of a bid with alternative energy, today not so much. >> they're going to try to appoint a ceo by the end of the month. >> thanks for coming. that will do it for "power lunch." >> i'm trying to get invited back. >> you will be. "street signs" begins right now. ♪ signs, signs, everywhere a sign, blocking up the scenery -- >> welcome to "street signs." and there are signs everywhere. now most of them point to a better economy and better markets. but there are some mixed sick es out there. we'll show you three sectors and what their signs might be on the street. do you think stock picking is dead? think again. millions of investors are buying etfs for safety and ease. but that comes with a price. we're going to show you how the safe etfs may be costing you huge returns. forget greece, iran is the new big fear. we are going to tie together how the world wars between iran and israel could put you and your money at risk.

courtney. >> well, thanks, brian. i'm courtney reagan. here's what else we're watching at this hour. sales of existing homes rides e rising 4.3% last month. that's the fastest pace since may of 2010. oil prices hitting fresh nine-month highs today as worries over iran outweigh any concerns over economic weakness in europe. and t-mobile wants the fcc to block verizon's purchase spectrum. verizon will control too much wireless spectrum if the deal goes through. >> all right, courtney, thank you very much. let's start with the markets as we kind of stay stuck around the 12,950 mark. things have gotten decidedly better recently. a lot of signs on the street. let's talk about three and what they may be telling us. first up, deep discounters. retailers like dollar tree and walmart. some are now asking if these companies might be facing a

double whammy of sorts, right? improving economy and higher gas prices. here's the thesis. the improving economy may push some families to trade up, maybe from a dollar tree to a target, if you will. while those in the lower side of the social economic spectrum may cut back on all their purchases as gas prices eat further into the disposable income. do you think that's bunk? well, keep in mind both dollar tree and walmart are under performing the major indexes this year as well as most of their retail competition. then there's the possibility of what we're calling the downside to the upside. huh? case and point, lumber liquidato liquidators, discount flooring company posting earnings per share and below consensus and management saying they will open about 20 to 25 new locations versus previous projection of 42. we might actually be seeing a case where as housing gets better, that's the upside, more families are choosing to move instead of remodelling their current homes, which could be the downside for names maybe

like a lumber liquidators or maas co. and certainly no cake walk, sorry, today for cheesecake factory investors. cake beat on the street on eps and same store sales rose. but management issued below consensus first quarter guidance and the stock is sinking. take a look at this. the year-to-date stock performance of cheesecake up about 1%. and some of its competitors, buffalo wild wings up 30%, red robin up 27%. parent company of olive garden up about 10%. bottom line based on our street poll yesterday, is the market saying high eer gas prices are going to push diners to eat more at home, not go out to eat, or maybe trade down from the more upscale casual chains like a cheesecake factory to go out and get a burger and a beer perhaps at red robin gourmet burgers. again. some mixed signs on the street. let's dig into these and try to uncover what they are telling us about the economy.

joining us analyst at colin stew wart and joins us now. lumber liquidators is not a name we talk about much, if ever, but is it saying something about maybe housing or the economy that we need to be concerned about? or is this really just a lumber liquidators' issue? >> you know, brian, lumber liquidators didn't really miss sales expectations and guidance for same store sales is just about where we thought it would be for 2012. they're really pulling back in store epings as you mentioned and making lots of internal changes as a new ceo, rob lynch, has arrived. i think they're having compa company-specific issues. and the pullback in the stock today is after a 20% run year-to-date. this is just a pause in what we expect to be a good year for lumber liquidators. >> fair enough. here's the logic that we used. if existing home sales are getting a little better and they are, and new home sales getting a little better and they are, instead of a family spending $10,000 or $20,000 or new kitchen or flooring, they may

just decide to move, wouldn't they? isn't there some sort of a downside to an improving housing economy? or really is it going to be a tide that lifts everybody up? >> brian, i really don't think there's any downside to the upside because if i move into a new home, that's the most likely time that i'll replace the flooring. so any activity in housing particularly if we could get any movement in home prices and it made sense to invest in a home again, we think that will be good news for lumber liquidators and just the gravy on the top. hardwood sales are off 14% since the downturn began. >> why are they pulling back on expectations of store openings? why go from 42 to 20 to 25? >> it's a whole new real estate team looking at what they've done in terms of site selection. i really think a whole new management team is just taking a step back. another thing to know is it only costs about $100,000 or $125,000 for them to put a new store up. they could ramp back up again. >> good point.

