Transcripts For CNBC Closing Bell 20170314

Biggest amount in seven years. Largely because of President Trumps pro business agenda. We have the full details on how it could impact your business coming up. Meeting with saudi Arabias Deputy Crown prince. This is on the heels of opecs new report showing conflicting data on saudis Oil Production. Saudi arabia directly reported to opec it increased Oil Production in feb to 10 Million Barrels a day. This conflicts with the secondary sources that saudi Oil Production decreased. Lets bring in brenda shav schaeffer from georgetown, university. An issue thats hurt oil prices before we go on to saudi and opecs impact and that, of course, is u. S. Inventory levels. Is that a genuine fear for oil prices . I think we have to look at the short term and the long term. The short term, obviously were seeing this is having a huge impact on the oil price, a very big dip down to november 2016 levels. So its the saudi data, the confusion about the saudi data and also the u. S. Inventories. If we look into the data we could see in the long term theres indication for a rise in the oil price. The data is indicate be yup tut up tick in demand. And francisco, youre also bullish on oil saying this is a dip to buy. Why does everybody maintain bullishness on the oil price these days . Yes. I think the markets trying to do two things simultaneously right now. The market is trying to clear out the u. S. Inventory glut and at the same time were also trying to slow down share production growth. So the two things that are going on simultaneously is that brent and wti spreads are about to widen. So we start pushing more barrels out of this country. At the same time the back end of the oil price, so starting off contrasting 2018, 2019 and beyond are coming down. So that shale producers slow down the rate of increases. Two things are going on at the moment. Francisco, of course so much of the Oil Price Recovery in the last year has rested on that supply cut we saw there between opec and a few other countries like russia. The saudi arabia Production Day to day worries people once again. To what extent is there a fear in the marketplace once they get through the saudi aramco ipo that they will ignore the deals theyve made in the last year or so . First of all, its not imminent. Were a year if not longer away from that moment. Im not sure why this much of a focus right now. The saudis have always been trying to do is push the market into it. They want to encourage more hedging by Oil Producers so the back end of the oil curve, so say prices in 2020 get anchored at a lower level while the spot price rises as inventories drop. Thats been the theme. The messaging in the last few days may have been a little bit off so im not going to argue against that, but i do think the objective hasnt changed. They want to achieve higher spot prices, lower forward prices and, frankly, this is really the time to get it done. Inventories in europe and in asia have declined. We just need the u. S. Inventory piles we have to calm down and, again, that requires a wider wti brent spread. Brenda, if this becomes an all out war for market share, who is going to win, opec or the u. S. Producers . How low does that mean the crude price could go . I think its really important to discuss the spread between wti and brent because as u. S. Production rises, of course it does affect the Global Oil Price and it does affect brent but the type of grades that are produced in the u. S. Dont easily find a different market. So i think i agree were going to see a growing spread here. This actually wont be such a war about market share. And also i think there are a few bumps in the road ahead of time. Last week the executive director of the International Energy agency pointed out nigerias production going down, venezuela, china. I think algeria is a big question. And even in iran with elections coming up in iran there could be major instability around elections in the spring. We might have outages. Not everything is going to stay the same. Brenda, quickly are you saying that u. S. Crude and international crude are not substitutes . Theres some reason they should be trading at different prices . Wti and brent do trade at different prices. Sometimes the gap is smaller, sometimes its larger, but youre seeing like, for instance, even today the wti took a much bigger dip than brent. I think well be seeing a lot more of this as u. S. Production rises. That will be very interesting. Brenda shaffer, francisco, thank you for joining us. The oil price down a percent or two today as well. Below 48 a barrel for wti. At this hour President Trump is discussing the gops proposed replacement for obamacare with the ceo of Health Insurance giant anthem. That stock is up there. Many other insurers are under pressure. Kayla tausche is in washington. Kayla . Reporter joining that call with the president is health and Human Services secretary tom price who told me that the content will focus on improving access to insurance. Press Secretary Sean Spicer said its about how Insurance Companies can create new plans for consumers. The ceo of anthem praised various facets of the plans in a letter like repealing Health Insurance, taxes and offering state stability funds. He writes, quote, without these changes the market will continue to deteriorate in 2018 and, therefore, i am writing to offer my support for moving this process forward as quickly as possible, end quote. Access is a key talking point for the administration and for its supporters in the wake of this new report by the Nonpartisan Congressional Budget Office that found positive fiscal effects. But loss of Insurance Coverage for 24 Million People. Heres Senate Majority leader Mitch Mcconnell addressing the report on capitol hill saying he thinks the fiscal part is inaccurate. Reflection, the coverage part is not. I pointed out the part that i think is an accurate reflection of the tax reduction, the likelihood of premium going down. The medicaid reform. Senator blunt pointed out its pretty hard to predict coverage when the government stops telling you you have to buy something you dont want. Very hard to predict. Reporter he later went on to say that the senate will accept and discuss the bill that the house puts forward that they will decline to play a heavy hand as of yet. They will let the house figure that out and they will take it up when the house arrives in the senate. As far as the calendar, the Budget Committee will have a markup on thursday. Thats the next thing were watching for to see exactly what comes into play here. What amendments get introduced and exactly how they find this would affect the budget long term. Kayla, thank you very much. Kayla tausche in washington. Lets move on to our Closing Bell Exchange today. Weve got greg sarian group, cnbc market analyst steve grasso and Rick Santelli at the cme group in chicago. Rick, i want to start with you. Of course coming ahead of this fed decision, we cant seem to meaningfully break above that 2. 6 level in terms of the ten year note. Whats the reason for that . Well, my guess is that theres two dynamics at work. We have a lot of outside issues going on just beside the fed meeting. We have dutch elections down the road a bit, french elections, and i do think that is something and other central banks, of course, but the meat of it is, wilford, i think you have this quarter point built in. That gets you that 2. 60 level. The real key will most likely be to some extent the press conference, more likely the q and a afterwards. Are there going to really be three for 2017 . And i think the more convinced traders become of that, even though it is showing up in the markets, i think that will be enough propellant to rocket us over this 2. 60 to 2. 63 area. You really picked the key part of the curve. The only maturity today whose yields higher than yesterday, twoyear notes, that makes sense, especially considering were all pretty much one and done with regard to tomorrow, we just dont know if theres two more floating out there even though if you look at january fed fund futures for 2018 you could make an argument it is. Steve, the market is slowly drifting lower. Is the drop in oil prices playing into that today . What are the other factors here contributing . I do think, kelly, that it is mostly the oil direction. I think that is really in charge of sentiment and directionality in the marketplace. The whole thing with the saudis, i think this is now all of a sudden theyre going to use where every time they go above those production levels theyre going to say that it was for in house basically storage. I think wilford touched on a key element. Saudi aramco. Everyone is ignoring that. And for me its such a contrived effort to Keep Oil Prices higher, and it looks like the market is timely getting a wiff that the path of least resistance is lower in oil. To ricks point, im not sure what we hear out of the fed is going to make this market go even higher. I think people are addicted to easy money. If they get a little bit more of it, maybe the market screams higher. Maybe we lose the financials, but its going to be an interesting week nonetheless. Greg, lets pick up on the financials particularly, the investment banks. Are you optimistic in what we can see in this quarter and this year . I think so much of that depends possible what we see with fiscal policy. Deregulation is front and center in all the Financial Press these days so we do think if we continue to see Interest Rates rise and get some deregulation from the financial sector, that should continue to bode well for banks and investment banks in particular. I think the key is are we going to see tax reform . So much of this market is run ahead of expectations of lower corporate, lower individual tax rates and if we begin to see a plan and more importantly implementation execution, we think that could be supportive for the market to grind higher. Greg, what are your favorite areas right now . Were very optimistic right now, kelly, on pharma and biotech. We like the demographics. Look at what repatriation would do to that sector. Theyre keeping billions of dollars of cash over seas. If you start to see that money come back state side, think of what it does for hiring and human capital. R d, we think thats a real spur for m a activity and a wakeup call to the executives running these companies to have pretransaction plans in place to reduce the income tax burden and keep more of what theyve built. Interesting stuff. Thank you all for joining us. Greg and steve grasso at post nine and of course our Rick Santelli. 