Transcripts For CNBC Closing Bell 20140331

Psychologically probably is worth trying to ramp things up in the end. Absolutely. Its the charge heard around the world. The stock market is rigged. Author Michael Lewis asserting that to kick off his book tour. We have more reaction. Well examine if average investors would help or hurt themselves by avoiding stocks because of what lewis is saying. We have plenty of reaction coming up. And its dday for obamacare signups, but healthcare. Gov has been sick on and off all day as in it hasnt been working on and off all day. Well have the latest on yet another embarrassment for the new Health Care Law and were going to talk with the ceo of a hospital care company. Theyre the largest Psychiatric Hospital owner in the land about the impact it will have on his business, on obamacare, and on your care as well. Very instructive. As we head into the final hour of trade, lets look where we stand across the markets. The dow is up 133 points. At this point its only about 120 points off its record high close there. The nasdaq, the index thats been hit hardest this quarter, is outperforming today, up 48 points. It only needs 21 here to be in the green this quarter. The s p 500 meantime, take a look at this one, up 15 points to 1,872. That means we are only 6 off the closing high for this index. Yes, maam. Lets talk about a lot of things coming up in the closing bell exchange. We have sam stovall with us. Tim leach, marty patel, Steve Liesman is with us, so is Rick Santelli. We are ready to go here. Steve liesman, i will start with you. We havent mentioned Janet Yellens speech today. She made it clear exactly how dovish she is, didnt she . Which is a key issue for fed and fed policy and what she said is that theres an awful lot of slack in the labor market as far as shes concerned. She mentioned people working part time for economic reasons, people unemployed for longer than six months. She talked about five different metrics and if there was any doubt how dovish she was on the issue of labor. I think the thing that moved markets was her saying that this required the fed to remain easy for at least some time. Didnt walk back the sixmonth comment, but in a subtle way suggested maybe it was longer than six months. Also, bill, taking a very populist tact for a fed chair. She mentioned individual americans by name and their experiences in the job market and later in the day maybe we can bring you this after her speech, hopefully well be able to bring you this video later, she put on a welding mask as she toured a Vocational Training facility. Wow. Thats usually a move is she running for office . I was going to say the joke is shes the treasury secretary. Rick, the interesting thing though, david, who we will have on the hour next hour, said its one of the most dovish speech hes heard from a fed official. Look whats happening in the treasury market which seems to be shrugging this off. Is it all about the jobs report friday . Whats going on . Well, it didnt shrug it off entirely. We had a little curve steepening because the part of the curve most affected by her First Press Conference was the short matures like 3s and 5s. Theyre the maturities that are down for the day. The long end is unchanged. Thats only a little effect. Steve called it populist, people like larry kudlow call it more bureaucratic in nature. But i guess id like to have a debate. Do i really want a fed official, the highest fed official, having anecdotal stories demonstrating slack in the economy . Its incongruent with the notion that somebody needs to be a banker of the country and be an adult. Im not so sure this is my cup of tea. I dont know how if theres slack in the economy because one of her examples was a clerical worker in health care, been out of work two years, how are zero Interest Rates or remnants ofq e going to better equip her for the job market . It just doesnt make sense to me. Rick, without defending the idea, let me just tell you whats behind the idea but you are. Well, ill just tell you whats behind the idea which is that i think the fed feels its lost the political battle with its policies, and i think i thought the feds apolitical, steve. Let me finish the comment which is i think the fed knows it doesnt make its policies in a political vacuum and that one of the things it needs for the independents to make its policies is to at least not have extreme political opposition to what it does, and i think theres a sense and bernanke had this sense as well and tried to do something about it, which was to at least make people clear why theyre doing stuff and yellen promised this in her nomination hearing that she would not forget that there are individual people behind the statistics. Lets move on and talk about todays market and the implications for the Second Quarter. Sam, youre the stats guy. Were essentially flat for the First Quarter. What does that mean for the rest of the year do you think . Well, i think so what we have to remember is in the summertime months of the Midterm Election year, traditionally the market goes through a bit of a softness, its vulnerable to selloffs. Going back to world war ii in general what we find is that this Second Quarter is the weakest by far on both a price change and a frequency of decline, and small caps are even exemplified of that being a greater declines than normal. You wouldnt be surprised if we see a typical spring selloff. No, i would not. I would welcome it. Weve gone 30 months without a decline and the average is 18 months. While i believe the markets will be up a year from now, but i think it will be a rocky road along the way. Tim, do you share that view . How much faith do you put in the Midterm Election cycle as a market gauge . Im not as compelled, kelly, by the midterm cycle as much as im looking for this year to really play out with a stronger economy in the Second Quarter. The stronger economy in the Second Quarter is going to drive stronger earnings, and thats whats really going to fuel the stock market from here is more from the fundamentals. I think that this stock market thats been relatively flat for the First Quarter is primarily because the market is anticipating the eventual cessation of qe3 sometime later this year in the fall and is trying to figure out whether the u. S. Economy can stand on its own two feet postqe3. And, tim, theres also been two things that have made it difficult to figure out what the situation is, and that is the weather on the one hand and the Affordable Care act on the other. Were seeing huge impact in the data from both of those things, and i guess its only going to be as we start to get data from the next couple months well be able to determine that. I think thats right to a certain extent, kelly, but i really do feel that the weather has been much more of an impact on the fundamentals than the Affordable Care act. I think the Affordable Care act is certainly at the top of the mindset of everyone in the u. S. But look at the data on Consumer Spending and personal income. Theres a huge effect. If you look at the january figures, and february was close, but i mean a lions share of the gains in income and in spending were because of health care and they were related to some of the outlays for the Affordable Care act. True, very true, but id say that the massive slowdowns that we saw across many, many sectors of the u. S. , including housing, which is so important, seemed to have had a much bigger effect due to the historic weather conditions that weve had. I know you managed both equity and fixed income, what kind of a portfolio would you see going through . If youre worried about the stock market, would you put some more money into fixed income right now or what are you doing at this moment . I think we can wait a little bit. I think that the market might be disappointed with growth for the First Quarter when its reported. It may turn out it wasnt all weather related or onoffs. So i think we might have a readjustment in the equity market to lower levels which would be an attractive point. I think over the years stocks will do better than bonds but the total return for stocks might be modest, in the midsingmid single digit area unless we have an acceleration for growth and the jury is out whether we will have that strong ak sell raths a lot of people were looking for. If you were to invest in fixed income, where would you go . I think high yield is still the best part of the market to be. I think its going to be another good year for risk takers. The yields are pretty low. 4 to 6 is where the high yield market today is. Its remarkable. But defaults are very near zero, so it hasnt been a market thats had a lot of principle losses. So i think for that premium over treasuries we can absorb any increase in treasuries if they occur in the immediate area. Otherwise i think we will be able to keep that extra yield n and at least learn more from treasury grade. And im interested in your thoughts on janet yellen. Tim, you first. Well, i really see janets comments today as really as being an outreach to the common man. I think that this is really historic though. This is a first, for the fed to actually be posturing to try to educate the population as to what their strategies are about. But i do think that its an effort towards that mass understanding of what is driving the fed to keep rates as low as they are for as long as they are, but i think that, you know, this obviously has been at least in my view has been a big reason why the market has been fueled today is with that kind of a promise that the fed is going to stay in longer. About 50 points on the dow is what art cashin said. Weve also had the fact that geopolitically things have been a little quiescent. Margie, whats your take . Every time we have a new fed chairman, it takes a little bit to get to know their personality and their way of expressing. I think she has a different style but shes been very collegial in her work at the fed. I dont think she said anything new. I think the six months is really perhaps a rolling six months rather than a sixmonth specific time frame. So i think well have to get used to how she communicates with us. All right. Thank you, folks. Nice to see you all. Thank you. Thanks, guys. Happy end of First Quarter. Thats a holiday. 