Transcripts For CNBC Power Lunch 20180214

Look there stocks hitting session highs as we kick off power lunch. Coincidence . Probably but this is the great rate debate as a tugofwar on inflation and Interest Rates and volatility continues to play out in front of our ieyes, stocks are making come back and the dow up and bond yield rising rising since the beginning of february and benchmark hitting fouryear highs and creeping closer. Gold is highest level in over a week groupon tanking on earnings miss chipotle on pace for the best day in years, they named a new ceo and netflix are rallies. Signing a deal well get more on the netflix story coming up. Welcome. Im Tyler Mathisen the markets shaking off the inflation concerns at least for this day. In fact, wall street socalled fear index falling below a key level. The vix below 20 for the First Time Since february 5th. Bob pisani is on the floor of the new york stock exchange. Explain it to me [ inaudible ]. Were having problems with his microphone so well interrupt him and maybe get back to him. If only his audio level rose at the rate of inflation we would have heard him. Speaking of which, concerns on the street rethinking their out look on the economy. Steve liesman is here with the rapid update. Lets look at gdp, and economists moved the growth out look because of inflation and disappointing january retail sales. Ill show you what happened here a big mark down in q1 gdp. 2. 6 is the running rate down 0. 3 and they mark down the Fourth Quarter of 2017 by 2. 5 and bank of america at 2 . The fed coming down by 0. 8 to 3. 2 they have a problem. And they were high on the street they have a model problem here meanwhile markets sold off hard on the Inflation Numbers before recovering take a look here at the at what the numbers were. 05, were looking for 04 and unchanged. Maybe the al goes traded on the month or month and the humans came in and traded on the year over year. Where inflation is hot right now. A5. 7 at gasoline and a power surprised to the upside that looks like an anomaly and commodity is up, that could be the dollar and medical care and airline fares down, 0. 6 i dont think they have the full screen there it is. Thank you. Prescription drugs down 0. 2 and housing and new vehicles down 0. 1 thiswill give the hawks at the fed to do rate hikes because we have coming lower unemployment, we have strong job growth and the tax cut stimulus working through the system so i dont think the fears of inflation are misplaced. Perhaps the over all morning action was. Weve been spending a lot of time this week talking about stimulus in the economy or we think is in the economy in the form of tax cuts and higher spending and so forth. With that as a back drop, why are economists lowering predictions for gdp growth this year. We have a these are tracking forecasts so you start off here and then the actual data come in. January was disappointing when it came to retail sales so the consumer is not seeing quite as healthy. 2. 6 is still a good number i think it is going to be a little bit of time before people see the tax cut in their paychecks, before the tax cuts work through corporations to individuals and you get the kind of spending or kingsian side of that and then many years before you get the supply side which is companying buying machinery and raising productivity of workers. Steve, thank you very much. The dow is up tripledigits. All three major averages back to being positive for the year. Im positive for the out look. I dont know about yall i am positive for the year bob pisani is always positive. Bob. I am positive in the two big stories today lower volatility, that is a big story and the Growth Stocks continue to do well. Despite inflation concerns just let me show you the vix this morning very unusual markets were down on the cpi report very early on well the vix kept dropping even as the marks were down. It is a little unusual let me explain what is happening. We did have a vix futures expiration but the key is what the vix measures it measured s p calls 30 days out and when it drops it is a sign that traders are expecting volatility to be lower 30 days out. That is a good sign because with all of the volatility, this is a shortterm bet that well be at least some kind of sign of a bottom in the next few days. Now who knows if they are right. But that seems to be the bet over all the other story is growth sectors are continuing to outperform and this is a critical distinction about how the market is reacting to the inflation concerns so you see banks doing better. With the higher ten year but Consumer Discretionary and Technology Stocks and industrials going better and what they are selling off, they are selling off in january and early february was Interest Rate sensitive like utilities and reits. It is not all of the same. So we look at the s p 500 down 6 since the highs financials and industrials and Consumer Discretionary, technology, they are down but just generally outperforming and today much better than the overal market. So the growth story is in tact and one reason is because earnings are really good not just for the Fourth Quarter, im looking at the First Quarter and through the Fourth Quarter of 2018 and the estimates are continuing to rise so this trend that weve had, improving expectations with stock prices lower, that is positive for the stock market. Remember the old trend that would cut the earnings expectations in the middle of the quarter because they were too optimistic that is not happening. We are not getting weak expectations of stock prices higher, it is lower and one reason we are continuing to see these rallies in the last couple of days. Back to you. Bob, lets talk more on the markets with ben mandel. Hes global strategist at j. P. Morgan and burns mckinney. And we have a lot of globality so we have a different environment. We are now investing in an environment where volatility is higher and inflation is a bit higher or the prospect of it what should i do how do i factor that into my Portfolio Management if you want into this risk thinking about portfolio, you are pretty positive on this end of the last two weeks. It is important to keep in mind that nothing over the last two weeks, the elevated volatility and signs of inflation, none of those represent threats to this economic expansion and to this bull market. What you have is a series of growing pains, growing pains from real Interest Rates coming off of a historical low, growing pains associated with Inflation Expectations reviving after a period of also very low levels lets not forget, were sitting here six months ago wondering what is inflation doing on the low side and is inflation ever going to come back so we seem to have passed through concerns over low inflation. Why is there a powell put . A new fed chair put on the market. I dont think so. Inflation through this whole experience was on the low side and now come back to what the fed was expecting in the first place. To underline, to tylers original question, things are different now. You just explained it. They are different should i do anything different you sound like you are positive on the broader market, but what about within the market . Are there places that will do better in this post whatever you want to call it world. In this higher volatility world, you should be thinking about a few things one is how big are the sizes of your positions so if you went into this like we did, overweight equities, you like equities versus credit or versus government bonds, you are still there directionally. If we are in fact in the higher volatility world you dont need as big of a position to meet your risk targets in your portfolio. I think the second consideration is that markets do tend to overreact. So one risk is that the moves in real Interest Rates which weve seen as a inherently good thing could move too far and the fed is an important part of that to the extent that it signals that it is overly aggressive. But we are not worried about that. Let me bring burns into the conversation ben said it is not an exit what weve seen here is not an existential threat to the economic expansion or the bull market i think im paraphrasing correct me if im not. But what we also can agree on is that a couple of inputs into the equations that people use to decide how to position themselves are different so what do i do different . Well, we do believe that inflation is starting to pick up and so what were telling our clients is that they should probably consider within equities rotating into cyclical value equities despite todays action, i think cyclical should do well given that you could give me some examples of industries or companies that you call cyclical value and what that means. I think that you would go into places that benefit from the synchronized Global Growth like financial services. Energy could do well but at the same time, industrials and technology could do well. Whereas on the flip side some of the places you have to worry about would be some of the more defensive value sectors. The bond proxies, the rust, reits, utility and telecomes that would suffer from a rise