Week. I think its a perfect buying opportunity. The market still has a lot of room on the upside. Not a lot. Lets say 5 or 10 . One investment idea. Technology right here right now. Most hated sector around the world. It is. All right. Thank you guys. See you later. Going out near the lows of the day. Right now reading the closing bell, new york city celebrating 25 years. Theyll be appearing at carnegie hall. As we head towards the second hour, waiting for the interview with the ceo of clorox. On the second hour of the closing bell. And it is 4 00 on swallow street. Do you know where your money is . Im Maria Bartiromo on the floor of the new york stock exchange. The market posting the first triple digit loss on the dow industrials of the year after closing above 14,000 on friday. The market has retraced quite a bit of that today. Were also following a developing story at this hour. The Justice Department planning to file a suit against Standard Poors. Mcgrawhill clobbered today. Also moodys down with it. And the dow down 130 points at the close tonight. About 1 lower at 13,880. Nasdaq composite also gave up about 48 points as you can see there. Almost 1. 5 on the nasdaq. And the s p 500 tonight down 17. 5 points. Joining me now is peter sorrentino, craig hodges, and our own rick santelli. Good to have you on the program. Peter, your thoughts on this lawsuit. How significant is this for these companies . S p and moodys . It is very significant. I think a lot of people have really let this slip out of their minds in terms of the ultimate kind of consequences for what took place several years ago. And it has to be atoned for. And this is going to way heavily. A loft of people have put this out of mind. Do you own any of these stocks . What do you want to do with this kind of news on the out and the uncertainty . Two of the things we never want to get in front of is a regular tear change in legal actions. If we did own them, wed be out of them right now. This is the thing we dont want to take chances with. I see. Wheres everybody else on this in terms of this Market Reaction . I mean, craig, was this justified, you think . Sharp declines on moodys and s p. Yeah. I dont know how justified, but the market being so strong, its looking for an excuse to go down. This could well be a reason. You know, some sort of headline risk like this. Youre always exposed to. But here at the hodges funds, well use the selloff to buy great businesses on sale. So we are seeing a lot of opportunities out there. Rick santelli, what about that trade coming out of fixed increase going into stocks . Are you a believer or no . Is it gaining traction or no . You dont have evidence of it . No. I personally dont see a huge sector change. I think its always going to be out there. And i think with a lot of money sidelined, its just putting money to work. Many believe its going to end up in equities. To be up 12 basis points in a five year to date or 21 basis points in a ten, as large as that may sound, i dont think thats near the big horse power ultimately that trade could generate. On the rating agencies, you know, it sounds a lot like sour grapes. I think the Rating Agency made a bunch of blunders. Theyre not going after him. He was highly aware of what was going on in derivatives. When we were downgraded from aaa. It seems like thats what was the time period some of these early talks about this developed. Seems like sour grapes to me. Your thoughts on rick santellis commentary there . Rick is true, but again, i think in the words of rahm emanuel, lets not waste a crisis here. I think this is a chance for the doj to go in and basically make some new rules. And so why waste the opportunity . You got guys out there to go after, use them. Peter, let me ask you about this market here. Weve seen a big runup in 2013 obviously. And theres debate going on if in fact we are seeing money come out of fixed income and move into stocks. Or whether or not the money is coming from sidelined cash. Money markets and corporate cash. Whats your take . Who is really driving this market . And does todays selloff interrupt that . I dont think it interrupts it. What we did see in our at least from our work is were seeing cash coming in from the sidelines. App lot of money on the retail side and mutual fund complexes. There was a lot of selling pressure. But remember the funds closed their books in october and november. That money had to go back to work. What were seeing is that cash rolling back into the market place. So the volatility has been ab normally low. And those pendulums tend to swing back and forth. To see some volatility come back in would be healthy. Craig, are you putting new money to work here . How are you invested . Yeah, we are. I would agree. This is very were in the first inning. One out in the first inning of this recovery. We had 400 billion come out of domestic equity in the last four years. 400 billion out, only 19 has come back in. So this is very early. We see some themes. Housing, some related companies in housing look good. We see a theme of crude oil being transported by rail. Mexico, from a lot of the companies were hearing, mexico is a very misunderstood situation. Theres some opportunities there, we feel like. Jobs are leaving asia and going to mexico. The labors not as cheap, but you save on transportation costs and logistically you can get goods quicker. Thats benefitting mexico. Theres a new report thats going to benefit the rails. Its cheaper to drop products there than in long beach. And so theres a lot of rail car barges, kirby corps. Weve been covering this move into mexico. A lot of money moving i said weve been covering this money moving into mexico. Recently we had the finance minister of mexico on. What about the drug trade . Should we not be worried about the adverse risks there . Yeah. And thats one reason why its an opportunity. Because the perception is