50 minutes left in the trading session here. The dow is up 135 points. Was up 157 and of the major averages it looks like it may be the only one that finishes negative for the First Quarter. The s p and the nasdaq are both positive for the end of the First Quarter. The gm scandal deepening. Well have the latest developments and preview mary barras testimony scheduled for tomorrow. Well have live coverage of the testimony tomorrow p. M. Also ahead, more Technology Glitches on the obamacare enrollment website as the signup deadline looms ever larger. Well have the latest figures and speak with universal Health Services ceo about the impact the president s Signature Health Care Initiative could have on what you pay and how much care you get. Plus the stock market is rigged. The United States stock market, the most iconic market in global capitalism, is rigged. Author Michael Lewis lambasting High Frequency trading and sending shock waves from wall street to main street with charges most investors are getting ripped off. Well sort out fact from fiction. Theres larry kudlow. Ready to go. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefull. With investment information, risks, fees and expenses first day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. It is tick tock time on open enrollment for obamacare. The deadline to sign up is tonight, and, of course, of all days users have been experiencing glitches on the website. Bertha coombs has the latest developments and the enrollment numbers now for us. Hi, guys. Less than nine hours on the east coast, less than 12 on the west coast and a record crush of lastminute enrollees. About 1. 2 million this morning alone on healthcare. Gov and its caused the federal exchange to cause a few hiccups. Nothing like six months but the site was down early this morning and for a time was unable to take new applications because of a software glitch. But those who try to get on before midnight local time today will have at least another week to get through applications on the federal exchange and pick a plan. The Obama Administration is poised to top the revised target of 6 Million People signing pup a big question, how many of these procrastinators are young and healthy and how quickly can they assess whether theyve priced these plans correctly . The whole numbers game for them is determining what do these new members look like, how much are they going to cost us in terms of medical care, and how do we factor that into our pricing for next year . Well, insurers have been among the best performers in the health care sector, up 7 . Investors encouraged by the strong numbers and more benign Medicare Advantage cuts for 2015, but that clock is ticking. Back to you. Bertha, thank you. Our next guest can tell us exactly how the new Health Care Law is working on the front line for hospital patients. Yes. Joining us now is allen miller, chairman, president , and ceo of universal Health Services. Welcome to the program. Welcome, sir. Whats the biggest impact youre expecting as this legislation as the open Enrollment Period is about to well, maybe about to come to an end . Well, were looking forward to more patients and were looking forward to a reduction in bad debt and that seems to be happening. I only have twomonth data to talk to you about, but the trends are good. It looks like selfpay and the charity care are down, and more people are being enrolling in medicaid who had not had insurance before. So i find those trends to be encouraging. So just to be clear even though this coverage hasnt begun yet, were just talking about people signing up for plans, youre saying from the Medicaid Expansion piece of this, which is a big piece, youre already seeing an impact . Yeah. Were seeing Medicaid Expansion, were also expecting and seeing a reduction in the selfpay and the uninsured. So the trend is good. Were seeing signs of that now, and i think it will increase. Obviously, the way that this thing was put together and put in place had a lot of glitches, but ultimately those will be worked out, and so 6 million is short of 7 million but were encouraged. And another thing yes, you like the plan because it will help your company, but youre not enamored of how it started, but you think more people will actually pay their bills now than the past. You dont have to go chasing after patients to pay their bills. Why is that do you think . Well, theyll have coverage. Before the people did not have coverage. That was called a selfpay, and some paid and some could not pay. Now they can be registered, they can buy a plan, they can be subsidized. All of those are good things, and as a matter of fact, now that the election is starting to appear, the fall election, the democrats have come out with another plan which is another to add to the others which has lower premiums, a little bit higher on self pay. So thats a good thing, too. Were starting to see some moderation, some changes in the original plan which was not all that well thought out. Alan, what can you tell us about the cost because thats ultimately what this is going to come down to. What kind of changes are you seeing and incentive changes are you seeing within your system for the delivery of care . Have you seen costs come down . If so why and do you expect that to continue . Well, we are working at being efficient, but i think the big thing is the cost of insurance and with three plans and now theres proposed a fourth plan which is a copper plan which is an even lower cost plan for the insured, so i think thats very positive. If they but for the actual for the services youre delivering, has the cost there come down significantly and if so, do you expect that to continue . Well, we are working on reducing our costs, but weve been at it from the very beginning to reduce costs. I dont know that the plan will reduce our costs. I think thats are internal and its a question of how good our operation is, which we work at, and im very encouraged by the first two months of data. Mr. Miller, good to see you. Thank you for joining us today. Youre very welcome. Alan miller, really appreciate it. Weve got about 40 minutes left to go until the close. Were seeing a rally across the board. The dow is up 134, 15 for the s p and the nasdaq. A little come back for whats been a tough quarter. Mounting pressure as mary barra prepares to testify on capitol hill tomorrow to explain why it took so long for gm to address the ignition switch problems linked to 13 deaths. We have new information from a major auto supplier that could make her task a lot more difficult. Well have the latest developments coming up. Plus, Michael Lewis new book alleging market rigging by high speed traders sparking quite the discussion. A former lawyer saying regulators just cant keep up with technology. But how do regular investors really get affected by all this . A free markets fair markets discussion coming up. Must be larry kudlow coming up. Ng up. Geico motorcycle. See how much you could save. Welcome back. Green arrows on the final day of the quarter. Seema mody rounds up the movers for us. A lot of big movers in health care. Lets start with amgen. Shares moving higher after a trial showed its new cholesterol drug was shown to lower bad cholesterol by as much as 66 . Switch over to biogen advancing after its hemophilia was approved. Teva pharmaceuticals rose after the Supreme Court agreed to hear its appeal. And netflix continuing its fall. The stock is down more than 20 from its closing high of 454 a share that it reached on march 4th of this year. This as competition intensifies as more Companies Look to get into the streaming video arena. And lastly General Motors losing ground. Gms Ceo Mary Barra will testify before Congress Tomorrow in the first public hearings on gms handling of recalls related to faulty ig figures switches. Bill and kelly, back to you. Thanks very much. Are we going to do this now . A few minutes ago you heard Steve Lessman mention a new adventure for fed chair janet yellen. The new Federal Reserve chair lets wait a minute. Shes now going to be seen donning a welders mask as she watches a welding student during a tour of job Training Programs at city colleges of chicago. There she is. That is the chairman that is the chair of the Federal Reserve. Our new populist chair of the Federal Reserve. And steve was pointing out in her speech today she mentioned, which is unusual for a fed chair, she mentioned anecdotes about individuals who have been affected by the slowdown in the economy who are unable to get a job. It was a very unusual speech, very dovish speech, but also very unusual for a fed chair to get that deep into the weeds about the economy. And keep in mind generally speaking the feds Communications Policy is something janet yellen has had a hand in over a period of many years. So perhaps shouldnt be that much of a surprise now that she has the chair position. She might look for other innovative ways to take the feds message to the public and were seeing one of them. Back to General Motors down 15 this quarter as new information surfaces about its faulty ignition switch scandal. Yes. Eamon javers has the latest developments outlining what Ceo Mary Barra might expect when she takes the congressional hot seat tomorrow. Do you think its going to be a nasty. It will be a tough day for General Motors on capitol hill. This is the kind of scandal voters can really understand. It affects potentially a lot of people. We now have some sense of exactly how mary barra is going to handle that tomorrow up on capitol hill because weve got what her prepared testimony is going to be. Take a look at just what shes going to say tomorrow. Shes going to say, i cannot tell you why it took years for a safety defect to be announced in that program, but i can tell you that we will find out. She also is going to say, todays gm will do the right thing. That begins with my sincere apologies to everyone who has been affected by this recall, especially to the families and friends of those who lost their lives or were injured. I am deeply sorry. So, guys, you know that in cases like this theres often a debate about whether the ceo should apologize personally. Clearly gm has decided that mary barra should apologize personally here. Were also going to see some of the family members of victims of this ignition switch malfunction on capitol hill tomorrow so we can expect an emotional day up on capitol hill and lawmakers really probing for some questions here as well. Thanks very much. Is the constant drum beat of disturbing news out of gm giving shoppers pause . Lets bring in andrew keen, founder of keen on the market. Com and itie. You remain optimistic they will pull through. I would agree that the risk of shortterm market share losses have increased with the escalation over this past weekend. We have to keep an eye on that. We look at past recalls, usu usually. In the last week of march, the last week several perception metrics for gm improved from the third week where they took a major dip. A lot depends on what