Transcripts For CNBC Closing Bell 20140116

Im kelly evans at the new york stock exchange. Im bill griffith. Doesnt look like third times going to be a charm. The financials, which had done so well, bank of america yesterday with a stellar report that pushed it higher. Today, Goldman Sachs and citi disappointed with their earnings and the financials are lagging this market and leading it lower. President dow was down 105 points at the low. Now were doing 68. Thats right. We have goldman down about 2 at last check. Citigroup off about 4 . Some of the regional financials its a little bit more mixed. We have pnc up despite analysts saying this maybe isnt necessarily a performance they can repeat. While some of the others are lower, even though commercial real estate, commercial and industrial loans, there is growth there. And then theres retail. Best buy. Worst buy. Horrible day for best buy shareholders, which well get to coming up in a little while here. Yeah, thats right. The Market Action wont stop. When the closing bell rings at 4 00 p. M. Today, we have two Major Companies with earnings due out. Theyre intel and American Express. Both huge bell weather dow components. Well get you the information first. Well get full analysis as those numbers come in. Also, when the president of the United States notices that you may be losing your cool, you may really be losing your cool. We have a special report on something that president obama said about facebook that piles on to the anecdotal evidence that i can sort of corroborate that young people are abandoning the social media website. But should investors bail on the stock . Thats the question. Well take a closer look coming up this half hour. In the markets right now, the dow is off about 70 points that the hour. A little less than that. The s p 500 is off sitting at 1845. The nasdaq is slightly higher, 4217 as we head into the final hour of trade. Lets do that. Lets talk about in our closing bell exchange. Gina sanchez with us today. Jim loul from adviser investments. Greg epp from the economist. And our own rick santelli. Gina, one day the financials, we love them, the next day we dont at all. Whats going on here . Look, the markets have been struggling this january trying to create the january effect. But its just not taking. And part of that is because we went into this january with pes having expanded for the first time in five years. Were on the maybe slightly expensive side. Were not that expensive, but we arent cheap anymore. Whats left . We have to see some earnings. We have so see some sales growth. We havent seen that. Jim lowell, at the same time, lets talk about those financials. How important is it to the market here that theres a little bit of a step back with regard to how the market is take numbers from goldman, from citigroup today . Well, i think the reality is financials play a large role in almost every investors portfolio. We have seen some bottomline cost cutting shore up banking earnings recently. But todays numbers, i think, were really driven by a slow down in bond trading. We saw earlier bank of america maybe being hit a little bit by a slowdown and refinancing. In 2014, i fully expect bond trading slow down and Mortgage Applications to offset refinancing. Far too early for me to get overly concerned. We welcome Ryan Dieterich from shaffers investment research. What do you make of todays action and this selloff . Weve been hearing some options traders were not expecting a meaningful move. Theyve been still selling the volatile any this market. Not expecting a big move lower. What do you make of whats going on here . Bill, when you get to today, the kind of mic itsen coura. Yes, weve gone sideways. When you look at that big rally, to me its constructive. Were going sideways with the right leadership. You mentioned volatility. You look at the vix, currently over 7 million calls open, which is near an alltime high. In other words, theres a lot of people out there that are hedging against higher volatility. The big question is, is that smart money . You look back recently, it hasnt been for the last 18 months or so. The last time there were this many calls open was august of last year before that good fourmonth rally. Could they be right this time . They could be. History says usually were not. Maybe the mass is usually wrong. Volatility might stay low. I still think we can have an upward move. Greg, any waves from ben bernanke today . Not really. Hes kind of backward looking. If you want to grope for something that had any relevance to the current outlook, he did sort of bat down any concern that the Quantitative Easing Program they had would be inflationary. Just look to todays inflation number toll see its not a problem. That made me think. Of course, Inflation Numbers came in very low. Core inflation still at 1. 7 . We had another fed official this morning talking about may we need to eventually raise the inflation target because this one is too low. I think that sort of speaks to the possibility that the low level of inflation could give us a friendly fed, at least on the Interest Rate side, for a while longer. Rick, im sure you you want to talk about that. First, we have a Throwback Thursday present for you. You sent me a picture last week. I dont know, was this the first time you were ever on with us on cnbc . This is from 1995. Look at those glasses. Look at that jacket. Rick, do you still have that jacket . The fall of 1994 when i did my first guest spot. I really started to turn up a lot more as a guest in 95. Yeah, i still have that jacket along with about six others. Kind of in the closet museum. You know how that goes. That was the dawn of the dotcom boom. A lot of things going on at that time, rick. Parallels to today, perhaps . How different we are now, huh . Well, ill tell you one thing that isnt the same. The definition of inflation. You know, we were talking about that at 8 30 this morning on squawk box. I got a boat load of emails from some traders i probably havent seen since that picture in 95. They basically said, if youre going to talk inflation, you need to clarify precisely what youre going to talk about. Really, the term being used now is most likely going to correlate with velocity of money. So im not really buying into that. But ill give you another one. Do you believe that the southern economies of europe are as in good a shape as the u. S. Economy . I dont think so. But look at year to dates of yields in the u. S. Then look at portugal, spain, italy. These yields are moving down massively. Now, forget the reason why because i think its more hypothecary from central banking. But the reality is, its changing my outlook completely. I think yields in the u. S. And in the u. K. Are going to be moving lower. Because if youre going to pay 80 over for a tenyear spanish yield versus u. S. , then theres a problem. The price of the u. S. Treasuries has to go a boat load higher, bringing the yields a boat load lower to make that spread look. Theres a new dynamic. Its relative strength and relative valuations. This is going to hold surprises for treasury prices. Rick, thats absolutely the case if you look at japan, for example, where they can get such a chunkier yield over here. That has interesting dynamics for how much of their debt is internally financed. Heres what i wonder about ricks point. How much of this is european banks buying up the debt thats being issued by european sovereigns . In other words, it doesnt necessarily bode for u. S. Treasuries. I totally agree. Ponzi game anybody . Yes, i totally agree with you. I think that a lot of this has to do with bank buying and doesnt necessarily have to do with fundamentals. It is a supply and demand story in the market. I dont think the treasuries go down. I think those yields eventually will have to go up. Thats the right move. Well, there has to be a relative value relationship there, though. Traders arent going to look at actual yields. Theyre looking at the spreads. Its also inflation there too, right . Yeah, youre absolutely right. Right, greg . Yeah, exactly. The United States isnt the only country with a low inflation rate. In europe, the inflation rate is below 1 . Its the lowest since the introduction of the euro. One of the reason bond yields are coming down in europe is precisely for that reason. Its not a reason to get bullish on europe. By the way, the imf is out talking about Global Deflation again. But its interesting because, in fact, the ppi yesterday, the cpi today were both a little bit to the upside for the first time in a couple months. What was interesting in the cpi report, a lot of that is rents. Greg, i wonder if people need to just understand the extent to which rising rents indicate rising inflation or if theyll continue to sap the purchasing power of u. S. Households. No, actually, rising rents are priced off housing prices is probably a good thing. They talk about housing markets getting better. Remember, the fed is keeping an eye on a different inflation rate, the pce inflation rate. Rent is much less important. That number is even lower. Its around 1 . Its going to stay around 1 on a core basis. I think the imf, the warning on deflation is very, very relevant. It doesnt really give the fed much room to maneuver in terms of accelerating the date. Jim lowell, before we go, are you more inclined to buy a dip or sell strength right now . Absolutely more inclined to buy a dip. Not just here but especially inside europe and maybe inside japan. Still japan . Still japan. Jim, does japan have to work for u. S. Equities to rally here . No, it doesnt. But i think it does have a correlation to the way the u. S. Economy in particular, not necessarily the markets, behave. I think that goes forward. I think its too early to call abenomics a success or failure. In t meantime, theres money to be made. Thank you, folks. Rick, keep the pictures coming. Exactly. More yet to come. Oh, brother. Thats what i was afraid. Look at that. Back then, the tea party was just a twinkle in ricks eye. And those glasses, bill. Ahead of the times. Somebody just said to me they thought those glasses had come back in style already. Exactly. Twice, i think. So were heading to the close. 50 minutes left on the trading session. The dow was down about 105 at the low of the session. Led lower by those financials we mentioned. The dow down 76 right now. And easy come, easy go. Stocks giving back a big chunk of yesterdays gains. When will 2014 find its true direction . Well ask the wise men at wall street coming up. Really looking forward to that. Also, google has been called big brother for invading peoples privacy, but now the founders are going to new extremes to ensure their own privacy, getting their own private terminal at san joses airport. Thats raising a lot of eyebrows. We got josh lipton on that story coming up next. And fallout over at facebook. One analyst estimating the social media website has lost 11 million young users since 2011. Will it end up hurting the shares . Well hear from both sides in that debate. We want to know how you think facebook can get its cool back. Your best tweets on the subject coming up. Youre watching cnbc first in business worldwide. [ male announcer ] the new new york is open. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment female announcer during sleep trains female announcer huge year end Clearance Sale, get beautyrest, posturepedic, even tempurpedic mattress sets, at low clearance prices. Plus, get free sameday delivery, set up and removal of your old set. And through monday, get three years interestfree financing on selected models. But hurry, this special financing offer ends Martin Luther king jr. Day. Dont miss the year end Clearance Sale at sleep train. Superior service, best selection, lowest price, guaranteed your ticket to a better nights sleep welcome back. So google wants to know pretty much everything about what you do and when you do it. But the founders want to keep very private themselves, especially when it comes to their own travel. Josh lipton, whats going on here . Yeah, its not uncommon for tech executives if Silicon Valley to fly on private jets, of course. But googles founders, they are taking it to a whole new level. Theyve won access to some prime real estate at the San Jose International airport. Cnbc has learned from sources working on the project that Ground Breaking will start in february for a new jet terminal serving googles founders. The 82 million privately funded project is expected to be completed by the end of 2015. Signature flight support, a company that manages corporate aircraft, is going to build the facility in partnership with blue city holdings. Thats a corporation representing the personal aircraft of googles principals. The jet center will have a 270,000 square foot hangar. Industry experts tell us it could potentially accommodate 60 aircraft, making it one of the biggest private air terminals in the world. The new private terminal means more jobs for san jose and 2. 6 million in annual rent to the airport. Bill, back to you. All right, josh. Thanks. And from two of Silicon Valleys top ceos to the offspring of another Top Technology chief, Oscar Nominations out there morning. You know the daughter of oracle ceo finds herself in the thick of the awards race this year. Julia has details from los angeles. Thats absolutely right, bill. 27yearold producer Megan Ellison swept the oscar no, maam nations. Shes the first woman and only the fourth person ever to snag two best picture nominations in the same year. Her company produced american hustl hustle. The film is also scoring at the box office, grossing 104 million in the u. S. So far, and its sure to see an oscar bump. Now, ellison also produced her, which drew five nominations for oscars, includings best picture. Warner brothers opened the movie nationwide this past friday. Its grossed about 10. 5 million so far. Ellison is no stranger to success. She produced zero dark thirty, which drew five Oscar Nominations last year, including best picture. She also produced true grit, which drew ten Oscar Nominations in 2011 and was a surprise hit, grossing over 250 million worldwide. Now, ellison never does interviews but is known around hollywood for taking risks on film makers, investing more in artier films than studios would necessarily want to spend, and securing bigname studio distribution. This year especially, her big bets are pay manager off. Bill and kelly . Isnt that amazing . It is. Runs in the family. That kind of big success. Thanks, julia. Heading toward the close, about 40 minutes left in the trading session here. All the major averages lower today. The dow down 75 points right now. The s p pulling back from those record highs yesterday. Speaking of the oscars, we should mention sea world rallied when back fish was not nominated. Also coming up, new evidence that young users are fleeing facebook. So should you flee the stock on that news . Weve got a stock brawl on facebook coming up next. And the head of a major bank entertaining his staff. Thats him dressed in drag. Well tell you who it is, where he did it, why he did it if we can find that out. Most importantly, well show you more of this incredible video later on closing bell close. Here at fidelity, we give you the most Free Research reports, customizable charts, powerful screening tools, and guaranteed onesecond trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Return on investment isnt the only return im looking forward to. And my parachute definitely isnt golden. [ male announcer ] for some, every dollar is earned with sweat, sacrifice, courage, which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as 50. Welcome back. Is facebook really losing its touch with young people . Well, it depends on who you ask. Facebook might not want to ask president obama right now. Right, seema . Thats right. It appears those concerns may have reached the oval office. A reporter at the atlantic recently overheard the president talking about social media with the president saying, quote, it seems like they dont use facebook anymore. Of course, who he was referring to is up for question. That said, today there is a new study thats renewing concerns over whether facebook is losing teen users in the u. S. Researchers looked at facebooks social ads platform and came to the conclusion that facebook has fewer high school aged users. Thats teens aged 13 to 17, than it did in 2011. Over the same period of time, the number of facebook users 55 and older increased over 80 . Cnbc reached out to facebook, which said, as policy, they do not comment on thirdparty studies, though they did direct to previous comments by coo sheryl sandberg, saying such concerns have been blown out of proportion. Facebook will disclose daily active and monthly active user numbers on its next Quarterly Earnings call, which is on january 29th. Analysts i spoke to today expect teen usage to be a topic addressed on the earnings calls. Maybe facebook losing its cool among teens. Bill, i know you are an avid user of facebook. Youre constantly updating your status, posting pictures, right . Does that make it cool or not . Youre very cool, bill. My daughter would disagree with you, seema. But thank you. She fled, as you well know. It is your household that christened fogie book. Thats what we call it there. Lets brawl it out, shall we . Aaron kessler bullish on the stock. Brian evans from adviser shares says the company has too many problems. Welcome to you both. Aaron, im just curious, first to you, do you think facebook is still cool, and does it matter for investors . I think it depends on who you ask. I think weve heard that for a while among the teenagers. Maybe its losing its coolness factor. But i think there is something to be said for the fact that sometimes teens maybe dont use it as much in high school. Then they go to college, want to stay in touch with people and reconnect. I think people can rediscover facebook even if they stop using it as much. What do you think, brian . Being a cpa, no ones ever accused me of being cool. I dont know if im the right guy to comment on cool. Do you use it . Rarely. But, you know, im looking at valuations. Looking at the numbers. I just think theres a lot better buys out there right now. In the fund that i manage, if we look at it in relation to the s p 500, theres about 300 stocks i would consider more undervalued than the stock is right now. You know, aaron, the problem i have with the demographics, numbers are numbers, right . I feel that about us here at cnbc. You know, advertisers obsess over demographics. We want a certain age group. For us, a number is a number because anybody thats going to watch is going to be an investor or consumer anyway. Can the same be said for a facebook or social media . What do you think . Numbers are important. Advertisers are still getting a lot of roi from facebook. They do well in the 18yearold plus category. Maybe not well at the 13 and 14yearolds. Youre seeing increased budgets. Our checks for this quarter show a lot of they continue to gain share from other advertising platforms out there. So we think the numbers speak for themselves, that they are gaining share from other platforms. Whats also clear, brian s that facebook is an incredibly successful advertising platform. I wonder even if their growth is slowing, even if people arent as engaged with the site, as their delivery of advertising become such a cashgenerating machine that investors are willing to look past it . They have looked past it in the last year, as it nearly doubled. Right now its trading at over 20 times gross revenue, even with 25 projected Earnings Growth. Its still not really going to grow into its current valuation for years to come. So at roughly 58 a share that it is right now, i know one of the questions you might ask me is, at what point would i put my moms money into this one . I would say its around 35 a share. Wow. The question ui was going to ask you, though, are there other social media you would prefer . They dont have to be publicly traded because the kids migrate. They move on. My daughters on to snapchat and others everyone is using right now. Is that an area you would look to for better growth necessarily . I would. I would look to where things are moving. These kinds of stocks seem to take off all at once. They get big gains, fully valued for years to come. Then they kind of level off. So theres, again, a lot better buys out there. If youre more of a risk taker, then i would certainly start asking my younger friends what theyre using with the new kinds. Maybe looking to get those early on. Not after theyve hit 140 billion market cap like this stock has. You got to hand it to facebook, though, for identifying this issue. It tried to go after snapchat. It did successfully buy instagram. For a song relative to what its valued today maybe. Brian, how important, how valuable is instagram and if facebook is able to convert it towards more of an advertising platform, could that be a cattist will . It could be a catalyst, but its a very small percentage right now. Its all factored into the growth projections. I just think that theres real issues when youre valuing Companies Based upon such a huge multiple of gross sales. A lot of these things just level off after a period of time. We just have to look five, ten years down the road when we run those discounted cash flow models. It just really pencil out. I think if it dropped back a little bit, back to where it was maybe six or nine months ago, it would be a buy