in Interest Rates to be careful of. But at the same time, within that value equities should still benefit from meaner version. Value stocks have lagged for about a decade. How do we know burns, what a value stock is what does value mean to you in the market. Value means it means a lot of things from a lot of people names that dont have a lot of growth priced in, low p. E. To book. And were showing everybody the tenyearyearo yield is 2. when are you nervous i think that given that we do still have were still working off of very low historical rates so it seems that you probably can move up to 3 or even higher than that. We could be at 3 in the next ten minutes. Oh, absolutely. I think that 4 would be a level that investors should be a bit more concerns with equities and start thinking about making a shift into other quickly do you have a number there. To be worried about for the ten year yield. It is not a number. It is a ratio. It is bond yields per unit of growth inflation per unit of Growth Markets freaked out because that ratio was off kilter the growth number was bad and retail sales was high. I dont see that as being off kilter so i think we could easily support north of 3 in an economy which is growing as it is gentlemen, thank you. Ben, burns, thank you. Do the recent market swings represent a threat to our Economic System . Your next guest is wellknown to you. Hell make that case plus netflix backing up the truck and spending big bucks on producers. But will those big bets pay off . The market thinks it will. The market, right. Power lunch will be right back big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov you know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Crazy volatility and wild swings is causing some to question the security and the sanctity of the stock market and in the new op ed piece on nbc, warning that out of control trading will lead to a break down in the countrys capitalist system here is that author, dick boday, i dont like the thousand point moves in an hour and crazy vix options ant etps, but connect the dots between that and sort of our entire system first off, you have to realize that the market does perform a couple of very important economic functions number one, it provides capitol to companies who want to expand businesses number two, it is a mon monitier of a wealth of tens of millions of people if people dont feel confident about the market to putn money in it cant meet the functions. And if the market is volatile, people will not put money in i have clients who have been in the business for 20, 30, 40 years who run hundreds of Million Dollars and theyre telling me theyre afraid to invest because they have no idea where this market is going why is the market volatile, dick i think it is volatile because were going through a shift from real negative Interest Rates of about 2 on the fed funds rate to what will be positive real Interest Rates and because money supply growth is plummeting. About a year ago it was growing at 7 to 8 , about five years ago it was growing at 10 to 11 . It is now growing at 4 . So youre stervei d starving th market for funds when you dont grow money supply and changing the method of valuing Financial Assets but that is normal. What happens in the past, do you believe the thousand point swings which i understand are not as big on a percentage bases as in the past we understand math here. But do you think it will lead companies to stay private and we shouldnt list our stock because the market is not secure. It is not Just Companies that want to list their stock or not list their Stock Companies are thinking we need to build this plays and do a secondary offering and if they cant find the money to do that, it affects the economy it is the base of capitalism if capital is what drives the economy in this country, then capital has to shift easily and smoothly from the provider to the user could you and it doesnt do that. When you talked about why the market is volatile, when we went into the segment i thought we would talk about etps but you highlighted Interest Rates and money supply you are talking about the federal reserve, is that right am i wrong about that. Federal reserve is part of it they are the ones pushing rates higher and slowing down the growth and push them much lower for years. If they are going to. But i dont think the fed is controlling the game i think that weve got this demand for money by the government, the demand for money to drive the economy higher, the demand for money to drive the stock market higher. The demand for money to make the european economy stronger. And while everybody is demanding more and more money, the money supply is growing at a slower and slower rate and the cost of that money in real terms is going up fairly rapidly. That is a massive change that is a reason for volatility in the stock market. So your prescription is not about outlawing or reducing the exotic etps, it sounds like you want less intervention from central banks. Do i understand that correctly well that is definitely correct. But as i say, i think that the demands for money are so high at the present time that what the central bank does is not that critical lets assume that we believe in capitalism lets assume we believe that the private market should function in a if you will a realistic fashion. The market is changing because of demands for money are accelerating at a rapid pace and that cost of that money is increasing as the demand for money is going up this is what you expect that is not good for financial asset prices got it. Weve certainly lived through that for the last couple of weeks. Good to have you on. Thank you. Coming up, gun maker remmington settled a lawsuit over the claims that guns fired on their own and now something could happen to put that settlement in jeopardy well explain when power lunch returns. Meantime, lets look at the dow 30 heat map. At session highs right now and there you see the 21 of the 30 dow stocks are in the green leading the charge, nike, cio,sc j. P. 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Remington could soon file for bankruptcy and that could affect a classaction settlement regarding a defect with the trigger on some of the companys most popular rifles. That defect caused the gun to fire without the trigger being pulled attorneys for the company appearing at a Court Hearing today in kansas city, missouri and our scott cohn is there. You are following this story for years. Your documentary in 2010 was it that long ago, exposed the problem and the coverup tell us about it. Reporter right and we should hasten to point out the Company Denies there is a problem or a coverup. Nonetheless, it says it is trying to get this issue once and for all by agreeing to replacemillions of triggers in guns that can allegedly all do this no fire. It didnt fire. Go ahead the gun goes off when reporter that is our 2010 documentary, recommending under fire it is still online at cnbc. Com the issue is linked in court to dozens of deaths and hundreds of series injuries. Most involving the iconic model 700 rifle. But critics led by two remington 700 owners say the settlement is a sham and they argue their case here at the u. S. Court after peels in kansas city saying remington and the plaintiffs lawyers are down playing the risk in order to keep the number of claims down remington acknowledged in court that only about 31,000 people have responded since the Settlement Office first became public in 2014 that is out of 7. 5 million now hanging over all of this, the companys announcement just this week that it intends to file for bankruptcy and the lawyers today refusing to shed any light on that. Now that this is done, can you say anything to reassure remingtons customers based on the news about the bankruptcy if they want to get their guns fixed, they will get fixed. Scott, i have to to say no comment to this. It is the policy of the company. Reporter these are tough times in the gun industry in general. With customers feeling less urgency to stockpile guns under the Trump Administration but remingtons problems are unique analysts say, 950 million in debt in no small part because of Product Liability issues like this one dating back to t to the 1940. It remington part of a bigger company. It is not publicly owned. It is closely held and it has an interesting history. It was part of a group of gun makers brought up by sub ris that they could take them public they canceled the ipo not long after our documentary in 2010 citing Market Conditions and then they have been trying in many ways to get out of the business for some time most notably after the massacre at sandy hook which involved a bushmaster ar15 rifle which was one of the companies in this Freedom Group which is now called remington outdoors, now they have filed for bankruptcy they were never able to find a buyer back in 2012 they let as many investors as possible cash out and meantime all of the debt piled up and so did the claims, which continue to this day. That these guns are not safe scott thank you very much appreciate your reporting. Scott cohn netflix spending hundreds of millions of