thank you very much, laura. >> thank you, brian. >> sign two, dollar tree and walmart underperforming in the market despite posting what many consider decent numbers. courtney reagan is with us now. what is going on with the names? >> this is an interesting story. it's david versus goliath. if you like the underdog, pull for a dollar tree. pretty much these earnings very, very strong across the board. same store sales really strong. they actually liked that warmer than expected winter weather. walmart blamed the weather for missing. they have apparel the dollar tree doesn't. this is a very interesting story and i'm not concerned about that slight cautious guidance let's say going forward. pen any less than what the streets expecting for dollar tree. i mean, jpmorgan in general points out guides conservatively. in the last five years they've beaten guidance by about 15%. >> is there any risk? we've talked about as the economy gets worse, people will trade down. they have to save every penny

they can so they can go from a dollar tree to a target or anything else. is reverse risk as things get better they'll go back up? or talk that dollar tree has permanently captured a new base of customers? >> i think dollar tree has permanently captured new base of customers. i think more consumers are willing to trade down to a dollar tree than to walmart. it's less intimidating, floor mats are nicer and organized and the product mix is strong. it's vastly improved in recent years. >> courtney reagan, dollar tree bull. sign three, what is on the economic menu? yesterday we asked you all to vote. what would you give up if gas hit $5 a gallon? 20% said you would stop going out so much. and that's not what cheesecake factory would want to hear. i asked about lumber liquidators, cheesecake obviously the stock taking a big hit today. largely underperformed as of late. is this a cheesecake factory

issue, or is this a sign that gas will eat into the casual dining space? >> we think what's happening today is more of a calendar issue in which the first three days of calendar 2012 pulled into 2011. however, we still think the company will meet at least the high-end of company eps guidance between $1.80 and $1.90. we're at $1.88. the company's poised additional market share. competitors of cheesecake about to close them i think cheesecake factory will gain a lot of that market share. >> you do. okay. we're trying to figure out and the reason we have you on is to figure out why buffalo wild wings is up and cheesecake is up 1% year-to-date. will people trade down to burger and beer rather than cheesecake? >> we disagree with that. as a matter of fact, we think the leading indicator for us is the four-week moving average for jobless claims. that has the strongest correlation with performance in

the restaurant sector where gasoline prices we think will hurt the most will be in a lot of the fast food qsr names with the possible exception of mcdonald's. >> bottom line, you think investors should buy cheesecake factory here. >> we say buy. >> steve, thank you very much. >> thank you. >> all right. i was 0 for 3 on my thesis. another hot stock, garmin, yes, garmin. garmin was a company five years ago some said would not even be around today to talk about. but not only is it still here, it is at a near four-year high. herb, say what you want about garmin, this is a heck of a reinvention story. >> it really is. and if you take a look at it, what they've done is they've turned around by they've made acquisitions, focused on what they think is the higher margin part of the business. i will say when i went through the call there's a lot of still changes that are going on here. they talk about the mix of the product. they talk about they're going to be spending more money so the operating margin's going to come in. but, yes, definitely -- >> we can agree that the stand

alone gps device, the thing you suck to your windshield, right, that's probably going to go away. that's a buggy whip. that doesn't mean garmin is going away. >> no. they have the fitness business with the watches -- >> that is booming by the way. >> golf course, that's a good margin. they have the marine going on in the boats. and they have private planes. so those are issues that have been actually big growth areas for them. again, we'll see where they grow. i would keep watching that. i want to keep an eye on it. not because i don't think they can reinvent themselves. look, by the way, they've got good free cash flow, a big dividend yield, they want to increase their dividend. they're playing with that as well. yes, look, they took their hit. they took the bad medicine, stock got clobbered. they're coming back trying to reinvent themselves. >> i want you to comment on the segment we just did. pretty much my thesis blown out of the water. sounds like nobody's thinking higher gas prices aren't going to hurt anybody? >> i just don't agree. i agree with you. >> wow. i dvred this show.

