Missing Malaysian Air flight. There are now more calls to install new technology so that passenger planes will always be in communication with an airport as we were discussing here yesterday. Absolutely. But get this, joining us today is a former pilot who has flown that same route between c cue kuala lumpur and beijing. An exclusive interview with john watson. His company just announcing it will be cutting production three years from now. Why . And whats changed . Well get answers to that. His view on oil prices and a lot more coming up with the ceo again just after the close. And two doctors with very different views will be joining us. One who says hydrowill start killing people the moment it is released. Its a highly controversial drug thats received fda approval. There are plenty of people who say it should not have. Remember the sgr thats a pretty powerful statement. First to markets where the dow off 80 points as we speak. Nasdaq off about 3 4 of 1 . Down 32 points. And the s p off 11 points, 1,865 is the level there. All right. Joining us in todays closing bell exexchange, kathy jones, kenny pulkari, peter anderson, joe durand, and theres Rick Santelli in chicago. Welcome, everybody. Kelly, this market is starting to lose momentum here. Whats going on . Not surprising at all. Actually, why hasnt it done this the last couple weeks . I think its finally catching up with itself. It feels a little tired. Certainly the news out of china is not helping. I think people are just investors and traders really are being a little more cautious today and saying, weve tried two or three times to get through the high, weve been unsuccessful, lets take a little off the table and watch it, see where it comes back to. I think it goes to 1860 before if finds another resting point to see what traders then assess at that point. Joe, what do you think . And how much is this a factor of whats coming out of china . You look at whats happening in copper, if you look at iron ore, the way some of the miners are behaviin behaving, the fact theres talk of how healthy or unhealthy chinas Credit System is. Why does that seem to be the catalyst for this action . I dont think today that this one thing is whats causing it. I think what were seeing thats a little different is weve had this very nice rebound, and now were resting and deciding are we going to go down and retest the low we just set four weeks ago or are we going to go to new ground . We always look for reasons and often what i see is an economy thats still struggling to decide if its going to catch its legs or not. The bond market is telling us perhaps it isnt. By the way, Rick Santelli, youll be happy to know this, twitter was down for a little while. Its back up. Rick santelli is amazing. He has a gazillion followers on twitter and to my knowledge you still havent tweeted once, have you . No, no. Im waiting for that definitive moment of ultra information. We will know something is important when Rick Santelli has tweeted. You know, bill, i have nothing against tweeting. I have nothing against social media. I think its a great dynamic, a disruptive dynamic thats a lot of good within our economy. Just not my cup of tea. But ill tell what you is my cup of tea, watching these tenyear note yields. Granted, the range is very compressed but were coming down and were about to ready to slip under yesterdays low yield which is about 2. 76 1 2 for you fine tuners out there. We were talking about china. I like when you brought up copper and iron ore. Not only are there dynamics with the weakening of the yuan and i have charts that show yuan versus dollar overlayed with copper prices, but when you start thinking back five years with all the rare earth and Industrial Metals that china was amessing and then even back then we started to see it might be a bad idea, so they found an alternative use for those stock piles to use them as collateral for loans. Exactly. What i think it does is its giving us a glimpse. If some of these structured financing deals are starting to put pressure thats showing up in other areas, we need to Pay Attention to that canary in the coal mine, so to speak. Today there was some talk, there was another bond default in china. I cannot confirm it. The point of that is that this is how closely things are being watched, and if you want to know what the catalyst for the next wave of selling will be, i cant imagine it isnt going to be something out of china. You know, squarely in your wheelhouse. Are you surprised were seeing yields move lower. At a time when were seeing soft commodities with pops lately . Im not surprised simply because the news out of emerging markets, particularly china, as rick mentioned, has been pretty soft, and you have also sort of outright almost deflation in some of the southern European Countries which has sort of dropped off the radar screen since the whole Ukraine Business started, but were seeing a lot of softness in global trade. Were seeing a lot of softness coming out of china which affects Everything Else, the weakness in commodity prices, and, you know, a little bit of lift to the economy maybe Going Forward, but were really holding a range in terms of the bond market right now. Weve been 2. 60 to 3. 