He will be on power lunch with us tomorrow for an extended interview after the release of his new book. It is called flash boys. He says the markets are rigged, mostly because of High Frequency trading. Are these markets free and fair for everyone . We will begin a conversation about that today, continue it with michael tomorrow. And north and south korea engage in artillery duels. Is this the real flash point the market should focus on . After a weekend of quakes and aftershocks in california, we are going to talk to a top seismologist at the u. S. Geological survey. Could the big one be coming . When . First, though, to sue, who knows a little bit about quakes and shakes. Oh, yeah. From southern cal. I have been through a number of big ones. It is not fun. Its going to be a very interesting conversation. She is the top seismologist in the united states. Meantime, right now, theres a little rumbling but thats the sound of the bulls. They are in charge today. The dow up triple digits. Right now, up about 145 points, dominic chu. You are tracking the big winners for us. Absolutely. The dow is moving within 1 of its all time high, thats 16,588. Right now you can see up about 140 points. You can see leading the way higher, youve got microsoft, big software heading up, at least leading the way higher, followed by united technologies, then you have intel on the chip side of things as well as ibm and visa. So it looks like technology, Technology Services and one large defense contractor really leading the way higher. So again, a nice 140 point gain but it wont be enough at least for right now to get the dow to positive on the year. Back to you. Yeah. Theyre not done yet. Well see what the rest of the day holds. Thanks. See you again in a second. Trading action right down here, bob pisani joins me on the floor of the nyse. We are closer to new highs on the s p than the dow. Lets take a look. 1878, thats what we need to close for a new historic high on the dow today. Only four points away. Janet yellen helped earlier on. She was talking about considerable slack in the economy, sounding very dovish. Saying keeping rates low be needed for some time, that helped. Market leaders today, looked like the beginning of 2014 again. Biotech stocks are up, airline stocks. Xsd, semiconductor stocks, those were market leaders early on, had trouble in the last few weeks. And speaking of trouble in the last few weeks, its gone away for emerging markets. The eem is up eight days in a row right now. China, brazil have recovered a little. Thats a new high for the year. We were saying this was dead three weeks ago. New high for the year. How about all the momentum and growth names that started out january as the big market leaders here. They are to the downside right now but they have been replaced by consumer stocks. So whats moving here is the growth names that people are paying a lot of money for. In the last couple weeks, theyre being replaced by more lets call them valueoriented names, cheaper names. Kroeger, pepsi, general mills. Who would have thought that was going on even two weeks ago. I think its a healthy sign. We needed some rotation. Maybe we get growth in the economy. These stocks are the ones you want to own right now. They are the cheaper ones. See you again in just a couple minutes. Ty . New fed chair janet yellen getting wall streets attention again today with a speech described as quote, very dovish. Our senior economics reporter Steve Liesman here with the details and the reaction. Market up. That would be one reaction. It was probably good for 50 points on the dow. New fed chair janet yellen making strong comments on one of the most controversial and important issues for the fed. How much extra labor, labor market slack, is out there. Yellen saying in her opinion, there is lots of it and the fed needs to keep its monetary policies easy and in place for some time. I think this extraordinary commitment is still needed and will be for some time, and i believe this view is widely shared by my fellow policy makers at the fed. Yellen offered five reasons why she thinks theres a lot of slack in the labor market. One, seven Million People working parttime for economic reasons. They want a fulltime job. There are not as many people quitting jobs, not the same churn in the jobs market. Wage gains are small. Many people have been unemployed for six months or more. And the Participation Rate remains depressed. Yellen went on to say she understands that the recovery still feels like a recession for Many Americans and in many ways, its as hard to find a job during the recovery as it was during many recessions. And the almost political tone, she mentioned by name three people and discussed their job situations. This is one of the most dovish fed speeches ever, saying deep dish dovish batman, Credit Suisse saying Monetary Policy needs to remain accommodative. The more slack in the jobs market, the more yellen believes policy needs to remain easy to keep Interest Rates low and aid the job market. Also, the more slack, the more the fed can keep rates low without worrying about wage induced inflation. About two weeks ago in her press conference, she intimated that rates may start to rise six months or so after the accommodation, the bond purchases and later this fall. It created a real abrupt slip in the market. Is this in any way an effort on her part to dial or walk that back a bit . I think so, indirectly. She doesnt mention the amount of time that it would take or how long, she says some time, but she makes a very dovish case about the market. If you want to know or had any questions how dovish yellen was, read this speech. When it comes to the job market, she thinks the fed has a lot of work to do. By emphasizing the slack in the job market she is by inference suggesting that they are going to be accommodating for a long time. There is still a direct need for her to respond. But this is a piece of that. Thanks very much. All righty. We will go to