration and production industry but the cash is sitting on the sidelines. the question right now that they have come here to explore is when the timing of that investment should be when they should take that money off of the sidelines. of course, we did speak to the wpx ceo on "squawk box" this morning. the producers have their own view on the timeline in terms of pricing. take a listen. >> second half of the year looks rerowe bust on the pricing front. near term i think we're going to see some pressure. >> okay. that is the standard line that we're hearing from companies that are speaking at this conference, but a lot of the investors are saying they think the can is being kicked a little bit more down the road. that is because slumberge said it expects production declines in the u.s. to not significantly occur until 2016 so potentially we could see two or three month timeline shift a little bit and investors need to think about
1:40 pm
that as they're positioning themselves. yes, cap x cuts for future investment have certainly been made. yes, those rig counts are declining. as one investor put it i think they're really taking their buicks off line. they're keeping -- those are the rigs that are producing the most right now. these are some of the issues to think about when you are watching crude pricing. a lot of people telling me they think a three handle is very possible in the next month or two. back to you, sarah. >> all right. great color and commentary jackie, from that big energy conference. coming up at 2:00 p.m. eastern time we'll have a cnbc exclusive, the ceo of southwestern energy. tyler. >> sarah, your eyes could soon be scanned when you get into your car. it's billed as an extra layer of security, and it's a battleground for tech taking place in your car. that story ahead in the second hour of power. meantime, we'll be --
1:41 pm
hey, girl. is it crazy that your soccer trophy is talking to you right now? it kinda is. it's as crazy as you not rolling over your old 401k. cue the horns... just harness the confidence it took you to win me and call td ameritrade's rollover consultants. they'll help with the hassle by guiding you through the whole process step by step. and they'll even call your old provider. it's easy. even she could do it. whatever, janet. for all the confidence you need td ameritrade. you got this.
1:42 pm
when the moment's spontaneous, why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical
1:43 pm
help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. >> ubs analysts are upgrading to a buy rating noting a favorable risk reward proposition for those shares. the investment bank thinks the office supply's retailer will more likely than not be able to close on its acquisition of office depot. saturday those shares up by nearly 4% today. back to you. >> all right. having a good day. an overall up market. the dow and s&p trying to post back to back gains, but the nasdaq creating lower. how do you invest in this environment in you have a rally one day and a selloff the next. joining us to discuss, david katz from matrix asset advisors and robert luna at shehrer best. you've been with us for a while. every time we get the big selloff, you said buy the dip. it's worked for the last few years.
1:44 pm
is it worth the strategy even with the volatility picking up here? >> we believe it's going to work in 2015. we think it's going to be like last year where you have 4% or month more. we would suggest a strongly buying on the dip this year. understand that when the dips are happening, the news flow will be pretty bad sxwshgs then focus on a stock by stock basis. >> robert,, what's different is you have a sharply stronger dollar which a lot of folks are worried about, and rightly so. we've seen the impact on corporate earnings. can this market continue to climb higher stocks even if the dollar continues to strengthen? >> well, you know i think it's going to be challenging because you look across the board. there's clearly nothing extent i restoration hardware that's really changing the landscape, and overall, the market is pretty fairly valued. >> you say income is still an
1:45 pm
issue, and energy names like conoco and chevron have dividends. does that mean you want to be in energy? we talked to david ruben stein from carlisle and he says he is bullish on energy more than any other sector right now. >> when you have a fairly valued market, have you to look for really big growth or look to be a contrarian, and i think energy is probably the most contrarian call out there right now. when you look at valuations across the board, a lot of the big majors look cheap right now. you still have a ten year that's dealing only 2%. when you can get twice that from conco or chevron. that's a good place to put your money. >> does it seem like a contrarian play? to me it seems like everybody is trying to bottom fish. they're looking for this rally to come and it seems like the crowded position. >> we don't believe it's a crowded position. we actually agree with adam. we would expect oil prices to be a whole lot higher and we think you can buy good quality companies with the high yields like the conoco and chevron or royal dutch at attractive
1:46 pm
prices, and if oil prices do rebound in this year time frame, you will -- >> you like financials. is that where rates are headed with all the fed talk appearing this afternoon, vice chair stanley fisher and the week before that fed chair yellen. can the financials rally while the federal reserve seems to be indicating it's feeling a little patient right now. >> you can have a convergence of good factors. the stress test last week was fraet good. most banks did as good or better than expectations. we think in a rising rate environment and it's going to happen whether it's june or september, it's going to happen. that's good for a lot of financials, and the valuations are pretty compelling. with the market it's 17 17 1/2 times earnings. you have a lot of footballs at 12 times earnings. you are getting a relatively okay yield while you're waiting. >> robert better valuation setup in europe? how do you play that? >> yeah absolutely. i think so. if you are willing to take on a little bit more risk right now, i think you definitely want to step into europe. valuations are much cheaper than the u.s.
1:47 pm
back to the income play dividends are substantially higher overseas. this is the first time we've seen in over five years actually we're to date where you are starting to see europe significantly outperform u.s. markets. as an investor you want to think diversification. some of the gains you've had in the u.s. prshgs i think it's time to die dee ploy those overseas right now. >> are you more focus odd what central banks are doing or what fundamentals of the economy and earnings are doing? >> you want to factor both in. there's not an either/or. in terms of europe we do like europe now but if you are a u.s. investor and want to stick to mutual funds, we would stick to mutual funds that hedge currency. if you are in a european fund that doesn't hedge currency you might be up 2% or 3% while the markets rup 15%. >> those are certainly in demand. thank you for discussing the markets, david and robert. be sure to go to power lunch.cnbc.com right now to see david's play on energy. that's powerlunch.cnbc.com. a lot of actionable tips in there. tyler. >> sarah, you're not going to
1:48 pm
believe this. pesky primates are creating problems in india snatching food and bags and running away. authorities think they have found a way to tackle the problem. we have film and the story in two minutes. pefshgy prime mates. you don't get that just anywhere. ♪ [upbeat music] ♪ defiance is in our bones. defiance never grows old. citracal maximum. easily absorbed calcium plus d. now in a new look.