dollars bringing in a big name tv producer will the spending pay off or is the Company Getting too big for its britches. And the Sports Illustrated jump suit issue that wasnt freudian and the controrsisvey starting. Is the metoo message missing the mark that is coming up on power lunch. Hello, im sue herrera here is your tash tash update for this hour. Nominee mitt romney will announce online tomorrow that hes running for the Utah Senate Seat held by retiring orrin hatch, according to multiple reports. His first public appearance in friday night in provo. Some terrifying moments for passengers on board a united flight from San Francisco to honolulu on tuesday. One of the engines lost the covering during flight but it still operated normally and the plane was able to land safely passengers say they were prepared for the worst my mom was crying i saw other people crying around us i think we were bracing for the worst. What if this lands on the water. We were just praying because we had never gone through this experience and i thought we were going to die. Virgin atlantic taking valentines day to new heights an Airline Flight departed london and mapped out a heart shape as it traveled over the coast of england it had to submit a special request to National Air Traffic services to fly that route over british air space. Bringing new meaning to love is in the air. Would i be a skruj if i complain about the length of the flight. Happy valentines day lets check on the markets the major average positive and hitting session highs. Industrials up about 158 points. Financial and Consumer Discretionary and technology are your best performing sectors take a look at the tenyear yield. 2. 9 just a hair bee below 3 . Ch chipotle and under armour leading and chipotle moving up on news of a new ceo. Netflix is also higher on reports that it has broken a 5year deal with ryan murphy, behind shows like american horr horror story and glee. Lets bring in steven badda ts tallio and Michael Morris from guggenheim how important is this guy . Is he worth all of this money. For netflix he is hes a big name brand name producer he was very important to fox in terms of the types of shows that he brought to them they were a little edgy and different and that gave a lot of the brand identity to fox and their Cable Network fx losi losing him, they lose what comes with it. They have his Serve Services for a while and they have shows in the pipeline but it is a blow to them and shows that netflix has substantial financial resources. In fact, i think this tells you why Rupert Murdoch decided to get out of the scripted Television Production business. Because it was getting so the stakes are so high. These Companies Like amazon, netflix, google, they can pay any they have more money to come in and the scale to do it. But Michael Morris, apple has got a lot of money, facebook has a lot of money netflix has a lot of debt. Is this really worth it for netflix in particular . I absolutely think it is worth it for netflix i think there is two things that work here, one netflix has a special programming budget the market is comfortable with that budget. It is over 12 billion this year it is not only about making a volume of shows but it is making sure they have high quality shows. What we have heard from industry from Media Industry leaders is that the biggest scarcity isnt getting access to shows per se, but it is having the best writers, the best producers make those shows happen for netflix to allocate 60 million a year to attract aproven a proven talent is a wise investment. That is fine. Except that netflix has 434 million shares outstanding stock up under 9. So is this guy ryan worth 3. 5 billion in added market cap today. Well i think it speaks to the enthusiasm of the market has for the netflix recipe you brought up apple before or amazon clearly tremendous companies with great technology. But individuals right now who are talented, who can pick from maybe a couple of places to go to and take their talents, when they go to netflix, their products could go global immediately and that makes them they prefer that and i think that it is just part of the cycle that we talk about. Picking up on what he just said, has there ever been a better time to be a producer film or television and there are so many buyers. And he raises a good point in terms of you are taking some of the risk out of this when you make a show for a network or a studio, you have to hope that the ratings are good that you can make enough episodes for syndication or for a good aftermarket sale overseas or to a streaming service. And then youll start to see big money. Netflix is given this money to him right away they are taking all of the risk out of this for ryan murphy. And he can go in there and do the kind of shows that he wants. Im sure that that is what lured him to netflix as i say, look, you wont get as many notes from us as you get from those guys or worry about advertisers, you could do you could realize your dreams and do the types of shows you want to do michael, if you remember the barron story critical of netflix. What do we know about the deal are they buying this content or just going to rent it . Because one of the big criticisms in the story they dont actually own a lot of the content that is branded as netflix content. That is an interesting criticism. I think that netflix is clearly increasing the amount of content that they own. I dont know many of the specific details about this agreement. I believe they will own this. There was he was producing for 20th century fox but netflix will own this content. And with respect to the content, he doesnt have to work on a small handful of shows. There are some show runners that have worked on ten shows in a given season having the expertise of someone with approach track record creatively and operationally to get shows done, it is just a great asset beyond any single series, whether the company owns it or not. I get that. Im not skeptical of netflix theyve done amazing things. They are like the amazon of produced content even though that might offend amazon because they produce content. But the point is this, is that we pay 120 a year to be a member of netflix. We added 3. 5 billion of market cap and again math, are they going to add 29 million new subscribers because some guy that most people have never heard of now comes to netflix. I dont know maybe they will. I think the number, 29 million over the course of five years, not one year so they are not paying him 300 million a year for starters and as we pointed out, they have a 12plus billion Dollars Program and say they didnt spend 60 million on a Library Title from some other company. They said well forego that this year and take on the risk of losing those subscribers but add a completely new ingredient which is a talented show runner to help us with four or five or six original owned series of the highest caliber. I think that is a good tradeoff. We think the company will have 180 million subscribers by at end of the decade. There is over 5 billion people in the world not in china. This is about getting the ingredients to make the content that appeal to a broad number of people. Michael, what about rising Interest Rates netflix in particular, because of its multiple and its debt, is far more vulnerable than a lot of the other names in this sector have you started to worry about what happens with the tenyear yield when you do your analysis of what netflix shares are worth. Absolutely we worry about the Interest Rates we published a note this week where we highlighted our best ideas in the industry and they were secular growth or strong stories and stories that had less Interest Rate exposure and in the case of netflix, it is highly leveraged on todays metrics but in our opinion, the company is not being run in the shortterm for profit. It is being run for longterm growth if this company decided today, hey, were going to focus on International Market and focus only for prove profi profit, b over a billion dollars and the leverage is lower if you ran the money for profit we dont think that is the right idea or what investors want but that is what we think about leverage as it pertained to this company. Thank you, gentlemen. Good to have you. J. P. Power out with the latest ranks of vehicle depend ability. And the cars that we are driving are better than ever no more kcars or no Alliance Phil le beau joining us with the rankings. This is a record high in terms of how people feel about vehicles fewer complaints about problems than in the past the top three, lexus repeats as the most dependable, threeyearold model this is the rankings of people who own threeyearold model followed by porsche and buick. It was the highest rated mass market brand and j. P. Power shows that the gap in complaints between the mass Market Brands like buick or chevy or toyota and the luxury brands, that is shrinking. One thing that is not changing, complaints about infotainment we still arent happy with the Voice Recognition or happy with in car connectivity. Too many bugs and glitches and the bottom three on the list who is struggling when it comes to depend ability. Of 31 brands the bottom are fiat, land rover and dead last is chrysler. By the way, we reached out for a comment on this survey and chrysler declined to comment. But we want to show you shares of Fiat Chrysler versus General Motors does depend ability matter look at the difference in shares and Fiat Chrysler generally speaking, they are at the bottom of this list and that is something that we have seen historically in recent years as well got it. Thank you, phil. You bet. Sports illustrated swimsuit issue wades into the Metoo Movement but is posing naked empowering for women or set back the cause. Well discuss with the editor of s. I. Swimsuit coming up on power lunch. Today, the new new york is ready for takeoff. Were invested in creating the worlds first stateoftheart drone testing facility in Central New York and the mohawk valley, which marks the start of our nations first 50mile unmanned flight corridor. And allows us to attract the worlds top drone talent. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, wow record time. S. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Bristolmyers spending 1. 8 billion to get his hand on a cancer drug developed by nectar theyre putins. Meg tirrell has more and probably a better pronunciation of the company game. You got it. It is one of the biggest biotech deals, the upfront payment of a billion dollars in cash and the rest in stock forging a partnership with bristolmyers for cancer immunotherapy they get the right to test a experimental drugs in combination with its own in nine different kinds of cancer. Now immunotherapy is an exciting new way to treat diseases unleashing the power of our own immune system and the drug oct ivo brought in money in 2017 but they face push to understand how drugs could Work Together to improve treatment options. So that is what bristolmyerss and nectar are doing here. Thank you very much appreciate it. So Sports Illustrated has a message for the world. This years swimsuit issue is more than just pretty women in bikinis. It is about female empowerment and confident beauty super model danielle hairington is this years face and body for the 2018 cover but given how much those skants illy clad bodies are still on display is the magazine still relevant in the metoo era. Lets bring in m. J. Day who is the editor and her 20th year working at the brand welcome to power lunch. Good to have you here. Thank you for having me. I hope we could show the audiences some of the photos were making reference to. We showed the classic cover photo. But youve also got photos of women with words written on them correct . What are those words and why were they chosen those words were chosen by the participants in their own words story that we executed last march in 2017 that illustrated and give voice to the diversity of the women that we feature in our magazine to make the statement that they are more than just a beautiful face. There is depth to them and passion. They have concerns, they have their own struggles and they have their own victories that they possess and that these words amplify that message on their canvas, which is their naked body. Is this because of the Metoo Movement or was this decided before. The shoot was conceived and fully baked before the Metoo Movement was even a whisper. This started in march of 2017. And it is not a response to the Metoo Movement in any way. It is a continuation of our messaging that sexy and empowered can very much go together m. J. , in the interest of full disclosure, we are friends and neighbors and our sons go to the same day camp. It is nice to see you. Ill see youali at kings la. Exactly. And i want to talk about how there is a needle threading that you had to do this year in the context of the societal conversation that is taking place and in the last two weeks, involved one of your headline models, kate upton whose alleged Sexual Assault on the part of a former employer, but has it ever been thus with the s. I. Swimsuit, it has always been controversial, always tread on a line and been subject to controversy and i say that as a person who used to work and i remember the days the magazines dropped in the hall and the next thing is all of the mens doors closing of their offices so how much more difficult in light of todays societal conversation is doing an issue like this . I dont know if it is more difficult, or if it is actually more inspiring as a woman in charge of this franchise i for six years, weve always made an attempt to make a change in a positive change from everything we do, whether from body inclusion and the inclusion of Bena Huckabee and a diverse cast of women that populate the issue. Im inspired by this moment in time that were in and i really think that with the readership and the eyeballs that this magazine and this franchise has, it is our opportunity to make a positive change and to evolve as a brand and to become something more than just a magazine for women in bathing suits this is a magazine full of very exciting and compelling humans that have a lot to say other than just look really good and inspire people on the beach. You know feminists will absolutely laugh at that and scorn, right theyre going to yeah. You heard what tyler said the issue drops and the men pick it up and close the doors at the office feminists will look at this and say this is exploitation of women as they pose naked for the benefit of men who like looking at it. What would you say to them i would say that no women who participate in the magazine does it for men she does it for herself and to celebrate who she is and the hard work that shes done and put into herself and her life and the thing that accompanied that that accompanied being a professional in this industry but also an opportunity to have a platform and to have your platform reverberate across the world. You get to hear about these women, what is in mir minds and look at them on the printed page but i think they also need to remember that we have more female readers than any other female Service Magazine out there. We have over 16 million female readers. So that is not for nothing women read this magazine too and a lot of women read this magazine. And it is always a targtd the target and the argument and criticism michelle just made final thought, was this issue done entirely shot entirely by females . And i point out that your predecessor julie campbell, the founder of it, the founding supervising he hadar, another female. Yeah. We have been staff has been since the inception of the magazine in 1964 the issue was not entirely shot by females we had two female photographers out of five. The in her own words piece was entirely femalestaffed. We are about 50 50 across the board. All right, m. J. , thank you. Thank you, guys. See more at si. Com swimsuit the issue is on news stands now. All right with many Retail Stocks down big over the past year are there any names you should be buying now on the cheap or are they cheap for reona as well dig into it next missing t missing out after hours. Not anymore, Td Ameritrade lets you trade select securities 24 hours a day, five days a week. Thats amazing. Its a pretty big deal. 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Lets talk retail. While the sales report for january may have showed its biggest drop in 11 months you have to dig in to understand what happened. Sporting goods basically dragged most Everything Else down. Are there good Retail Stocks out there that are worth your hardearned cash joining us now, senior retail analyst. What a crazy day the headline says huge drop. Just read the headline and you think it stinks. Every single retail stock is higher today how come look at one of the ones on top is under armour. Talk about Sporting Goods. Thats as specific as you can get. It makes me think its a bad news rally. Like a short squeeze. This has been the earnings cycle of the unwind. Think about companies and stocks that hedge funds, anyone has been crowded in. Those trades have been painful you named two of the squeezes on the way up two on the way down are michael kors and canada goose. I would say kors was better than expected the number they put out is better than expected in two years. Ho how do we know what companies are going up and not good and this is a Short Covering rally lets leave it at not good. Less bad. Something else i was thinking there are companies putting plans in place michael kors is cheap. It got knocked down on good results. This is a company that came out a year and a half ago to two years and said we are going to shrink to grow, take our grand equi equity we got ubiquitous. Pull back on inventory the street can determine if this is a good story or a less bad story, are prices getting higher did you drill down on the data that came out today can you parse it for us more headline bad and when you dig in, not that bad whats interesting is first of all, its backwards looking we have Companies Reporting so its up to date. We can look at companies that have been putting out results that are less bad and then there are companies putting out results that are good. Canada goose is one where