Transcripts For CNBC Power Lunch 20150128

And 401k 529, emerging market. Where should small investors put their money to work right now . We asked 20 of the very top financial advisored in the united states, and you have to hear what they say. First, though to sue who is across the room at head waters today. Hi ty. Very volatile day on the street. The dow rising as much as 94 points. Then wiping out the gains. Its a little bit higher right now on the trading session, as can you can see. The dow is up 49 points on the day. The s p is higher as well and the nasdaq composite in the green too. Were keeping an eye on the tenyear note, of course because we do have the fed decision a little bit later today. We have a whoyear note Auction Going off the board, and rick is going to handicap that for us in just a few minutes. As ty said the big stock story of the day is apple. Its shares are surging on the back of that blowout earnings report, as can you see. Apple it s now up almost 8 on the trading session. The tech giant posting the biggest profit in corporate history thanks to soaring sales of the iphone. Our josh lipton spoke with apple ceo tim cook about the results and whats ahead for the company. Swrosh. Well sue, tim cook describing apples quarter as historic, and investors, they seem to agree. Setting that stock racing higher. Apple posting its highest earnings and revenue ever and that number that wowed wall street the most, though apple saying it shipped over 74 million i phones. Remember analysts had estimated around 66 million units. Strength coming from around the world with the u. S. Up 26 . Emerging markets up 58 . Mainland china, sue, up 100 . Ipad shipments down nearly 20 from a year earlier. Macs coming in at 5. 5 million. He was very excited about apple pay telling us that the service is off to in his words, an unbelievably strong start. What can investors expect in the months ahead . For one, remember apple usually updates its Capital Return Program in the spring and certainly apple can afford to give more cash back to shareholders. Its current cash pile 178 billion. While apple had teased the i watch as early as this year we now have a firm date. In april. Tyler, back to you. All right. Were going to bring in john ford. Iphone sales, blockbuster posting this stuff, john. Mac sales, ipad sales, a little bit. Ipad sales are down. Still a 9 billion dollar business. Amazon and others are selling tablets for much cheaper. Retail, very nice trick. Theyve got hundreds of stores expanding in china. Speaking of china, thats another trick. Theyre managing to grow revenue about 100 in Mainland China at a time when a lot of other people are having trouble making inroads there. Theyre also vertically integrated, which is a trick in and of itself. Apple pay and the watch, you know, were looking at those. The revenues arent showing up wret. Im starting to look at these as sort of enhancements to the ecosystem. Things like ilife used to be that will make people want to have a 6 or 6 plus and upgrade from previous phones. That should support average selling prices going forward. We just looked at the 800 million a day in revenue for this company in this quarter. Josh i mean apple has not always hit home runs with every product, but boy, i cant think of another company that has been more adroit of capturing the imagination of consumers than apple. Yeah, absolutely. You know, go back to your point, too, tyler. One trick pony but that is one impressive pony. Actually beating even the most optimistic estimates i was seeing. 55 million, 56 million. The iphone represents the bulk of the companys revenue. The majority of the companys gross profits. Its interesting to read through the notes today. Even though emerging markets, though, up 58 . That makes some analysts think the growth rate in the emerging markets could even be faster than they initially thought. Well go to chicago right now. Stay with us for a second there, josh and check in with Rick Santelli with breaking news. Well thank you, tyler. 26 billion twoyear note just hit the marketplace with the late auctions due to northeast weather. The yields 54 basis points. Almost half a basis point under where the one issue was trading. Lower yield. Higher price. The auction, i gave it an aminus. For a twoyear note auction, which not a lot of volatility. Its balance extremes. If you look at 3. 74 bid to cover, thats the december 13th. 48. 6 on indirect. The best since february of 2010. Considering everything this was a stellar auction. Of course we fwet two for tomorrow. 11 30 eastern, 1 00 respectively. Be there. Tyler, back to you. All right, rick. Thank you very much. Back with john and josh. You know apple, as i said has proven to be masterful at capturing peoples imagination. They really had in this case i think, a lot of pent up demand. A lot of people had the iphone 4 or the iphone 5 who were just waiting for that moment and they pounced when it came. And there were a lot of people in asia who just really wanted a large screen phone. A lot of the analysts mistakenly thought that samsung had somehow captured those users and that they wouldnt move over to apple. They have moved. Tim cook saying that the android switcher rate is higher than ever in this cycle. You know what a breakdown in apple looks like is a superior product or an equal product that comes out from