Transcripts For CNBC Closing Bell 20150224

For a record of its own trying to close higher for a tenth straight day. That would be its longest win streak since july 2009. Investors encouraged by Janet Yellens hints to congress that the fed will probably start raising rates later this year. What does jim grant say about all this and is he behind the audit the fed movement . Well talk to him about that when jim joins us coming up. By the way, 10year has moved lower, comfortable ablably below the 2 level. Were at 1. 98 and change. 2year note auction after the testimony, then the 5year is at 1. 46 . 10year at 1. 99 and 2. 60 on the 30year. Were getting so used to this volatility but it is really unusual, especially on a comparative basis for how lowther here. Big move after janet yellen today. Lets talk about it in our closing bell exchange. We have renee norris from urban wealth management, Quincy Krosby krosby, Jim Osullivan sitting in my chair at the new york stock exchange. John manly from Wells Fargo Funds Management and Kenny Polcari from oneill securities. Im start with you, kenny p. Why is the market up . Is this all about Janet Yellens testimony . The market is up but it is about janet yellen. Its about the fact shes now clarified clarified, rates arent going up in june. Even though the market kind of sensed it its a little bit of this relief rally. Theres not a lot of volume not necessarily people just piling in, and we seem to be hitting some resistance on the s p at 2115. We would expect that to happen and allow the market to back and fill as it prepares for the next move. Jim is it possible the market is getting this guessing wrong. Janet yellen not necessarily opening the door to moving later but perhaps to moving sooner . Where are you in terms of the first rate hike . Im a little surprised. I didnt hear her say they werent going to go in june. What i heard today, the biggest difference in terms of what she said before was she was really emphasizing when we drop patient, it doesnt necessarily mean were going to go two meetings later. Shes setting the stage for them to drop patient in march. Does that mean they go in june . No, but theyll have the option. I think theres still a good shot they go in june but if its not june, if its july, if its september, one way or the other, the upbeat tone from the fed chair today is consistent with them starting the normalization process pretty soon. Renee, if my note is correct, you see the dow hitting 20,000 this year. Absolutely. Does it matter what the fed does then . Well not really because i think that our economy has been Strong Enough to be able to support this. Its been a slow and steady type of a process and the feds have been very transparent so we know exactly what theyre thinking. We just dont know when theyre going to flip the switch. So i am the fed made it clear in the minutes that were released last week from the january 27 meeting that they are concerned about what the market will do when they do begin the process of raising rates. Are you . No im not. You know and i think that thats a very cautious statement that they ought to make for sure. You know weve already seen i think the shot across the bow the first shot across the bow last week with walmart, for example, saying they were raising wages for their employees. One of the things the feds have been looking for is wage growth and were starting to see that. So as long as theyre transparent, theyre letting everybody know whats going on, i dont think its going to create a shock to the markets. Quincy what about you, the impact for the market and dow 20,000 this year do you think its possible . Well, i think the market has to pull back before the market can set the stage for the next leg up. Once the fed starts to raise those rates or we believe theyre going to profits and Revenue Growth is going to matter tremendously. And what were seeing is thats coming down right now. We need to see that start to move up and let us know that companies are really gaining market share and able to keep their bottom line with higher wages and were seeing wage growth across the spectrum. Thats going to take away from the margins. John manly, you equate our fed watching here with the old story of the boy crying wolf. We hear it again and again and again. Were anticipating when finally the wolf shows up. When do you think that is and what do you think the market does with it . I think its a puppy when he shows up. I think essentially i know exactly when the fed will raise rates. As soon as they can do it and have no impact on the economy because the last thing they want to do is pull the economy down from this level or even slightly stronger levels. At some point the fed will do it but theyre very data dependent at this point and theyre not going to do anything stupid. I felt the chair of the Federal Reserve is at least as smart as i am and probably a lot smarter. If what theyre trying to do is give some flexibility so the market doesnt overreact in march if they drop the patient language, that still could open the door to them going sooner, couldnt it . There are positive signs out there for this economy and we know this fed is a little bit anxious to move if they feel like the conditions are falling into place. June is very much on the tanl table. They wont move before june. But if they drop patient in march, they could go in june. That doesnt mean they have to go and they just dont want people to overreact because they want to see more data over the next couple months. If the economy keeps improving, unemployment keeps falling, they will be tightening before too long. And i think the market fully expects that right . No one is under the impression that theyre not going to raise rates. If they raise them 25 basis points which is probably what theyre going to do and then theyre going to be very slow to do it. I agree with the guests. Do i think its going to be a major negative for the market . Not at all. But i think its going to cause the market to pause. Were showing this again, the 10year is back below 2 . Its interesting to think about what weve learned, and this week existing home sales have disappointed. The housing data hasnt been that great and then Toll Brothers comes out with its strong commentary then home depot puts up numbers talking about contractors getting involved in demand thats materializing. Rene, i dont know how you played this market at this junk juncture. Are we going to see all of a sudden a big pop in for example, Housing Demand some pent up demand held back by a cold winter . Is that what propels us higher . I would disagree. I dont think were going to go straight up. I think that this First Quarter that were going to go through is going to be very very messy in the way of earnings. First of all, we had a strong dollar, thats going to really show up in multinational companies. We saw a little bit of it in the Fourth Quarter but i think its really going to show up in First Quarter. Secondly, weve actually had the west coast port woes even though we have come to some agreements right now as far as the contracts with workers. There still were tons and tons of ships sitting out in l. A. s harbor and im in the Los Angeles Area with lots of materials on it. So its going to be and merchandise. So it will affect a lot of retailers. Its going to affect Smaller Service companies, companies who need raw materials. That will really show up in this quarters earnings as well. And then finally we also have the weather which has had a major impact on a great part of the country. So this quarter is going to be pretty messy. I think we will see a pullback in here. It may take the feds back a bit before they decide theyre going to change and raise rates. But Going Forward i do see us hitting 20,000 before the end of the year. The footsie istse is up, the nasdaq is up. We have a strong economy. Its going to take some black eyes but were going to get through it okay. John manley where will you make money . I think its already gone down. The stock market corrected over 10 versus the bond market. I think some of the stuff were talking about has been talked about and i think earnings are bottoming right now. I think i can make money in technology. Thats how corporate earnings got to be so good. The cycle is still intact. I can make money in financials. When the fed raises rates but theyre not really tightening thats a Good Environment for financials and i think i can make money in europe. This is a classic value story. How can you make money im sorry, how can you see earnings bottoming out here . Is this because the drop in Energy Earnings has been priced in and Everything Else now starts to move higher with the growth trajectory . I think, first of all, to bet against earnings turning back to bet against the economy is to bet against the American Consumer and thats a tough bet for me to make. Weve had problems with the dollar. Weve had problems with oil. It may not be this week but i look at the chart every week that tells me what the forward 12month or forward 52week earnings are and theyre down a decent amount and they seem to be bottoming. Thats me reading a chart. Ive been wrong before but i suspect were probably close to having seen the worst were going to see for a while and how many 4 to 7 corrections do we have to have before people say enough. Its just not going to fall apart. Before we go kenny p. Before we get to dow 20,000 presumably we hit nasdaq 5,000 and the market loves these round numbers. What do you think happens when that finally does occur . I actually think its a very bullish very bullish for the nasdaq. You dont think its the end of the period . No i do not. I dont think were in a nasdaq bubble at all. If it hits that 5,000 number i think it ends up being a bullish sign for investors. All right. Very good. Thanks guys. All right. All right. Hang loose. Talk amongst yourselves. Were being asked not to dismiss anybody so stick around because we have a lot to come with about 50 minutes left in the trading session. The dow is up 105 points. Were at the highs of the session right now as we go into the crucial final hour of the trading day. Coming up we have jim grant, founder of the newsletter bearing his name. Well get his reaction to Janet Yellens capitol hill testimony, where he sees bond yields heading and more. And if you thought the greek drama was bad for wall street, the upcoming general election in the uk could usher in a british exit from the yump peneuropean union. A top financial pro discusses the stakes. 