again. Its just a Little Pricey for me right now. Aaron, i think you would agree, theyre going to have to evolve their Business Model as Many Technology companies that do achieve this kind of icon status, the way an apple had to do or a microsoft certainly had to do over the years. Is facebook going to have to face that same kind of evolution as it grows . Yeah, i think theres always going to be a need for a facebooklike platform where you stay in touch with your friends. I dont think facebooks going away. They did acquire instagram, which addresses the younger group. Its still going to primarily be an advertising driven flat form. We still see facebook as a longterm key player in this space. I dont think theyre going away any time soon. Aaron, do you use facebook . I do use it pretty often. One other thing is with mobile now, people are checking facebook much more often than they would before. Usage was up 30 year over year combined if you add mobile plus pc. Thats not even tablet data. I think engagement concerns are a little overblown still. Exactly. Good point. All i see on facebook are engagements. That seems to be what its a platform for these days. Thanks, guys. It will be interesting to see what they have to say when their results come up. We want to know how you think facebook can get its cool back, if it has lost us. Tweet us and well reveal your best responses. cnbcclosingbell is the handle. Were looking for fun things, as always. Thedown down, Holding Steady toward the close with about 30 minutes left in the trading session. So will the real market please stand up . Down on monday, up big tuesday, wednesday, now down today. Are we heading back to record highs, or is the longanticipated correction still to come right now . When we come back, we get to hear from two of the biggest names on wall street. And a new study, meanwhile, finding female Hedge Fund Managers have outperformed their male counterparts for a second straight year. So how come women only run a fraction of the Hedge Fund Industry . And wildfires raging right now just outside los angeles in the glendora area. Well keep you posted on this fastmoving fire later on the closing bell. You make a great team. Its been that way since the day you met. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. At a company thats bringing media and technology together. Next is every second of nbcuniversals coverage 0f the 2014 olympic winter games. Its connecting over one million lowincome americans to Broadband Internet at home. Its a place named one americas most veteran friendly employers. Next is information and entertainment in ways you never thought possible. Welcome to whats next. Comcastnbcuniversal. About half hour left in the trading session. The nasdaqs turning positive, but the dow and the s p pulling back. The s p yesterday at that alltime high. Not today as the financials lead us lower. Were waiting for earnings tonight from intel and American Express. Yeah, a couple of big names coming up. For now, lets bring in a pair of true market veterans to help us navigate this environment. Welcome. Great to see you both. You came to new york to get out of the cold. Yes, minus 30. Brutal. What about these markets . Same thing. A little chilly. Minus 30 . No, no. I guess im in the camp of looking for rolling rotation, a pullback of some kind. Nothing serious. Today represents the second full week of trading in a new year. One thing that stands out to me is that the dow industrials is not at a new high and the transport is. That doesnt make me not sleep at night, but if that continues, id get a little concerned. Dont you like it when the transports outperform . No, i like it i dont like it when theyre not both moving in the same direction. Thats the oldest theory in technical analysis. Thats dow theory. You want them both moving the same way. Yeah, i want them to confirm. Thats the word. What about the fact the indexes broadly havent been moving in the same direction this year . Well, the s p came close, didnt it . Didnt quite make it to a new high. Im not worried about it. If you look at the breadth of the market, its done real well. Under the surface, things are okay. If anything, dennis, it has been a sloppy open to 2014 for the u. S. Equity market after such a stellar 2013. What do you make of that so far . Well, like ralph, ooim an o guy. Been around for a while. I try to keep it as simple as i possibly can. If you put a chart on the wall, whether its of the s p, whether its of the dow, whether its of the nasdaq, walk 20 feet away from them. Theyre all moving from the lower left to it the upper right. It is a bull market. Its going to continue to be a bull market. You can write this down until it stops. Thats the best that one learns after being in the business as long as i have. The trend is still the trend. It is still moving to higher prices. What does that mean, though, dennis, when it stops . In other words, the reason why people get upset about every small correction, every downward move is not because of what it represents in and of itself, but the fact that maybe its telling us about some bigger downward turn or the end of a momentum or Something Like that. No, kelly, i dont think we have to worry about that right now. A lot of people, very smart people, have been worrying about it for the last year and a half, that it will stop. It hasnt stopped yet. It will stop eventually. Who knows when that shall be. The only thing you know is that you wont make a new high. Youll fail, youll break some trend lines. Itll fake to make a new high after that. Then you can say definitively the bull market has ended. Until that happens, and tops take months usually to develop, it will be a long while yet before this is done. I think its still a bull market, and i think any periods of weakness, and i mean 1 and 2 , nineteeed to be bought. Strength does not need to be sold into. Since the big lows of march of 09, weve had very few corrections to use that term. A 10 pullback in this market. We havent had one in about 2 1 2 years. Yes, yes. Very unusual. Yes. In the late 90s, and you and i were there, we had a couple years back to back when markets just kept forging higher. In the late 90s. We know what happened after that. Well, yes. But were not even close to coming to the end of that. What ended the late 90s was the bubble. Were not in the bubble. Theres no bubble. What i must say, though, if a lot of these stocks are on spikes. Those stocks have to rotate a little bit. And that can happen without the market more broadly following that lead. Yes, thats called rolling rotation. And heres what i wonder. I know that its the charts that you focus on most. But what is driving this market from here . In other words, we had a sharp downturn. We had a sharp rebound. Equities have largely tracked profitability. Whats the underlying force propelling this market forward . Long term . Well, i think somewhere out there, and we talked about it. All of us have talked about it. A huge boom for the economy over the years. Im not even going to put a date on it. Number two, i think theres a building boom going to happen. You look at the stocks like alcoa, u. S. Steel, theyre starting to say something. And another sector or group that is only now coming to the floor, the shippers, the haulers. And we havent seen that in the last, i dont know, long time. Dennis, you agree with him on that, on the big picture themes going on right now. Absolutely. Energy is number one. No question about it. Its amazing that ralph would bring up the three areas i find the most enticing. Alcoa, steel, and shipping. The industries that are absolutely fundamental to economic growth. So give me energy independence, something ive argued in favor of for the last four years. Give me that. Give me the continuation of the fed. Whether you like it or not, the fed is continuing to push money into the system. The economy is doing reasonably well. Why Everyone Wants to believe this suddenly has to come to an end is beyond me. The public is not involved at all. The public is skeptical. As long as that skepticism continues, prices probably want to continue to go higher. But we want people to participate though, ralph. Theyll get there. Well, theres nothing like rising prices to lure the public back. Hasnt happened yet though. No, thank god. Tell that the brokers though, right. I just mean is it a more democratic approach . Should president obama as part of the stimulus plan years ago handed out shares of the index or something so that at least people would feel as though this wasnt happening to just the 1 . Leftists dont do that sort of thing, kelly. Im sorry, thats not going to happen. The public will find its way into the mark in and of itself. If we can find an economy, and were doing many good things right now. I cant see that changing any time soon. Very quickly. One more point. No stock splits. The only one we had is mastercard. Public likes to buy stocks around 50 or a little less. Tell them to start splitting. Why dont you . No one will listen to me. Blame warren buffett. Guys, good to see you. Thanks for joining us. Bill, good to know you all these years, my friend. Yes, sir. See you later. Your daughter says hello, by the way. Shes a producer at cnbc. Im not going to go there. Breaking news on the target data breach. Hampton pierson has details on that. Yeah, bill, several breaking developments here. First of all, were learning that the u. S. Government, specifically the department of Homeland Security and the secret service, have distributed a confidential 16page detechnica bulletin to retailers that really describes the Malicious Software and the techniques used by hackers to target the Target Corporation late last year. The report basically provides steps to identify the Malicious Software used by the criminal hackers. It went undetected. The Antivirus Software when it was infected, that i just got off the phone with the ceo of john waters, the ceo of eyesight partners, excuse me. He says part of the information that his firm along with the government was able to learn about all of this. First of all, as far as the nature of the threat, essentially it now looks like from the early to middle part of last year is when this particular malware was developed and began to be circulated as a strategy, if you will. He describes it as, quote, it was fairly widespread targeting of retailers that used pointofsale data systems as far as the distribution of that malware. It also was, we are told, written partly in russian and circulated. Thats according to the government report. The malicious code couldnt be detected by Antivirus Software. The hackers behind the breach targeted numerous unnamed retailers, as we said, and displayed innovation of a high degree of skill. So again, breaking news on the developments, specifically that a government report prepared by the department of Homeland Security and the secret service is now in the hands of major retailers, telling them what is known about the nature of the threat, perhaps some methods that can be taken to prevent and protect their systems going forward. Back to you guys. All right. Thanks very much. Kelly and i have talked a lot about this behind the scenes. We are told that there are other retailers who have been the targets and victims of hack attacks. Why in the world dont we know who those retailers are at this point . Yeah, the level of disclose sure theres no this has not been handled well by the retailers, by any regulators potentially involved. I think the public is sitting out there with no clue as to what the real story is. We absolutely should know who they are for a number of reasons. At any rate, on we go. We got about 15 minutes left in the trading session here. The dow Holding Steady still, down about 77 points. We have an intel and American Express out with earnings in about 20 minutes. Well have whats at stake on those reports coming up. After the bell, can you tell by looking at this which big bank ceo took the stage dressed in drag to pump up his company . The big reveal coming up on the closing bell. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] this man has an Accomplished Research and Analytical Group at his disposal. But even more impressive is how he puts it to work for his clients. Morning. Morning. Thanks for meeting so early. Oh, its not a big deal at all. Come on in. [ male announcer ] its how edward jones makes sense of investing. Is your tv powered by coal . Natural gas . Nuclear . Or renewables like solar. And wind . Lets find out. This is where americas electricity comes from. A diversity of Energy Sources helps ensure the electricity we need is reliable. Take the energy quiz. Energy lives here. Welcome back. Just want to mention as a programming note, the ceo of life lock, todd davis, will be joining jim on mad money this evening. This, of course, shares up 0. 7 , as more and more consumers are focused on protecting their privacy amid these data breaches. Identity theft a big, big story. Big noise coming from the earnings parade today after the bell tonight. American express and intel just a few moments away. Dominic chu joins us with a little preview. It could have a big impact on markets. Thats right. I mean, when we look at what were looking for here, were going to start off with those name, but one stock i want to highlight is nu skin. I want to highlight this because it plummeted on news that Chinese Government officials were investigating its business practices. The company did acknowledge that the investigation was there after first saying it was just an inquiry. Nu skin is also pressuring fellow multitier markers like herbalife and usana both to the downside. Certainly worth a look there. Also, a tough day for best buy as well. The Electronic Retail reported domestic hold say season samestore sales dropped a percent. Analysts were expecting a gain here. On the flip side, aol moved higher. Tesla also moving higher. The stock is gaining ground for the second consecutive session. Now, like you said, the two companies you got to watch for after the closing bell today, intel. First of all, it expecting to earn about 52 cents a share on profits on 13. 7 billion worth of sales. And American Express expected by analysts to earn 1. 26 a share on revenues of 8. 5 billion. So expect a lot of price action in the after hours session. As of yesterday, worthy of note, traders were pricing in a 4 move up or down in intel shares on the heels of this earnings report, guys. Back to you. All right. We will have dr. Jay joining us on the closing bell panel. Thanks, dom. Got about ten minutes left to go before the close. The dow is off now 93 points. So the declines are picking up a bit. Yeah, the low of the day was 1 105. Maybe were heading back to that. Mt. Rushmore, one of the great signs of democracy. But will democracy always triumph . Big questions being asked on closing bell. We look to the future and what democracy might look like at home and around the globe 25 years from now and what that might mean for capitalism. That as we continue to celebrate 25 years here at cnbc. Stay tuned. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Lease this 2014 cadillac srx for around 319 a month with premium Care Maintenance included. I nethats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. About eight minutes left in the trading session here. It has been a down day today. So one day you got a pretty good rally two days a good rally this week. And two days a pretty good selloff. Here we are down 83 points. Joining me, jj burns from jj burns and company and bob kizer from s p capital iq. I start with you because you follow the earnings so closely. It has been all about the financials this week. A couple of days they loved the financials. Today they dont love the financials. Its important to remember earnings season is just Getting Started. Were currently tracking about 5. 3 . Financials are expected to be one of the stronger sectors. Its supposedly providing market leadership. When everything is said and done, we think earnings could end up between 7 and 8 . Were benchmarking Fourth Quarter against 8 because the pe pendulum is swinging back towards an old normal. Earnings should be 3 higher than where we started. Initially, alcoa, for example, disappointed. That stock is roaring back. Ford is going to start using a lot more aluminum in their cars and trucks. Were starting to see more steady instability of Earnings Growth. We want to make sure were looking for that organic growth. That theres some type of business expansion. But by the same token, we want to be cautious on exactly how those revenues look. Were not just getting earnings for the sake of declining employment or cutting jobs. Are you getting that so far from what youve seen . I think we are. I think that well continue. But its also been only one correction in 2013 thats been about 5 . On average since 1928, weve seen around 3 1 2 corrections annually. So we could have a pause of refreshes. It could be deeper than 5 . So id be a little cautious here, make sure the companies we look at, you know, are really taking on good, positive revenue growth. Are you getting the quality of earnings that you expected here . Yeah, so far, so good. About twothirds of companies are beating, on average. Revenues are growing. We had so many preannouncements, negative preannouncements relative to the number of positive preannouncements. That hasnt panned out so far. Companies are still very cautious about the outlook and theyre managing expectations. But the foundation for Earnings Growth in 2014 will also be revenue growth. Revenues have to grow somewhere about 3 to 4 higher. The companies and markets expect youre going to see topline growth and bottomline growth. Thats fully priced into the marketplace right now. Thats why were kind november a waitandsee mode. Okay. Good to see you both. Thank you. Thank you. Were going to come back with the closing countdown with bob in a moment. After the bell, retailers on the ropes. Sears, jcpenney, best buy. Did you see best buy today . Someone has come up with a list of five things retailers can do to fix all their problems. Well have that list coming up on the closing bell. Youre watching cnbc, first in business worldwide. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment im all about free travel, babe. Thats what i do. [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. Two and a half minutes left. Heres todays trading. Anymore lately it seems a lot of the action occurs in the morning. Then when the european markets close, we get this sideways action after that. Thats basically what happened. We were down 105 on the dow in the morning session. Then this afternoon, weve just gone sideways. The bad and the good today. Show you some of the highprofile stocks. Earnings out from goldman and citi disappointing. Down today. Down almost 2 on goldman. More than 4 on citigroup. But alcoa has been coming back. One trader was telling me if it can close above 11, that might push it higher, even after the disappointing earnings report. Here it is up 4 today. We are above 11. So keep an eye on alcoa. Now were watching for intel and American Express after the close tonight. From intel, theyre expecting earnings of 52 cents on 13. 7 billion. That stock is down a fraction. So is American Express. Theyre looking for a property of profit of 1. 26. Bob, were down two days this week, up two days this week. Put up that Goldman Sachs and citi chart again. This is the power of market cap weighted indexes. Citigroup is a huge, huge stock that moves around the s p 500. These are two of the biggest stocks in the financial group. Because theyre down so much today, theyre dragging down the financial sector. Most of the other stocks are down nearly what those are down. Thats why were seeing the financial stocks. This is a good example of why market cap weighted indices can move around fairly easily. Other than that, fairly quiet day. Vix didnt move much. The volume is much lower than it was yesterday. Thats a good technical sign. Lower volume, down days, higher volume, up days. Horrible day for best buy. Didnt highlight that one, but they didnt miss by much, but their guidance isnt great. Thats a big problem for them as well. If you put up the top ten retailers, you would be shocked about the yeartodate decline. Most are down double digits. There was a good 15 of them down double digits. All right, bob. Thanks very much. So whatll it be . Well have to have a tie breaker tomorrow. Two down days, two up days. What happens on friday . Thatll be determined by the earnings coming out at the top of the hour from intel and American Express. On the second hour of the closing bell with kelly evans. See you tomorrow, kelly. Thank you, bill. Here we go. Welcome to the closing bell. Im kelly evans. Heres how were finishing a tough day on wall street. Take a look across the major indexes with the dow and the s p in the red. The nasdaq, though, managing to buck the trend. Its up about three points to 4218. The dow shedding 62 points. The s p off just a couple to 1845. Weve got a couple of dow components that are going to report any second now. Intel and American Express. So lets get straight to it with todays panel. Joining me now, cnbcs own john ford and Michelle Carusocabrera and cnbc contributor john. Also joining us for more on todays Market Action, brian kelly. A great group. Thank you so much to all of you for being here. Dr. Jay, whats jumping out to you about todays mark . Well, i certainly thought that starting off with