Brian, thank you and welcome to power lunch im Tyler Mathisen big rally. The dow soaring triple digits. It would help the nasdaq avoid the first four day losing streak since november of 2016 now brian talked about the treasuries yields pulling back just a little bit. Lets see where they are right now. The 10 year note at 2. 91 thats down just a bit results of a 29 billion dollar auction just moments away. Could be a market mover. Sometimes they are sometimes not so much. Most stocks are up but these three are down seriously roku plunging, missing profit. 17 , man you dont like any part of that. You dont want any part of that. Missed estimates, guidance wayfair. It says tanning. Wayfairs not tanning, that would be tanking down 20 the company reporting a wider than expected loss and pandora taking a hit Music Streaming Service also posting a wider than expected loss despite the fact that i was listening to it this morning. Thanks. Lets get more on the trading action this hour bob has the latest. Hello, melissa. A pretty broad advance 31. The bias is kind of toward cyclicals again. Looks like the early part of january. Take a look at the big Sectors Energy moving up here today. Chesapeake had good earnings transports are strong. Thats pulling up the transports you can see the cyclicals doing better look at the banks. They turned negative as we see yields down 3 or 4 basis points but thats all it takes for the ten year yields to move the markets. We have seen pockets of weakness out there. Energy stocks have had a terrible month and we still see 52 week lows had earnings and its not helping then down 5 . Some of the consumer names sitting at new lows like kraft hienz and hershey. Look what happened yesterday from 21 on the vix to down to 17 on the concerns there and then rocket back up after the meaning for the fed to 20 again and today we have been drifting lower and again not a lot of news out there just three or four basis points in the yield seems to be moving the markets. People have to get used to that more volatility now and why do you have that . People have been talking about the structural change in investing. We had a stronger economy. We had a larger deficit now. We had the fed withdrawn liquidity and all of this amounts to higher rates and more volatility people have been talking about this for a long time and i just think now were going to have to get used to the fact that small moves in rates have outsize effects in the stock market. Guys, back to you. Thank you very much the fear of rising rates has added to this resur gegent volatility warning about too many rate hikes. The idea that we have to go 100 basis points in 2018, that seems like a lot to me thats kind of price for perfection everything would have to go just right. The economy would have to surprise on the upside a bunch of times during the year im not sure if thats a good way to think about 2018. Four rate hikes he says the big question will rising rates end the bull run with us is the Portfolio Manager and head of equities and brad newman Investment Strategy gentlemen, welcome let me start with you. Who is afraid of the big bad 3 . Is that the Tipping Point . We dont think so we think 3 and 4 is reflective of the stronger economy. And thats all good. Just a couple still talking about the possibility of deflation. This is all reflecting stronger economics and thats good for earnings and thats good for stocks at the end of the day even 4 is not the end of the world for stocks so its just reflecting strength in the economy. Ill grant you that ill grant you that the reason rates are going up are generally positive but are those rising rates consistent with an expanding multiple in other words are people going to be willing to pay a higher price for each dollar of earnings if Interest Rates are moving toward 4 we dont think were going to get multiple expansion the continuation of the market going up is going to be driven by strong Earnings Growth. You saw 13. 5 in 2017. Earnings were pretty much all filled in. Were looking at 26 for 18. The consensus and thats mostly made up of organics. 10 of that is made up of the tax reform 16 organic and another 10 for 19 so its all driven. So ernesto says that rising earnings are going to cover a multitude of sins. I paraphrase there do you share that view i do share that view. If you take a step back and think about why investors fear Interest Rates theres two reasons. The first is that ultimately higher Interest Rates could slow Economic Growth. In our view it would have to be something on the order of maybe 100 basis point increase in rates. Were nowhere near that now. The fed own model suggested it increases in rates and slows by 40 basis points and frankly theres many times the economy is able to power through that. 2013, for instance, rates increase by 100 basis points and what the economy did shrugged it off and sbaccelerated. The second reason people are afraid of higher rates is valuation. You discount back cash flows at a higher rate and youll have a lower net present value but at our view stocks never priced in lower Interest Rates so as the rates go up valuations wont be hurt so we think the market can power through. This environment, you still like Growth Stocks thats what has been working and it will continue to work even as the environment has been changing toward rising rates. We invest in change and change leads us to growth and innovation so change in ecommerce for instance, taking share from brick and Mortar Retail i. T. Shifting into cloud and those kind