tv Closing Bell CNBC March 21, 2014 3:00pm-5:01pm EDT
shot. he sent one over this morning. clearly they used the cnbc head shot instead. >> i am not yummy and i am darn happy about that. >> what would you be if you weren't a yummy. >> sum said i was a retrosexual because i grow a beard and cut firewood on the weekend. >> vf a good weekend everybody. >> "the closing bell" is next. >> and welcome to "the closing bell." i'm kelly evans here at the new york stock exchange, bill, and what a ride it's been already as we enter the final hour. >> crazy day. i said this is wall street's version of march madness. i'm bill griffeth at cnbc global headquarters. it seems like ancient history but the s&p early on today was on track to close at a record high. but shocks have turned lower. you had dallas fed president richard fisher apparently he has a calendar, and he figured out that at its current pace, the fed's bond buying program would
end by october. was that the reason for the sell-off? we don't know. we're going to talk about that. nasdaq the biggest laggard by for because of the rout among the biotech stocks. gilead sciences getting aot congress wanting to know about the pricing of one of their drugs. that sent investors scurrying out of biotech drugs. >> steve liesman will join us shortly. an hour from now the president host egg tech bosses at the white house. this amid growing concerns about government surveillance. among the ceos expected is mark zuckerberg. we'll take you live to the white house and we'll speak to knows in attendance. >> and more developments in tesla's fight to sell cars directly to consumers. arizona, it's one of the three states out there that currently outlaws selling cars without using a dealer, a middle man. but one state congressman in arizona is defying the car
dealer lobby and pushing a bill to reverse that ban. that lawmaker will join us exclusively coming up on "the closing bell." >> perhaps arizona wants that gig giga factory. >> do you think? >> dow is only up about 9 points, 16,340. look at the nasdaq as well. this is the weak link. it's down 42 points, almost 1%. meantime, the s&p 500 sitting lower by 5 points, this after hitting a new intraday high earlier this morning. we've had heavy volume already this session. >> yeah. first hour was very, very heavy and we're expecting because of the expiration today, heavy volume in this last hour of trade. joining us in our "the closing bell" exchange today, erin gibbs, bill smead, steve east, michael block, we've got steve liesman on board, rick santelli is along for the ride as well.
steve liesman, let's start with you. coincidence or not, but richard fisher, the dallas fed president, speaking in london made those comments that he made typically hawkish. the market started to sell off. is that why we saw the sell-off today do you think? >> i think so, and something appears to be bothering the market that i didn't know was bothering them, which is doesq e end in october or does it end in december? kelly, some quick math. five times ten. five meetings at $10 billion gets you where? >> that's $50 billion. >> okay, bill, here is to you. $55 billion over six meetings gets you how much left over if you do it in $10 billion increments? >> that's a lot. >> it's $5 billion. five left over. the question is does the fed do one $15 billion one to end the whole thing in october, let it go? why do we care? it's simple why we care. >> we're splitting hairs now, right? >> when does the clock start ticking on the six months or so --
>> it's ticking. >> or rather on the considerable period. >> it's crazy. this shows what happens when you micromanage. >> is it crazy the market really cares does qe end in october or december and does -- >> i don't think that -- >> what? >> you and i have debated this already. we did the math. we knew by the december meeting there would still be $5 billion left. whether they do an extra $5 billion along the way or not, does it really matter in the grand context -- >> apparently the market cares. >> we've conditioned the market to be stupid. >> michael block, you have been in this market all day. how important was it to hear from richard fisher that he wants to do $15 billion and wind this up by october? >> i'll tell you what, stamp a ticket because i'm with santelli here. this is splitting hairs. fisher sounding hawkish here it's like saying, in other news, it's friday. i don't think fisher has anything to do with the saleoff. i don't think we should worry
about when an extra five -- >> when it ends, presumably based on janet yellen's comments on wednesday, that presumably is when the clock starts ticking that considerable period or six-month period before they start raising rates, don't you think z think? >> the question is how credible is that six months. there's a camp that says, look, everyone is acting like this is some horrible sell-off, but guess what? what are we? we're less than a percent from the all-time highs. does the market think the sick months is not credible? james bullard from st. louis fed who is very influential but he's not a voting member this year but he's the guy i call the godfather of qe, he had a chance to say that six months wasn't right today. he blew that. he said six months is right. >> erin -- >> let me report that for a second because i was at the conference where bullard said. what he said was yellen's assertion that considerable period means six months is in line with private sector
surveys. so i think he was saying there wasn't any news in what the chair was saying. i think that was the point. you said -- >> set your watch, rick. >> exactly. >> erin, i want to hear from some of you guys. let's back this out a little bit from just that specific phrase. has anything changed for new the last 48 hours? >> absolutely nothing. this is what happens when you give people too much information. we really are splitting hairs. i think for our expectations it's always sometime toward the end of the year, whether it's october or december really make no difference. i think people we need to focus more on how much are they going to start tightening and how -- >> bill, same thing for you? >> the market needs to clear froth out. biotech happens to be one of the areas with sizable froth. what you've got here is the momentum people and if the momentum people see something that might interrupt their momentum, then they attack the froth. very much like '83-'84, that's a
long time ago for many of your watchers, but we had a frothy market, small cap was hot for nine years and they blastered them for six months and it didn't affect the s&p much at all. >> we may be splitting hairs, and believe me steve liesman and i cannot afford to split hairs, but janet yellen made that sick-month comment. that's going to be on everybody's mind right now, isn't it? >> wasn't it on everybody's mind already? >> it is on everybody's mind. i think she made a rookie mistake. she was trying to be helpful and answer a reporter's question fully. but they have been given guidance all year and they slshd back into date based. but that toothpaste is out of the tube. i think what we found out is how badly the fed wants out of not only qe but zirp.
>> the fact we're debating this reflects what's happened with fed policy. we moved from having quantitative targets on the unemployment side to not having the unemployment target to now having to consider a consolation of factors and it's led us and will lead the market to have to have this argument day in, day out. >> kelly, let me point out that the director who dissented without out a statement that said policy without targets loses its effectiveness. i think he's concerned about this discussion we're having right here. i agree with michael quite a bit. i don't think the three months matters a whole lot. i do think uncertainty matters, and i think what you might be hague is at least the bond market, if not the stock market, pricing in uncertainty not only about when the first rate hike happens, but the slope and also the terminal point of when it ends.
and i think when you -- >> you think the flatness of the yield curve is going to change if we say we're going to have one meeting with 15 instead of end the year in december with 5? >> no, not that, rick. no, no, no, i don't think so. my point, rick, would be that the market is less interested in this october/december issue than when the first rate hike happens. am i talking about an extra 25 basis points? how quickly do we ramp up and where do we end? that's the debate in the market. the issue of do we start in october or december. your guys are very nervous about this issue -- >> i don't think they're nervous. >> and asking questions later. >> bill, you made an interesting point. do you take this as a canary in the coal mine here, the fact that some of the momentum names are selling off or are you saying we shouldn't be that concerned? >> small caps are overpriced. private equity funds have drowned them in takeover offers. that is the froth. the froth will come out.
