Transcripts For CNBC Closing Bell 20160316

Now is probably benefiting around 1,000 a year, and some very detailed microdata that i have seen on Household Spending patterns suggest there may be a link, as you would expect from reduce reduced amounts that people pay at the pump to overspending like eating out for restaurant meals and other things, but the aggregate data, you know, is not as strong spending is not as strong as it could be given the decline. And, of course on the other sigh we are it may be that it will take a while and its something that will slowly strengthen over time if Oil Prices Stay low. On the other side, of course, we have seen a marked decline in drilling, which is depressed investment spending, and, of course, very substantial layoffs in the energy sector. With respect to impact of oil prices on inflation and what would happen if they move up, the committee has generally tended to look through movements of oil prices, whether they were on the up side or on the down side, viewing it as a factor that should have a transitory influence. When i say that, what i mean is that if Oil Prices Move up during the time that its moving up, it raises inflation, but they dont need to move down again to their previous levels for that influence to disappear. They only need to stabilize at a higher level. And similarly, oil prices have obviously moved down a great over the last year. And were not expecting them to move back to their previous levels, but to stabilize at some level. They are obviously volatile. As they stabilize the influence will move out of both headline of headline inflation and thats what you see in the forecasts of participants. So if oil prices were to increase to 50 i mean that would probably slight will you move up our expected path for core inflation maybe speed how rapidly we would move back to 2 , but i would think that would be something alone that would have great policy significance. You want in the policy statement in december said that the risk to the outlook were balanced, and you raised rates. That phrasing disappeared then in january and march. Could you talk a bit aboutness your comments today you seem to be indicating that not that much has changed. Could you help us to understand what needs to happen to get back to balance . Is that the language we need to look forward to see the next rate hike . So let me say that, in recent weeks, the committee certainly things the risks to the outlook has diminished, nevertheless we continue to see risks which we highlighted. Now, i would point out that we decided not to describe the balance of risks as weighted to the down side, so the committee did not reach that judgment, and there is no collective judgment in this statement on whether the risks are balanced or not. My we decline to make a collective assessment. You know, my guess is that some participants see them as balanced, and some see them as weighted somewhat to the down side, but i think it is important to note a couple of things. First of all, the u. S. Economy has been very resilient in recent months in the face of shocks, and we highlighted that right at the beginning of our statement where we want that Economic Activity has been expanding at a moderate pace, despite the Global Economic and financial developments of recent months. And that that is important that the u. S. Economy continues to do well. Second, i would say that while Global Developments do pose some Downside Risks, the risks are not all onesided. A number of countries, including china, the euro area, the bank of japan, have taken measures to stimulate the economy, so theres also upside risk to the Economic Outlook. In addition, oil prices have rebounded from their lows. That eases concerns about the Financial Condition of some energy firms and the stresses facing some oilproducing economies. At the same time low Oil Prices Continue to boost household purchasing power. So there are risks. We are attentive to them, we have not described them as unbalanced to the down side, and theyre twosided, one can identify both upside and Downside Risks here. Wage growth thus far has been disappointing, very uneven, disappointing figures in last months jobs report. Why do you think that is . And how important is sustained wage growth to removing your wariness on inflation . So i must say, im i do see broadbased improvement in the labor market, and im somewhat surprised that were not seeing more of the hiccup in wage growth. But at least and i i have to say in adeck dotal reports, we do hear quite a number of reports of firms facing wage pressures, even broadbased slightly faster increases in wages, wage increases that theyre granting. But in the aggregate data, one doesnt yet see convincing evidence of a pickup in wage growth. Its mainly isolated to certain sectors and occupations. So i do think consistent with the 2 inflation objective that there is certainly scope for further increases in wages. The fact that we have not seen any broadbased pickup is one of the factors that suggests to me that there is continued slack in the labor market . But i would expect wage growth to move up some. Patrick lusk with cnn money. Numerous polls show that American Voters number once concern is the economic. Theres negative sentiment about the economy, yet unemployment is low, job gains have been pretty good for the past year, and Consumer Confidence has picked up. Why do you think theres such disparity between the progress between the economy and its progress . And how voters feel . My second question is how does any negative sentiment factor into your Economic Outlook and your decision on policy . Let me start with the second question, if i might. So, in tries to judge the outlook for the economy, we do look at measures pertaining to Consumer Sentiment. They are in solid territory. Household Balance Sheets are much improved. Gains in inflation adjusted disposable income are running at a healthy pace. As i mentioned, households have benefited pretty significantly from lower oil prices, and measures of Consumer Sentiment do reflect do reflect that. So they are not at low levels. And really the labor market i think has improved a great, and every democrat Graphic Group that we track regularly has seen improved in the labor market. Perhaps not all equally, but almost all demoGraphic Groups have seen improvement. So i think its right to say the economy is improves and most groups are seeing benefits. That said, we know that inequality has been rising in the United States over many years, not just the last several, but going back to the mid 80s there has been downward pressure on real wage gains for groups, particularly those that are less skilled and educated, and those longerterm trends that may be associated with a number of factors, technological change and globalization have been a concern for many, many years, and that may be part of what you are we are seeing expressed. Thank you. Chairman yellen, there seems to be some growing sentiment that even the direct Economic Times between the u. S. And other economies still relatively modest that the impact through Financial Markets and Exchange Rates has become more robust. Because of that, its becoming more or will become more difficult for the fed to diverge from other major Central Banks with the special Interest Rate. Would you generally agree with that sentiment, why or why not . And very briefly, second, if i may, in your mind, does it undermine in any way the standing of the Federal Reserve as a nonpar san institution when one of its sitting governors contributes to the campaign . Of a National Political thank you. So let me start with the question pertaining to Exchange Rates. We haves Global Capital markets . In in a world with highly integrated capital markets, Monetary Policy actions in any country have effects, spillovers to other countries. Thats true of our Monetary Policy and its true of other countries monetary policies. In part, that shows up through movements in Exchange Rates, and those movements are a factor that any country needs to take into account in deciding what is the appropriate stance of Monetary Policy. So the fact that there are these linkages is an important factor in designing a Monetary Policy. But it does not mean that monetary u. S. Monetary policy is somehow constrained in a way that makes it impossible for our Monetary Policy to diverge from policies abroad. There are many periods when monetary policies in Different Countries have moved in Different Directions and, you know, the United States has been growing more strongly and had Better Success in the labor market than many other advanced countries, and at this point, its natural that there should be some divergence in our monetary policies, movements in Exchange Rates partly reflect that. So i wouldnt want to endorse the notion if, you know, that youre suggesting that our policy is in some way crippled by the fact that there are these interlinkages that simply have a Global Financial system works. This is one reason we meet frequently with other economic policymakers in other countries, Exchange Notes about houses we see economic developments evolve and try to keep one another apprised of economic developments in likely policy responses. Your second question concerned the political contributions. So i want to start by saying ive been involved for many years in the Federal Reserve system, and we are a nonpartisan, independent institution devoted to pursuing our congregally mandated objectives, and i have never seen political views in any way influence the policy judgments that are made inside the Federal Reserve. I want to say that emphatically. The Political Activities of governors, participants, Government Employees are governedi the hatch act. We are all subject to that, and the hatch act does allow Campaign