such a horrible number, kelly, from best buy and then followed up with the citigroup numbers today, which werent as bad, nearly as bad, of course, as best buy, but nonetheless that put the market on its heels. A lot of folks decided it was enough even to push goldman, which was up about a buck at the time to make them roll over as well. I think people just took advantage of that, of the weakness, the relative weakness and hammered almost everything in that space. Goldman finishing down almost 2 . Just shy of those levels. Citigroup off better than 4 on another earnings disappointment perhaps because of a lot of bullishness. Jp seemed to kick things off. How does the performance of this sector matter for people who are long markets here . We really, really like financials at these levels, especially considering the kind of growth were seeing in private Health Management side of things. Plus, loan growth, we believe, the second half of the year is going to be quite strong. Its unfortunate we had results today that had to come back up against some retail and Consumer Discretionary side of things to put a damper on the market. We believe financials are exquisitely positioned for the next several years. Exquisite. I feel like were describing gemstonine gemstones. Well, the yield curve hasnt steepened like a lot of people thought. That tenyear yield stays below 3 . To what degree, brian, are you depending on that becoming steeper . Are you concerned that hasnt happened . I think if you think about where financials are going and where yields are going, theres a better chance for that the second half of the year, especially as we get better economic numbers. Thats number one. Number two, we think the plan financials is not about loan growth. Its about those big diversified financials. So we think thats the major trend, transactions in this rotation back into equities is expressly profitable for those types of banks. Brian kelly, i want to throw this out there. Its the data point of the day. Black rock year end, 4. 3 trillion in assets under management. That equals roughly a quarter of u. S. Gross domestic product. I just want your thoughts on that fact. Listen, we embarked on an experiment four or five years ago to increase the financial economy. Lo and behold, at the end of Ben Bernankes term here, he has increased the financial economy. Thats whats going on right here. What i thought was interesting on the internals of blackrock is that they were saying theres a great rotation going on but not necessarily from bonds to equities but within the bond market. So im not sure. Were all waiting for great rotation. You know, im starting to lose faith. But kelly, it seems to obvious. Think about it. When Interest Rates are so low and youre an investor, you are desperate for yield. Long time ago, you could just throw money into treasuries and they yielded nothing. Dont do it anymore. Youve got to find somebody to manage money. Makes so much sense that Asset Managers just get bigger and bigger and bigger as people desperately search for yields. Great year for the guy side, right . Great year for people managing assets. We had great performance. Early indications from this year point to something a little more mixed. I wonder how investors should play this. Think about this. In the late 1990s, the average investor account in america had 90 stocks. In ias and Financial Advisers around north america have done a wonderful job rotating people on and diversifying. They could be buying etfs, private equity, float rates. All of those are transactions and very steady eddy businesses. It helps the banks and helps the brokers and helps banks and more consistent and true Asset Managers. Sounds like a lot of up side. The financials are so important, obviously, to Everything Else happening in this market. Were showing a chart of intel. Its earnings are due out any second. Under pressure, john. You want to talk about . They are out. The earnings are out. Looks like the revenue numbers, i believe, beat the bottom line, kelly, the earnings per share was a penny light of what street was looking for. Why were you you like intel, right . I like intel. Whats the case for intel here . How attuned is it to pc demand on kind of a rebound for now versus the secular decline most people believe . I think theyre much more positioned now for tablets, kelly. Thats their focus. And thats where it should be, quite frankly. I like what theyre doing there. I like what theyre doing in wearable tech. John can probably speak to both of those. Thats where i think the future is for intel. Thats what theyre addressing. Well have to see exactly why the bottom line number looks to miss by a penny. But at least thats a miss by my numbers. Maybe its not a miss overall. Well get into that more in a second. Also want to show you American Express. Again, moving lower after hours. Those earnings just out. They are light. Looks as though theyre light on the earnings side, even though beating perhaps a touch on the revenue side. Lets get straight to Mary Thompson with more on that. Hey there. American express earnings light, 1. 21. Analysts looking for 1. 25 there. Revenue in line with estimates at 8. 54 billion. U. S. Card services, this is an area where people key in on. They were looking for u. S. Spending. It accounts for about half of their total revenue. 9 increase in card member spending. That was a little bit better than expected. However, in the quarter, the companys tax rate did increase slightly. Its expenses totalled 6 billion. That was down 8 from last year. Investors should like that news. Again, it appears the earnings are a little light. Im going to dig into it. Back to you. All right, mary. Great stuff. American express moving down almost 2. 5 after hours. Intel moving to the downside as well. Those earnings are out. Josh lipton digging through the numbers. What can you tell us . Yeah, kelly, so the street was looking for 52 cents on 13. 7 billion. Intel delivers 51 cents on 13. 8 billion. Just combing through the product segments. The pc group, analysts looking for 8. 3 billion. Intel delivers about 8. 6 billion. On the data center group, thats chips used for server systems, street was looking for 3. 3 billion. Intel came up light. In their other Group Responsible for chips used in smart phones and tablets, the street was looking for 1. 1 billion in sales. Intel delivers smack in line. So were going to keep looking through this report and get right back to you with whatever else we find, kelly. Josh lipton, very much appreciated, sir. Want to get some quick thoughts here from our own john fort. Looking through the numbers . Well, the guidance, kelly, looks to be pretty much in line. Gross margin theyre guiding to 51 . They had got it to 61 a quarter ago. Not too bad. One thing that jumps out to me about the eps miss, the tax rate was 26 versus 25 , where they had guided. So that might kind of explain the eps miss a bit, though you would hope they build some wiggle room in there. Itll be interesting to hear the commentary on the call, particularly about their switch to new manufacturing processes, how thats continuing to affect their gross margin guidance. But were going to need the data center group, all these Cloud Companies to keep buying servers with intel chips in order for them to power through. Lets get thoughts now from patrick wayne. I know youre just digging through the numbers as well. What jumps out to you . I mean, when you take a look at it, the street was really expecting a very healthy raise. You take a look at the stock just since november, and the stock is up a good 10 , 15 , outperforming the nasdaq. I think that when you look into the pc data points have been better. Investors have been warming up on it. When you look at the actual numbers here, they came in disappointed on dcg. Folks want to invest in cloud and servers and came in a little light there. For the other bullish investors, they look for numbers to go up. When you look at 2014 guidance, they kept revenues and margins flat. I think thats probably the disconnect here. Okay. What about the First Quarter numbers there, patrick . They really guided in line. So when you take a look at the sequential, they came in above on q4. They guided above seasonalalty in the First Quarter. What theyre telling us is theyre off to a pretty good start. The question really comes down to, how strong servers are going to be over the course of the year. Is enterprise pc going to come back . And is this sustainable over time . Patpatrick, we got strunger numbers from taiwan. Im curious where this leaves the sector more broadly. I think the sector is fairly healthy right now. Really comes down to end demand. When you look at the sector, the biggest concern that ive had for many years has been inventory, right. So i think from tsm this morning we heard that the inventory correction is coming to an end this quarter. From intel, were seeing that pc builds are fairly healthy in the q4. When you look at the way they guided q1, its tearily seasonal to maybe a little better. What it comes down to is what China Consumption is going to be, what pcs are going to be, and really how smart phones and tablets go over the course of the year. Okay. Patrick, thank you very much for joining us. We want to get reaction on American Express earnings. Mary thompson, first of all, continuing to look through that report. Mary, what can you tell us . There was an adjustment in the Fourth Quarter we want to highlight. This was for the merchant Litigation Settlement that was announced back in late december. Once you exclude the adjustment, earnings were 1. 25 a share, which was a penny light of expectations. I also want to highlight a comment by the company ceo Fourth Quarter results reflected a healthy increase in build business, both in the u. S. And internationally. Card member spending, both u. S. And international, up 8 , ahead of expectations. Excludeing that adjustment, the Company Earned 1. 25 a share. Back to you. Mary, thanks very much. Lets get reaction to those earnings. David, thanks for your time. What do you think about the quarter . I think its respectable. They had beaten earnings for 12 straight quarters. A penny light is a bit disappointing. I think the more important number is the sales number. They had missed six out of the last eight quarters on sales. Thats going to be the key. Sales are growing between 5. 