Transcripts For CNBC Power Lunch 20150317

Elimination of a single word. Patience. Will the fed lose its patience . Will it stay in the statement . Will it be gone for good . What will it mean . Will it mean another taper tantrum in the markets. Also high on the agenda this morning, everything else. Look at the tenyear note theres the yield at 2. 05. Gold down just a little bit. West texas up just a little bit. And the euro lower. It just takes 1. 06 now to buy a euro. Mandys out. And as i mentioned, sarah joins us from the nyse. As you mentioned, all ten s p sectors are actually red today. Materials, consumer staples, and energy getting hit among the hardest. Bob pisani down here ahead of the fed release tomorrow. Lets talk about those Energy Stocks that made a turnaround. Its very hard to put together two up days. I want to show you the s p 500, where were coming off of the bottoms, but not by too much. Were still in the red. And as sarah mentioned, its energy that you want to watch. Now, this happened yesterday and its happening again today. Energy stocks started down as we hit new lows on oil and have been turning around midday. I want to show you Something Like anadarko petroleum. Im picking one stock of many that we could potentially pick. But thats what happened yesterday and its starting to happen today. Some names like anadarko lets put up some energy names that have been negative all morning, have just now turned into positive troy. Transocean was positive five minutes ago. You can see either side of positive or negative. After making lower lows intraday, yesterday and today, oil is rising and its bringing oil stocks back with them. Home builders just an awful report this morning on the housing front. Starts well below expectations. I mean they missed the numbers by like 15 . That rarely happens, but still, i think, very modest declines sarah, in the Home Builders given those disappointing numbers. A lot of people are hoping that the permits numbers were pretty good and well have a nice spring rebound next month. Transports, outperforming today for a very simple reason. American airlines going into the s p 500. Jetblues is in the transports. Southwest in the transports. Thats lifting a little bit above overall expectations. As for the trading right now, theres no signs that the market is particularly worried about whats going to happen on wednesday. Its the bonds im watching and yields there still remaining pretty muted. Lower yields and weaker dollar. Over the dom chu for a market flash. Land and buildings making Investor Presentation advocating for the conversion of the company to a Real Estate Investment trust or a reit. It says that mgm could unlock substantial value by doing so and it wants to nominate four members for the mgm board. Land and buildings currently owns a less than 1 stake in mgm. In a programming note land and buildings founder and coo Jonathan Litt will be joining us to talk about his proposal. Tune in today at 5 00 p. M. Eastern. Thank you, dom. Honing in on the Utilities Sector may have led mondays rally and been outperforming today, but the group is among the biggest losers so far this year. Investors anticipating the Federal Reserve to hike Interest Rates for the first time in almost a decade this year. What does it mean for utilities and other highdividend paying stocks. Lets bring in david berkstein, utility analyst with hilliard lions, Travis Miller director of utilities Equities Research with morningstar. David, why do i need to own utilities, if at all, in an environment where the Federal Reserve is set to raise Interest Rates for the First Time Since 2006 . Sure because they still offer attractive yields regular earnings, and Dividend Growth. Let me give you an example of how they fair in terms of Historical Perspective on Interest Rates. Between mid2004 and mid2006 the fed raised the rates 16 times from 1 to 5 and yet over that twoyear period the electricity actually outperformed this in the 500, and by a fairly wide margin. In other words, just because you get an era of rising rates doesnt mean the utilities underperform. Travis, i guess the question is arent they expensive after that tremendous runup they had last year, i think up 24 . Yeah you know i have to agree with david here. The absolutely returns and heres a difference in the sector. Absolute versus relative. Absolutely returns are still strong. Absolute returns will stay in that 8 to 9 most likely regardless of when Interest Rates do over the next two to three years. If you look at utilities investors who are buy and hold type of investors, you still have good yields out there relative to the treasuries and still have good Balance Sheets good Dividend Growth out there, and absolute returns look really good. David, its almost been like the group moves in tandem whatevers happening with Interest Rates like when we see yields lower today in the treasury markets, but give us a few names where you can expect those yields to actually start rising. I think in terms of names we like, ppl corporation, its a regulated utility based in pennsylvania. It has a 4. 6 dividend yield. Thats an above industry average. The industry average right now is 4. 69 . The stock trades at a discount. Next year the largest utility in florida looking for above average Earnings Growth there from 5 to 7 , which ought to support Dividend Growth of 6 going forward. Travis do you have any names, and particularly ones that might see Earnings Growth with the valuation that some of these utilities have. Sure yeah. We saw february the big drop there in utilities make some of these regulated names pretty attractive now. So you look at regulateds comes down into the 15 times p. E. When you look at the group and what its been trading at over the last year its 16 plus times p e. They want these long time southern, very well regulated and very well regarded Dividend Growth and, you know, this is a name thats come down substantially from where it usually trades at a premium. And now trading at a discount to the group. So you look at 4 plus Dividend Growth. And your absolute returns look pretty good on that name. All right. Thanks for the tips gentleman. David and travis good to see you both. Yes, tyler, utilities can still be sexy in a world of rising rates. Oh, yes, they can yes, they can to the American Housing market now. Bob pisani mentioned that housing stocks taking a hit on the latest data. Builders pulling back in a big way on new Home Construction. Is it a temporary blip weather related, or a worrying sign for housing . Diane olick is now in washington for us. Di . Well, ty look everyones blaming the february weather for this really rough report. And its definitely a part of it but certainly not the whole story. Take a look, if you will. Total Housing Starts fell 17 month to month. 3. 3 from a year ago, but i want to look at just Single Family not the apartment construction because thats where we have such a tight supply problem. Single family starts fell 15 for the month and are up a little less than 1 for the year. Were running at barely twothirds the normal historical pace with huge pentup demand for Single Family housing. Now, yes, starts fell the most in the northeast and the midwest, where weather did play a part. But these regions always account for the fewest starts. Even in june there are just one quarter of starts. And in winter there are about 10 . And thats why Building Permits are a much better read on the market. Look at Building Permits. Theyre not great either. Single family down 6 for the month and up less than 3 from a year ago and a year ago was pretty bad. This is nowhere close to what is needed to meet that demand. Now, Builder Sentiment fell again in march, the Third Straight month, as builders are just not seeing enough foot traffic and are still facing land and labor issues. Sarah . Some worrisome signs from the Housing Market diana olick. Thanks for running through that. Greece continues to be a big question mark for europes economy, but when it comes to the u. S. Economy, does greece really mart . Some surprising results o ss of our exclusive cnbc fed survey. Plus death cross. Three stocks in the s p 500 that are showing a vicious, bearish pattern in the charts. Are they in your portfolio . Find out next. The eclass has 11 intelligent driverassist systems. It recognizes pedestrians and alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2015 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back to power lunch. Matrix rejecting a bid from simon property. They say the offer substantially undervalues the company. Both stocks in the red. Macerich down more than 3 . Stifel nicolaus updating alibaba from buy to hold citing improvements to the Retailers Online platform. And shares of conocophillips are slipping. The energy giant announcing a threeyear plan to cut Capital Spending by about 5 billion. Shares of conocophillips down about 0. 5 . Dominick chuy now for a market flash. Weight watchers is still falling after it was downgraded to an underperform rating from a neutral at Credit Suisse which cites the weight loss firms earnings outlook as well as its current valuation. But were only down by about 3 . Weve been climbing steadily throughout the course of todays session. Dominick, thank you very much. Greece continues to be a trouble spot for europe and global investors. But when it comes to the United States economists does greece even matter now . Steve liesman joins us with the exclusive reports of a cnbc fed survey. And i think we find in the survey is how policy has bought a little stability and maybe a little term. Who are we serving . 38 economists, Fund Managers guys on the street, friends of mine. I want to show you the concern about greece right now. A big number here. Whats the probability of greece or a different country leaving the eurozone in the next three years . 41 for greece. Compared with some of the other countries, 13 for portugal 12 for spain, 9 for italy. I guess these are sort of elevated, but not in contrast to greece. So then how much concern is there about europe instability spreading and creating risk. You can see its come steadily down. I can only surmise, this comes in the wake of a massive quan Quantitative Easing Program from the European Central bank. Perhaps thats why, on a 1 to 10 scale, its only 4. 