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So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Welcome back. If youre just joining us rally day post janet yellen testimony before congress. The dow is up 104 points. Were in alltime high territory obviously as we have been. The s p, same thing. Its up a third of the percent to 2,110 and nasdaq has been hovering on either side of unchanged but right now its up 5. 5 points. Our panel is still with us. We have rene nourse john manley Kenny Polcari, Quincy Krosby. The market interpretation would seem clear. If we have stocks up 100 points, the 10year below 2 . Its an indication they heard from janet yellen she wont be moving as quickly with rate hikes. Its not like the market was pricing in june to start with. She made clear its not automatic that they will go two meetings after dropping patient. She also suggested theyre going to drop patient in march. It doesnt mean we go in june. Then again the markets werent really pricing in june. The bond market has sold off and people are rationalizing. I saw a note earlier from one of our Research Staff that pointed out that the fed funds futures right now, theyre betting on october, that the highest percentage of a fed of a rate increase by the fed would be in october. Earlier it was in august now its moved up after her testimony today. Yeah. I mean the whole market has rallied for sure. The bond market is it looking for an excuse kenny . To jims point, weve seen the 10year. That was the story before this. Were moving up to 2. 3 . Utilities were in correction territory. We were looking at reits starting to get concerned. I think every time janet gets out and speaks and she does a great job but it causes everybody to get excited, and then tomorrow will be another day because she will address it again tomorrow and then the market calms down a little bit because she didnt really say anything new. Shes going to remove patient out of the conversation but people are expecting that. I think its a little bit of an interreaction. Weve had a very nice move but it needs to do some back fill before really its going to move ahead. And the truth is they dont know. They dont know. Of course not. It really will depend on the data. Do you think the fed knows . No they dont know when to do it. And Elizabeth Warren doesnt know either. You know what . I thought that was very interesting, her pushback from the senator from new york schumer, and also new jersey. When the little love fest of thank you dr. Yellen thank you, she said hey, not so fast. Weve been accommodative. She hinted that this isnt going to last forever. And for the market it was great to see the xlf and the kbw, the financials, despite the yield coming down that those financials were able to hold in there suggesting that investors believe the economy is gaining momentum. Right, but she didnt say anything, quincy that we didnt know. Everyone expects that theyre going to go up. Its just a matter of really people are trying to play that timing issue. Everyone is trying to speculate on when its going to happen. And were paying too much attention to this. I think the market is telling you that the economy overall is gaining momentum and thats what we need to hear. But one lagging area have been the financials but youre betting on financials as many are, that the steepening yield curve when rates finally do go up will help the financials right . It always helps the financials. Im talking to john now. Im sorry. I cant see. I know. Its okay. She can talk. But i think basically you have higher shortterm rates, theyve been very very low. They could be more profitable for financial corporations and i think if you have an accommodative fed because the fed that whole talk about when they raise rates, were missing the point. Theyre not going to try to pull the economy down for a while. At the same time though what happens is you get things like marty writing about some of the high yield space talking about how weve been covenant quality every been lower in some ways. Does this give another leg to concerns about quality in the credit space and the concerns its creating a zombie exist sense for Corporate America . There are arguments on the Financial Stability size to take away this accommodation as soon as possible. But frankly thats secondary for the fed right now. Theyre much more focused on the Inflation Trajectory the unemployment trajectory. Even in the official report not in the testimony, there was talk about the equity market potentially being stretched but thats kind of something secondary at this point. Theyre watching it. Its not to the point yet where thats the reason for tightening. Let me go to rene for a second. Youre at my old stomping grounds. Real estate is very important to that market out there. How is the Real Estate Market because we continue to try and get a handle on the Housing Market in this country, and we get very mixed signals. So how is it doing in one of the flagship markets in the country right now . Its doing just fine. You know i think a lot of the issue that is were having with the Housing Market is really directly related to the weather patterns that were having and also the opportunity for employment. So employment has been strong here, and now with the drop in Energy Prices oil prices at the pump here in california are just crazy because we have all of these other surtaxes and taxes on top of that. So weve seen a really nice drop, and also seeing some nice discretionary dollars being put to use. Spoken like a true angelino. They always bring up the weather anytime they can. Its like a harvard graduate. Five minutes in you know they went to harvard. You know rene is from los angeles because she mentioned the weather. Thank you all for joining us. Appreciate your comments on todays market action. 40 minutes to go. Yes, there is 40 minutes left, kelly. A marquee day. Up 109 points. We continue to inch ever higher into record territory, same thing for the s p and the nasdaq now is 32 points away from nasdaq 5,000. And up next as the nasdaq eyes 5,000, wait until you hear which five stocks have been pulling most of the weight getting it there. Were back in two. S been a journey to get where i am. And i didnt get here alone. There were people who listened along the way. People who gave me options. Kept me on track. And through it all my retirement never got left behind. So today, im prepared for anything we may want tomorrow to be. Every someday needs a plan. Lets talk about your old 401 k today. Welcome back. Take a look at markets here. A lot of headlines going to be generated if we can hold this for 35 minutes. The dow is up 110. This would be a record close to the index. The s p is up 7. Same deal. The nasdaq up 8 points. While its a laggard on the session it nonetheless is trying to continue what would be a tenday win streak inching ever closer to the 5,000 mark. And as we get closer to that magical 5,000 number the number 5 is very important to its triumphant return. Here to explain is veteran nasdaq watcher dominic chu. I had no idea. Well its been a while. I was a young one back in the business during the dotcom bubble. If you look at the yeartodate gains for the nasdaq composite which is over 3,000 stocks from apple to the small 20 million biotech companies, that nasdaq composite and the nasdaq 100, the biggest stocks in the nasdaq, theyre both up 5 so far yeartodate. They mimic each other so far. The performance discrepancy is nil. With the nasdaq 100, these are market cap weighted indices, meaning the bigger the company, the more weight they expertert over the index. Five stocks account for all the gains in the nasdaq 100. Lets start with number five because netflix is up 38 . Thats good for ten points. I want you to keep track of these points because theyre going to become important. Netflix is adding ten points to the nasdaq 100. Gilead sciences is adding 15 points to the overall gain yeartodate for the nasdaq 100. Then here you have biogen another biotech company, up 20 . Thats another 17 points. Here is where things start getting interesting. Amazon. Com because its a Larger Company has added 35 points and the one stock thats added by far and away the most to the nasdaq 100s yeartodate point gain is apple. 141 points. This is all through yesterdays close. You tally all those together you get 218 points. Thats about what the nasdaq 100 has gained all yeartodate so far. So these five stocks account for every point and more of the gains so far. Its very interesting. It just goes to show you how much weight some of the larger cap stocks carry over the overall index, guys. Whats fascinate something a lot of what people have said about the difference this time versus last time is that its much more broad in the nasdaq the stock that are increasing contributing to the run up. I hear your report on this and i start to think maybe it is a little too top heavy. Its interesting because as you mentioned, theres a little bit more diversification, but back then there was a lot more technology represented in the overall at least for the nasdaq composite and the nasdaq 100. These days theres some diversification. More biotechs. That may in and of itself be bubble indicative, but if you look at the overall scheme of the nasdaq 100 and the composite, they are not trading at the same multiples they are then. They are case to be made why this time may be different. I dont know why, but its fair to say there is no real apples to apples or oranges to oranges comparison you can make, at least not for now. Last time it was all dotcoms now its only true dotcom is among the leaders with amazon. Thank you, veteran dom chu. Much more to come. We have jim grant joining us of grants Interest Rate observer. Plus a top wall street pro explaining why he thinks tesla could be heading for a pothole. First sue herera has an update. Here is whats happening. Mitch mcconnell says he has spoken to democrats to seek cooperation on a clean bill to fund homeland security. He said he plans to hold a separate vote on friday on a bill to block president obamas immigration actions. Secretary of state john kerry testifying before the Senate Appropriations subcommittee said russia has repeatedly lied to him about its aggression in ukraine. He went on to say that russia is engaging in the most extensive Propaganda Campaign since the height of the cold war. The Justice Department will not file civil rights charges against george zimmerman, the florida Neighborhood Watch volunteer who fatally shot unarmed teenager Trayvon Martin in 2012. Justices saying there wasnt enough evidence to charge him. Unbelievable video out of seoul, south carolina. Two pedestrians exiting a bus are swallowed up when a sinkhole opens up on the sidewalk basically right in front of them. It was caught on tape by a Security Camera from a bus service. Luckily the man and the woman suffered only minor injuries and were eventually rescued by firefighters. That is a scary moment to say the least. And that is your cnbc news update for this hour. The closing bell returns after a quick break. Lers. 