5 and 6 currently, probably accelerating to 7 over the balance of this year. And that acceleration is going to keep the stock moving higher. A stock that in the last five years has compounded money at 40 to investors. Double the s p, double financials, and a true wealth creator. So i think that the longterm story is still intact at American Express. Still, its fascinating look, you can talk about topline expansion. Its what people like from whether its a macro point of view, better sign of the economy, et cetera. But these companies, one after the other, whether its alcoa, American Express, are not being rewarded for beating on the revenue side. Theyre being punish for missing on the earnings number. In this case, i think the meat on the sales side at first glance over the rest of this quarter will be viewed favora y favorably. The penny miss, disappointing, but i think the market will look through that. And a stock that trades at 16 pe on this years earnings, that is more and more of a payment processer a la visa, trading at 24, 25 pe ratio, can allow the valuation to go higher in American Express. Thats whats going to get the stock price in excess of 100. David, thank you very much for thoughts there. Those shares moving lower by 2 . Just a Quick Reaction here from around the panel. Intel, American Express, two big misses for the dow this afternoon. For the dow and then you also have capital one, which missed by a dime too. I know not a dow stock, but nonetheless. I thought the part that mary highlighted about what the ceo said, 8 spending increase by card members. You dont want to brush over that. Not that mary did. We certainly dont want to brush over that. Thats a positive sign, granted that is not regular america. Thats the upper percentile of america. John fort . I posted a piece of cnbc. Com. What, just in the last two seconds . No, no. His earnings take is already up. Unless emerging markets accelerate more than expected this year, were going to have somewhat of a margin crunch. Its not clear where the growth is going to come from. We know cloud is moving in. But thats not the same as the pc market being healthy. I think, you know, emerging markets helped intel out a lot over the past couple years. That seems to have slowed down. Now were start to be feel it. All right. Im going to be watching lenovo too. See how they react after being up sharply this morning. Anyway, thank you so much. Brian kelly, got to let you go. Well look for more coming up on fast money with brian at 5 00 p. M. So many earnings to digest. Well, far away from wall street, a tragic story unfolding today. Wildfires raging just outside los angeles. Jane wells, just how bad is it . Reporter its pretty bad so far, kelly. Just in the last hour, the park ranger came in here and changed out the very high fire danger to extreme. This youd expect in the fall but not in january. You could see as we look at live pictures fighting this fire northeast of downtown. You can see the smoke pouring across the valley when the fire broke out around 6 00 a. M. Here. Its still at this point 0 contained, zero control. It has charred about 2. 5 square miles, up to 2,000 people have been evacuated, involving 1,000 homes. Only two homes have been burned down, which is really amazing. One person has been hospitalized with some burns. Three people have been take into custody. According to at least one of them, they claim its federal land there, they had a campfire and were throwing paper in it and it got out of control. More than a dozen aircraft from helicopters to the super scoopers, and the good news is at this point, the winds arent too bad and the fire seems to be moving toward a fire break area. That should help the aircraft to get a better handle. One last thing. There is a second fire here in the Los Angeles County area, which has just broken out. Some resources are being diverted to that. We are going to have these. Odd for this time of the year, which is supposed to be the rainy season. Santa ana conditions, dry and breezy, until later this afternoon. Back to you. Jane wells, well follow it along with you. Thank you so much this afternoon. Now, best buy free falling 28 on the heels of holiday sales that apparently deeply disappointed investors. Take a look there. Down almost 29 today. Up next, the top five problems retailers need to fix to turn their fortunes around. Well talk that out with the retail analyst and our panel next. Later, youve heard the adage woman knows best. That could be true. A new study shows females have better results than the average for the second straight year. Yes, the woman behind that study joins us just ahead. Well be right back. Welcome back. We know 2013 will go down in the record books as a dud for many retailers, but some analysts say they can still turn things around, but they have to fix things and fix them fast. A list of perhaps five ways retail can try to fix itself. It includes what . Kelly, lets talk about the big picture first. Its all about redefining the Retail Experience to keep up with changing times. Retail experts weighed in on this very hot topic at the recent National Retail federation convention. So the first fix, make the stores an experience. It is just way too easy for customers to go online to buy things, so if you actually get them in the store, it has to be more than just about a transaction. Number two, think big when it comes to mobile. Dont just limit the mobile Shopping Experience to browsing or maybe buying on your phone. Analysts suggest you go one step further. Maybe an app that gives consumers recommendations based on where they are in the store. Number three, this is a tricky one, but Trading Information for deals. The privacy and Security Issues clearly a very hot topic after the target data breach. But surveys show that people are willing to exchange privacy for discounts. Number four, when you think differentiation, think about it in terms of product and not discounts. The recent Holiday Season shows that big promotions arent necessarily a traffic driver. So experts say focus on making your product really unique, really innovative, not just about being on sale. And number five, this is probably the easiest one,basics. Build trust. A lot of retails blocking and tackling. For more, check out the full article on cnbc. Com. Kelly . All right, sheila. Thanks very much. I want to turn to bill now. You just heard the list. I guess part of the question is this, how transformational do these changes within the Retail Industry today need to be . I mean, it seems as though the obvious moves right now may not be enough. You know, i think youre right. And to that first point about the store experience, i think it goes well beyond the store experience. I just spoke at the National Retail Federation Big show in new york this week. And the buzz on the floor was all about omni channel. It starts well before the customer ever sets foot in a store or visits the site. Theyre getting access to information about retailers through catalogs. Theyre getting emails. Theyre participating in social media. So the retailers that are going to win in 2014 are the ones that are going to understand the consumer, how they interact with all these different channels and optimize that experience. And bill, i want to bring in our panel on this too. We got some shoppers. Were all familiar with retail. What was interesting as well is during the Holiday Season, there was really this sense, guys, that the online webbased applications were changing the game fundamentally. And best buy, have they not now confirmed that . Mobile in particular, i think, changed the game. Best buy less strong in mobile than they are in the web in general. Think had some growth that stood out versus the declines elsewhere. But i think thats an area to focus on. Also, we had weather. Retailers like to use that as an excuse. Kelly, i think for a long time, for decades, for women in particular, shopping was an entertainment experience. You went out on saturday with the girlfriends. You spent the whole day at the mall. As a teenager, you went to the mall because you werent allowed to talk on the phone very much. You wanted to see your friends. Mobile now means you can communicate all the time. You have so many more entertainment options. Shopping has to be more entertaining to compete with all these other things that you can now do enabled by technology. Thats a very open question, right . This means theres got to be a lot of innovation as retailers expeerpt and try to figure out what works. Do you see any signs of whos maybe got it right or what the next wave is going to look like . When you guys go out, any sense i thhear what hes talking about. I shop a lot at j. Crew. I dont have to go there anymore. They email me ten times a day. I know when they have new product the second it happens. The other thing is, i never pay full price. I always know theres going to be a sale. Heres what i wonder. So a j. Crew can maybe reinvent itself. What about Shopping Mall operators . They have to do the exact same thing retailers are doing. I think everyone should look to amazon from this past Holiday Season. Amazon at some times was up 20 in their traffic this last hold s Holiday Season compared to 2012. The ones that are going to win this coming year are the ones that really spend time to understand whats the best way to entertain that customer, to get them in the store and keep them there. Brian, not counting channel checks, when is the last time you were counting in the mall . I didnt buy a single present this year in a bricks and mortar store. Not one single present. I got a lot of deals on my phone, the mobile side. But i didnt shop on that either, kelly. I bet most of us didnt. But instead, that caused me to go to the website and buy it online. Got it. Brian . After christmas. You went into the mall . Well, right before we went on vacation. I think you have to think about what the main core problem is in retail. Walk down 7th avenue. Theres too much capacity, right. Selling the same stuff. If business is going to be condensed and personal income is going down and personal consumption expenditures is not increasing, you have to appeal to the consumer in a special way. Exactly what michelle was saying. Whats the scarcity proposal to retail right now . Again, theyre selling the same tshirts. You have to be it has to be something elegant, something different, something that you cant get anywhere else. Thats a major structural problem with retail in north america. All right. Got to leave it there, guys. Thank you so much. Bill, appreciate your time. Thank you. Have a good one. What happens on main street may not stay there. Coming up next, the ceo of Regional Bank bb t riding better than expecting earnings. Climbing 6 in the face of falling revenue and lower margins. Hell explain why hes so bullish on loan growth this year. You wont want to miss it. Well be right back. [ male announcer ] meet mary. She loves to shop online with her debit card. And so does bill, an identity thief who stole marys identity, took over her Bank Accounts and stole her hard earned money. Unfortunately, millions of americans just like you learn all it may take is a little misplaced information to wreak havoc on your life. This is Identity Theft, and no one helps stop it better than lifelock. If mary had lifelocks bank account alerts, she could have been notified in time to help stop it. Lifelock has the most comprehensive Identity Theft protection available, guarding your Social Security number, your money, your credit, even the equity in your home. You even get a 1 million service guarantee. Thats security no one can beat. Dont wait until you become the next victim call the number on your screen and use promo code notme for 60 days of lifelock Identity Theft protection and get a document shredder free. Call the number on your screen or go to lifelock. Com notme. Welcome back. Todays after the bell action on wall street has a good chance of moving markets and your money tomorrow. Lets get a round up. The after hours, certainly action here. Were going to begin with intel, down in the after hours session. It reported Fourth Quarter earnings of 51 cents a share. That was a penny shy. Revenues also came in just a bit higher than expectations. Also, American Express reporting Fourth Quarter earnings that missed street expectations by a penny. Revenues coming in as expected. Theres a theme developing here. Capital one earnings coming in 1. 