when you tighten credit, when you pull back, you're going to get the froth come out, and large is going to clobber small we think in the next year. >> even with a large cap, we're trading at 16 times forward earnings. we are priced for perfection. we will continue to see volatility when there's all this uncertainty and changes going on. >> now that we've got this time clock in your minds, whether it's real or not, just perceived, what do you think that does to earnings expectations and the guidance that companies may offer to wall street knowing their cost of doing business is going to go up? >> they've already come down massively, bill. they have come down they're almost at 7.5% growth for 2014 versus 10% starting the year, and this is just going to ratchet them down further. so i really see potential for corrections, particularly as earnings season starts in about three week that's where we could see some real dips. >> long duration investors should really not be the
slightest bit bothered by this. only economic strength can cause steve and rick to have a hard time a year from now. if they start to naturalize short-term rates, then it will be economic strength driving it and main street white outperform wall street and what a novel concept that would be. >> imagine. >> did mention the rotation from small to large. we could also see a rotation from growth into value. >> agreed. >> and that -- >> and that gets to what bob pisani has been saying. if you look at the big tech nam names, perhaps that reflects the very arguments you guys are making. hewlett-packard and microsoft did laall right. >> if your earnings come from outside the united states and you won't pay the tax to repatriate it, you make --
>> i guess that's a powerful argument for bringing it back home. >> have a good weekend. go mercer college. >> go heels. >> thanks, everybody, for your thoughts. heading to the close, yes, we could get some volatility. we had a lot of volume on the open this morning and some volatility and because of expiration, we're going to get more coming up. the dow is up just 26 points. it was up 125 points at the peak today, kelly. >> remarkable. the s&p also set a new intraday high but it's turned negative. it's down three points. what kind of momentum would it take to turn this market back around? we have a lot of different factors going on. we have the simultaneous ex pir ration of stock options and future contracts. we have rebalancing that could make it a volatile last hour of trading. there is apple down a fraction. they've been stuck in a tight range this year but we'll hear from somebody who says this stock is about to take off. is he right? good old-fashioned stock brawl on one of wall street's favorites coming up. >> and tiffany's earnings and
welcome back. it's been a pretty interesting day here for stocks to say the least. >> dom chu has been following what's driving the roller coaster. >> all kinds of individual great stock stories to talk about. let's kick it off with biotech stocks. companies like alexon, regeneration, gilead all down. some analysts aren't quite as convinced it will turn out to be a big negative overall in the end. on that front, check out shares of endocyte. they saw positive test results in a midstage trial for a type
of lung cancer drug it's partnering with merck on. it received approval from european regulators for use of that drug to treat ovarian cancer. lionsgate it's newest teen movie franchise "die ver gent." some feel it won't be quite as successful as twilight or hunger games. we'll end things with the luxury side of things. tiffany up a percent. they were lower after quarterly results missed but it did really offer full year outlook that was a little cautious. there is, however, optimism that tiffany is just being extra conservative about that guidance. hence some of that bid coming back to the stock. tiffany approved a share repurchase program of up to $300 million in common stock. back over to you. >> thanks very much. luxury retail is feeling a little bit of a pinch lately. an area that's been a standout
in this market while other retailers have been soft. >> is the high end shopper running out of gas? how big a concern should that be for investors? joining us expect retail analyst stacy wid lits and also with us a mary epner. good to see you both. stacy, slowing down in europe, slowing down in asia. that's a problem for a lot of high end luxury retailers. >> absolutely. we saw a period of double digit growth and now it's normalized. the most important thing you have to think about is it's follow the currency bouncing ball from country to country. now that the u.s. dollar is weak, the chinese are shopping in the u.s. they're not shopping as much in europe as before. so the pie is pretty much staying the same, but the consumer is just moving around and following the easy currency. >> mary, it sounds like the trouble is for a lot of retailers in the luxury space, it was precisely the strength in europe and china that was driving the growth. it was driving the story for
these names. so what happens now? what names do you like now and what's the next phase? >> well, what's happened with the luxury brands is they've made a conscious effort to trade customers upwards. it's alienating a customer who used to want to buy a gucci or a louis vuitton bag. it's created a whole new price tier that other brands are entering. so there are a lot of shifts going on. luxury is getting higher. there's a space being created for brands like phillip lim and alexander wang, $500 to 12$1,20 price points and the men's business continues to be strong. there will be upsets in the next 12 months. >> are those investable names? it makes me think of a kors which came in and did extremely well. >> what we expect to see happen is kors will come out with a higher priced line and will address the $500 to $1,000 price point. stacey and i were just talking about coach, and we expect to
see with the new design director, he is going to offer a higher priced look and aesthetic for fall but we won't see the results of that until the back half of the year and then hopefully we will finally see coach turn around. >> stacey, what about tiffany? i was reading today, i didn't know this, their flagship store on fifth avenue, that's 10% of their whole business. no pressure on one store, but what about their business here in the u.s.? it puts more pressure on them because of the currency play you were talking about. >> here is the good news for tiffany is if you look at that flagship store which representses 8% to 10% of the business, about half of that store is tourism. that's a huge number. as the chinese are coming in with the weak dollar, guess what? tiffany comps were up 7% and that's what all the luxury brands are seeing. they're seeing that customer come into the u.s. now they're saying, hey, let's open more stores in the u.s. let's open fewer in china. >> this is so interesting. stacey, would you say it's going too far to perhaps see some of
these names shudder these massive stores in china and europe they are paying such high rents for and instead redeploying that capital in the u.s.? >> that's the problem. ife built stores to capacity for high single digit growth and we're seeing a smaller pie, that's a good point. rents in europe have doubled for the luxury space in the past five years. if we're stored up and geared up for high ingle digits and the consumer doesn't show up in europe -- >> i don't know about you, but when you walk around manhattan, especially in the soho area, for example, seeing so much demand, rents there are increase sing s rapidly -- >> you're not exactly getting a bargain in real estate in manhattan right now. >> i'm amazed at the strength of it. >> the one thing i wanted to mention on the jewelry front is that luxury watches -- actually watches at all levels continue to perform well. that customer has not been
impacted. so if tiffany would actually boost that business a little bit, it could have some long-term momentum. but, yes, i agree with you back to your topic, yes, i agree. >> i buy all my watches from those guys on the corner. >> that's not what we want to hear. >> bill, you're supposed to -- >> they tell me they're the real thing. i don't know. >> yes, of course, they are. >> whatever you want to believe. >> no one is getting the new samsung watch. >> yes. >> just yet. >> thank you, ladies. >> thank you, guys, very much. tough day -- well, they did all right, i guess. >> my watch has stopped. i don't understand. >> that actually has happened to my grandfather a number of times. happy birthday, gramps, by the way. we have a half hour left to go before the closing bell. the dow jones industrial average is slightly weaker at this hour, bill, off by 7 points. >> apple is lower today as well. we have an apple stock brawl today. our bull says buying apple shares no-brainer. our bear says you'd have to have
no brain to buy apple right now. they'll duke is out coming up. that's just the under card to our main event. janet yellen told us the fed could start raising interest rates this year. dom chu says you're better off investing in financials. they'll spar later on "the closing bell." closing bell." we know we're not the center of your life, but we'll do our best to help you connect to what is. dom chu says you're better off r ♪ [ male announcer ] a car that is able to see,
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those days are long gone at least for now. >> the stock is significantly underperforming the s&p 500. josh lipton with more now on what the street is saying about apple these days. josh? >> kelly, on wall street analysts still might love apple's products, but they're not as excited about the stock. apple has been trading, as you mentioned, between $500 and $550 for months. it's causing some analysts to sour on the name. right now 70% of analysts on wall street have a buy rating on apple. that might sound high but it's actually very low for the company. it's five-year average is 84%. but if you own apple, maybe that lack of love from wall street is a good thing. for one, you could see it as a contrarian indicator. in september 2012 remember when apple hit that all-time intraday high of $705? 89% of analysts at that time were telling you to buy. next they cratered 45% to a low
of $385 in april 2013. paul hickey says if you own apple you should be happy that buy ratings are down because it leaves room for potential upgrades if the company launches new products and services that excite consumers. apple bulls still think apple is a company capable of creating revolutionary products. back to you. >> josh, thanks very much. how should investors position themselves on apple? our next guests have battled it out and they are back for more. lou says it's a buy. bert is a bear. >> i like apple, it's a wonderful company, but i don't like the stock. >> because? >> well, they're losing market share. android phones in 2012 had about 69% of the market, and last year they had 79% of the market.
