You picture that in power lunch starts right now. S. Hey, everybody welcome to power lunch for a wednesday. Thanks for joining us. Im tyler mathisen, stocks on track for the first down day maybe for 2018, and you want to be volatility you wont see it there look at those moves. The dow just peeking into positive territory by 0. 01 of a , led by the airlines, american, united, delta all flying a new tenmonth high and breaking news on the tenyear auction results Just Moments Away were above 2. 5 Home Construction stocks tracking for their worst day, folks, in more than a month. Morgan i am Morgan Brennan are Rising Interest Rates a threat to this rally we have all the angles covered Rick Santelli in chicago watching an auction of tenyear notes. Steve liesman here on set on the rapidly Rising Interest Rates, but we begin this hour with bob pisani where stocks are rebounding bob, whats going on slowly but surely, about you it started out rather rocky. Preopen, the futures contract, where about 35k trrp some reports that china officials may consider slowing or halting their purchase we dropped seven or eight points and slowly clawing our way back, and none of that is confirmed, throw in gundlachs comments yesterday, grosss comments, take a look at bond proxies. Utilities are at tenmonth lows, reits at sixmonth lows, so that whole complex is under pressure. Higher rates, of course, yields up thats helping the banks tenyear yields close to tenmonth highs, so most of these banks are at the highest levels since 2008. Transports, you heard earlier from tyler, united and american raised guidance helping the airlines remember, railroads have been the real performers this month talk about sectoro tags, tech has been under pressure, and remains under pressure so over in taiwan and over in korea, we saw some of the big names, these have been weak for several days samsung had disappointing commentary yesterday, its down again. All the big semiconnector names are again weak this group really sort of topped out back in november, and having been doing much since then. Thank you, bob. See you next hour. What does it mean . Steve liesman nose, thats why hes here. A lot of what has happened is putting the yield curve, different yields on the spectrum, back to where it was, its not breaking new ground the twoyear has rising steadily along with fed rate hikes, but the tenyear has yawned under the last couple weeks. The tenyear yield is caught up with where the twoyear was, you can see one key elements is the spread between the two and the tenyear has widened again after months and months of worrying flatteni flattening a series of events, china reported this morning to be rethinking allocation in treasuries better Growth Numbers have suggested to a while that long yield numbers should be higher, and inflation along with more definite set spending is expected, so this is a modest problem for companies out there that borrow. Corporate bond yields have risen, so some of the tax cut benefits could be reduced a bit by higher rates. This solves, however, a problem for the Federal Reserve. Some officials were starting to get worried that rates were failing to respond, and reducing the Balance Sheet. A higher long yield, a bit of comfort, that its not out of the game here, that shortterm rates are having a broader effect. The people you are talking to, are you surprised at this rise in rates . I isle tell you what happened this time last year, we had a Company Dinner and i was forced to give my yield i wasnt invited. Tyler was there. A bunch of ceos i gave a 3 yield on the tenyear as follows. I thought the fed would hike three times, which it did. 2 , which it did, and i thought that the tenyear would be 100 basis points over that. Are you bragging right now or saying you werent caught offguard impltsds first, im at least ten days late, but i think it makes sense if youre going to have better growth, better deficit spending, and a tenyear approaching 3 is not out of line. And tenyear notes are up for auction. Rick santelli is tracking that rick, what are you seeing . Ill tell you what. Before i give you my grade, everybodys expecting a crumby auction. Whos going to want to buy it . The whole world seems to have gotten bearish overnight well, somebodys buying it, because this was a stellar auction. Second reopening, original issuance was november 8th of last year, but i gave it an a for demand 2. 579, risk under 2. 58, and 2. 58 was the offered side on the oneissue market no pricing problem there 2. 69 bid to cover, 2. 69 times many people interested in securities available, best since june of 2016 indirect, 71. 4, best since august of 16. The only thing that was average was 6. 