Transcripts For CNBC Closing Bell 20150120

68 wall street. Today its a luxury residential building but thats beside the point. Were seeing the results of the ice, the owner of the New York Stock Exchange moving and consolidating some operations not just the equities but also some futures business some of the options, and just some general support here as they continue to run vat the space. Thats right. I miss the garage i will say, but time marches and the options traders have a beautiful new trading floor. So things look a little different at the New York Stock Exchange, but its the same for the stock market overall. We still have volatility in this market kelly, and a lot of it. Were waiting not only we know about the state of the union tonight, but the ecb meeting, European Central bank meets on thursday. That could have a profound effect on this market right . Thats going to be a big one. A lot of anticipation arguments over whether you should buy europe or not. Even Johnson Johnson this morning on that disappointing earnings result talking about some of the weakness in europe and the weakness in russia, the weakness in venezuela and brazil. Oil prices also under pressure. Thats contributed to the dows mixed. Er formance today. Right now were up 10 points. The s p is in green territory and the nasdaq add being 26 points at the moment. So much to talk about. Lets get to it on our closing bell exchange. Theres Amy Wu Anthony Chan from chase is back with us so is girard fitzpatrick. David kudlow from Mainstay Capital Management and our own rick santelli. Anthony, youre our big economic bull. Imf reducing growth targets. It wasnt too long ago we had 5 handle on the economy and gdp now were wringing our hands over china and europe and things. Are we slowing down globally or not right now . Wroo wroo well, we are going to be a little slower. Its clear china is rebalancing their economy. They came out with a forecast of less than 7 but they said the u. S. Economy will grow faster in 2015. I think its positive. And to the extent we get some stimulus out of the European Central bank which at this point very few people are debating. The only debate is how much were going to get, we will see that the Global Economy will start to heal when all that takes place. You know against this backdrop we also have to point out to people some of the big moves again and u. S. Treasuries today, are rates going to keep going lower . What stops it at this point . U. S. Treasuries the big issue there has been more concerns on a global bisaysasis but particularly disinflation. Real yields are still not super low but the nomal yields have nose dived. Where are we going from here . I think were on a trajectory the u. S. Economy still looking pretty positive for this year. The jobs story should be somewhat more positive but there are concerns ahead. The curve is starting to flatten. Theres some wider International Concerns out there. And i see the risk of potential slowdown just rising not necessarily this year but ahead. I see u. S. Treasuries going 2. 5 to 3 on the 10year but for the first half of the year as global slowdown is likely to be to peoples fore as the inflation story is likely to dominate, i can see nominal yields staying low. Amy, youre good at gauging market sentiment. What is the feeling about that meeting with the European Central bank on thursday . Are they betting up or down or what is the expectation there . You know what surprises me bill, as you said earlier everyone is watching thee cb meeting, and, frankly, thats all theyre doing, theyre watching it. Were only pricing a plus or minus 2 move on the s p. Thats relatively average. You would think given the volatility that we have experienced and will experience through the catalysts ahead in the Options Market there would be more placement but were not seeing that. Were not seeing hedges enacted to any degree. I think people are sitting and watching seeing what happens. I think if expectations are out of whack from what happens, well experience even more volatility than weve seen. Speaking of watching david, tonight the president is likely to announce he wants to increase the Capital Gains taxation rate to 28 for the highest earners from currently about 23. 8 . If that happened, would that impact this market . I think it could impact the market to some degree. Were always looking at how politics affect the market. With a Republican Congress where would that go. If we look coming back to the economy though the u. S. Economy, what it has going for it right now, the gdp growth of 5 latest reading, highest in 11 years. And the International Monetary fund raised 2015 outlook a half a percent while downgrading most of the rest of the world. We have Consumer Confidence, the highest in 11 years. Jobs growth the highest since the 1990s. Ism numbers well above 50 and we look at china slowing, we look at japan and the technical recession and europe on a path down that same road with i think the ecb probably disappointing on thursday. I want to get to rick in a second, but anthony, is it possible for the u. S. Economy to grow relatively robustly when all everybody else around us is slowing down . Does that make sense . Bill i dont think thats true on a sustainable basis, but you got to remember you got to ask the question where are those global economies going, not so much over the next quarter or the quarter after that but over the next 6, 9, 12 months. And if the European Central bank does a huge amount of quantitative easing, something north of 500 billion, we know the european economy is going to pick up and here in the United States that lower energy price, i know everybody is beating that drum, but studies show including some i have done myself when Energy Prices decline, Consumer Spending tends to go up. 54 correlation between what happens to Energy Prices and Consumer Confidence and 54 correlation between Consumer Confidence and Energy Prices. Thats not that high anthony. And there are some studies out there, kelly, that show with a oneyear lag, the correlation is 80 . If youre not impressed with 54 , you got to be impressed with 80 . Ill take 80. Going back to the j j quarter, shares under pressure partly because of the guidance and factor that is supported what otherwise was a real hit from the stronger u. S. Dollar and some concern about their ability to meet sales target if the dollar remains just at these levels forget going higher. What are the guys down there saying happens to the dollar from here . If you have a problem with the strong dollar your real problem is with all the other economies that give the strong dollar value on the spread. You cant trade the dollar in an isolated fashion. Its only against the euro the pound, the swiss, and to that end the economies on the other sides of these trades are really the proactive force. Its just so easy to say strong dollar. As i look up on the board today, theres some huge moves, huge moves. Were gaining big velocity against the yen in particular. Now, you really think thats a strong dollar story . You really think its a weak japan story, and its important. It isnt just semantics. This is huge. And i continue to see all the dynamics in place for 2014 continuing into 2015. Our one guest said im sure if they do 500 trillion euros worth of qe, that the european economy is going to get better. Why . Why . Why do we know that . We dont know that . And its not the right question to ask anyway. The right question to ask is is there a benefit, a cost benefit, to putting the european economy into even more questionable unintended consequenceville, if you will to do this and nobody is asking these questions. Everything is just, you know, this is the way its been this is the way it is. Just like a strong dollar and rick what about gold . Rick, the german 10year bund is already below a half a percent. How much more canq qe help . Right. Quantitative easing is not just about lowering Interest Rates. It also impacts the currency, and if you believe that a lower currency doesnt help the economy, all you have to do is look at history and find thats the case. It will definitely help exports to some extent but once again, is this a dollar problem . Is this a multinational problem . No, its a beggar thy neighbor problem. We need to identify problems like tonight, state of the union speech. Just because the Warren Buffetts of the world are getting richer because of ben bernanke and yellen, i dont understand why that makes a guy who wants to get a good education and open up a new business, why does that put him at a disadvantage . I dont get it. None of it makes sense. Amy wu somebody mentioned gold a second ago. Gold has just finished its best sevenday up period since 2007. Were getting close to 1,300. I dont know if youre doing any reading on options activity on gold these days but what kind of sentiment do you see there . Weve actually seen upside buying on the call side in not only gold but some of the other derivative commodities related. One point i wanted to make going back to the oil beneficiaries is, you know, look i think a lot of people are afraid to play energy either single stock or macro directly right now because a lot of it is geopolitical, but we know that lower gas prices will help certain things in the chemical spacen the retail space, in the derivative place and those implied volatilities havent moved as much as you have seen on the energy space in general, so i like that indirect approach. All right. That explains some of the activity we are seeing. Guys, thank you. Amy, thank you. Thanks, everybody, for now. This afternoon we have about 50 minutes to go. The dow and s p still both in positive territory although just. The vix is a little bit lower today, but anything could happen from here. Coming up wall street veteran john calamos is speaking with us to find out how hes navigating these wild swings and what hes buying with his 20 billion in client money. Always looking forward to talking to john. Also, when we come back former fdic chair sheila bair will weigh in on the nations banks. The talk about breaking up the banks is only getting louder. Stay tuned for our interview with her coming up on the closing bell. Stay tuned. You can find a new frontier. Theres nothing stopping you and a lot helping you. Technology thats with you always. This is our promise. Its never been better to wander because wherever you go, youll find us doing everything we can, so you can. If youre running a business legalzoom has your back. Over the last 10 years weve helped over one million Business Owners get started. Visit us today for legal help you can count on to start and run your business. Legalzoom. Legal help is here. [epic music] introducing aleve pm. The pm pain reliever. That dares to work all the way until. [birds chirping] the am. New aleve pm. Its the first to combine a safe sleep aid plus the 12 hour strength of aleve. For pain relief that can last all the way until morning. New aleve pm, for a better am. Welcome back. Its been an up and down and up day on wall street. The dow, all the major amples opened higher. At the low we were down less than 100 points. Now were back in positive territory with 45 minutes left in the trading session. Inside the dow, it looks like roughly half are positive and half are negative right now. And thats what they call a trading market. Its not a stock market kelly evans. It is a market of stocks. Thank you. Wise man once told me that. President s state of the Union Address this evening is expected not just to ask for higher taxes on high earners but also new fees on banks. And the financials remain in the crosshairs at least politically. Elizabeth warren continues to call for the banks to break up. Just today there were protesters outside the New York Stock Exchange calling for the return of glass see gal. More reaction on all of this and an exclusive interview, former fdic chair sheila bair. Its great to see you again. Lets begin with this move that the president may announce tonight. 