1:49 pm
1:50 pm
now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. 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. shares up about 6% in midz day trading. analysts with a strong buy saying investors should buy the stock on the prospect that biogas station gen's alzheimer drug will cut costs for the long care insurance contracts in the
1:51 pm
longer term. tyler, an interesting play. one drug may cut the cost for an insurer later on down the line. back to you. >> dominik, thank you. >> this is bananas, folks. the indian city home of the tauz ma hall being overrun by monkeys. they've created problems for passengers and shop keepers at train stations. they snatch food and take bags and run away. the monkeys are also climbing on electric lines and transmission systems. authorities now think they have found a way to tackle the problem. they have employed langers. these are giant monkey with distinctive markings at various train stations in the city to try and ward off the smaller monkeys. big monkey scares little monkey. one train station manager says passengers, passengers are to blame for the monkey problem because they often feed leftover food to them. sarah. >> i don't know how to follow that. i'm sure -- >> there gu. >> i'm sure the tourists love that crazy story.
1:52 pm
here are the this hour's power points for you. flash boys michael lewis's book on high frequency trading being released in paperback with an afterward covering wall street's reaction to the book's allegations. vice chair stanley fisher saying there are no plans for regular series of rate increases on the part of the federal reserve, and greek prime minister alexis and angela merkel they're in berlin meeting for the first time in an official one-on-one meeting. reminder, if you missed any of the stories in the past hour go to our website powerlunch.cnbc.com. tyler. >> sarah less than a week after starbucks started its campaign to spark a dialogue about race issues, the coffeemaker now tells its barristas to stop writing "race together" on cups. was this campaign a good move for starbucks? that's today's power poll. 18% of you say yes, it was commendable. 66% say firms shouldn't engage in social issues and 17% say
1:53 pm
starbucks should try a different campaign. well, the ultimate mansion amenities for the super rich. marble yacht docks and sky garages. robert frank as usual on the story. >> well when you have a 400 foot yacht, it's hard to find a dock big enough to park it. we'll show you a florida mansion with a $2 million dock and the ferrari with the best view in all of manhattan. that's coming up. so you talk to
1:54 pm
your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at
1:55 pm
see car insurance in a whole new light. liberty mutual insurance. ♪ help northern china reduce its reliance on coal fire heating plants and prevent 60 million tons of co2 emissions? when emerson takes up the challenge it's never been done before simply becomes consider it solved. emerson.
1:56 pm
>> coming up a big hour for your money. the ceo of an oil company that just sold off assets reveals why he did it and what he thinks is ahead for the price of crude oil. plus a guy who got it right on bonds unveils his latest surprise prediction. probably the most insane super car test rack that i have ever seen. >> sounds cool. we'll check it out at the top of the hour. now, if you are a big fan of peanut buttercups dive into this. using a -- oh gosh is that gross? look at that. using a kitty pool and more than 400 pounds -- 440 pounds of ingredients, a los angeles candy shop says it has smashed the guinness world record creating the world's largest peanut buttercup.
1:57 pm
the giant treat will be sold off in one pound pieces. a poubd is a lot of peent ut buttercup. the proceeds sarah, will go to charity. >> i don't think it looks gross at all. i think it looks delicious. >> to the world's richest and their extrav gantt amenities. robert frank of course is here with that story. >> that is very super rich. all right. forget designer kitchens sarah. home theaters and infinity pools. the hot new status for today's super rich are parking garages in your penthouse and docks for your mega yacht in the backyard. check this out. >> welcome to the sky garage. >> how many buildings in new york have something like this? >> there's only one. there's this. this is the sky garage building in new york. >> to be able to drive in off the street and never get out of your car before stepping into your kitchen. ♪ >> while some of the rich want a view of their car, others want a
1:58 pm
view for their car. this ferrari has a view of the empire state building 14 stories above manhattan. and sky-high views come with a sky-high price tag. $20 million. it may not look that impressive but broker and i are walking on a dock constructed out of solid marble. the cost? $2 million. >> 450 feet of direct waterfrontage. all the marble was imported from italy. >> italian marble across 450 feet. that's the length of three statues of liberty, and enough stone to make more than 90 marble bathtubs. the draw here has absolutely nothing to do with all that fancy marble. the super rich are building bigger boats. some over 400 feet. the cost? more than $200 million. very few homes come with a spot
1:59 pm
large enough to park them. >> all right sarah. the price for that house in boca, $19 million. the price of that place in manhattan, $20 million. now, the $200,000 ferrari california tea which i would just take that that is not -- >> the view of the empire state building? >> that is not included. again, you know you look at the amenities, the amount of money that's going into -- the toes of the super rich it's not surprising that they want a place to put them. >> is this the best you've seen yet? every time you do this you have seen so many of these crazy things marble docks. >> this season bigger flashier better faster richer. i mean it is -- there was stuff this season that shocked me after doing this for ten years. check it out. >> that's a good tease. can't wait to see it. >> super lives of the super rich premiers tomorrow 10:00 p.m. eastern and pacific only here on cnbc. don't miss it tyler. >> all right. it's been a day of role reversals. are you usually here. i'm usually there. >> it's fun to be here. >> i'll bet. that's it for the first hour.
