Transcripts For CNBC Closing Bell 20140926

Press releases today this did not end ammic bring. We have more details on what happened here today. Yes. Also yahoo getting active. Shares surged today as investor taking a big position in the stock. There it is up. We will have the latest on whos behind this and how ceo is reacting. Also, of course, these markets, i mean, volatility is back in a big way this week with the dow bouncing back after one of the worst days of the year yesterday. The dow enjoying its best day in seven months or something i saw. 181 points. Undoing some of the damage of yesterday and we shouldnt forget the week its been. Tripledigit moves in both directions. Maybe its that time of yore. We got the s p up 17 points. We are at 1983 at this hour. Nasdaq doing very well up 44 points. But again, i mean, we have had 100point swings for the dow every day this week. Multipercentage moves for all the major averages. Three of them down. Two of them up. Look at the russell. Up right now at 1118. Lets talk about it. In our exchange, he said, joe durant with us today and ken mahoney, kevin caron, monica madai and our own rick san tell lo joining us, as well. Joe, what do you make of the volatility this week . Whats going on and what are you doing about it here . I think a couple of things. What you are seeing is the market is reflecting the self correction happening for about six weeks now. The russell has been down almost 10 . Many stocks down 20 or more. The indexes have done very, very well. All that we have seen this week is market reflecting that and a concern about the end of easy money. The beginning of higher interest ratds. It ees causing the dollar to g higher in anticipation and especially relative to the euro and the stock market is reflecting that. More volatile, especially for company that is have less flexibility with their financial structure and thats why the small caps have been lagging. Will you buy the small caps here, joe . Do you think they have had the move . No, i dont think so. Because even at these valuations where relative to the s p at quite extreme levels even with the decline we have had. No. Ken, youre calling for an uptick in volatility anyway. Wh what does this mean for you . We are calling far choppy market with upward bias. We are looking for headwinds and a stealth correction going on and the major averages holding on to the year highs and yet underneath it seen deter ration and seen the small cap taking it on the chin. For us fundamentals and europe concerns us. We see the economies over there continue to slow down and the policymakers further and further behind the curve and russia is a wild card and continuing to be consistent. We recently sold the r. I. P. And preparing to buy the next dip in the market. Buying the next dip. Kevin, we have now had both joe and ken talking about a stealth correction. I guess people out there think is this going the morph into an event to pull a major index down 10 . Yeah. I wouldnt be surprised to see a bit more of a correction only because we have had such a good run of it. Data has been incredibly good relating to the economy. 4. 6 print on Third Quarter gdp. Second half of 3 . Thats all the good news. The question is, the elephant in the room is Interest Rates. Interest rates at low levels. You have had a moon shot in equity prices for the last several years. Multiples are about 10 above where they ought to be and reflecting improvements in economy and the real question is what does the fed do next . Time to start to normalize Interest Rates . Currency markets are picking up on it. All of this is part and parcel of an adjustment to an economy thats Getting Better and maybe choppiness and not expected and its healthy for a market with some pricing discipline. I noted showing the European Market there is that the dax, germany, the weakest market in the european majors. Fellow the 200day moving ampbl and fell as the others bounced a the this juncture. Monica, what are you doing with your clients money right now seeing the volatility pick up here . Look. You know, we are mostly in alternatives. Were doing a lot in real estate, were in specific plays so this because youre is that a specific strategy right now or is that where you see the better opportunity . I think investing in what you know should be everyones specific strategy and so were focusing on real estate in texas where you are seeing a lot of employment strength and a lot of people moving down here but, again, you know, one of your guests mentioned the high point is a higher gdp that we saw for Second Quarter and i would argue as a metric of economic vitality, you should look into the details of driving gdp. You have a new definition of corporate profits. And youre actually seeing more spending for obama care thats required and same token personal spending an consumption is 20 below expectations so that key metric of what calls for a strong, healthy economy is wages and we see very depressed wages. So, i mean, i think if youre a hard pressed to say that we have a strong, healthy, vibe rantd consumer. So now as we see the 10year Interest Rate creeping up, is that because, rick santelli, the u. S. Growth outlook looks better, a bill gross effect in the market here at all do you think . Or is it that the stock market is only down 150 on the dow and sits and the s ps only down 15 . Many wouldnt have guessed that yesterday. You know, remember our conversation yesterday. I think the bond market divined something in a very excellent fashion. I think the lack of any major buying pushing 10year rates dramatically under 250, the type of dynamics in the first weeks of 2014 when the equities couldnt get legs together didnt see it. I think we will have more of the same and i think, yes, there was some knee jerk reaction of everything is speculated and mr. Gross, outflows that we need to deal with, they had lots of futures positions, very liquid. I dont know that thats an issue for the markets, but, you know, generalized weak cincinnati the new fundamental to Pay Attention to whether its china and europe and slow moving events. Dont see theyre going to toetdly destabilize equities and i dont think you see a major moon shots on Interest Rates but learn a lesson of yesterday that if the equities kind of still maintain very close to contract high pricing structure i also doubt if were going to get significant tests of 2 1 4, as well. Joe, are you more inclined to want to buy the dips that were seeing right now or sell the strength that we have been seeing lately, as well, in this volatility . So, i think neither. I think what you want to do is look at your personal portfolio. We manage the clients entire net worth and within the portfolio tilt it the direction you should be. We think you want to be in larger cap names. Instead of dividend payers gorks to growers. You have to figure out in advance because the market acts in advance what should you be doing in a higher Interest Rate environment . Before Interest Rates go up, those stocks are the ones that will be already have gone up so, again, shifting from just dividends to dividend growers, focusing on larger cap than smaller gap and emerging markets and forward leaning. Europe will get a lot of money pumped into it and you have to expect high volatility. Go ahead. One thing that we are looking at is a hybrid strategy. Everybody has a philosophy to handle the markets but buy and hold and active, if its stocks, etfs you like, buy and hold that. Be more act wif the quarter, 30year portfolio and be able to buy the dips and sell the rips. Not day trading but kind of combination of buy and hold and be active when you see the dips and be able to sell the rips and a better performance in these choppy markets. Kevin, i feel like its two Different Things here sometimes. Joe and others on the one hand talking about positioning for a higher rate environment and rick saying look for generalized slowing growth and monica pointing out that the economy weaker than it appears so, kevin, is that what do you do with those conflicting stoirls . Seems as though investors making two decisions that point in Different Directions here. I think its a couple of Different Things. Bond portfolio, we like the idea of laddering it. Cash in portfolio. If valuations dont make sense and ultimately if you look out three to five years you get a very different sense as to relative to what happened this week. And as a matter of fact, as far as the correction of volatility is concerned, it is really nothing. S p at 2,000. Equity values, u. S. Equities valued at Something Like 23 trillion so we didnt move all that much this week. Just stick to the knitting. Focus on Cash Rich Companies growing reasonable price. Kelly, one thing. Be looking at correlation getting decoupled again. Europe is in a different place and the banks act differently than the u. S. In the future. Since you mentioned that, joe, we are asking the viewers later which section they would rather buy of the world. U. S. Or europe. Show of hands here. How many would buy europe right now . Anyone . Okay, joe. Go ahead. I just think you want to go where the market isnt. They have easy money for a very long time with lower rates than the u. S. In a year from now and recovery, theyre 18 months behind us. Would you have bought the u. S. 18 to 24 months ago . Yes. Do they have less, more risk . Yes. The market reflected it. You dont want to go where all the money has been made so you want to be concentrating in the u. S. And should be looking at europe now. Fair point. Very good. Thank you all. Nice the see you. Thank you for joining us. Appreciate it. Well pick back up on the theme of the u. S. Versus europe and especially talking about strong dollar. Thats all coming up. Yeah, the economys surging by 4. 