Transcripts For CNBC Power Lunch 20150225

Targets chief Financial Officer. The cfo will be joining us in a power lunch exclusive to give us his financial forecast. We begin now with the health of the American House housing market, and new numbers on home sales as we begin to gear up for that spring selling season. Fingers crossed it comes. Youve got dr horton and toll. All moving to the down side. Lets get to diana who is live in washington. Hi diana. Hi mandy. After a disappointing report on january sales of existing home sales of newly built homes out today a bit more heartening but you have to keep them in perspective. Take a look. January sales came in at an annualized rate of 4,1,000. Thats flat from december but december had seen a huge 11 monthly jump, and we didnt give any of that back. Thats good. The 30year average for new home sales is over 700,000 a were. We still have a long way to go. Sales of new homes priced under 150,000 are onethird of what they were a year ago. That is why luxury home builder Toll Brothers is doing so very well beating the street in its Quarterly Earnings report where heed when asked on the analyst call that tried to push volume over price as some of the other builders are starting to do. The answer was pretty clear. Bob toll said thats not our game. Great for toll but heres a bit of a scary stat. Realtor. Com looked at 200 local housing markets and about onethird of them had no newly built homes for sale that were considered affordable by the markets median income. Zero none. Tyler. I have never seen this in ive heard fed chairs accused of being biassed towards capital. Maybe against workers, but not being a democrat or republican and favoring one side. I want to play you just one of the exchanges that happened today with congressman milvaney. If you are sticking your nose in places that you have no business to be you have no business in the longterm labor markets. To the extent you claim to be wanting to help fix income inequality and Wealth Distribution in this nation, in the view of many of us youre actually making it worse. She was accused of favoring one of the parties because she spoke about inequality two weeks before the election rsh here is Tea Party Member sean duffy in exchange for the fed chair. Was there one party that was pushing the whered of income inequality over the other party in the last election . Was one party pushing that idea over the other party . I have heard politicians on both sides of the aisle la meant rising income inequality. Had showed several documents there. Scott, our congressman, here in inglewood cliffs covering this area saying she met more with the white house or white house officials than she did with congressmen. Sfwroo i thought that part of the feds mandate was to Pay Attention to the labor market. You would think so and inequality, and, by the way, theres been a long tradition, tyler, of fed chairs or chairman before she. Talking about broader Economic Issues whether or not theyre within the direct perview of the federal reserve. Look, i think from a market standpoint what matters is whether or not theyve weakened the fed chair. Whether or not theres going to be any movement. I dont think so. I think this probably stops in the house and doesnt go any further and the senate. We didnt hear this kind of strong questioning yesterday in the senate. Steve, thank you very much. Steve liesman reporting. Lets go to sue herrera and breaking news. Fiveyear notes up for auction. Hi, sue. Hi, ty. As a matter of fact, it was 35 billion in fiveyear notes. The yield came in at 1. 480 . The bid to cover ratio was a little light. Thats the measure of demand for the issue. It came in at 2. 54 . The bid to cover the prior ten auctions is 2. 66 . It is a little below that. Indirect bids normally the average is about 53. 3 . This one came in higher. 60. 1 on indirect bids. Well watch Interest Rates for you postauction. Back to you. Indeed we will. Thank you for that sue. The markets are gradually edging higher now. Consumer discretionary stocks are taking the lead while utilities and techs are at the bottom. Lets bring in don, investment strategist and economist at Lpl Financial and mark tipper, Strategic Wealth partners. Mark. I look here in the united states. The markets are sitting around record highs. I look across the atlantic. You have a number of markets there at record highs. How do we get that next leg higher . Whats going to be the catalyst . Its going to be tough. When you look at u. S. Stocks in general right now, you know were very cautious over the course of the next three to six months. Much more constructive over the next six to 12. I think the next catalyst is really just money is going to continue to chase yield. Theres a complete lack of investment alternatives right now. You know unfortunately, valuations right now as they stand are at some pretty high levels with u. S. Stocks and i know valuations dont matter until they actually do but, you know, it really becomes an issue of what could potentially cause investors to balk at these current valuations that pull the markets back. Right. When you say, mark just to jump in there, when you say you are cautious over the next three to six months are you suggesting that we will get a pullback of some size before we sort of take a bit of a breather, digest, and then get the next leg higher, as you say, over the next 12 months. Over the nearterm down side risks are definitely elevated. We havent seen a 10 top to bottom correction since october of 2011. I mean this is the third longest market rally in the history of the stock market. The second longest rally ended october of 2007, and we all know what happened after that. Yeah. Were long overdue for a pullback. I dont know that were necessarily going to get one, but we are cautious right now. Theres a lot of potential issues that could cause a pullback in the near term but, again, over the next 12 months we are constructive. Hey, john you must be happy today because Consumer Discretionary is something you like very much, and its the leader right now on cheaper gas prices. You look it i believe. Just going between here and whats happening in europe for two seconds. Why do you not like europe even though you say the valuations are more attractive . Well europe is definitely stopped getting worse. Something cant get better until it stops getting worse. Then the last six months europe has definitely stopped getting worse. The ecb has done what it needed to do. Youre seeing some of the financial transmission mechanism in europe improve. Youre seeing some of the Economic Data be very lowered expectations. You are staying right here domestically at home. Apart from Consumer Discretionary, john, what else do you like . We like tech. S we like industrials. Were in a procyclical area. We think were still in the middle stages of the economic cycle. Maybe in the second half of the cycle rather than in the first half of the cycle, and then definitely in the second half of the cycle, the market favors Growth Stocks over value stocks. Since rates started to move back up, thats been more the market that we expect over the rest of the year. Okay. Well, well wait and see. Yellin has been dovish so far. Thank you very much to both of you for joining us. Also Energy Exposure is something that were keeping a very close eye on. For more on mark and john ass Energy Outlook and their plays, go to power lunch. Cnbc. Com. Ty. Mandy, winter storm reemas is about to wreak havoc kroots the south. Perhaps appropriately enough there. A wintry mix of cold snow and ice is forecast but much of the gulf coast and even up into virginia and d. C. Heres greg postel and the Weather Channel with the details. Big winter storms will move through the south during the early afternoon hours. Lots of snow in mississippi northern alabama, and north georgia. Atlanta on the edge. I think the heavy snow really targets Central North Carolina overnight tonight. Watch out Raleigh Durham charlotte, and even greensboro and then getting on into virginia as well overnight hours. Looks like heavy snoi is going to be moving into incorporates of southern virginia and norfolk, maybe even d. C. Guys. This is a winter storm that is going from the south all the way up through parts of the middle atlantic and northeast. How much are we going to get . A look at some of the numbers. We have five to eight in eastern arkansas. The biggest snow in north georgia will be in the mountains there just south of chattanooga, and then as you head towards north carolina, look at how much we got here for the central piedmont there near the Raleigh Durham area. Perhaps 8 to 12 inches there, and then maybe, maybe, in d. C. One to three. Largely staying south of say, trenton, new jersey and certainly new york city. Back to you. Thank you. The bankrupt billionaire, the judge, and the porsche. Chief International Correspondent Michelle Caruso cabrera with more on the very bizarre story. It sounds like some kind of, like, i dont know, soap opera. Stroo yes. Flamboyant former brazilian billionaire batista lost 34 billion in a year. Now he is on trial, and his judge is driving one of his very expensive cars. Oh. Thats not fair. Sfroo how does that happen . Well explain next on power lunch. Hey, girl. Is it crazy that your soccer trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Shares of American Express up 1. 