corporation but they have their logo on, they're customized. all pimped out and they're a better price. >> we have to leave it there. thank you very much, barbara, as well. >> first time she's ever said pimped out on national tv. >> on that note, i will drive off into the sunset and hand you over to "the closing bell." >> and your little dog as well. thank you for watching. welcome to "the closing bell." i'm kelly evans here at the new york stock exchange where the dow is off 70 points. >> i'm bill griffeth. the s&p needs to add less than a point to close at a new high. we are currently down though ten points, near the lows of the session as we go into the final hour. so it's not looking good right now for all-time highs. >> a couple different factors. maybe it's china, even the talk about the fannie and freddie moves coming out of congress. >> and some of the other stories we're watching at this hour, the search does continue for that

missing malaysian air flight. there are now more calls to install new technology so that passenger planes will always be in communication with an airport as we were discussing here yesterday. >> absolutely. >> but get this, joining us today is a former pilot who has flown that same route between c cue kuala lumpur and beijing. an exclusive interview with john watson. his company just announcing it will be cutting production three years from now. why? and what's changed? we'll get answers to that. his view on oil prices and a lot more coming up with the ceo again just after the close. >> and two doctors with very different views will be joining us. one who says hydrowill start killing people the moment it is released. it's a highly controversial drug that's received fda approval. there are plenty of people who say it should not have.

remember the -- sgr >> that's a pretty powerful statement. first to markets where the dow off 80 points as we speak. nasdaq off about 3/4 of 1%. down 32 points. and the s&p off 11 points, 1,865 is the level there. >> all right. joining us in today's closing bell exexchange, kathy jones, kenny pulkari, peter anderson, joe durand, and there's rick santelli in chicago. welcome, everybody. kelly, this market is starting to lose momentum here. what's going on? >> not surprising at all. actually, why hasn't it done this the last couple weeks? i think it's finally catching up with itself. it feels a little tired. certainly the news out of china is not helping. i think people are just investors and traders really are being a little more cautious today and saying, we've tried two or three times to get through the high, we've been unsuccessful, let's take a little off the table and watch

it, see where it comes back to. i think it goes to 1860 before if finds another resting point to see what traders then assess at that point. >> joe, what do you think? and how much is this a factor of what's coming out of china? you look at what's happening in copper, if you look at iron ore, the way some of the miners are behaviin behaving, the fact there's talk of how healthy or unhealthy china's credit system is. why does that seem to be the catalyst for this action? >> i don't think today that this one thing is what's causing it. i think what we're seeing that's a little different is we've had this very nice rebound, and now we're resting and deciding are we going to go down and retest the low we just set four weeks ago or are we going to go to new ground? we always look for reasons and often what i see is an economy that's still struggling to decide if it's going to catch its legs or not. the bond market is telling us perhaps it isn't. >> by the way, rick santelli, you'll be happy to know this, twitter was down for a little while. it's back up.

rick santelli is amazing. he has a gazillion followers on twitter and to my knowledge you still haven't tweeted once, have you? >> no, no. i'm waiting for that definitive moment of ultra information. >> we will know something is important when rick santelli has tweeted. >> you know, bill, i have nothing against tweeting. i have nothing against social media. i think it's a great dynamic, a disruptive dynamic that's a lot of good within our economy. just not my cup of tea. but i'll tell what you is my cup of tea, watching these ten-year note yields. granted, the range is very compressed but we're coming down and we're about to ready to slip under yesterday's low yield which is about 2.76 1/2 for you fine tuners out there. we were talking about china. i like when you brought up copper and iron ore. not only are there dynamics with the weakening of the yuan and i have charts that show yuan

versus dollar overlayed with copper prices, but when you start thinking back five years with all the rare earth and industrial metals that china was amessing and then even back then we started to see it might be a bad idea, so they found an alternative use for those stock piles to use them as collateral for loans. >> exactly. >> what i think it does is it's giving us a glimpse. if some of these structured financing deals are starting to put pressure that's showing up in other areas, we need to pay attention to that canary in the coal mine, so to speak. today there was some talk, there was another bond default in china. i cannot confirm it. the point of that is that this is how closely things are being watched, and if you want to know what the catalyst for the next wave of selling will be, i can't imagine it isn't going to be something out of china. >> you know, squarely in your wheelhouse. are you surprised we're seeing

yields move lower. at a time when we're seeing soft commodities with pops lately? >> i'm not surprised simply because the news out of emerging markets, particularly china, as rick mentioned, has been pretty soft, and you have also sort of outright almost deflation in some of the southern european countries which has sort of dropped off the radar screen since the whole ukraine business started, but we're seeing a lot of softness in global trade. we're seeing a lot of softness coming out of china which affects everything else, the weakness in commodity prices, and, you know, a little bit of lift to the economy maybe going forward, but we're really holding a range in terms of the bond market right now. we've been 2.60% to 3.00% in the last nine or ten months. we're right in the middle of that waiting to see what happens next. it doesn't surprise me we're drifting lower. >> peter anderson, kenny is not the only skeptical trader about

this market. there are a lot of them who feel we are really -- we need some sort of a pullback in this market right now and it's not happening, but you still feel there's good value to be found in this market, yes? >> you know, call me an optimist. i mean, i have been that in the past, and let me just -- i know, bill and kelly, you love details. let me just sober us all up with this fact. i run a portfolio of 24 stocks, okay? and out of those 24 stocks, 23 of them are what i would call fairly or lowly valued. in other words, that there is considerable upside in that portfolio. they all have a pe that's pretty reasonable when you look at their earnings growth rates. so that's one of the reasons why i'm optimistic here. you know, we can talk about interest rates decreasing a bit based on china, et cetera, and i think that's kind of just temporary noise. if you look at the fundamentals of some of these companies, as i have said in the past, they still look very, very appealing.