6 . Thats the last revision for this Second Quarter. Fastest rate of three years so is it full steam ahead for the economy and could this force the feds hand to raise rates sooner rather than later in thats within the big question all along. And this mention, are you better off investing in the u. S. Amid the economic jolt or europe . Is that the better play as the economy teeters . Weve got both sides of that debate. And we do want you to weigh in. A chance to vote on this is coming up. Plus, as you have heard, bill gross, shocking story going around wall street today. He leaves pimco. The bond giant that he founded in 1971. He heads to janus capital. Coming up, well discuss whens behind the shakeup and whether its a major problem for pimco still to come. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Welcome back. A strong day here. Nike surging double digits after a strong earnings beat yesterday. After hours. Adding about 63 to the dow up 186 today. But again, the other indexes up to the tune of 1 . Also helping word out that the u. S. Economy expanded by 4. 6 , the fastest growth rate in about 3 years. Good news or is it . That is if you worry about the fed raising Interest Rates. Sooner rather than later. We have more on what it means now. Joining us, chris thornburgh, chris lowe and very own steve liesman. Welcome, everybody. A great group, steve, by the way, no surprise to you. You were saying it would be a strong number and heard the concerns monica raised last segment saying perhap its obamacare related. Trends arent as strong as they appear. I want to explain why its no surprise. We have the rapid update. Survey of ten forecasters who have a tracking survey every time data comes in, put it in gdp and they tell us how that changes the forecast. We upgraded of 4. 2 to 4. 6 september 11th so that was quite a bit before this number came out and in pretty much with the expectation and want to follow it go to cnbc. Com rapidupdate and following it up. You have one quarter thats a negative 2. 1. Another is 4. 6. How do you break the tie . With the Third Quarter and the Third Quarters coming in 3 plus. Good consumer spending, good capital spending. Theres the forecast of the tracking for the Third Quarter with a range. You can see whos where. Goldman is right there at 3. 3 and not the sort of radical economists. These guys are the center of the street here. Bar class at 2. 8. Theres still data to come. Overall the ties broken by somewhat above trend growth in the third quert. Do you win anything for nailing the number . If you want a coffee cup with my signature on it, send me an email, bill, ill send it to you. Chris, is this the kind of growth rate . Were told by the fed to be watching job growth and inflation expectations. What does this number mean to them in terms of fed policy . Again, a lot of the Second Quarter simply a bounce from the big negative of the First Quarter. Ultimately, first half of the year was kind of weak largely because of the external account but i echo what was just said. We have a monthly model, as well. Tracking 3. 3 to 3. 4 and candidly all indications are to continue. Consumer credit is doing great. The banks are lending. Nonresidential construction is up. Housing market is rebounding. Business spending is doing well. You look at chris, can i just chris, i want to interrupt real quick. This housing is a big absence in all of this. Do you think i mean, if housing is on board, dont we have all cylinders firing here . Absolutely. And thats sort of a point. I know we went through a mini down spell because the investors went away. But now you are seeing the numbers. Mortgage credit starting to expand again. The housing market. We saw that good new housing sales number. Inventorys still low. My guess is by the end of the year Single Family permits start to trend up again and next year is a very good year for the builders. Chris lowe, i dont mind cold water on this. I wonder if it takes a form of as trying to talk about inflation expectations. Explain whats going on here and why the market is worries of inflation when everything should be pointing towards more momentum if the economy is improving. Thats right. Look at inflation expectations. Fiveyear forward fiveyear inflation rates, the break even rate is fallen by almost half a percent in the last few months. Wow. What it reflects is strength of the dollar not just against the euro but all major currencies. We are up about 5. 5 which, by the way, is almost exactly how much Commodity Prices are down. So already were seeing the deflationary impact of the lower dollar. I think if the dollar keeps moving like this for a couple of months were looking at an inflation rate falling to somewhere between 1. 5 and 1. 75. What do you think about that, steve . What if we do see the dollar continue higher, deflationary implications it has, pressure it puts on commodities and what that means to the fed watching inflation so carefully . I dont think the dollar within a certain band matters a whole lot. What matters is change in adjustment. You have guys doing trade and a certain price and the dollar is 5. 5 greater in value and that changes the calculus at the margin for some Business People to take adjustment. Losers and winners out of that. I dont think its a big enough move to disrupt or even gives the fed a little bit of breathing time with this much impact of the dollar on inflation. Thats it. This is why its so important. The very moment that everybodys talking about the fed behind the curve, in fact, if were to believe and i understand it can move around and the market saying that the bias is dovish side of things. Thats right. Let me respobd real quick. It doesnt matter, kelly, you know this, how we get to the real growth number. The inflation adjusted number. We can get there with nominal growth at 3 and, you know, inflation at 1 . Really the real number that matters and so if we get there with low inflation, as long as you have that economic activity, 3 , 2. 5 , still a good number. Look. What bill dudley said this week from the new york fed is that if the dollar continues to appreciate like this, i agree, the movement we have had so far is fine but if it continues, the fed should move later because it will affect gdp growth and it will affect inflation. Its going to limit exports and so on and the reason the dollars moving, of course, is that the u. S. Is going towards tighter policy while the rest of the world is going toward easier policy. I dont think this dollar move is done. All right. Before we let you guys go, steve, bill gross news today with leaving pimco, the stunning story moving to janus. Somebody asking me this morning how much of his lack of performance the last couple of years had to do with this. What do you say to that one . Well, ive listened to bill over a long period of time. I think hes an extremely smart person. I have sort of raised my right eyebrow as far as it could go with the calls on the Federal Reserve and not understood what he said and seems to me it was long in a lot of important occasions and manages 2 trillion worth of money but in terms of underperformance, i wonder if its getting bad advice or had the Federal Reserve wrong. I guess the phrase that sticks in my mind is tim robbins of Shawshank Redemption calling the warden on tuesday. Remember that . Thats what bill gross and the fed made me think of. Wow. And Shawshank Redemption debuted 20 years ago this week. As you well know. My favorite movie. Thank you. More on the bill gross story coming up, as well. What he might be up to with the new fund. He is, of course, weighed in often on whether the very issue of inflation expectation. Janus with a big pop on it today, as well, along with the rest of the market rallying. Heading toward the close, the dow off the highs and up 174. Its the fifth straight triple digit move for the dow this week. First time we have seen that since june of last year. Coming up, a take on the strong Economic Growth number and what it means for the fed and the market when mark zandi joins us. Alibaba shares down more than the overall market this week. Is that expected to be after the huge ipo run of a week ago today or a sign of things to come. Well talk alibaba and starts Trading Options on monday. That will be interesting. Buckle up. That and more coming up on closing bell. Work with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. And cialis for daily use helps you be Ready Anytime the moment is right. 