Transcripts For CNBC Closing Bell 20140422

Again, more fundamentals. Earnings palooza comes your way with at t, young branum brands. Amgen and gilead. Well have the information first. The analysis, the market reaction, everything you need to know coming up on the closing bell today. Also, should you be allowed to accumulate stock in a company you know will be a takeover target . Some say thats what bill ackman did. The former head of the securities and Exchange Commission harley pitt weighs in exclusively about whether or not its legal. Very thorny, controversial issue. Heres the numbers and all that we have for you right now. The dow, as you see, rallied from the getgo. European markets reopened today after the easter holiday. And they were in a buying mood as well. The european markets were higher this morning. The dow up 96 points off the high. We need to get to 576 for the previous alltime high. So as you said, were about 31 points away right now. Nasdaq up 45 points. Once again, the strongest of the major averages with a gain of more than 1 . Now at 41, 67, and the s p at this hour is trading up 11 points. Were trading at 18. 83. Joining us today, kenny pulcari. Steven wood. Chris hobard. And rob morgan. Good to see all of you. Kenny, i am not picking on you. But we do bring you on because you are the resident skeptic here and the market just keeps going higher here. It really does. And at some point, i think im going to be right, because its a little bit confusing, right . The market just keeps marching higher, but what has really changed . The nasdaq is still not there yet. Has not recovered. The s p and dow certainly have. Earnings are coming in mixed. Top line revenue not really there. But i suppose Janet Yellen Holding everyones hand saying listen, were not going anywhere, nobody worry, rates will stay low. So it forces the tradein. I think, though, were right at the highs on the s p and dow. I have to believe theres resistance here. Steven what about you . Do you believe theres any fundamentals that justifies these moves on the markets . Last couple weeks, i dont know theres fundamentals that justify the up and down. The economy is doing okay. That square root shaped economic recovery. Nothing really is going to knock it off or up, in our opinion. Earnings are going to come. I think we do need to look at top line. I think Revenue Growth is going to be far more important in this earnings cycle. I think if you look at the yellen play right now, thats a squeeze play that weve been talking about for years. Thats the way theyre going to run this playbook, so that means investors need to look at that riskbased strategy. Chris hobard, i expect youre in kenny polcaris camp. Youre looking for pretty good correction. Maybe as much as 14 . That was last week. I was going to say, whats going to spark it after the kind of rally . This will be the sixth consecutive update weve seen for the major averages. Well, and thats it. Were cautioning clients to expect some form of a pullback. Perhaps 17 to 14 . Really what were counting on, this is really to clear out the weak hands or those that have been speculating on those momentum driven stocks that have been out there. Really more of a back and fill type of a correction. Something thats meant to push this bull market or reenergize the bull market. Perhaps the fed begins to show their hand and say yes, we are going to raise rates where tampering is more aggressive. We do see that as what will eventually cause a little bit of softness in this market. But youre saying that the washout that we saw and a lot of the momentum stocks last week, that caused all this a couple weeks ago. Excuse me, a couple weeks ago. That wasnt enough for you. I wish it were, but no, its not enough. I still think that weve got more. I still think weve got a lot of weak hands out there and i think weve got people that held on through that, but theres still a lot of nerves and were just waiting for one or two extra shoes to drop and were going to see more people pull back. Its a natural correction. But again, its pushing this bull market more forward into the future. Right. But michelle, dont forget, that was really the nasdaq that we saw suffer the most. The s p was maybe three and a half percent. Thats not even an adjustment. All right. Nasdaq was down almost 10 , 9. 7. But the s p and dow were down just three, maybe 3. 5 . Its the nasdaq thats leading this charge right now. Did he raise the point about momentum stocks looking for washout in momentum stocks. Thats where we really saw a lot of the pain. Rob, you like this market. I do. Of all of us, i guess im the most bullish. I wouldnt be surprised if we saw they pulled back because we are overdue for one. Stocks are still cheap here. I disagree with the statement, that the fundamentals arent there. Were 15 times earnings. Even though earnings season hasnt been necessarily spectacular, the economy is improving. Earnings are going up. The estimates are going up. Technically the market looks good. Retail investor hasnt gotten back in and thats going to happen too eventually. So yeah, were overdue for a pullback. But at the same time, in the long run, i think were going higher here. What do you do, do you sit on your hands and wait for that correction . The market could get away from you here if its not already doing that. No, no. Thats the thing. Were not sitting on our hands waiting on this. Theres still good buys. One of my favorite areas is going to be the area of old technology. Thats a beauty right now. Youve got things that are undervalued or just kind of boring thats not respected. But again, youve got good, solid Quality Companies out there, strong balance sheets, ample liquidity, great size of companies. And i think this is where you hunker down, go towards some of the past proven areas. Intel is a great example of a company. Last week, absolutely annihilated earnings. Looked terrific. And theyve got a great Business Model going forward. Theyve got some great legacy investment with their windows. But on top of that, you can also look at what theyre doing in the mobile market. So again, look for things that have proven track records in the back but are also marching forward into some new areas, again, intel being one going towards the mobile markets. Rob, where is the best place right now . Is it small cap versus large cap . International versus u. S. Domestic . Yeah, i like the small cap growth space for domestic, and i do like the International Market. I think russell made the comment earlier that diversification makes sense and i would certainly agree here. Steven, youre the russell hes referring to. I am. They have been charging higher here. My apologies, stephen. He gets that a lot. Mr. Russell. Mr. Russell, thank you very much. Proud to be. Small caps had been powering higher. They sort of lagged here lately. But what do you think . Yeah, they have. Our call right now is when you look at large versus small, the russell 1,000 versus russell 2,000, from a valuation perspective, youre looking at small caps being more richly priced. So from that perspective, we would look in large cap space. But also from the fundamental perspective, my point earlier was there hasnt been this huge volatile swing either way in fundamentals that would justify the heights right now. Its been chugging right along, but we do think its going to be more active management, more security selection. Were looking at the russell 1,000, large cap being up six, seven, eightish percent. We think coming from active management and security selection. Kenny polcari, i think you and David Einhorn might agree on this. Have you heard what he said in the last hour . He put out a letter to investors and said hes got a basket of stocks that hes shorting. He calls them the bubble basket. So hes also looking for a pullback. But listen, i think if you heard everyone on this panel today, everyones expecting this pullback. Not a collapse, but a pullback and an adjustment of prices. I think everyones on that same page. And so therefore, its just a matter of how much you think the pullback is going to be, right . Yes. I asked mr. Hobart, hes not sitting on his hands, hes investing. Are you playing this market at all, kenny . Listen, i am invested, so i stay invested. Im not one of these guys thats in and out and in and out. Ive got a long range plan. Im bullish on america and the future, but were talking about whats going to happen today, tomorrow, next week. I think thats kind of what investors need to be kind of careful about. Got it. All right, guys, thank you very much. Stephen or should i say mr. Russell, well see you later in the hour. Well bring you back and see how this market closes out. Thanks, guys. Weve got 15 minute 50 minut the closing bell. Remember the record high is 16,576. Should investors buy when stocks are trading near alltime highs . Who better to talk about that and where these markets are headed than the legend himself jack bogle with us. Wait until you hear if hes a market bull or bear these days. He speaks with us exclusively. We always enjoy our conversations with mr. B coming up. Also coming up how does someone kind of basically know that theres going to be a bid and be allowed to accumulate stock . That would be front money, if we had an sec that was on the case, i think that they would opine on this. Is jim cramer right in calling out activist investor bill ackmans joint bid for allergen as a legal scam . Well talk with harvey pitt in another cnbc exclusive. See what he says. And then citigroup executives have been facing off with shareholders today for the First Time Since the failing of the feds latest stress test and uncovering fraud at its mexican operations. How should chairman mike oneill be . A disgruntled citi watcher weighs in. Cog up. Weve got a lot to get to, so dont touch that remote, coming up. music defiance is in our bones. Defiance never grows old. Citracal maximum. Calcium citrate plus d. Highly soluble, easily absorbed. Hedge fund manager David Einhorn has a warning. David einhorn is making some waves in the market. This time, his letter to investors, a recap of the First Quarter performance. In it he disclosed that Green Light Capital had taken new stakes in a number of companies, including sun edison and appliance and Home Furnishings retailer kahns. Both those stocks are up near session highs. 