Transcripts For CNBC Closing Bell 20150218

Communiques. Market perceptions had they will take patient out next month in march and then they will raise rates in june. These come out whether its jpmorgan saying theyre more dovish than expected or capital e con saying this just adds to all the confusion. The signal to markets is clear, this sounds like a fed thats slightly more dovish but the shelf life may be a couple days. We hear from janet yellen on tuesday. The data in the month has generally not been that great. Well talk about that in a moment. Were keeping an eye on a story developing in Southern California. Some kind of incident at an exxonmobil refinery in torrance. Theres a fire well have the latest details on. The Energy Market reaction. Weve seen an update in gasoline prices in georgia, gasoline futures, what they call car bob futures in l. A. The price has gone up 10 to 18 cents per gallon. Well keep an eye on that because oil has had such an impact on this market today. The stock of the day though has got to be, take a look at this angies list. Yes, its up 52 . This after reporting stronger profits and user growth than expected. We will be speaking exclusively with the companys ceo coming up on this program. Well find out what his plans are to keep this momentum going. That is big. And how is this for confidence . Sonys ceo says profits will jump 25 fold not 25 , 25 fold within three years even as his Company Considers ditching the tv and cell phone businesses. Should investors believe him . And if hes right, what is that stock worth right now . Something we will look at a couple professionals join us in a little bit right here on sony. A lot of overlapping themes in these individual stories were going to be following today. Here is where we stand in the markets with an hour to go. The dow is down about 23 points. Were seeing if it can hug that 18,000 mark. Yesterday we were on record closing watch, 18,053. Were still 30 points away as the dow and the s p are in negative territory. The nasdaq is trying to stay positive. Well see if it closes above 4,900. Within 100 points now of 5,000. That is amazing. Finally. Lets get to our Closing Bell Exchange with keith fitzgerald, jack bouroudjian, Brian Jacobson from Wells Fargo Funds Management lindsey from stern a. G. And Rick Santelli in chicago talking about the markets there. Lindsey, whats your read on what the fed is thinking about right now based on the minutes we read an hour ago . I think there were two key take aways. The first is there is no signal the fed is gearing up to move away from that patient language. For now there was an opinion they can maintain and shud maintain that patient language. The second is international developments. They added that into the list of considerations in that january statement, but there were no specifics. Did that mean greece did it mean china, the u. S. Dollar Central Bank Policies around the world . What we see from the minutes is in fact, under that umbrella of international developments, the fed is watching all of these issues. So a plethora of barriers again to rate increases. So pushing out the time line for the first policy increase. And it was somebody rick i forget who, who said they look at the statement and think the fed is afraid of the Market Reaction when they take out that patient language. So now were getting some big swings in treasury markets today. What do you think would happen if next month the fed removes that language . Would we see a further increase in yields or no . You know i really cant say rick, go ahead. I cant say if they leave it in. I think in the end they continue to show patience and they continue to treat the u. S. Economy like it is a patient in the emergency ward and it really isnt. Its very hard for me to get my gps. You said were 100 points away from a new high. You know were 150 basis points away from normalized rates at the current level of activity for the economy. Current level for prices with regard to inflation. Were too low. And i think the Market Reaction was interesting. We have a couple of charts. Fiveyear notes took the brunt of the purchases. They dropped ten basis points. But if you notice the dow and s p never moved into positive territory and they were basically very close to where they started before the minutes within 45 minutes. So me thats fascinating to think about. What does the market really think about the fed . Do they believe the fed has lost control of the marketplace . I continue to think that more of what were seeing is still a response and a correction based on the january 22nd ecb meeting and i continue to think the biggest dynamic in front of the current treasury market and u. S. Stock market is going to be how quantitative easing begins in march in the eurozone. Keith fitzgerald what do you think . Would the market be spooked if they start to show even more signs of raising rates in the near term here. Im absolutely with rick. I think the fed is a side show at this stand point. Anybody who hasnt figured out how to trade Interest Rates at this point shouldnt be trading for a living. I think the bigger issue is how qe goes. The Bigger Picture to me is what happens next not what is being looked at in the Rearview Mirror by the fed. Listen you said anybody who doesnt know how to trade these rates shouldnt be trading them. Every professional on the street it sounds like is trying to figure out what is going to be the next move in interesting rates. What is it to you thats so blindingly obvious . Whats blindingly obvious is the fed doesnt know what to do next. You have to have two schemes of thought. You have to make those decisions ahead of time. Any trader worth his salt has already done that. The Bigger Picture is the unknown and thats the qe in europe because greece is digging itself in further. Europe is digging itself in further. Does not appear to be a middle ground and that is the true unknown. Jack and brian, well get to you in a moment. We want to get more developments on this refinery explosion out in Southern California and what that could mean for gasoline prices, which we know what thats going to mean for gasoline prices dont we dom chu. We do. Gasoline may be more localized in terms of the price increase if we do see one in the next couple of days here on the retail side in california. Thats because this exxonmobil refinery in torrance california, that saw the incident exxonmobil itself said it had an incident at one of its refineries. Its just about 16 17 miles south of downtown los angeles, about ten miles north of the long beach port where work stoppage is currently happening. You can see here these are shots taken by knbcs helicopter over the refinery. You can see structural damage to parts of this refinery, smoke coming out. There are hoses being deployed underneath. A number of damaged vehicles as well on the property and what looked like an extra large burnoff from one of the pipes coming out of this particular refinery. What we do know is this refinery accounts for about 10 of all gasoline production in california for a specialty grade, a blend of gasoline specific to the california market. Thats why the gas price increases may be localized. This refinery refines about 156,000 barrels of crude oil per day and produced about 1. 8 billion worth of gasoline last year just to give you an idea of the overall capacity. Now, what we do know the latest development here is four people have been taken to long beach medical to treat minor injuries and for observation. Thats what we know right now. Still trying to ascertain other details, but, bill kelly, well bring you more as they become available to us here. Back over to you. Dom, thank you very much. Joining us now on the phone to put this in perspective for us former Shell Oil President John Hofmeister. Welcome back. Were all thankful nobody is really seriously injured in all of this so i can say this i think. Is it my imagine or at this time of year do we usually get some sort of a refinery explosion or some accident of some kind that mysteriously pushes gasoline Prices Higher . I mean whats going on here . Well, i think in the first instance exxonmobil is famous for its focus on Safety Health and environment, and so youre not going to find an operator who does it any more safely than exxonmobil. And youre not going to be youre in a state that is the most probably the most focused intently on companies following regulation. But still incidents do happen and obviously we dont know the full extent of this yet. But with respect to prices with respect to supply california is an island unto itself. Nobody ships gasoline into california from say, the eastern part of the u. S. Or the midwest. California produces what it sells. Its a rather thin market because of the environmental condition placed upon the mix of the gasoline thats produced and so a 10 facility which it sounds like it is thats a pretty Significant Impact if if this is going to affect gasoline production. We dont yet know. I used to work across the street from this facility, believe it or not, and i dont know to the extent it would affect the gasoline production or is it something in the chemical production, and we just dont know that yet. So it may be a jump in the price thats unwarranted. Time will tell. Meanwhile, jack bouroudjian, today a lot of energy names have been trying to grapple with the fact that Warren Buffett exited his exxon stake. That name is under pressure today. Look at Diamond Offshore on that bmo downgrade, for example. So, jack is it really the still fallout from the lower energy and oil prices here thats having more of an impact on this market do you think . Well you know the question is what kind of impact are you looking at . Those Lower Energy Prices i think are already factored in. We saw the fact over the course of the last few months. If youve been in any Energy Related stocks you felt that pain. Remember, what were talking about is lower energy and all of that is very very bullish, and the minutes that we saw today were very bullish. I mean look if youre watching this watching those minutes come across and you were long the market and aur bull, you have to feel like jim cantore in a snowstorm. Its really exciting. Everything about what were talking about, the fact that this fed is data dependent, the fact theyre now looking at international issues. The one thing about that line thats very important and i would probably