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tv   Closing Bell  CNBC  March 25, 2014 3:00pm-5:01pm EDT

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positive at this stage, and it kind of feeds into our little fury that we had at the top of the show there as well. >> about how things tend it turn down and then up again. it's a real tug of war. a real olympic battle. i'm sure there will be more of this ep i cic battle on "the clg bell" if kelly and bill haven't been hitting the mangria too hard. >> "the closing bell" is now. yes, welcome to "the closing bell." i'm kelly evans down here at the new york stock exchange where, bill, stocks, the dow at least, having almost a triple point session. >> it has a couple times today. i'm bill griffeth. stocks are trying to finish the day strong as we enter the final hour of trading. we were up triple digits out of the gate. at the peak we are up 130 points then lost some steam. right now the dow is up 95 or thereabouts. mixed economic data out today. consumer confidence, six-year high. home sales figures, five-month low. >> and mixed with markets as
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well. we'll get to that in a moment. two exclusives with two heavyweights the street widely follows. nouriel roubini joining us. he's about to turn bullish on some emerging markets. and jim grant from the grant interest rate observer. he has his own unique take on the message the fed is taking about when raids will rise and some opportunities on global markets. >> i cannot wait to hear jim grant's take on janet yellen's news conference last week. that's pay per view material right there. speaking of pay per view, nba mega star kobe bryant just invested millions of his own dollars in a new sports drink. kobe will join us live in just a little while, get his take on that. plus, we'll talk about phil jackson joining his rival the new york knicks.
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that's coming up on "the closing bell." do not miss that. here is where we stand in markets. entering the final hour of trade, the dow is up just shy of 100 points. is it significant we were at that resistance level? art cashin was over here talking to us about that. much will depend on how we finish the session. we have seen it fading into the close the last couple trading days. the nasdaq is only up 3 points. and the s&p 500 adding about 7 this hour or 0.4% to 1864. >> all right. let's get to our "the closing bell" exchange. happy belated birthday to patti edwards. we have mark, drew, john stole fuss and welcome back to rick santelli as well. >> patti, a few steps forward, steps back. we are sort of in a herky-jerky kind of market environment right now. what do you make of this?
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>> we're thinking what you're see something three steps forward to one step back as opposed to the two steps forward. a little bit of progress, not a huge amount. if you look at the data this morning, some of it was good and some of it was controlled by weather. >> which we're getting snow today. well, stab is gomebody is getti today. >> do you mean with regard to the housing data? >> you have consumer confidence showing some of the best readings in six years and yet you have got weather driven housing reports. you know, some of those markets had 200% of normal snow. in that type of weather, i don't know about you, but i certainly would not be going out looking for a house. >> sure. and we're definitely going to talk more about what's happening in the housing market next hour. mark, there's a little bit perhaps of either people positioning for a snapback in housing in some of those weather-affected sectors in the next quarter or so. you guys like cyclicals here. is that part of the story?
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>> it isn't so much related to the weather as much as it is our view that we think the u.s. economy is poised to accelerate over the balance of 2014, and that's within the context of a synchronized global economic expansion. so the consequences of that plus still a highly accommodative central bank policy to us suggest you want to favor those sectors that are most pronounced in terms of their direction pointed towards participating in an uptick in economic activity. so that's why we favor cap ex facing technology, industrials, financials, and energy at this point. >> john, has the shock of last week's fed news conference with janet yellen, has that worn off? is there more to come? what do you make of market action since that time? we've had tremendous volatility here. >> bill, i got to say, i think that was the test of janet yellen. even though she's certainly not a new component at the fed, she is new as the chief in terms of the market. the market put her through a bit of a test, then it's getting
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back to fundamentals. spring is in the air today. good confidence out of europe earlier today. we got confidence here in the states side and a bounce back in some of the stuff that got sold off earlier this week. >> so you sound like you're buying something right now. >> yeah. i think it's time to stick with that cyclical game. go for some of the stuff that got oversold here in this correction. it wasn't a correction but in the pullback that we saw even within biotech, and let's move ahead. >> drew, what about the fact that the yield curve is flattening here? traditionally taken as a sign that economic activity is going to slow but it has a lot to do as well with what we heard from janet yellen last week. what's the signal? >> i don't think it's signalling a slowing in the economy. i think it's signaling the fed will have to raise short-term rates more quickly. i think before we think that's a bad thing, i think we have to consider what people have been doing in a zero rate environment and that's they've been looking at ways to get income. they've been rewarding buybacks,
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dividends, and i think what we have to do is switch back and what a rising rate environment will do is allows to switch back to one where growth is rewarded. a positive for growth a positive for cap ex and that pickup in overall volatility in financial markets in the economy will be something that encourages people to start making decisions in a timely manner. something zero interest rates didn't do. >> drew, you mentioned that you think this is the market anticipating the fed being more aggressive with regard to raising rates. that would be different than the certainly the rhetoric we're getting from the fed which says not only is it going to be exactly -- >> that shallow glide path. >> what do you say about all that? >> they can hope. the simple fact of the mat ser once they created a balance sheet that was $3 trillion too large, their ability to control rates in the way they have become accustomed to for example when i worked there is really gone. that money is fungible. it's going to move around the
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banking system. it will try to avoid where the fed can actually put its pressure in terms of raising rates on repos or raising interest on reserves. and when they begin to move, what they're going to find is that they're going to be competing for funds rather than it being a price setter. they're going to be a price taker and that's going to mean rates have to go up faster, particularly that 2016 space that we saw the fed actually add a rate hike to. >> i see your smile getting bigger there, rick. what do you think about what drew is saying about future fed activity? >> well, i find it a little hard to swallow that zero interest rate policy is terrific. when it's on it's going to be even more terrific when we take it off. i think that, you know, when you listen to charles plosser this morning on cnbc, he thinks for 2015 we're going to have a 300 -- a 3% fed funds and 4% for 2016. so my question is simple. where are we going to pack those 275 basis points along the yield
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curve? and i'm not so sure anybody has the answer. one thing i can say for sure, that, you know, everybody thinking that the globe is growing so fine, then why is that qe and whispers of qe are just everywhere regarding europe? it's the ongoing debate to combat what they potentially see as deflationary pressures? that isn't augering a great response or shouldn't by the growth crowd. and kelly was right. normally a flattening curve isn't really associated with growth. but that's a proactive curve where it's, you know, first time positions, kind of dealing with new information. what happened with the yield curve last week was really old positions and it really hasn't moved much. it's deepened a little today, but virtually the two metrics to pay attention to, the one with europe, the spread between our tens and their bunds is the widest it's been since the fall of 2009 and if you look at our fives to 30s, that's virtually the flattest it's been since --
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i'm sorry, that's 2009. the bunds to 10s a 2006. those don't auger for positive outcomes. >> but it's interesting, rick, this is exactly why people are looking at what's happened in europe and the extent to where their yields have fallen whether it's germany or across the periphery where they're trading at levels a couple years ago people are shaking their heads how could they ever have borrowed so cheaply -- >> they borrowed to cheaply because they own all their own paper and that's not going to end well either. >> right. let's all remember, they've got a big balance sheet full of their own stuff, and when rates rise, they lose principle at the same time. patti, do you invest for growth even though the fed will be raising rates? can the market absorb a rate rise or at least a diminution of their easy money policy over the next several months here? can the market still be going up do you think? >> you know, i think a lot of this is going to depend on how employment continues on. if we continue to see the gains in employment that we've seen in
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the last month or so, what you're going to see is you're going to see all those folks who were on the long-term unemployment take jobs at lesser rates. that can cause some wage inflation. that can cause some growth. that's what we're looking for. we are watching very carefully though for both earnings and revenue growth for these companies. >> john, finally -- go ahead. >> you know, i'd have to say when you look at this picture, you really see still going from recovery into economic expansion very modest, if anything. you don't have inflation. it's disinflationary, our environment. so the likelihood of interest rates rising substantially, the market might put rates up on a perception of where they feel they should be, but just as we saw earlier this year, you will see rates come back down again. our expectations are we'd be surprised to see rates at over 3.25% by the end of the year. >> and, drew, real quick, where are you seeing the ten-year? >> we're at 3.5% at the end of
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the year. we agree, until the fed pulls back fully from qe, they're buying more than 100% of the net supply by some measure, net duration. so it's impossible for yields to go higher because the fed is still buying everything. once the fed pulls back enough, second half of the year is when you can see yields move more quickly. >> all right. we will see. >> the great unwind. thank you, guys. skro >> thanks, everybody. >> 50 minutes to go until the close. the dow up 104, the s&p by 8, and the nasdaq by 5. >> stocks rallying today but we have been in a narrow range this month so far. can the bulls break through or will the bears end up winning this tug of war? famed economist, nouriel roubini, dr. doom himself, has some thoughts on that. you may be surprised what he has to say. also, jim grant, he's got plenty of thoughts, of course, about what the fed is up to.