sheila dharmarajan, arent we . We will talk about the biotech index having a terrible month. We have been reporting on that fall since the peak. Take a look at the chart. Its a pretty gradual down turn. About 11 in a month. Thats the ibb, the etf that tracks the biotech index, down more than 12 . You can see the steep falloff on the righthand side of that chart. Sheila dharmarajan is at the nasdaq, home to almost all the stocks in that index. One sector does not make the nasdaq alone. So you will report on some of the winners and also the losers on this final day of q1. Yeah. Its the last trading day of the First Quarter and look, the nasdaq has certainly been the scene of the crime. We have seen a lot of volatility this quarter. Lets talk about the biotechs because yes, they have been getting battered in the past month, down double digits, but the group is still showing gains for the quarter. The biotech index is up about 3 for the quarter right now. Very mixed performance when you look at individual names. Gilead, celgene, all posting losses but amgen and others are hanging on to gains for the quarter. Got to talk about momentum at the nasdaq. Theres a lot of talk of this momentum trade being over. What the quarter has really shown is that theres a divergence across the group. Tesla still posting 25 plus gains for the quarter. Facebook is also up but priceline, this is interesting, this is one of the big momentum winners in 2013, only up about 3 for the quarter. Netflix, another one of those in the red. Finally, shift gears to large cap tech because this is a lot of what traders are talking about. Google, for example, barely positive for the quarter. Amazon showing double digit declines for the year but take a look at microsoft, posting a solid double digit gain, hitting a near 14 year high. A lot of talk about that mixed performance. I want to mention geopolitical concerns, whats happening with russia and ukraine still very much in investors minds. Take a look at the biggest loser for the quarter, a Russian Telecom company. When you are thinking about the quarter ahead, a lot of people say expect this volatility but also out for this divergence. Its not like the biotech trade will work or not work, or the momentum trade will work or not work. We are starting to see a stock pickers market emerge for this quarter. Very strong day for the Dow Jones Industrial average. We are up about 143 points. The s p up 16 and the nasdaq up 1. 25 on the trading session. Cnbc contributors kenny pulcari and michael farr are here. How optimistic are you given the volatility we have seen and are starting to see that rotation kick in as well . Reasonably, i think optimistic. We have had kind of a flat pullback quarter where things didnt do a whole lot, but after a 32 rise in 2013, i dont think a flat going sideways quarter is bad at all. We have changed fed chairmen, we heard the fed chairman make a very uncharacteristic hawkish remark a couple weeks ago. We heard more i think of the real inner yellen today in her dovish remarks, and you know, i think the inner yellen said what was it, extraordinary support will be needed for some time. Stocks like it. I dont think the feds going anywhere. I think stocks can do okay. I dont think wildly optimistic but okay. You like consumer staples, health care and technology, correct . I do. Theres no need to swing for the fences in here. I think solid Balance Sheets that are growing top line and bottom line. You have to be able to grow top line along with bottom line in this market. Make sure you own some things thats good that i think can appreciate and grow. Kenny, you kind of disagree that ms. Yellen has changed her tune. I dont see how two weeks ago she could have come out and been so in fact, hawkish as she was, i think she was very legitimate. She said listen, its a slow recovery but the fed is going to continue down the path. She could not have been any clearer, right . She even indicated rates six months at the end and everyone started speculating. I think actually the market needed to hear that. She said what it needed to hear. Today, listen, the market was up ten points before she even opened her mouth at 8 30 so you cant necessarily say this whole thing is because she came out with a dovish speech. Certainly the next five or six points might be attributed to that. I think people are reading way too much into that. I do not think she will turn around and be weak spined versus what she said two weeks ago. Gentlemen, thank you very much. Sue, i think kennys right, just really quickly. I think its true that janet yellen said what she meant, but i think she still softened it. I think she gave the fed report at the last meeting and i think shes telling you how she feels right now. You have to listen to the fed chairman. On that note, michael, you get the final word. Thanks so much. Kenny, see you again in just a second. Ty . Always good advice. Listen to the fed chairman. He may be the business novelist of our time, Michael Lewis has a new book out taking on the High Frequency trading world called flat boys. He will be here live with us tomorrow on power lunch at 1 00 eastern. Do not miss it. He is also bringing the man many say is the star of the book, iexs founder, who has developed an exchange he believes will really, really, not kidding, level the Playing Field. That is tomorrow at 1 00 eastern time only right here on power lunch. Eamon javers has gone through the book. There is really like one copy out there. He is with us live in washington. What did you find . Reporter well, heres the copy right here. This is the book that all of wall street is digesting today to try to figure out what the implications of it are going to be. Last night, Michael Lewis sat down with 60 minutes to explain why he says the u. S. Stock market is rigged. Take a listen. It all happens in tiny periods of time. There is speed advantage that the faster traders have, its milliseconds, sometimes fractions of milliseconds, but