5 . The dow component says its hiking Interest Rates for many of its credit cards following a yearlong review process. The Company Spokeswoman says that rates of u. S. Consumer cars, many of which currently enjoy below market rates, will see some changes with this new move to the up side. Mandy, back over to you. Thank you very much dom. Well tjx, the Parent Company of marshalls and home goods, boosting pay for its u. S. Workers to 9 an hour. The move mirrors walmarts recent decision to increase its hourly wages. Apple, ordered pay more than 530 million in a patent trial involving its itunes software. Apple plans to appeal and target beating its earnings estimates despite taking a big financial hit from pulling out of canada. Chief Financial Officer will be joining us at a power lunch exclusive to discuss the retailers outlook, and that folks, will be in about 20 minutes time. All right. He was once brazils richest person by far, but his life has taken a complete uturn. Batista on trial for insider traced over the financial meltdown of his oil company. The judge now facing heat in this case as well. You two get to follow some weird stuff. Weird stuff happens overseas doesnt it . A brazilian newspaper, take a look at this has published photos showing the judge in the trial of former Oil Billionaire ike batista driving batistas porsche suv. The car was seized by authorities earlier this month to keep batista from selling or giving away his pricey assets. Here is the front page of the newspaper extra. Thats judge flavio behind the wheel of the Porsche Cayenne that can cost anywhere from 65,000 to 100,000. A newspaper called managed speak with the judge who told them the federal police did not have a safe place for the car. It was exposed to sun, rain possible damage. As i want the car to be as preserved in good condition, i took it to a covered space. I did not take it to use. Just to look after it. It is a normal situation. The car is one of nearly a dozen cars seized earlier this month on fears that batista was dumping his assets. The judge chose not to safeguard this lomborghini. Did he drive it around the house . I think he had an elevator that he could put it into. Dont quote me on that. He is accused of selling stock in his company when he learned that his oil rigs werent finding as much oil as he thought they were going to find. His net worth declined more than 30 billion in one year as his company went south. Wow. Ouch. You could make up a story like this, and people would say, no its too farfetched. Staying with brazil because the shares of petrolbras is down. Brazil on its own could be facing recession because they have so many issues but the situation with petrobras very significant because its stateowned by the government. Moodys cut them to junk and says its on standby in fact to do it again. The reason is the massive Corruption Scandal engulfing the company which means that petrobras still hasnt published audited financial from the last quarter. Heres why. It appears a huge percentage of the deals that this company did were padded with kickbacks. That means many of the assets on the books, likely overstated at a higher valuation than they actually deserved. We still dont know by how much. If the company doesnt report earnings by april 30th they trigger what they call covenanted. Think of them as clauses in the companys debts, which would put them in technical defaults and could force them to make massive debt payments. This is a process known as acceleration in the bond world. Its significant because this company has more debt than some countries. 170 billion worth. Important to know here. Both petrobras and ike batista have nearly the same Business Model. They borrowed a boatload of money, and they said dont worry, were about to pay it all back. Were going to find all this oil, and they didnt find that much oil. This is long before the price of oil declined et cetera. Is the Company Going to collapse . Sfroo wow. That is a good question. The state owns the majority of the shares right . I have said i think the shares could go to zero. People say no no the government will pour more money into it. They just dont know how big the hole is. They could start to face political constraints. I mean, if moodys is worried about the debt what should you think about the publicly traded stock . Right. The stock gets hammered, and brazil rules are a little bit different so you might have a little more protection, but generally speaking its very very bad. I believe that brazil has absolutely no plans at least currently to pour more capital in. Well just have to wait and see. Thank you so much michelle. Thank you. Plus coming up a power pitch pick me up. This startup recharges your brain with a drink that should help you think. An online drink brand using nir row tech to disrupt the 40 billion energy drink market. Will it quench this panels thirst . How are you tracking and communicating outcomes . How do you reconcile that with a product thats in a mysterious bag . Or leave a bad taste in their mouth . Stay tuned to find out. Corrects for lane drifting. And if necessary, it will even brake all by itself. It is a luxury suv engineered to get you there and back safely. For tomorrow is another fight. The 2015 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable professional. Im actually a dj. [ dance music plays ] woman [laughs] no way that really is you . If theyre not a cfp pro you just dont know. Cfp work with the highest standard. To defense a panel of experts that his startup is the next big things. Its an online drink brand using neurotech by providing direct focus as an alternative to alertness. Lets say you didnt get the best sleep last night. You have a lot of work to do. You know the options. Coffee and energy drinks. Those options help you stay alert. From our research we found that its not being alert that helps you be more productive and efficient. Its clear balanced focus. Sounds great, but why do we think we have the answer . Because we can see the difference in the brain waves. Our ucla Neuroscience Team quantifies attention using wearable tech, and we formulated our drinks based on the biology of focus. We use active which are widely used in europe. We shipped over 10,000 boxes to members in over 50 countries. Our online partners include urban daddy, ah ha life and stack commerce. Were backed by the start Engine Accelerator Fund and currently raising around 500,000. With true brain our members are getting their work done faster and getting out of the office sooner. And welcome to todays power pitch. Im mandy drury. You just saw Chris Thompsons pitch. Now lets meet the panel. On set with us here is nikhil partner at vast ventures. Thats an early stage ven fewer fund which invests in consumer startups. His portfolio includes somo water, the First Sustainable water filter. Also with us is alicia founder and ceo of Pantegrion Capital group. Shes also a board member of new york angels. Joining us from San Francisco is rebecca kaden, a principal of maveron, a Venture Capital firm. The groups investments include ebay and groupon. Great to have you all with us today. Chris, are you in the hot seat. Would you like to throw out the first question . With the massive Global Consumer trend towards eating whole foods, eating organic foods, how do you reconcile that with a product thats in a mist ear where yous bag . It is its an 80 natural with these ingredients, but its not just the healthier alternative to energy drinks. Its a better performing, you know version of that same idea where you can actually get that true direct focus as opposed to just alertness. Chris, i saw that youre planning on publishing studies on brain wave data and your product in top journals like the new england journal of medicine. How soon could we xwp to see that information come out . Weve done two studies underway. Very exciting results. It is a process, so im not going to promise when were going to get there. Thats part of where some of the funds are going to that validation. How are you track and communicating outcomes of drinking your drink . We dont want to make these bold outrageous claims but for now its you know nutropics is gaining in popularity and with our active neutropics. Well be behind on being able to claim exactly what it is. Has anyone ever come back to you and said you know i tried your product, but it really didnt work for me . Theres always a bell curve of response. There will be a slice that it doesnt actually work for them or it doesnt do anything noticeable but for the vast majority, there will be something. Like if i were using wearable tech, what are those two or three big data points that you would look at . Our ucla trained Neuroscience Team, thats the group thats working with us. Were all together in this to try to quantify exactly what attention looks like. You have brain wave ratios in each sphere of the brain, each loeb. If you look at the frontal lobe you have morale fa brain waves. That means you have better control over your executive function, which means i can determine what im focussing on and what i should block out. How does the Customer Experience work . Do your consumers feel the impact after one drink or does it take more chances to feel the results . Its a bit like a juice cleanse. You do have to be a little bit patient. Its part of a routine and a regimen where it takes a little bit. It takes, say, three, five sech days of consistent use for you to actually start to realize the focus benefits. How long does a box last for . Its a monthly subscription. Theres 30 50shgs or 60 drinks. It works out to approximately how much per one of these . Its less than a starbucks coffee. Were not trying to replace coffee, but its something that can work well with caffeine. Okay. Well, we all heard what chris had to say. Now we need to know if the panel is in or out. I think theres a few core challenges. The product takes a long time for it to work. I think that its a little misleading on whats actually inside it. However, what it does have is an unbelievable rapid following and great distribution already. For that im in. What about you, alicia . I have been on the product myself for the past few days and i havent really seen results yet, but with that said i think that theres a huge opportunity with brain health. I think their Business Metrics look