45 minutes to go into the close. Keeping an eye on a down session. We mentioned the biotech stocks. The dow is down 37 points, s p down 8. 5. Declines for the russell. Small caps down. Transports down 122. Well talk about the factors there. Nasdaq down 20. Is following bill ackman a bad idea for investors. Shares of valeant getting crushed after he cashed out his entire stake losing 4 billion on the trade. Well look at some of ackmans other holdings and whether investors in those names should be concerned. Thousands of Flights Canceled today because of the storm and transport stocks are taking the hit. Weve got someone who says there are opportunities to buy on the dip. Hell tell you which companies coming up. Youre watching cnbc first in business worldwide. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Welcome back to the closing bell. Theyre down 41 points. A little bit more than that. S p and naas dk. Energy the worst performer. Also worth pointing out that the likes of walmart, nike and disney near the top of the dow. Lets take a look at some of todays individual market movers. Money gram popping. Receiving an unsolicited takeover offer of 15. 20 from u. S. Electronics payment processor. It exceeds a bid by jack maas. Dsw rising on the back of a Quarterly Earnings beat. Better than expected gross margins. That news overshadowing the disappointing sales. Hanging on to a gain of 1 today. Valeant pharmaceutical dropping after bill ackman cashed out his position. Hes been on cnbc several times over the years to defend his valeant stake. Theyve done a remarkable job. The least well understood story of valeant is the remarkable productivity of the r d pipeline in terms of whats coming. You have a history of shareholder friendly allocation of capital. The company can very comfortably sell billions of dollars of assets without affecting any core franchises of the company. The stock suffers a lot from uncertainty. Obviously theres been a big overhang. Sold out the entire performance. This is the worst period of performance in my history as an investor. We made a very big mistake in paying a passive position. We were betting on managements ability to create value by buying other assets. We can spend an hour or two about the mistakes we made there. Such a big loss. Worry about some of his other holdings. Leslie picker joins us. Where theres smoke theres fire. Valeant shares are plummeting. Investors in his other positions are getting skiddish too. Restaurant brands chipotle, mondelez, and the big short herbalife is trading well. Some investors are more focused on what hes buying. He disclosed in january that he took two positions that represent 13 of his 11 billion portfolio, but he has not said what they are yet. Regardless, this could be a big year for the investor that was once dubbed baby buffet. His net returns have been negative the last two years and lagged the s p 500 during three of the last four years. His performance struggles are not alone though. Its an issue thats plagued much of the active investing community over the last few years leading many to criticize the concentrated bets that Hedge Fund Managers like ackman tend to make after the 4 billion loss he could use a win to assuage investor concerns. Where does he stand today versus where he began the valeant stake . Hes seeing a decline in assets under management over the last few years with this being one of the prime measures of trades having gone wrong but that said, he still has a source of permanent capital with the publicly traded entity over in amsterd amsterdam. Its unclear yet what todays trading loss number will do for investors, whether theyll seek redemptions or not. Thats still up in the air at this point. Leslie, now that this has happened weve seen the price of valeant go below 11 roughly around the area where he was selling this block of shares. This price is on the market, on the other hand ackman and valeant investors, especially ones who got in the in the last couple of months, maybe thats a big chunk of bad news for the stock to get behind. Absolutely. I mean, if ackman, who has, as youve showed in the clips earlier, has defended this stock time and time again, if he says at 11 a share its time to get out, that makes other investors skitti skittish. He had two board seats on valeant. He had a window into what exactly has been going on with this company. Obviously it has yet to do any restructuring. I think those close to ackman and they have seen that as a win, the fact that the company has not had to file chapter 11, that it kept it afloat given all of the crises that its gone through over the last couple of years. At the same time if hes exiting now the question is why does he not see the up side in sticking around and at least posting a better than 4 billion loss on his position. Im sure more people got in at higher prices than at the bottom. Leslie, thank you. Appreciate it. Leslie picker following the latest in this saga. About 40 minutes to go. Still seeing red arrows across the board. Dows down 49 points. Brittain moves a step closer breaking away from the european union. Also ahead, well get an update on Flight Cancellations on the monster snowstorm. And ceo ben bodanza can tell us what this can do to profits on airports. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. 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Something theresa may is addressing the topic of brexit. Mr. Speaker, the new relationship, the new relationship with the e. U. That we negotiate will work for the whole of the united kingdom. That is why we have been working closely with the devos administration. Including, including scottish government. So, mr. Speaker, this is not a moment to play politics. It is a moment to bring our country together, to honor the will of the british people and to make for them a Brighter Future and better brittain. I love the pmqs. This isnt pmqs. Well have that tomorrow. Ill let the honorable gentleman continue. Thank you very much. I like that. Anyway, sterling is down off the back of this half a percent over these developments. Worth pointing out with regard to scotland that the time decision must come from theresa may and the u. K. Government, highly unlikely to grant a Scottish Referendum until after the Brexit Process is complete. That will be march 2019. Sterling weakness today. Up next well go live to chicago ohare for a check of the havoc being caused by the massive snowstorm. Plus, truck and Railroad Stocks you may want to consider adding to your portfolio. Back in just a couple of minutes. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back. Check out shares of the stock of macys today is up a quarter of a percent. This after speculation that Canadian Retail giant hudsons bay is exploring an acquisition of macys. The wall street journal reports that hudson bay is in talks to buy nieman marcus. Earlier today nieman said it hired a Financial Investor to explore strategic investments. Matt, thanks very much for joining us. Oil the main factor today . Yes. Not so distant past i remember oil dictated what the market did. Were starting to see that a little bit more. Weve seen it over the last week or so. Market has been listless and a lot of it is due to oils decline. Weve had quite a consistent decline in gold prices over the last two or three weeks. Is this a buying opportunity . Were going to see the fed citing higher inflation and stuff like that, is it a good time to buy gold . I think at this point, 1200, weve seen oil stuck in that range. Gold looks like it wanted to break out two weeks ago as you mentioned. Broke down below 1200 today. Im not so certain its a buy right now. It hasnt acted that well. Underlying, some of the equities havent acted that well. Hoping for a bigger move lower. In terms of the health care move, whether thats shaping up to be a good or a bad bill, is that affecting markets today, the declines on that . Is that a warning sign that washington might not have everything. People are looking for tax reform and infrastructure. Now were talking about third, Fourth Quarter and into 2018. Thats not fast enough for the market and see where we are. Health care is not going to move the needle enough at least for the broader market. Matt, thank you. Kelly. Its time now for a cnbc newsup date with sue herera. Hi, kelly. Heres whats happening at this hour. The marine corpss Top Commander vowing to appear before the Senate Armed Services committee this morning. I would ask to take this opportunity to speak directly to every female in our marine corps, past and present. I know im asking a lot of you right now, but i ask you to trust the leadership