7 on the richter scale. And the biggest threats to the u. S. Economy, what we find is that first, Global Economic weakness, thats 28 , thats the number one, slow wage growth in the u. S. 17 , number 2, followed by a perennial favorite of this group, tax and regulatory policies often in the number one slot not now. And we ask about the european recession and the financial crisis. Thats only 6 equal to the concern about deflation. Hes some of the commentary we got from our panel. David kotok at cumberland advisers say, europes negative Interest Rates are an awesome and powerful force. Market agents underestimate how much they encourage rising asset prices. But subodh kumar says raw geopolitics like the middle east, russia ukraine, or even in asia and economic politics like greece argentina and venezuela appear underestimated. And hank smith says forget about ecb policy. Your pooern Economic Growth will be subpanch until they address fiscal concerns. And finish by asking the question, whats the chance of that happening. Michelle have you met my friend, steve . I have. What say you, chief international correspondent, about what steves panel observes about europe and greece particularly . Is it an economy, and i cant remember, they say, the size of the state of maryland or Something Like that. Fairly meaningless in the scale of things. Im not surprised by the outcome. Just today, Morgan Stanley put out a note saying they think theres a 25 chance of a greek exit. They can a staycation is possible. They can put on currency controls for a while. That doesnt mean they leave necessarily. Cypress was under currency controls for a long time. Folks, were talking with quotations around exactly. So not surprised. Whether or not it would be meaningful, theres two things to think about. One, in the old days many many european banks held a lot of greek sovereign debt. They dont anymore. So that ability to really crush the Banking System has been eliminated. So thats really important. Second, the other thing you hear is, oh if greece leaves everybody is going to price in the departure of portugal ireland, you know, italy, et cetera. How would you price that in . You would start selling their bonds, right . But whos out there buying all those bonds right now . The ecb. So agree if the ecb bought absolutely. Some time and stability or lack of contagion from this issue . Absolutely. Compare greeces twoyear yield to the rest of europe. What does that tell you . The reason its spiking all this week its two decimal points to the right of what the other guys are. Theyre 20 the other guys are 0. 2. Exactly. Its really really startling. Theyve got roughly 2 billion worth of payments on friday and its unclear whether theyll be able to meet them. Once again, one of these greek moments a zero coupon greek bond. That sounds like one i would like to own. Probably some stuff i probably have owned. You can read all about this the cnbc fed survey on cnbc. Com. You thought maybe you could do that. And that i would say that. Steve good to be with you. Sarah, down to you. S p selling off today, those we are off the worst levels of the session. Nasdaq just turned positive. There are a number of stocks in the s p that are getting off some pretty bearish signals right now. Dominic chu here to name some names for us. The death cross. Chart watchers look at this and say, maybe its a sign of bearish things to come. We have a load of names to go through. After the break, with well tell you about three of them that youll want to watch out for. Maybe theres more downside ahead. Keep it right here. Ent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. 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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 [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. All right. The dow and the s p are in the red for the day, but the nasdaq just turned positive. Stocks unable to post two days in a row of gains this month and a number of stocks in the s p 500 are showing some very bearish sins. Our bear hunter dom chu tracking them. We are tracking bears. Because about half the stock in the s p 500 now are trading at some negative momentum levels. Theyre below their 50day moving averages. Shortterm momentum. So chart watchers like to look for some of these signs as maybe an indication of future trends going forward. One of the things theyre looking at is called the death cross. Its when the shortterm batting average for a market or a stock goes below the longterm batting average. Its a sign of the shift of momentum. There are about 20 stocks in the s p right now that are showing those science. We picked out three of them because they are more wellknown names and they are showing signs of possible momentum going forward. Johnson and johnson, the drug and consumer giant, is one of them. Its been a steady performer, but in the last few months weve seen this trend to the downside, you can see here and that orange line has drifted below the green line. The orange line is the 50day moving average. And the green line is the 200day moving average. Basically, one of them the orange line is an indicator of shorter term momentum and the green one is an indicator of longer term momentum. So, when this so when the 50day moving average goes below the 200day moving average it indicates that perhaps theres a shift in sentiment, a shift in momentum. It could be going towards the downside now. Thats why Johnson Johnson shares are ones that some traders are focusing on. Maybe more downside ahead. Another one were watching is another large cap stock thats very well known, but one we want to focus on because its showing signs is of that as well. Take a look at that particular one, alcoa. This is a stock thats been on fire, ever since getting kicked out of the dow, its doubled in value. And now you can see over the course of last month or so showing some signs again of a little distress. Nothing to be panicked about yet, but weve seen this death cross form here as well. Maybe thats a side of more downside to come. The orange is my 50day the green is your 200. And youre seeing the orange go below the green one. That indicates sentiment may have changed. And microsoft, the tech giant, its been the talk of a lot of tech investor conversations right now, maybe a value stock. You can see where and why. When you look at the stock price chart, you can see a sharp falloff there that is really whats pulling that 50day moving average down. And you saw it on alcoa. Those shortterm averages are much more volatile. We have a lot more of those things on cnbc. Com pro. Check that out on the website. Sarah, over the you. Thanks very much, guys. Oil prices are closing. Under pressure ahead of the fed. Bertha coombs checking the action for us at the nymex. We hit a new fourmonth low on gold here, ahead of the fed. Nervousness about what janet yellin and co are going to say in that statement. But interesting, weve watched today the dollar actually turn positive. The dollar index a little bit. The euro is a little bit stronger. Thats usually positive for gold, but hasnt seemed to really helped out in the metals. A bit of a reversal tuesday. They gave up the gains from yesterday. But whats interesting is, we are seeing a reversal when it comes to light sweet crude. Nymex crude has moved right on up with the dollar here today. It is options expirations, so we are seeing volatility quite a bit when it comes to that oil price quite a bit. Back to you. Thank you, bertha for the gold closing. Lets get a check on the bond market, as the fed kicks off this twoday meeting. Rick santelli is getting ready for chairman yellin in chicago. Hi, rick. Were all getting ready. If you look at a twoday chart of tens theyre getting ready to small range, there is a drift lower. I dont care how good permits were. You cant put enough lipstick on that particular number. Lets open it up to march 5th. Why . Unemployment date was the 6th. It seems the jobs part of this equation is doing well. Maybe its how much wages is generated by the jobs, it isnt. We continue to get a drift lower postjobs report. It always seems to be the extreme of the month. Lets open the euro for a longterm view all the way back to the beginning of 03. Pretty much a lot of downside, except for today and yesterday, as bertha was talking about, twoday chart of the euro the euro is starting to drift back towards unchanged after a strong opening. Whats different today . Fed meeting. Handicapping Central Bank Activity is the new traders love and believe me if janet yellen sticks or removes patience, watch the euro downside over the next several days. Tyler, back to you. Rick thank you very much. We are having a look at tesla shares right now. The ceo elon nuskmusk gearing up to speak any moment now about the future of the auto industry. And there you see the stock basically flat at this hour 195. 67. Will he say anything about teslas future . We have all the headlines as they cross. Plus hes only played for one season in the nfl, but a young star already calling it quits out of fear of developing a brain injury. Could his decision become the nfls next headache . If youre running a business legalzoom has your back. Over the last 10 years weve helped one million Business Owners get started. Visit legalzoom today for the legal help you need to start and run your business. Legalzoom. Legal help is here. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Hi everyone. Im sue herrera. And here is your cnbc news update for this hour. The president is weighing in on the latest gop Budget Proposal appearing today with the irish prime minister, mr. Obama said that he was hoping for a little irish luck but that the 3. 8 trillion plan is not, in his opinion, a budget for the middle class. But he is keeping a clover in his pocket in case gop leaders want to talk. Swiss drug maker novartis has been hit with a 110 million class act lawsuit. The lawsuit claims that the company denied female employees equal pay and promotion opportunities. In 2010 a u. S. Jury ordered novartis to pay 250 million in a gender discrimination suit. Lufthansa has already canceled at least 750 flights tomorrow due to a planned strike by pilots. The airline says more than 80,000 passengers are affected. Early retirement is at the heart of the labor dispute. And everybodys a little irish on st. Patricks day, right . Well the white house paid tribute by dyeing the fountain on the south lawn green. The obamas started the tradition in 2009 an homage to their hometown of chicago, and they dye their river green for the holiday every year. Youre up to date. Back to power lunch. Sara . That green river in chicago is something. Thanks, sue. In honor of st. Patricks day here and the floor of the new york stock exchange, we have bagpipers getting ready to take to the floor and play their annual tradition. Well bring it to you, of course, live. But in the meantime lets get into todays trading action. We have kenny polcari, a cnbc contributor, and our own contributor, bob pisani on the markets. Just mentioned that the nasdaq is positive and small caps are outperforming. Does that tell you anything kenny . I think it reiterates the fact that people are concerned about the strength of the dollar and the multinationals, theyre going to flock to some of these names and be less impacted by the strength of that dollar. And this has been happening all month, really. The russell has been outperforming the small caps and it does make a little bit of sense. I think the important thing today, what weve been seeing with oil, because once again the Energy Stocks are starting to turn around. West texas went positive briefly and the xle, the oil etf, is almost on the verge of going positive here. Very quickly, i hear the bagpipers warming up. Well get to it in a moment within, but we are seeing another day and another triple digit move in the dow. Its really about the anxiety thats being created result of the fed and oil and dollar. If you look at it on march 9th trading at 20. 