so apple is on the what i to maybe having 10% of the smartphone market, diminishing market share is for me always a sell signal. they have diminishing profit margin. their sales, their revenues are really not increasing. all the apple groupies don't realize that. they love the product and i like the product, too, although i don't have anything except the ipad, but it's a challenge for the company. everybody is trying to eat their lunch. >> right. >> what's interesting here, guys, is that with the stock being largely range bound it's like everybody and nobody is right. where do you think it could ultimately trade and why? >> look, i think the stock is going to over $600 before the year is out and for a very simple reason. we're in a market where everyone is clamoring where can i find bargains. apple is absolutely it. you have tesla, amazon, netflix trading on hope, and apple is prime for the picking at 13 times trailing earnings, 11
times forward earnings. another thing is the unsung hero of leading indicators are patent filings, and for years apple has been telegraphing where it's going next with their patent filings. into biometrics, mobile payments, more raently into wearables and nobody is pricing this into the models. i think apple has a unique position in that they have an ecosystem. they have insanely loyal users. they're i-sheep. if apple rolls out a product, they're going to buy it. they're meant for premium buyers. i think the comparison to android falls really flat. >> bert, clearly, this is not the momentum stock it once was for various reasons. but it has a maturity now to it, and it has that loyal customer base that both you and lou agree about. so why wouldn't you consider this a long-term investment if you believe in the products? >> listen, bill, i don't believe
in the product. >> you just said you like apple's products. >> i enjoy using the ipad. okay. that's about it. apple has 85,000 employees, and i wonder what those 85,000 people are doing. it has just a little bit higher market cap than google. >> they're innovating, bert. >> innovating? where is the innovation. multicolored phones? is that an innovation. >> you said that last time. i'm telling you the big innovation is mobile payments and wearables. >> one at a time. >> sizes, that's not a technological enhancement. galaxy has had different sizes for the last two years. apple is no longer the technological leader. >> there's a misconception that tim cook needs to be the next steve jobs. he can't be nor does he have to be. steve jobs built a tremendous, loyal following that tim cook just needs to leverage that enormous asset base.
incremental innovations are really going to move the needle -- >> you tell me what products has he come out with that are really exciting. tim cook. >> it's not what he's -- it's what he's going to come out with. >> the future. oh, yeah. the future, yes, we've -- >> next you're going to tell us -- is your only reason not to buy apple a technical one? there's going to be some fib notchy retracement down? i really don't understand where you're coming across on the negative. >> my god, when you're losing market share, that's not a negative? when you're losing profit margins, that's not a negative? when you have 70% of the analysts on wall street still being bullish on the stock, 70%, i wouldn't touch apple until 10% of the analysts were bullish. that's the place to -- >> that's never going to happen -- >> when 89% of the analysts were bullish on the stock, that was the peak and that was the exact
time when i turned bearish on the stock. >> so, bert -- >> everybody is bullish, you want to be bearish. >> if lou says it's going to $600 by the end of the year, where do you say it's going? >> i think at about the current levels you have a great chance to sell just before the next decline. i have a feeling you're not going to say -- see the prices again where it is right now -- >> is it going below $500? >> oh, absolutely. >> before the end of the year? >> my technical target for the long term and that means around the next couple years is around $320. >> janet yellen learned her lesson. you don't pinpoint numbers down the road. you learn your lesson. good to see you both. thank you for your thoughts on apple. >> thank you. >> thanks. go gators. >> heading to the close. 30 minutes left in the trading session and the dow has turned negative. it's an expiration day, anything can happen, anything has happened. the dow was up 125 points. we're expecting some more
fireworks as we head to the close. >> it's been wavering between a profit and a loss all hour. the crisis in the ukraine sparking calls for the u.s. to start exporting natural gas to our allies in europe. we'll hear from the ceo of one energy company who is all for it. he says it will create a lot of jobs right here in the u.s. president obama is getting set to meet with top technology ceos over growing concerns about internet privacy, including outspoken mark zuckerberg of facebook. so are surveillance fears starting to hurt their business? we'll take a look at that coming up on "the closing bell." stay tuned. stay tuned. simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach.
welcome back. geopolitical tensions surrounding the crisis in ukraine are giving oil prices a pop today. >> jackie is at the nymex with details. >> traders telling me they do not want to be short oil going into the weekend because they are keeping an eye on those geopolitical tensions. they're not expecting anything to happen necessarily, but they were just a little bit cautious about it as they left for the weekend. meantime, west texas intermediate trading just under $100 a barrel. seeing a little pop from the strength in equities. that trend now reversing as
well. i want to switch gears and talk about nat gas because we saw some selling pressure today. yesterday first day of spring, warmer temperatures are here so traders are selling even though the models are saying we could see some cold early next week but keep in mind i spoke to someone at the cme who told me volumes this year even though we saw a lot of volatility were lighter than last year and last year was a much more mild winter. go figure. i also want to point out this is a political hot button right now. a lot of people talking about the u.s. exporting natural gas to help boost the market and keep that market more stable when tensions like what's happening in russia and ukraine spiral a little out of control so keep that market more stable. that's one of the hot topics people are talking about when it comes to nat gas. back to you. >> "usa today" out with an editorial saying the west can turn the tables on putin if the u.s. exports its own natural gas to other countries. speaker john boehner seems to be showing his support of the idea. he retweeted the idea with the article with the #mustread.
>> for more on if this is a good idea, let's bring in gary evans. we know where you're coming from, but the critics will say this comes at the wrong time. we shouldn't export because we have all this natural gas we've discovered. this could create finally the energy independence that the u.s. has been needing for decades. why send it overseas right now? what do you say? >> it's pretty much a no-brai r no-brainer. we got prices in the $4.50 range when japan and china are paying $18, $19. europe is paying $10 to $12, and we got probably a 200-year supply if not greater. to think we're going to sit here and keep this gas in this country and not export it to other countries around the world and create all these jobs that
the industry has been doing for the last five years is actually insane. >> you're saying it wouldn't jeopardize our energy independence if we were to export it? >> absolutely not. in fact, it's probably going to energize it more because there will be more capital available to exploit the shale plays we discovered in the united states. >> but let's say that the natural gas price jumps from about 4 bucks and change today to $6 or $7. it will mean our producers, our companies and our consumers, will pay more. so that is a trade-off worth considering, gary, is it not? >> sure it's a trade-off, but look at the benefits of $5 to $6 gas compared to what other people around the world are having to pay. it's still about a third of the price. so i believe that with the industrial demand that could come with our ability to have this cheap gas, to create all the new chemical plants, petrochemical plants, ethanol plants -- >> if we're not going to do it, someone else will. canada, iran, they're trying to
approve export lmg and does that suggest if we really want to get serious, we better expedite the process and find some place to put these plants and get it going? >> that's exactly right. we only have six facilities approved. there's power play 30 trying to get approved. we're headed to 80 bcf a day. we need this ability to export this natural gas. >> what is bcf? >> billion cubic feet. >> assuming we were able to get plants online, realistically when could we start to export a meaningful amount to europe to make up for the shortfall that russia may whithhold. realistically what time frame are we talking about? >> it will take many, many years. >> yeah. >> the first facility goes live in texas where i'm from just next year, late next year. and the only -- like i say only
