Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . All right 37 we tallied our results of the debate earlier and you said mike murphy made the better argument. Final trade time. Joe . I think gold is going to 15. 25. Murph. Titan. Splv, like it. Follow me on twitter. Are we going to make new highs on the dow today . I dont know. No. Halftime is over. Power lunch and the second half of the trading day starts right now. We will get you one hour closer to finding out whether the dow will close at an alltime high here on power lunch. Dow hitting a fresh fiveyear high. It is of course close, close, 75 points distance from its alltime high. So how is the smart money riding this rally . Where are they putting money . Where are they putting it and where do they go from here . We have lots of other stories here. Four smart stocks for this rally. Less than 48 hours to go until the automatic spending cuts go into effect and members are already leaving for the weekend. Congress people, look at them go. Members only. They are leaving. Theyre out of here. They need rest. Defense stocks trading at alltime highs. Sue is away today. There you see the defense stocks, we will see what happens with the Defense Budget if the spending cuts go into effect. Sue is out today. Simon hobbs is in for her at the exchange. Hi, simon. Hi, tyler. Lets check how far we are now from the alltime highs on the dow. Remember, that we hit it october 9, 2007, 14,164. There you see, 75 points away. And i can show you that on the s p as well. Lets switch over and look the a alltime high on the s p, and you will see the s p 45u7b index obviously. There you will see we are 45 points away from the alltime high there. Now, bear in mind, in terms of market moves, points on the s p is ten times roughly as big as a point on the dow. So s p underperforming as we seek to hit those alltime highs. Lets bring in bob pisani and speak specifically about the possession we have today. After big gains earlier in the week is overwhelming. Not enough to move the dial. Look at the dow here. We are used to the triple digit gains here. This is only a 50point gain for the Dow Jones Industrial today. Advancing and declining stocks, take a look at sector leaders. You still get broad participation. See consumer discretionary. Healthcare and Consumer Staples also strong early on. This is broad participation. One of the reasons the market has been strong. In terms of the leadership, theres the transports this year on the white line, up 13 this year. There is dow industrials on bottom line. You see transports, dramatically outperforming. Finally, i want to know, home depot is helping the dow. Good numbers since its earnings. There is 12year. Simon, just a point or so away from historic high on home depot. 70 back in april 20000. We are approaching that. Lets bring in director of oneill securities. Kenny we are just churning, right . Digesting, after what we did on monday and tuesday and wednesday, mark set digesting. You said it today, gdp didnt really knock the stocks off, right . Listen, everyone is talking about sequester on friday. This is automatic spending cuts. Automatic spending can cuts, lets just under. 12 00 a. M. Friday, it doesnt really mean anything. The world doesnt come to an end. But cuts dont take effect at 12 00 friday morning. Only can 40 billion take effect this year. What are you saying . It is a discounting mechanism . Exactly right. It is not worry it is looking ahead eight to ten months, the end of thei the year, not pricing for friday, not at all. And 40 billion we are talking less than 1 thats right. And with the continue is resolution. If the government shuts down, thats a major problem. Thats different. But thats a different conversation for a week and a half from now. Lets leave it there. Thank you both. Kenny and bob. Back to you, ty. Thank you. Where is the smart money investing in this rally . Are they investing . Founder and ceo of destination Wealth Management and cnbc contributor. Michael, welcome. What are you buying and what are you selling as the stock market approaches an alltime high on the dow . First of all, lets clarify what alltime high means. That means if you invested in october 2007, tyler, i hate to be a bummer here right away, that means you are breaking a even. Congratulations. What are we buying, what are we selling . Reducing our energy positions. We think oil would be under pressure given how we have a fairly slow economy here in the u. S. As indicated by gdp. And of course continuing disaster happening in europe. Emerging markets are bouncing back. But not consuming as much commodities and energy as they have been. We have reduced our position in gold. We think gold is under pressure because hedge funds are raising so much money right now trying to take care of redemptions and in terms of what are we buying, consumer staple stocks. Companies like nesle, telecommunication stocks to participate in. Continuing Wireless Infrastructure buildout. Companies like vodafone. And you like campbells soup among others. Is that because you are playing it or you think campbells like heinz might be a juicy takeover tarlg snet. Lets think about what our strategy is. They will say buy this sector, buy that sector. We are dealing with real peoples money. So we make sure we have our assets in different places. Campbells is an opportunity for us to get staples and yes, we think it is a potential take over target like heinz. Slow and steady cash flow company. On the other hand you have Companies Like qualcomm that are more in technology infrastructure. You play both sides of the equation. Thats how you protect yourself, if in fact sequestration is a disaster. But it is also the way you participate in the