Will it be one of the big banks . Well explore that. And the great High Frequency trading debate. Got a computer like that . Thats not the one were talking about, folks. A lot more than that. Lets listen in. Its great to see, bill, instantly throw at brad, the idea that hes doing all this to promote a business model. He said that and also said, shame on you. How do you react to that . Yeah, so ill say it again. So i think hes outrageous. I think hes part of the problem. Today we will take you through the arguments that have ignited a furious debate. One small, we hope, understandable step at a time. First, though, to sue on a day where the dow hit that record and then fell back. Sue . Yeah, indeed it did, ty. Stocks hitting that record high today. The question is now, can the gains continue . Are we on the verge of a larger correction ahead . Shortly after the opening bell the dow did hit an alltime high intraday of 16604. 15. You can see things have fallen but certainly a milestone day. The transports also making a new high, and the s p. So we have a collective 40 billion worth of advice right here on power lunch for you from our guests, dave and the ci aro at atlanta trust and joe duran, ceo of united capital. Welcome to power. Nice to have you here. Joe, start with you, if i could, because youre a little nervous. Were into spring. April is kind of a difficult month for some, because we do have tax selling that usually kicks in. Tell me what youre expecting out of this market . I think what im seeing is a shift away from very speculative names. Which kind of is telling us that im not the only one whos concerned that weve gone a little too far, too quickly. Secondly, im very concerned be a the flattening of the yield curve. Interest rates appear to be flattening out, and that is seldom a good sign for a high growth economy. So im concerned the bond market is telling us that growth is coming, but not in the speed we would like. Theres a lot of talk of the second hatlf picking up steam. Perhaps thats not what will happen. Dave, you dont seem to be as worried or share the same concerns, anyway. Is that a correct read . Pretty much. I think the u. S. Economy is poised to do better. Weve had weatherinduced slowing, weve seen in the december through february period. But more recently seen better signs. I think seeing march in, vehicle sales, get above that 16 million mark is very important. A great consumer barometer, because its big ticket discretionary items. The ism survey go up and leading indicator component, and unemployment imclas continue to be low and well begin to see a better pace to payroll job growth. We think that 3 gdp growth even with a slow start is where well a end up in 2014. Thats a critical outcome for the sustainability of the bull market. What parts of this bull market would you be investing new money in . Well, i think you have to start realistically with where we are. We are in a fairly valued to fully valued market. So we dont view that there are a lot of hot sectors out there. What keeps us cautiously optimistic on the market is weve seen a breakdown in correlations. The implied correlation index on the s p, back to a stock pickers market. We think a quality rotation is underway and looking for companies with a recurring reserve revenue stream, with strong Free Cash Flow generation and where valuations are reasonable. You can find those across sector selective areally. Joe, you say itch swing of you 0 the more highly speculative stocks and into the better value, for lack of a better word, also the bigger, safer stocks . Yeah. Youd rather own a microsoft than an am soazon. You might prefer to own google than a netflix. Seeing a ford rather than a tesla. Seeing a shift to more reasonably valued. Thats what happens when the market gets a little too speculative, so i think were on the same page, that you want to continue to own stocks. Frankly, theyre the only game in town, but maybe companies with very predictable revenues with higher growth, Procter Gambles doing better than some of the more speculative names. You think thats where you want to be. Gentlemen, stick around. I want to turn the conversation to the hot topic of the week. High frequency trading. The value of a millisecond and what investors will pay for it has been a big part of our High Frequency discussion this week. A recap from the flash boys author Michael Lewis, i. E. Exceo brad cats yama and labatts ceo bill obrien. We are not as fast as the fastest hfts. Weve were slowed down hfts aint to react on this change. If a mutual fund or hedge fund gives an order its our responsibility to price it the same hft customers we do buy producing a valuable service to the market. Lets just it got deep, hairy, very technical, gentlemen. Dave, let me start with you, and if im understanding your position on High Frequency trading, its that you are a longterm trader, and that fundamentally, youre happy that theres some light shed on these practices, but that fundamentally, it doesnt really matter to you whether you bought the share at 30 and a penny, or 30 and 1. 