74 on the s p. So in reality, over a week we havent gone anywhere, yet, weve had these massive moves in the market, massive volatility. And there we see the bag pipes this is a floor broker right, thats playing the bagpipes. They do this every year. A wonderful little tradition for them. They come in this is actually in the area right in between the current building were in and the garage. And again, all these people that come in are member of the floor. Yep. Hes done it for a lot of years. And you know hes one of us down here right . Hes one of the members of the community. Yep. Lets just listen for a moment. He always comes back in into the immediate area. No green today in the market. One thing i want to point out, what happens on the fed day. We have asked our partners what happens on the fed day, since 2010 38 days 38 times, the fed has met. And interestingly, the s p has only been up about 0. 6 has only been up 60 of the time and that was 0. 3 . The real good trait has been the financials. Thats whats done very well. Thats been up twothirds of the time. Hoping for higher Interest Rates. Were out of time. Thanks for being down here with me with the bagpipers. For now, back to you, tyler. Very enjoyable sounds there. One of the most fascinating people in World Business tesla ceo, elon musk delivering a keynote address at a Technology Conference today in san jose. Phil lebeau is monitoring the event for us. Hi phil. Tyler, were expecting elon musk to take the stage in san jose any minute now. And when you does hell be talking about Artificial Intelligence, something hes been talking about at length over the last couple of months and the future of automobiles. We do not expect him to make any news at this conference. That said, this week will be filled with a lot of news from elon musk and from tesla. Specifically, it will be coming on thursday morning. Thats when he will be making an announcement regarding what he says will be a move by tesla to end range anxiety. This will involve a Software Update that will be done over the air from tesla. Battery Energy Description is the speculation from a lot of people, that thats what the focus is going to be in terms of ending range anxiety for models vehicles. And the press conference scheduled for thursday morning. For elon musk a lot of people are wondering, what exactly is he talking about when it comes to ending rang anxiety . Does that mean hes trying to make it easier for people to get a sense of where the next charging station is or is it about actually extending how far a models can go on one full charge. Take a look at shares of tesla, yeartodate which theyre kind of under pressure relative to where they were a year ago, but as you take a look at shares of tesla, keep in mind that this is a stock that is very volatile guys and we saw a move earlier this week in fact yesterday, it moved higher and again, when elon musk staketakes the stage in san jose well let you know wherever he has to say with regards to tesla and Artificial Intelligence and vehicles. Guys, back to you. Dominic chu now for a quick market flash. So tyler, speaking about this volatility, Airline Stocks are gaining ground after oil prices traded near their sixyear lows earlier today. But we should point out, oil has actually moved just a bit of green side so far this afternoon. American airlines regardless up about 6 on news its going to be added to the s p 500 index after the close of trading on march 20th replacing allergan, which is being acquired by activists. So American Airlines jetblue, a host of the Airline Stocks all in the green despite the fact that oil right now is very narrowly in the green, sara. Back over to you. Weve seen the reaction in Energy Stocks coming into the green first. Meantime checking the broader markets. Stocks off the lows of the day. How do you play this market volatility . Its been crazy over the last few sessions. Weve still got the bagpipers going on behind me. But joining us to discuss these markets, christian amani, and michael cojano portfolio management. Good of you to join us. What i like about you both youve got a nice longterm view. So krishna, do you care if the Federal Reserve keeps or leaves the words patient in its statement tomorrow . What does that mean if youre a longterm thinker here on these markets . I think for the shortterm it matters. But for the longterm, it really doesnt. Our view is that rates are going to remain low for a long time. And the fed may tighten policy but the impact of that for long rates, is probably going to be minimal, because there are all sorts of deflationary pressures coming from other parts of the world. Is that why you still like utilities . It says here in the notes, youre not ready to sell them yet. You know, its very tough to like utilities, but i think everyone is looking for utilities to correct. But, remember, utilities are the closest thing to a good bond in the stock market. So if rates are going to remain low, its difficult to see how utilities correct in a big way. Michael, if we do see the Federal Reserve drop the word patience, and that does lay the groundwork for a world where were going to see higher Interest Rates eventually maybe later this year what does that mean for your portfolio . Do you have to switch around your Industry Groups and your allocations right now. Not necessarily, because in our view on the stock market anyway we tend to focus on more growthoriented stocks more levered Economic Activity et cetera. So you know, if the economy is truly strengthening and as a result, the fed has to raise rates to some level, we dont think theyre going to be able to raise them much regardless. And i think once the market gets comfortable with that some of the volatility will calm down. But be that as it may, we would tend to go more towards those growthoriented names, levered to growth, versus the more defensive names like utilities. Lets expand it beyond the stock market christian. You like munis and highyield u. S. Credit. Talk about those. Sure. If you look at munis, the highyield munis, specifically, is quite high. And if you have a high tax bracket, the tax equivalent yield or income you can get out of munis is probably higher than any other part of the u. S. Fixed income market. So we like highyield munis a lot. And similarly, in the current environment, where debt growth rate is relatively modest Corporate Credit quality is quite good with we continue the like senior loans. Somehow they have gotten a bad name in the market place, but we think they offer tremendous value for their credit quality. Michael what are you doing to your clients . If we really are on the brink of a major change in Interest Rates. Yeah, i think, you know in our mixed asset product, as well as our bond products were basically going towards Higher Quality, stronger Balance Sheets, et cetera, and probably lower to mid, lower to short to medium durations, on the theory there could be while the fed may be predictable, market Interest Rates are not. So we want to make sure were earning something on that money, but not taking undo risk on the theory that higher levered types of debt instruments are probably going to get hit with the volatility much more than say for Higher Quality instruments in the shortterm in this environment. So on the issue of utilities on municipalal alities municipalities, i would say the big concern would be credit quality Balance Sheet issues if youre not able to get your principle back. Thank you very much gentleman. Going across assets there on this small utility in the markets, with the dow down 118 right now, krishna, good to see you and michael as well. Go to powerlunch. Cnbc. Com right now to see krishnas energy play. Thats power lunchpowerlunch. Cnbc. Com. Youll get both of those guys recommendations when it comes to stocks, bonds, and currencies. An emerging nfl star quits at age 24 over fears of developing a brain injury. Could his decision to leave the sport he loves become the nfls next big headache . That story, straight ahead on power lunch. E financial noise financial noise financial noise financial noise welcome back to power lunch. Another stock in the green under armour entering a deal with san paulo. They have won Six National Titles and 12 international ones. Shares of under armour up almost 2 on the day, sara. Back over to you. Nike earnings later this weak. Thank you, dom. Shadow banking, turns out is making a comeback after getting hammered during the financial crisis and Goldman Sachs is getting in on it. Our Mary Thompson has the details live from cnbc headquarters. Mary . Hey sara. Goldman taking a small step into an area pretty much offlimits for regulated banks, because to participate, they have to set aside a lot of capital. Goldman is getting around this with a Business Development company or bdc. Created in the 1980s, bdcs provide loans to unrated or lowrated middle market firms that cant access the public debt markets. Goldmans bdc between 20 and 21 million. It will trade under the ticker gsbd. Goldman sachs declined comment, but attorney david says banks are watching this ipo. If successful it might have other banks set up bdc to loan money to risky clients. Goldman invested in the bdc and will maintain about a 20 stake. Because they function like mutual funds, banks dont need to set aside capital to cover these holdings. The upside for goldman and its clients, the high yields generated by the bdc which will distributor about 20 of its income. As the manager of the bdc, goldman will also be collecting fees. For goldman, its a small investment so the main risk is going to be reputational, not financial. She says the bdc may underperform as the group is generating lower yields than they had been recently on what she considers to be poor underlying assets. Wall street will be watching. Tyler, back to you. Mary thanks very much. You may want to stick with us. Now to a disturbing trend that is emerging in the National Football league, players retiring early and many of them blaming injuries and the risk of concussions. Heres a look at some of the players who recently announced their retirements. Not all because of concussions, but all are under the age of 30 with the exception of patrick willis, and he is just barely 30. A fivetime allprolinebacker. So just how big of a problem is this for the National Football league . Here with me John Najarian fast money contributor formerly played with the chicago bears. Jack brewer former nfl team captain, ceo, and founder of the brewer group. Jack, always great to have you back. Where do we stand on this now one of the youngest players in the league who did very well second in the league i believe, in tackles last year getting out over the fear of head injury. Is this getting worse, not better . The league says its Getting Better. I think player safety overall is Getting Better if you look across the board, but this is an epidemic. So you will continue to see players at a young age retiring early. This happens to be brain awareness month, tyler, and if you were paying attention a couple of weeks ago, you saw that players are starting to donate their brains to research. Its a trend thats happening and i think youll continue to see it over time. Steve weatherford of the giants, the punter said he would do that just earlier a couple of weeks ago. Lets take a look at the statement from the National Football league. Football has never been safer and we continue to make progress with rule changes, safer tackling techniques at all levels of football, better equipment, protocols, and medical care for players. And it goes on to explain whats going on. John, i asked you offcamera i dont know how old your children are. Would you let them play . I would, but i would be really careful about the program they were involved in tyler. So, both of my kids are girls, young women. So its probably not going to be an option for them do you worry about them playing soccer i do. Soccer has a lot of concussions. Anything where youve got repetitive head injuries. Jack, im sure can talk about it as well. But thats one of the big issues here. Football, when the head becomes a weapon because of the helmet itself, and because the lightweight nature of what these guys are running around in. When i was playing, you know, the equipment was probably five to seven pounds heavier than it is now. Now, it is as the nfl said much safer. However, i dont know if its the safest it ever has been because some of your comments, for instance about some of the older players who believe that without the face masks, you werent seeing people propel themselves into another player head first. A lot of head tackling. John and i, jack were talking offline, through a connection, i had a conversation once with frank gifford, nfl hall of famer, and he said back in the day, when they did not have face masks, players did not lead with their heads, either on offense or on defense. Would that actually perversely help . I think so. Its to different than changing the rules on how you tackle and not being able to, you know take headtohead contact. The bottom line is to me its about that education. If you look across the board, the National Football league now tracks more concussions than when i played and when john played. If youve got a concussion, when i played that meant you were knocked completely out. Thats what we thought. Now weve been educated. When you see players take big shots, you have that moment but you have concern. When i played, you would have laughters and high fives when guys got knocked out. I think now we are having more concussions because we are actually tracking them. We have to leave it there. We appreciate it. An ongoing discussion i am sure. Gentleman, appreciate it. Sara, down to you. All right, tyler, heres a question. Ever wondered what we can learn from penguins . Turns out a lot when it comes to walking. According to a Research Team that is putting the waddle to the test. Weve got all the best stories for you on power lunch. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. If you are looking for the ultimate trophy gift that doubles as a longterm investment how about this 100 carat diamond . Could certainly fit the bill, because this knockout gem could sell for 35 million or roughly 200,000 a carat. Thats going on sale on the Auction Block next month at sothebys. Its also one of only six diamonds of this size and flawless quality to ever be auctioned off. The last one of this caliber actually sold for 30 million or just about the price of some luxury condos in manhattan. Not too shabby. If you missed any of the big stories in the past hour log on to power lunch. Cnbc. Com for more details on that 100 carat diamond. And that terrific story about a body double for nfl player Russell Wilson of the seattle seahawks. You can check all of that out at powerlunch. Cnbc. Com. I dont know, tyler. Do you wear that as a ring . On a necklace . I guess you wear it as a ring, but you would have to dust it all the time. Thats the problem. I dont want to dust it. Here are this hours power points. Lets start with Single Family Housing Starts off 15 for the month. Theyre up just about 1 for the year, which many believe is nowhere near enough to meet demand for housing. Respondents of cnbcs fed surveys, basically the guys that liesman hangs out, say theres a 40 chance that greece will leave the eurozone in the next three years. And Goldman Sachs pricing an ipo for its Business Development corporation, which will trade under the symbol gsbd. In less than 24 hours from now, the fed will announce what some are calling its most important policy decision in years. Will they lose their patience . What will they do . Well talk more about that. Never before has this kind of passion this kind of innovation, engineering, design and performance. Been available. 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Plus are socalled activist investors really good for the markets and your money or just out for themselves. And a fivestar fund manager tells you what he is buying and selling ahead of the fed. And i believe theres something about a fed meeting tomorrow. Yes. Ive heard of this. Ive heard something about it and we are going to have it tomorrow i am sure because the fed reserve chair janet yellin will deliver the statements on Interest Rates and theres one word everybodys watching for and thats patience. Thats what i try to bring to the table every night with my 9yearold. Will they keep that in the statement or take it out . Lets bring in Steven Stanley of securities and Robert Brusco of fact and opinion economics. Lets have your facts and opinions, robert. What do you think the fed will do . What do you think they should do . I think theyre ready to take the language out. I think it probably was ill advised of them to adopt it. And i think that they want to probably have the ability now. I think the Economic Data make it more difficult a decision right now, because theyve gotten soft. And so i do think if the fed pulls the language out, the markets arent going to react well to it. But i think thats what theyre going to do. Because it means what . The removal of that word suggests . It Means Nothing right now, but what it means is youre not going to have a twomeeting notice for the fed to raise rates. So youll be at risk to a rate hike at any fed meeting. Steven your word your thoughts . The same. I think theyll take patient out. I think they want to take it out because they want flexibility. As it stands theyre basically telling you theyre not going to move for three months, as long as patient is in the statement. Were getting close enough at this point this they want to have the flexibility to actually address the data and perhaps make a decision as every meeting, beginning in june. So if they take that word out and it basically says to the market, and to investors like you and me you are on notice we are getting ready for liftoff here, when liftoff comes, steven what do you think the trajectory and pace will be . I think thats a huge question for the markets. I think the fed ends up moving in june. I think the inflation data are going to start to firm up as we move through the year. And then it will depend on the data. I mean i think personally i think the fed is has been slow to act and is a little behind the curve, and as a result, they may end up moving a little faster than awhat the markets have priced in. I know youve thought that way for a long time but with regard to this latest data there are massive swings in the markets right now. Do you think any of it has to do with the fact like the equity market, like the currency market, is sniffing out something wrong with the u. S. Economy. The latest batch of Economic Data has been sort of mediocre at best. Well i think, you know, we have to be real careful, because i think the february data has certainly been impacted by the weather and some of the data may also have been impacted by the situation at the west coast ports, which should be unwinding now. So you know, im really anxiously looking forward to the march data because that will give us some insight into whether this february data has been distorted, or whether, like you suggest, perhaps something, you know, not so great is afoot. Bob, last word to you. What will the fed funds rate be one year from now . I think the fed funds rate one year from now is going to be either unchanged or only slightly higher. I dont think the feds are so much on the verge of raising rates right now. I dont think the data will accommodate it. This speculation situation has the fed moving their target persistently. Let me make sure im understanding you with the seconds weve got left bob. You think they will take the word patient out, but basically do nothing. I disagree on the inflation outlook. I think inflation is still under pleasure. I think that oil prices have fallen. Another leg down on oil prices. I think the fed keeps missing its inflation target it wont have the ability to raise rates. Its a staycation. Sara great to be with you. Thats the first hour of power. Lets go over to brian to bring it across the finish line. Tyler, thank you both very much. It is 2 00 here at cnbc hq 1 00 in chicago, where their river is a sea of green, but it is a sea of red on wall street. Stocks taking a hit. Look at this my computer monitor here. In fact, youll be looking at what im looking at now. We have this capability incredibly dangerous for me personally, but ive decided what the hell, lets go ahead and do this. These are the financial stocks right now, they are also in focus. As you can see, most of them are down. The worst performing financial is lucadia international. Berkshire hathaway all lower. Not everybodys down. Mcgraw hill and Charles Schwab are your top three best financial stocks. Whats interesting, melissa, is its odd the financials are down, because many of them especially if youre lending out stock, for example, should like higher rates in many ways. Absolutely. And if you take a look at banks and break them down brian, its the Money Center Banks that are faring a little bit better. Richard handler, the ceo of jeffries saying that q1 was a bit tepid because of lighter than expected fixed income commodities and currency trading, as well as fewer leverage finance issues. So we are seeing the impact mostly on the banks that have most exposure to that. Take a look at a Goldman Sachs as well as a Morgan Stanley and thats where were seeing most of the weakness today within the financials. Tomorrow is the big day for the fed and maybe the biggest market day of the year so far. And something everybody wants to know, will the fed remove that word, you heard a billion times today on this network, patience, from its statement. But there are other questions as well. For example, the dollar. Oil, emerging markets. Steve liesman is here with the exclusive results from our cnbc fed survey. Steve . Brian, thanks very much. What we did was go through an exercise that im pretty sure the Federal Reserve is going through right now. What is the impact of oil and the dollar on growth and on inflation. Lets take a look what our 38 respondents said. Economists, Fund Managers and analysts. You can see here that oil cuts both ways. Its a positive for growth almost. 