Contributions to be made. It outlaws other forms of partisan activity. And i would say within that, so it is up to each individual to decide what is appropriate in their point of view, but the Federal Reserve is not a partisan political organization. The policy, the projections appeared to reflect an increase in your labor markets slack. You talked about one reason for that, maybe the softness of wage growth. Are there oat considerations that very led you to as to how much slack there is in the market. I should point out, i think what youre talking about is the slight decline in the median estimate of the longerrun normal employment rate. Is that [ inaudible ] the path of rate increases maybe slightly reflects the modest decline in estimates of the longer run normal Unemployment Rate. That i would say reflects for those who brought it down an estimate of greater slack in the labor market. The fed funds rate projection is not just that, its also, as i mentioned, a reflection of shifts and other views, for example, the likely pace of Global Growth that affects what we need as a policy path to achieve our objectives. But the slow pace of wage growth, the fact that parttime employment for economic reasons and voluntary parttime employment remains high. We have seen an upward movement in label force participation, which is heartening and suggests there was scope there for further improvement in the labor market. My guess is that those things influenced individuals who wrote down a slightly lower number for the longer run Unemployment Rate. Weve heard a lot of talk today about president obamas pick for the Supreme Court, but there are a number the vacancies on the fed board of governors, and theres a new position, the vice chair for supervision, that the president hasnt even nominated anyone for. Would you like the president to nominate someone for that position . And what effect are those vacancies having on the effect . Well, i think congress intended for the Federal Reserve board to have seven members, and that tends to bring on board people with a wide spectrum of groups and experience and perspectives. I think thats valuable, and i would like to see the senate move forward and consider these nominees so that we could operate with a full complement. With respect to the nomination for vice chair of supervision, thats a question i think you need to pose to the white house. I would say that we are doing a very good job on supervision and, um, we are very focused on and devote a great deal of time to that issue. So really its the nomination question is one for the white house. The president last week expressed concern about what he termed cynicism on both sides of the aisle concerning progress made since the crisis to reform the Banking Sector and Financial Sector more generally. Do you share that concern about kind of Public Attitudes that either not enough has been done or what has been done has not been effective in changing the regulatory landscape in banking . Just what are your thoughts . So i feel a great has been done. We have been working at this for a number of years, and i believe we have made very substantial progress. We have a much more capital, Higher Quality capital, liquidity in the banking system, our supervision mo, weve made very meaningful changes in our supervision, for example. The stress test, the stress test methodology that we use routinely to evaluate the robustness of the capital positions and plans of the largest institutions constitutes a quantum leap in terms of the quality of supervision we are providing, especially of the largest firms. So we have finished writing most of the dodd frank rules. We are working very hard on too big to fail, which is of grave concern to the american people. In addition to having a Financial System that is more robust and less likely to experience a failure, we have also worked very hard, continued to work on make sure we have the ability to resolve a firm. If it were to fail, in spite of having more capital and liquidity, and there too i think weve made very substantial progress. A month or so ago we came out with a rule called the tlac rule that would require the largest firms to hold a substantial buffer of longterm debt that in the event they were to fail could be bailed in to protect the taxpayer from having to bear any burden in terms of injecting capital into the firms. It would provide loss absorption in that event and working jointly closely with the fdic, firms have made a great deal of progress with their living will wills. We are in the process of evaluating the most recent submissions. And i think potential techniques that could be used in the event of a failure significant financial institution. We have also made a lot of progress there. I think i was at the meeting of financial regulators with the president when he made those comments, and i understood that what he was trying to tell the american people, that they should understand there really has been very substantial progress, and thats something they should be aware of. But do you think that despite all that progress, why hasnt that message or why havent they improvements made its way to the public . Perhaps do you find that that is an obstacle either among people that you meet . People in the public or representatives in congress that maybe have this pervasive view that nothing has changed . Is that an obstacle . Is that a problem . Well, i think its our job as we make these improvements to explain what we are doing and to try to educate the public about whats happened, and they may not understand how much has changed. Its certainly part of my own responsibility to try to explain that to the american people. In the s. E. P. Today, the Unemployment Rate forecast for future years for 2017, 2018 was marked down. Without changes to inflation, and there seems to be a growing debate about the relationship between lower unemployment and higher inflation. What is your view about the strength of this relationship, the phillips curve . And how does that rue weigh into how much actual inflation versus anticipated inflaws youll need to see . So that was a complicated question, and there let me start with the phillips curve. So the phillips curve posits theres a relationship between the degree of slack in the labor market and inflation. Its an empirical relationship that, while not absolutely tight, has been a consistent relationship over time, and i believe that relationship still holds. But the impact of shifts in the Unemployment Rate on inflation should not be overstated. The phillips curve has become, according to most estimates, quite flat in the sense that movements in unemployment have only a modest impact on inflation, so we shouldnt overblow how large that is. In addition, the phillips curve theory suggests that Inflation Expectations are also an important driver of actual wage and price setting decisions, and inflation behavior, and i believe theres also solid empirical evidence for that, and its one of the reasons that i highlighted in my statement and we continue to highlight in the fomc statement that were tracking indicators of the Inflation Expectations that matter to wage and price setting. Now, unfortunately we dont have perfect measures of these things. We have survey measures. We know that household measures, even when households are asked about longerterm inflation, they tend to move in response to salient changes in prices that they see every day, in particular when gas prices go down, which is very noticeable to most households. You tend to see a view you tend to see responses about longterm inflation marked down. So thats kind of an overresponse to something thats transitory. So its difficult to get a clearer read from those survey measures. Inflation compensation is measured in Financial Markets, also embodies a variety of risk primia and liquidity primia. So we monitor those closely and discuss them in the paragraph 1, but again theres not a straight read on whats happening to you expectations that influence wage and price setting. S but this model continues to at least influence my own thinking and certainly is a factor that i and at least some of my colleagues are incorporating in these projections. Madam chair, thank you. Notwithstanding what the dots tell us about rate expectations, has there been any discussion among members of the committee about the potential need for furse stimulus . Even if there hasnt been such a discovery yet, could you share with us what you have learned from the revaluation of negative Interest Rates, whether you consider any tifr Interest Rates effective, how effective relative to quantitative easing and whether the committee would hypothetically use them in the event that the economy should warrant further stimulus. So what i would like to make clear is this is not actively a subject that we are considering or discussing. The committee continues to feel we are on a course where the economy is improving and inflation is moving back up, and as i indicated, if events continue to unfold in that way, we are likely to gradually raise rates over time. Again, thats not fixed in stone. Well watch how the economy behaves. We are preparty to respond if things transpire differently, but we are not spending time actively debating and considering things we could do for and certainly not actively considering negative rates. We are looking at the experience in other countries and i guess i would judge they seem to have mixed effects, some positive and some negative things. But look, if we found ourselves in the unlikely situation where we needed to add accommodation, we have a range of tools. We know from things we did in the past, we have a number of options with respect to the maturity, for example, of our portfolio, with respect to asset purchases, or Forward Guidance that remain available to us that are tools we could turn to in the unlikely event that we need to ackack daz accommodations. So negative rates is not something we are actively considering. All right. Fed chair Janelle Yellen wrapping up an hourlong News Conference which included a refresher course on the filly i suppose curve, which im going to bet is on the midterm this week. We welcome you to closing bell. Im Bill Griffeth along with kelly evans. The headline is no rate increase to this point. And lowering of the longterm projections about what might happen both with rates and with growth. The reaction you can see immediately playing out. The dow is up about 100 points after having been in the red before this decision. Now its up about 88. The s p is up 11, nasdaq is up 34. Dollar index hit a onemonth low. Gold up, what, 2. 