111115 cents . Well, i would say this. First of you a, best execution on behalf of clients is always the standard that has to be adhered to, and a level Playing Field is a very important part of that. The point i would make, though, from an individual investors standpoint is that its a great time to be a longterm investor and not a shortterm trader. If youre not engaging in high turnover portfolios. If your investment time horizon is in months and years instead of seconds and minutes, this is still an interesting and important issue, but its not going to be a makeor break issue in terms of your portfolio. Joe durant, you read the book. Did it scare the begeezus out of it . It actually did. I read it on the flight from new york yesterday. The entire book, and it frankly reminded me a lot of what we saw during the mortgage crisis, which is a lot of Exotic Products that are very opaque but nobody knows how they work exactly. That nobody understands whos making the decisions. In this case computer computers, and that nobody really understands the implications or whos making what and how. When you have that opaqueness, its seldom good for most of us longterm investors. And what i would suggest is that the regulators, unfortunately, cannot keep up with the rate of innovationened, and we dont understand when most of these traders who do not really provide liquidity. Theyre bridging functions. They own stocks for one second, maybe. That theres a real probability that we dont understand how things might break, and what ive seen exactly. Doing this over two decades now, that the ag market acted in peculiar ways that i cant see logically why the market starts up 50 and goes down 150 then closes up 50. The volatility month to month is not higher but the volatility during the day is very peculiar. And this book, i think, is very important, and its going to start a very big debate internally about what we should be doing as a country to address this. It goes to the heart of peoples confidence in our capital markets. Absolutely. Dave, let me turn you to that, because one of the issues with the High Frequency trading that has been going on is the cost of execution goes up. The bigger your trade thats in the system, the higher the cost goes, and incrementally it can go up a full percent or so. That eventually gets passed down to the individual investors, whose money is being managed by a pension fund, or an endowment or something along those lines. So it does impact the individual investor. Maybe not directly, but indirectly. I agree that it can, and thats why its good that a light has been shown on this. The challenges part is, obviously, its an incredibly complex, technical issue, which doesnt often stir passionate debate, but has here. I think maybe were moving into a phase where less passion and more facts need to be gathered and i think that will happen both from a regulatory perspective and an industry perspective, i would certainly endorse that. Gentlemen, thank you all very much. Appreciate it. Lets go over to dominic chu for a market flash. Dom . Check out shares of facebook. At session lows now. Stock losing another 4 today. You can see currently just towards session lows now. Since hitting its high of 72. 59 march 11th, stock down more than 15 . Another one of are these momentum type stocks that are getting hit in the current market. Back to you, tyler. Ill take it, dom. Thank you. More headaches for citigroup. The New York Times reporting federal authorities are launching a criminal investigation into whether citigroup ig are noed warnings about the 400 million fraud that took place in the banking giants mexican division. Citi and the fbi declined to comment on the report. Shares of citi down almost 1. 5 . Meanwhile, u. S. Attorney general Preet Bharara taking on the big banks. Would go that story, kate. Thank you. Its no secret the u. S. Attorney in southern new york is irked with the big banks, compliance he finds lacking ands presumptuouses in offensive, other appears to. At a securities industry regulation Conference Monday he warned wall street in no Uncertain Terms to watch itself. In my view after arthur andersen, the pendulum has swung a bit too far and need to swing back a bit. And so you can expect that before too long, a Significant Financial Institution will be charged with a felony or be made to plead guilty to a felony where the conduct warrants it. Part of his rationale, the gloomy prognostication, executives resigning in shame simply dont come true. In fact, hes been Monitoring Companies that warn of dire consequences and finding in many cases they prove to be baseless fears. What i have found tipic willy is that in reality as we had suspected, the sky does not fall. Fk in, sometimes the sky brightens. Stock prices remain steady or go upened a the company is viewed as putting problem bees hind it. Clintsz and customers and Key Employees dont bat an eye and sometimes the ceo even gets a raise. And so this repeated chicken little routine, i will tell you, sometimes begins to wear thin. Now, of course, that reference about sometimes a ceo gets a raise, felt to many, myself included, a reference to jpmorgan, given dimond a raise in 2013 despite a number of regulatory issues. In any case, these feelings made to banks like jpmorgan and others in which hes reached settlements. Now citigroup needs to take note. Investors certainly are today off 1. 5 . Thank you. Ty, over to you. Switch it over to dominic, looking at a couple ipos that began trading today. A lot of those ipo stocks in the arena, start with chinese i. T. Services educator International Moving higher after a price 15. 3 million shares, 9. Currently up 13 on the trading day. Corium international, not quite as successful. The Drug Delivery systems provider, 16. 5 irshas, 8. Just about flat for the session although climbing back from lows. Two big ipos priced tonight. Grub hub, leading mobile platform for restaurant owners, 23 dollars to 25 a share, what we expect. And Ims Health Holdings one of the Biggest OnlineHealth Care Data managers in the world looking to price a big kun. 65 million shares at 18 positive 21 duck as pop. Of course, a 1. 2 billion ipo deal. Again, names youll want to keep an eye on both now and after the close, tyler. Back to you. Domic in, thank you. The department of transportation is launching a new campaign against texting and driving today. Here is the commercial thats about to hit the airwaves and the net. How many letters . Five letters. Just think about what am i doing right now . Smile. Smile . Uhhuh. This is so easy. Nobody likes to be stopped by the police, but if id seen her texting while driving and given her a ticket it just might have saved her life. 71 of teenagers and young people text and drive according to the department of transportation. 