2:00 pm
>> all right. well, tyler, sarah, robert thank you all very much. if you could just consider us a different kind of peanut buttercup in this hour. it is 2:00 on wall street. just 1:00 in the big easy. i'm brian sullivan. melissa lee is at the nasdaq. welcome, everybody. the dow is struggling figuring out which way it wants to go. we have an important guest on right now because he not only runs a gas and small oil company, but one that is making some big moves on its balance sheet. something hundreds of millions of dollars worth of assets and paying down debt. cnbc exclusive is the ceo of southwestern energy steven mueller. we do appreciate you coming to the program. are these moves a sign? you are primarily a natural gas company, the fourth largest in america. are these moves a sign that you do not see the price of natural gas or or oil rebounding any
2:01 pm
time soon? >> our most recent dispositions helped finance that. what we did was basically double the size of our company with that acquisition, and it's almost all natural gas. i'm a bull on natural gas. >> okay. so you grew and now you're divesting. that would seem within 12 months a lot of people investors, might say, well do they really understand what's happening in the market? square the two. square the deal. now square the divestitures. why for each? >> the acquisition we bought was in northern west virginia and southwest pennsylvania. some of the best rock in the world for production has both oil and natural gas with it. mainly natural gas. we wanted to be in the best places long-term. one of the best places to be to do that we had equity and did some financing, some debt and then we just disposed of about
2:02 pm
$700 million worth of assets. >> what would have happened had you not divested these assets? >>. >> we're an investment grade company, and one of the things we want to do is make sure we retain investment grade. it's very important for us to do that, and part of the overall financing plan we proposed to the community and especially to the various groups that follow us from that side was that we do this divestiture as well. we're an unconventional gas driller. that's where all our activity has been. it wasn't part of the long-term plan. >> i wanted to ask you about that. your stock, steven is now significantly hit its high and a lot of people about oil and gas in general, equities that is, say.
2:03 pm
>> i don't know if i'm -- they certainly got them on the low side. you know, i used to talk about a falling knife. we think there's up side. there's certainly if you look at demand in the country, demand has increased on natural gas. it's been flatter or slightly down. the demand will continue to increase over the next five years. we think it's a perfect time for acquisition. buy low and then hopefully -- >> your -- it was $6.9 billion. the net debt ratio almost 60%, which is the highest in the group. i want to ask you about a point that ubs made in a recent note of theirs and that is that the up side case for your stock, for your company, is that your company be acquired because they prefer well capitalized and more oil weighted emp's, and, of course 93% of your estimated commodity production this we're is going to be natural gas. are you for sale? would you be open to talks?
2:04 pm
>> well let me also correct one thing for you today that 6.9 billion was before we did the equity. it's smaller now. that ratio is -- it's more like 40% today. having said that we're building a company long-term for a low gas price environment and consistently having great returns for shareholders. as we look into the future if someone comes to us and wants to pay us for that we'll be happy to talk to them about that but we don't have a for sale sign up. we're building this thing to continue to grow. we're already the forty largest producer. >> are you making a bold bet on the part of america where not a lot of other companies are -- you bought assets from chesapeake in eastern ohio northern west virginia. according to people i've talked to there are limited test results there. however, they are optimistic. we've seen dismal pricing in that part of the world, so you're placing a big bet here.
2:05 pm
what have you seen? geologically, testing, etsz that makes you so optimistic about this region? >> i think there's a little bit of a misnomer. we actually purchased and what we paid for was marcellus production. we had a lot of production there with 300 wells. utica is the big wells. there's about 20 or 30 a day. they all look good. we have some and that's the up side. >>stein, we're going to leave it there. thanks for the purpose your time. we appreciate it. >> thank you.
2:06 pm
>> steven mueller, the ceo of southwestern energy. sdmrirchlgt the national association of realtors says existing home sales rose 1.2% last month. that's pretty much in line with expectations. our own diana ohlick did some digging and found what could be a big red flag for housing. diana. sfroo well sarah, don't blame the weather. blame supply or lack thereof. that's what the realtors said in their february report. you heard the sales number but here's the headline. there are just 1.89 million homes listed for sale right now. that might sound like a lot, but at the current sales pace that's just about a four and a half month supply and a normal healthy market should be a six month supply. now, usually listings increase about 6% between january and february, but this year barely 1.5% increase. now, that's putting upward pressure on prices yet again. the median price up 7.5% in february. that's a reacceleration in price gains and the realtors chief economist called that "unhealthy." it's hurting affordability.
2:07 pm
especially for first-time buyers that are increasingly cash strapped due to much higher rents. their share just 29% of home buyers in february and it should be around 40%. now, the realtors do expect to see more listings come on in the next couple of months, and if you are one of those precious few about to list your homes, we have some tips for you. they're in a special video just for cnbc.com. selling tips for the spring season. go to it. there's already a great conversation going on around it. back to you. >> well, before we go to the website, give us one tip. don't give them all away. what's one thing we can do? you know clean things up. a little makeup? bronzer under the eyes. >> can you say clean things up. the most interesting thing i found in talking to realtors was don't turn the heat up too much. keep it actually colder than usual during your open house. people may be coming in in sweaters, jackets. the hotter it is they're going to want to leave. >> it's an interesting strategy. i dig it. diana, look forward to the rest of the tips. thank you very much. back to the stock market.