i'm going to put it on loop and watch it. >> i think if you talk to anyone in the restaurant industry, they'll tell you they get hit by that. cheesecake, one quick thing, bob, runs ol steen funds he told me just the other day he thinks cheesecake is fully valued at this level. he sold it in the 30s. road it up from 8. >> it takes a market and a herb greenberg agreement with me. what a wednesday. all right. coming up next on "street signs," stock picking apparently is not dead yet. the mob rush to etfs might be the single biggest mistake for your money. and president obama says he's going to cut the corporate tax rate. but we know he needs to raise more money. so what might be going up for companies as the headline rate goes down? next up we're going to head to the white house to speak to deputy director of national economic council, jason furman, about just this. stick around. it's here-streetsmart edge, the advanced,

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well, maybe perhaps one of the best economic signs out there is that, mastercard. up another $7.50 up about 2% to $406. say what you want about people putting stuff on credit cards or debit cards or spending whatever it is, they are spending more. that is benefitting mastercard's bottom line. today the president unveiling his plan to reform the corporate tax code. here's the headline. let's cut the headline corporate tax rate to 28% from 35%. but the president also wants to eliminate dozens of deductions and loopholes that help

companies pay less, often much less, than the headline rate might suggest. joining us assistant to the president for economic policy and principle deputy director of the national economic council, he joins us from the white house. welcome to "street signs." can we get anymore detail on what deductions are at risk? >> sure. the president put out a plan today. and he called for getting rid of dozens of special tax breaks. taking all that money back and plowing it into lower rates here in the united states. so you're encouraging businesses to invest and create jobs. framework, you can download it from the web. special tax breaks for oil and gas, tax treatment of corporate jets, insurance companies, whole range of things. the key principle here is doesn't make any sense that you have a company that builds a building for manufacturing paying three times as much in taxes as if you build that very same building for oil and gas. too many loopholes like that. get rid of them.

lower the rate. >> okay. well, luckily i was able to download that framework and have a look through it. i want to talk to you about a couple things that caught my eye. you talk about reform treatment of industry and products as well as the taxation rates on companys that are bringing cash overseas or sending it overseas. here's my concern, aon announced it's moving official headquarters to europe. halliburton has done it. what is to keep companies from saying, okay, i'm just going to move my actual headquarters outside the u.s. and escape the u.s. tax code almost entirely? >> the entire goal of this plan is to make america a more competitive place and a better place to invest. we've had a tax system that we haven't changed for 25 years. it's grown more and more complicated, less and less suited to a modern global economy. that's why what the president's proposing is to slash that tax rate here in america 35% down to 28% and do it in a common sense way that has bipartisan support for broadening the tax base.

>> but if the official rate is 35% and after deductions say company abc is paying 10%. right, we've heard so much about that. the president's talked about it. everybody's talked about it. we have some deduction sos corporate tax rate goes up to effective 17%. they're paying 7% more. what's to keep them from leaving the united states, jason? >> the goal of this plan isn't to raise taxes on businesses. this plan is about collecting taxes in a smarter way so that you're encouraging companies to make decisions for the best economic reasons not just because they get a special tax break for doing something this way. >> agreed. but if you lower a deduction or eliminate the deduction, that is effectively a tax increase. >> this is a plan that would cut taxes for, you know, small businesses, cut taxes for american manufacturers, cut taxes for people creating jobs here in america. but, again, the question is -- and there's a lot of bipartisan

support for this. you have chairman and president obama with approaches like this what can we do so the tax code isn't picking winners and losers but instead giving everyone more of an incentive to invest. >> i wasn't going anywhere with that line of questioning. talk about the u.s. manufacturers, understood, we know manufacturing jobs need to come back, but is there any risk of a trade war on that as foreign manufacturers say, hey, look what they're doing. this is essentially sort of a reverse tariff in disguise. any risk of the trade war, jason? >> absolutely not. we're building on a structure domestic production deduction out today. we take that and reform it. we'd make it more generous. but it builds on something that we've had in place for the last seven years. but, again, the basic idea here is to really level the playing field so that we are able to compete and succeed globally. >> revenue neutral? jason? >> the plan is revenue neutral. we don't think we could afford at a time like this of large

deficits to be spending money on corporate tax reform that you'd have to make up with a deeper cut somewhere else. but we also think this can help us with our fiscal discipline. year after year we have tax cuts for businesses that we do a year at a time. we never pay for them. this plan would either pay for them or we'd get rid of them. so it would help cut our deficit and contribute to fiscal responsibility. >> okay, jason furman from the white house, jason, thank you. >> thank you. >> all right. do not miss a live interview with treasury secretary tim geithner coming up on "squawk box" this friday 8:30 a.m. sure to be a big one. i guarantee we'll talk about corporate tax rates. the tell prompter says this, chat with cramer. he's the man with one name. he's greenberg, he's cramer. you came out in our segment we talked about cheesecake and lumber liquidators, my question to you during the commercial break that viewers couldn't hear, if we get the $5 gas, is it very different than $5 gallon gas two years ago given the change in the overall economy?