somewhere else at a cheaper price that breaks down their retail advantage, that has not happened. If i do say so and i can wait. Phone is going to ring here in a minute, i know. I think they were a little smug for a while there about the fact that many people did want a larger screen phone. Right . Yeah and now my grading as intensely from its bigger. They wanted it. They did want it. This proves it. Its more than bigger. I think apple also mitigated some of the down sides of it being bigger and apple has managed to stick to its knitting on what it really believes. A lot of the criticisms they ignored. Tim cook has done a good job scrapping the orthodoxy about capital return bshgs the size of the phone, about the size of the ipad, but sticking to it when its something he really look who has arrived here. Josh as fast as he could. I wont say what town we live in, but we all live in the same town as new jersey dont we . Mr. Whop ner is here and he has been following carl icon speaking out about apple on fast money Halftime Report a couple of moments ago. I think following what you guys were saying, and obviously he is as pleased as anybody could be as one of the largest shareholders in the company. He owns more than 50 million shares. We spoke him. His son brett and david who were coportfolio managers for apple is one of the biggest if not their biggest positions, and they continue to make the case that apple shares are just simply under valued. Listen. When you get a brand thats accepted and you get something that people want that you are going to see it go through the roof and the sky is the limit, but you know what i have never seen. When you get a company like that that has that 30, 40, 50 times earnings not at nine times. He makes a point that apple, guys, is essentially trading at nine or ten times earnings by virtue of the cash. If you take the cash out of the way, they just say the stock should be trading higher. Back in october they wrote this letter to tim cook and the board saying that the stock right now is valued right then back in october which valued at 200. They made it clear on the show today, i think, that they think its worth a lot more than that at this point, and i think they also made it clear that theyve been buying a little more apple as well john. Remind me scott around 70 adjusted. He has been in it in a profitable level. Thats pretty nice. Theyve been doing pretty well. Im curious of your thoughts on the whole notion that at the time they wrote this letter, they had 133 billion in cash. They now they have 178 billion. He continues to make the arguments that they should just do a much larger buyback than theyre doing at the current time and apple maybe tim cook would say, look as i said on the halftime show we have done 57 billion. We have returned 57 billion to shareholders in the last 12 months alone. Weve returned more than 100 billion to you already. We got this under control. I think apple will do more. What i also think is the fact that apple parked all this cash overseas to avoid taxes looks smart at the time. I wonder how much of a hit theyve taken on that and whether repat yags doesnt look so bad if you are looking at some of the continued fx. Im not an expert in that sarah eisen is but its one of the things. I expect theyll be giving back more cash. They can break down the numbers six ways to sunday as to why this stock should be trading at a much higher multiple than it is now. They say analysts who continue to remain incredibly bullish, and i think you had price targets raised today. Maybe as high as 160 150 in that area are still too low, even in the most bullish cases from the street. Got to leave it there. Thank you. Appreciate it. All right. Dominik, market flash. Tyler, apple is 117 a share. This is the hanes brand. The stock is moving higher and the companys move here has based a lot of dividends came at really moving by about 33 to the up side here. 40 cents a share. It also announced a four for one stock split as a result of those shares up by 2. 5 on todays trade. Back to you. Shares of u. S. Steel have been surging on better than expected earnings. Company reportings its first profitable year since 2008. Hard to 3w4r50e6. They have done it. Morgan, as you can see, is here with some of the details about that report. So u. S. Steel posting an annual profit of 102 million. Not very big, but it is certainly a rebound after years of a multibillion dollar losses. Credit suisse another impressive quarter of a challenging operating environment, and challenging is really the keyword. Youve got the collapse in oil prices. Thats already creating a big drop in demand for the highly profitable steel parts that are used in drilling. Now, thats why u. S. Steel is temporarily idling four plants. Potentially laying off 2,700 workers. Analyst dozen note that the company is getting ahead of what is expected to be more energyrelated woes. Also, the stronger dollar fueling a flood of cheaper steel imports. Its what nucors ceo called ridiculous levels. Thats adding pressures to domestic steel prices that are tumbling in tan dem with iron ore as a key production ingredient. They tend to move together. There are bright spots in all of this. Increased demand from the auto and construction industries. Both of those are industries that have helped other steel producers as well. Weve got nucor and ak