>> thanks for coming in today. it's been great having you. pete the bull won our debate on caterpillar. that's kind of surprising. not because you made the argument but it's a battleground stock. your final trade? >> whirlpool. at the earnings they knock it out of the park. >> urban outfitters. >> "power lunch" starts right now. "halftime" is over. "power lunch" and the second half of the trading day start right now. >> thank you very much. the markets are not terrible today, no big drop, but they're not good. the emerging threat from the emerging markets weighing heavily across the globe and one big factor, of course, is the china factor. if overseas investors are wary about everything from athens to zurich and beyond, will u.s. stocks rise if the money men and women all over the globe believe american shares are their better, safer bet? to help give you ideas, we will look at stocks born in the usa. we have run a special series of

screens designed to show us all about the companies that have the highest exposure here in this country, and the lowest exposure to all those problems beyond our borders. we'll do that and more on a very busy hour. meantime, to sue at the nyse. >> good to see you. we have a lot of volatility outside the u.s. in the last several days, of course. and a lot of ups and downs for the u.s. markets today. right now, the dow is down 63 points. we have been on both sides of the unchanged level today. the s&p is down 13 and the nasdaq is the biggest percentage loser, down another 1.5% on the trading session. we watched the transports very closely, we are paying a lot of attention to them right now. they are down 100 points plus and if you are a theory subscriber, that does not bode well for the dow jones industrial average. in terms of interest rates, we have seen money flow into the bond market over the last two days and we have the yield on the ten-year down to 2.74%. as for the gold market,

basically flat on the session right now. brent is down almost a full percent. the european markets ended their monday about 90 minutes ago. they were down, not terribly so. italy perhaps the worst of it, down 2.75% on the trading session. here back in the united states, we mentioned the fact that the nasdaq is the biggest percentage loser. we find seema mody at the nasdaq, down 1.5% today. >> the nasdaq 100 just broke its 50 day moving average. the nasdaq now down about 4.4% over the last three days. the worst three day drop since november of 2011 and it seems like that momentum trade is being unwound here. you take a look at some of the biggest losers. tesla now the worst performing stock on the nasdaq 100. social media stocks which had their fair gains in 2013 are also moving lower. you are seeing facebook shares getting hit. facebook reports earnings later this week. all eyes will be on mobile ad revenue. then you look at biotech, the

biggest losers there. we have celgene, biogen down more than 2% today. seems like investors are trying to sell some of their winners and we all know biotech has been one of the winning sectors in 2013. lastly, one of the big losers in tech is cisco. jpmorgan downgrading that stock to underweight citing its excessive valuation as well as weakness in emerging markets. back to you. >> thank you very much. over the past week, cnbc has been warning of emerging problems on the horizon. those problems really popped up last week. we learned more about them over the weekend. today, they are the talk of wall street and global finance. michelle caruso-cabrera, sara eisen are here to explain different facets of exactly what's going on and why everything is so interconnected and why everyone is so bloody nervous. we begin in china, michelle. we use this as the definition of the problem, problem number one, a wager -- major wealth management product that's a fast growing financial product in china that invests in things considered risky over there, like real estate, these wmps, i

want to call them wimps, offer much higher yield and a major wmp is believed in danger of going bust this week. this reminds me, michelle, of auction rate securities in this country, circa '07. >> the reason this product may cause fears in the chinese banking systems, there are so many of these wmps and managers often don't know what's in them. they are often invested in questionable assets. if there is widespread belief among people in china that these products are no longer safe, do they end up having the equivalent of a subprime crisis, a run on the banks? that's the reason to be scared. there are two reasons not to be scared. china has tons of money to recapitalize any failing banks and they also have the authoritarian power to do so quickly. china's financial system is still pretty closed to the rest of the world.