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. The major averages continue to muchinch ever higher. Were in record territory for the dow. Same thing for the s p which is up 7 points. And the nasdaq up 7. 5 now, 32 points away from its nasdaq 5,000 level. Of the sectors in the s p 500 only health care is not participating. Perhaps its just taking a breath because tip icically it seems to go up regardless of what else is happening. Once again utilities leading the way. How many times have we had Money Managers on the show we ask them do you like utilities, and nobody likes it. So who is buying utilities . A day like this utilities certainly getting a second wind. Morgan brennan is keeping us up to speed on all the other movers. Investors also taking a shine to solar stocks today. Were seeing a lot of those names soaring on the announcement from first solar and sun power they are in advanced talks to spin off existing Renewable Energy assets into a yieldco. Sun power is up 18 today. First solar, which is right now leading the s p 500 higher is set to report Fourth Quarter earnings after the bell ahead of those numbers. That stock is up 12 as well. Back to you. Morgan thank you very much. One of the Big Questions this week, what would the president do with the Keystone Pipeline bill . John harwood has breaking news for us right now. Whats the store . Y . Weve just gotten word that president obama has transmitted his veto to the senate of the bill that would force the approval the Keystone Pipeline. Josh earnest emphasized at his briefing this was not a veto on the merits of the Keystone Pipeline itself but rather forcing the process, but i have to say that just underscores the political nature of this fight and how obama is handling this fight because the administration cites this ongoing review thats at the state department over the potential environmental and Economic Impact of the pipeline but there has been no indication at any point in this very long process that the state department thinks it would have a substantial negative impact. So the president appears to be waiting for some sort of a bargaining or negotiation with republicans, and we dont know exactly when and if thats going to happen guys. Leave it to washington where we just want a yes or a no or a thumbs up thumbs down to make it that difficult. When all is said and done do you suspect we will see the Keystone Pipeline with the president s blessing or not . I do but i think its going to take a while, and i think hes going to insist on a price from republicans who have been pushing this very hard for a long time. Our john harwood in washington. Thank you, john. Our next guest using Hedge Fund Strategy to run long and short stock funds structured like mutual funds. We thought it was time to check in to see how his long as and shorts are faring. We welcome back joel greenblatt, cochief Investment Officer and founder of gotham funds which includes gotham funds. Com. Good to see you. Welcome back. Thanks for having me. Youre a value player when all is said and done. Are you finding value in this market still . There are some values. Weve looked over the last 25 years. We take a look at stocks large caps and small caps so in the russell 1000 which is roughly similar to the s p 500, based on our valuations of the individual underlying stocks, were in around the 29th percentile towards expensive which is market has been cheaper 71 of the time more expensive 29 of the time. When its been here in the past the year forward returns have averaged between 5 and 10 . The small caps are a totally different story. Looking at the russell 2000 which is those are in the fourth percentile. When theyve been here in the past theyve lost about 4 over the next year. Lets talk some specifics. A lot of these are larger names. You still like Towers Watson but i actually want to start with a name that you think is overvalued here, and that would be tesla. Sure. Well tesla is doing great, but theyre still not earning money. They have a huge market cap. We Like Companies that are gushing cash and if youre losing money and have a large market cap, those are things we find unattractive despite the fact that they have nice potential prospects. The market has taken that into account plus a lot more. I know you like to figure out how much a company is worth and see if the stock price reflects that. A company like tesla, has it ever reflected what the company is worth . Even elon musk said it was overvalued for a time. You know we really play the percentages, so theres obviously the future is unknown, but if you bought a lot of companies that were losing money at these kind of valuation levels on average you would end up losing a lot of money. We like to fish where you can make a lot of money generally. We play the percentages. A couple other names here include on your short list are zynga and groupon. You put them together and as we look at nasdaq 5,000, do you see that index in danger of being overvalued . Well, the smaller there are a lot of overvalued companies. Generally if you have high market caps and no earnings or negative earnings it takes a big move to justify those prices, so generally thats what were not attracted to. In our long short portfolios we run long short hedge funds and mutual funds. We own 300. Those are a couple of names that rank quite low, meaning theyre very high priced and lose nice amounts of money and their Business Models are suspect at this point. New longs for the funds orbital, viacom and she mentioned Towers Watson as well. Why those right now . Well other than the fact theyre undervalued. Stocks are not pieces of paper that bounce around. Theyre ownership shares of businesses and we value the businesses and buy them at a discount. Thats what they are. Theres a lot of noise that goes around them but theyre ownership shares of businesses. If we can value the businesses and feel confident about that thats what we do. Orbital is selling very cheaply. Earns lots of cash flow relative to the price were paying and theyre probably classified as defense but they do a lot of satellite launch and Missile Defense and those are businesses that can actually grow from here. So maybe theyre getting tarnished with other defense contractors and so theyre pretty cheap. Viacom is selling fairly cheaply. I think people are worried theres rumors some of their networks might be dropped from dish network. But when you can buy a company of this quality thats gushing cash thats using this cash in a way to buy back stock and deliver it back to shareholders we tend to like that. We play the averages. A company ha spendthat spend their money well, we like those. And just a woshd on Towers Watson . Its not super cheap but its an excellent business and the Health Care Exchanges could be a reason for growth Going Forward. Joel perfect. Thanks for having me. A lot to think over. Joel greenblatt, really appreciate it. 20 minutes to go into the close, bill. With the dow up 107 points right now. So the s p and the dow both in record territory and we inch ever closer on the nasdaq to 5,000. Were up about 8 points right now. Up next jpmorgan executives battling renewed calls to break up the bank. Kayla taushy ytausche is in the middle of that action. Stick around for a look at the goings on when we come back. Che is in the middle of that action. Stick around for a look at the goings on when we come back. Over 20 million kids everyday in our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy affordable, kidinspired chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. Welcome back. Want to show you the components of the Dow Jones Industrial average. The dow itself is up 110 points. Interestingly, not all 30 stocks are higher. You got five of them that are trading lower. The big loser is United Health but one of the big winners, number two on the hit list is jpmorgan right now. The banks top executives have been meeting with investors today and as they expected they had to deal with renewed calls to break up that bank. Our Kayla Tausche was at the meeting. What was the mood . There were a lot of questions executives presented throughout the day on various lines of business. Just wrapping up moments ago as it usually does with comments from chairman and ceo jamie dimon. A lot of the discussion concerned cost cutting, 2 billion in new cost costs, 2. 8 billion at the Investment Bank as well as some new strategies to help tackle some of the massive amounts of capital need needed to support the banks 2. 