really good so far, and tear willing to hold themselves accountable by measuring results so, im in. What about you, reb kwa . I think youre at the heart of some big trends around health food and beverage impacting our mind and body. Im concerned about stickiness here. Especially on a product with the delayed wrout comes and the price point you are focused on. Im out. We have two ins. You have one out. What do you think . Well i really appreciate the feedback. I know the Consumer Companies that you guys are involved with that you back you really understand the space, so appreciate all that feedback and its something where were first to market here and we have to continue to build and grow this. Okay. Well, good luck. Well be watching. Thank you very much to chris of true brain, and also to our panel. That is todays power pitch. And what about you, viewers and listeners . Are you in or out on true brain . You can tweet us using the power pitch, and let us know what you think. For more on power pitch, visit power lunch. Cnbc. Com. By the way, ty ive got another power pitch update for you. I love these. Theyre always really positive stories. Back in early november south worth, he pitched his Alcohol Delivery startup called thirsty and since appearing on cnbc the mobile app that allows users to order booze, has expanded a total of nine u. S. Cities. Its also raised 1 million in funding. And they tell us sales are now up 32 . Im pretty sure theyre going to be drinking to that. Ty. All right, mandy. Southwest shares taking a bit of a hit this hour. Low cost carrier grounding more than 100 planes because they missed inspections. Ceos cashing out a surge in Insider Selling going on right now. Well look into it and tell you what is fueling it when we return. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts mean your peace of mind. Now you can get the works, a multipoint inspection with a Synthetic Blend Oil change tire rotation, Brake Inspection and more. 29. 95 or less. [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage or major disaster, when you need us most, were there. State farm. Were a force of nature, too. Israeli Prime Minister Benjamin Netanyahu says world powers have given up from stopping iran from developing nuclear weapons. The comment came as mr. Netanyahu plans to address congress on the nuclear negotiations. An injury risk has prompted costco to recall hundreds of thousands of convertible hand trucks. The wheel hud can separate or break and inject pieces. A majority of Supreme Court justices signalled support for a muslim woman who filed a lawsuit against Abercrombie Fitch after she was denied a job at the retailer because she wore a head scarf for religious reasons. A decision is due from the justices by the end of june. Astronauts terry and barry are floating outside the International Space station for a planned six and a half hour space walk. Their mission is to install a series of power and data cables that will allow future dockings by american crew capsules. Youre uptodate. Thats your cnbc news update at this hour. Back to you, ty. Thank you very much. Dominik chew now, market flash. Lets talk alt bit about whats happening here with beer. Boston beer the maker of sam adams and sam adams light, coming off of its lows of the day, but still the worst performer in the s p midcap 400. Down about 10 . You can see now 11 on the day. This after the companys 2015 profit projection fell short of some analyst expectations. Fourth Quarter Sales also fell short. Though the company did score a three cent beat on its Fourth Quarter profits. Tyler, back to you. Well have to do something about that. Both of us here to try to help them out. Mandy being there, mandy is all in. Gold prices closing right now. Take a look at it. Up 4. 12. 01. Take a look at silver copper platinum, greens. There against all of them. About 1. 5 for silver. About 2 for puladium and half a percent for copper. Platinum up. 4 . Two big cnbc pro stories to tell you about today. Dominik chew is looking at a surge in Insider Selling and bob reporting on the best bond etf debut ever. Bob, youre first. I bet mr. Gunblatt is smiling again. He has entered the etf business. Wow. Husband dibble line total return Exchange Traded fund thats a mouthful, at a respectful debut. Traded 600,000 shares. Now, this is an active managed bond etf. With bonds picked by gunlocks team. Its going to consist mostly of Investment Grade debt and various flavors of mortgagebacked securities. It could also include corporate high yield debt and potentially even some emerging market debt. This is active management remember. Gunlock can change the investment mix whenever his team decides. As for competitors, there arent many. This is active management. Its a small part of the etf business. The big ka huna you see here pimcos total return its got 2. 5 billion under management. In a recent etf conference he has to say why he wanted get into the etf business. On whether its right or not, the etfs will ultimately surpass new wal funds. It seems like a reasonable category to get involved in. Its cheap, and its not that cheap. The cost is 55 basis points a year. Thats 0. 55 . Now, is that worth it . Well, it kind of depends. Can you get into the van garde total market etf, and you can hold the whole bond market for eight basis points. A fracture of that. The argument is that gunlock has a history of outperforming. He is going on his reputation. I would also note, by the way, this is using a different strategy than gunlocks total return fund. Broader fixed income mandate. Here they have a lot more places. High yield emerging markets, bank loans, whatever they want that they think will help them generate outflow. Well see here whether or not this really creates some excitement in the whole new space in etfs of active management. Jury is still out, but gunlock has a strong reputation. Back to you. Thank you very much. Dom chew now, and the surge in Insider Selling. Some really surprising numbers here. Some investors do like to look towards whether ceos and other executives are buying or selling their own stock as a way of gauging the sentiment of how they feel. Do they want to stay in it. This is from the vickers insider for market research. They look at the numbers around insider buying and selling, and they found interesting at least themes over the near term. Just over the past week about ten shares were sold by Company Insiders for every one share bought, and thats among Nyse New York Stock Exchange listed stocks. Now, whats even hor interesting, about four and a half shares were sold for every single one buy, and thats a rolling eightweek average. They roll it all together. There is a lot more Insider Selling than buying right now. Thats the highest level since july of last year. What does all this mean . If you take a look at the s p 500, the last time we reached these types of levels in july of 2014 we watched the s p 500 pull back by about 9 on an enter day basis. You can see july over here and then the ultimate peak that we saw later on towards october. A nice move lower here. Now, thats not to say that insider buying and selling is the end all be all indicator, but it could be something that some investors are watching and tyler, for more on this story and bobs story, go to cnbc. Com pro. Weve got a whole array of other topics to talk about. Insider selling in and of itself does not mean necessarily no. They could be doing this for Estate Planning reasons. Replan. Correct. Or to pay tacks or whatever. It is always interesting to know. Its one watch. Thank you very much. Developing story involving a possible Terror Threat in new york city that the hour. W nbcs jonathan dentsz has the details. Three men were arrested for trying to travel to syria to join isis and they had talked to an informant and were recorded talking about wanting to target Police Officers in new york, fub agents, even the president if they were unable to travel and join the terror group overseas. Then perhaps they would try to do something here in new york. The fbi had to monitor the men, and when they first came upon them back last summer and the investigation has been ongoing, but the main thrust is that three men living in brooklyn were allegedly plotting to travel overseas to syria to join isis to join the terror group over there to join the fight there. They had met at a travel agency in brooklyn and discussed carrying out acts here in new york in case their travel plans fell through. They were arrested overnight and two of them will appear in federal court in brooklyn this afternoon. The third man is in florida and is expected to appear in court there. Again, the possible targeting of sights here in new york aspirational, if you lshg the men did not have guns or bombs at this time but they did have plane tickets. Two of them did have plane tickets, planning to travel overseas to turkey and then travel into syria and thats when the fbi and nypd moved in made these arrests because they were concerned that they were about to travel and join isis overseas. As you know the fbi is concerned across every state of possible home grown terrorists being inspired by isis to join the terror group. Now appears three men from brooklyn may have done exactly that. Back to you. Jonathan, thank you very much for the latest on that. Well shares of Southwest Airlines today are moving to the down side. The carrier grounding 128 jets because of over due maintenance checks. Phil lebeau keeping an eye on that story for us. Phil is this something that southwest has imposed on themselves, or is someone imposing this on them . Well lets be clear, mandy. The grounding of these planes which happened on tuesday because they missed routine scheduled inspections of rutters, that has essentially been lifted, and most of those planes are flying again. The faa told Southwest Airlines look you can take these 128 planes. You can continue to fly them. Slonksz they do their inspections within the next five days. Poom are saying whats going here . They werent inspected. Should they be able to fly. This would be routine inspections. It doesnt mean the faa says its okay to blow them off. Theyre set to happen within a certain time period, and when it doesnt happen within that time period, if the faa finds out about it they will tell you to ground your plane, and in this case the faa has told Southwest Airlines some of these planes most of these planes can go and continue flying, but you have to do these inspections within the next five days. Again, take a look at shares of southwest. Mandy, most of the groundings and the Flight Cancellations involving these 128 planes they happened on tuesday. Most of the flights today are happening as scheduled. Thank you very much. Thanks very much. Phil, lets get a check on the bond market and take a look at the fiveyear auction. Taking a look there. You can see the twoyear, the threeyear, and the fiveyear notes. The yields moving lower. The tenyear the wreeld of 1. 