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tv   Power Lunch  CNBC  April 29, 2015 1:00pm-3:01pm EDT

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>> this is a tough one. >> never gets talked about. >> we don't talk about it as much because alibaba came along. this thing still moves. it still makes for excitement in both directions. we'll be watching. >> good stuff. thanks for watching. "power lunch" begins right now. >> halftime is over. "power lunch" and the second half of the trading day starts right now. >> good afternoon, everybody and welcome. the dow taking a hit, a big one before the fed announcement at 2:00 p.m. >> other indices also taking it on the chin. nasdaq is down 1%. three quarters of a percent drop for the s&p. >> major wall street firm getting out of major trading businesses. wheel explain why. ? is this move coming at the wrong time. >> but the big story is the fed.
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we're less than one hour away from the decision. our full coverage here on cnbc starts right now. so as we were saying it's decision day. just under an hour's time the fed releases its latest statement on rates and the economy. it comes on the heels of a very week gdp this morning. will it change position on when to raise rates? steve liesman will break it down. >> reporter: fed watchers expect the fed statement to take note of the weakening economy. the big question is how much of the weakness in today's disappointing 0.2% rise in gdp. the fed attributes to temporary factors compared with permanent ones and whether we get a huge second quarter bounce back the way we did last year. now severe winter weather in the east, port shutdowns in the west those are the obvious temporary factors but the negative effects
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of a stronger dollar in terms of exports and decline in oil prices also played a role. no one knows how long they will hurt the economy. what we do know it was another weak first quarter in a string of them. here we go. q1 gdp up to 0.2%. the consumer hanging in there, 1.9%. business investment and that structures decline, that's the effect of lower oil and gas. exports as well and state and local government declining by 1.5%. here's how this plays into gdp. consumers added 1.3 points. exports on the other side took off 1%. the uncertainty is a reason why the fed might wait to hike rates even beyond september. at ubs they say the hike rate is their forecast.
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some economists more confident in that second quarter rebound with folks at hfe saying we believe weakness was grossly exaggerated. we need to remind workers of the work we do here at cnbc exposing a long running problem in the reporting of first quarter gdp. the government has acknowledged the issue publicly and said they are looking into the reason why first quarter growth over a 30 year span has been significantly weaker than the other three quarters despite seasonal adjustments. >> let's get to trading action ahead of the fed decision. the dow down triple digits now. bob it seemed the market took another leg lower. >> reporter: tough day. a number of sectors getting hit. i want to point out where we're at. we're all to the down side except energy. health care is getting hit. a number of sectors, discretionary is getting hit. home builder is weak.
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technology is up. look what's going on in germany and europe. germany down 3% closed right at the lows france and italy had a very rough time. here's what's going on. the market has been long the $and number two they have been long germany. these two trades are coming unwound a little bit today because of the weak gdp numbers. here's what that weak gdp means. fed will be slower to raise. a weaker dollar and higher euro which is bad for the german stock market. this is unwounding the long trade that exists. the other implication for stocks is longer plays are also under pressure. health care is the big gainer. you all know about biotech going up. a lot of sectors in health care that have done very well and now having a little trouble. medical equipment makers like stryker had a goodyear.
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cigna, they are under pressure in addition to the bo tech. the builders which had a great start to the year also under pressure here because of the current economic situation, home building numbers this morning not very good. back to you. >> let's move over to what's happening in bonds. seven year notes up for auction. rick santelli is tracking the action. on monday for two years you gave us a c. yesterday for the five years it was b plus. what is it like today? >> c plus. we get a charlie plus for the seven year. if i graded more on a curve i might have graded it higher because it's a challenging day to be sure the fed has an effect on the markets. just look at where the last time we were over 2%. last fed meeting 17th and 18th of march. 29 will lone seven years yield at the auction, 1.82. when you buy the offer it's not
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as cheap as the bid so that's a pretty good demand scope. if we look at the 2.44 pretty close to ten option average. directs 12.8. pretty much all average. but the way it priced we give it a plus for charlie plus and do keep in mind with that 1.82 yield we'll continue to northern the after effects because it was a built in concession as yields rose and price dropped. back to you. >> thank you very much. big day ahead for the bond market with the fed as well. let's get out to the nasdaq where bertha coombs is following that. >> reporter: the nasdaq falling fractionally below 5,000 for the first time in some seven sessions. we'll see if it can hold on to that mark. a lot of big movers to the upside. go pro. apple continues to be a drag today. it's selling off even more following its earnings and wynn a huge disappointment there.
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also some other health care names today in the news anthem and express scripts have two good quarters. anthem said it's mixed on public exchanges is feeling younger. press scripts said it controlled its buy back in the quarter. they said this on the conference call because they were looking to maybe do a deal. meantime, mylan is raising its bid trying to do a deal for perrigo. finally the nasdaq apologizing for the earlier release of that twitter earnings release yesterday, shareholder.com is their site. they said there was a complication. this comes days after the nasdaq did settle one class action lawsuit over facebook to the tune of about 26.5 million dollars. back to you. >> rick santelli just brought us the seven year note auction results but take a look at the ten year. we're sitting a little bit above
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2% 2.062 as you see the yields moving up ahead of the fed. how are the big bond players positioning themselves. let's bring in one of the biggest and best from pimco. let's play past what the fed may or may not do today with what you're going your portfolios and what i as an individual investor might well do given what your basic hypothesis is about the direction of interest rates. what are you doing? what should i do? >> thanks. well we think the main thing that investors should be focused on as a theme is this ongoing policy normalization, the divergence between what the u.s. federal reserve is doing and other central banks in the world are doing. a lot of investment themes we have in work in the pofrls they emanate from that idea. we do think it's likely the federal reserve begins to normalize interest rates this summer, probably late summer maybe september. and that's at odds with what's
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going on with the rest of the world where there's vast amounts of quantitative easing that are supporting bond price and financial assets in general. so that means one has to be a little bit more careful when taking bond risk in the u.s. one reason why we're underweight and look for other ways to take bone arriving. good environment to exploit those types of strategies. in addition some of this volatility that we're seeing in the marketplace we think this is going an ongoing feature of the marketplace. we've had more volatility in many different sectors of the market lays for the past six months. we're looking for ways to benefit from that. >> i want to ask you about something completely different, and that's what's happening at the top. we understand ben bernanke has been added to pimco as a senior adviser. do you think a really big name like that will be a draw card in terms of instyling investor confidence in pimco and bring back some of the investors that
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you might have lost? >> well we're very pleased to have ben bernanke as a senior adviser to the firm. it continues a long tradition we had of engaging great policymakers from around the world. a continuation of what we're doing. hard to find a more well-respected and experienced macro thinker than ben bernanke. we've had him out as a guest in the last six months so we look forward to deepening that connection. we think he has a lot to offer in terms of our thinking and positioning our macro thought process. >> how will you use him, scott? what will doe for the firm? day-to-day or whatever. i see you have the bernanke beard going so that's a good thing. >> it start ad long time ago. ben bernanke was our guest, forum speaker back in the year 2000 before he became chairman of the federal reserve. we had a long relationship with ben bernanke and we're just
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looking forward to connecting on a more high frequency basis. he'll participate in our most important strategy meetings to set policies for where we think the portfolio should be positioned. >> and maybe make beards mandatory. >> we're counting down the fed's latest decision as you know. less than an hour to go. 48 minutes. three sectors you should be in when the fed eventually begins to raise rates. we'll take a look at that. what does the fox eat. you have to see how this crafty creature whips up a culinary creation. look at that. your mom's got your back. your friends have your back. your dog's definitely got your back. but who's got your back when you need legal help? we do. we're legalzoom, and over the last 10 years, we've helped millions of people protect their families and run their businesses.