4 of a point, a negative for inflation, shaving about 0. 2 off. The strength of the dollar in the same direction on both. Weaker growth and lower inflation. Put them together about 0. 4 off of headline. You can see that in two ways. Heres the cpi forecast. Horace theres the lows we asked for. Oil, low 40 in this cycle, and the dollar euro at 95 cents. Now i want to show you what the inflation forecast is for this group. You can see, its heading down towards 1 the feds target is 2 and we dont get back up there, according to this panel, until 2016. Show you the growth forecast here now, and what you come across here is they came down and you can see some of that is the impact of the dollar. About 0. 3 of a point shaved off, coming back up to 2. 84 . And what uhyou find the probability of recession, taking a jump. Up to 16. 4 . That number is still low. Weve been as high as 25 or 30 , brian, during the worst times, but a little bit more nervousness about the economy in the months ahead, brian. And i think, steve, the big debate has been, and to the point of sara and tyler in the hour before this weve had some weaker than expected data lately. Everybodys kind of out there thinking, all right, is this the oneoff thing, or are we starting to see a bit of a rollover. Well, i think theres two things happening. I think, first, were having a comedown from stronger growth if the second half. We get a very strong Consumer Spending the number in the fourth quarter. Weve rolled off of that a little bit but i think you have some weather involved there, brian. And i think well talk about that a little bit in another segment. And you know ive also been concerned about the effects of o oil prices as well. Right. And to be clear, because some people have called me out and said, what exactly are you saying . I want to be clear. Texas has been such a microoutsized part of any data if texas slows, it might skew the macrodata that we get to a point where people might get a false read on the economy slowing down. Please tell me that made any sense . I think that makes some sense, and the economists might frame it in a way that is less understandable, is that they would point out that the marginal growth has been coming from places like texas. Now, im going to believe in Richard Fisher the dallas fed president , who insisted up and down over the course of this oil recession, if you want to call it, that the texas economy is more diversified than oil. If thats the case i think the impact will be less than other crashes weve had in the oil marks. I heard your wonderful interview. Thats right. You were in houston. I had a couple of questions of my own. Keep it here. Thats for a different day. You can catch the fed decision live tomorrow, of course, 2 00 eastern time. Thats about four minutes ago, but in 24 hours, that will be followed by fed chairman janet yellins news conference. The questions, the conference those are the big meetings. So let us now bring in diana olick. Because steve and diana, dont make me get between you, because the two of you have been going back and forth on twitter, rather politely, over todays Housing Starts numbers. The Commerce Department said that starts fell 17 last month to their lowest level in a year. Steve, you said its the cold weather is the reason. Diana, you said not so fast. Diana, im going to turn it over to you to make your case first. Okay. Well, i want to focus first on Single Family housing only. Because thats where we really need to identify the problems. Because thats where we have no supply. And Single Family lets remember back to last february, where everybody was blaming everything on the weather, because average temperatures were well below normal and it was a horrible winter. You have Single Family Housing Starts in the northeast down 40 from last year which was a terrible winter down 14 in the midwest, thats got to be something bigger than weather. Then you look to Building Permits, an indicator of future construction. Theyre down 7 . Were talking about the future when it is warmer. Theyre also down 6 in the south, which wasnt hit by terrible weather. So i believe there is a much larger problem going on in Home Construction right now. I can tell you with it is but ill give steve a chance to argue back. I think diana, you misread the weather. Yes, last winter was bad, but this winter may have been worse. Here are some facts from noaa which might be worth looking at before saying dont blame the weather. Number one ten states in the northeast had the second coldest february on record. Im talking on record 120 years. Number two, the 56 plunge in northeast Housing Starts was the most in history. Unless you think theres some depression going on i think you have to blame Something Like the weather. 25 states in the northeast, and yes, diana, the south and the midwest, representing 51 of the population and 78 of Housing Starts had, according to noaa much below average temperatures. I dont think housing is going gang buster diana, but i dont think its plunging at a 17 rate, and i think you could very well blame the weather. You can blame it, i said, for part of it. But you like numbers, your a numbers guys. The northeast and the midwest in february make up less than 10 of all Housing Starts. And maybe the south was lower they fell because of the weather no, when you look historically, even in june im talking in june. I looked back at the numbers. In june they make up barely 20 of Housing Starts in the nation. I went back over six years, diana steve and diana. The three regions together all right 78 do you want to talk about numbers or talk about dont make me send you to your room without dinner i had a nice big lunch it actually worked. Talk to a builder, talk to a buyer. Two quick points to wrap up the segment. Steve, you keep talking about noaa, i dont know what a guy that collects animals about the Housing Market. A lot about weather. He knows a lot about weather. Then why are permits down . Why are the permits down if its all about weather . 23 on the month, diana. On the month guys, guys guys one point here. Wont we just find out if it was the weather next month. Theoretically, if it was the weather in february steve, all those starts will happen next month. So youll see a 40 bounce next month . I think in part youll find out. Im not saying housing is gangbusters. Talk to a builder. Talk to a builder who will tell you one at a time guys. Diana, im going to get louder until it works and i can win in that competition. Diana, heres the question. Yesterday the National Association of Home Builders, we were looking at their numbers came out, and something caught my eye. Theyre talking about labor shortages. Exactly, theyre talking about the price of land because you cant find a worker you cant build a house. Thats what im trying to get out here. When you talk to the builders and the buyers theyre talking about prices being too high and the premium for new homes, builders are saying, art hof knavian said it, were dialing down on the speck homes, becausere concerned act selling these homes. A builder yesterday said, i cant find the dirt to build a cheaper home. I said why dont you build a 200,000 home. He said, i cant find the dirt to do that because he cannot afford. The builders cant do it, so theyre keeping the price points higher and they have smaller demand for that price point. Lets wrap it up guys. Melissa, would you agree theyre both winners . Both winners in our eyes brian. But the market will tell us whos the real winner. Same time next month. A very good discussion guys as always. Got to get to dom chu now for a market flash. Footlocker is raising its longterm financial objective, saying it expects sales to reach 10 billion by the year 2020 with 600 million in sales or 600 in sales per gross square foot. The shoe store also announced its slowly going to commit its lady footlocker business over the next several years, as leases start to expire. Those shares you can see as a result up by 1 . Again, moving up higher in an otherwise down market. Thank you very much, dom chu. Apple plans to launch a tv service, possibly this fall according to the wall street journal. The service could include content from several bigname broadcasters. Canter fitzgerald put out a note saying appletv streaming service is ready to become a reality and apple is paving the way for grander ambitions in the tv market. Appletv stock trading higher on the news. And cable providers are seeing hits pretty much across the board. Edmond lee is managing editor and josh lipton is in san jose. Josh, lets start off with you. Were there many surprises. Given, apple recently cut the price for appletv, we sort of thought something was coming. Yeah, you know melissa, i had the chance actually last week to talk to apples eddie cue, the man in charge of itunes, and i talked to eddie about tv and eddie believes that you are beginning to see what he believes the reinvention of tv. We talked about those big bundles we all pay for, talked about that dramatic shift in how we approach content. The fact we want to watch what we want where we want when we want. Maybe not too much of a surprise that apple sees an opportunity here, particularly if you have this service, stgs one that apple could, of course exponentially capitalize on given all that hardware the appletvs, theyve sold 25 million to date the iphones, and maybe even the ipads. We know thats a device thats been disappointing wall street but could a service like this give that device a boost as well. Whenever apple enters any sort of industry it disrupts the power balance. They did with music. Thats right. Now what happens with the networks . We saw in the past all these disputes over carriage fees and blackouts. Does this change the game for them i dont think it changes the game as much as it did for music. With music, the way they disrupted it they want