they are growing sales meaningfully when you think about it, you want to take the managements to task from a company perspective, not a stock perspective. Are they executing on plans and getting healthier . It sounds like you are more focused on brands versus retailers. Dont buy the buildings in which the brands go. Buy the things that go in the buildings because you can sell them on line, et cetera. Heres the irony. The brands are becoming retailers. Michael kors has stores. Nike has stores. The move is to go direct whether in stores or on line so who has control if you want to make change, retail has been evolving, devolving. Now we are on an upswing, but its changing. If a Management Team doesnt embrace it they are in trouble why do you like tiffany what we like is you have a company that in addition to having strong brand equity because when the dust clears you want a Company People recognize and want to own. Thats Tiffany Management is new. What you have is a lot of selfhelp. The theme we are talking about and the recurring theme. Who has things under their control . Tiffany has a lot of opportunity to change the way they are running with a new Management Team it seems set up for that. Simeon, thank you very much good to see you. Is inflation really a problem . If so, what will the fed do about it plus, the bayon bridge the poster child for an Infrastructure Project caught up in red tape. Is it really the truth about regulation coming up in the second hour of power. Most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Fidelity. Mom anits not theirs. Car. Its mine. Mine. Mine. And it always will be, forever and forever. The new rx 350l with three rows for seven passengers. Experience amazing at your lexus dealer. Are you feeling hot, hot, hot . The latest inflation data coming in hot but sending a chill stocks shrugging it off. Why . You ask and we deliver we are answering your questions with our experts send an email to power lunch cnbc. Com or tweet us buy now and aggressively one stock is already up 30 in the past year. Hell make the case why it goes up more. Im Brian Sullivan the second half of power lunch begins now welcome to power lunch. The markets are coming back. Sitting near session highs after opening lower for the dow 150 points right now its up nearly 180 points threequarters of a percent. 24817 is where the dow is now. S p higher by 31 points, a gain of 1 and the nasdaq higher by 1. 5 or 109, almost 110 points back above 7,123 the tenyear yield on the move Interest Rates moving. Tenyear yield hitting 2. 911 earlier in the session thats the highest level since january of 2014. Now its at 2. 90 that jump hitting the real estate and utilities segments which are most sensitive to Interest Rates you can see the real estate lower by threequarter of a percent and utilities as well. The move helping banks the kbe on pace for the best day in months. Zions, Morgan Stanley and sun trust with gains between 3 and 5 retail seeing nice gains fossil, signet, under armour, Williams Sonoma and target are the leaders. A gain of 75 . Look at the retailers this and other topics with mike santoli and bob pisani you have been looking at what the bulls need to see before they embrace the idea that a sturdy low has been put in yeah, tyler some of the tests have been passed in the early going today. Before the market opened i wassing looing for the s p 500 to surpass the oneweek high we are now above mondays highs, about 1 above what stands out at 2727 is last wednesdays highs which was the highest level after the big break a week ago vix retreating toward 20 we are below it now. That shows you the tension is draining out of the market its a little bit more back to normal after the expiration today. Stocks should be able to absorb the next major move in the bond market which in the early going today didnt seem like it would be the case. Right now, stocks seem to be making their peace with treasury ills at these levels you have to say so far so good even though of course you have to be an alert for the idea that we retrace some of the fourday gains. Im encouraged by what we are seeing the most important thing is the vix dropping basically what happened today is everyone who panicked last week and went out and bought hedges basically the futures contract expired here rather than buying more puts at expensive prices they let them expire thats why the vix drops it measures puts and calls in the next 30 days thats an important sign people involved in volatility believe it will be a lot lower in the next 30 days. That may be signs that people believe we are at least some kind of shortterm bottom. Just the way the market the trading we are seeing the big selloff in Interest Rate sensitive sectors in the utilities and reits to a certain extent look at growth, industrials, Technology Stocks. They may be down in the last month but not as much as the overall market is. The s p 500 down 6 . This is before the last few hours. Its gotten better tech stocks have been outperformed more. They are not selling growth dramatically off they are not concerned theyll have as much volatile ain the last month as we saw. Thats whats going on today. And midday yesterday and today for whatever reason youve got this rush of buying that took guys, i read today is the market is now comfortable with 2. 9 on the tenyear. 2. 5 to 2. 9 is not enough to freak out the growth aspects of the market in other words, nobody is betting at this point that growth is suddenly going to decelerate as a result that matters to the markets. By the way, Earnings Growth is not decelerating either. Thats the important factor. Is it that its sold off enough so now that the multiple sits at an appropriate rate for 2. 9 of the tenyear. The s p 500, 6 cheaper than it was when the tenyear yield got above 285. You could dial back a little bit and say the yield is roughly where it was at the recent highs. Stocks are cheaper i think there is a time component, too you have to get your head around the idea that maybe we are in a new range for yields as i say, stocks have to make their accommodation. We have short memories. The rate equity correlation between tenyear yields and the markets is steady until 5 now we are freaking out about 3 i guess thats the new normal. 5 was a different era. We have to go by that for now. Thanks, guys. Where are we headed next and is the bottom in lets bring in managing director with web bush securities and the president and chief Investment Officer with castle Rock Management steve, you heard the discussion. Whats going on here why is the market higher even as we see the tenyear touching 2. 9 i dont think these Inflation Fears are really grounded in reality. What started this was a 2. 9 increase in wages. That was trumped up by a couple of onetime events you had several states raising the minimum wage in january. You had the supposedly onetime bonuses coming from corporations due to the tax bill. Those are one and done and gone. Well see what the wage growth number looks like in february and march. My guess is its not going to be 2. 9. Yeah, things are getting better. The economy is improving youve got the fed possibly going to raise rates three or four times this year youve also got the bank of japan and the ecb both continuing to be aggressive. Jerry, whats happening in the market and what do you suggest people do . We have lost the abject fear we had a week or two ago when people didnt understand why we could go down at the rate. Now there is evidence that the machines that touched off selling are suppressed and out of the way you get this period of time to ask yourself whats really changed . As we talked, inflation is not running away on the upside Interest Rate still with a two handle on it doesnt do anything to valuations. Now you get to buy everything at 5 to 10 discounts to six weeks ago. So the reality will be this is just fine. I thought you were going to say we lost that lovin feeling, jerry. Whatever at what point, however, to pick up on what michelle was asking, at what point do Interest Rates and inflation start to not be comfortable for stocks. Sure. And therefore sort of shave the p. E. Multiple . I would argue im sorry. Jerry, take it first. Then steve. Okay. Thats a much higher level. Probably close to 19 times forward earnings where it matters. Youve got two or three multiple points between now and that level where 3. 5 which starts to challenge valuations its much higher than where people worry about today. Right. It is a trend well look back on this month and time period and laugh about how we were concerned this early in that part of the cycle. Steve, jump in, quick thought. I would argue when worldwide Monetary Policy changes you still have a large, big banks being very aggressive with the Monetary Policy. Maybe not in the United States its a worldwide economy that currency flows to our shores as well when the boj and eoc slows down this is still today very aggressive Monetary Policy. The reason higher rates mattered and some may disagree, but its what i believe and the people at hedge funds say. Hundreds of billions in equities are being sold to realign the risk parity trades so the move up in yields is causing a temporary dislocation between stocks and bonds where you have to sell stocks, do this and that to rebalance it. Bridgewater and aqr and other big firms. But the risk sort of the rate equity correlation historically a hundred years is clear until 5 on the ten oyear. Is this a market that can with stand 4 youre getting close to a selloff but 3. 