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welcome back to "power lunch". genworth financial shares are looking at going private or selling off its long term care insurance unit. they posted a first quarter profit. back to you. >> 12%. thank you very much. man versus camel. this camel making a break for it on a busy highway in the united
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arab emrates. a barefoot man chasing the camel. witnesses couldn't confirm if the man was ever able to catch his runaway animal. >> bet on the camel by six lengths. continuing with our animal memories here. there's a fox. video that's gone viral. fox in the chernobyl exclusion zone. the fox trots up. begins to stacks them like a sandwich. look at this. he's not dumb. make a sandwich out of it. takes it back to a den. maybe it's a mother fox taking it back to its little babies. let's see what happens next. we don't know what happened to the fox or where it went but this was taken by a person who was shooting a documentary on the chernobyl exclusion zone. okay. moving away from animals unfortunately and back to the stock market. lumber liquidators say the probe
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by the justice department will cost the company $10 million. the cfo announcing he'll leave in june. mylan sweetening its bid for perrigo. less than a week after perrigo rejected an earlier bid. perrigo is likely to reject this latest offer as well. walmart expanding in the people's republic. retailer planning to build 150 new chinese stores by 2017. when you hear white collar crime you think of curby country club prisons. that's not always the case. tonight andrew ross sorkin will show us what life is really like on inside with someone who has been on both side of the law. former nypd commissioner and convicted felon. >> 18 months have passed since bernard carrick left prison but the memories eat at him even as
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now he can return as a free man. >> i don't know of anyone any real human being would show up at a prison and think oh, this isn't too bad. it sucks. it's the worst. >> the prison system wants to you act like a man, agent like an adult, to act with integrity and respect, but basically treated like a child. >> do you ever get adjusted to that. >> no. you don't get adjusted. >> catch "white collar convicts life on the inside" tonight at 10:00 p.m. eastern on cnbc. >> home builder stocks getting whacked. these stocks are all over the map up 11%, down more than 20%. why it may be time to get bullish on this sector now. plus -- >> coming up a power pitch for your pooch. >> we will be the trader joe's of the pet world. >> will the panel be all paws
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in or throw this start up to the dogs. >> who is it are you targeting. >> why are your the team to do this? >> stay tuned to find out.
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>> time now for the power pitch where to entrepreneurs have 60 seconds to convince a panel of experts that their start up is the next big thing. >> i'm marco this is betty we're protein for pets. when you shop at groceries do you shop the craft aisle?
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no. there's nine stores for five years with investment to circle.com. we'll be the trader joe's of pet world. our small store format and track record creating a national brand, p for p will be the innovative retailer. >> we can return capital faster and keep our price loss. our format yields a even margin while using distribution which allows us to focus on marketing. we don't offer daycare, or grooming services. >> we plan to break even by month 12. petsmart was bought out at nine times earnings. >> welcome to today's power pitch. you just saw the pitch for today
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but now let's meet the panel. on set with us we have dr. katy nelson. and kelly hoey she advices early stage staurpt. and joining us from san francisco is rebecca kaden. the firm's portfolio includes e-bay, groupon even an insurance company for pets. lots of experience. marco and betty you're in the hot seat. >> we know that we have the people that are going to buy the food off the grocery store shelves or $90 bag of freeze dried food. who are you targeting. >> people who have a passion for their pets. we have in our stores they are done by protein type and needs of the pet. you have your products in your grocery store which are okay.
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with ours no wheat, corn or soy products and $40 bag of grain free dried dog food. >> kelly >> how will you win our hearts and minds. >> we have low overhead. we also have great alternative foods like raw foods. >> you talk about private label as a part much your brand. how are you performing as compared to other brands in the store >> we haven't started our private label. our first product will be raw food. we just started our company a year ago. we just opened our stores. we're opening up nine stores right away in the first year and bringing best in class vendors and then stick our private label in the raw food section in the exotic section, in the alternative section. >> why are you the team to do this? >> we've been in the pet industry for a number of years now. we built a brand of dog food
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before. now after moving on from that thinking to ourselves what will we do next in the pet industry. the pet industry didn't need another brand they needed to deliver it better. >> what do you think of your e commerce? >> we're focused on off line retail. we feel it's important to stay focused on one ling. online might be part of our future but we're expecting to that last mile to the consumer. >> is the panel in or out? katy nelson what do you think? >> i love the ease and convenience of the trader joe shomg experience. it's easier for people to walk into a smaller format. i do have concern with the naming strategy. protein for pets is not the most intuitive of names but because of everything else you're doing and because of your experience in starting this i would say i'm in. >> what you, kelly? >> we've seen established start
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ups doing pet partnerships. i'm concerned with the lack of an online strategy. i understand the cost of shipping certain foods but consumers are so used to having that omni channel with retail. for that reason i'm out. >> rebecca you're the deciding vote. >> i love how you're building a brand based on quality. i like the idea of using private label to increase your margin characteristics in a category that's often slim. but i'm worried whether merchandising style is enough of a difference to stand out here. and agree i think you need an online strategy to build a great new brand so for that reason i'm out. >> one in two outs. what's your reaction? >> the online is main concern. we got a great proposition for people. we appreciate the feedback. >> thank you very much. and thanks to our panel.
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and that's today's power pitch. >> your in or out on protein for pets. tweet us #powerpitch. and for more visit "power lunch". >> counting down fed. 30 minutes until the latest statement. will the latest gdp data make policymakers change their tune on when to begin their hike rates. three sectors you should be in when the fed does eventually raise them. we'll be right back after this. .yea dulcolax tablets can cause cramps but not phillips. it has magnesium and works more naturally than stimulant laxatives. for gentle cramp free relief of occasional constipation that works! mmm mmm live the regular life. don't just visit new york. visit tripadvisor new york. with millions of reviews and the best hotel prices... book your next trip at tripadvisor.com today. thank you for being a sailor, and my daddy.
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a high school english teacher from texas who works with refugees from war-torn countries was honored at the white house as america's teacher of the year. president obama praising her saying america is hungry for more teachers like her. >> shannon's classroom provides them a safe-haven and in shannon they find somebody that protects them fiercely and believes in
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them deeply and is confident they will do amazing things. >> maryland's governor thanking the multiple law enforcement agencies and the national guard for their support in baltimore last night. larry hogan visiting the command center where the agencies are set up saying their presence made a difference in keeping the peace. >> the british trader accused of helping to provoke the 2010 flash crash appeared before a london court after he failed to make bail. he arrived in court in a prison van. he's been charged with wire fraud, commodities fraud and market manipulation. >> 2,000 lufthansa shareholders held a moment of silence of the victims of the plane crash last month. that's the cnbc news update at this hour. back to you. >> let's take a look at gold prices and what they are doing on this down day for equities. see how gold and other metals are stacking up. down about $4.20.