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Theyre something thats gonna change the cities we live in today. I find it so fascinating how many people ride this and go to work every single day. Im one of the lucky guys. I get to play with trains. People say, wow, we still build that in the United States . And we say, yeah, we do here we go again. Its triple digit move for the dow this time to the upside. A gain of more than 1 . As a matter of fact, as you see the dow is the lead dog today. Up more than 1 . Followed closely behind by the nasdaq up almost 1 right now. Yeah. Yesterday was hurt by apples underperformance. Today, Bertha Coombs keeping an eye on the big movers at the nasdaq. A grout bounce back today in terms of big caps. Biggest gainer of micron. We stock up on new mobile phones. A yahoo with the suggestion, memo to meyer. Blackberry on the back of the earnings outlook, as well. And among the big gainers today is apple. Thats helping. Apple, in fact, as it moves higher here, back above 100 is closing out the week just about even after a roller coaster ride here over the last few days. And thats whats certainly helped the performance of the nasdaq 100 but for the week we continue to see the big caps down by 1 . Its the small caps where the pain continues. Despite some relatively good performance today, we are seeing the russell 2000 down for the week, down for the month and still down as were looking to end the quarter next week, as well. But bio teches are the surprise in this roller coaster week. Eking out a bit of a begin and best performers at the nasdaq and both have drug trials and drugs in development that investors are very, very interested in right now. And theyve really bid them up this week. Take a look at it. This is a stock that jim cramer touted back to you. 20 move today. Bertha, thank you very much. We have a half an hour until the close and the dow holding the gains up 170 points. Almost up 200 at the very highs and still close to those levels. See the u. S. As we know ready to raise Interest Rates. The eu ready to start easing we think. So will the strengthening u. S. Economy make it a better place to invest right now or bet on a to invest right now or bet on a central bank fueled rally in if i told you that a free tensecond test could mean less waiting for things like security backups and file downloads youd take that test, right . What are you waiting for . You could literally be done with the test by now. Now you could have done it twice. This is awkward. Go to comcastbusiness. Com checkyourspeed. If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. Hes going the u. S. Way. He thinks it will continue to outperform. John, make the case here. Bill, what wed have to say if you look at the u. S. , we have a run for five and a half years. We are well into an economic expansion beyond the Recovery Process. Europe is still in its process of recovery. Very accommodate president of the ecb. Plus Germanys Merkel very much an ally of his. We think theres plenty of opportunity. Those markets underperformed versus our market for the last few years. And the dividend yields of the stock 600 around 3. 6 versus s p 500. Talking about the way we were about the u. S. Three or four years ago. Thats the idea. Why stick with the u. S. Now, robert luna . Well, i think because the main argument really that everyones coming up with for europe is to be like the europe and based off of hope right now. I think if you look at japan, the same thing is said there. Theyll take Interest Rates and bounce back and 25 years of underperformance there. The idea with the u. S. Is we hit a 4. 6 gdp number. Most important part about that right now i think is business spending. Business spending up over 11 right now. So the businesses are whats going to create jobs and as jobs come back into the economy, Unemployment Rate goes down at 6. 2 right now. Europe over 11 unemployment. The clear place to be right now is in the u. S. Valuations are reasonable and as Money Managers are underperforming, going into the Fourth Quarter especially the last thing to do is try to pick a bottom in europe needing to catch up on performance. Are you suggesting that were going to see a prolonged period in europe the way we saw in japan . You know, i dont think its going to be as long but looking at europe its a different place than the u. S. So to have a comparison and i think its a little bit naive to think its playing out like the u. S. Is, theres a very different labor force. Well, i would going on in europe. Theres entitlement issues. Bob, we are not going to take that naive business lightly and saying considering the world class multinationals of europe, the fact that the average price of the euro versus the dollar has been around a buck 19, a buck 20, actually, a buck 22, buck 23 since inception in 1999 and the Recovery Process with europe a chief trading partner of the u. S. , we have got to think these world class corporations plus a distinctively more aggressive ecb over the last five and a half years than abenomics coming online recently, we have to think that europe is ready to engage the process of recovery. You know, the problem is that again looking at the workforce, look at italy. They slipped back into recession over there. Looking to play mugs nationals, you are looking for a play outside of europe and the problem and to my point, the domestic economy in europe is struggling. Overlaying the financial etf of the europe versus u. S. , the same thing is said of the retailers. Those sections are leading indicators. Theyre just getting the quantitative easing in october and what we have to expect is give them little bit of a chance here plus european multinationals, thats what were investing in. We want to participate in the Global Economic recovery happening with the u. S. In the lead and in the process we think europe side led up to the u. S. Following us through. The problem with the mugs nationals theyre not cheap. But those multinationals bob, the multinational vs a Good Opportunity to see the earnings grow significantly. Im thinking of diamler, nestles. Youre basically trying to get Global Growth at a cheaper price than u. S. Gives you exposure. Very much so. The viewer vote right now, just about to close the poll. 74 would go with the u. S. Do you take comfort of that . Will you play contrarian here . Bill, i have to play contrarian. I have for five and a half years with the u. S. And worked pretty good. Robert . Guys, lets not forget russia. Germany, the leading engine of europes economy right is a big trading partner with russia. 30 of those export gos to russia and sanctions increasing thats a huge headwind. Dependent on russia right now for the energy. The problem is im not saying europe cant be a play a year from now but right now you want to be in the u. S. I think you invest for a year ahead, two years ahead. We dont invest for tomorrow. All right. Good discussion, guys. That was instructive. Thank you both. Thank you. Thank you. Thank you for joining us today. 76 of the viewers continue to think the u. S. Is a better investment. Dow up 170 heading toward the close with 20 minutes left in the trading day. Bond king bob gross spicing up the friday with the morning announcement he is jumping ship from pimco to janus. What does that mean for the future of pimco and for the rest of the bond market . Leg masons ceo joins us next exclusively. Alibaba shares gaining back some ground after losing some altitude in its first week of training. What did the first week of trades say about that stock . Thats later. Stay tuned. Im angela, and i quit smoking with chantix. People who know me, to this day they say, i never thought you would quit. You know, i really didnt either but chantix helped me do it. Along with support, Chantix Varenicline is proven to help people quit smoking. It gave me the power to overcome the urge to smoke. Some people had changes in behavior, thinking or mood, hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. If you notice any of these, stop chantix and call your doctor right away. Tell your doctor about any history of Mental Health problems, which could get worse while taking chantix. Dont take chantix if youve had a serious allergic or skin reaction to it. If you develop these, stop chantix and see your doctor right away as some can be lifethreatening. Tell your doctor if you have a history of heart or blood vessel problems, or if you develop new or worse symptoms. Get medical help right away if you have symptoms of a heart attack or stroke. Use caution when driving or operating machinery. Common side effects include nausea, trouble sleeping and unusual dreams. Im a nonsmoker; that feels amazing. Ask your doctor if chantix is right for you. Whenwork with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. We woke up to the bombshell in the bond world. Pimco founder bill gross leaving the firm he founded years ago to join janus capital. Our Sharon Epperson joins us to talk about individual investors. Kelly and bill, theres excitement and nervousness in the bond market today with bill grosss departure of pimco. He ran Pimco Total Return Fund and the Worlds Largest bond fund, also the Largest Mutual Fund in the 401 k marketplace with nearly 222 billion in assets under management. More than half of all large 401 k plans hold pimco total return and clearly many participants and individual investors need to pay close attention to what happens next. For many, pimco total return as a fixed income return for balance in the retirement portfolio and need probably did not change. Several Financial Advisers today said they were concerned that grosss departure creates emotionally charged decisions and its the time to reassess. You may buy into the fund because of the manager but remember there are many professionals involved in the daily management of pimcos funds and also many securities underlying investments that make up the funds so follow what the Fund Research firm morningstar has done and put pimco total return and other funds under review. Waiting for information, Financial Advisers say find out more about other bond offerings, consider their expenses and volatility and returns and