Well have them first with the best analysis you can find. That all starts after the bell. Then after that in exactly two hours, president obamas exclusive interview with our Steve Leisman will air in its entirety right here on cnbc. Steve will join us on the show beforehand to tell us some of the highlights. We do know the president wants to talk about tax inversions, letting it be known he will support legislation to stop companies reincorporated overseas to escape the 25 tax rate here in the u. S. Well have much more as the president and Steve Leisman get into it over the economy. Melissa lee and i will anchor a 5 00 special on that coming up. It is a bill sandwich tonight. Lucky you. Also it would be big ceo interviews just ahead. Dunkin brands disappointed today. Jetblues dave barger will be here. Youll hear from both of these ceos on todays closing bell. An hour to go and the do you jones industrial average down again today to the tune of about 21 points. Yesterday it was the lone major index to sit out of the rally that took the s p to new highs. But today giving up some of those gaines, the broad market index is off by about a point, the nasdaq off about four. Were waiting for xee noen componenxoe components of that index to report. Heather hughes, jim lowell, larry glazer, drew nordlick from highpower and drew, it says you are building cash. Why. And two, where are you selling the billed cash . Were maintaining diversified approach across portfolio accounts keeping allocations to equities to fixed income to cash an alternative as new cash has come if from cash and earning investments we are keeping it on the sidelines. Our concern is real lit lack of volatility in the marketplace. Weve gone 1,022 days without a 10 correction. Thats the third longest in 25 years. A lot of that is really geared towards the fact that the fed seems to have outlawed volatility. Investors are continuing to pile money into equities with the assumption that the fefb deral reserve is there, it is going to be there but we have three more months, then at that point the fed is out of the way. The last two times the fedex ited kwaquantitative easing increased volatility. Weve moved from 15 on the p ebay sis from the s p to 17 1 2. We have concerns. Wed use any kind of down draft as moments to add to equities. Youre building cash to wait for that down draft perhaps. Larry glazer, what buttize . Is it right to attribute so much of this to the fed to the markets resilience, i mean, when you have geopolitical events this concerning taking place around the world . No question. This has been a relatively unremarkable Earnings Period amidst an expensive and extended market. With that said it is still exciting and creates opportunities for investors if you are looking hard enough. We see those opportunities are really three fold. One is in the traditional obvious place where you see an intersection of growth and momentum. Something like Large Cap Technology which still looks cheap relative to history. Not super cheap but cheap enough you can put money into a cash rich company. In turnaround plays, consume discretionary revenues like ther like theyre improving. The worst may be behind us. Finally, the down and dirty. If are you truly a contrarian here, you see where guidance is weak. Caterpillar terrible guidance going forward. Mining stocks get killed. If you have a strong stomach you can start to look at those. You have to dig and look while everyones at the beach. During this earnings season, the markets have behaved pretty well. No question about it. Dont worry about low volatility or the fed as much as the prior guest. Certainly wouldnt want to be market timing with cash. We see the fed being accommodative and flexible. Thats a good safety net underneath this market, no question. But the fundamentals continue to drive us to the believe that were seeing slow gloet, no no growth. Not just in the u. S. But even a little bit tentatively inside the jur row zone. Of course we are very focused on what consumers are doing with their money and they are buying big ticket items, whether existing homes, whether it is cars. We saw ford deliver its First Quarterly profit from the eurozone in three years. So we see signs that the consumer is not dead and not out. Unless and until we do were going to stay focused on finding managers who know how to cherrypick what is certainly a very lofty market. Heather, do you agree and where are you seeing opportunity right now . I think it is interesting. I heard the consumer discretionaries were hearing, if you believe in the contrarian play, that they may turn around. If you believe in a stronger consumer. But i dont know that the data is indicating that right now given housing that we had this morning was weaker, job Participation Rate still has issues. Slack in the labor force or declining wage growth isnt even keeping up with inflation. Can that help consumers or spending powers through discretionary spending. We need an increase. And wage growth i think for the market to continue higher. Even on the backs of earnings revenue is ticking a little bit high sorry thats reassuring. Were not just cost cutting on the bottom line there. I agree with that point. At the end of the day it is earnings that drive the market, not geopolitical events. The israeli stock market is up since the conflict in gaza began because investors see through that. They say this is where growth is coming from. In a world were so desperate for growth. Investors are smart enough to reward them but theyll also punish people that dont have future guidance. Tell that to the russian stock market. Rick santelli, very good jobless claims number this morning much lower than expected. Is that why the 10year is back above 2. 5 . I think thats part of it. Think there are technical reasons as well. We basically held the low close yield of thee, 2. 