talk to rick about this is do you think that theyre talking about relative spreads . Because, quite frankly the question is whether the fed can do anything at all because what they are in jeopardy of doing is becoming a jeanclaude tra shay which is being out of step with the rest of the Central Banks i think theyre already there, jack. Well you know it feels like if they were to go out there and make a move they would be in trouble. What do you say, rick . I say that was exciting to watch the rocket get a shot and then pitch fast. Arod get a shot and run and jump. Watch sammy sosa hit 500 home runs but it wont kosher. The economy doesnt need the subsidy in Interest Rates when its churning along at the current level approximates. Lets bring brian in. Keeping this point on oil and the impact its going to have on the market for just a moment do we need oil prices to move higher for stocks to move higher or is jack ultimately going to be proven right here . I dont think we need oil to move higher in order for stocks to go higher. When it was down 33 34, we did need oil to go higher. But were back to a level which i think is consistent with the near term fundamentals. If we see oil go higher it might be a positive for stocks, they might be somewhat divorced over the short term here. One does not necessarily depend on the other. Just like in the if you look at the fixed income market, why is it you saw all the activity with treasuries and barely a nudge with equities when the fed minutes came out . I think the equity markets have become somewhat inoculated against some of this shortterm variation and the mild dovishness or hawkishness of the fed just like its become somewhat inoculated against short term movements in the oil price provided theyre small movements. Lets finish where we started. Lindsey, one of the questions the fed was asking itself at the meeting was is it possible we could start raising rates too soon and it would hurt the economy. What period of time would that be do you think . I think too soon would be in the realm of 2015. I think the fed was very clear they still want to maintain this patient stance and given the fact that we are seeing disinflationary pressures and uncertainty in the labor market we saw some Committee Members come out and say they want to see more improvement, they want to be confident the labor market is, in fact improving via page pressures. I think the fed is very well situated to push rate increases out into 2016. Can i just real quick before we let you go John Hofmeister ask what your gut instinct is about the price of oil as well . Are we through the worst of it . Have we bottomed or do we have another leg lower to go do you think . I think its too soon to tell whether weve bout tommed or not but i think as we head to summer and the fall i think well see price recovery across the entire industry. Plenty of others as well hoping for that at the same time we have consumers maybe pulling into the opposite direction. Well leave it right there with a thank you to everybody for joining us John Hofmeister with our Closing Bell Exchange. A little off the lows of the session but not a ton of reaction to those fed minutes. The real reaction in rates, we should talk about gold at some point as well here lots more coming up. Gold dipping below 1,200 for a time. Sony rising after its ceo outlined an ambitious turnaround plan he estimates could boost profits 25 fold in just the next three years. The pros will debate how much this stock could be worth if it turns out hes right and if now is the time to jump into the sony action. Later, the ceos of rack space and angies list are here to talk earnings. Angies list up 50 . Still about 50 below its ipo price. Will it get back to that level . Were going to talk about it. Stay with us. 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. The road. It can bring out the worst in people. But the mclass scans for danger. Corrects for lane drifting. And if necessary, it will even brake all by itself. It is a luxury suv engineered to get you there and back safely. For tomorrow is another fight. The 2015 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Markets on the flat line here. Some pressure on the energy space. Were keeping an eye on some movers. What were watching here is, first of all hersheys shares with a sweet jump. Theyre reaffirming their 2015 outlook and announcing a 250 million Share Repurchase authorization. Garmin saying that Revenue Growth will slow this year thanks to a stronger dollar and perhaps less demand for its car navigation devices. The stock is off by about 9. 5 . Then cinemark seeing surprising sales growth. Strong titles like fifty shades of grey and american sniper have helped the chain get off to a running start. And sony shares are up by 4 following comments from the ceo that the Company Wants to increase operating profits 25 fold within 3 years focusing on its camera sensors and Playstation Game console business. It could be about fun and games for sony in the future. Back over to you. They are hoping. Dom, thank you. Sony may be moving higher but lets take a longer term look at the performance were talking about. Quite a fall there as you can see over the last 15 years. The stock once at 142 a share, bill. Now under 30. But if you take a look at sonys oneyear performance, it is up about 56 compared to a 14 gain for the s p, so looks like sony is showing signs of relative strength and life again. So if the ceo is right about monster profits by 2018 just how much should sonys stock be worth . Joining us with their take she have james ra mellie and also with us is roy choi from techno buffalo. Roy, you know the ceo has been very ambitious with his plans. Do you think he can pull off the kind of profitability hes projecting in just a few years . Absolutely. Were going to see a new sony. Its been called the onesony approach but well really see two sonys. One on entertainment and the other the aspect of the camera sensor market. Were going to see the electronic side of the sony business get pushed away, sold off, or spun off, but well see a more profitable end of sony become more prominent in the company. 25 times as much though james . Right. I mean i really do think that this is an attainable goal for sony. What we have seen through the restructuring efforts is a more streamlined and leaner sony focusing on more profitable segments of their business. Most investors dont realize how large the market is. These are the sensors in the front facing cameras of cell phones tablets, and used in automotive components. This is a huge huge market. Sony is projecting 20 or so of their revenues will come from this segment within the next two years but some analysts are saying this market is so big and growing so quickly that that number could be as high as 40 to 50 . I think we really could see those type of returns for sony. Thats amazing. Roy, we talked yesterday about this transformation that apple has been going through from being a gadgetmaker to a platform company. Could sony be taken in the same direction or can you still find growth in a company like that just by making gadgets . Absolutely. You look at sony it already has a very strong stronghold in entertain am and media, music, movies and playstation has been selling gangbusters for the unit. I think last quarter they sold 4 Million Units, and as of the release of the playstation 4, i think 18 Million Units total. On top of that i think about 10 million subscribers for the Playstation Plus network. Thats an additional revenue stream that keeps continuously growing and adding to the bottom line for sony. Yeah. Lets talk a little bit though about these areas theyre choosing to focus on. Its interesting for me not being as familiar with a lot of these different categories in some ways it sounds like theyre selling old assets and reinvesting in new ones that in a converging media landscape that perhaps would make sense to hang onto some of these pieces even just the tv thing. Finally jettisoning that for example, at a time we keep hearing about apple and everybody else trying to get in this space. Its a highly competitive market. The Biggest Issue for sony is the large competitors from samsung, lg and a handful of cheaper chinese manufacturers that are making really great sets. If you go to ces or any of the shows throughout the year sony just plays second fiddle, third fiddle to samsung, lg. If you go to the samsung lg booth, the buzz is there. Sonys buzz has been lacking in those departments for such a long time people just tend to overlook the sony products. Even though they may be investing a ton of money and the profits may be growing, its just not as lucrative as it used to be for sony. James, youre the trader. We mentioned sony up 56 in the last year. Does it still maintain this momentum or is it time to take some profits here do you think . I think it does continue this momentum higher here. If we look at the Options Market through april which is about two months away theyre implying around another 2. 50 to the upside which would put us around the 30 region and it lines up with other technical indicators we use. It seems theres a lot lining up for a push to 30 in sony stock. I assume you own the stock . I am long sony via options positions, yes. Thats what everybody is doing these days. All the cool kids. Thanks, guys. James and roy this afternoon talking a little sony. Thats why they kept the options floor in chicago at the merc. Momentarily the dow turned positive but we have since pulled back a little bit. Well get a read on the imbalances toward the close from art cashin. The s p is down a fraction but the nasdaq inches ever higher and were now less than 100 points away from that magical 5,000 number. The fed minutes reminding us the data is more important than ever. Up next, well get the latest on the west coast ports dispute and how much damage could be already inflicting on earnings at the nations retailers and the economy. Deutsche bank saying it so shave as much as a point off gdp growth. Also should you invest like Warren Buffett . Anybody can do that with 300 billion. But if you did, would you want to do it after all. The pros will chime in on that and much more ahead. Growth. Im louis, and i quit smoking with chantix. I told myself for so long that i needed to quit smoking. I would quit then id go right back to it. 