also take this time to reassess your own individual investment goals. Bill . Always good advice. Sharon, thank you. Sure. Lets get exclusive reaction with leg mason ceo joe sullivan. Thank you. Its interesting. You know, your shares, shares of some other rivals are up today. I think to the tune of 5 as the market thinks through where some of the funds might go if they do leave pimco. Are you seeing inflows today into the fixed income flows . We dont have the reports on flows into funds yet but i can tell you for sure certainly at western asset and a brandy wine global what we are seeing is a lot of activity, a lot of discussions both on the institutional side with Client Service teams, a lot more discussions, a lot more conversations as well as in the field with our wholesalers and sales teams talking with advisers and activity, for sure. Does a move like this to have the largest manager, the man to call mr. Bond move from one place to another like that, does it go beyond water cooler gossip and chat and does it have an impact in the bond market, do you think . Well, certainly, it does go beyond water cooler chat, for sure. I think your earlier report mentioned that its while not time to panic, its certainly a time to reassess. Investors be they Institutional Investors and the consultants who advise them, individual investors and the Financial Adviser who is work with them, they dont like noise thats not investment related around their managers. They like stability. I was talking to some of the folks here on the floor Trading Floor at western. Lets continue to be boring. You know . Lets not create any issues for our investors. Distractions for investors. But it is. I mean, theres clearly it is a time to reassess and to think about, you know, how it might impact. It will impact the bond markets in the short run for sure. Theres going to be we have seen it today. Some of the i assume hedge funds and traders like that are front running what they expect to be potential flows or outflows in what are considered pimcos core strategy and seeing some of that. Again, i wouldnt advise panicking but reassessing is certainly appropriate, absolutely. And you have brought up a point, joe, of stability and investors. Something leg mason struggled and assets declined, people were searched about the underperformance then. Can you comment from your position to win people back or grow a business that does have an issue like this . How difficult is it . How much of a legacy issue does it become . Well look. We certainly dont want to confuse some of the challenges that we had leg mason. And obviously, we have come back and done a good job and i think are on the rebound but dont confuse those issues with the stability and the performance at our affiliates. So western, for example, has 123 different investment professionals across 7 countries globally. These professionals have in excess of 20 years average experience. Were led, our cio is ken leach at western asset and been with western asset for 25 years so you see we have the stability. The performance of the products is exceptional. Our core product has beaten b barclays aggregate and outperformed pimco for the 1, 3, 5year period. I did see that, yes. Just a final question, too, as this all shakes out. Of course, it comes when the industry has seen a ton of startups coming from the etf world and competition and pressure on fees. So again, bill gross goes to janus, an unconstrained bond fund probably going to hoover in money as people say im willing to take a bet, anyway for a little while. What kind of Competitive Pressure does it put on the industry and on the fee structure, do you think . Look. One of the key things is that you have to be able you have to have the infrastructure in place to be able to take in significant inflows. I think the fund that hes going to manage is currently 15 million in size. Im not saying he wont get some assets as a result. I dont think its a foregone conclusion of a strong flow of assets to janus to follow bill. Meantime, they have a lot to set up in terms of infrastructure. Western, for example, and other firms, have but westerns one of the few thats large enough to be able to take in the size and the what you need are the depth and breadth of investment capabilities globally. Thats not necessarily in place today at janus. Whos the new bond king . Well, you know, ive got two bond kings here between ken leach and Kevin Hoffman and we feel good about the capabilities. Honestly we dont have coronations here around kings. Ours is a Team Approach and we think that serves us pretty well. You want to be boring. Dont worry about this. Were boring. Hopefully continued outperformance and boring. We like that. Joe sullivan, ceo of leg mason, thank you for joining us. Thank you. A close friend in high school became a cpa and said his clients early on didnt want the accountants wearing elaborate jewelry and worn none. You want to be boring in many cases coming to money management. Thats for sure. Not been a boring week lately. 7 out of 9 sessions tripledigit moves. Today the dow up about 160 with 11 moneys to go. Art cashin signaled to me flat to the close. No bias up or down heading to the closing bell. U. S. Economy firing on most cylinders. Moodys chief Economist Says he sees the good times rolling along. He states his case coming up here. A simple question people in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. 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Kate rogers here for the days big movers for us. Kate . Lets start off with nike and by far the biggest gainer in the dow today and accounting for about 60 points of the dows gain and surging after the big earnings beat last night and blackberry gaining after posting stronger than expected earnings this morning. The smartphone companys stock up around 4 and shares of yahoo spiking this afternoon after activist investor sent a letter saying the company undervalued. And suggesting a merger with aol to unlock value and the shares up over 3 . Back to you. And its kate, thanks very much. My understanding that at no time did Starboard Value tell yahoo they were serving too many breadsticks. Just did not come up in their letter at all. You know what . Yeah. Anyone . Unlimited salad. Were coming back with a closing countdown mercifully in a moment. The dow up 171 points. And then after the bell, investor wills get a new first chance to own a piece of alibaba. 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Just coming off the highs with a gain of 165 points. Nasdaq now the leader up 1 . The s p up. 85 today and the russell up. We pointed out 100point moves for the dow every day this week and kelly remembering we have had tripledigit moves for the dow 7 out of last 9 days. Volatility is back. Heres this week. Three down days. Two up days. Overall for the week, down about 1 . David joins us here along with greg sarian from hightower. What do you make of the volatility . Is this the kind of action you normally see at a top of the market or bottom of the market . Investors have been spoiled. Last two years, low rates, slow growth and important that investor embrace the volatility. Its an important time to make sure your portfolio is in balance. It is like getting a cold or the flu. This is actually healthy. It builds up the immune system. Negative side, slow growth in china hurt the market this week. Japan is still limping along. Europe is slow. Okay . Those three things, bill, and geopolitics, four things. You could add valuations that are high. Over here on the positive side. Four things that start with m. Manufacturing. Monetary stimulus. Mansions. Thats home prices. Okay . And Motor Vehicle sales and retail sales surprised to the upside so the markets trying to figure out which way to go and the coming week the jobs numbers a week from today. Kay shiller home prices enyou will see personal income and personal consumption for august and the coming week, were going to put down more cards on the table and see the way the market wants to lift or stay the same. Were you buying on did down days or selling on the up days . You know, i think its important to make sure that youre protecting on the downside and investors made a lot of money the last couple of years. Its important to protect on the downside. Those in the market . Those in the market. Those underweight equities, use the dips. This week is important, weps what the ecb is doing counter the fed. Stopping qe. Ecb is going to be starting a qe process and going to add the stronger dollar which is a whole other currency change to affect the markets, as well. Listen to greg. The name means protector. Own europe and own japan, bill. They basically lagged behind. Own europe and japan. Thank you both for joining us. Appreciate it very much as we wrap up a very volatile week. See if it continues next week on monday. Have a great weekend. Meantime much more coming up on the second hour of ix4dthe clo bell with kelly evanevans. Have a good weekend. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans. Heres a look at we finish the big bounce back day on wall wl and the end of a pretty volatile week here with the dow going out 7th out of 9 sessions up 165 points. Just about 1 and it was up almost 200 points and a little bit fading there into the close. The nasdaq up 1 . S p adding 16ment back to 1982. Russell even joining the fun today up 0. 