5 direct is a little light, 7 tenauction average, primarying only take 22 , and granted its the second reopening, but this was a solid auction following a solid threeyear yesterday whats left . A dozen 30year bonds. Tomorrow as well totalling 56 billion in supply. Back to you. All right mr. Santelli, thanks very much stocks may be taking a bit of a pause here, but the oracle of omaha told becky quick this morning do not give up on this recordbreaking rally just yet. What has hat in the 345rk9 is very sensible. Now, in addition i have the tax act which is a huge factor in valuation. Meanwhile, bill miller considered one of the best investors ever after beating the market for 15 years in a row at legg mason weighed in on whether we would so another massive move higher. I think its still to come if we get it, and it will be driven by tenyear yields those go through 260, head towards 3, i think we could have the meltup we had in 2013 where the market was up 30 . If we get it. But not everyone is on board billionaire investor jeff gundlach, and its about 120 billion, says the s p may go up is a the first part of the year, but i believe when it falls, it will wipe out the entire gain of the first part of the year with a negative sign in front of it. So who is right . And where is the recordbreaking rally going from here . Joining us now is david s peismt eaka, and steve masaka mr. Speakesa, what is the state of our union in the stock market. Well, thank you, tyler, i appreciate the introduction. I would say regardless the three experts that you cited a moment ago, that we be most closely aligned where mr. Buffett, in that we think the rally will continue however we think it would be with more volatility what we have seen has been unprecedented. Think about it people were worried the market might open up down 50 basis points thats crazy we have hit the longest period of time ever for a number of market without a 5 correction 14 straight months of positive equity market returns. We like the a market, but we absolutely think there will be more volatility, and we think thats healthy were going from hyperhyper to just hyper. Right around 2 1 2, 309year is below three. Thats just in america, and the fed is tightening, but its the fourth largest Balance Sheet on the planet china is tightening swan, but the b. O. G. And ecb continue to be aggressive, and i dont think they have shinzo abe was quick to the mike saying no, he wants aggressive policy, and everyone is worried that draghi will be placed by a german, but it will continue to push for lower rates. After brexit, i think the ecb will be leery about creating distance between themselves and than say illy, spain or portugal. We have qt, and for the first time in a decade, the twoyear treasury yield is now above the s p 500 dividend yield. Dont you fear that rising rates and, you know, just a bit more yield on some of these bonds is going to prove competition and headwind for equities . Theres no question the key factor in driving this market last year was low inflation and low rates. That goldilocks scenario we saw. So Central Bank PolicyGoing Forward, which will drive Interest Rates higher, tack larry if inflation is faster than expected, will prove to be headwind taking away one of the legs of those stools that has driven the market if we get faster growth than expected that could offset some of that, but again the biggest factor in driving the market last year was low rates and low inflation. To the extent they pick up, that is going to cause some angst. So, steve, lets talk about some of the crosscurrents that may play this year weve been saying on our desk here the past couple days we think 2018 is likely to be a more interesting year than 2017. Thats saying a lot, because not only do you have not just the prospect of a new tax law, you have the reality of one, you have lots of profit questions to ask and get answered youve got an economy doing well, but now were beginning to see some of the maybe the green shoots of inflation coming on the scene. Will this by a trickier year for investors than 2017 was . Well, you have to say yes, because 2017, low volatility, straitup market, will that continue again in 18 . Its hard to say that will be the case, but once again, i would say that Monetary Policy is so aggressive, even if it backs off a bit, it will continue to be good for the stock market and the stock market, you know, maybe will have a 20 rally, but i certainly dont see a significant decline in the market unless something changes dramatically now you have a very aggressive fiscal policy as well. Not only do i have the tax bill, but regulations being torn up right and left so you just have to think that thats going to be a Good Environment for stock. Jell, thank you President Trump in a Cabinet Meeting a short time ago eamon javers is live at the white house. Reporter the topic of the meeting was supposed to be infrastructure, but the president spent the top of it talking about the accomplishments from the Previous Year and the astonishing meeting from yesterday, a 55minute livefire negotiations with republicans and democrats in the room over immigration and where that issue will go this year. The president very pleased with the Media Coverage of that, but not pleased with some of the other Media Coverage hes getting, specifically apparently a reference to Michael Wolffs new book, which got so much attention appeared caused the ouster of steve bannon from the trump camp heres what he said in the wake of that book. Our current libel laws are a sham, a disgrace and do not represent American Values or fairness well take a strong look at that you cant say things that are