44, on may 8th. Based on the 62,000 drop in last months new home sales, were in the 400s now. When it comes to the consumer, depends on which consumers a er are looking at. The middle class, the sccar is e new house. When you look at the markets i see some unusual things we should be aware of. The british pound is losing a bit of ground against the dollar. The whole tightening with mr. Carney seems to be a backtrack. On the china front at their best level against the green back since march. Were seeing widening on the credit stretch. If you look at barclays, whether it is Investment Grade or high yield. But thats under one month. You open the chart out much bigger, you dont see it and we dont want to forget theres been huge amounts of issuance since mr. Draghi said he would do anything and if there is a lot of issuance, maybe investors have a limited menu, broccoli and spinach. But if are you hungry enough you eat broccoli and spinach. Want to go back to drew to something that jim lowell said. It is kind of a dig. You said we wouldnt want to be market timing with client cash here. Im interested what you would say in response because a lot of people are sitting now in conservative positions waiting perhaps for a employment to get in who have been wrong and caught on the wrong side for quite some time. Yes. Were not big fans of plugging your nose and just buying at any time. The reality is that weve seen pe multiples go from 15 to 17 1 2. Earnings moving up at a 5 clip but revenue is only at 3 . We are sitting in a market with a lot of Financial Engineering behind it. The Federal Reserve has kept Interest Rates low so Corporate America can borrow on debt and buyback stocks youre not sitting there kicking yourself that youre missing this party . No. So bill, as i mentioned, we do have an exposure to equities. What were not doing is buying at s p right now alltime highs in july 2014. The reality is so you had a nice rally in 2007 that didnt end exceptionally well. Could you have bought that all the way up. If you didnt sell or didnt pick your points you ended up hurt by it. Volatility is low right now. Earnings are not accelerating at the pace necessary to support a 17. 5 handle on a pe ratio. But is this 2007 . All over again . No. No. Im making the analogy to the fact that you have markets that go pushing too alltime highs which thats the last time we experienced alltime highs. Unrealized profits shouldnt be spent. Thats what hes saying. Were not buying, were not buying the market, were buying sectors inside the market. Our managers are buying stocks inside of those sectors. I think we agree there are selective opportunities to be had. Certainly maintaining a well diversified portfolio makes sense. But i would certainly worry about just parking all new incoming cash. Look at the health care sector. You are getting lower risk, higher return driven by earnings and fundamentals, not by geopolitics whatsoever. That would certainly be an area id look to. The market average doesnt tell the clear story. Janet yellen said certain sectors of the market were telling. Biotech. You do have a bifurcation inside the market. You have those stocks that are performing well and those stocks that are not. What it comes down to is free cash flow. If you have companies that are manufacturing earnings by buybacks or theyre not experiencing revenue growth, those are the companies you want to stay away from. Those are the companies that are going to get hurt as soon as we see increased volatility. Look for companies that have free cash flow. If you dont buy those you are taking an inordinate amount of risk. Im slokd hes adding to the 10. 6 trillion thats around the world sitting in cash. Thats amazing. Wonder what are janet yellen thinks is undervalued right now. Get her opinion on that. Yeah. Thank you all for joining us. The California Public employees Retirement Systems now dealing a major blow to the hedge fund industry. Calpers is considering scaling back Hedge Fund Holdings significantly. This goes to a theme weve been following on the show and what we were just discussing. Kate kelly joins us now with the details on what could be a precedent setting morph. Why the dissatisfaction . Kelly, calprs has been a trail blazer before. Todays news could be very bad for hedge funds. California state Retirement Fund is considering dialing back its Hedge Fund Exposure substantially hoping to sim ply its 300 billion portfolio. Calprs staff are scrutinizing their Hedge Fund Holdings spread out over a couple dozen funds. In recent years it included names like the blue trend fund, among many others. While no final decision has been made, the staff will present their findings to the Investment Committee in the coming months and they may wind up reducing their Hedge Fund Investments starting this fall from what im told and also as the wall street journal reported this morning. The move comes at a paradoxical time in the Hedge Fund Business where assets are at a record high of 2. 8 trillion according to hfr, yet performance has been und und und underwhelming. Over the past three years, hedge funds have returned an average of 3. 