2:08 pm
midcap stocks they're kind of like the jan brady's, right? they don't get much love. cindy and marcia much more fetching. 400 midcap sector. let us bring in dominik, who joins with us a look at three of the mightiest of the midcap stocks. dominik. >> i know. okay. some of those home building stocks that diana just referred to may be beneficiaries in this midcap rally. traditionally a lot of money manager advisory looked towards midcap stocks as a sweet spot. it's where small cap managers go to look for a more defensive conservative play, and where larger cap managers will go and stretch to see a little bit more of that maybe outperformance there. if you look at the midcap stocks can you see that we've hit another record high. we're up about 12% just over the course of the past year. this index record territory. among some of the stocks that have really driven those gains, check out one of them. first of all it's an airline stocks. it's not the majors. it's jet blew blue. those shares are up 23%, and that's just year-to-date. jetblue shares along with a lot
2:09 pm
of other airline stocks, beneficiaries of the low oil prices that we've been seeing maybe the stocks helped drive the gains again going forward. another one to watch out for, is fast food. maybe the beneficiary of the lower fuel cost that is we're seeing. people can spend more in places like fast food restaurants. wendy's share up over the course of the past year-to-date. then one more. this is a deal relate item. it's a biopharma, biotech stock. salix pharmaceuticals. it's getting acquired by valiant for a pretty sgooent decent chunk. $175 in cash and stock. if you look at the shares up 50% year-to-date. midcap stocks interestingly enough melissa, are where a lot of the outperformers are because they're right in the middle where people can find value and growth at the same time. >> are there any trends when it comes to sector leadership within midcaps versus leadership in the large cap? >> there is in mid and small caps. small caps later on. from midcaps spatial, one of the things that you see really develop here is an idea that the
2:10 pm
drug companies, these medium size drug companies and biopharmaceuticals are powering the way higher. you see with midcap stocks, and later on this hour we're going to take a look at the small cap universe and there it's even more pronounced. we'll highlight a couple of names on that front as well. small caps and midcaps, a lot of biopharma really the theme there. back to you. >> all right. thank you very much. by the way, great song from a couple of years ago by a band called middle brother. it's called me, me, me. it's my theme song. a tale of two biotechs. two big analyst calls on two different stocks. plus a guy who got it very right on the bond market. has another surprising call ahead, and we're going to meet the cutting edge technology that gives new meaning to eye on the road. power lunch back after this had quick break. the road. it can bring out the worst in people. but the m-class scans for danger...
2:11 pm
...corrects for lane drifting... ...and if necessary, it will even brake all by itself. it is a luxury suv engineered to get you there and back safely. for tomorrow is another fight. th the 2015 m-class. r exceptional offers through rcedes-benz financial services. (trader vo) i search. i research. i dig. and dig some more. because, for me, the challenge of the search... is almost as exciting as the thrill of the find. (announcer) at scottrade, we share your passion for trading. that's why we rebuilt scottrade elite from the ground up - including a proprietary momentum indicator that makes researching sectors and industries even easier. because at scottrade our passion is to power yours.
2:12 pm
now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place.
2:13 pm
get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. sfo take a look at the nasdaq biotech index. struggling today down more than 2%. actually snapping an eight session win streak. this is ae sector that helped push the nasdaq to a new record intraday high last week. take a look at this across the board. the big caps are having a rough day today. meantime bullish call and a big downgrade moving two big drug company stocks today. let's go to meg with all the details. meg. >> hey, melissa. let's start with the bad news. check out biogen.
2:14 pm
stifel downgrading them to hold after a 10% gain on the back of exciting data for its experimental alzheimer's drug. the stock still up 40% so far this year. nearly double what the nasdaq has returned. stifel saying that's too rich to expect more growth and noting two biodgen's key programs and one multiple sclerosis. don't have expected catalysts for the next 18 months. now, on top of that stifel points out an ongoing patent dispute of the -- not everyone agrees. on friday they came out six analysts raised their price targets on biogen's stock. there's still a lot of optimism there. on the flip side a positive move for pfizer. the drug giant was added to the franchise picks list at jeffries which raised its price target from $3 to $45. it says it expects pfizer shares to appreciate significantly in the next year or two on a fast lodge of its new breast cancer drug i brands. the groh of its established products and proteshl splitting
2:15 pm
off of that business in 2017. now, remember pfizer just spent about $16 billion to acquire hospira which jeffries expects to boost that established products unit. >> melissa, back to you. >> i think brian has a question meg. >> well it's sort of a question. i don't know if it's a question/comment. we were talking about it on friday. if you remember that guys about whether there's a bubble. these are the names that i have. we put it on the big screen. they were lower on the year ahead of today. a big reversal is my point for
2:16 pm
biotech today. >> there's definitely a question if a reversal is going to come. i've been talking a lot about folks about this and the fear about this and the sdugs about this is mounting. people are really optimistic. >> i think it's important to note that there are a lot of generalists moving into the sector. it's not just a traditional health care and biotech portfolio managers who have the expertise to navigate this sector where we're seeing a lot of the generals come in but at the same time you're seeing the -- we take a look at the ibb which has the holings of the larger cap. we're to date or 12 months versus the fbt, which is the smaller cap, you will see it's been a better performer 12
2:17 pm
months we're to date, and some would say if there is froth in the sector it is in the smaller cap issues versus the larger cap. >> i think a lot of people would agree with that absolutely. a lot of people will agree that the smaller cap names are what you have -- they're not as driven by revenue in earnings. >> two quick points. because they're smaller caps maybe thaef got one drug in phase one. they have a long way to go before anything gets approved, and number two, i think you made an excellent point about the fundamentals, what has changed fundamentally, there's a lot of great companies in this list, and it's something we talked about last week. i think the point we tried to make on friday at least i did, was that you can't bet on 95% of these companies coming out with a hit drug. it's -- it would be so far out of the history calling -- >> the bigger point is when we're talking about the ibb, it's mostly the larger cap stocks with more than one drug. it's not the one drug in the pipeline with the hope. they have many drugs. they have anti-lingo.