six have been approved. these are two to three year to four year lead times. we're not talking about having any impact on this economy in exporting lng. >> there's a not in my backyard problem with this. that's plans are massive, they're costly, they're not attractive. i think the chesapeake area comes to mind. >> it's like gas refineries. everybody wants them but not in their backyard. >> there's only one in the northeast. >> how do you overcome that obstacle? if we argue it's for the good of the country and for the good of our geopolitical relationship, then how do you effectively say we need to get these built and find the areas to do it to move that along? >> well, the states of texas and louisiana have been more willing to have refineries and petrochemical plants so that's the logical place. we have all these major trunk lines in the united states that feed into the gulf coast. so most producers like up in the marcellus and utica are looking
for ways to get their gas on firm transportation down to the gulf coast so that we have the ability to export this hopefully in the future. >> that's precisely where you are getting more active, in that part of the country, correct? >> that's correct. the marcellus and utica and laitsch is t appalachian is the cheapest place to find natural gas and we have abundant splice. it's going to become a bottle neck if we don't figure out how to get it out of here. >> thank you for your perspective. >> thank you. >> only a little more than 15 minutes to go. the dow has been vacillating but it's now off 35 points. the s&p 500 is also off about 7 points on the session. >> the dow has lost about 160 points off its high of today's session. meanwhile, tesla may have lost its fight in new jersey which just banned direct auto sales, but coming up, we're going to hear from a lawmaker in arizona who is leading the charge to overturn a similar ban in his state. but first we've got a fight of our own coming up next. seema mody says you need to buy
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coming and are they kryptonite to a bull market rally in j? >> which sector is the best bet in a rising interest rate environment? time for our market marquee match-up. dominick "dynamite" chu says investors should bank on financials. >> in this competition i'm mercer and you're duke. technology, guys, tends to outperform in a rising rate environment and here is why. it's a cash rich sector meaning little debt, so it's less impacted by rates rising. stronger economy typically means i.t. spending increases which is a boon to tech's bottom line. and third is international exposure. tech is not relying on just the u.s. it can bank on other markets for growth. three reasons right there. >> my one big reason is momentum. if you talk about what the
financials have done since the depth of the financial crisis, they got clocked and they got clocked hard, but here is the thing, they're the second best performing sector in the s&p 500 since the financial crisis, and they're up about 24% over the last year. that's in line with technology. they're also yielding 1.7% as a group. that's in line with technology. so as you take a look at the overall financial sector, one of the reasons why financials are in focus right now is because you have a fed that's starting to loosen its grip on capital controls. the fed is taking a little bit more of a step out of the picture. that's important, see ma. >> and i think we should also look at this week's performance as well. if you look at tech, we heard from janet yellen that rates may rise in the near future and while some sectors saw a sell-off, technology outperformed. microsoft, ibm, hewlett-packard all up this week outpacing the gabs gains on the s&p 500. even social media, cloud computing also getting a bid
this week. kind of shows you how investors are reacting to the prospect of raising rates. >> those are ancillary ways, they kind of benefit from. banks explicitly benefit from higher interest rates. every time you take out a loan, they charge you more. the steepening yield curve is one of the things we're looking at. the spread of two years over ten years in treasuries, it gradually goes higher and the expectation is it will get even steeper. if you borrow short term at low rates, near zero right now, and keep lending it out long, ten years, 20 years, 30 years for mortgages, that's a good sign. john over at oppenheimer, he says as the economy gets better, these banks do well and they can reward investors, especially if the fed is starting to loosen its controls. remember, they've been handcuffed in how much they can pay in dividends and buyback in shares. all that may start to lift in the coming year. >> you're getting dividend
growth and buybacks in tech as well. >> not to mention this week, guys, they've both done well. so we'll see if that can continue. >> kelly, bill, over the past year and over the past year-to-date, they're almost exactly the same in terms of performance. >> and that's what makes it even more exciting. >> we're going to go into overtime i guess. >> yes, o.t. >> thank you, guys. good job. >> bill, did you read there was only three perfect brackets left in warren buffett's bracket challenge. >> allegedly. i doubt they will make it through the weekend. we'll see. it'scrazy tournament so far. we have about ten minutes left to go into the close. the dow is still negative off 27 points. the s&p is lower as well. 1864. remember, the closing high was 1878. we touched a new intraday high but we couldn't hold on. >> once upon a time. the s&p was on pace to close at a record high but no longer. stick around these last few minutes could prove to be
extremely volatile because of the expiration. do not miss what could be our version of march madness on the trading floor. stay tuned. stay tuned. [ telephone rings ] [ shirley ] edward jones. this is shirley speaking. how may i help you? oh hey, neill, how are you? how was the trip? [ male announcer ] with nearly 7 million investors... [ shirley ] he's right here. hold on one sec. [ male announcer ] ...you'd expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing. ♪ it's how edward jones makes sense of investing. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need.
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with the expiration coming up. joining me is chris from merrill lynch, david darst, senior adviser with morgan stanley wealth management. the volatility this week, chris, is the market justified in being a little more skittish after janet yellen's comments on wednesday? what do you think? >> you know, i think so. i think you're in a period of indigestion. you have this comments that went one way and market participants that were expecting something else. you have to digest that. what we're really going to see over the course of the next couple weeks is markets adjust to the fact we may see tightening in terms of fed policy earlier than anticipated. keep in mind it was 2016 where most expectations were. it's now likely to be 2015 where the fed starts taking more concrete action to tighten up monetary policy. >> plus, david, more evidence this week of the slowdown in china and the implications that those carry. that doesn't help our market here as well, does it? >> it does not, bill. you see, the copper price is down 11% on the year.
you see china's down about 9%, 10%. so china is going through a period of structural change. you've got ping coming in. this is a period of adolescence. tough work your way through it. anybody who has teenage kids with a stone kncell phone knows difficult it is. stay with it and you will be ple pleased with the results. i've been heartened by the chicago pmi number. thei sm manufacturing and nonmanufacturing in the united states. you have the philly fed and the empire state fed gave good readings this week. now, the first quarter is going to be slow. your viewers have got to know, bill, it's going to be about 1.5%. the second quarter will get back what we lost in the first quarter. it may be as much as 3.5%. these are annualized rates of growth. people are going to start screaming to the fed to ease off
and let the gasoline keep going to the automobile rather than tapping on the brakes. janet yellen is doing a great job. she's just like mario draghi when he starts, when bernanke started eight years ago. she's doing a great job. you get mr. fisher in there, stanley fisher, and we're going to be just fine. >> it was very short honeymoon if her comments caused that sell-off on wednesday. stick around, guys. we're going to come back in a moment and get a quick break out of the way. come back with the closing count don and what could be volatile final moments because of the expiration of index futures and options. you're watching cnbc, first in business worldwide. stay tuned. stay tuned.
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new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. about two minutes left in the trading session here. if we can we'll show you the chart of the dow for the week. tremendous volatility, but when all is said and done, i suspect we'll finish with a gain of about 1-plus percent for the -- 1.5% is what i was thinking but we are going out about 24 points lower. the highlight today had to be the biotech stocks, down hard after an influential member of congress sent a letter to gilead sciences asking them to justify the pricing of one of their drugs.