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want to know what he thinks about fed chair janet yellen's statement last week about when interest rates may finally be raised. he'll join us in a little bit in an exclusive interview. nba legend kobe bryant is preparing to take on the business world even before his playing days are over. when we come back, kobe will be with us to tell us about his big energy drink investment and what he thinks about the report that the nba may soon require him and other players to put sponsored logos on their already crowded jerseys. that's coming up. an exclusive interview. logos on their already crowded we know we're not the center of your life,
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but we'll do our best to help you connect to what is.
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welcome back. stocks staging a comeback after mopped's pullback. the dow is up 113 points. >> dom chu, what is leading the rally? >> look no further than ibm leading the dow higher. big blue is hague a big day in part because it said its teaming with pitney bowes to deliver a new location service via the cloud that will help customers draw deeper conclusions about the relationships between people, places, and network effects here. so a pretty big deal for ibm. also airlines flying high. spirit airlines leading the way higher. beginning coverage with a buy rating. delta, american, southwest, and
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united continental are all in the green as well. on the flip side, you have carnival cruise lines sinking after it forecast a loss for the current quarter due to a rise in costs. that stock you can see there lower as well. overall, some decent individual movers but carnival cruise lines to the downside in an otherwise up market, kelly and bill. >> thank you very much. kobe bryant has proven himself on the basketball court creating one of the biggest brands in the nba. will his success translate off the court? >> kobe joins us right now to talk about his newly announced company. kobe inc. and its first major investment in body arm ouor, a sports drink out there. we know you wish you were facing the knicks tonight but we're glad you're with us instead. >> thank you for having. >> why body armor and why isn't your picture on the botle? >> if i get an investment from a
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kobe bryant, i want kobe's picture on this thing. i don't just want your money. >> yeah, i'd much rather sit here and do this interview talking about the brand and what the brand represents more so than having my picture on the bottle. when i first came into the league, that was really the model and has been the model for players for years is to do endorsement deals. at this stage in my career, i really don't have the energy to walk around and do photo shoots and things like that. i'd much rather do something different and challenge myself a little bit more. >> but that would help your investment. that's my point. it's not just an endorsement deal. you have put some money on the line so why not put your picture on the bottle to help that investment? >> well, by default i'm enhancing the investment by sitting here and talking about the product. >> okay. >> unless i say something completely foolish. >> and you are drawing the distinction that this is a sports drink not an energy drink. i'm interested more broadly, as you transition from on the court to off the court, obviously a lot of these deals are going to
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be an important part of building that empire, whatever that ends up looking like. why not go the phil jackson route? why not coach? why not be more of an owner? why not keep your game, your skills, in a capacity that's more on the court than going off into more of the commercial space? >> well, you know, you have to find something that you're passionate about, and i'm passionate about playing the game. coaching, i just don't have that obsession to be a great coach. business is something that's always been very interesting to me, and, you know, it's exciting to kind of start a new journey where i feel like i'm a rookie all over again and speaking to extremely successful people and picking their brain about some of the biggest lessons they learned through their process and then trying to draw a common denominator between what i've learned as an athlete and winning championships versus running a successful company. how is that accomplished? what are the things i can use that i have learned in my previous life as a player. >> who is helping you on that
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front? we have often talked to shaquille o'neal who it seems is almost becoming a model with how you might go into the business world. what is it like in terms of the people who are advising you and how do you single out and find those investments you want to be a part of? >> you know, it's been great. i literally just cold call people most of the time and just get on the phone with them and just pick their brain about respective industries. i'm a sponge. i enjoy learning at the core of me. >> will guys like mark zuckerberg return your call? >> yeah, yeah, yeah. absolutely. so far. >> what else do you want to invest in? what's next? >> i think it's important to stay with what i'm comfortable. the sports drink industry is something i'm very familiar with. it's in the wheelhouse with what i do as a basketball player. the tech sector hasn't been something that's been appealing to me. obviously the upside and the potential for tech investments
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is massive but i don't know anything about it. you know, i know about being an athlete. i know about inspiring athletes. i know about helping to enhance our performance. so that's what i'm going to stick to. >> okay. you know, this move now, the nba talking about maybe you guys wearing logos on your jerseys and things. you have endorsement deals. everybody has endorsement deals but it might go counter to what you are already endorsing. would you wear other logos on your jersey? >> well, you know, i think we'd be smart about striking up a nice partnership with body armer eats up most of the space on the jersey, i'm fine with it. >> good luck with that. that's a bigger investment. >> yeah. >> kobe, we have a couple twitter questions i just want to throw your way as well. one guy wants to know what stocks you have in your portfolio. another wants to know if kobe inc. is hiring yet? >> well, i try to be relatively
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conservative with my stocks. you know, i really look at that as an opportunity to kind of preserve the wealth that i have built, and i try not to be terribly stupid with my money. i have some entrepreneurial things i'm focusing on that's really become my -- kind of my bucket of risk. in terms of hiring, yeah, we are hiring. i'm looking to build out the staff right now and starting at the top and then working down from there. >> i have a question for you, and just so you know where i'm coming from. i'm a life long laker fan going back to the jerry west days. it's clear that the franchise is struggling now. you know that. now that jerry bus is gone, his son is struggling with the franchise. he let phil jackson go to the knicks last week. i know you're not happy about that. my question, kobe, is, is it time for the bus family to think about selling the lakers? >> no, i don't think so.
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you know, it's tough. it's a tough period. you know, you're talking about one of the greatest owners, if not the greatest owner, of all time in any sport. so it's a tough act to follow. >> but he's gone now. >> yeah, he is gone, so now you have the adjustment period where you have to figure out, you know, what the leadership style is going to be going forward, what our culture is going to be going forward. that takes a little time but we'll get there though. >> do you have the patience? do you have the time? i mean, are you coming back full force next season? >> yeah. my plan is to come back with a vengeance. you know, i have some of the entrepreneurial things i'm kicking off and focusing on while at the same time absolutely getting right back to my cycle, maniacal training and looking to come back next season with a full vengeance. >> incredible. >> well, we wish you well, kobe, with the enterprise and say hi to phil jackson. i'm sure you will tonight. >> thank you for having me. i appreciate it. >> thank you so much.
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>> kobe bryant joining us obviously. heading toward the close here. excuse me, this board is gone today so we have to look over here. market is starting to pick up a little pace here as we head towards the close. about 40 minutes left in the trading session. the dow is up 112 points right now. it was up 130 at the high of the day. >> now, he's been known as one of all street's biggest bears in the past. but as stocks near record highs, neural roubini changing his tune. >> shares of apple are down more than 3% this year, but coming up, we'll hear from somebody who says the iphone 6, which many believe will be out later this year, will be a bonanza for shareholders. why he's predicting a 20% gain for apple stock coming up on "the closing bell."
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market continues higher here. we're up 104 points. we're getting word of an interview that richard fisher has given to reuters in which he is quoted as saying that he believes that rates will stay near zero until the fed is certain that the u.s. recovery is well under way. of course, we know richard fish ser one of the great hawks on the fed. he would love to have seen rates rise sooner rather than later. >> although, i have a feeling he would want the recovery to be certain before policy is normalized. so, you know, i think markets are trying to figure out exactly what to make of it. appears to be an interview he was giving with regard to the
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subject of too big to fail. the new york fed has done some work on this saying it's still out there, it's still a bit of a problem, and potentially crowding out some of the smaller players in terms of the banking space. >> let's ask our next guest, dr. doom himself, nouriel roubini, teaches here in new york city. first of all, on fed policy, is it time for them to be pulling back on quantitative easing? is the economy starting to pick up enough now that they can do without the training wheels? >> well, they can now start as they have tapering qe and they'll be done with qe by october. that said, they're going to be on hold for at least six months and what janet yellen meant was not that that was a ceiling, but it was a floor to how much they're going to be on hold before they're going to normalize. they're going to normalize slowly. >> you think that's a good idea? >> i think part of the signal by the fed is the correct one. there's, of course, a reason they're going to go too soon.