2:18 pm
they have -- they have a pipeline of drugs. >> that's the biggest of the big. there are plenty of small caps in the ibb. >> what's fascinate about this entire thing is that biogen which does have that pipeline growth being driven then it's going downgraded. people say even names like biogen which has so much growth coming from the pipeline, even that's had too big of a run. that's why it's fascinating. >> i think biotech is not going away any time soon. >> the big battleground for technology. not your living room. it is your car. phil lebeau is here with one company that is giving new meaning to the eyes on the road phrase. phil. >> when you are looking at smart vehicles, check this out. the company is called i lock incorporated. it's based in new york city. it has developed new technology essentially small infra-red cameras and technology that scan your irises because you have already put your irises into the memory of the car, it will yous you to then start up the
2:19 pm
vehicle. therefore, it will cut down on vehicle thefts. at least that's the idea. we should see this in new cars within, oh three or four years, and insurance companies are certainly interested in the possibilities of insuring who is driving the vehicle and when are they driving it? check out the trucking companies. this is the type of technology they would also be interested in because they want to make sure that the certain driver is driving that vehicle at certain times. i lock would allow them to do that. eyelock is also in conversations with airport security firms about moving this iris scan technology into security checkpoints. the idea being this is a quicker way of perhaps identifying trusted travellers. >> we will see this type of technology move along quickly, along with eye monitoring
2:20 pm
software to make sure you are looking at the road not looking at a black bear or something else or dozing off. this is what we will see more of in the future. it's all about looking inside the vehicle, brian. not just looking outside. >> still ahead, we are talking electric cars, yoga mats and the olive garden. street talk it on deck. plus, this man bounces his way into the record books. we'll tell you how he did it why he did it when "power lunch" returns. i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.
2:21 pm
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.
2:22 pm
the future of the market is never clear. but at t. rowe price we can help guide your retirement savings. our experience is one reason 100% of our retirement funds beat their 10-year lipper averages. so wherever your long-term goals take you we can help you feel confident. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. call us or your advisor. t. rowe price. invest with confidence.
2:23 pm
>> file this one under extremely random record breaker. a polish stunt bicyclist set a new world record for most stairs climbed in one run. you can see the guy uses his bike to do it. he climbed, get this 3,139 stairs in the type a 101. that is one of the world's tallest buildings. it took him more than two hours to do it. the new boss same as the old boss because that guy had the previous record of 2,755 steps climbed at one time. he may as well -- we all know he may be the only guy doing this. time now for street talk. the analyst recommendation on
2:24 pm
the stocks that you need to know about of day. we do it every time. are you ready to climb some stairs, mount st. helens wra? >> oh yes, brooirn. 101. type in 101. let's do it. >> stock one -- invidia. they call the company's technology outstanding, but they're concerned about a licensing deal with intel because that deal expires i think in 2017 and it's not renewed, then massive hit to revenues. >> goldman is basically saying investors are way too nonchal ant when it comes to the expiration of the license deal. pc accounts for 55% of nvidia's licensing products. because of what else the strength in the u.s. dollar. that brings estimates down and the price target goes down too to $2 the 3 from $300. the analysts overall, extremely positive on the stock. model three announcement gigafactory updates, those will
2:25 pm
all send shares meaningfully higher. they think it could attract a new group of believers. >> it's interesting because the mean target price of tesla 254 a share, but that doesn't tell the story because the price is actually range from $400 to the mid $150 range. analysts are so far apart. >> battleground stock. >> all right. stock three, lululemon slicing its target to 55 from 58. the stock is at $63.60. very negative on the name. they see it falling. a bunch of dollars. they say ae a weak start to the year will lead to cautious ordering. their rating is hold. it probably should be sell. it does seem like analysts are getting cautious on this one on lululemon. >> darden restaurants, optimism continues after the strong earnings report. this is a new 52-week high in today's session. credit suisse hike it to $69
2:26 pm
from $62. it's excited about the prospect of the real estate monotization. it auto have a higher cap rate than most analysts have been modelling for. >> the stock had been left like a soggy cold bread stick. now it has the become the best performing nonfast food in the restaurant space. sonic, wendy's, and jack in the box have done -- >> whatever you think about the hedge fund community, he has really helped turn that stock around. >> must be something in the water. >> well salted. final stock, always the under the radar smaller cap name. it is cyber ark. israel-based security software company, bank of america, merrill lynch to the buy. it implies 20% up side. they love the security side of the story, and they know revenue growth and strong operating margins. >> you probably notice a lot of analysts because this is actually the expiration date. this is after the ipo here. it's still well off the february
2:27 pm
20th high. 7,048. can you imagine? stock is 54 and change. it's quite a decline. >> it's probably because they have to do every deal in two's. that's what i heard. i can't confirm that. thank you very much melissa lee. that was the worst pun ever. on deck tell you about a stealth stock stud that is seeing double digit moves to the up side. trading nation on deck. plus, we are kicking the tires on this. $500,000 super car. that, by the way, is driving on ice. this is ridiculous video. you got to see it. coming up.
