Industry lobby group in washington, who said weve built our pricing for 2014 around the idea that all of the plans were going to change. So its very difficult for them, without some relief from the administration financially to make it work, and therefore, make the exchanges work. John, we appreciate it. Apologize for the audio issue we had at the very top. You couldnt hear us. Were surrounded by the traders well, today. Simon baker is here along with steve weiss, joe terranova, and stephanie link. Stephanie, on a year when the Health Stocks have done well, health care is the second best performing sector out of the s p 500 this year. Im wondering what your thoughts are, and what happens with the stocks . I dont think anything he said is a surprise. You have to expect the blame game comes out of washington on both sides. This is a mitigated disaster. The Insurance Companies budget at least a year in advance. So theyre a little offsides in the budgets. At the end of the day, i dont think it matters. Maybe you see them reset expectations next quarter or preannounce, in terms of reduced expectations, but you still need to be in a group that continues to grow, whether the economy is growing or not growing, so i like it. More importantly, what this did was, it sort of casted yellen in a shadow, and that was by far, to me, the more important conversation today, what she was saying. Well, yellen certainly has had somewhat of an impact on the overall market today by virtue of taking what most people expected was a more dovish stance on fed policy, that the market is holding up in that realm. Stephanie link, what are your thoughts on the Health Care Stocks . A lot of the insurance stocks ran up in anticipation of the Health Care Law going into effect. Do they continue to go up now that weve had this snafu . I think they will. And i think the interest egg thi interesting thing is earnings have been reset. The companies, the stocks rallied, they all reported, a lot of them came down. And im focusing on the hmos and hospitals, as well, but they gave out conservative guidance, because they dont have visibility into next year. One thing is clear, though, that the Companies Continue to cut costs. So i think numbers can be beatable should this when this gets fixed, and maybe focus on wellpoint. Lets not forget, joe, because of the political fallout, we did see the speaker of the house, john boehner, make comments ahead of the president today. The upcoming debate on the budget is likely to be as contentious, if not more so. Yeah. Than it was before. That could have a direct impact on stocks. Oh, clearly. Clearly, its having an impact on the ciscos of the world, when you see the federal spending being cut. I think overall, though, that will be alleviated over the next couple of months, and going back to stevens comments, its incredibly important whats gone on with janet yellen in the last couple of days, particularly the emerging markets. We talked about that the other day. Well, clearly, the comments are felt by emerging Market Investors to be favorable, and its provided stability to those assets. Youve had theater on a couple of stages today, right . Youve had the president making his administrative fix to the Affordable Care act. You have had the fed nominee, janet yellen, on the hill, taking questions from the Senate Banking committee. And in the face of all of that, youve had the major market averages at alltime highs. Thats where the Dow Jones Industrials sits now, 15,861, a gain of 40 points. Bertha coombs has been listening to the president , as well. Considering the fallout from all of this. Bertha, what are your thoughts as we heard from the nations Insurance Companies weigh in quite angrily today . Thats right. Karen ignani saying, look, if you change the rules in the middle of the game here, this could be very destabilizing towards the market. Effectively, we have a december 15th deadline here for people who want to have a plan in effect by january 1st. So were talking about 31 days for them to suddenly turn things around and try to say, okay, were going to use those plans after theyve already priced towards the new rules. For the people who are affected, certainly it would be great, it would mean they would still be in compliance, because if they bought one of the old plans, they wouldnt be in compliance, so they wouldnt get a fee. But again, it puts a lot of pressure on the insurers. The other thing not to lose sight of here is that we are also facing that effective december 1st deadline for the website to be working really well. Although this the individual market, this fix today, the broader picture of all the people who need to get on, the fact that they want to have 7 Million People enrolling or need to to have a viable market through the website is a problem. And whats interesting to me was one of the things that a lot of people have talked about the likelihood that theyre not going to be ready by december 1st. And the president today basically said, you know, its not going to be perfect. Listen to what he said. I guess thats not ready, but he basically said we know we have set the bar really low, and they said its going to keep working for the vast majority of people saying obviously its not going to be perfect for everyone. So the bigger problem down the line, while this may be a political issue, the bigger problem and reality for the insurers is whether they can get enough volume of people coming through here in time for their december 15th payments in order to be insured by january 1st. Bertha thanks. Bertha coombs for us. Simon baker in the context of Health Care Stocks overall, youve been more bullish on the market than perhaps some of the other folks that have come through the set in recent weeks. Do you