will happen tomorrow, but typically we dont think these types of share losses in the near term typically sustain with recalls. If you look what the stock has down. You mentioned down 15 . It seems to price a significant share loss already. Andrew, thats whats so interesting about this. There have been a number of high profile examples of companies dealing with huge legal issues that carry on for years and yet it doesnt seem to be reflected in their share performance. Gm, thats not the case. This is clearly weighing on the shares. How much downside could there be . When you said earlier that they were going up across the board or going up in every stock but gm, gm is down in the markets hitting new alltime high. The stock is down 17 this year. It looks really weak. The testimony gnome will be very important. I think gm is headed lower. They have auto sales tomorrow and i dont think the auto sales number will be good as well. If it holds 34 it has a chance maybe in the longer term but in the short term i think its headed lower. You dont buy the notion that italy put it, that the bad news is already in the stock. Absolutely not. You dont know how many more cars this could be in. The ignition switch could be in so many more cars and we could see more recalls in the future. Andrew, just to be clear, how much so 15 move to the downside, thats a big move. Were talking billions in market cap. So, you know, is there a way of quantifying their exposure generally . I dont think so. I mean, you cant quantify it if you dont know the factors involved. The factors are the engine switch could be in so many different cars we dont know about. We could see cars three months down the road with recalls. You could see more injuries. We have a cold winter as well. Thats going to hurt the auto sales as well. To quote former defense secretary don rumsfeld in a different context, we dont know what we dont know. Doesnt that add risk to this stock right now . It does. The risks we dont know what happened in the events leading up to it. In terms of the point there could be a lot of other recalls. Gm has announced a lot of new smaller recalls over the past few weeks. They seem to be very proactive in trying to get any quality issue out there as soon as possible. Toyota lost over a point of market share when they had their recall issue a few years ago. If gm were to lose a point of share, its about 50 cents a share in earnings per share and the stock has fallen by much more than what that has implied. Theres a lot of uncertainty in the near term going to the recall hearing but to say theres other vehicles out there with these i mean, gm has been very proactive in announcing additional recalls and theres no evidence of that actually being the case. Thats exactly what i was going to ask. We had senator blumenthal on the program last week. Hes calling for a Compensation Fund and saying perhaps that would help to forestall criminal lawsuits from the do j. Would you recommend the company pursue a measure like that . We dont have an official recommendation but anything thats confidence inspiring could work. They could highlight how much safer vehicles could be in the future. Gm is leading the path in this mega trend of car connectivity. How much safer cars could be in the future if they can analyze data on a realtime basis. Gm is leading the way to make few sure cauture cars safer. I would agree there is uncertainty in the near term because we yet dont know all the facts of what led up to this very serious and tragic recall. Well know more tomorrow maybe. Gentlemen, thank you both for your thoughts on this important issue and cnbc will provide live coverage of mary barras testimony to congress. That begins at 2 00 eastern time on cnbc. Half an hour left to go in this month and in this quarter. And its looking like were going to go out with at least some gains trying to offset the losses weve otherwise seen, but the dow is still not quite in positive territory for the quarter. The s p and the nasdaq are. It has been the talk around the water cooler across the country, are high speed traders putting average investors at a disadvantage. Thats what author Michael Lewis says in his new book. Later, a in you study showing regular diet drink consumption linked to heart problems in women. Well have the story you need to know about and why the soda business really didnt need this kind of bad news right now. Well explain, stay tuned. Well be back after a short break. Break. Beeping ] [ cellphone rings ] hello . [ male announcer ] over 12,000 financial advisors. Good, good. Good. Over 700 billion dollars in assets under care. Let me just put this away. [ male announcer ] how did edward jones get so big . Could you teach our kids that trick . [ male announcer ] by not acting that way. Ok, last quarter. [ male announcer ] its how edward jones makes sense of investing. Makes sense of investing. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Says in his new book. Break. Break. With everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Its the last day of the trading quarter. Thats why they call it window dressing. Lots of plus signs across the board for the major averages in the stock market as traders and Mutual Fund Managers and Money Managers and hedge funds buy up the high flying stocks to perhaps help their quarterly statements look a little better. As we were just saying, the difference between a red or green arrow is not big this quarter and today could make a big difference on that front. Michael lewis latest book is called flash boys and its sparking controversy on wall street and main street. Lewis alleging the u. S. Stock market is fixed by internal and external players. He appeared on 60 minutes last night to talk about it. Here is what he had to say. The stock market is rigged. The United States stock market, the most iconic market in global capitalism, is rigged. By whom . By a combination of the stock exchanges, the big wall street banks, and High Frequency traders. I know that had me jumping out of my sofa and i know it had you doing the same thing last night. Is Michael Lewis right . Is the stock market indeed rigged . Joining us to talk about it, tom sposhg and his partner at Buckley Sandler law a Financial Services law firm and a former s. E. C. Attorney. And look who also is joining us, the newly retired, how about this for retirement, larry kudlow, who is following this story, of course, very carefully as well. Is the stock market rigged, larry . No, i dont believe it is. I think there are imperfections. I think mike lewis is a very bright guy, has fingered some of the imperfections. Im not sure he got this story as accurate as our own bob pisani had the story, but i encourage everybody to read bobs memo this morning but whatever, there are imperfections and there are dislocations. Nobody likes to see that. Certainly for Retail Investors who still havent come back, you want a level playing feel. Perhaps the s. E. C. Has some more work to do. Is the overall market rigged . Is this the reason why weve had this huge gain for five years . No, absolutely not. And, tom, it seems to be sort of two Different Things going on here. Theres the one issue where a lot of players, lets call them, you know, the big Money Managers of the world, when theyre trying to make a trade, their front run on that trade and over time that adds up and they lose money because of that. But to larrys point is the average investor out there who might have, you know, a pot of money in this market in index funds, are they paying for are they losing because of this in do they need to be concerned that the game is rigged against them . Well, clearly theres that perception, and wherever theres perception, we need to have the s. E. C. Out in front studying this market and telling investors whats going on. Right now the s. E. C. Cant see deeply into the markets. There is no consolidated or unified audit trail at present that is cholock synchronized. The s. E. C. Cant study with a broad sample set study these allegations and come with a conclusion as to whether there is an unfair playing field, but there will be a consolidated audit trail. The s. E. C. Has been on the forefront pushing this and hopefully by the end of next year or early 2016 theyll have that deep granular order data to be able to study the markets and determine what the future of our markets should look like. I mean, its sort of like look, i basically agree with whats being said, and the s. E. C. Will try to consolidate all this, and if theres law enforcement, theres law enforcement. So far from lewis book and so forth, theres nothing illegal highways been done. In a sense youre blaming the technology. Thats what youre blaming, and i never like to blame the technology because the technology is neutral and somebody is always going to come up with a better mousetrap. Exactly. Its a bunch of smart guys who have figured out how to game the system and theyve got enough money to take advantage of this system as it exists, but to say that that is a rigged market thats completely wrong. Thats a misstatement. You are going to have smart guys who will come up with mousetraps to counter. Thats how free market works, right . But may i say as a nontechnology expert but as someone who still practices macroeconomics, the reason for this fiveyear rally is, first and foremost, profits, and second, yes, liquidity and low Interest Rates from the Federal Reserve. It is not front running or quasifront running even though some of that does go on. You have to give credit to the guys who developed this new exchange, this iex, which they say tries to put everyone basically the pros and the even quicker pros on the same playing field. Thats one development to come of this. Thats one market response, if you will, to all of this. Tom, again look, theres no such thing as a free lunch. If someone wants to buy or sell a security and they want somebody to be there to take the other side s there always inherently going to be a cost to that transaction . Its either going to be a human or machine that has to act as the intermediary, dont they . Absolutely. The inefficiencies we see in the marketplace now are things that as you point out, the iex exchange is trying to level the playing field. Theyre spooling orders and theyre putting speed bumps in place. Finally the buy side is fighting back, and thats why we need to be responsible and give, you know, our trust and confidence to the s. E. C. To study the markets before we throw the baby out with the bath water. Firms have spent billions under the new Market Structure to trade in this very vast and complex market system. We cant just leave them in the