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silver copper platinum those are moving higher at this hour by fractions there by half of a percent for silver and copper less so for palladium and platinum. >> u.s. 10 year yield above 2%. rick santelli is in chicago. doing what he does tracking the action at the cme. >> you know after 30 sessions contained in a range of 186 to 199 we have 2% yesterday. what were you supposed to do? you were supposed to really take never that. it's fed time. open the chart up to march 16th. day before the 17th 18th meeting that's the last time we were at these levels. it makes sense. one of the big issues in the bond market is lack of liquidity. let me tell you that's getting a lot of talk these days and if you look at the boon yields
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close to 28. the low was on april 20th at seven basis points. they almost tripled, more than tripled. liquidity plays a part in all of these moves but the winner, the king of the day for the easiest trades you may have never done dollar index getting walloped. it should get walloped. investors don't think the fed is tightening any time soon. >> where did that water go? don't slip over there. felt the water was going all over the place. >> i have a couple of thirsty pooches down here. >> stocks are sliding, guys. currently the dow down by about 120 points. the second drop for the dow and s&p in three days and third straight one for the nasdaq. is the sell off a buying opportunity? joining us the senior global equities strategist with wells
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fargo investment institute and ceo of first allied asset management. scott, what do you think the fed will do and say today? what does it mean for the market? >> well i think it's going to be a pretty boring release. i don't think the language will change very much. there's slim to zero chance of any rate move in june. a slight one in september. but certainly the federal reserve while i don't think the language is going to change much today they are definitely going to heavily prep the market three or four months in advance of whenever that initial rate hike is which, you could make an easy argument that they don't need do anything this year but i think they want to get the ball rolling and i think they will do a little bit in september. >> certainly after the gdp this morning a lot of people are saying they shouldn't do anything. greg, what could they do or say today or more importantly what would they say, telegraph to the market that could ruffle a few feather? >> i agree with scott. they recognized qe produced
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overcapacity. this is a cautious fed. they will give european qe some time to work. so that would blunt any dollar rally associated with the first rate hike. i personally think there will be one hike in december. they will pause and look for the financial stability impact which rick was talking about around the liquidity and wait and see. >> talking about the dollar do you think that at least near potentially medium term the dollar rally is over? >> i think ultimately it will depend on the strength in the u.s. economy going forward. this is one of the reasons why i like energy very much because you see some similarities in the '98 and '80 bottom dollar. it's typically a nine month cycle, peak to trough in terms of decline. we're at ten months. that's a good backdrop for energy. seeing the dollar back off it will continue. >> you want to jump in there as
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well, scott, on that issue? >> i think the dollar was overbought. i think the market overanticipated how tight the fed was going to be and how soon and i think the market is overestimating how easy the ecb will be. when you have inflation rates converge at basically zero and currencies it's all about which central bank will be tighter. and investors thought six months ago that the u.s. fed was going to be a lot tight ear lot quicker than they are going to be and i think the ecb is doing a big qe program but in the end their economic numbers in europe will be better than people think and so the ecb might not be quite as easy as people think. that's one reason we've seen the euro bounce back here. >> it's above 111 today. great. thank you very much guys. we'll be watching. we're still counting down down here. 24 minutes and a few seconds to
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go until that fed decision. go to powerlunch.cnbc.com. >> will we get more clues about the timing of a rate hike? that's what everybody is looking for and as we head out a check on the markets and a lot of red there as you see. down two-thirds of a percent for the s&p 500. we're back in two minutes. fore i had the shooting, burning, pins-and-needles of diabetic nerve pain, these feet... ...served my country... ...carried the weight of a family... ...and walked a daughter down the aisle. but i couldn't bear my diabetic nerve pain any longer. so i talked to my doctor and he prescribed lyrica. nerve damage from diabetes causes diabetic nerve pain. lyrica is fda-approved to treat this pain. lyrica may cause serious allergic reactions or suicidal thoughts or actions. tell your doctor right away if you have these, new, or worsening depression or unusual changes in mood or behavior. or swelling, trouble breathing rash, hives, blisters,
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>> global brokerage gbc partners posted first quarter earnings and put its energy unit on the block. bgc shares up 40% in the past year and today trading 3.5% higher around $10. bgc chairman and ceo who heads up cander fitzgerald is with us. how is business and number two why put this energy trading unit up for sale? is it a call on energy sirt strategic reorientation for "your business"? >> our business did great. i mean revenues up huge. our profits were up 28%. 29%. the business is doing fantastically. we have a gigantic real estate business. these low interest rates, somebody loves low interest rates and that's our real estate
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business so that's been doing gang busters and our earnings are up big. our profits are up big. we're projecting next quarter revenues up over 50% and profits will stay up over 30%. so really business is great. >> but what is your call on energy? what do you think will happen with energy prices considering already just looking at a price today i think we're up 40% since the marlow of 42 bucks. >> well energy -- look energy is a great trading market and businesses like ours we don't buy them and hope they go up or sell them. we just are all about volatility, how much volume and trading is there. we have this business called trade port and it's a great technology and it is really in a super position in europe for energy and commodities and what happens in our company like ours it just doesn't get attention it deserves. we thought all right we'll
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explore the sale of it to see if exchange private equity companies they will give it the valuation it deserves. it's a great business built sometimes the market doesn't look at the parts of companies like ours correctly so here's an example. we did this about two years ago and we sold it for a billion and a quarter and our stock doubled. we figured we got this great asset let's do it again. our shareholders will loyalist. we raised our dividend from 12 cents to 14 cents today. i think the stock is in a great spot. >> do we interpret this asset that you say basically doesn't fit as nicely as it might on its own or in another company's portfolio do we interpret this to mean you're doubling down on the real estate side of the business and what happens to real estate as the fed raises interest rates or do you think that will be a nonfactor for the kind of real estate that new vest in?
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>> i love the energy business. the market only ovals our company a certain way and it's a pure technology play company so get a much better pe multiple in someone else's portfolio. would i love to deep business? sure. my shareholders want notice create these kind of businesses and if somebody ovals it more sell it and like you said invest. would we invest in the real estate business? absolutely. we love the real estate brokerage business. the fed raising rates to what a quarter of a percent? a half of a percent. real estate loves low interest rates for long periods of time. i think interest rates are going to stay dead low for the next five years. >> you say real estate investors love a low cost of money. >> correct. low cost of money is fantastic for this business. look the fed raised interest rates to a quarter percent or half a percent to all of us who
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are talking today that's not an interest rate. what did you do with your interest you bought starbucks coffee, a quarter of a percent? >> howard good as always to see you. we appreciate your time. >> let's get out to dominic chu for a quick market flash. >> he's an interesting character. we're watching shares of general dynamics on the down slope even though it popped early this morning. it beat first quarter earning estimates. revenues came in above expectations. the company saying operating margins grew in three out of its four main business groups so those shares up by 2.5% but moving lower as we head towards this fed meeting. >> santa monica versus airbnb. the city taking a hard stance against the rental company. what are they doing? and sleep deprived.