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changing the composition you have new now hawks like flishis prosser. the composition is rather different. up to four new members of the board, three for sure, maybe four, having new voting members. so janet yellen matters, but under the bernanke, the fed became a collegial democracy not the monarch which it was under greenspan. the genie is out of the bottle. she has to be collegial. she's one vote out of 12, an important one. >> do you think they could make a mistake here then? >> well, two types of mistake they could do. one to start too soon and hike too much and that could lead to market consequences like we saw last year when there was a surprise from the fed tapering. another one could occur right now. the other mistake is they could start too late and normalize very slowly, not in terms of risk of goods inflation, but
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asset inflation. last time around it took them two years to normalize from 5 to 25. created the biggest housing, real estate equity bubble. this time around they'll be on hold for another year. they'll normalize very slowly. take them up to four years to go from zero to 4%. the risk is we'll create another huge bubble in the economy. that's a big risk. >> i was going to say to that point about 4% before we move on, is that the normal policy rate anymore? >> yes. >> there's a huge discussion right now as to whether that rate has moved lower because -- >> it has. neutral fed funds rate used to be 6.5% two cycles ago, then 5.25%. now the fed agrees it's 4%. long-term inflation is going to be 2%. the real feds fund rate is neutral. therefore, the new neutral rate is going to be 4%. >> none of this is happening in a vacuum. i mean, it's still full speed ahead in europe and in japan
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with their monetary easing process over there. does it give them a greater advantage as we begin tapering at this time? what do you think of what's going on in europe and in japan right now? >> i think europe and japan, they need more monetary easing. in japan the consumption tax will slow the growth. markets were expecting the boj would start easing before april. they have not done so. that's why the yen has been strengthening and the stock market has been falling. i'm sure there will be more easing by the boj. the question is not whether, but when. i think it's going to be in july when they see the feks of the consumption tax. the ecb is still on hold. they should have another rate cut, credit easing possibly, even quantitative easing. they will eventually get there but later than the markets are expect pentagon. >> mario draghi keeps saying we'll do whatever it takes but he hasn't done much. >> talk is cheap. but they cannot keep on saying we'll do something when
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inflation is lower and growth is uneven but they will be slow because they have a single mandate on price stability. >> what does that imply for the u.s. stock market? the last time you were on you had said you were much more bullish on the prospect for equities. where do you stand on that issue today, especially if there is the case that even if the fed is tapering, the bank of japan and the european central bank could be more stimulative? >> u.s. economic growth will recover even if below consensus. i think only 2.6% this year. the fed will exit only slowly. i think single digit returns on the u.s. equity this year are warranted. not the 25% last year. if you look at the ratio well above historic averages. while paradox in europe they're well below historical average. you could see eurozone stocks outperform actually those in the united states becausep e ratio evaluation is much lower than the united states. they're coming from recession.
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money is flowing into the eurozone. european stock market could be better than united states this year. >> what about the emerging markets? one of the great parlor games right now is when is it time to get back into the emerging markets as they continue to fall? especially now that the fed is tapering. that's not going to help them at least in the near term here. what do you think of the emerging markets? >> there are three global risk that is affect emerging markets, one is fed tapering. the tapering is already priced in. second, how much of a slow down of china. soft or harder landing. how much more of a correction in commodity pricing. internally most of that loose monetary, fiscal, and credit policy. they have moved away from stocks. therefore, potential growth in the typical emerging market has fallen the last decade by 1% to 2% unless after the elections that are going to be in india, brazil, south africa and other markets. potential growth will be lower
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and therefore -- might be the same one you see in the next deca decade. those are some of the risks. in addition to geopolitical rics. >> two quick issues potentially unrelated. what do you think about the u.s. housing market and what do you make of russia? >> on housing, i think there will be a recovery but it's not going to be as robust as the consensus believes. after all, the big housing was 6% of gdp. right now barely 2%. i believe residential investment will increase 10%. effect directly on growth. it's kind of spare change. be an improvement but i don't think it will be radical. there are some headwinds including rising short and long rates are going to be a hamper to the housing market. on russia and ukraine there are three scenarios. one is positive in which there is the de-escalation. agree on federalization of ukraine. and there is the middle view
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that most likely scenario in which we have sanction, counter sanction. there's not an improvement, there's not a real escalation and the effects on global financial market remain limited as long as there are no other global factors like a china shock or a fed shock or other geopolitical that might lead to another episode of risk off in emerging market. >> but that most likely scenario doesn't help the european economy because any sanctions where putin withdraws natural gas -- >> that's the downside scenario. even during the cold war, the russian zs not essentially cut off europe from gas supplies. you need to have a downside scenario. it's a low probability. so the effects on the european economy are minor. the confidence could be significant if you have an escalation of the tensions. >> nouriel row biroubini. >> thanks.
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>> the dow is holding up at 104. the nasdaq lagging adding 6. 4232 is the level there. >> the once red hot biotech industry has been getting bashed. but two big banks say fears of a bubble bursting may be overblown. is it time to get back into the sector? the hitter of candy crush set to price its ipo after the bell. we'll have the details of king digital's offering as soon as it breaks. we want to know whether you're going to buy this stock once it begins trading tomorrow. your best thoughts and we'll reveal them later in the show. l. or more on car insurance. everybody knows that. well, did you know pinocchio was a bad motivational speaker? i look around this room and i see nothing but untapped potential. you have potential.
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welcome back. so when it comes to smartphones, is bigger better? >> all right. >> that's a good question. i think we should ask that often. >> i think we should as well. >> they get smaller, more powerful, all kind of things are going on. >> who are we going to here? >> stocks may be rallying but there are some potential warning signs investors need to monitor, radio snit. >> sheila dharmarajan is taking a look at the beat down biotechs have taken. seem moo mody is watching red flags in the ipo market and dom chu breaking down the momentum
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stocks. sheila, let's start with you and what's been a rout lately in biotechs. >> biotech has had a rough couple days. investors are pushing the sell buttons, maybe some profit taking happening. but analysts are now saying, look, there's good reason to get back in the sector. this pullback could be a good buying opportunity. so three reasons to talk about. first of all, is valuation, especially for large cap companies like amgen, gilead, biogen. the forward pe is only 16 times and that's for revenue and profit growth of more than 20%. according to rbc, that's a winning combination. you're not going to find it anywhere else. the second part of the story has to do with drug launches. this is really the life blood of the biotech industry. jpmorgan points out they have been going very well. all of these high profile drug launches have exceeded expectations. if you take a look at the pipelines at companies, they are strong, they are doing well. so, again, one more reason to continue sticking with the biotech sector.
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finally, got to talk about the big picture. this is the macro back droup. the aging baby boomers. so lots of things going in biotech's favor but i want to point out analysts are getting more selective about the names they are choosing within the sector. so, for example, they are really focusing on large cap names and really pointing some caution signs toward some of the smaller biotech companies. they are starting to ring these worries about price increases. that was brought to the forefront last week with gilead. they say this isn't going to go away but it's an issue that's been around the industry for a very, very long time. but that is certainly some headline risk to be aware of, bill. >> all right. sheila, thanks very much. now, the ipo craze gets a little crazier tonight when candy crush maker king digital prices its offering after the bell. we have seema mody there. you put your phone down so you stopped playing sancandy crush
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answer this. some experts are seeing major red flags. >> here is what's worrying investors. first, the strong investor appetite for newly listed companies that are unprofitable at the time of their ipo announcement. according to s&p capital iq, castlight health, and akebia and intrawest fit into that category. of the companies that have gone public this year only 13 are trading below their offer price and 7 of those are from the biotech and pharma space. last warning sign is the massive jump in the tech ipo shares on the first day of trading. while the average ipo in 2014 has seen a 22% first day pop, tech ipos have been averaging a 55.7% first day pop.