>> yes. >> are we making too much of it? >> i never want to make too much of it because i paid $82 in one saturday and it's in my mind i pay $82 because i handed the guy $75. >> are you driving a school bus? >> it's a 2006 lexus, you know -- >> $82? >> yeah. i just driven down from boston. i was paying $4.25 in connecticut. but here's what always confuses me. i keep waiting at the $4 last time we had clarence otis, terrific ceo, say on his call that this is the level where it hurts red lobster thrks , this s where it hurts olive garden. it's almost as if it's not as shocking as people think it is. >> or is it just that it's crept up on them right now and they haven't seen it yet? >> i'm going to break every single rule. >> they should be fired if it crept up on them. >> true. i'm going to break every single tv rule and tell you right here, right now, i wish i knew. i don't have an answer. i looked at dollar tree today.

dollar tree should be doing well because you take the money you don't have at the pump and what's left you go to dltr. parago is hurt because the most important ceo of all time left the company, which is the johnson & johnson ceo because he was the gift that kept giving. but -- it's a joke. never mind. >> crack went right -- that went right over my large elevated head. >> a c-47 right over my head. but the dollar tree not doing as well given the fact we should be trading down. what's doing well? target, macy's? that's a trade up. >> bottom line it then. this is what we were trying to show at the top of the show and sounds like i completely failed. >> stop it. why did i come out here? because you succeeded for heaven sake. >> is the market overreacting, looking at dollar tree and cheesecake, just two names we picked out today. overreacting to $4.50 or $5

gallon gas because the economic environment is different. people who are working are in some cases getting raises and won't impact them as much. >> yes, i think we are -- >> that's still on the margin. >> what is urban outfitters doing up today? that person doesn't know jack. that person may not be that schooled in how urban's doing. >> urban itself may be turning itself around sd. >> that's a different story. who wants it? like one of those cars that parks itself? they lost a lot of management. why is panera still at 150? why did i have to wait in line at panera when i had to spend $7 for a chili bowl and bread. chipotle's not coming in at all. ross stores -- harley davidson. i hate harley davidson. have you seen that stock? >> if i had buttons and sound effects, i would play them right now. i can picture this on "mad

money," 6:00 p.m. eastern time. >> thank you very much. >> you say something in the effect of folks, if you think you're going to sell everything that has too much exposure to $5 a gallon gas like what happened a few years ago, that would be an investing mistake. >> exactly. that's my theme. i take my cue from stocks. and nike here at 105. i'm coming back again and again to what don't you need that you're paying for? do you need a fancy stereo system? do you need a personal calcul e calculator that tells you where you are when you're hiking in the woods? cabela's? you don't hike in the woods when you're hurting. it costs a fortune just to get to cabela's. it's 90 miles away from everybody. >> this garmin heart rate monitor is spiking by the way. >> nicole, she's the marathoner, i said why is this going up again? >> the watch. >> the watches are great. >> the watches are booming. >> maybe execution.

executing the heck out of things. >> anybody you think will be impacted by $5 gas? >> i'll tell you -- >> listen, we were talking about in the oil break about nov. >> wow. >> hiring like mad, right? >> booming. did you hear what jason furman just said? the white house wants to eliminate tax breaks. i'm not making a political comment about whether it's a good thing or bad thing, but it's the one industry that is booming besides technology and apps and stuff that is employing people. and now they're talking about what is -- be realistic, a higher effective tax rate on ese companies. >> and remember these guys like to have that tax break because not every time they drill is it a home run. there's a lot of bad drilling. chesapeake talking about bakken how it's not that lucrative. chesapeake i understand isn't what you're saying. the stock is really flying here and he is $40 all in for oil. that's how much it costs. he's producing it for $40. that's expensive. >> yeah. >> and you need -- well, you say