lurch and change in midstream our markets. So i think its important to give the s. E. C. That opportunity. I just want to come back with another shout out to my colleague, bob pisani, because the issue of proprietary fees which give you not only the pricing but the book, so you want to know how much trades are behind this trade, that to me is actually a heavier weight issue than what mr. Michael lewis was talking about, and i think you got to watch that. In other words, if i was the s. E. C. , i would go to that issue because that issue, the length and depth of the book really does give you a trading advantage. Otherwise, look, flash trading what if its the wrong trade . What if youre on the wrong side. You can get your head handed to you. The flash crash a few years ago. It nose dived and came right back. No one is sure why that happened. The proprietary history gives you the book. Let the s. E. C. Do its job. I say to people out there, i say to retail people and anybody else who is saving through investment, stocks are a great investment. They reflect the economy and the fundamentals over a period of time, and it is not it is not a rigged market that has given us a fiveyear bull. It is profits, the recovery of americans business, and, yes, aided and abetted by low Interest Rates. Larry, its great to see you. And great to be here. Come back and see us more often. I said youd retire but just from your show last friday but you can join us anytime you want. You were the guy who brought me back to this network. You were the guy who brought me to this network. And it was my great pleasure. We love having you. Tom, thank you for joining us. Michael lewis will be here on cnbcs power lunch tomorrow at 1 00 p. M. Eastern time so you dont want to miss this interview as well. Its coming up tomorrow afternoon. And weve got about 15 minutes left until the close. The dow closing up at 140. The s p 15. The nasdaq 45 now. Well tell what you the markets need to do to finish the quarters to the upside next. 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Change your number. Turn it up. Androgel 1. 62 . Welcome back. 13 minutes to go and stocks look like theyre going to wind down this quarter with a rally. Seema mody is back with us. Give us some of the hits, runs and errors. The numbers continue to change but at this point it looks like the Dow Jones Industrial will close the quarter lower by 0. 7 . The nasdaq could end the quarter higher while the s p 500 again at this point is up about 1. 3 for the quarter. This despite the underperformance of the Consumer Discretionary sector which is the worst performing sector this quarter. The big losers, best buy, stapl staples, and International Game technology. Utilities the best performing sector for the quarter as investors switch into more defensive strategy. Health care also a big winner this year despite the recent selloff in biotechs. The big winners been forest labs, eli lilly, intuitive surgical, and edwards life sciences. Bill and kelly . Seema, thanks very much. 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Theres romance, face slaps, whatever that is, pirates, helicopters, piratecopters. Argh hmm. Its so huge, its being broadcast on mars. Heroes. Bad guys. Asteroids. Available only on mars. Theres watching. Then theres watchathoning. About 8 30 left in the trading session. Typical for the last day of a quarter, window dressing they would call it. The dow up 129 points. Was up 157 at the peak today. The nasdaq pretty strong with a gain of more than 1 . And the s p 500 up 14 points at 1,871. Its close to the alltime highs, about 7 points away. Doug sandler from riverfront joins me. Today notwithstanding, this market is not exactly going into the Second Quarter with a lot of momentum though, right . Youre right, but thats the exciting thing. You know, we have had a lot of fundamental improvement, so weve tested the taper and the market can handle it. Weve had fundamentals improve across the board whether its company earnings, whether its the big macro factors and you can buy the s p at the same price you bought it at the end of the december. I think thats a good deal. You sound like youre buying . Yeah, i think this is the pullback to buy. Its gone sideways. The s p is going to finish positive for the quarter. Good point. The dow will be the only one thats negative. Pullback in valuation. We have more earns on the same number. You have this special time where i think number one, youre going to see some good earnings come through. If you dont, you got the weather excuse that everybody will use and everybody will believe. It will be interesting to see what earnings do tell us about the weather and how much was not weather related, right . Its a free pass for companies. So what will you buy here . What do you think will lead the charge in the Second Quarter . So our Bumper Sticker for 2014 in the u. S. Is basically growth is where the value is. So companies that can grow faster than the s p are trading basically at s p multiples. I think they should get 10 to 15 premium at least. You find a lot of them. So the big tech stocks that pay dividends look good. Weve been buying the transports. Energy, which weve been underweight for the last couple years, were finally equal weight maybe going overweight at some point. Theres a lot of attractive stuff. Investors who are on the sidelines havent missed it yet and you have a pullback opportunity. You must take comfort from janet yellen, that speech she made today. It was very, very dovish at this point. Yeah. I have heard some of the blurbs. Its going to be essentially sounded dovish and thats good for the markets as well. Doug, appreciate it. We have about seven minutes left. Well come back with a closing countdown and then after the bell, diet drinks, heart problems in women. 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[ male announcer ] ask your doctor if chantix is right for you. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Welcome back. Three minutes left in the trading session. Were about to put the First Quarter to bed, close the books. Here is what we did. This is the dow. Started the year at all time highs. The last time we saw an alltime high was december 31st of last year. Downward in the month of february, came back in march. Were finishing with a minor decline. Needed about 100point gain on the dow to finish positive for the quarter. Nasdaq will be positive for the quarter with a gain of a half a percent. You can see slightly more of an upward bias for that index than we saw for the dow. The s p also will be positive for the quarter with a gain of 1. 26 . So the best performer by far of the three major averages. Best and worst performer inside the s p, forest labs the best performing stock inside the s p for the First Quarter and best buy was the worst performer but today up 1 . Bob pisani, youre looking at eem . One of the things thats interesting is what a roller coaster it was for everybody. We started out at the beginning of the year sell emerging markets and buy the growth names in the United States. Bottom line the eem, take a look over here, we sold right into it. Look how dramatically it moved into the downside. Weve been up eight days in a row. We are now at essentially highs for the year in the eem. We had given this up for dead. They were concerned about chinas growth slowing down. Now theres still concerns but the chinese are talking about some kind of stimulus. Thats helping the overall market. Elsewhere, what a roller coaster. Consumer discretionary started strong. They sold off because the retailers did lousy brought down the numbers. Whether it was weather related or not. Health care, including biotech, led the way with pharmaceuticals. Then a little selloff. I think its all very good news. I love to see this kind of rotation in the market. It gives us a lot of things to talk about and it gives professional traders to a lot of things to get into and out of. People have been talking about your terrific essay in response to Michael Lewis contention that the market is rigged. I ask you to go to cnbc. Com. We have been talking about this for a long time. I have a laundry list of things id like to see changed its not perfect obviously. I want to see some reforms but im not going out saying the market is rigged and, therefore, and the implication of that is the average person should not invest in the market. Thats wrong. This is a great time to invest in the market overall, and im not an apologist for High Frequency traders. Lord knows i have many a problem with them but im not making those kind of statements. Well done. Go to cnbc. Com and read more of bobs essay. Good job. Thank you, robert. See you later. So were going out with gains today and, again, as we highlight it, the s p and the nasdaq will be positive for the First Quarter, the dow slightly negative. What happens in the Second Quarter . Well talk about that plus whether or not this market is rigged coming up in the second hour of the closing bell with kelly evans and company. Ill see you tomorrow, kelly. Thank you, bill. And welcome to the closing bell on this monday as we close out a lot of things, the month, the quarter. Here is how were finishing the day on wall street. With a rally across the board, the dow adding 135 points, the nasdaq 43, the s p 500 15. Look at the s p at 1,878. Only 6 points off the alltime high. The nasdaq closing higher i think for the quarter. The First Quarter is in the books so how did we do . Lets get back to cnbc headquarters with the final score from seema mody to kick things off. Today marks the official end to the quarter and here is how we stand. The Dow Jones Industrial closing at 16,458, down 0. 7 for the quarter. The s p 500, which hit numerous alltime high this is quarter, up better than 1 for the quarter, closing at 1,872. The big winners forest labs, neighbor nabors and green mountain. The nasdaq up. Speaking of the nasdaq, check out the biotech index. Concerns over valuation have resulted in many biotechs selling off but the intention clo index closing higher. Quick look at the emerging markets. Geopolitical tensions weighing on emerging market stocks earlier this year. The index still down for the year excuse me, now up 0. 