steel also beating estimates this week. Later today weve got steel dynamics. Thats going to report earnings as well. If you take a look it was a mixed session. We have u. S. Steel up double digits. Two others that are positive. Ak steel is the one thats trading in the red. Morgan, thank you so much. Appreciate it. Were going to talk more about the stock market because stock pick issing back in vogue given the return of volatility. Can you still make money with large caps with the strong dollar . We have nine stars worth of Investment Advice for you. Joining us is Eric Marshall coportfolio manager of the five star morning star rated Hodges Small Cap Fund and rob mckooefr, the fourstar rated jepson Quality Growth Fund. Nice to have you both here with us. Eric, im going to start with you. Volatility certainly has made it a little bit better for those who have been picking stocks versus the passive index funds that weve seen in the past couple of years. Where do you see opportunity in this particular time period of the market . Well we see this earnings as being very turbulent. Especially with lower oil prices, lower Commodity Prices and then whats been going on in the currency markets. I think if you can read through that, this is really an ideal time to focus in on a lot of the domestic small caps Pay Attention to whats going on in the individual businesses, and were finding plenty of opportunities out there, but you have to remember not all small caps not all of these are created equal. Eric sticking with that the volatility theme, are the small caps that you are looking at less exposed to currency volatility . In general they are. Typically the smaller Cap Companies will have smaller amount of their sales being done domestically. Some cases, they import goods and services that they resell. A stronger dollar could actually help their cost to get sold. You have to look at it as a case by case basis, and thats where stock picking plays an Important Role in this market. You are more cautious. Tell me why. Thats right. The volatility that derek mentioned is clearly back in the market and something that investors should be well heedful of. Consequently we think of something more defensive, more skrim nature issing washted. At jenson we Fare Companies with competitive advantages high returns on equity and what we call all weather business models. These are companies that we believe are so successful and makes so much money for their shareholders in good times and bad. They can generate the cash and grow their businesses and reward shareholders in had the shortterm. For example, one of the top positions in the jenson Quality Growth Fund is a Company Called becker dicken son that supplies the world supply of needles and syringes. Its a compelling investment opportunity. You said you do have to kind of pick and choose so where would you put money to work . You gave us a couple of picks. Some of the things we own are Lithia Motors which is benefitting from an upgrade cycle in automotive, which we think is in the early stages. They own over 80 dealerships here in the u. S. Trades at a very low multiple. We see a nice earnings trajectory here throughout this year. We also like eagle materials. This is a cement and jipsum wall Board Company thats been beaten up because they have a small amount of their business tied to energy. They sell fracture sand and oil weld cement. We feel like right here thats been more than priced into the stock, and we look for situations like that to really take advantage of in this market. All right. Gentlemen, thank you. Eric, rob, appreciate it investmentvery much. You can find out what else go to power lunch. Cnbc right now and check out their picks. Lets go over to dom for market flash. Sears holdings here. Right now the company is moving lower. Its said that it cut 115 corporate jobs mainly at its headquarters near chicago as it works to reduce expenses. The stock is theyre down by 4. 25 . Back to you. Thank you very much. Where should small investors. Their money to work right now . We pulled about 20 of the very top Financial Advisors in the country. Not just the top. The very top. You have to hear what they say. Plus counting down to the latest fed decision. The strong dollar causing concerns about the global xhi economy and the headwind that that might pose for many u. S. Companies. Will the fed then stay on track with its plan to begin raising Interest Rates. Well explore that and more when power lunch returns. Recently, a 1954 mercedesbenz grand prix race car made history when it sold for a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2015 cla. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. This is power lunch. Were watching the Energy Sector moving lower after the numbers that kim out this morning. Stockpiles hit their lowest level since records started being kept back in 1928. Heavy ron and exxonmobil are two of the biggest drags on the dow today. Also if you look broader. Hess and Conco Phillips moving lower. The Energy Sector is the worst performer in that large cap index. Neighbors industries danbury resources, murphy oil, all down more than 6 . Another tough day for the Energy Sector overall. Back to you. Ford is recalling. Nissan adding another 168,000 cars to this recall list. Yahoo rallying after spinning off the remaining 40 bull alibaba stake after losing the since midnovember. Burger king shake shack is raidsing its ipo Price Expectations to between 17 and 19 dollars a share. They hope to raise 95 million. The company will trade under the symbol shak. Ty. All right. Were right here. I know. You think were far away but were not. Members are something called the cnbc Digital Financial adviseor council. Our personal finance correspondent sharon eperson here to tell us what they said. Its no surprise that a majority of our advisors ranked equities as a best investment right now. Thats where they are putting the core of their clients money. A recovery underway in the housing market. Thats for real estate as an investment, and commodities at the bottom of the list in light of what weve seen in the sharp decline in oil prices. 13 out of 17 plan to increase their clients exposure to internationals this year. In terms of International Exposure 59 , 11 say that emerging markets. 41 favor europe. Even with the uncertainty around the European Central bank plan to stimulate the recent economy. One of the things that was intn interesting is where advisors want to put their tactical Asset Allocations, and a lot of them said emerging markets. The majority said that assist et class. Do you agree . If you look at the history of tactical Asset Allocation shares, its dismal because nobody has a consistently clear crystal ball. We have a much better strategy for individuals. Its strategic Asset Allocation where you create an individual Investment Policy Statement laying out specifically the percent of your equities in the u. S. , international, and subasset classes setting tolerances and when your positions move above or below those tolerances you rebalance. Not because you think you have a weejy board thats giving you the right answer for 2015. Its where to be for the long run. You need to have that asset alkwags and make sure you are rebalancing on a regular basis from the large caps equities that have been so well in international. Absolutely. How do your clients feel right now about the stock market . I mean weve had some really good years. Now volatility is back. You know, they were used to making money basically in index funds in some cases or by a more passive approach to the market. If thats any guide, we will not be having a repeated of the strong perform wrans. One of the things we say thats really important for clients to focus on is a willingness, ability, and need to take risk. If you are low on any one of those elements this is the time to be thinking about fixed income. Hoe how do you get real estate in these is it . We think thats the best way. Its also important for people to be factoring in their personal home when they think about real estate exposure as well. Especially retirees who have a lot of equity. It does. Absolutely, tyler. Thank you research. Good to have you here. Nice of you to come in. Counting down to the latest fed decision on Interest Rates. Cnbc will be as we say, all over it. Treasury yield sitting at 20month lows. How much lower will they go . We will ask the man who took over for phil gross at pimco, scot mather. I thought it was going to be marshall mather, m m. Up next power pitch laces up with luxury kicks for men. Were here to help you step up your shoe game. Will the shoe fit . How are you going to acquire customers . Or will the panel get cold feet . Earlier you had a Kick Starter Campaign where you didnt successfully reach your funding goal. What happened there . Stay tuned to find out. Welcome back. The cnbc market flash. Facebook is taking on twitter. Announcing a new super bowl experience for ceasars connect and find votes from news wroutlets, teams players, and nbc. Plus, a live feed of public reaction. Looks like direct competition with twitters play to hold the public a Second Screen companion to sports. Facebook shares are up about 2 . Ahead of earnings out after the bell this afternoon. Closing bell will have full coverage. Tyler. Get 60 seconds to convince a panel of experts that they have what it takes to step up their shoe game. We sell highend dress wear and Leather Goods at paul evans ny. Com. We source design market, and distribute all of our own products in house in order to eliminate the middle man. We sell what normally costs over 800 at Department Stores for less than 400 online. We compete on style, convenience, and value. Our shoes are made in naples italy, at a familyowned factory that produces for other internationally known brands. Our shoes are made with the finest italian leathers and are blade stitched made for comfort and sleek cut, interesting colors, and unlike our competitors, we ship internationally for free with free u. S. Returns. Were growing over 80 quarteroverquarter, and our Gross Margins are over 60 . Were looking for investment to take us to the next level. Welcome to todays power pitch. You just saw the pitch. Lets meet the panel. On set with us is carter weiss, a Founding Partner of silas capital. Thats a venture firm focussing on early stage Consumer Brands from fashion to healthy sflaks and Alicia Syrett shes the founder and ceo of pantegrion capital. Thats an Angel Investment vehicle focused on early stage investment. She serves on the board of new york angels. And joining us from boston is kent bennett, of venture partner at bessemer ventures where he focuses on tech enabled consumer services. The firm has a 1. 