00 in the last nine or ten months. Were right in the middle of that waiting to see what happens next. It doesnt surprise me were drifting lower. Peter anderson, kenny is not the only skeptical trader about this market. There are a lot of them who feel we are really we need some sort of a pullback in this market right now and its not happening, but you still feel theres good value to be found in this market, yes . You know, call me an optimist. I mean, i have been that in the past, and let me just i know, bill and kelly, you love details. Let me just sober us all up with this fact. I run a portfolio of 24 stocks, okay . And out of those 24 stocks, 23 of them are what i would call fairly or lowly valued. In other words, that there is considerable upside in that portfolio. They all have a pe thats pretty reasonable when you look at their Earnings Growth rates. So thats one of the reasons why im optimistic here. You know, we can talk about Interest Rates decreasing a bit based on china, et cetera, and i think thats kind of just temporary noise. If you look at the fundamentals of some of these companies, as i have said in the past, they still look very, very appealing. Can you give us a couple examples. Im curious if youre specifically looking for those names that are trading cheap or whether you mean that some of the blue chip names of this market are giving us that message. In other words, you want more details. Just a little bit. Okay. Thats fine. I love that, kelly. Sure. Some media names that i own, for instance lionsgate, Madison Square garden, and 20th century fox. These three stocks have not enjoyed the rally up to this yeartodate returns. However, when you look at what analysts are projecting for their growth rate, theyre really, really astonishingly cheap when you look on say a peg basis, you know, the price to earnings divided by the Earnings Growth rate. Its names like that. Id also say this, fundamentally just think of it intuitively, kelly. When youre looking at stocks like that, those are media stocks, i think that all of us, including all of us on this program right now, will realize were not going to skimp on getting information, and when you have that thesis, stocks like this are just a natural buy. Kenny, are you ignoring fundamentals . Well, listen, technically i just think the market is overdone. Im not necessarily saying long term im not an optimist and a bull. I absolutely wham. I think you have to be in the markets. Were talking about whats going to happen in the next five or ten trading days and i think well see that pullback. I think peter is right, but i think as youre talking about from a trading perspective, nobody should be surprised to see the market come in and test lower and find that support level. Rick, i dont want to pull a fast one on you, but i am curious if youve seen a little bit about whats coming out of washington with regard to getting rid of fannie and freddie potentially. Those names are getting hammered. I wonder right move . Is this potentially a reason why the markets more broadly may be seeing weakness. There are plenty of guys like dick bove willing to say this will be the end of the 30year mortgage in america. Its about time. If the u. S. Government wants to take over industry after industry, if the fed wants to take over the marketplace, you know, everything from health care to Interest Rates to financing our houses, thats fine, but it was never the intent, its a lazy factor. It was putting put in conservatorship in 2008 and years later they havent dealt with it. Theyre going to combat Mother Nature for global warnings and theyve left these groups in conservatorship. They cant finish their homework. Canada is doing just fine without governmentsponsored enterprises. If it has to be the end of the 30year mortgage, so be it, but id like to be a privatization back of the mortgage arena. I thought you were getting revved up. I thought we were going to have another Political Party born here. Joe, durwould you buy anything here . I think you have to be cautious. Europe is an interesting example. I think what youre seeing is a lot of speculation, whether its record levels of margin that people are putting on and growth in margin, going into names that are highly speculative. Everyone concentrated on high growth, high momentum stocks. Thats not an early cycle thing for us. I think we are in a multiyear recovery that is slower than everyone would like, and were going to get moves from growth to value back to growth, and i think were probably going to be shifting toward more valuebased names that have not participated as much as your earlier commentator suggested. I think europe is very interesting. Theyre about 9 to 18 months behind where we are. So easier money and safer money to be making right now. But theres a lot of speculation and i think that were due for a 10 to 15 correction. Probably on the way back again, but definitely more volatile environment. Well, as the dow is off 90 points this hour. Thank you all so much for the perspective there. So many different stories. We look forward to that first tweet, Rick Santelli. I will say when twitter was down, kelly and i were very frustrated because there was no place to go to express our feelings about twitter being down. I tried to get you on instagram. Just tap somebody on the shoulder. There are still or gganisms wit 98. 6 degree temperatures. Hes a phenomenon on twitter. Thank you all, folks. Heading towards the close and we are setting lows for the day. The dow down almost 90 points at this hour. And the financials in particular under pressure. Also, energy prices, theyve been outperforming stocks so far this year. Who better to get the outlook now for oil and natural gas from than chevron chairman and ceo john watson. Hes now saying chevron will be cutting back production. Why is that . You dont want to miss this exclusive interview after the bell. Also, a new incredibly powerful painkiller is hitting the market with fda approval despite its own panel voting against it. Almost unprecedented. Now some lawmakers in washington and some doctors are already calling for a reversal of that fda decision. We will hear from both sides of this huge controversy and find out why a drug that is ten times more powerful than vicodin is needed right now. Later, new jersey, get this, taking aim directly at tesla. Banning direct auto sales. What that could mean for teslas future coming up on the closing bell. Youre watching cnbc, first in business worldwide. Ldwide. Iwe dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. 