still very negative. You ask a hundred investors, 95 would say they wouldnt touch mexico. But it is an improving situation. Thats where youre going to make your money. Buying things that are perceived as negative that has some upside. Weve got seven or eight companies that were buying right now that we think are going to benefit from the resurgence in mexico. Their gdp is going to be twice what the u. S. Is. Such an interesting story. I love it. Well keep talking about that. Thank you, everybody. Well see you soon. Back to our top story. The Justice Department reportedly planning to sue Standard Poors for fraudulent rating bonds that led to the financial crisis. Moodys was also down big because there was a fear this could spread to the other ratings agencies. Joining me on the phone ed aderino who covers both stocks. Whats your reaction to this . A little bit of deja vu. Theyve been through the wringer many times. I dont know if you recall the recent financial crisis. They were in front of just about everybody. Theyve been, you know, diced and rediced. Investigators have been all over that company with a fine toothed comb. And over the centuries many years, there have been many lawsuits. They have won every single lawsuit. Never lost a lawsuit. One of the key strengths of these companies is courts upheld time and time again that a rating is an opinion. Its not a prediction of price. Its not a prediction of fault. Theyve been upheld as opinions on the culpability. I dont know what the governments new attack will be, but they have been beaten and beaten and won. In the last hearings a couple years ago, i think a senator the two weeks of hearings stood up and said this is the best system weve got. Thank you very much. So i dont know what and according to what im reading somebody sent me something. Apparently the government is threatening to sue. So what i hear you saying, ed, you think this is overdone. Are you saying this is a bond opportunity . I dont know if theyve got a new tactic. But connecticut sued, new york sued. Everybody sued them. Under whatever brilliant lawyer came up with and the laws have stood behind them. Maybe the Justice Department has a new tact. But it seems this is another witch hunt. Okay. But what about the pile on . The fact that once you see the doj getting involved in Something Like this actually readying to put the suit forward, you see others coming forth. Investors who lost money. Are you expecting a pile on who create problems . Maria, i dont know whos left to sue these guys. Theyve been sued by everybody. Im sure there are lawsuits outstanding now. But theyre getting dismissed. I dont know what new tact the government is going to try. All right. Well leave it there. We appreciate your time tonight. All right. Thanks very much. Ed atorino. President obama calling for smart spending cuts. But what does that mean . Well get washington speak translated by former gop senator judd gregg . And did beyonce blow out the lights at the super bowl . Maybe. Well talk about that. The superdome power outage. Also the beatles said money cant buy you love but can it buy you happiness . Well see what the millionaires say. Stay with us. Is is for real thi. Is is for real thi. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Welcome back. The dow industrial it is pulling way back from fridays 14,000 peak in a significant way. Lets get to bob pisani recapping the movers. Biggest declines of the year. Declines up 1. 5 to 2 in all the big names. But please note compared to what happened in europe, this is small potatoes. Put up some of what happened here. Nothing yet in italy the oldest bank is being investigated. The problem is draghi was the hes being drawn in a bit. Spain calls finish the Prime Minister to step down. France and germany on the downside. You see italy down 4. 5 . Damage worse there than here. India investing. Even overseas investing. China. That fxi was also on the weak side. What was the gainers . Well, its the risk off trade stox. The bond funds did well. And people who were investing in shorting the stock market like the sds did well today. Finally is this the start of a consolidation flat lining . We dont know. But the vix moved up. Id say right now 1 decline 100 point decline after a thousandpoint move still pretty small. I think we have to wait for another 300 or 400 points before we get concerned. Automatic spending cuts looming large and will occur in less than a month without some kind of d. C. Deal. Heres what president obama had to say about spending and taxes last night on cbs news before the super bowl. There is no doubt we need additional revenue. Coupled with smart spending reductions in order to bring down our deficit. And we can do it in a gradual way. So what does smart spending cuts mean . Judd gregg is cochair of the fix the debt campaign. Robert reich is from the university of california at berkeley and author of beyond outrage. Both are cnbc contributors and we thank you for joining us. Good to see you both. Senator gregg, whats a smart spending cut . Whats that mean . I dont know. I think its a washington speak word for probably no cuts. No cuts . Thats the tradition in washington. They say if its not a good cut, dont make the cut. The fact is theres going to have to be decisions made here. Taxes were raised at the end of the year. And we know we cant get to the fiscal responsibility we need without our entitlement accounts. Theyll vo to step up. Do you think we will actually see spending cuts on the entitlements . What i think is going to happen here is youre going to e see the sequester. Its going to go forward. The pressure is going to be so strong from groups that benefit from those accounts there will be a coming together to relieve that pressure and moving over and doing something on the entitlement side. Which is where it should be done. You cant get all the money you need out of the discretionary