to sell single tracks and the Music Industry basically relented. They want to do the same with television. Steve jobs says, i want people able to buy one channel or two channels. The business is designed around bundles and they held their ground and this new service will be a bundled service. The programmers are still winning that side of the battle. And apple wont have quite as much leverage. In fact if were talking about leverage, its the programmers, the tv channels basically abc, cbs all the major ones the Cable Networks as well. Theyre trying to get a leg up against the cable teleco satellite guys against which, you know theyre always negotiating for those fee rights. If they can sell through other channels directly online it gives them a bit more leeway. So the cable providers are all trading lower. It seems like they might lose out on two fronts first of all, the fees they can get from these networks who have to pay for them but consumers may be more apt to actually cut the cord this time around. I think were seeing consumers cutting the cord in actuality. The subscription rolls for tv are flat or declining. The cbsess of the world, they see that and say, we have to find ways to grow our market and if i have to go directly to the consumer or an appletv or sony is also working on an inert tv service, its more opportunities for the programmers. Theyre going to take advantage. Great stuff. Our thanks to you, edmond lee swb as well as josh lipton out in san jose. I goose, thank you very much. Let us tell you now about the menu for the rest of this hour of power. Elon musk making key comments about his company. See what hes saying about the future of tesla. Does sothe socalled activist investor help you, the individual investor . Well, were going to dig into that. We have Herb Greenberg and methny mcqueen coming up next. And next all of those ever countryspecific etfs, the european marks are up big, but if youre investing in most of those etfs that track europe well give you an update on your portfolio. A lot more to do. The dow is still down. Were back after this. Do you have something for pain . I have bayer aspirin. Im not having a heart attack, its my back. I mean bayer back body. It works great for pain. Bayer back body provides effective relief for your tough pain. Better . Yeah. Thanks for the tip [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. That is a live look at the port of los angeles, and you can very clearly see that the backup from the labor disruptions that just happened still a problem. Dozens of ships still waiting to move in and unload cargo. This is going to be a long backup folks. The disruptions are not going to be healed anytime soon. But ill tell you this its not bad news for everybody. Two stocks that have benefited from this Expediters International and ch robinson. Yeah, theyre not up today, but theyre up 25 and 46 respectively over the past 12 months. Actually spoke with a guy who works for one of these companies. He said the port strike was great for their business, because companies thatted to find all these different ways to get stuff from point a to point b, especially very time sense stif tough. And according to this guy, they are pretty much willing to pay whatever it took. So good news more expediters and ch robbins. Were also watching shares of tesla moving slightly higher. Right now, take a look at the stock. It is up by 0. 2 of 1 . An interesting reversal as the shares did open lower. Teslas ceo elon musk in silicon valley, talking the future of the hightech cars so lets get to our own phil lebeau with more on that. Phil . Melissa, elon musk just wrapped up a q a session at this tech conference. The subject matter was supposed to be Artificial Intelligence in vehicles and the future of autonomous drive vehicles. Elon musk had a couple of bold predictions, saying that look its much easier than people think to develop autonomous drive vehicles. That technology is coming along very quickly. And when he was asked a about the future 10 or 15 years down the road listen to what he predicts will be the future of the type of vehicles were driving right now. May outlaw driving cars because its too dangerous. You cant have a person driving a twoton death machine. Thats right, he believes that perhaps some day, it will be outlawed that you will not be able to drive a vehicle, that it will have to be an autonomous drive vehicle. And brian, one other comment from him got a fair amount of attention. The fact that he says look tesla is considered the leader in electric vehicles right now. It wants to be the leader in autonomous drive vehicles. Thats where the company is going, including Third Party Firms to try to hack their vehicles in an effort to make sure that they have all the software in place to prevent a systemwide hack. Finally, brian, no comments about thursdays announcement, which is intended to end range anxiety. So if we were hoping to get a clue or two about what hes going to be announcing thursday morning, he didnt get it. Technology so a part of cars now, thinking about racing in the streets by the man, bruce springsteen, ive got a 69 chevy with a 396, lets go back to that. Phil lebeau with thanks very much. Coming up next investors like bill ackman carl icahn, nelson peltz, eliot singer. They sure know how to make money for themselves. But are these socalled activists really lacking out for your best interests . Bethany mcclain Herb Greenberg on just that ahead. Plus Details Behind the coolest picture you will see all day. Wow. Power lunch back after this. You cant predict the market. But at t. Rowe price weve helped guide our clients through good times and bad. Our experienced investment professionals are one reason over 85 of our mutual funds beat their 10year lipper averages. So in a variety of markets we can help you feel confident. Request a prospectus or summary prospectus with Investment Information risks, fees and expenses to read and consider carefully before investing. Call us or your advisor. T. Rowe price. Invest with confidence. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. [ male announcer ] at northrop grumman, weve always been at the forefront of advanced electronics. Providing technology to get more detail. Detect hidden threats. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. Check out this amazing picture of a meteor lighting up the night sky over loch ness in scotland. The man who took this photo isnt a professional photographer. In fact, he says hes a scottish tour guide who was just in the right place at the right time. Brian . All right. Actkman ackman icahn, peltz, singer youre looking at a gallery of activist investors. We call them that on this network. Theres no question they know how to make money for themselves. But are they looking out for your best interests . Lets bring in Bethenny Mcclain vanity fair contributing editor, also Herb Greenberg, Pacific Square research. Bethenny, ill begin with you. I was shocked in this report i read from a law Firm Last Year that there were 237 activist situations around the world in the year 2013. Thats about 230 more than i thought there would be. Is there any evidence that these guys and most of them are dudes, are making money for everybody, or just themselves . I think thats a great question and precisely the right question. I was surprised when i started to ask longterm sharls what they thought and surprisingly the answer was that most of the time, they felt that activists are on the side of leverage investors and are actually working hand in dploef with these guys to maybe make noise in a way that the longterm shareholders arent comfortable doing. But the feedback i got was most of the time, these guys are working in companies and therefore individual investors best longterm interests. But, of course thats not always true. And there is you know, the word activism covers a large range of behavior. Everybody from the kind of yelling fire in a crowded theater to the people you never hear about, who work very quietly behind the scenes and are friendly to management and are really trying to operate in the longterm interests of a company. You know, herb, i guess its hard to go to the data because theres activist investors in situations that are over and there are those that are currently ongoing. So ill just pluck one. Darden, starboard value, comes out. The stocks up 31 now over 12 months. Do you believe that these activists, and the reason i want to do this segment, because i sort of thought to myself why are we calling these guys activists . They used to be called corporate raiders in some cases, did they not . It depends on what the tactics were back in the day . Not all activists are created equally. And if you want to look at a situation that was where they didnt really help the smaller investor, it was adt, when kor vis was in there, these guys get on the board and a special buyout to get off the board when the stock is at a certain level. Thats not the activism you want to see. You want to see the activism that a jeff oven a value act when he gets involved in a name you want to pay attention, because he tends to be fairly quiet. He he takes a big stake. He takes a big stake, gets the attention of the board. But i guess my point, bethenny was why do we believe that somebody that sits on a 21st floor building in manhattan running a hedge fund knows anything about running the kind of business that they might be going after. Well they dont always and i think thats a great point. But sometimes, what they do someone said to me actually and i love this he said if we had competent boards of directors, activism would die. What activists are doing, the best ones are bringing the message to management that an entrenched Management Team sometimes cant hear or isnt willing to hear. And it might be a message about capital allocation, which these guys are qualified to do. It might be a message about on opex opex and ways to trim it. But its funny, the example herb brought up is exactly the one i heard as well. What you dont want are green male type of situations, where youre paying off one shareholder and doing nothing for the longterm health of a company. And if you had boards of directors that were being active and out there doing things and talking to investors and being something other than passive, maybe you wouldnt have activism. A good lesson and hopefully we are the network of ceos, betdny. A busy day, but a good discussion. Herb bethenny thank you very much. Street talk is coming up and were going to highlight not one, but two smaller cap stocks and analysts see 20 upside in. And another rough day for oil, as we hit a new low for the year. A little bit up now. Well see where it closes in a few minutes. Come on back after this commercial break. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Hello, everyone. Im sue herrera. Heres your cnbc news update at this hour. Authorities reportedly found more than a quarter pound of pot and a revolver in millionaire Robert Dursts hotel room when he was arrested over the weekend. The millionaire is charged with murder in the killing of his friend 15 years ago. He is also suspected but not charged in his first wifes disappearance back in 1982. A Penn State Fraternity had been suspended pending an investigation into a Facebook Page. Police say the private invitationonly Facebook Page was used to post photos of nude and partly nude women, some apparently asleep or passed out. Police found the page thanks to a tip from a former member of the kappa delta rofe fraternity. Police say anyone who posted those photos could face arrest. And a new study finds that aspirin may not have the same benefits for everybody. Researchers say some people with certain genetic variants may actually increase their risk of colow Colorectal Cancer. Other studies have found that it could cut the risk of Colorectal Cancer by 30 . And video game maker Electronic Arts announced that rory mackcelroy will be the face of their new golf series. The Company Ended its is 15year relationship with tiger woods in 2013. Youre up to date. Thats your cnbc news update. Lets go to dom for a market flash. Citigroup shares and barkley shares are close to settling or are moving higher and close to settling a forex lawsuit with private investors. Theyre expected to combine an expected 8 million. Lawsuits are expected to settle this litigation as soon as this week. Citi and barkleys are both moving higher on the session, lls although barclays still very much in the red. Oil is trying to make a comeback. Bertha coombs at the nymex, for a wild day, bertha. This morning oil was down right before the show i looked and it was up. Now im looking again and its kind of a wild day for oil. Wild day, which is why im putting up the Oil Volatility index. That has been on fire of late. Hit a high this morning, was about 60 and it came back and as a result we also were watching crude futures come back as well. At one point, we did go positive. We were positive for about two seconds on the day. A couple of tries, they failed. The focus now goes to inventories. Theyre expecting to a 3. 7 million barrel build in crude. That would put us well above record highs and particularly, theyre going to be watching for the nymex delivery hub at cushing, which is at about 73 of working capacity. If you see another big build there, that is certainly going to be bearish. Guys . Bertha thank you very much. Well take a look at denbury resources, like many oilrelated names, it has been hit hard by the drop in crude, but denbury is now one of four s p 500 stocks with a trailing and thats important, trailing pricetoearnings ratio of under 5. Do you want to know the other three . Youve got to read my weekly new ideas column which is on cnbc pro. You can find it also on power powerlunch. Cnbc. Com. Time for our new daily segment, trading nation. One topic, two guests a variety of opinions because traders trade better together. Weve got rich ross technician with evercorps isi. Boras schlossberg. Boras, i think the 1 trillion currency question is very simple. Has the dollar been moving because of anticipation to the fed, or will the dollar really start to move once the fed raises rates, assuming it does. Assuming it does the dollar will continue to move. But today, my topic of the day was, where are the euro bulls. I think the single Biggest Issue is where the euro is now is that sentiment is unbelievably skewed. All the banks are tripping over themselves forecasting, 90 95 cents to the euro in the nearterm and that kind of linear thinking is very dangerous in the currency market. I think we could be in for a euro bounce if the fed does not signal theyre going to raise rates tomorrow. You heard boris. A euro bounce is possible. Strip out the emotion. What are you seeing in euro dollar . Any support out there . Shorting the euro is like picking kentucky in the office pool. Its the biggest consensus trade out there, but its also the correct trade. And when you bring up the chart, ill show you exactly why. First, lets look at that longer term monthly chart of the euro. And you can see a clear structural breakdown from an 11year distributive top to boris point that projects measured downside to as low as 80 cents, brian. But when we zoom in you can see this trend channel, we see lowend support there. We also see historically oversold conditions. That could potentially create the backdrop for about, but nothing else brian. The euro is going lower, to parody first. 93 cents, then and potentially as low as 80 cents. I would be a seller on any bounce. Last word do you see 95 cents a as a possibility in the near term . Not the near term. I think the fed will be very constrained by everything thats going on including the fact we have Lower Oil Prices now and theyll probably hold off on rates. It will probably be a little while before we get there. Boris and richard, good discussion. And i have to make one statement on national tv here. Kentucky isnt going to win. The Arizona Wildcats will win the Ncaa National basketball tourney. Thank you very much. For more trading nation, head to tradingnation. Cnbc. Com. The drop in the euro we just talked about has been pretty great for european stock markets if youre buying them in u. S. Dollar terms. Germanys dax up more than 20 yeartodate. But if you tried to play it with an etf, an Exchange Traded fund you probably missed out. Well explain why. Plus why are researchers watching penguins walk . It is not just because they are cute, though they really are. Stay with us 7. 8003452550 [ male announcer ] your love for trading never stops tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 so when a market move affects one of your positions, tdd 18003452550 schwab can help you decide what to do. 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The answer is yes, it can. So, the question your customers are really asking is can your business deliver . 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. Introducing the new canam spyder f3. With a cruising riding position and the most advanced vehicle stability system in the industry. Youll ride with a feeling of complete freedom and confidence. Visit your canam dealer and test drive the spyder f3 today. Constipated . Yea dulcolax tablets can cause cramps but not phillips. It has magnesium and works more naturally than stimulant laxatives. For gentle cramp free relief of occasional constipation that works mmm mmm live the regular life. All right. Not everything is bad today. Well, one of the sectors we follow is up so not everything is bad today. Technology is actually up a fraction. So im going to show you, come once again into my computer again, folks. And when i say stuff like these are my screens, this is what im looking at you probably think, what the heck is he talking about. This is my fact check. We have a nice big screen. Its a little bit easier for yall to see. Apple, facebook adobe, nvidia those stocks are all in the green today. Why are there so many lines and column columns, because ive got it broke out by percent changes, one week one month. If you want to see some data ping me on the twitter machine and well try to bring it up. And melissa, hopefully it will be this web page or this fact set screen that is shown on this monitor. You know what im talking about . No, i have no junior Online Shopping your naughty websites. No, no. What . You said it like theyre supposed to be combined. Could be the same thing. No no. The ncaa pool. I dont know what you keep on your little laptop down there. My little laptop. Back to you, melissa. The weak euro has been good for european markets. Take a look at germanys dax up 22 percent so far this year. But buying the etf that tracks the dax, that has not worked out so well. Michelle carusocabrera joins us to explain why. Its all about where the dollar has gone michelle. You can really get hammered if you get the currency trade wrong or the stock trade wrong. If you look at the yeartodate performance, they look really great. What if you bought them way at the beginning of the year as an american investor with dollars. Remember, you had to buy the euro way back then. That means in dollar terms youre up for example, in germany, germanys up 24 , but you, youd only with up 9 in dollars. In spain, you would actually be negative. Where you really see it is in the etf. So if you buy etfs that track certain countries, take a look. There you see france thats the French Market over the last month. Its up nearly 6 . But if you bought the etf that specializes in france you would have lost on the dollar because the dollar has gotten so much stronger and the dollar has weakened so sharply, you lost money in the current, you would be down more than 2 . Its even worse for italy, where the italian market is also up over the last month. Thats a gain of more than 7 but the actual italy etf is lower by more than 2 . What you could do you could buy a hedged etf. Here were going to show you, this would be the hewg. That would be the hedged version of the german etf versus the regular germany etf. You would be up 9 over the last month versus only 2 . And you can look at the hewg the hedged version of the german etf. Look how closely it actually tracks the german dax, the actual index. Thats one way to go. Its probably the cheapest way. I tried to theoretically put out a trade there. Call up and say, i want to buy a hundred shares or a thousand shares and help me hedge out the currency. Charles schwab said they wouldnt do it at all. But a private banker said its going to cost you a lot of money. Youre far better off going into a hedged etf. But not every country has them thats part of the issue. You can buy a pan europeanedged etf, but thats not going to get you near specificity if youre looking for specific stocks guys. All right. Interesting analysis there on the etf. Lets bring in bob pisani. You are now our de facto etf expert. Dont shake your head. It stuck. What do you make of michelles stories here . A lot of people buy etfs, thinking, im going to get exposure to this. And then there are things going in the opposite direction, thinking, what the heck just happened. I guess the question is why doesnt everybody just invest in hedged etfs . And michelles right, theyre not widely available, but theyre getting more wildly available and people are realizing that. Take a look at the biggest etf in europe. Thats wisdom tree. This is the number one etf by dollars under management. Vanguard european the other big one, not edged, is 12 billion. People are catching on to this whole idea. Another reason that a lot of people arent doing this these currency moves are extremely rare. This thing going on with the euro, nobodys ever seen it before. The yen moved big last year and its hardly moved at all this year