that you need tax breaks and another person's going to come to my door like someone did this sunday and said would you please sign this petition which has big oil is like the worst thing in the world. i mentioned that on squawk. it's not. they're hiring. i refuse to hammer someone who's hiring. >> well-said. and i have to say, you know, with all due respect to jason. i'm sure he's a smart guy and put out in kind of a difficult spot, he didn't admit what we all know which is if you reduce a deduction, that's higher tax rate. >> yes. >> but nobody's going to say that. i hounded on him a bit. >> i think one of the things -- the difficult job you have is when you're interviewing someone from the administration, they're told to say x. people should know this at home. you don't want them to say why, but you want them to be gray. >> thanks for coming on. got to the bottom a little bit. herb alert. cyh. community health systems up 15% on earnings. herb says do not be fooled. why should i not be fool snd. >> you know -- >> they're up 15%.

>> because she told us not to be fooled. >> she's so good. >> she is. >> you want to see what happens when shorts think they're wrong? earnings beat analyst estimates. careful. crt capital nailed this group says she thinks the quarter was a miss on every level. in a report to clients today she said only the only statistics that matter, the only one that investors should pay attention to is same store admissions. and they were down 6.7%. this is the 13th quarter for such a decline. to her that means only one thing and this is her quote "the fundamental same store business is in deep trouble." now for something completely different, tomorrow when it announces earnings, sears will hold an earnings call. normally that would not be news, but with sears it is. i think this is the first time the company's held a call since hedge fund manager merged sears with k mart in 2004.

one more thing, by the way tomorrow i will be hosting a google plus hangout on cnbc. >> cheap plug. >> it's a cheap plug. submit your questions between now and tomorrow at 4:30 and i will try to answer them. >> i tweeted out you did not respond, is there free virtual beer? >> i'm working on it. >> okay. steven campman is an independent film writer, actor, director and a guy who had movie funded by private equity. it's called "buzz kill." i got to say you are the writers of one of my favorite movie of all time "back to school". >> excellent movie. >> talk about private equity. how did you get them to invest in your movie? >> well, first of all, it's a long story how we got involved because when you're doing these kind of movies, when we're talking independent movies, we're talking $1 million or less, number one. the numbers are not in the

traditional kind of studio independent numbers. >> this isn't tron legacy. >> no. the studios have wings of independent movies that are made for $8 million, $10 million. we're talking lower equity to get involved because they're not as high. >> what's the downside? private equity guys known as being maybe tough as sharks. what are they asking? they're going to give you money but might want a little blood in return. >> you have to come and have good arguments. and i happen to be a believer that right now in 2012 private equity involved in lower budget million dollar or less independent movies is a smart profitable move for about five reasons. and i start with the fact is we're in an economic downturn, entertainment always does well and what could be a cheaper way than downloading a movie. that's one. two, production costs are way down because of the evolution of the technology -- >> the middleman is evaporating. >> that will get to my third point which will be about distribution. but even on production making a

movie nowadays with the evolution of the camera and the editing, it's been demock tized to the point you can make good product for less money. and now we get to the other distribution. that's an issue of course. and for independent film basically distribution in the traditional mode is dead. independent movie isn't going to be in theaters. they don't have the money because all the money is poured into production. it's not poured into marketing. >> and what type of a turn would somebody be expecting? just because you may a million dollar movie doesn't mean it's going to be the next that makes 10 or 20 or 30 fold production cost. >> here's what i'm proposing, what i want to do, and "buzz kill" is a prototype for what i think can work. number one, i'm going to make three movies for the price of what i did "buzz kill" which was about $1.3. right away the investor has an attractive -- >> hedge. >> basically you have one of those movies -- right.

here's another thing that's interesting that's happening. directors and film makers like people like edward burns who is coming over made a movie called "the newlyweds" for $25,000, they're coming to this world because they want the creative control. equity part can get better film makers coming over to make for less dollars, more film and that brings us to the marketing. >> well, steven, we have to leave it there. we appreciate your time. "buzz kill"'s the name of the movie. >> can i tell you about it? >> quickly. >> a writer driving across america to take a meeting with an l.a. producer about his new script and it's about the fame and fortune of what happens to him when his script is taken and stolen and his car's stolen by the karaoke killer who only kills people who sing karaoke. >> i can respect that. >> do you understand where i'm coming from that? don't just say it's a dumb comedy because i'm going to