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experts say be cautious. names that have moved up so fast have farther room to fall. bill and kelly? >> seema, thanks very much. some of last year's biggest winners have turned in some of the biggest losers lately. dom chu, why have these momentum stocks lost, well, their momentum? >> you talk about momentum stocks. at their very heart, the momentum stocks stem really their concept to the investment style debate from growth versus value investing. they're exclusively growth oriented companies. stocks that traders and investors will pay higher prices for because of the promise that financial results will eventually match and catch up and justify those premium valuations. also, great wolf execution chief technical analyst mark newton says it boils down to change in price over a certain period of time. he says the greater the price change, the higher the momentum. so the risk with momentum stocks is that when they turn, the moves can come fast and with a good amount of force and power.
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you think about stocks like tesla which gained 344% last year. it's up another 46% this year, but here is the rub, it's off 17% from its recent highs. all time highs. what about yelp? this company was up 266% in 2013. it's up another solid 18% so far this year. but it's lost a fifth of its value from its recent high. so those stocks in particular ones to focus on. while we're on the subject of social stocks, tune into cnbc's twitter chat of the day tomorrow highlighting the rise conference, kelly. you will be talking about that because you will be there later this week. join noon eastern time on twitter #ud rise and we will talk about social media's impact on financial markets and what's happening in business journals. >> it's profound is what's happening. that's for sure. thanks, dom. >> thanks, guys. >> heading to the close, about 15 minutes left. pardon me my back. the dow up 110 points. we've sort of been sideways for
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the last hour or so holding on to many of the gains that were achieved on the open this morning. >> a new survey showing only 13% of americans trust bitcoin over gold. up next, we'll show you how some of the digital currency's biggest supporters are now fighting back against the anti-bitcoin sentiment. also, connecticut senator richard blumenthal is demanding that general motors set up a compensation fund for those drivers affected by its recall controversy, and he wants to enlist the justice department to force this issue. all this as new regulations show general motors initially dismissed concerns about the ignition switch problem. blumenthal will join us for an interview you do not want to miss coming up on "the closing bell." stay tuned. stay tuned. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ]
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make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. so there's a look at bitcoin. it's been a pretty rough couple months for the digital currency. it's plunged nearly 30%, in fact just over the last 60 days. >> now some of bitcoin's biggest advocates are starting to fight back. josh lipton joins us with details on that. josh? >> yeah, bill. here at coin summit at bitcoin conference going on in san francisco, today marc andreessen of andreessen horowitz took the
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stage. remember bitcoin does have its critics, including warren buffett. he called bitcoin recently a mirage. andreessen was asked specifically to respond to that criticism. here is what he had to tell the crowd. >> the historical track record of old white men who don't understand new technology crapping on old technology is i think at 100%. >> andreessen with some tough words for the oracle of omaha. he was asked how do you invest in the space? how do you commit capital? andreessen saying this is a growing ecosystem that's attracting top engineers. he compared it a lot during his speech to the early days of the internet. firms like andreessen are looking to make big bets on companies that are really trying to build out the core infrastructure around bitcoin. so the security outfitting websites with bitcoin wallets. as a firm they have committed $50 million to bitcoin related companies and marc andreessen talking about bitcoin said it's as bulletproof as anything he's
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seen. back to you. >> josh, thanks very much. of course, another knock when the irs saying bitcoin is property, bill, not currency. we'll head to the close, 12 minutes to go. the dow is up 97 points. the s&p is up 8. the nasdaq adding a couple at this hour, 8 points. >> i didn't realize, it's back. closely followed fed critic james grant, can't wait to hear, he's warning us about the biotech stock boom. did he that a month ago. what is he worried about now and when does he think interest rates will begin to rise? we'll ask him those questions and more. it's an exclusive interview coming up on "the closing bell." stay tuned. stay tuned. but way too many aren't. why? because selling their funds makes them more money. which makes you wonder. isn't that a conflict? search "proprietary mutual funds". yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for you. e*trade. less for us, more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses and other important information and should be read and considered carefully
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welcome back. some breaking news now on dan loeb. kate kelly, what's going on? >> thanks so much, bill np in a suit just filed in delaware chance ri court, the activist hedge fund third point run by dan loeb is suing directors of sotheby's for a poison pill implementation they have recently made. thirdpoint sought to increase its ownership in the company up to 20%. was rebuffed by sotheby's. they're saying sotheby's is inappropriately interfering with their rights and they would like
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to seek injunctive relief in delaware. they note in the lawsuit just filed that this has never been before decided, this particular issue, by the delaware court system. it will be an interesting one to watch for sure. >> a new wrinkle in the age of the activist investor. thanks, kate. >> thank you. >> keep us updated on that. kate will be joining us coming up at the top of the hour here on hour two of "the closing bell." we're moving higher with seven minneapolis left in the trading session with the dow up 107 points. joining me is oliver portia. welcome back, sir. >> thank you. >> this market has been volatile, sideways, no clear direction here. what do you do with it? >> january 1 to today basically a lot of volatility with no movement in either direction. basically zero sum game. there's been a lot of activity that won't be repeated in the second quarter. all the stress with russia and argentina and crimea will be behind us. let's focus on the fundamentals. the economy continues to improve
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and we continue to see positive points on the data. when we get into second quarter earnings or first quarter earnings as being reported in april, i think you're going to see better top line numbers and slightly weaker earnings numbers meaning profits. >> what i hear from people these days oliver is be more selective though with your stock picking. you can't just buy whole sectors. >> who things. i would say two things. be more selective on stock picks and everybody likes to talk about being a stock pickers market but for individuals who own mutual funds, etfs, be mindful of how much sector exposure you have. if a sector corrects, you're going to get hurt. >> what do you like right now? >> we like large cap technology, so the ibms, apples, microsofts and intels of the world. the johnson & johnson and mercks of the court. large cap energy, exxonmobil, t total. rock solid corporate balance sheets are key.
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>> oliver has been one of the solid bulls that joins us frequently and he joins us. >> good to see you. >> we'll come back with the closing countdown and then candy crush maker king digital to price its ipo anytime after the bell rings. we'll have the instant analysis of that offering. we want to know whether you plan to buy this stock. you play the game, would you buy the stock in tweet us with your thoughts. we'll reveal your best comments later on "the closing bell." you're watching cnbc, first in business worldwide. ♪
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coming up on two-minute mark as we head towards the close of trading today. this is what you call volatility. this is the kind of trading pattern we had seen recently. this is the dow for today. rally on the open this morning, and then a fade as we headed toward midday and it looked like here we go again. we'll have another down day after a higher opening. not so. then we took off around midday and the dow was up 130 points at its peak. then we turned sideways and we're trading up about 90 points right now. industrial average around the 16,368 level. bob pisani, art cashin has been identifying 16,410 as a resistant level. >> you know what's interesting, to watch how choppy it's been in the last week. the prevailing paradigm in the beginning of the year, short
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emerging markets and go long cloud computing stocks. now everybody has decided to go short cloud computing stocks and you know what's been better? emerging markets. this is the way the stock market works, herd mentality. >> you have been highlighting the ipo craze lately. tonight we get a popular one i would say. we'll see how it does, but king digital, the maker of candy crush. >> my wife was addicted to candy crush. >> she's not alone. >> 95 cents she would buy for the extra things. i'd say what are you doing? i have to get to the next level. you know what i think is the most interesting deal? c bs outdoor. it's the boring billboard business of cbs. economy getting better, they charge more. >> there's a reason les moonves will maintain 80% of that company's ownership. >> that will be interesting to watch. much more conservative than the stuff we've been doing recently. >> thanks, bob. see you later.
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going out with a good gain here. see if that can continue as consumer confidence data out to help that. we get the king digital pricing on candy crush coming up now on the second hour of "the closing bell." i'll see you tomorrow, kelly. and welcome to "the closing bell" on this tuesday. i'm kelly evans down here at the new york stock exchange, and here is how we're finishing up this day on wall street with the dow jones industrial average giving us a pretty strong snapback today. it's adding 95 points. again, we're off the session highs of 130 but still up almost triple digits on the day powered by strength in ibm among a couple other names. the s&p 500 adding 8 points to 1865. the nasdaq add being 7 to 4234. so for more on what to make of it all, let's bring in today's panel. joining me is sharon epperson, marcus lemonis, kevin o'leary, and our very own kate kelly. a lot to digest today, guys.