market rally if you continue to move forward. Thank you very much, michael. Tyler, if when we do hit the alltime highs, who will be the hero of the day . Arguably ben bernanke. There is a rally you could argue on, steve, inspired by the fed. Back to you. Fed chairman and two key things for markets, two days of testimony. First suggesting the outlet for asset purchases this year, is more secure than investors believed in prior several days. But second, he even said feds easy Monetary Policy could be secure in years. I call that a stealth easing. Qe benefits outway cost that is one of his points for this year. Then he said, 6 unemployment is likely until around 2016. Then, this notion of rethinking the exit which i call the stealth easing, these comments from fed chief that the fed needs to reconsider exit strategy calling for selling assets that bought over three to fiveyear period after hiking rates. Now he is saying maybe not sell them at all. Here are the results of the last cnbc fed survey. One of the best measures for what the market thinks. 35 asset sales in 2013. Three quarters thought 14 and 15. Bernanke hinted at more easing from the fed. The chairmans komt of the feds easing policies long last from traction and we have seen some of that in Interest Rate sectors like housing and auto in the recent economic data. So steve, for people down here trading stocks, what does the landscape look like in the future . It is kind of interesting, simon. I think two things have happened. One is that we kind of got back to where we were before there were doubts about fed policy this year. And now maybe 90 point above when those doubts really started to sell off. So i think what we would be returning to the track we were on of this maybe slow steady grind, based on the outlook or positive outlook for fed action. In other words, bernanke puts under the market. I think thats right and i think is maybe more extended than we thought before, simon. Seef, thank you very much. Steve liesman, back to you, ty. Thank you, simon. Jc penney getting wacked today and why not. Reporting the shafrpest drop in sales. Courtney, where is bill ackman in all of this, big share older, very active shareholder in penny and can ron johnson survive it . He is in the red by quite a lot. Ackman is. As of december losing 400 million on the jc penney stake. If you take the valley of the stock yesterday as of low he today, that a loss of 129 million for jackman just as of today. As of today. And sales have not responded. Stock has done exactly the opposite of what you would want. True. But ackman is still very supportive. I believe we have a soundbite where he says just that. Everybody else might be negative but this might be the time to buy. This this is from two weeks ago. The press is unbelievably negative. Ron gets picked on. My general experience is when efrp thinks you are completely stupid, very, very bearish on the company, is probably time to look at the stock. Lets talk about kohls. One would think kohls would be the beneficiary of jc penneys lows, not so much. Not so much. Up almost 17 at the yearend. They have inventory, but the wrong inventory. The other problem is a real estate problem. If they dont like what they see, it is harder to turn around and walk into kohls because kohls arent anchored at the malls. It is a thoughtful trip to kohls. Exactly. As opposed to a strip mall. Lets talk about sears which had it its own problems. Some better than expected and maybe better for the wrong reasons. When we say bet are than expected, a handful of analyst cover sears because the float is so small. Expectations, i would even almost take with a grain of salt. So yes, they beat on those expectations but they did a lot of costcutting. If youve been into sears, you can tell, they havent made much investment in the store or inventory. People want newness. Yeah, kmart too. Same thing. Just not competing as much as they should. Simon, down to you. I want to squeeze in one more stock. Lower after the book seller reported, hurt by a sharp 26 drop in nook sales and ebook business. Overall revenue falling more than 10 . As we told you earlier in the week. I have a chairman Leonard Riggio is looking it take the Retail Business private. All right, Government Spending cuts, going into effect tomorrow. As you know, defense could be hit. Defense stocks hitting new alltime highes. What should you do . By, sell, do nothing . Who knows. Dow getting closer to the record. There you see. 14094, alltime high. 14,164. It is then 70 point away. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back power lunch. Im josh lipton. Ceo of Reality Trust will step down next month. Steven roth will assume the ceo spot as well. Vornado is the biggest Investment Trust after Simon Property group. Down some 3 right now. Tyler, back to you. Josh, thank you very much. Tomorrow is the deadline for automatic federal spending cuts and congress is starting to leave for the week pend 7 there goes some of the members, fleeing the capitol. So what is going on . Is there still time for a deal or is a deal really what we need right now . Representative kevin brady is republican from texas and he is chairman of the joint economic committee. Welcome, good to have you with us, sir. Thank you. I believe you assume there is no prospect for a deal to avert the spending cuts that kicks in midnight tomorrow night. Is that such a bad thing . No, it isnt. I think is absolutely necessary. This was a bipartisan agreement. Idea proposed by the president , agreed to by republicans more than a year ago. In fact the president threatened to veto any change in the cuts last year. And so, i think while these are relatively modest and a tiny, tiny part of our