knowingly false, we want fairness, and be able to smile as money pours into your bank account. Were going to take a very, very strong look at that. Reporter so the president here making the case that he doesnt like people saying things that are knowingly false and she shouldnt be able to profit from that well see the president later on today. He has a briefing with the Prime Minister of norway coming up well see a press conference between the two of them, called a two and two. Both leaders will take two questions from their own domestics press corps. Well see if the president talks about the Upcoming Trip to davos, where the populist president will speaking with the globalist elite. Well see if he gives us any hint of what hes going to tell them when he goss to davos next month. Eamon javers, thank you very much. Its usually nice to get a letter in the mail maybe its not nice when its from a senator demanding answers about your company the latest pressure on tim cook, ahead. The theme has been to grow manufacturing in america well tell you where toyota and mazda have found a new sweet home theyre coming to america nobodys putting their money into equities. Theyre not investing in commodities or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. Phil lebeau is live in chicago with more on the story. Well have the formal announcement a little later on this afternoon sources tell us that toyota and mazda have agreed to open up a final Assembly Plant in huntsville, alabama. It will create about 4,000 jobs. Once its build, probably about 2021, it will have the capacity to manufacture about 300,000 vehicles a year, half of those being the toyota corolla, and then a new suv for mazda for toyota, the corolla at this plant is a crucial vehicle its the bestselling vehicle worldwide. Among its best here in the United States, and in terms of auto production in the u. S. , this will move alabama ahead of tennessee, which its currently tied for fifth place in terms of states that manufacture the most vehicles, and depending on what happens with this market over the next five years, you could see it eventually pass up kentucky toyota has said the plant will open in 2021, the companys fifth final Assembly Plant well be talking with the head toyota america, jim lentz. A question well be asking, remember it was just a year ago that the president was targeting toyota saying, hey, why are you building vehicles in mexico, when you were be building here in the United States its been a rather quick move by toyota to say, yeah, a fifth Assembly Plant in the u. S. Guys, back to you. Huntsville known as aerospace, thats why they call it the rocket city any reason why they choose huntsville its not just aerospace as youre familiar with that area, huntsville has a lot of the highertechnology, if you will, that Knowledge Base for electric vehicles, for future generation Transportation Systems. Thats what toyota will be tapping into, because while theyre building the corolla there, theyre also going to be focusing on electric vehicles and future Transportation Systems at this plant as well. Huntsville is a logical location for that. Almost almost also has nick saban, right you have a big man crush. Apple under fire now one u. S. Senator wants to know whether apple is designing phones to become obsolete. You just have to keep buying new ones. Plus one of the biggest stars pranking a rookie. You have to see this video we will be right back. barry murrey when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. We call that the golden hour. Evaluating patients remotely is where i think we have a potential to make a difference. barry murrey we would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . 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You know your family. We know Senior Living. A place for mom. You know your family. We know Senior Living. Together well make the right choice. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Apple facing more heat today over prone problems with older i phones, senator thune writing tim cook a letter. The heart of the issue is planned objects lessens. Is apple designing phones so you are inclined to buy a new one as they get older josh lipton joins us with more. Senator thune wondering whether apple has been as forth coming as it could have been that introduced software that would slow i phones with older declining batteries. Part of the thing we want to get at is the transparency issue. If they deny theyre engaging in planned objects l ene ene planened senator thune telling c increases he would call a hearing and in his words elevate this further senator thune want to know if they have tracked complaints about processing performance and if the iphone maker has, should now get some kind of rebate. For its part, remember apple flatout denies this charge, saying first and foremost, we have never and would never do anything to intentionally shorten the life of any apple product, or degrade the User Experience to drive customer upgrades our goal has always been to create products that our customers love and making iphones last as long as possible is an important part of that still apple creating criticism in