Transcripts For CNBC Closing Bell 20180214

The rise in inflation we heard about this morning the Consumer Price index, cpi, up from a month before meaning grosh groceries to gasoline are more expensive, transportation to retail to restaurants, we have the impact in a moment, but, first, lets get to bob pasani and talk about the surge for stocks, bob, what happened what whang changed . Look at the vix, it was down even this morning when the markets were down prior to the open on concerns about the cpi better than expected all the people who panicked had to unwind with the option explorations telling you they are not as worried about volatility in the next 30 days as what the vix measures, a good sign traders believe theres less panic in the market. Number one number two, look at the groups moving yes, inflation is a concern, but rates move up, banks outperformed here today, outperforming again. We see Interest Rate stocks sell off, and that happened in january, going into february as well, so, again today, utilities are down, at t is down, vornado all down here. Outperformance from growth areas in the market Like Technology stocks, that have been outperforming, although they are down in the last week and a half, they performed better than the overall market same with industrials. The railroads, the aerospace, your deep industrials like caterpillar, they all outperformed in the last week and a half, although, they are still down a little bit more puz pzling to me, frankly, retailers one reason the market could be going up is because less chance of fed raising rates with a disappointing retail sales number, but retails are on the upside hereme menthere. The possibility is the belief that the tax cuts help retail overall and the consumer thats a positive explanation. Tough things to explain today. Back to you. Over to Mike Santolli on post nine creating the conversation we had awhile ago where realistically, this is a market seeking e quill libri librium. Right the tension is draining away youre obviously taking back some of the losses that seem to be caused by a lot of the mechanical panicked selling. This is a market thats been trying to make some accommodation with the prospect of were going to have a higher range for bond yields and potentially a little bit of an upward risk for inflation. Why is the market up today dramatically starting in the middle of the day when, in fact, it sold off hard at the first sign of Wage Inflation weeks ago . Well, one thing is that the tenyear yield on february 2nd hit 285. Today, its 290, thats not a big difference s p 500 is 6 lower since then you had a haircut in stocks. You had time to decide this is the new world were in, and bond yields may be are not really taking flight. Nudging higher, but maybe they are not just going to be tearing through 3 i agree with that about 2. 9 . Guys, stay right there breaking news on a School Shooting in florida. Lets get to sue with whats happening. Reporter a shooting has been reported at a high school, in parkland, florida, the wtbj, our affiliate in the area, live video showing multiple people on stretchers put into ambulances we do not know the status of the casualties the schools in lockdown at this time it is a medium sized high school from what ive been hearing from the local affiliate there. The shooting occurred about 45 minutes ago. Thats the best estimate you can see live in the pictures, the officers with the dogs, we have also seen assaulttype of vehicles surrounding the high school. Its not visible in that shot, but if indeed its like magic, pulling out at the time id like them to do that, and pan to the right, you might be able to see assault vehicles theres reports of multiple casualties, reports earlier of people put into ambulances we do not know numbers or the status of the victims or whether they were students or teachers the school is in lockdown. Everys been told to shelter in place. This is the majorie Stone Douglas High School in parkland, florida. As soon as we know more or thoughts that give us more information from our local affiliate, well bring it to you right away back to you. Continuing to follow the story for us, mike, bob, thank you very much. Back to the inflation concerns in the market now rising prices raise concerns about that, a raert eporter is standing by. Kate rogers looking at restaurants, and Morgan Brennan in the stratransimportanports. Transportation services up 4 from a year earlier. According to the labor department, auto repairs rose, and Auto Insurance really spiked thats one reason stocks passed gains today, progressive has been pretty robust airline fares, however, those fell 5 from a year ago as more competition leads to a price war, but do not let that fool you. Inflation is manifesting there as well. Brent up 14 over the past year, fuel is becoming a bigger part of airline expenses, trumped only by labor costs according to the aita, and Passenger Airlines like american and continental, delta, that means more Cost Management if the market does not support higher fares. That said, different for didn denting. You can see from this chart, dnc solutions, it shows dramatic spike that weve seen in drive van spot rates record highs signals more demand than supply. They do not expect that dynamic to let up, especially because youre going to start to see the Contract Price move up to go with that spot market price as the year goes on thats your benefit truckers like snider, werner, but its bad news for retailers and other shippe shippers this is the reason why a company like tyson predicted higher meat prices later this year you got higher labor costs, higher shipping costs reported, Higher Commodity Prices being reported, and where possible, it might expect to see that push out to consumers as higher prices as well back to you. I have to say, i was on the road this past week, and just up and down i95, that corridor there, i saw more truckers than i think ive ever seen before. Its amazing amount of transport going on right now morgan, thank you very much. Absolutely. Speaking of airlines, theres an exclusive tomorrow with the ceo of boeing, along around 9 00 a. M. Eastern time tomorrow here on cnbc. And with the markets hitting highs again for the day right now, the dow up 250 points, lets get to kate rogers for more on how inflation could affect restaurants bill, well, inflation might not be a bad thing for restaurants according to analysts i spoke with today. First of all, the gap between inflation at the Grocery Store and restaurants is smaller, 150 basis points or so, so consumers may eat out. Wholesalers like tyson may absorb the costs, which is good news for restaurants, but long term, its easier for them to pass prices on to consumers, especially if consumers are already being hit with inflation everywhere from the gas station to the Grocery Store plus, one thing to remember, tax reform means more cash in consumers pockets and added pad to Industries Like the restaurant sectors many mentioned inflation, so far mcdonalds was up 3 year over year, but expect that to be back in line by the end of the First Quarter. Chipotle said they save on 5 Wage Inflation by offsetting that with fewer promotions, lower insurance, and benefit costs as well. The partners also crunched numbers for us, and theres six surprises in terms of the upside since 2010, one month after those instances, your best bet in terms of return and reliability in order would be starbucks, dominos, dunkin donuts, and the worst are yum brands guys, back to you. All right, well see. Thank you. We are watching the retail ers and how those stocks are impacted this could be selfinflicted. Follow along here. The cti report had an increase of 1. 7 from december no january when it comes to prices consumers paid for apparel this is after four general deflation years. You see the price of apparel apparel prices have only increased month over month twice in the last year it is curious this price jumped up in january from december because january is typically a big clearance month for retail, but theres two things going on that could be supportive of the higher prices. First, retailers had higher inventory going into the Holiday Season and generally strong sales, so theres less to sell as discounts are in january. Second, many retailers and brands are actively working to wean shoppers off discounts getting us to pay full price more an. It looks like its working ralph lauren, michael kors, owns men as warehouse and jos a. Bank and more, they already said items have increased because they let it do to. Retail sales go out today too, the ideal raw number was disappointing. Look inside. Clothing sales increased 1. 2 last month, and Department Store sales improved. 8 , but shoppers are buying srt up 2 . Department stores, macys up 3 , kohls up 2. 