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Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Welcome back. For the s p 500 in particular, we had some early gains this morning, but they have quickly faded away. The dow is off 82, bill. Courtney reagan, whats driving the action right now . We have a lot of movers today. Lets begin with plug power plummeting after sigh trcitron h says the stock is worth 50 cents a share. Shares at 6. 45. Ballard Power Systems fuel cell energy and Uqm Technologies also falling in sympathy. Good day for jcpenney. Citi upgraded the retailer to buy from neutral saying the company can continue to deliver samestore sales that are positive as it updates its merchandise mix. Getting a price target up, too. Joseph a. Banks and mens wear house rising. We end with mcdonalds. Making positive comments at the bank of america consumer and retail conference. Bill, back to you. Court, thank you very much. If you have been to the Grocery Store lately, you have probably been hit with sticker shock. Whats causing this food Price Inflation . Its happening globally. How long will it last . Sara eisen is here. You have this Unlikely Group of factors thats driving up prices of commodities. A new report from the United Nations shows food prices jumped last month by the most in more than a year and a half after a pretty long steady decline. Look at some of the gains here according to this u. N. Food commodity price index. Cereal prices up over 3 . This is at global level. Thats january through february of this year. Vegetable oil, nearly 5 . Dairy up 3 . Sugar up 6. 2 . Meat was down but those prices have been rising. Youve got abnormal weather, not just in the United States, also in brazil and other places where these commodities come from. You have supply issues. You have shortages. The question though is when does it all show up in the grocery aisle . Youre already starting to feel higher costs. Talked to a bunch of analysts and its six to nine months, thats the normal lag time between the commodity price increase and when, say, the Commodity Company or the Food Companies have to raise prices except for hamburgers and dairy. They cant hedge their costs as well so those show up six weeks later. Thats why mcdonalds cut its patties, two patty to one on the dollar menu according to david parker ofr bc and why kraft food prince may raise prices because they have a lot of dairy and meat in there as well. We have heard from yogurt makers, theyre concerned with dairy prices. Whats also interesting is geopolitically, if we have food prices popping in the next six to nine months, what does that mean for the next round of discontent, for example. You can never predict which country its coming from, but theres so much instability that we dont even talk about now and weve been in a winter period where food prices were on the wane. Always a concern when you have rising food prices, especially in developing countries. Weve seen that before. This is the beginning. We dont want to overplay this. It has to be a sustained rise, but it is a reversal of the trend and thats why people are paying attention and its not being driven by, say, higher demand. Thats why its a little worrisome. Very much a supply issue. Especially for people wondering if this is going to be sustained or not, el nino is on the way and shuuger in particul popped last time. It means maybe it isnt going to be you mentioned cocoa prices, coffee prices. Coffee is another one where you start to see it. Starbucks saying it has its costs hedged for the next year. When you look at overall inflation numbers, the ones the Federal Reserve is watching, they dont tell this whole story. Thats why people say they need to go out there and shop. Kenny, the trader who you were just talking to, going nuts about higher grocery prices. Because that man does more home cooking than anybody. Exactly. You have to see his blog. He has great recipes. Pasta and sauce recipe approximates. Thanks, sara. Speaking of el nino, you know its going to snow here in a couple days. So much for el nino for right now. I know. Global weirding. When have we never complained about the price of bread or any commodity . In history. The trouble is its kind of like people the other day saying no one has ever called the market too cheap. No one ever called bread too cheap but that doesnt mean when the price goes up it doesnt cause real pain. It is causing pain here and there. And pain for the bulls today. 40 minutes left with the dow down 81 points, just off the lows right now. The s p would need to be up about a point to get a new alltime high. Not happening right now. Down 11 points. A new and very powerful painkiller just went on sale over the weekend. Some doctors saying it will do a lot more harm than good, and one stock is soaring because of all this. If our next guest has his way, this new painkiller will be taken out of circulation. The stock behind the drug next. And if you want to buy a tesla and you live in new jersey, youre out of luck. Get this, the state just a few hours ago bann