But this rough weather is starting to have an impact on the Great American economy and Steve Liesman has some really great and interesting stats and facts for us. We are talking about the impact, everything from jobs to stocks as a result of the weather. Im Bill Griffith in for tyler. Great to be back on power lunch. Sue is ready to go with several big market stories. Its great to have you with me today. You mentioned the big nasdaq spike. The big caps and small caps are also making some very big moves today. You see the drop and the pop for the s p midcap index. A similar pattern for the small caps. Youll see that in the russell. You can see it right there, as a matter of fact. Down. 75 . Yeartodate the russell is down 6 . The midcaps down 5 . Perhaps we shouldnt be surprised given the gains we saw last year. Seema mody is live in times square to put some perspective on all of that today. Good afternoon. The nasdaq on track for its worst week since june of 2012, that adp report certainly not giving investors a reason to get back in this market. In fact, one trader telling me he doesnt want to step back in until he knows where the bottom will be. With that said, Technology Stocks have had a terrible day today. Some of the stocks that have a significant weighting on the nasdaq are lower, including google and amazon. Apple shares outperforming, getting specific, 3d printing stocks getting hit on the chin after 3d printing systems lowered its earnings outlook due to slowing demand. Thats moving some of the other 3d printing stocks lower today as well. Lastly, big moves and heres the reason. Macaos gross gaining revenue, up 7 in january, its lowest growth rate since october 2012. You can see the screen red across the screen. Back to you. Thank you, seema. The etf that follows the dow is now down almost 7 yeartodate. The etf that tracks the s p 500 down 5 this year. The qs track the nasdaq and are down 3. 5 . How do you win when the markets lose . Bob pisani and dominic chu are working that for us. Dom, i will start with you. You really looked into this whole theory of how you can profit from the market going to the down side. Either profit from it or hedge some of your exposure if youre long stocks because if those stocks are going down, you want an investment that goes up to counteract that loss. Take a look at the volatility index, the vix, the fear index. This uses options prices. We wont get more complicated than that. It uses options prices to gauge what the volatility pictures like for stocks. You can see its been up and down all over the place and it has spiked up just recently over the past few weeks. If you take a look at a more near term picture, see that, over the past three months its up 47 . Thats a massive move for one particular index, if you will. Theres an etf that tracks it, vxx is the ticker. Its an chanexchange traded not. Take a look at the spike up this way. Thats a big one. There are etfs that track each of the indices. Take a look at this one. This tracks the s p 500 inversely. It goes up when the s p goes down. Thats the sh. Same thing happens for the doj which goes the opposite way of the dow. Its a dog, if you will. Then the qqq that you said, psq is the opposite. It goes up when the nasdaq goes down. Mind your ps and qs when you get into this, because it is difficult. You may think youre buying one and you are actually not. Bob pisani knows a lot about that. He just returned from the big etf conference in florida. Hes our man on that particular subject. What did the guys in florida tell you about the short etfs . I love these products, providing you are a professional investor and know what youre doing. These products are not suitable for long term buy and hold people. Let me explain why. Look at the vxx. What you have here is a basket that owns short term vix futures in the near term like februarymarch, for example. The problem is that you have to keep rolling over into the next month as they expire. By definition you are selling low and buying high, a higher contract, and thats why you get a disconnect. It doesnt match the vix. Its fine short term if you understand how to use it as a professional. Let me move to the short inverse, the sh. Here, the problem is it resets every day so for example, after a month, if the s p is down 2 , you think the sh will be up 2 . Maybe, but maybe not, because its whats important is how it gets there. If youre up 1 then down 2 the next day, because it resets every day, you may not get the exact same price. I will give you an example. Right now the s p is down 1. 75 for the month and the sh is up 1. 69 . Thats close but not quite, and as it gets further out, it can gyrate more depending how the values go. Youre agreeing. Absolutely. I like these products. People dont understand what they are and they get into trouble. Thats the trouble i have. Thats why i dont go on the air talking about them a lot. But for professionals, i like them. You have to use them tactically, you have to get in and out of them, use them for short Term Investment hedging instruments. Thats why theyre used by a lot of professionals like bob said. Thanks, guys. Appreciate it very much. Lets talk more about this market, because edward and craig are investment strategists. Last time when you were on power lunch about three weeks ago, called it. You said watch out for a dip and this was your explanation. My concern was that many were underestimating the volatility that will come from transitioning simultaneously to new fed policy and new fed leadership at the same time. I still have that concern. You called it and you got it right. How do you feel about the market now . Because we have seen quite a retracement. I never thought there could be a smooth fed exit in this emerging market turmoil is the latest evidence of that. I dont think the selloff is over. We probably have to test below 1700 on the s p 500 to get any buying back with any real volume. Do you agree, edward . Actually, i respect craig but i think that we are kind of getting close to this correction. The reason i say that is because if you take a look at history, you typically dont go from a bear market, a bull market, i should say, an extended one, into a fullfledged bear market in the span of one month. You typically see a topping process either in the form of a narrowing participation or we havent seen those bread crumbs of late. As you get closer to 1700 on the s p, it becomes a fairly good level to be more aggressive with equities. What would you be where would you be allocating cash right now . I ask that because it seems as though the bond market is also trying to tell us something, breaking the 2. 