5 specialty players are up, Urban Outfitters up 5 higher prices are being toler e tolerated by shoppers, and for retail, thats a good thing. Kelly . They are loving it, thank you. Inflation fears spooking the market a little bit, but now the dow is up, so who knows. An array of things could be keeping inflation in check like robots taking jobs, keeping wages down, global competition, Online Shopping, and its the era of low inflation really over lets talk about it now with observers of that, Julia Coronado is here at post nine, and also with us, chris, managing director and chief financial economist at Mufg Union Bank good to see you both julia, what do you think, globalization and technology kept inflation low all these years . Yes, they have. Is that era over . No. It is not over, and, in fact, what was started in the good sector, Online Shopping in retail, its now rotating to the services sector. Think about what uber and air bnb and what service apps do, the does ripisruption is ongoing theres some cyclical upward pressure, but compared to prior erro errors, it is muted and likely to stay so amazon is getting into health care thats something to watch. If that sector gets disrupted, itll be hard to see higher inflation. A big sector do you think this is an Inflection Point more signs of inflation we got more Wage Inflation and employment report a week and a half ago, that friday, and then, today, we get core inflation, look at the core, thats the trend, up 0. 3 today for the month of january, up. 2 last month. It looks to be accelerating. In the very least, all the fed members who talked and warned about the worries of the inflation, all the ideas about deflation in the middle of last year, forget about it. Its gone. Inflations headed back to the 2 target. What is shocking is that the fed is so far behind the curve they are miles away from putting rates to normal levels the only thing i wonder, viewers wonder, how long have you felt this way . In other words, you know, people say economists have called nine of the last three recessions, and you had zero Inflection Points on inflation. I felt this way at 8 30 this morning. No, but, i mean, all were talking about is that inflation were not in deflation, okay . Two more months from now, were going to see, remember that cell phone data plan, they gave you more data a year ago last march . Thats going to wash out of the data in two months, inflations going to go up. 3 higher two months from now. How do you reconcile your thoughts on low inflation with this mornings cpi, and i dont know if you know, the fed just this afternoon out with the report on inflation for january, 3 it saw. Okay. Lets start with this mornings number it was. 3, matching last january. The months leading are volatile, leaving the year on year pace steady no acceleration in the annual pace of inflation, and, in fact, its still below 2 . On core on core inflation dont get over our seats here. Its welcomed. Its good news, first sign that the fed can achieve the 2 target the feds measure, theres a lot of survey data and Market Measures in it, so lets stick with the feds target, core pce inflation, its at 1. 5 . Itll probably stay at 1. 5 , again, given last januarys strengths, with this january reading, so we still got we are not behind the curve theres room to run for them to get to their targets do you think they are doing in terms of rate hikes this year, 3, 4, Something Like that . I think they are going to stay on track with this number this is welcomed news, what they have been projecting, right . Projected it nine out of the last, eight, nine years. This was the first year they were able to execute the plan, and if all else equals data this morning say they can execute their lan, again, they are dat dependent. It depends on how the economy is off. Okay, julia, chris, good to see you both, thank you for the thoughts were glad you disagreed thats what makes the market all right. Back to sue now for the latest details on this high School Shooting in florida. What do you think, sue an active situation in parkland, florida, at the majorie douglas, the parent of a child in lockdown inside of the school tells cnbc that the shooting, according to his child, went on for some time there are reports of victims you can see some of the students that have been leaving the school the shooting, according to the child, went on for some time, there are media reports of victims. The numbers are unconfirmed. We want to stress that they are unconfirmed of upwards of 20. Once again, nbc has not independently confirmed that we do have reports of victims. We have seen ambulances. We have seen stretchers. We have seen students running out of the school. The local street around that high school have all been closed the school is on lockdown, but it is a Large High School. Several thousand students, so they may be able to get some of the students out of certain parts of the high school that are not affected by this particular shooting. It is an active situation. We hear the shooter is still at large. The assumption is, and, again, that is unconfirmed, that the shooter is still inside the building, but we do not know that, but there reports that are unconfirmed, a victim, possibly as many as twenty or upwards of that its a live situationment youre looking at live footage from our affiliate. There you see some of the assault vehicles i mentioned earlier. Its a fluid situation were watching it. Well keep you posted. Guys extending it to break, i think, and back in a few minutes with more on closing bell mom and dad got a new car. Its not theirs. Its mine. Mine. Mine. And it always will be, forever and forever. The new rx 350l with three rows for seven passengers. Experience amazing at your lexus dealer. Today, a focus on innovation in the Southern Tier is helping build the new new york. Starting with advanced manufacturing that brings big ideas to life. And cuttingedge Transportation Development to connect those ideas to the world. Along with urban redevelopment projects worthy of the worlds top talent. All across new york state, were building the new new york. To grow your business with us in new york state visit esd. Ny. Gov. Toyou know whats not awesome . With ugigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Welcome, now housing data, a surprise with newly built homings, heres more well, kelly, higher Interest Rates hit the Mortgage Markets hard last week volume down 4. 1 for the week and up 3. 5 compare to a year ago. It was calmed buyers who drove the drop with purchase applications down 6 for the week, and home buyers are facing a record low supply of homes for sale, creating head hot home prices Mortgage Applications to refinance are lower, falling 2 for the week, and average rate on the popular 30year fixed rose to 4. 57 from 4. 50 , with 20 down thats the highest in four years. The interesting part, while Mortgage Applications overall have been weaker, those who purchase is newly built home, up 18 in january builders are clearly benefitting from the lack of supply in the existing home market the only problem is that new homes, of course,premium, and a rates rise, that cuts into affordability, especially for those higher priced newly built homes. Kelly . Diana, thank you, on the latest for housing more on the latest of the School Shooting in florida with us now, former fbi Swat Team Member kevin, thank you for join iing us last minute notice. Those who just joined, theres been a School Shooting in parkland, florida, 50 miles due north of miami, hearing about possibility of victims there, but local authorities there, kevin, said the shooter is at large. This is a very dangerous situation right now. Who is in charge right now do they bring the swat teams in, the fbi come in . How does it work right now well, typically, theres different layers you, obviously, got the patrol guys that are the closest. They are going to respond. Almost always really wellprepared for these sorts of things, the worst thing on their mind, and then you always have, then, the tactical teams that can be close by ain police cars or mobilize from the station, and then, i think, like in columbine when i was there, if its big enough, they put out a bunch of requests for other agencies to come in. It depends on how the town is set up kevin, details are sketchy right now. So what are you looking for to gauge the size and scope of this event . Well, you know, obviously, the First Responders are going to be reporting in, you know, they may or may not try to engage anyone, then, you know the Police Departments getting calls from different people that might be on the inside, and so that sort of information all takes a lot of time to get through, and theyll try to figure it out, but here too, you know, theres a big push trying to engage active shooters to see if they can save lives initially. The fact that hes he or she is still at large complicates it, but they have been, as weve been seeing here evacuating some of the students as they go along, so is the priority to keep students sheltered in place or get them out of there what is usually the protocol here well, its a combination, so when they dont have their thumb on the guy, and thats almost always the case, they assume that, you know, i mean, three things, hes in there still hiding, hes mixed in with students, which is the biggest worry, or hes completely gone so guys outside not responding, they check to see if they can see him, you know, every single cost looking all over town, and then you got students they try to keep safe, make sure they are not him, but get them out of harms way, and anybody inside, they have schools are just fraught with problems. They got locker rooms, theres closets, doors that open in and out, and its really, really tough, and that lends itself to a slower, deliberate action if nobodys shooting at the time. This is 50 miles north of miami. How quickly do you expect federal Response Teams