97 and the 30 at 2. 57. Targets transformation. Shares up more than 35 over the past were. Weve got an exclusive with targets cfo next on power lunch. What does it mean to have an unlimited Mileage Warranty on a certified preowned mercedesbenz . What does it mean to drive as far as you want. For up to three years. And be covered . It means your odometer. Is there to record. The memories. During the mercedesbenz certified preowned sales event now through march 2nd, youll get complimentary prepaid maintenance and receive your first two months payments on us. 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Although sales did miss. It also lowered guidance, and its still above some analyst expectations. Analysts at stern ag says cvi isnt as sensitive as some previously thought. Back to you. Thank you. Very nice. Well target beating Fourth Quarter estimates today. Shares are up more than 36 over the past year. Courtney reagan is here. Courtney got an exclusive interview with the cfo. I sure do. John, thank you so much for joining us. You know the first question i have to ask you, of course is that on the media k5u8 you said you were surprised by the strength that you saw the back end of swran. First of all, why were you surprised, and second of all, where did the strength come from . Yeah. I think, you know in the middle of january we said we thought a 3 comp for the Fourth Quarter ended up today reporting a 3. 8 comp, which was a pleasant surprise for us. We have way great discount on discounts of black friday holiday, and all of those gift cards come back into the store in january. Really bringing all that sales back in january. We think the stores did a phenomenal job bouncing back from a busy Fourth Quarter or Holiday Season and then bouncing back getting ready with new product, having all that ready when people came back into the store. People look to start the new year in a healthy way. One of the initiatives you had was Free Shipping for all orders. No threshold online. What was the cost target . As we think about this we thought about the Free Shipping and Fourth Quarter. One of the best investments we can make. As we look at guest behavior, when we look ate guest who shops our stores routinely, if we can convert them and get them to shop own line automatically we get more saelz because theyre shopping online. That cost seems to be well worth the payoff is what you are trying to say there. As far as the port situation goes. Certainly there has been a slowdown. We know theres a tentative agreement in place, but what can investors and target consumers expect to see at target as a result. Were pleased theres an agreement, and were happy theyre operating at full capacity again. I think were really proud of the work our teams did. This has been ongoing for several months. Our teams did a fantastic job over the Fourth Quarter in mitigating the slowdowns. You can see it didnt have a Material Impact on our business. It was reported through the 3a comp. Now there are some places in the store where were light on inventory, but as we see the port situation continue to improve, we expect that to resolve itself relatively quickly here. Walmart and tjx are two Companies Recently that have made some announcements and initiatives when it comes to training programs. Will target do the same . You know its a great question. I think weve always considered our store teams a real point of differentiation for us and talk about and are committed to having the best team in retail. We think we have that. We want to have that going forward. We pay federal minimum wages. I think the other piece of that that comes with the competition is training and development, like you mentioned, courtney and there were very 60 of our team leads started in target as hourly employees, so theyve been developed and grown and now theyre leading our hourly team members. We are very committed to that. As it relates to you know the recent announcements, we dont think that those will have a Material Impact on us. It certainly hasnt changed our view of either the quarter or the year. Its just part of our normal course to evaluate wages. And looking forward as a final question i understand that you and mr. Cordel will be in new york to address investors next week. What can we look forward to hearing about next week that we have not heard about today on the various earnings calls . You know were really excited to come next week. Casey carl ahead of Strategy Innovation and jess jones head of marketing. Really this is our opportunity to tell the whole story to the Financial Community and the media. Heres where were going. Brian has outlined our Growth Initiatives centered around accelerate and having industry and digital growth. Our focus on category signature categories, style, home kids babies. Our guests have said these are the categories we expect you to deliver. Localization and personalization. Then building smaller formats for urban locations. Then, you know of course the first fiflt plank areas managing cost to invest in all of that. So well talk a lot about that and paint the picture of a much more fully about how we intend to deliver that and what it means over the longterm for our financials. Thank you so much mr. Mulligan. We will be there at that investment, and i want to mention as you are ending the interview with us that target shares have hit an intraday high. Back to you. Thank you very much. We should point out speaking of highs, the dow and s p at alltime highs very recently here today, and the nasdaq very close to a session high and within really just sort of shouting distance of 5,000 and its alltime high set so many years ago. Third Largest Global crop. It is nonallergic, nongmo. It is shown to be as effective at Building Muscle at annualbased we wr. Is reese the new meat . Its back in two minutes. Say youre a finance guy. A farmer. A researcher. You used to depend on experience. The internet. Your gut. Today you can use ibm watson analytics. It can make sense of all kinds of data. Uncover hidden correlations and new opportunities. And give recommendations with more confidence on who will buy. What to make. Where to plant. Which helps you make smarter decisions. Theres a new way to work and its made with ibm. 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. Welcome back to power lunch. Lumber liquidators is off today, and its still just a hair off of its lows today. You can see there down by 19 . The Company Revealed on its Fourth Quarter earnings conference call, its going to be the subject of a negative profile on an upcoming episode of cbss 60 minutes. Additionally, the company also said in an s. E. C. Filing that a may Face Department of justice criminal charges under something called the lacy act chshgs bans trade which violates u. S. Laws and plants and wildlife. To it it off, they fell short of expectations, Fourth Quarter profs and sales. Thank you. This could be the worst possible alarm clock. Look at that. Early Tuesday Morning residents in the south new jersey neighborhood woke up to an explosion. It was felt township a mile away. This is a Police Dash Cam capturing the house blowing up and there looking at some aerial video of where the home used to stand. Its now just a smoking pile of debris. About 15 fireworkers and gas workers were injured in the blast. Gas leak may have been the culprit, but the cause continues to be investigated. Mandy. Is rice the new meat . Its a question that our jane wells has been investigating. Jane. Mandy, one of the hottest diet trends is to add protein, but a lot of people dont want to add meat so look at this guy. He is adding protein with the most unusually product. Were going to meet him and the ceo behind the Company Making it. Yes, lets just watch. As the power of protein lunch continues. Hey mom, you want to live by the lake, right . Yeah. Theres here. Did you just share a listing with me . Look at this one. Its got a great view of the lake. Its really nice mom. Your dad wouldve loved this place. Youre not just looking for a house. Youre looking for a place for your life to happen. Zillow can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . We are continuing our march towards naxz 5,000. The latest on the markets move ahead. Plus, is apples big run setting up some big opportunities in other stocks . Your guest says yep. Well name some names. Why something that is happening in the commodity market could mean good news for one group of stocks and can black bear make a comeback by going back in time . Melissa lee joining us at the top of the hour. For now send it back over to tyler and mandy. Right. Thank you very much. Rice, its what for dinner. Jane wells joins us now to explain. Hi, jane. Hey, guys. America is on a nutrition and diet