of things but i will say were investing in bank stocks were overweight relative to our benchmarks for a few reasons. One the highest Interest Rates and two less regulation and three a technological change where we think that people are starting to go to banks more based on mobile apps and Technology Rather than the proximity of the bank branch. You like a bank as well bank of america. Bank of america is one of our top picks right now. Rising Interest Rates is good for them higher Economic Growth is good for them deregulation is good for them. Tax reform is going to shave off 10 off of their effective tax rate and theyre tied to Economic Growth so very, very strong. Everything is great, brad but you have to be worried, youre paid to worry. Whats your biggest fear right now . Well, of course, if Interest Rates go up too dramatically. Define too dramatically well, like i said, i think 100 basis point increase in rates to Something Like 3. 5 in relatively short order that would be a negative. You know and of course were watching, you know, the economy and underlying fundamentals, what we spend most of our time on as long as the secular trends stay in place theyll be okay. Not personal, just professional. Spiders he doesnt like spiders. Not the etfs. What are you talking about here one of the things that im worried about is protectionism were sitting in tax reform, very pro market. All the economic measures so far but the one area where im concerned were not promarket is protectionism and how far theyre going to take this beyond the appeasing of the bas remains to be seen and thats one of the things that keeps me up at night. Thank you for being here. Always good to have you in the studio appreciate it. Thanks. Results of the 7 year bond option are crossing right now. Rick at the cme. I gave it a cminus charlie minus. We had two year that was soso we had a five year yesterday that was soso plus today its soso minus. They were all some what near average. Lets go through the internals shall we 29 billion one billion higher than our last package that included 7 year notes and the yield at the dutch auction 2. 839. The big side was around 283. 5. You had a little tailing going on there it covers 2. 5 times better than actual securities for sale a little below 2. 55. Ten auction average. 62. 2 a little light on indirect the one bright spot, 15. 6 on direct best since september of 17 dealers take 22. 1 of the auction and not including some of course, 92 billion in supply this week out the door and if you look at Interest Rates there hasnt been much of a move in the last half hour back to you. All right ill take it thanks we want to get straight to the news alert on airbnb hey, guys airbnb ceo and cofounder just took the stage here in San Francisco and hes announcing a number of new initiatives that airbnb is rolling out that be l put it in bigger competition with Online TravelCompanies Like booking. Com and expedia hes announcing a set of tools that will make it easier for hotels to list rooms on the site and a Loyalty Program that it will be launching later this year now airbnb has let certain, mostly boutique hotels, list on the site for years but now its making it easier for guests to find them by introducing their own categories its also including a new tier of listings for the website including airbnb plus. This is a brand of accommodations that will be checked for quality before guests arrive. Also beyond airbnb this is launching later this spring but theres luxury rentals its been much speculated that they would be making a bigger push into this space do not expect to find a marriott or hilton or hyatt hotel room on the site any time soon because Company Policy explicitly says that large Corporate Hotel chains are not the right fit for airbnb but at the same time, airbnb is taking a major page from the hotel playbook by introducing tiers and categories all right thank you very much. Deidra bosa for us airbnb cofounder will be coming up on the closing bell at 4 15 today. Tale of two retailers, walmart taking aim at wayfair and ikea rolling out its plan to sell more Furniture Online and toys r us closing more and more stores lets check movers in this rally. Chesapeake energy, scana and an services leaving the s p 500. Power back in 2. Walmart making changes to try to invigorate its online sales that disappointed investors in a big way earlier this week. The fix, apparently is fixing the website. Courtney reagan is here with details for big online changes. Theres still a lot to come but were at least getting a glimpse here this is the first look at the plan to overhaul the website it can guide consumers to shop by using one of nine decor styles style and design tips on here too. So shoppers are getting more comfortable ordering a couch without sitting on it or a book shelf they havent seen in person this is something walmart wants to capitalize on its not revealing what portion of the total or ecommerce sale comes from home decor. But it has been successful when it comes to grabbing sales wa wayfair is plunging on earnings. Half of wiliam sinoma online so theres a lot of competition in this space. Another big chain in the news toys r us. Whats happening this is an interesting one. Theyre operating in bankruptcy right now so theyre going through a restructuring. Not for the first time. Thats true and toys r us isnt confirming reports from cnbc but a source familiar with the situation says that 200 store closures is at least one possible consideration at this point. So its working to