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a lot of focus, kate, seems to be on all of a sudden it looks like, you know, is it the financials? is it tech? bob pisani just told us suddenly everyone wants to short the cloud and go long some of the emerging market space. nobody can dig out what the paradigm is. i think you're absolutely right. i have been taking a look at macrotraders and they're struggling. a lot of presumptive market moves are breaking down. of course, janet yellen last week gave a bit of a surprise in terms of her signaling about what would happen to interest rates six months after tapering stopped. so i think you're seeing strength unexpectedly in fixed income markets, especially in the markets. you're seeing sector specific shifts that weren't necessarily predictable either whether that be tech or financials. b biotech getting crushed the last few days. people are struggling to see where the traditional patterns are. >> sharon, we're not getting much help from the space you cover closely and that's commodities. you could look at gold which has
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been up and down. you can look at some of the softs going in one direction and the industrial metals the other way. >> we're not seeing that same correlation we've seen. you would expect them not to be correlated. that's what a lot of investors who wanted diversification have been counting on. we saw close correlation last year and in recent years. now we're seeing again a lot of volatility and a lot of fluctuations. some of the financial advisers i'm talking to are saying they also like some of the macro traders are concerned about where is the fed heading next and the commentary we got from janet yellen actually creating more confusion than it did some type of real clarity on what they should be doing next, particularly for the long-term fixed income investors. >> kevin and marcus, all they want to talk about is this kacay crush ipo, right? >> i like what i'm seeing on the industrials with caterpillar. we're seeing a lot of companies
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are starting to put money out of the bank, put it in cap ex. we'll see a late summer drive based on what people are putting into their business. >> we get the durable goods number tomorrow morning that will give us a sense of how much momentum there is with regards to what is happening with business capital spending. last year the lack thereof is one of the puzzles. >> the durable good numbers won't be great. i think we need to be optimistic that the next quarter is going to look a lot better. >> kevin, what about you? >> listen, i think the most fascinating story of this market, kelly s a very simple one. the equity markets continue to rise and the long ten-year bond stays below 3%. bond guys are never wrong. this is going to resolve itself one way or the other. if the bond doesn't get above 3% and one of these weeks it has to happen, if that does not occur, stocks are going to go down. >> but i think the relative stag nancy of that curve is one of the effects i was alluding to. people were surprised by the yellen color and they wanted to see a little bit more of a yield but given what she's saying, you
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know, the move isn't happening. >> right. i want to bring into the conversation now "fast money" trader steve grasso just finishing up on the floor. steve, tell us about the action today. what did we learn? >> you know, first of all, we came off of that s&p rebalance last friday. we came off the expiration so you had a little bit of a day off yesterday for traders trying to figure out where they wanted to line up. but right now it's just -- i remember the last time we spoke about it, i said look at how guys are still trying to buy utilities. why are they buying utilities, kelly? em was confusing most. everyone thought that was the place where you had to get out, you had to ep cascape, and it wasn't. anything with a yield got dumped. now you see guys going for safe tech, buying utilities. they're totally confused. so i don't know if i buy into this that we're going to stream higher from here. >> and that's consistent with what kevin was just saying as well. it's funny because a lot of people are saying look, we should be grateful.
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it means we're in a stock picker's market. the trouble is it seems to be the contrarian stock picker's market. it's everything people, kate, really haven't been picking unless we're going to find out once we get all the first quarter disclosures there was a massive repositioning. >> you did get a massive reapproximatir reposition basically with allocations on friday where you start to see a lot of funds rotate in and out of names. maybe that's a huge part of biotech. maybe -- >> oh, sure. it could have a lot to do with people, you know, closing out of positions for whatever reason. >> think about rates going higher, kelly. what does it do to r & d? everybody looks at it through their own prism. if you have rates going higher, r & d gets squeezed out of it. now you have congress trying to nitpick on how much drugs should cost. so doesn't that make everyone tighten the reins? >> i think these are all good points but i think it may be a story where patience wins the day. if people are going to get frustrated by a temporary
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pullback and they're going to rotate out of positions, they're not going to be in it if the value returns later this year. i find the consensus is we'll have a good year in u.s. stocks. maybe not the same as 2013 but still very solid, probably double digits. who knows but -- >> the most interesting -- >> what they're trying to do is read the tea leaves out 18 months from now, try to figure out where we're going to be in terms of that period of time particularly when it comes to interest rates and trying to plan for that. so i think that is also frustrating retail investors and some of the institutions. >> they will be lucky to make 8% on equities if the long bond stays under 3%. trust me, bond guys are always smarter than stock guys and they're telling you slow down the coming unless we get this handle above 3%. >> what's frustrating me are people are changing lanes too fast. these companies have great balance sheets. there's a lot of good earnings out there. value is there. we keep talking about the bond market and i understand, but -- >> it's the only market that matters, marcus. wroo we're changing lanes too
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fast. the fundament the fundamentals matter. >> especially if you wanted one kind of global gauge of, you know, the most liquid, the most responsive, that's why people often look to the bond market. i understand that. one of the interesting things as well that's happening today if we want to keep talking about kind of the quirkiness of this market, you had consumer confidence jump to a pretty decent level and yet consumer discretionary and some of the retail stocks were some of the laggards. you would think this would be the one space where you would see a little more strength. >> that's because the improvement has been so gradual and there's stim so many households out there that are struggling. if you look at one of the top stories on right now it's about folks not being able to afford to buy a new car and how many big cities out there the people can't afford to spend $26,000 on a new car. so there are a lot of folks out there that are struggling. i think that consumer confidence, while it's better than it has been over the last several years, it's been a gradual improvement and we're still not in a great spot.
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>> aren't we in a situation where it's the new normal. we're seeing good job growth numbers. economic improvements that are undeniable. it's not 2007. it's not 2006. >> we're used to that because we cover it every day. people out there are still saying why isn't this not like what we had seven years ago? why am i not experiencing what i had seven years ago? and they're not realizing that this is how it's going to be going forward. >> i was talking to a fortune 500 company earlier about whether they're seeing finally now any upward pressure on wages, and the answer was no, none. and as tight as the labor market has gotten relative to where we were -- >> blame the government for that. that's regulation at the small business level -- >> oh, stop. >> absolutely, absolutely true. we are turning -- >> this isn't a small business though. >> we're turning this country in france. that's what's going on in every state. that's why you're not seeing any pressure on wages. any job created in america is not being made in america. >> kelly, that's fortune 500
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companies aren't feeling the pressure yet because the labor force is too scared to raise their hand and ask for a raise. >> exactly. one is yes, job growth is looking good but as we know, a lot of folks have dropped out of the job search and that's why they're not necessarily being counted. the other thing i think you're right. i think it's going to be a multiyear trend for companies to feel the pressure and i'm sure they are feeling pressure, kelly, when it comes to highly skilled jobs -- >> why is it so hard to understand. we forced them to figure out how to do more with less. >> i would say this, as we have watched the unemployment rate fall and as we've watched the economy string together several more quarters of decent growth, the last thing that needs to happen, and this has important implications, is whether or not we get to a point where it's tight enough that wage gains generally start to show up. >> but, kelly, look at health care. where is the clarity in health care? how do corporations know what the actual employee is going to
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cost them? where is the minimum wage debate going? how can you hire? we're trying to see something -- >> that's right. you're absolutely right. >> if i don't know what an employee is going to cost me, why am i going to hire one until i know what that is? >> it's because it's a variable cost. if you have customers walking through the door, your phone ringing, you're producing something -- >> you're talking about a certain percentage of the population of corporations that have sales. i agree with you on those. >> everybody has some form of sales whether it's a service or a product. >> you know from your show if you want to dump money into companies, in corporations, you have to start to see what the landscape looks like before you do so. >> the fundamental point though in here is this. you hire when you have to. and what's going to be the most telling thing about whether the economy is truly on the verge of kind of the self-sustaining breakout and the fed responds and all of that is whether we're at that point. i found interesting today despite a lot of improvement we've seen across a variety of indicators, this particular company and others that we've all spoken to are really -- >> but, kelly, who says you have
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to hire in america? why don't you hire where you don't have the concerns of health care. you don't have to worry about minute w minimum wage. you do that in mexico. >> a lot of traders i know are still bullish on the u.s. relative to other places. if you look at europe, even parts of asia, we are in a solid position relative to other xhes and a lot of people are bullish on it. >> you about it's the job growth thing we're all worried about. there's a reason we don't have this situation solved. the real unemployment rate i think is double digits, probably 11%. you have got to change the environment so corporations will actually take cash off their balance sheets and invest in america. that's not going to happen until minimum wage and health care costs are understood and they are not. >> we're going to see the durable goods number. that will tell us what people are doing. >> we have to leave it there for the time being. steve, thank you, sir. >> thank you. >> good to see you. stick around and catch steve and the rest of the crew on "fast money" at 5:00 p.m. now, they say you can't fight the fed. jim grant of grant's interest rate observer doesn't always agree.