5 trillion balance sheet. Shes where a lot of criticism came. Dimon told investors just because it may seem like that capital is a drag on the company right now doesnt necessarily mean its a bad thing. We always had more capital than our competitor and always had more liquidity and yet there was always a disadvantage but i remember also being questioned why werent we doing more in cdos and doing more in subprime and why arent we doing more with all the people 345iking money making men. Were not going to follow the lemmings off the table. Not going to follow the lemmings off the table so theyre playing it safe dimon says. Why is the stock undervalued . He thinks the market has it wrong. He says legal and regulatory uncertainty should ease over the next couple years and that the banks franchise value, as he put it will reemerge. He suggested something that would be very important to shareholders, that the fed in the next few years could allow dividend payouts to be higher. Of course, that is something that we will be watching for in the next few weeks when banks will tell us what theyll be able to give shareholders back this year. But for now, kelly, the debate still continues over whether jpmorgan can continue streamlining its business and growing organically. Back to you. Stay right there if you would. Joining us is a jpmorgan shareholder. Jpmorgan is his Third Largest holding. Hes bill smead. Blood to good to see you. What did you think of the comments you heard from management today . No surprise at all. Remember Warren Buffett thinks jamie dimon writes the finest annual letter of any one written in all of america. The future is incredibly bright for jpmorgan. What you have to understand is our largest Population Group is not a big bank customer. Thats millennials, and he wants that capital because when they buy houses and cars over the next ten years, he wants to be the primary lender to them. So the price is cheap and these stocks are hated. A lot of Academic Research has come out in the last two or three weeks that says that a successful business that goes on being hated makes a better investment, and this is living proof. But, bill if you believe, and i think you do that the parts would be worth more broken up than they are together at this point, why not want jpmorgan to be broken up then as an investor . Well thats a great question. It could cause the stock to be higher in 6 to 12 months than it would be if you didnt do it. But it very possibly wouldnt cost the combination of stocks to be significantly higher 5 to 10 years from now and what us active managers have got to learn is that our advantage is in the willingness to spend the five to ten years owning a great business not in our ability to pick 6 to 12month time frames. Kayla, what do you think about the prospects for jpmorgan to make inroads with millennials. Jamie dimon commented on that this afternoon. He said the reason why we dont have millennials as customers is because they dont have any money. As soon as they start earning some real income and having some real savings, then the first thing they do is come into a bank branch open up an account, and potentially take out a mortgage. He thinks because of their inroads in the Digital Space with gordon smith at the helm of the Consumer Banking unit he says their apps are best in class and thats why a lot of millennials are coming to jpmorgan. Now, one thing i found interesting, kelly and bill about the breakup debate is this idea that it actually wouldnt be advantageous, that the bank is keeping its options open but it actually found that they wouldnt get that much of a capital help from breaking up and actually dimon this afternoon said if we break up theres pretty much every Regional Bank on the street that could do what a smaller version of us could do. What we do is help advance corporate clients on a global scale and thats where size can help. What do you think, just a quick question on a recent move weve seen for banks to start charging people for holding so much cash. As an investor, whats the implication there. Is it a good or bad move . Theyre learning from the swiss who you pay them to hold your money. The millennials are beginning to have money. They actually have the best Balance Sheets at age 28 of any prior generation. But lets think about it. Millennials dont go to bank branches, so as the millennials get older the next five to ten years and become great customers, the amount of expense jpmorgan will have to take care of them people deposit money by taking a picture with their phone. Millennials will not go to a granch branch. They wont need the branches or the employees or the expense that goes with it. Gordon smith mentioned they had gotten rid of 20,000 land lines and a 30 drop in expense there. Thank you so much. Thanks to bill smead. What did art cashin just say . 900 million to sell here. Going into the close. Thats the imbalance to the sell side here even though the dow is up 101 points right now. Right. Perhaps thats bringing out some of the people who would prefer to sell this strength. Well find out if this has an impact on us losing the triple digit over the next 12 minutes. Were wondering if the dow and s p can close at the new highs. Anything can happen in the final minutes so dont go away. 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Shes looking for inflation. Is this a market that doesnt want the fed to raise rates anytime soon . Is that why were seeing a rally . Absolutely, but that doesnt mean you dont have to be careful, especially overseas. Currencies really can pay a big percentage of a Downside Risk overseas. So there are a couple etfs i love specifically. Deutsche bank hedge equity for europe, and also wisdom tree. These two which wisdom tree . The wisdom tree europe hedge equity, and i think these two hedj is really important from a standpoint of the hedging that currency risk because as long as they keep rates though the dollar will go higher here. And as we have qe going on in europe, were going to have a european especially if you look at what the European Central bank is doing and were talking about this before. Theyre going to be even more dovish than janet yellen today. They have to be. They have to be. When you look at the u. S. You want to be mindful while the fed is putting a floor under asset policies and a sharp collapse is very unlikely thats very different than the ability to make a lot of money Going Forward and were seeing that in some of the volatility and some of the very slow climb were seeing. Youre going to need to see earnings and valuations. For us that goes into europe a little bit. Thats where the conversation started and you want to hedge out that currency risk. Tom is right. Use etfs as we hit new highs here youre looking for value in europe just like you are. And these etfs are up double digits. We had a nice run in the u. S. But were up twice as much in europe. Theres still some great values in the u. S. But its becoming increasingly difficult. Fourth quarter earnings were far from stellar. First quarter earnings well see how they come out, but were not out to a great start. You have seen warnings from Large Cap Companies with strong Balance Sheets for the rest of the year. You want to be more cautious. You want to look at Balance Sheets and seek out value and you have to be agnostic to where that is and understand the risks. Got it. Thanks for stopping by. Well come back with the closing countdown. It looks like well get new records for the s p and the dow and the nasdaq continues higher here and when we come back we have hewlettpackard, first solar, and boston beer posting earnings at the top of the hour. Theres a group for you. Well bring you the numbers the second they hit the tape along with the instant analysis and the market response. Youre watching cnbc, first in business worldwide. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. Apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. 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E trade gives you the support and guidance to make informed decisions. Are you type e . A couple minutes left. The dow what it did today during the testimony, it began at 10 00 a. M. For janet yellen, and thats when we saw the move up. A bit of pullback in the afternoon. A gain of 95 points still an alltime high. Were watching nasdaq as it marches presumably toward 5,000. Today up 6, almost 7 points. Off the highs at 4967. Three stocks are reporting earnings after the bell. Well be hearing from hewlettpackard which is trading up a fraction right now. Look at first solar up another 10 today. Big day yesterday as well. Well see what the earnings come in at yet and boston beer is down half a percent. Joining me a quick assessment we have Brian Reynolds from rosenblat and the birthday boy, bob pisani. Happy birthday. You and abe ba go da share a birthday. George thorogood. Will nasdaq 5,000 mean anything to you . No because the other indices are already at alltime highs. This jigsignifies were in a bull market. Everybody loves technology. Tough to find anybody who doesnt Love Technology right now. But if we hit this new milestone here, is that the end of something or do we power through it do you think . I think we power through it. We powered through the alltime high in the s p last year and we kept on going. The big thing is were in a credit boom. The credit market has been on fire and thats providing fuel for buybacks fuel for mergers and acquisitions. As long as the pensions keep putting money into the credit market, its probably going to be a bull market for stocks. If Janet Yellens goal was to keep the markets calm and at the same time talk about rate increases down the road neat trick mission accomplished. She did it. It was a remarkable performance. This was a long way from the woman who said we might raise rates six months from now. None of that. She played this beautifully today and this was her goal. She accomplished it. New highs on all the major indices. Enjoy your celebration tonight. Happy birthday again. Thank you. Good to see you. Were going out new highs for the dow and the s p, and we continue to watch, wonder how much longer before we get to nasdaq 5,000. Stay tuned now. Some big earnings coming out, including from hewlettpackard on the second hour of the closing bell with kelly evans and company. Ill see you tomorrow, kel. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans. You just saw that graphic. I dont need to tell you, we are at record highs here for these markets. Take a look at how were finishing the day on wall street starting with the Dow Jones Industrial average ending up 95 points, just shy of a triple digit gain. 18,211, that will be the new record closing high for that index. Next is the s p 500 adding 6 points today, about a quarter of a percent. 2,110 there. Its actually 2,115, so 5 points above its record high. The nasdaq a tenday win streak. 