8 or about 9 points so a busy and volatile week on wall street. Morgan brenen in joining me. Whens going on . Well, an update and down week for stocks. Worst week in eight. All of the major indexes for the u. S. Posting losses for the week. The Dow Jones Industrial average down about 1 . S p 500 down about 1. 3 . Nasdaq composite down 1. 5 for the week and the russell 2000, of course, biggest loser for the week, down 2. 5 although still a bit better than what we saw earlier in the week after we had that socalled death cross hit on monday. Now, all the sectors in the red for the day. Industrials, energy, utilities, consumer december yiiscretionar furthest. Focusing in on the specific movers auto, retailers, car max down about 11 this week after disappointing margins and comp sets thanks to stalled sales because of lighter lending conditions. Lithia motors and group 1 and penske auto. Different for footwear. Thank nike for that after strong earnings beat across the board up about 9 for the week. Also deckers outdoors and foot locker with modest c week up each up. Highyield funds. Those are all finishing mixed today but all down more than 1 for the week. Hyld down about 2 for the week on worries of rising Interest Rates and tight inventory. Kelly, sending it back over to you. All right. Thank you. An important reminder that despite the action today, it was a pretty negative week for these major averages. Lets talk about it. Kevin oleary, john stalavali and tim seymour and kayla and, sir, since youre watching this tick by tick, whats most significant to you about the price action here today . The untold story is the fact that brazil ramped, you know, the market there. Brazil . Brazil up a lot today. That actually brought our Energy Sector up and helped us kind of turn around so i think that was kind of an untold story today about brazil as the election didnt mcdonald talk about this on our air a couple of days ago and bullish. Might have been. I might have been tuned without larry. Possibility. A read through of the emerging markets looking to look. Tim seymour, i know this is youre all over this stuff. Are we seeing green chutes or no . I dont think so from brazil. It is an economy that clearly has significant structural reform and the election result is priced in. Emerging asia will continue to outperform but look at emerging over two weeks it is a story of an inversed correlation to the dollar. Dollar closed at 11th straight week higher and putting pressure on all markets, especially the emerging. Currencies is where its taking place. Buying emerging with two feet here . No. I think its not oversold enough. I think you can see emerging trend lower. Even though on valuation and in terms of fundamentals in a world where the fed is raising rates in 15 or 16 emerging is not as exposed as they used to be and the highest, this kind of a move successive moves in the dollar not since brett and woods. This is momentous, historic and will continue. Wow. Im getting chills, kevin. Yes. And this is one we heard as well saying the second inning of what could be a 9, 10inning move here. Game changer. Maybe. But, you know, i look at this and say if anything really out of the market concerned as the euro started to dive that europe was going into a recession, that was the kind of fear with the s p now close to half of its sales in International Markets including germany, france, italy, the big economies, maybe well see a crimp in earnings. But all through this volatility in the last couple of weeks theres been no change, top down or bottoms up guys on changing the s p. So the only thing thats happened here is concern as compressed pes a bit and back at the farm earnings are spectacular. All i say is, okay, get used to volatility. Stay on the course until you hear somebody say, huh oh. Something in the world has changed what im going do do in Free Cash Flow after cap x . Kayla . Theres a growing coarse of people saying i want the money in large cap domestic equities because even if as john said if you see brazil with a big rise intraday, even if there is some green chutes over in asia better than expected, its just it takes too strong a stomach at this point and the russell losing 3 this week alone, 5 prgs in the last month, when you see high yield and even though 600 million of net inflows this week, seeing high yield having some risk off the table just feels like theres a divergence in the market and if there is resilience its here in the u. S. Greg, but let me hang on a second. If you can back out for us to the 30,000foot view and why this volatility now in the market . I think that its dawning on investor that is the clock is ticking on when the fed starts to take the punchbowl away. They have told us that quantitative easing, bond buying, will be done next month and then the stopwatch begins on when they start to raise Interest Rates and as it starts to dawn on people that the seven years of Interest Rates stuck at zero with no volatility, no uncertainty where rates were going, that goes away. It is not about whether earnings are strong or growth is strong but the uncertainty about how those two things impact the fed. Youre adding volatility. We have been basically spoiled with how low volatility has been. If you pull the camera back and look at vix over five or six years, this week is still nothing, an overall calm market and you will have to get used to the idea that in the next six to nine months the fed will be in play. Interest rate uncertainty will be higher feeding into the uncertainty in the bond market and if you have good fundamen l fundamentals like strong earnings, that uncertainty starts to take away some of the bullishness. John, what do you think people do . Should this change aloe case change investment ideas altogether . Part of the volatility, we are at war, right, in the middle east again. Oil spiked 20, 50 early 90s. Now because of the renaissance and the middle of the country, we havent had that. So obviously you buy dollars with war. Buy u. S. Large cap stocks. I think that if we look you know, sunday night is really when we kind of sold off a little bit and we were at a 20 20 high and then we didnt drop bombs until the next day and take it into consideration, as well, because the volatility spiked. We are at war. Things are going on. We dont know how many boots we have to put on the ground. Russia going into the winter. Talking about cutting off gas to europe. Do you want to invest in the dax and russia at the border . Tim, weigh in on this, if you would. Greg is kind of pointing toward a scenario of the worry of a stronger economy to speed up scare. John is talking about the opposite, almost a little bit of global flight to safety on the back of more. Right, right. Lets try to drive down the middle of the fairway on this. Look to next week with adp on wednesday and nonfarm payroll on friday. It shows an expansion of the job market and get to 2. 5 to 3 . Growth for 2014 and which means more volatility, the dollar is going to strengthen. Policies around the world to allow the fed to push through. No one else is close to lick i canty out of the markets not even the chinese. Looking for growth around the world, probably going to get some of that selectively in Southeast Asia and the u. S. Market is going to continue to be a place for people to invest. I think Energy Stocks which have significantly underperformed the s p over six months are the place to look, not because oil prices are lower but the valuations with interesting. Brazil energy, bpr. The big number next week is pce. If thats a negative number so true. Bernanke speaks sunday in chicago. The fiveyear forward is going down. Right. Inflation expectation. Whoever is saying that the fed is tightening that was greg. Greg, you want to answer that before you go. No. Its a great point. I want to add that i try to, greg. Next week, thats right. I only wish i made it sooner. I have to give you credit for it. Yeah. We could have 1. 4 pc inflation on monday pushes back against the notion of earlier fed tightening and prepared for the possibility of a disappointment on friday. By the way, on the global tension story, the real story is whats happening in china. The reason of oil coming down instead of going up, in spite of the Bombing Campaign in the middle east is because china is slowing down so much so that, too, is a negative. But the point i was trying to make here, kelly, with unt that we can have a unidirectional bet of things better or worse, its the certainty. The skew of possibilities expanded on economy and on Interest Rates and that volatility, that uncertainty, alone starts to erode investor sentiment. So right. Seeing it already. By the way, greg, knowing what would qualify as a disappointment on the payroll count on friday . Whats the level . 