its enough for them to identify what youre going to do and do it before you do it at your expense. So it drives the price up. It drives the price up and in turn, you pay a higher price. The High FrequencyTrading Community is responding to this this morning. Peter nabit of the modern markets initiative sent us this statement. Take a look. He says market quality and integrity are of the utmost importance and we welcome the opportunity to continue improving the market for end investors. Unfortunately, the 60 minutes story only presented one view of a very important issue and promoted sweeping inaccurate generalizations about High Frequency trading. Also, i should tell you that i called the s. E. C. To ask about the allegations that the u. S. Stock market is rigged. Its the s. E. C. s job to make sure the stock market is not rigged. A spokesperson there declined to comment on the lewis book but pointed out that the s. E. C. Is conducting what he called a comprehensive datadriven analysis of all this. Sue and tyler . Thanks very much, eamon. Stick around. We will bring in sue, bob and kenny into the conversation. Bob, what is your initial reaction to the charge that the market is fundamentally rigged against the little guy and that their costs to buy and sell stocks are higher than they would otherwise be because some folks with big Fast Computers beat them to the punch . We have been talking about High Frequency traders for five years and the fact that some people have access to fiber optic lines and how fair or unfair is that. The fact is that calling the market rigged is i think a gross overstatement of what is going on. There are High Frequency traders who want to sell people and scalp a penny from people out there. If you want to buy apple at 530, they are trying to sell it at 530. 01. I would rather that not happen but to say that the market is rigged as a result of that is a gross overgeneralization. You know, i talked to a very Prominent Hedge Fund manager this morning and asked him his take, and he is livid about the High Frequency trading phenomenon thats going on. He basically said to me it increases my trading costs by up to half a percent on each trade as i execute it, in and out approaching 1 . He has billions of dollars under management. You may say it doesnt impact the little guy but heres the problem. If you are in a 401 k or in a pension or part of an endowment, those costs are not absorbed by the trader. They will be passed on to the investor. Thats exactly the confusion. Because you have to define the individual investor. Hes right, if you are just some guy going to buy 50 shares of coke and put it in your kids college fund, absolutely not impacted but if you are an individual participating in a 401 k or mutual fund or i. R. A. , its that institutional flow that gets impacted from High Frequency trading which ultimately flows right down to the individual participants in that fund. So individually it makes it more costly. Much more costly. When was this Golden Moment 30 or 40 years ago when everybody got the perfect spreads . Im not trying to be an apologist for them but we know spreads were wider 30 or 40 years ago. We know its cheaper to trade now than its ever been for anybody out there. We know the spreads are tighter. We know the execution is almost instantaneous. Hes telling me its not cheaper for him to trade and it takes a lot more time for him to trade. For the individual investor it might be cheaper. You can go to fidelity for 7. 99, you can do all you want. For the Institutional Investor its not cheap. Eamon . One of the questions here is the irony in all this which lewis points out in the book is that computerized electronic trading was really created to eliminate the middleman in the first place, the guys on wall street who had access to all the information that the rest of us didnt have. So the irony here is that it created an unintended consequence where theres another gap now that can be exploited. The question is as you propose solutions to this, how are you going to do it in a way that doesnt create some third unintended consequence that we cant see just now from where we sit. Because the technology is moving so fast its very difficult for regulators to get a grip on this and they clearly are struggling to figure out what they ought to be doing and how they ought to be constraining this or if they should at all. The s. E. C. In the 1990s, eamon is right, they felt the nyse and nasdaq were moving too slowly, were not innovative enough, and they were encouraging this kind of computerized trade. Right. Now theres a massive conflict of interest because you have every Investment Bank has got their own venue, their own center, its fragmented. They have no incentive to go to a public marketplace. They have every incentive to fragment it and keep it inside which then weakens the overall public and what this offmarket trades. Thats right. Last time i checked, dark doesnt mean transparent. Too many places to trade creates too much confusion. All right, guys. The other thing, what this Hedge Fund Manager is telling me is because his costs are increasing incrementally, it forces him not to move in equities. Hes looking for alternative investments like etfs or something that cost him less. There you go. To be continued, right, ty . To be continued tomorrow, in part because Michael Lewis will be here with us live on power lunch at 1 00. He has been a friend of the program for a long time. For my money, the best Business Writer out there, bar none. Plus, iexs founder, the man lewis thinks will solve many of the problems he lays out in his new book. They will be together talking about leveling the Playing Field of modern trading. We will hear from the other side as well. In the fight against cholesterol, statins took the market by storm. A new class of cholesterol fighters is taking the stage. Dominic chu is on the case. Several big name stocks are in this group. I will have those names and show you how they a