4,968. So 32 points away now from nasdaq 5,000. The third highest close ever for the nasdaq. Lets bring in todays panel to talk about this and whether its A Janet Yellen affect or something else. Shark tank investor kevin oleary, Sharon Epperson and guy a adami. This is a guy adami day. You have Interest Rates below 2 . Stocks are still flying. Is this all about janet yellen . Its not painful. I meant the stocks piece of it, but the rates thing has been your big thing. We talked about it yesterday. I thought the tlt bottomed out at an important level last week. We talked about it. Had a really nice move today. I think rates continue their move significantly lower. And that has coincided, by the way, with equities on the rise as well. I will say that at some point the two have to they have to go their separate ways at a certain point, but for the last month last year and 18 months, they both go up. In other words rates continue to go up and the stock market continues to go up. So so far so good in terms of what the fed is trying to accomplish. Kevin oleary, does this all go back to janet yellen, when people are talking about it, changing their positions et cetera, is this what its all about, that she was able to give the market everything it was looking for. What she did successfully was push out the june 25 bit rate hike to sometime in october. Thats my read of it. Guy is pointing out hes getting a wonderful downdraft on the 10year but i interpret it a different way. Were getting more volatility on a 10year. Thank you so its not good news. It just means more vol. We were 1. 6 only weeks ago. We went up past 2 . People lost a lot of money going long in that period. Were you one of them sfl . Never. I would not touch the 10year. Thats toxic waste. Its one of the riskiest Asset Classes in the world. Today is just another example of it being volatile. I like short duration corporate credit. I get paid to wait. You will love this john at gfi group calls it corporate qe. He says companies are able to benefit the same way the fed did. You have the fed and youve got the Financial Engineering and they go together like Peanut Butter and jelly into one yummy sandwich. And unfortunately, it keeps enabling. I was looking at some Companies Like home depot today announcing another buyback and their float. If you look at the shares they have outstanding yearoveryear, it is like this. Its unbelievable. So i think that this entire fed intervention has just been a catalyst to increase more buybacks, increase returns of cash to shareholders to increase m a activity. It doesnt mean the underlying fundamentals of these companies are any better, but until this goes away its going to keep pushing higher. Were about to get results in hewlettpackard for one. That will be an interesting window into whats going on. You have to admit, because you raise the home depot, theyve been performing extremely well. Talk about Peanut Butter and jelly, its like they have the fundamentals and the Financial Engineering but both of those pieces are there. The result is many stocks at 52week highs and the problem is how many consumers are becoming investors and are taking advantage of it. Really interesting study out this week from america saves. 52 of americans are saving at least 5 of their income. Thats not a lot of people. Thats not a lot of savings. Thats not a lot of money to put into the market. If most of that money is going to just say for everyday expenses. So theres a great rally going on here but a lot of the country is not participating. Should they, kevin . I think they are in this sense. This change in peoples tonality about what an asset class to invest in is and isnt, lets take oil. Youre not giving enough credit to anything like a home depots rise in strength being from the fact that people are not paying 100 for oil anymore. Thats coming back into the economy. That is benefiting the consumer. Thats reducing their debt a little bit and its good. Kel, real quick hang on one second. Were going to hit the earnings. Hewlettpackard results and david faber has a breakdown. Thanks. 26. 8 billion is the revenue number for the First Quarter for the company. Thats down 5 from the prior year period. 2 on constant currency. 92 cents a share is the nongap diluted earnings per share but the story for hewlettpackard is going to be about the year guide frens the company being reduced by 30 cents a share. The real story is going to be about the incredible strength of the dollar and the impact thats had on hewlettpackards business. Its been quite significant to the tune of what theyre calling 3. 3 billion in revenues or 1. 5 billion hit annually is what theyre seeing for this year from that dollar. In particular while twothirds of their business is international and of that half of it is in europe so you might imagine they would be taking perhaps a harder hit than some other businesses out there although this may at least have investors yet again focusing on the strength of our own currency. In certain markets in particular theres no natural hedges. So youre buying components for a computer in dollars but selling it in euros. Youre getting hit on all sides. They have hedges in place but those hedges actually roll off over time, and so youre putting a hedge on now, well its at current market prices so youre not benefiting as much from the hedge that have rolled off in the past. A strong dollar will mean a 60 cent a share hit but 30 cents of that theyre saying they will make up through productivity costs and raising prices to be competitive but still get paid for the rising costs given the dollars significant rise as well. The 30 cents otherwise is going to be hitting guidance which now falls for the year kelly, to a lower range. Were talking about 353 to 373 for nongap diluted net eps for the company. A 1. 3 billion separation charge or cost is also something that hp is telling us about for the first time. Of course, the company is going to be splitting into two. Hp inc. And hewlettpackard enterprises. That expected to have taken 34r5is place by november 1st. Thank you very much. A lot to sift through. Please stay there. For more lets bring in analyst David Garrity joining us at post 9. Shares under pressure understandably. This is a miss and a lower. Its a big miss. You basically had 500 million on the top line because of the strong dollar impacting the company and also you have this whole indication in terms of their dropping their own guidance. Even as you go forward looking at the separation, investors are going to start asking the question arguably when you had one company, you had the ability to achieve economies of scale. Youre breaking it up into two companies. How much of their costs will be rising on both sides. There had been a hope on the street that going into the separation there would be a revaluation in terms of the pe multiple. But obviously right now given the current operating conditions and given the outlook as far as costs are concerned, look for the shares to pull back. Are you saying this calls into question the wisdom of doing the split altogether . People on the street are basically saying they didnt really understand what the subtext was. Here you have the company was under pressure, all of a sudden they cave to outside activist investors and they said fine you want us to be two separate companies, here we go. It did help the stock in the short term. Deal was pitched to me from the sell side that the reason you want to buy this presplit is theres going to be a massive change on pe multiples. Im not buying into that anymore when i see this. They both look like theyre not growing. On the enterprise side, you have difficulty in terms of the services margins. You have old businesses that are not necessarily very profitable. It takes time to move that around and on the hardware side youre just coming off a very strong year on the pc side which was important. You had windows xp support being phased out by microsoft in june of last year and the thing to appreciate about the pc cycle is it has a negative cash conversion cycle. As the pc business grows, it throws off more Free Cash Flow. You will see Free Cash Flow growth. What do you do if you own the stock and youre worried about the split, do you get rid of it before november hold onto it until after november and see what happens . Hewlettpackard outperformed the s p 500. Its been a good name. Nobody in this business ever got fired for taking a profit and if were looking at a split up thats going to be coming nine months out, why catch a falling knife . Why not take some profits, move it to the sidelines, there may be better names. David, what do you expect meg whitman to say. These questions obviously if were already hearing pretty vocally now, i would imagine it would put quite a bit of pressure on her. I did have an opportunity to speak to her and the cfo and we will be speaking to meg whitman tomorrow morning at 9 05 on squawk on the street. They will tell you getting an opportunity to do that and getting an opportunity to go line by line over the costs is a really once in a company opportunity, if you will. Once in a lifetime company opportunity. And so they believe that the cost structures for both the companies are going to be significantly less over time than they currently are together and thats going to be a real positive when you free people up like that to sort of allow them that zero based budgeting. Theyre absolutely continue to be in favor of the idea of separating into two fortune 50 companies. One as mr. Garrity mentioned will be more of a growth component conceivably at least and the other more about returning capital to shareholders, that being printing and computers. As for Free Cash Flow which i mentioned, we didnt get to that. 3 about the 5 billion to 4 billion is the new guidance. Thats down but it comes down solely as a result of the currency and the separation costs that i mentioned as well. Carol, a quick word . I wanted to know in terms of your models breakup value i have seen 35 up to 45. I dont know if those have taken into account the full strength of the dollar. What are you looking at in terms of breakup value . I was looking at 40 to 42 on a sum of the parts basis. It will have to come down because of the disappointment in terms of the numbers. Were probably looking 38 to 40 but you still have a conglomerate discount right now on the stock. Thank you for being here. David garrity on a big afternoon for hewlettpackard. Our thanks to david faber for bringing us those numbers and to guy adami. Im sorry we didnt get you back its all good. No worries. I was going to go back at kevin oleary but there will be another time for that. Bring it on, bring it on. Well just use that as a tease for fast money. How about that . Catch guy on fast money at 5 00. Theyll be talking to the ceo and president of sun edison. Dont miss a moment of that. Much more on this special market coverage in just a moment. Plus coming up jim grant weighing in on Janet Yellens testimony suggest an Interest Rate hike may not happen until later this year. 