Mohammed eleran. This economy has a 50 50 chance and well likely to have another financial disruption in this market. Looking forward to that. Bill clinton and Lloyd Blankfein, a dark alley where someone gets their throat slit and one paragraph in Tim Geithners new book in the financial crisis. Our Andrew Ross Sorkin spoke with the former treasury secretary. More on what bill clinton told tim geithner when the world was on the precipice back then. Andrew will join us next hour to talk about that, so were looking forward to that. Where we stand an hour to go into the close, a little bit of Different Directions here. Depends what happens with the s p the dow is up about 12 points and the nasdaq is also higher today, and notably we should add that its been leading the market downward the last couple of sessions and s p 500 sitting on the flat line at 1875. Lets talk about it with our closing bell exchange, quincy cross by and ken mahoney and eric from russell investments, ron mullencamp and our own rick santelli. Quincy, our bob pisani has this adage its really significant when the stock markets following the bond market so closely and stock markets have been like a laser beam on the tenyear yield, and youre sort of dismayed that it does hover around 260. You think it should be higher, right . The tenyear is the embody meant, you know, of better Economic Data, worse Economic Data and geopolitical concerns and also what the fed is doing and how much treasuries are being auctioned off. The other thing is were seeing that foreigners are picked up buying in the tenyear which is pushing the yield down. That said we think if the Economic Data continue to pick up, we will see a more cyclical tone in this market. Almost regardless if the tenyear cant start pushing itself up. You know, we talk a lot about valuation here, whether its parts of the market, the market overall and it looking frothy. Eric, jeff dunlop is out there saying Corporate Bonds are the most expensive hes seem them in his career. Would you agree with that, and if so what choice does that leave for investors . Well, they are not cheap, so if youre going to own Corporate Bonds youll own them because you have a running yield advantage obviously over treasuries and we think that thats actually a fairly safe thing to count on in terms of incremental turn. Youre later in the credit cycle at this point. We hi it has a lot more room to run and what were expecting is a flat spread environment. You think sorry, just want to stop you there because thats a fascinating point. Even though were already seeing these incredibly high prices in that space, to some extent in the stock market, you think were not even anywhere close to the end, in other words, that they will get more and more expensive here . No. I dont think they are. I think they will kind of remain on a relative pricing meaning the spread will stay pretty stable. Were a long way in our minds from a recession and really major moves in the spread. Youll need some kind of Major Economic slowdown or major recession to get them to blow out or even increase meaningfully. We just dont think thats likely. Clip the lead. Ron, we know youre a great value investor. Youre always looking for value, and you are here to pound the table, not on stocks but on natural gas, right . Well, yeah. We see no value in ponds. You can find some value in stocks. When we broaden our horizon a little bit, natural gas is still the nobrainer. Gas is selling for about half the price of crude oil so anybody who can shift from burning crude or gasoline or diesel or anything based on crude to natural gas. We think thats a good play. Probably for half a decade or more do you buy stocks that play in the natural gas field . We own a little bit of the drillers and own some of the people who do the service, including the fraccers. Were looking for people who do the distribution, primarily clean energy there, people who make engines for trucking. Trucking looks to be like the next teed up and rails, and were trying to have a leg in this in every piece of this place. Weve seen a spoik. That was back in march. See it on the screen there as well and when the weather and climate was so cold around the country. Where do you think the natural gas price is headed longer term in order to justify people getting in at these levels . We think gas will be 4 plus or minus a buck. Thats between 3 and 5 for a decade or more. Youre saying thats a reason to be long. Already at 4. 5 right here. Can people afford to capture whats going to be the upper end that have spread . Im not betting on the price of gas moving up. Im betting on the price of gas moved and all the people that can benefit from using more volume of gas. Were betting the volume of gas gets used because the price remains in this area, so im not betting. Were not buying natural gas futures, for instance. Buying all the people who would benefit from the switch from crude to gas. Ken mahoney, you still like stocks. What do you buy . This is like the and going ad going and has to be frustrating the bears. Look at the headlines that they have to work w. Every day its russia, chinas slowdown and the fed tapering, and yet the bears really cant get the claws into this market. Its good for the investors not to be focused on headlines here anywhere. Thats how they look at their Investment Strategy and the direction of the market when they are looking at the headlines. The last couple of years, headlines were peres pretty ugly for syria. The government shut down and the credit bob call that we had. For investors look at all the noise. Kind of lock ahead and say earnings would be good and Interest Rates are pretty low and while the seas are kind of cheap theres an upper bias in to market. Look across the dashboard, the dollar index is moving higher to the tune of half a point. Is that about a dollar rise . Everything is