restructure through this chapter 11. The law only allows a certain amount of time to submit the final plan and it has a lot of figuring out to do and its running operations with the help of more than 3 billion in a debtor and possession loans. It was disappointing so financial conditions we know were main strained the retailer hasnt revealed exact detail of the holiday though they have told us 180 stores were set to close so these reports that 200 more store closures could be coming and if theres still stores hurting rather than helping it makes sense that they would close them. Could this company go the way of Sports Authority or radio shack . Sure. It is really possible and this something that we need to watch in particular with hasbro and mattel when you have ecommerce and you can go direct to consumer that makes the retail offering a little bit harder, right this is an old story but they got this intermediated by walmart and target and amazon and exactly if you have the same one thats something that youre going to have to fight and thats changed the game here. When you were a kid going to toys r us was a big deal. We all say that but then we all turn around around ordnd orr toys online. Youre not supporting it enough to keep it open. This is a generation that will not have even gone to a bookstore. They dont know these tangible things. Its digital. Right or go outside and play. Or talk to other people. Overrated. My son got in a rental car and it had a window with a crank and he said whats this. He had never seen a window that was not electric just say son, you know what a crank is. Thats me. He got it. So how could these toys r us closures impact the big toy makers toys r us accounts for 15 to 20 of sales, 11 globally represents 14 in the u. S. And canada alone great to have you with us you have done the calculations what are the impacts to sales at each of these companies. Based on the 2016 numbers that you just cited we estimate about. 6 and then. 7 to sales per 100 Stores Closed by toys r us i would say that 2017 was probably lighter in terms of the toys r us contribution given their not so Great Holiday so it could be less than that and i do think that both of these plan very conservatively since the bankruptcy announcement i do think that the initial 170 or 180 stores they plan on closing, they did put most of that into the 4th quarter. Is there a chance they could sell these direct to consumers yes. Its about 20 of their total sales. However, they do have some sales through their website. They can sell more of that online because they dont want to compete with their retailers on price. Toys r uss product are doing fairly well i assume so who is selling the product then in terms of not toys r us. Toys r us are struggling but the biggest supplier is doing well. U. S. Toy sales were up 1 globally last year so theres so many more distribution points for toys versus what we have seen historically hasbro is in 150,000 stores globally and that doesnt include vendors such as amazon so now toys in drugstores and toys in best buy toys in multiple channels that we havent seen before beyond the walmart and targets of the world. So its unfair to say that toys r us is being killed by amazon, they have been being killed for years by everybody. Yes walmart is very competitive on price and thats hurt them theyre buying stuff online. Will they be around in five years . Well see what happens. Its probably going to hurt more of the smaller players out there. Probably only toys r us or a few select retailers as a Distribution Channel the bigger guys have so many different options nowadays to distribute their toys. Eventually in the long run if the industry does it probably helps them. All right susan, thank you major leadership changes and departure of a key executive of inappropriate behavior more detail ahead. And suzy welch is here she has an interview with tim tebow about his leadership lessons. And the bulls are still in charge we are off the highs but the nasdaq still doing well. Tesla up nearly 3 were back after this. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Anand made it liberating. De with a clear advantage. We took safe, and made it daring. We took intelligent, and made it utterly irresistible. 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And were talking about the news that broke yesterday afternoon where he announced he was leaving the company. He is leaving ford immediately due to the inappropriate behavior it then raises the question whats going on with the leadership at ford now when you take a look at the leadership some are weighing in including the analyst brian leavy. He is out with a note saying that he is cutting his rating of ford to hold writing while we believe the company has a deep enough management bench to replace mr. Nair with little disruption the new leader will face challenges. Ford ceo, he is in the mix and he became ceo in the middle of last year hes trying to reposition this company for the future while at the same time trying to appease shareholders look at your Current Business where youre building and selling vehicles like the f150 like the suvs. You have to raise your Profit Margins in north america thats why leadership is so crucial for ford at a time when the company is trying to essentially fix whats going on right now it does not need to see more that is clearly when wall street and investors say we think mary bara and her team have a vision in the future and we dont see that before. At least not to the disease that we see it with Gener