10 on the day here. He also said that they continue to make money on their stake in micron technology, another chip company, and they lost money on their bet against keurig green mountain. The funds also closed out moneylosing propositions on long positions in General Motors as well as short positions in chipotle, as well as michael coors. Einhorn also made mention of recently making a bet, and michelle mentioned this earlier, against a group of highflying momentum stocks. He also said that were in the Second Technology bubble in the last 15 years, and that investors who are worried about the effects of High Frequency traders should route their Stock Traders to iex. Thats highlighted in michael lewiss book. Einhorn also said that green light owns a small stake in iex. Michelle, back over to you guys. He wasnt specific about which stocks are in the bubble basket. He didnt mention why would you if you dont have to tell people about what youre doing. Of course. Especially a short position. Absolutely right, michelle. You can talk your book. Bill ackman, the reason icahn went after herbalife. Otherwise we have green arrows on wall street again today, putting the s p on track for its longest win streak since last fall, and we are closer to record territory right now. Yep, mary thompson, nice run, huh . Nice run for all the major indices, michelle. We want to start with the s p, which is on track for its fifth gain in the last six sessions. As it stands right now, just about 34 points away from its record closing high. Of course, the dow recovering from those april lows. The s p 500, as you mentioned, on track for its sixth straight gain. Right now, it is just about nine call it eight points below its record close of 18, 90. 90. It has come up nicely from that low, led by strength and energy. Health care given all the deal news that weve heard today, and the remember weve seen in biotech along with industrial stocks contributing to the s ps rebound. And the nasdaq up for the sixth straight day as well. Two sectors were behind the decline that pushed the nasdaq into correction territory, leading the way over the last two days. Those being the social media stocks, as well as biotech. Back to you, michelle. Got it, mary. Thank you. So, is it smart for investors to get in as stocks approach new highs . Joining us to weigh in, our friend, the legendary investor jack bogle. Lets hope the microphones work this time around, jack. Well keep our fingers crossed, bill. And ill try and keep my hands still. Okay, good. Maybe that was the problem. Were approaching new highs the day after we get this survey out that said that 73 of investors who were surveyed would not go to the stock market even though certificate of deposit rates we all know are so minuscule right now. Theres still an implied lack of trust in the stock market on the part of the average investor out there these days. I guess thats an oxymoron. But do you blame them after what we went through starting in 2008 . Well, i dont blame them, but i think the bad behavior has very little to do with the longterm prospects for investing in inequities. What investors have to realize is the stock market creates nothing. Its a derivative of the value created by our corporation and the stock market subtracts its cost from those values. If you focus on Corporate America, be worth a lot more on the day you retire, let me say, 20 years from now. For me, maybe 30 years from now, bill, i dont know. But thats the important thing. The amount of capital youve accumulated when it comes time to draw it down. In the interim, you know, when you think about it for a minute, you really want stock prices to be lower. In other words, the high prices are good for sellers and bad for buyers. And low prices are good for buyers and bad for sellers. So this market going up i mean, i think probably here at vanguard, maybe as much as a third of our investors are investing regularly for retirement. And, you know, the rising market creates a larger Capital Value admittedly for what they have accumulated. It also creates higher prices when they buy in. So i think we should spend a little time less on the market. The investors also heard a couple of weeks of the markets rigged, the markets rigged. High frequency trading means you are losing to people who are in the know. What do you say to folks who think that its just not an honest game . Well, im a little disturbed. We started to talk about this before about michael lewiss book flash guys. It takes a subject, which is a legitimate subject, an important subject for discussion. High frequency trading. Very important to understand its strengths and its weaknesses. And he talks all about the weaknesses. Because balance books about strength and weaknesses dont do very well, and polemics do very well. Ive got to admit, as an author, im jealous of all that early publicity. But still, when it comes to High Frequency trading, its not an evil, necessarily. The game is not rigged in your eyes . No, i dont think the game is rigged by any standard that i know of. There are insiders that are taking this inside information going on, people with knowledge of orders that are coming, and they can bid up a penny so the buyer has to pay a penny more. And thats not good. I think its illegal and it ought to be stopped. I think many there must be much more disclosure. But every single trade ought to be disclosed. I think there ought to be regulations about how much trading you can do order cancellation. Some of the real weaknesses in the High Frequency trading system. But its to reduce trading costs and thats good. Its helped to create liquidity. I think thats good. And it probably has helped in the area of price discovery, and i think thats good. So when i balance it all out, i think its better to have High Frequency trading than not. But id add this kind of caution. And as we live in an area where we want everything yesterday. Speed is the name of the game. Nano seconds is the time period we think in. And the stock market is never going to be exempt from those societal trends that drive our lives every day. So its not going to go away, no matter what anybody wants. I ask this knowing its a mugs game, but ill ask you anyway. Do we belong at alltime highs right now . Is this a matter of the market sensing the fundamentals Getting Better in the economy, or is it simply just taking comfort in knowing that the Federal Reserve is still going to be there for them to keep the money flowing into this system . Well, id say that the market is probably a little on the high side of fair value, but not enough to make me take an investment action. I heard one of your commentators say 15 times p. E. Its 15 times expected earnings, expected operating earnings for the coming year. And if i look at actual realized reported earnings for the last year, the past year, previous 12 months, i get 20 times earnings. And thats a little above the norm. But over the next say ten years or even longer, dividend yields are going to contribute 2 to the return and theyll probably grow at the rate of earnings growth, which could be as high as five. So i think Something Like a 7 future return is going to be what people are going to have to accept, and the longterm return is nine, because the longterm dividend yield was not 2 , but 4. 5 . So we have to dividends are very important in the equation as i look at it, we just have to be prepared for lower returns and historical norms. It all sounds so logical when you say it. Because it is. The voice of reason. It is logical. Always good to see you, mr. B. Thank you. Thanks for having me on, guys. Jack bogle joining us from pennsylvania. Heading toward the close, about 35, 40 minutes left in the trading session here, the market hovering. Were up 90 points right now. We need a gain of about 127 for the dow to hit an alltime high. The nasdaq is up 41 points. Thats the big gainer today with a gain of more than 1 at this hour. Coming up next, how comfortable mike oneill should be for the fraud uncovered at its mexican operations. A frustrated citigroup pro weighs in. Plus, gilead, amgen among the big names expected to post earnings after the close. Were calling it earnings palooza. Well bring you those results the instant they are released. U be on at ts network for 175 dollars a month . Yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. 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Or, check out viagra home delivery, a convenient place to fill your prescription online and have it shipped at no additional cost straight to your door. Viagra home delivery. Get started at viagra. Com. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Citigroup shares higher today even as top executives face shareholders for the First Time Since failing the most recent fed stress test and also uncovering fraud at the mexican operations. Kayla town had a front row seat. I guess a tense atmosphere, yes . It was, bill, but actually wasnt as tense as expected for a few key reasons. Number one, the meeting took place about a thousand miles away from citigroups headquarters, and far away from where most of its investors are clustered. It took place in a hotel that citigroup actually owns. Number three, there are actually more citi employees in the room bussed in from local offices rather than shareholders. There are a couple of hours of very tense managing for citi management. The lines of questioning were why did they fail the feds stress test . When will the massive restructuring pay off . And why havent they met certain key benchmarks that they put in place over a year ago . You can imagine the chairman mike oneill and ceo mike corbat answered as best they could. They said theyre trying to slim down to become a safer bank so theyre not too big to fail. They are actively trying to hunker down their Risk Management to resubmit in 2015 for the fed. They hope to meet those shareholder benchmarks in 2016, even though theyre asking shareholders to be a little bit more patient than previously. The big items on todays agenda were of course, the vote. The Big Questions were rather shareholders would affirm kpmg as auditor, even amid some auditing issues. That vote sailed through. Also, they affirmed corbetts pay for 2013. 