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>> welcome back. i'm brian sullivan and we're 15 minutes away from the federal reserve. will the fed raise rates or better signal when will it. we have a huge show with an all-star panel ahead. am for you and your money. federal reserve counting down in 14 minutes. going to be a big one. >> all for us. thank you very much. okay. fed statement due at the top of the hour. you know that already. the market is taking a turn to the down side but the dow let's take a look how it's doing. it was down 120 points early on. let's bring in david kelly.
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it's a bit of a dilemma bus on the one hand we know the fed likes to keep its options open doesn't want to be painted in a concern. at the same time we like guidance, we want some direction. what will the fed give us today? >> not a whole lot of change mandy, from the last report. they obviously, i think, need to acknowledge the economic weakness of the fir quarter which was shown again in the gdp report this morning. but since their last meeting we had some economic weakness we had some i would argue pick up in inflation. net is yes it's still data dependent but sometime this year because the starting point is zero i think they get going. >> do you think they will characterize -- they my acknowledge the weakness of the first waert but will they characterize it as temporary? >> i suspect they will. if you look at trailing 12 months gdp in the u.s. is 3% real. 3.0 to be precise. clearly the first quarter was a problem. is it a true trend?
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only time will tell. the consumer is waking up and soon spend some of their energy dividend and that will help in the back half of the year. >> david, if i'm remembering correctly you're in the camp that you want the fed to get on with it and start raising interest rates. do you feel that way? do you think the tone or tenor has changed at the fed? >> well they have been hesitant all along. this is the most dovish fed we've had in a hundred years. i think they will raise rates. it's important to read what they say in the statement. they will raise rates when they see further tightening of the labor market and more confident of inflation moving back to 2%. let's look what we got here. we have slow growth. growth will pick up in the second quarter. i think the labor market still will tighten. if you look at oil prices moving back up and dollar moving down
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that will add a little bit to inflation. so they will feel confident inflation is moving back to 2%. their scorecard of what they need to see in order to tighten, i think they can take that off this summer you know. if i were them i would have raised rates last year. there's still a chance they will raise rates in july if not july september. >> you see the tumbler clicking into place. if they stick with their word and raise rates as inflation gets to two and unemployment comes down to five hey, go do it, right? >> absolutely. they got to be careful not whiplash the markets. if they lull markets into too much complacency the fed will never do anything. when they do it that's a big shock to financial systems. so their job is to prepare people for the fact that they are going to raise interest rates and it's important for them not be too dovish in this statement today. honestly 5.5% unemployment
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economy, solid growth no recession, oil prices moving back up they absolutely should be raising rates. >> all those years of qe and this is the kind of growth we get. you wonder why isn't it higher after all that. nonetheless what kind of strategy should we be taking here? what should an investor do? >> i think an investor has to say we've been in a trading range in equities earnings have had some flies in the ointment. we just talked about it the lower oil price and rising dollar. if david and i are correct and the economy picks up in the back part of this year largely on the back of the consumer earnings will start improving and stocks will start moving back up again. i want a pro equity position. if rates start moving up as inflation begins to move up that's a question mark for bonds. >> david favor stocks over bond? >> absolutely. within the stock market you have to be careful of bond proxies
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like utilities which could get hurt. the fed will have to raise rates. >> bob and david thank you so much for joining us. death, taxes and fed raising rates all these things. dom, a bit of a market flash. what your looking at? >> shares of exxonmobil the company saying it's second quarter dividend will increase to 73 cents a share up from 69 cents in the first quarter of this year. they are working towards flat on the session so far but, remember apple just recently surpassed exxonmobil as the biggest dividend payer. we'll see, crunch the numbers and see how mob's dividend boost stacks up with regard to it's overall dividend payments. >> that's it for the first hour of "power lunch". >> take a look at the dow. 18,038. fed statements minutes away. we'll have full coverage straight ahead in seven minutes
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time. second hour of power continues after this short break.
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there's some facts about seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too. hello and welcome back we're now five minutes away from the federal reserve's decision interest rates. no rate change is expected
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however the fed could surprise the big focus, any further clues about the timing of what would be the first rate hike in nine years. i'm brian sullivan in southern california the bond capital of the world. that's right. pimco, metropolitan west double line and now bill gross all based around here and we gathered many of them together for this huge fed show. joining us now is guggenheim partner and we're a few minutes out. scott will the fed raise rates? >> no brian. i've never done that before. no. i think the question is will they leave june on the table. >> what's the answer? >> they will take june off the table. the chairman is trying to make sure she sets expectations so we don't have the risk of another taper tantrum.
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they will make it clear as possible what their expectations are. >> how will the fed take june off the table. what will they say? >> they can be fairly direct. i've been surprised with some of their language. i think they would probably say something along the lines that the events are data dependent however they want to see after the weak gdp report this morning that they would like to see some sort of reassurance that second quarter gdp is going to rebound, and that for that reason you know june may be an unlikely event. >> what do you expect out of the fed. what do you want to hear? >> i have a different view. i think there will be no forward guidance in this statement. this is the first meeting since march of 2009 without any forward guidance. i think june will be a live meeting. they will leave that possibility open. i don't think they will hike in june but they want to have a discuss and they are at a significant point where they are getting out of the forward guidance. >> here's one of the weirder
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questions. what will the fed not say. how will we read that in their statement that they are shifting a bit? >> they currently have a line in their statement that says we don't hike. that line will come out and be silent about june and by being silent that opens up june as a live possibility. >> the fed may be even more vehiclesing. >> yes. i don't think they will hike in june. they are concerned about the inflation outlook and growth outlook and have a discussion and in some sense that's important. >> your expectations larry? >> we think june is off the table. i don't think they will change the statement to indicate that june is off the table. but when you look at the gdp report that came out what they did at the last meeting was basically a shadow moved their expectations down crushed the forward rate curve. i think they were doing that because of the dollar strength. >> we've talked too much about the timing of any potential rate hike and less about the pace of the future rate hikes after
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that. once they begin and they will eventually start raising once they begin how quickly, how aggressively will they move? >> it's hard to know that. they are signalling they want to show the markets they will move in a againstle fashion. that's why they moved the dots down. i do agree, they do want to get out of this forward guidance business. we've seen the notes coming out of the minutes going down from 800 words on average to a little over 500 words now in 2015. they are trying to do more is less -- less is more excuse me. >> let's talk about this pace. how aggressive how hawkish, scott do you anticipate the fed will get once it begins to raise? >> the fed will make it clear every move is data dependent.