6 billion venture fund and its portfolio includes shopif wr and pinterest. First we goes to you. Can you give me what your sales are like for 2014 and what are you projecting for 2015 . 2 million for 2014. You have made a great amount of progress to date but you also have no retail background whatsoever. How do you overcome that . Weve been able to execute at a really high level so far in the industry. Make a ton of inroads and certainly income new york has been a big help so far. We go in with a mission to execute and no matter what is on the to do list that day, were there to get it done. Tell me more about your manufacturers. What were they doing before you are met them and how can they possibly scale with you . I apologize. I have an image in hi head. They currently make shoes for very well known european brands that we could reference here and you would certainly all be they would love us to ramp up further. Carter you get another question. Do you plan to go wholesale sf. We dont have an interest in going wholesale at this point in time. Our next steps after selling onlean are certainly an omni channel approach. Its a slimmer, more effective, more efficient way to reach the customer with smaller retail sections without having to hold inventory and still having the ground presence for customers that like to try on the shoes. I have always assumed that the people who spend 800 on a pair of shoes kind of like spending 800 on a pair of shoes. That luxury that the brand is important. Do you have to establish brand that is all your own, or can you sort of skate in the middle somehow . Were targeting a customer who doesnt want to necessarily pay 800. They may be willing, but they want a really, really high value proposition, which is what were offering, as well as style as well as a convenience factor. You can be anywhere in the world, be on your phone, order onlane, and in two to three Business Days youll have your shoes at your door. Earlier this year you had a Kick Starter Campaign where you didnt necessarily reach your funding goal. What happened there . Crowd funding is not for us. We had revenue from day one, so thats never been a problem. I think with funding thoeshgs we dont have the right product for them. How are you guys going to acquire customers, and how will that acquisition channel scale . We have been acquiring customers organically, and weve started to try paid advertising. Ill see returns. Weve also had an amazing customer repurchase rate around 20 so far. The lifetime value of these customers is huge. We heard what ben and evan had to say. Now we need to know if the panel is in or out. Carter. Very early stage its in a niche, and its very competitive. For this round im out. Im not sure right now whether this is a business thats going to make just a couple Million Dollars or its going to make tens of millions of dollars. For right now im out. What about you . We may be dealing with a small population of people who like these high price shoes, but dont want to pay a lot of money for the high price shoes. Wron how beg that niche is. Im not in your demo. Theres so much fat to trim in this supply chain that i think im in. We have two outs. One in. Ben evans, whats your reaction here . We certainly appreciate the comments. We definitely want to reach out to you guys. When were farther along and you appreciate the input. We cant wait to be a Massive Company coming back to talk about our success at some point. Thanks so much to ben and evan of paul evans shoes and to our panel, carter alicia, and kent. Thats todays power pitch. Do you agree with the panel . Tweet us using the power pitch, and let us know whether you are in or out on paul evans shoes. They look like nice shoes, but pretty high priced there for many of them. For more on power pitch, visit power lunch. Cnbc. Com. Sue. I can see you in a pair of those. They look niece. They sure do. Stocks are higher ahead of the feds latest decision on Interest Rates. Will a strong dollar derail the feds timeline on raising rates . Well have sk the man who took over for bill gross, cnbc exclusive with scott mather coming up next. Welcome back to power lunch. We are watching a big onshore oil driller. The stock is moving lower due in part to an Industry News report that the company has begun layoff that is could number possibly in the thousands. This according to upstream online. We have reached out to the company for a comment. We have not heard back yet. The shares down by nearly 6 in todays trade. Thank you very much. Sfroo were just about 20 minutes away from the feds decision. Lets bring in scott mather cio of pimco. He took over for bill when bill left the term. Since taking over the Worlds Largest bond fund its gone from the bottom of the fourth quarterile to the top of 1 . Congratulation on that success, scott. Welcome. Good afternoon. Thank you. You did that in the face of a lot of headlines and scrutiny. What were your strategies that managed to turn the fund around in such a short period of time with such success . Not just in the last 17 years, but going back decades before that. We have, you know the same process, and most of all the same people. Very much focused on doing what knee alleges done. Lets talk about the fed. What are your expectations shortly after 2 00 p. M. Eastern time from the federal research . We dont think were going to see