17. 6 million, even in a year where they failed the fed stress test and, of course, shareholders were expecting more capital. So michelle and bill, i think what you can take away from this is shareholders are willing to be patient for now. But well see what the Company Actually ends up doing and whether it can deliver. All right, dont move, kayla. We want to discuss this even more. Lets bring in jeff hart, hes principal at sandler oneill. You just heard what kayla was reporting from that meeting in solution. Are you satisfied with what they said today . Yeah, i think so. Historically, im used to dealing with institutional investors. They kind of view annual meetings as nonevents almost. Not a whole lot comes out of it. We used to call it evolutionary, not revolutionary. If you look at the problems citigroup have, its very disappointing they did not get approval. But really all that does to me is delay the capital returns. The numbers that came out are still very strong. I think were still looking at donating tens of billions of dollars of capital return to shareholders. While fraud is never a good thing, the order of magnitude is pretty small. Theyll be subject to fraud from time to time. It doesnt strike me as that bad. Can i push back against that . Its a very small percentage of citis revenue. I got it. But 400 million worth of fraud in one spot is a very high level of fraud. I mean, you dont have concerns about overall controls in auditing within the company . In general, when you cover the globe like they do, i always have concerns about how well you tie things together. But given how global they are, no, i dont have a lot of concerns. It doesnt strike me as that big a deal. If you look back historically, im talking over decades with citigroup, from time to time, things like this come up internationally, but i think the key here is you still see International Growth in revenues and profits. They tend to grow right through them. I think theyre going to do that here as well. Kayla, you know, the issue comes down on the failing of the stress test whether its an operational problem that they have or just a failure to work with regulators. I mean, they had a damaged reputation a damaged relationship with regulators for a time that they were trying to repair under mike oneill and mike corbat. Were they wrong . What happened there, do you think . That was a question, bill, that came up today, and chairman mike oneill said that he was confident in corbats relationship with regulators and his relationship with the board. It was simply a matter of not having the resources that other banks had behind this, not really having the fine tooth comb that other banks had. J. P. Morgan hired 7,000 people just in risk. They have more than a thousand people working on just ccar. Citigroup didnt really have that heft, but now it does. Jeff raised the question about their global reach, but thats sort of the elephant in the room at this point because citigroup has 35 local banks that its trying to merge under one roof. Its in over 90 countries and has the most global reach of any bank, but there comes a point when you have to wonder okay, are they too diverse . Are they too big . Can they really manage whats going on in each of these various localities or do they need to do a better job at simplifying what businesses theyre in, what countries theyre in and how theyre operating there. Are they too big . Thats an amazing question. I was reading your tweets today from the meet chg weing, which fantastic. The chairman responds at one point where he says, enough. We have already sold 90 billion in assets, we have arguably done more restructuring than any other company in history. Theyre approaching the restructuring level of greece, an entire country at this point with the size of that restructuring. Jeff, are you satisfied with that answer, 90 billion or do they need to sell even more stuff . They still theed to do more. I think theyve made a lot of progress. But when it comes to structuring like this, the old saying haste makes waste. I think theyre making rapid enough progress, but i dont want them to go out and do something too quickly, make a mistake, sell assets and take losses they dont need to take. I think its going to take time to work out, but theyve made a lot of progress along those lines. I dont think theres such a thing as too big to manage. You can be too complex to manage, but i really dont think citigroup is too complex to manage. Citis underperformance here and right now year to date really strikes me as a buying opportunity to get in. I really havent changed my opinion of the company at all over the last six months. We all know that when theyre putting doddfrank together and working on this too big to fail portion of the regulations, that citi was one of the companies they had in mind, youve sort of answered that question right now. But do you think the government Still Believes that citibank is too big to fail right now . Is that another reason they might have failed the stress test this time around . Lets also be clear here, the thing citigroup did wrong coming into the crisis and what almost led to the failure of the company was u. S. Mortgage lending. It wasnt proprietary trading, it wasnt their international presence. It was u. S. Mortgages they kept on the balance sheet. That is right under regulators noses. Thats where the problem was. I think theyre working hard to fix that. Theyre getting it fixed. But really that Global Platform is not where their problems came from. All right, thank you, both. The irony of that is were in st. Louis, which is where thats headquartered, so theyre really bringing light to that issue and its been a pretty weak business, and one that almost costed the company. Good point, kayla. Thank you. Thanks, jeff. Heading toward the close, 30 minutes left in the trading session here. Kind of gradually pulling back here. You know, if you look at a longer term track of the dow, the previous high, 15,576, if we fail to get above that in a reasonable way in a reasonable amount of time, we are in danger of doing a double top here. That would be technical analysis. There we go. And that would be bad. The calls and there it is. Were getting back to that previous high set earlier in the month. Its these kind of moments i wish we still had the telestrator. Terry duffy is with me next. Wait until you hear what his take is on the markets, which we just spoke about with jim bogle. Up next, though, get your green on. No, its not st. Patricks day, its earth day. Happy earth day, by the way. To mark the occasion, we are talking to the head of a top green mutual fund, which has seen some pretty green returns over the past year, as a matter of fact. Back after this. All stations come over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. 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The winning streak here is continuing. The nasdaq on track now for six Straight Days of gains here. 1 on this session. And look, its really been a 123 punch of some solid earnings, good Corporate News and of course, all of this merger mania. Lets start off with those earnings, because both netflix and comcast are two of the biggest winners on the nasdaq today after better than expected earnings. But take a look at the biotech index. Rebounding bigtime today. Up about 3. 5 , really after this pharma merger news, helping out the biotech sector. Also dont forget, we do have gilead earnings after the bell. And finally want to end up on facebook, because this stock is single handedly the biggest reason the nasdaq is up. Its having the biggest influence to the upside. Upgrading its rating on the stock to outperform. The company does report earnings tomorrow after the bell, so its going to be watched. But credit squeeze does think all these credit introductions will be helping out its average revenue per user. Michelle . Thank you, sheila. On this day, earth day, Nbc Universal is going green, raising awareness and encouraging our viewers to make environmentally friendly choices. Did you know, though, that you can also make green investing in ways that are green and friendly to the environment . Leslie samuelridge is here to talk about that. Leslie, what we used to call socially responsible investing, the hallmark of that was avoiding things. You didnt buy gun makers. Cigarette makers, things like that. Your method of investing, though, youre more of an activist investor in the green arena. You work with Companies Like kellogg to change their supply chain. You work with bed, bath beyond to eliminate some harmful chemicals. You take a more proactive rather than reactive style of investing. Right. In green century, we both screen out the worst polluters in both our funds, but also invest in environmental solutions. And as part of what we do, we do a lot of shareholder activism. So as you mentioned, we worked with kellogg this year to get them to change the palm oil supply chain. Do you do any cost benefit analysis along the way as you do that . Sure. I mean, when we are working with one of the companies in our funds, we are always looking at what is the Business Case for them to make this change. As well as the environmental case. And when theres a Reputational Risk to those companies, we feel its in their benefit to make a change that both will help their overall performance in valuation, but also will help the larger environment, and thats what our investors are looking for. Theyre really looking to align their values with their investments and make an impact through their investments. Let me ask mitchells question a different way. How do you rank i mean, where do you place the cost and benefit analysis on the list of priorities to invest. One of the knocks for years on socially responsible