of the marine corps to takes action and correct this problem. I ask you to trust me as your come men dant. Im outraged when you earn the title marine and havent been given the same respect. American airlines will now be offering free meals in the main cabin on select coast to coast flights. Customers will be offered a continental breakfast or a boxed meal with a sandwich wrap. Cpsc says the battery chargers from the xbox one video controllers will be recalled. About 121,000 units in the u. S. Are affected. There have been 24 reports of the chargers over heating but thankfully no one has been injured. Thats the news update this hour. Ill see you next hour. Back down to you. Thank you, sue. Thank you very much for that. A massive noreaster is wreaking havoc on air travel. Phil lebeau is at chicago ohare. Good afternoon. My bad. Feeling like i was on worldwide exchange. Good to talk to you in the afternoon. I have good news for you right now, the flight board is showing fewer cancellations and a few more flights to the east coast are showing that theyre scheduled to take off a little later tonight. They may ultimately be canceled, but this is an improvement compared to what we saw earlier. Take aware at the flight aware misery map. This is a little bit of a time delay here. You get some sense of the biggest delays at the biggest airports. Generally speaking its been a mess for the northeast. More than 5900 Flights Canceled today. Thats why were seeing scenes similar to this. Theyre basically ghost towns at most of the major airports out east. More than 400,000 air travelers have been impacted because their flights have been canceled or delayed. The flight schedules are expecting to increase starting tomorrow morning. By the middle of the day theyll start to pick up. The expectation is that the flight schedules should be back to normal by late morning, midday on thursday. So although this has been a real hassle for the 400,000 who have had Flights Canceled or delayed, it is one of those things where its a quick moving storm and, guys, the airlines will reposition those planes over the next couple of days. Back to you. Phil, a lot of talk today about how long it takes for airlines to react to the weather changing their schedules, likewise for customers to book air travel. Is it realistic that well ever have a sort of uber model for air travel in the future where people can book last minute very easily . No. No. What you will find is that the airlines try to book as much as possible even over book most flights. Thats the Business Model thats locked in. I dont see that changing. Theyre always going to have a few seats that are available at the last minute, but its not going to be like the uber model where you might sit there and say you get these two to compete and get a lower price. Thats not going to happen. Youre always going to be paying more for that lastminute booking. Wilford, i think you should start that business right now. Ill be your first customer. First i have to buy a plane. Well try. Try to get that cost. You say no, you watch. Frost airlines is coming. Thanks, phil. Phil lebeau. Ben baldanza will talk about winter storms on Airline Profits in the next part of the program. In a way price line tried to do that. Then some of these private jet companies. We need this to be broadly available. The transport sector alone down 1 . Down almost 5 from its alltime high hit on the first of march. Things could be worse in the transports because of this storm. Joining us is donald broughton. How do you assess the impact of a storm like this . You look at it by segment. You look at it by whats going to happen with the truckers, whats going to happen with railroads, whats going to happen with rail freight. Truckers will be the most impacted because thats where you have the most chance to slip and slide, to hit other things, to damage cargo and unfortuna unfortunately damage other cars and people. Theyll lower asset utilization. Rails have similar issues but not quite as severe. Air freight, parcel actually ironically had the least of those because they quite frankly manage through it better. They have their own Weather Centers literally at both fedex and ups. Donald, we think of weather as a reason for earnings being lower than expected, this is a day or perhaps a week quarter when they report earnings. Does it have that big of an impact or is it blamed disproportionately by Company Management . Well, it depends. Sometimes, indeed, when you look across the segment all of the truckers had issues and therefore you can say well it was an issue for the entire industry. Other times youll see a particular company calling out. Other issues, other underlying problems, but you have seen it already just in the marketplace. I love to talk about what happens with the dat spot rates. Theyve got the best data, deepest data out there in trucking and you can see that over just the last 36 hours as truckers tried to get trucks out of the northeast and not take loads in, you saw the rate the charge to go in has gone up by over 7 . 5 to 7 just in the last 36 hours and so they obviously dont want to be there. Any companies you think should be a buy here, donald, because theyll somehow benefit from working through this storm or are they all going to suffer . Well, less weather related, but we are big fans of csx. We love that they just hired Hunter Harrison to take over their company. Hes less than two weeks in the new ceo and we just know what hes capable of doing when it comes to creating shareholder wealth. We continue to be concerned about companies that carry high selfinsurance retentions, shares of swift carry 10 million per incident. You really only have to have a couple of fatalities in order to very shorply negatively affect a quarter. Donald, these stocks, of course, as we mentioned all down today in light of this weather. Should they be up because of the frats over the past week . Is that a bigger factor . Its a transient issue. Oil has been up and up for the last several months and now its off a little bit in the last few trading days so were still up on a yearoveryear basis, what, close to 30 . So lets just put this all in perspective. Whats more important is you look at the macro issues. Freight flows. Freight flows across the board are signaling a stronger economy. What do you want to blame . Animal spirits, trump bump. The resurgence in oil fracking activity and the number of wells that increased just in the last few months . Whatever you want to blame, the bottom line is that truck freights up about 2. 5 . Loads are up about 3. Transpacific air freights up about 8 . Trans atlantic is up about 6. Industrial car loads by rails are up 6 . Across the board freight phones are telling us the economy for whatever reason is overall stronger and lets face it, whats happening right now, railroading, trucking, air freight, those are all outdoor sports. They go through this every single winter. Exactly. And perhaps the underlying trends will begin to show some strength again. Thank you for joining us. Donald broughton from avondale partners. Lets send it over to meg tirrell. Were looking at frms shares of tesaro. Under intense pressure down 14 . Thats because of shares of astrazeneca. The results coming in positively for a competitor in this space known as park inhibitors. Clovis is up more than 10 . Its competing in this space and a lot of moving parts. Clearly interpreting them to be negative for tesara. Thanks very much for that. Weve got 20 minutes to go before the closing bell. The s p and nasdaq down 1 3 of 1 . One thing positive discretion, energy, the worst sector down. Optimistic about President Trumps agenda. Details of that coming up. And later stark warning on how genetic data dock used in internation int could be used in International Warfare coming up. Stay with us. Say carl, we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Experience exciting offers on sales event is here. Our most thrilling models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. Welcome back. A new report showing inincrease in ceo optimism. Great optimism in america and results will be better. John harwood joins us with more. Hi, john. Kelly, the snowstorm didnt keep the Business Roundtable now headed up by jamie dimon of j. P. Morgan chase from having its quarterly meeting here in washington. The ceos came with a lot of enthusiasm as you mentioned. Take a look at the numbers from the ceo Economic Outlook index that the roundtable comes up with. First of all they showed the highest quarter to quarter increase in optimism since 2009. They showed the index above historical averages for the first time in two years. Double digit increases in expectations about sales, employment and cap ex. The former white house chief of staff is now president of the Business Roundtable said that because the ceo is picking up on indications that the Trump Administration is going to be positive in terms of job creation and investment. One critical element of that optimism is the belief that from whatever difficulty theyre having right now with the health care bill, difficulties are considerable, that the drive to deregulate and to cut corporate taxes is not going to be interrupted. I happen to think theyre correct about that, but to some degree that depends on how long reform debate drags out, guys. Especially if it doesnt end up going the way the white house and republicans wanted. The president is incorporating it. The roundtable, the individual round. The sector at a certain time. Whats the latest that were used to. We have those different sets of groups. Given where donald trump comes from in his career, given the business over a long period of time, the fact that hes from new york city as well. That is bringing a lot of these business representatives closer. They identified more with the Republican White House than with the democratic white house. So, yes, its different. I do think it is likely over time that the Business Roundtable, to the extent that President Trump is serious about going after the trade deals that he has been criticizing, Business Roundtable is heavy with very Large International businesses that arent likely to be cheerleading for that aspect of the trump agenda. At the moment that is receding, but the greater emphasis there is on things that the International Businesses dont think are constructive, the more friction youre going to have. John, thank you very much. John harwood in washington. 