150,000 is the whisper. Sounds about right. Not a high bar to beat. No. Meanwhile we should be up 100,000. The global, you know whats the beneficiary of this . Not gold. Dividend paying large cap stocks back to daddy. I thought shark tank tonight. Thats huge. Even that without dividends, and without royalties, no shark. Well leave it right there. Greg, thank you. Tim, appreciate it. Catch tim coming up at 5 00 talking to eric yak son of Ironfire Capital of starboard turning up the pressure of yahoo to merge with aol. A possible merger he called months ago. You wont want to miss that. Nantucket, wellknown for the sailing and seafood, today, though, all about stocks and selloffs. Larry summer, larry sternwick and robert diamond making some waves at the nantucket project conference. Up next, what they said about this stock market. And the financial world has been digesting the news that the bond king pimcos bill gross has left the room. Hes left the company he cofounded anyway. In fact, going to a different room. Coming up, jane wells looks at the intrigue surrounding this story and didnt end well between pimco and gross. Well be back. Welcome back. Andrew ross sorkin talking at a conference in nantucket and asked them about the selloff yesterday and where the stocks might be headed for the rest of the year before anyone knew we would have a snapback today and heres what they had to say. Theres no question that assets are more fully priced than they were 18 months ago. Yes, price earnings ratios are a little high by some measures but thats what you expect when real Interest Rates were low. I think its more reasonably priced than that. I think a lot of the key factors in terms of theyre still inexpensive money and oil prices are reasonable level. I think golds at a reasonable level. I dont see a big crash coming. Ive been talking more months and we get nervous on the way down when the tree shakes. Healthy for the market to shake and get loose hands out of stocks and create conviction but i do think we have been we are up here on the top of the lake and the lakes getting f z fissures and cracking. We wonder if todays big move higher to change minds and see what the next guests think. Joining me now with the panel, Brian Reynolds and kenny pulcari. Good to have you both with us. Hey, kelly. The point barry made about liquidity, especially in the pimco funds today, by the way, seeing big gap moves on bill gross leaving. What does it say about the risks in the market . Well, its bullish. Remember 2007, everybody was 50 times market. All the dealers, her lil lynch, bear staerns, aig, off 50 times margin. Dealers never used the Balance Sheets to cushion the bottom. They had to sell when they were cut. So that means that were having the biggest credit boom ever without the dealers participating because doddfrank wont let them rebuild the Balance Sheets and next crisis they wont contribute to the next crisis. They wont be part of the problem but right now were having shortterm issues and seeing the selloffs over the last five years because people are so scared of global events and the fed and now we have pimco with bill gross leaving. Thats going to cause shortterm tush blens. Four or five months from now it wont be a big deal. The money going from one fund group to another and people dont play nice and dont like to make markets and having redemptions they wont give you good bids and could be a little turbulence here. Stocks failed in the 1985 era and i think theres turbulence for a few weeks and the credit boom is intact because the nations pensions bringing in more money to make 7. 5 and a bigger credit boom to lead to my buybacks and more mergers and acquisitions. Theres an extent to which the Pension Funds are underfunded and driving this. Kenny, you know, you heard it from brian there. A couple of levels on the s p to watch. Does todays action do enough to keep the bears at bay here do you think . I think it does. I thought 1975 more the level to watch, right, supported on the way down. Resistance on the way up. Closed at the 1980 level and there was not a lot of volume on the way up today, there was more. More yesterday on the way down. We see that but that just goes to thor ie nervousness. Yesterdays action fed by once you broke the technical levels, 1975, it kicks in broken a technical level and, boom, start to sell it and the buyers know it and pull back. There was no panic in yesterdays selling. Nobody should sense that the market down 250 that there was this panicked selling. It was actually very methodical. The bounceback today up and through resistance i think is healthy. Brian, what about the investors who might have some of those holdings in pimco, retail or institutional and are looking elsewhere . I mean, so you laid out some of the risks here. What feels like the right thing, something to do now . Well, most a lot of pimco funds held on behalf of clients and move in a herd and we saw some of the Exchange Traded pimco funds with heavy volume on down days and tells you the investors are getting out right away and reallocate the money and some were at prem yums and if youre in bonds. I dont think theyre a great investment but some people feel they have to be there, look for a closed down bond fund at traded at a discount. Cef connect, i dont have a relationship with them, you can search for bond funds at a discount. Search for with or without leverage and make a better decision. We are doing that, looking at the names. Panel, thoughts here . I want to go back to what david farver today. Gross goes or we all go. If hes a mad genius, controversial manager, some indication that could be the case, putting him in janus doesnt this happen all over again . Right. Isnt that the risk . Right. Kenny . I would agree, absolutely. And im not necessarily so sure that youre going to see all that money leave pimco and follow bill gross. I know everyones talking about that today but i would agree with kevin. Im not sure that youre not going to have a same situation appear at janus, the divisiveness of pimco. That being said it sounds like a decision akin to a friend taking him in, of course. Like the nfl. Bill gross did a relationship with the ceo of janus and the fund is relatively small. I agree with you. I think thats the case. Certainly not going to be the fund at pimco by any stretch and i think thats really it. It was like he provided a shelter for bill gross. Guys, well leave it there for now. Two big things to keep in mind. Last word. Its a shortterm thing and the money wont leave the system. This is really netnet over multimonth period. Not a big deal for the financial markets. Correct. You heard it here first. Thank you both. Have a great weekend, everybody. And a big move for the u. S. Economy today, a big move for the stock market s. That a coincidence . Well talk to the chief economist for moodys and where the economy and market is heading. Mark zandi is coming up. Yes, bill gross jumping from pimco to janus funds. Its more intrigue than a pa ras coup and jane wells will break it down next. Hello. You can go ahead and put your bag right here. Have a nice flight. Music plays music plays traveling can feel like one big mystery. Youre never quite sure what is coming your way. But when youve got an entire company who knows that the fewest cancellations and the most ontime flights are nothing if we cant get your things there, too. Its no wonder more People Choose delta than any other airline. Welcome back. House of pimco could be a prime time soap opera. First the departure surprisingly as ceo and then addition of four cochief investment officers and then the return of an economist with the biggest bombshell today. Founder bill gross leaving the firm. For more on the pimco problems, we go out to our jane wells in california. 2f5w you cant kelly, even in hollywood. Pimco in newport beach. Bill gross turned 200 into 10 grand at a table at vegas and today he decided to fold them at the company he created. Legendary Portfolio Manager bill gross leaving pimco. Reporter a year ago who would have guessed but trouble began in january. Resigning effective midmarch. Reporter the two men had a very public breakup. Theres no clash of personalities here. We got along real well. Drama at pimco back in the headlines tonight. Reporter investors didnt like it. Pimco, you know, had a rough patch. Reporter former Portfolio Manager rehired as chief economist. Did they beg you to come back . I would not use the word beg at all. Reporter this summer, Parent Company continued to express support. Is bill gross past the sell by date . Bill is working hard on the recovery. Reporter just a week ago, bill gross weighed in on our own air about the fed. What would i do . Considerable period of time, lets stop and evaluate the evidence. Reporter behind the scenes, aimportantly a resolt. The s. E. C. With with an invest into a pimco etf and then the shocker. Bill gross would leave the company he created. This is stunning. And it was. Pimco coceo hodge said in a statement the company is grateful for all that gross has done but they had, quote, fundamental differences how to take pimco forward. Gross said it was time for him to focus on, quote, the purr aspects of Portfolio Management at a smaller firm. Kelly . All right, jane. He is not leaving the spotlight and leaving pimco. Appreciate it. For more on whats really happening with bill gross and pimco, joining me now is dan freed from the street. Com and contributor ron insana with the rest of the panel. Dan, what happened here . Well, i mean, bill gross is clearly just totally lost his mind. Right . I mean, the guy couldnt get along with mohammed whos one of the easiest guys to get along with in the world. Hes an egomaniac. 