7 basis pounds with 7 basis points on 50 billion. Is it the right move . Well first of all, i dont think its going to happen. I think its politics. You know we had a very sizable assessment for institutions above 50 billion as part of the dodd frank bill the original bill that passed the house. The administration actually opposed that in the senate. Their Treasury Department they also lobbied against the transaction tax in europe. So i think the only reason were seeing it now is because they know the republicans are in control and theyll stop it so they can play a little politics with it. Im sorry, given the past history of where this administrations Treasury Department has on any kind of bank tax, i think theyre playing games. I dont think its real. I dont think they really are serious about pursuing it. Let me ask you about dodd frank. Is it too late to change the regulatory structure in that bill . The reason i ask, you know jamie dimon famously last week said banks are under siege right now, theyre under attack. Even barney frank has told us on this program that one regret he has about dodd frank is that they left the regulatory structure too complex. They should have simplified it more. Can we go back and simplify things do you think . Actually i think that would be a very constructive discussion to have on Financial Issues as opposed to all this nickel and diming of dodd frank and weakening that. I think we should give a serious look at regulatory structure. I dont support a single regulator. I think thats too much concentration of power in one entity but we could have a lot fewer, and hes right. There is a piling on effect and everybody is afraid of looking like a weak regulator if somebody else is going after a particular institution. Its not good government. So i do think that would be a very constructive debate to have in congress as opposed to all of this trying to seriously weaken dodd frank, which i dont think is a good idea. Related to all this is the ability to resolve failing banks, as you know. Some say this bank tax obamas proposing is actually a form of fdic insurance. Right. Would you agree with that . No i dont think thats the way to look at it. I mean what we were trying to do in the dodd frank bill was provide a fund for working capital. It would be adjusted on the basis of risk, which would be much more nuanced than what the administration is proposing, so if you have a lot of shortterm funding, a lot of, you know, level three assets hard to value assets higher levels of leverage, there are a whole series of factors which would have resulted in a higher assessment. That makes sense and should be done but i just dont think its going to happen. But the larger question i think, you know, just by raising Capital Requirements forcing them to issue more longterm debt, which is more expensive than shortterm debt you can try to make them internalize some of the external risks they pose to the broader economy, and that in itself can create pressure for them to break up. The more expensive it is to be big, the more market pressure there is going to be to get smaller. I know youre a fan of Elizabeth Warren but with her call to break up the big banks, thats one thing that jamie dimon says is one reason that he feels like hes under attack by the federal government at this point. Yeah, right. It makes for a great populist argument to do that but is it constructive to do to make that kind of a statement, to break up the big banks when in fact dodd frank was created to deal with the big banks in this economy right now. Well i actually believe that the market would get us there. I think the only reason they can operate there are a lot of management inefficiency was having these very large complex institutions and its more about complexity than it is size. But derivatives dealing, commercial banking, those are all different skill sets. If youre trying to imagine them all centrally, you get a lot of management inefficiencies. The only way i think they can do this with all the leverage is because theyre implied government support. You send that you end the markets perception of too big to fail you increase the funding costs, i actually think the market itself will force them to down size because it is really hard and inefficient to try to manage these very large conglomerates. Its interesting the way that at the same time we have this huge market force i guess coming on the banks in the form of just plummeting yields. This is also true yes. And to what extent is this a double whammy . Should it be frankly, encouraged that this is accelerating the transformation of this countrys Banking Industry sheila, or do you have a concern about what these low yields ultimately are going to mean . Well i have a concern about low yields from a different perspective. Yes, its compressing margins, especially if you make your living making loans, traditional banking, which i think is Important Public Service and something banks should be involved in. If you are doing that you are being punished by very low yields and it forces investors and others to go farther and farther out on the yield curve. You saw it last week all these retail fx investors playing this swiss franc against the euro and taking a bath with 50 to 1 levels of leverage and higher. Thats the kind of activity you get when people cant get yields on their safe investments, and similarly with banks. If they cant get yields on the safe investments, it gives them incentives to take ricssks, too. Do you think the fed is doing the right thing then by raising Interest Rates i do. Even if it seems like the market is telling them the result of that will be somehow lower rates in many years time . You cant control the Global Economy, and theres still if reports of the Global Economy are having trouble, you will see a high demand for dollar. Thats going to result in lower treasury yields regardless of what the fed does but i do think they should start on this path. We need to get those rates what i would call more normalized which is at least so your safe assets for regular savers are at least a bit above inflation so theyre making some real return on their money. I think that is something we should do. They need to do it gradually. Weve been in this for a long time but i think janet yellen and the rest of the board are absolutely right in sig naling they will do this. I think thats absolutely the right thing. Good to see you. Thanks for joining us. Happy to be here. Sheila bair joining us from washington. As we said an up and down and up day. Were up right now as we head towards the close. A gain of 19 points on the dow, kelly. Up next we got to talk about oil tumbling again today. Weve got a guest coming up who says the oil price, this is what we should be looking at. Hell explain what he means by that. Later we talk with wall street pro john calamos speaking with us exclusively about the markets, how hes putting his clients more than 20 million to work. Well get his outlook on the markets and the economy for 2015 coming up. Stay tuned. Do y ou like to travel . Im all about free travel babe. Thats what i do. [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its si. Breaking news on standard poors. Dom chu has details. What were watching right now is a reuters report saying that s p is in talks to pay as much as 1. 5 billion to settle with the u. S. Justice department as well as state authorities over its mortgage ratings. That according to a source familiar with the matter. S p also possibly in a settlement of its civil fraud litigation that could be reached as soon as this month. That according to sources familiar. So reuters saying that s p could pay about a 1. 5 billion settlement with the u. S. Justice department and state regulators over its mortgage ratings. Of course, with he show mcgrawhill financial is the Parent Company of standard poors. An Interesting Development here kelly, bill, on whats happening with the Credit Ratings agency. Back over to you guys. Thats real money. And a in the works for some time as well. Thank you very much. Keeping an eye on markets here the dow again in positive territory despite being a big underperform seeing a big underperformance from j j. Consumer discretionary getting hit which is interesting in light of the better attitudes and sentiment data weve seen. A positive session for tech. Two of the darlingingss from last year not doing so well this year financials and discretionary. Oil kicking off the week on a down note. Jackie deangelis is following that for us. Good afternoon. The selling pressure back today. We were down 2. 35. Closing price 46. 39. The first is thei mf cutting its Global Growth forecast for 2015. And weak data coming out of china. Then iraq production 4 Million Barrels a day, record production keeps going up while prices keep going down. Also, some earnings out from baker hughes and halliburton. The numbers were good but cautious commentary from management on oil prices in 2015. Price for a gallon of regular price according to aaa, 2. 