that spooked investors out of biotech. you can see the nasdaq biotech index itself down 4%. chris, i don't know if you have an opinion on biotech stocks but when you get that kind of movement in a group that's been so strong recently, does that present a buying opportunity? do you think about getting out because everybody else did? >> i think it's a little bit of a wait and see. there's all sorts of opportunities in the health care sector to take profits. a lot of them happen around the regulatory environment. i think when you look through what's been said so far, it's really an opportunity to reassess. i'd say it that way. >> very quickly, gentlemen, we've been debating with the rising interest rate environment, technology or financials. you who do you like, chris? >> i think the financials here. a way to think about cheap beta in a market that's on average reasonably valued, even slightly expensive. that cheap beta, financials, technology, energy, and manufacturing look attractive to us. >> quickly, david. >> you want to basically stay away from real estate investment trusts and head towards
insurance companies. they can put that money to work at higher interest rates. that's what you want to do. >> got it. thank you, both. have a good weekend and everybody else do the same. but stick around because we have a lot more coming up. some great stuff on the second hour of "the closing bell" with kelly evans and company. i'll see you on monday. have a good one, kelly. thank you, bill. so we started the session strong today but we have closed decisively in the read. welcome to "the closing bell." i'm kelly evans. here is how we're finishing the day and week on wall street. as we head towards the end of the first quarter, the dow jones industrial average giving up 33 points. the nasdaq hit hard today. it's off 1% or 42 points and the s&p 500 off six. nowhere near that closing high of 1878 at least given where we started the day. let's get to it with today's panel. dani hughes, chris whalen, our own sheila dharmarajan and robert frank and "fast money"
contributor brian kelly. it's great to see all of you. brian, why the turnaround today? >> well, you had a couple things going on. one, remember, we have quadruple witch today. it's hard to get that feel for what this market wants to do. and then we had the banks turn around which everybody was excited about them last night, but when the banks turn around, they've been the leader, that was a sign to at least take some profits. >> there were a couple canaries, you could talk about biotech today. how much of a tell is that? >> biotech was a big deal. today's sell-off was very company specific. gilead got this letter questioning the high pricing. but if there's anyone who was a little bit concerned about biotech getting to froothy, getting ahead of it itself, they used today to sell. a lot of people are saying we may not be at the end of the biotech party, but we're in the seventh inning.
>> i think the ceo will be on "fast money" i believe next hour. that stock among those getting hit hard today. we also, dani, have to keep in perspective how far some of these names have come. year-to-date and certainly over the last 52 weeks. >> it's been a really big ride, kelly, but the thing that concerns me so much is volume participation. there has been nothing going on this week. monday and tuesday it was like we were on a holiday. so -- >> but wait a minute because i'm looking at the board. i see we're going a billion shares or something like that. we were spoiled by the riches of art cashin following this all day because we had huge volume on the open and the close. are you saying that's an anomaly because it's related to the expirations -- >> go back to earlier this week. you had nothing going on monday or tuesday. it was almost like they were in thanksgiving. high frequency wasn't doing a whole lot. we have a lot of volatility. so what's the next mover? >> i think that's what people are waiting for. that's where traders are sitting
at the edge of their seat. what's the next shoe to drop? >> what do you think, chris? >> the problem for the last couple years has been we haven't had a driver. you were talking about banks before. they're under owned. the street will definitely go into those names. is there a catalyst there? no. if anything, as we were talking about before the show, lending is pretty much flat on net. c & i ending is up, mortgages are running off. there's nothing particularly exciting -- >> but does it have to be exciting? the street is underweight. the bank index is still off 40% from when the -- >> don't look at the past. >> why should it be? >> book value more or less is where bank should trade. they were two times book during that period. the last ten years, if you're an analyst, was skewed. you have to look at all the data series and adjust them for reality which is right now, unfortunately. >> it's really that lack of excitement that i think had people concerned.
a lot of people are calling this a reluctant rally. a lot of people are saying this is the most hated rally. we don't have a catalyst really to push us very strongly one way or the other. >> we also have to look at the sort of multiple personalities of the market. on the one hand today, we had that sort of mini burst in the biotechs. you have more biotechs going public with no earnings than you had tech companies going public during the ipo boom. so big correlation there, but then you had tiffany coming out, big miss on the top and the bottom and yet the stock is up. you had, you know, vladimir putin running a tank over the new world order and the markets saying, it's just some oligarchs that can't use their houses in miami. i think it's the resiliency of the market on the one hand. on the other hand, there seem to be strategic surgical pops of bubbles in biotech. >> the bottom line is that the economy is flat and the market is lacking direction. no big surprise. >> the ipo market though, kelly,
don't forget, it's up big. we did $40 billion so far this year which is huge -- it's much higher than we were last year at this time. that's a big driver of what's going on. and everybody likes to look at the s&p at all time highs and say this is the top. i don't think that's really correct. i don't think we can just call it just because we're up at the top right now. that's not what's happening. >> kenny polcari joins us now. there's huge volume, some of this expiration, some rebalancing stuff going on at the close. so what in your opinion is the message? what did we learn today? >> it's a quadruple witch. we're not learning a lot today. options traders are balancing out their positions. that's why you had the big opening and then the big close. i think you really don't learn a whole lot from this other than the sell-off into the end of the day is much more again we're coming into the weekend, there is that option expiration, and there's just still a sense of nervousness. we had a 250 point rally over
the last two days after janet yellen. a little coming off the table would not be unexpected. that's exactly what you saw today. you didn't see any panicking. you didn't feel like anyone had a run for the doors at the end of the door. they didn't. tornado watch it was just a typical what we've seen -- >> why do you think we couldn't sustain the rally? why is it we were so strong early in the session and then just seemed to kind of fall out of bed? >> because i think we went right up to resistanceresistance, 187. it tried it, it challenged it this morning. there was no momentum to get it up and through so then it just rolli rolled over. people realized it wasn't going to pierce it today so they took some money off the table. >> as dani said, there's no investor participation in this market, and it kind of makes me think of the housing market, kenny. we got no first-time home buyers, no families. we have professionals. in both cases the asset prices are going up because of the fed and we don't really have support --
>> i think tifs richard fisher who said quantitative easing was a massive gift on behalf of the fed in terms of the wealth it generated but the retail values are starting to get more involved. we're seeing people take $32 billion out of money market funds. 91 straight weeks of inflows into floating rate debt. we've had $75 billion come out of emerging market equity. this will eventually get put to work in the stock market, will it not? >> when it runs out of bonds. >> when people start taking losses in bonds. >> brian kelly -- >> next week is the very end of the quarter. you have a lot of end of quarter positioning where big asset managers are going to want to tweak their portfolios. my sense is they will try to hold it here at the highs. you won't see it fall out of bed but you may not see it challenge and go to 1900 just yet. >> brian, this morning you said the most actionable headline of the day was the one eu readies natural gas plan to cut reliance on russia.
you like nat gas and coal names here. why? >> you have a couple different things. one, we know that the biggest card that putin has to play is the fact he sells natural gas to europe. all he has to do is raise prices and you hurt the european economy. you look to perhaps natural gas imports into europe, exports out of here, the u.s., and then that also means you will take some of the natural gas supplies we have that are at five-year lows after this cold winter that we've had and you're going to have those prices go higher. that will push utilities into the coal area, and their coal stocks are at five-year lows. those are the two areas i want to be in to play that. we don't know what the catalyst is here. maybe china -- >> it's still a couple years off. >> what's that? >> because we were just talking to gary evans about this last hour. it's going to take years for the u.s. to be equipped to export natural gas for anything beyond a nominal rate.