5 , thereabouts. Wti, oil, with a gain of almost 6 . As that adjusts from some recent lows there. So were seeing most of the movement in the commodities and in the currency markets, not so much in the equity market. Many of the questioners puzzling over how the fed having been three months ago, bill, talking about better growth prospects. Stanley fishers rhetoric, and so much else, now a very different kind of sentiment. Lets kick it around, see if we can figure out whats on the mind of the Federal Reserve board right now. Michelle meyer from bank of America Merrill lynch, Keith Fitzgerald from moneymorning. Com. Steven sarge guilford, and rick sabol telli checks in from chicago, and Steve Liesman, who was in the front row there you saw at the News Conference. He will join us. Sarge, let me talk about the market response here. What did you make of what the market is doing . This is not a huge rally. But youre not getting the kind of rally we used to get when the fed didnt raise rates. No. I think were trying to assess what the fed is actually targeting it. Youre not seeing it in equities. We know we have met much, much or employment mandate. We pretty much met our inflation mandate. What are we doing now . Theyre targeting in my judgment the u. S. Dollar. They want to weaken that, and trying to steepen the yield curve. Youre seeing the reaction . Gold and oil. Michelle, you know, what kind of fed are we looking at here . Is this just because the fed is notoriously responding to market moves that have already happened . So the negative tenor of the last couple months is sinking in . Or is there a real change in fed philosophy . I think theres a change in the philosophy per se, but i think we are learning the fed is going to be very, very cautious and careful, reacting both to market moves and to the data. So i think what theyre telling us is that you had significant stress, Financial Conditions, they want to see how that plays out in the real economy, and although some of the recent data has looked good on inflation, seemingly theyre not convinced yet, so they want more time to assess, and as a result they sounded more dovish than they would have expected. Steve liesman i think has emerged from the room. You asked the first question, which really kicked off the whole discussion about what is the fed waiting for here . What do they need to see to Start Talking more about donald trump about making America Great again . Im unfortunately not much clearer. You hear the chair ace answer. I think maybe michelle was getting at this. This is a turn towards a more dovish Federal Reserve. She wasnt really verifying inflation. I thought it was interesting she wanted to verify theres still strong job numbers. Its hard to imagine needinging to more data on but this fed has turned cautious, and really did nothing to signal that next month she said its a live meeting next month, but very much a perfunctory response, but i think that for sure that that seems very much on hold through june unless somehow the chair chooses to signal that some form of rate hike is imminent, because i dont see it coming Keith Fitzgerald, she ran down a litany of the weakness that theyre citing overseas, china was at the top of the list, japans in there, you know, europe and what theyre doing going to negative rates there, or to zero, with the ecb, but you feel like its the international Central Banks that are kind of doing the feds job for them now, right . Well, to be really precise i think theyre doing the dirty work for her. China made its move, japan made its move, the eu made its move with draghis xwa zooka. I think she has no choice. Today i absolutely expected, but again doctors used to believe that bleeding your patience was a way to heal them. The fact that she think stimulative move is in complete ignorance of the fact that the underlying markets are in a wreck. Theyre going to see what happens next. If you the fact that all the Central Banks are moving at once should add some impetus to the global picture, right . This theory you have a policy divergence for good reason, further along in the recovery and other economies are fighting inflation and weaker growth. If you believe the response is appropriate, then in the longer term its going to lead to stronger Global Growth. The challenge is that right now the data globally hasnt been coming in that well. They are city risks from abroad, and they want time to monitor that and to assess how that would feedback into the u. S. Economy. I think the key message is gradual, its cautious. I think the fed will go ahead and normallyize further. Were still in the camp they hiked two times this year, but its a fed that will be moving very slowly. Rick, do you agree with sarge . One of the tasks of the fed right now is to talk the dollar down . Thats one way to get inflation to move higher in a sustainable way, as the fed chair was saying . Not really, no. Okay. You know what . Honestly, steve asked a good question. Her answer, i have it printed here, i read it three times. I wanted to real it fast like one of those commercials where they read you all the risks at the end, but i dont understand a word of it. Steve, could you understand any of it . Any of it, seriously, just a yes or not. Did you understand what she said to you . Not much. It was not precisely responsive to the questioned i asked. Unbelievable. Basically we made these dots importance, but she said the dots dont mean anything, peoples opinion that is dont matter, they probably arent going to be right. I mean, this is i wasnt even talking about the dots, rick. Bingo, rick. It was more let me start with the question the feds credible. Using the promise to promise and as i try to emphasis in mild Opening Statements path the participants project for the and throw or commitment or a promise. Instead they are not even the media, should they be interpreted that way . They mean nothing to the forecast. Like, what is this nonsense . Rick, let me jump in for a second, though. It seems somewhat clearer what shes saying is to remind everybody god bless you, obviously you and steve are way more intelligence than me. Its not a promise. The facts change. Oh, no, no, no. If i might, kelly its like the seinfeld fed. Its my question. I get to talk about what i meant there. What i wanted to ask her was this question. I think it was pretty clear about it. You have all these factors that you said you needed to see are now more or less in line with what they needed to be. The data is not dependent and youre not hiking. Is that a danger to your credibility . And then the issue if this is not sufficient, what else do you want to see . Frankly i left there a little concerned. I really expected today the fed to pause and not to hike, but to give a stronger signal that were now approaches that time when maybe soon the fed will need to hike. She kept it open. Steve, what do you think then is holding them back . What are they waiting for that shes not talking about . You know, i have to take her at her word, its the global weakness, its the idea one of those 10,000 words. Right, its the global weakness, the inflation has come back up, but they want to verify its there for sure, and i think the unspoken thing, which has kind of been gotten at keith got at this, the idea that the ecb has moved, the bank of japan is deeply in negative rates right notice, and the fed just does not feel comfortable get that far away. She said its working. She said some foreign central banking are working. You want to be inflation medical 3. 9 , transportation 2. 6 ,. What about rent . Core theres plenty of inflation. She has the execution. She obviously didnt do it because her banking masters have told her not to. Can i add one hang on one second. Theres a hidden message here. What shes saying they other nations have made stimulative moves and the banker have go the thing under control. What shes telling the American Public is the fact she willing to let inflation run rampant simply for the express purpose of pulling everyone around by their bootstraps. I think you attenuate that, keith. I wouldnt use word rampant, bud you cant be getting at this issue, the fed may be suggesting that its willing to let inflation run hotter than the 2 . She lied. The word she used was sustainable. Michelle, what do you think . That seems to be the missing piece. Employment is there, but the wage component is not there and inflation is not where they want it to be. Thats the critical part i was going to try to jump in with. She was trying to argue that shes not convinced yet that the tightness in the labor market is leading to price pressures. She said several times the Participation Rate might be picking up. People could be coming back into the labor force. Theyre not seeing broadbased wage gains. Until she sees evident theres that sufficient tightening in the labor market she still seems caution. So even though the recent data on inflation is tired, she had kind of dismissed that as well saying theres a few component within the inflation measures that are pushing them higher, but shes not convinced its going to continue. I made a note that maybe opec is the new Federal Reserve, that they have to take act before our own fed does. What do you think . Steve . I think that would be a significant component, but when i hear michelle interpret the chair, i hear her saying this is a chair who doesnt want to see inflation. Ing that leash been for rack that is maybe looking for rationalization for not hiking. But ive looked at this component, which is the vast bulk, and Service Inflation consistently has been pretty high. So and it strikes me that the fed has room to move and ive been captivated by the market you mow now, you get to where you can on an earlier base, and thats made a lot of since. I think the fed is losing this opportunity to take back a bit of the emergency still lug. We have to go, but the dow is up 106 points. Is this like the ecb action where we could see the rally build on this . Were above 2028 on the s p 500 level. Were now above it. Its almost like a football score. Were going by 7s at this point. If this cracks, we fall back to 20. 