6 level on the tenyear, then we moved back up. The trade for 2014 was supposed to be higher Interest Rates. Its not. We are getting lower Interest Rates. So the good news is i dont think the economys falling out of bed here. I know bad news is bad again and we have had some big misses but i watch credit spreads, theyre not signaling a huge distress. I thought the q4 gdp was a pretty good number. I would be looking to allocate on weakness, be very patient here to the cyclicals, industrials, things that get exposure to a replacement cycle. I would use this to reduce exposure to treasuries because i think 2. 40, 2. 50 on a ten year is probably the floor. I would look for income substitutes. Where would you put money to work, ed . Well, particularly in those sectors that are outperforming. Take a look at this year, health care continues to be a large overweight for us. We are also finding new opportunities in technology with Wireless Semiconductor names like skyworks, for example. Also, were taking a look at names that already reported, classic companies where you are seeing not only earnings upside but revenue upside and fairly good constructive guidance for 2014. As the market pulls back and the multiples on those names contract, we think those will be good opportunities for us. Yeah, health care, technology as well as some of the industrial names like union pacific. Thank you both. Bill says hey. Great to see you both. Dominic chu is back with a market flash. Lets take a look at deckers moving higher, near session highs. The company had a 98 price target for the stock. Its the maker of ugg boots and a lot of the other footwear products. It is currently moving higher on the day. The stock is down about 7 yeartodate. Back to you. Thank you very much. If you live in the northeast, the new york city area, tristates, more specifically in my neighborhood in new jersey, i can sympathize. We had a rough mean nasty morning. The snow started after midnight, the ice a short time after that. New York City Schools are open, tough group that they are. You got major Public Transit running but slowly today. We are hearing about another storm this weekend. Lets hear about that now with the weather channel. As you move through the afternoon hours, it looks like the wintry weather will wind down across parts of central and southern new jersey and parts of southern pennsylvania but not so across northern new england. Significant snow will be likely ongoing there. All through the afternoon and evening hours. The storm really doesnt go out to sea until overnight tonight, then we can put this winter storm to bed by tomorrow morning. Additionally, this is how much snow we expect, at least eight to 12 inches in parts of southern new england. Certainly ski resorts will be happy with that. No additional snow accumulations across south jersey and southern pennsylvania or southern connecticut for that matter. Lets turn ahead to this weekend, where everybody wants to know where there be a big snowstorm along the coast. Right now, it does not look like it. Thats not to say its not going to happen. Some of the guidance we were looking at earlier did suggest there might be a coastal storm. This one looks like there are two pieces of energy that are coming together at different times and they do not combine forces in a way that will produce a big storm along the east coast. Doesnt mean there wont be snow but it just might not be the big storm that some may have been anticipating early, but stay tuned for further details. You know things change. Back to you. Darn. I wanted a noreaster. Didnt you . I wanted a lot more snow coming this way. Im done. I am so done. We are all so done. This is Steve Liesman, obviously. We want to look at the impact, you can imagine all this snow is going to have an impact on the economy but you will show us specifically how. Heres the deal. It happens every winter. It gets cold and snowy. No surprise. It would appear to make little sense to blame bad economic numbers, numbers that are seasonally adjusted, on the cold and snow except it does appear this winter has been substantially colder and snowier than previous ones. In fact, this is business weather expert paul walsh. He told me several areas are breaking snow records this year. This year, snow has been particularly impactful because we had so much snow. In areas like chicago and new york and philadelphia, we are approaching record levels. What that means is that municipalities have to spend money to clean up the snow and a lot of these municipalities are starting to get close to actually running out of money. You know its a bad year when theyre running out of sand and running out of the salt. Now layer on top of the snow the cold. Heres where we have looked at, they put together a graphic for me over at the weather channel, thank you very much, of temperatures compared to average. You can see a vast swath of this country pretty much half of it, where a whole lot of people live, much colder to colder than normal, even all the way down to florida. Especially down here, where you get cold in the south, where they build homes in the wintertime. Then the numbers arent really seasonally adjusting for that. Along with retail, a lot of the industries affected during the same. Interest sensitive sectors, the fed cares