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Use caution when driving or operating machinery. Common side effects include nausea trouble sleeping and unusual dreams. Im not worried about smoking my next cigarette. To me that feels great. Ask your doctor if chantix is right for you. 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. The Retail Industry Leaders Association is calling the west coast ports situation, and i quote, a catastrophic shutdown of americas supply chain. Our jane wells literally in the middle of this port mess. She is smack dab in the Pacific Ocean near los angeles, one of the busiest ports in the country, at least it usually is jane. We hope your signal there isnt as choppy as that ride looks right now. What can you tell us . Whats the latest . Well its amazing whats going on here kelly. The whole situation may hinge on the fate of one man. This may all be about one man, the arbitrator who settles disputes when the union and management down here at the los angeles and long beach port complex. According to the ap the guy, the one arbitrator who used to be a union official, is basically appointed for life. The union says hes treated them unfairly. They want to be able to unilaterally fire him, and that is reportedly the one core remaining issue leaving all these ships out here staying for in some cases well over a week before they can even get inside the berth. Now, weve been on the water for six hours this morning. We have not seen one of the 30 ships here outside the port leave to go inside to be unloaded not one. U. S. Labor secretary tom perez is meeting with management and the union for a second day. The port of oakland is blaming the slowdown for a 32 drop in volume lostast month. There were some ships being unloaded, but to give you an idea of how this is hurting one u. S. Industry beef exports account for 9 of sales, says bret crosby. More than half of those exports go to japan, south korea and hong con. They are down 15 in a year. These are higher margin sales. If that continues, guys that could impact the beef industry alone by 2 billion. Im not sure whats on this ship. Certainly its not california or u. S. Beef going out that way. It is anything as one guy told me, could be anything from garmin gpss to lycra hot pants. Its not moving. Jane wells, thank you so much jane. Trying to keep an eye on the activity or lack thereof in the port for us this afternoon. Lycra hot pants. Be interesting if those crates were all clear. Help security thats for sure. For Many Industries there may be no safe harbor from the storm of the port crisis. Lets talk about more on that with liz dunn, the founder and ceo of tomag advisers. When i go to the store where will i see the biggest impact . I think you will see less goods on the floor. Once we start to work through the goods, you will see higher sales. You mean higher prices. No i actually mean like more discounts, higher discounts. Okay. Because once the backlog kind of clears through you will start to see higher discounts, but i think whats interesting is that retailers are airing it all in. They obviously dont have the power to mark that up and pass it onto the consumer so i think really its going to impact the retailers in a lot of ways that wont necessarily be as visible to the consumer. Which is interesting because if theyre swallowing it it comes at a time theyre dealing with a fickle consumer around the holiday period an important time to move a lot of merchandise, and a kind of unclear consumer environment generally. What can you tell us about the places that seem to be taking it the worst or having to cough up the most here . The biggest impact weve seen so far is from perry ellis. Thats interesting because they sell to the Department Stores. If you think about walking your way down the value chain and who sells to whom. When youre talking about a wholesaler that sells to Department Stores once those goods miss the shipping window, the Department Store if theyre already feeling weakness says just cancel the goods. That sort of company has to eat those profits. The vertical retailers are also experiencing it. Weve heard a lot about diverting goods, airing goods in which is eight to nine times the cost of putting it on a boat or diverting it through to the east coast which takes more time. Its impacting retail quite broadly. How close do you think we are to the closing of the window. Were already seeing it and Many Companies have come out and said were seeing an impact. Perry ellis is one, Anne Taylor Lululemon mentioning it in terms of a sales impact and a margin impact. As we head into earnings season for retailers, i think well hear about it from a pretty large swath of retailers. Any longer term effects from this . Theres been several disruptsions to the ports. What happens if air traffic use has to become a higher expense item for the companies . What other options are there . What long lasting effects are you anticipating . I think you will start to see retailers put no contingency plans. I was covering coach in 2002. At the time they started to really implement more going through the suez canal and fine contingency ways to put it on a smaller boat, send it through the suez canal so they wouldnt get caught up in the west coast port. It happened in 2002 when we saw almost a 16 billion impact to the economy. So i think a lot more Contingency Planning around this sort of thing. Quickly because we have to go, but how much of that Contingency Planning could eventually become lets produce it in the u. S. Then we dont have to worry about shipping it getting the goods here. You are starting to see more production move back to the u. S. Obviously labor prices are increasing in asia and theres a lot of trade and tariff reasons you can move things closer to home. And so its possible. Thats one potential longterm impact. Or mexico as well where we dont have to cross that port. Exactly, central america. I wonder if it will be a tipping point. Liz, thank you very much for being here. Liz dunn with talmadge advisers. Some names to focus on. Were reminded its not just for individual chains, its for the economy generally. Absolutely. Much more to come on the closing bell. Is it a feasible investing strategy to find out what Warren Buffett is buying and selling and do the same . But first here is scott wapner. Thanks so much. Here is whats happening at this hour. President obama naming Joseph Clancy to lead the secret service. Clancy has served as interim director since october when then director Julia Pearson resigned under pressure. Clancy is a 27year veteran of the secret service. The European Central bank keeping a lifeline for greece in place today. They voted to continue to allow funds to greece. They increased the amount to 68. 3 billion euros. Thats up from 65 billion. The fed revealing its minutes from january. They were concerned that raising rates too soon would put a damper on the economy. Carmelo anthony is shutting it down. The New York Knicks star opting for knee serge ri that ends the season for him. An announcement from the team due later today. Coming up on mad money whole foods ceo walter robb. Thats the cnbc news update for this hour. More closing bell when we come back after this quick break. Welcome back. The nasdaq about 100 points if you havent heard from retaking that infamous 5,000 mark. Morgan brennan is in the middle of the action in midtown. Weve seen the nasdaq turn ever so slightly positive this afternoon in the final moments of trade, and one of the reasons is because weve seen apple turn positive. That stock is up half a percent and its less than 40 cents away from yet another alltime high but besides apple, its been all about earnings here on the nasdaq today. You have a Small Company company thats been making the biggest moves and thats angies list soaring about 55 today after the review sites membership climbed. Potbelly up 14 . Jackinthebox gaining 7 . Boets Companies Reported better than expected earnings. Same sale comps that were strong. Different story for watchmaker fossil plunging 16 , 17 after Quarterly Results that disappointed. And rackspace, check out shares of the managed cloud company. Company reported a big jump in q4 profits but a weaker than expected outlook for the current quarter. Nonetheless, those shares did turn positive in trading today. Theyre up about 2. 5 . Kelly, back to you. Morgan thank you. We should quickly mention for our viewers, were watching apple shares. 128. 58 is equivalent to 900 on a presplit basis. Follow along as they continue their rally. Incredible. That has become a true juggernaut again. And behind why the nasdaq is close to these levels again. The Cloud Computing war raging on. Big names competing in the storage space. Another contender looking to carve out a following, rackspace,r ax trading at that 52week high. Joining us is ceo taylor rhodes. Good to see you, taylor. Thank you for joining us today. Thanks for having me bill. Clarify the guidance. Fourth quarter profits did well. Youre trying to rein in costs so that helps, but what about the guidance for revenue for this in the next quarter . Whats going on . Yeah bill. For folks who follow our stock regularly, they understand that q1 is generally our seasonally lighter quarter, especially compared to q4. We host more of the big ecommerce sites than anybody else. A lot of times those campaigns rack down after christmas and january is a time they reset for the new year. They have some seasonality. We expect that normally accelerates out to q2 and 3. Can you talk about competition . Where is it coming from today and how differentiated and bifurcated is the cloud space becoming . Its really separating out. I think cloud is becoming an irresistible model because it makes Technology Innovative and powerful again. In the first five or six years, it was really an early adopter market. You had to be technologically savvy because cloud providers would give you a platform but you had to make it work yourself. What were seeing is the mainstream starts to move is most companies lack either the breadth of skills to keep up with cloud applications or they want to focus on whats core to them. As the mainstream market moves, we see the cloud market separating into unmanaged clouds and managed clouds. Rackspace is the de facto leader in the managed cloud segment. Let me ask it from a different angle. Youre in a land of giants in cloud computeringxu computing. Youre a 7 billion Market Cap Company competing against