05. Everybody is watching to see when that National Average goes below 2. Its already happening in many states. By the way, one of our next guests say forget the current price of oil, its the oil futures. Those stand at 53 for december of this year, under 59 for december of 16. Joining us why is John Kingston director of news. Thanks for joining us today. Campbell, what do you see here . On the one hand youve got a guy like the prince who is one of the savviest investors who says we will never see 100 oil again. And then John Hofmeister says well see 100 bucks by the end of the year. What are we to make of that and where do you see it going . What i think is way too much attention is put on the spot price. Just a few minutes ago we heard 46. Theres much more information in the market about the price of oil, and the logical place to look is the futures curve. And oil frukluctuates wildly at the short term of that curve. Were seeing a period where the oil price is low but the futures tells us the price will revert to a higher price. And i think for many of the more important things in the economy, whether its airline stocks, whether its a papelineipeline decision, whether its an energy company, all the valuations of those securities is based upon the long term. Theyre not based upon some spot price of oil, yet all the attention is on the spot price. Fair point, but, john how reliable is the futures price of oil . Did it predict a 50 drop that was coming or does the current hope really actually reflect a bailout for some of the company that is would otherwise when theyre hedging or trying to receive income locking it in for the next 6 to 12 months have to realize the spot price . Right now the fact that the futures price is higher means they dont have to do that. I never thought the curve was a very good predictor. That doesnt mean its not important. I think to me when i look at the curve that was just discussed, it looks like the kind of curve you would get in a contango market with a very over supply in the short term and very steep curve going out. I have always viewed it as more of a statement of value, of what its worth now to own that now, and thats kind of a complex brew of Interest Rates and inventories but it does have value. First of all that somebody is buy crude now, sell it 12 months forward, store it for the interim and with low financing charges they can money. So i think thats important. I also think its possible that a company can hedge some of its future production but, you know, a lot of these companies are junk credits or close to them or theyre getting that way and thats a liability on your books as soon as do you that. So i dont know if theyve got that. So i have never been big on the idea that its a good predictor of where prices are going to go. I want to get your comment on that campbell but first the word contango. Its a fun word. It simply means the futures are pointing to a higher price down the road. Campbell, what about that and the thought that maybe the futures arent that much of a predictor down the road . So theres many important things here. Number one, it is true that the futures price isnt exactly the forecast of the future spot price because as was mentioned theres cost of storage, and thats very significant for oil. I think the point is how do you want to do this forecast . Do you believe that there is some mean reversion in the price of oil, or do you believe that you need to extrapolate exactly the spot price from today . Im a Firm Believer that prices mean revert in the long term. It just so happens that the futures curve is consist went that mean reversion. So i think that its important to take all of the information into account whether its mean reversion, whether its the futures market whether its inventories, all of this into account and not just look at the shortterm price. John theres a theory going on around weve got to go here but i want to bring this up because there was talk on the floor today and art cashin was pointing this out, that the new swing producer in energy are the u. S. Producers now. They are the swing producers in terms of putting supply in the market or withdrawing it when its not economically feasible and whatever the price is that is feasible for them to continue production art cashin and others contend thats the new cap for oil prices right now, and were almost there. What do you think about that idea . I think thats actually a return to a normal market, the kind of thing they would teach new economics 101. The fact is in the market previously the swing producer was opec and the saudis. They would take oil off the market or inject it back in as the market needed it. They took that role on themselves rather than let the free market work. Well, now theyre saying were not going to do that not now and maybe for a little while, so then you basically get back to the order book who has got the orders for it, whats the supply demand balance. I would agree, the pressure is on the people in north dakota producing in the eagle ford and to a lesser degree up in canada. The lead time is a little longer there. I would absolutely agree with that theory. Very interesting. Gentlemen, good to see you both. Thank you for your thoughts. Thanks. Taking a look at the market with half an hour to go pressure on crude putting some broader pressure on stocks here and now the dow has turned negative again giving up seven points. Puts it just over the level of 17,500 while the other two indexes trying to hang onto positive gains. We have mega earnings a half hour away ibm, netflix due after the close. Well bring you the numbers the second they hit the tape and break them down. Before we do that, john cal calamos joining us. Well find out what hes buying when we come back. 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. Can get the real answers you need. Start building your confident retirement today. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Mixed day today. Less volatility. Ill bet well be seeing that until thursday kelly, as everybody waits for that European Central bank meeting and the announcement possibly of some sort of quantitative easing program. The dow is down just two points. The s p up two points. Nasdaq doing well up 21 right now. By the way, i would be remiss if i didnt mention why im sitting in haushseadquarters. Im on nightly business report. Check us out on your local listings. We look forward to it even though i miss you down here. Speaking of dominic chu, hes keeping an eye on some of the big movers for us on this monday. Hi dom. So lets start with here with Johnson Johnson. The worst performer in the index today after the Company Issued disappointing guidance for 2015. As a result the shares down by 3 . Also red box parent outer wall is moving lower as well. This after announcing its ceo was stepping down and resigning from the board. No explanation was given on that particular move so you can see down by 18 those shares. Tiffanys trading higher after wells tar ss fargo upgraded them to outperform based on valuation. Those shares up 2 . Well end is Orbitz Worldwide spiking on a bloomberg report its seeking a possible sale and has drawn possible interest from private equity funds. Orbitz worldwide you can see up by 8 on todays trade. Back over to you guy approximates. Thanks, dom. Well see you later. A lot of earnings coming out after the bell. Markets have certainly had a volatile start for the year. Today has been no different. So how does a firm that manages over 20 billion of clients money navigate these kinds of moves you ask . Well lets ask Calamos Investments john calamos joining us now. John, its great to see you again. Welcome. Lets just begin with the volatility weve had so far in january. How it affects the trading decisions that youre making and what you think it means for the rest of the year. It seems like, you know, were just on a risk on risk off type of environment thats been a really tough environment, but i think you got to look through some of this nearterm volatility, look a little bit further out and position yourself that way, and were actually positive for 2015 overall, but this volatility has really been quite dramatic and its not going to go away soon. John most Money Managers will tell us on this show its about earnings that why they invest, thats where they invest, but inevitably our conversations get around to fed policy central bank policy. Were all obsessing on the European Central bank right now. You know how does that affect how youre going to invest this year, especially if mario draghi finally is going to get around to some sort of quantitative easy money policy this year . Well i think its uncertain whether or not thats going to work well. Theyre obviously trying to emulate what the u. S. Has done here, and weve done it and our economy has grown, so theyre looking at qe to say, okay we should be doing that now, too. The problem they really have is were they dont have a very uniform view across all the countries, and thats going to be the test there, but theyre trying to become more competitive in the Global Economy by lowering their rates in here and hopefully that will stimulate growth in the european do you like europe . Would you invest . Well i think there is some areas of europe. I think some of the companies in europe that export outside of europe seem attractive so you have to be very selective. Were a little bit nervous about the political situation in europe right now, but if you look at overall valuations europe is cheap. Its whether or not theyre coming out of the slump that theyre in and thats the critical part that were looking at very carefully. John, if you dont mind, pull the kircurtain back a little bit on your own business and tell us where people are attracted. Are they looking at etfs, mutual funds or is it an appetite increasing for u. S. Equities here . What kind of trends are you witnessing. I think what were seeing is again wed rather be in the equity markets than the bond markets with these low rates. Also i think were you know were in more volatile markets, so obviously some of the lower volatility strategies i think will be appealing to investors, convertible strategies like that because were in a very volatile period, and like i said earlier, you have to think, you know, really beyond the nearterm volatility and from that point of view were positive on the markets. So, you know, i think this low Interest Rate environment is tough. Just could you clarify what you mean by some of the lower volatility convertible strategies because it sounds like an area that might be of interest for a lot of people watching volatility lately. What do those do . What do they offer . You know what those strategies have offered over market cycle is really cushioning your downside, you know, risk