30 minutes left to go before the bell. Looking at. 2 of 1 . Dow at the bottom. Walmart and nike the two companies on the dow up more than 1 . Meantime, s p and nasdaq down a little more. The federal reserves Interest Rate decision. Low volatility stocks . Hoping to bias the market rally takes a pause. Stay with us. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Welcome back. Lets take a look at the top stories moving markets. Stocks are lower as the fed twoday meeting gets underway today. Theyll be eyeing a decision on raising rates. Oil is continuing the slide. The major theme is down more than 1 . Saudi arabia is increasing production. Health care stocks under pressure after the cbo released the numbers on the gop plan yesterday. Joining us now to discuss markets, eric shernstein and bmo global asset management. I want to start with you. Were all focused on the fed. Weve been focused on the rising rates in the environment and a lot of people support bank stocks. Within financials you prefer Insurance Companies. We do because of the simple fact that they are defensive and very attractively valued. The reason we like defensive stocks is because we see the economy starting to roll over on its own and the fed rate hike will only push it down further. We think the optimism that the presidency and his programs have generated is over done. Infrastructure, tax reform and deregulation were all announced, but weve only seen Obamacare Repeal and replace and weve tackled the hard stuff before. They tackled the low happening fruit which in my view would have been deregulation. So i think were going to be stuck here for a while. Eric, you guys are taking more of a traditional looking for companies to buy in this environment, great Growth Prospects while all of this is going on. What are some of the examples of what youre finding . The key is kind of the growth were looking for. Not momentum based growth. Really good prospects for enduring business performance. Longterm capital appreciation. Capital modes or investment modes that you can find. Those are companies that are going to endure regardless of what happens with policy and everything else. We think of a company like an adp, very sticky. Very high switching costs but something that assists companies in terms of productivity. Something like an ecolab which is in the chemicals and solvents business. Its a 90 Annuity Business as far as the things that they produce. A lot of consumables. They have the ability to perform regardless of whats happening with the economy which is a way of reducing risk. Water sports and microsoft. On the microsoft front is that old tech that needs to fly in companies to find growth. We saw that with intel or does it have growth options of its own . Its a little bit of both. It does have growth options. The thing thats consistently under appreciated about microsoft, we talked about cloud. For them the platform of the service, the apps and softwares as a service for them is a growth area that we think has a lot of legs to t. It it. Its not the commodities level which is where amazon and others are competing. And ernesto, tell us from your point of view, i mean, listen, to have a low volatility equity fund, thats called the s p 500 these days. Does that complicate things for you . We are even lower volatility. A couple of stocks that we own like everest re and axis capital, theyre. 7 of the risk of the s p 500. So theres a lower risk there. Very attracttivelily valued at 10 and 15 times earnings respectively. Generating all of this income from the portfolio. And theyre pretty immune to the economic cycle. This is the kind of stock we believe we should own in this kind of environment where things could go well but i think the risks are to the down side. We think the risks are to the down side in this cycle. Ernesto, thank you very much. Eric, thank you very much. Up next were right back with the closing countdown. Valeant bill ackman selling his entire stake. Well discuss if the company can come back from the major selloff. Youre watching cnbc first in business worldwide. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] with these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. So dont wait. 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With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com just a couple of minutes to go before the close of the dow. The s p and nasdaq are down 1 3 of 1 . The big talker, oil prices slipped again. This comes off the back of 9 declines for wti last week. Lets have a look at the s p energy sector. You can see the way that has been weighing on the market over the last couple of weeks. You could frame the performance of the market as resilient in the face of that. Quick look at the ten year treasury dipped below 2. 6 today ahead of the fed meeting. Finally, Goldman Sachs i want to show you which has now declined despite financials out performing for ten straight sessions. Something to keep an eye on. Bob pasani. Thats a slightly worrying effect. Theyre showing a few signs of crack. A couple things worry me. A list of words, transports down again today. Theyve been down consistently. Not just the airlines. Truckers are down today. Even some of the railroads are on the weak side. Russell 2000, small caps down again today. 4 off the historic highs. Thats not a good sign particularly. You want the small caps to lead. Theyre supposed to be the big beneficiaries of the big tax cuts. The big story that youve been talking about, ive been talking about, oil down. Oil down 12 this month. Extraordinary statement from the saudi oil ministry. They were clearly upset about the opec report that they had increased production in february. The Saudi Ministry issued a statement and said, no, fellas, youre not interpreting this right. We did increase production but it was in the agreement. Were still on with the production cuts. Were fine with that. Were worried with the way the market is interpreting this. Were down today. We have bad weather so theres low volume. Thats accentuating things. Were pausing ahead of a massive fed meeting tomorrow. Could we bounce as we get into it . We certainly could. Today is traditionally a bounce day. This is called the fed drift day. The markets have traditionally moved up in the 24 hours before the fed meeting for many, many years. Were not really getting that today. I think the market definitely priced in three rate hikes. They are taking it in stride. I dont know about four. Well see the terminology and the tone of the fed. Lets touch on the banks. Yes, rates are higher. Yes, were around 2. 6 . The yield has been flattening a little bit. Thats not good for banks. No. You want to see the yield curve, borrowing short, limiting long. That hasnt helped the market. Im not so much worried about the banks. Keep an eye on the oil stocks. Theyve got to move up oil. 30 seconds to close. The dow down. 2 of 1 . Walmart, nike and disney. Ringing the bell at the nasdaq. Kelly evans has the second hour. Thank you, wilford. Welcome to the closing bell, everybody. Im kelly evans. Another down session today on wall street. Theyve largely been gentle but persistent over the last several days. The dow dropping another 44 points. That brings us to 20,837. Bigger declines relatively speaking. Both are down 1 3 of a percent. 2365 and 5856 are your levels there. The russell 2000 small caps down more than half a percent. 