>> can you give us a couple examples. i'm curious if you're specifically looking for those names that are trading cheap or whether you mean that some of the blue chip names of this market are giving us that message. >> in other words, you want more details. >> just a little bit. >> okay. that's fine. i love that, kelly. sure. some media names that i own, for instance lionsgate, madison square garden, and 20th century fox. these three stocks have not enjoyed the rally up to this year-to-date returns. however, when you look at what analysts are projecting for their growth rate, they're really, really astonishingly cheap when you look on say a peg basis, you know, the price to earnings divided by the earnings growth rate. it's names like that. i'd also say this, fundamentally just think of it intuitively, kelly. when you're looking at stocks like that, those are media stocks, i think that all of us, including all of us on this program right now, will realize we're not going to skimp on

getting information, and when you have that thesis, stocks like this are just a natural buy. >> kenny, are you ignoring fundamentals? >> well, listen, technically i just think the market is overdone. i'm not necessarily saying long term i'm not an optimist and a bull. i absolutely wham. i think you have to be in the markets. we're talking about what's going to happen in the next five or ten trading days and i think we'll see that pullback. i think peter is right, but i think as you're talking about from a trading perspective, nobody should be surprised to see the market come in and test lower and find that support level. >> rick, i don't want to pull a fast one on you, but i am curious if you've seen a little bit about what's coming out of washington with regard to getting rid of fannie and freddie potentially. those names are getting hammered. i wonder right move? is this potentially a reason why the markets more broadly may be seeing weakness. there are plenty of guys like dick bove willing to say this will be the end of the 30-year

mortgage in america. >> it's about time. if the u.s. government wants to take over industry after industry, if the fed wants to take over the marketplace, you know, everything from health care to interest rates to financing our houses, that's fine, but it was never the intent, it's a lazy factor. it was putting -- put in conservatorship in 2008 and years later they haven't dealt with it. they're going to combat mother nature for global warnings and they've left these groups in conservatorship. they can't finish their homework. canada is doing just fine without government-sponsored enterprises. if it has to be the end of the 30-year mortgage, so be it, but i'd like to be a privatization back of the mortgage arena. >> i thought you were getting revved up. i thought we were going to have another political party born here. joe, durwould you buy anything

here? >> i think you have to be cautious. europe is an interesting example. i think what you're seeing is a lot of speculation, whether it's record levels of margin that people are putting on and growth in margin, going into names that are highly speculative. everyone concentrated on high growth, high momentum stocks. that's not an early cycle thing for us. i think we are in a multiyear recovery that is slower than everyone would like, and we're going to get moves from growth to value back to growth, and i think we're probably going to be shifting toward more value-based names that have not participated as much as your earlier commentator suggested. i think europe is very interesting. they're about 9 to 18 months behind where we are. so easier money and safer money to be making right now. but there's a lot of speculation and i think that we're due for a 10% to 15% correction. probably on the way back again, but definitely more volatile environment. >> well, as the dow is off 90 points this hour. thank you all so much for the

perspective there. so many different stories. >> we look forward to that first tweet, rick santelli. i will say when twitter was down, kelly and i were very frustrated because there was no place to go to express our feelings about twitter being down. >> i tried to get you on instagram. >> just tap somebody on the shoulder. there are still or gganisms wit 98.6 degree temperatures. >> he's a phenomenon on twitter. thank you all, folks. heading towards the close and we are setting lows for the day. the dow down almost 90 points at this hour. >> and the financials in particular under pressure. also, energy prices, they've been outperforming stocks so far this year. who better to get the outlook now for oil and natural gas from than chevron chairman and ceo john watson. he's now saying chevron will be cutting back production. why is that? you don't want to miss this exclusive interview after the bell. also, a new incredibly powerful painkiller is hitting

the market with fda approval despite its own panel voting against it. almost unprecedented. now some lawmakers in washington and some doctors are already calling for a reversal of that fda decision. we will hear from both sides of this huge controversy and find out why a drug that is ten times more powerful than vicodin is needed right now. later, new jersey, get this, taking aim directly at tesla. banning direct auto sales. what that could mean for tesla's future coming up on "the closing bell." you're watching cnbc, first in business worldwide. ldwide. iwe don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years.

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welcome back. for the s&p 500 in particular, we had some early gains this morning, but they have quickly faded away. the dow is off 82, bill. >> courtney reagan, what's driving the action right now? >> we have a lot of movers today. let's begin with plug power plummeting after sigh trcitron h says the stock is worth 50 cents a share. shares at $6.45. ballard power systems fuel cell energy and uqm technologies also

falling in sympathy. good day for jcpenney. citi upgraded the retailer to buy from neutral saying the company can continue to deliver same-store sales that are positive as it updates it's merchandise mix. getting a price target up, too. joseph a. banks and mens wear house rising. we end with mcdonald's. making positive comments at the bank of america consumer and retail conference. bill, back to you. >> court, thank you very much. if you have been to the grocery store lately, you have probably been hit with sticker shock. >> what's causing this food price inflation? it's happening globally. how long will it last? sara eisen is here. >> you have this unlikely group of factors that's driving up prices of commodities. a new report from the united nations shows food prices jumped last month by the most in more than a year and a half after a pretty long steady decline. look at some of the gains here according to this u.n. food

commodity price index. cereal prices up over 3%. this is at global level. that's january through february of this year. vegetable oil, nearly 5%. dairy up 3%. sugar up 6.2%. meat was down but those prices have been rising. you've got abnormal weather, not just in the united states, also in brazil and other places where these commodities come from. you have supply issues. you have shortages. the question though is when does it all show up in the grocery aisle? you're already starting to feel higher costs. talked to a bunch of analysts and it's six to nine months, that's the normal lag time between the commodity price increase and when, say, the commodity company or the food companies have to raise prices except for hamburgers and dairy. they can't hedge their costs as well so those show up six weeks later. that's why mcdonald's cut its patties, two patty to one on the dollar menu according to david parker ofr bc and why kraft food prince may raise prices because they have a lot of dairy and meat in there as well. >> we have heard from yogurt makers, they're concerned with

dairy prices. what's also interesting is geopolitically, if we have food prices popping in the next six to nine months, what does that mean for the next round of discontent, for example. you can never predict which country it's coming from, but there's so much instability that we don't even talk about now and we've been in a winter period where food prices were on the wane. >> always a concern when you have rising food prices, especially in developing countries. we've seen that before. this is the beginning. we don't want to overplay this. it has to be a sustained rise, but it is a reversal of the trend and that's why people are paying attention and it's not being driven by, say, higher demand. that's why it's a little worrisome. >> very much a supply issue. >> especially for people wondering if this is going to be sustained or not, el nino is on the way and shuuger in particul popped last time. it means maybe it isn't going to be -- >> you mentioned cocoa prices, coffee prices. coffee is another one where you start to see it. starbucks saying it has its costs hedged for the next year. when you look at overall

inflation numbers, the ones the federal reserve is watching, they don't tell this whole story. that's why people say they need to go out there and shop. kenny, the trader who you were just talking to, going nuts about higher grocery prices. >> because that man does more home cooking than anybody. >> exactly. >> you have to see his blog. he has great recipes. >> pasta and sauce recipe approximates. >> thanks, sara. speaking of el nino, you know it's going to snow here in a couple days. so much for el nino for right now. >> i know. global weirding. >> when have we never complained about the price of bread or any commodity? >> in history. the trouble is it's kind of like people the other day saying no one has ever called the market too cheap. no one ever called bread too cheap but that doesn't mean when the price goes up it doesn't cause real pain. >> it is causing pain here and there. and pain for the bulls today. 40 minutes left with the dow down 81 points, just off the lows right now. the s&p would need to be up about a point to get a new all-time high. not happening right now.