resent that. >> i didn't say it was a dumb comedy. >> i got it from both of you guys. i'm going to tell you right now this comedy is not dumb. >> i didn't say it was dumb comedy. >> students who watch this actually do better on their s.a.t. scores. >> really? >> they have sam kinson as a history professor. >> okay. [ overlapping speakers ] >> i got to go. thank you very much. appreciate it. "street signs" back right after this. stick around. to put your cash?a bette here's one you may not have thought of: fidelity. now you don't have to go to a bank to get the things you want from a bank. like no-fee atms -- all over the world. free checkwriting and mobile deposits. now, depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity. [ male announcer ] the 2012 m-class continually monitors blind spots, scans the road to reveal potential threats,

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all right. now back to a serious subject, that is the iran threat. the oil market certainly right now brent crude continuing its climb higher trading at nine-month highs. we're examining the escalating tensions with iran from all angles. we start now with cnbc's chief international correspondent, michelle caruso-cabrera, who's live in israel. michelle, what kind of capability does iran have right now? >> already right now they have a lot of capability that is quite frightening to the israelis. what's amazing is the very tough face they put on in spite of the situation. they actually joke about it. they say, yeah, there are threats from iran, but what do you want? we live in a tough neighborhood. let's just show you how tough it is. we've created some maps so you can see the distance from which they are to iran and just what

kind of capability iran does have. iran is about 950 miles from israel. iran is believed to have solid fuelled rockets. that means they can be hidden and fired very quickly. they don't need to be filled with unstable liquid fuel that can actually take days. they also have missiles that by just about all accounts can hill all american troops in the middle east. they can hit all over israel and even parts of europe. some of their most dangerous missiles are the long-range and the k dar used to attack shipping in the persian gulf and the straits of hormuz. the range of those missiles 125 miles. as iran has stepped up its verbal threats, they've also increased military exercises in the past several years. they've tested missiles while ground troops have practiced invading islands in the region. and their fake enemy in these situations is frequently, you guessed it, israel. that's something that is quite

frightening. their technique that they hope to use because they don't have the same kind of military capability as say the united states is to use swarming. that would be to use many, many small ships to try to overwhelm the much larger u.s. navy. the threats against israel don't stop by the way in the east. there are also threats emerging from europe that they'll break away from the peace treaty they signed decades ago. their imaginary target has been israel. in the north there are fears that syria's embattled leader is going to try to distract the world from the rebellion going on in his country by attacking israel. he's capable of doing just that in fact all of israel is within range of syria's very potent missile arsenal as well. syria is of course closely allied with iran. and in fact there are reports that iranian agents are helping fight syria's rebels. and just this week two iranian naval ships docked in syria. add to that southern lebanon, brian, which is controlled by

hezbollah and you have a whole series of issues that israel in fact is long-use to facing. that's what they tell you repeatedly. we're getting used to this everyone though they realize this situation and a nuclear situation is certainly an escalation they haven't seen in the past. back to you. >> michelle, thank you very much. let's bring in nate hughes, director of tactical intelligence as well as cnbc's chief, how prepared is the u.s. militarily for the iran threat? >> brian, it was just a week ago i was on the aircraft carrier abraham lincoln as it steamed through the strait of hormuz. the fifth fleet commander, vice admiral mark fox at the time told me, look, we are ready. the navy and the u.s. military is ready for anything that iran can throw at it. there are currently two aircraft carrier battle groups in that region. besides the carriers, they have guided missile cruisers and destroyers. and submarines equipped with guided missiles.

long-range bombers with bunker buster bombs. and in fact they just sent their latest 30,000 pound bunker buster back into the shop to refine it and make it more effective. and then of course you have the mind sweepers, a fleet of mine sweepers, that if the iranians should try to make good on their threat to shut down the strait of hormuz and cut off the flow of oil out of the persian gulf, they would have -- they would be able to deal with that. and quite frankly, u.s. navy officials don't believe that the iranians could actually close the strait. back in the late '80s during the tanker wars, there were mines laid in the gulf and in the strait of hormuz and still those tankers proceeded to push oil through the strait. and in response to what michelle was talking about, yes, the iranians, according to u.s. military and intelligence officials, do present a lethal threat. but they think it's obviously limited compared to the u.s. military. and it's no match for the u.s.