think, as one of the best performing sectors of the year, there will be a rotation away from a more defensiveminded sector into some more risky or more cyclical areas of the market . Yeah. I think weve talked about that on the desk, and i think we all agree, hedge funds up 6 . I think youve still got to stick with the names. I agree with stephanie like tenet health care. I think ultimately people can get insured by the website, those companies are going to benefit and i think the expectations have come down so low, theyll be better next year so id stick with those names. I would say stick with the hmos. Stephanie points out that expectations have been lowered after he werin earnings. Guidance and pricing real conservative. Whos best positioned and understands whats going to happen here in terms of 2014 headwinds . I think unh. I think thats a company that you want to look at, managed care and definitely if youre long, stay with that. Thanks so much. Well take a quick lunch. Power lunch will pick it up on the other side. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome to power lunch. Kayla tausche and bob pisani down on the floor of the nyse where we have the markets hitting new alltime highs on the douw jones industrial averae and the s p. Well have complete market coverage throughout this hour of power lunch. Were also following the Health Care Story in washington. Well bring you that as well. We are basically your touch point for everything thats happening in the markets and in washington today. Im going to turn it over to Kayla Tausche and bob pisani. Guys, the markets did get a little bit of a boost from Janet Yellens testimony as well in front of the Senate Banking committee this morning. And thats also on the agenda on power lunch. Thank you so much. We have bob here and weve been watching the markets. It seemed like the market pretty much knew what yellen had been planning to say. Heres the problem. The yellen rally was essentially yesterday. The rumors for once about maybe janet yellen would be a little more dovish than we expected happened, and the move happened yesterday. Today, modest moves to the upside on the dow industrials. But the bottom line here, kayla, is i think janet yellen is delighted with what happened because the markets were on the upside on the s p 500. We are at record highs, and on the Dow Jones Industrial average, Interest Rates are flat to slightly down. Put up the tenyear yield. Very little movement. Gentle slope to the down side on the yields. And i think the most important thing is the testimony was remarkably uncontroversial. Nobody raised their voices. Some people were expecting land mines to be planted, aggressive testimony particularly when she said she didnt see any big signs ofs set bubbles. And yet it was all very civilized. Right. Some people were surprised by that. One of the questions she got was about communication or about moves in the market based on what the fed does. She said, look, i understand that rates can spike, stocks can spike. Given what the fed says because of that. I hope to communicate clearly. And of course, i think the market believes that she already has. But kenny, senator pat toomey said what happens when the morphine drip runs out. We keep talking about new alltime highs. But we also keep talking about a potential pullback. How do you spot that . Thats the problem because i dont think anyone was expecting any pullback, so the market continues to march to new highs and will continue to do so. I think you said it yesterday. The market rally add head of her testimony today. Its rallying again today based on everything she said. I think the fear is when its not so much when but how will they be able to do it unless this economy all of a sudden, you know, all the macro data starts to get so good quickly. Thats the only thing thats going to carry us out. Of course, we have touch points in december and well be watching for as well, bob. Slightly different the mo mo monotonic tones of her voice. Wipe some of the sand out of your eyes, bob. I dont want to say that exactly, but it was i expected a little more aggressive questioning. Right. And they asked the right questions. It it was tame necessarily or it wasnt like nobody asked the right questions, but the answers were very soothing in some kind of way. Right. Even senator corker who i expected a little fireworks from was downright solicitous. On that note, back over to headquarters and robert frank. The market keeping an eye on every word that janet yellen says today. Lets go over to Hampton Pearson to talk about that. I dont know if it moved markets, but it may have moved votes. It was the exchange janet yellen had with senator bob corker where he in essence shared a conversation they had had in his office. Isnt the fed, with its tapering policy, basically become a prisoner of its own policy and by extensioextension, a prisone markets . Listen to what really was the moment in todays hearing. It seemed to me and i think you discussed this a little bit in the office that the fed had had become a prisoner to its own policy. Well, senator, i dont think that the fed ever can be or should be a prisoner of the markets. Our job is but to a degree in this case, it did affect the fed, did it not . Well, we do have to take account of whats happening in the markets, what Impact Market conditions are likely to have on spending and the economic outlook. It is the case and we highlighted this in our statement when we saw a big jump in rates. We did have to ask ourselves whether or not that could potentially threaten what we were trying to achieve. Thank you. Im just a little bit of a prisoner, not fully, i understand. And that was the Lesson Learned from last spring when the fed began to hint about a possible strategy