6 for Pension Funds tracked by wilshire trust. Beaten roundly by categories like private equity, fixed income and equities. Kate, yet some of these themes still with the hedge fund community. Position remains bearish. Well see if the next six months bear out the way the paf six months have. Again, could be a trend setting move. I sit on two nonprofit boards. A couple years ago both of those boards were looking at hedge fund as a way to reduce the volatility in their portfolio. I happened to be against it. Not that im that smart. But it just seemed like it was too complicated an issue to get into. Now there is no volatility anyway and theyre looking to get out of those hedge funds. Precisely. And are you that smart, bill. Kate, thank you. 45 minutes to go into the close. Speaking of equities, we have some pressure across the board. The dow is off 15, a point off the s p and five off the nasdaq. S p went out yesterday at a new high of 1,987 and change. Another giant wave of after the bell earnings heading our way. We got amazon, starbucks, visa, pandora, among the big names reporting tonight. Well have the numbers to watch and bring you those results the instant they hit the tape. These are likely have a big impact on tomorrows markets. So you cant afford to miss it. Ahead on this program, Dunkin Brands getting dunked after blaming bad weather for weak u. S. Sales today. Dunkin is almost putting its earnings out for the rest of the year. The companys ceo will join us to explain whats going on in a cnbc interview next. Ill be cohosting a cnbc special report at 5 00 eastern along with melissa lee. President obama will be speaking exclusively with our Steve Leisman. A lot to talk about, including his administrations pushing back against tax inversions by major corporations. It is a political hot potato right now. Well get into that starting at 5 00 eastern. Dont touch that remote. Is in a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. E financial noise financial noise financial noise financial noise markets. The s p, any positive close will and new alltime high because we set one yesterday. Nasdaqs down three points. The dow, were down nine points right now and we are about 60 points 62 points away from an alltime high so were keeping an eye on that. Not likely to happen today, kelly evans. In the meantime, dominic is covering some of the big movers today. Start off with shares of mankind corporation, a Biopharmaceutical Company thats taken a hit after cnbc. Coms announced it is believed the stock will trade down 90 in value. Go to cnbc. Com for more on this story. Shares are down 5 or 6 just off their session lows. D. R. Horton has lost 11 of its value a day after reporting a drop in quarterly profits and really missing analysts expectations. Driving down other Home Builders like lennar, pulte and kb home. Dunkin down off session lows. The Company Reported profits that matched wall street estimates but but, sales fell short as the company blamed bad weather for some of its results. Back over to you guys. Investors not buying the weather excuse when it comes to dunkin today. Were wondering if we are. Reaction now in our first on cnbc interview with nigel travis. Got to say, appreciate you coming back but i read a portion of the transcript of your Conference Call with analysts today. You talked about the early spring rain that you attributed to some of the sales disappointment. People dont drink coffee when its raining . Well, bill, this is a business that is based on ritual. If people are disrupted by very high storms or rain, they dont get out their car, they dont stop off at the drivethrough, that disrupts their normal pattern. But i also said on the call the weather wasnt a major part of the reason we missed. Were disappointed we missed. It doesnt hit our normal high standards. But i think what was important about the quarter is, despite the disappointments, we saw some very good news. We grew our transactions and we grew it in an industry that seems to have stagnated. Today npd came out with numbers that showed that in the 12 months to may this year, 61 billion visits were made to restaurants, which is actually lower than prerecession numbers. So we gained share, we gained significant share over the last few years. Our franchisee profitability is still very high. So despite the disappointments, and we have to do better, there are some silver linings. That is going to be the question, nigel, for analysts, for investors following this, how do you do better . How much more difficult is it going to get out there . There are headwinds on both the ice cream side with Baskin Robbins and dunkin as competitors like mcdonalds are offering free coffee lately. Theres cost pressures in dairy and other key components. Theres just, as you said, this shift away from some restaurant visits. So how seriously are you rethinking strategy here . Does this mean you have to get much more aggressive, for example, in rolling out new restaurants across california and the west . Kelly, thats a very complicated question. Ill just pick out some elements of it. We actually feel we have very good plans for the rest of the year. I think two or three things id focus on. Weve got some great new products. Weve got apparently the southwest state burrito thats doing very nicely. Weve got a series of new drinks coming out. You mention ice cream. We had a spectacular quarter on Baskin Robbins. We grew 4. 2 . They had the best quarterly store development numbers since 2006. You talk about competition, you talk about mcdonalds. We beat mcdonalds by a significant range. So we feel actually that weve got the traction as we go into the Third Quarter. We grew every month sequentially more positively. So i think were in good shape as we go into the third and Fourth Quarter and it was really a math reason that we took down our guidance for the year. How important let me ask you. Were running out of time and we got so many things to ask you about. But mobile marketing and customer retention programs. You have Something Like starbucks does. How important is that to keeping a customer coming back to dunkin because they have a card in their pocket or a mobile app that theyve accessed that makes it easier to pay for the product when they get to the store. Bill, thats absolutely essential and i think starbucks and i are probably leading the field. Weve had 8 million downloads of our app. Weve had 1. 3 Million Peop