investing was that you were missing opportunities. Or that you were ignoring Financial Difficulties simply because it meant your screen on your social responsible portion of where you were investing. So where does the financial angle fit . Well, we evaluate Companies Based on both their financial performance, but then integrate in the environmental social and governance records. So its fully integrated into the stocks and bonds that we choose. But do you look first for Good Investments and see if they fit . Yes. Well, with our balance fund, we start with the large universe of 2,000 companies, and eventually it gets whittled down through both the economic and the esg performance to about 70 to 80 companies, and then some green bonds and other bonds. And then our equity fund, we invest in the longest running sustainability index. So its about 400 companies minus fossil fuel companies. Got it. Leslie, nice to see you. Happy earth day, by the way. Thank you, happy earth day to you, too. Thanks for joining us. Thank you. Weve got about 17 minutes before the closing bell. The Dow Jones Industrial average right now is up 80 points. So we are fading from the highs of the day. The nasdaq is up roughly 46 points. Earnings coming up at the top of the hour. We have at t, yum brands, amgen, well tell you what the numbers are and then well bring you those earnings the instant they hit the street tape. Keep it right here. Also coming up, dont miss my exclusive interview with former s. E. C. Chairman harvey pitt on whether bill ackmans joint bid for allergen is a legal form of frontrunning that ought to be made illegal. Stay with us. Ith us. 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. slurp hear that . Thats the sound of your electronics sucking power from your outlets. So unplug youll save energy and money. slurp the more you know. Another very busy after the bell session expected. We have mike terrell. Thats right, weve got two of the big four biotechs reporting after the bell today. Analysts look to the Big Companies with earnings growth. Were looking at amgen and gilead today after the bill. Gileads hepatitis c drug is the big one to watch. The whisper number they say could be double. So its going to be really hard for gill yacht to top expectations, but that is the big driver to watch. The other one is amgen. Analysts say it could be harder for amgen to have a beat on revenue. Theyre going to be looking at the pipeline for potential updates on their cholesterol drug called pcsk9. Meg tirrel, by the way. Meg knows everything about everything on biotech. She is terrific. Then theres at t and yum brands, among the other big names reporting results at the top of the hour as well. Dominic here to tell us what to expect. With at t, one of 11 dow industrial components slated to report numbers this week. Average analysts here looking for earnings of 70 cents per share. Special attention with at t will also be paid, as always, to trends in the Wireless Subscriber business, whether theres additions or subtractions from that number. And while not a volatile stock around earnings days itself, at t shares have fallen in six out of 11, the last seven reporting days. So at t, a volatile one. Not as much. But still a downside stock. And then theres yum brands, owners of taco bell, kfc, pizza hut. Here analysts are looking for shares of 80 cents a share. Of course, the big story here, always will always be about china where yum gets around 60 of sales. Traders are gearing up for some volatility on this stock, though, postearnings. Options markets are already pricing in an expected 5 move on the stock, so keep a close eye on those yum earnings. Back over to you. He knows everything about everything, too. He does. Ask him anything, hes got an answer for you. I try. 13 minutes left in the trading session here. We could get an alltime high if we get a little buying here at the end, right . Yeah, its possible. Possible. After the close, the head of the chicago america tile exchange is going to join us, terry duffy on the markets and High Frequency trading. Plus, former s. E. C. Chairman harvey pitt gives us his take on bill ackmans play for allergen. Harley davidson surging after the motorcycle makers bottom line blew past estimates. Going to speak with harleys president and ceo about his plans to take harley to the next level and the next generation. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Welcome back. Back to dom now for this quick market flash. The shares are risings up, after it became the target. It continues to add to its positions. They believe that shares remain dramatically undervalued and is urging to initiate a Share Buyback program with its cash balance sheet. Those shares rising up to session highs. Back over to you. Okay, dom, thanks very much lets talk about this market. The dow up about 83 points with about eight minutes left in the session. About 40 points now from an alltime high. We were pretty close to it earlier in the day. But weve since been pulling back. Joining me once again, stephen wood. We have terry dolan now of benjamin and gerald joining us. What have you been doing with this market . Up around these ranges, we start to sell. I think we talked about it earlier, that if you took out the low in february, and you look at the market since january, really trading between 16,000, 16,600 if you want to call it that way. For me, its following the trend. I suspect that the nasdaq needs a little work. I wouldnt think were going to be off to races right now. Its a nice rally and its nice to see the strength come back. Youll take what you can get for the moment. Looking forward to trading back down into the range. Was it you that said we were at 15 times earnings . Jack bogle took issue with that. Hes looking at trailing the fact that the earnings that have come already were at 20 times earnings at these levels. He thinks were a little expensive in this market. Thats the point i made. When you look at the small cap space versus large cap, the valuations have been rich coming into 2014. Less so in large cap space, so from our perspective, when you look at it from a capeningle, i think that the smaller cap would be a little more pricing. But you also want to look globally. What would be a global credit strategy looking at currencies, looking at security selection and not just taking Interest Rate risk within a bond portfolio. I think a global one on top of that. Why did we get this rally right now . Six up days in a row. What is that about . You know, the dow traded down to the lower end of its range. And theres no real rhyme or reason to my view. Market trading with confidence. Looks like its not ready to fail. At the same time, its not ready to break out. The longer it trades within that horizontal range, more positive, if its positive, the longer the breakout will be for sure. Were going to take a quick break here. I want to show you guys a chart of the dow. Well get your comments on that, as we head toward the close here, and then after the bell, get ready. Here we go. Amgen, at t, yum brands among the big names unveiling their latest financial reports. Well get these stocks. Could they be the big movers in the afterhours session and could they affect the markets tomorrow . We have full Team Coverage coming your way at the top of the hour. Well see you then. Stay tuned. Ome over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. For what reality teaches you. Firsthand. E. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. The 2014 glk. The engineering, and the experience, of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Two and a half minutes left, and we are pulling back now. The dow was up well over 100 point. Now its a gain of just 67 points. This is the dow this year, going back to january. December 31 is when we hit the alltime high. We had the correction in february, or at least the decline. Wasnt a fullblown correction. Came back, had the selloff, and weve come back. This is the high i was talking about. If we fail to get above that i think we could be near a double top. A reminder again, earnings coming out of the top. Four biggies to keep an eye on. Theyre going to have their hands full watching for numbers for gilea gilead. Will be very interesting to see about the pricing. Will that put pricing pressure on their margins going forward. Wont be affected by congress, but in the future, it will be interesting to hear what they have to say about that. Meg tirrel will have more on that coming up at the top of the hour. Weve got terry and stephen still with me here. Possible double top. What do you think . I think theres a lot of Technical Work that would suggest that the market is in for a slight downdraft. I wouldnt say the whole place is going to fall apart, but the moving average has certainly deteriorated. The nasdaq rallied quickly. The nasdaq is what we should be focusing on. Thats where a lot of the action has been, this year especially. And biotech has been one of the leaders in that sector as well. In terms of high fliers, yeah. Being mr. Russell, i would look at the russell 1,000. The smaller biotechs, right . Theres a difference between a peak and a high. When you look at the highs being put in by the market, that doesnt necessarily lead to the precipitous dropout. So highs are being placed in, but i think it comes back to fundamentals. When you look at that broad asset allocation. I think top line is going to come for a lot more than bottom line. Security sector is going to drive a lot more value. Weve got a good sampling of what Corporate America is going to tell us here in just a moment. Good to see you guys. Thank you for being with us. Heading toward the close, welloff the highs for the session for all the major averages. Are we putting in a double top . Well find out. But these earnings will have something to say about that. Coming up. Stay tuned for the second hour of the closing bell. Ill see you tomorrow, michelle. See you tomorrow, bill. All right, welcome to the closing bell. We are at alltime high wash today. Higher by 67 points, welloff the highs with still positive day. Nasdaq