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i think the reality is that as we start to see and continue to see unemployment fall wage growth become stronger that the pace of tightening will accelerate through 2016 but i would be really surprised, brian, if they had the short term rate much higher than 1.25% by the end of 2016. >> sit tight guys we're 30 seconds away. it comes across right around 11:00 a.m. pacific, 2:00 eastern. oil may be your big story today. up about 3.5%. oil bull market don't go up. gold not doing a whole lot. there's your set up right ahead of the fed on a day that saw weaker than expected data. >> in this latest statement from the federal reserve, all calendar references have been removed when it comes to when
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the fed might begin raising interest rates. the new forward guidance says the committee anticipates it will be appropriate to raise the target rate for the fed funds rate when it's seen further improvement in the labor market and reasonally confident that inflation will move back to the 2% objective over the medium term. assessment will take into account measures including labor market indications and expectations readings of financial and international developments. on to the economy. since the last meeting in march, it now suggests economic growth slowed in the winter months in part reflecting transitory factors, pace of job gains moderated, unemployment rate remain steady range of market indicators suggest under utilization was little changed. growth in household spending declined. household's real income rose reflecting declines in energy prices. the recovery in the housing sector remains slow and exports
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declined. looking forward the fed goes on to say although growth and output in employment slowed during the first quarter the committee continues to expect that with appropriate policy accommodation, economic activity will expand at a moderate pace. the committee judges consistent with its mandate, finally the last word on inflation the committee expects inflation to rise gradually as labor market improves further and the transitory effects of declines in energy and import prices dissipate. back to you. >> thank you very much. let's get instant reaction now with our chief economist, steve liesman. your reaction and the part where the calendar references are out. >> that's it. we knew that was going to happen. some members of your panel talked about it. we've been talking about it for a couple of days now. the evolution of this they told us beginning in march of '09
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when they went to zero they would be at zero for a while. now it's data dependent. every meet cigarette live. so you wonder when are they going to hike? then you go to the top of the statement and you look at really how down beat the fed was on the economy. actually a little more down beat than i thought they were. they went from moderate to slow. they talked about spending was declining i guess is the word they used. overall, brian, lackluster down beat view on the economy that i think pretty much takes june off the table for the moment unless of course the data were to rebound very sharply. >> all right. thanks so much. i want to get the market check, market reaction to this. bob pisani is at the new york stock exchange. rick santelli has seen fairly dramatic reaction the bond pits at the chicago mercantile exchange. bob, the banks that lend are
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moving higher on this. >> yeah. it's interesting that the broader market is largely unchanged. the s&p was down six points. really that's essentially where we are right now. i don't think we've seen much of a move here. you look at the interest rates, like utilities, they were down three points. don't see a huge move here. if you take a look for example, at the vix which is not far from the lowest no particular spike in that. i kind of agree with steve just reading through and i don't have the full release of what was being said. to get to a june rate hike they need be more bullish on the economy and clearly indicate inflation was moving towards that 2% target. that's not here right now so i don't think the fed is necessarily more dovish on the economy i think they are flat to neutral. one statement here economic growth slowed due to transitory factors. we talked about this a lot. of course they are referring to
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weak oil as well as some of the poor weather they have received and possibly as well i wish then enunciate this clearly the dollar being transitory. the $is weaker today. overall it's a pretty mild market reaction. >> deutsch bank was making the point when we have these releases without a press conference we see very muted reaction. we're seeing banks, like bank of america, citi as well as morgan stanley. rick santelli, bonds pared their loss on the back of this. >> they did. let's look at the dollar index. i saw it down about 130 before the statement. ended up coming back quite a bit less negative now moving back sponsorship a very small move in that change considering where it's trending up. 30 is the long end. 275 out the 279. now under where it was before
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the statement. got up to 2.08. you get the point. seems most of the whippings on the long end makes since. liquidity is an issue. whether it's bill gross tweet or everybody i talked to for the last several months that's what you want to pay attention for. transit ents factors seems every cycle we have transcy end factors whether it's winter spring summer or fall. when will the fed tighten? big debate on the floor. they are not looking for anything to happen very soon. back to you. >> rick santelli in chicago. thank you very much. let's get back to our panel. the calendar references were removed but what does that tell you we're in an eternal fed guessing game. are you any more confident what will happen based on what you just snaerd >> i thought the most important thing hampton said the fed said
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they are transitory. they are willing to look through the weakness. they think it's oil and the dollar and think the economy will be stronger in the second and third quarter. >> i'm a weather hater. i under why companies use it. however this time the great lakes are frozen boston was under snow we had droughts port strikes. the first quarter data are you completely erasing it from the analysis that you guys do at guggenheim. does it matter at all? >> we were anticipating very weak number today. >> as weak as it came out? >> i was talking about zero. so i think that now the test is will we see the traditional rebound in the second quarter. we need to gate print above 3% otherwise i think it will draw into question how strong the economy is. >> was the first quarter a transitory slow down.
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if we don't the federal reserve game may change out further down the calendar. >> the market's expectation right now is that the hike will occur closer to december than june or september. so that's already in play out there in the markets. the fed has done nothing to dissuade us of that. the dollar to call in a transitory factor depends on interest rates. if the fed talks about raising interest rates you'll see the dollar get stronger. if that occurs that will have a huge impact on gdp. >> brian, steve here. a lot is dependent on the next two jobs reports. that's not breaking news. what the fed will not with stand is the job market mandate moving against it. what we've heard from yellen you know what? inflation if it remains where it i can see raising rates. but if both man tats are moving away from the fed's goals then i think that would take an interest rate hike off the table. june is possible. imagine a world where we do 2.50
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each of the next two job reports before the end of the june meeting and we get that as somebody described the traditional second quarter bounce whack. june could be back on table in a hurry. >> when you take a look at the trade in financials it does look like they are interpregt or investors are interpreting june is still on the table. does this change does the statement change at all your view about the bond trade? when do we see that rush to the exits if we do see one? >> you have to start preparing for it now. one of the things we haven't talked about is lack of liquidity in the bond market. to time that rush out of the bond market is a very difficult and challenging thing to do and so investors should be very careful and cost averaging out of risk in the bond markets and being prepared for the fed to remove the steroids they have been giving the bond market. >> investing in pharrell
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williams is the flip side. will they benefit from a rising rate environment? >> i think this is a good time to be increasing your holdings in the banks. you know the bank of america, we saw it making new highs. community banks. those sorts of stocks do very well when the fed begins to raise rates. >> melissa, i went back and looked the last time fed embarked on a rate hike cycle in 2004. one thing, the market at that time was stable up to that day and what they drobd the most telegraphed rate hike in fed history. if that was the case in 2004 it will be more telegraphed this time. the market went on a 30% run over the next several years as the fed raised rates and the market rallied. i don't think anybody is going to be caught by surprise. when the fed decides it's time
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to raise rates they have to find tlang. it's not in the statement now. but they have to find the language to signal the market. my guess is the next couple of statements will be about establishing that new code with the market here. >> let's look what happened when the fed has cut rates. perhaps the inverse is going to happen once they going raise rates. i went back and looked at what each of the main markets and commodities has done since the last rate hike which is june 29th of 2006. nearly nine years ago. since that time the dow jones is up 54%. ten year bond yields have fallen 60%. gold has doubled and oil hasn't moved too much down 20%. once we begin the rate hike do you expect yields to go up and stocks to fall, the opposite of what's happened in the rate cutting cycle or zero interest rate cycle? >> i think interest rates will rise but it will be extraordinarily gradual. it won't be a sharp move. it will be more of the two steps
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forward one step back that we've seen in this recovery. interest rates may go up. >> will it kill the stock market? >> on risk assets and stocks in general we're more optimistic. if you look at things like the p ratio or credit spread they don't look that out of line. credit spread are wider than they were. >> i think, john you're right. my view however, is as rates rise, this is going to be an automatic breaking system to the economy. that is we're highly dependent upon housing, if we see housing activity starting to slump i think that's going to drag on output. >> but do you expect a slight interest rate hike to hurt the housing market? >> it's been amazing, brian, to watch how sensitive housing has been to half a percent swing in mortgage costs and the fed is very focused on house something think if we start to see housing
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de dehe dese decelerate. >> happening now outside of the federal reserve the baltimore orioles and the chicago white sox have just begun playing baseball at camden yards. but there are no fans at the game. the nearly 46,000 seat stadium is empty. it was done over security concerns over the recent riots. this is the first time in major league baseball's history that a game success played with no fan attendance. on deck another west coast bio legend speaks. plus the stateealthiest of stealth companies.