these giants. Are you suggesting that youre going after a niche that they wouldnt have an expertise in or how do you compete against these guys, if you do . Sure. Bill, as cloud matures, well see like other Industries Like retail, different players will compete on different investigatevectors. Walmart sells on volume and low price every day. We will compete on good quality infrastructure but also high value services. We view ourselves as the economies of expertise player where we will provide a superior customer outcome. Were world famous for being the Service Leader in our industry and thats our competitive angle is providing economies of expertise to make cloud applications work. The other model is about cheap infrastructure but you have to figure out how to make it all work. Taylor whats the next chap for then and how much investment is required for you guys to stay at the forefront especially when youre going up against big pocketed rivals. I think the pie for cloud is getting bigger as the mainstream market really starts to move now. It has not been the case in the last few years that most mainstream cios and ctos have been investing in cloud. Its moferg out of what i call science market phase. For us its about really making our message loud and clear, about if youre looking for great options plus Trustworthy Service and expertise in the skill sets thats the rackspace offer versus alternative offers in the market and so well continue to invest in the market and build Value Proposition around areas like security in the cloud, ecommerce content management, et cetera. Taylor rhodes of rackspace. Good to see you. Thank you for joining us today. Thanks for having me. Thank you so much. All right. 15 minutes left in the trading session. Holding steady. A lot like yesterday. We arent seeing a lot of volatility in the market right now for the major averages. And its funny because going into this year people talked about buying the vix and the stock market volatility with the fed moves and everything. It turns out you should have bought vix on just about everybody else oil, the 10year, even gold making some interesting moves today. Well keep an eye on all of those for you. Signs its crucial home spring selling season may be heading for trouble. What you need to know about the latest numbers. Stay with us. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. lowe hi. Im rob lowe. And i have directv. hs lowe and im peaked in high school rob lowe. And i have cable. lowe directv is wireless, so you can put your tvs anywhere without having to look at those ugly wires and boxes in every room. hs lowe cable isnt wireless but you just gotta put something in front of them. lowe im still in awe of how great my tvs look. hs lowe and im still captain of the team. lowe dont be like this me. Get rid of cable and upgrade to directv. Call 1800directv. Welcome back. Here is a look at the markets. The dow trying to hold 18,000 today. We have to turn our dow 18k hats around. The s p is off 3. The nasdaq barely positive and here is a look at the main breakdown of the s p 500. Roughly split between gainers and losers. Well keep a quick focus on shake shack. Their trading post is right behind us at post 9 on the new york stock exchange. Were seeing a pop. Its up almost 8 here. Thats right. Wall street journal story this morning talking about the Company Expanding into japan adding nine locations by 2020. Dont know if that would be behind the recent last couple minutes here. Maybe its because it looks like theyve indicated their first eps report for early march. I would like it if they expanded in the u. S. First before they get to japan. Its getting late in the winter and those of us in the northeast are on our knees hoping that the all important spring home selling season is about to get under way. But there are signs that it might not get off to a great start. We have diana olick here with that story for us. Bill believe it or not, realtors actually consider president s day weekend to be the real kickoff to the Spring Market so were in it but so far not so good. Take a look. Mortgage Interest Rates rose to their highest level last week since early january. The 30year fixed at 3. 93 . Still under 4 , but even at that historically low levels, applications to purchase a home dropped 7 . Theyre barely 1 higher than a year ago. Rates move higher yesterday, so what does that mean in real cash money . A borrower taking out a 200,000 day would have to pay just 42 more a month than they would have if they bought on january 1st. Now, that might not seem like a lot, but it gets higher the bigger the loan and homes are still getting ever pricier. Why . Because there is just so little supply of homes for sale nationwide and the builders are not helping. Single Family Housing starts fell 6. 7 in january month to month. Theyre running at about half the level of 2000. Thats prehousing boom and thats not even adjusting for population growth. So the big hope is that as much of the nation starts to thaw out, we hope we hope more people will list their homes. But, again, that remains to be seen. Back to you guys. We hope we hope. Thanks, diana. Heading to the close, ten minutes left. Art cashin just walked by. The imbalance is to the buy side but not by much. 200 million in stock to the buy side. As art said probably will have a negligible impact on the close today. Were down 32 points on the dow. Well see what does have an impact here. Ten minutes to go final market volatility weve seen. Well watch what happens to your money in the final moments of trade. Buckle up, were back in two. Stay with us. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. About seven minutes left in the trading session. The dow down 35 points. Hanging there, still above 18,000. The s p down 2. 75. Nasdaq is up 2 points back above 4,900 as we head to the close. Joining me is David Sherman and bob pisani. Bob, we had the minutes of the fed come out from their january 27 meeting. Not much impact in the equity market but a lot in the treasury market. Yes and we saw yields move to the downside. We did have a little bit of reaction to stocks. Bank stocks moved down because the yield curve flattened a little bit and thats a little bit of an issue. Utilities rallied because yields went down in the bond market but overall it was a muted reaction. The fed seems terrified, terrified about the idea of raising rates. The impact on the economy and the markets. Maybe terrified is too big a term, but they seem afraid of their own shadow. Im going out on a limb here but dont you think they clearly indicated were not sure what were going to do. I think the fed is nervous. I think the fed has a lot of room to manipulate and to stay in this easy money period because you have negative yields over in europe. A lot of uncertainty both politically and with the sovereign risk in europe. Youre still seeing a lot of interesting opportunities with the selloff as a result of oil. You have bonds yielding 8 9 . Bonds with a 400 million issue side or less the typical spread at treasuries over 500 basis points. These are things you can buy for your mother or grandmother and put away and clip your coupons. If youre in a fund the inventories arent there. The dealers arent holding any inventories anymore. If Something Weird happens, this stuff goes zero bid, isnt that a problem . It doesnt go zero bid. Nothing goes zero bid. Theres always a price that people are going to come into. Okay. Were happy, happy to provide liquidity at a price. But in answer to your question, look, if you buy a bond at a 9 yield for five years and its money good you might have price volatilities but if youre holding it to maturity. But its got to be money good. If you own an energy bond it could be a different story. If you dont own energy bonds, at our funds we own less than 2 in energy. We keep getting this slow melt up today is flat but on the lack of bad news. Greece muddles through. The fed is not going to do anything. Maybe june is off the table. Maybe not. I dont think people were positioned real long. Lets take a break and come back and see how we do on the closing countdown. After the break, angies list the ceo speak was us exclusively. His companys stock having a remarkable day up more than 50 for a time. How he hopes to keep the stocks mojo going. Thats coming up on the closing bell. Youre watching cnbc, first in business worldwide. No. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. 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Know you have insights from Top Investment strategists to help set your mind at ease. Know that planning for retirement can be the least of your worries. With the guidance of a pnc investments Financial Advisor, know you can get help staying on track for the future youve always wanted. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable professional. Im actually a dj. [ dance music plays ] woman [laughs] no way that really is you . If theyre not a cfp pro you just dont know. Cfp work with the highest standard. 90 seconds. A quick look here. The dow pretty narrow range again, like yesterday. We were negative all day, one little moment there this is when the fed minutes came out, the market started to come back but it retreated a second time. The biggest impact of the fed minutes, the 5year note. Watch this the decline in yield of more than 9, 10 basis points. Its come back a little bit. Were at 1. 