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. Welcome back. Record highs abroad today and record closes here. The nasdaq still steaming towards 5,000 with its third highest close ever. Lets check in with bob pisani the birthday boy. Jackie deangelis and Bertha Coombs for all of what they saw today. Bob, lets begin with you. And some of the records that we are notching here today. Its right across the board. Wilshire 5,000 is the broadest measure of the stock market. Historic high. Sipp s p historic high. The dow transports have not hit a new high. Everybody says the nasdaq is not quite at historic highs. 2 to 1 advancing and declineingdeclining. It was a nice rally. Almost a stealth one. Thats whats so interesting here is despite all of these record highs, Kenny Polcari was saying this earlier, doesnt exactly feel like the champagne and fireworks are out. Is bertha there . Bertha . Well come back in a second. Jackie deangelis lets talk about crude. This has been the driving force behind the market going up and down and all over the place recently. What are you seeing out there lately . Its interesting, we saw seesaw action again today. We were trading higher for most of the day but then we ended under 50 and we were in red territory. This was actually the one trade that really didnt have anything to do with what janet yellen was saying or what the market was doing. This is a market now thats sort of struggling to try to find some footing. It could potentially take a leg lower from here. Were going to get some inventory numbers tomorrow that could set us up for that but this is a market right now that is sort of decoupling from Everything Else at this point, and whats interesting here is that youve got crude prices going lower. You have got products prices going higher. You have prices at the pump going higher as well. You know that at some point is probably going to take an impact and have a toll on what the consumer is doing out in the economy. So its an interesting sort of trickle down effect here. I think its interesting that the demand though for gasoline is very very high right now. One of the reasons i think refiners are doing particularly well. I think this is another sign that the economy is doing well. People are out driving around despite the weather and overall i think its a good thing here. But do you think, bob, do you think that the demand is being spurred because prices were so low for so long so people said well, lets not Pay Attention to the weather, well get out there and drive a little but as the prices go up the demand might trail off . Yes, theres an elasticity we know that to gasoline. Everybody in america thoughs people are saving 10 to 15 a week in their car. We may find that hard to quantify, are they saving or spending, but its 10 to 15 a week and thats not nothing. Thats a significant savings. But jackie, what are they saving in terms of their home energy right now . A lot of people who have been hit by storm after storm, even though we are seeing lower prices for home heating oil, perhaps lower natural gas, theyre doing much more this winter in terms of heating their home than they have probably anticipated or any forecast early on in october had told them they would spend. So where do they stand right now, those consumers . This is interesting because weve seen a spike in heating oil and in products towards the end of the winter and a lot of traders are saying this really isnt going to impact the consumer that much because natural gas, which is what the bulk of the country uses, has been low for so long. Weve been sitting under this 3 range. Supplies are really stocked out there. This little blip in heating oil were seeing at the end, the traders are looking at the longterm forecast and saying this winter doesnt have much gusto left to it. It probably wont make that big of a difference. We can only hope. Bertha, sorry about that earlier. Welcome into the conversation. Lets talk about its not the round number yet for the nasdaq but how about this winning streak . Ten days now . It is amazing. Be interesting the last time the nasdaq had as long a winning streak was back in 2009 in july. At that point we saw a much bigger move over the course of 12 days of about 13 . This nasdaq composite is kind of grinding higher towards 5,000, and talking to folks on desks, the technicians say there really isnt any technical reason that is going to be a resistance level for the composite to reach that 5,000 level and take out its alltime high and psychologically its going to be the issue. One of the things you have to watch is we are coming up on the anniversary, its a 15year anniversary. Today the interesting thing was that the composite inched higher into the green without apple. Apple down fractionally on the day and without biotechs which have really been one of the driving sectors. We cant blame janet yellen today. If youd invested in biotechs when she talked about them seven months ago, youd be up about 45 on the btk index. Yeah. Bob, its carol roth. I want to ask what youre hearing in terms of decoupling. Jackie mentioned the decoupling from oil. What about the decoupling from world and political events . We have some little bit of issues going on at home from a political standpoint. Lots of issues going on around the world. It doesnt seem those are factoring in at all. Are you hearing any rumblings that people might be concerned, investors might be concerned, traders might be concerned about those and is that something you think could possibly derail whats going on what strikes me is qe is working the same kind of magic overseas as it did in the United States. Germany is up 13 this year. Fwrans is up 13 . Were at new highs over there. The s p is up 2 maybe 3 . A lot of people feel maybe slightly improving prospects over in europe but theres a natural rotation going on a little bit more into european stocks. Same thing happened in japan. Japan is outperforming this year. I dont know about decoupling but theres definitely a sense were ending our qe here. The Central Banks in europe as well as, of course japan are continuing theirs and thats having an influence. Kevin oleary, you can only buy one index, what do you buy . Im staying north american. Were not overpaying for nasdaq. Theres a little more breadth, its not all crazy tech at a crazy multiple. And when you talk about germany going up 13 , think about postfx. Americans, we buying into euros that are constantly weakening is not good. Right. I think the story of 2015 has been the remarkable volatility in currencies. 40 change in the swiss bank versus the euro. Thats incredible. Thats unprecedented. Thats why you have to look at the hedge product the wisdom tree products, trying to take out thef x. Kelly, our market timer now. Not those kind of hedges. Well leave it there. Bob, Bertha Jackie thank you all very much. Stocks closing at new highs but is the bull market in trouble once the fed hikes rate . Fed critic jim grant joins us next, and after a tough launch, the World Wrestling Entertainment Network just hit the 1 millionth subscriber mark. 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Welcome, jim. Good to see you. What jumped out to you about Janet Yellens testimony . Nothing. It was perfectly bland. It was a rhetorical yoga stretching here and stretching there and seeking to offend no one and seeking to disappoint no one. She let us know they would raise rates in the fullness of time. They may be patient or they may not be patient. But in any case they would race rates when they decide to. That was my takeaway. Does that mean the markets reaction which especially in rates was pretty significant, does that mean its all misplaced . Oh i mean i think that what she said was essentially not much, and perhaps the market went up because it was going to go up anyway. To me the substantive fact about the fed is that it has been involved in the greatest protracted experiment in price control in modern times, Interest Rates are prices that have been suppressed and manipulated and generally federally man handled, and the consequences of the distortion of these critical price is called Interest Rates. These distortions are at every hand but we cant know the final consequences but we can be pretty sure they will not be wholesome, and to me so this virus of radical Monetary Policy is now coursing through the political bloodstream. Theres no going back at least not for the medium term. The world has come to expect Central Banks will be there in force in unprecedented ways with the greatest improvisations come times of trouble. There will be times of trouble coming up there always are. There will be a bear market at some point. There will be a recession at some point. So what then . What do they do then . Quite apart from what the chair did or did not say today and i think she did not say much, those to me are the overriding important questions. Do you think one reason rates have stayed low is because theres just been a structural increase globally and demand for these products . Does it even reflect fundamentals anymore. . Theres been a structural shift in Central Bank Policy. The central bank of portugal temporarily traded more cheaply than did the United States treasuries. Now, portugal is a fine country but its not necessarily a more creditworthy country than this one. What youre seeing the world over, these diggsstortions wrought by central bank policies. I read in the new Merrill Lynch great picture book called the longest picture, its a great chart book of long drawn out Financial Trends and from this book i learn that 83 of the worlds stock market capitalization is under the shadow of 0 Interest Rates and something in excess of 4 trillion of sovereign debt yields nothing or a little less. So, you know, we cant know exactly what valuations would be in the absence of these most extraordinary interventions but i think we would have a very different financial landscape. You guys were early in telling people first of