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he will join me next in an exclusive interview. can't wait for his take on the new fed under janet yellen, potential interest rate hikes and the timing of the hikes. the pressure is mounting on general motors. they have been linked to 12 deaths. senator richard blumenthal of connecticut is demanding a consumer compensation funding set up. the senator will join us live from washington. that's all ahead. keep it right here. you're watching cnbc, first in business worldwide. siness world.
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welcome back. another day with the major indexes moving in some different directions. dom chu has been tracking that action plus some movers after hours and joins us now. >> kelly, let's start off with apparel company pvh corp. they beat street estimates by a penny but first quarter and full year guidance came in below forecasts. a programming note, manny chirico will be on live with jim cramer at 6:00 p.m. eastern on cnbc. a different story for five below, it's moving higher in the after hours after posting better than expected fourth quarter earnings and revenues. then international game technology, igt, falling after it said it's reducing the
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workforce by 7% after it lowered its 2014 full-year guidance. >> dom, thanks very much. earlier today on squawk books, charles plosser spoke candidly about the fed's plan to unwind policy. >> if the market gets ahead, i have often said financial markets aren't always patient, and if they get ahead of us, we'll probably have -- we may be faced with a situation we'll have to raise rates faster than we otherwise would have chosen to do. and that's one of the great unknowns about this whole exit strategy. >> and with us now for reaction to that and all things fed is jim grant of grant's interest rate observer. welcome back. >> nice to see you. >> when you hear charles plosser, what do you think? >> i think it's a nice intention. i think it's a laudable intention. the fed can't know, it can't predict the kind of consequences
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these extraordinary, unprecedented monetary actions will have. as it is, there are plenty of examples of markets that i think are distorted by low interest rates. it stands to reason that if the rate at which you discount the value of capital assets is itself suppressed, then the value of those assets will be correspondingly inflated, and we see that in biotech. we see it throughout the credit markets, junk bonds, leveraged loans and the like. you see it in real estate. mr. plosser says if the fed sees evidence of excess in the financial markets, it will react. it seems to me if the fed chose, it could see those examples of excess right now. >> but why when you look back at the last time the fed raised rates in 2004 or throughout that whole cycle, you know, stocks kept moving higher at that point. in other words, that was not the end of the rally. why is that the case this time around? >> it might not be. there was a saying back in the days before tesla that when the horse gets the bit in his or her
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mouth that, you know, that's the horse's decision. the horse will then take matters into his or her own hands. the animal is not going to wait for the fed. so i'm going to stop this equine metaphor now but simply observe throughout financial history when there have been central banks at work, the central bank has often found to difficult to tighten. >> when you were here last time you talked about some of the concerns you had about valuation in biotech in particular. >> biotech is the outstanding example of excess in the equity markets. >> and it seems to be blowing off some of that froth of late. so is this just a couple-day move or is there more to come? >> i don't know. there ought to be more to come. biotech has scarcely begun to adjust to a world in which we all live as opposed to the world in which we all dream about living. >> you guys are actually stock pickers. you often look very specifically for value. >> we try. >> what does it mean for your investments more generally here?
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kind of acknowledging both what -- both how the world is and how you think it should be, what does one do? >> it's a rather unsatisfactory pronouncement. the be so cautious is tire. so here and not especially helpful. i just returned from india. i'm now a world authority on india having been there for four days. >> reading your piece on india was pretty enlightening. they have elections coming up on april 7th and what really caught my attention is you say, and this is in the latest newsletter, for people who missed out on the investment opportunity that the reagan revolution, thatcher in great britain, even the german post-world war ii economic miracle represented, you think india could be that next great -- >> i think it could be. i think the world is always looking for the next growth story and i would nominate india. i think china is fading on account of its truly frightening
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misallocation of credit. you know, india has got -- it's got an average -- median population, i think age is 27 almost. europe's is something like 44 or -- mid-40s. india is confounding, flummoxing, exciting. it causes one to wish that somehow enlightened market related ideas had prevailed there about 100 years ago. >> yes, i think you still blame the british. for leaving their social -- >> the british -- they didn't take their social with them. the fellow who now is leading in the polls for the balloting only begins last month. the announcement comes in may. but mr. modi is not so much a libertarian, but he is all about modernization, and he has policemened to give business a much freer hand.
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india has been in thrall to statism under every guise, socialism, gand hiism, neruism. the indians are expected to spend $5 billion u.s. on this election. that is seven times in proportion to population what americans spent in 2012 on federal election. that gives you an idea of the power of government to withhold and grant favors. >> last quick question but something kevin o'leary just mentioned in the last segment which is warning that the u.s. is going the way of france. how do you feel about drawing an analogy like that. do you share that concern? >> well, john kerry spoke french and was all too mindful of france when he ran for president. only to express the fervent hope that we do not go down the road of west european statism. it is altogether unfun. >> and we will leave it there. >> k okay.
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>> although you are much fun. jim grant of grant's interest rate observer. if you drive a pontiac solstice, a chevy cobalt, chevy ion or sky between 2005 and twiven listen up. they are part of gm's massive recall due to faulty ignitions and senator richard blumenthal is demanding they create a fund. he states his case next. don't go anywhere. don't go anyw. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. sunny or bubbly? cozy or cool?
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welcome back. with more bad news food for general motors. new reports of engineers knowing about ignition switch problems on some of the recalled models and basically dismissed the issue. phil lebeau has the latest developments. >> you take that news along with the claim that's coming out of texas from an attorney down there who has asked a federal court to issue a park it now injunction for all gm vehicles that have been recalled and there are more questions mounting for general motors. let's talk about that filing that happened in a u.s. district court. the attorney says that these stop it now or park it now alerts should be issued for all recalled cars. gm says the recalled cars can be driven with nothing on the key ring, just the key in the ignition. however, in its recall notice, it does warn drivers of potential risks if the car hits bumps and that is the concern for the attorney filing this motion. >> if they're telling their customers if you hit a bump in the road this could happen, even if you follow the instruction on the key chain, you know, there's
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not anyone i know that would put a family member in it at all. >> meanwhile, still more questions about what gm is liable for in terms of claims involving these recall cases. and here is the breakdown, kelly. in civil cases they are not responsible for accidents that happened before the bankruptcy was declared in 2009. criminal investigations, including the one by the doj, they are responsible for all actions of their employees pre and post-bankruptcy. the reason this question comes up is there's more than a few people out there, and you will be talking with senator blumenthal, who say it is not enough to say general motors is free and clear of anything prebankruptcy. there should be a fund set up or perhaps a revisit to the law saying they are not going to be responsible for anything prebankruptcy. >> thank you so much for that explainer. now to two democratic senators calling for new legislation to
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ensure more transparency when it comes to early warning reporting. connecticut senator richard blumenthal is working with senator ed markey on this new push. asking the justice department to create a fund for victims of the gm issue. it's good to have you here. welcome. >> thank you very much. good to be with you, kelly. >> so as i understand it, there are two separate things you're moving forward. one is to set up a compensation fund and the other is to introduce legislation aimed at doing what exactly? >> the legislation would essentially provide for more disclosure earlier, more fully, so that people would be put on notice that accidents are occurring, for example, as a result of a faulty ignition switch in gm saturns or cobalts. the nhtsa, the government watch dog, knew about some of these crashes sometime in the early 2000s, but never really detected a pattern and never disclosed the crashes. and so they should be required, the agency, federal agency,
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should be required to make full disclosure. on the compensation fund, remember that the only reason that gm has this shield from legal responsibility is that it concealed these defects in its automobiles. it failed to disclose to the bankruptcy court in 2009 that it might have these liabilities. in fact, it deceived the federal government which supported it having the shield. and so it was given a quick, easy pass through the bankruptcy court without a fund being created as would ordinarily happen when there is a recognition of liabilities. >> and there are -- >> a complicated legal explanation. >> but certainly an important one, especially for gm shareholders right here who are trying to figure out if they're going to be on the hook with new gm today for what happened in the past. if you have your way with this, the answer is yes. the question just becomes where does the money come from, how does it happen, and how is this all set up?