4 for the year but off of its lows. Lastly, a quick check on gold because gold is outperforming the u. S. Equity markets, up more than 7 after losing 28 in 2013. Here we are closing up 5 for gold on the year. Kelly . Seema, thanks for running through all of that for us. So on the panel today weve got cnbc contributor michael, sara eisen and dominic chu and brian kelly with a hearty welcome to all of you. Brian, first of all, how much of the rally today was janet yellen speaking earlier about Monetary Policy and how much of it, in your opinion, was due to other factors . Well, we came into the day already strong. I think the s p futures were up seven points overnight. A lot of that had to do with the fact that late on friday we had the announcement that john kerry and his russian counterpart were going to talk some peace in ukraine. We came in already elevated. We had the pmi, and then janet yellen came in with a stick save and saved the quarter. Janet yellen saved the quarter. David, you said it was one of the most dovish fed speeches you ever heard. Yes. Im still actually in a little bit of shock, kelly. We had a fed chair actually bring up three individual cases of people who have lost their jobs, had struggled with getting back into the labor force, getting health care, all of these things that you would almost expect to hear from a governor or a president or a congressman does that matter . Rick santelli was not pleased with this. Im sure. But from your point of view, is it just that its a surprise to hear this kind of rhetoric or is there some issue with her using anecdotal examples . I feel like it was the other day or yesterday when i was sitting here on wednesday just after janet yellen gave her speech and we were talking and you asked me to give her a grade and i gave her a c minus. Thats right. I think she miscommunicated her real goals and today was an opportunity for her to really reiterate how she sees slack in the market, how much slack she sees in the market, how she sees very little risk of inflation on the horizon, and how shes going to continue to work very, very aggressively to get jobs back into this economy. Youre saying this is the real janet yellen. This is what the new Federal Reserve is. Bernanke was much more measured in his speech. Weve already heard yellen come out and give time frames which bernanke never did. Now shes being very, very strong in her statement that the fed is going to continue their easing policy. Im of the belief that, yes, the russian situation certainly did help, but mostly its janet yellen. When you start hearing theres unbelievable amounts of free money thats going to stick around wait a minute. Okay, look, at the same time its not as if the treasury market, and i know on the short end things are a little different, its not as if we moved that much in response to it. Is it not just people positioning for what looks like it could be a strong jobs number on friday and macro data driven developments, not necessarily the comments she made this afternoon . Mixed reaction to the comments. I have talked to some people who said there was nothing new in the comments today from janet yellen. A lot is riding on fridays job report, looking for around 200,000 jobs to be added for march and critical psychologically coming off a few weak unemployment reports that showed perhaps temporary factors due to the weather, well see if we get a give back in the jobs number on friday. Right. And dom, what was so fascinating with a hat tip to ward mccarthy for pointing this out, the u. S. Lost 8. 8 million jobs in the recession. Payrolls havent grown since 2008. If he had more than 160,000 on friday we will be back in positive territory. Psychologically and really, that is huge. I went back and i remember first covering it right after the financial crisis and saying theres no way we can get all the jobs back that we lost during the Great Recession in like three, four, five years. Theres just no way. It would have to be a massive v shaped recovery and in essence thats what weve got. The jobs are there. For that reason the path of least resistance for the markets at least from an asset valuation point of view is to the upside. Whether you blame the fed or whether you credit the fed, thats irrelevant. What it comes down to right now is, yes, the markets are going to move higher. It is, however, what traders tell me, it is on abysmal volume. Its not very theres not a lot of conviction to it. Unless you see the Economic Data really start to take hold, thats when you start to get a little bit concerned about maybe where the markets are heading. It should be to the upside. Dom makes an excellent point here is that were now five years away from the crisis. Were now several trillion dollars intoq qe and the furthe away you get and the more qe you get, the less effective it woox. Thats part of the reason why youre getting the low volume rally. Fewer and fewer people are believing that the next six months are really going to see that huge economic turnaround. I dont know if its going to happen or not. Im just saying its probably why theres no volume. Here is what i want to know, david and michael. Doug sandler just made a comment to bill, he said you can basically buy the s p 500 now for the same price as you could at the end of the december and thats a great deal. Would the two of you agree on that . I agree. I think the upside on the market just like dom said is positive. Really if you look at the jobs numbers as he mentioned, it really is pretty astounding. I was one of those folks who said theres no way the jobs are going to come back. Tech will soak up jobs. Outsourcing will soak up jobs. Again, whether or not its real or not real, and many will argue it is not real because its basically fed driven, doesnt really matter. The reality is here is where we are. Doesnt the job situation tell us it is real . Not really. If you have but a job is a job, right . A job is a job but if you are basically funding jobs based on borrowed money is it really a job . Essentially or does it last . Or does it last, exactly. Its not as if the people hiring are using im not talking about corporations. Dont we have to see wage growth . Dont we have to see longterm unemployment go down, dont we have to see Higher Quality jobs . Absolutely. This is the janet yellen point. And the leverage is not companies. The leverage is the leverage the fed is placing in the system by keeping Interest Rates so low and who is suffering from those low Interest Rates . Youll these retirees making nothing on their investments. Those are the ones that are really subsidizing the bad real estate loans and all the lost jobs. Thats why people are so pissed off. Actually all those points are great points but the fact is that the fed has got its dual mandate. Janet yellen sees a lot of slack. Even though we increased these jobs to replace all the lost jobs from the crisis, we still have population growth and we have population growth over the last five or six years and the employment of population ratio has not risen very much. Something janet yellen has pointed out. She sees a lot of slack. She sees a lot of parttime whose want to work full time. She sees a an unprecedented increase in unemployment. And those facts are driving her to follow the Monetary Policy that will continue to try to get rid of those problems and you think that will continue to drive the stock market. . And the lower rates will drive liquidity into the system and ultimately not so much penalize people who are elderly, although it does have that effect, its incentivizing us to take risk. If you go out there and you put your money in the bank and you have done for the past four or five years, you got 0 . Inflation has been running on a headline basis at 2 . Ben bernanke and janet yellen have charged you a 2 tax for not taking rick ask. That is absolutely true. By the way, that was a great thing for us to do because in 2008 and 2009, nobody wanted to take risk and you will never grow an economy without risk there are plenty of people who will debate whether that was a great thing to do. For decades. Where the rubber meets the road in this, whether or not people are actually taking risks or buying things with these low rates is in the Housing Market and were starting to see signs that perhaps the Housing Market isnt quite as robust as we thought it was going to be. Thats true. Low rates incentivize people to make capital purchases and when americans are not buying homes in wholesale fashion, that says that those low rates arent accommodating exactly what the fed wanted them to do. This was never going to be a recovery based on a housing sector boom. We had a double in but thats an indication, right . Isnt that an indication of an economy that is not as strong as everybody would like to believe . I think a lot of people would say that the government for many yearses a put policies in place to incentivize too much housing risk. People buying too much house. A lot of people for the first time in two generations saw house prices go down 30 and theyre saying, you know what . Maybe a house isnt for me. Ill take a condo in the city and ill rent. You can see where fannie and freddie are getting caught in the middle. Were seeing risk taking in good places, by yes tech, energy, technology, place that is can generate lots of growth. House something not really a growth generator. It creates jobs but you dont see positive longterm recurrence from building tyro foam houses outside las vegas. The key dom is making is not necessarily house something going to run the recovery. More so housing is an indication whether or not people are going to take risk is borrowed money. Exactly. I think you cant look at the United States in a vacuum when youre talking about the Second Quarter. If youre looking at the prospects of rising rates, the u. S. Looks pretty good. You have to look at the risks he will where bringing up japan. The consumption tax goes into effect literally tomorrow. The jury is out on whether the economy is going to be able to withstand that. Theback bank of japan is do the equivalent of 75 million a month. Theres high hopes the ecb is going to do something to fight deflation, the lack of inflation, theyre seeing over in europe. China is also still a big question mark. Brian kelly, give us a final trade before we let you go for the rest of the week. I like japan right here. You might want to try to buy it on a pullback, dxj. The index is down 9 , 10 for the quarter, for the year so far. A lot of uncertainty is priced in. Contrarian call. I like it. Great to see you, sir. Yeah. Stick around and catch brian kelly and the rest of the fast money crew at 5 00 p. M. The rest of the panel stays with me. A market treading water and a roller coaster ride in the First Quarter. What about the Second Quarter . Well take a look at that next. Author Michael Lewis has everyone on this floor talking today with his accusation that markets are rigged. And as the commercial says, things may go better with coke but not diet coke or any other diet drink according to a new report. It could be giving women heart attacks. That story and how coke and pepsi are reacting is just ahead. Ahead. I dunno, i just ah woke up today and i said i need something sportier. Annnd done. Ok maxwell, just need to ah contact your Insurance Company with the vin number. Oh, i just did it. With my geico app. Vin is up to the loaded. Ok well then jerry here will take you through all of the features then. Why dont weeeeeeeeeeee go out to the car. Ok, ill just be outside. Ok, yeah. His dad is my boss. Yeah. Vin scanning to add a car. Just a tap away on the geico app. Welcome back. So what a quarter its been. We have record highs but also some downright down days. For what lies ahead in the Second Quarter were hitting the flies with bob pisani, sheila dharmarajan, and Rick Santelli at the cme. Bob, as we start to get a repositioning effect for the Second Quarter, do you think that could be a boon for stocks or no . The most important thing is going to be the economy. This is going to be the make or break quarter for the economy. Things will show theres an improvement or not. The bulls down here believe were going to go from 1. 