economy, i think it is finally time we get some real authentic spending restraint in this government. A small part of the economy. I take your point. And even a relatively small part of the spending overall. But in terms of the spending that will be affected, because so much has been taken off the table, with respect to these cuts, it is a it is a more and they will phase in over the next seven months, it is a more significant cut. Im curious about your district not knowing exactly where it is. What will be effected in your district if these can cuts go through and are sustained. A lot of this is conjecture. The president is threatening to close down a runway at bush intercontinental airport, which doesnt make sense. Faa spends hundreds of millions of dollars a year on consultants, 200 million a year on airports to nowhere, and i think you could pay a consultant 25 bucks to tell you dont close down runways. It is hard to know, you know, sort of differentiate the fact, fiction, scare tactics and truthfully the modest savings that will take place. I think we all could agree that a better way to achieve spending cuts would be to target them p the way that you seem to be proposing. Not this across the board approach even though there are people who think thats really the only way can you do it. Nobody seems willing to have their ox gored here. Isnt it the nature of the across the board cuts that things like the shuttering of runway at bush intercontinental would take place . It is the nature of the game, isnt it . Well, whats frustrating, is, look, theres been plenty of time last year to provide flexibility. I think the president would like it now. I dont know why he is waiting to meet with our leaders after the spending cuts take place. But yeah, we are prepared to give the president our military especially, but agencies flexibility to set priorities. But right now, it is really a scare game. My point is, the way our global competitors have cut spending and got their common going is different from this. But it is still a start. You know, the stock market, congressman brady, i dont know how close you watch it, but you must watch it a little, is within 70 points of an alltime high. I wonder if would you fast forward for me 30 days, to the end of march when that continuing resolution expires. Is that really where the rubber is going to meet the road . You know, actually no. The answer is no. Here is why. I think actually march be spent accomplishing a couple of things. One, the house. And i think the senate and president will agree on some flexibility within the savings cut. New lower budgets. I think we will agree fairly readily on how to fund the government for the rest of the year. I think thats fairly simple. March, though, requires the house and senate to lay out their budge chet answers the question for the market, which is, is washington serious about spending their or addressing the spending crisis especially our longterm spending problems. I actually think the market will be looking that over the next 30 days. Very interesting month, congressman brady. Thank you for being with us. March madness isnt just a basketball tournament, is it . Yes, sir. Ty, in that graphic we just showed you, marsh is the critical month for concerns on Government Spending cuts in the military. Despite that, defense stocks have done pretty well this year. They rallied, certainly big time yesterday. In fact the Defense Sector is now up 7. 25 , as you can see, for the year so far. Lets bring in richard aboulafia, a defense analyst and consultant for the teal group. Welcome. I say the defense stocks have done recently well. Today we do have news from lockheed martin, the pentagons biggest contractor suggesting that actually sales this year will drop by more if the automatic spending cuts kick in and future years will also be materially affected. What is your view on the sector . Well, right now, theres just a lot of fear but there has been for some time. So there might be a certain degree of recovery, realizing that it is bad but not the apocolypse that some people have painted it as and there is a good chance that some damage might be undone in that interim period. So while we dont like living in uncertainty and while there will be paying under almost any scenario, it certainly doesnt mean the end. There are definitely positives for this industry in the sector. Which is the greatest threats. Automatic spending can cuts or the fact that you have a president who is in his second term and therefore perhaps more able to cut spending programs that might hit particular cities or regions and a new defense secretary. You know, it is interesting. Of course a lot of that is simply by events. Obama didnt seem it make that much of an antidefense move in its first term. It was accompanied by the afghanistan surge. So there was just so much he could do. But right now, you have definitely got a move towards, if not isolation, definitely a move from intervention, appointment of secretary hague el as you point out, is definitely endorsement of that. Even within that, within the republican party, there is a danger that they are focused on, moving toward budget talks rather than defense and Foreign Policy talks. So it is tough to see who carry theory the mantle for defense. Thank you richard. Richard aboulafia from the teal group. On the back of its earnings and what a miss, stock down 75 over the past one year. So where does the online deals site go from here . And as we head out, lets look at financials. There they are. All higher. Not so much, but higher. We are back in two minutes. [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well that would make you. 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