there, and you do give up some of the upside but in very volatile times, that has worked well and for investors really preservation of capital, protection on the downside is very important. So those type of strategies, you know, work well, and they dont have the Interest Rate risk that if rates all of a sudden go up they dont get hammered as well. So i think theres a lot of interest in those strategies. I assume if youre concerned about europe and the political structure and whats going on over there that youre on the bandwagon that says king dollar is with us for a while, the dollar is going higher and if thats the case what about commodities and other hard assets . Are all bets off, you just dont want to touch these right now or what are you doing . I think a commodity play is all about inflation, and wed love to see a little inflation. Were actually in a deflationary environment, so, you know i dont think thats the answer. I dont think that commodities are the answer here. You know i think i would prefer equities to commodities in here. You were pretty cavalier with your comment there that were in a deflationary environment. Do you want to expand on that . Do you see prices going much lower from here or whats going on . No, i think, you know, the monetary authority, whether its in europe or here want some inflation, they want the 2 inflation. Rates are coming lower, could really, you know, be the catalyst to, you know spur inflation, and i think that overall that would be good for the economies. Very low Interest Rate environment, flat yield curve, you know overall is you have to for the economy. Yeah, it certainly is. Presents a host of challenges. Thank you for helping us understand how you guys are playing them. John calamos, ceo of Calamos Investments. Heading to the close we have 17 minutes left in the trading session. The dow has been hovering on either side of unchanged. Up 15 points with the s p up 4. Nasdaq up a comfortable 25 points. Coming up mohammed elerian says the u. S. Is the best place to invest right now. Hell tell us how this weeks expected European Central Bank Stimulus could affect your money. When we come back well tell you what to watch for as we get closer to earnings for ibm and netflix so dont go anywhere. Were back in two. Welcome back. The earnings parade continues this week. Ib m, a dow component, and netflix, expected to announce earnings minutes from now. Dominick chu is back with the numbers that could make or break stocks. 15 to 20 minutes from now. Big blue ibm, analysts are looking for about 24. 8 billion in revenues. Thats down almost 11 from the same time last year. Adjusted earnings are expected to come at 5. 41 a shay for there for the Fourth Quarter. Big blue also expected to discuss a huge reorganization from their executive raknks as well focusing on cloud business. Ibm currently flat on the session. Netflix expected to earn 45 cents a share on sales of 1. 45 billion in its Fourth Quarter. A key metric for this company will be whether its number of paid Domestic Subscriber additions will hit or surpass its guidance of 1. 35 million subs. Those shares up by 2. 5 so far in trading. Well end with one on the smaller end for chipmakers. Advanced microdevices forecasts are for a penny a share gain. Those shares are down 6. 5 ahead of the earnings report. It is expected to be a volatile one for a company thats now only worth you can see there about 2. 25 per share. Back over to you. A you have to session again for amd. Thank you. About 12 minutes to go before we hit the closing bell and start to get those earnings. The dow back in positive territory, but its been fluctuating all hour. The s p is up about 3, the nasdaq 25. Its by far, bill despite some pressure there that dom mentioned, the outperformer of the day. The state of the union is at 9 00 p. M. Eastern time and his tax proposals seem to be targeting a lot of attention probably most cnbc viewers will be Live Streaming that whole thing, by the way. Why is the president talking higher taxes for high income earners when everyone says it has no chance of passing the Republican Led Congress . Robert wolf, a former ubs executive and former member of the president s jobs council and economic recovery Advisory Board will be weighing in on that coming up on the closing bell. Stay tuned. Isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Take a closer look at your fidelity green line and youll see just how much it has to offer, 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. The dow still hovering around that unchanged level with about 8 30 left in the trading session. There is the dow down to 17,504. Joining me from the floor of the big board, phil and bob pisani. After last weeks swiss bank surprise, can you blame some traders for not wanting to make a big commitment before the European Central bank meeting on thursday . Do you think well sort of be quiet until that time . I think it will be. You know you have the president s speech tonight, which is obviously raising some consternation. You have whats going on in europe and the ebb and flow of data some good some not good. Certainly i think people are holding back as of at least for the next few days. And some earnings bob, especially the big question mark, big blue here. You know look we know what the problems with big blue is. Its not the hardware problem. The problem is their service and software has got enormous amounts of competition, and well see what happens there. I have a much broader concern. I know there are macro issues going on. Theyre bringing down earnings estimates across the board, not just in energy and materials but even for q1 for the financials are not looking great. I want very impressed with financials today. They were talking about lower numbers in q1 as well. There was no bid at all this morning. There was no effort to buy the market. We went down right after the open. Id like to see a little more interest but i think its earnings. What do you think is going on with the economy and the markets right now, phil . It does seem like things are starting to slow down here to some degree. I would take it as a buying opportunity. I still believe were in much better shape than were being made out to be. The Global Consumer will benefit by 0. 7 just by the correction in oil. The average consumer will save 1,800 a year. I see the earnings information. Alcoa, good. Some others mixed. Sales are up 2. 5 . If sales continue to strengthen we only had 50 out of 500 companies report, i think theres a lot better news to come. Were only on the beginning of the energy renaissance. I think its an opportunity to buy stocks. Point well taken on the benefit of lower oil for the consumer consumer. As the dollar goes higher, economically thats not owe soso good for the gigantic multinationals. No doubt. But 80 of your population benefits from lower energy. 80 will benefit from a higher dollar. Maybe fanlinally diversification works again. In the end its an outstanding benefit for everyone. Lower cost of manufacturing, it adds up to a stronger market. I agree with that, but the stock market is priced off of earnings and a multiple of earnings. I see the impact of Energy Earnings being down is far greater than the positive and i agree its a positive effect than there are in consumer stocks. We heard delta talking about the benefits of that today. I dont see that being borne out in the earnings and thats what empowers stocks right now. Were going could tom back with these two with our closing countdown for this tuesday. In a few minutes, ibm and netflix will be reporting earnings. Well have the numbers, the instant analysis and the Market Reaction on how it may affect tomorrows trading. Thats all coming up. Youre watching cnbc, first in business worldwide. Do you have something for pain . I have bayer aspirin. Im not having a heart attack, its my back. I mean bayer back body. It works great for pain. Bayer back body provides effective relief for your tough pain. Better . Yeah. Thanks for the tip ive been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. Coming up on the last two minutes. A quick look at the dow. As we said an up and down and up day as we get ready for the president s state of the union tonight. The European Central bank meeting on thursday. So a kind of waitandsee market right now. 10year, a lot of long term yields went lower. The lowest i saw was 1. 76 on the 10year. The 30year got to 2. 39 and then finally the earnings coming out tonight that weve highlighted. Get ready for ibm, netflix, and advanced micro devices. Phillip, i dont want to put you on the spot, but would ibm be on that Shopping List if youre looking for companies that would present value or have fallen on hard times to some degree . Weve kept a close eye on ibm. Its interesting. Im not sure were there yet. I think you can get a little cheaper here. A few Year Companies i like better on the mlp space better. A big tech nim likeame like ibm i would hold off at least through february. The market has to soften up a little bit and maybe as earnings come out. Bob, oil still calling the shots. Another 5 decline on wti. Yeah. The only good news here is we didnt see Energy Stocks drop quite as much and again the big question is whether or not this is a great time to buy them. The biggest question in the last 30 days is that xop which is the exploration and production etf. A lot of people have been trying to pick bottoms on that in the mid40s. They failed once theyre trying again the last few days. Well see if that holds off. My sense is historically oil is when you have a 50 drop oil is historically higher six months later. Its only happened five times in 30 years when weve seen oil with a 50 drop and that is a rare occurrence but we havent seen these kinds of supply side issues before. The thing about iraq cranked up production thats having an impact. Think of it this way, are you going to drive your car more with gas down . Are you going to heat your home more with oil down . Yes. That will drive the price of oil back up. Thank you guys. Thanks, phil. See you later, bob. Heading toward the close. Mixed day. Well sow how see how the president s speech effects the market tomorrow. Second hour of the closing bell coming up with kelly evans. See you tomorrow kelly. Thank you, bill. Welcome to the closing bell. Im kelly evans at the new york stoke where it looks like the dow is managing to finish in positive territory, although just. Its up 4 points or so at the bell. The s p adding 3 points. A little stronger session there to a level of 2222. The nasdaq up about 20 almost half a percent, but