down 11 points. >> a new and very powerful painkiller just went on sale over the weekend. some doctors saying it will do a lot more harm than good, and one stock is soaring because of all this. if our next guest has his way, this new painkiller will be taken out of circulation. the stock behind the drug next. and if you want to buy a tesla and you live in new jersey, you're out of luck. get this, the state just a few hours ago banned direct oof sales. whatever happened to free market? huh? we're going to talk about that coming up. is that bill? that is bill. >> is that me? >> look at that. a makeshift driving range. that's times square today. >> yes, it was. >> wow. itching to get out on the greens once all the snow melts apparently and he's not alone. find out how winter is impacting the golf world's bottom line coming up. >> that's my new best friend, hank haney. >> that's why you were out there. >> i had a lesson this morning. wait until you hear.

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we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. a lot of buzz about this new painkiller from a small drugmaker that's causing a big commotion in washington and in the medical community. >> sheila dharmarajan joining us

now. why are some dockers and lawmakers urging the fda to reverse this drugs approval? >> critics of zohydro say they don't need another powerful painkiller on the market. it's being marketed by a small company and the active ingredient is hydrocodone. unlike vicodin which is mixed with acceseat minden, it -- you avoid liver damage issues associated with long term use of acetaminophen. it's been very controversial from the get-go. even when the fda approved it, it was against the advice of its own advisory panel which really doesn't happen that often. analysts i spoke to said despite some of the public health issue was painkillers, the fda in this case was simply following its

own guidelines and zohydro did meet all of its current standards. it is very rare for the fda to technically reverse a decision unless there's new evidence. for now it seems like zohydro is here to stay. the stock has fallen a little bit on the headlines but in the past year this is a stock that's up over 100%, but i will point out it's a very small cap stock, kelly. >> it's a great point, sheila. thank you very much. a small cap stock that's benefited big time from this new painkiller over the past six months. it has more than doubled but earnings extremely small market cap. you must know the risks. >> let's talk about the drug itself. more on the pros and cons. we bring in two doctors with very different views of this drug. dr. steven garner thinks the drug will help many people who are suffering terrible pain, but dr. andrew colatni says it will do more harm than good including killing people. you actually believe the fda would approve a drug that would

kill people? >> actually an fda advisory xhe voted 11-2 against allowing this drug on the market and that was over a year ago, so many people were shocked to see the fda go against the recommendation of its advisory committee and approve the product. >> why did the panel turn it down? do you know? >> well, for two reasons. number one, this is a very dangerous opiod. the 50 milligram dose has ten times as much hydrocodone than you would find in a regular strength vicodin. that's enough hydrocodone to kill a child. it's two capsules could kill an adult who is not used to taking an opiod. it's easy to crush. you can cut it open. you can snort the drug, you can inject it. that was one of the reasons. the other reason -- >> the question is what is a 2-year-old child doing with the pill. >> that's a good question but the other reason that the advisory committee voted it down is that this is a product that's

going to be more likely to harm the very patients it's intended for than help. even patients who take it exactly as directed, the manufacturer is targeting this product for chronic pain. we're talking about low back pain, fibromyalgia, headache. these are conditions where it's more likely to harm people than help them. >> as was pointed out by the report, these drugs contained tylenol and motrin-type drugs which have be harmful to elderly people, particularly their liver. they may not have an option. so i think -- >> dr. garner, does this drug need to be as powerful as it is. >> it doesn't cure pain in everyone. the argument is are we upset that the pill is so powerful or that the people who are prescribing it are not doing it correctly or the whole infrastructure is not working when it comes to these pills? any of the opiod s have the same

prisk. >> just to take this pill as a particular example, is there anything this illustrates about the problem with pharmaceutical. that they can be taken incorrectly, it can fall into the wrong hands. it seems to be a flash point for the whole debate. >> whole way that a drug comes to abrofpprovaapproval. it is quizzical to see a panel vote it down and then the fda approves it. we can't do a blanket one policy fits all things because they drugs will offer something to let's say an elderly person who has knee pain who can't get to sleep. >> these are actually very bad drugs extended release are bad drugs for someone who has occasional knee pain. products like this are pront for treating pain at the end of life, for example from cancer. but even for patients that are helped by medicines like this and even for patients who can't

tolerate tylenol, we have many opiod formulations on the market already that have no tylenol in them. >> but this drug is -- >> right now the market is saturated with these products that have no tylenol in them. there are plenty of options for the small number of patients that are helped. >> doctor, why do you think they approved it even though the panel voted no? >> that's a terrific question. everybody is asking the same thing. i believe that fda's analgesic division has had a cozy relationship with the open youd manufacturers for the past decade. as this epidemic has gotten worse as prescriptions increased and we've seen rising rates of addiction -- >> they turned down -- >> dr. garner, go ahead. the other side of this case needs to be made. >> i want -- >> the an algesic -- >> dr. garner, go ahead. >> had this been turned down all

the similar drugs would have had to undergo a ree valg wation. they all have harmful effects and they all have therapeutic effects but harm that can be obtained. you always worry about the risk versus the benefit. does the benefit outweigh the risk? i believe having this pure pill outweighs the risks, it will allow more people to take it who are having severe pain. we're worrying about somebody who is going to sell it illegally or get it illegally more than the person who -- >> we're out of time but let me ask this quick question. i think this is important. dr. garner, would you ever have reservations about prescribing zohydro and, dr. kolodny would you ever prescribe it? >> i would have no reservations. pick it for the right patient, for the right treatment course, and you're going to do it correctly. >> okay. >> there are some patients who could benefit from an extended release opiod without acetaminophen in it. we have products like it on the market. and the patient who benefit from

drugs like that are very few. >> we hope, gentlemen, because of this conversation anyone who finds this drug in their household because of, say, a relative is extremely careful with whose hands it falls into. it is not vicodin. thank you both. >> thank you very much. >> thank you. >> very important. heading to the close, 30 minutes left here. coming back a little bit. the dow is down 70 points. the s&p is what traders watch, down 10 points right now. 11 points away from an all-time high. congress also getting set to hold hearings over gms faulty ignition switch recall that's been linked to 13 deaths. yesterday on this show we heard from the parents of a young woman who died according to them as a result of this very issue. up next, we'll hear from a lawmaker on the committee looking into why the government and gm didn't listen to warnings sooner. and a new study says handsome men are more likely to make a successful business pitch than women, even beautiful women. we'll get reaction from two people who know a thing or two about listening to pitches. we have "shark tank's" lori

greiner and marcus lemonis. >> check a new episode of "the profit" at 10:00 p.m. lots of reasons to stay tuned. we'll be right back. tall the building is,t ba. or how ornate the halls are. it doesn't matter if there are granite statues, or big mahogany desks. when working with an investment firm, what's really important is whether the people behind the desks actually stand behind what they say. introducing the schwab accountability guarantee. if you're not happy with one of our participating investment advisory services, we'll refund your program fee from the previous quarter. it's no guarantee against loss and other fees and expenses may still apply. chuck vo: standing by your word, that's what matters the most.