to be on the ground there, or all, you think, on local authority who hopefully have training for these situations well, i think, you know, the federal authorities would help they are usually asked the closer you are to a big town, the Better Options are, obviously, and then, you know, you think of the different layers, theres Police Department tactical teams, Sheriff Department tactical teams. Thats a diverse, sophisticated part of the state, obviously, so it takes awhile. In columbine we were the third layer there, and we were only 15 miles away it took an hour and a half, two hours to get to a small suburb and prepare to go. Its not instantaneous thats why the cops that show up, maybe theres security already in place at the school, most of them have them, those are the most important guys. Kevin, appreciate your insight as we continue to follow this story here. Kevin, former Swat Team Member, and, obviously, mentioning columbine years ago there in colorado more on this developing story, of course, bringing you all the details as we get them, and as soon as we can confirm them, well be back in two minus. Te hey, need fast heartburn relief . Try cool mint zantac. It releases a cooling sensation in your mouth and throat. Zantac works in as little as 30 minutes. Nexium can take 24 hours. Try cool mint zantac. No pill relieves heartburn faster. Weve been preparing for this day. Over the years, paul and i have met regularly with our ameriprise advisor. We plan for everything from retirement to college savings. Giving us the ability to add on for an important member of our family. Welcome home mom. 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A student has told nbc, the shooting went on for some time there are reports of victims we do not have hard numbers on that various media reports put it at 20 or more we cannot confirm that at this time footage we have seen is children coming out of that high school, some of them being escorted by Law Enforcement officers some of them simply running. It is still an active situation. The Broward County sheriff says the shooter is still at large. The president has been informed, according to the white house the president is aware of the situation, and the white house is monitoring it we do have some tweets, senator marco rubio tweeting, monitoring the horrible unfollowing situation in Broward County florida with reports of a shooting in a local high school. Representative ted deutsche tweeting closely following updates from sheriff israel on the situation. Hoping everyone is safe at Stoneman Douglas high. Law enforcement asking everyone to avoid the area as they respond. We are also hearing from our source on the ground there that parents cant get anywhere close to the high school they have closed all the streets, understandably, perhaps, around that high school, but, certainly, frustrating to the parents who simply want to find out the status of their child and status of the situation in the high school its a very difficult thing because its a Large High School, and as kelly and bill just reported, you have a lot of different areas with someone if they are still in the school can high so they have to be meticulous in going through and make sure whoever has done the shooting does not get out with the other students that are being evacuated from the school. Technically, the school is still on lockdown, as i said, we have reports of injuries. We do not know the status of the injuries although, we have seen stretchers, we have seen ambulances, we have seen tents go up where victims are being taken. We dont know what for yet, but it is very much an active situation. Well continue to monitor it and try to get hard numbers on possible victims and their status bill, kelly, back to you all right, sue, thank you keep us posted on the situation. Meantime, watching the markets financials here have been one of the best performers amid what is another rally, dow at 256 points, bob has more banks, of course, have actually kind of been flat for the month where the rest of the market, notably, the banks today, many of them were actually up for the month, but, today, 12 moves, and you can see some of them are up more, 3 , the big super regional banks. Interest rates sensitive understandably have been down. This has been happening since the middle of january, so your utilities, at t, most of the reali real estate stocks the Technology Stocks generally down, outperforming the s p 500. I think the key story here is while the markets are concerned about the move from 2. 5 to 2. 9 on the tenyear, this is not enough to derail the overall growth story that the economy is expanding, growth areas of the economy are expanding like technologies and industrials, and the market is trying to keep an eye on that particular issue, and thats one of the reasons were turned around here today from the declines early on back to you. Bob, thank you very much. Well see you at the close lets get to the Closing Bell Exchange for this day, joining us, andy back with us from region atlantic. We have cnbc market analyst, both here, and jack checks in from the cme in chicago. Jack, i start with you this inflation number, here we go again, you know, expected to be high, it was hotter than expected, and the yield on the tenyear goes to 291, highest now in four years. I mean, do you believe that inflation is going higher . The markets seem to be embracing it as the days progress here bill, we are so far away from worrying about inflation in my mine the better question we have to ask is is this the era of disinflationary plaguing central bang bankers . Thats whats been happening we see its curve, nowhere near as steep it dictates it gets cheaper over the course of years, but were not seeing that. Only get it to 0, you know, and what im trying to say is that technology, one of the biggest factors in disinflationary pressure is no longer a big factor, and more importantly, what we are seeing is the fact that 2. 9 is maybe 3 , its not armageddon, and, in fact, if anything, fuelling the fire. 2. 913 is the new high for the day, anyway, steve, so do you think this is a big regime shift here or people making too much of, you know, getting to the levels, but extrapolating from them as well in. Once you kick up to the 3 number everyone fears, its going to drive so much Foreign Investment into our market place, into the yielding assets that i dont think we stay there for long anyway. Having said that, when you look at cpi and energy as a factor on cpi, a lot was due to Energy Prices, and if you look at where we are at, if february, Energy Prices have come in as aggressively as they rose to cause that cpi blip, so we think that it is much adieu and robots took over. They read the headlines, saw what to do, hey, quick, we have a sniff of inflation, lets sell equities, and when human beings took hold the wheel, you start to see that unravel and saw pickup in the overall markets. Be that as a may, when you look in broad strokes, financials are the strongest today, presumably a sector that benefits from higher inflation and higher Interest Rates and utilities are the biggest losers in the other camp there, so, again, the markets seem to be embracing the notion that inflation is on the horizon, what do you think . I believe inflation is on the horizon, but higher Interest Rates r rate regardless are on the horizon. We tried to talk the dollar down at the secretary of the treasury level has been doing it, and weve issued a very significant tax ut weve also passed a very significant spending bill. All these things point to significant treasury supply and when most of the supply can get taken by the fed, taken by foreigners, and they expect to get something out of it. The only issue, though, bill, with your premise is that we have seen over the last couple days, where Interest Rates have spiked, and utilities have been up, reits are up, and financials are down i think today is basically an unbind of that volatility clause we took into the market place last week. Right we start to see, hey, lets see what we want to own, and maybe we got it on the cheap as far as mr. Market thinks, so thats why you see better gdp and better growth, maybe things are okay truth is, Interest Rates rise and Home Builders are up Market Trends last for 15 minutes these days right well, you know, the other thing that we got to keep in mind is that a little inflation is not a bad thing you, remember, it gives people purchasing power, gives people operating margins, especially with ppi out tomorrow. Lets see its as hot. If not, think about it, youll see expanding operating margins. This is not that bad when you start to get hyperinflation, velocity of inflation picks up, you have a problem. Having a little bit in the equation now is very good and healthy. All right obviously weve had a busy news hour we have to move on thank you, all, for the thoughts, andy, good to see you, steve, jack, get back to work as well we have about 22 minutes left in the trading session, dow up 257 points, again, another volatile day when we return, two Asset Managers following the money, where they see it slowing, and if they prefer growth over value. When we come back. I think that shes a very nice girl. You never got the brakes looked at . Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. 