2:28 pm
2:29 pm
2:30 pm
>> i'm sue her air yashgs and here's your cnbc news update at this hour. intelligence agencies will stop bulk collection of data documenting calls by u.s. telephone subscribers in june unless congress extends a law authorizing the spying. that's according to u.s. officials. efforts by congress to extend that law, however, so far have proven fruitless. federal reserve vice chairman stanley fisher says he expects the fed to start raising interest rates sometime this year. he said there were no plans for
2:31 pm
regular rate hikes says. fisher made the remarks to the economic club of new york. the supreme court declined to revive a lawsuit by singer and songwriter todd rundggren accusing somewhere p morgan chase of -- that objection let stand a lower considerate's dismissal of his lame for damages. crews in boston used explosives to demolish a bridge that had been closed due to safety concerns. the demolition is expected to be completed later this year. a new bridge could cost $80 million. the city has requested proposals on that. that is your cnbc news update this hour. back to you, brian. >> thank you very much. well, big move in oil into the close here. let's find out why jackie deangeles, we're seeing oil -- okay. maybe not. let me give you a quote -- it's called self-service television. the price of crude oil is up 82 cents. that's one and three-quarters move. this despite the fact that early today, really last night the saudis said don't expect us to
2:32 pm
cut production just because of where the price of a barrel of crude oil is. $47.36. in the meantime, what an incredible run it has been for the russell 22000. small caps looked decidedly large, but even as the overall index soars, what stocks are really standing out. well, there are about 2,000 to choose from so dom has manually gone three every name, and he joins us now. >> there are a lot of them. 2,000 stocks. one of the things i want to say is about the oil and gas trade right now. some of the more volatile stocks have the smaller cap, microcap oil and gas type stocks. there, again, they're some of the most volatile out there. when you talk about an index in the russell 2000, that's up 6% over the last year it may not seem all that impressive, but it is a record high for the index, and today if it closes positive it would be the sixth straight day of gains for the russell 2k index. among the standouts that have driven the performance, we look at some of the larger cap names that have more of an impact on the overall index.
2:33 pm
one of them for one is amberella. >> somebody else wants to buy them change their status and buy up all the real estate. those shares are up about 61% over the course of just this year-to-date. another stock to watch here. it's worth, again, larger than some of the other smaller microcap names in the russell 2000. we'll end with one of the biggest performers here. again, this is a company -- this is espirion therapeutics. it speaks to the theme that we spoke about earlier this hour that idea that bhoi caps can really drive some of the gains
2:34 pm
here. this company does a lot of cholesterol treatments. it's working on some of those fronts right now, and as a result, those shares are up 173%. biotechnology a big theme among all of the small cap performers. an interesting move here. oil and gas volatile. these biotechnologies also the ones driving the gains. back to you. >> as always we appreciate it. we got breaking news right now on the national football league. let's go to sue herrera. >> indeed we do. the nfl has announced that there will be no blackouts in the 2015 nfl season. as you may know the league and owners are meeting this week and this is one of their latest decisions. the nfl clubs voted for a one-year suspension in the long-standing blackout policy for 2015. basically they have been making significant efforts to minimize blackouts and just for reference, the nfl says that there were no regular season blackouts last season and only two in 2013. for the 2015 pre and regular season there will be no blackouts for all those football
2:35 pm
fans. brian, back to you. >> i think you're sending a personal memo out to the good people of jacksonville florida, sue. >> and also to green bay. >> we have the same thing. thank you very much. >> see you later. >> check out this chart of herbal life. the stock is now back above where it was trading before bill abbingman said that he was short. where is the battleground stock perhaps going next? let's bring in trading nation here. we have todd gordon with trailinged analysis.com watching the technicals. david seaburg, trading with cowan and company. i want to start with you as a technician. what are you looking for? are you surprised by the sort of slow motion snapback on the name? >> it's still in the down trend, and i don't think we are going to kind of be free from resistance until we see a move up around the 52. set up the trade. look at the decline we've seen since the beginning of 2014. we saw a little move up there at the end of march of 2014.
2:36 pm
it was about a $20 move. we're seeing a very similar setup here. another $20 move which essentially forms this kind of down trend channel. outstanding call position in april 55. big buyer up there. i don't think those calls are going to see the light of day. i would like to use those to lean against until the chart can prove it's free froo resistance. we have kind of a ceiling around the $5020 $55 level. >> we're watching 50 or 55. they're looking at the same balance sheet of income statement. how do you value a name like this. >> from todd -- this stock is not going to get -- there's no resistance here. it's an uninvestable stock. i look and say ackman's
2:37 pm
commentary have made the stock uninvestable. how do you justify him coming out and making some sort of comment that's going to knock this thing down another x amount of points? until they come up with some solution or resolution here they have the s.e.c. looking into it, fcc. you have two attorney generals checking into it. until they come out with some sort of resolution here all bets are off the table. i've never seen anything like it before. i'm not putting my money here. i can't imagine if you are a portfolio manager that you can justify investing in this stock. i hope that when this news does come out, i hope they actually do hold some people accountable if they're making accusation that is are false accusations based on no merit. look it's an interesting scenario here. i say stay away from it. you can't -- this has resistance written all over it for the near term. >> have you to believe some of the deep analysis that ackman or others claim they've done. they say this is phony and they say, no, it's more than real. maybe this does go a long way.