higher by 37 points. Lets bring in todays panel. The Inflation Rotation Fund joins us. Our own sharon epperson. Kevin oleary. Also with us, fast money trader brian kelly. Brian, what explains this rally . Have earnings been good enough . Is the economy good enough . The bar is very low for earnings. So they are good enough to get over the bar. I actually think today wasnt that great of a day. Why . Great news from netflix. We had china cut reserve requirements. For me, im not sure this is an incredibly strong market. I wouldnt be going all in right now. Michael, do you believe this rally . No, because i dont think bonds believe this rally. To brians point, the fact that yields are still not really rising substantially, its kind of troublesome. The fact that utilities, in particular, which my colleague and i wrote about in an awardwinning paper, are still strong, is kind of problematic. I dont think this is the right kind of environment here. We could, you know, just be seeing this conditioning effect here. Every single time we had a dip, we had this v formation in u. S. Equities. At some point, its the last v. What is it about utilities that bothers you . Look, utilities are not supposed to be outperforming in a broad bull market. Going back to 1926, what we found out was that utilities tend to lead and increase corrections. Thats over many, many decades. Theyre the best performing sectors. So when they do well, we should all be worried. Kate kelly, i see you nodding your head. Im just clueing in to what he said about the disbelief in this rally. If theres one consistent theme ive heard from the traders i tend to talk to, is that theres going to be a lot of volatility. So in general, i think people are optimistic about 2014. I think they think well end higher, although its not going to be as visible as last year. But whether or not were going to see such ongoing euphoria. You need this to keep rallying. Absolutely. What we need to see right now is what were seeing. The volatility is what everyones been talking about all yearlong. What ive been looking at as well is what weve been seeing in the commodities mark. Where today we saw a significant pullback in oil prices. Not looking at the paper running the market, but also looking at some of the fundamentals of this market. Maybe were seeing that in equities as well as commodities. Oil case in point. I know youre investing in portable cupcakes. But what about stocks. How do you feel about this market . We could get somewhere around 7 returns out of the market this year. About 2. 5 of that coming from dividends. The reason we didnt get a whole lot of follow through today, even though it was merger tuesdays, and this sector in pharma, people like me remember back, you know, almost over a decade ago, fizer was inquisitive. They brought warner lambert. It was all about execution in the end. That was dead money for years and years. So im not that excited about these deals until you can show me where nature is. Just because merger participants say its going to make more money, doesnt make it so. You know what, though, kevin . Health care brought a lot of strength to the market today. I actually spent the day looking at this valiant allergen proposed deal. Can you hold on one second . Weve got to go to dominic choo. Hes got the at t numbers. So michelle, what you should know right now, the stock for at t is up marginally well call it a half a percent after hours. At t with a 71cent earnings adjusted earnings per share number. That beats the average analyst investment by one penny. Revenue coming in at 32. 5 billion. Thats in line with analyst estimates. Wireless revenues come in at 17. 9 billion. They do see 2014 consolidated sales growth of at least 4 . So 4 plus consolidated sales growth for 2014. They also see adjusted earnings per share growing in the mid single digit range for 2014 as well as the Capital Expenditures slated for this year to be in and around the 21 billion range. So again, a beat on earnings, inline sales. They say Revenue Growth will be about 4 or more in 2014 with earnings per share slated or expected to grow in mid single digits. Right now, shares are up about well call it a percent and a half now. Were still looking for subscriber numbers at this point. Thats right. But wireless revenues, the total number is up 17. 9 billion there. Got it. Lets see the net ads when we get them. Lets go over to meg, whos got gilead earnings. Michelle, a big quarter for gilead here, as we told you earlier. The new hepatitis c drug was the one to watch, blowing estimates out of the water 2. 27 billion in First Quarter revenue for sovaldi. Thats gileads new hepatitis c drug. That compares with analysts estimates of as high as 1. 38 billion. So really blowing estimates out of the water. Looking at the top line at revenue, 5 billion. First quarter revenue for gilead. That compares with 3. 98 billion consensus estimate. You get 1. 48 a share, compared with 91 cent estimates. This is a big quarter for gilead. The shares have been halted, looking like theyre going to open again at 4. 30. Im glad you explained them being halted. I was wondering why we werent getting a reaction. Thank you, meg. Brian kelly, are these numbers enough to support the move we had in stocks . I think its hard to extrapolate gileads earnings to the rest of the market. What i will say, what you can extrapolate from it, its not so much the news that matters. Its the reaction to the news. Lets say at 4 30, we get a pop in the stock. If that starts to fade and we wake up and that stock is fading, thats a very bad sign for the market. Brian, what about at t . Whats your take on that . I think at t is fine. I would look as we get into the Conference Call what theyre saying about how much theyre going to pay apple, because i think it has more of an effect on apple than necessarily at t. Certainly a surprise here on at t, but we saw it with comcast this morning, its not that bad in that area. Kevin oleary, i want to go back to you. What we were talking about in terms of mergers going on in the pharma sector. Because historically, when we have seen a lot of m and a, people have said okay, that is really good for the markets. Other companies are seeing value. They want to buy. Thats lifted the entire market. Youre suggesting, though, that theres an historical memory here, that we remember the last round of pharma deals that didnt turn out to be so good, and does that not maybe give us the same boost this time around . Is that what you were suggesting . Pharma is a core holding for me because im a value hold investor. I only buy securities or at least equities that buy dividend yields. Thats what pharma has done traditionally well. I was feeling better about pharma after we got through the whole obamacare thing because we have more certainty. But the only reason you do a deal in pharma, and if you address me as a shareholder, is tell me how its creative. Dont tell me the vision and how show me how its acreedive means when you buy that company, it immediately adds to your bottom line. Absolutely. A company will say this will be acreedive in two years, in other words its not going to add to our bottom line in two years because there will be costs involved. But oftentimes, a deal can be immediately acreedive. The day we buy it, that means its going to add to our profitability, right . Absolutely. If youre telling me it takes two years to become profitable, or make me more free cash flow, that means you overpaid for it. Thats why youre not seeing as much optimism as perhaps you thought youd get. People like me are elephants. They remember. I remember. Amgen is out with earnings. We just saw a blowout quarter from gilead. Not the same for amgen. Looking at revenue for the First Quarter, 4. 52 billion. Compared with analyst estimates of 7. 76 billion. Eps also missing, 1. 87. Earnings per share adjusted figure there. Compared with 1. 94. Looks like some of the drug sales were light, thats whats driving sales to miss on the top line. Enbrel is a little bit light. Dont move, meg, we want to bring in david nelson, get some reaction on the biotech earnings. I understand youre a gilead shareholder. The numbers, the numbers from amgen and gilead, tale of two different stocks. Amgen missing, gilead a really big blowout. Im looking at these numbers for gilead. It is a blowout. Not only did they beat the number, but they took out the highest estimates from everybody out there, and the more important number, the sovladi number, thats a blowout as well. I think consensus was around 1. 3 billion. So over two billion, thats pretty good. I think what investors will be looking for in the fall is any discussion of discounting. We all saw what happened to the stock, received the letter from the house subcommittee. To pricing is key. Folks who are watching the screen. Meg tells us its not going to open until 4 30. Thats why we dont see any activity. Why such a huge blowout number . What did they sell so much of . This is such an important drug for them. Really, gilead its really gone from being a gross stock to a value stock at this point. People have to understand with this drug, it may be very expensive. Were talking about a cure. This is not a chronic treatment that well go after years and years and years. When people take this drug 12 weeks later, 90 of them are cured. Its a big deal. Amgen, your thoughts . Amgen is a miss on top and bottom line. What is the inventory drawdown look like. They raise prices at the end of the year. There was a lot of restocking at the end of the year to beat that price hike. In other words, google loaded up at the end of the year. You see the stock lower by about 3. 