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stocks generally lower, although we're coming off the low. the dow was down 90 points around 3:00 p.m. eastern time. now down 61 points. the s&p would need a one-point-plus gain today to be in all-time high territory. down nine points off the lows right now as well. kelly? >> now, it's a big day for puerto rico. the u.s. commonwealth. it's a big day for puerto rico, the u.s. commonwealth. there's courtney reagan. why don't you take it from here. >> i don't know much about what you're talking about with the puerto rican stuff but i can tell you fannie mae and freddie mac are getting crushed. i want to show you the shares and check out what's going on here. what we know now is that lawmakers are releasing a blueprint for a housing finance reform. they will redo what we had previously done with the mortgage market. they want to wind down fannie

and fraededdie, reform the hous finance system. this will be a blow to what the hedge funds were betting on what would happen with the restructuring of fannie and freddie. the stocks are down here more than 25%. so we're going to watch this carefully and follow along how this proposal works its way through d.c. kelly? >> court, thanks very much. such an important issue. >> yeah. where were we? >> i don't even know. following up on a story we brought you yesterday, that's where we were, very serious topic. general motors, the national highway and transportation safety board commonly called nhtsa face new pressure from congress both already under scrutiny to explain why it took a decade to recall 1. 6 million vehicles for faulty ignitions linked to 13 deaths. the house energy and commerce economy launching an investigation and there's word the senate will follow suit. joining us is the chairman of the house subcommittee investigating this recall. >> that's representative tim murphy, the republican from pennsylvania joining us right now.

congressman, welcome, thanks for joining us. >> thank you. good to be with you. >> why specifically are you calling this hearing now? why are you investigating? >> well, we see that apparently gm was aware or maybe they weren't aware of some problems. we heard a top gm executive said their reporting system was not sufficiently robust, but nhtsa had also been looking at this issue for a number of years but concluded a couple years ago, there was not enough information to move forward. what we do know, that 13 deaths have occurred, many, many accidents, and thousands of consumer complaints. there's a very, very important law passed in 2000 which requires manufacturers to inform nhtsa in an early warning system that problems that dealers report, warranties are out there, consumer complaints, and we have asked nhtsa to tell us what have they been hearing over the years, what have they communicated with general motors, what have they heard back, and we need to find out in a very factual-based way what has been occurring. >> you're always going to get people complaining about a vehicle. you're always going to have

tragically accidents that can result in death. but at what point does an automaker have to restrain production of a vehicle or do the recall when it becomes -- even before it becomes clear that there is something fundamentally wrong with that vehicle? i mean, that's really what's getting to the core of this right now. it took them time to figure this out they say when there are those who say it took ten years to do that? >> well, they were focusing on the she have cobalt, as i understand. when general motors added a saturn vehicle and a pontiac vehicle, suddenly the numbers jumped up to 13 deaths. we don't know if that was part of the issue, that they were compartmentalizing the issue. these are all questions we have to ask nhtsa how were they looking at data? how do they analyze this? who did this and were they properly communicating with gm? was gm being properly honest and straightforward in all of their things, too. that's why we have this investigation. we're going to do it very fact based, very deliberative, very

careful, but to get to the bottom of this is essential. >> you raise the issue about nhtsa. there are two different places where there could have been oversight or something done to prevent these deaths and these incidents and that is, one, from the automaker itself, gm of course, and the other, from the government. and what we know from nhtsa and from "the new york times" piece over the weekend is that their argument is basically, look, this was a very, very, very small number of vehicles, so, you know, unfortunately, it wasn't big enough, frankly, for us to spend resources on it. i'm paraphrasing. if that's the argument, what do you do in that kind of situation where, granted, there are limited number of resources to investigate every complaint? >> exactly. >> what has happened is nhtsa has just sent a list of 107 questions to general motors. those are going to take some time and volume to explain that. but along those lines, it is a very important question. why ten years? what information was out there? did it get pigeon holed somewhere because they thought it was a small number or were

there trends emerging that if someone had taken a careful look they would have seen something? this is the same as if a doctor overlooks a lab test and misses a diagnosis. let's go back over this and was the proper reporting coming from general motors not just for the cobalt but from some other cars they made as well that had a similar ignition system that also had problems? in th the aggregate, the number may be there, but let's look at the facts. >> we want you to listen to something we heard yesterday on this program. these are the parents of an accident victim. listen. >> the regulatory agency, they don't seem to have any authority or influence over what gm does. they sent us some kind of report that didn't state anything to our attorney, didn't give any details, and basically how he summed it up was like they're telling us, if you think there was a problem, you prove it.

>> congressman? >> well, it's sad. to put this all on the burden of the consumer is a bit of a problem. the reason that nhtsa is there and the reason the early warning alert system was put in with nhtsa in the 2000 law, the tread act, was for this very reason, to give the consumer more strength and to have the government either looking out for the citizens along these lines so you didn't have any kind of untoward action on the part of a company. i'm not saying general motors had some problems with their reporting system, but what the government is supposed to be doing is working with constituents, with taxpayers to find out was the information really being out there. they should have listened. >> representative murphy, nice to see you. thank you for your time, sir. let us know what you find, would you? come back and tell us. >> we will do. >> thank you very much. meantime, incredible story, tesla, if you haven't heard, will soon no longer be able to sell cars directly to customers in new jersey. they don't have dealerships. they sell them directly. phil lebeau, what's going on here? >> this is a move that has just been passed within the last

couple hours, bill and kelly. it comes from the new jersey motor vehicles commission. it held a meeting today and essentially changed the rules in terms of how it will award who can sell vehicles in the state of new jersey basically saying you can't sell directly anymore. that essentially means that tesla will no longer be able to sell vehicles through its galleries in the state of new jersey. new jersey becomes the third state to ban the direct sale of tesla vehicles. tesla has two stores in new jersey. it will have to lay off 27 employees. here is the head of vehicle and business development for tesla talking earlier today about how damaging this change in new jersey would be for the electric automaker. >> this is at the very least disappointing if not outright outrageous, what's going on to our business in new jersey right now. shutting us down and putting people out of work. >> again, this was just passed within the last couple hours. about 15 people spoke at the new jersey motor vehicle commissions meeting.

