Lawrence lindsay saying we could see a bond market tantrum if janet yellen and the fed dont raise Interest Rates. A new Study Finds Companies may be buying back stock at a record pace. However, corporate insiders are not. Thats interesting. Coming up well discuss whether thats a sign that executives believe stocks are starting to become too expensive right now. Watching the insider trade. Heres what we see, right now with an hour to go the dow is up 16 points. Buffeted by earnings today. The s p adding about 4 points. Nasdaq up 19 bill as we continue to get the pulse of the u. S. Consumer today. Lets get to whats going on in the world today in the world of finance. Our Closing Bell Exchange with some of our favorite people Jack Bouroudjian, Keith Fitzgerald from moneymorning. Com. Susan fulton from fbb Capital Partners and our own Rick Santelli. Rick, ill start with you because the markets response is interesting, maybe instructive. After the minutes came out, nothing happened. And in fact the dow is in the midst of a very narrow trading range for the last four or five trading sessions. The first time weve seen that this year. Whats going on with this market right now, do you think . Listen i know that theres all the issues of whats going on with First Quarter gdp seasonality. The market doesnt seem to be too dissuaded from the notion that the fed isnt an issue in the near term. You can argue that the minutes say that. On one issue in particular, id like to put something on the screen. With regard to larry lindsay, the fed on page eight of the minutes talking about the volatility we may experience during normalization said the following, increased roll of High Frequency traders, decreased inconvenientventoryies and elevated bond funds. All of those conditions are the unintended consequence of the feds own policy. If you have a boat thats leaking, drill holes to let the water out. I dont know. This is very fascinating. Its going to be a great chapter of financial history to live through when the fed finally does a one and done to see how the markets act. Im glad rick brought it up. A lot of folks, the fed included are focused on fixed income markets and how they might react. What do you say to people out there who are invested in some of these instruments . Some of them equitylike. You know i think its be careful what you ask for, you just might get it. This is the path to normal normalization normalization. Whether we like it or not it will be messy and volatile. I agree with rick when we were talking about it. I mentioned it last week, some of the liquidity were seeing in the bond market. One of the ancillary effects of that, were seeing the rotation taking place. Guess what this is a breakout. When people go back and do hindsight analysis they wonder where the breakout is. This is the breakout. This is the buy in may scenario we were all talking about and more than likely would last to the end of the year. Keith fitzgerald, i think you agree with that. Youve been staying the course anyway. We get headline risk out there, the weakness in the economy in the First Quarter, until this week housing seemed to be in the doldrums still. Youve been advocating hang on to your quality blue chips, right . Absolutely. 85 of the buy sell decisions are wrong. Headlines are usually wrong. The more extreme, the better. Right now the fact that we have lots of doom and gloom stuff in the headlines, yet we have an accommodative fed. The bondette is absolutely the buy product of the feds manipulation, so are equities. The path of least resistance remains up as long as the big blue chips can make efficiency gains that come to the bottom line. Profits always lead share profits. Its the way its worked since the dawn of time. Jack just said this is the equity breakout and it will continue for the rest of the year. Do you agree with him on that . I dont think i really do. I think equities are fully valued right now. I think theres room for upside. Theyre probably safer than bonds but im not sure that i would use the term breakout. Why not, susan, what do you think is more likely to be the case here . I think to a certain extent we may not see rate increase this year. I mean to quote, a lot of this appears to me to be a lot of ado about nothing. Theres nothing that i see right now on the horizon that will alou the fed to make a decision in september. Im impressed you got to page seven or eight. One of the fears expressed by fed members of the april meeting was if they did raise rates in june you could get a spike in rates. Another taper tantrum. Do you think that would be possible . Listen im going to refer to my good friend ira harris. I dont particularly believe a june tightening is on the table. The minutes dont believe it. Theres a certain segment of the market that believes it. A lot of it is Steve Liesman and San Francisco fed. If you believe theyre going to tweak the seasonalities to make the First Quarter look better you better hurry up and tighten. At the end of july you have the first look at Second Quarter. Im siding with the atlanta fed. Youre not going to have the First Quarter seasonality excuse. You have a very small window for your one and done and if your focus is trying to build up the growth for the First Quarter with be what other reason could there be . Its an interesting theory. Rick, rick rick makes an interesting point. Theyre already factoring that in. Look whats happened to the 30year over the course of the last month. Its moved almost 50 basis points. Thats more than the fed would even move. [ talking at once ] i dont think markets are paying all that much attention to the fed. You know what theyre paying attention to in the long end . Qe is done the am of securities are are quarantined gets