money, currencies, capital can't flow across the borders freely, only if the government allows it. even if things do go wrong for domestic chinese investors it might not affect world markets because they have the power to almost put a financial wall around that economy, at least around the banking system. economists have a wonky term for this. it's called a closed capital account. >> so they can quarantine it. >> in theory, yes. >> let's move on to the sort of question number two. it's a serious commodity capital crunch that has been spinning around here. here's our definition of it in countries like turkey and argentina. they have been living off of high commodity prices and low borrowing rates, you know, cheap money powered by the lower rates that we have seen in the united states. lot of people have benefited from both. now chinese growth is slowing and that's lowering demand for commodities. interest rates starting to move up here. the fed beginning, one presumes, to start pulling back on the stimulus and that leaves

countries like turkey and argentina in some kind of distress. beyond the fact that they've got political distress big-time. >> right. which exacerbating everything. now they are paying the piper when it comes to the interest rates because interest rates were so low for so long in the united states, a lot of investors sought out riskier parts of the globe for investing. now when our interest rates rise or we presume they are going to, those other countries have to offer better rates of return to keep the money that was put there. turkey's a perfect example of that. there has been political upheaval there which made the place a lot more risky so investors have been leaving the country selling the currency. as a result, tomorrow, the central bank there is expected to hike interest rates anywhere from between 2% and 4%. think about that. we talk about the fed raising rates a quarter of a percent. they trying to keep capital in the country. that's why they're doing that. argentina is far less economically important, has been a mess for more than ten years. however, the big sell-off in the currency sparks a lot of market interest because several big hedge funds own their debt. argentina's big exporter of

agricultural products like soy, which is where they get most of their dollars from. they need those dollars desperately to buy oil and pay off their bonds. if they're getting less and less for their commodities added to horrendous mismanagement of the economy, they will have a weaker economy and also very high -- >> and a political system that is turning left hard. >> right. right. it's possible this government could fall. things are getting so bad there. >> thank you. sara is waiting patiently to come back and join us in just a minute. sue, down to you. >> that's right. we want to find out how much of a threat if any at all this is to the u.s. market. we are bringing back andrew slemon, managing director of global investment solutions at morgan stanley. last week, you had a fairly bullish outlook. the fundamentals remained good in your view. we've had this selloff in the last couple days and now we have the emerging markets in turmoil. does it change your opinion of u.s. equities? >> no, not longer term. maybe this week.

don't forget we have an fomc meeting this week and earnings, and that creates anxieties. don't forget, the market rally, 32% right into december 31st so a pullback in january doesn't surprise me at all. but no, emerging market volatility, it's right out of the playbook. when the fed changes policy, emerging markets tend to struggle. the weakest links are exposed. that's what's happening. it's not a reason to get bearish on u.s. equities. >> you mentioned a very interesting statistic before we came on air. in one previous crisis, which was started by the thailand currency, the emerging markets index. tell me what it did. >> in july of '97, we had the crisis that spread through asia, the asian index dropped 50% from july to the fall of '97 and during that period, u.s. stocks rallied 10%. so there was a movement into u.s. stocks. i think that could happen again. >> stay with us. we will go back up to e.c.

>> in today's yahoo! finance question of the day, we asked how you're planning on investing in the middle of this emerging markets threat. let's take a look. those are the questions. invest more in the u.s., a balanced portfolio, short emerging market etfs, go to finance.yahoo!.com and vote. i guess we will show the results later this hour. all right. we are back here, the three musketeers. there's another worry out there revolving around currencies. our person on that is sara eisen. emerging market currencies are falling and falling fast and historically when that has happened, it has led to global crises. just mentioned, the 1997 crisis. >> a lot of people are talking about that. >> that would be the most immediate proximate correlation. >> it triggers bad memories for wall street. some are worried we could be starting to see the same thing that we saw back in 1997.

asian crisis. michelle mentioned the peso, the lira, it's spreading to other emerging market currencies. this is really important. the mexican peso, south african rand, fast-growing economies. the question is, why is the street so concerned about an emerging market currency selloff spiraling into this type of financial crisis. here's the difference. emerging markets are much more important to world economy right now and to companies, big multinationals, than they were back in the '90s. the weakest links here that we are talking about, argentina, venezuela, chile, peru, south africa, ukraine, turkey and thailand make up 4% of world gdp and according to deutsche bank, if you put all the emerging markets together, that's 40% of the world economy, almost half, and double what they were back in the '90s. but there is a silver lining that makes this time different. emerging markets are sounder financially than they were back in the '90s, they have more

flexible currenciecurrencies, s external balances and more developed debt markets than they did. the other big difference is china. china has been a force of strength in the region. it has trillions in reserves or ammunition to fight its problems and its economy has ballooned, it's four times the size of what it was back in 1997. so that should be a force of stability unless something goes wrong in china, whether it's the credit and banking system problems that michelle talked about or the economy. so the bottom line, not yet, it's not yet the threat of 1997, where it was 1994, the mexican peso or 1998. but as you can see, the currency drops are important to watch historically. they can lead to a lot of trouble. >> i had forgotten the ruble crisis. you learn something every day here. i did not know ukraine traded on the hirvinia. >> andrew's an equity guy.