70 years old and now going to go work for a firm in denver that manages 20 billion in bonds. This is i can tell youre his First Investor here s. There personal animosity . No. Its a public meltdown. Hes doing, you know, poems to his dead cat. Hes, you know, questioning the man in the mirror. He himself admits weve got a 30year bull run in bonds that is over and now, you know, he doesnt know if hes the one that is responsible for the great performance or if its just that he picked the right market at the right time over the past 30 years. Ron, maybe he is just being honest. Listen. I mean, i know a lot of Billionaire Hedge Fund managers that ask the same question. Were we in the right place at the right time. They have a skill set that is conducive to delivery above average returns. I dont think bill is crazy or nuts. I think, listen, these things happen. Founders oftentimes are forced out of the companies. Bill at this for a long time. I have known him over two decades. He is one of the best Bond Investors in the history of the business but as even bill says, running a bond fund and a 2 trillion company are wildly different and although see and bill lasted longer than most any founder around and there are times you sell your company and you come to that point where you have a big disagreement with the folks you sold to. Ron, but would you disagree with the dan describing him personally . Yeah. I have known bill for 25 years, and while we havent spoken recently, yes. He is quirky in his writing and writes poems about his cats. Writing these, you know, Financial Reports to your investors you have to do something to get their attention. Is that what i need for performance . Writing poems to dead cats . Thats not the point at all. Hardly. I mean, in terms of keeping the readers engaged is one thing. Running the bond fund, the largest in the world, something that bill did away from investors and said hardest at work sitting silently in front of the screen and two different multiple parts of this job. I really dont think bill is crazy. Maybe, look, people as they move on in their careers can get more difficult to work with. I know plenty of individuals in the investment world who are extremely difficult to work with but also quite successful. Thats not unique. Wait a minute. We are talking about Bond Investors here. Bond investors are conservative people. Where did you get that idea . They manage portfolios for insurance companies. I mean, why take a risk on somebody like bill gross when you can put your money somewhere else . John . We have to remember the Parent Company is a German Company and talk about conservative, you know, theyre very conservative. They probably had it up to here with what they were hearing from the home base and said its time to pull the plug. They also open themselves up to lawsuits if they have Portfolio Managers saying this guy is abrasive, belittling and not just mohammed now. You have five other pms saying were going to quit so you have workplace problems and just a second. If i can. Lets disabuse someone of the notion a bond fund is a boring, conservative investment. I dont think we said global the problem is that he sold not like he had a hedge fund and making interns go out. Its not like that. This is a i want to go on the record about bonds. Theyre very, very sexy. Especially making money. Through the comparison of this morning and interested of the thoughts on this. Larry ellie sons exit. A founder of his own company and he answered to himself and his board but a very seamless exit last week. A company that he had described as idiosyncratic and yet you put the Building Blocks in place for a seamless secession and something that didnt go according to plan. We have to go. In a word, ron, real quick . Hell hath no fury like a bond king scorned. Ceo ubris. Thank you for being here. I suspect this didnt is last well be discussing this. Still ahead, a week since alibaba went public. The giant stock up today following a rough patch. Come monday, another big test. Options begin trading and investor cans get a piece of the hottest ipo. Popular Million Dollar homes feature back and today were heading to the College Towns of some of the cnbcs anchors and reporters. Plus we want you to vote on the clash of titans. Thats all coming up. And a gentle wavelike motion. Aahhh ahhhhhh. Liberate your spine, ahhhahhhhhh aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. Find out how fast aflac can pay you, at aflac. Com. Cozy or cool . Exactly the way you want it. Until boom, its bedtime your mattress is a battleground of thwarted desire. Enter the sleep number bed. 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If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. So the economy is growing. Stocks are rallying and next guest isnt surprised. Joining me now is mark zandi, the chief economist at moodys analytics. Great to have you here and see you again. I just wonder in light of the fact of a really bad First Quarter for the u. S. Economy, really good Second Quarter, do you think we can count on sustained, strong growth from here now finally . Yeah. I do. You know . I think the economys been growing was growing about 2 per annum through most of the recovery. But growth jumped closer to 3 and i think thats the underlying rate of growth. So about 3 . I think that can be sustained, yes. So where does that leave us if we have growth thats finally sustain bring as you say moving in the right direction and inflation is not really there. What do we do . How important is it if we dont get the Inflation Numbers moving up . Well, thats i mean, i think it is interest. That allows for a lot of strong growth, a lot more jobs, lower unemployment. And so, if everything kind of hangs together and we stick to script, we should be back to full employment by the end of 2016 so two, two and a half years from now so, you know, with low inflation that gives us a lot of room, the Federal Reserve a lot of room to maneuver here. Should it proceed as though things are proceeding according to plan and let the economy stand on its own or respond to the fact that it does have that mandate to get inflation up to what it has said is the goal of about 2 . Well, i think everything is sticking to script, kelly. I think this is the growth rates to see. And i dont think theyre going to change a thing. I think theyre going to start raising Interest Rates, shortterm interest raits by mid next year and june and that is the script laid out to us. Looks good for them. What about the u. S. Dollar . We have been talking a lot on the program about that and the impact ins having on everything from Lower Oil Prices to maybe u. S. Investors looking overseas for real estate options. How much of an impact is that going to have here if this is the historic move laid out . Well, you know, i think its great news. As you point out it keeps oil prices Commodity Prices low and thats a boost to our economy. Most of the Dollar Strength is against the euro on a, you know, a broad trade weighted basis against all currencies. The dollars, you know, strong but its well within the range that prevailed since you have to go back to the recession an we havent seen a really big move on a broad traded weight basis and against the euro and europe looking cheap and getting cheaper for american investors because the european economy obviously going in a different direction than our economy. Is there anything youre worried about . You know, you know, its clear that the feds got a lot of work to do here and whether they can pull you know, my baseline world view is that they can Interest Rates to rise consistently with the improvement in the job market but thats easier said than done so, you know, thats the biggest risk in the near term, whether the fed can pull it off gracefully. They have the will, the tools to do it. They have to execute but in my mind thats the biggest threat. All right. Mark zandi, your perspective this afternoon, much appreciated on a strong update for the markets. Thank you. Thank you. Up next, alibabas oneweek anniversary of being a publicly traded company. Eked out gains today closing at about 90 and change s. That a bullish side for baba long term compared with other ipos in the early days . Well discuss, stick around. In. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. 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Investors gearing up to get in on the alibaba action, Stock Options go live for trading on monday. Finishing the first full week of trading just under where it started on monday. 90. 46 is where it closed today. For more on if this is a good sign for the company, lets bring in Andrew Romans with brian hamilton. Good to have you both here. So, andrew, what does this one tell you so far . Early examples of facebook and twitter. Is alibaba pointing towards more gains ahead . We believe it is. I mean, if you look at the small selloff, thats a small element if a broader Decision Making equation which is driving the value of alibaba. If you compare it to real estate, investors are interested in location, location, location. In my business of venture capital, we are looking at management, management, management market. The size of the ecommerce market in china just recently this year overtaken the size of the ecommerce market in the United States. So thats big. So we think that a company with that kind of dominant position in a market that big is going to have a good growth stock and not entered the u. S. Market yet so we a lot of room for growth. Brian, has it won you over . Really interesting. Good points by andrew. I agree with everything except for one thing. I think it was terrific for the vc guys. Great for the finance guys. But right now, where its priced today, kelly, im worried about it. Right. They went from bums me out. Went from 60 to 90 overnight so im a little built worried of a bull market, rich valuations on the company long run. Brian, you didnt believe their numbers in the first place with regard to some of the profit margin figures and saying