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This morning, we got waiting for the price index, tomorrow morning, the dow was down 150 at the opening this morning mainly because of inflation number, but then the buyers came in, and we have been setting close to new highs for the day here, dow up 257 points, but the best gainer here, as you can see, the nasdaq, technology, up strong 1. 8 . Nasdaq up 7. 5 since the intraday low on friday. We had volatility to the upside this time too. Where do you find value in this kind of market director of trading, victor jones, and ernest ramos. Victor, to you first, off the lows for the nasdaq, is it too late to seize opportunity here, or what do you think look at whats happened over the last couple of weeks in terms of s p 500 valuation thats coming from about 18. 5 all the way down to longer term or fiveyear arches around 16, what that means is clients even in the volatile till and weakness from last week, used that as an opportunity to enter into attractive valuation. In particular, kelly, buying in consumers discretionary. Three names off the top of our heads here was amazon, getting into the 1300, and netflix getting into the 245 area and ford at 1050 all three names attractive valuations for the clients over the last week or so. What about you, ernesto, knowing value is a subjective term, but with the volatility, is there opportunity for the Value Investors who have been frustrated by this Growth Market absolutely. After since the beginning of 17, value has underperform by 20 percentage point, the growth benchmark. Now with earnings coming in, after the earnings recession, you have 13 growth from 17 to 16 , and analysts project 18 sorry, 26 growth for the year 2018, so having the disparity between growth and value and value more sicklically exposed to Economic Growth and to rising Interest Rates because youre trading financials, but i think we think that value is a better place to get better returns than growth having outperformed for a long period of time. Yeah, again, value in the eye of the beholder sometimes. What about the dividend paying stocks, victor is this the kind of environment where they could do well because economys doing well and Companies Raise payouts, or will they be hit by Interest Rates . Go to the notorious high sector dividends, it was not an attractive area. To your point, other areas of interest from our client base has been actually financials, and if you take a look whats happening as we talked earlier, 2. 9 , steepening of the yield curve, you have not necessarily see participation in financials, so over the last week, we saw a little bit of buying there across our client base in particular, in j. P. Morgan. Ernesto, who would you be buying right now bank of america we bought that as soon as the election took place because we saw the deregulation that the Incoming Administration had in mind, and banks are the biggest beneficiaries of deregulation, and add to that the steepening of the yield curve as mentioned, the banks and very attractive valuations at 12. 5 times for bank of america. You really are owning a stock with phenomenal macro backdrop, strong fundamentals tied to the recovery in gdp growth and acceleration in gdp growth, plus steve mentioned the yield curve, all good for bank of america and other financials, bill happy to be exposed to the Financial Sector at this point all right, thank you, both, for your insights on navigating this volatile market right now we are mindful, if you just joined us, theres been another shooting, this time in a high school in parkland, florida, north of miami theres still more questions than answers right now, and what we have been told is that the shooter is still alarge, a lot of Law Enforcement, a lot of medical care on site theres been injuries. The numbers, we have not been able to confirm, so i dont want to bring them up at this point, but the drama continues to unfold there in florida, well continue to monitor the situation and bring you the very latest details as they become available. In the meantime, with the dow up 280 points, kelly and i llwi be back with more closing bell in just a moment. Slap on some cologne im 85 and i wanna go home just got a job as a lifeguard in savannah im 85 and i wanna go home dropping sick beats, they call me dj nana 85 and i wanna go dont get mad. Get e trade, kiddo. [fbi agent] youre a brave man, your testimony will save lives. Mr. Stevens . This is your new name. This is your new house. And a perfectly inconspicuous suv. You must become invisible. [hero] ill take my chances. Big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov hello, everyone, im sue, bringing you up to date on a still active and developing situation at a Large High School in parkland, florida you can see the locater there on the google map we have an active shooter still at large, there have been injuries, multiple Media Resources are saying 20, and the miami herald says one is dead and says at least 20 injured this started just before dismiss sal, apparently. Now, there is a parent who has a child in that school who has been communicating with cnbc that child told his father that the shooting went on for some time we do not have confirmed numbers at to the injured, but as i said earlier, the miami herald is going with 20 quoting a local fire chief i want to play a sound bite from a local reporter talking to Young Students who just evacuated out of the high school lets listen trembling, in shock she saw people being shot at and luckily she was able to make it out, but right now, i mean, the kids out there, barricaded himself. What did she say she witnessed . What building . The freshman building where i think it all transpired. The three Story Building . Yes, thats the threeStory Building closest to springs. Right now, its chaos out here how was the tone . She was in complete denial and shock. She was numb like, the way to describe it, the message in her voice gave off this is not reality, that theres no way shes seeing people down. Is your sister okay shes all right, yep. That was just a few moments ago. The school is still on lockdown, aloe students have been exiting the school, escorted out by Law Enforcement officials. The shooter still at large, what we heard from every Law Enforcement officer who is putting out various statements we have some tweets to representatives of the state of florida. Marco rubio said, we are moni r monitoring the situation in Broward County florida with reports of a shooting at a local high school. Representative ted deutsche, closely following updates from sheriff israel on the situation, hoping everyone is safe at the high school. Law enforcement responding we also have the president tweeting his condolences to the families and we have rick scott, the governor, tweeting hes spoken to the president about the situation there. The president tweets just came out moments ago. We have one report of one person dead we have several reports, media reports of at least 20 people who have been injured. We dont know the situation in terms of the types of those injuries as we watch those children evacuate. We continue to follow the situation. Back to you and bill, actually no, a break as we continue to monitor the tuion. Is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. 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I wish i could show you the futures market that traded before the open this morning thats when we got that inflation report, the cpi report, at 8 30 a. M. Eastern time this morning. At that point, the dow futures were up. Looks like a positive open, but as soon as the report came out, they slammed the futures lower, down about, i dont know, 250 points at that time, and, n. , the dow open lower, down 150. Sat the low of the day, and here we go again the buyers came in, and were setting the highs for the day right now, so the volatility continues as this market still is seeking some sort of price stability in the wake of what happened in the last couple weeks. The tenyear yield getting signs the market is embracing the inflation story slowly temperatu 210 and change every time we hit that, it pulled back, but now its 291, a fouryear high, and blackstone said today he thinks the long end of the yield curve has the greatest risk now. He sticks to the short end because of the volatility. Oil, thats also moving higher were back to 60 a barrel. Remember that . It was moving lower with the inventory suggesting increasing glut in the oil market, but now were starting to see prices within there, and the dollar index continues lower, wouldnt you know, back below 89 right now, bob pasani, andas the dollar is lower, that carries inflationary issues as well. Number one, volatility is a sign that traders are not as worry about future volatility. Vix measures volatility 30 days out. Not as worried as they were a couple days ago. Those who cant see it, back below 20, First Time Since early february surprised it moved that much. We had future expiration today number two, hard to explain how the markets rallied so much talking about inflation concerns, but if you notice, banks were up noticeably they would benefit Interest Rates down. They would not benefit Growth Stocks, industrials and Technology Stocks have outperformed i think its difficult to explain, but the market believes the growth story is in tact, Global Economic expansion, earnings expansion, and move from 2. 