we want to keep him focused on equities. you made an interesting point earlier. as the fed continues to do its taper which you expect it probably will this week, that strengthens the u.s. dollar and makes the dollar more of a safe haven. >> correct. that will help u.s. stocks, investors will move out of the more imperiled currencies and that helps the dollar and the yen. >> does it have any impact, the weakness in the currencies sara just highlighted, have any impact on multinationals who are doing business locally or would you use that as a buying opportunity? >> don't overthink some of the weaknesses. most of these big multinationals, most of their business is in developed markets. be careful overextrapolating this weakness. >> sarah, did you have a question? >> just to highlight the importance of emerging markets now versus back in the '90s, what about more vulnerable countries like in europe which are just starting to recover from the crisis? this emerging market slowdown or

financial pain you would think could really hurt. then you are really talking about a world growth issue. >> so europe does have more exposure to the emerging markets so that would be more vulnerable than the u.s., but still, i still think therefore money will flow into the u.s. but i wouldn't expect europe to be overly weak. i think again, very accommoda accommodative central bank policies will drive the economy there. >> in 1997-98, the u.s. markets finished higher. >> exactly right. >> thanks, all. appreciate it very much. let's get back to the question of the day, as people keep voting. how would you play the emerging market threat? right now, 17% of you say invest more in the u.s. 45% say have a balanced portfolio. 6% say short emerging market etfs. 10% say mutual funds. 22% say i'm not investing overseas.

all right. let's go to sheila dharmarajan for a market flash. >> check out shares of xerox. that stock down more than 5% and on track to fall for the sixth straight session in a row. today it cut its shares from outperform citing valuation on friday, barclays cut its shares to underweight citing competition in emerging markets. just as you were talking about, all the emerging market conditions are certainly worsening. remember despite today's drop, in the past week's drop, xerox had gained about 79% in 2013. >> thank you very much. if the emerging threat becomes worse, what will it mean for the u.s. housing market? we'll tell you about it next. and from the ukraine to the great polar vortex, it's striking again. it is so bad, how bad is it? it is so bad that schools in places where they're used to snow and ice and cold have canceled classes. that includes chicago, much of the state of minnesota. the forecast is coming up.

plus, companies born in the u.s. with little exposure to the rest of the world. dollar tree, e-trade, humana and denbury, all 1% of their revenues -- all 100% of their revenues come from home sweet home. seema mody has the biggest players. >> these are stocks that you might want to think about if you believe the rest of the world is a scary place to put your money these days. more "power lunch" in two. (vo) you are a business pro. seeker of the sublime.

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caterpillar shares moving about 4% or so higher on the back of its latest earnings. the world's biggest earth-moving equipment maker easily beating profit estimates. aggressive cost cutting helping to offset some otherwise sluggish sales. revenue down 10% from a year ago but comfortably tops forecast. caterpillar announcing a new $10 billion share buy-back plan. so where do analysts stand on the big cat right now? there are six buy calls, no sells and 14 holds. sue? >> with fears about the emerging markets threat out there, should you protect yourself by investing in companies that are u.s. focused almost exclusively? seema mody is reporting on all american revenue stocks. >> five stocks that make 100% of their revenue right here at home. let's start with walgreens, your local pharmacy. the stock was on fire in 2013, gaining 56%.

this year it's had a slow start. another stock that does business here in the u.s., think of your telecom provider. that's right, at & t. news today that it would not bid for britain's vodafone over the next six months. another one to consider is altria. while the tobacco player is dealing with a slowing cigarette market, analysts point out that it has been diversifying into smokeless tobacco products and has an attractive dividend yield of 5%. then there's wellpoint, with a $95 price target. its new management team may yield an improved decision making environment and that could lead to better operating results. lastly, a quick service restaurant player, chipotle. they report earnings this thursday. baird capital says its underlying brand momentum is strong and it is positioned to deliver another year of healthy growth. those are some made in usa stocks, companies that make revenue here in the u.s. >> thanks very much. the recent global sell-off also raising questions about two big parts of the u.s. economy.