2, 3. 3 which is a long way from where we are today. The policy, the Interest Rates in effect today, the way money is created today continues to be very aggressive worldwide. Thats good for asset prices, not just stocks but real estate and whatever when you are creating this money, thats a vitamin pill for asset pricing. Well leave it there on that cute metaphor. Thanks, guys on deck, could inflation be the headwind that brings down the eightyear roaring rally well talk more about it coming up Oil Producers cant help themselves they are pumping more oil every day. Is there a way to make money in the crazy oil market now plus, youve got money questions, weve got money answers. Email us at powerlunch cnbc. Com or tweet us powerlunch. More power ahead feel that . Thats the beat of Global Markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. The market is shrugging off a jump in u. S. Consumer prices that rose more than expected Jpmorgan Chase slashing the forecast to 2. 5 from 3 the reason is scorching cpi and ugly retail sales data here to make sense of it the chief economist with Grant Thornton and Steve Liesman we were reporting this with Simeon Siegel a few minutes ago. Was the retail sales number as bad as all that . When i dug in it was still up 4 year over year Sporting Goods jumped off a cliff. Everything else didnt seem that horrible. I keep hearing this word on advertisements, so i will use it january sucks when it comes to retail sales. January sucks in every way. Its cold and dark exactly youre in the dead of winter you dont believe summer ever was or will be again. There is winter in the south. I think the consumer should be strong and i expect them too rebound from this lousy number gdp came down. Im not taking my cue from the dramatically seasonally adjusted january number. What do you think of the numbers out this morning, diane . Retail sales weak but people got spooked about inflation, at least temporarily. The stock market shrugged it off. Whats the message this morning from the key data points never make too much out of a month. Talking to retail clients they were reporting strong retail there was weird weather in the south where tourism destinations closed down. There were disruptions out there. Really weird it was interesting the increase in apparel which was unheard of. Hasnt happened in 30 years. Exactly also it was interesting during the holidays, retailers kept inventories down the only time i went into the stores was the day before christmas or Christmas Eve because i forgot something and there was no inventory if you looked at the inventory numbers retailers had a decline. They were able to not pass through as many discounts which showed as a big increase in prices thats not sustainable. The amazon effect. We know that we are in a warming trend on inflation. The retail sales number is a head fake. February may not get the rebound wed like because there is a delay in tax refunds that will show up in march instead. Speaking of inflation, steve has cool charts. Talking about a generation thats never known inflation they didnt know it was coming thats a pi ty the charts show the average inflation over what we are calling your generations inflation, your parents generation inflation and your grandparents inflation. There we go. There it is i only have data to 48. Your grandparents, benign. Your parents went through Interesting Times right there. For the purpose of this am i a parent we can talk about that later, tyler. Youre young at heart, if nothing else. This generation, its been low. If you look at the maximum numbers the middle dealt with inflation as high as 13 we have never dealt in this time period since 1992 with inflation thats even topped 4 . Michelle, you talked to analysts have they ever covered amazon in the time of inflation. They said they have covered it for 15 years, so no. Its been a long run of low inflation. Im not sure we have to deal with more than 4 but we dont know that world s. I will make it worse. I dont know if tyler or michelle has done this every event i go to with Financial Planners i say raise your hand if you were doing this job in 2004. About twothirds of the room usually raise their hand a third doesnt. I say 30 of the Financial Advisers in this country have never managed clients money in a rising fed rate hike cycle they would have been 22 years old. They are now 37. Does that worry you . A lot of things worry me. We are going to have good growth this year. I think well hit 3 because it is debtinduced through tax cuts and stimulus well be borrowing growth in the future and the bond market is waking up to the fact there is a lot of supply. A lot of analysts dont know we are in uncharted waters. The fed will be on a preset course to reduce the Balance Sheet by over half a trillion this year. That will be stepping up it was a nonissue for chair yellen for chairman powell it might be more of an issue as the supply of Treasury Bonds go up. Thats something the market has to adjust to beyond the inflation issues, higher bond yields as steve pointed out this is one of the greatest bond rallies of all time with the exception of 1994 as between rising Interest Rates, realize that the fed controls and the feds action to lessen its Balance Sheet, which is the more important one to watch in terms of what the effect will be on Interest Rates and on the bond market. I need to give you a twopart answer first is what the fed wants it to be and then what it will be the fed wants the Balance Sheet reduction to be on auto pilot. They have said vociferously they are not going to adjust the Balance Sheet reduction in response to conditions or as a policy matter. Not data delivriven. Only if they bring rates to zero i dont know that theyll get away with it they want you to forget it and count it in as the backdrop to whatever decisionmaking you might make the Interest Rate is the variable here. That would be datadriven. I would follow that first with an ear towards what powell might say about how flexible he could be with the Balance Sheet. When do we hear from him . 28th. Well look forward to it. Thank you, steve and diane. President trump hates red tape how much could deregulation promote investment in the nations infrastructure . Well take a look. Plus send in your market questions. Email powerlunch cnbc. Com or tweet us power lunch. Look at the dow. We are now up 210 points hitting a session high of 24,851, a gain of 211 points. We are back in two minutes announcer the cnbc Trend Tracker live data board brought to you by the cme group. Whos the new guy . They call him the whisperer. The whisperer . Why do they call him the whisperer . He talks to planes. He talks to planes. Watch this. Hey watson, whats avionics telling you . Maintenance records and performance data suggest replacing capacitor c4. Not bad. Whats with the coffee maker . Sorry. We are not on speaking terms. And made it liberating. 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The Trump Administration wants to cut the time it takes to get a permit for Infrastructure Projects by as much as 80 . But would permit reform change the infrastructure game as much as the president hopes kayla has more on the story. Reporter the white house wants permit deadlines of two years and only one federal agency leading each Infrastructure Project the 64foot raising of the bridge behind me has been painted as a poster child for too much red tape. The white houses inspiration white paper uses this as an example saying the Environmental Reviews spanned 20,000 pages and by the time its done it will have taken nearly a decade the projects defenders say it is not an example of red tape run amok the actual permitting took two years. It was the construction that took six because of harsh winters and heavy traffic. The project actually would have met the Trump Administrations goals. Of course there are two components to every Infrastructure Project there are permitts and money they hope they can get businesses to come to the table with the money by solving the first problem. Critics say government is already underfunding agencies with infrastructure oversight which is a problem in and of itself there are 90 billion of army corps of engineers water projects ready to go with all the Environmental Reviews, all the permits out there and there is nothing to do all they need is the money obviously there are stake holders on both sides of the decisions. For some of the busiest ports on the eastern seaboard cargo records were up 5 because bigger ships can come through the higher bridge. Back to you. Kayla, i love the fact that youre there Philip Howard who runs common good i urge everyone to read it its nonpartisan its interesting because the Environmental Review done at that bridge was initially brought on by the teamsters, the truckers union. They sued under environmental grounds and that forced a house by house environmental inspection that took years this story replays hundreds of times over america, does it not . Reporter it does one of the complaints is you dont actually know how construction will affect, say, the foundation of your house there were complaints that peoples windows were cracking, they had exposure on the Staten Island side to contaminated soil those will be issues wherever a project is taking place, but the hope on behalf of the white house is if you put one federal agency in charge then you can fast track the process but its worth noting that the department of transportation already has a fast track process from the obama administration. That cut permitting times down from about 6. 