21. I dont see a major selloff going into the bell. Well see what happens. Thank you, all. Appreciate your thoughts on what we heard and didnt hear during the News Conference today. We have about 17 minutes left, but the volatility has been all over the map. Even though, by the way, the vix today hitting its low for 2016. Were below 16. In fact were below 15 right now. The conversation about the fed, were going to keep it going. More reaction to the decision and Janet Yellens comments. A and rick rieder and james grant. Stay tuned. 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. [alarm beeps] the intelligent, allnew audi a4 is here. Aint got time to make no apologies. Welcome back. Financials may have some disappointment that we didnt see the rate increase, and health care is still leading to the down side. Financials are begging for a yield curve. Materials have moved to the front of the pack. Lets send it to dominic chu for a check of some of the big movers heading into the close today. Peabody energy down more than 45 . This is one of americas biggest coal producers, saying it may need to file for bankruptcy protection. Now, at this point the companys only worth around 40 million, so very much a small company. A year ago shares were close to about 100 a share. A fast fall for it and much of the coal industry. Also shares of mallinckrodt. That stock month many special drug makers is still feeling the pressure as valuian slashed its forecast. Add to that on citrons last night on mad money, its on pace to its worst Weekly Performance in its history, though worth noting on fast money last night, mark trudeau, the ceo, did defend his company saying they werent as reliant on one special drug as citron would suggest. Back to you. Thank you, dom. The fed leaving rates unchanged for the moment, but yes. Heres how fed chair janet yellen explained just moments ago. Global economic and for example developments continue to pose risks. Against this back drop, the committee judged it prudent to maintain the current policy stance at todays meeting. Markets have responded favorably to the new but lets look at what it means. By the way, be we get to our guests, lets get this out in a timely manner. Art cashing say rick rieder is here today, chief investment office, and next to him is dan mcmahon. Director of equity trading at raymond james. Do you know what she said . What is it that they are waiting for . Listen, im surprised that the door was open, they certainly could have done a bit more. I think you have to consider two things, and i think Steve Liesman described it right. One, they are responding to Global Economic and global conditions. Chair yellen talked about it a number of times. By the way, you have top respond that the dollar cant rally on the back of other easing second point, this is a fed, and i would argue most would rather see inflation run hotter, employment run hotter, because theres so many tools to break it. You dont have many tools to bring it up. Its easier to pull on a string than p usual on it. I think thats what theyre willing to do. So dan, were starting toss materials, a few other sectors like that leading the pack here. How do you trade and investment around this event . On the one hand theyve had not set things were horrible, but on the other hand indicated they certainly arent great, either. First question she faced from the committee was, if not when and why not now . Youre now factors in two rate hikes down from four. For this year, right. So they have to start at some point. Nobody likes free money forever. Do you think thats whats going on with the market right now . As i was pointing out earlier respect you used to get these big rallies. The free money continues, but i think theres fatigue now. Is good news bad news . Is bag news good news . I think thats where we are now. And you are seeing a rally into last years underperformers, you saw the groups that were the weakest in q4 have been the strongest in q1. Youve seen rotation out of the financials, a bit of rotation out of the health care continued because of who knows whats going on, and its been such they were using it as a source of funds last year. Even within sectors, in tech, mealia telecom youre see a rotation into software out of hardware. So rick, we also see people looking at the tenyear interest yield it kind of cracked 2 today. It has sunk lower every year of this expansion pretty much. What happens now . So, we think overtime rates could move higher. The fed is going to be patient. The other side is you have the International World where in negative rate, that u. S. Tenyear treasuries at 2 look pretty darn attractive. I would say theres an important point here to your question about fatigue. I think something is powerful. Theres a transmission mechanism. Once you move rates down, the elasticity starts to slow. The credit markets are where, the Mortgage Markets are where you get the real transition, and whats happened to those spreads have pushed out. I think the market is starting to realize weve already hit the elasticity point. I think if the fed were to move rates up, i think the markets could absorb it. Are rate hikes something that no, i dont think so. I think theyre largely expected. They have to i i this is theres an countercultural, it provides to actually increase. Okay. Have be got it figured out now . Go find out. Rick rieder and dan mcmahon. Up next the closing countdown. And then after the bell, jim grant, the founder of the observer, will be here, and were also going to talk valiant, a company hes been bearish on twoplus years. Breakthrough. This morning i read over 4000 articles on leukemia. In less than a second. speaking japanese i can understand euphemisms, idiosyncrasy and complex metaphors. I know every detail of every public Quarterly Report in the last 20 years. And im just getting warmed up. Hello. My name is watson. Together we can outthink the limits of whats possible. Welcome to the cognitive era. Intenselyflavored. Colorfullydiverse. Beautifullymisshapen. Cultivated for generations, its the unexpected hero of any dish. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. 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Get off the computer traitor i wont. cannon sound mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle. And it keeps my investments fully mobile. Even when im on the move. Ahhh. 3 1 2 minutes, were up 73 points, but lets do a quick recap of the market response to the feds decision not to raise rates today. You had to start with the dollar. The dollar index. You can see commodities going higher. Thats up almost 6 late in the day. A almost the same growth for the brent crude gold also higher today. He went in big on gold, and hes been reaping the benefits of that. The yield on the ten year went lower. Remember at 192, late in the day and then the dow, von. So its got to 300. And let me point out, we have a big expiration on friday. So there may be some maneuvers there. Youre starting to see more volume, this is the second biggest exploration, other than december, but very important today, goldilocks fed, at least not markets here, economy expanding modestly, exactly what they wanted to hear, and lower Interest Rate forecast, now down to essentially two rate hikes. The fed has come to where the market wants it. That dollar weakening really being moves, the materials sector closing at a new high for the year today, and the sector, take a look at some of the xhod commit stocks, u. S. Steel is ripping, freeport is risk, alcoa. A lot of the high beta Energy Stocks like devin and southwestern are all moving as well. I think this has very important implications. We could see some of these names here moving up rather aggressively even in the next few days. But confusion for the markets on this point. What is it that the fed is waiting for. Theyre either unwilling or unable to articulate the conditions that will prompt them to finally begin the rate increases . I think the fed clearly indicates. Her body language, at least the way i was watching, clearly indicated they are still uncertainly, and very especially as it pertains to inflation. Their whole body language indicates that the way they feel is still very tentative. Thank you, bop. After all is said and done, more earnings coming your way, and bringing the closing bell at the big board. And ssnc. Stay tuned for the second hour of closing bell. See you tomorrow, kell. Thank you, bill. Welcome to closing bell. Heres how after the feds latest decision and lengthy press conference, the dow going out with a gain of about 78 points or half a percent, s p gaining 11, closinging about 2027, the nasdaq the outperformer, or 