housing and automobiles. diana olick and phil lebeau on those stories. home buying is highly dependent on consumer confidence and on americans feeling wealthy. where do we stand? >> i like to say home buying is 15% downpayment, 85% confidence. while the average home buyer is likely not depending on gains in the stock market to make their down payment, they are going to base decisions on confidence in the overall economy and especially in the job market. two things important to note about today's home buyers. one-third of them are paying all cash and just 27% are first time home buyers. these numbers are way off from historical norms. all cash is usually less than 10% and first timers generally make up around 40% of buyers. it's interesting to note the numbers today from the new home sales, the home builders, sales of newly built homes dropped a larger than expected 7% month to month in december and both october and november sales numbers were revised lower.

prices were higher by 5% but that jump was not as high as price gains annually in the past several months. buyers of new construction tend not to be investors, so less all cash. first time buyers are also key to the market but those prices much higher. we know builders are catering to the higher end buyer because that's all they've got right now. so coming back to confidence, where we started, a blip in the stock market isn't going to do much, but a longer term sustained drop in overall consumer wealth will hurt home buying. that is not what we want to see as we come into this usually strong spring selling season. >> thanks very much. now to phil lebeau with three reasons why the auto sector may conversely be immune to the global fears. phil? >> i'm not expecting a big impact for the auto industry from this selloff we're seeing on wall street. a couple reasons. first, you heard diana talk about consumer confidence. that's the biggest indicator of why people are going out and into showrooms. confidence remains relatively strong so it's not expected to

hit auto sales with this latest market jitters. that's because consumer confidence, the biggest driver of auto sales. also, when you look at the widespread credit availability, that's bringing people into showrooms. the average new car loan auto rate, 4.27%. that is historically very low and as a result, when you take a look at the annual auto sales, $15.6 million was the pace last year. expected to be well over $16 million for this year. the auto stocks, however, we have noticed within the last six months or so, they have started to plateau, maybe even pull back a bit. that's because a lot of people look at the auto stocks and say look, they really brought in a lot of the gains over the last two years, now it's time for a bit of a pause. if there's another leg, it will be because of what they do in the international market, not what they do here domestically. bottom line is this. many people look at the auto market as sort of immune to what's happening on wall street, if we see an extended selloff, that might change. not in the foreseeable future. >> phil, thank you. stay warm.

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how would you play the emerging market threat? early returns are in. invest more in the u.s. say 18% of you. 45% say rely on a balanced portfolio. 6% of you say short emerging market etfs. 9% say go with mutual funds. more than one out of five says i'm not investing overseas. sue? >> there was a major explosion in manitoba, canada after a natural gas pipeline there exploded over the weekend. people living nearby were forced from their homes. the gas was cut off. that fire was extinguished. wisconsin is now the 25th state to declare a propane

emergency due to widespread shortages. 14 million american households get their heat from propane. propane prices because of this cold winter are up 17% in the last three months. back to you. it is so cold in the middle west that most schools throughout minnesota are closed for the day. same for chicago. wind chills are minus 30 degrees in some parts of that region of the country. lake effect snow also hitting cleveland, rochester, new york. the weather channel's tom niziol has the forecast. >> tell you what, you want to know about this winter in the u.s., all you have to do is look at the jet stream. very warm in the western part of the nation and dry as well, guys, but in the eastern part of the nation, continued shots of arctic air. this is the pattern we've had, this is what we're going into. a reinforcement of arctic air down across the eastern half of the nation. look by tomorrow, as the jet stream works its way all the way down to the gulf coast of the u.s. in fact, daytime high tomorrow in atlanta, 33 degrees.