counterintuitive, moving in countertrend measures. Steepening of the yield curve, dollar index doing better the last couple of days. Look at the longterm charts and oneyear charts of 10s, 30s, im sorry. They just dont look like yields will be going a lot higher. They look like flat to lower. Dollar index, the last chart for one year. Its still bumping along. Still very close to minus for the year based on where it closed. The dislocations in the marketplace i think make some of these moves very difficult to predict, more difficult to explain, but ill keep it simple. I think when you look at the ecb they have really painted themselves in a box, and theres a lot of knowledge to draw from it . Why would they want to go to negative Interest Rates . Does that portray the type of healthy economy that most analysts have been harking in europe, and if its about disinflation or deflation, im sorry, im not buying it. I think that is crazy. Its not using natural gas, and i think when the politics change, that guest is going to be the fifth head on mt. Rush machine. No amount of flat earth politicians is going to dissuade the public for what makes economic sense and jobs. Look at some of the Chemical Companies and some of the users of natural gas are worried we export a bunch of it and the price rises. This is the dumbest argument as well. If we wouldnt have started exporting food two generations ago we would never have seen the type of productivity weve seen in agriculture. Exporting energy will just build. It will build all the technology, and it will build the industry to be better for everybody. Go ahead. Im trying to picture what a head of natural gas on mt. Rushmore would look like and im coming up with nog nothing too pleasant. Quincy crosby, dont you want lower yields for the 10 and the 30 because if they were to rise, that provides competition for stocks. I mean, you want a lower yield in the bond market so you can be more attracted to stocks, dont you . Well, you do to a certain extent, but what you dont want is the tenyear yield telling you that the economy is never going to pick up. Thats not what you want, and as long as the market is focused on that it is what it is. We deal with the cards were dealt. Moointd mind you the one thing we do not want is the tenyear yield to move up dramatically or markedly suggesting that the fed is behind the curve. That would be the worst thing for both markets, and were not there yet, but if the data continue to improve and we dont get a sense from the fed that they are going to talk about rates rising or talk about maybe speeding up qe, the market is going to begin to wonder what on earth are they doing . Eric, got to go. Real quick, the russell 2000 is points away from being in a correction opportunity. Is that an opportunity or a warning sign . I think its an intramarket correction. Expensive stocks are coming back to earth. We dont think its a fundamental correction in the russell 2000. We hi it will continue to move up as other areas continue to consolidate. Happy friday. Happy mothers day. Oh, yes. Happy mothers day to all mothers as well. 50 minutes left in the trading session here. Can we do it . The dow tantalizingly close to alltime high territory. Wouldnt it be nice to do that for mom, finish at an alltime high close. 8 points away. Can do it for dad next month. Just mentioned the russell 2000 as well. That index of smallcap stocks is creeping closer. Heres a look to the 10 correction territory. 1091 would be the level to watch, at 1104. How worried is wall street . Mohammed eleran speaks to us exclusively next. Apple in talks to buy dr. Dres beats electronics for as much as 4. 2 billion, but why now, and will this deal give apple the cool factor it needs to keep its mojo going . Were going to toss that around with some top apple pros coming up. And happy mothers day to my mother, to all you moms watching. There is new evidence moms may be the majority of ceos in the near future. Why . We have a special report coming up. [ female announcer ] theres a gap out there. Thats keeping you from the healthcare you deserve. But if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. 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The dow need a 29point gain or thereabouts to hit an alltime closing high. Getting there. Up 17 point right now. The nasdaq positive. When was the last time the nasdaq was positive . Been a while. And even the russell 2000 which has been beaten down, adding. 06 today, but its still within striking distance. Its typically a leading indicator for stocks. Dominic has the details for us. Reporter the russell smallcap 2000 was flirt iing i regard territory. Look at things like rocket fuel, down about 16 over the past couple of loss, posted a loss in the First Quarter on weaker than expected revenues. Gogo, inflight wifi and facing wireless challenges from the likes of at t. Isis pharmaceuticals losing half of its value. It reported a wider firstquarter loss than analysts were expecting. All in all, a tough two months for smallcap stocks, and luke you said, a lot of traders lock at this as a leading indicator for the overall market and the question is whether or not this is a dip, kelly, bill, thats to be bought or a sign of things to come. Back over to you guys. Thank you for now. More insight on this possible correction in the small caps and what it means for the rest of the market. Joining us, mohammed eleran. Welcome back. The small caps and the russell 2000 down roughly 10 from its recent high. Whats the message of the market for you right now. Two messages from the downturn 10 . One is valuations matter, especially for the high beta stocks, and the second is when you come to the mature phase of fed support, which is where we are now, we get into the mature phase of support for the market, it really impacts different segment of the market in different ways, so more generally i think, bill, the key issue is this market is now settling into the great moderation 2. 