5 . Both amgen, both gilead, very different stories. What do you do when you have a bundle and you have all of these stocks . The earnings on an individual Company Really dont make a difference to you as a shareholder in an xbi or an ibb. Its really the sector as a whole. I think on average, the sector most of the etfs are down about 25 . So its a lot more attractive at these levels right now. What do you think gileads going to do when it finally opens in 20 minutes . If it doesnt ramp higher right when they open it, ill be extremely surprised. Theres something in these numbers that were not seeing right now. Wouldnt you think theres a huge influx of buyers at this point, which is why they had to put on the Circuit Breakers . Youd think well see a big hop. Is that why im not even sure. Its usually when theres an imbalance in one direction or the other, so you would assume its buying it. Or could be halted for news pending or they want to wait for it to come out. I havent seen the short position. Ive got to believe its going to open higher. Dominic choo has more on at t. You mentioned the subscriber numbers. We have an indication what those look like now. Perhaps some of them coming in maybe just slightly below some analysts estimates. What we do know is that wireless revenues were up 7 postpaid net additions of 125,000 for the best First Quarter in five years, says at t. Postpaid subscribers. Not the ones who prepay and have those go phones. Postpaid subscribers added 625,000, the best in five years. Total net additions of more than one million. Also more than one halfmillion editions, both postpaid and prepaid, along with the 13,000 tablet subscriptions for those particular products. 1. 1 million new postpaid smart phones added, and again, 92 of those new smart phones are 92 of postpaid phone sales are also smart phones, so it just goes to show you where the direction at t is going in in terms of customers. Theyre all buying smart phones. Theyre adding new customers. But theyve got 625,000 postpaids for the best First Quarter in five years. Michelle, back to you. All right, dom, thank you. Stocks lower by 27 cents in after hours trading. Thank you, david nelson. Super helpful on the biotechs. Be sure to tistick everybody coming up at 5 00 p. M. Eastern time. The rest of the panel is sticking around. Bill ackman took a big stake in allergen. Then he launched a takeover bid for the company. Thats got Cnbcs Jim Cramer up in arms. How does someone kind of basically know that theres going to be a bid and be allowed to accumulate stock. Classically, that would be fraud money. Is cramer right . Thats next when we speak with former s. E. C. Head harvey pitt exclusively. Also, talk about high on the hog. Investors loving Harley Davidsons earnings beat. The stock up more than 7 . Find out whats revving up sales when we speak exclusively to the motorcycle makers president. And then former minnesota governor Jesse Ventura going off on ceo pay. Ceos, just because theyre the boss, that doesnt mean they work any harder. You think they sweat more . You think they need a different deodorant from the lay borer because their work is harder . I dont think so. Hell be here to discuss those comments. I have a feeling kevin oleary will have something to say about that, right, kevin . Well talk butt that later in the show. Dont move. Ve. And what theyve been through lately. Ve. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Today is tuesday today, we greet you. Treat you. Care for you. Today, you can come to Cleveland Clinic for anything, everything or just to get that thing checked out. Big, small, and yes, the best heart care in the nation. Its here everyday, for everyone. Thats the power the power, thats the power of today. Cleveland clinic. Call today, for an appointment today. The story of the day on wall street is easily billionaire investor bill ackman and the deal he made to try and take over allergen. For the past two months, ackman has been buying up allergens stock. Kate kelly, what have you been seeing, what have you been talking about . You were at the Investor Presentation today. It was a fourhour extravaganza. Ackman style. I thought he was going to come in under the length of time, but he did not. Anyway, we heard from mike pearson. We also heard extensively from ackman. In terms of the Insider Trading session, there were a number of questions about that to ackman. I thought one of the most interesting came from one of valiants trading partners. Said youve put 4 billion into our company, but we think with our math and the options structure in this deal, its only 30 million. When is the 4 billion going to come or the rest of it . Ackman said look, because of s. E. C. Rules and some of the procedural things we had to observe, we had to do options. We had to exercise those. He says hes going through the proper channels on that. Very interesting deal for him, michelle. In the past, hes gone active, but not with the assistance or really the back of a corporate takeover company like this. So really, for him, its an enviable position for an activist hedge fund. Not only does he make a bold statement, and he earns 10 now, so he has the ability to control his own destiny, to some extent. Lets bring in now, we have an exclusive interview with harvey pitt. He used to run the s. E. C. And explore more of the question. Hes now a ceo at catalrama partners. Jim cramer has been very critical of ackman. Will be to what he said this morning on squawk on the street. I heard it no. Okay, basically we dont have the sound, mr. Pitt, but bottom line, he said, how is it legal for okay, were going to play it now. How does someone kind of basically know that theres going to be a bid and be allowed to accumulate stock . Classically, that would be front money. If we had an s. E. C. That was on the case, i think that they would opine on this. Theyre not going to. This is going to be blessed, i believe. Everythings going to be fine. Its unfortunate because i dont think it is the way that things should be done. But being right and being legal are two different things. What do you think . Is it illegal . I dont think theres enough of a basis to suggest that what happened is illegal. One would have to know when ackman started negotiating with valiant. But what is clear is that prior to his consummating an actual deal with valiant, he was in the marketplace, and my suspicion is the s. E. C. Will look at that. And try to determine the facts to see whether he was front running valiants bid. Thats the real issue. Heres what i dont understand, though. The minute youre going to do a hostile, you start accumulating the stock, right . And you know theres going to be a hostile coming. You could never do a hostile if you werent permitted to buy the stock of the company that you were going to bid on. Thats if its your information. The way that you have a problem, is if you know somebody else is going to make a hostile bid and they are searching you out as a possible partner and youre not yet their partner, then youre trading in advance of their information and that can be problematic. Well, i can help with the chronology here. As far as i was told, there was a mutual friend involved. But essentially, mike pearson, who runs valiant, sought act man out. I believe they met and agreed to go forward around late february. Ackman began amassing shares of the takeover target allergen. Today he now owns 9. 7 . So what do they argue, that they have a deal . They didnt reveal it until late last night. Harvey, based on those facts, what do you think . I think based on those facts, it would be hard to say that the front brand valeants offer. The difference here is ackman has never learned the meaning of deferred gratification. Hes a shorttermer. One of the issues is this bid, at least his part of it, really serious. Or is he just trying to profit from a quick up flow in the price of allergan stock. I think four to six years is their average. Look at jcpenney. He rode that almost all the way to the bottom. And in better cases, he rode General Growth Properties all the way to the top. So he has been a longer term holder in a lot of cases. Herbalife, he started amassing that about two years ago on a short basis. He expects it to go to zero, but i wouldnt say of him that hes a shortterm guy. I know hedge funds tend to be. He has a shorter list of holdings and i think hes committed to them on a longer term basis. I think in both the case of jcpenney where he lost a fortune, and in the case of herbalife, he held on because he didnt get the shortterm bump in stock prices that he was looking for. Thats a place for the marketplace to decide. Whether any bid by ackman will have the credibility that he needs in order to pursue this to the conclusion. Hold on. The herbalife position, for example. He starts amassing a short position knowing hes going to do a massive presentation and try to punish the stock. Based on what were talking about here, that could be considered front running. That could be i mean, when you become so powerful yourself that you could drive the stock and trade, what do you do . Are you not allowed to trade at all . Well, in the case of herbalife, he seemed to be moving from trying to inform people about problems with the company, which is a positive, and actually just trying to get the stock price to move. Now, he succeeded in generating at least some investigations, but theres still no facts that support his positions, and everything he did was simply trying to get the price to move lower. Even amassing his billiondollar short took seven months. The question is, as the old adage goes, can he stay solvent as long as if hes right, the market stays irrational. Kevin oleary, you want to weigh in here, please . Yeah, absolutely. I think we should take a History Lesson on what he did with cp, a company that he took a longterm view in, went to shareholders, brought his case. I listened to him and he said look, i see tremendous value, im going to make massive changes. But in the end, youre going to make money right beside me. And thats exactly what happened. Ill reinvest with this guy any time he comes to town. I think hes a very good operator in terms of finding and mining out value and doing something about it. He has the guts to take the criticism. Insider trading, the fact that hes going to take a position one way or the other, the minute we know his position, its going to move the stock. You are making the assumption its ridiculous. You are making the assumption right now that he has a done deal and he will exit at a profit. Exactly. Theres