one person saying, look, this is un-american, not allowing tesla to sell vehicles in the state. shares of tesla have been under pressure for the last couple hours. there you have it, three states now banning the direct sale of teslas, new jersey, texas, and arizona. guys? >> unbelievable. >> phil, while we have you, we'd like to go back to the story we were just discussing with regard to general motors and the faulty ignition switches because we're hearing from reuters the u.s. attorney's office in new york has opened a criminal probe of gm related to that recall to see if they failed to properly disclose these problems. your reaction? >> not surprised, and i wouldn't be surprised if we see more of this, and we know that general motors has already brought in two law firms to look at the handling of this recall investigation. don't be surprised if we see gm take an even more pronounced step back and say, okay, let's see exactly what's going to happen both in washington and with state ags around the country who may be considering criminal probes. >> all right. thanks, phil, very much.

by the way, more on the tesla story. marcus lemonis, the profit, will be with us next hour. he has some strong opinions about that story. might surprise you though. >> he has some strong opinions about the dealers. there are about 15 minutes to go until the close. the dow is off 75 points. the s&p off 11, bill. look at that swing, huh? see that? that was perfect. oh, that's me, i'm sorry. when we come back, we'll find out why i was golfing in the middle of manhattan, in times square today. what it has to do with all the bad weather around the nation this winter. later chevron chairman and ceo john watson explains why $100 oil is the new $20 oil. general motors shares down more than 5%. we'll be right back. [ female announcer ] who are we?

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welcome back. you can see stocks cooling off a bit today after the record run up that we've seen. but in the meantime, it was actually a beautiful warm day, bill, here in new york. it finally felt a little bit lie spring. >> upper 50s. what better way to celebrate a break in the cold weather than hitting the golf greens. that's what i did in times square of all place was my new golfing buddy, dominic chu. dom?

>> look at that collar. >> i'll tell what you, guys. just about an hour ago all this behind me was a full on pop-up driving range. like you said, bill, we decided to work on our golf game a little bit. take a look at what we did. >> it's been such a long winter in new york, dom and i had to come to times square to practice our golf swing. how sick is that? >> this is a pretty nice way to spend a winter morning and afternoon here. >> so not a lot of golf gets played in the wintertime, does it? >> it doesn't. if you take a look at the stats, national golf foundation says only 12.5% of golf is played nationally in january, february, and march. so it's been a harsh winter. traditionally not a lot is played. if you can get into spring, the quicker you can, the less of an impact you're going to feel for the golf industry overall in terms of rounds played. >> i buy a lot of my equipment in the wintertime. this is my dream time, right? so i get there, and i -- nice. >> nice swing. >> does a lot of equipment get bought in the winter or what do they do? >> here is the thing, a lot of

equipment does at least start to get purchased in the wintertime. the pga equipment show happens in orlando in the first part of the year in the winter. what they're trying to do is build sales momentum because people typically try to buy the equipment in the first few months of the year in the hopes that they can take that new car or new golf club out for a spin, if you will. so that's the big thing. it's a big business. multibillion dollars, $5 billion a year gets spent on equipment and apparel every year. >> i just visited my golf club last weekend just to see what shape it's in. there's still 10 inches of snow on it. golf courses in the area where it snowed all this year, they're going to suffer this year. >> in a good part of the country. it affects the local economy. just to put a number on it, again, national golf foundation says for every extra day of winter, a day of winter where a golf course is shut down and you cannot play, aggregate, it's a $50 million a day hit to the golf course operators. so this is very much about a local economy as well. your club included sxroop bef. e

>> before we go, show me what hank haney did to your swing. >> i need some serious help. for right now he told me i just got to work on the top part of my swing -- >> nice. >> so, i don't know, we'll see. i have to spend a lot more time on the range for sure. all right. so as soon as the weather gets better, i'm definitely hitting the driving range a little bit more. >> i'll be there with you, pal. thank you, dom, very much and thanks to hank haney. >> i want to know when i get out there on the lacrosse field. >> we'll get you. heading to the close with the dow down 74 points right now. >> that's right. more "the closing bell" in just a moment. stay tuned. stay tuned. salesperson #1: the real deal's the passat tdi clean diesel gets up to 795 highway miles per tank. salesperson #2: actually, we're throwing in a $1,000 fuel reward card. we've never done that. that's why there's never been a better time

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welcome back. down 69 points as we head to the close here. we've got six minutes left. we're keeping an eye on general motors. we just learned the u.s. attorney in new york is talking about opening a criminal investigation into what gm may or may not have known about the recall of those cars on the ignition problems, and as a result that stock is moving sharply lower, down 5% right now. joining me is leo kelly. leo, nice to see you. thanks for joining us. are you inclined to sell the rallies we've had recently or buy a dip like we have today? what's your view of the market? >> we're more inclined to buy

dips. we're long term bulls on the market and we're looking for opportunities. so specifically we think the u.s. looks good long term, but a little rich after last year. a big push in pes up, so we think you have to be smart and buy on dips. >> a lot of people still bullish on the markets are buying cyclica cyclicals. they think the growth oriented stocks are the place to be. >> what's going on with the fed, if the fed starts to really hit this taper button and starts to lower interest rates or raise interest rates, emerging markets run into a big problem. if they run into a problem, the cyclicals run into a problem. >> so who do you like here? >> we like the emerging markets. >> really? >> if you look at the emerging markets, there's value there. you have to be smart, you have to be patient. buy on dips and we love it long/short. put the managers who can really have the have nots -- >> if you like the emerging market, you are buying on the mother of all dips then. >> it is the dip. >> that's amazing. leo, thanks for joining us.