53 , but a huge move lower for yields along the Treasury Curve with that flattening that bob pisani was talking about. Very quickly, nasdaq continues to move higher. Were now within 100 points of 5,000, David Sherman. Do you Like Technology . Are you going to follow it higher here to 5,000 . Im a bond guy, so if theres good money good bonds in technology ill buy them but i dont have a view on stocks. Would you buy this debt apple is issuing you in. No, it doesnt have enough yield for me. I want to focus on things i can make 7 8 9 on. I dont want to own 2 or 3 and be long my treasury. Got to go at this point. Thanks, david, very much. Bob, well see you later. Were going out with a minor decline. Volatility but well see how things turn out tomorrow. Hour two of the closing bell with kelly evans and company. Ill see you tomorrow, kel. Welcome to the closing bell, everybody. Im kelly evans. Here is how were finishing up the session on wall street. Its a week weve been watching key round numbers here. Doesnt look like we will have any major headlines because once again the s p 500 closing down about a point, so 2099. Meanwhile, the nasdaq up 7 points. Thats enough to put it across 4,900. Guaranteed that thats going to be a little bit of a water cooler talker. The dow, a little retreat from the record close of 18,053. We have been watching to see if it can reclaim it. Joining me today to talk about all this cnbc contributors i emphasize, evan newmark and karen roth. Sharon epperson joins us and fast money trader guy adami. Guy, well kick it off with you. Not much reaction to the fed minutes but interesting moves in gold and rates. You know its interesting, you have to ask yourself, i think were at a point where you have to say is the bond market bottomed . Is the tlt bottomed and are rates headed lower or are we at the start of this long awaited rate move higher. If you believe the latter the banks become interesting. Citibank, bank of america, bank corp. Im sort of in the other camp that says i think weve sold off enough, weve held a bit of a trend line and i think this is the reason why or this is the moment where rates continue their momentum to the downside. So that has not, by the way, thats not stopped the stock market from going higher, but thats what i think is going on in the bond market right now. You still take the other side of that trade evan . Yeah i do. I have a very different view on it than guy does. My view is that its actually moving the other way right now and i think the action in the bond market and even the action on the long end of the bond market today, it hung in there pretty good even after the fed minutes came out, so my view is, look at the bond market for where i think the stock market is going to go. Carol, sharon . I want to go back out to guy for a second and, first of all, guy, id like to acknowledge your very sweet dance moves. If anybody hasnt seen the vine on twitter, they should check that out. Please do. In some ways we are so close yet so far away to that nasdaq composite alltime high. The 15th anniversary of that is coming up in a few weeks. What do you think the investors psychology is around that if were able to break through that number, i guess it was like 5046 and change. Is that a good thing or a bad thing for the market . You know i think the russell is something both you and i have watched for quite some time the iwm. I will take my cues from that, and, you know, here we are at this 122 level in the iwm which has been resistance and were sort of hovering around this level, but some of the things i have said the market doesnt give you a long time to buy the lows and sell the highs. In this case the iwm has been basically trading at this level for a while which leads me to believe were waiting for the next leg higher. Whether or not i believe its right doesnt matter. If we get a close above 122, i thin it drags the russell to the next level and it probably drags the s p with it. You know and for people like you and i who are nonbelievers, i would say, it takes us along sort of kicking and screaming. And the nasdaq as well though . Well yeah. It feels that way. I think it all gets dragged up. Again, were getting towards levels that are very interesting. You know now youre getting towards levels where the bears have to prove themselves which they have not been able to do and youre at levels now when the bulls dont have to necessarily prove themselves. Momentum might take over for them. Again, it doesnt matter if you believe the reasons why. The fact of the matter is the market feels like it wants to take the next leg higher right here. I think investor psychology is a great point that carol brought up guy, and i think that a lot of individual investors are really not concerned that the market may seem to be overvalued and, in fact they have significant profits that they need to take off the table now and maybe reapply elsewhere. And so whats interesting is whether or not were going to see individual investors really kind of going with this herd mentality that were at historic highs for the s p 500. Were going to have this milestone for the nasdaq and were going to keep in the market and keen ap along for that ride when some investors may need to pare some of their gains and make sure they have a balanced portfolio. Especially in apple for example. Lets take a quick look at what happened today. Closing it looks like at about 128 and change. A good enough for that to be equivalent to the 900 mark prethat 7 for 1 split we saw in the name. Shares of apple over 900 on a presplit basis for those following that benchmark. Ened some individual investors that talked to me thats the first stock they bring up. He will bring up apple. They also have a ton of credit card debt, they may have student loan debts, but they want to know should they keep putting more in apple stock. I point out a lot of investors are not focused on the longterm picture and theyre looking at this herd mentality and going with the flow in apple and other stock and its a hard road that a lot of Financial Advisers say they have to get their clients to reevaluate where they are. Rich peterson points out going back because they have done four splits. If you had 100 shares of apple from the first split, theyd be worth 5600 shares or 716,800. I was just going to say whether or not they keep putting their money into apple stock, we know they keep putting their money into apple products. Actually on that note, lets get out to dom chu. That watch for nasdaq 5,000 is really heating up. Today we just crossed 4,900 and closed there. What say you . Here is the thing, if you look between then and now, the comparisons are rarely as simple as apples to apples oranges to oranges here. Lets show you something here. Back then the s p 500 Technology Stocks traded at around 67 times earnings. Today thats more like 17 18. So already youre seeing at least the large cap stock picture be trading a little bit more within the realm of reason. Lets put it relatively speaking. Take a look at some of the individual companies. Microsoft was probably one of the poster children of technology back in 2000 19992000. Back then it was worth 526 billion. It traded at 27 times earnings. Today lets say the caveat here its a much different company, a much more Mature Company. It trades worth 357 billion and 18 times earnings. So the growth expectations are there but not so much as it was back in 2000. Take a look at another one. This is interesting. Cisco systems. It was a 467 billion company back then. It traded at 233 times earnings a very growth oriented company. Today its still worth 150 billion, but right now trades at 18 times earnings. More in line with the market. Here is one, yahoo . It was synonymous with internet search and internet content back in the internet heyday. A 94 billion Company Trading at nearly 1800 times earnings. Today a very different company. A more Mature Company as well. Its worth 42 billion and trades at 6 times earnings. So here is the caveat. We make these comparisons, but the reality is its hard to tell what company today is the same as yahoo back in the day. Is a twitter or a facebook or a go pro the yahoo of yesteryear today . I dont know what it is. A lot of experts try to weigh in on this but weve got a lot of viewer comments tweets about this. Its not an easy comparison to make but just for a little bit of an example, this is the relative kind of valuation we saw back then versus today, kelly. And thats in the center of this argument and thats why, thank you, dom. I look to you, mr. Newmark. You lied edlived through this entire period. I was the ceo of an Internet Company that had a valuation by some Morgan Stanley analyst of 40 billion to 60 billion on it. The company consisted of me a temporary secretary, and a rented photo copier and that is 100 true. And, you know, it was a crazy time. I think i got my timing just about exactly wrong. Okay. I started the company up in january of 2000 two months later you had that. Look you know, its not the same thing today as it was back then. There are more but there are pockets. There are pockets of stupidity. There will always be pockets of stupidity out there, and the question is, you know, just dont get caught in a pocket of stupidity. I was going to say, ill toss this back to you as well, is that a lot of the stupidity, some of the deals people talk about like whats app, that was a private deal to facebook. People will talk about this idea that we have a bubble in private markets, and you can see that with valuations perhaps with uber perhaps with snapchat and whatever else but this was the point i was going to bring up because guy can weigh in on this. He and the fast money traders all of them, they talk about the biotech industry right . We have had a number of people say to us where there may not be a bubble in technology, the bubble that youre seeing right now people say is brewing in biotechnology. Now, there werent that many biotech ipos back in the heyday of 99t2000. Last year there were a regard number of ipos for biotechs so maybe thats an indicator. Remember, guys the average ipo first day pop for tech stocks, 90 in the first day. Last year it was 25 . Still healthy, but nowhere near bubblicious. Well give you the last word. If history doesnt repeat but it does rhyme, is biotech the rhyme . No i like dominic chu though getting right in my grill. You look at the big ones amgen, cell gene gilead theyre not trading at ridiculous valuations. You can make the argument that theyre cheaper than some of the big cap pharma names. I dont think theres a bubble at all. Is there a one off biostock that has only one drug they rest upon . Absolutely. Ill know if evan starts a biotech company. The real biotech stocks arent in a bubble. Ill go right back at d. Chu. I love carol roth she snuck in a hall and oates lyric. I caught it and i love it. Guy wont recognize what is the biggest bubble out there, the bond market. I disagree. You said that a year ago. You could have said that six months ago, a year ago, 18 months ago and it rang hollow then. You Better Believe we end up like japan or else you will end up a poor man. What happens if you have a lot of mini bubbles all linked together instead of one giant bubble . Do they pop in a different way . Youre asking me that . What am i . I think we let this question hang out there because it is the question carol. You nailed it. This is what the fed minutes we go back