to begin the end of tapering, the market reaction, and you heard janet yellen and senator corker go into the consequences of communication being perhaps not understood in a timely fashion. So it got her some credibility and probably some more votes towards what seems to be confirmation as the next chairman of the board of the federal reserve. Back to you guys. Okay, hampton, thank you very much. Lets talk a little bit, robert, with kenny and bob because that exchange between senator corker and ms. Yellen was not only very revealing but just before that, she was asked whether or not there were asset bubbles out there. And she said she didnt see them. And kenny, your point about the fact that if she doesnt see an asset bubble, there may be more room on the upside in this market. Well, listen. Whether or not she sees an asset bubble, i think the conversation thats happening is that this is complete disconnect. And we keep talking about it between where the stock prices are and where the economy is. She herself said that we are still in a fragile recovery. And so in my opinion, i think prices reflect something much better than a fragile recovery, which is where the disconnect is, which is what is causing some frustration. This goes to my point of what we said earlier. I thought with that moment with senator corker, that was going to be the moment when some fireworks were going to fly at this point. And yet it didnt happen. Look what she said. She said were not a prisoner of the market, but we do have to take into account the market reaction. And senator corkers response to that was, well, thank you very much, ms. Yellen. We appreciate it. It was downright solicitous. I thought that was the moment where things were going to kind of take off, and it didnt. It did give you tea leaves with rates. She said it did give the fed pause about how fragile the recovery was and how we should act. But kenny, if youre watching the bond market and the stock market at home and youre watching that confirmation hearing, what are you taking away from this, and how are you treating it . That the market has more room to the upside because the feds not going everywhere. As long as Everybody Knows that, the pullbacks going to be very shallow. Theres certainly lots of money that wants to come. People will start to come out of the bond market and push into 2014 in the equity space partly because the recovery is happening but it will be slow. Theyre not going anywhere for a while. Shes got room here judging by the reaction of the congress there, when she said theres limited signs. What . You know, show where my emails were everybodys piling into highyield funds for the last three years. The bond market, too, is pretty unimaginable. She was politely asked about it and again politely said, and again, no showdown, no confrontations, no trying to lead her into dark alleyways, none of that. Is part of that just because it was now her first appearance . Everybodys trying to play nice in the sandbox . But still. Wouldnt you . I think the first time you dont have to play nice in the sandbox. But this is congress. All right, guys. Exactly. Were going to take a quick break. When we come back, there have been some very big job cuts announced at a major defense contractor. Well tell you all about that. Jane wells is working that story when power lunch continues with the dow and the s p at alltime highs. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. vo our new planes dont fly any faster. But it sure feels that way. Because with power ports. And wifi. And inseat entertainment, for everyone on board, now when you fly, time flies too. Flight Attendant sir, were about to land. vo were adding a brand new plane, with all this, every week. Its just one way were building the new american. Welcome back. Right now we have the dow and s p both at alltime highs. Up again today. The dow right now near highs of the session, up 45 points. The nasdaq is less than 40 points from 4,000. The s p Holding Steady at 1789, up just 7 points. And this is a big but, there are warning signs out there. Despite what we just heard from kenny and bob, we have three reports that you need to pay close attention to before your next trade. Well start with seema mody at headquarters. Over to you. Kayla, more than 90 of companies on the s p 500 have reported earnings. Thats roughly 450 companies. But get this. Fewer than ten have been able to beat street expectations on their top line, bottom line and issue Earnings Guidance thats above the estimate for q4. Were calling it the triple threat. First up, lam research, this past quarter marked the highest in history, surpassing the 1 billion mark. It grew by nearly 200 basis points. Analysts say its been able to rise from the semiconductor and cap ex spending. The environment is improving and thats expected to continue into 2014. Netflix, this has been one of the turnaround stories this year. Popular success of its original content shows as well as a growing Subscriber Base has fueled sales and profitability. Shares up about 270 year to date. And then theres bed, bath beyond, attractive products, competitive prices have helped them surprise the street with its earnings report. Although, analysts say, amazon may be an impending threat. And lastly, microchip technology, the only company that made the triple threat list this quarter and last quarter. Top and bottom line beat guidance, also higher than what the street was expecting. Williams financial says this is particularly impressive given many of its peers guided well below expectations. There you have it. Less than Ten Companies that made that list. Again, its a beat on their bottom line, top line as well as on guidance, kayla. Seema, i think i helped bed, bath beyond. I moved earlier th