certainly a mixed day across the street. Some pressure from some key dow components. By the way, some big components including ibm due to report in just a couple minutes time. Joining the panel for the hour we have cnbc contributor carol roth along with sharon epperson. Welcome. Also with us for more on todays Market Action and the earnings set set to hear from ibm and netflix, guy adami. Hi guy, and david nelson from bell point asset management. Welcome to everybody. Carol, im going to start with you on the market here. Its been kind of a rough session out of the gate in january but its interesting because at the same time we have all of these record highs in Consumer Confidence and even the general polling data on the economy is turning up. Its funny there is within the market that is obviously not doing quite as well there is a bright spot and i call it the prepper portfolio, kelly. Talking gold were talking guns, were even talking campbells soup. If you think about it gold is on the rise. That kind of prepper. Smith wesson raising guide ens for the rest of the year and what does that say to me . That says the consumer isnt feeling all that confident. I think that speaks volumes about whats doing well in todays market. Sharon are you a prepper . Im not a prepper, but i am someone who is looking at the Global Growth story and looking at where money can be put to work other than the u. S. , and i think a lot of investors are doing that as well why . Why now . I think part of it is that theyre concerned with the volatility weve seen, and theyre looking at perhaps some european equities and wanting to be there instead. The other thing i think theyre looking at is the earnings that were seeing and the earnings forecast for the First Quarter and theyre concerned about what that says about the u. S. Economy and the u. S. Stocks. It is interesting to see a big component like Johnson Johnson miss this morning. A little bit soggy guidance the stronger dollar was a key factor, but what are you supposed to do with that . They talked about how the weakness was coming from overseas. I dont think you will see much downside in the name. Its a pretty strong dividend yielder. It got hit hard by a goldman sax downgrade going to a sell. Garl is carol is kind of scaring me with her trades. Thats very 2008. Im not liking the sound of that. This year is starting off very much like last year. I think theres some places to focus but im not quite in her camp yet. Look at the numbers year to day. Guy is doing to agree with me. I know it. Right, guy . Carol roth could read the phone book and i would agree with her. That makes it easy. Netflix just said something pretty cool because that stock is up 10 . Im sure the crack staff back in e kre. Is ec to about to give you numbers. You have to give the market credit. It held 1990 a couple times, it held 2,000 today. The bounce was nice. I think the russ selell is trying to sell you something. The resilience of the s p is noteworthy. Youre sounding more upbeat. No no lets not get crazy. Im not any kind of beat. Im just trying to point out whats going on. I just mean on the market. You have to have respect the price action. For whatever reason the market had every opportunity to break down and overnight it looked like it might have wanted to do that. How many rabbits are in how many hats of the central bankers. Bob pisani said it well earlier, there is no other al tern tifer for longterm investors. If you want longterm growth you have to be in the stock market. You can look elsewhere, there are alternative Asset Classes to be into in smaller doses but longer term if you want that growth, you got to stick with stocks and ride out that volatility. But sharon, were all waiting for the ecb to thak mare big announcement, if we see some bigq e european edition, does that make europe the alternative . It likely could. That might be some of what were seeing. Some people anticipating that could be the case. We might be wildly disappointed from mario draghi. Hes disappointed the street in the past and he has to deliver this time. Hang on a second. Lets get to netflix results. Julia, a big pop here on the quarterly results. What do you see . Better than expected results from netflix. Revenue of 1. 48 billion coming in in line with projections but earnings per share at 72 cents. Wall street had projected 45 cents. Next flittflix had projected 44 cents. A big beat to the upside in terms of earnings per share. A couple factors here. There was a onetime item that was excluded from that but some cost efficiencies. Now, another key number here the key issue here kelly, is always with the number of new subscribers. The company adding 4. 3 billion new subscribers adding a record 13 million new members over the course of 2014 ending with a total of 57. 4 million numbers. Now, the company adding 4 about the the. 33 million members in q4 the majority coming from international. And better than the 4. 07 million in the year ago period. A couple Key Headlines here kelly, in terms of international, the company says its going to be fully global by the end of 2016. That means open to anywhere in the world by the end of 2016. Theyve always said they will expand as fast as they can by staying profitable and they are expanding faster than expected. The one exception here is china where they say it all depends on whether they can get a license there. Another key nugget here from this letter to shareholders from Ceo Reed Hastings is the company says its actually more efficient to create a original content on a cost per hour basis than licensing content. That means they will continue to ramp up the amount of originals that they are creating. They say we should expect 320 hours of original programming this year. Thats up from about a third of that amount last year. So a lot of really interesting details here especially as they are trying to sort of really expand and scale internationally. Juke see everybody, the reaction. Netflix trading up almost 12 on earnings. Its actually a very subdued reaction for this company. I know it sounds out of character, but, you know, since 2012 the move has been anywhere from minus 25 to plus 42 . I wouldnt get all that excited about the bottom line number. You can see that the revenue didnt grow. I think theres a larger secular story here that really needs to be addressed. Sure, i get the fact that theyre streaming and thats the future of the company. Theyre not going to own this space. I can watch this very program streaming on my ipad anytime i want. I can go to any show i want. Nbc, cnbc all have streaming content. Theyre not going to own the space forever. Lets pivot and get to ibms results hitting the tape. Hi, dom. So here is whats happening right now. Ibm earnings are out here. Earnings per share on an adjusted basis coming in at 5. 81. That beats the average analyst estimate of 5. 41 per share. Revenues also coming in at 24. 11 billion. That is a narrow miss to the Thompson Reuters estimate for about 24. 8 billion in sales. Now, the 24. 11 billion also represents the 11th straight quarter of flat to declining sales for ibm, and also interesting of note here the company did say that currency and divestitures negatively impacted reported revenue by some 2. 5 billion. So were going to comb through the rest of the report but you can see the share reaction there up by about 3. 25 for ibm shares. Remember over the last eight quarters kelly, on the heels of earnings, 6 out of the last 8 quarters, the stock has reacted flat to negative. An interesting positive move in the early going. Thank you. Joining us for more reaction is daniel ives. Quite a move. What do you think is going on . I think its a step in the right direction from what we saw over the last year. I think these large cap tech players like ibm, sap, oracle theyre having difficulty on growth as more i. T. Budgets shift to cloud, big data and Cyber Security but i expect were going to see more consolidation. I think the ceos have started to look in the mirror and realize what they need to do in terms of cost cuts and potential acquisitions down the road to put fuel in the engine. Is this guy adami, the kind of growth you want to see . In ibm, no. Theyre the poster child for Financial Engineering. The other quarter is good enough to get a relief rally. Look at the performance of the stock over the last two years. It has not clearly not performed with the broader market, but i think what youre seeing is exactly that a relief rally. A lot of people probably short into the number covering now. Continuing to miss on the revenue side. They dont have near the cleararity in terms of the earnings going forward. I think you sell it again. I dont see why it wont continue. When you dig into the numbers, you have to ask how much are they reinvesting in the business versus the Financial Engineering that guy was talking about. Are they returning money to shareholders or really reinvesting in the business because obviously that is a business that needs a lot of reinvestments. Thats exactly the question daniel ives. How much of this is the buyback factor for an ibm . Thats playing a lot into it and thats really where investor focuses on the top line can this company be successful in the cloud . Thats really this bipolar spending environment. Which of these, the ibms, microsoft, the sap, which could be successful in the cloud transition and the outlook going into 2015 is really whats front and center for investors. Were missing the elephant in the room. Six months ago this estimate was 680 for ibm. Its down 20 since. I think the stock being up 3 bucks right now, thats just a vote that analysts have probably overcut here. Compare that with netflix if you will. Can you tell a tale of these two i emperor has no clothes on ibm. Maybe hes wearing some underwear this time. Its a little bit of a beat maybe a step in the right direction. Obviously this company is in the middle of a turnaround. If you talk to managers inside the company, they will tell you how frustrated they have been with management. Each quarter management would come to them and say you have to cut your cut inside internally, lay off people cut your costs because its the only way well make the numbers. They have to start focusing on growth and i think that means were going to have to become a smaller company. I think what investors are interested in is what were showing on the screen and thats the 50gain in netflix after hours. If you are in a t. Rowe price mutual fund you may already own it. So be happy. Look at your mutual funds and your 401 k and be happy if netflix is in there. Netflix is all about