78 admit reading texts while driving. Sue, frightening stuff. It really is, ty. Absolutely. All right. We have steve up next. Right, Steve Liesman . And larry, too. Several bright points on the economy. Ill give them to you next. The biggest week weakness in the whole country right now, softness in business investment. Cap x and discouraging jobs and wages. Ill still play from the optimistic side on the Great American stock market. Youll see why, next up. We know were not the center of your life, but well do our best to help you connect to what is. Im taking off, but, uh, dont worry. Im gonna leave the tv on for you. And if anything happens, dont forget about the new xfinity my account app. You can troubleshoot technical issues here. If you make an appointment, you can check out the status here. You can pay the bill, too. But dont worry about that right now. Okay. How do i look . Thanks. [ male announcer ] troubleshoot, manage appointments, and bill pay from your phone. Introducing the xfinity my account app. Welcome back to power lunch. Im eamon javers in washington where cnbc learned iv eint acti brokers announce the first large retail brokerage 0 of 0erring customers to iex. So much attention in the wake of mikes lewis book and new trading plastform designed to allow customers to avoid High FrequencyTrading Technologies and techniques. Interactive brokers offering its customers the ability to click on an icon and choose directly to route their trades to iex, the first time theyve had that ability. That is expected to be online within the next five to ten days, that option should be available for customers of Interactive Brokers, and we expect to see that announcement as early as this afternoon. Back to you. Ayman, interesting stuff. We asked brad about that and whether business had really picked up when we had him on power lunch. He said, yes. Ever since the publication of Michael Lewis book, it had gained quite a bit of momentum. s pras understandable. Right, steve . Given the controversy over High Frequency trading. Now we can all get on the super highway and take a but trade here. Right . Whats interesting, sue. Go ahead. What Interactive Brokers is likely to say is that theyre not in a position, they dont want to take sides in this High Frequency trading debate, just offer customers the ability to go directly to iex, if thats what they want. They have historically been among the first to connect to any any exchange, were ut this will offer customers an opportunity to go directly to iex. So one of the things well have to watch and see is how many customers are motivated by this whole flash boys debate and decide, you know what . I want to avoid hft and only go to iex. Whether or not they get the best price there, is there an ideological decision customers are making as much as a business decision . That has to be seen here. Iex is appealing to those who want to avoid High Frequency trading or dont want to be in that it stream, because. Right. Iex ostensibly creating speed bumps along the way . Is that exactly. It slows down the order flow so that they nobody can get ahead of you. The orders arent seen by the High Frequency traders. And also said theyre going to limit order types as well. Theyre deliberately limiting the complexity thats built into the Market Structure over the past several years with all of these convolutedened a difficult to understand order types, theyre saying theyre streamline that. Thats the pitch. To that point, streamline that. Two quick questions. Is iex seen as a white knight here . The good guys. The white hats rather than the black hats . Certainly portrayed that way. Yes. The mike lewis take. The media bought into that. Secondly, regarding the iex trades, will it be cheaper for customers . Thats what i want to know. Commissionwise, whatever. I dont think we know that yet. Thats a key point. It is, but also, they regulate their trades so that what they do is avoid the High Frequency trader. Yeah, but the critical question becomes the volumes. Right . You want to trade in the market with the most volume. If youre saying im going to ob be outside of that exchange or the other exchanges with the volume, then i think youll worry, are you getting the best price out there . You have to. Thats the law . The regulation . They have to show theyre getting the best price. Barry, unless you specify sand say only a taking it you might cost yourself money in the long run doing that. My point. The question issish did ayman people will be fired up saying im only going there. A small seg mtht of the market that does that. Aquestion for larry. The question is whether or not the main street popularity of a pook like flash boys will nudge the sec closer to figuring out some way to either a regulate High Frequency trading, maybe by, as Charles Schwab suggests, putting in a transaction fee, which would stop stock stuffing, or, you know, because the popularity of this book, once youve been on 60 minutes, once youve been on cnbc, once main street reads the book, how do you think Mary Jo White will handle publicity surrounding this . Ms. White specifically and the s. E. C. Generally want any excuse they can to come in and regulate, all right, and look for bad guys. Thats the deal. Shes a cop. With all due respect, Mary Jo White, i have a lot of respect and have met. Im saying the new rule in the new world order post2008 and in the last year or to two, s. E. C. , u. S. Attorneys they wants to get in. They want to get in and theyre going to get in, and and this is the part for the fact that the s. E. C. For some years was absolutely not i understand. I am very worried about the regulation. Ayman, you and i worked on a story that dealt with the . Ed guys in chicago dont have the same access as guys