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>> and the best way to do it, frankly, would be for gm to do the right thing, voluntarily. the second best way would be for the department of justice to compel a fund to be created, even in advance of concluding its criminal investigation and possible prosecution. just as it did, for example, in toyota where there was a deferred prosecution agreement and toyota established a fund of $1.6 billion. so the possibility here exists that gm will do the right thing even without a prosecution, and i think it should. >> isn't it pretty clear there's going to be a prosecution? >> i'm a former prosecutor. i was a federal prosecutor, then a state attorney general. i never prejudged the results of an investigation, but gm knows better than anyone whether there's going to be a prosecution. i would bet on it. >> because this case comes down to whether they are charged with
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a criminal issue, of course, that would then make them liable for what happened prior to 2009. as you say, that time frame, that cutoff is about -- will determine so much of what happens in this case going forward. >> and, you know, kelly, in 2009 when i was state attorney general, i actually opposed this legal shield that they were granted. i said they should not receive this broad all encompassing immunity because there might be defects in some of the cars. unfortunately, that warning has come true. gm shareholders should be rightly apprehensive that gm is going to be on the hook for somewhere between $3 billion and $8 billion, but, and here is a big but, isn't it better for gm to do the right thing now, establish this fund, and acknowledge its moral and legal responsibility before there are criminal actions that further -- sgroo but do you think if -- think about it from gm's point of view. if they did something like that,
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putting a number out there, do you think that would do anything to forestall the avenue that is otherwise the doj and others might pursue on this front? >> i think if the department of justice follows the call that i very respectfully have made to enter into some kind of talks with gm and reaches a deferred prosecution or some other agreement, then a prosecution of the company might be avoided, and that would be to everyone's good. gm in effect can help itself, help consumers and loved ones of injured and killed people as well as others damaged, and really help public policy by doing the right thing. >> senator, thank you very much for the context around this proposal. that's senator richard blumenthal of connecticut this afternoon. >> thank you. >> bigger a better. that's how some feel about the iphone 6. and if you're sweet on candy
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crush, do you like the video game enough to sink your money into the ipo of king digital entertainment. tweet us your thoughts. we'll use your best tweets later in the program. in the program. gunderman group is a go. yes! not just a start up. an upstart. gotta get going. gotta be good. good? good. growth is the goal. how do we do that? i talked to ups. they'll help us out. new technology. smart advice. we focus on the business and they take care of the logistics. ups? good going. we get good. that's great. great. great. great. great. great. great. great. great. (all) great! i love logistics.
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so when it comes to smartphones, is bigger better? our next guest says a new iphone 6 with a larger screen could boost apple's stock price by 20%. here is explain his reasoning is jack howe. jack, it's great to see you again. >> good to be here. >> look, you wrote in barron's about the 20% upside. you said apple could have a second half sales bonanza and this all because of the bigger screen size? >> i think it's the biggest reason to upgrade your phone we've seen in years. look at the last iphone. what do you get? a fingerprint gizmo? it's cool but i don't really need it. what i do need is to stop feeling the screen envy i have every morning on the subway when i see all the five inch samsung screens. i would like a bigger screen. i think a lot of users feel that way. we looked at some analysis and they say the percentage of iphone users who are upgrading is around 9%. that's pretty low. typical levels are 10% or 11%. peak levels are 12% to 14%. if we get back there in the
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second half, could see 10% to 15% earnings upside. i'm curious what the panel thinks of this? >> i'm happy that you're focusing on screen envy. i'm focusing on their cash they have. that's the envy i have. but i think what they're going to try to do is turn up the trade cycles. i think they were starting to get them a little longer trade cycles. this may shorten the trade cycle four to five months. does that sound right to you? >> i think one thing investors should focus on in this business, it's a mistake to think about this as a hit driven product company. people saying if the camera on the next phone has enough megapixels, this company will do well. >> you said hardware is a service. >> it's a hardware annuity business. i will go in every couple years to get my new gadgets because i don't want to bother going to a new ecosystem. you don't need tremendous growth. it's 12 times earnings, 8 times earnings if you back out the
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cash. >> i'm buying into this. >> don't you think people are fatigued by the fact that apple does things like change chargers, the size that you need for the power cord which means you have to buy three new chargers. changing the sizes. making little change that is require to you forgo more money. is there fatigue attached to that by consumers? i know the iphone to me now feels a little bit like my car. it's a depreciating asset. it's going to need to be replaced. going to need new parts. it's a wonderful device, but at times it feels like a money pit. >> would you get the bigger screen? jil not because i like the portability of the smaller phone but i'm always the opposite side on these stories. >> i'm going to admit yesterday, i went in and gave apple $4,000 yesterday because they announced they're finally going to put office on the ipad. so i bought a new mac pro, the small thing one -- >> i thought you meant the stock. i'm like how do you -- >> no, no. this is helping move the stock. i bought some stuff from them i haven't bought in a year because they gave me nothing.
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with office on the ipad, i bought the mini ipad, love it, because the new i-mac. i just upgraded. i look at the phone. i said i just bought a note three because i want a big screen because i can't read as well as i used to. why don't you make this thing bigger and you will get some money out of me. >> i'm lake kate. i'm one of the late adopters. i have an ipad that's really my daughters. i have a couple iphones i use because i need them for work and they're easier. the portability kate mentioned is very important to me. what i love and what i'm trying to encourage my kids to think about is owning apple for real, owning the stock. you may not even have to buy the stock. you probably own it in your 401(k). we did some research a couple months ago and according to bright scope, the most widely held stock in a 401(k) is apple. a lot of us own it regardless of whether we want the product -- >> it's appropriately valued at
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12 times. look at what happened to samsung recently. >> the smartphone business is becoming a duopoly. if you take apple stock and put a microsoft multiple on it, you have fantastic upside. >> to chime in, i think people want to upgrade every so often. i, too, have a mac book i think is a revelation. it's just -- it's lightweight. i have writ an book on it. it's a fantastic machine, but at the same time i don't want to buy a new one every 18 months to two years and is that a little bit what you're talking about in your story here, that people aren't necessarily going to update quarterly? >> i think the days of needing a new notebook every couple years are long over. i think you might juupgrade the smartphone that frequently. apple give away a lot of software programs for free to get people locked into the ecosystem and give them an easy experience and those folks will come back every so aun and pay
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premium prices. a lot of good money ahead. >> we have to go, jack, but what's interesting to me mostly about this piece is that it's not about the watch. it's not about the tv. it's not about this, that, and the other. it's just about a bigger screen. >> i'm not convinced on the watch. i had a nerdy calculator watch when i was a kid. i'm not convinced we're going back there. >> what does the retail store expansion look like? are they opening more stores? >> i'm not sure about fast expansion but i can tell you the stores are really a key differentiator for the company in terms of those people being locked into the ecosystem because it's nice to have somewhere to go to get a little service and advice on the products. >> great point, jack. great to see you. thank you. >> thanks. >> jack howe of barron's. march madness hits home literally. we're crowning the tourney champion when we come right back and also candy crush, you may love to play the game, but is the company behind the game, king digital, let us know if
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with investment information, risks, fees and expenses geico motorcycle. see how much you could save. welcome back. all day on cnbc homes across america have been battling it out. since we're in the middle of march madness, all the homes are located near schools with teams that recently won a tournament. we're now in the championship round. the teams in contention are the north carolina tar heels versus the kentucky wildcats. touring homes are seema mody and
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dominic chu. >> at this estate exclusivity means luxury. sitting on about an acre this three-story brick home offers access to the governor's club, just one of the perks of living in an upscale gated community. >> this traditional ranch style brick home sits on three-quarters of an acre in a quiet neighborhood but it's five minutes away from a vibrant downtown and a university center. >> this 5300 square foot home is ideal for nature lovers. a wide open floor plan, a spacious den, and the state of the art chef's kitchen helped this home come alive during march madness. >> this 5400 square foot home is built for entertaining. the kitchen has state of the art appliances and its centrally located between the dining room, living room, and nook. >> with four bedrooms, each with their own bathroom, visitors will feel comfortable in this home. soak in some rays in the two sun rooms, get some work done in the
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quiet office, or unwind in the master bedroom steam room and spa bath. >> the master suite of this four-bedroom, 4 1/2 bath home has easy access to an outdoor jacuzzi and a fireplace that you can enjoy from both in bed and in the bathtub. >> the real selling point is this expansive golf course right in your backyard. enjoy the views from the renovated deck or try your hand at scoring a hole in one. if you can swing $980,000, the ball is in your court. >> if you're looking to relax, this secluded backyard is made for you. the heated swimming pool has a waterfall and the gazebo has a fire pit. all of this could be yours for $995,000. >> okay. joining us is real estate super broker dolly lenz. great to have you here. >> thank you. >> remind us, first of all, it's gated retreat and the brick beauty are where? >> the gated retreat is in north carolina where the tar heels are.