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we're lower. near the lows of the session down 61 points. we're also watching general motors which is down, has been down 5%, still is. after word just a short time ago that the u.s. attorney in new york is opening a criminal investigation into what gm may or may not have known about the recall of those chevy cobalts. bob pisani, another group going lower, fuel cell companies. >> a speculative stock for sure. plug power had been on fire the last few days. push over here and see if we can get plug power up. down in the middle of the day. there was a report from citron, a research firnm, saying basically there's no reason for the run up. they sell power for forklifts and there's been speculation pow ser going to go somewhere but obviously stocks are getting ahead of themselves. >> thanks, bob.

heading out, minus signs across the board for the major averages. stay tuned. kelly has the chairman and ceo of chevron, john watson. he has big ideas about the price of oil down the road you will want to hear coming up on the second hour of "the closing bell." i'll see you tomorrow, kelly. thank you, bill, and welcome to "the closing bell." i'm kelly evans, and what a day on wall street. here is how we're finishing up. it looks like red arrows across the board, and this coming off record close for the s&p 500 on friday, but we are moving lower from that point, and today the dow giving up about 67 points. the nasdaq about 23, and the s&p off almost 10. for more on what to make of it, letsga get straight to it. joining me lori greiner is here. marcus lemmonis, michelle

caruso-cabrera. david, i have to start with you. what do you make of these markets and is today the beginning of a sharper pullback? >> it was only, what, four or five hours ago we were at all-time record highs i think in the s&p or pretty close to them. we were having a pretty good day. so i'm reluctant to read too much into the day-to-day gyrations. we're still extraordinarily close to those all-time record highs. so i think it's very much still a risk-on environment, it's an environment characterized by central banks that have at it and other that is will continue to add liquidity to the system, and i see that as a theme that's not going away anytime soon, even with the fed taper. we have a lot of other easy central banks out there and central bank that is if things get bad are going to come back and give us a little more juice. so i feel pretty good about that. >> sharon, i can't get over the action in commodities lately. help us out here because on the one hand, you have got copper, iron ore taking it on the chin. you have some of the foods moving so much higher. is there a broader signal amid

all this? >> i think the broader signal is that a lot of traders are waiting to see kind of all of this weather-related data we've gotten recently, how that's going to play out ultimately. is that something that's going to be a continuing trend, at least what we're seeing here in the u.s. i think a lot of folks are also looking to see what impact we're looking at from some of the emerging markets and some of the developed kumen eed countries, countries. the other thing you have to keep in mind when we're talking about oil prices here in the u.s., we still have levels of inventory that we have not seen in many, many months, and so that has been putting a little bit of pressure on prices but interesting to hear from john watson about going forward where those prices are because most folks i talk to say, yeah, $1 pull back you might think that that's going to be good for prices at the pump. it's not going to last. we'll be right around this mark for a long time. >> we will talk to him in the next block. if you want to get a broader sense of what's happening, michelle, look no further than

what puerto rico did today. >> a whopping bond offering, $3.5 billion. this is the largest junk muni offering in u.s. history. it was originally thought they would have to pay more than 10% but investors and hedge funds are so hungry for yield, they offered to buy more than $16 billion worth of the stuff. super oversubscribed. they only had to pay, only, a little more than 8.5% which, by the way, triple tax-free, no federal tax no, state tax. we'll talk to the two leads on that coming up later in the show. >> exactly. and the reason why i raise it is just because whether it's puerto rico, whether it's, you know, parts of the european periphery, credit markets are so strong, there's such a reach for yield still -- i want to bring in "fast money" trader jon najar n najarian. dr. j, are you there? >> i am, indeed, kelly. how are you? >> good, sir. what do you make of the action today? >> it was a story of a lot of turnarounds today. you cited plug already.

we've already had fannie mae and freddie mac, these two stocks really flipped around. fannie hit $6.35 or so this morning. and then sold off very hard. that's fnma, sold off very hard. breaking through $4 to the downside. relatively small moves for single digit stocks but percentagewise, kelly, these were massive moves. >> and the hedge funds involved in these names. this a 32% drop. i don't even know -- that's really going to hurt, it could cause some pressure across markets. by the way, could put some pressure as well on other parts of the financial and home building complex depending on how exactly this moves forward, and by the way, from homes, marcus, to autos. got to talk about what's happening with tesla today because pretty shocking to see now three different states whose dealer networks are so strong they're able to say, sorry, politicians, we don't want tesla to be able to sell directly to consumers. >> i know tesla attempted to use manufacturing plant in texas as

kind of the loophole to get into that state. these auto lobbies are so strong, and i think they're for more consumer favorable than what tesla is trying to do. i love the car, i love the company, but to break up that dealer community is not going to happen. >> shouldn't the consumer decide -- >> the consumer should decide. >> if they want to buy directly from tesla, shouldn't they have the right to? >> the consumer should decide but these states are involved in licensing dealers who -- >> vested interest, yes. >> that's right. because there's a tax base there. they will get the same with tesla, but there's service after the sale you have to be concerned about as well. and tesla hasn't demonstrated that they're able to service the consumers after the sale. >> so then the consumer won't buy the product. >> other piece i struggle with is who is going to keep the market pricing? in a dealer environment if there's four chevy dealers, you know you're getting a fair price. if there's one dealer and controlled by the manufacturer, how do you control it? >> one of our producers bought a

tesla in new jersey and said the service has been great. >> but i don't know if the pricing was right? >> who am i sitting next to? >> you're sitting next to the profit. >> lori, what do you think? by the way, welcome. >> my stocks are going up. >> what are your stocks? >> i have different funds, but, you know, today i really wasn't watching the market. by book launched today so i have been busy doing the talk shows. i am going to decline on opinion today because i really wasn't watching the market. >> i want to ask a little bit about this whole issue in new jersey, just the latest state with tesla where it's coming out -- i asked phil lebeau about this last hour. i said i don't understand why a state is able to say to -- is basically able to rule that a company can't sell directly to consumers. he said there are a lot of these franchise laws that were put into effect back in the late '90s when the internet was growing quickly, and there was a worry that companies like ford and gm might sell directly to consumers and sideline or undercut an entire industry.

now, maybe then if you wanted to be worried about the disruption i could understand it, but michelle, to your point, this is the 21st century. we're talking about some incredible new innovation coming out of the auto space, and it seems a little strange that the message from politicians is, you know, that this company can't sell directly to you. >> think about how many other industries where this happens. of course, it's a much smaller industry, but think about the record industry. think about the publishing industry. so many industries that have gone directly to the consumers bypassing whether it be the big publisher, bypassing the record labels and doing it on their own and how successful they've been in doing that and in branding themselves. i think tesla is just taking that whole marketing idea to a different level. >> why do auto dealers deserve any kind of special protection compared to those other -- >> i think the bigger issue is this is going to set precedent. at some point it will clear the market. let's be honest with each other. it will clear the market. but this sets a lot of precedent for general motors and ford and mercedes and the other manufacturers who may say to themselves, we're giving up margin by going through the