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>> the etf that tracks riits are down. >> microsoft is on pace to post it's been day in seven and a half years. josh lipton is at microsoft's build conference in san francisco. josh. >> we are at the build conference where the ceo is on stage and he's convincing the thousands of developers here that they should write apps for his company's platforms and not rivals and of course the big one is windows 10 the new version of the operating system. take a listen to the pitch. >> windows 10 as i said is not just the release of windows, it's a new generation of windows. it is windows built for this era
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of more personal come computing. >> now i talked to microsoft and they will say the design of windows 10 is more clean, more modern and talk about the new browser, integration of microsoft's answer to apple's siri and window as 10 is a unified single operating system sponsorship it runs across all major devices whether it's a smartphone tablet, pc or gaming console. important for developsers because they write that single app and reach that many people. microsoft set it saefl new goal. they want windows 10 running on 1 billion device in two to three years. important that windows is a winner. windows doesn't account for 25%
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of the tech giant's revenue. back to you. >> it is a dickens of a housing market. the best of times for some. the worst of times for others. still to come a tale of two markets. plus we're keeping an eye on the big move in oil. say good-bye to lower gasoline prices but say hello to "power lunch" right after this we were protecting networks. then, we were protecting the transfer of data. and today it's evolved to infrastructure... ♪ ♪ ...finance... and military missions. we're constantly innovating to advance the front line in the cyber battle, wherever it takes us. that's the value of performance. northrop grumman. why do we do it? why do we spend every waking moment, thinking about people? why are we so committed to keeping you connected? why combine performance with a conscience?
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welcome back. we have two very different reads on the health of the spring housing market. diana oleck is in washington with the details. >> let's start with pending home sales. these are signed contracts to buy existing homes in march an indicator of closed sales in april and may. they rose a touch over 1% month to month and up over 11% from one year ago. march 2014 saw real weak sales so the comp pretty easy. that said pending sales are running at their highest level in a year and a half. realtors point to another positive fewer investor sales in these numbers so this is real mortgage dependent occupants. i want to focus not on refinances but applications to purchase a home. they had been rising steadily up 13% in the past four weeks
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but they stalled last week np as rates on the popular 30 year fixed has been at or below 4%. the stall is odd given we're at the very heart of the warm spring housing market. look around you. one week of aberration or is something afoot. rates haven't moved but they may be about to given that weak gdp number. and everything we heard from the fed today we did see rays inch up ever so slightly. will they don't rise or sit where they have been for so long. back to you. >> you know the housing market as well or better than anybody. fed looks at housing and was shocked how sensitive the market appears to be for small rate moves. do you believe that a creep up in the mortgage market is going to perhaps significantly hurt the housing market? >> absolutely i do. here's why. it could actually mean a little bit of buying if rates start to come up quickly people get
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nervous. oh, my god i missed the lowest rate i got to buy now. if they do continue move to higher and significantly over 4% over the next couple of months today's home buyers are very rate sensitive because home prices are so high and they are sensitive about the overall health. when they see costs go up they inch back especially those first time home buyers that have so much trouble saving for the down payment. >> white collar prison time is the subject of our new cnbc documentary airing tonight at 10:00 p.m. what happens when the chief executive officer becomes the chief executive prisoner. the former ceo of quest found out. >> i have guys in prison who put themselves in harm's way from text my back and yet i had guys who i made tens of millions if not billions of dollars wouldn't even check to see if i was
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alive. >> joe has it better than most. despite paying $63 million in fines and restitution the former quest ceo is still wealthy. still married. and still scarred. >> i sleep extremely lightly now. and i'm always -- i always call that sleeping with one eye open. >> you're on point. >> you're on point. you always know something bad can happen at any time. and i still leap that way. i don't know if that will ever change. >> be sure to catch white collar convicts life on the inside. it premiers tonight 10:00 eastern time. it is a huge day for oil, we go live at the nymex. quite a day. quite a week for oil. >> it's been interesting, brian. we're seeing in here 3% pop as we head to the lose. a couple of reasons for this including digging in to that report. i'll have the story four and what you need to watch for and
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where we think crude is going next. stay with "power lunch".
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hi everyone. here's your cnbc update at the
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hour. new and dramatic video of the sudden avalanche that killed at least 19 climbers on mt. everest last saturday. the nepal earthquake trig terrified avalanche causing a vicious cloud of snow and rocks to blast down and right through a base camp. it was video-taped by a climber. >> the injury deliberating in the murder trial of pedro hernandez says it is dead locked unable to reach a unanimous decision. the judge did not accept a defense request for a mistrial and told jurors to continue deliberating. russia's mission control failed stiblabilize a cargo ship spinning out of control in space. it's declared a total loss. police used tear gas and pepper spray and a water canon to disperse teachers striking in southern brazil. 1500 teachers and their supporters marched to the
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state's legislative assembly where lawmakers were debating a bill that would change their pension plans. they were blocked by police. and that's your cnbc news update at this hour. back to you, brian. >> oil today getting back to levels it's not seen since december. jackie what's the push behind the move. >> reporter: we had the eia report this morning. a build of nearly 2 billion barrels. traders looking at that. less than what they were expecting. lot less than we've seen in the last few weeks. that was supportive. u.s. production slightly higher but inventory significantly lower seeming to balance out the supply issue. we had a weaker dollar and the geopolitical situation flash points that we're keeping our eyes on. traders are saying to look at a close over 59 which we won't get to today to give us that next
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push to $60. if we get to 60 we haven't seen that level since last december. this is very significant in terms of crude and a lot of people saying the strength we've seen is signifying to them this thing is going higher before it goes lower. >> 30 minutes ago the fed pointing to weakness in the labor market and economy as a sign the central bank is not ready to raise rates yet. that's not telling he in entire story. take a look at the components of the xlf. banks that can benefit from a steepening yield curve. bank of america just off its session highs and breaking through $16 a share just moments go up 2.2%. jpmorgan and citi sitting close to session highs at this point. >> let us dig in on the bond trade.