craze. Paleo, vegan, cut the carbs out, gmofree, and one of the Worlds Largest crops happens to check all those boxes. Darren personifies everything in modern fitness. He does crossfit eats paleo, but without the meat. Instead for muscle recovery and protein he has turned to alternatives like rice. Rice is the new meat . I feel better. My body feels better. My recovery is exactly the same. This is rice and pea . Rice and pea protein. The ceo of axiom, the largest producer of plantbased freens in the u. S. Cashing in on americas hunger for more protein in our diet. The bbc estimates animalbased whey protein will be a 12 billion Global Market in two years, and axiom wants to carve out a niche. Snoo is this for expensive . Its less expensive, and its also hypoallergic and glutenfree and vegan. Axioms rice protein sells everywhere from whole foods to small stores like the vitamin barn in malibu. Nutribiotics has been use it and rice profine products are now its Fastest Growing line. The organic sales since 2011 have increased 204 and actually last year the sales increased 72 . Rice protein doesnt cost that much because axiom uses unsellable broken bits of rice as source material. Annual sales are estimated at 100 million. With a study in the nutrition jushl showing no difference in muscle recovery between using whe wr and rice protein, the market is expanding from the health food crowd to the health club crowd. Privately held axirm foods it is its in talks with General Mills and kellogg by adding rice protein. Kellogg says it has nothing to add to the story, and General Mills says for competitive reasons, it doesnt discuss future product plans. By the way on cnbc. Com right now, i do a taste test. Guys, back to you. How was it jane . Taste all right . Yeah it did. Its a little chalky but you really cant taste it at all. It was mixed in with it was good. Thats it for the first hour of power lunch. Indeed. Thank you very much for watching. Brian, take away the second half of the show. Will do mandy and tyler. Thank you very much. Its 2 00 on wall street, and welcome to the second hour of power lunch. Im brian sullivan. The dow right now is up just a bit, but the story is the nasdaq composite the nasdaq continuing its march back to 5,000. Oil is back above 50, and we have an apple stat that may just blow your mind. Right now the big story is actually at the nasdaq which is where melissa lee is. It is shocking. Well goat that in just a moment. Atake a look rat where the nasdaq stands right now. Were up just fractionally. A little on hold as yellin continues today. We have the nasdaq up by a quarter of a percent. Take a look at whats pushing the index higher into the session. Facebook and yahoo making very nice moves. It is also worth noting that along with yahoo, were seeing a nice move higher in shales of aliba barry alvarez, and also first solar continuing its big gains from yesterday after announcing a proposed joint venture in yield ko was sun powers first solar continuing its power higher into todays session. Up by 7. 25 . This is not a new high in the stock, but it is a nice move towards that high previously, which is 75 a share. Were seeing that move nicely. In terms of that stat brian, you know what that stat is. Im going to mention it now. A lot of people out there are invested in the nasdaq through the cues. Thanks so apple. Which is actually pulling back in todays session. Thanks to am. We have these gains. If you and mandy ran an elevator and i joined it would i more than double the weight of elevator. You are like apple. Im like apple, except more delicious. Lets kick things off for todays food for investing thought here. Food stocks have been hot. Look at these sixmonth returns. Hershey, campbell smuckers, kraft, tree house doing better than the Dow Jones Industrial average. Perhaps as i wrote in my new ideas column on cnbc pro this week this is basically because the ingredient commodities have been slammed recently. Orange juice, sugar, and wheat, hogs all down this year. Only corn fractionally higher over the past six months. Lets find some opportunities here. We have jonathan of he corps the food stocks. Let us kick things off of kkm on the commodities. Jeff, tell us why all of these ingredient commodities as we call them are down and whether or not you think this has got to be just straight up good news for the food prugsers. I think it is good news. For the Food Producer as well as the consumer. We have seen tremendous volatility in the commodity space. Look at lean hogs. Down by 26 in the last six months. Cash a little bit here in the greenroom in chicago. What were actually looking for is continued down look at orange juice. Talked about it last week. Looking for it never materialized. We saw new 52week lows in orange juice. Sugar at a fiveyear low. Lean hogs means a good thing, but i do worry a little bit about the kelloggs the General Mills because they have warned about the u. S. Dollar strength in the head winds overseas. As we see continued jeff agreed and essential currencies has been a major part of the story. The reason we brought this up. Were digging into the numbers, and im thinking i wonder if some of these lower ingredient costs and lower gas prices through distribution might help offset some of the currency woes that everyone has been moneying and growning about. It does. We worry about demand. Look specifically at lean hogs or even sugar. That demand, its just not there. That production is keeping up. I know some folks are concerned about wheat. That seems to be relieved. Its all about demand and the production is not its increasing some some spots. Sfroo jeff thanks a lot for that. Lets get the stock angle of the story. Lets bring in the food and beverage analyst. Jonathan, great to see you. In terms of some of the moves that weve seen in the stocks over the past few months here six months hershey up 14 . Smucker up 1 and so on. Is that because of lower food costs or because they were simply able to push price increases along in the past and keep them . Well its both. Falling food costs do two things at the same time that are both great. They make the products more affordable to the consumer. Particularly that middle income consumer who really has been beaten badly in the past five years. Relative to high income consumer. The second thing they do is provide a tail end to companies that request hold on to that pricing. Those cost moves are great, and thats helps hershey and smuckers in the industry as lot. As we see the pullbacks and some of these Agricultural Commodities these days which tox stocks will benefit the most from this and when will we start seeing that benefit . To answer your question, you look at dean foods chshgs we like a lot. Prices after multiyear highs. The volume should help their profits considerably. We like that. We do like hershey. Frontal boundary you look at what coffee has done this year unexpected and dramatic decline in the roasting grounds segment thats under pressure from single serve. That should help them too. We like all of those. Do you think it will jonathan, balance out the currency headwinds . Well when the companies i just mentioned have small exposure overseas and thats why i mentioned them particularly. For the companies with big global businesses, no. I mean, you are going to see a currency reset thats going to hurt their profits probably more than the commodity tail wind and developed markets will help them, but you have to remember, thats not a fundamental either. Thats a onetime reset. Doesnt change the growth or the fundamentals. Back when Commodity Prices were spiking, its 2008 wooin, 2010. You get the picture. These Companies Announced price increases. Now that Commodity Prices are falling, is there any chance in hick that were going to see price decreases or should margins just expand . You bet. The answer it depends on volume and demand. Theres categories theyre got under prir. Take a breakfast cereal. A wonderful business for years. Its been under a lot of pressure as People Choose for protein heavy breakfast and eat it away from home. As you are seeing prices come down and theyre trying to stimulate demand thats one where, yes, you see prices come down. Chocolate, i dont think youll see prices come down at all. You have a couple of companies on innovation. Even as costs come down. It depends on the category and it varies. Jonathan it was a real pleasure to have you on power lunch. Thanks very much. Great. Thank you. All right. Take care. Likes dean foods and hershey. Meanwhile, shares of target up about half a percent. Just moments ago on the first hour of power lunch target cfo told our Courtney Reagan what is really driving sales. Take a listen. In the middle of january we said we thought a 3 comp for the Fourth Quarter ended up today reporting a 3. 8 comp which was a pleasant surprise for us. I think what really drove that was several things. First, we had a very a great discount on gift cards that we did over the black friday holiday. All those gift cards came back into the store in january, so really bringing all that sales back in january. And right now there are six target analysts with a buy rating on the stock. 12 with holds. Two with sells. On target thinks the prospects are bright. Pat vick a neutral rating with a 70 price target. Welcome to power lunch. On a day when target shares are setting a new 52week high. The stock is up 38 since may. Its coming up against tougher comps after that hacking incident. Why should we still be in target at this point . I think the story today is really about leadership and strategies going forward, and so what theyve outlined on todays call as well as what they plan to outline on the march at the march 3rd analyst day are very Distinct Strategies to drive growth. I think you did see an acceleration in the business in the Fourth Quarter. The Online Business was very strong and it seems like those new categories that theyre really focused on working. Patrick, you had a neutral rating on the price. Your price target is 70, which would imply that its basically dead money from here. Did you miss the wrong end target . Did you underestimate the power of brooirn cornell . I did miss some of the run in the stocks certainly. As far as the business though looking forward from here that is one of my concerns melissa. What you mentioned. The comparisons. If you look at the Fourth Quarter, they had a 3. 