to those minutes as well, did they say they were concerned about they called out certain areas of valuation but not one this time around overall. So theyre still being what should we say . Patient, using their own language for the time being to see the Market Reaction. Thank you. Dominic chu, thank you, sir, as well. Stick around to catch more with guy adami and fast money at 5 00. They will have all the after hours action from solar city from sun edisons earnings report. Dont miss a moment of that. Straight ahead here well talk about Warren Buffetts Berkshire Hathaway underperforming the market so far but its sloan away the s p 500 over the past decade of course. Should you be more like buffett in your investing to secure your financial future . Copy his moves even if it means buying ibm . And angies list rallies 50 after topping the 3 million member mark for the first time. Thats coming up on the closing bell. Market so far but its sloan thats coming up on the closing why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. Yesterday Warren Buffett disclosed a handful of changes in Berkshire Hathaway stock holdings. A new stake in deere. He completely shed his stakes in exxonmobil and conocophillips. Now that you know what the oracle of omaha is buying and selling, we ask should individual investors follow in his investment footsteps. With us is pat powell. Should it go as specific as investors buying and is heselling what hes buying and selling. I would think you always have to pay a little bit of attention to Warren Buffett. They dont call him the oracle of omaha for nothing. However, i think these may not turn out to be his most stellar investments as we look out a few years from now. I mean it seemed one is uncertain as to exactly when he stole the Energy Stocks but it says Fourth Quarter. If he sold in december, he was finding a bottom. It is difficult for a large investor like Warren Buffett to dump billions of dollars worth of stock even of those very large companies. And that is where a small investor actually has an advantage when theyre trading a few hundred or even a thousand shares of a stock. The market just doesnt care. But when you go with billions of dollars worth of stock, the market cares and you can really see it in the footprint. Its interesting but im not sure that investors should now be following Warren Buffett any longer. What about, pat. Following the philosophy of a buy and hold strategy that requires you to look at slow and steady. A lot of investors are getting out of the market at the wrong time, whether its because theyre afraid of the market volatility or theyve had some disruption in their life like theyve lost their job and they just cant afford to put as much money away. So what about that strategy in terms of following buffett, in terms of thinking like him but not using the exact picks. I love the idea of longterm investing if you have longterm goals. I think thats absolutely right. Youre rewarded by the federal government by giving you Capital Gains treatment which is better than the ordinary income tax treatment. So you have a twofer on Something Like that. But i think when you look at some of his holdings you might take a moment of pause and say, is he really what is he really doing . I look at things like cocacola and this is a company thats really struggling to have Revenue Growth. In fact, its been shrinking. How much more cocacola are we drinking . I look at a company like that and i think what a great 20th Century Company that was, but is it really the right investment for the 21st century . So when youre retail investors, i think they should be looking at what is going to be a great longterm hold for the next ten years, not the prior ten years. I agree. I think sharon hit the nail on the head. You want to look to great management teams, look to a long term hold. Buy what you know but even if you wanted to invest like Warren Buffett you really couldnt because he gets sweetheart deals because hes Warren Buffett. Even if you went into the same names, youre not going to get preferred stock. Youre not going to get some sort of a discount the way that hes getting it to get the same kinds of returns that hes getting. So i think if you really want to emulate his strategy, you would buy Berkshire Hathaway rather than trying to emulate shes absolutely correct. Theres always a sweetheart deal just for warren. Thats true. But i think he already answered this question himself. I think Warren Buffett has come out and said a number of thims,imes, listen, you shouldnt be buying individual stocks. Most people should sit on an index 500 times and sit on it and not worry about copying me. I think its good advice from an 85yearold man. Youre referring to buffett, not himself. Thats the way you characterize him a random 85yearold man. My point is but its precisely his experience after the greatest investing career in terms of single picks, his advice still to most people is dont try to do that, just buy the cheapest cost broadest fund. And stay in it. Penal say i dont have 300 billion. But the point is continue to put the money in on a regular basis and when something happens and there is this disruption, dont just take the money out. A Td Ameritrade survey shows people start putting money in by 300 or more they have lost so much money time is the most powerful. Before we let you go im curious if you can bring it down to a point for us. What do you think is the strategy for the typical investor . Is it to buy stuff you know and hold onto it individual names like a portfolio of five or ten or 12 of them or is it just buy the index fund cheaply and hold onto that . Well i think for most investors having an allocation and using funds or Exchange Traded funds i think for most investors that will work the best. I think maybe segregating a small amount of money, maybe 5 or 10 of your portfolio to try to emulate the kinds of things that a Warren Buffett might do might keep you a little more interested and interesting and you might occasionally hit that grand slam home run, but i think trying to do exactly what Warren Buffett has done is going to be tough. And i will take dispute one point. I think a small investor does have an advantage over Warren Buffett. And they have an advantage over the hedge funds and all of these big players. When a small investor trades a few hundred shares, they do not move the market. When these charge investors move billions of dollars theyre moving the market and it sometimes takes them weeks and months to get in and out of a position. The small investor doesnt have that handicap. If theres one thing we can all emphasize it sounds like minimizing churn is the point. For the small investor you dont even worry about it just buy in and buy in and stay in. They will save a nickel on buying a block of 100 shares its not going to matter at the end. Its something to keep in mind when we look at the 13f filings, there may be more to it than getting in and out of the positions. So the s. E. C. Gave warren another sweetheart deal in that he didnt have to disclose anything until his positions were fully achieved. You know i think you create rules and regulations not for good guys. Good guys have to follow them but the rules and regs are created for the bad guys. I was a little startled to see all the special deals that the s. E. C. Is now giving warren over some of their case competitors. Very startling. Hes bailing people out left and right. Pat, thank you so much for being here this afternoon. Pat powell from wealth health. Now,eded the founder of pandora has much more than just streaming new music. And its one of the most popular sitcoms of all time but seinfeld reruns may not appear the same as you remember them. It has to do with advertising dollars. Well explain coming up on the closing bell. Media heavyweights are gathering today at the code Media Conference produced by recode which we have a content sharing agreement with at cnbc. Our Parent Company is an investor and our Julia Boorstin joins me from that conference in dana point, california with the pioneer in the streaming music business. Julia . Thank you so much. Im joined by tim wester gren, founder of pandora. Just on stage made some big announcements about a new direction that the company is going in. What did you announce . We announced artist messaging which is essentially getting artists the ability on pandora to deliver short audio messages to fans of their music. So people who thumbed up their music, created stations with their name so its really a communications tool, a really powerful one to go after these massive audiences they have on the service. This builds on the recent announcement youre going to be giving artists a lot of data about who is listening to their music and when. It sounds like a new revenue stream. How much will you charge for this ability to tell fans they can go buy a ticket to a concert or go pay to download an album . It seems like a very valuable tool. It sits on top of this enormous Data Foundation we launched a few months ago that allows an artist to see all the activities thumbing up thumbing down, the demographics of their audience. Literally a heat map of where their audience is which then provides a great tool for them to kind of optimize their careers and the next step now is take that data and find ways for artists to harvest it. And the beauty at our scale, we have over 80 million monthly listeners now, theres a lot of artists on pandora who have huge audiences including thousands of artists who get no radio play of any kind so this is kind of the working mans musician kind of dream come true. Interesting. Kelly . You know streaming music one of the most exciting and competitive spaces in tech right now. Im just curious, if im somebody who is with you when you launched the initial pandora idea, then maybe i went to spotify, maybe now im on google play what are you doing to get me back . Well its interesting. There is a lot of activity in our space but theres a fundamental hypothesis that most people in the end want to listen to radio, hit a button, lean back, and be entertained. We havent really seen direct competition for listener hours between an on demand service and a radio product. Our focus has been on making a personalized radio experience really good and that is a fantastically hard problem to solve. We feel good about our competitive position. What we dont know yet is what apple is going to launch with its new beats product. What if they come out with a radio product similar to pandora. How big of a threat is that 1234. Of course, we view any sorm of radio as a competition. Today broadcast radio is our primary competition. It will come down to who can build the best play lists. For us what we bring to that is the music genome product, the intense data layer we have been working on for 15 years and the 50 billion thumbs up and thumbs down from listeners. Were comfortable with any other product including itunes radio will not really compare to the sort of experience we can offer people. Well. To see what apple has in store. I know youre not ceo but pandora stock is way down has dipped dramatically since your most recent earnings report. Yeah. And the big question is really what youre going to be able to do to turn this around. Is the new revenue that could come from your new artist platform going to turn things around . No. Thats really not the purpose of that. Thats part of our core mission, empowering artists. Thats why i founded the company way back when. As a business we look ahead and say we are the opportunity we have is one that comes along very rarely. This is a gigantic industry, radio. 