>> i agree. the eu wants to do something in three months. there already are natural gas he can ports. when you have certain plays that you can get into like a glng was up about 4%. those are the places that i want to be in a market that's -- we're not 100% sure which way it's going to go. >> dani, how are you positioning here? >> there's a lot of things going on next week, kelly. one of the things that concerns us a lot is the price of copper. copper has fallen off a cliff and it has chargely to -- largely to do with emerging markets and china. we think all commodities can kind of fall into that. we have iron ore also falling off. if we see the credit crunch continue to happen and unwind in china, that could mean not so great things for the u.s. equity market. >> the other thing that happened that was big, you had a big developer basically sort of creep toward bankruptcy after defaulting in millions of dollars of debt. the government basically sending
a message to the entire world saying whether it's a developer, whether it's any kind of company, we're not going to come and bail you out. that's a very positive thing for capitalism but not so great for growth. >> they did. they did bail -- they did come and bail them out. they had talks with them this week, they had a mini stimulus program and then last night they're allowing the banks to issue preferred stock. >> preferred stock. >> it is bailing out these companies. >> the chinese are in a very, very difficult position because, you know, on the one hand, the western observers think they're going to liberalize further but that's not the case. the chinese communist party's paramount concern is control, and civil unrest, if you have a major breakdown in the chinese economy, watch out because everybody -- >> people have been talking about this major breakdown, they've been talking about the cooling down of china for a long time and they have been resilient. >> it has because it's an authoritarian country but china is not an emerging market. it's the oldest nation on earth and they are very, very
controlled. i like to joke with economists there are no banks in china. we look at the statistics and believe they're real. they're completely manufactured. >> look at the chinese market over the last five years. the thing is down 45%. so it's been in this down trending mode. we might actually be closer to the bottom, right? >> you could be, but, remember, it's an allocation economy. they don't repay loans. it doesn't work the way a western economy works. >> we do have the hsbc manufacturing pmi for china coming out on sunday evening. the street estimate a 48.7. that would be a slight uptick. every basis point matters when it comes to the chinese data. >> we believe the statistics. that's the funny part. >> that's what i mean. >> but this is -- >> we've got to go. >> yeah, brian? >> it's the hsbc's pmi which is a lot more accurate. >> that's coming up this weekend. you can stick around and catch brian kelly and the rest of the crew on "fast money" at 5:00
p.m. and straight ahead on this program, the nsa surveillance program upsetting a lot of americans but none more so than tech ceos who faced a backlash from their customer base. those very ceos meeting with president obama at the moment and we'll take you there live when we come back from a quick break. also still ahead, another chapter in the tesla versus auto dealers duel. we'll speak exclusively to an arizona lawmaker trying to help pass a law for the electric carmaker to sell autos directly to consumers in his state. that's coming up. you're watching cnbc, first in business worldwide. capital to make it happen? without the thinking that makes it real? what's a vision without the expertise to execute it... and the financing to make it grow? whatever your goal, it can change more than your business. it can change the future. that's why, at barclays, our ambition is to always realize yours.
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welcome back. last week facebook ceo mark zuckerberg posted he called president obama to complain about the government surveillance program and today the white house meeting with silicon valley execs to discuss the issue, including mr. zuckerberg. john harwood joins us from washington to explain why those two events are unlikely coincidence. >> i think we have some video of mark zuckerberg walking into the west wing. they're meeting right now. we expect that meeting to go on for an hour and it's part substance, part political. remember, it wasn't just the obama administration that was embarrassed by the revelations about nsa data collection.
it was also those internet companies and phone companies that were cooperating with the government. they don't like being seen by their customers as people who are an arm or an adjunct of big brother government conducting surveillance. the administration is in the middle of a review to try to figure out whether or not the metadata they have been collecting and holding can be housed in a third person and still be accessible to the government. the president continues to believe in the merits of the programs but trying to figure out a way to satisfy some of the civil liberties concerns and the internet executives, who also have been cooperating with the government, want to try to figure out a way to satisfy their customers as well. white house official i talked to doesn't expect any big announcement out of this meeting but it's part of the review that's ongoing that we expect to be wrapped up within the next month or two before we see whether or not there's legislation required or something that the white house is able to do on its own. >> just to be clear, this copy
says this meeting comes a week before the march 28th deadline that obama had given attorney general eric holder and other administration officials to present options for reforming then nsa's collection of bulk metadata. it seems like the deadline would be one reason to hold the meeting this afternoon. >> no question about it. they are getting near the end of the road. i don't think the recommendations from eric holder will end the process, but this is something that's been ongoing for a while. it's been going on a separate track with some of the phone companies who are not participating in this meeting with the internet companies, but it's getting near its conclusion and they're trying to figure out a way to -- the administration wants to preserve the program while dealing with some of the concerns. >> john harwood, thank you, sir. have a good weekend as well. with us now for his take on the contentious issue and the position the tech ceos are in,
zach, se ward. what do you make of this meeting? >> it's a bit like cannibals holding a convention to discuss the protection of human flesh in a way. the technology companies and the government both have an interest in collecting as much data as possible but also saving face and making it seem like they are protecting the privacy -- >> wait a minute. i'm still sort of thinking -- we've got to get the panel in here as well for their reaction. zach, why are the tech companies the cannibals here? >> well, look, most of these companies have business models based on collecting user data and mining that as much as possible. the government has a different interest in this data, but both are -- seem to be in a way implicated -- >> is that fair, chris? >> zach makes a good point. you know, years ago -- i won't tell you how much -- i ran an internet service provider, and
the government was collecting bulk data in those days. they had a closet in may east and may west for that purpose. now the companies thegmselves ae clecci collecting the data as well. >> generally speaking there's a level of awareness when you engage with a product -- >> is there? >> you're right there's maybe not enough but there's still a difference between that and this -- and to not have any idea the extent to which everything that you do is being monitored. >> with unis being collected for commercial mercenary purposes and the other is being collected to protect the country. i'm more fine with the latter than the former. there's a difference between the phone companies, which i think very few people realize they were submitting their phone records for metadata versus -- i think that's a separate issue that has to be talked about separately from the facebooks and the social media -- >> is your phone data sacrosanct -- >> when you sign up for google, google chat and you say i agree
to terms, most people don't read all the terms but it is in there. people maybe just aren't aware of it. >> where are the people in this conversation? it's the government and the internet companies talking about what they're going to do to protect the people. where are the people? >> the media got excited about this because of the revelations about the nsa, and that's great. we should be grateful for that, but the reality is our colleague just said the phone companies passively have been allowing the government to collect this data for at least two decades. >> zach, isn't the real issue that a lot of tech companies themselves were taken by surprise with the extent of what the government was up to. they're losing boys -- business or worried about losing boys. is this a way to save face or is there something to this? are they really serious? is that why mark zuckerberg is wearing a suit and not a hoodie?
>> that's the shock. >> facebook and other technology companies claim the first time they heard about prism is when it was reported in the press. we still don't know the extent to which they're implicated in the nsa's surveillance program. it is about saving face. like i put on a suit today for cnbc, zuckerberg is putting on one to look good. >> the other important issue here is that the nsa attorney has said these companies cooperated previously with the government in giving this information over. so it's a little bit of a he said, she said thing but that's an nsa attorney saying it wasn't a surprise to him they actually cooperated earlier. >> zach, to be clear you're saying there is no substance here, this is only for show? >> i notice reed hastings, the ceo of netflix, is also in attendance. he's not necessarily there to talk about data privacy. there are other big issue, how the government regulates net
neutrality. i can imagine them making more progress on that issue than data privacy. >> but remember, a lot of the internet flow comes across the united states. it's just the way the network evolved over time. so if nsa is taking data from the major peering points from around the country, they see everything. >> we can't forget these are all very important political donors to the obama administration and the democratic party and i think he wants to show that he cares about what they think. that is really -- >> that's right, and that's my point. the people are not -- this model is all about what they can suck out of us for free just because we are getting -- >> you have the option not to be on facebook. i'm not on facebook for that reason. you don't have to sign up. >> you can't not use the phone and be part of the world. >> that's true. >> you can't not use a computer and be part of business anymore. so you can't opt out. and the point is that the model is now not based on anything that we say or do. it's just fed back to us and we have to pay for it. >> eye-opening all around. zach, thank you for joining us.
we didn't even get to twitter's eighth birthday but that's happening, too. happy birthday, twitter. there's bad blood flowing between tesla and america's auto dealerships. at issue, direct sales of tesla electric cars to consumers. up next, an arizona state lawmaker who is defying the dealers' lobby. you'll want to hear his story. we'll be right back. l be right . 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. 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.