0. This perception that were on a range bound economy and predictable policies, and thats, of course, quite a few rotations within the market. Mohammed, does that also mean like the last socalled great moderation, inestbly leading to a credit boom and collapse . So i worry about that, in the sense that its encouraging massive carry trades. The minute you tell someone theres great moderation, then the temptation to lever any risk element is huge, so were seeing a major compression in the equity risk premium, in the credit risk premium and the default risk premium. Liquidity and volatility. I worry that people may be getting too comfortable with this notion, especially that the fed is going into a more uncertain public environment. Moemt mohammed, for those not familiar with the term, a term of the more popular trades today. For example, greece being able to issue below 5 . Italy and spain having record low yields well below 3 . All that reflects a mentality that you should go wherever there is yield and get it now, because you see a yield play pays you every day. So if youre out of it and the world is stable, you actually bleed income, and thats something that investors dont want to do today. We heard from both janet yellen of the fed and mario draghi of the ecb this week. Are they saying basically the same thing . Are they in lockstep in trying to revive their respective economies with moderate infligs, and how do you think they are doing . Yeah. Mr. Draghi and ms. Yellen said three things that the market love, first, that they are very committed to supporting the economy and avoiding deflation, second, that they will do whatever they can to achieve the outcome, and, third, that they see the risk to the downside, so that gave a lot of encouragement to the markets, but but look also what yellen and jeremy stein said. They both warned us that policy is evolving and that were entering a less deterministic and less precise support phase. So evolving being euphemism for were making this up as we go alonging correct . Were exiting qe, bill, exiting qe, and weve got to rely more on forward policy guidance, and forward policy guidance is a different type of instrument, and i dont think the market quite realize that had. Mold, i want to lean heavily on a reuters piece talking about some of the problems your former player is saying. Back in 2002 it was you personally who made a daring and highly profitable debt that paid off and brazil is now one of the most illtimed wages pimco has made over the last couple of years, making it one of the real underperformers in emerging markets especially. Can you comment on whether the emerging market bets were an attempt to slow some of the outflows were seeing from pimco at the time and generally whether you approved of them . So, i cant speak to the specific trades. Let me tell you a result story. Its very important to emerging market investors. In an active class like emerging markets, people tend to get way too excited on the upside and way too depressed on the way down, and that is because its a technically robust after club. So that with this story its been a pretty good story until about two years ago. Two years ago the government did not make the transition to the next set of structural reforms, and the market it took a lot of the market to realize it. Now the market has realized that if anything it has corrected exocetively relative to where it is today. If pimco lost 200 million on some of these trades, as the article suggests, did you approve of those trades or did you put it back on that strategy . I dont speak to what happened within pimco, kelly. I dont speak to what its like to invest in emerging markets, and its a fairly volatile after thought. How could we not ask mohammed, do you like u. S. Stocks right here . What do you like, anything . So i generally think that this is a good time to take some bets off the table. I think the geopolitical situation in ukraine is much more serious than what the market realizes, that its difficult to control things on the ground. I also think weve come a long way for an economy thats so sluggish, so you want it doesnt mean you exit markets completely. Get some dry powder because we have volatility ahead of us. Thanks for sure. Mohammed, always good to see you. Thank you. We have some breaking news, speaking of california, on the Los Angeles Clippers. Dom, whats the lateest . Guys, whats happening here is the nba has named former citigroup chairman and former time warner chairman and ceo dick parsons tonight interim ceo of the Los Angeles Clippers. Thats effective immediately. Parsons is currently serving as a Senior Adviser at Providence Equity partners and, of course, in a former life, also an economic adviser to president barack obama. Adam silver, the commissioner of the nba, says i believe the hiring of dick parson will bring extraordinary leadership and immediate stability to the clippers organization. Parsons saying in the release, like most americans ive been deeply troubled by the pain the clippers team, fans and partners have endured. Im a lifelong fan of the north korea and am firmly committed to the values and principles its defending. Im honored to be asked to work with them and help open a new inspiring era for the team. Remember parsons, former president barack obama economic adviser, he will be the interim ceo of the Los Angeles Clippers so at least bring in some semblance of stability to an otherwise turbulent at left situation. Kelly, bill, back over to you guys. Wow, just a remarkable story that continuesing to be remarkable. Thank you, dom. Dick parsons to the l. A. Clippers. You need somebody with a strong hand, and hes got it, thats for sure. 40 minutes to go now into the close, and the dow is up about nine point. H