15 billion, 16 billion. Its moving from broadcast to the web. We are 80 of Internet Radio right now and technology is only accelerating that shift. So for us we dont think so much about quarter by quarter, what can we optimize . You, of course Pay Attention to it but we really ask ourselves how could we get the biggest opportunity in the long run. Were not concerned about the short term gyrations. No one likes them but in the end were asking ourselves are we setting ourselves up to be there when this opportunity flourishes and weve tripled our Engineering Team we have a huge amount of great idea products in the pipeline. The company is feeling good. Kelly . Tim, im curious if you can share, you mentioned you have a huge treasure trove of data and thumbs up and thumbs down. What are some of the most surprising things you have learned about the way in which people stream music, some of the preferences they might have and anything else thats jumped out to you from that 15 years of Data Collection . Well i would say that one thing i had say is peoples music tastes is broader than folks think. One of the problems with the historical Music Industry is you had to pick from a small number of narrow channels. Theres an ajumption that people really dont want variety, they dont want diversity. They like the mainstream music. We find on pandora, people want everything. Classical, folk, country, bluings, reggae indian and the appetite for that is enormous. Thats part of the real joys of an Internet Radio and a personalized service. You can play this huge catalog of stuff and everybody gets to participate in it. You have this persistent problem of high royalty cost. Over 50 of your revenue to licensing costing. When will you be able to overcome that . The key metric is revenue per hour. How much money can we make per hour because our costs are essentially fixed and that trend line is moving up and up and up. And the investment we made since we launched has really been around how do we grow listeners but how do we create an efficient monetization effort. Its about how do you deliver ads, scale your local Ad Sales Team and train them and make inroads into now 40 local markets . That investment is paying off. So we dont wring our hands around can we make it over this royalty hump. We feel like were in the right direction there and well sort that out end of this year well have an important ruling as everybody is aware, but our concern is not that. Were really focused around how do you keep growing and drive monetization efficiency. Well look forward to hearing some of those artists speaking directlily to fans. Thank you so much for joining us. Back over to you. Thanks very much to you, julia and to tim as well. As mentioned, such a competitive space. You know what they learned over 15 years . Are you a pandora listener . I am. They learned people want to listen to music and not pay for it. Thats what they learned. They learned people want to listen to they learned people want to listen to whatever they want and not have to pay for it. I disagree. The Biggest Surprise for me personally is im paying for it. Youre paying for pandora. Do you know what the artists will put on the message, please buy our downloads. Please dont listen to pandora. Its still better than the radio. You are not reading this wrong. Angies list did skyrocket nearly 60 today. Coming up well here from the companys ceo on whats behind that big earnings beat. But first scott wapner joins us with a news update. Here is whats happening. The u. S. Accusing israel of leaking inaccurate information about Nuclear Negotiations with iran. Further increasing tensions now over the issue before Prime Minister Benjamin Netanyahus visit to washington next month. Former Florida Governor jeb bush says mistakes were made in iraq during his brothers administration, but he did praise his decision to surge troops into iraq in 2007. New York Attorney general Eric Schneiderman filing suit against u. P. S. Saying the company deprived the state of millions of dollars of revenue by shipping nearly 700,000 cartons of untaxed cigarettes. U. P. S. Denying the allegations. And regal beagle miss p who won best in show kept up the tradition by having a steak at sardis restaurant. Lets just say it is good to be the king or at least top dog. Miss p will be on squawk box tomorrow at 8 30 a. M. Eastern and speaking of another big guest, Walmart Ceo Doug Mcmillon will be on squawk alley. Thats the cnbc news update for this hour. The closing bell coming back after this quick break. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Im type e. I know what my money is doing. I rebalanced my portfolio on my phone. You know what else i can do on my phone . Place trades get free real time quotes and teleport myself to aruba. I wish. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. Welcome back. We begin with our dominic chu and a quick market flash. Were watching shares of footlocker. 6,000 shares have traded. The company is declaring a 25 cent dividend on its common stock up from 22 cents. Footlocker is approving a 1 billion stock repurchase program. Those shares up on that bit of news by about a percent. Back over to you. It continues. When banks say no to people who need a loan, theres a new layer saying yes and thats burning up cnbc. Com today. Allen wastler joins us with the hot list. Everybody is interested in who has the money. The Credit Unions are filling the gaps. They have had their best year since 2005. A little bit more than a 10 increase over last year so, theyre up to 720 billion worth of lending. Mostly mortgages and car loans which makes sense since banks are doing mostly industrial and commercial loans. Number two on the hot list weve had that terrible refinery explosion in california in torrance, california. People are really anxious about that checking that out. And particularly theyre interested in what its doing to gas prices out there because that refinery apparently made a specialized kind of gas just for california. 10 of the market there. So already gas prices on the futures up by 16 or 16 cents rather. Then finally, number three, noui know you have love this one, the next salvo in the chicken wars. Mcdonalds, theyre trying out nevada and a few test locations flavored mcnuggets. Wait, flavored . I just had some mcnukts last night. Flavored how 1234. Zesty ranch, chipotle barbecue and garlic parmesan. Why not go with the flavored sauces . Theyre feeling the heat from burger king. It was fat tuesday. Thats my excuse. Did you see what angies list did today . The stock surging 60 after a big earnings beat. Ceo William Oesterle joins us next and a meeting at the white house has dubbed the violent extremist summit continues today. Find out if a new plan to stop isis was skausdiscussed. 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And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. Here is a look, everybody, at angies list. Easily the stock of the day soaring after last nights earnings beat up 60 while the companys smaller than others we usually talk about, its market cap is less than 460 million even after todays move its popularity with consumers has more than 3 Million People using to find High Quality Service companies and professionals. Here now in a cnbc exclusive is the ceo William Oesterle with our panel. Its great to have you here. Welcome. And the significance for you guys is the profitability here, correct . I think that is. This was a profitable quarter and we finished with a profitable overall year. And this now, you guys even though you have gone public recently, we all remember it down here on the exchange youre actually a couple decades old as a company. Tell us about the trajectory now for earnings to be strong healthy, maybe get you back to that ipo price. Were a recurring revenue business. So we certainly have the ability to grow to invest and to deliver margin growth which weve done consistently over the last couple years. Carol . How is your mobile app that you have just recently launched . How has that really helped to drive your business and where do you see that going in terms of consumers, new consumers perhaps, finding you and using you more efficiently . Yeah thats really we consider that to be a tool for consumers to actually get work done. So its a wonderful tool for if someone has a problem, they can submit that problem and instantly get one of the highest quality providers. So its a big part of our mobile strategy Going Forward and we think a big part of our marketplace business. William, its carol roth. On the other side of your business, you solve a problem for Small Business owners as well helping to connect them with their customers. What kind of insights do you have right now about Small Business . How are they doing and what kind of challenges and problems are they facing currently . Yeah. Well, its been a you have to couple years on Small Businesses. But theyre now beginning to see demand, particularly discretionary demand return. And they struggle a lot with their there are these new enables technologies mobile and just the web itself all sorts of social media outlets, and they have a difficult time understanding how to implement those and how