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by pushing legislature that would allow tesla to bypass laws and sell cars drooirectly to consumers. phil lebeau has been following this story closely. before we get to you, i want to mention we reached out to the arizona automobile dealers association. we're expecting to have their president on the show on monday. so warren peterson, first to you here. look, why come forth, why push, why sponsor this bill? would would you like to see tesla sell its cars directly to consumers in your state? >> for me this is about economic freedom. you know, there was a report that came out in mamp that says that the united states has dropped out of the top tep in the world for economic freedom, and so this is a great bill for economic freedom. it gives customers the ability to choose what cars they want to
buy and furthermore it sends a welcome message in arizona that we welcome business, that we're open to business, we're not going to wrap people up in red tape and we're going to allow consumers to choose. >> and you're open to tesla's business specifically? the headline is arizona proposed lift on direct sales ban as tesla evaluates giga factory location. it would em loyploy a lot of pe in your state. >> that's a nice pin. but the reality is i'm happy to open it up for anybody. currently the law says all electric calls. i'm willing to open it up to all manufacturers but the reality is they don't want it. they want the protectionism -- the way it's structured right now, if you want to buy a car in arizona, you have to purchase through a dealer. tesla does not use a dealer model. they use a direct sales model, and so what we want to say is, yes, you can buy a tesla car
here in arizona. you don't have to go to another state. >> you know, phil, does this have to be the be all, end all, end of the road for the dealership model? can't there just be a tesla carve out or even if it is a broad carve out for electric cars, for example, is that something that really threatens the future of the dealer model? >> i think most people who have looked at this have said this does not threaten the dealer model, that the argument you hear from dealers that if you let tesla open a dealership, it's going to hurt their business, in reality almost every dealer i have talked to say, i don't think tesla selling directly will hurt my particular business, but the dealers are worried it sets the precedent. that's what they're concerned about. i'm curious, representative, have you heard from any dealers? >> you heard from the dealer association? have they said to you this is not going to go through? >> yes, i have heard from the dealers. i have heard from many, many lobbyists on this issue. the more i hear from lobbyists, the more i feel like this is an
important law that needs to be passed. they're actually convincing me that this is a law that we need to pass. i want a consumer to make the choice of whether they buy directly from a manufacturer, wh they buy directly from a dealer. i don't want the government making that choice. i don't want a dealer making that choice. i want a consumer to make that decision. >> can you tell bus the area you represent and whether there are car dealers in your district? >> sure. i respect gilbert and queen creek in arizona. there are dealers in our area. the lobbyists that have approached me have represented the whole state. i haven't specifically had my dealer approach me on this issue. >> phil, how significant is it, do you ythink, if this legislation moves forward. >> very significant. i'm sorry, representative. >> phil, go ahead. >> it's very significant from
this standpoint. if tesla can get a win, it's much more likely they can say to other states, states like ohio and new york where they're battling against the legislators who are saying maybe we should put a ban in place. they can go there and say arizona has seen the light, they think it's okay for us to sell vehicles directly to customers and you should do the same thing or allows to continue to do the same thing depending what state you're talking about. >> kelly, can i add onto that? >> certainly. >> look around the world. there are other countries that don't do this. they don't ban direct sales and not only that, here is the reality. people in arizona are buying tesla cars. there are 600 or so tesla cars on the road. it's not a huge impact. it's not going to rock the boat. they can both exist at the same time. it's just the consumer is going to make that choice. so, no, it's certainly not the end of the world for dealers, and the reality is arizonans are already buying teslas outside of the state and just bringing them
here. so we might as well buy them here in arizona. >> that's the argument that elon muck was making for those in energy as well. ware r warren peterson, thank you for joining us. phil, appreciate your perspective as well. what could make a new york banker embrace more regulation? it's coming up right after this. friday night, buddy. you are gonna need a wingman. and my cash back keeps the party going. but my airline miles take it worldwide. [ male announcer ] it shouldn't be this hard. with creditcards.com, it's easy to search hundreds of cards and apply online. creditcards.com. [ male announcer ] how could switchgrass in argentina,
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welcome back. goldman sachs is one of the biggest and most powerful trading houses on wall street. just like the average investor, it turns out even goldman is worried about the inequalities that high frequency trade can go create. so much so a top executive is asking for more government regulation. gary cohen is president and chief operating officer of the firm writing an op-ed outlining four ways to fix the current system. he writes the equity market needs a stronger safety net of controls. secondly, there need to be incentives created to reduce excessive market instability. third, public market data should be released to everyone at the same time. and finally, the exchanges should provide a uniform system for clearinghouses to limit risk. so will cohen's proposal get the attention of the exchanges? cnbc's bob pisani joins me along
with the panel to weigh in. will cohen's piece be the catalyst for a change? >> this is all not an accident that snyderman comes out with something, gary cohen has an editorial. michael lewis has a book coming out in a week and a half. we're getting a mini boomlet in discussion on market structure. i think it's terrific. it's about time we had a discussion. mr. cohen has a couple good points. i'm in favor of a kill switch. a kill switch would say if things go crazy with your algorithmic trading, you find a quick way to shut it off. >> chris, what do you make of all this? >> it reminds me of 20 years ago when jerry corgan left the fed in new york to become essentially the protector of the otc derivatives market and goldman was always sponsoring these meetings to talk about back office, structural office.
i sit on a finra committee that talks about this all the time but we never talk about half the volume on the big board is from program trading. >> what are you saying? >> i think this is a beautifully executed diversionary tactic by goldman to focus us on structural issues instead of asking why we have program trading in the first place. >> those issues exist and if we weren't doing this way, wouldn't all the activity -- >> we have a market of lily pads. we have over a dozen -- >> a great way to put it. >> they're supposed to communicate efficiently in realtime and expose -- >> and they don't. they keep all of the orders in house. they say we can pair them up on our own systems. they're all dark pools and, frankly, there is a really big problem. you've got all of these high frequency firms co-locating with the exchanges. they're in bed with the he can changes. the exchanges are incentivized to keep it that way. it's a very nice, cozy, warm bed. you know, the new york statea g
just came out yesterday and said we're on it and we're going to take some time to go after all of these guys. of course everybody is going it's not us. >> it's been brought up before. it was brought up during the flash crash. i think the question is does the mom and pop investor feel any better about the fact of whether the financial system is rigged against them or whether they actually have an equal playing field when it comes to trading? >> bob? >> the mom and pop investor has never had better execution at cheaper prices. $7.99 to trade 10,000 shares ofi bm for $7.99. you know what that would have cost 30 years ago, hundreds husband -- and hundreds of dollars. the average investor is getting good execution right now. >> i don't know if everyone is matching what we're seeing with the picture coming in and out which is kind of funny in light of the discussion we're having. >> we should end the conversation. >> i wanted to -- >> pull the plug.
>> matt levine pointed out snyderman was upset with some of these names like a virgin financial. they were touting the fact they had pretty much all of its trading days where they make a profit. he said they provide liquidity to the markets. that's the point you're making. danny, would you say though that that's not representative of what you think these firms are really up to because that's certainly what the average person out there feels, but it's important we explain what they actually do. >> i don't know if they necessarily are there to provide liquidity. i was a market maker for 15 years and that was my job, to provide liquidity. however, my big job was to make money for the firm off the orders that i saw, buy and sell. so i had the ultimate insider advantage. i knew who was buying at what price and at what level they were selling. so it's the same thing with these high frequency traders. they have the same insight. they are the big firms, and they're actually just much speedier at it than we were as market -- so it's a more
efficient way to provide liquidity. >> let me ask, bob, don't you think it's touching after years, even decades of having an enormous advantage, goldman sachs all of a sudden is -- >> they're the everyman. goldman is for the little guy. >> it's ironic but i think they feel there's going to be some little boomlet of interest around this and they want to get ahead of it. goldman sachs owns a dark pool. they're one of many firms that own dark pools. i think we have too many of them. he didn't mention that. i thought that was interesting. >> did snyderman address this, the dark pool issue? >> in a generic way he has said wondering why there are 50 different places to trade and that's an issue i think is worthwhi worthwhile. >> thank you, guys. important topic. it's called one of the most remote places on earth but the southern part of the indian ocean is where the search is poe
focused for the missing malaysian flight. and david gregory is joining me. we'll be right back after a quick break. k break. announcer s joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. it's just common sense. no two people have the same financial goals. pnc investments works with you to understand yours
phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. welcome back. the search for flight 370 mab going on for nearly two weeks with no end in sight. nbc news bill neely joins me from perth, australia, with the latest. >> well, another day of frustration here in berth in western australia where there's
been a search. 1400 miles off this coastline. but, again, it has come up with nothing. five planes went out today from australia, from the united states, and five came back having seen no debris and having seen no signs of anything unusual. so you've got this curious thing of very high tech planes, satellites, of course, 22,000 miles above the earth, and very low-tech men on deck with binoculars but all coming up with the same thing, that is nothing. the australian prime minister, tony abbott, a little defensive today saying this is just about the most inhospitable, inaccessible place on earth to conduct a search like this. he was also hinting that this area can be where shipping containers can be in the ocean having fallen off ships. so it is a difficult area. it is a difficult search. the search will resume tomorrow, but sadly today another frustrating day, nothing found. bill neely, nbc news, perth, western australia.