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>> chapel hill. >> exactly. and university of kentucky is wildcats. >> louisville. >> we have chapel hill, north carolina, louisville, kentucky. a relatively similar part of the world and similar size. >> and similar tacks. it's all very, very similar. this is really the point in the game where it's tough. >> it gets -- >> the houses are both terrific. they both give a lot in many ways from pristine condition to great locations. just everything is terrific about both houses. >> there's got to be something wrong with you if you find something wrong with either one of these places. . >> exactly. >> which is the better value? >> the problem -- i think we have to find one thing to say why is this one better, right? i think we have to say that dom's house is better, and the reason it's better, it's walking distance to everything, night life, town, school, everything. and, b, it's a broad appeal house. the other house in a gated
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community, it's a golf community, it's a jack nicklaus house. it's super but it's going to have a very small basket of people wanting a specifically jack nicklaus -- >> all the same, we've been doing all these package was diana olick on how home buying an renting is changing over time and what it's going to look like in 25 years. isn't it the case that a home on a golf course will at least have a buyer, someone who wants to live on a golf course. this brick beauty house, maybe that's a person who would have bought in the past but is going to be renting or hopping around the country today? >> i don't think so because you will have professors who would buy it because it's near a school. you will have families who want to bring up their children there. you're going to have everyone who wants a night life, who wants to walk everywhere, who wants to be in the middle of the experience. the other will be people who want to play golf. >> i like the way you said that, people who want to play golf. >> i don't want to play golf and the fact i'm going to a golf turn am, but it's not my thing.
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wint buy a house that was around a golf course. >> perhaps it is falling out a vogue a little bit. >> but, look, there's three-year supply of homes at the golf community. >> we have to leave it there. but you will stay with us. we want to know if you agree with the winning home. tweet us using the #milliondollarhome. >> if you disagree, don't tweet us. >> or tweet me and we'll talk. >> dolly will stick around and we'll have more on what's heating up the real estate market or not with the panel after this quick break. uick bre. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.
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welcome back. we're back with superbroker to the superrich, dolly lenz, along with the rest of our panel. talking a little real estate before the break. we were talking about the case for a home in lexington, by the way. not louisville. apologies. >> louisville, for dennis berman, as well. versus chapel hill. we should broaden this out a little bit, right? is housing itself still a good investment here? the market has gone through a couple of speed bumps this winter. >> i think housing is definitely selectively a good investment. you just can't buy any house or any condo or any piece of land and assume, that's it.
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i've done my due diligence. that's done. it's going to go up in value. that's no longer the case. like it's no longer a case, everybody's guaranteed a job. people have to look at things very carefully. >> i get a lot of questions from folks that say, i basically want to know, should i invest in real estate? should i invest in mutual funds? when do i decide when it's time to make an investment in real estate? not just for my home. but when to have an investment property. when do you say is the right time for folks? >> i think when the numbers make sense. if you're presented an opportunity, where the numbers make sense, where the house carries itself or the apartment carries itself or it's something you may want to use yourself some years later, or something you want to give to your children some years later. >> let me give you three reasons why real estate is a terrible investment. and allow you to defend them. in the next year, rates will probably go up, 1 1/2 to 2%.
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real estate sucks in a rising rate environment. number two, the transaction costs because of you as a broker, and the other side of the trade, are often as high as 6% and 7%. you said yourself, the chance of capital appreciation in a five-year period being anywhere near that is probably zero. and lastly, you showed us a house where there's a three-year supply. if i was going to move to a golf course, i'd rent it for $2,500 a month. >> i agree on the golf course. i would simply rent that particular property or a property like it. with regard to the other metrics, i don't agree. anyone who looked back five years, thinking i should have bought then, they were right. when we look forward five to ten years, we're going to see the same thing. you have to be selective. >> speaking of interest rates, i'm wondering if we'll see a rush into the real estate market in the rest of 2014, as people anticipate what kevin was just mentioning and what we heard
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signaled from janet yellen, which are higher rates in 2015. >> higher rates aren't until then. they're not going to rush then. >> they're going to get a year to get the financing together and lock in the rates before they get to be a handle or two higher. >> and there's more interesting mortgage products on the market. including even prequalification products that are almost equal to cash. really close to equal to cash. >> dolly, thank you. >> thank you. >> last chance for candy crushers. we've been asking if you would give the ipo for king digital entertainment. let us know if you are game or buying real estate, instead. here's a word you should keep in mind "unbiased". some brokerage firms are but way too many aren't. why? because selling their funds makes them more money. which makes you wonder. isn't that a conflict? search "proprietary mutual funds". yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for you. e*trade.
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welcome back. king digital entertainment, maker of the popular game candy crush, set to price any moment now. gearling up for trade tomorrow under the ticker symbol, king. are you buying into this ipo. chris tweets, why do you buy into a stock that gets 75% of its revenue from one game? noah tweets, i've never played candy crush and know nothing about it.
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yes, definitely a buyer. john tweets, i like king for about $21 to $23 a share. and if only a pop, i'll take it. does anyone here play candy crush? >> my kids play it all the time. >> i found it to be positively addictive, to the point where at my husband's behest, i deleted it from my iphone. having said that, it wasn't as interesting when i reloaded it. >> i pay 99 cents to get to the next level several times, i do. >> how many times do you have to get zynga before you buy one-hit wonders. >> can you name one game that's outlasted -- about an 18-month shelf life? >> monopoly. >> board games. >> you lost a lot of money in the toy business waiting for the ten-year cycle to go through. there's no diversification in this company's portfolio. this is radioactive waste. don't touch it. >> they had a superhit.
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and the valuation is rich. but if they can re-create a good game, you never know. >> i don't think there's enough interest in it longer term. my kids love it today. they're not going to love it in a couple weeks, perhaps. the life span on some of the games is really short. >> what's the dividend on this stock? >> the -- >> zero. >> berkshire hathaway doesn't pay dividends, either. i'm not making a parallel, to be clear. >> with candy crush. >> right. >> quick final thoughts from the panel tomorrow. we have the durable goods number we'll be watching. >> i want to see the durable goods number. buying a house right now is not a bad thing. the rates are still low. >> you have to pay dolly 6%. >> tune in and catch kevin on "shark tank" minimarathon tonight, kicking off at 8:00 p.m. eastern time. and catch marcus on "the profit." "fast money" coming up in a few moments. what's on tap today? >> have you seen one of these
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yet? >> is that a -- >> it's a fresh, from the launch today -- >> is that an htc one? >> exactly. >> it looks like it has a big screen. >> this is the phone that's going to aim to take market share from samsung and apple this year. we have them on set with us, with a couple of the phones. and we'll check them out ourselves. >> compare the screen size. >> "fast money" starts right now. live from the nasdaq market site in new york city's times square. our traders are tim seymour, brian kelly, steve grasso and guy adami. old technology stocks are becoming the new momentum names. look at the moves over the past five days for ibm, cisco, intel, and qualcomm. is it too late to buy into some of the tech players? let's start off with ibm. hpq's gain this year was ibm's loss. >> look at the last quarter at ibm.


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