5 to 2. 9 as bill showed on the tenyear is not going to wipe out the growth story. Were nowhere near the kind of inflation that would impose, you know, test growth, but it is were starting to see signs its going to happen its inevitable with the Unemployment Rate as low as its been for so long its got to cause inflation at some point thank you, bob off the highs of the day, a gain of 248 points. More earnings and talk of inflation as we prepare for the Producer Price index tomorrow coming up on the second hour of the closing bell with kelly evans and company. See you tomorrow, kelly. Thank you, bill welcome to the closing bell, everybody, im kelly evans, another rally, stronger today on wall street, dow up more than 250 points on the bell, a 1 gain the s p 500 up 36 points, a 1. 3 gain the russell and nasdaq stronger, up 1. 8 today. The nasdaq composite up to 7143. The nasdaq now at 7. 5 from fridays intraday lows. 6. 5 higher for the dow and s p since that moment as well. Sharp rebounds today that said, the volatility gauge has been dropping, and its back below 20 for a reading of 19 right now. Much more to talk about, Interest Rates and those levels, that in a moment, but its also going to be a busy hour for earnings josh lipton is covering ciscos results, and morgan with supply materials, and we have trip adviser an and marriott. See if they get the numbers out this hour. See you shortly. Joining the panel, cnbc Senior Market analyst, and managing director of ciaa investments, and josh brown in the house, ceo and founder of whole Wealth Management the dow today, biggest winner was nike and loser verizon and chipotle the winner, after announcing the new ceo, current ceo of taco bell, up 15 mike, again, we have come back quite aways from fridays lows 7. 5 for the nasdaq, and 6. 5 for the others you wonder if it punishes im not declaring that, but Spring Loaded on friday, and people were concerned about more mechanics selling from whatever strategy, the selling did not show up, and we took off it was almost as if this weight was lifted now, we got ourselves up to a level on the indexes that is very logical threat to stall out and see if sellers can reemerge. Would have been logical if we didnt have the rebound at all look at the charts from the liftoff we had early part of this year, it did look like a correction that brought us to something sustainable, but quickly we climbed back. Tell me were not back up to meltup mode already. I dont think so. I think volatility is here to stay for a while, but i dont think what especially with that number today, i thought, wow, a hot number. The cpi number, but then, you look at the year over year basis, and 2. 1 inflation, not horrible inflation is gradually rising, Interest Rates rising because of that, and also from the growth, also from our earnings, and guidance and so what i thought was interesting today, and in the last couple days, its really been the value trade thats worked. The iwm is back up, the dollar has fallen, commodities are up its a cyclical trade that is leading. Well see if it lasts, but it was evidenced today. Even in the report, itself, there was one offs like that, jump in apparel prices and things like that the thing is, all that said, the tenyear moved up, over 2. 9 , and decided halfway through the day, that was fine and they were okay and had a great day in spite of that president. Money market at 1. 5 is not quite competition for an s p yielding 2 with double digit, high teens Earnings Growth, and accelerating gdp maybe thats not the case at 3 or 3. 25 , but thats not where we are thats an important consideration. To the point, its the noisiest number on earth, louder than the closing bell ceremony here theres a lot of oneoffs and important to understand that higher growth is going to bring along higher costs in the real economy. What was interesting, though, a lot of the contribution came from gasoline at the pump, and Wage Inflation is not really a problem yet, and, in fact, that was muted in the report. Year over year, and sequential month over month thats what the markets void from that this morning, and in the absence of anything worse, we bought them supply materials are crossing the wire morgan in. Kelly, thats right we got a beat on top and bottom line for materials, 1. 06 adjusted versus the 98 cents consensus estimate 4. 2 billion for revenue, better than expected. Company giving strong Second Quarter revenue and etf guidance as well. The board of the materials are dowling dividends to 20 cents per quarter. Look at the shares, up 2 now on the heels of the earnings beat back over to you morgan, thank you 2 gain, doubling dividends long overdue. One of the lowest of all the lower cap names. That was something that was widely anticipated is that a trend or continuing one . Yes they are lagging they are lagging that should have been higher, and so now right . Yeah, no, i agree whats interesting when Lamb Research reported earnings, beat, raise, and stock tanked, right . I dont know if you remember, but there was two, three weeks, and took down all the others. Right i think the sentiment, the mind set is a little bit different in this goaround in this report. Supplier gave us long term guidance of over 5 a share. The call is important to talk about where they see the equipment spend, what that dollar level will be because thats going to drive it and give comfort this is the pique year, when it peaks. The fact we had this reset in the market change the expectations a little bit . 15 from the high they also preempt that question on the conference call, what do you do with the trump tax . Were not details that any further. Doubling dividends right thatll skip right ahead to the fundamentals see if its lower bargaining, and cisco up 10 10 year to date. Yeah. You know, all year, youve seen it flow through the companies and the stories now. The question on cisco, i want your take on this, is this going to grow at above cpi or not . This is a declining story like ibm . Now maybe 2 hold on, after the number the official answer josh lipton, tell us, how did they do . Kelly, cisco reported eps of 63 cents versus 59 street at 11. 8 is 1 billion. Looks like total gross margin clocks in at 64. 7 , and the guide, kelly, looking for between 64 and 66 cents, street at 63. Revenue growth between 3 and 5 turning to the product segments, kelly, looks like applications and security, each increasing about 6 infrastructure platforms, so thats a core networking offerings, switching and routing, those increased by 2 this call starts at 4 30 eastern. Well be on it. Kelly, back to you up 5 thank you. How does this fit in with the story . So last quarter was the First Quarter we saw guidance growth, 12 , so, josh, to your point, its meager growth, but it had been some time since any growth. Clearly, there was inflection in some of the products and businesses, and some of the new businesses, so cyber security. Cybersecurity, but now theres a switch that also is a new product cycle for them, got data points from the company, the ceo and cfo, body language that things were going well, and Enterprise Spending on the rise as well, and there were high expectations, but, clearly, they delivered. Theres a couple things going on that this is no longer the Legacy Company its actually has growth to it, may not be that robust, but look at every old tech that switched to subscription from enterprise sales, look at the chart, and i want to jump off a roof because i dont own it. They figured it out. If cisco pulls that off, even for a part of the revenue a lot of credit for having realized that ten years ago before everyone else caught on this is a 6. 4 yield. This is a stock thats really pretty cheap morgans back what is the news additional news there . Yes in addition to doubling the dividends by materials, its authorized an additional up to 6 billion in Share Buyback. This is incremental to the 2. 8 billion thats remaining in the previously approved authorization, so they are hyping the dividends and increasing buyouts back over to you okay. Thats more information. Bottom line, return on capital basically got a war chest buy back 15 of the company. Wow yeah. And, again, as josh said, thats the answer to where is the cash going youve been forced, on paper, repatriate using the money for buyback hire, like, one or two people so that the white house can say it maybe in the United States. Thats one of the most global companies. Fair enough just goes back to the question, if they are buying back stocks and thinks theres value there, increasing dif denlvidends witht of cash in the coffers thats coming, if we can withstand the peak, which i dont think we are thats the obsession. Good data point. Josh has more on cisco kelly, some news on capital return here i want to quickly highlight for you. Ciscos declaring quarterly dif depd, kelly of 33 cents, a 4 cent increase, up 14 over the previous quarters dividend and say the ciscos board approved a 25 billion increase to the authorization stock repurchase program. Kelly, back to you thats a big number thats meaningful thats outside the u. S. 60 billion issue returning 25 billion, investing the new amount thats a good number i heard higher, actually, but ill take 25 slowish growth, good cushion of Free Cash Flow. Why cisco is a better target for returning more of the capital opposed to investing it . Helps explain well, yeah, exactly. You know, exactly. Whats the high return business in ciscos sweet spot they invest tens of billions of dollars in enough to move the needle exactly right we saw the 6 growth rate coming from security and applications, the small pieces, but 2 for the core business the stocks up a little more than pennsylvan 5 hard to tell if people will excited because if its just a growth period for the company or because of the onetime measures it takes a lot of the Legacy Companies a lot to turn the ship look at ibm, oracle, i mean, look at the companies, and this one actually is probably the furthest along of the three i mentioned, and its nice to see at least were getting an inflexion. Its not just wild growth, but some of the policies put in place and m a and core growth theyve been focusing on is working. Again, you come back to the valuation, it is on the balance sheet, and anything, theres more buybacks. The 200 billion market cap in the year 2000, it was over 400 billion. Wow was the Biggest Company in the world. First to a trillion now we talk about different names in that. Theres supplied materials and cisco, rallying after the results. Waiting on others. Back to the inflation discussion investors have reasons to be concerned now. Steve . Kelly, no doubt inflation is clear that the question is, whats the right reaction . The 500 point plunge in the morning for dow futures, within minutes of the news, or the later by investors that not only did inflation matter, but represented a buying opportunity. Heres the benign way, year over year unchanged at a low rate, and 2. 1 , and 8. 1 per core. A huge increase of things like apparel, one time up 1. 7 . Doesnt seem to think they are likely to repeat, but this is the worrisome look up a strong 3. 9 , the hottest since 2008, and thats before the tax cuts hit amid modest wage growth. Three or four hikes this year . Not a difference, but those worried about inflation wonder if they can increase their fed view for 2019 now. Josh . So that last hike of the year is really where the action is in the futures markets, and i think after the market debacle of last week, got down to a 44 probability. That seems too low, but maybe 100 is too high one of the things were doing with portfolios internally with Wealth Management clients, weve overweighted tips relative to traditional u. S. Fixed income. We did that a little bit last year this year, a little bit more we also like overseas stocks, and we are now 60 of the equity exposure across the models thats overseas stocks, which is tough to do until your clients understand how much of a benefit you get from the currency and how relative returns work, relative valuations, relative trends, so other than that, i dont know that you want to go all in commodities or start inflation panic, but think outside of 26 times ratio in the s p. When people say, oh, put on the inflation trade or take it off. Means Different Things to different people right very Different Things for how stocks do. Right look back different periods, talking about inflation here thats consistent or accelerating look at companies that actually can be beneficiaries of a higher nominal growth, domestic economy, opposed to those who cant pass it along. Its going to work itself through. Its the world were in in terms of the market, those living in the world of inflation, inflation, inflation, and we get a little bit, and we say, we talked about it. Whats the big deal . Its priced in. Thank you so much. We got to go happy valentines day thank you so much so thats again, we just did some of the earnings in discussion about the market. We want to get back to sue with the latest on the School Shooting in florida that happened two hours ago this Development Just occurring saying that the shooter is now in custody. The shooter is now in custody. However, the scene is still active just to let you know what happened earlier this afternoon, before dismissal, there was an active shooter incident at the marjory Stoneman Douglas high school, reports of up to 20 people injured, Media Outlets saying the fire chief told them that one person is dead senator bill nelson tells nbc news that there are multiple fatalities this whole event unfollded in te freshmen building. Theres several buildings on campus this was the freshmen building, a threeStory Building governor rick scott is on the way, but the Late Breaking Development is according to the county sheriff, the shooter is in custody, but also says the scene is still active. The shooting, according to a source to cnbc who was on the site there, a parent of one of the children in the School Reports the shooting went on for some time. We have been hearing some tape that has some thoughts on it, and appear there were quite a few shots. Well play a tape now of a student whose younger sister was in the freshman billing. Hes an upper classman he was evacuated to the talked to the local reporter on scene this is what he had to say reporter describe the scene, pulling up, i know when i arrived here just flooded in cops. Flooded. Coming here was a hassle i say, leek, nine cops flying by, making my heart race more. I couldnt believe what was going on just seeing the helicopters in the sky is i cant believe anything thats going on right n now. His sister, she was eventually evacuated and is okay we have seen pictures just like that of people loaded on to into stretchers and into ambulances local authorities at hospitals are awaiting victims we have no numbers yet as so what they expect, but the scene is still active. Assault vehicles are on site, but, apparently, they do have the person they believe to be the shooter in custody the scene is active. Its a Big High School they are in the process of getting all of the children out, and back to their parents. Parents are waiting aways away they shut down all the local schools, and they are extremely anxious about this still developing story we have multiple injuries. Reports of one death from the local sheriff, although, senator bill nelson reports that hes heard from Law Enforcement officials that there are multiple fatalities. Trying to run that fact down so that nbc can confirm that independently. Well be back in a moment. Ti suaonhel monitoring t acveitti its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Welcome back, breaking news, pharmaceuticals, leslie picker with the details thats right. I want to draw attention to shares of pharmaceuticals, up in after hours today after a filing showed that Berkshire Hathaway took an equivalent, 13 f filing at the end of 2017, so that position may have changed in the six weeks since then, but these are, of course, quarterly filings that Investment Managers have to do at the end of every quarter, so were keeping an eye on the chshares now back to you. Leslie, thank you up original 1 mike, makes me smile shares hit so hard over the last couple years straight down in the last year even just everyday things bring new challenges for them, a new ceo, trying to turn things around, but yes, essentially other competition, one of the cheapest stocks in the s p 500 for the a long time. Ten times forward earnings for the last two years, under eight, so, clearly, whatever price they got in at, it was a cheap one. Down 62 over two years incredible. Even with the after hours move well see if theres more from the filing and in the others up 8 , how about shares of cisco . They reported earnings, system at 5 after results with the news about the dividend and Share Buyback programs eric joins us with daniel, guys, thank you so much for the time eric, starting with you. Whats significant for you, results from the quarter or Capital Return Program i was more surprised by the capital return, 25 billion as a portion of the net cash is substantial. Thats a good demonstration of confidence on the part of management, quite frankly. And thats because . Well, i think that their net cash between bet and total cash is about 35 billion or so, so 25 billion for buyback is substantial. Yeah. As we said earlier, 1012 of the size of the company. Daniel, what do you think . I mean, now that this will be priced into the stock, of course, they have to demonstrate growth still, right . I think thats right. The key beyond the results in our view is the fact that the company is continuing to trend mission to business to more software and services. This is helping the margins, helping the earnings power, and we think the Earnings Growth potential here is likely to be more than the market expects i think given strong Free Cash Flow generation, weve seen historically the Management Team has been an excellent stewart of capital and announcement around the dividend and buyback are positive speaking highly of the companys business drivers and the fact that the team has been and likely to continue to be aggressive on returning it, which is certainly positive. Eric, also going to become a little bit more of a top line growth story seems this fiscal year its in the realm of the 5 forecast, Top Line Sales growth, nominal gdp levels is that a piece of it or transition were talking about that gets it up for a while . So, quite frankly, 5 probably is on the generous side in the near term i look at it in two parts. I look at the infrastructure side and then the applications and security, and what we saw for the most recent results is the infrastructure, actually, did a little bit better than i was thinking for the quarter the application and security was 6 thats not too much of a surprise id like to see some of the infrastructure and security accelerate at this point if they can just grow that portion of the business, then i think the stocks got some upside and fuels upside for the sock. Thats what you look for in the call, eric, today as well . Whether the outlook for those two components should show improvement from here, yes all right i know you got a hold on the stock. Daniel, you have a buy is that because you expect them to get traction in the various areas eric referenced . So i think they will continue to see traction there. The key from our standpoint is that when we speak to customers, cisco is increasingly strategic to them because of what they are able to deliver in software and services, and so while we should see improving Revenue Growth over the course of the year, the business is inherently lumpy, so the key from the earnings potential is that if the Team Continues to drive good margin progression, then that enables the Earnings Growth to be there and, of course, we talked about the capital return, and so what we think about cisco, its the total return story that compounds at attractive rates in our view over the next few years, which makes this an attractive name. All right shares still at 5. 