>> thanks to bill neely for that. the hunt for the missing plane has captured the world's attention. the only other story is the crisis in ukraine. here at home an important deadline is just ten days away and that's the last day to sign up for obamacare. david gregory is following had story closely in washington. how much of a challenge is it for the white house to get the message out there with the world's attention captivated with what's happening with the airline? >> it's difficult and ukraine. so the president is out there trying to bulk up the numbers who are signing up. he did his between the ferns interview, so they're plugging away at that but they understand the obamacare discussion and the political context is really a challenge to be listened to. they want to get enrollment numbers up. they won't be up to the level among young people or just enrollments period that hhs secretary sebelius said was the goal by march. but they've got a lot of people who have been enrolled.
they're still looking for the young people, and, again, as a political issue republicans are still running against this hard about whether eventually it will work, whether it will be, you know -- all the propsgramse pro were kept will be honor. >> the 5 million figure is the latest i heard and that's well short of where the administration hoped to be which is relevant not just for people involved in the plan specifically but for all of us who are going to have to deal with the cost of health care. >> well, they're short and they're certainly short among younger people which is how the whole model has to work. young, healthy people have to sign up to pay for the older, sicker people. they're not there yet. the other challenge has to do with whether the individual mandate is something that gets compromised on at some point down the road. which is to have that go off successfully, you have to have the right balance of younger and older people because the president has delayed
implementation and some other aspects of the law, which conservative republicans have been very critical of. >> and, david, i wonder if there wasn't a missed opportunity here, especially because president obama is such a basketball fan himself. look, i think something like 7.5 million people signed up just for espn's march madness basketball bracket. if they had somehow found a way to tie that together with obamacare, i don't know how, perhaps that could have helped. >> yeah. maybe so. i'm just worried about the fact that my bracket is so destroyed. i couldn't possibly imagine how to do that, but seriously, i think that they would have liked to have tapped into that. they've been looking for different ways. the difficulty is not just finding the ligright vehicle. the difficulty is persuading young, healthy people that they need something they cannot fathom they need and why should they have to pay for it. >> and the young people are
hearing more and more about how they're bearing the cost of this, getting upset about it, feeling as though they're being satled with something they can't afford especially if they're dealing with high student loan debt and a relatively bleak prospect in the job market. >> exactly right. and it might be easier just to pay the penalty for not meeting the individual mandate. >> and you guys are talking a little bit of basketball and geopolitics this weekend, are you not? >> we have a special interview coming up with the president of the nca a, the secretary of agencies, arne duncan and reggie love who was probably best known as the president's body man, his aide in the white house, but who was also a terrific bage player at duke and a financifootball p. the issue is whether student athletes should be paid. they're getting more pressure to pay their top student athletes but we're going to hear from the president of the ncaa who is against that and get into a discussion about where this controversy lies.
>> and at the same time even in this conversation, trying to deal with the issue that is ukraine and russia and vladimir putin. >> i'll talk to mike rogers about how that's being handled, where it goes from here. if there's a new world order putin is creating. how does the united states deal with that? what's next? there's economic sanctions. what if they press further into ukraine, not a nato country, how do we deal with that? big issues on the table. >> david, thanks very much for your time this afternoon. >> thanks. >> david gregory, moderator of "meet the press." check your local listings for sunday to catch the program. some people spend the day checking their ncaa brackets. allen wastler spends his time checking the cnbc hot list. the top results will be up next. jim grant will join me monday for an exclusive interview. stay with me. we're back in two. we're back in.
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is hot. we're leading the site right now with our wrap-up of what's happened to the brackets with duke losing today, my wife's alma mater i'm going to be hearing about that tonight. unbelievable. i'm shocked. harvard won. in fact, we just heard from our friends over at yahoo! you know the big contest they were running with the brackets, $1 billion prize, warren buffett's outfit insuring it, they say there's only 16 perfect brackets left. >> that's even more -- we were only thought there were three left. >> it's crash and burn. anyway, people are gobbling up this story. we have some more serious stories on the site, too, getting a lot of attention. one, consumers staples stocks,
the equity version of the bond, lot of people dove into them last year. they're beginning to show their dark side. reason, big premium to begin with. people are reading that one all of the way through and then finally, we also have a wrap-up from jeff cox on what's going on, goldman came out with a note, remember the bank's stress test yesterday, bank of america passed but goldman started pointing to some of its numbers and saying -- we're not so groovy on this. it's pressured bank of america stock just a little bit. everybody's looking at it and reading it on the website. >> the second part of that whole exercise is still to come next week. lot of people are spending the weekend on that. thank you. good to see you as well. if you're one of those three, we would love to hear from you. we started the weekend on st. paddy's weeken green, but n
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the action begins sunday night. the attention shifts back to china. we'll get the manufacturing pmi. whether or not you shrug your shoulders they get their way out of it. >> you just have to understand, they have been holding it together by maintaining employment, allow kating a lot of funds to industries that don't make sense. they are stocked. they have to come up with another model. >> yeah, their currency has been declining. japan is depending on a weakening currency. whether the third arrow of obo
economics works. just as it fete that might get out of it, there was some fiscal pressure that pushed them into deflation. >> it's still a deflationary economy, kelly. the japanese don't let many companies to go bankrupt. so, the banks don't lend and you don't have a lot of growth drivers in that economy. >> are you banking on us being different? >> it's hard to do that. in the emerging market world, s&p 500 companies rely on that pretty largely, about 15% of the earnings from s&p 500 come from emerging economies and china is in that that bundle. that could have a deep effect on our markets here. >> speaking of emerging markets, alan was just talking about companies, it's part of the
emerging markets. speaking of deflalted, got to watch the biotechs next week. i think that's going to be a big one. very sector-specific news. if that pressure continues, you'll see a lot of more questions being raised whether that biotech bubble is finally getting bust. >> i love the point you made about biotechs. >> not just so much the trading, remember, the tech bubble burst when it was in excess of ipos and those ipos started to fail. they really predicated the tech bubble. look for the same thing here. the other thing next week is how russia is going to sort of deal with europe and whether europe is going to be hard on the ol o
oligogarchs. that's going to be big. >> housing, too, next week, we'll see if it's up or down. >> thank you all. have a great weekend. "fast money" begins momentarily. melissa. >> we got the ceo of biogene. >> over to you guys. "fast money" starts right now. i'm melissa lee. take a look at the nasdaq, getting hit today. stocks are coming back to earth. biotech, 3-d solar all under pressure. guy, do you make of the pressure? >> you know, i killed goldman sachs a couple of weeks ago when they downgraded, in retrospect, they got timing off a