1362. Transports also getting hit. Airline stocks in particular today on concerns about winter storm stella. Thats despite the drop in oil prices that we also saw today and was a major story. Coming up former Spirit Airlines ceo ben baldanza talking about how this weather could weigh on a companys bottom line. Joining me Michael Santoli and scott ren checks in from wells fargo investment institute. Ill get to you in a moment. We want to get to our meg tirrell with a market flash. Whats happening . Reporter looking at shares of Endo International falling after an fda outside Advisory Committee has voted that the risks of endos long acting opioid painkiller. This is a drug called opana er. This news coming in from an outside panel. Negatively about this opioid painkiller drug. Thats sending shares down half a percent. Meg, this after the news just a little while ago which was on a different test involving a couple of different companies. Reporter yeah. Well, the market flash we were bringing you earlier, we were talking about Ovarian Cancer drugs. Yes. Oh, good. Thats right. A lot of news today. A lot of stocks moving. That one on Ovarian Cancer. All flying in different directions. Now this opioid painkiller, theyre saying the risks out weigh the benefits. Endo shares are down 1 1 2 . Thank you, meg. Meg tirrell there following all the 4e89 care news as she does so well. Michael, what do you think of the market today . There was definitely a little bit of a cautious tone taking hold. Really modest losses on the headline index. We talked yesterday that it was the all weather growth stocks, nasdaq and the over heated kind of economically linked companies that were not. And i think thats basically been the pattern again. Its been a little bit of a kind of playing defensins march 1st, but without much overall damage to the broad market. So the question again is is this just a rest or is it kind of the early inklings of a playoff. Scott, what do you make of this action . Its funny. It almost doesnt feel like the fact that the fed is about to raise Interest Rates. I dont think it is on this one, kelly. I think the markets fine with it. The fed is certainly going to take advantage of the market really allowing them to go ahead and continue to normalize. I dont think tomorrows announcement is any big deal and, you know, certainly it seems i guess its not impossible, but id say theyre going to hike rates tomorrow. The momentum is starting to waynewane a little bit. Mike mentioned rotation. If you look at it, small caps are under performing. The oex is out performing. I think that probably is going to continue and the market is a little bit higher than where we think it will be at year end. We thought we were going to see it trade to 2330 or a touch above around the middle of the year. Thats happening but its happening a couple of months earlier than we thought. Could we trade up to 24, 2500 . Sure we could. But i think the momentum is starting to fade really for good reason. Weve come a long way without any correction. Bringing in rob cox who joins us. Breaking news. Looking at the fact spgi, s p Global Indexes have been one of the stocks all time highs day after day. Adobe, j j and phillip morris. You have mixed signals. This oil stuff, you start to think, all right, its just production. The saudis are pumping stuff out. At the same time you have a little bit of concern where the demand is. What is it that made them produce more. Were they expecting greater demand . We should be expecting greater demand . Because we are expecting the fed to raise rates. Thats like, duh, a foregone conclusion. People are looking at these where you might be able to pick up growth. Yes. Irrespective of whats happening with the Bigger Picture on the economy. Meanwhile in the opec report itself, did produce over 10 Million Barrels a day. Other producers cut back. The idea was supposed to be, kind of, hey, theyre cutting back. Yes, weve increased it and it hasnt changed. The market took it and slammed it. Market was not positioned for anything that could be even interpreted as bearish supply news. I think thats what youre seeing play out. I dont think were sort of looking at what oil is doing and saying massive demand shock. This is an economic demand globally. Theres still the linkage between industrial stocks and expectations and industrial activity and nominal growth which is inflation plus real growth. Thats all linked to the oil prices. That reflation trade was one thing. Now its back sliding a little bit. Thats why i think it sort of filters into that general view of, hey, the fed raising rates. Inflation may be coming off the boil. All of a sudden economic indexes maybe have peaked for the very short term. Thats why its a little bit of caution. I remember you saying inflation. I was thinking about the producer price. Yes. Up 2. 2 , the high since march 2012. Cpi tomorrow. Scott, heres the interesting thing. The dollar is up half a point. The pound sterling was dropping. Youre looking at things from a global point of view. How do you figure out where the dollar is going and what that means for stocks . Were not looking for much of a dollar move this year. Our year end target dollar yen a little bit higher. The euro probably the dollar a little bit stronger there, but were not expecting big currency moves. Really thats not part of a factor or a big part of our decisionmaking process this year. You know what were most concerned about and what we think the head winds for the second half of this year is that were going to see more wage pressure, markets going to worry about it in 2018. Theyre going to worry about the fed being behind the curve and thats going to be the head winds for stocks this year. Thats not to say the cycles over. We think theres a good chance it keeps rolling but for this year, this is more of a stalled to slightly positive year when you look from january 1st to december 31st. Youre not going to see a whole heck of a lot of movement in the markets. Well see. Lets take a look at the white house. Live shot of the rather snowy white house in fact. Lovely picture there. President trump is currently having the phone call with House Speaker paul ryan and House Majority leader Kevin Mccarthy about their new health care bill. The latest cnbc fed survey finding respondents are split over whether the bill will be better or worse than obamacare. Steve liesman has more. The plan was just out. The fed survey last week so we put a couple of questions in. What youre about to see are some of the first opinion surveys done on this health care bill. These are from the 50 respondents to the cnbc fed survey. What you see is first they think its kind of neutral when it comes to Economic Growth. 45 say it will have no effect on Economic Growth. But 38 say it could possibly improve the economy versus 13 who say it will be worse for the economy. As you said, what about it versus obamacare . Well, theyre kind of split. 38 say its better than obamacare. 34 say worse. 13 say the same and 13 , who i have enormous respect for dont know enough yet to really make that conclusion. How does all of this shake out . Whats the time line . A lot of stuff on the president s agenda. We ask respondents when do you think stuff is going to happen . To the left of your screen. The Fourth Quarter of 2017, tax cuts, doddfrank and Infrastructure Spending in the First Quarter of 2018. And then later on you might get fannie and freddie. 1 3 of our respondents dont think it ever happened. 100 say the fed hikes in march. That will be announced at tomorrows meeting. 69 say the next rate hike is in june and 60 say three rate hikes this year. Kelly, one other factoid for you here. 25 say there could be four rate hikes this year. Its what weve been talking about. The debate isnt two or three, its more three or four in 2017, kelly. Who are these respondents again, steve . 50 of them economists, strategists, fund managers. Jim bianco, david bookbar. A lot of your favorite people. What would their edge be on health care. Not that they cant look like the plan through anybody else. When i see that split evenly, is it just a political response . No, i dont think further details . Thats a great question, kelly. I think both of them are great questions. First of all, id suggest that they skew a little bit more conservative, this group, rather than liberal. That would be the first thing. The second thing is their edge on health care is no greater than anybody else except they have to factor it into their forecast. Were asking this group because we care what they think and how they factor that into their growth forecast for the quarters ahead, the month ahead. We want to know on an early basis how theyre thinking about it. Not so much for now but how that changes later on. Big number in the deficit, mike. Cumulati cumulative. I think for an economist trying to do estimates, whats inside of this health care plan, if it got past in any form like its set out, a high end tax cut and potentially people who are paying out of pocket for insurance and dont prefer to would not have to do so. I wonder if, steve, do they ever go back and look at the effects the passage of obamacare have on the economy . I think some have. I think there was a line of thinking that obamacare might have taken the edge off of some Consumer Spending because some new Insurance Fund payments were funneled away from Discretionary Spending towards insurance spending but also there was some up side. There was an over all decline. That helped overall. I think also the total expenditure of obamacare was less than had been expected by the cbo. And, rob, scott, youre still with us. Rob i was just going to ask you as well, what should be top of mind for investors as this works its way through the legislative process or doesnt. I was curious about this. Maybe steve has a thought on it. What would their views be about sentiment, confidence and Economic Growth if we cant get a deal done, if the house the house bill fails, the senate says no and nothing happens . We go to the stages of lets let the thing blow up on its own and we show the world we cant govern and get anything done. You mean just on health care . Yes. What happens if nothing happens . I will tell you first of all this Group Overall is more pessimistic about the Trump Program than the rest of the market. They think the market is overly optimistic and theyve dialed in on all of the Trump Programs. 