all to keep an eye on india which was a huge boon in terms of the stock market growth, some of the reforms they are making. Also warning people that the swiss might have to abandon their peg. And lets us not forget we were in the vanguard of incorrectly being bullish on russian securities but i still am. That, too. I was going to ask, when you look at the landscape today, what opportunities do you see . Well there was a wonderful quote distilling the state of the world by the biggest nordic buyout firm, i have foregotten the name they said we look around the world and nothing is cheap. Thats not exactly true. Theres cheap zurts in placesecurities in places you want want to be seen in polite company, moscow is one place. Yielding upwards of 4 or 5 . The referred is much cheaper than that. Gold is an asset that to me is most confoundingly cast off from mainstream consideration. Gold stocks are, therefore, for the taking. They get cheaper and cheaper all the time. To me gold is the great contrainvestment in a world of central bank dominance. Its the anticentral bank investment. Last question bringing it back home if i were to say to you same question where do you see opportunities in the u. S. In u. S. Assets generally across acrossed the board at grants we work from the bottom up. We look for opportunities both long and short based upon specific life lock being a recent example of a name you dont like. That was a short sale candidate of ours. Were finding much more interesting ideas on the short side than the long side. We do look diligently for long ideas because our readers, most favor them but its really hard to find. Well leave it there. All right. Thank you so much. Thank you kelly. Jim grant from grants Interest Rate observer reacting to Janet Yellens testimony on capitol hill and Central Bank Policy around the world. Watch out fed ex and u. P. S. , theres a new competitor in the delivery wars and its hungry to gain market share. First, sue herera has this news update. Good to see you. Here is whats happening at this hour. President obama has vetoed the Keystone Oil Pipeline bill. Senate Majority Leader Mitch Mcconnell says the chamber will consider an override of the veto no later than march 3 rd. Talks regarding a fragile peace deal in ukraine ended in tensions with differences over who was to blame for the continued violence. The Foreign Ministers of russia ukraine, germany, and france met in pairs amid uncertainty that the truce will hold. Sony has named tom rothman, a force behind blockbuster movies like titanic and avatar to head its movie studio. He replaces amy pascal. Consumer reports is out with its top car brands of 2015. Topping the list lexus. Rounding out the top five mazda, toyota audi and subaru. Buick came in at number seven but it was the only american brand to crack the top ten. And thats the cnbc news update for this hour. The closing bell with kelly returns after a quick break. R. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent i plan to retire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. Brand to crack the top ten. In our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. Welcome back. We begin with Morgan Brennan joining us on a quick earnings alert. Check out boston beer. Those shares falling in after hours trading. While the beermakerss Fourth Quarter earnings beat by 3 cents, revenue came in light. The company also providing disappointing Earnings Guidance for full year 2015. Thats why were seeing shares of boston beer trading 6 lower in the afterhours. Back over to you. Kevin is not doing enough to support the brand right now i guess. Thank you very much, morgan. Janet yellen sending stocks in uncharted territory. Allen wastler joins us. Oh baby did janet yellen make the hot list today. It was all about her today. Over 165,000 people piled into our live blog covering the hearing. You know and the aspect of whether or not to audit the fed or not, thats whats drawing the most attention from our readers. People commenting on it left and right. We have a wonderful buick story from phil lebeau. Luke made the buick made the top ten of consumer reports. We also have the story about the fbi has put up a 3 million reward for a russian hacker who released the game over zeus botnet which steals 34u7bmoney from peoples bank account. The fbi is looking for you, and if anybody knows where he is theres 3 million coming for you from the fbi. That should do it. Thats quite an incentive, allen. Anyone here drive a buick . I have always thought that was one of the Ugly Duckling cars. Thats what were saying. Im very impressed it would move up the food chain. There is your next rental car. Im looking forward to that. When the wwe launched the net wook a year ago, capacity issues made it appear it would be pinned to the mat. Up next, ill enter the ring with thec fo of the Sports Entertainment giant and from wrestling to waffles, the waffle house getting into the Home Delivery business we dont expect the chains renowned breakfast treats at your table. Well give you the details coming up on the closing bell. Well a year ago today World Wrestling entertainment launched the wwe network allowing subscribers access to pay per view events and all its original programming. It has amassed more than 1 Million Viewers in 177 countries across the globe. Here to talk about how the Sports Entertainment company has tag teamed live events with streaming is george barrios, chief strategy and Financial Officer down at post 9. Welcome. Thanks for having me. Its great to be here. What a year it has been. Its incredible. Cant believe its been a year. Ups and downs. You guys have seen it all. As mentioned, you now have passed the 1 Million Subscriber mark. Whats your goal . How big do you want this to be . When we started this we said long arc of time dont know if thats three years, four years, five years. We think we can get to 3 million to 4 Million Subscribers. We have in our view 100 million broadband homes. If we can get 3 to 4 penetration weve transformed the company. How much is it to subscribe . 99 9. 99 a month. Not going up . 9. 99 a month. Wrestle is one of those things either you love it or hate it. I have a question about the model. What you have done is remarkable, to build out a million in virtually zero time in Network Reality thank you. Thats incredible. But the criticism from the media analysts that i talk to about you is your churn rate is through the roof. People come in watch, dump it. Maybe come back i dont know. What can you do about churn rate . Because thats probably your biggest enemy. I think the media analysts also need to look at subscription businesses and sometimes they dont have that background expertise. If you look at any subscriber business, it will do somewhere between 4 and 8 in churn. Thats but youre materialally higher than that. Were not actually. Do you publish churn rates . We do. And you track them quarterly . Well i track them by the hour actually but we publish them quarterly. Let me ask you a specific question on that. You have a big event coming up do you know the name of it . Wrestlemania. I know before big events you seem to have sort of an upsurge. Do you have more churn sort of in conjunction with these bigger events than on an average basis . Its a great question. So so far we havent seen that but were 11 months in. So i think time will tell us. Observable data will tell us what the churn will eventually be. Some day three or four years well look back and see what our blend was. Right now were early going. We think weve got 12 signature events. Obviously wrestlemania sits at the top, but every month we have our best content on the network. What about your digital and social presence which is so strong . And im wondering if i can just im impressed you know a lot about us. If i know the highlights of sting, so if i want to see this other sting, i can just look him up on youtube through your youtube channel. Why do i have to subscribe . Its a great question, and i got to tell you, one of the things that the media has gotten wrong is this concept of cord cutting. We dont view it like that. To us its really the balancing act of where content goes. To your point on youtube we did 4. 2 billion video views over the last 12 months. Thats our free video on demand platform. Raw and smackdown sit in the bundle. Cross subsidy bundle and traditional paid tv, 12 to 14 Million People every week. Paid subscribers get access to our library. Weve tiered it. We think theres a place for different content to go in different places. What you see on youtube is different than what you see at wrestlemania. When you look at the cost of maintaining all these platforms and you have a rapid Customer Base i assume as they age they tire of blood everywhere. The only question i care about is your Customer Acquisition cost less than lifetime value, yes or no . Absolutely. And do you know why . Because we have the best platform to acquire the customers. We have five hours of prime time tv that gets watched live every single week 52 weeks a year in the United States, and in about 170 other countries. Thats the platform that we use to acquire our customers. We actually spend relatively speaking pretty little third party media. So our sack is actually pretty low. Here is a question as well. What if your 3 to 4 million targets turns out to be only as high as 1 1. 5, maybe 2 million. What if youre not quite grasping the ultimate demand for this product and the first rush is all these people excited to sign up but then it levels off. That seems to be moving the shares around a lot as people try to figure out the value of this. I think were lucky because what were talking about is different degrees of good. 3 or 4 million is transformational. 