5 to 2 ft. First quarter to 2. 5 in quarter two and over 3 in the second half. Thats why well watch the jobs number on friday. That will be the most important thing. I like the rotation, but its all going to take a back door to the economy. Thats a good point. Sheila, what was interesting is the extent to which the First Quarter seemed to be a step back from the trend that was in place throughout much of 2013. Do you think the Second Quarter is a resumption of the 2013 trend or could it be more of the same of the last couple weeks of the volatility and some of the weak points weve been through . I think its going to be more of the same of what weve seen over the last few weeks. Traders say theres going to be a lot more volatility. Also a trend weve really seen emerge here at least at the nasdaq is its a stock pickers market. If you look win the Biotech Sector which has been battered over the past couple weeks, over the quarter there have been definite winners. The momentum trade, weve talked about it over and over again. For a lot of names that held in the quarter but for a lot of names it didnt. I dont think you can do one of these one trade wins all favors. It becomes a stock pickers market. Rick, we saw a little bit of a rebound in the tenyear yield. Where does it go from here . You know, i think since the fed meeting, Interest Rates havent done a lot. So for the First Quarter and thus yeartodate were up 4 basis points in the 2year. In a 3year, were up to 10. In a 10year were unchanged. In a 30year, were down 40 basis point. I think you will see fits and starts like we have for the last several years. I think Interest Rates are mostly going to be contained in the long end. It really is going to be a yield curve trade for the Second Quarter and the reason, the Federal Reserve. Hey, bob, by the way, usually its the fed everyone has said rigged the market. What about the lewis allegations flying down . I have a laundry list of things id like to see change but thats different than claiming the market is rig. You have been getting a lot of kudos and i thought what you wrote was phenomenal. When i listened to Michael Lewis, the implications he had was more on the side of the hft. It is rigged for them to make money and skim that one cent just like you said. I didnt get the impression he necessarily said the whole system was rigged, but then again just a little pregnant, just a little rick, youre a sophisticated trader. That is slighting the onion too thin. Thats not what the public is going to come away thinking. The public will say, honey, its not safe to invest in the market. He told us its rigged. The implications are somehow the average investor, its not safer for them to be in the market. Thats not true. But the average investor thinks the s. E. C. Is watching out for the marketplace. Im sorry but if a large krgrou of people can take that 1 cent all day long day in and day out theres a problem. Im not happy with the 1 cent but i dont think it means the average investor what is it . Its never been easier or cheaper for the mom and pop to buy and sell stocks. Is that theres only 40 of them involved and it continues to drop . I have a laundry list of things that i dont like about the market. I think the public has this on the top of their list. If you were getting pennied, im not in favor of that. However, thats a long way from saying the market is rigged. Thats a strong word. You made a good point. They made all of this part of the system. Now its like, oh, well, it would shake things up too much to extract it. Same argument i hear in health care. When we get on the wrong track, were on it forever for that type of logic. Rick, are you invested in the stock market . Do you have like a 401 k in stocks, rick . Im invested the same way you are. Whoever owns us, i get to buy their stock. The rest of it, i think id rather have tangible assets. I really dont like paper anymore, not even at the stock market. Were going to leave it there. Thank you, three. Appreciate it as we close out the quarter. Contentious issue. Well have more coming up. Lets send it over to seema mody. We have breaking news on General Motors. Thats right. Check out General Motors. The company informing the national Highway Traffic Safety Administration that it would recall more than 1. 3 million vehicles in the u. S. For a sudden loss of electric power steering assist. They are more than doubling their charge to 750 million in the First Quarter. Again, this is a different issue a different recall for gm. And another one thats sure to be on peoples minds tomorrow. Thanks very much, seema. As we mentioned flash boys is wall streets new flash point. The new book is the foundation of Michael Lewis charges that the market is, quote, rigd. Ged. Gunderman group. Gunderman group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. Growth . Growth. I just talked to ups. Theyve got a lot of great ideas. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome awesome awesome awesome all awesome i love logistics. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Welcome back. Author Michael Lewis shaking up the world of baseball with his bestselling book money ball. It seems fitting on baseballs opening day hes shaking things up again, this time targeting wall street and High Frequency trading. Eamon javers is here with the flap flash boys is causing. He really rocked wall street with allegations that wall street is rigged. Thats what youve been talking about this afternoon, but also this afternoon Michael Lewis now in a war of words on his Facebook Page posting some very harsh comments critical of a particular banker. Let me read you what he put up on his Facebook Page within the past couple hours. He says a guy who works for a big bank bnp parry bass just typed an email saying i have an undisclosed stakes in iex, the business at the heart of flash boys and thus by implications am underhanded and corrupt but i have no such stake. Who starts a rumor on wall street . Why does a big bank report it . Bnps name is john nunziatta. Does his mother know what he does for a living . Weve called bnp for their comments on this brewing dispute over an email which lewis says accuses him of owning a stake of the exchange at the heart of his book. This is a controversy that will continue into the rest of the week. It certainly is. Stay right there. I want to bring the rest of the panel in for their take on this. Dom, you have some direct experience trading. Whats your reaction . No other chapter of my life i was a Program Equity guy. I traded quantitative equities basically on a quantitative basis. I used a lot of these pools or any kind of liquidity pool. I will say this, its a very complex issue and its something bob pisani has been trying to talk about for some time now. There are benefits to the way the Market Structure is set up as well. Rigging is a tough way to call it a rigged market i think. If you look at the way the market is structured right now, there are benefits and there are drawbacks. Yes, theyre highly publicized ones, but you have to understand that for the Retail Investor, you dont get the sense that there is any kind of an unfair advantage thats being had thats going to impact them severely. They should not be scared of the markets. What i would say in response to this is that you have to look beyond whats happening. I also had a former executive for an Exchange Company email me saying, you know what this iex platform were talking about, its not actually an exchange per se and its erroneous to call it that. Maybe the way the s. E. C. Would define it. This platform should be scrutinized a little bit more. And it certainly will be after a story like this. Everybody but dom, thats the heart of the criticism here, right . You say that not everybody will be impacted severely, but what lewis is arguing in this book is that everybody will be impacted to some degree or slightly. And thats sort of whats going on here is that everybody is losing a little bit on trades because its a zero sum game at the end of the day. If youre buying a the a price youre not getting the profit its not breaking news 60 minutes its not like them saying nobody knew this was going on weve been talking about it for two years. But the Retail Investor already knows. If they have 5 and somebody else has 5 million, its not going to be a level playing field. What this really suggests is if youre a shortterm trader which is what this is really all about, High Frequency trading, youve got to be very, very careful to play in that neighborhood. If you work an a longterm strategy, the bar is much more even. Yes, maybe your entry and exit points vary somewhat. Im not saying its okay but i dont know that the market is rigged but the reality of the world we live in today, im not saying this is right, but the reality is if you have money, you have more access. Its really that simple. Thats the whole point of private client services. It seems to me, correct me if im wrong, this is where the concern boils down to, there is a way in which players in the market can capitalize on the fact that say a big trader big money manager wants to make a trade. Theyre able to know that information, affect the price of that trade before it happens and over time that adds up in charges the institutional player money. Absolutely. Thats behavior you potentially need to be worried about, crack down on, do something about and thei ex is develops in response to that. The real problem is the impact or fallout from this generally will be that the retail public already on