17 in philadelphia. you don't even get above the zero mark in minnesota. you take a look here at that cold front, that arctic front stretched across the gulf tomorrow. we are going to run a low pressure system along there. that low brings in a little gulf moisture and guys, we set up for a winter weather event for the southeast. some of these areas haven't seen these snowfall totals in years, running from houston through new orleans, right up through atlanta and charleston, a mix of snow, sleet and some freezing rain. that's been the story of the winter of 2014. over the next few days, we are going to continue to see more of the same. back to you. >> one to three inches in new orleans. wow. while much of the lower 48 are in a deep freeze, check out alaska. it's balmy. 40 degrees this week. the snow melt has already damaged cold weather crops up there. there are avalanche warnings. the early thaw is forcing some schools to close. it's just too muddy. >> unbelievable. it's not even february. i don't know what we're going to do.

this is going to be a long winter. gold is trading at a two-month high amid fears about the emerging markets but it turned negative right at the close. we are down just about 90 cents on gold. silver's a little bit higher but copper and platinum are down on the day as well. you're up to date. back to sheila dharmarajan for a market flash. >> take a look at visa and mastercard. both are getting hit today amid concerns that emerging market economies may be slowing. the two generate more of their card borrowings and revenue in the u.s. but have been enjoying high growth rates in emerging markets. both companies do report earnings this week so definitely two stocks to watch. sue? >> we will check the bond market and we always do that with rick santelli, who is tracking the action at the cme. interest rates are holding at much lower levels than everyone expected this time of year. >> they are. it's counterintuitive today because the new home sales

number this morning down 7% wasn't very endearing. normally that pushes yields down. you know, it's interesting. most traders i talk to on this floor say don't look at what's going on in the emerging markets, china, japan to some extent, it's a panic situation. look at it more as a global condition. i think that fits better. if you look at a chart of tens, we are up several basis points on the day. year-to-date, chart of ten year yields will show it's all about lower yields throughout the year. we settle at the highest yield level since july of last year when we looked at the 2013 settlement 303. for the moment, whether good or bad, the yen has become the surrogate for the kerry trade. it stabilized, no doubt. a year-to-date chart will show the ugliest part of the trade was the last part of last week. we will continue to monitor what's being perceived as a condition more than an emergency at least by traders. tyler? >> thank you very much. more than 1300 funds with almost $2 trillion in assets.

etfs are playing a bigger and bigger role with investors so where is the money flowing? bobby pisani is live at the biggest etf conference of the year. >> when we come back, we will talk about one very popular type of etf, high dividend paying etfs. we know about all the problems with emerging markets. we are talking about it here. we will talk about whether high dividend payers might be a better way to protect your portfolio. plus another case of hundreds of people getting sick on a cruise ship. the vacation coming to an end early for thousands of passengers on that big boat. more companies, though, with 100% of their revenue coming from right here in the u.s. i always say be the man with the plan

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nwas the most watchedage otelevision event ever.s so, what's next? the upcoming winter games from sochi. where every second of nbc universal's coverage will be available on every device. on tv, online or streaming on the nbc sports live extra app. beginning february 6th, experience the winter games everywhere. welcome to what's next. comcast nbcuniversal a number of big analyst calls on the street today. jpmorgan chase downgraded cisco to underweight from neutral, citing what it considers excessive valuation as well as weakness in emerging markets. merck shares hitting a 52 week high. morgan stanley upgraded the drug maker's stock to overweight from underweight. morgan says merck's prospects for a new cancer drug have

improved and could bring more than $6 billion in annual sales in by the year 2020. shares of kb home hit hard. last trade down 4.75%. barclays downgrading from underweight to equal weight. royal caribbean cruise turns into a royal pain after an outbreak of a very contagious stomach bug. cause not immediately clear. the illness which affected nearly 600 people appears to be consistent with the so-called norovirus which causes flu-like symptoms and spreads very quickly when people are in a confined area. royal caribbean says the ship is going to return to port and will undergo a complete sanitation. passengers will be compensated for a vacation gone wrong. in the last three months, royal caribbean is up 25%. norwegian up 26%. carnival basically flat. to sheila dharmarajan for a market flash. >> we are sticking with this

emerging markets theme. check out this fund, that etf at session lows as the benchmark stock index recorded its biggest percentage loss today in nearly five months. this of course is amongst the bigger picture concerns about emerging markets economies. no one is being spared today. >> thank you very much. the etf market still trails the mutual fund side of the story, but that gap is narrowing. bob pisani is in florida, where the etf folks have come together. >> i'm in etf heaven. there's 1600 investment advisors. they are listening to pat riley from the miami heat speaking in the next room. the important thing is you should consider having etfs in your portfolio and here's why. an exchange traded fund or etf is a fund that holds stocks, bonds or commodities. most etfs track indexes like the s&p 500 but you can invest in almost any asset class, tech stocks, industrial stocks,