diminished with every 10 billion that goes out there every week. Rick is hitting the nail on the head. If the fed doesnt like the data, first thing the fed does is change it. They put a seasonable adjustment on it. This is what they do. Traders are great. Traders have to make decisions with real money, not academic models. You dont believe the gdp numbers, is that what youre saying . I dont believe anything the fed puts out. That doesnt change the fact i have to Pay Attention to it. Come on keith. Come on the feds data is more cooked than the christmas goose. They have more adjustments in every data stream theyve got. What im saying is i dont trust it as far as i can throw it. I want to look to traders and see what theyre doing with real money. Thats whats going to tell you how the market perceives risk and opportunity. Susan, lets make this meaningful to the individual investors. They should start with the employment reports. Thats where they should start. Point well taken. Susan, lets make this meaning ifle to individual investors. If youre skeptical about the rise in the market right now, what are you doing . Arent there places to invest if youre a longterm investment . Oh, yes. Were doubling down in lowes. We think the fundamentals are just fine. We think its being mashed around today. And its an opportunity. You know we are always buying. But were always selling. Why do you like lowes, sus susan . They are down. 5 on an earnings miss. But its an earnings miss. Home depot performed well during the same period. Its a projection miss. The lowes miss is a projection miss. Its not a miss in terms of their revenues increasing or their cost being contained. Its a miss because the market thought they would do better. The fortune tellers were wrong. That doesnt make the company bad. Right. Is this a vote for housing as well in light of the strong housing start numbers we got the other day . Im not pro housing. Youre not. Im not. Do you disagree. Im listening to this conversation and trying to figure out a response to this. What it really point out to me is not so much to buy low. What im worried about is that it points out a miss in the consumer. I think it points to a thinner wallet and unintended consequences and points to the fact that all this money they supposedly were going to save in the gasoline when that oil price came down is not finding its way back in. Youre talking about lowes keith . Thats what you think is going on with that story. Its a canary in a coal mine. I think the miss is significant. I think its a broader picture here. Whats wrong with saving though . If theyre taking the savings from the gas pump. Absolutely nothing. Absolutely nothing. Dont forget what the federal government wants you to do. The federal government wants you to spend money, which is the complete opposite of what a rational consumer will do. Our economy is built on us spending money, not saving money. Susan, what do you like better walmart or target here . Another two companies who have had dueling reports. I heard target. I didnt hear the other. Target or walmart . Target. All right. Me, too. Were underweighted in walmart because our clients cant stand it. You must be fun to deal with. I love that. We always love having you along, susan. Thank you. A few minutes to go in this session. We are seeing pressure in earnings names, lowes being one example. Target shares are 1 higher. The dow is adding 13 points at the moment the broad index 3 and the nasdaq 18. Our discussion on fed policy and the economy continues. Two top fed watchers will be weighing in on the taper tantrum part two. That would be if janet yellen and company waited until later in the year to pull the trigger on an Interest Rate hike. That story is coming up. Stay tuned. Dont just visit new york. Visit tripadvisor new york. With millions of reviews and the best hotel prices. Book your next trip at tripadvisor. Com today. Ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. Female announcer through memorial day at sleep train, get up to four years interestfree financing or save up to 400 on Simmons Beautyrest and sealy posturepedic. Even get four years interestfree financing on Serta Icomfort and tempurpedic. Plus, free same day delivery setup and removal of your old set. When brands compete, you save but this special financing offer ends memorial day at sleep train. Sleep train your ticket to a better nights sleep welcome back. Breaking news on gdp, an important report that we were just discussing. Steve liesman is here with the details. Steve. Kelly, thanks very much. The Government Agency charged with calculating the nations growth rate is acknowledging problems with its numbers and pledging a series of fixes over the next several months. In a statement to cnbc the bureau of Economic Analysis says its aware of issues in the Gross Domestic Product data and is, quote, developing methods to address what it has found. The bea statement showed that gdp growth has been weaker for the past 30 years and stanley weaker over the past five. The 1. 87 number is 0. 6 over the last five. Several economists with including researchers at the San Francisco and philadelphia feds and many wall street economists have since confirmed cnbcs findings. The San Francisco fed found First Quarter growth could be as high as 1. 8 compared to the initially reported 0. 