you thought this was a sham. Well let me jump in. Not a sham. Timeout, timeout. Not a sham. Look. They have a u. S. Audit firm. My issue was not on the financials. It was on the governance and specifically today, i mean, this is where we sit. Weve got good sales growth. I agree with andrew. We have a 44 net profit margin. Check. Thats terrific. But you have a very, very high value in a bubble market. Theres no doubt about it. Great for the vc guys. Great for the finance guys. But for the consuming public, im a little bit worried about where they stand today. Both of you a question. Hang on. Bringing in kevin oleary. Cash flow positive or not, i couldnt wait until the option market finally there to hedge up my risk as an insider locked up. Isnt that exactly whens going to happen next week . If im locked up far year on this thing trading at 35 times, im going to sell myself into a collar for sure. Andrew . Take a look at facebook. If you guys dont like the valuation of facebook, then you probably dont like the valuation of alibaba. If you look at the financial metrics like pe ratios, price to forward earnings, its eerily similar to facebook. If you look at what happened with facebook with its drop in price after the ipo, part of it was that the market didnt like the position on mobile. Alibaba is a mobile first company. Theyve got 87 market share on mobile at home in china. And i think the markets going to reward them for that. Yeah. But remember, andrew, wait a minute. We are way later in a bull market. All these babies look terrific in a baby market and cute but were a lot further along in the market and as you mentioned, facebook went down so if you look at the relative values of these companies now compared to companies in the past, theyre very high. And people just need to know this. Not to mention, guys, this is not a good week for data around china either. You have the finance minister ruling out stimulus after 81pl week and the chinese economy could get softer Going Forward and alibaba being a play on china whether you believe its a bull market here, theyre going to be susceptible to swings in the cycle. They have swings, too. Theyre not available to be an index because the way theyre in the cayman and a second problem is facebook went down and now a market cap of 202 billion less than alibaba. So alibabas 221 billion. Facebook is 202 billion. Is facebook i mean, is alibaba going to double to 108 a share and it takes the problem is we have to go. We have to we got to go. Leave it there. 32 billion. What would you rather bet on to double . I think i take yeah. Wrap. Okay. Andrew, thank you. Appreciate it, brian, too. Well try to pick it up as soon as we have more time. Payoff to our Million Dollar homes competition with the College Towns of reporters. We have jane wells and Mary Thompson facing off in the finale and want to hear from you. [bell rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Then boom. What happened . Stress, fun, bad habits kids, now what . 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So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. Cnbcs Million Dollar home competition back to school. Our reporters visited their college hometowns to find Million Dollar homes and you determined which home is the best bang for your buck. You do that going right now to cnbc. Com vote to cast your pick. The winner moves on. The loser winner moves on. The loser gets eliminated. The locations are not revealed until after we get a look. Far from college dorm living, this grand custom home sits on 3 acheers of beautifully landscaped property. A circle driveway with a fountain, a threecar garage with a large deck. This home has it all. Behind the massive double doors, almost 9,000 square feet of living space, complete about builtin book case and other highend finishing. This gourmet kitchen, a granite countertop and lavish breakfast nook. Seven bedrooms and two half baths. A massive on suite with a double vanity and a tub with a sky light. The lower level has ample room for a reunion with your college friends, a woodburning fire place, separate door and sliding doors. This can be yours for 999,900. This 90yearold renovated spanish style home sits on a fifth of an acre where you have to fight on through traffic. It is just a short walk from some of the hippest shops in town. Less than five miles from the most astonishing Downtown Renaissance ever. The house is just over 1,800 square feet and retains much of the original 1923 flavor. A quick student body right puts you in a kitchen with modern appliances though none made of us it can. Four bedrooms, two paths. The house is big enough for a family. The garage is turned into a guest house, plenty of parking from tailgating six miles from the greatest university in the history of the world. For those that feel like a Rebel Without a cause, the view of the most iconic observatory. For 995,000, this is your conquest. So it is mansion versus casa. It is up to you to select the winner. Cnbc . Com. Mary thompson went to notre dame so that home is in indiana. First, where do you think janes home is . I know. I want to bow out of this one. The hawaiian shirt in the red color should be a hint as well as the conquest. Any guesses, kevin, john . Im thinking california. Now, im thinking hawaii as a result of that shirt. What about the griffith observatory. She didnt say that. You gave it away. Dolly, the location is . Los angeles. She threw you off on purpose. That. That was sneaky of you. The voting has the mansion at about 60 of the cost. Who needs 9,000 square feet. I was thinking the same. I want to hear it from dolly. Which one, please . I have to tell you, the people that were voting are not putting their money in it. There is no return. They dont care. They love the pictures. Thats what they are voting on, heart and emotion. Never do that in real estate. No emotion. You dont like that 9,000 square feet. You dont want to be in indiana . Hard to get to. A lot of floods in indiana. Good luck in the restaurant. We are going to go there. You are not renting that house to college kids. Jane wells house is petite, fabulous, walking distance to everything. It is cheap, has very low carry. Empty nesters, all kinds of people could share it. Have a family vacation. It is a fabulous house. Proof in the pudding, it sold above ask this week. That says it all. More insider for me. Do you know how much above . I dont, no. I this i they ank they are wait to close. Keeping with the theme de sure, we ha jur, Mary Thompson back in college. There she is. Look at how koot. She is so beautiful. Look at those banks. We have one of our jane wells. She is not a blonde. Oh, my god. Was she dating Charles Manson then. Mr. Wonderful. You are not going to get a restaurant reservation anywhere in california. Which would you yobuy . The casa, for sure. Dolly is swinging the vote again. The voting is closed. The casa, 51 . Egone, you ddolly, thank you. Good to see you as always. Really appreciate it. Just how far with a College Graduate go to land a lucrative internship at a startup. One 19yearold took her application to an Ecommerce Firm to new heights. Well explain when we come right back. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. This guy could take down your entire company. H . Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. Its a tough job market out there. So tough this 19yearold girl decided to film herself jumping out of a plane to show just how much she wants to work at australian startup ahphatise. Talk about taking things to new heights. That cant be cheap to do. The parachute didnt open. What is it with you . I am feeling frisky. This is just too much. It tells me she is smart. He sh is getting so much media from it. Somebody will hire her, if not the original firm. I wonder how much like that costs . A couple hundred dollars to jump out of a plane. I once tried that. I got up there. They opened the door and i would not go up out of the plane. It is not natural to jump out of a plane. It is not natural. I didnt do it. I said, im not doing it. I will pay you a fortune to leave me in this airplane. Were you going tandem . It scared the you know what out of me when i saw the ground. That cob a big problem if people decide to at the last minute. I dont care. If you are a control freak and you go tandem, it is a problem. Every once in a while, bad things happen. I dont want to be part of that statistic. A guy i went to college with broke his leg doing that. Risk averse kevin oleary. Bonds are sexy. Thank you all for being here. A lot on tap for next week. We are going to toss things over to fast money coming up with melissa lee. Hey, there, kelly. A lot of people talked about pym pimco and a lot said it was the bond market. What is the impact of bill groves leaving on the actual bond market and rates . We are going to tackle that question. Huge question, important question. Straight over to you guys. Fast money starts right now after the nasdaq market. Im melissa lee. Our traders tonight are tim see more, brian kelly, Pete Najarian and guy nadalma. Ending the day up 167 points after yesterdays violent selloff. The s p seeing the best day since early august. The nasdaq soaring back with over a 1 gain. Keep in mind, all three major averages logged their worst fiveday performance in over eight weeks. Pete, should we be setting up for more volatility ahead . I think we are going to see some swings. The volatility index, the fact that it got as high as it