municipal bonds, japanese stocks, physical gold or silver. the big attraction is that unlike mutual funds, etfs trade like stocks and can be bought and sold during the trading day. etfs are also more tax-efficient and usually have lower costs than mutual funds. thanks to these advantages, investments in etfs have surged in the last few years. at the end of 2013, there were a little more than 1300 funds in the u.s. with a combined value of $1.7 trillion. that's only about one-tenth of the money in mutual funds but it's jumping quickly, up 26% last year. and trading in etfs is growing fast as well. they now account for 15% of the volume of stocks listed across all exchanges. >> we're back with tyler, an asset manager who invests in etfs on behalf of his clients. thanks for joining us. i got to ask about emerging markets. people are concerned about it, they are talking about it here.

can you invest in emerging markets and actually collect a dividend, perhaps reduce some of the concerns about investing? is it possible? >> sure you can. look at an etf like the wisdom tree emerging markets income fund, dem, with a dividend yield of 4.3%. absolutely you can. >> what are you investing in? >> a number of countries. russia, china, poland, countries in eastern europe and so forth. it's a diversified mix. >> i notice it went down last year so it's not like it went up. >> that's right. but we are taught to buy low and sell high, right? i think it's a good play about now, if you want to get back into the emerging markets and do it in a conservative way. >> it did outperform the dem. >> yes, it did. >> let me move on. people kept asking me about investing in high dividend paying stocks and there were a number of big etfs out there that everybody piled into. i will give you an example. the vanguard one, the high dividend yielding etf. that was a good one last year, 2.8% dividend yield but it

dropped big time in may and june. what happened there? you see the drop. >> okay. there's a ton of dividend payers out there. you have to be aware of the indexing methodologies they use. certain dividend paying methodologies may overweight utilities or may look like a bond etf, actually, less so than a dividend payer. >> here you're just buying a fund that only invests in the highest dividend yielding stocks, right? >> right. >> something a little bit dangerous on that, for example. when your interest rates go up as they did in the middle of the year, those funds get hurt. they're bond-like in a way. >> i think that caught a lot of people off guard last year. lot of people in the run-up were chasing yield, chasing dividend. you have to be very careful of those etfs. >> there's another way to do this that you have been pointing out all throughout the last couple days, to get into the dividend appreciation game without necessarily buying mindlessly the highest dividend yielding stocks. how can you do that? >> right. there's an etf called vig that

has a screen that you must increase your dividends consecutively for ten years. what that does is create a high quality portfolio and eliminates some of the risks we saw last year. >> before i let you go, you are not just buying high dividend yielding stocks, you are buying companies who are consistently increasing their dividend, not necessarily the highest dividend paying stocks? >> right. they are confident in their balance sheet, they can continue to do that. it's a great portfolio. >> long term you feel that's a better way to go? >> absolutely. >> okay. tyler, thanks very much for joining us. we will talk throughout the next two days about what's hot, including emerging market funds. we will talk about that tomorrow. back to you. >> look forward to it very much. bob is live at the big etf conference all day today and tomorrow. check out our cnbc special report at etf.cnbc.com. here's one etf that has been getting whacked because of the emerging market threat. the mcsi emerging market etf down more than 4% over the past week. should you buy into the region

on this? two top strategists join us to talk about how to play it. speaking of emerging markets, protests in brazil turning violent. they are angry over brazil's national pasttime which is soccer. we will talk about that in two minutes. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order.