8 increase in same store sales. Store traffic was up 3. 2. Last years Fourth Quarter store traffic was down 5. 5 . Some of that was the data breach, no doubt. On a twoyear basis, which is important, its an important thing to look at traffic was down. I think as they come up against tougher comparisons, youll see the top line. That comp number slow a bit, and even the guidance they gave this morning for the first quarter, a 2 increase in samestore sales implies that things will slow down a bit. Yeah. We look at target. They used to be known for sort of having, you know, 80 of the stuff everybody else had, and then kind of their cool special stuff. Are they getting that vibe back . Are they getting that gain back because if theyre just going to sell me bounty paper towels then the nationalingins will be slim and theyll be competing against everybody. Are they special again . I think they really do want to focus on differentiation. Particularly in those categories that they talked about. Lifestyle, like baby kids and wellness. I think the Wellness Initiative is something very very significant. Patrick, if not target then what . What do you recommend . I like big lots here dsw, kohls, which will report tomorrow morning. Identify got a good number of buys. Im just not that positive on the Mass Merchant space. The walmarts and targets. Much more on target. Check out power lunch. Cnbc. Com. Lets check brent crude ahead of the close and wti as well. Were up 50 in wti. Brent crude up 2. Thats the european trade. We care about wti. Thats what gasoline is priced off of. Were up 120 a barrel. Also, the triple qs that mirror the nasdaq as we are watching a march towards back towards, i should say, nasdaq 5,000. The qqq is up onetenth of 1 . Heres the menu for the rest of the hour. The next big battleground for tech is not your lig room. This song should be a big hint. Has apples record run created fantastic opportunities in other stocks. Well give you our theory and names ahead. And three stocks that have been red hot in my world, wall isnt a street. Return on investment 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. Every day is a big day. We have not one, but two different fed president s. 7 00 a. M. St. Louis fed president james bullard, and at 2 15 on power lunch cleveland fed president Loretta Mester will join us live. Its tomorrow on cnbc. Forget your living room. The next big tech battleground is going to be your car. Many would say its about time because the current state of car connectivity is this issue in need of a serious tuneup. Phil lebeau joining us now. The numbers that are out today from j. D. Power with the annual Vehicle Dependability survey they are not encouraging and it reflects what a lot of people are already saying all around the country. I hear it from my friends and relatives. I cant make a phone call in my car. Whats wrong with my car . This is a survey of 3yearold vehicles. J. D. Power sent out a survey to all the owners and said tell us what you think about whats working, whats not working in your vehicle, and its clear there are blue tooth blues out there. That system which is really a consortium of different Tech Companies that use that system, 55 of the people said they cant get any phone recognition on their bluetooth system in their car. 31 said there was no automated connection as soon as they got into the car for overall Vehicle Dependability. When you look at the 2012 mogdzs 3yearold models youre two and a half more times likely to have your connectivity system break down and three years than you are in the first three months. 2012 models and 1. 5 problems per vehicle. 60 of the problems are design related. Were not talking about mechanical failures. Were talking a lot about tech issues within the dashboard of the vehicle. That said, the most dependable vehicles according to jd power for 2015. Lexus tops the list. Lets hand it to the folks buick is having a heck of a week. Comes in at number two. Climbs to the number two spot. Toyota is third. Followed by cadillac, and then you have a tie for fifth between honda and porsche. I want to quickly show you the stocks over the last year. For some of the key suppliers who are working in that dashboard area brian. Were talking about Johnson Controls visteon, delphi. Were not saying these guys are responsible for the breakdown in connectivity within a vehicle, but this is that area where everybody is trying to do more in conjunction with the automakers and as a result, weve got a lot of things going on here melissa, that frankly, if you look at the vehicles that are out on the road right now, most of them here just not working in terms of connectivity. So if this is not going well phil, does this open the door for, lets say, apple to get in and own that dashboard . Absolutely. Absolutely. Apple car play and android auto. About 650,000 vehicles worldwide. Thats preponderanced to jump to 250 million over the next five wreerz. Thats the area that both apple and google can exploit because connectivity within the car, its a mess right now. If you can do it right and do it well, you are going to find the consumers will say i want it. I dont care who builds it. If its apple, great. If its google great. Thats a separate issue. I want connectivity. Especially since i cant use my phone cant hold it while im driving. First off, im still wondering why car play is only available in volvo right now. Thats an odd choice. Its early, brian. Heres my issue then phil. Lets say im an apple person, and maybe you are an android person. Does that mean that were going to only be able to buy the kind of car that matches our phone operating system . Man, i really like to have that in a buick . Oh, but thats android, and im apple. You are either going to switch my phone ecosystem thats a separate question that the automakers are all going to have to cross at some point. Do they say im getting in bed with one specific supplier . At this point really im being honest with you. I hear more complaints from consumers about this issue than anything else. Its a joke. When they go into dealerships and they say i cant get my phone to work, you know what they get . I dont know. Its not working. Dont know what to tell you. This is the quickest way that the automakers are going to lose customers. They know it. So do apple and so do google. Thats why theyre spending so much time in this area. All right. Phil thank you very much. All right. On deck why sheep may be to blame for one industrys stock woes. Plus, red hot stocks and one record cold month. Stick with us. Youre watching power lunch. Its effects on society really came about because, not because i was selfish and wanted one for myself, which i did. Its because i had, had a passion. My whole life i wanted to teach myself to build computers. I wanted to build these things for free. I just wanted to do it for the world and you know when you want something, thats what you do the best. Youre driving along, having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to power lunch. Mcdonalds shares are the best performers in the dow industrials today. The worlds biggest Restaurant Company is up nearly 4 and its been climbing all session long. Now, not a lot of specific news that are sparking any kind of move here. Still, traders in the Options Market have traded more than three times the number of bullish bets than bearish ones so far in the Options Market. Shares have been under performers over the last year. Up only 2 . Todays move means that mcdenialed dones shares are up 5 yeartodate. Back to you. Dom thank you so much. Gaming stocks over the past few days on weaker than expected revenues. It is unusual because macao usually does well in the days hence, our sheep reference. With me now in studio its great to have you with us. Why is this your weaker than before . Thats a large part. What weve been hearing in the last 24 48 hours is v. I. P. Has been even softer than that. Beyond that i think the last week weve seen some up and down days. Going into Chinese New Year we saw some very weak days on the casino floor. Otherwise. I think in the days after we saw a significant pickup in business even in the early days of this week weve actually continued to see pretty strong oems. Do you think weve seen the worst when it comes to declines on macao. Forced choose right now, would you choose the gaining stocks that are more levered to the u. S. Versus those more levered to macao, and which one . Sfwroo our number one pick would be an mgm. Certainly given much heavier exposure. You like the reet. Absolutely. I do like the reet. I think the view on the reet is different in the sense that you think the opportunity is more on the regional assets within mgms property there as well. We have to leave it there. Thank you. Over to you. Melissa, thank you. Well thankfully there are only about two and a half days left in the month of february because many parts of this great nation are on pace to record one of the coldest febz ever. Heres something to warm your investors souls. Dom joining us now with more. Dom. It started off so cold in january in terms of the stock market. Right now things are really heating up. The nasdaq 11 straight day of gains, and of course its up about almost 8 for the month. Now, if you look at the overall sectors, the hottest three entering todays trade and the s p. Material stocks up 9 . Very hot so far. Its not a big part of the overall market. Still 9 . Technology nolg is important. The biggest sector overall. Up 8. 