possibilities and ibm is all about reality. Netflix, is there a possibility that this is going to continue the momentum and this is really all about a psychology trade. Ibm, is there a business reality that youre going to be able to bank on in the future. The most interesting part the original content. On the heels of what amazon has announced, what theyre doing in terms of going into movies and what receive seen with Golden Globes and those that won being in a totally different sector than we ever thought about two years ago, five years ago. Is there a Business Amazon is not in yet . This is true. I dont think the bunker business. The guns business . Dont get any ideas. Guy, if theres one point we can connect these two reports after hours is that they both missed on the top line and shares are rallying anyway. One has a huge Short Interest a lot of nonbelievers. And the net ads in terms of subs and their International Growth is carrying the day because if you look at the guidance at least for the next quarter, eps wasnt great. Ibm, whats the big deal . I think the fact they continue to miss on the revenue side off of what has been probably really compressed expectations lead me to believe that although the stock might rally to that 165 level, every rally in the stock for the last 24 months has been a sale and again i think that trend continues. You know what else continues tonight on fast money . Were going to have a tag team street fight. First time ever kelly. You better tune in man. This is going to be nuts. Youre getting ahead of yourself. We have to go back to dan ives because before we let you go just cure flus toious to gais point, every rally has been a point. What does it take in terms of numbers and guidance to turn it around . I think its about giving investors comfort in the cloud transition, in that road map. You compare it with what that dell has done and microsoft, hes done all the right thing. I think its about giving the playbook. Its not just talking the talk but walking the walk. Dan, thank you for joining us. Good to see you. Guy, youre not fighting dan, are you . Me and dan are going to take on pete najarian. Have you ever seen the movie heat with robert de niro. Hes a dead ringer and then the blue eyed tim see more. Thats two cats against dan. Dan nathan to be clear. Well well see you on fast money at 5 00. Theyll also be talking to dennis gartman. Well have more ahead on the expectations. President obama set toim pose new taxes on wall street and wealthy americans tonight during his state of the Union Address. That includes a lot of cnbc viewers. How should investors react . Well take a closer look at what the president wants to do and also are lower gas prices impacting Consumer Behavior . Rick harrison of pawn stars here to tell us what hes seeing at his shop later on the closing bell. Youre watching cnbc, first in business worldwide. Aflac and a gentle wavelike motion. Ahhhahhhhhh. 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. See why speed matters, at aflac. Com. Have you heard of the new dialing procedure for for the 415 and 628 area codes . No what is it . Starting february 21, 2015 if you have a 415 or 628 number youll need to dial. 1 plus the area code plus the phone number for all calls. Okay, but what if i have a 415 number, and im calling a 415 number . Youll still need to dial. 1 plus the area code plus the phone number. So when in doubt, dial it out welcome back. Lets start here with our dominic chu and an earnings update. Here is what were watching. Watching shares of cre e moving higher. Posting better than expected Second Quarter earnings of 33 cents a share on sales of 413 million. Thats just a bit above wall street forecasts. Its guide sense in line for sales and just a little bit better for the earnings side of the equation. As a result shows shares up you can see by about almost 5 now. They were also up about 4. 5 in the regular session ahead of this report. Back over to you. A strong day there. Thank you. President obama delivering his state of the Union Address tonight, and john harwood seems to have a message, he wants more of the money of the wealthy doesnt he . He does. To give to the middle class, kelly. There have been a lot of proposals the president has laid out in the two weeks leading up to the state of the union but most of the attention especially from wall street is going to be on the tax and spending proposals hes going to lay out. First, lets look at the tax side. What he wants to do is raise the Capital Gains rate to 28 , the top rate. That applies to incomes over 500,000. He wants to eliminate the exemption for the appreciation in value of assets that are inherited from one generation from the previous one. And he also would impose a financial fee, seven basis points, on the 100 largest Financial Institutions that have more than 50 billion in assets. Seven basis points on their liabilities. The theory is it would reduce risk. How would he spend that money . He would give money to the middle class. Trying to deal with the problem of stagnant middle class incomes. 175 billion in the form of new tax benefits a credit for twoearner families two years of Community College free. Also the proposal the president has had to expand the earned income tax credit for workers who dont have children. Now, people on wall street who are concerned about being taxed can relax a little bit. These are not going to pass in this congress but what the president is trying to do is engage republicans and begin a debate which is going to play out in the 2016 campaign and in the next presidency over what to do about those stagnant middle class incomes which essentially have been flat for 40 years now, kelly. All right, john harwood in washington. Getting ready for that address tonight. John, thank you. More reaction now with former ubs americas chairman robert wolf. Our panel joins us as we hedRick Harrison from the hit show pawn stars. Robert, we got a big announcement from the president tonight understanding that it will be hard to pass it through the gop congress. In terms of the substance, do you think this would achieve what hes after, this transfer of wealth from the wealthy to the middle class . I thought the big announcement was ricks new app but away from that. I mean listen its clear to me that john was spot on. The focus is going to be middle class economics. The chances of this getting done is slim to none. I think theyll force a conversation about personal income taxes, but really the two book ends that can get done is trade and Business Tax Reform. So its not going to be from the personal side. Basically this is political theater and hes using the opportunity to have a state of the Union Address to pander for votes, which is really from my perspective a little bit disheartening. I would rather hear some real proposals on things that can realistically be done to help with the middle class i dont think that theyll realistically be done, not with the republican controlled congress. I want to hear some realism. But they are realistic to those middleincome americans who are saying i have not seen my wages go up in several years. Im working two jobs my wife wants to work but cant. Were going to get a tax break for that. Were going to get a tax break for the child care we have. Were not going to have to figure out our flex spending anymore. We will just get the only way you get that the only way we do that is if we transfer wealth versus curbing the spending in government. Thats just not accurate. It actually there are 30 Million People watching. Its time for a debate on this wage stagnation happening in the middle class. Doesnt mean its going to be solved on tv. But it forces a debate. What can be solved tonight is things on education, free trade, infrastructure, things that we all agree on both sides, and then hes going to have some things that are certainly left leaning but trade has been right leaning. Rick, where do you come down on all this . Its not do you suddenly want to give away money from the government. The government is never the answer. Just plain and simple. Thank you. You want to stimulate middle class income . Lets repatriate some of the money overseas without 40 tax on it. All you have to do in a state of the union is say, hey, repatriate the money, theres only 5 or 10 , wed have trillions of dollars coming into the country and it would stimulate the economy. And then you would pay income tax on the money you made off that money. Tie it to a job training training. You have to put a Training Program in place to help people getting the skills. Then it becomes a win win. Its easy to say lets repatriate but you have to watch the deficit. He would do a repate yation for revenue neutral tomorrow. You cannot get a revenue neutral deal done. Have Congress Stand up and vote up or down on every pork you wouldnt even get them in line. So lets just make rate 20 , 10 . With all the other things that go on youre not going to get that revenue neutral. We have had a tax holiday, okay under bush and it didnt move the needle on the economy. Theyre not going to do a tax holiday. The repay triation has to be revenue neutral. Getting free Community College for those who need it want that kind of education sharon its not free. You know supply and demand. The price of college is going to go up. I agree that you need better education, but that certainly isnt the way to do it. I think thats one of the ways to look at dock it. Look at College Tuition rates right now. I have a daughter that wants to go to harvard, okay . So i know the tuition rates, and and i went there is i know too. Everybody gets a loan it raises the price of everything. I went there. Not everyone gets a loan. Listen lets not have the glass so half empty here. Today, okay the wall street journal poll said 85 of the country wants to prioritize the economy. At the same date the president had his highest rating on the economy on his approval. So at the end of the day were in the right direction. Its not optimal but were in the right direction here. And the key is the middle class, and thats what the focus is going to be tonight, okay . I dont think the people up here are the ones hurting. No im from the midwest and im involved with the small Business Owners of this country and i see how theyre hurting every day. I think theres too much political theater. Theres a lot of talk but all the policies they do end up hurting Small Businesses and end up hurting the people they need to most under the guise of helping them. Which policy are you talking about . What policy are you talking about . Things like minimum wage