5 after hours. Thank you, both. Thank you police in parkland, florida said the high school suffered a School Shooting is still active, the shooter in custody, receiving word theres 14 victims. The status of the victims is unclear. We continue to follow breaking story from parkland, florida when we return from the quick break. As Investment Management professionals, lets measure up. Cfa institute. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. In the 2018 lexus es and es hybrid. Lease the 2018 es 350 for 339 a month for 36 months. Experience amazing at your lexus dealer. Experience amazing transparency. Expertise. These are the Building Blocks enduring relationships are built on. As Investment Management professionals, lets measure up. Cfa institute. Im sue, back with breaking news on the still active and developing story in florida. There was a School Shooting earlier today, a Broward County official saying theres multiple fatalities in the School Shooting and the School Superintendent briefed reporters saying theres at least 14 victims. We dont know the status of the victims or that those are fatalities, however, officials and senator nelson told nbc news theres numerous fatalities in the School Shooting that started before dismissal time. The school has been on lockdown. They are trying to get as many students out as possible it occurred in the freshman building, which is a threeStory Building the shooter is in custody. We do not know who the shooter is we have not necessarily seen them take the shooter out of the billing, but, apparently, he or she is in custody. A staging area has been set up at a local hotel to reunite parents with their children. A local reporter basically got a hold of some of the students as they evacuated and got a chance to ask some of them questions. This sound youll hear is from an upper classman whose younger sister was in the building and heard the shots. Lets listen to what they said on the ground. Trembling in shock she saw people being shot at and luckily she was able to make it out, but right now, i mean, the kid barricaded himself reporter what did she witness . What building . The freshman building where it all transpired. Reporter the three Story Building yes, the three Story Building, closest to homeburg and coal springs its chaos out here. Reporter how was her tone . She was in complete denial and complete shock she couldnt even she was numb like, the way to describe it, if the message in her voice, gave off was that this is not reality. This theres no way shes seeing people down. Reporter is your sister okay shes all right, yep. We also have reporters that got a chance to catch up with the parents who incidentally are kept some ways away from the school, understandably so because they have to close the streets to get Emergency Personnel and First Responders in because we do have multiple victims and multiple fatalitiefs but heres what this parent had to say, keep in mind, he not only has family who are teaching in this school, but also has several children in the School Reporter what are they telling you . They were flipping out. Thats thats the only way to describe it. Did they hear gunshots or see anybody injured . I dont know if they heard it or if they heard from other people that they thought it was fireworks at first, and then someone else said it was gunshots, so not im not sure i have not been able to have that much a conversation yet reporter able to communicate with them . Waiting at the Meeting Point or going to the park . Waiting to hear from them when they know where they are going to be let out to and meet them there and pick them up. Again, shooter is in custody. We have multiple fatalities. We have multiple victims the sacene is active they want to go through the school and ensure theres no other shooter involved, make sure theres no other victims that they have not been able to get near or rescue at this point. So the shooter is in custody, but it is still a very active situation that well continue to monitor. Well be back in a moment. In the Southern Tier is helping build the new new york. Starting with advanced manufacturing that brings big ideas to life. And cuttingedge Transportation Development to connect those ideas to the world. Along with urban redevelopment projects worthy of the worlds top talent. All across new york state, were building the new new york. To grow your business with us in new york state visit esd. Ny. Gov. To gyou or joints. Something withfor your heart. Tate but do you take something for your brain. With an ingredient originally found in jellyfish, prevagen is the number one selling brainhealth supplement in drug stores nationwide. Prevagen. The name to remember. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Welcome back we have more earnings here trip adviser numbers are out the stock is rallying after hours, kelly trip advisor, attractions and restaurants that helped revenue beat expectations. 321 million dollars, although, earnings did disappoint, 6 cents adjusted, but despite that, average unique monthly visitors, branded applications through 17 in the Fourth Quarter, higher than what the street expected. Also, average monthly unique shoppers grew 3 in the Fourth Quarter of 2017, a sign that trip advisor is better an monetizing the user base and incentivizing users to book travel on its site guidance strong. Commentary from management, we believe our Addressable Market opportunity are unique competitive position, low strategy position allows us to return double digit Revenue Growth and adjust mergers in excess of what we have operated to over the past couple of years, shares up over 18 , and 250 million buyback from trip advisor. Pivot the discussion to marriott a strong report from the Biggest Hotel operator in the world, 1. 12 adjusted on the estimate of 1. 00, and revenue 5. 88 billion, surpassing the street. Revenue available room, a key metric we watch for hotels, up 4. 6 worldwide, driven by north america, higher by 3. 9 , but asia continues to be a source of strength, and similar to hil torks, shares flat, but a hilton, shares flat, but a great run for 2017, kelly. Yes a better start to the year, thank you. Surprisingly good day for retail, january retail sales report, the worst in a year, but the stocks did okay. Joining us to discuss that, steve grasso welcome back, steve. What is going on there why were they cheered . Look at it through a bigger macro prism. This sector has been overshorted, under owned the multiples have come down drastically, setting up for easy compares for the First Quarter you look at whats behind it the weather was not terrible we had no polar vortex where we lost accustomed to new ja jargon it was the right amount of weather to sell goods. You throw in a tax rate higher than the going average, and that came down, so multiple tail winds for the space. Obviously, he brought up the fact we didnt have to go through weather concerns and that thing, but i think when you look at the various names, a great example, target one of the names that part of the benefit today was the upgrade. That did not hurt. Look at a name like that, trading at a multiple of 15. Look against what everybody compares them with of walmart, for instance, that trade did a multiple of 27 on the pe its inexpensive despite the fact tart had a great run from november to the levels where it is now, and then you start to add in, as steve mentioned, tax reform some of the tail winds out there and Growth Prospects of not just that, but individual names, retailer types out there, like the nikes of the world as well where there is a tail wind there is some strength, and when you look at the International Growth of some of the names in the shoe world, like the nike, its absolutely incredible yeah. I would just add, if you look at the maam macro numbers from this morning, its one of the things you can bank on that being a transitory thing, right . People get refreshed with tax cuts in terms of their pocket and things that are keeping investors up at night, its inflation, which is probably looking like its helping the guys because of ho higher thats good for the retailer its one of those things selfcorrecting. Anything you worry about, oh, its okay for the Retail Supply off the market, and walmart outcompeted last year, and kohls outcompeting this year home depot not as much the leader just a transition. Target has been whispered around as potential takeout for amazon i started that whisper, i think. I was going to say im not long the name, but on the white board. Yeah. Anyway all the more reason to watch it thank you. Berkshirehathaway issued a warning today. Wel veheatt tt next tomorrow, its a day filled with promise and new beginnings, challenges and opportunities. At ameriprise financial, we cant predict what tomorrow will bring. 