45, about 10 cents light of what wall street was expecting. Revenues came in here a bit higher as well. Well end here on food distributor sysco down. Florida and other states are reviewing its proposed deal to buy rival u. S. Foods. Theres always those Regional Banks which reported better than expected thirdquarter earnings as its revenues were in line with fraforecasts as well. Again, bb t, one of those big Regional Bank movers in todays action. And staging a lateday comeback too. Thank you, dom. Lets get more now on bb ts numbers. Joining me now is the ceo kelly king. Great to have you here. Thanks. Glad to be with you. What can you tell us about, look, your revenue clearly declined with mortgage banging. But Community Banking, tell us about the strength that you saw during the quarter. Well, our revenue was actually up for the quarter, but youre right, it was down year over year because of the decline over that period of time in mortgage. But we did have a very Strong Quarter in terms of Community Banking. You know, we have a really unique Community Banking model where we have 23 regions, where our regions have an awful lot of autonomy and theyre very, very close to their clients. That produces very high quality. So we were able to see a lot of activity, particularly as we came into the end of the Fourth Quarter. The first part of the Fourth Quarter was frankly very slow, but it started really picking up in momentum as we headed into the december period. A lot of activity in terms of small business, equipment finance, commercial real estates coming back strong. So just a number of areas are pretty strong now. I want to ask you about those in a second. First, you vetted a portfolio of texas locations as well. Is that because you want to generally grow the franchise, or because you see texas in particular as having strong fundamentals . Well, we do want to grow the franchise, but youre right. Texas is just such a unique opportunity for us. Its a huge state. 26. 5 million people. Were just Getting Started there. We started in 2009 with the colonial acquisition. Weve added 30 commercial new branches this year. We just did 21 with the city acquisitions. So were up to 80. Our Value Proposition plays well in texas. And its a growing state. Its a big opportunity for us. And i understand you like some of the other Regional Banks that have reported. Commercial and industrial loan growth in 2014 as well. I wanted it ask you, though, interest margins. Kind of the bread and butter of the business. Down year on year, and even as you see opportunity and expect to grow loans in those important areas this year, what do you think is going to happen with regard to your margin . Well, as you know, kelly, there are a lot of factors that impact banks margins. So the biggest driver over the last year for most banks has been, you know, a relatively flat low yield curve and higher priced assets running off. Now, though, looking forward, we see the probability of a steepening yield curve. Its already happened over the last three months or so. So thatll be a positive. I think youll see a lot of increased mix in loans thatll have higher yields thatll be a positive. Cost will be relatively flat as we go through the next several months. So i think youre seeing at least for us, kind of a bottoming out or a flattening of the core net interest margin. With upward pressure through the next several quarters. What about pay manager out a dividend . The fed notably, when it conducted its last round of stress tests, didnt approve of the plans you guys had at the time. Do you feel as though thats because youve been critical of regulators over the years, or are you doing things to adjust the business to try to make it easier and perhaps bring forward that timeline of returning more capital to shareholders . Well, i think there are a number of factors. I, myself, have been critical over the years about regulations versus regulators. I think a lot of times people tend to bash the regulators, and theyre just following the law. The regulators have actually done a pretty good job. So the issue with us was, one, you know, we cant really discuss the qualitative nature of why we had an objection to our capital plan. You will recall, though, kelly, we had one of the best stress tests. Our financial numbers were great. We have to think about the level of dividend. Our dividend level is already very high. We kept it high through the whole recession. So, you know, well need to be relatively conservative in terms of dividend increases just because its already so high. And last question, kelly, do you feel as though regulation is standing in the way of you guys making more acquisitions in the near term . Well, i think today were all in a bit of an unusual place in terms of being able to do acquisitions. There are a lot of rules that are still not yet settled down, like the capital rules, the liquidity rules. Bankers on the acquisition side are very concerned about doing acquisitions because of, you know, frankly issues of the companies that might be acquired in terms of regulatory compliance. Theres a lot of unsureness with regard to what kinds of acquisitions the regulators would approve. So today its a little bit soft, but i do think its getting ready to pick up. I really do. All right. And you feel good about 2014 it sounds like. I do. Im very bullish. You know, i think weve had a Pivotal Point in the economy. Been kind of a seat change. A lot of positive things looking forward. Its not going to be, you know, bullish, period, but its going to be better. Kelly king, thank you so much for joining us this afternoon, sir. Appreciate it. Thank you. Good to see you. Youve heard the term a womans got the power. Well, how about a womans got the profits. A new survey showing women outperform men when it comes to managing hedge funds. The woman behind that report explains why next in our panel. And is this bank ceo taking it too far . Guess which company is entertaining his executives by dressing in drag. Stick around. The big reveal at the end of the show. Female announcer get beautyrest, posturepedic, female announcer even tempurpedic mattress sets, at low clearance prices. And through monday, get three years interestfree financing on selected models. Dont miss sleep trains year end Clearance Sale. Your ticket to a better nights sleep welcome back. A new study showing the hedge funds ran by women outperformed s p 500 and the Hedge Fund Index more broadly. This is the second year in a row thats happened, yet very few investors seek out women to invest their kelly, great to see you. You know, so what is it you think that accounts for this gap in performance . You know, this is actually the Third Annual Survey weve done, and the survey actually started with 82 women managers who were in hedge funds. And i think as we looked at it as what was the change and what made the difference of why they were doing so successfully, part of its because women run managements tending to be smaller. Theres also a consideration they perhaps arent more risk averse but more importantly possibly just more risk concerned. If you dont mind, i want to bring in the panel. Michelle, what do you think . Im deeply skeptical. I went to a womans college. Believe me, im sympathetic to this whole notion. I dont know what were trying to suggest here. Why did you pick a 6 1 2 year time frame for performance . When i see that, it seems really suspicious to me. The traditional one is five years or ten years. If you did just six, would they underperform . If you did just seven, would they underperform . The index was actually done out of the hfrx index. It was done for a period of time where we could get as much statistical knowledge. Its not that we reduced it so we were only able to get a certain amount of information. Its getting enough women into the group. Dr. J. , you going to have your wife manage your money now . She would tell you shes not good at that. Shes a judge. Shes good at judging. She does judge me all the time. But kelly, id love to ask you, when you mentioned that theyre managing smaller amounts of money, i know part of your survey is they just have a hard time attracting the bigger dollars as well. When you match the women managers up against the male managers of the same size, do they outperform or is it the same . In other words, you cite the fact that smaller amounts of money are somewhat easier to get in and out of without impacting the marketing. If you match these 82 women, lets say theyre managing 50 or 100 million, against 82 men managing the same, do the numbers equalize . You know, we actually didnt look at that. I think the piece that was the most important from the investor side of how much theyre managing is the fact that most women managers are still finding their assets to come from either individuals or family offices. So when you start looking at the fact that most of the large money in hedge funds has really come from pensions and endowments and they arent able to put that much money to work at a time, so the women managers but do you understand the point of his question isnt the point of his question is excellent, right . It may just be that theyre managing small amounts of money, so it may have nothing to do with gender. But you dont know that at this point, right . I dont know that we specifically know that, but i think what we can tell is that weve got, you know, a group of women thats outperformed both the hfr index and the s p for a 6 