you dont think we should be raising minimum wage . I certainly dont think we should be raising the minimum wage. In a consumer driven 28 million small Business Owners in this country and it ends up hurting the very people who need it the most. The millions who are watching tonight are really middle income americans, those he wants to watch tonight to raise the numbers from what we saw at the last state of the Union Address. Waents to talk to the people who are hurting saying why havent i seen my income go up, what are you going to do for me . Thats the part that kills me. Thats the they come up with ideas with good intentions but the execution ends up doing the opposite. Rick what would your state of the Union Address be . Im pretty much as little government as possible. Like reagan said and a lot of things he did i dont agree with, just get government out of the way, everything will be great. It really will. Like obamacare, okay . I have 60some employees right now, and, you know, i ask a u. S. Senator how am i going to know if i have in compliance. He says i have no idea. If anyone tells you you are, theyre wrong. We come up with new regulations every day. On obamacare were going to have 30 million more people insured at the end of the year and the cost of health care is slowing. We have the highest cost of health care the increasing costs are out of control, are not rising as fast one of my best friends hang on. One of my best friends is a retired cop, okay. His health care went from 900 a month to 1,900 a month. The cost by the way, you can always have a one off. The cost of health care its not one off. I talk to people all the time about this. The slowest growth rate weve had in decades. But its still increasing. And its being shifted. The challenge of the health care the population is getting older, yes its increasing. Now, listen the whole problem is the fact we should be focusing on decreasing the cost of health care. Before this turns into an allout brawl, if theres just one question i have before you leave it is simply this. Is all of this heading towards Major Corporate tax and income tax reform given the complexity of the system . Im trying to file my own taxes. It is a nightmare. So i think there is slim chance there will be personal tax reform before 2016. There is probably a 35 chance we can get were calling it Business Tax Reform because of partnerships and llcs. You have to to call it Corporate Tax return. We have to call it Business Tax Reform. Thats also not Small Business because most of those are taxed at the personal income rates. The thing we can really get done is free trade. Thats the side where with the Republican Congress, theyre for it, the president is for it and it will likely be asia free trade. Lets leave it somewhere where we agree. Patriots winning the super bowl. We agree on the patriots winning the super bowl. Our robert wolf thank you so much for being here. Really appreciate it. Panel sticks around. Drivers have enjoyed going to the gas station lately because of plunging pump prices. What are they doing with that money . Theyre saving. Up next we have Rick Harrison to tell us what hes seeing at his renowned las vegas pawnshop. And coming up mohammed Louisiana Air elerian and whats worrying him about where were headed. Stay tuned. Ed louisiana elerian and whats worrying him about where were headed. Stay tuned. Elerian and whats worrying him about where were headed. Stay tuned. And whats worrying him about ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome bark. Lots lots of earnings coming in. What we have is amd stock moving lower after posting earns a penny less. This on sales of 1. 24 billion and shares down about a percent in the afterhours trade. Interactive brokers losing ground. It posted weaker than expected earnings. Revenue was at 208 million below wall street forecasts. Interactive broker shares down by 4 in the afterhours trade, kelly. Ouch. Thank you very much. Gas prices falling across the country. The price per gallon for many people is below 2. Thats leaving a decent amount of extra cash in peoples wallets. Rick harrison here cant wait to find out how is this affecting, if at all, Consumer Spending. Actually my sales were right around flat around contribution. I think christmas. Your sales were flat . They were flat. Year on year. Does that surprise you . Not really. I guess im doing better than everyone else. Do you have more people coming in to pawn or about the same . I dont have your normal pawnshop pawnshop. I have 4,000 people a day in my pawnshop, most of them are tourists. What do people seem to feel about the economy . Do you think theyre more optimistic . I really most people think well see what happens in a couple years. And my businesses are doing well but then again i have im a select and people want to come see and see me for some reason. When you look at surveys where all the people are getting their gas, and people are more opt stickimistic optimistic. Only 16 of the people are actually spending the money theyre saving. Are they paying down debt . We have so much Consumer Debt in this country. We have an amazing amount of Consumer Debt. We have a lot less than we used to. But we have the student loan problem. We do. But im trying to understand if overall the amount of Consumer Debt is down significantly from call it five or eight years ago. Should people still be paying it down so aggressively . Well im a history buff. And you look at one of the problems was later on in the depression people the economy was Getting Better but people were still saving. We still have that mindset of what happened a few years ago. You know and its not everyone is like we were free spending up until 08. From now on lets bank a little money. And i do think, i think especially with the millennials and just what everybody has been through over the last five or six years, that youre getting that sentiment that im not going to do anything bold right now. I am going to wait and see. Or im not going to make the mistakes my parents did. Besides tourists kind of the demographics of them granted there are a lot of people who want to see you, of course, but who is coming in and what are they spending their money on . My place is generally jewelry. A lot of gold and silver bullion. A lot of that. Gold. What about guns . As far as guns go i just sell the antique ones not the modern ones. My business is really well. Im opening another shop. You mentioned you were flat year on year around the holidays. Gas prices have still kept falling and especially in vegas i have to think thats goss to affect because people are driving so much its a few extra bucks. Are you noticing are sales up . So far for january im actually up a little bit. But i dont think its going to last long. Eventually opec is going to have to break. I mean theyre going to have to you know theres political reasons why theyre not cutting back and by the end of the year they will cut back production and drive the price up. They dont have a choice. You should buy some furniture. We have some breaking news to get back to on earnings. Dominic chu, whats happening . Not so much on the earnings front here but breaking news on the corporate actions front. First of all Bristolmyers Squibb has announced they have appointed a new chief executive officer. Hes a dr. Jioctor who had been the chief operating officer of the company. So a sea sweep change there. And a new director of the exec fif tiff board. Also confirmation on the spacex front. They have raised a billion dollars in financing with google and fidelity. Spacex is saying for the record they join existing investors, Founders Fund valor equity partners, and capricorn. They will collectively own just under 10 of the company. So 1 billion for 10 of the company imply that is 10 billion valuation for spacex. That has now been confirmed by the company itself. Back over to you. All right. A lot of big moves this hour. Dominick, thank you. Its been another rough day for the bulls on wall street. We did finish positive but barely. Mohamed elerian saying the u. S. Is still the best place to invest right now. He will make the case next. And gold has been well golden at least lately. If you havent noticed, were on a run and we want to know if Rick Harrison is starting to see more people coming into his shop to sell their gold. Thats later on the closing bell. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with efficiency . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. Welcome back. So far a year full of volatile triple digit swings for the dow. Now the market is waiting to see what the European Central bank will do later this week. Many anticipating its own version of a bontd buying version like the feds. Earlier we spoke with john calamos and he described the deflation he sees right now. I think a commodity play is all about inflation, and wed love to see a little inflation. Were actually in a deflationary environment, so, you know i dont think thats the answer. I dont think that commodities are the answer here. You know i think i would prefer equities to commodities in here. Joining us now with his reaction to those remarks, mohamed elerian. Great to have you with us. Welcome. Thank you kelly. Lets begin with how much better you think equities can do if were in a deflationary environment. I dont think were in a deflationary environment. I think inflation is coming down. Its good disinflation because Lower Oil Prices put dollars in the pocket of the consumer. Am i worried about a deflationary world in which negative inflation makes people postpone their purchases and, therefore, we get into a downward spiral . No. Were not going to get there absent a Global Economic catastrophe. Arent we already getting that in housing . Nobody is buying a house because they think rates arent going any. You may get it in particular sectors, but the reason why economists worry about deflation because its a generalized issue where everybodys Inflation Expectations turns negative and people postpone spending. So you may get certain sectors adjusting. Thats what a modern capitalistic market economy does, but i dont think you get general deflation unless we get a catastrophe in europe. You know i think people would feel better about the outlook if oil prices were collapsing and bond yields were rising because it would indicate people expect faster growth and a little more inflation and that sort of positive circle that would ultimately lift wages. The very opposite is happening right now. How much does that worry you . So youre right, people would feel better. First of all growth is picking