too much new. For one, there hasnt been that much fundamentally different in terms of the data which would move the fed off of its target and course of planning to begin to normalize Interest Rates in the summertime. The second thing is really theres not that much to be lost by just preserving the optionality, waiting until the march statement when there will be a press at the same time as young. The chance for the fed to kind of come and comment on what might be different about their thinking. They dont lose much by basically reiterating much of the same statement that they had last time. We think the key will be to watch for two words that are critical in this statement. Thats the new word of patience that they introduced. The last statement basically they told us that means that theyre on hold for at least a few months. If they use that word again, which we think they will, that will mean that april is off the table. Thats not a big surprise to anybody. The second thing is the word transitor wr in talking about the affects of headline inflation. They said theyre going to look through that and its not going to significantly alter their determination. They think theyll use that word again too. The situation in europe. The Dollar Strength some say is not going to be transitory. That given the turmoil that we have in europe and other parts of the globe in currencies specifically, that benefits the dollar and as a result its kind of a de facto tightening. Do you agree with that . Well certainly a stronger dollar is a form of tightening of financial conditions, but, remember, to the extent that thats offset by easier financial conditions in the rest of the world, you know, it offsets some of the pain of the stronger dollar. Undoubtedly there will be winners and losers but historically the u. S. Economy has not been derailed by a stronger dollar and we think since much of that Dollar Strength is coming because other Central Banks in the world are easing Monetary Policy thats a good thing for global aggregate demand. Thats going to offset much of it. We dont think its going to significantly change the feds trajectory. What about the situation in europe . It seems to be deteriorating economically. You have the situation in greece and then the new Prime Minister is ruffling big feathers. Does that worry you at all when you look at a global macroenvironment . Well, its a source of concern. Greece by itself is too small to alter the trajectory of europe in most scenario that is are reasonable. Ultimately we think it will be a bumpy few months of negotiation but ultimately, its in everybodys interest, in greeces interest, in the European Unions interest to find something some middle ground, and thats what we think will happen. It may be that you know if this turns out to be the year that europe surprises us to the up side. We have a record new push by the ecb to ease monetary positions, and well start do quantitative easing in march. We think that can have a positive impact in europe, and we shouldnt get too mired down in negative sentiment. Do you buy european bonds or invest in fixed income . Would you buy greek bonds at this point . Yeah we do envest in europe. Its been one of the strategies weve been employing in our total return fund. European bonds across the continent have done quite well. Of course, were always monitoring the situation in greece. You know we its one of the countries that we do invest in. Well be looking at those developments very carefully. The big opportunities we think in europe are really in the larger areas of the bond market. Its in countries like italy and spain where the ecb will have a very powerful impact immediately on bringing those yields closer to german yields. Do you hold any im not trying to just focus on greece. Its just its in the headlines right now given the election that we just went through. Do you have any exposure to greece . We have very small holdings. Almost not worth mentioning. Of course it varies by different product strategies we have. Very veshgs small holdings. Scott, thanks for spending time with us. Please come back is do it again. Okay. Thank you. Ill let you get to the Newport Beach sunshine. Ty, over to you. Sue, i think when they change the words patient and substitute the word itchy, thats when we have an issue there. Were kounding down the fed decision. Were identifying for it. I dont think theyre going to put the word itchy in. Live at the top of the hour. It will come up on street signs. Also on street signs an inclusive interview looming. Bill gross, his reaction to the fed. Thats minutes away. Markets right now, there you see them. In the green. By a smidge. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. You show up. You stay up. You listen. You laugh. You worry. You do whatever it takes to take care of your family. And when its time to plan for your familys future were here for you. Were legalzoom, and for over 10 years weve helped families just like yours with wills, Living Trusts and more. Visit us today for legal help you can count on. Legalzoom. Legal help is here. The activist vefrl carl ikahn says he has never seen a company like this. You say that again. Hanes brands the patient of hanes apparel higher after raising its quarterly dividends and announcing a 4 for 1 stock split. Scott mather who replaced bill gross at pimco telling power lunch the Dollar Strength has not derailed the u. S. Economy. He also says he has been buying european bonds. He sees big opportunities in countries like italy and spain where the ecb impact will be felt he says immediately. If you missed any of the big stories, visit our website at power lunch. Cnbc. Com sue. Lets take a look at some of the s p 500 sectors. Power lunch fwhak two minutes time. Theres nothing more romantic than a spontaneous moment. 