against the dollar. And you can see, there is the wisdom tree hedged etf, up 12 . The japan shares etf is only up 11 . The reason theyre the same almost, is because theres not a lot of difference between the yen and the dollar this year. So the answer is people should be doing it a lot more theyre not, its a little bit of a problem with the availability. And theres a tradeoff there, guys. Remember, too, if youre in a period with very little currency volatility and buying a hedged etf, youre i dont want to say wasting, but a lot of money is being spent on making sure those hedges are in place just in case so youre losing value on the net asset value. Theres always a tradeoff. Its not a free lunch. Thats aed edgood point. But if youre listening to all these banks saying it will go through parody by 2017 this could be the new normal in buying hedged over nonedged, at least for the next couple of years. Wherever theres a trend, the etf community churns them out. Are we expecting a lot of new products in the pipeline . Absolutely. And thats exactly whats going to happen. In fact, the germany one is relatively new. January 1. On the call structure, most of the costs o of these etfs are about half a percent, the international ones in general. In fact hedged versus nonedged, its usually about 50 basis points. Part of that the cost of actually engaging and setting all of this up and hedging. I do hope it will go down as more and more people adopt that. About 50 basis points is what youll spend here. Great discussion guys. Thanks all. We are less than 24 hours away from the big fed meeting. A fivestar fund manager will give us his best opportunities right now, plus why are these penguins at the london zoo walking on a track . Well explain in two. First impressions are important. Youve got to make every second count. Banking designed for the way you live your life. So you can welcome your family home. For the first time. Chase. So you can. E financial noise financial noise financial noise financial noise now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. There are many great mysteries of the world. Who built stonehenge why does the platypus exist . But perhaps the greatest mystery of all is why dont penguin slips when they walk . Its usually on ice and snow. Its a mystery that may be solved, though. The university of texas and the uks Royal Veterinary College are studying the penguins waddle. There are sensors in that track that theyre walking on will distinguish how much force on the penguins legs each ones use when they walk. Perhaps, some day soon none of us will ever have to walk on ice again, as long as we waddle. Walk this way. Investors a bit uneasy as they get ready for the feds Rate Decision tomorrow. Lets get some investing thoughts for the future. Joining us now, with john bellows, a fivestar portfolio at western asset. Welcome to the program. Everybody has this, what do they call it . It was taper tantrum. I think now its patient panic or rate rage. Lets invest for the long term. What looks good to you . We think the opportunity right now is actually outside the treasury market. We think theres better opportunity in credit markets, including Corporate Bonds and perhaps emerging market bonds. When we think about the fed tomorrow, i think the fed is going to be cautious. I dont think they want to do anything to disrupt Financial Markets or to disrupt the economy. This fed has been very supportive of both, and we dont think they want to jeopardize that record tomorrow. We still like credit and we think theres an opportunity there given that we think the fed is going to be cautious tomorrow. Its been the perfect storm for companies though. They can borrow cheap, right . Almost free. And then they can buy back a bunch of stock and see their stock price go up. Its this perfect formula that many have done here and across the way, john. What is the risk then to your credit thesis . You know i think the primary risk is a growth risk. If Global Growth were to slow sharply, it would be challenging for credit both Corporate Credit and emerging markets but thats not our central case. We think the Global Recovery trade will be ongoing. It will be a slow recovery characterized by two steps forward and one step back but we think the Global Economy will continue to recover. We think Monetary Policy will be very accommodative. It will support the recovery. Youre seeing that in europe and japan and i think you will see it tomorrow out of the fed. They will want to support the recovery. All right. So, john what would be the biggest risk to the stock market . Listen, we all know the fed is going to raise rates. It may be tomorrow. It may be june, it may be in september. But i am going to die, im going to pay taxes, and the fed will raise rates. Of those three things i am sure. Lets look five years out. Besides credit what looks good to you . You know so again in credit i think were pretty interested in the credit trade. So when you want to look outside credit, i think you could get interest in some emerging markets, maybe some financial bonds. Thats another place we think the credit quality is improving. Ba sheets Balance Sheets are getting stronger. Just to be a little more specific, we think there are opportunities in places like financials even looking five years out past a fed like. John it was a real pleasure to have you on the show and i dig the tie. Thank you. Up next street talk. We have two tox. Stocks analysts see 20 gains in but you have to stick with us to get the names. Before larry instantly transferred money from his bank of america savings account to his merrill edge retirement account. Before he opened his first hot chocolate stand calling winter an underserved season. And before he quit his friends leafraking business for not offering a 401k. Larry knew the importance of preparing for retirement. Thats why when the time came he counted on merrill edge to streamline his investing and help him plan for the road ahead. Thats the power of streamlined connections. Thats merrill edge and bank of america. Alright, so this tylenol arthritis lasts 8 hours, but aleve can last 12 hours. And aleve is proven to work better on pain than tylenol arthritis. So why am i still thinking about this . How are you . Aleve, proven better on pain. Graphic says it all. Time now for street talk the Analysts Recommendations of stocks you need to know about. Carmax, their target 75 bucks. About 15 upside. They say the company is quote, aging into the demographic sweet spot and the zero to fouryearold car market should grow over five years. Thats stragerring growth although the analysts concede the stock is not cheap. Its trading at 19 times the analyst calendar year 16 eps estimates. Were looking at vivent solar. We swrurs spokejust spoke to the ceo last night. Credit suisse pounding the table on its outperform target. They met with management. They were impressed by robust demand indicators and they are increasing their volume forecast. Stock has done well. Im looking at it live up 25 yeartodate but up 40 in just one month. Since they reported earnings. Kudos to you for doing it on the show last night because the stock that people have been ignoring except for you. Stock three, service now. Ticker now. Same analyst has a call on linkedin at breen capital. They started with a buy at 97 target implies 20 upside. They see upside from a new product called the create now express, whatever that is. The average target of analysts 80. 60. So the analysts there at breen is very bullish on this company. The stock is doing pretty well so far this year and for the past 12 months. Only 2 off its highs. A key test is to see whether the stock can surpass its 52week high. Gunar cayman islands, the most attractive way to play the large and fast growing chinese online traffic market. Flight and Hotel Markets and improving its margins. The price target goes up to 41 a share. The rating outperform. I had dinner last night with a guy who runs a college endowment. His biggest concern is china. Its a Company Exposed to chinas economy as well. Finally todays under the radar name abm industries. Its a new york city based Facilities Management company. Very low tech. Up to outperform at rw baird. They see about 20 upside for abm. Did you see the chart on this one, brian . Because had a big drop. 5 drop after the Company Reported earnings earlier this month. Its sort of been treading water since. All right, brian. Tonight on fast money im very excited because it is day one of the fast money madness challenge. Traders debating 16 of the hottest tech stocks over the next three weeks. Take a look at the brackets. Only one stock will be named the champion. Tonight this is the matchup here. Down in this quadrant. Qualcomm versus intel. So you can log on to cnbc. Com pro right now for a preview of tonights debate. That is going to be interesting. A chip stock matchup. Hold up hold up. Lets go back to this thing you call the smart board that you just circled so elegantly. How does it work . Is it audience voting or the traders fight it out and the audience votes on who wins . Would it be guy adami versus pete for intel or qualcomm . How does it work . Well take a vote on the desk to see who is going it advance qualcomm versus intel to the next bracket. And then we will v, just like the sweet 16 we will see who they will be pitted up. They could face nvidia or micron. It will be the traders first and then people with log in and tweet us and we will incorporate the viewers choice as well. The winner would ultimately be and folks at home listening, we do not practice this stuff at all. It probably shows. The winner would be the company of which your traders can vociferous lick makely make the best argument for. Were taking an actual vote. You got a Little Supreme Court going on there too. You cant have a tie. Who is on the other side . Can you scootch to your left . Joosk. I feel like vanna white here. Im going to pick a winner. We have social we have hardware. Are you picking like an ultimate winner . Im just kind of off i think apple would be the kentucky, if you will, of your bracket. Gosh. Im going to go with facebook. I think facebook ultimately wins the whole doggone thing. Facebook. Ill hold it to you. Arizona in the basketball turn tourney. Thank you for watching. Closing bell starts right now. Hello and welcome to the closing bell. Im kelly evans on this st. Patricks day on the new york stock exchange. Plenty of volatility to mark the occasion. I dont see any green. Its in spirit. Im bill griffeth. Whats unusual about this market, we have so many triple digit moves for the dow to this point. I had the Research Staff look into this because i suspected this was going to be the case. Of the i think its 11 trading days that there have been so far this month in march, the dow has seen 8 triple digit closes 8. Four have been up four have been down. Thats