2:38 pm
some of the work that they have done. i get your point. well founded from a technical. getting out the emotion. todd says watch 50 or even 55 a share. good debate. technicals and fund mental wrshz for more trading nation head to our website, trading nation.cnbc.com. we do two segments every day. all right. a man taking a rather unusual animal for a rite ride on his surf board. it's a very cute video, and it's ahead. plus the quick silver resources bankruptcy has other people asking who in the oil patch might be next. we're going to talk more about that coming up. plus a guy who got it right on bonds unveils his latest rather surprise prediction on interest rates. stay with us. -800-345-2550 [ male announcer ] your love for trading never stops tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so when a market move affects one of your positions, tdd# 1-800-345-2550 schwab can help you decide what to do. tdd# 1-800-345-2550 with tools like free live-streaming
2:39 pm
cnbc tv tdd# 1-800-345-2550 that give you the latest financial news and trends. tdd# 1-800-345-2550 and bubble charts and price charts that let you see exactly tdd# 1-800-345-2550 how market activity is affecting your positions. tdd# 1-800-345-2550 so when the time comes to decide whether to scale in tdd# 1-800-345-2550 or scale out you can make your move, tdd# 1-800-345-2550 wherever you are. tdd# 1-800-345-2550 and start working on your next big idea. tdd# 1-800-345-2550 ♪ ♪ open a schwab account and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 tdd# 1-800-345-2550 call 1-877-729-2379. tdd# 1-800-345-2550 or visit schwab.com/trading. tdd# 1-800-345-2550 schwab trading services. tdd# 1-800-345-2550 your go-to for trading know-how. tdd# 1-800-345-2550 ♪ ♪ you're driving along, having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for
2:40 pm
a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. never before has this kind of passion this kind of innovation, engineering, design and performance... been available... for this kind
2:41 pm
of price. the 2015 cla from mercedes-benz. see your authoerrs >> after the brips of quick silver resources the question that many are asking who in the oil patch might be next? kate kelly joining us from the new york stock exchange. >> people are definitely expecting to see a wave of bankruptcies of this period of super cheap energy continues, and depending on what happens with the commodity market may well last into 2016. for now, wraen way, the next victim is unlikely to be a major company with continuing access to credit and saleable assets. so the quick silver bankruptcy
2:42 pm
last week certainly put another chill through the market. it was at least the fourth chapter 11 filing in the energy sector in the u.s. in recent months as companies like dune energy and zpd resores take hits from interest payments that they're having to pay their bond holders. in that case it scuttled a plan militiainger that would have salvaged. junk bond traders are having a field day hoarding through the credit markets to see who might be worth owning. in that case of course certain bonds very well might be converted into equity stakes where the equity stake holders that exist before the bankruptcy are wiped out. you are seeing some names -- the energy sector down over 20% since last june when oil had its last peek and from both chevron to chesapeake most individual
2:43 pm
stocks have fallen by double digits during that period. southwestern, brian and melissa, is actually one of the more challenged names in that group and having falling 50% during that period. you know they've got some rocky scholes to get through here. >> kate thank you very much. do appreciate that. well back in august friend of show made a bold prediction on the ten-year yield. listen to his call back then. >> i'm going to tell you for the first time that the ten-year treasury is going below 2%. >> in what time frame? >> within the next six months. >> i fwot to -- hold on. squeak, squeak. did you say below 2%? >> below 2% on the ten-year yield. down 44 basis points from today's level. >> all right. mandy and i couldn't believe it then. guess what he was right. barely a month after he made the call the ten-year yield fell below 2%. in fact, as low as early december. shri has a new prediction at the
2:44 pm
drop of the ten-year yield is not over. guess what, we've got him on with us today. joining us, sri, you know listen, you can smile. do a victory lap. you fwot it right. many people, myself included thought the yield was going higher. you're here now once again. international television. how low will the ten-year go? >> thank you for having me on brian. i think rather than have a victory march, you earn your keep every day in terms of where you think the interest rate is headed, but right now my expectation is that ten-year is headed towards 150, so we have 40 basis points from current level, and even more important, the 30-year which was as high adds 283, 285 earlier this month is now down to 250, or 30 basis points lower, and i expect the 30-year to go down to 2% also in the next few months. this is speaking about a weak economy and much stronger bond market.
2:45 pm
>> okay. people buy bonds when they are nervous generally. when they buy bonds, yields go down. you are saying that people will buy more u.s. debt but yet, sri, arguably isn't the u.s. economy one of the strongest and perhaps safest out there in the world right now? why will people continue to flock into the treasury market? >> you actually give the answer in what -- your question brian. yes, the u.s. economy is stronger than the others but it is also much safer than the rest of the world. for a country which is very safe which is the united states, it is now wreelding 190 on the ten-year whereas you are somewhere below 30 basis points on the german ten-year and that
2:46 pm
is not sustainable. i think the german yield is very rich and the u.s. bond market still appears to be very cheap. that's what causes the yield to come down. >> so sri, we are sort of out whack here because you're predicting that the yields are going to go lower. we had a strengthening u.s. dollar. usually they go together because we reflect a stronger economy. if your anchor is a prediction of the ten-year going to 1.5% what is your call on the u.s. dollar and what you see for equities? >> u.s. dollar melissa, i think in the medium term is headed upward, but before last wednesday before the fed decision i starting to tell my investors sort-term the dollar was going to weaken as a result of the fed move. the fed move was not a surprise to me because i don't expect the fed to increase interest rates. i didn't expect them last week. i don't expect them to raise interest rates the rest of the year either despite what stan fisher said in new york today.
2:47 pm
because of that i think what you are going to have is the yield going down the dollar generally strengthening because of the rest of the world unless the fed steps in from time to time and try to weaken it. i think if you don't read the newspapers on a daily basis, if you look at the dollar a year from now, it's going to be stronger and the bond yield is going to be lower. both of them take place because of the capital coming into the country as brian mentioned wrerl. >> and just one more sri. equities from here s&p 500, higher or lower? >> six months from now lower. >> lower. fwot it. thank you. >> thank you, melissa. >> coming up driving lom ber geenys in the snow. who does that? the super rich. >> hey, melissa, one word energy. not just crude oil either.