side. The way these are structured, over a long period of time it doesnt have to be tomorrow. In order to put in place programs can be sustained. Do you agree . You said congress should enact a trigger for spending cuts . Whats that mean . It means that in the shortterm, you dont want to have spending cuts or tax increases on the middle class because the economy is still fragile. We still have high unemployment. But over the longer term particularly when we get to what i consider to be a trigger, maybe 3 annualized growth and under 6 unemployment, then you want to have some mandatory spending cuts and tax increases to bring the deficit down. So do you think thats what well see . I mean, theres been such an inability to come up with actual ideas on what to cut. How do you think this plays out . Look. By the end of march, were going to have 85 billion of cuts which will be devastating to the km i. Could result in about 1. 7 drop in our growth rate this year. Which is already going to be very slow. Some people say its not going to be more than 2 . We dont want to go there. What ought to happen instead, it seems to me, we want to trim the military budget and get rid of corporate welfare, a lot of stuff that is not necessary. And in addition close some tax loopholes. Why should anybody be able to deduct mortgage interest more than 45,000 a year. I would like to know the response to those yed . Those are ideas that have been tried and you cant get to where you want to go with them. We gave it the 600 billion of new revenues at the end of the year. What we need to do is address the issue. Medicare, medicaid, social security. Thats whats driving this deficit. You got a retirement population that has doubled. And you simply cant afford these programs as theyre structured. And you need to change them over the long run. And youre not going to get there by cutting defense. And youre not going to get there by raising taxes. Youve got to address the problem which is entitlement spending. Heres one of the major problems with regard to medicare. And that is Rising Health care costs. Already 18 of total gdp. Seems to me the best way to control medicare and medicaid, those are the ones out of control. Social security is not out of control. Its medicare and medicaid but it hasnt been fixed. The best way to deal with medicare and medicaid is to get Health Care Costs under control. What you want to do is basically use the bargaining of medicare and medicaid so that providers move from a fee system, a fee for Service System to a fee for healthy outcome system. Wouldnt you agree . Well, absolutely. As you know, thats the proposal being pushed forward by dartmouth your alma mater. Has a lot of viability to it. But its easy to say but its hard to do. The point is, however, that youve got to have a president whos willing to step up on the issue of medicare specifically and say were going to try to control these costs and not just add to the costs. Theres three things that could be done in medicare that would make a big difference. We could adjust to go raise the age over a long period of time so that people over the age of 20 arent impacted but you change it over a long period of time which benefits it. And third values in outcome system than utilization system. None of thats being done. Its not being talked about. All thats talked about in washington is raising taxes. Senator, i think theres a great deal of support for the values in outcome. Moving from fee for service to fee for healthy outcomes. The problem with the current cost of living increase understates the inflationary cost of health care for the elderly who are paying a larger portion no, it doesnt. No. Their dollars for health care. Youre wrong. Youre simply wrong. Why . Going to a chain cola does is say that it anticipates what human nature is. If you raise the price of milk, they will stop buying. The fact that people are going to buy less milk into it. Chain says you account for that adjustment. Are either of you surprised that the markets have not reacted to this at all . I mean, a were seeing people put money into the market consistently even though we know we have these major issues on the horizon. Were the best horse and glue factory right now. Look around the world. We are a great country. And we have great potential. Our problem is our fiscal policy is broken and were headed towards a fiscal insolvency situation. People look around and say were better off than anybody else so put the money there. At some point theyre going to stop putting the money here. Were going to have to devalue the debt to do that. Whats the catalyst to do that . I think the sequester is going to be a huge catalyst. I think well go into sequester. And a lot of these programs effected are very personal. Meals on weals, head start, low income energy. And so to relieve that pressure there will hopefully be a sense in congress and the president that theyve got to look where the problem is. Entitle accounts. Maria go ahead. Final word. Raise the ceiling on income subjective social security. I didnt hear that among the senators possibilities, but i think thats very, very important. Actually we did that in the Simpson Bowles bill as you probably know. That was part of our bill. But it has to be enacted. Wed love to have the president enact it. It was his commission. Great point. Well see you soon. Appreciate your time tonight. Up next, banner day for clorox. Hitting a record high. The ceo will speak with me about the Bright Outlook after the break. Then later trying to turn off the profits. Wait until you hear what theyre saying about the most expensive musical ever made. Dont miss my new documentary tonight betting big on broadway. Thats tonight. Back in a moment. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement plans, it could save you thousands in outofpocket costs. 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