military. and they also think that the iranians actually have a red line that they would not cross. that they would probably not directly attack u.s. military forces in the region. that would be an act of war. and the u.s. military would strike out and pretty much destroy much of iranian's forces. >> jim, thank you very much. now let's bring in nate hughes, director of tactical intelligence at strike that 4. do you believe there will be a military conflict between iran and u.s., iran and israel or u.s. and israel with iran? >> the real challenge for iran is that its strategy is one of deterrence. the moment hostilities break out, all of iran's military preparations have failed. the real question especially in the strait is with tensions so high that there might be some sort of miscalculation that leads to an escalation in violence. >> what are the odds if that happens? >> well, both sides want to really ultimately avoid a conflict.

iran, again, is trying to deter attack. and the united states is looking to preserve the global confidence and the flow of oil to help with the global economic recovery. >> bottom line it sounds like you think there will not be a military conflict because both sides have far too much to lose? >> absolutely. >> nate, thank you very much. rapid. we appreciate it. get to the point. all right. mie lon shares off to a strong start this year. next up, an exclusive interview with the ceo of mylan. the health of generic drug market with lots of big brand names coming off patent, he said. only "street signs" can go from retail to iran to generic drugs. stick around. [ male announcer ] let's level the playing field.

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shares of mylan labs up today on the back of pretty strong earnings. what is next for the generic pharma leader? before we get into your business, you are a ceo that does a lot of business around the world. you just heard somebody from the white house effectively say that they want to change tax laws as regards to taxation of profits and cash overseas. right? >> yes. >> i countered that that might encourage companies to move overseas. he did not seem to buy that argument. you are a ceo, do you buy that argument? >> look, i absolutely agree that the united states needs to look to do something to encourage corporate growth in the united states. i think we have the second largest tax rate in the world. so i absolutely am for let's look at lowering that. i think there are a ton of loopholes that need cut out. but i'm not as familiar with the plan they came out with today that if it actually does that. it doesn't sound like you're

convinced. >> we don't know all the details is my point. and we've talked about this, let's say the fda requires inspection every two years of the facilities in the u.s., which is a good thing. we want safe, clean, healthy drugs. >> absolutely. >> but if you're a fortune competitor in india, you don't have those regs, throw in a higher tax rate, the d disadvantage, true or false? >> absolutely. i testified in congress last week making the claim we have an unlevel playing field, it's anti-competitive and guided by a 1938 law indirectly is saying i certainly shouldn't grow manufacturing jobs in the united states but i'm incentivized to make my manufacturing jobs elsewhere. >> the good news is this, as of right now you are going to spend more on r & d, right? >> yes. >> pretty ambitious spending plan that way. analysts i talk to want to know how confident are you that

you'll get the return on investment from that higher spending? >> looker w not only going to spend over $2 billion on r & d between now and 2018, we're going to double our manufacturing capacity to 18 billion and double our earnings growth. we have a target out of $6. we believe strongly -- we presented a lot of strong drivers yesterday whether it was biologics, respiratory platform, specialty products. i mean, the reality is the generic industry has never been better. the growth outlook -- i know people talk about a patent, it's certainly not effecting us. and i would tell you that generics have become obviously the backbone of the u.s. health care system. it's going to continue to become the backbone of health care systems around the world. >> i was looking at the forecast you guys put out. this blueprint. one thing that struck me was your cash flow while it's going to be sort of growing, it re relative to the net income you forecast, it's actually slowing -- or net income's going to really surpass the cash flow.

that's often a little bit of a red flag. what's going on there? >> look, i think what we laid out yesterday, the fact is we are going to continue to invest in our future. so when you look at from cap x we said almost $1.5 billion to grow the capacity, we believe the ability to truly have scale, we believe we're the only global player concentrated on being able to provide on all fronts of the generic industry and pushing for the efforts that will allow us to have generics grow in every segment of the world. >> you talked about epi pen. how big is the global opportunity? >> it's huge. let's start again here in the united states. we're only serving 7% of the population of people who are at risk for anaflactic shock. >> that will take marketing.