5 . Retail Consumer Discretionary stocks up 8 as well. This is where the heat has been in terms of the buy side in february. Jp morgan up 12 as well. Remember, mcdonalds is posting a healthy gain today. Its only up 5 so far yeartodate. In the s p 50000. Take a look. Maybe some of the beaten russian shares and speculation. Trip advisor, like we said, and priceline. The travel section has been hot. Of course, thats because expedia, travelocity, orbitz world wythed, no matter who you say, its earnings and takeouts. Again, hot parts of the market. Especially in the nasdaq for travel stocks. Meantime a mystery over paris. Drones are buzzing over closely guarded landmarks. Heres nbcs bill neil. For the second night running, mystery drones were spotted hovering over some key landmarks and overnight monday hovering over it is u. S. Embassy. It was back last night or at least a drone or possibly drones hovering over five locations all across central paris. Now, the police did manage last night to spot these drones and even to film them. People are worried. Is there an innocent explanation, or is this something much more sinister . I wonder if the french are saying still ahead to apple with love. Perhaps the stat to end all stats on just how big apple really has become. As we do every day at this time we are counting you down to the oil close. Brent crude is now up nearly 3 . Stick with us. Power lunch returns right after this quick break. The quietest or nothing. The sleekest. Sexiest. Baddest. Safest,. Tightest,. Quickest. Harshest. Or nothing. At mercedesbenz, we do things one way or we dont do them at all. The 2015 cclass. See your authorized Mercedes Benz dealer for exceptional offers through mercedesbenz financial services. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Im Courtney Reagan sxfshgs heres your cnbc news update at this hour. Senate democrats have agreed to a republican plan to Fund Homeland Security without linking it to immigration legislation. Senate minority leader harry reid says he looked forward to working with republicans to get the merdon by fridays deadline. Former president bill clinton visited a newly built cholera Treatment Plant in the capital of portauprince. Recent destruction from the 2010 earthquake that killed 300,000 people. Well petrobras has hired jp morgan to manage its asset sale this year. As the Embattled Brazilian stateowned oil giant battle az Corruption Scandal. Are you distract whenned you walk busy streets . If so you are not alone. Researchers at William Patterson university in new jersey studied more than 2,1,000 workers in new york city and found that nearly half who crossed busy intersections with dont walk signs werent peaing any attention. They were either wearing headphones, talking on the phone, or looking down at an electronics device. Our mothers would be so disappointed. 8. 4 Million Barrels of crude. Stocks are at eightyear highs. You think that we would see pressure on this but we didnt and traders are telling me that is because this is all about refineries and this is about products. Yes, we have refinery maintenance. We have refinery beings. We have refinery strikes going into a fourth week. That is causing those products to spike. That creates a pentup demand if you lshgs for crude, and thats why traders arent worried about this 8. 4 million barrel build. Having said that theyre looking to the weeks out and the months out. They do think that were going to work through it. He is sharing it with the market, and that took brent crude up. Back to you. I will say that kyle cooper a guest on this show sent me a note and said clients are saying by his own account, Oil Production is 9. 285 Million Barrels a day. That is another record high. That is right. More oil is coming out of the ground than ever before. Jim cramer said it best this morning. America is the new opec. Speaking of oil, check out shares of bill barrett. Its a midsize oil and Gas Exploration company. The stock is down today. Earnings are weaker than expected. At least 50 to preserve their Balance Sheet. A 50 cut in future developments. Were hearing all sorts of cap ex and then also taking a look at u. S. Silica. Its a provider of sand to fracturing. Weak results. Raising its bad debt expense. U. S. Silica saying it will no longer give ebida guidance because of lack of visz eblt into the oil and gas markets. You pair this brian, with what were hearing from chevron. Just the biggest bond offering by a u. S. Produce arer. 6 billion in bonds because its shoring up its Balance Sheet in case of further oil decline. You know that Silica Market the sand market for fracturing is not a very big market. You got a lot of little guys like oneoff trucks. The fact that they do not have visibility into their customers means their customers dont have visibility into their own business because they would tell them. Take a look at silica. The ticker on that one. Then also the other publicly traded ones those two are getting hits in todays session. Thank you very much. Lets talk more stocks. Every day at this time. Trying to walk through five Analyst Recommendations of stock news that you need to know about. Lets do it. Your stock number one is one we just talked about. Petrobras. Moodys cutting the debt rating to junk status. Second cut in less than a month. Melissa, stock down 40 over 12 months. I will say this. The p. E. Is now less than five on petrobras. Back in september this was a 20 plus stock. I mean thats what a Corruption Scandal and delayed Earnings Releases will do to the stock price. Exactly. Next up here Ptc Therapeutics with the new high in todays session. Credit suisse raising estimates. Price goes to 100 from 66. Reuters reporting that ptct is a potential takeout. It could be possible suitors here. Credit suisse believes a takeout is it a likely outcome before or after phase three data released in october for its treatment. This is a rare disease drugmaker. Who is not a biotech takeout candidate perhaps because everybody else seems to be buying each other. Eight analysts cover the names. Their average target price is 68. 07. Next up sprouts farmers market. Initiated by. Capital markets target there. 46. Now, the stock is only up 4 a year on competition concerns. Be and t analyst says new competition that is being faced in the core western markets is manageable. This is an interesting call here brian. We always commend analysts for coming out ahead of earnings. Theyre initiating the buy rating ahead of earnings tonight. Well see how that pans out. Next up weretation a look at sam adams. Downgrading to a market perform and an wrout perform. Remember earnings last night. 2015 guidance. A biz mal. The stock that was up 43 since midseptember. Cowans thinks this looks expensive given the bad outlook it gave for 2015. You know they have a fivepond compounded annual growth rate of 37. 6. Thats a darn good number. If that slows down it just seems natural that the valuation is going to have to come down like a beer whose top has been off for an hour. Thank you. The a californiabased data and analytics company, it was begun overweight atsteins. Their target is 40 and melissa, that implies about 40 up side. Yeah. This has been a dog this year though, brian. Its down 14 yeartodate. There is a lot of optimism. On top of the call that you were just mentioning da davidson just put a 49 dollar price target on this stock. This one could be one to watch. Everybody knows about apple. Up nearly 20 so far this year. Theres a whole wide world of tech stocks out there. Not called apple. Can you imagine . Wait until you see how the s p tech sector is done with apple and without it. Plus a handful of tech ceos are still around from the days of nasdaq 5,000. How have they managed to navigate the boom to bust the boom, the bust, and the boom again . Stay with us. I talked to one of the management gurus, investors, and they say the secret to the ceos longevity, theyre innovators and theyre unafraid to reinvent their firms, and, third, theyre unafraid to hire others to help them. Now, given the confidence pegz the average tenure for an s p 500 ceo at 9. 7 years. Its pretty xeerd. Jeff be sfwl os he has created an intbt retail giant and is forcing recreation of all retail. Thinks secret, relentless focus on the Customer Experience and he is not afraid to fail. He also sets profits for longterm projects. Stocks up 459 . Like bezos, starbucks Howard Schultz is obsessed with the Customer Experience. One analyst said that he came into a coffee shop in brooklyn to see what they were offering. He is constantly checking out the competition. Its important. The chain stumbled when he stepped aside in 2000. Returning in wait he closed stores, hired new people and asked for suggestions. He was willing to change the term, and it did. Stock is up over 900 since 2000. Larry ellison is oracles founder and chairman now. He is the first primary strategic thinker. He changed way we think about a product. Oracle bundled things and sold it as a site. Oracle stock up over 17,000 since its ipo. Gains are far more modest. Up only 17 . They help to build and change systems with a series of acquisitions, bringing auto new product and talent. Stock is down though, since investors are giving hem a break. Basically because of rapidly changing pace of the technology in his space. They say really ubd note that he is actually survived and maintained a leadership role at a time when a lot of his rivals that were back there in 2000 theyre no longer in existence. I know. Whats interesting is that John Chambers is one where some people are saying he should step down for some period until the stock has rebounded. More recently in the past 12 months or so. Theres