about auto and housing, people dont go out and shop for cars and homes in subzero temperatures. Thats not to mention tens of thousands of canceled flights. It all adds up. Fed interested in figuring out if the data is a weather effect or sign of broader economic weakness. Heres the problem. It may not be able to know it, what the right trend is, for awhile. When weather depresses the economy you usually get a bounceback. Walsh is bullish on the spring. Spring could be stronger and neither the strength of that nor the winter weakness will tell the fed the real underlying trend. Of course, this is a bucket list of mine standing in front of a weather map. Always wanted to be by the way, some economists already taking down their First Quarter forecasts by half a point, in some cases more than that. Heres some of the figures. Chicago, 58 inches so far which is just average from here, it will be the fourth snowiest on record. New york, 40 inches as of today. Headed for a top ten year if they just do average from here. Cleveland, 53 inches. Average 36. Youre plus 20, a couple feet almost right there. Detroit, 39 inches in january, a new record. Know what you should buy . Obviously natural gas and propane. How about salt . Did you see did you see that . A barge just arrived in milwaukee with 50,000 tons of salt to distribute throughout wisconsin. Youre making my point because the economics of it are that salt is seasonally adjusted. They are ordering what they believe to be the average amount of salt. If the price spikes, thats a market signal already that youre well above average. Same with propane and some of these other heating related products and commodities. Thats the way we roll around here trying to figure out the impact on the economy. I like when you point to that map. Like over there. Front coming through. Thats a bucket list thing of mine. See you a little later. Well talk jobs in a little bit. Sue . Blame that groundhog. Its all his fault. Girl power and Silicon Valley. A new all female fund is starting. We have the ladies behind it coming up next. If you drink coffee, hang on to your wallets. Well tell you why in two minutes. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome back to power lunch. Continuing a strong run, the stock up 30 based on news that an experimental drug to treat Irritable Bowel Syndrome succeeded in a couple large scale trials. Its up another 9 on top of yesterdays gains. So a huge move there. I just want to point out that we have now clawed back to even on the s p 500 so the mini rally intraday in stocks is continuing at least for now. Back to you. Rough morning, dominic chu but things are looking up as we head into the afternoon session. Another commodity going up. Coffee prices are spiking as brazil, the Worlds Largest producer of coffee beans, they are dealing with severe drought conditions. Check out this chart for the year so far. Beans are up 20 . Big turnaround for that commodity. It had been declining for the past three years, down about 40 in that time. Two of Silicon Valleys most prominent female Venture Capitalists are starting their own first. Theresa gow from excel and jennifer fonstat will focus on early stage mobile startups. Together, they have helped create 10 billion in Public Market value and have over a dozen ipos under their belt. In their very first broadcast interview, its right here on power lunch. Welcome, ladies. Congratulations on your new venture. Thanks, sue. Thank you very much. You must be very excited. You two have known each other from when you first both started or were at bane capital, is that correct . Its true, jennifer and i have known each other professionally, personally for over 25 years from our very first job on the same project team. Jennifer, why now . What about the environment now in Silicon Valley and or in the market made this feel like the right time for you two to strike out on your own . Well, theresa and i have known each other for a long time. We felt we had a shared vision in what we wanted to do, what we wanted to accomplish. We both really wanted to get back to our roots and invest in startups at the early stage, rolling up our sleeves, we have been working with companies for over two decades each and we really wanted to work with companies for the full arc of their growth from seed all the way through to longterm sustainable businesses. Theresa, the market has been extremely volatile right now. Does that make a difference in your ability to grow these companies and eventually take it public, or does perhaps the volatility work in your favor . Well, you know, jen and i have both lived through two major boom and bust cycles from internet 1. 0 to now, sort of the age of mobility, and i think that this particular volatility in capital markets, we have not yet seen slowdown in Technology Innovation or in the growth of the Early Stage Companies. I actually think its a really great time for us to be investing at the ground floor of these startups. Jennifer, talk about the atmosphere towards women in Silicon Valley. There are very few people, females, in Venture Capital. Why is that . Because women tend to be terrific investors and terrific ceos and their returns many times outpace their male counterparts. Well, we do think that being women does offer different perspective at the boardroom and in the management teams of our companies. We are excited to bring our fresh perspective to those companies. We have seen and theres a lot of data thats shown that women around the board table and diversity around the board table improve the bottom line and has real impact on outcomes. In the case of startups where you increase the chances of success, very important. Is this going to be a firm only of women . Or are you going to be kind of gender blind in your hiring and investing . Theresa . We are going to be gender blind in terms of our hiring and our investing, both jennifer and i have been very successful in investing in Early Stage Companies in