up. Just look at the imf projections for the u. S. Undoubtedly growth is picking up. Undoubtedly this economy is healing. Why arent yields moving accordingly even though the fed is easing its foot off the stimulus accelerator . For a simple reason. We live in a global interconnected world, and we are no longer a pricemaker kelly. We have become a price taker in treasuries. We depend on whats happening to the german bund and thats whats driving our yields right now. I know and im trying not to interrupt you. Here is what i cant help but think is theres always an explanation. Last time around it was asias fault. This time around its europes fault. At the end of the day maybe thats too simple and narrow a way to look at what weve been seeing for the last 15 for 20 or 20 years. I think theres been secular changes and i think we entered a world of new normal where it takes a long time to adjust but fundamentally the question is the following. Do we see wage increases in this country . Right. When i look at 11 months of 200plus thousand job creations i think we will. If that materializes the mood will change and there will be a lot less concerns about deflation. Very true. I have to wonder what happens in that environment for investors. If were moving into a period where the economy does better does that mean you want to get out of the stock market and into other assets or is this precisely the time in which you should be getting out of the bond market and maybe into equities . So thats the irony, right . That weve come through a period where the economy hasnt done very well but the markets have done extremely well. Why . Because of Central Banks. Central banks were able to decouple fundamentals from market valuations. Now were entering a period in which fundamentals are improving, that the fed would look to normalize and i think the fed will be hiking rates this year, and the markets are not going to get the support. So fundamentals need to improve really quickly to validate prices and push them higher. And thats a big task kelly. It is. Do you think the fed is going to be one and done when it comes to rate hikes . I think it wont be one and done. I think theyre going to embark on a very slow and gradual 3r0 ses process and they will start well below the 4 historical avalancheer average for the fed funds rate. I think they get started, they move slowly and strengthen forward policy guidance to calm things and always remind us that they can stop at any stage. And real quick when it comes to europe isi just told us they think europe is going to try to get rates equivalent to pi news 3 or minus 4 by doing a couple trillion dollars over time in purchases. Whats your expectation . So i do think theyre going to try to do a lot. The problem is theyre going to try to do it through the National Banks which is another way of saying that the loss sharing will not be at the regional level, it will be pushed further down. And thats going to mean that their qe is going to be less effective than our qe. And that worries you . I dont think qe in europe is the answer. So it doesnt worry me especially. It does worry me that markets have built in massive expectation on what mario draghi can deliver and actually he cannot deliver that much. Even if hes willing to do so hes not going to be able to do so. Thank you so much for being here,monthold el ar here,monthold mohamed elerian. Two tech and brand giants, ibm and netflix, holding Analyst Conference calls. Well look at the aftermarket trading and see what trends might be buried in the results. Also gold has been on the move. When you have the owner of a famous gold and silver pawnshop in the heart of las vegas as we do with Rick Harrison you are going to talk about it. Ibm and netflix highlighting a big day for after hours earnings. Dominic chu recapping the results. For big blue first, were going to watch shares of ibm, theyre moving lower in the after hours down by 2 after guiding 2015 operating earnings per share below the wall street forecast of around 16. 51. The stock had moved higher after it reported this Fourth Quarter earnings of 5. 81 a share. That actually beat expectations. Revenues slightly below. So some of the things that well be watching for because the Conference Call is going on right now, theyre going to be talking about growth areas, geographically being down 16 . Sales in those parts. Also Global Services sales down 8 . Although those results are better when you adjust for currency and one time divestitures of businesses. On the Conference Call the ceo will be defending their Growth Markets in terms of products things like cloud analytics, mobile and Cyber Security which they claim represent 27 of total revenue. That Conference Call ongoing. Well bring you more details when we get more from that call. Kelly, back over to you. Dom, thank you. Lets pivot to netflix making big moves after hours. Julia boorstin is breaking down the results. Hi, kelly. Netflix shares flying higher now, up about 12. 5 on better than expected subscriber additions of 4. 3 million and earnings that blew past projections on lower than expected international losses. International growth is a big focus for netflix. Reed hastings announcing the company will complete their Global Expansion over the next two years. Thats earlier than expected. Netflix announced plans to grow the percentage of its content spending on originals saying it will have 320 hours of original content that year. Thats triple the amount last year. Kelly, back over to you. Thank you very much. They are golden they are delicious, but are they potatoes . Thats the question behind mcdonalds french fries . A story thats cooking at cnbc. Com on the hot list. The details next of the french fry mystery. Stay tuned. The trade of the century, thats the story. All of our web viewers cant get enough of today. For that and the whole hot list the sites managing editor joins us now. Yeah, kelly, up from mark faber, dr. Doom author of the doom, gloom and boom report did a little segment with our futures now folks talking about how hes convinced Central Banks are going to bungle whatever turnaround they are trying to construct here and he says the trade of the century would be to try to short them. He says, unfortunately, theres no direct short. Easiest thing to do is bet on gold. Another thing thats drawing a lot of attention today, oped from eric cantor the former House Majority leader. Oh, yeah. And he thinks tonights state of the Union Address will only enflame the gop and finally mcdonalds has come out with a video taking a look at what their french fries are made of. Heres a fun fact for you. 19 ingredients go into those bad boys. Get some fascinating data. Is that a bad thing or just different kind of salt and spice . 22 said after seeing that video they are not so sure they would eat the fries, another 42 said it would make no difference. You view it. You be the judge. I found it kind of appetizing. Kind of hungry now. Cnbc. Com for all of your french fry viewing. Gold meanwhile hitting a fivemonth high, as mentioned, perhaps the trade of the century, and more on one of its best runs in a long time. More on that when we come back. Sound good . Great. Because youre not you youre a whole airline. 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For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back. Its all about gold lately hitting a four and a half month high. Up 7 in the last winning streak. Almost 1,300 an ounce as you can see. Curious, rick are you buying gold . Are people walking in to sell it now that weve seen a bit of a bounce here . Having a real hard time getting supply because i do retail bouillon and im having a hard time for my suppliers finding it. No one wants to sell their gold still. Giant suppliers, coin shops around the country. They are out. Yeah, rick. I want to know what kind of gold trivia do you know . You have a new app thats out now. Anything in the ricks trivia app on trivia on gold. There are some questions. I cant give away the answers, otherwise its no fun playing the game. Its Rick Harrisons trivia challenge, in the app store, its fun. As far as gold goes living in greece right now, would you want euros when they will be turned into drag maas the next day and you dont know about it . Gold is a currency, and if you actually have the physical one, its not suddenly devalue ated. Thats what they really want right . They want the physical gold dont want the gld or the gold etf, they want the physical bouillon. Think how high gold has gone up recently with the decline of the euro. Its a safe haven and still one of the oldschool guys who believe you should put 5 10 of your money into gold hard assets, because governments dont control them. In your bunker kelly. Exactly. In your personal portfolio, do you have that much gold bouillon, 5 even more in. A little more than that. Speaking of which, lets go back to earnings weve gotten this hour ibm an netflix. Are these names you look at personally. If i made you pick one or other, which would you pick . Definitely netflix. Its the new Network Model five years from now. I think that is going to be the Network Model. Youll turn on your television and and it will just its going to ask for your wifi password and take you straight to netflix and a few other Companies Like that. What do you think in a . Thats a rough choice, kelly, netflix or ibm. Is there a choice c here . Im not a momentum investor but i think if ibm is my other choice then i if for netflix for the quick trade but im going back to the tangibles and the consumer. Do you watch much cable . Well i watch cable and make my kids watch it with me and put the laptop away which they would rather watch while they are watching the cable so thats a approximate but i would say own vanguard and state street and some of these mutual fund companies. Then you can have both ibm an netflix. That was the lesson from tween. Thanks so much for being here. A lot of ground to cover it. That does it for us on closing bell and fast money begins right now. Fast money starts right now with an earnings alert. Netflix shares rallying more than 13 , company beating earnings expectations the Conference Call beginning right now. Well bring you the details throughout the hour and ibm guidance sending the shares south, stock down more than 17 over the past year. Well bring you latest from the ibm ceo. Im emmelissa lee. Were expecting volatility and here we are, pete to the upside. To the upside. Caught a lot of people off guard. When i was going through the reports, people asking what were the expectations . Absolutely crushed the