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if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. coming up on "street signs" in about 15 minutes time from now, a lot of markets around the world are caught up in this global risk aversion so it's really a case of sorting out the strong from the weak. we have really smart experienced people telling you where you can take advantage. also, the ceo of breitling energy will join us to talk about a brand new merger and what on earth is up with nat gas? we have the top stocks trading under ten bucks. all those things and lots more coming up, top of the hour. back to you on "power lunch." >> thank you very much. ahead of the world cup in june and the summer olympics, two years from now, this is not exactly the image brazil wants

to project. tens of thousands of protesters marching, saying brazil needs to spend money on schools, roads and hospitals rather than sporting events and venues. the bill for the world cup alone will top $14 billion. some of those protests actually got violent. there was property damage in sao paulo but no reports of injuries so far. sue? we will talk more about emerging markets and the u.s. market right now. how risky a bet are the emerging markets? the chief investment officer for global equities at federated investors joins us and chief market strategist at ban ion partners. you think this is a pull-back but not a crisis for most of the emerging markets? >> i think you got to separate it. for some it's kind of a crisis. argentina, turkey, there's sort of a vicious downward spiral happening here. we think it's still early.

i think the imf is kind of stretched. these countries almost have to solve it themselves or price action has to make it more attractive. >> those markets may be in crisis and have more to go but you do not think china's in crisis. why? >> china's okay. they have a tremendous balance sheet. they are adding to it every day. they still have a current account surplus. they have a domestic credit bubble they are trying to diffuse gradually but they have a lot of resources to deal with that. their backs aren't up against the wall. i don't think they will take the step of blowing the place up. it's just too dangerous. our guess is they grind it down to a more stable growth rate and will probably be okay. i don't think -- i think it's early to buy this because we are still working through -- >> longer term, you are bullish? >> we think the market goes higher by the end of the year. >> bob, you also feel you are bullish longer term.

we were talking before that everybody was calling for a pullback at the end of 2013 and people have said when we do get a pullback, i'm going to get in. but when we get it, they don't like it. >> right. you have to be careful what you wish for. the market was really -- the market knew that a correction was about to come. everybody had been saying it. i think a lot of folks really put off on taking some profits, especially last year, heading into the end of the year. who wants to take the profits as you head into the new tax year. so you wait. so the market got some reasons to get a little bit nervous. the market started to pull back a little bit. everybody starts to worry, everybody's starting to look for an excuse. they're looking at turkey, at argentina, at china. it's something to be mindful of but none of these things are really going to blow up the global economy. i think china is correct to be at least knowledgeable of but i think china is going to be very careful of what they do. they will allow some of these shadow bank loans to fail but they won't allow the whole system to collapse because of that. so they are going to just watch it and just really provide a

backstop. i really wouldn't be overly worried about china. what gives me encouragement about the overall market is everybody is saying oh, i'm putting a list together, i want to be a buyer but i'm just waiting for the bottom to be put in. i think the bottom is going to be at least targeted for about 10% but you won't get down to 10%. you will get some bargain hunters stepping in and maybe around 5%, you will see a little bit of buying action. we saw it this morning. i think that was an overall good thing. i think we get down to 7% -- >> we are actually positive now on the dow jones industrial average, to your exact point. steve, you are also bullish long term here domestically and you have an s&p target of 2100. what's going to get us there? >> the u.s. economy is accelerating right now. all the factors are in place. we think it will keep pushing forward. there's a lot of pent-up demand coming through, housing, autos, corporate cap, the energy sector, the fiscal deficit getting better. we got a gdp surprise, we think 3.5% this year. that's going to drive top line.

that will take earnings to 120, we think. there's a lot of leverage. >> i think steve's right on target with it. if you take a look at the economic data, the manufacturing data, the new york state manufacturing data, you got the service sector that continues to perform relatively well. you got the initial unemployment claims showing up level about 330, maybe starting to decline a little bit. the unemployment rate still has the ability to rise up a little bit but at least the nonfarm payroll numbers are moving in the right direction. the economy will pick up some steam, 120, you will probably see this market trade up to around maybe 16, 16 1/2 times, and so i'm still in favor of the cyclical sectors. >> if you have to put your money to work somewhere, our market probably looks best. gentlemen, thank you very much. so nice to have you here at post nine. we really appreciate it. apple is gearing up, right? >> they are. gearing up for earnings after the bell. we will tell you whether you