middle man. >> right. >> so i think that's why the lobby is as strong as it is, it's going to stay that way for a while. at some point to the rest of the panel's kind of probably agreement, it's going to clear the market at some point but it will be done in a way where all the concerns are eased. >> david, before we let you go, sir, you have written and been one of the most incisive people when it comes to this market to the fact that central bankers, whether it was ben bernanke, janet yellen, were going to keep a bid in place despite the sell-offs that have come up from time to time. but when i read your notes, i get a sense that you seem to be one of these kind of fully invested bears, if you will, or kind of, you know, you hate the market but you got to be in it. is that a fair way of characterizing the activity more broadly that we're seeing across stocks right now? >> kelly, i think we have to always understand that there's a lot of stimulus in the system, a lot of stimulus coming from government sources, from the federal reserve, the bank of japan, the ecb, auld the ecb is a little limited, certainly bank

of canada, swiss national bank. it's been an important part of the market for a very long time, since the crisis. eventually the handholding will go away and we'll get the usual animal spirits of markets that take over but who knows when this transition takes place. i always worry they overstay their welcome and create another bubble. it's been the pattern in history. we had a commercial real estate bubble in the late '80s, an s & l crisis, that popped. we saw the fed come in, ease. we created a tech bubble out of all of the ashes. that popped. the fed eased. we created a housing bubble. that popped, the fed eased. it's a question of what the next bubble is, but we all stand around and scratch our heads but nobody is good at finding bubbles and nobody is good at identifying them. i can guarantee one thing, we will have another one and it will probably be induced by the central banks and we won't really know how to assess it until it's actually popped. >> well, you better at least give us a warning.

we're counting on you. great to see you, david. >> thanks for having me. >> thanks very much. also our thanks to dr. j. you can catch him and the rest of the "fast money" crew coming up at 5:00 p.m. and much more ahead on the markets here and your money. up next, chevron ceo john watson sitting down with me exclusively talking about the u.s. oil giant's plans to shrink production, yes, cuts are on the way, and believe it or not, rising oil prices not necessarily a great thing for big oil companies. chevron's ceo just after this. also, the latest on the search for the malaysian airlines plane that vanished last weekend. as calls grow to amp up technology, we'll speak with a pilot who explains why that's a waste of money and resources. keep it right here. you're watching cnbc, first in business worldwide. [phones rings]

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welcome back. oil prices hovering around the $100 mark and according to my next guest, that will be the new normal as oil and natural gas become harder to extract and increasing production costs push prices higher and higher, how will energy companies keep up with demand and what impact will it have on consumers and economic growth? joining me now in a cnbc exclusive is john watson, the chairman and ceo of chevron.

welcome to post nine. >> thank you. good to be here. >> you had a day that you spent answering questions, talking to the community more broadly about chevron. oil prices under pressure today. around that u.s. benchmark of $100, slightly below it. where do we go from here? >> we spent a day with the analysts talking about our plans going forward. most of the day was spent talking about our growth plans, where we're going to grow production 20% over the next three or four years. we talked about the peer leading returns we had, but we also talked about the industry, and some of the pressures we're feeling in this business. oil prices have increased significantly over the last ten years. but what hasn't been closely followed is the costs have increased also. >> how much have they increased? >> well, we've seen costs of oil field services doubling, tripling, in some specialty cases more than that. so costs for many classes of asset development have caught up with prices. there are still plenty of opportunities to invest, but increasingly companies are having to say no to resource

that is we thought we could develop years ago because of those higher costs. >> which would explain why you, others, are actually cutting back on capital expenditure, and people would look and say we're in the middle of this massive u.s. energy production boom. why is it that the economics have changed, and how serious an issue is it? is $100 oil today a fundamentally profitable place for your business to be? >> oh, it is. we can continue to make money at $100 a barrel, in fact less in many developments. chevron is spending a little less in 2014 versus 2013, but we're still going to spend $40 billion developing oil and gas and the world and about a quarter of that is here in the u.s. so we have significant investments in the gulf of mexico, very significant investments in the permian basin in texas and new mexico, and we'll continue to make those investments where acreage is made available to us to develop. >> if anything compared to exxon, you look a little more aggressive on that front. why is that? >> we have a growth profile that

we think is second to none. it is hard to grow in our business. we'll be growing 20% between now and 2017. a lot of other companies are finding it difficult and are more flat in their production outlook. so when you spend a little bit more, you can realize the growth and that's what our plans show. >> and now there's a lot of talk about policy. with everything that's been happening with the tensions between russia and ukraine, there are calls around the world and, frankly, even in this country from people who are a little skeptical about pushing to increase our energy outputs and exports to do that and reach new customers in different parts of the world. >> how business is a long cycle time business. it takes time to blf liquefied natural gas plants. the cycle time can be five or ten years or more. one thing i know is that oil and gas demand is growing. it will be the predominant form of energy for years to come and the developing world needs that energy. and so regardless of the source,

i believe the policy of our government and others should be pro-development. we need to develop oil and gas resources everywhere, including here in the united states. >> if the policy starting tomorrow, starting november, 2016, whatever, was aggressively pro-development, what would that look like? >> what we would see is more acreage made available. right now, for example, in the outer continental shelf, 85% of the outer continental shelf is off limits to development. in fact, we've seen oil and gas production increase nicely in the united states over the last few years, but it's all on private lands. on federal lands and the federal government owns a lot of land, we haven't seen that production increase. so making that acreage available, reasonable environmental policies, and maintaining the kind of tax structure that encourages investment are the things that our government can do to keep production growing in this country. >> are you confident we won't have another incident like the deepwater horizon? >> there have been a number of changes put in place in the industry, and i think that our business is safe. >> would it prevent that from happening in 2014 or 2015, a

similar incident to that one? >> i think we've put in place better practices that reduce the risks, and that's really what we're trying to do. whether it's developing the offshore business or in shale development activities. there have been concerns there. we think all of these businesses can be performed safely or we wouldn't be doing them. >> all the same though, some of this offshore stuff is much more expensive to your first point than the traditional drilling methods and how expensive is it? and if the future of energy development in this country is in a lot of these more sophisticated or more tricky parts to extract from, what -- how much pressure does that put both on your company to deal with that and ultimately on consumers as well? >> the returns can be good in this business. we have a development called jack st. mallow which will be coming online and it will be profitable. to give us an idea of what it can cost, a deep water rig and the other services can cost $1 million a day drilling. >> wow. >> so it's an expensive, high-risk business, and we have to have the returns that are