2 for growth and. 4. If Health Care Fell through that would be okay. What theyre looking for is tax cuts for business, tax cuts for individuals and deregulation at the center piece of why theyre more realistic about the economy. Thats my point. I dont think health care factors in a whole lot. If you cant get this done, which as they said this is a do or die, make or break moment. Everybodys been everybody on the republican side promised this, if you cant get this done, what does that tell you about your ability to go and really deal with a Major Corporate tax code and all of that kind of stuff . I just dropped in at John Harwoods office here in d. C. And i asked him that same question, rob. He doesnt think it matters that much. He thinks they can book a defeat on health care and move on and do tax cuts. I think he said that on this show about an hour ago. Interesting. Steve, thanks for joining us. Scott and rob cox there as well. Thank you guys very much. Thank you. Thanks, guys. Hedge fund manager bill ackman selling his entire valeant stock for a loss 46 billion. Well look at the future of the drug maker and now that its most vocal bull running for the exit. Your dna could be used to make a biological weapon. The frightening details later on the closing bell. Your a watching cnbc first in business worldwide. Welcome back. Shares of valeant sinking after he sold his shares for a 4 billion loss. He told cnbc he should have sold his position earlier. Heres what he said the last time he was on cnbc. Stocks still suffers a lot from uncertainty. Obviously the theres been a pretty big overhang. Big shareholders sold out their entire position. Mikes sold a bunch of stock. New investors, theres still a lot to be clarified about the story. In any case, it now makes the second largest shareholder of valeant with a 4 stake. I spoke with him on the subject a year ago. Do you think this will be a trillion dollar stock again . I think you could earn your way into that. Short sellers in the media that are dying for some new crisis. The media. Is kind of filling the space. As we do here, we just put our head down and, you know, try to make sure the company is better when we leave it than it was when we got there. That was right before the stocks shell even more sharply. Down 50 the following day. They have been in it for quite some time. Bill miller of llm holds a 1 stake. We spoke to him in january about his outlook for the company. I think the perception and the reality of valeant are very, very different at this point in time. I would expect that would be if were going to be right about it, that perception will change over the next 12 months. I dont think they need to sell the whole company nor should they unless they can get a great price for it. Now there have been certainly many critics along the way including jim chanos. Hes still short of the stock. He was here talking about the position. Thats why we are short valeant. This company is uneconomic to the shareholders. The company is working for its bond holders right now because mike pearson over paid for these drugs. Its just that simple. All of that said. What is next for the embattled drug maker. Were bringing Charlie Grant in here from post nine along with our own meg tirrell. Welcome back to you as well, meg. Charlie, valeant is a story that so many things have gone wrong. At the core of it is there a group of assets that under the right leadership this could turn out right . The assets are still good. The issue with valeant has been and continues to be its debt burden. It has 30 billion in debt, maybe a little bit less after a recent asset sale. Theyve been talking about Debt Reduction for almost a full year now. That number has barely budged. Until you start to see either Growth Profile that can change the debt picture or some asset sales at some good prices, its going to be the same story that we talked about. When you look at the makeup of the debt theres not a lot of immediate maturities in the next couple of years, but the debt if you go out to 2020 and beyond its all trading at yields 9 1 2 to 11 1 2. Looking like theres stress on those. What are the markets were looking for . Covenants and things that might happen before the maturities . Right. You want to be looking for asset sales obviously. Also there is some hope in the pipeline, not much, but the new drugs are critical for pharmaceutical companies. Theyre launching the psoriasis drug. Maybe in the second half of this year. They had to pay 130 million to astrazeneca as part of that deal and they havent seen any revenue for that drug. Even their bright spots have hit them in the short term. Meg, what do you think are some of the assets that might be on the block . To charlies point, if the buyers can ask for quite a bargain price. The big question, are they going to sell barb and laum . Otherwise it seems to be piecemealed smaller sorts of deals like the ones we saw announced in january. Some people raising questions about whether the second of those deals is actually going to close. So the Big Questions are do people start to look at them. As for all of valeants assets, can they get good prices . They were saying they over paid for them. Maybe they didnt over pay when they could buy things and raise the prices of the drugs but that strategy is out the door, too. A lot of people questioning what theyre going to do. This all came very much to the broad attention at the time when the hard drugs, they did it on those sparked a front page treatment in the journal. Now is the question they have to somehow change their entire Business Model from here on, how do they do that . Right. You have to buy the existing drugs and jack up the prices. Deals were made and debt was raised on top of the premise that you would be able to raise the prices. Its not, look, well have to make money at the prices we have. Can you do that . Under the same premise before and covers your debt. Weve had the Management Change already, charlie. Ceo who led this much of the way through has been replaced by joe poppa. What good options does the company now have . Not many. Youve got to just keep pounding the table on some of these asset sales. Its still a decent m a market. Its possible there are buyers. Time is ticking. They still have a few years until the Debt Maturity wall starts to hit. By the way, is it an advantage at all to have bill ackman having sold out of his position. Hes not going to be involved with the company anymore . You could see it as a clearing event. You had david on earlier. Hes finding out what ackman found out before. Hes an insider. It should cross your mind as an outsider. Charlie and meg, thank you very much for joining us. Talking valeant this afternoon. Appreciate it. Breaking news on gap to get to. Seema mody has the news. Gap appointing a new mobile head of banana republic. The former ceo of gymboree. He will report to art peck, the president and ceo of gap and will serve on the companys Senior Leadership team. He will join the company in may. Back to you. All right. Thank you, sema. I thought that said breitbart. Thats an interesting pick to run banana. Gap shares unchanged in the after hours. Thousands of flights being canceled because of the blizzard hitting the east coast. Coming up former Spirit Airlines ceo tells us what kind of impact the shutdown could have. A federal Law Enforcement official warning foreign governments may be trying to get ahold of americans genetic data to create tailored biological attacks. Well have the details when we come back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Welcome back. Cyber and Border Security have been tauted as huge risks to our security. Now you can add dna security to that last. Eamon javers has more on this troubling story. Eamon . Reporter ive been to a lot of briefings in this town but none like the briefing i went to yesterday at a large federal Law Enforcement agency here in washington with a federal Law Enforcement official. The conditions were we couldnt name the agency or the official. The official laid out a stark warning to American Pharmaceutical Companies and Health Care Companies saying theyre not doing enough to secure americans biological data. Thats Health Information and dna information. Heres what the official told a couple of us reporters saying that aish shan based companies are creating large datasets of u. S. Dna and health info. Thats a concern to officials inside the u. S. Government. They say that that data could be used to create tailored bioweapons or specific vaccines or a vaccine for a pan dem anything before the United States can get to it. When they say asian based companies were on safe ground assuming theyre talking about chinese Genetic Testing Companies but they did not specify china. It can be used to undermine u. S. Leadership and thats the concern the official expressed very directly. Theres an economic threat to the United States as all of this u. S. Genetic data is going off shore. The pharmaceutical will use its advantage globally. Heres a quote from the official saying the offensive capabilities go to the scifi nightmare scenarios. Right now your dna sequence on its own doesnt mean much but on a population scale it means a whole lot. So, kelly, some concerns here from the u. S. Government about these companies off shore in asia that are testing americans dna and then presumably able to keep that dna information in data off shore in those home countries that can be used in big data kind of way to search for weapons and also vaccines, kelly. Eamon, stay with us. Mike, the one thing that occurs to me is that this kind of major warning is at the very ip fancy in this industry. Yes. Is it enough to think twice about do i want to get involved in this . Is it enough for 23andme to call everything into question or are people going to accept its like email, i might get hacked. Email or all phone records are being swept. If i understand eamons point its an aggregate that the data is being analyzed. Its not necessarily my data attached to me as an individual and theyre coming after me. It creates a very tenuous link between what i decide to do for my own edification and then maybe the threat thats out there. Eamon, does that mean that getting access to individual records would be a possible next step here at all . Reporter well, accessing individual records, this official said that the possible motive to some of the hacks of Health Care Companies that weve seen where millions of Americans Health care data have been stolen might be not to create a financial incentive to steal that information for financial gains but to amass biological big data that can be used for other purposes. This official saying ultimately if your dna is stolen, dna information is stolen, its not like Financial Information where you can get it back. Once your dna information is stolen its gone and you cant get it back because you cant change your dna. You can change your credit card number. Thats right. Makes me think, would you ever do it . No specific interest in doing it but i dont know that this necessarily, you know, puts it any less likely for me. I dont know. I think it does for me. Eamon, thank you very much. Time now for a cnbc news update with sue herera. Hi, again, sue. Hi, kelly. Heres whats happening at this hour. Forget about the snow. The Transportation Department says u. S. Air lines are having trouble keeping flights on time this winter regardless of the weather. Only 76 of flights arrived on time in january. But that is down sharply from 81. 