>> we are definitely spending. we are not shying away from this spend. both on epipen and our entire platform. >> heather, ceo of mylan lab, pittsburgh based. sorry to hijack the beginning of the conversation. >> you're not sorry. >> i'm actually not sorry at all. does retirement planning make you want to scream? if you can't afford this masterpiece now up for sale, how about the art of investing in either etfs or single stock in the index gallery. we're going to fell you why it may be a bad idea to buy the etf instead of the single stock. but before we do that, let's go down to bill griffeth and find out what's ahead on "closing bell." >> we're talking about nasdaq today, brian. we're not even close to 3,000, but in talking numbers today, we're going to show you a chart that suggests that nasdaq 4,000 could be in the cards. just reading the prompter, folks. plus the outlook for oil prices and exclusive interview with the ceo of energy 21 and his view of the price down the road. and we'll have instant analysis

and investor reaction, the big one tonight, hewlett packard reporting earnings at the top of the hour. we'll see you on "closing bell." in the meantime, "street signs" is back right after this. [ male announcer ] how do you trade? with scottrader streaming quotes,

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the math makes me nervous. but it's time for your retirement equation. today we got to thinking about etfs. you don't have to do the work that normally goes into buying an individual name, right? but that thinking may hurt your overall returns big-time. here are five-year returns on some of the most popular etfs. the ishares, oil equipment and services index, up over five years. the pharma index up about 42%. these are five-year returns. the transport index is actually down 1% over five years. so 29%, 42%, not bad. but when we take a closer look at what is inside these baskets, the best performer in each of these etfs, blows away the names. look at the oil etf. fmc technologies is up 203% in five years.

allergan, up 55%. still, outperformance nonetheless. the transports, which are down 1% over five years, if you bought unp, union pacific instead of the etf, 115% versus 1%. the point is this, while etfs may be easier to invest in, and yeah, safer, because maybe they go out of business, whatever it is, you can also leave a lot of money on the table. let us bring in mike, manager of the wasatch long/short fund. mike, i guess i've sort of made the case for your industry, and active management. >> sure. thanks, brian. the basic thought that we have is that this religion, if you will, of efficient markets and modern portfolio theory doesn't actually hold up in practice. and the why is because we're human. market participant psychology

matters. and to the extent that it matters, it leads to under and overvalued situations. and so in what we do, we're looking to be long the stuff that is undervalued and short the stuff that's overvalued. put the two together, lower volatility, makes for better returns over time. >> i love hindsight and i love being an armchair quarterback. it's easy to look and say, guess what, if you invested in union pacific, you made 115% versus basically nothing, easier said than done. that's why folks get paid money to manage money. do you feel investors in some way, because of etfs, have gotten lazy? >> i think so. and i don't know how much of it is the investor or if it's the intermediary. >> financial adviser. >> who are looking to -- >> don't list single stocks, buy this. >> yes. they're able to justify it and say i know for sure we'll get you exposure with low fee. basically there are two levels of fees out there.

fund fees and adviser fees. the advisers are saying the lower turn environment, don't beat me up, i'm getting you a really cheap etf. if that cheap etf is making you nothing, i don't know what the value is. >> that's a dangerous issue that's occurring there, because they're just buying these as the stock now, where they don't have to do the work they used to. that could be a disaster in the making. there's something else, though, when you talk about the laziness of it, brian. i would say even if you look at hedge funds, the ability to short a stock, instead of shorting a stock and taking that risk and doing that level of work, and being subjected to short squeezes, they just short the etf as they hedge against the portfolio. i think that has changed the markets to some extent. i think that train has left the station. >> is he right? >> i fully agree. as part of our work, we short individual stocks, we long individual stocks. wasatch is a firm very much bottom-up stock. we understand the fundamentals.

and that's where we take our shots. >> what's the place for etfs, very quickly? >> i think it would be for niche exposure, sectors, countries, when somebody wants to get into something, and they don't want to own all of europe, but they might want to own all of germany. >> appreciate your time. see you again on "street signs." up next on this program, lucky 13. carrot, you will not believe this jewel, this bauble, this bling. the diamond.

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disaster in sunshine time. herb's delivering a disaster, papa john's. >> you know what's interesting, all their competitors are discounting, because there's so many coupons. yes, that is the business where there's tons of discounting. >> quickly, mandy's probably listening, if not watching. today's sunshine stock is this, rio tinto. not looking so hot, but there's a reason we're having it as our sunshine stock. it is a rare argyle jubilee diamond. it is 13 carats found in western australia, wherever that is. it is the biggest rock on earth from the argyle mine. more than 90% of the pink diamonds of the world come from the argyle mine. could bring in as much as