1 2 year period and theyre not getting as much attention as theyre counterparts. John fort . It serves the purpose of pointing out if you hnadnt considered a woman fund manager, it makes sense. It seems to me, you dont get to pick a basket of 82 people to give your money to. You have to pick one. So i wonder how these numbers help someone make that decision. Because you might pick the worst performing man or woman in the group, and then you lose either way, right . Oh, absolutely. I mean, you can pick the worst performing or best performing person, gender neutral. I think this gives the woman who have outperformed perhaps an opportunity to go out in front. Nobody sets out to say, i want a woman to manage my money. I want the best person to manage my money. Right . Absolutely. So if she has good performance, shell attract money. Maybe thats the point. Thats what people should think. But yet, when you look at the title of our report, which says its a marathon, not a sprint, the frustration of the 440 people who responded to the survey said our frustration is the money is not coming in as quickly as what the returns are. And how do we get that piece going . And you know how many Hedge Fund Managers tell me the same thing . Men are desperate for money too. Kelly, we thank you so much. We have to leave it there. A fascinating topic to explore. I wonder if this doesnt help some women market or attract money. Isnt that two guests named kelly in a row . No comment. There was an evans last hour too. Our website is burning up. The top stories on our trend lest next. Plus the future of democracy and capitalism across the globe. Is it as bright as you think . Well hear from a wellknown futurist whos not optimistic. And a study showing facebook is losing its cool, losiing younge users. Your thoughts later on. [ male announcer ] eeny, meeny, miny, go. More adventures await in the new sevenpassenger lexus gx. Lease the 2014 gx 460 for 499 a month for 27 months. See your lexus dealer. I nethats my geico Digital Insurance id card for 499 a month for 27 months. Gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. [ male announcer ] start the engine. And shift through all eight speeds of a transmission connected to more standard horsepower than its german competitors. And that is the moment that driving the lexus gs will shift your perception. This is the pursuit of perfection. Welcome back. Apparently some snow outside cnbc headquarters earlier today. Not taking the heat off the website though. We have a look at the hot list. You know, i got a real barn burner today for you. We are leading right now the ugly battle over Police Pensions. People are diving into this story. Its acquiring readers at about the rate of 60 people a minute. What it is, okay, we know about all the cities having budget problems and the politicians there talking about were going to have to cut back the budget. One thing we might have to hit are the Police Pensions. Well, the police, apparently, we have reports that traffic stops of politicians, parking tickets for politicians. Its a fascinating read. Dont get my grandfather started. Every time Police Pensions come up, i get an earful. You know, its a tough situation. People were promised, yet, you know, the bills are due. Anyway, number two, were always accused of being negative on the website. We do negative stories. No, no. We got one. The warden professor everybody follows was on our air earlier today. We wrote up his interview. He says, dont sweat it, were going to hit dow 18,000 by the end of the year. Sounds about right. Although he says there will be a little wobbling in between. My third hot story today, target. We have some details about what was in a report, apparently code from russia. Target has been a big puller on the website all week long. We got the details right there on the website. Yeah, some troubling stuff in that report. Thanks very much. People should check it out if they havent already. Are capitalism and democracy in danger . Coming up, well hear from a futurist about those could bring. And a new report says facebook is losie ining millions of user. We want to know how you think facebook can get its cool back. Your thoughts when we come back. Customizable charts, powerful screening tools, and guaranteed onesecond trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] afghanistan, in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. We still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness if you qualify, and new car replacement, standard with our auto policies. So call Liberty Mutual at. Today. And if you switch, you could save up to 423. Liberty mutual insurance. Responsibility. Whats your policy . Welcome back. Weve got some news. Want to send it to dominic chu here for a market flash. Sprint and tmobile audz. According to a report from dow jones, sprint has received proposals from banks for financing a possible bid for tmobile. This is according to sources at dow jones. Roughly paying about 31 billion for tmobile overall. But the talks are complex. Sprint is trying to weigh whether to bid regulatory concerns an issue. The tmobile u. S. And sprint shares are on the move in the afterhours. Dom, thank you very much. Keep following that story. Cnbc is turning 25 this year. And well be honoring that milestone, featuring a monthly report on how the world may look 25 years from now. We are speaking to a futurist who says democracy and capitalism may be dwindling globally. I spoke with a marketing guru. Does intensive research about global trends. The rise of the arab spring has led to a lot of speculation that were beginning to see a wave of democracy breaking out in that part of the world. It hasnt happened. And he says its not going to happen. Im an american by choice. But i have bad news for americans. American democracy in 25 years will not be the way of functioning around the world. Im in dubai. They tell us, your american democracy, what do you mean . Pornography . Samesex marriage . Violence all the time . Now, free drugs in colorado. Is that what you mean . We dont want that. So, while we associate democracy with freedom, a lot of people associate democracy with chaos. And he says democracy never arrives in china. Do democracy and capitalism go hand in hand. Theres an experiment under way in china, whether more Economic Freedom leads to more democratic freedom. They seem to be mutually beneficial or not. They kind of build on each other or dont. I think well wait and see at this point. Maybe my biggest takeaway from that is our marketing is terrible. To have all those things and the nsa. Oh, my goodness. We need to work on that. Somebody. Youre so right. Pornography. Exactly. I know. What do you think . Im a flagwaving, love my country patriot. I love our country. I believe that we have a manifest destiny. I still believe that. And what the rest of the world is its one thing to love the country. And another thing to say we have a manifest destiny. They go hand in hand. Look at whats happened in the last five years. With whats happened with the American Economy and the emerging markets economy in europe. Thats where the problems are. America was humbled between 2000 and 2010. We got our corporates straight its one thing to say we have problems. And another to suggest we should be doing something what is manifest destiny implying . Democracy elsewhere . Again, im not saying that we have to be the worlds policeman or anything like that. What im saying is, i still believe that this is the model. Weve had some tough times. But were starting to turn the corner. And people around the world are missing it. The hate america train is over. We are unique in that we believe humans have certain inalienable rights. You are born free. Theres a universal declaration of human rights. And we started first, right. And theres parts of the world where they dont believe that, kelly. And we find that hard to understand. I like thinking about the world 25 years from now. Its one way to help put todays moves in perspective. Thank you. Your tweets on how facebook could get its cool back are m coing up next. And a big reveal on which ceo dared to perform at a company function, in drag. Dont go anywhere. Well be right back. [ male announcer ] this is the story of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Welcome back. President obama, earlier today, suggesting facebook wasnt cool anymore. It seems 11 million teens agree with him. With that key teen demo leaving facebook, we want to know how facebook can get its cool back. You tweeted, heres some of the standouts. Young users, indeed. Im out and im just 60ish. Myspace was a particular space for teens. Then, they migrated to facebook. Soon, teens will migrate again. And facebook should turn back time and not be a publiclytraded company. Are publiclytraded companies not school . Thats a good question. Weve been showing you pictures of the ceo that took to drag to pump up his troops. If youre thinking jpmorgan, guess again. If you put your money on lloyd blankfein, absolutely not. Its abn ceo gerrit zalm. He dressed up as priscilla. And he knows a little about the business. She claimed to have run a brothel. And banks like brothels, strive on good customer service. What about good p. R. . I think its great. I think its terrific. I think context is everything. If any employee of that bank turns out to have patronized a brothel, this is going to be killer video for them. Who knew that the dutch bank ceos could have such fun as these kind of, you know, company moments. Im not surprised. Youre not suggesting the dutch are boring, kelly . I dont know what im suggesting. I dont know what to make about the whole thing. We didnt want to leave you guys without a little look of what was happening. Thank you to the panel for joining me. Its been a great discussion today. Fast money is coming up in a couple seconds. Melissa lee, what is happening . From brothels to robots, kelly. Youre probably thinking, i wonder how many Global Industrial robots there are, right . Exactly. Yeah. Recordhighs. Did you know that . Recordhighs. Thats not going to help, melissa, with the situation we talk a lot about wages, about employment. Exactly. But it will help manufacturing. And it will help the makers of the robots. Were going to give you the rise of the machine trades. All right. Fast money starts right now. Live from the Nasdaq Market site in new york citys times square. Our traders are tim seymour, brian kelly, karen finerman, and guy adami. We have someone who says buy best buy on the dip today. It crashed after reporting ugly holiday sales numbers. Its the latest in a series of numbers that have dropped bombs in the past but years. And stocks have suffered because of it. Lets start off with best buy first. This is the fourth