2:48 pm
we're going to tell you why. we're going to break this down. what investors need to know about these stocks when "power lunch" returns. [ male announcer ] legalzoom has helped start over 1 million businesses. if you have a business idea, we have a personalized legal solution
2:49 pm
that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom.
2:50 pm
2:51 pm
take a look at shares of kansas southern. the railroad down big and dragging the rest of the railroad stocks with it. morgan joins us now to explain. >> well it's really due to one word and that's energy. so kansas city southern cut first quarter and full year guidance as lower oil and nat gas prices are affecting revenue volumes and operating income. there are four ways we're seeing this impact from energy play out. slower than expected crude oil growth for 2015. that's especially interesting when you take into account the fact that ksu carts crude majority from the canadian oil sands not the balkan. less revenue in q1 from frac sand and pipe thanks to significant decline in new
2:52 pm
drilling operations in the u.s. this is interesting because it's also like declining rig counts an early indicator that we're going to see a slowdown in oil production coming. the third, a 20% drop in quarterly coal revenues. this as cheaper natural gas curtails demand for coal. this is especially worrisome because coal remains such a big part of the overall railroad industry's business. and lastly while falling fuel has thus far cut costs, falling surcharges are starting to hurt the top line. that's a trend we're starting to see affect the entire freight transport sector. also a headwind currency since nearly half of kansas city southern's revenue comes from mexico but overall what makes this warning such a big deal today, investors and analysts have worried that oil would cut into railroad earnings and kansas city southern is really the first company to confirm those fears. that's why when you take a look at shares of all the railroad companies today, you look at union pacific, csx, norfolk southern, the canadian
2:53 pm
companies, canadian pacific and canadian national railway, they're plunging lower in sympathy on kansas city southern's cut guidance as well. back over to you guys. >> all right. morgan brennan, thank you very much. on that coming up we're going to reveal which cute animal but they really all are, is riding a surf board. great pictures coming up on the way. plus, it is time for a new season of "secret lives of the super rich." robert frank is here with a preview. >> on most shows you're going to see lamborghinis going around racetracks. on "secret lives" you see lambos going around a track groomed in ice and snow. we'll show you that coming up.
2:54 pm
the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest ...baddest ...safest, ...tightest, ...quickest, ...harshest... ...or nothing. at mercedes- we do things one way or we don't do them at all..uthorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.
2:55 pm
♪ ♪ ♪ first impressions are important. you've got to make every second count. banking designed for the way you live your life. so you can welcome your family home... for the first time. chase. so you can. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all.
2:56 pm
that really is you? if they're not a cfp pro you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. now for today's cute animal pictures. surfer dan murphy picked up more than a nice break surfing off california. a friendly little baby sea lion decided to invite himself on murphy's board. murphy says when the pup originally climbed on he actually thought he might be being attacked but the sea lion just wanted to hitch a ride on his board. the two ended up surfing together for about an hour. can you top that melissa? >> that's really cute. look at the little puff on his back. all right. i don't have pups. i have got people surfing, and they were doing it in a river in britain. the wave on the river was caused by the high incoming tide pushing against the force of the river flowing the opposite direction. the wave traveled down the river
2:57 pm
for several miles. let's take a look at that. i bet that doesn't happen every day this britain, brian. >> still very school stuff. all right. this is also cool. lamborghinis $500,000 cars with snow tires driving on ice. we showed it to you before the break. robert frank is here to explain why anyone would do this. >> this was crazy, brian. it's called the winter aacademy. they took their super cars as fast as they could around a snow track groomed like a ski slope. take a look. you'd have to be a little bit crazy to take at least a $200,000 car out in the snow and ice. >> the car is there to drive, and it does very well in those conditions. so i just do it. >> two things most people don't realize about lamborghinis. first, you can put snow tires on
2:58 pm
them. these are fitted with studs for extra traction. and, second, lambos are all-wheel drive super cars. >> newer lamborghinis are as easy to drive as a four-wheel drive pickup truck. >> along with the hurricane clients also raced a half million dollar car. i raced one around the track antd didn't go quite as fast. you will see one crash into a snow, crash into cameras. crazy video. >> good stuff and speaking of tomorrow night, robert thank you, the new season of "secret lives of the super rich" premieres tomorrow at 10:00 p.m. right here on cnbc. what do you got tonight on "fast money." >> you know, brian, the "fast money" madness challenge continues. our traders debating 16 of the hottest stocks over the next three weeks. we've already started. you can logon to cnbc.com/pro.
2:59 pm
in tonight's match-up over here in the chip sector. we're going nvidia and micron. the twitter vote has counted to break ties. we urge people to read the preview on cnbc.com/pro and then also weigh in tonight with their choice on twitter because they have broken the ties here on "fast." >> the people's vote matters melissa. >> it does tonight at 5:00. >> 5:00 eastern. thank you, melissa, and thank you for watching. "closing bell" begins right now. and welcome to "closing bell" for a monday. i'm bill griffeth at the new york stock exchange. >> i'm michelle caruso-cabrera in today for kelly evans. we continue to keep a close eye on the nasdaq moving in and out of positive territory today within striking distance still though of that all-time high set
3:00 pm
more than 15 years ago. >> just think, i think you and i were doing "power lunch" when it hit that all-time high at that time. >> do you remember pets.com the craziness that was. that was fun. >> but are we at that crazy level again? doesn't feel like it. >> it doesn't feel like that. the valuations aren't the same. we're not talking about eyeballs anymore.

45 Views

info Stream Only

Uploaded by TV Archive on