3 a year earlier. That follows a similar pattern in december. French president ial candidate has been given preliminary charges in a probe into taxpayer funded jobs for his wife and children that they allegedly never performed. Fillon has vowed to keep campaigning less than six weeks before the contests first round. Israeli Prime Minister Benjamin Netanyahu and his wife testifying in a tel aviv courtroom this afternoon. They were there to con front a prominent journalist who they say invented a story that Sarah Netanyahu once ordered her husband out of their car during a fight. And the worlds Oldest Golf Club is admitting women for the first time in its 273 year history. The move will allow the Scottish Club muir field to return to the list of ten courses that can host the british open. Thats the news update this hour. Kelly, mike, ill send it back down to you guys. They have a female Prime Minister in scotland, right . The golf clubs have been very reluctant to comply with pressure and so a couple of years ago the british open said if you do not allow women to play or join the club, you cannot host the open and that was a big financial incentive. Whatever it takes, i guess. Exactly. Thank you, sue. Sure. Sue herera. Up next, will this blizzard put Airline Profits on ice after they were forced to cancel thousands of flights . The former ceo of Spirit Airlines weighs in. Former astronaut buzz aldrin will tell us how he thinks air travel will fare under President Trump. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond James Financial Advisor can do for you. Welcome back, everybody. Energy was one of the weakest performers. It has a lot to do with the price of Oil Moving Lower today. Heres a look at the oil trade in extended hours. Wti down. Brent is actually green by a quarter of a percent. 51. 46. Talking earlier about some of the disparities which is actually possibly suggesting to go the other way. In any case, winter storm stella causing more than 6,000 Flights Canceled today and nearly 1,000 more cancellations tomorrow. Airline stocks all lower today. That also contributes to the weakness in the market. Joining us by phone is the former Spirit Airline ceo ben baldanza. Welcome, sir. Thank you very much. Great to be with you. Great to talk with you. Do you get a sense for when these storms happen, you know, it seems like with all of these cancellations there is more than a fleeting effect on airline profitability. Stocks traded pretty weakly today. What do you think were going to see as the effects from all of this . I dont think this will be a major effect on industry profits. It certainly does affect it in some ways. Airlines save some costs when they cancel because the variable costs of flights like fuel and things like that, but it also costs them money because a lot of the airline costs are fixed, like the crew expenses this close in and the air flight costs and things like that. Ben, i guess i wonder how much business is deferred and how much might be lost. Is there a way to calculate how much of these how many of these trips may otherwise happen and just get delayed or perhaps if it was going to be a quick business trip, high value ticket, its not going to happen . Yeah, its very tough to determine that. It often depends on the licks of business and leisure traffic. Leisure traffic can be delayed a day or two. That tends to be recaptured by the industry on a later flight. Business traffic while it may not come back immediately usually ends up covering itself over time. What airlines count on to some extent, once they can get the airlines started again or the operations started again that some of the revenue they lose will come back but they never get it all back but they do tend to get some of it back. But theyre not really sure how much is going to come back until they know when the airlines running full speed again and what the forward bookings look at that point. There is united down nearly 5 . American nearly 3 . Theres the Airline Index down more. My dad was in a five hour go to meeting today online instead of a trip to florida. Thats a trip that will certainly be lost. Ben, i wonder if one of the impacts feeding into all of this is what were seeing in terms of carriers adding meals now back into flights. In other words, whether its soft or hard, this it feels like theres kind of a race to you know, against each other once more. The competition heating up across the airlines space. Do you feel that happening as well or no . Well, no, i think youre right about that. You know, a very small percentage of the traffic in the industry pays very high fares but that carries a large percentage of the industrys revenue. They spend a lot of money and invest a lot in chase for that relatively small number of bodies that are willing to pay a lot. So things like delta choosing to put meals back on long haul flights and things like that is absolutely intent to try to gain an edge in the small number of bodies who are willing to pay good prices but that represent such a High Percentage of the revenue in the industry. I think there is a race and youve seen that in a lot of cases. Jet blew adding their mint service a while ago to compete in the trans atlantic. People extending leg room, buy flat seating all in a chase for the higher revenue paying passenger. Ben, one of the wrinkles to all of this in terms of trying to project out impact on airlines bottom lines is the Airline Stocks have tended to trade recently along with the price of oil, the idea being that cheaper fuel makes airlines more prone to maybe get into some price wars. Is that a calculation that you would have been making internally at times at your airline . Yeah. I think thats right. You know, when the price of oil goes down, it makes sort of a hurdle rate of flights lower so the reality is price tends to follow that marginal cost closely. So prices do come down to chase, to fill the incremental extra seats. And the reality is the industry is a little more stable with a little Higher Oil Price as odd as that sounds. Doesnt mean that they cant make good money when Oil Price Goes down, but there also tends to be more volatility in the pricing environment when oil prices go down. All right. Ben baldanza not too concerned about winter storm what was her name . Shirley . Stella. Thats a maverick effort. Its the whole back and forth. Ben, thank you for joining us. We have a market alert on oil inventory. Seema mody has more on the oil price. Come as a surprise. Falling, kelly. U. S. Crude oil stocks falling 531,000 barrels. Challenging expectations. This is the weekly api report in response were seeing about a at one point we saw a half a percentage point pop in the price of oil. As you can see ice brent crude. Wti crude. Gas prices moving higher. That helps explain what we were looking at on the charts a moment ago, seema. Some green arrows there. Much needed for the oil price this afternoon. We have a news alert on microsoft now. Josh lipton has the details. Josh . Kelly, this news crossing from microsoft the tech company saying announcing the appointment of reed hoffman to its board of directors effective immediately. Hoffman a partner with graylock, of course cofounded linkedin. In a statement Microsofts Satya Nadella saying it was reids ability to define Disruptive Technologies that he admires. Hoffman long time high profile tech investor here in silicon valley. Microsoft saying the board of directors declaring a Quarterly Dividend up 39 cents per share. Reid hoffman, impressive guy. Going from one hit to the next to the next in an area where success can be fleeting. Exactly. I think for that reason this move is being taken pretty positive about people looking at microsoft. It was not a foregone conclusion after the linkedin deal he would join the board. Now he is. Linkedin cofounder reid hoffman joining the board there. Storm stella. And then astronaut buzz aldrin talking about the future of humans on mars. Julia boorstin talked to him but not before getting yelled at by a hollow gram. Im buzz aldrin and get your ass to mars. [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. 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But i found so much more. its really a melting pot of activities and people. applause, cheering new york state is filled with bright minds like victorias. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Welcome back. Winter storm stella is giving snowplow companies a lot of business. Were on the road in new jersey with a front seat look. Kate . Reporter hey there, kelly. Thats right. A snowstorm like stella can be bad news if your a a Small Business that has to shut down for the day. If youre in the business like jay campoli, its definitely welcome. Theyve been in the snow removal business for about 50 years in addition to their general contracting business. For them plowing is serious. It means a lot of preparation just like a municipality would go through because of the scale of our business and size. Its a matter of making sure we have enough ice melt and sodium in our warehouse, preparing equipment, moving equipment to certain sites if theyre needed. Now in a big storm they can have about 25 different trucks out depending on the year and how much snow they get. Snow removal can make up about 25 of their business. If its a really bad year they can gross close to 1 million but theyre not taking that all home in profit. A lot of it is getting reinvested right back into the business. 15 years ago we made an investment into a multimillion dollar facility thats within our service area and we use that year round for our equipment but also its to warehouse our product for ice melt and maintenance for our equipment. And so its a major investment that goes back into this. Its not just about the day that it snows. We see this 12 months a year. Reporter theres also a lot of costs associated with running this kind of a business. John says they can spend up to 200,000 a year on snow liability insurance, Workers Compensation and auto insurance. He points out theyre not just paying this in the months when theyre doing snow removal. Its all year round. Kate, how many hours have you been on the road today . Reporter well, i did have to pop back into the office to do a different story, but i was out with them this morning and then i just rejoined them live for closing bell so we could be in the plow. I kind of cheated. Brads been out here all day. Working very hard. Thats what i was wondering. I wondered if he got out there crack of dawn. Im so impressed people are shoveling to keep the sidewalks clear for eight plus hours now. Reporter hes been saying the snow is a little weak. I bet they probably want a little more snow. We do. We want a lot more. Reporter he said they want a lot more. I didnt but they did. Exactly. Im with you. Kate, thank you so much and brad as well and everybody in the snowplow business this afternoon. The Trump Administration has called for a rapid and affordable return to the moon by 2020. Asked nasa to focus on the Economic Development of space. Coming up, pioneering astronaut buzz aldrin talks about what that could look like. The chair of a 20 billion pension fund who pulled 1 billion in Pension Funds says theres a big problem facing the smart money right now. Hell explain what that is at the top of the hour. At the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Start trading today at etrade. Com e trade. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome buzz aldrin is the sharing his thoughts on mars. I spoke to the legendary astronaut buzz aldrin in three ways, in person, Virtual Reality and in this hospitl graphic simulation. Im buzz aldrin and get your ass to mars the Virtual Reality experience created by a. I. Which brings consume enters into his plans to send humans to mars. Aldrin is giving people the ability to meet the astronaut through this new interactive hologram. He is optimistic to inspire a new generation with Virtual Reality. It will spread, expand, and involve more and more people and the great experience of almost being there. And that will be wonderful for expressing for expressing wonderful ideas. He has talked on jeff bezos and to elon musk about spacex. Last week he met with Vice President pence. I asked if he thinks the Trump Administration will keep investing in space . I do. When you say investing, we have been investing. That number, hopefully, wont go down. If it stays the same, were going nowhere. Unless we reduce those expenditures and put them toward something more beneficial. Reporter now, aldrins big vr debut comes as south by southwest puts it in the spotlight. It is the first time people can submit games for competition and there are about 50 sessions on the topic. Mostly about how to apply the technology to different industries. From film and margareting to art and space exploration. One thing i dont understand that we were saying earlier, what is the Economic Development of space . Does that imply something here on the ground to support that . Or does that mean monetizing . What is the Economic Development part refer to . Reporter well, hes talking about how he really doesnt want there just to be a trip to mars and you spend one or three days there the way did you when you were visiting the moon. This he said because it takes six months to get to mars, he wants to colonize mars. The way elon musk is talking about it. I learned a lot about this going through Vr Experience today. He has a whole plan. You would build a society on mars and start on the moon of mars and then from there to mars itself. So this is about mining our moon for minerals that can be used for fuel to take us to mars. It is exciting stuff. It is all very impressive. Julie got that great experience. Thank you very much. Julia boorstin. Up next, a surprising chart shows how tough it is for Department Stores right now. Stay with us. D. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Oh. Ncome on. Och method whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for team building. Smoooooooch that felt right. Whats wrong with you . Hes so trusting. Oh the things you say oh youre unbelievab e youre unbelievab e heigh ho heigh ho heigh ho heigh ho its off to work we go heres to all of you early risers, whats up man . Gogetters, and shouldbe sleepers. From all of us at delta, because the ones who truly change the world, are the ones who cant wait to get out in it. Hudsons bay, the Parent Company of saks fifth avenue. This after it was record the company was interested in macys. But theres a much larger issue here about the health of the Department Store sector. Niemann marcus has been struggling with the debt burden. They tried to go public. This is more of a motivated seller in hudsons. This is chart that serve talking about. This is year over year. From bank of america sources. This is by tracking debit and credit card satisfies so this is their own data, look at this drop. So the first two things. This has been below zero for most of the last couple of years. Year over year declines, pretty much consistently for two years at least. Then you have this big spike down which is january to february. What we dont know is how much of this is structural and how much is cooling off of Consumer Spending. Weve talked about the delayed in tax refunds. So this is a onetime thing. That would be the best possible story. If it is that, this could come popping right back up. If not, you have to look at the 15ers and wonder is this the month the Department Stores ended. It went from gradually to suddenly. I dont know if theres a reason to think about that except smat point it does become a real victim of mall traffic. The other area is real estate investment. So basically you see a lot of people piling on this trend and thinking that it is at a critical point. Why does hudson bay want Niemann Marcus . They have higher end Department Stores. They have a relatively high debt load. When they looked at macys, they said im not sure i can swing this. So i think maybe this would be a smaller bite and they have a very strong franchise. And upper income, not like macys or even like a regional story. And you mentioned the impact on some of the rates. I didnt realize. I was reading will bored and taylor, embroiled in a dispute over a Maryland Mall trying on close. They said they govern everything from who can open a hotdog stand in the mall. So if the mall operator wants to shut down, the anchor might say not so fast. That goes back to how powerful they were to drawing traffic to the malls. In fact they pay almost no rent. Sometimes no rent to the malls because they were considered to be, if you had a placies and a sears in the old place, it was considered to keep the rest of mall in business. We can expect that it is an historic day. They will either raise rates, pretty infrequent. They wont do anything at all. Theyll go more than expected. Or maybe even in the press kompbl talk about selling bonds or letting bonds run off the balance sheet. You have a lot of things in place because you have the perception of a newly energized fed. It could be about how they approach he policy. How would you interpret it . I think they want to get in a hurry of this normalization process and say we think this is an element of. I it is a Mission Accomplished moment. We will find out tomorrow afternoon. A lot in store for that meeting. Also interested to find out the bond level. What is priced in . Exactly. That does it for closing bell. Fast money begins right now. Fast money starts right now. Overlooking a snowy times square, the traders on the dreks teem seymour, karen finerman, guy adami. The banks are up nearly 25 since President Trump was elected but is now the time to cash out ahead of the possible fed rate like tomorrow . It is a contrary yandle call from the chart master himself. Plus, oil sinking. Another crude collapse ahead. And later well talk to the head of a 20 billion pension fund who pulled a billion from hedge