theyre going to affect their own businesses and were in a position to help them with that. So we try very hard to assist them as they navigate the sales and marketing side of their business. William, you know its interesting, i should disclose i actually signed up for angies list in the last month or to. It has a lot to do i would imagine with Housing Demand household formation, people wondering if theyre going to undertake a project and get someone trustworthy. The reason was i could do 11 for three years of a membership by the time you threw in some discounts. Is that fairly typical for new terms of the kinds of price points at which youre bringing in these new customers . Yeah. We have a tiered membership and so we offer we worked very hard to expand the affordability of the membership and then offer increasing levels of service. So were very glad to have you. We hope that you will use the service quite a bit, and because we now have opened a marketplace on our platform the fact is that we can make the membership prices more affordable and, in fact consumers can now actually consume Services Without being a member. And then we come back and we attempt to sell them our memberships or premium memberships. Which i know evan newmark has. It sounds like you could have gotten this for free also kelly. Im a very cheap person. I do have a question though. Because i, of course have never used angies list unlike you. Briefly if you could. Let me ask, does angies list work in different geographies in a different way . Meaning who is the typical angies list user . Is new york city a weak spot or a strong spot . Oh, its a strong spot. We appeal to people who value information who are wage earners where the opportunity cost of a bad plumbing job is really high. So new york city is a fantastic spot for us. In fact i believe its our largest household basis now in new york. New york and l. A. Are fantastic cities for us. Im wondering with so much information, william, available to consumers, how often do consumers look at angies list then look at yelp then look at Amazon Services and come back to whatever angies list suggested . Do you have any sense of how tough the competition is right now . Well, we dont have a sense for what they look at outside of our platform but we have a sense of usage rates per member or per user and ours are extremely high. Our members are very active. They report to us on a per user basis more than anyone else on the web. We have a very dedicated base. William, before we go as well, whats the latest on your headquarters in indianapolis . It made National Headlines because of the tax breaks you were looking for. Is that proceeding . We have a big vote with the City County Council this week and were optimistic about that. Our headquarters are in a section of town that really has been down on its luck for the last couple decades, and weve been a part of revitalizing that. We really enjoy it. We like being part of the neighborhood and so were hoping to expand there. All right. We will be following along for all of that. Thank you for being here william. Good to see you. Thank you very much. On a big day for the number and the company. William oesterle of angies list. The isis threat is now global. President obama has gathered a group of public and private officials to discuss domestic and International Efforts to combat threats. Our john harwood with the story next. Anything . No. You . No. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. Have you heard of the new dialing procedure for for the 415 and 628 area codes . No what is it . Starting february 21, 2015 if you have a 415 or 628 number youll need to dial. 1 plus the area code plus the phone number for all calls. Okay, but what if i have a 415 number, and im calling a 415 number . Youll still need to dial. 1 plus the area code plus the phone number. So when in doubt, dial it out president obama hosting an anti terror summit at the white house this week. John harwood joins us now with whats happened so far. Hi john. Kelly, the president has gathered officials nongovernmental officials, Community Leaders from about 60 countries to talk about ways to combat the threat of violent extremism. In remarks he made he took on directly the criticism hes gotten directly from the right that he doesnt explicitly refer to this as islamic extremism. The reason he doesnt, he says is that to do so would accept the false assertion from terrorists that the United States is at war with islam. We must never accept the premise that they put forward. Because it is a lie. Nor should we grant these terrorists the religious legitimacy they seek. They are not religious leaders, theyre terrorists. Now this summit continues tomorrow. We dont expect any concrete results, and, of course the president is going to be judged in the longterm but how effective his strategy is at diminishing this threat. Unfortunately, for him in the shortterm its being judged by the American People on the basis of the horrific images of violence they have been seeing from iraq syria and libya, kelly. And john, briefly, there has been some criticism that president obama hasnt addressed specifically enough the threats inherent to islam, for example. That hes targeted his remarks more at a vulnerable population taken by these ideas. Have you noticed any change in rhetoric at the white house as a result . No. He is simply making the case this is not about islam per se. The terrorists may cite parts of the the can ron. Its one that has people following closely percenting the terminology and our john harwood, well leave it there this afternoon. Thank you so much. John at the white house. Youve heard the saying time flies, but thats never been more true than when you watch a seinfeld rerun on tv. Its literally speeding up the show to squeeze in more ads. Is this a controversy about, well, nothing . Well talk about that when we come back. Antic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. 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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. Welcome back. We begin with dominic chu. Marriott moving higher after the bell. Up 3, 4 . The company reporting Fourth Quarter diluted earnings 68 cents, beats analysts estimates by 3 cents on again revenues of 3. 56 billion. That beats expectations, as well. The hotel chain is giving First Quarter and fullyear guidance above expectations. So you can see that move up about 3. 5 . Continuing with this travel and leisure theme, avis budget Fourth Quarter profits beating expectations as well. Earnings per share at 23 cents a share. Analysts looking for 20 cents. Revenues, though missed a little bit coming in at 1. 89 billion. People were expecting 1. 49 billion. Fullyear guidance for the company also perhaps disappointed. Thats interesting, as well. And we want to point this out. Not earnings but look at whats happening with crude oil. You can see there extending its move to the down side down by 5. 5 . The American Petroleum institute, api, a trade organization for the industry announced that their data shows supplies for crude oil in the u. S. Rose by 14. 3 Million Barrels this past week here. Thats a lot more of a supply build than analysts were expecting. So more supplies building up means a more bearish price for crude oil. Thats whats happening with the trade now, at least, so well keep an eye on crude oil into the overnight session, as well kelly. Back to you. If i could whistle,dom, i would let out a low one now. Witi crude. 17 years since seinfeld ended and its still a hit. It may look or sound a little different of late. Apparently tbs plays it at 7. 5 faster rate than the episodes originally aired to squeeze in more commercials than originally intended. Now, so you can listen in heres the proof posted by one reddit user. The faster version is on top and youll notice an echo as it runs. My clothes, my towel, my umbrella, theyre all gone. I start screaming demanding my stuff back. I grab their boombox, chuck it into the ocean. Seems reasonable. We reached out to tbs and they said the network airs a time tabled version using methods standard among broadcasters and distributors across the industry. Wow. Is all i can say, guys. Whats the deal with that kelly . No realistically speaking were all, you know crunched for time these days. I actually appreciate the fact that theyre speeding it up. Really . More time for breaks. I relish the awkward silences. No. I like things to there. Were all on the internet. Not me. By the way, this is exactly why this is exactly why people dont watch tv anymore. They do watch seinfeld reruns. No, they watch it. You watch it you tweet it. Youre doing a million different things. Its multitasking. No. Thats why they binge watch. They watch over netflix or things like that. Who wants to sit there and watch that many ads. I noticed you were speeding up as you introduced the segment. Thats exactly why we have five seconds before we have to go. I think i watch everything on fast forward anyway. So this makes perfect sense. And that way, you can go and do everything you have to do in between small amount of time to watch television. I dont want to be wasting time. Timesaver for everyone. This is insane. I am starting a slow television movement. To slow everything down. Lifestyle now. While you eat a slowprepared food meal. And just like Everything Else in the program today, no one will pay for that either. By the way, if you did this show really slow the viewership would take care of itself. Now you can toss it over to slow money. They would go watch seinfeld. This toss is going to be itself. Thanks for being here. Fast money is coming up in just a few seconds. With melissa lee and the game. Whats on tap . Solar earnings kelly, after the bell. Theyre moving right now. Slow it down. Over to you. Fast money starts right now. Live from the nasdaq narcotic site overlooking new york citys time square im melissa lee. Pete najarian dan nathan guy adami. Heres whats coming up. Refinery fire in california pressuring exxon. Well tell you the impact on gas prices retail and refiner socks. And solar city and sun edison stocks getting smacked. You can see on the reports, we have the details. From the nasdaq getting closer to the key 5,000 mark. Last time it was around these levels was year 2000. Weve got the three next generation tech plays that could power the index higher. We start off with a developing story on the r