35 points to 4763, and again oil prices rallying as well. And weve got two key Earnings Reports were watching for this hour. Morgan brennan will be monitoring for fedex as results, and Courtney Reagan will bring ugh Williams Sonoma. We have mike san tolli here along with carol roth. Jeffrey cleveland joins the frey, and yes, fast money trader brian kelly. Great to have everything on board. Mike, first to you, how significant is the news this afternoon . I think it was significant. It was much more about i think confirming the markets view of the world more than it was adding a lot of incremental information. We werent expecting anything today or in april. Maybe it was a coin toss. With all the supposedly dovish messages that were hearing commentary about. Were back to like a coin toss for june. So i think its more about the market getting affirmation that the fed is not on its own kind of agenda with its own schedule ignoring the data. I think thats okay. I do think, you know, being late, letting inflation run a bit is not really that jarring. Was it clear to you, carol . Nothing was clear to me. I think the fed is bipolar at this time. I felt like the more that janet yellen talked, obviously we saw that the market went pretty high and then started to back off. Obviously she took the rate hikes off two of them off the table, went from 4 to 2, you hear that the economy is moving along, but then the signals are very dovish. At this point in time, im not necessarily surprised by what theyre doing, but i think at this point its a travesty. Obviously the work theyre doing is not doing what its intended to do. They need to get out of the way. We need to get back to some semblance of normalcy. It ends up being a vicious cycle around the world. Theyre trying to add some growth here or working against each other. You were making the point that no matter which of the two it might be, you would buy gold here . I think it depends on whether you want to be half full or half empty here, but couple this move where they didnt necessarily weaken the euro, what the Japanese Bank has done, the boj, they didnt print more money. If that logic is correct, the chinese should be next, but in either case, what youre looking at is either a weaker dollar ultimately. Lets say we have currency wars, or the fed is going to tolerate higher inflation here. In both cases, gold will do very well and you saw that today. That said, jeffrey, the inflation red the fed focuses on is 1. 3, 1. 7 on the core. Its not the cpi. Its not like were quite there yet, at least by their preferred measure, are we . Are we getting closer . Kelly, i think were close. If you look at the underlying trends for inflation theyve been moving higher. Were 1. 7 on core pce, 2. 3 on core cpi, so the inflation the actual inflation trend is moving higher. Kelly, the question i would ask janet yellen is they have 1. 6 core pce penciled in for year end. If they really believe that, then they shouldnt by hiking at all. They should take all the hikes off the table. So something something doesnt add up for me on the core pce forecast. Mike, you agree with that . Go ahead. I do agree that theres no real effort to have tremendous logical consistency with the whole constellation of the individual members outlooks for the end of the year and what they expect in terms of rate increases. On the other hand were not at the target yet. So the question today is, do we have to try to be proactive, or can we let it see if we have this trend remain in place for a while . I think theyre happy to see if the current trend solidifies itself. Can we just make the case this is a really bad experiment thats not working out so well . And instead of going down the same path thats not working, maybe we should try something different. But the metrics are if success is determined by growth and inflation, on the growth front jobs are there, gdp is coming back down. A lot of mixed messages. I this i where the recoveries should be versus where it is today, were not there. Except where. So if you hike rates congratulations. If you hike rates today and the dollar rips higher, it undermines this is a vicious cycle. At some point something is going to have to or this entire thing is going to collapse and everybodys going to go down. I dont think thats a good outcome, either. Brian kelly, the dow index down a point. Theyre occurrences sills lower. To mike ace point. That would have been bad for everybody. The dollar has been the global wrecking ball. So to the extent that janet yellen actually engineered this weaker dollar, she did a masterful job. Whether or not it continues, i dont know. But again, lets just keep this in perspective. It was 90 days ago that the fed told us everything was so great theyre going to be hiking rates. What they did today was acknowledge everybody weve talked about is the Global Economy is slowing. This is a step away from that ratehiking cycle. They will continue to step away over the year. Jeffrey, what is the impact go ahead. I think theres a much easier story here. Ocams razor here. And the fed got spooked, they didnt want to say 3 to 4. They moved closer to the market. Thats the simple story. We can add in the fact that their inflation forecast i dont think makes much sense, and theyre probably going to get that wrong as the year progresses. So stick to the simple story, and you can understand why they did what they did today. If thats the case, the rebound we have seen in the market, mike, you know, theyre looking at the information from janet at this point, which was much weaker, the new felos. Where does that leave us . You know, the markets have settled down. They are obviously in a pertain of calm. That nobody expected today, or in april or may not even in june. What i do think it means is you saw the if you think rates will be lower. Banks down, utilities up, so thats not exactly say risk on, the fed has the punch bowl back out. But at the same time thats not supposed to be their mandate. Their mandate isnt theyre supposed to be regulating the markets. Their mandate is supposed to be about the economy. Obviously their policy isnt doing a whole lot in that regard. I dont thinki fair for them to keep using the market especially one analyst pointed out it sounded like a fed bought into Larry Summers stagnation idea. Its an idea that, you know, people will take different issues with it. You know, theres nothing about this that cant be fixed, but at the same time the longer point we go on, its harder to make the case ive been arguing for a long time the fact that you have this Central Bank Intervention creates these disincentives for companies to invest in appropriate ways. At some point if we want to see real growth, we need to normalize, to making the capital investments, you know, getting the highpaying jobs back on the dockett, and were not going to see that if we continue to have this vicious cycle. Thats, i think the Biggest Issue of them all. I dont think you have to you a Second Quarter hear stagnationist to say that the burden of proof is pretty high to see if the economy can have a Sustainable Growth past. You can say 2 isnt good enough for us to disturb things and not necessarily say were in for another decade of subpar growth. On that point, brian kelly, you know, the gold play, i understand, you know, were talking about a way to navigate these markets, but its not something, you know, not an asset thats going to pay you a cash flow over time. That people are even supposed to be making if this whole thing is working. I dont know, does tess lay pay a cash flow overtime . They lose money, and with negative Interest Rates, holding gold doesnt cost you money, or at least on a relative value type of basis. So i dont know, ive never bought that argument that gold does nothing. All that really matters is that it goes up. If you have et cetera you want to protect, gold is your et cetera. Jeffrey, well give you the final word here. Its hard for me to believe secular stagnation with a 4. 9 unemployment. Adding 200,000 jobs a month, and inflation is actually lifting. I think the secular stagnation,ists will be proving wrong. It may take more time, but well get there. Brian kelly, thank you, sir. Everybody be sure to stick around and catch brian with the fast money crew at 5 00. Dont miss that. Coming up here, Hillary Clinton and donald trump taking another step towards winning their partys president ial nominations, as the field slims down, will the economy become the number one issue . Well show you what the candidates have to say about it next. Plus jim grant is here to react to the big decision today and take a victory lap over a call he made two years ago thats really paying off this week. Those details later on closing bell. Youre watching cnbc, first in big worldwise. A disappointing Earnings Report below the expectation of 60 cents. Retch also below estimates at 4. 4 billion, analysts recalling from 4. 