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yields going back to 2%. at the conference we had a lot of big bond players saying they wouldn't be surprised if the ten year went below 2% but possibly 1%. what are the charts telling you about the future for interest rates? >> that's a possible scenario. i don't think we're very -- wouldn't say we're bearish here on bond prices. can you play them in a range. on one hand there's a bit of a floor here. i think if you look at the sentiment regarding bonds it's become much more optimistic versus where it was 12 15 months more calls for 1%. that's your floor. but at the same time we're not seeing a lot of upside here either. if you look at the attractiveness of u.s. rates versus global bond markets elsewhere the spread between the u.s. and german bund at its widest level is your cap. as the ten year gets back to its
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200 day moving average, great time to buy some bonds. that's the ceiling right there. >> at some point the federal reserve will be in play again. not today. could be june. more people think it's september. what will it mean for bond yields and maybe our viewers don't care about the ten year but care about the mortgage market and the two are linked. where is it going? >> the gdp number today will tell you exactly if you were on the fence about a hike in june i mean you're off that fence. i think it will be a while before the fed acts. rates will stay. the yield on the ten year will stay low until they do. i think you have right now you have a scenario where you're seeing a lot of sort of risk off trade but people taking the trade off the young european bond trade off right now. you heard gross make comments about the bund and the fact it's an overcrowded trade and people are looking at it and say we're coming off.
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you see rates in europe rise. it's a short-lived trade. you'll see the residentsy yields come in in the next several trading sessions. i look for it to settle around 192, right around that range as far as the yield on the ten year over the next several months. >> david, guys thank you very much. you mentioned bill gross. bill will be appearing on our show in five or ten minutes. thank you very much. for more trading nation head to outbound website tradingnation.cnbc.com. >> luke, great to have you with us. we're seeing a bigger move owti. cushing inventories down for the first time since november. are traders thinking the worst is behind wti? luke can you hear me?
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obviously having problems with luke. so we'll get back to him. again seeing a big move in wti. but the bigger move in wti. >> again, i don't know if u viewers caught our coverage of the millken conference. every person i spoke to thought the price of oil was going higher in the coming days and months. possibly 90 or back to 100 within next year almost everybody is bullish on the price of oil they think production which still has been a record despite recounts coming down production may start to meaningful decline and demand could come up especially if china begins to the stimulate or try to their economy. >> we'll try to get luke back on here in just a bit. the markets reacting to the fed a bit. the do you know dow jones average fuel a little bit. yields back above 2%.
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where does bill gross see the fed raising. what does he think about the stock market? we'll get his thoughts on the timing of a rate hike. stick with us. >> now the latest from tradingnation.cnbc.com and a word from our sponsor. tdd# 1-800-345-2550 [ 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 if you get a trade idea schwab can help you take it on. tdd# 1-800-345-2550 we're getting a lot of questions tdd# 1-800-345-2550 about organic food stocks. tdd# 1-800-345-2550 [ male announcer ] sharpen your instincts tdd# 1-800-345-2550 with in-depth analysis by schwab experts. tdd# 1-800-345-2550 and if you want to run your idea tdd# 1-800-345-2550 by a schwab trading specialist, tdd# 1-800-345-2550 our expertise is just a tap away. tdd# 1-800-345-2550 what's on your mind lisa? tdd# 1-800-345-2550 i'd like to talk about a trade idea. tdd# 1-800-345-2550 let's hear it. tdd# 1-800-345-2550 [ male announcer
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we're going try this one more time. let's get back to luke. luke, good to have you with us. are most traders thinking the worst is behind wti at this point? >> i think so. this is the second time we had the numbers come out and both times wti rallied off because it wasn't as big of a draw down as they thought it would be. we have a good floor on crude right now. >> the bigger question is how quickly the sense will be what are traders forecasting on that? >> it's hard to say right now, but trading at 58.5 i like to see crude trade on even numbers.
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we're coming up on the summer driving season. unleaded gasoline inventories are at a five year low. so i think we're going to go through 60 come middle of summer. >> what happens to the spread between brent and wti from here. is wti's ascent going be more rapid than brent. >> brent is trading more freely. wts more strained because of export laws in the u.s. and how it trades in the u.s.. but i think wti will start to catch up to brent and then be lock step for probably toward the end of the summer. >> luke i'll leave it. brian. let's get morton fed. bill gross of the janus globe fund. based on what you heard do you think a june rate hike is a possibility? >> i don't. i think i changed that a few months ago. i think they will raise rates
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once in 2015 if only because they want to prove that they can do it. but certainly as evidenced by their statement today although they are talking about transitory and talking about a return to normal growth rates and potentially a 2% inflation rate. i think they have problems in terms of those objectives. i noticed one important thing and most you know newscasts and most news dailies don't print this at all that the real final sales number absent inventories was a minus .5%. while this 2% growth is anemic but not as real final sales without inventories and that will have an effect in the next quarter and next quarter after that. 2% to 3% growth going forward problematic in my opinion. >> but the fed does seem to be saying maybe more strongly than it normally does this was
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transitory, we tuned first quarter was weak the gdp print was awful, a lot of the data we've seen is coming weaker than we expected. with all due respect we have an unbelievably awful weather, port strike. there were reasons. your wiping out the data or do you believe some of this weaker data is real? >> well let's acknowledge some of the conditions. let's acknowledge, you know lower oil prices in terms of investment. let's acknowledge the weather in terms of consumption. let's acknowledge all of those things. the question becomes how transitory is the real economy and i would add to that in term of the negative that the real economy is affected by you know, very long term structural issues in terms of demonstratoe o demographics and high debt levels. these are things that the fed
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doesn't want to muddle, doesn't fit neatly into their tailor rule. it's something obviously that larry summers as he brought up secular stagnation. the real economy going forward as acknowledged by imf and other independent sources is 1.5% to 2% number for the next 12 to 18 to 24 months and is that great? no. but it's better than most. >> just a quick note here bill. our viewers saw a flash. salesforce.com crm halted for volatility. not sure what that means. just want to call your attention. crm is halted. we'll figure out what's going on there. bill you tweeted out something interesting or janus did about no liquidity in the bond market. you said the bonds are moving even on small trades.