another kind of reinvention. Reflection point. A number of people still think it might be a share of the next where he actually he has been there since 1995. Thank you. Thank you very much. There are many mindblowing stats about Apple Floating around but this 3450i9 be the stat to end all stats. With a market cap of 762 billion, apples value is now approaching surpassing the value of the entire brazilian stock market. Apple already now worth more than the exchanges. The total value of every company on the exchanges of singapore and russia. Our thanks to Tom Mcclellan for pointing this out. Brazil, by the way, the seventh biggest economy in the world. This got us thinking. If everybody is buying apple, all the attention on am, is that leaving a lot of really other Good Companies completely unloved and unbought because all the money is going to apple . Kim forest is here with fortpitt capital group. Im assuming our theory makes some sense. Do you think there are Good Companies that are being ignored because everybody just kind of runs into apples stock . I do. I do. I think i think we dont revolve around the sun anymore. Apparently we revolve around apple. Just kidding on that. Thats leak swroex for science people. Anyhow, getting back to i think its good. We have three picks today. Sandisk, and ca and xilinx. Looking at businesses and the technology they use is a great idea. Yeah. Okay, so xilinx. Sandisk we know. Users buy their stuff for flash memory, phones whatever it might be. Talk to us more about xilinx. Thats a name that ironically we used to talk about a lot. Its kind of been off the radar. Why do you like it . Well we like it because it has stumbled recently but it doesnt necessarily mean that the Business Model is broken. The people that they sell their products to they make something called a programmable gatorade chip. Theyre used in mobile networks so base stations things below the antenna of the tower. China mobile stopped buying in bulk for its. I understand that you own ca kim . I do own ca. Fort pitt and our portfolios own and, and i own it as well. It has a huge component of mainframe software. The mainframe has not gone away. Its still an integral part of many businesses. The new ceo is bringing the company in from decades before past. Theyre trying to show people that theyre relevant, and i think they are. I have to can you about sandisk. When actually reported the quarter, it reported a miss on a preannouncement. Im wondering, did fort pitt own sandisk prior to this xshgs whats the next catalyst at this point . First of all, they have a patent problem or a patent fight going on with another company. Not only does the company make stuff that you and i could go out and buy, but their product fwz into lots of enterprise appointment, and solid state disk drives you know drives without parts. They make those. One of their higher margin products is in a patent fight. If that gets resolved this year thats a catalyst. Stlo thats going to take six to nine months you say, until they can sell the product again. Thats a long time, kim. That is a very long time. Were longtime owners. We like to buy low, sell high. This is a low point we feel for sandisk. All right. Kim, it was a real pleasure to have you on the program. Is apple masking other good opportunities segment which doesnt fit on a banner, but thanks very much. A little long. Thank you. All right. Speaking of apple, tonight on fast money eye im be talking with citi analyst jim suva, and he will give us the five reasons why apples stock still has room to run. Five. You had six, i would be impressed. Coming up can a Small Company take on apple . Were going to tell you about a Little Company called pebble which is trying to rock the boat in smart watches. Plus im praut sure you have never seen what three tons 6,000 pounds by the way, of cocaine looks like. There it is. 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Colombian authorities showing off their haul seized from a drug gang. Police say they were destined for panama with the intent of selling it in Central America and mexico. Wondering, the u. S. Street value estimated at more than 90 million. Wow. Wearables supposed to be the next big thing but they havent caught on with Hillary Clinton. Listen to what she told kara swisher at a Silicon Valley conference for women last night. Apple watch or fitbit . Well you can tell im not doing fitbit. And i havent gotten into the apple watch yet. Yeah. Im not in a wearable frame of mind yet. All right. You know i mean three people have given me a fitbit or a jawbone, and i look at it and i think, do i really want something telling me i should do what i know i should do . Okay. So maybe Hillary Clinton isnt big on wearables, but one company tried a novel approach to selling its watch and it may turn out to be the biggest crowd funded project ever and a real threat to the apple watch. Job josh lipton joins us with the nuts and bolts on pebble. If you needed more proof wearables are red hot, take a look at how much money pebble is raising for its latest wearable. The startup launched a campaign on kickstarter for its new start watch called pebble time and its proving to be a big hit. Some 43,000 backers have already contributed more than 9 million, the fastest funded campaign on kickstarter ever. Now, the new start waven is water resistant, features a color display, and up to seven days of battery life. It will retail for 199 bucks, but pebble faces a real challenge, specifically the worlds most valuable company. Apple will ship its watch in april. The Company Reportedly asked its suppliers to make as many as 6 Million Units of its watch during just the first quarter. Still, pebbles ceo told squawk alley he isnt worried, not one bit. Were the most popular smart watch plat norm inform in the world. The direction were taking making a watch that works really well as a watch but is also very smart is the one that consumers actually want. Now, pebble boasts advantages of its own. Its new wearable is platform agnostic meaning it works with iphones and android smartphones. Pebble is taking advantage of a wearable market on track for significant growth. Analysts at idc say the u. S. Wearable market will reach 24 Million Units this year and surge to nearly 40 Million Units in 2019. Brian, back to you. All right, josh lipton thank you very much. Coming up next point counterpoint. Three hot topics three ways for me to win, and we hit on blackberrys rather oldschool efforts to jump back in the game. Plus, we asked you to channel your best Marshawn Lynch and come up with a catch phrase suitable for hats and tshirts. Well read some of your responses coming up. Financial noise financial noise financial noise theres nothing more romantic than a spontaneous moment. So why pause to take a pill . 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For a free 30tablet trial go to cialis. Com 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. Im here so i wont get fined. Marshawn lynch wants to trademark that line im here so i wont get fined, so we asked you which catch phrase i do you want to trademark . Nicole said id trademark too blessed to be stressed. And dont audit me bro. Time for point counsel per point. Counterpoint. Lets get started here. Topic number one. Planning on new funky headquarters that would be a series of canopy like buildings. We dont have any images yet but here is some of the work being done by big Architectural Firm working with the heather wick studios. What do you think . Cool, not cool . Whatever it comes out to be google has work to do in the town. Theyre onefourth of the population. Frask traffic in Mountain View is awful. Why dont you give back a little more to the community because you have cops and teachers living 100 miles away. Topic two, blackberry saying youre my boy, blue. The blackberry classic is coming out to verizon. A smart appeal to longtime users . I think its a smart but i think it will be a weak attempt to capture the glory days. I get not wanting to be hacked and going there for the security. But they dont have the photos, the camera, the ability to can tour video that people love these days. They dont carry cameras around. They just want to carry their smartphone away. I know but battery life is a big key, i have to say. It could be a winner because some this thing is not too bad though. Some people are getting sick and tired of smartphones. Finally here topic number three, American Express raising Interest Rates on more than 1 million customers. The rate will climb 2. 5 Percentage Points to nearly 13 . Got to do something. Its the worst performing dow stock in the index. And it just got booted from costco. That exclusive agreement is gone so i guess it has to make up the difference somehow. We didnt really argue once again, melissa. I know. Thats frightening. Whats on fast money . We are going to talk as we march to nasdaq 5,000, apple was a big part of that run. So weve got an analyst, a citi analyst, who says there are five reasons, including the auto why apple could go higher even as apple sees more than 2 losses in todays session. Looks like another big show melissa. Thank you. See you tomorrow and well see melissa tonight on fast money. Check out powerlunch. Cnbc. Com. The closing bell begins right now. And welcome to the closing bell. Im kelly evans and thats Bill Griffeth taking a picture with his blackberry. You can take wonderful photos with a blackberry. It has a terrific camera. It wasnt always that way. I use it all the time. Love my blackberry. Lets get to business for closing bell this day. Stocks giving back some gains we saw as we entered the final hour of trading. The dow still positive just by a couple points. Still trying any positive close we know will be a new alltime high. Not so for the s p right now. Any positive close will be a new alltime high but its down