5 years to 3. 5 years as of 2016 well see how much material headway they can make here. Kayla, thanks oil getting crushed in february down 8 since the month began. Well talk about the Ripple Effect as crude cools off. Facebook rallying 32 in the past year. One Analyst Thinks the ralry is far from over. Why investors should be aggressive buyers of facebook now. Priority shared by both parties. He revealed his 1. 5 trillion plan earlier this week we are here today to discuss the urgent need to rebuild and restore americas deleted infrastructure we have been having meetings with members of congress they have been successful meetings well see how it all turns out. Kuwait announcing International Donors pledged 30 billion to help rebuild iraq while it falls short of an estimated 88 billion needed to rebuild the country it easily surpasses the 20 billion iraqi officials said they initially needed the best in show winner at the Westminster Dog Show is little flynn, a bichon frise more than 2800 dogs from 201 breeds were in the competition flynn was chosen by seven finalists, each champions in their breed. Its all about the hair. What does he like like without makeup absolutely pawful. [ rim shot ] got it. What a nice little dog. Nothing to bark at. Sue, thank you. Lets look at the markets now. Here we go it doesnt say the dow it says the sow in the prompter. Thats a different competition. Thats the Minnesota State fair. The sow is near session highs after opening down oink the nasdaq leading gains up more than 1. 5 right now. It says ad lib boards. There you go now to the tenyear hitting 2. 91 . Thats the highest level in four years since january of 2014. Financials and tech are the best performing s p groups. Real estate and utilities are lagging. Let us point out the last time the tenyear was at this level was the last time the Winter Olympics were going on how about that get ready for the next one technology, tenyear note, 2. 902. Just down a little bit brian . The oil market set to close for the day. Jackie, d, were up over 2 in crude. We started lower but moved back into positive territory now over 60 a barrel. The data this morning was bearish on its face. We had builds in crude and gas and rising u. S. Production but bullish factors, inventories declining. Powerful price drivers today and the dollar indentix on the moveo the down side. Cpi showing traders use commodities as a hedge lets dig deeper into oil and opportunities therein. Mike kelly from Seaport Global securities joins us now. I dont want to use the word permanent for anything, especially the oil market. However, are we in a relatively permanent 55 to 65 dollar range for oil in your view for the next months, quarters, years hey, brian. Thanks for having me on. If i was offered the 55 to 60 i would hit that bid all day long. There are a lot of guys that make a tremendous amount of fun and profits in the 55 to 60 dollar world that we are a little fearful that you dont stay in that range there could be downward pressure. We are pumping 10. 2 barrels a day, the highest amount except for a few weeks and all the way back in 1970 Oil Producers here in the states, all great people cant help themselves. Theyll take more and more out of the ground. They are getting good at it, too. Give perspective on it and q4 when the dust settles in the numbers you will see Oil Production has risen 800,000 barrels a day in a quarter thats insane. Put it in perspective. The opec cuts called for 1. 2 Million Barrels from the opec member states. We made up 75 of that in one quarter in the u. S. Did you say insano . Thats a technical term i hate to be jingoist, but its awesome, right . The drillers cant help themselves but its fantastic the United States is in this position you have to go back to the 70s when we decided to kill the oil sector with price controls and let the world take over. No more of that. This is incredible. I agree 100 . We love Diamondback Energy they talked about the finding and Development Costs down to 9 a barrel operating, 10 it costs about 20 all in. They get 60 a barrel. Three to one return on your money. They are making good returns in this environment if you are one of the low cost guys like diamondback. The former ceo of pioneer runs parsley energy, some of the most respected guys out there. I was trying to pin downtheir cost of production he said, the reverse price is right. 25, 20 hes winking at me you think there are a lot of producers that are profitable under 20 there is a host of them well find them in the baby saudi arabia nestled in west texas which is the basin diamondback, pioneer, concho i remember saudi arabia has 5 barrels of oil. The break even price for shale is 75 we got laughed off stage its sub 40 now for an all in for a lot of the guys. Its changing rapidly. Youre right, this is a great thing for the country. Mike kelly, we appreciate it. We need a baby eagle with an American Flag over it for that segment. Play the anthem. Thanks, guys. Facebook investors tapping the like button. Shares up 3 after an mkm after gr aggressively buying the stock. Rob, you sent a nice valentine to zuckerberg and team out there. I want you to explain something here you like the lower multiple on this you think it represents a buy. But you make a point in your note that slower Revenue Growth is going to translate into higher earnings per share. Explain it to me its not intuitive to me the point of the note is that the consensus outlook for 2018 and 2019 is very conservative in our opinion in terms of Revenue Growth deceleration. The consensus, if you go from q417 exit run rate of 47 down to 32 so 15 to 1600 basis points of deceleration in four quarters is the consensus. Its also a significant expense ramp which i think is another area of potential upside on earnings even with the conservative outlook and consensus the stock is trading at the alltime low just over 20 times forward p. E. If you x out the cash. The combination leaves pretty limited room for further multiple compression i think some significant potential for upside on earnings on top of a rapid growth rate that still exists for the company. Im sorry to be slow here are you saying you dont expect revenue deceleration to be as dramatic as consensus nor the expense spend to be as dramatic as consensus absolutely. Thats exactly what we are saying we think the consensus outlook is too conservative as it has been thats another point of the note if we look at the consensus outlook prior to the q2 results, q4 was expected at that point to be a 32 growth quarter. The quarter they just reported was 47 . Thats what im talking about. The consensus expectation is too aggressive on the slope of this Revenue Growth deceleration. I see. There lies the upside. You mentioned right now the forwardlooking multiple is 20 times. What do you think it should be i think for a company thats growing still 47 theres been a pretty severe decoupling of p. E. To growth. In previous big systemic change Companies Like google for instance, the deceleration Revenue Growth led the p. E. Contraction. In this case its decoupled significantly. Arguing for a 25 multiple is not a stretch for an asset growing this speed if the growth rate can continue at 25 or greater then you are going to compound at that rate and have an attractive stock for years even at 20 times multiple. Theres facebook at 178 yes. Facebook can go to 240 in your view. How soon does it get there, number one, and number two, what is the biggest challenge they face as they try and remake some of the front end of the business emphasizing different kinds of engagement yeah. I think thats a 12month target thats what we are looking for entering 2019 is 240. What challenge do they face there are a few there is a high wall of worry about some of the narrative coming out of management and the changes they are making. I dont think theres fundamental changes required i think they are deemphasizing certain types of content to make more room for what they consider more valuable content which is connection to your peers and communities that you care about. Deemphasizing passive engagement of just watching news media or video for instance. I dont think there is a fundamental shift in the nature of the app but thats causing consternation amongst investors. One of the reasons the multiples is under pressure. Thank you very much for your explanations your patience with helping me understand it. All right thank you, guys. Straight ahead, we are answering your stock questions with our experts power lunch is back in two minutes. 