no certainty. This isnt front running. The front running is when you move and sell and you can show your profit in an untoward basis. That did not happen here and it hasnt happened yet. And he strenuously made the point that hes going to be a longterm investor in valeant. Well see if that is the case. I would say there are a lot of investors in the audience and they pummelled him on this point. Whats your exit strategy, how long are you going to stay with us. He kept repeating im here for the long haul. Thank you so much for joining us. If you read his actual agreement, youll see he is not committed to being a longterm investor. That is one of the things that he omitted from the agreement. Harvey, in the long run, were all dead. All right, final word, thank you, guys. Really appreciate it. Mr. Pitt, thank you, it was really great to have you on on this important issue. Catch more on activist investors when david faber sits down with carl icahn later today, from the active passive investor summit in new york. Sounds psychological, doesnt it . Were going to stream it live on cnbc. Com at 6 00 p. M. Eastern time. Coming up next, dont miss an exclusive interview with terry duffy. Hes going to weigh in on everything from the bill Ackman Allergan controversy to High Frequency trading. If you dont pay your taxes, youre going to get fined or you go to jail. But if youre an irs employee, apparently you get a bonus. Yes, this unbelievable story is going to make your blood boil. And then later were going hog wild with the president of Harley Davidson. Hes going to tell us exclusively how the iconic Motorcycle Company just blew past the earnings estimates, later on the closing bell. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Could save you fifteen percent or more on car insurance. S Everybody Knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Gilead stock just reopened after reporting earnings. Dom chu has the details. What weve got here is an upside move. A little more measured, but still a pop. Just opened about 30 seconds ago, shares of gild are up about 4. 5 . Now close to 5 . Volume is about 414,000. Now about half a million shares. So the share trading, the volume is picking up, but you can see there towards after market session highs, up about 5 . Of course, very nice numbers in terms of sales and revenues from the likes of gilead. Well keep an eye on the stock as the afternoon progresses, but for right now, a nice 4 to 5 move on gilead in early after hours trade trading. Its been a bumpy First Quarter for the market, as michael lewiss Controversial Book put a spotlight on High Frequency trading and caused public outrage over his comments that the markets are rigged. Terry duffy is president and executive chairman of cme group. We want the talk about High Frequency trading in a second. But first, weigh in on the conversation that we just had with harvey pitt, referenced bill ackman and his position in allergan ahead of this takeover bid. It will be difficult for me to weigh in too much, because i only caught bits and pieces where they were talking about the transaction. It seems to me that theres a fine line that everybody seems to be walking here. Im not completely up to speed. Are you suggesting dill ackman joining valeant, building stock. I think any time they try to out the it in a certain direction, try to manipulate the price of the product. Cnbc couldnt exist. Cnbc couldnt exist. I mean, every person who comes on probably owns the stock that theyre talking about the position on. We debate buying and selling every single day here. All the presentations me made to certain investors. Its really difficult to start prosecuting Insider Trading at this point. Listen, i agree with you. You asked me my opinion, im saying that if somebody you called it during the interview, is this front running . And i said i wouldnt call it frontrunning. Id say someone trying to manipulate a price. Mr. Pitt, former chairman of the s. E. C. , said this guy has made certain trades for shortterm gains, really not a longterm investor. Others say it differently. So this is not in my ballpark and i will stay out of the conversation. High frequency trading, is the market rigged . Absolutely not. 525 , according to cnbc. Had that statistic out there, so its really difficult to say Something Like that would be rigged. The market has created a lot of wealth for a lot of people. Created a lot of opportunity for companies to grow. And in return, it gives companies that opportunity to hire more people and help with unemployment. I see you nodding your head. I agree. I think the issue of rigged or not, if you dont have High Frequency traders in there, i think it would be fairly wide. We used to trade in teenths. Something like half the volume of the United States trading is driven by High Frequency traders. If you remove them completely and remove some of the arbitraging they do, which does in turn benefit the retail investor, youll have issues with how youre trading overall. The trading that were seeing here in the stock market and the trading and commodities market is very different. When you talk about High Frequency trading, its a very different animal. When you talk about how it works differently. Its a great point. I wanted to raise it. When youre looking at fragmentation in the marketplace, youre looking at 13 different exchanges, 40 of the volume being traded in dark pools. Now youre trying to determine the real price, as brad was referring to it on this show. In our world, youre operating in a vertical silo. When that order goes into one of cmes markets, the only person that knows about that order is the person who entered it. Its actually impossible to front run that order. But when you put an order into another Securities Exchange thats fragmented, if it gets partially filled and goes somewhere else, the allegation by mr. Lewis is the High Frequency guys are chasing that order to a different pool of liquidity. Is that true . I dont know. But if people are front running any client, that is against the law and should be penalized. Can i just ask a kind of devils advocate question here. Youve had some questions raised at the cme i believe about issues of blatancy wheres your mic, kate . No mic. To be continued. I think the issues, theres still people out there that say some of the things that have been going on in terms of with electronic trading, if you have your server right next to the exchange of severs youre going to have a better price, it happens on the cme groups exchange as well as the nyc. Is that true . No, whats important about location and where its located is really important. So when brad referred to looping the shoe box on the show here, what we do at cme group, is every box in our colocation has the exact same length cord, so whether youre on that side of the room or right next to the server, its right theyre all the same distance, so it cant be any different. And, whats really different about what we do, we will sell a single sliver of a server to a small participant if they want to be colocated. We have commercials in Agricultural Products and Energy Products and other products that are colocated with us, at a very affordable rate. A lot of terminology here. My audio problems are fixed now, i apologize. I was just curious. Youve had some concerns raised about issues of latency a reference to speed. Some people having Faster Technology than others. Not necessarily in an attempt to frontrun. But what ends up happening is those with the Faster Technology get more favorable prices. Do you disagree with that that happens . Its doesnt happen. No one knows about their order but themselves. I think someone received their market data before they got their fill. Or they received their fill and the market data went up. We have shrunk that latency into what is called the speed of light. You can only go so far. But if its order for order, market data for order comes out the same time. You have to realize theres thousands of contracts and thousands of messages getting pushed out to certain clients, they might get their confirmation first and then the quote goes up on the screen. They know they got filled. And then they see the quote. But theyre the only ones that got filled. They dont have an opportunity to go run around the 13 other exchanges that have the same exact product. Its impossible in our world. So theres a huge, huge difference here. Thanks so much for joining in on two controversial subjects. I wasnt good on the first one because thats not my topic. You did fine, i think. Thank you so much. What a ride it has been for Harley Davidson shareholders today. Shares revving higher after very strong earnings. So whats driving sales, and can harley keep sozooming past the competiti competition . Well speak to the ceo next. Jesse ventura is no fan of american ceos. Ceos, just because theyre the boss, that doesnt mean they work any harder. Do you think they sweat more . Do you think they need a different deodorant from the laborer because their work is harder . I dont think so. He says physical lay borers should earn the same as ceos. Jesse is here and kevin oleary is ready to talk back. That showdown is later on the closing bell. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mfs. Carstheyre why we innovate. Theyre who we protect. Theyre why we make life less complicated. Its about people. We are volvo of sweden. Harley davidson shares revving higher by 6. 