5 billion, the guidance does not look good for third quarter, earnings of 12 to 18 cents. The estimate was for 51 cents, so very low guidance here. You can see the stock is down better than 8 . Keep in mind that jabil is reportedly an apple supplier. Back to you. Seema, thank you. Thats right about in the middle of the 52week range. The stock had come back a bit. It was kind of going sideways nicely, but not a great sign for the manufacturing reply change. Would you read anything into apple . Its hard to get directly at apple. They have a range of products. Well keep all eye on it and the other earnings were waiting on. Big wins to donald trump and Hillary Clinton last night, but all the remaining candidates highlighted jobs. Our countries are leaving our country rapidly whether its carrier air conditioning, whether its ford. So Many Companies are leaving, and frankly im disgusted with it and tired of seeing it. This election will focus on three Critical Issues job, freedom and security. As president , my number one priority will be jobs. As ive traveled the countries and i look into your eyes, you want to believe. You want to believe again that we can have job security. You want to believe again that wages can rise. Were going to create an economy that works for all of us, not just the 1 . Good paying jobs are the ticket to the middle class, and were going to stand up for the american middle class again. All right. So who benefits from lets bring in cnbc contributor regardly kudlow. [ laughter ] you can have it. Extra teej is mess with his my head. I love the focus on jobs last night. Will this be a real pivot point . Who benefits the most. You look at every exit poll weve had. Economy and jobs, the number one issue. Every exit poll weve had, including last nights the trouble is the candidates themselves didnt talk much about it. Look, all i asked, all very simple. Thats all i ask. Give me a 15 Corporate Tax rate, give me full cash expensing, give me easy reba repatriati repatriation, and i tell you this, the u. S. Will become a magnet for capital all over the world. We will create phenomenal amounts of jobs and higher wages. Thats all i ask. Is trump close enough . Is Bernie Sander close . Trump is close enough, thats correct. I think the republicans have it basically right. I just heard hillary, just heard Bernie Sanders, god bless them, i love them. What theyre basically telling is were going to create jobs by taxing rich people, therefore youre taxes businesses and its not going to happen that way. As you read the rhetoric, whats the substance beneath it . Once we get past the primary, jobs will become a much bigger focus. All day weve been arcing over a 25 base point Federal Reserve Interest Rate hike. Weve done way to which on Monetary Policy, not enough on fiscal policy. No matter who wince this election, i believe there would be a fiscal policy mandate, because the economy will dominate the rest of this election cycle in the general election. The democrats are talking about raising taxes on the wealthy, using that mon for Infrastructure Spending and continuing this Monetary Policy of low Interest Rates. The republicans are talking about repatriating 2 trillion of cash back overseas and putting that money to capital investment, infrastructure so one way or another were going to get that more, more, more. No, my friend dan clifton, its going to be bigger than that. Im not talking about repatriation of cash overseas, though you are correct. Im saying we need to make america the most hospitable place to invest in the world. If we do, with low tax rates and expensing, all of the rest, literally trillions and trillions of dollars from all over the globe will come to the u. S. And we will create a tremendous investment boom with highpaying jobs. Larry, this is carol roth. This is why the republicans should have you running for president instead of the people that they have running for president , because the fundamental issue is, with all the candidates out there, the real answer is who is best for jobs . Larry kudlow, none of the above are best for jobs. The other challenges from the voters perspective, depending on which voter you are, absent the reality, each voter thinks something different. If youre a kid off college, you think somehow bernie is going to create the jobs. If youre an entrepreneur, you think trump is going to create the jobs. At the end of the day, the sad reality is that its probably none of the above. Heres the thing i loved your clip of john kasich, because what he said was, as i look into use you are eyes, were going to create jobs. Kelley evans, we need to slash taxes. And deregulate, kelley, as i look into your eyes, i see deregulation, which would help Small Businesses and brandnew business startups. So kelly, thats my i look today. Im blushing, dan. Im blushing. Dan, so tie this up for us. Yes. If we can expect more of this rhetoric going forward, and i know what sewer say about fiscal policy one way or another, but lets take the frontrunner, how does donald trump do things that are business and jobs friendly . What do you really think hes going to be able to do there . First, kelly, watch paul ryan, the speaker of the house. Hes spending all of 2016 to work out the kinks of the Corporate Tax reform plan larry was just talking about bringing the stakeholders in. They want that plan ready for wlofr the next president will be, whether thats trump, cruz kasich, possibly even clinton. So keep an eye on that. As much as were doing good on tax reform and getting capital into the United States, we worried about these protectionist trade policies, and both parties are talking about less trade, and we need to be careful on that. Dan clifting, i just want to say outright, dan is this is really a tragedy in a way, because its antigrowth. Every single candidate, every single candidate on both sides of the aisle are opposed to the pacific trade deal and opposed to trade in general. Thats a very bad attitude. If you raise tariffs, all youre doing is taxing American Consumers and businesses, youre preventing americans from buying the cheapest priced goods at the best quality around the world. There are things we have to do with china. China is a bad actor, okay . But lets have economic sanctions, lets have enforcement discussions, we need a strong leader to do that. Tariffs are no good. Nerve work, nerve work. Larry kudlow, dan clifton, thank you both. A great discussion. We appreciate it. Lets begin with fedex, the earnings are out. Fedex delivers quite the beat on both the top and bottom line, recording earnings per share of 2. 51 for fiscal third quarter. Thats better than the 2. 34 per share that the street was looking for. Revenue of 12. 7 billion, also better than expected versus the 12. 4 billion that had been anticipated. In terms of outlook, the company saying that for fiscal fullyear 2016 its tightening its earnings outlook to 1070 to 10. 90 per share. Thats the higher end of the previously cited range. Also worth noting that here a few comments about regarding peak season, which is what this quarter was with fred submit chairman and ceo mentioning challenges of stronger that expected in shipping demand. Just going through this report, it looks like that affected operating margins negatively. The peace season competed expectations, but again we have a beat on the bottom, the top line, and fullyear guidance was moved to the higher end of previous forecasts, so sharing are up 5 . Morgan, thank you. A lot of focus on this company, mike, as p amazon continuing to make inroads. For now this is a pretty good beat. The estimates for fedex were about 250, where they came some 251, in june of last year, so the estimates came whittled down a bit, and basically back to what you were expecting to do nine months ago when the stock was at 183. Theyre skying having a solid outlook for the remainder of this year, the longerterm stuff with amazon, thats a crapshoot. This they edged up their capital expenditures. Thank the lord, but i do think that mike is right. I think the issue here is really about investor psychology. If youre thinking about fedex, i think theyll do well, but given the pricing are the stock and people are so worried about amazon, whether or not thats a real worry or not, that worry is out there. I think thats something investors should keep an eye on. U. P. S. Shares also trading a higher. There you see it, up 2 on some relief across this space perhaps. Lets turn to Williams Sonoma. That report is also out. Courtney . It looks a little different from the fedex numbers, at least the stock reaction. Shares are trading low ser, down by about 6 . Williams nono reporting earns per share 1. 55. Three cents below consensus. Also slightly below analyst consensus. Comparable sales increased 0. 8 , thats the total. However, weakness nearly across the board compared to the same time frame the year before for each of the individual brands. Remember, Williams Sonoma also is the Parent Company of pottery barn, west elm, those are some of their bigger name there. For the First Quarter and full year, that Earnings Guidance also weak from Williams Sonoma. They also did reiterate their longterm outlook for Revenue Growth in the mid to high single digits. Earnings per share long term. Not enough to lift those shares. Williams sonoma also upping its dividend by 6 for 37 cents per share, as well as 508 million stock buyback, but none of that enough to make investors feel better. The shares have been dropping further, now down nearly 6. 5 . Kel kelly . Ing in in that release where it blamed the stock market sell jot earlier this year for its tougher results . Nothing in this release that directly points to any of that. Of course the Conference Call is coming up in about 35 minutes time. Im sure there will be more questions about where the weakness came from, at least relative to what analysts had been expecting. If you look at the comparable sales, though, pottery barn, west elk, Pottery Barn Kids and teen, all lower from last year, somewhat significantly so for pottery barn teen and pottery barn. So ill be interested to hark from the ceo. Courtney thank you so much. President obama announcing his choice for the Supreme Court nominee this morning. Senate republicans threatening not to consider the nominee. The impact it could have on business. And later some hoping that paul rye yoon would right into the convention on a white horse to grab his partys nod. Find out what he says about that speculation later on closing bell. This just got interesting. So why pause to take a pill . And why stop to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use. Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. Welcome back. Hampton pearson has the details about the nominee, and the hurdles awaiting him in the nomination process. Reporter we did earlier see president obama joined by the Vice President with Merrick Garland, calling him basically a moderate with a long career in public service, as well as a great jurist, but the president also spent time making his case that its now time for the senate to do its job. To suggest that someone is qualified and respected as Merrick Garland doesnt even deserve a hearing, let alone an up or down vote, to join an institution as important as or Supreme Court, when two tlirds of americans believe otherwise . That will be unprecedented. Garland is chief judge of the d. C. Court, with a lot of regulatory cases. Legal experts looking over rulings say there is a pattern of perhaps favors goff agencies liable the epa and s. E. C. , a few of those rulings made it to lower court were actually overturned by the high court. Merrick garland has been very deferential to regulation, if they decide to crack down on a business, he would be very unlikely to tell the agency it cant do that. Now an fbr analysis of that same record goes on to say if garland were on the high k0rd it cant impacts regulators going forward. Hampton, thank you so much. Our Hampton Pearson in washington. What do you think, carol . I think that i hope he actually gets a chance to be heard. I think it would be very unfair and not the right direction for the gop for him not to be heard. He certainly isnt the type of judge i would necessarily want to see on there, but i would like to see the gop lead instead of follow, follow back on the biden rule which everybody believed at that the point in time was a bad idea, step up into a leadership role instead of following the bad things that people have done in the past and at least give us a reason if youre not going to confirm him. Theres going to be so much talk about the Supreme Court as it relates to the president atcampaign. Jim grant up next hell tell us about his ultrabearish call twoiers on a stock thats been crashing this week. Plus a hypersonic plane that can fly 20 times the speed of sound. Find out how much it could cost and whether there will be demand for it later on closing bell. Highway to the danger zone youre an at t Small Business expert . Sure am. My staff could use your help staying in touch with customers. At t can help you stay connected. Am i seeing double . No maam. Our at t buy one get one free makes it easier for your staff to send appointment reminders to your customers. And share promotions on social media . You know it now im seeing dollar signs. You should probably get your eyes checked. Good one babe. Optometry humor. Right now get up to 650 in credits to help you switch to at t. Trolling for a gig with cant blame you. Its a drone you control with your brain, which controls your thumbs, which control this joystick. No, im actually over at the ge booth. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. To bes in a waitandsee pattern for most of the day and then spiking. It was largely expected. What came as a surprise is the fed now expect just two rate hikes, and cut the forecast for two week citing developments that do continue to pose risk to the u. S. The dow closed up 74 points. Thats not just helping stocks, though oil and gold prices staging rallies, and fedex shares sharply hire after hours, the company delivered better than expected quarterly profit and revenue, also raised the low end of the fullyear guidance and hiking the capital expending forecast. Shares of, p. S. Are higher as well. Shares of valiant, though, closing a bit higher today, but having the worst day ever, down more than 50 . The company rpt warrant of weaker guidance. And one noted investor, i spode to on monday was optimistic. Do you think it will be a 200 stock again this. I think you can earn your way into that, yeah. We havent been been to control the short seller and media dying for a new crisis darn media. Its kind of filling the space. Were just, as we do here, we just put our head down and, you know, try to make sure the company is better when we leave it than it was when we got there. Some remain optimistic, others have been sounding the alarm. Among them jim grant made his case against the country calling it a financialized pharmaceutical company. Good to see you again. Thank you. Has valeant being a theres nothing wrong with it except its valeant. You would think that a company could do this, make these fixed charges. The trouble is, a, it is valeant, and theres an existence at threat on the are accounting procedures, the filings, so as my son Charlie Grant reported today in wall street journal, the results are actually binary. Its either solid or not. So the debt is a speculation, but not attractively priced. You cant look, for example in the desea drilling business and finds securities priced on a speculation to yield upwards of 30. You mention a couple of them in your her as well. Not liked, but that they might be able to rite out the storms. These are really byman or womans risk. However you roll the dice with valeant at a possible yield, so theyre not exactly apples and oranges, but the point is with valeant there are better speculations. Youve also said or one of your colleagues in the past said observed that the longer a business is under a valeant umbrella, the worse it performs. Thats the great evan moran who has done work on this. Yeah, anyway, actually its time to draw the veil of charity over valeant. Weve had our say on it, and i dont want to over pound the table. Well, the time for pounding is over. Is it something specific to the company . This is not an indictment of the broader spectrum . No, the Business Model is shattered. People will say they spent nothing on research. That might have been a problem, however company that is do intend a lot on research, lie eli lilly, for example, or might also be problematic. We think lily is problematic, so its not just that valeant spent nothing on research. I think the overall model was more than dubious. Is it something that implicates the ceo . In other words, is there a change in leadership that gets to the heart of the companys issues . Or is it structured in such a way mike pearson can we change the subject . I mean, this is, i dont have any more to add on valeant. Its down from the peak. You dont want to kick the dog when its down. We appreciate that, jeff. One other mention, and then john deere, just baas because it feeds into the whole whats happening in the world right now. You think the Company Still has risks . We do, were bearingish on john deere. The prices of used machinery, of which there is a seemingly glet on the market, deere conpiece with and theres a credit aspect as well to the deere story, on so we think the intersection of low alternate cultural prices and credit difficulties among other things, and certainly falling farm incomes, they are down substantially from the peak, so we think that deere is a thats perhaps a good set upfor the discussion of the fed today. What is happening with the u. S. Economy . And how you make sense of their steering here of the economy . We need not to be steered, it seems to me. Kelly, there was a great kerfuffle in the papers owing to the heist of 100 million from the Bangladesh Central Bank whose deposits were at the new york fed. It got me thinking about the issue on filching money from a central baismg. Currency and checking accounts is a 3. 15 trillion number, or thereabouts. Every year the fed seems to steer 2 from the purchasing power of the American Public in the name of inflation target, which has pull out do you think theres need for inflation no o. No, no, you do not. Its about 63 billion, compare that to the 100 billion that the central bank of bangladesh lost through an act of cyberheist. So this is a fraud question. People say you need it seems to me you do not need just to be clear, were talking about something that isnt the price of things we buy, which we would you love to see that fall, but it implicates our earnings power, right . But there have been plenty of examples, for example the American Economic past where prices fell and wages, you know, were stable or fell less quickly. Real wages, therefore, increased and, you know, working people were well compensated, and but wanes wages hold their own against falling prices, that is called progress. The fed calls it deflation. We need parent clair in our letter, and the new york policymaking. Yeah, but inflation perhaps being still the theme we come back to, whether its how many times youre going to raise Interest Rates this year, it sounds like theyre trying to get out of the way, so to pell. I think theyre pulling back certainly from the muted four times this year, to they dont know i dont know what i will observe is sometimes inflation comes on little cats feet. It doesnt ring a bell, it doesnt issue a press release. It is there are and the fed will have to deal. More than once in our recent economic past the fed has been behind the times. In fake it makes a its a delightful image. You always have a way with words. Thank you for joining us. Youre welcome. Precision Laser Weapons . Its new technology out of the defense giant Lockheed Martin. Our jane wells is here. There she is, making some trades. Shes going to bring us all the details about this new what are they calling . Ahypersonic aircraft . Atport 9, next. First in business worldwide. Look excited, jane. Were thrilled. We were born 100 years ago into a new american century. Born with a hunger to fly and a passion to build something better. And what an amazing time its been, decade after decade of innovation, inspiration and wonder. So, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. Came courtesy of james and patricia thompson. This tv . Margaret