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It is time now to answer your stock questions here with us is fast money trader guy adame i dont know what i am anymore. And the comanagingpartner a douglas c. Lane Associates First up, wally asks with the recent setback for cboe is it a buy on the pull back or will cme steal its thunder . Im a big fan of the cme. Terry duffy has been on the show a number of times. Its more expensive than the cboe but thats gone from 134 to 114. A couple of analysts took the target down to 110 i think it is safe to dip in a toe. The products they trade are under the microscope now buy cboe but long term i like the amerimercantile exchange be marty wants your thoughts on wells fargo. Thoughts today that berkshire is jumping in to defend them. What do you think . I like the financial space. There is a lot more opportunity outside of wells fargo given the opportunities at jpmorgan, bank of america, First Republic there are a lot of banks i think have a clear vision going forward. There will be bumps along the road a better entry point to wells than now shayna wants to know if tez la will rebound from the price dip and at what price range should i wait to buy it . Great question. Tesla is in the 280 to 350 range. Im not sure it will get to those levels it will take out the alltime high of 380 or so. Its not a car company this is a Technology Company buy into the story every so often it is an opportunity to buy the name. I dont see this as different. To shane. Shane asks why the airlines wont go up . The overhang came from the Earnings Call from united which basically said they are growing capacity i think this is the right time to buy we like delta. They are the bluechips of the airlines they are making money. They trade at a much big discount to the s p. They have a 2. 5 dividend yield. I would buy delta today. Nibble on united we have taken down positions on american and we own southwest. Given the global economies these are companies that will do well. They have pricing power. If oil rises they can pass through some of the costs. Give it time you have to be patient kathy on twitter wants to know if you like applied materials. Im on the twitter. Are you . Im not on the twitter. I am a fan. Last quarter was great the stock failed at 60. They report after the close today. Brian sullivanbusily typing on his computer. Jim cramer just had Gary Dickerson on hes the ceo its a great story at a reasonable valuation if you want to trade the stock, buy half now, half post earnings this afternoon id add one thing with applied. Be careful with the semiconductor cycle. As we get closer to the end stocks like applied get hurt though they are growing earnings. Agreed. I would suggest from the 61 level a month and a half ago to the levels now so to push back, maybe they have already priced it into the stock. Well see. Thats what makes markets though, brian. Im told you have value picks you like, sarat. Gm is one that people say, we are at the end of the cycle. Stock trades at seven times earnings, almost 4 yield. One could argue its trading as if we wont get more growth in cars they are profitable, making more money now. Guess what, they are coming out with innovation. I like the stock i want to hold it for a couple of years two more . First republic, one of our favorite banks this is a bank thats focused on the High Net Worth space, loan space. Really good management, high Customer Service its sold off after the new tax laws came in i dont think it will hurt business its a good time to buy a High Quality Bank gentleman, fun. I was going to ask guy happy valentines day whats wrong, brian . You dontwant to say hi to me. Youre way over there. Where over there. Ill give you a hug if you need it. Im sorry, michelle. What can i do for you . Is the worst over its too neat to say the worst is over. Volatility has been taken out of the market i get that if the worst is over, this is the most textbook recovery in the history of recoveries. I still think there is some hiccups left in the market what about you, sarat i agree with that we have probably taken out most of the downturn. In the next couple of months you will see another hiccup. This wont be like the last 18 months be selective with the stocks you pick its a buyers market. If companies are sold off for nonfundamental reasons its a great time to pick them up. Lots of volatility players. The wall street journal with an amazing story do you know Pension Funds like the hawaii pension fund were trading volatility. Do you think they are qualified to trade value tiolat. What are you saying about hawaiians . This has been the biggest tr decades, going against three to four years, its an annuity. Everyone loaded up on it, and now last week we saw what happened the question is, can give you three, four years, i suggest the slow, but can that be unwrapped or resolved in a week and a half my answer would be no. All right i agree they agree. Two nos gentlem gentlemen, thank you call it the burrito bounce, up 14 after announcing the change in leadership should you dig in . Well debate the stock straight ahead here on power lunch. Well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from Td Ameritrade. Time for trading nation, the best day in four years because chipotle named the former taco bell ceo as its ceo meaning more sour cream on everything thats not what it means lets bring in the trading nation team with the bathis group, and craig johnson, and, craig, why are you negative on chipotle well, brian craig sorry no worries, craig, why are you negative on chipotle i look at the chart on chipotle, and it looks to me this is a relief rally forming in here. Now, this is a relief rally that certainly carries on here for a while longer up another 7 just to get back to the 50day on this stock, and if you were to reverse the long term trend, you have to get back above 400 keep in mind, it was a 700 stock several years ago, so its good for a trade, but we need to see more evidence of a longer term trend chain unfolding michael, your turn. Does this change your view for chipotle not only was the taco tuesday, but turn around tuesday. Market loved them adding the new ceo, who, he has work cut out for him, change the brand, the culture, and if anybody can do it, this guy can do it he had a history of turning around companies, built numerous brands over the years, and were betting on that that he can turn around the stock, which is off more than 60 from the lows on the 52 week high yeah. He did a heck of a job at taco bell, so, michael, your optimism is noted the charts are not convinced thank you, both. For more, go to tradingnation. Cnbc. Com check please is next now, the latest from tradingnation. Cnbc. Com a Double Bottom is a chart pattern that says the down trend is ending ready to reverse sometimes called a w formation because it looks like a w. A double bond is two lows at the same level traders often view a break at the highest hi ithghn e formation as a bullish signal. You might take something for your heart. Or joints. But do you take something for your brain. With an ingredient originally found in jellyfish, prevagen is the number one selling brainhealth supplement in drug stores nationwide. Prevagen. The name to remember. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. Check please, i wanted to revisit shaun whites gold medal win last night that run, he had to do it perfectly, the last run of the night, did a super dupe things never done before, and it was amazing. I love watching the olympics, and this is such a great moment. Look at him crying fantastic. It was clutch it was clutch his first olympic win was, when, 2006 around there he was, like, 12 years old. This is his fourth olympics he did not do well in sochi this was his comeback mine is less exciting i have a twitter poll asking all yall is the s p 500 will be bigger or smaller than it is right now. Bulls out in force voting is early, 74 of you said the s p 500 will be higher than it is inflation be darned, tyler. I would be nervous if that was in the 90s in the 70s, like, okay thats not so my guess is that it if i had to vote, it will be higher, my guess is also that the stretch between may and election day will be bumpy and flat midterms could be interesting. I think they will be interesting. I think then after that, the market finishes on a rally so say tyler. Bumpy and flat is the theme for the market this is not the s. I. Edition, okay thank you for watching power lunch, and closing bell begins right now hi, everybody, welcome to the closing bell live from the new york stock exchange. Im kelly evans. Making me Bill Griffeth the dow was down triple digits for a time, but we did hit a high gain of 224 points. The major averages are on pace for the first winning streak in about three here back in positive territory for the year, at certain levels here hitting benchmarks here, notable benchmarks gaining tra