the sidelines will stay on the sidelines and not be invested in the market in the behavior you just heard Rick Santelli say he was staying on the sidelines. If Rick Santelli is on the sidelines then the small investor probably throws up their hands and says what chance do i have. What does dave zervos say . I dont have a ton to say. Were talking about front running and its been in wall street forever. It happens in all markets and people who have access to information and flows use that to their advantage, and its been very, very hard to stop that through all time. So i dont suspect it should come as a surprise to mom and pop or any institution that some people see order flow before others, some people get to act on that order flow before others. Seem people get to put in their bids and offers before other people do. As we were saying earlier in this segment, if you have more money, you have more access, and thats true of almost every market. Its true in the market for cars. True in the market for houses. True in the market for anything. If youre a wholesaler, you have better access than a retail. So why would wholesale equities be any different than Retail Equities . The question is how egregious is this . Is it a fair or unfair advantage . Or is it something that a wholesaler in any business would expect to have because theyre doing that much more volume . Theyre providing a service in general which is a Liquidity Service which could be deemed as valuable to the end retail client who is looking for that liquidity at all times and maybe theres a healthy balance that wholesale gets a better price than retail. I dont get where the regulators are. Theyve been looking into this for a number of years. The new York Attorney general has been looking into this. The s. E. C. This was supposed to be first on their agenda. Remember, sara, even after the flash crash in 2010, all that ever came was about a 100page report and no clear conclusion. In fact, guys, dom, if i could jump in here sure. One of the things that i asked the s. E. C. Today is just respond to Michael Lewis allegation that the stock market is rigged. Its the s. E. C. s job to make sure the stock market is not rigged. But they declined to comment on that question. They said theyre not going to comment on this book. They said theyre engaged in an ongoing review of Market Structure and we can expect the results of that at some point tbd in the future. I will say the reason why i think, and this is just because, you know, my experience in the past, the reason why there hasnt been a decision or a comment is because it is a very complex topic and you have to weigh the pros and the cons. I will say there are pros and cons to High Frequency trading and i think thats the reason but you know where the solution is coming from . There are ideas from gary cohen from goldman sachs. Interesting its coming from the industry with specific prescriptions about how to deal with it. And that may be the best way to address it. Got to leave it there for now. Eamon, appreciate it. I know you have been covering this issue for that while. How did the First Quarter fare for the average investor. We will ask them if they believe author Michael Lewis that the stock market is rigged against them. First, are consumer of diet soft drinks trading calories for heart problems . A new report hinting at just that, especially for women. The study has implications forred soda business, health care, and probably someone you love. Well be back with details right after this. After this. Opportunities arent always obvious. Well be back with details right after this. After this. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Welcome back. So a new study raising alarm bells in board rooms at soda companies. It says women who drink two or more diet sodas are 30 more likely to sufficientary heart attack and 50 more likely to suer from heard disease. Sara, whats going on . How significant is this . Obviously the study is disturbing and a double whammy for the bench industry. You have this study, you also have new numbers just out this morning from beverage digest which is considered the premiere data center in the industry showing diet drinks are actually declining for u. S. Consumers. Much more so than overall soda drinks which are declining, ninth year in a show we saw carbonated beverage drinks declining in north america. This time the speed is happening rapidly and deeper than previous. They declined 3 last year. That was worse than the 1. 2 decline in 2012 and diet coke, diet pepsi sharp volume decline. 6. 8 and 6. 9 . Diet is just no longer in favor. Thats huge. The study just hit so clearly there was already a change in buying behavior. Thats part of the reason why consumers are shifting away from diet. You get these negative studies. This one just to recap, women postmenopausal women, 30 more likely to have a cardiovascular event or heart attack. 50 more likely to actually have death as related to some sort of Heart Disease and thats with women who drink two or more diet beverages per day. Not ten. Lets discuss this with the panel. I want to bring into the conversation with his Expert Opinion dr. Kevin campbell, a cardiologist from North Carolina heart and vascular. Should we be taking this study at face value . I really think we should. Weve known for a long time that soft drinks can be detrimental to our health. These ladies who are drinking this drinks often are more obese, have high Blood Pressure and other risk factors for Heart Disease. This is a big, big deal. Doctor, this is the point though, right . Its not necessarily the diet drinks that are causing these problems thats exactly the point. There are other factors that are at work. It just so happens theyre associated with these particular numbers. Is that right . That, by the way, is what the Beverage Association is fighting back and saying. Its correlation, not cause and effect necessarily. Thats exactly right. Its not been shown cause and effect but its highly associated with it and folks who are drinking these diet drinks have lifestyle and habits that are detrimental to their card cardiovascular health. Thats the big lesson from this study. As a result, we have seen cocacola experiment with more steve steve ya. Is that a healthier alternative . Natural sweetener versus artificial . I think that is a step in the right direction, but honestly water. Water is the best thing we can do to drink. It doesnt its not fancy, its not flavorful i think theres a reason why sparkling water is suddenly everywhere. Thats the double digit growth. Thats a high profile mayor of new york city not too long ago who wanted to mandate whether or not people should drink a certain amount of soda or not. The question then becomes where the government should be even involved at all involved in legislating this kind of behavior, right, doctor . I think that is a question and i think you run into how much government do you want . How much regulation do you want of your day to day lives. There comes a point where we have individual responsibility as citizens and patients to do whats best for ourselves and four families. For viewers of this program, besides care being someone we love, is what exactly is going to happen to the stock prices of these companies who make all their money off these soft drinks . You have seen coke and pepsi move towards more healthy products, organic. You cant get away from organic anymore when you go to the grocery store. You are almost forced to buy organic. You have people who are actually going to mcdonalds to buy goodness knows salads, not quarter pounders. So i think whats happening to the soda industry is theyre simply just having to evolve. Theyre adopting. To a new lifestyle change and its bound to have shared destruction, bound to have destruction of their core products. When theyre talking about pumping out syrup they sell to consumers i think you are spending a little too much time on the coasts of the United States. You take a drive through texas from austin to san antonio like i did the other week and stop at a buckys, theres lots of people drinking big sodas. Not to mention internationally. Thats most of america. We have to go in a second but let me ask you this. Is there a way because of studies like this in which theres going to be class action suits do you ever think against some of the soft drink makers . I think that is something that might happen. Certainly when we have this large data set, 60,000 patients showed this association. It was very significant. But do you think has there been any indication or evidence that the makers of these soft drinks themselves and some of the sugar sub statustitutes kne were potentially harmful . I havent heard or seen any of that. I certainly hope they do not because that would be a big problem for everyone. That would be the tobacco industry. I raise it because with a study like this, its important with this information being Public People are then able to ajust their decisions accordingly. If this is the first time the industry or general public or medical Community Say ware of these kind of risks, then it seems like a pretty big deal. Exactly. Now, weve had other things associated with low bone density. Theres been some rare association with cancers and things of that sort but this is a big well powered study that this is the first time weve seen this effect. All right. Thank you so much, doctor, for your perspective. Thank you. Its that time again, were bringing the you the Retail Investor round table. Were bringing you real people who are putting real money to work. Thats coming up. What stairs aories are lighp the website . Well have the hot list right after this. Youre watching cnbc, first in business worldwide. Business wor. Heres a word you should keep in mind unbiased. Some Brokerage Firms are but way too many arent. Wor. Why . Because selling their funds makes them more money. Which makes you wonder. Isnt that a conflict . Search proprietary mutual funds. Yikes then go to e trade. Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Welcome back. So its the end of the quarter. Time to tap in the mind of the Retail Investor. Joining me now is sara, an adviser at texas private Asset Management in austin. Carol, a registered nurse in sacramento, california, and trevor, a student in nashville. Welcome to all of you. Its great to see you. Sara, we want to start with you and why youre worried about a pullback here. In 2014 im fairly optimistic about the stock market, though im vae buery bullish long term. Im always in the back of my mind considering what a Market Correction looks like. So i wouldnt say im predicting a Market Correction, im just mentally preparing for one. In terms of your portfolio, what are you holding . Im looking for things that i think add value and that have limited Downside Potential if a correction comes. So if some of the place that is im looking for value are close End Bond Funds, i like the Double Line Income Solutions fund, just a closed End Bond Fund you can buy at a 7 discount to net asset value. I like the mortgage reit space for the same reason. The price is down significantly. Its trading at a discount to book value. Im talking about annaly capital. Both of those investments pay a pretty significant dividend so theyll pay me while im waiting. Carol, what about you . You like the blue chips here . Yes, i do. We had Market Correction several years ago, and the blue chips did well, and i think they will also do well going forward. Theyre usually the last ones to lose ground and the first ones to recover. And probably we are going to have a Market Correction in the relatively near future but we just need to hold on for the long term and i think well all be fine. Trevor, you have got a very long term to think about. Are you moving in and out of a lot of different trades or are you trying to buy stuff you can hold for a while . A lot of times i just take into consideration pe values on eps. I do a lot of price targeting and discounting cash flow that is allow me to value a market on perception for the next fiveyear growth rather than worrying about trade by tomorrow. You were talking about the High Frequency trading. You know, people in college are not really concerned with that at this moment in time, which is kind of conflicting compared to global assets and all the noise thats going around in the world. So i think the biggest problem right now is the market cant digest theres too much noise going on. The market cant digest the actual numbers. Weve seen numbers that have been negative and the market shoots up 200 points and vice versa. I think thats the biggest problem with the market right now, theres so much noise, especially investors like me and those on the show, they cant digest the information. I see at t is one of your picks, china mobile. You brought up the High Frequency trading issue, i want to get your reaction to the Michael Lewis book alleging the three of you and other investors are getting ripped off by High Frequency traders. Here is what he had to say. Stock market is rigged. The United States stock market, the most iconic market in global capitalism is rigged. By whom . By a combination of the stock exchanges, the big wall street banks, and High Frequency traders. Carol, do you think the market is rigged against you . No, i dont. I dont trade often. I check my stocks quarterly. And i do sleep at night investing. I pick solid companies and dont worry about whats going on moment to moment in the stock market. What was your reaction to that interview, to Michael Lewis saying to the general public you need to know this is a rigged game . Well, i heard them talking about pennies here and pennies there. And i personally dont believe it. Im sure he has his thesis why he said that was so, but ive been in the market for 20plus years and i have not felt that i have been cheated or rigged by the market. Sara, what about you . I actually kind of disagree. I think Michael Lewis book which im excited to read probably is just stating the obvious, what a lot of Retail Investors feel and what is probably true, that in the shortterm, we cant compete with the big institutional investors. We cant compete with people who have their computers, you know, feet away from the exchanges. In the long run hopefully those things come out in the wash, but one thing i have been thinking about in terms of this high yield or this High Frequency trading, yeah, is people who put in stop orders with their broker and leave them there, you know, on a good until canceled order may be setting themselves up to be vulnerable to some of the algorithms that can go in and poke at some of these soft spots in stocks and you can get stopped out of a stock pretty easily. We saw that in the flash crash, too. Trevor, we got to go here. Well try to get you back very soon because its such an important day and i love hearing it from your perspective. Thank you all here. Really appreciate it. Good luck next quarter. Good luck trading. We have some breaking news on facebooks executive compensation. Pl Morgan Brennan joins us. Yes. So facebooks new proxy file something out and the compensation for 2013 markedly lower than 2012. Here are the three 2345i78s you need to know. Mark zuckerberg, 653,000 in 2013. Thats compared to 1. 9 million in 2012. Sheryl sandberg, facebook coo, 16. 1 million in 2013. Thats compared to 26. 2 million the year prior. Lastly, david ebersman, cfo, he made 10. 5 million in 2013. Compared to 17. 5 million in 2012. Thats thanks to a reduction in stock awards. Back to you. Thats going to be interesting, morgan. Thanks very much. What has got the street clicking today . Well bring you the hottest stories on our website next. Its the hot list. Its next. Dont go anywhere. Dont go anyw. Especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Work with equity experts. Who work with regional experts. Thats when expertise happens. Mfs. Because there is no expertise without collaboration. Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. What are you wearing, jake from state farm . [ jake ] uh. Khakis. She sounds hideous. Well shes a guy, so. [ male announcer ] another reason more people stay with state farm. Get to a better state. Welcome back, what stories to the top of cnbc. Com, lets ask the managing editor of the site. What do you see . Well, hey, kelly. The sheriff of wall street gave a little speech down in florida to a Securities Group and said basically, heads are going to roll. He said you can expect pretty soon a Major Financial Institution is going to get hit with a felony charge. She wrote it up for us and people are eating it up today. And number two, you were talking about this. Highfrequency trading. Big topic of debate. Mark cuban was on fast money halftime, and he went off. He ripped highfrequency trading. I saw that. He says it doesnt allocate capital properly. We threw the video up and the story to go with it. People are watching the video are most highly engaged right now. And finally, another one near and dear to the heart of all parents. College is coming up, weve got five mistakes commonly made with five but right now 529s. And mistake number one, you dont have to invest in your own state 529. Oh, thats interesting. I read a fascinating piece about whether its time to invest in russia. How did that one do . It was medium around lunchtime and sort of cooled off. Im hoping itll pick up overnight when our european audience comes in. Good point. Thank you so much, alan wasser. Medium. Mediums better than lackluster. Is it time to buy russia, though . And im looking at the tally. The russian stock market. Down 9 for the year. Exactly. Shortterm maybe so. Longterm but by the dip, an overreaction. All the viewers, you need to click on that russia story to get me up above the stories we just talked about. People are much measure interested in that. Im curious, you dont have to invest your own 529b plan in your own state. I didnt know that either, dom. I think people trying to make the best longterm decision probably have no idea that you can shop around. 15 days. Okay. So were weve got a couple of different themes going on. The Second Quarter trade, the geopolitical stuff which appears to be a little bit on the back burner. I wonder if you have an investor who says im concerned about the Russia Ukraine situation, or pick your area of concern along that border, what do you do in this environment . Well, look, weve been at jeffries, at least certainly in the Strategy Group have been pretty defensive on the emerging markets for a long while. Largely because we believe the developed markets have engaged in a competitive devaluation. What is qe . Printing dollars, what have we done, the japanese done, the europeans done, the brits done. Weve devalued them. And thats creating growth in developed markets at the expense of growth in emerging markets. And thats why emerging markets hated qe to begin with. The brazilians were always upset, the russians were always upset. And i think that story is a very lowfrequency story. Its going to happen over quarters and years, not over days. And while weve seen a nice little pop here at the quarter end, its back to flat on the year after being down, i think, 5 or 6 at least the eem. Im not that excited about it. I think a lot of these emerging Market Countries have been in a bull market for 15 years, they devalued, became the cheapest places in the world to invest and set up businesses, now theyre pretty expensive and need to devalue. And the last thing you want to do is invest in an emerging market when its going through that devaluation process. Its just politically too risky. Hold the rest of that reaction. Were going to get your final thoughts after this commercial break. Tomorrow marks the first day of trade and Second Quarter. And theres a slew of Economic Data weve got to watch for. Jobs number friday. What else is there . The panel will bring their highlights next. Highlights next. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. Growth . Growth. I just talked to ups. Theyve got a lot of great ideas. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome awesome awesome awesome all awesome i love logistics. Welcome back. Time for final thought. Michael . Buy the dip. That was three. You do get to carry two over. Stocks are for lovers, gold is for haters. More than five. Thats too many words. I just added some prepositions. Prepositions count. Please come back soon. Fast moneys coming up. Melissa lee is back. Whats on tap . We close out the quarter with a gain on the s p 500, big rally in technology, but what were watching was momentum and microsoft continuing up until the build conference on wednesday. We got a top analyst and, of course, our traders take on what to do with the stock which has seen nice gains yeartodate. Fast money starts now live from the Nasdaq Market site in new york citys time square. Tim seymour, brian kelly, Karen Finerman and guy adami. Well break down the First Quarter, but first, breaking news on caterpillar. John harwood with the details in washington. John . Reporter melissa, were going to have the latest in a series of Senate Hearings in which a subcommittee is taking on american corporations for the way they shelter income from u. S. Taxation. The committee tomorrow is going to present testimonyut