2 million is weve hit a double or a triple. Well be more profitable than wwe has ever been. I like the different outcomes we have in front of us. What about your demos . Primarily young male . Have you ever been to a show . I have. Then you know but good question. If you go to the audience what you see is multigenerational, male and female because the way it gets consumed are moms and dads with their kids grandparents. Thats when i started. My granddad took me to see an event and i used to watch it with him as a little boy. Thats what you see in our event. If you look at our demos we tend to index the population. Its a family event. Thanks for joining us. George barrios, a year in wwe. The day may be coming when your local fed ex store may offer breakfast and lunch. If you think thats crazy, you havent heard about the waffle house and roadie. It could change how you ship and where you eat. Er trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. The real question that needs to be asked is what is it that we can do that is impactful . What the cloud enables is computing to empower cancer researchers. It used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day. Whatever i can do to help compute a cure for cancer, thats what id like to do. Welcome back. When you think of the Package Delivery wars you probably think of fed ex versus u. P. S. But waffle house is serving up some new competition. Kate rogers joins us with the details. Thats right. So this is a whole new take on food delivery altogether. Drivers and senders using the roadie app will have an official pit stop to connect at waffle houses. They announced a partnership today. Roadie connects people to items to send with drivers who are already heading in the right direction. The atlanta based startup has raised 10 million in funding and it has 7500 downloads. They also allude on their website to more partnerships down the road on things like food and gas in the future. Now, waffle house says it will offer roadie drivers free food and drinks and it provides a location for the two parties to meet across the 25 states that it operates in. If you download the roadie app you get a free waffle and if youre a driver on a gig you get a free drink from the waffle chain which is famously open 24 hours a day. The likely hope for waffle house is that road. Roadies will stay and have more than the one waffle. You are a terrific marketer. Was this your idea waffle house . Are you a longtime house, a listeningtime fan . Im definitely a longtime fan. All of us are fans of waffle house around here. Yes, i mean roadie is not a delivery app. Its a community of people that help each other out. If you pick any community that is the a community in of itself its waffle house. You go into waffle house four days in a row, they know what youll want in your coffee the next day. They take care of their people. How many downloads have you had of the app . These are very early days for you guys. I wonder if waffle house is winking at that as well that they dont for see losing money on a ton of business right now. I dont think theyre thinking about it at all. Weve had over 7500 downloads. And weve only been doing this now for under three weeks. So i think theyre looking at driving a lot of the folks within the sort of tech enabled millennials to their stores and driving them in there to give them a free waffle and see what else they might enjoy. Mark, which is costing you more, to get customers that actually want to ship products and packages on the trucks or getting drivers is costing you . The drivers are probably a little easier to acquire than the actual senders. But the key to it im assuming this is kevin, theyre big fans. They probably just want to tell me im out. First ill eviscerate you. Then ill tell you im out. No, the road east there is no reason not to. Youre going that way anyway. Youre helping somebody out. Youre literally getting paid for being a good neighbor. Youre helping the environment. Youre going get benefits to waffle house and other places soon. Youre going get free road assistance and writeoff miles on trips you were going anyway there is no reason not to do it. On the shipper side, there is the traditional business but there is also this white space of youve got college kids that are at school and their parents need to send them something. Youve got a distributorship around atlanta that sends car parts to all the different dealerships. Its 6 00 a. M. In the morning. What happens after that if you bring your car in . There are all the instant needs people have. Different from uber where theyre going somewhere they werent already going and taking you somewhere again theyre not already going. Someone with roadie in the general vicinity is just giving your stuff a lift on a place theyre going. And carol serves up eggs, grits, smothered hash browns and waffles. I have to say mark is a shining example for other entrepreneurs and Small Business owners. As he said he has been at this for three weeks. I heard the story in so many places. You have really blown it up. To get a Partnership Like waffle house that is really a winwin for both of you. With a company that is only been around for three weeks. Kudos to you. And i love the out of the box thinking and doing something that is different. Would you invest carol . Can i put my kevin oleary hat on . How do you like as a business . He is doing a great job. But is this something you think is promising longterm . This is something actually just from a conflict of interest standpoint know its something similar in chicago that im talking to. Im not going to address that specifically. But in general my investment style, i like things that are a little bit later stage and more proven from an execution standpoint. But from what i understand i dont need to. Because hes got such amazing investors. I heard that even ups has invested. That correct mark . That. Is correct. Its pretty awesome. We have ups as investor eric schmidt of googles fund. The mellon group is an investor Warren Stevens out of little rock, David Bonderman of tpg capital, Alan Schwartz of guggenheim. We have a list of pretty great people. Youre overpriced already. Your valuation is outrageous. Could you just for my kids tell me im out and theyll be happy. Ill do better. Marc, youre dead to me i think kevin is going to be using this before too long. Exactly. I just wonder what senders might think about Security Issues or any issues in terms of having either someone come to the waffle house that is somewhere public to meet. But you also go to their home or their place of business. What are some of the security concerns and what have you done to alleviate those concerns . Last word marc . Absolutely. Sure if im going to bring you your couch, you probably dont want me to drop it in front of the waffle house there is chain of custody the whole way. So you know what it looks like in the front end, the middle and the back end there is 500 worth of insurance that comes with every gig, which is what we call the shipments which is five times what the traditional carriers have. And its very clearly listed the things that you cant take explosives, things like that. I think after today were going to add pancakes to that list. I was going to say i dont go to waffle house for the waffles. Carol . And i totally want to have my couch dropped in front of waffle house. Any place that i want my couch dropped is right in front of that. You know a wonderful story i really havent told much. The company has been around for years. A year ago they had the idea. We were filming the video that is on the front of our website at roadie. Com. And when we were filming it there, there was an older couple that showed up with a car full of tvs, and a younger gentleman showed up in a pathfinder picked up the tvs out of his car and put them in his. He was going to their lake house where he was going anyway there was a reallife roadie transaction happening in front of us while we were filming a video that was a wink at me that okay, were on the right path here. Marc, you have certainly started with a bang. Well be watching closely to see how quickly this technology is adopted and what kind of wafls come out of it marc gorlin. Thank you. Appreciate it. The panel weighs in two. Tigers, both of you. Tigers . Dont be modest. I see how youve been investing. Setting long term goals. Diversifying. Dip you got our attention. We did . Of course. Youre type e well, i have been researching retirement strategies. Well thats what type e s do. Welcome home. Taking control of your retirement . E trade gives you the tools and resources to get it right. Are you type e . Welcome back. Two seconds for some final thoughts of the panel. I just found out im the only one who has eaten at the waffle house of this whole group . Im a Cracker Barrel girl. We just dont have them in chicago. I like to go to the Cracker Barrel. Thats my favorite place. Were all going to go do a road trip after this. Record highs across the board today. You want to kick it off . I think were going to continue to go higher. What i want to see is more participation from regular investors who are worried that they dont have enough money to put in this market. You have something to put in. And if its going to continue to go higher you dont want to miss out on it. Carol . Im watching mma and buybacks. Who announces the best deal and is buying back more shares. Thats whats going to happen over and over and over again. Selling apple, selling apple, selling apple. I cant believe the strengths of this thing. But i remember what happens when you fall in love with a stock. Have i sold so much an until the last month, i cant believe it. You hope you sell as much wine . Absolutely. Before too long here. I really hope that happens actually. Well have more detail on that one coming up. For now well leave it right there. That does it for us on closing bell. Fast money is coming up in just a few moments. Hi melissa lee. Whats on tap . Hi there, kelly. Solar was a hot sector. Weve got first solar earnings. Were on the Conference Call. Well get instant analysis by an analyst on the call. Also, an exclusive with the ceo of sunedison. Spoke to him at todays analyst meeting, and he has some interesting comments about all these yield cos coming to market. I want to ask you, how eclipse and europe with all the solar power may be a huge problem for them, cause all these disruptions that. Is an interesting topic, kelly. Yeah. So straight over to you guy thanks a lot. Fast money starts right now. Live from the Nasdaq Market overlooking times square our. The Conference Call starting right now. David will break down the results coming up. And move over. Whats up . And we chat another mobile messaging app is stealing the spotlight. Weve got the cofounder of kik joining us live. As big tech Companies Like yahoo look to break into this space. The s p and dow closing in on record territory after Federal Reserve chair