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we wanted to bring your attention to the fact that everybody thought this was going to be a rough downside session for the dow. we are actually positive by 11 points. we were briefly positive by 25 a few moments ago. the s&p has turned positive. the nasdaq still struggling, but the transportation average which was down 103 points when we came on the air with "power lunch" has cut that loss in half. it's now down only 55 points. so the market's tone at least for the dow and s&p is improving pretty dramatically. >> yeah. look at that. that's really quite something. of course, transports are down markedly there. power rundown time. let's go to chicago. gentlemen, you guys can choose who answers this but how worried should we be about this emerging markets tumult? >> age before beauty. >> we should be worried about it. there's no doubt about it. but i worry about everyone giving the credit to the s&p

down move to that being the catalyst. if you really think about it, for three weeks the s&p made a new high, then flirted with the highs trying to find a reason to break through and have follow-through. it couldn't find it. after that it's got to find a direction. down seems like the only one left, if you can't go up. so call it a taper in the face of a 74,000 jobs number, call it earnings that were just kind of ho-hum. call it emerging markets. put that together, the weight was too much to bear. it's important but it's not what's really completely driving the stock market. >> is this the straw that broke the camel? >> well, i think it's very convenient to hang the hat on that but honestly, jimmy's right, this exhaustion in the s&p 500 or domestically, obviously we are seeing great disparity and look at the disparity in the last year between emerging markets and the domestic stock market. you're talking about nearly 50%. that's a big delta. i think certainly that u.s. stocks feel like the emerging markets, now that it's front news, everybody knows about it.

seems overdone. >> let's assume i want to make money out of this situation. how do i do that? >> a lot of folks talk about shorting this but i think when you see everyone talking about this, this is the time to buy. if you want to add for the long term perspective, i think the eem as well as wisdom tree, dem, those are two great etfs to pop into and substantially lower. why are you smiling? >> because my choice is exactly the same. we don't compare notes ahead of time. i got a different reason. we are throwing out the emerging markets. a lot of people, their only access is through the eems that aggregate all the emerging markets. we are sometimes throwing out the good with the bad. around 37 in the eem is the time to step in. lot of markets affected by the taper talk but a lot weren't as well and they are getting punished. >> what do i do? do i find a single country emerging market fund that i like? >> you can try that. i'm not going to do that. i'm going to just assume -- >> if you're not doing it, i'm not doing it. >> good. i will assume that eem will have enough good and so around 37 i think it's time to buy. >> very challenging to try and

identify a certain country. obviously you are seeing problems in argentina, worried about brazil. i think honestly, you have that basket, that opportunity gives you more diversification allows you to catch the upside. this is a three to five year play. they're not going anywhere. emerging markets will go up, up and away but it will be tu mo t tumultuous. >> apple out to report fiscal first quarter earnings. shares up about 25% over the past year. obviously when you start measuring and when you stop is a real determination of what you do. where do analysts stand? 39 buys, seven holds, one sell. how would you play apple right now? >> i'm long going into apple. i'm not going to tell anyone to buy apple going into this earnings report but i am long and won't hesitate. i will stay long. over the last couple weeks, we have consolidated. to me, if we had rallied 20% over the last few weeks or month, then i would think everyone was coming in. i don't think that. i think apple results can be eye-popping, whether it be

china, whether it be payments. >> 20 seconds quickly, i like apple. it's poised to go higher but the payment, they have an opportunity 575 million users. those users are loyal, they are trustworthy. honestly, i think they come into the space, they could go after visa with $150 billion backing them, they will dominate the space. it's going higher. >> thanks very much. three big winners in today's trading right after this short break. and kicking off the year-long celebration of cnbc's 25th anniversary, we have unveiled a list of the 200 most influential business people of the past 25 years. over the next few months, we will narrow it down to 25. we will rank them. we need your help. go to cnbc.com/25 to vote for your picks. leave your comments. you want to write in somebody, we may have forgotten, go ahead and do it. tell us where we're right or wrong. ♪

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there right now. sprint is up 6.75%, cat up 4.33% and robert half international up 3% on the day. be interesting to see in the last couple hours whether this modest advance in the dow jones industrial average holds. >> gather up your ukrainian hirminias and come home. that does it for "power lunch." >> "street signs" begins now. yep. it is a very uneasy beginning to the week. markets around the world still on edge. the dow dropping again. this all ahead of the final fed meeting. we have your full rundown of the latest emerging market turmoil and whether this could cause ben bernanke to give you a big going away present from his final fed meeting. also a winter sticker shock. nat gas is burning money right from your pocket and maybe even the stock