and tom lee. The championship game ball . That was sebastian diaz. Good guy. And all i had to do was ask for their money and pretend i was investing it. Their life savings is now my lifestyle. Female announcer dont let someone else live the life youre saving for. Find out if youre dealing with a registered investment professional at investor. Gov. Its a great first step toward protecting your money. Before you invest, investor. Gov. Im spending too muchs for time hiringnter. And not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 Lockheed Martin unveiling new technology, and it shows no signs of slowing down, nor does jane wells. Heres the things, the ceo said we must continue to disrupt ourselves before our competitors do it for us. Even though theres fewer defense programs and strong dollar and oil prices are impacting customers, you company is thinks way ahead to something make like this. An aircraft which can easily transition from takeoff, perhaps reference yu8ly more than 20 times to get in and out of areas before enemies even know what hits them. But maybe a weaponized aircraft . Maybe unmanned . Maybe eventually able to care passengers . Houston said it could be, quote, affordable, one the size of an f22 flown for under a billionsh last year they invested almost 00 million in private r d. The company has started on technologies for the next generation fighter. Houston was asked if theres any appetite for such aircraft, given Defense Budgets and an eye electric year. She believes its the right time to get started, because everything now takes decades to come to market and the chinese and russians are not standing still. It may not be as good how much of a scientific leap is this, jane . I can barely wrap my head around what we are talking about. Huge. Huge. I mean, i think the sr71 could go over mach 3, but speed is key in the future to get in and out before the russians or chinese or whoever can figure out youre there. They are working on modernized airplanes and Bluewater Navy and that sort of thing. Lock heeled feels well see who the next president is you have to invest now, because unfortunately you dont get things running on they do things on spec . Or does the government say hey, explore . A bit of both. Darpa is asking for these sorts of things, which is part of the pentagon that does advanced research, but no lockheed set its own money put in 900 million. So given this is an election year, how does that impact the viability of this even happening . Well, this is now i dont know if its affordable at under a billion. Its a bargain, jane. And this is thinking 30 years out. Were talking about 2046 before Something Like this might be on the market. The thing about, you know, you might thing republican president would be great. Well, donald trump plans to buy more for less. Ted cruz watts to audit the pentagon. Does Hillary Clinton want to look weak on defense . So, you know, its an interesting you dont i hope it goes commercial and gets us back from california without having to take the redeye. This is wonderful news. Im in for that. You could come to us just as part of your working day. It will be great. Wow. Wow. Were signing up now. Our jane wells joining us here at post 9 staring into the beautiful beautiful future here paul ryan for president. Thats John Boehners solution if theres no republican nominee by july. Well hear from the speaker of the house himself next and a quick programming note. Nike Ceo Mark Parker will join squawk on the street tomorrow in a first on cnbc interview, 10 00 a. M. Eastern time. You definitely dont want to miss it. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Plan your never tiring retiring retired tires retirement iv. I wanted to live. On waterfront property. My favorite thing is that sound of that motor going by. Its where i want to be. Whatever home means to you, well help you find it. Zillow. Despite Donald Trumps wins the results of yesterdays primaries still leave the possibility of a nomination fight at the Republican National convention in july on the table. Former speaker of the house john boehner says his successor paul ryan should be the nominee if the spot is still open in four months. John harwood sat down with speaker ryan and joins us now with the details from that interview. Hi, john. Hi, kelly. You know, Hillary Clinton had a great night last night wiping out Bernie Sanders in a series of big states, including ohio, florida, north carolina. Donald trump had a good night, but hes not yet gotten clearly on track to win a majority of delegates. He might but he might not. The antitrump forces hope they can deny him a first ballot victory and i asked paul ryan when we sat down yesterday how he would answer if the deadlocked Republican Convention turned to him. When people talk about the prospect of a convention that isnt decisive, you are suspect number one for ill take a sip of guinness. Reporter who can be drachted . Have you categorically ruled out, if the convention asked you to do it . I actually think you should run for president if you want to be president. Im not running for president. I made that decision consciously not to. I dont see that happening. Im not thinking about it. Im happy where i am, so, no, yeah. This is not reporter dont intend to do it. Youre not making a sherman statement about that though . I havent given any thought to this stuff. People say what about the contested convention. I said, well, there are a lot of people running for president. Well see. Who knows. Reporter now, two things happened after we aired that clip this morning. One, politico reported that former House Speaker boehner said if the Republican Convention was deadlocked he would be for paul ryan for speaker even though hes endorsed john kasich who is still in the race. The second thing that happened was the Speakers Office put out a statement saying he will not be the nominee, a stronger denial than he gave to me yesterday. So what we can do now is just listen and watch. Guys . It was interesting watching that play out, john, because it was a stronger denial, but i guess at this point, you know, hes not going to deny it flatly and outright, right . Well, he said he will not accept the nomination. He will not be the nominee. Thats pretty strong. All right. Reporter remember, paul ryan said the same thing about becoming speaker when john boehner announced that he was leaving, so theres theres a track record there, but i do think that it is more likely than not that trump will end up with a majority of delegates and that the contested convention scenario wont ever materialized so it is likely, in my view, that paul ryan is going to be staying in his job as speaker. I still think those cleveland rooms are already booked up. Thats right. John, thank you so much. John harwoods great minutes away. Minutes away from earnings calls from Williams Sonoma and fedex and another retail stock getting hit hard after hours. More after this. Away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. In new york state, we believe tomorrow starts today. All across the state, the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. Like in rochester, with worldclass botox. And in buffalo, where medicine meets the future. Let us help grow your companys tomorrow today at business. Ny. Gov thank you. Imagine if the things you bought every day. Earned you miles to get to the places you really want to go. With the united mileageplus explorer card, youll get a free checked bag, two united club passes, priority boarding, and 30,000 bonus miles. Everything you need for an unforgettable vacation. The united mileageplus explorer card. Imagine where it will take you. Guess are sinking after hours down almost 12 , this after missing earnings estimates. They also issued weak First Quarter and full guidance. Another retailer getting hit after hours is Williams Sonoma, and that Conference Call is about to start at the top of the hour. Shares of Williams Sonoma, which owns pottery barn and some other brands are down about 6. 5 . Finally, fedex, mike, is up 5 . Thats probably going to be the most interesting one tomorrow. It is. Especially because of dow transports and that whole sector has been on a revival mode. See if it has any legs. If it was just more than the hated beaten up stocks that got a bounce. What are you going to be watching, carol . To me if the Retail Stocks are telling a huge story because this upper premium tier that had done well for so long is showing real signs of cracking, and it says to whee what is it about that consumer thats going away, and does that mean that the middle consumer and maybe the Lower Consumer is going to follow after that . Right. Or can they step up here, you know. That will be a nice development. Guys, thank you so much for joining me on closing bell. Carol roth and Michael Santolli as we continue to make sense what just happened this afternoon with the Federal Reserve, dow goes out with a gain of 74 points. That does it for closing bell. Right now fast money begins now. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Traders are steve grasso, brian kelly, Karen Finerman and guy adami. Stocks hitting their highest level of the year but a top technician says something is very wrong with this rally. Hell tell you what that is and how you can protect yourself. Plus, fedex out with a big beat and the stock is surging after hours. The call getting under way right now and well bring you the latest and the implications on what that should mean for the broader markets, and later energy space is so bad right now that it could actually be good news for one very crucial part of the market. Well tell what you that is, but, first, we start with what was the most northern day for the markets this year. Both the dow and s p 500 closing out their highest levels of the