2 . Many attribute the problem to one known as residual seasonality. This is seasonal patterns that hang around and remain even though the data is already adjusted for seasonality. Chief of beas National Income and Wealth Division they oversea the gdp report. She said in a statement that the agency has identified several sources of trouble in the data including federal Defense Service spending. And inventories as well. Other data would be revised and initial rounds of changes to be completed by july 30th. Thats in time to be incorporated in the benchmark revisions. Glad somebody brought it to their attention. We kept a couple of our guests around. Rick santelli and Jack Bouroudjian are here. Take a victory lap. I say lets go with the Second Quarter gdp and see when that comes out if theres a seasonal adjustment problem there as well. There will be rick. We also showed in our data that the Second Quarter sends to be higher than the first. As far as we can tell right now, this is not a problem of gdp should be higher overall than reported. Its a matter of the sequencing of when theyre calculating the growth, should it be in the fourth, first or second. My hats off to you. Tell them to work on the birth death model. That has significant issues on the employment report as well. You want them to add back 1 150,000 jobs . You can parse words and be cute about it. Its subjective 50,000. There were some arguing from the other side. Its not about being on the offense or the defense. Its about doing it right. Jack bouroudjian i agree. I agree. The problem is it should be acknowledged to the people who do these numbers, calculating the change and the movement in a 17 trillion economy with 141 million workers aint so easy. Its not easy. How to do it is not entirely obvious. Give it to the private sector so its done right. And if its not done right, we can complain out loud. The data is being of public good that all people have access to. Everything the government wants to do for me is for public good. I completely understand. Jack how reliable in your view, you have to make Investment Decisions every day. The First Quarter numbers keep disappointing. How much do you think this is affecting investments across the country . You know what i guess its a blinding glimpse of the obvious. We have known this for the last 25 years that ive been in the markets. We have absolutely seen these numbers skewed and quite frankly we factor them in and kind of just go with the flow. Jack, jack wait a second, steve. As a trader you do. You know why you do as a trader . You should be rich. You realize guess what, a lot of traders down here are rich. You should be leading against it. The data showed that the market is not aware of it. They figured out that pattern. We look at the trading look at the history of the market. The market doesnt need a lesson in education. Its the people trying to regulate it that need knowledge in the market. Steve, can you explain thats, rick. Hang on. What you need is to scrap the entire system. Let me point something out, guys. While were talking, were going to assume this is a result of your report steve. If we can see an intraday chart of the Dow Jones Industrial average, the market is moving lower. Not appreciably but the trend that was in place has changed here. There are interesting implications here. Lets go back and see if the San Francisco fed and barclays both calculated independently by the way that a real number if you seasonably adjust it is positive 1. 8 . Instead of 0. 2 our tracking estimate of the number is actually negative. Negative 0. 7. The way i look at the First Quarter right now, the current First Quarter it was weak but the seasonal problems that we identified overstate the weakness. Lets think about the fed in light of a First Quarter thats revised higher to the plus side and something of the rebound that i was talking about with rick in the Second Quarter. That would possibly put rate hikes sooner than you would otherwise think. We still cannot explain last years 2. 1 decline. Getting to what jack was saying ive seen this over and over jack may be very quietly seeing this and profiting on the side. But people expected the weather effect last year. They expected it this year. They still dont have the right numbers going into the first report. Let me ask you this steve. Theres been a rivalry of sorts because of this. Maybe its media contrived between the San Francisco fed and the atlanta fed which has this online gdp now, which computes the growth rate on a daily basis. Minute by minute. That has been weaker than what San Francisco has come out. Right, right. Now that we have the bea confession, whos closer to the truth, San Francisco or atlanta . Theyre doing different things, bill. I hate to say the question is not correct. Spoken like a true economist. What the atlanta fed is doing is a mechanical mathematical thing which we do on cnbc rapid update where we average the tracking forecasts. A number comes in plug it into the model and you get a calculation. It looks the atlanta fed has been the weakest of all of the tracking forecasts out there. I think theyll be tweaking their model over time to see how it works in real time. I dont know that either one is actually correct here. What is our my thinking again whats the growth right right now. The cnbc rapid update is showing minus 0. 7 . Which is what atlanta is showing right now. Atlanta is minus 0. 8. Which is completely wrong. We can see whats happening. We saw earnings come out. Thats a skewed number. Its like a spring that loads up and it happens every year for the last five years. Last word. We have to go. This tells investors listen to everything. Listen to the market. Listen to ceos, cuban yesterday saying my business is nowhere near as weak as that gdp number. Then listen to what the economists and the data say. Try to create a framework around it. Thats the disconnect. Somebodys business better be doing good. Were making record highs in stocks. There you go. Thats true. Thanks, guys, for sticking around. Appreciate it. Thank you. Fascinating. Good stuff. You know the conspiracy theorists are going to come out of th