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More entertainment, internet, and unlimited plans. More for your thing. Yeah, thats our thing. sighs i hate missing out missing out after hours. Not anymore, Td Ameritrade lets you trade select securities 24 hours a day, five days a week. Thats amazing. Its a pretty big deal. So i can trade all night long . All night long. Is that Lionel Richie . Lets reopen the market. Mr. Richie, would you ring the 24 5 bell . Sure can, jim. Trade 24 5, only with Td Ameritrade. Welcome back, more breaking news, leslie picker, whats happening . During through the filings in Berkshire Hathaway they upped the stake in apple by 32 million shares, it was about billion there. They added in bank of new york melon 6 billion shares for a total of 60. 8 billion shares they are pairing back in ibm by 35 million shares, also, doing some selling in gm by about 10 million shares and selling a bit out of wells fargo, about 6 million shares pulled there, and as we mentioned, of course, they took a new stake in pharmaceutica pharmaceuticals, 18. 9 million of the abrs there, equivalent to 358 million at the end of the year the shares moving higher in the after hours, back over to you. Leslie, thank you mike, what stands out to you i think the apple add is interesting, mostly because, of course, the stock ended higher they bought into strength not waiting to pull back now its considered a core holding. Were not sure which of the Money Managers pull the trigger on the trades, but thats the one for me apple up a quarter of a percent now. The vice chair was speaking to shareholders at the Daily Journal today weighing in on wells fargo and the banks troubled track record. I think wells fargo will be better off for have making those mistakes any bank can make a lot of money by making a bunch of loans at higher Interest Rates or abusing the customers, very aggressive treatments and, of course, they shouldnt do that, and i think as a result of all of the trouble, wells fargos customers will be better off for this event, and i think its time the regulators let up on wells fargo a human stake relative to the size in wells going back to the financial crisis, and so, i mean, it wouldnt be surprising that the regulation is going too far. The twist on it saying, you know, its better, that, in fact, theyve gone through the process, and thats the way you come to terms with it. Its worth noting that, of course, berkshire has been involved in wells for long before they became fixated, and that was the measure that mattered the most, so they wanted the franchise from before, and so this shows maybe theyll get back to the old way of doing things. Maybe although if allowed to today, senator warren sent a letter following up on the reporting about not reaching customers correctly. Shares up 3 on the day. Also discussing the current market environment and what returns investors should be expecting. Take a listen. When berkshire came out, we had an easier world than you people are facing at this point forward, and i dont think youre going to get the kind of results weve got by just doing what we did. Thats not to say that what we did and the attitude that we had wont are obsolete or wont be useful, but prospects are worse. Said it before, mike, Investment Management business is harder now than it was then size keeps it harder to do well. For them. For them. Just markets in general are so much more firkefficient, mov faster, information flow doesnt get clogged up along the way and did not have kind words for the model where they singled out some as somebody who didnt take it for ten years until back to the High Water Mark saying this is how warren did back in the day and back to whether they emulate the strategy now why pay somebody pay invest your money, repeating a criticism. They could take a fee, and, you know, of course, buffet himself said start out with the index fund, and right now, such a tremendous collection of businesses that its a approximaty for the best in the u. S. Economy of the no longer just the best idea that i have an edge in absolutely. Which is what its about today interesting to hear from charlie, and them, of course, that insight into berkshire buying and selling these days. 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Cfa institute. Welcome back a lot of Business News breaking this hour. We have reporters here to bring us up to speed leslie has Berkshire Hathaway as big moves. We start with josh lipton on ciscos results and a big return they have announced. A strong report from cisco across the board it wasnt just a beat on the top and the bottom Gross Margins came in better than expected 65 . Infrastructure platforms the companys bread and butter core networking in relation to switching and routing grew 2 . The boards decision to approve a Stock Buyback Program enabled by a huge cash pile, 67 billion which it has parked i dont have seas which it can now bring back thanks to recent tax reform. Genevieve saying they are going to be buying a lot of shares which is going to drive earnings estimates higher shares up 6 . Cisco has started to be a bigger mover on earnings mike as they are getting traction and the growth that the investors are desperate to hear about. For years it was in the penalty box in terms of valuation. It traded cheap as if it was never going to grow again. November it started trading. Liked the tax reform and people liked the strategy in the business thats all in this report. The buyback is people is the thing the people are latching onto the buyback makes sense. They have cash flow, debt, and its going to help the existing shareholders between this and Applied Materials up on its earnings reports it feels like a good stet setup for the nasdaq which is up nasdaq is a good performer. The Growth Stocks that still have a fwid and have their appeal even though everybody is going go to cyclical trip adviser and marriott trip adviser, kelly, up more than 19 here in extended trade on what was a better than expected fop line number given by its nonhotel portfolio businesses so attractions and restaurants the company says its also signature loontly reducing its online traffic acquisition expenses guidance was impressive. Thats being primarily driven again by its nonhotel portfolio as more users book experiences on its site. Thats been the big challenge for trip adviser marriott reporting a strong report on its top and bottom lines. Nearly 8 rise in quarterly revenue driven by north america. Ritzcarlton continues to to be the stand out for marriott which has approximate 1 brands it continues to prioritize max moxie one of the brands targeting the millennial audience something to watch for in the coming year. We will be on that conference call, which starts tomorrow. Back to you. Shares have turned around to the downside now anything on the wires that might explain that or we will have to wait and see. I think we have to wait for the conference call. We are looking at some of the tax impact on the bottom line. Raps we are expecting a bigger bump there aside from that things look good. Thats true seema, thank you mike, they were never up big, less than 1 . After hours, but more than doubled in 15 months. That may be the better the two names are a big contrast marriott is benefitting from the hollings cycle globally, the lodging cycle looks great for the hotels operators trip adviseror is emphasizing the nonhotel side of the business because the hotel benefit isnt working to their benefit because it is a tight market it is a deeply hated stock, thats why you are getting the big balance. Berkshire hathaway is making big moves. You are referring to the names where he is perairing bac his stake. Thats ibm he is selling shares of ibm. He is selling shares of wells fargo. Pairing back his stake as well in general motors. But he is also putting cash to work increased his take stake in apple and took a new position in teva we will be watching those shares today and tomorrow. Back over to you. Leslie, thank you very much. Teva again being it is a new name in the portfolio, one thats out of favor, very cheap. You are probably going to see that get a fresh look by a lot of people tomorrow meantime, the ibm stake is basically gone now yep he sort of said, my bad. Yeah. And thats being back burnered or eliminated. Im surprised they came out of that basically entirely it wasnt of one of those we are going to ride it out, they are throwing in the towel. The stockasnt ne hdo terribly. That does it for closing bell. Thank yo [ music playing ]