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Ask your doctor about cialis for daily use. For a free 30tablet trial go to cialis. Com welcome back to power lunch. Payment services up around 6 . Its raising its price target from a 35 target after the Company Posted better than expected profits. The firm is saying that they are seeing its fastest organic Revenue Growth in six years. Sue, back to you. We are minutes away from the fed decision. The Yahoo Finance question of the day, do you think the fed will raise rates in september . 36 say yes. 35 say no. Its too early. 29 say it depends on the economy. All right. Lets go to the markets right now. We have had a pretty big swing in todays markets. We were up about 94 points. Now the dow is up 68 points. Less than a half a percent. The s p 500 up about four points. Less than a quarter percent. The nasdaq composite is the leader many terms of percentage gains, and a lot of that is due to am. Its up twothirds of a percent. Just about 30 points. Where are Interest Rates . 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Liberty mutual insurance. In just a few minutes we are going to getted feds first Interest Rate call of the were . Will it be more of the same or could the fed shock the investing world and thant a rate hike is on the horizon . Welcome to this fed day street signs. Manned where i still on assignment and melissa lee is still with us. Bill gross is also going to lay out one of his favorite fund picks coming up right now. Melissa, how do we look hfd the fed . As expected brian. Stocks right now are slightly hire, but really in a wait and see pattern here for the Federal Reserve decision. The Dow Jones Industrial average is up by just onethird of a percent. Take a look at where the tenyear note is yielding. 1. 78 . That will be key to keep in mind as we are awaiting that decision. The dollar index is slightly stronger. Gold is about flat where the action really is brooen today. Its in the oil markets. We are at session lows right now below 45 a barrel and that could impact the feds view of inflation right now. All right. Ellet us bring in our allstar panel. David kelly with jp morgan funds, brian kelly, and our senior economics reporter Steve Liesman here with us through the fed decision as well. David, first to you. Your expectation from the Federal Reserve. Do you expect a change from the Federal Reserves wording . I think its just if they stick with the language about being patient . Thats the key thing now. It was there last time as an addon. It probably cant be dropped. The rest of this i think is pretty much not a big event. Point point out, its not a big event, youre right, but i think it should be. Either the market or the fed is increasingly off sides here when it comes to expectations. We just found in our sur way that the market now really sees on average a september rate hike, not a june or july one. When you look at the fed Fund Futures Market predicting 45 basis points for the end of december 2015 this year and the average fed projection at 1. 12 , thats nearly threequarter point hiked. Look, were going to readjust for sure in march, but you are talking about a rubber band snapping back. I dont think the fed is going to make any changes here. The economy is closer to full employment than they had thought. The economy is getting farther away from price stability. Its going to be hard to get back there. Then the pricing of the market of the lower path for federal funds rate and later rather than sooner will be justfied. That inflation rate is really coming down. The core rate next monday when we get the report not the quarter. Its the override rate thats going to be 0. 8 . We mention inflation expectationed. Oil obviously is sort of the wild card and the fed thinks its a transitory impact. Here we are. We have everybody and their brother saying 40 a barrel 50 a barrel for the rest of the were. I think we clearly its going to probably stay there for a bit, and its also inflationary expectations. The market may be looking for dovish signs. They need to watch this show more if they call it transitory. We pointed out the inflation adjusted price of crude for the last 25 years, 48. This is the exact median point. Longer we stay here the less its going to be a concern for them. Its like earnings costs. As medical bills they might have a different view on inflation. But they dont. But i think there are a few things here. First of all, dont pay too much attention to the fed fund because you got a very great comment coming. We also the fed rate call is coming. Right now lets go to Hanson Pearson with the statement. The language is identical with the december stating saying based on its Current Assessment the Committee Judges that it can be patient in beginning to normalize the stans of moan Monetary Policy. Since the Committee Last met in december had he say Economic Activity has been expanding at a solid pace