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what do you mean by that and is this a problem for the bond market? >> well an observer can see it if they watch their screens seven or eight hours a day which i do. i'm not the source of liquidity these days. janus much smaller. you can see in terms of the treasury bond market the ticks are one or two ticks apart whereas before you know it was almost non-existent in terms of the movement on a second to second type of basis. if the treasury market is relatively liquid compared to where it was the high yield market other markets are liquid as well and i think you're seeing that certainly in germany today and in the euro and markets where those yields are much higher. you know based upon sort of an
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liquidity moment. >> when i hear one of the biggest and most liquid markets in the world has become more ill liquid according to you makes me nervous. you got some things that could shake the market. what could be the outcome from this and why do you think market participants either aren't there or aren't participating? >> well to a certain extent they are confused in terms of other central banks and their particular policies. the u.s. treasury benchmark, the ten year as related to the german bund and the be ecb is buying german bunds for the next 12 to 18 months. they set their conditions on terms of where they would buy them and how much they would buy so the market to some extent expect that check writing from mario draghi and expect that
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dloibt liquidity to be available on a daily basis. when it's not it exposes like warren buffett said when a tide goes out it let's us know who is wearing a bathing suit. today investors were not wearing bathing suits. >> i just want to remind our investors, you called shorting the german bund is short of a lifetime. i do want to ask pimco hiring ben bernanke as an adviser. your reaction? >> well i think that's great. pimco, you know hired alan greenspan, bill thompson and i got together nine ten years ago and brought in alan greenspan four times a year for some quarterly discussions. i think that's great. we've always been a supporter at pimco of ben bernanke and i think they can benefit from him. you know perhaps i'll sneak over and take a listen myself. >> threw go you read my mind.
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here's what i'm thinking. you and ben bernanke are walking to your car in the parking lot of where you guys still operate, if you happen to bump into ben bernanke what's the one question you would ask him? >> well i would be interested in why he's being so public in terms of not confronting the current fed but at least engaging the fed in terms of a discussion. that was very unlike alan greenspan. and you see a discussion from bernanke almost weekly in terms of confronting fed policies or fed intuitions on the taylor rule and other policies. so let's have a beer and talk about these things and why, why is it that you're so public with your comments. i like it but it's very unusual. >> if you get a beer with ben bernanke, bill and i'm not invited i'll be personally
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offended. thank you very much. have a great day. >> all right. again salesforce.com crm halted for volatility. let's get more on this story. >> this is a bloomberg report saying salesforce.com according to people with knowledge of the matter has been approached by a potential acquirer and that it's now working with financial advisers and bankers to look at possibly the idea of selling itself. now this is a big deal. sales force is worth about $44 billion. this is no small doe acquire. the story goes on the say that again possible suitors could include big competitors of theirs like oracle or microsoft. that's why you have that trading halt. again not for news this is a volatility trading curve. it just stopped so things can normalize again. we'll see what happens when it opens up again.
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>> it does look like it has resumed trading. when it was halted it was up 5%. now up 13%. hitting a new high of 76.74 in today's session. again volatility bloomberg report possible take out target and the stock is surging on the back of this news. >> if you're still there let's talk more about this because if this report is accurate the number of potential buyers are ersers are very, very small. you mentioned asp, oracle natural fit. the ceo who runs sales force is a long time oracle guy. microsoft or asp and ibm. let's not forget let's take the market cap of crm, let's tack on a 30% premium to any deal. guys number of potential buyers on that deal is miniscule and this would be one of the biggest technology deals of all time if
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not the biggest technology deal of all time >> you're right. you and melissa and we follow all of these names but the more interesting thing right here is this is also an interesting personality story. these are fierce competitors with salesforce.com. sales force, some would say the undisputed leader when it comes to client relationship management software. you look at these product offering, each one of those companies you just mentioned have some operation in a way that could maybe take an acquisition as large as a crm. again this is all speculation. the report does say they had been approached had been approached by a potential acquirer on this. it's going to lead to all kinds of speculation, guys. >> when we're talking market cap, we're talking a $44 billion company and growing by the moment. we are seeing the stock up by 16% right now. this is surely a developing story, brian, that we'll be
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following. >> yes. mark benoff was a star at oracle. he was young. he was named salesman of the year in his early 20s. he went off on his own. he leaves, starts salesforce. profitability elusive for sales force. this could be the biggest technology deal of all time if that report is correct. salesforce.com stock is up 15% on that news. we'll get you more on this developing story as well. you're watching "power lunch" on cnbc the worldwide leader in business news. stick with us.
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all right. your big and developing story in the stock market right now involves salesforce.com the tigger symbol crm. there's a report out there that perhaps somebody is poking around to buy salesforce.com or salesforce.com has been approached or perhaps it is shopping itself. the idea is this basically salesforce.com as a company may be in play to be purchased. that stock was briefly halted. it is not halted any more. it is up 10 kbuks a share to $77. that's up 15%. and melissa, looking out, obviously, the biggest tech deal of all-time aol/time warner, 106 billion.
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facebook/ facebook/what facebook/whatsupp. if it sells itself it will be the second biggest tech deal of all time and one of the biggest m & a transactions the world has ever seen. this is not a small company. >> slicing this finer, brian, the biggest ever tech m & a deal was jds uniphase buying sdl for $31.5 billion in july 2000. rich peterson over at s & b capital makes a point that biggest of the peers that could buy salesforce.com, sap and oracle. y pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use,
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well, sir. after some serious consideration i'd like to put in my 15-year notice. you're quitting!? technically retiring, sir. with a little help from my state farm agent i plan to retire in 15 years. wow! you're totally blindsiding me here. who's gonna manage your accounts?
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this is a devastating blow i was not prepared for. well, i'm gonna finish packing my things. 15 years will really sneak up on you. jennifer with do your exit interview and adam made you a cake. red velvet. oh, thank you. i made this. take charge of your retirement. talk to a state farm agent today. the stakeholders theory is you have a lot of important stakeholders that are important for your company, your employees, your customers, your partners. the community around you. you know all these, the people who live here in san francisco, for example. the environment. and a lot of other key stakeholders as well. to really think and be successful as a ceo today you need to think in a multistakeholders framework. >> that was last night on "mad money."
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jim cramer interviewing mark benoff. jim, speaking of mark benoff, salesforce.com based in that building. benoff is apparently at another conference today. we're trying to get commentary from him. that is the big news crm -- it's just one report we need to make sure our viewers know that one report that salesforce.com has been approached to be bought, has approached a potential buyer itself or somebody in a position of authority has said hey, maybe we should take a look at crm. that stock is soaring today, up 13.5% right now. >> that's precisely why we are telling you about this one report. the stock hitting 78.46. this looks like an all-time high for salesforce.com. this is certainly an interesting story. it won't be -- it could be actually the biggest tech m&a deal. rich peterson at pointing out the acquisition of sdl in 200
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was the biggest tech deal to date. this could surpass it. we'll be watching this story on "fast money" as the traders try and dissect and digest this news and determine whether or not anybody would want to buy salesforce. >> if they do melissa, it will be more expensive now. you'll put a multiple on that. guess what, the report sending that stock up 13.5%. if you are a buyer you'll have to pay more. melissa, we look forward to "fast money" at 5:00 eastern time, 2:00 pacific. i'm brian sullivan. i'll be back east tomorrow hopefully. "closing bell" with more on the fed and all the crm stuff. i've enjoyed being with you from los angeles. i'll see you tomorrow from englewood cliff. "closing bell" starts right now. thank you. hi and welcome to the "closing bell," everybody. i'm kelly evans down here at a busy new york stock exchange. >> here we go again. i'm bill griffeth.
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the fed releasing its decision in the last hour comment on the economy. obviously weak data out on the first quarter. which was much weaker than anticipated. the fed still is data dependent. it looks like june may be off the table in terms of a rate hike. we'll talk about that. we have a lot to talk about. top names on wall

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