5 today, easily beating wall street estimates tha s thanks to strons overseas. The chief operating officer joins me now. Good to have you here. Thanks, great to be here. Tell us about the strength overseas. Considering that still, the vast majority of your sales are domestic. Well, clearly, investing in International Growth. Weve added over 120 new dealers outside the United States over the last four years. And our Distribution Channel is one of the strengths of Harley Davidson, so being able to reach customers with our powerful brand and our products, which are increasing more tailored toward the tastes of what we call our outreach segments here in the United States, as well as our international customers. Were able to realize the potential of the brand, wherever it is around the globe. Its a fantastic story, but only part of it. Clearly, the stock is reacting really well today, but robin farley, shes at ubs, puts out a note and she cautions a little bit. She says maybe sales werent as good as they look because of your early shipment of piglets . What are piglets . I have no idea what robin farley is referring to there, but i can tell you that, you know, the u. S. Is clearly a big part of our business. She explain that you ship these motorcycles that you can ride in training courses and arent necessarily for sale . Yeah. We Just Launched the street motorcycle, which is an allnew platform for the company. It comes in a 500 cc version and a 750 cc version. Were just now shipping those to support our Rider Training Program here in the United States. Just a fantastic gateway into the brand for new people to the sport. But importantly, the street motorcycle we see as a huge opportunity for us outside the u. S. Back to your point about international, given that the International Market is much more heavily oriented toward a smaller displacement of motorcycles. This is great for Harley Davidson to reach people here in the u. S. Through riders edge as well as direct sales at retail. Plus, all those International Opportunities that we have around the globe. All right, well thanks so much for joining us. Thats the street product, yeah. Okay, thanks so much for joining us. And the stock obviously reacting really well to your number today. Thank you, were very pleased. Just ahead, you cannot make this up. You just cant. The Internal Revenue service gave 2. 8 million in bonuses to problem employees, including, are you ready, to one million workers who didnt pay their taxes. How does this happen . Were going to try to explain that next. And still to come, he was first known as wrestlings the body. Then he was elected governor of minnesota. Now Jesse Ventura is a selffashioned man of the people and hes coming up next. Tdd 18886486021 there are Trading Opportunities tdd 18886486021 just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you tdd 18886486021 out there. In here. Tdd 18886486021 out there, tdd 18886486021 there are stocks on the move. Tdd 18886486021 in here, streetsmart edge has tdd 18886486021 chart pattern recognition tdd 18886486021 which shows you which ones are bullish or bearish. 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So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Make a my financial priorities appointment today. Why relocating manufacturingpany to upstate new york . I tell people its for the climate. The conditions in new york state are great for business. New york is ranked 2 in the nation for new private sector job creation. And now its even better because theyve introduced startup new york dozens of taxfree zones where businesses pay no taxes for ten years. Youll get a warm welcome in the new new york. See if your business qualifies at startupny. Com now to this crazy story about irs workers getting bonuses even when they dont pay their taxes. Eamon, i misspoke during the tease. I said there were a million workers. They gave a million to workers in bonuses. Clear it all up for us. Its all about dollars, not people. This is one of those stories thats going to be extremely frustrating for those of us who paid our taxes on time and appropriately last week on april 15th. In the report, they found that irs employees, over a thousand of them, got bonuses, even though they had federal Tax Compliance problems. Those workers received more than 1 million in total altogether and more than 10,000 hours in time off. The irs says in this report that it plans to conduct a study on a possible new payment policy. The irs has also told cnbc that none of these bonuses went to executives. Yes, its apparently true that if youre not current in your taxes, you can still get a bonus as an irs employee. Amazing. Only a thousand workers who didnt pay their taxes. The treasury secretary had some unpaid taxes. Yes, timothy geithner. These things do happen. It goes around. Coming up next im not going to go too far the heavyweight matchup weve all been waiting for. Jesse ventura says ceos should make just as much money or the same amount of money as physical laborers. Good thing jesse is off the grid and kevin oleary is on remote because the sparks are going to fly when we come back. [ male announcer ] what if a Small Company 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. All right. Kevin oleary. I want to get thoughts on this story about irs employees that got paid bonuses even though they didnt pay their taxes. Well first of all, im very happy that we have a mechanism in place that can discover this and shine the light on it. Thats the first thing im happy about. But every time we go through april, every year, we start to focus on the irs and taxation and usually theres a senator or congressman, this year its cart pillar. Wet as a nation we never fix the problem. 1 million of overpayment to 1,000 employees is immaterial. We needed a president the next one perhaps will say, look, im going to make it my task the next four years whoever that might be, man or woman, to fix this fundamental flaw in our economy. Taxation is broken in america. All right. You know what, we got Jesse Ventura ready to go. First were going to go to break next. And then Jesse Venturas camera is good. Hes going to tell us why ceos should make the same amount as physical laborers. At the active passive investors summit in york, cnbc will stream it live at 6 00 p. M. Eastern time, 3 00 p. M. Pacific. Were back after this. Life less complicated. Thise its about people. We are volvo of sweden. Its the get growing sale from adt. 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Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. So hes known for his battles in the wrestling rangd political ring and now on his off the grid program. Former minnesota governor Jesse Ventura joins us. Governor good to have you here. Heres some of what you said. Ceos just because theyre the boss, that doesnt mean they work any harder. Do you think they sweat more . Do you think they need a different deodorant from the laborer because their work is harder . I dont think so. So its all in what you define work and as i said before, it seems if its physical work, it seems to be viewed as unskilled. Where if its mental, then you have all these skills and we pay more for skills than unskilled. So can we be clear. We have been teasing that you think laborers and ceos should make the same amount of money. Is that true . No. No. I didnt say that at all. Naturally the ceo runs the country. Im making the comparison that we seem to cheapen physical labor. We call that unskilled. And therefore, we pay that minimum wage. When the point im making is most ceos are incapable of doing physical labor. They sit around with suits on all day pushing pencils. The point im making is anyone that works a 40 hour work week, if you work 40 hours, you should not have to be subsidized in any way, shape or form by the government. You should be able to earn a living if you work 40 hours a week regardless if its physical labor or pushing a pencil as a ceo. Kevin oleary, what do you think of that . Jesse do you think you have any right to tell a ceo what his pay should be when you dont own a single share of his company . No, im not saying that at all. I love main stream media, how you people love to put words in peoples mouths. I will repeat again. I was making the point that we somehow diminish physical labor. We call that unskilled and therefore, we can pay so much less for someone who has to physically sweat and labor, digging a ditch, whatever it might be. I got that. Look, thats a i understand what youre saying. Well, then you make big money. Im just saying i dont say the ceo should never get paid the same. If you own the company, you make as much as you want to but ceo pays have gotten way out of line compared to kelly has got a question here. Governor, very interesting point. I think many people would agree. But i feel like youre making two different arguments. One is to say the system, the free market should reward this physical labor much better than it does making unnecessary a government subsidy such as minimum wage. On the other hand, were in this capital system where some of that labor is not well compensated therefore, we have a minimum wage and movement to raise it. It seems like theres an impasse there. Well, there certainly is. Like i said, anybody that works 40 hours a week should get paid at a rate that they shouldnt have to go to the government and be subsidized. I dont care what you do, if you put in 40 hours a week. Why wouldnt the market decide that. The market guys, hold on. If you go to home depot and want to hire a physical laborer to do work around your house, guess what . Good luck. He gets more than minimum wage. They get paid much more than minimum wage in most cases. Yeah, thats right. Well, then why i dont understand wait. Wait. Tell me why look, i want to know why you think raising the minimum wage creates one more job in america. How does that help the people unemployed who you say you want to help . Raising the minimum wage stimulates the economy. Thats what it does. It stimulates the economy. Because the people at minimum wage spend that money. They need that money. It goes right back into fwoogoo and services. That helps to stimulate the economy. Jesse, we have got to cut you off. We are running out of time. I got to run, too, because we have got drones down here and they kill people who speak out against the u. S. Government so i got to duck. Fast money is coming up. Melissa lee, what do you got . Im going to take it. Fast money starts right now. In new york citys times square. A solid day for the markets. Well the s p 500 seeing its longest winning streak since september. Both the nasdaq and biotech industry swinging back. Not only that, but the momentum barometer is back in play. Take a look at the moves and the following names since aprilish