commensurate with that risk. >> which are? >> well, we've got -- we earn more than $5 a barrel more than our nearest competitor. we've been able to earn an average of $22 a barrel in our business across all of our oil and gas activities around the world, and we think deep water developments in the gulf of mexico compete nicely. >> let me ask you about the oil price because even as we're talking about a lot of geopolitical uncertainty and perhaps the u.s. demand picture looking healthier, you look at a day like today in the markets, it's under pressure, and you're starting to hear more people say what happens if we're entering a 1990s kind of environment where, you know, who would have thought it, but the oil price really starts to drop despite all of that? you guys just raised your forecast for the oil price, did you not? >> we raised the assumption at which we made certainly calculations around our business, but we look at a range of prices when we consider our developments. one of the things about our business that's a little bit different than some is there's a decline curve. oil fields eventually decline. just to stay even, you have to

invest. to give you an idea, the world needs to invest about $500 billion a year just to meet the energy needs that we're going to need over the next 20 years. so it's trillions and trillions of dollars that are going to be needed to meet the energy needs, not just here in the united states, but around the world. >> and so if your new forecast -- i think you had previously modeled something like $79 for the oil price. now you're looking more about $110, is that right? >> we assumed for certain calculations around government share in our projects around the world, and oil has averaged $110 for the last three years. so that was just an assumption. we actually consider a range of prices, some higher, some lower, when we consider our investments because let's face it, it's very difficult to predict where oil and gas prices are going to go. >> it's also difficult even to talk about oil prices because there are so many different benchmarks. does the system need an overhaul? >> well, we need to have liquid markets so to speak and there are different benchmark crudes that are out there, and they're priced differently depending upon the quality and the location. we've seen a bit of a disconnect

in markets because of transportation limitations in this country, so you have seen crudes trading at a wide range of price that is over time we think will come back into more parity. >> that's right. and in the meantime, this country will be seriously considering whether to increase and how fast to increase exports of energy. what would you like to see happen? how much of a difference do you think the u.s. can make to the global supply picture? >> i think it's a pretty straightforward argument. the u.s. is going to be a net importer of crude oil but our refineries were geared toward heavier oil that is come from overseas. now with the shale gas boom in the country and the light shale oil boom, we are produced more light oil that's better suited for refineries elsewhere. it's an economic efficiency argument. we'll be a net imposhrter of oi for many years to come. >> thank you so much for stopping by and sharing with our viewers some of the transform mags happening with your business and the industry. >> thanks for having me on the show. in the high-tech age, how

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experiencing its worst daily performance in two years on the expanding investigation into its ignition switch recall. vera phone moving higher after reporting better than expected fourth quarter results. tesla lost ground after new jersey banned the direct sale of automobiles forcing the company to sell its cars through dealers. new jersey becomes the third state after arizona and texas that will not allow tesla to sell its vehicles directly to consumers. d dick's sporting goods gained ground with sales coming in above estimates. myriad genetics -- we end with boeing which continued to move lower after it said late friday it found, quote, hairline cracks in about 40 of the 787 dreamliners currently in production. i don't care what kind of cracks they are, that scares me. kelly, back to you. >> court as an athlete, you know a hairline fracture can be

serious business. the search continues for the malaysia airlines jet. >> reporter: reuters is now reporting that it has been told by the malaysian military that they did, indeed, discover that they had managed to track flight 370 or they think they may have done heading towards an area west of here called the malacca straits while at the same time they say the plane's last signal, the last signal from the plane itself, that that was heard if you like northeast of here, hundreds of miles over the south china sea. so in terms of the investigation as to what happened, we now understand that the malaysian authorities believe that they have identified the two men with stolen passports. one of them an iranian asylum seeker. the they are one they think they know also likely an asylum

seeker. the suggestion is these people or at least one of them they are confident had nothing to do with terrorism which takes us back to the more likelihood or moves us in the direction that this may have been some kind of catastrophic failure. back to you. >> keir simmons, thanks very much. what we want to know is today in 2014, don't we have the technology to know where a plane is at any given moment? and if we have that technology, why isn't it being used? joining us now to help explain is denny kelly, principal at kelley james and associates an airline accident investigation firm. mr. kelly is a former pilot and has clone in the south china sea many times. great to see you again. being intimately familiar with this area, why aren't we able to figure out or know where any plane is at any given time? >> well, i think we can figure out where most of them are at any given time. these newer airplanes have what they call adsb on them. if that's working and people are monitoring it, it's kind of like an electronic signal that gives

them information on the airplane. whether or not this particular airplane had that or they had it on, i don't know. but as you can see now, the malaysian military says that they tracked the airplane for quite a while after it went down to a lower altitude. so it's hard to figure out who knew what when and where. >> i want to bring the panel in. >> this is sharon epperson, mr. kelly. is it a regulation for them to have the atsb, every airline, must all planes have it? is there a certain requirement on the type of plane that has to have it? >> it is not. it's a relatively new concept. people are trying to get it put in all over the world on every airplane, but they have not done that yet. the american faa has kind of backed off a little bit on it from my understanding, but eventually by 2020 it will be probably be on every airplane. >> more data doesn't necessarily mean more answers though, right? in nearly every industry we were

talking about, even when you talk about the nsa, you get all this stuff in. for example this malaysian plane, now we're learning for days later in fact they could track the plane to a different location at least according to the military. it seems to me it's not just the data, it's the people in control of the data and their training which is also crucial. >> that's right. it's not only the data, but it's how you interpret the data and who has control of the data and who ultimately will get to say what the data means. there may be somebody out there right now that knows exactly where this airplane went down and they just haven't told anybody for whatever reason. >> what is the installed cost to put this system in a current plane? >> well, an adsb system is not that expensive. i'm not -- dollarwise i'm not exactly sure, but per airplane, but it's not that expensive. there is a certain amount of expense for the receivers and the people that monitor them, but it's really not that expensive. it's a lot cheaper than having

satellite radar coverage. >> so what motivates the faa to be more lenient on this issue? what's allowing that? >> well, i think there's some economic reasons. i think the major airlines are kind of backing off a little bit for while because they see the cost of this thing, and they've got other problems that they need to throw money at. so i think the cost is one of the considerations. >> and mr. kelly -- go ahead. >> i was going to say the faa pretty much does what the major airlines want it to do on this type of thing so that's why they backed off a little bit. >> that's reassuring. i guess the central question here is if there is a high cost associated or the airlines themselves don't want to take it on for whatever reason, given the importance or just by the way the costs, the search and recover costs for some of these accidents, should there be some kind of intragovernmental body that's able to push for adoption of these systems? >> well, you know, there is.

every -- like the united states has the fa a and the ntsb and the airline industry and there's all these different countries have all their different investigative and all their different regulatory agencies. they're all pushing for certain things, and this is one of them. i just think that, for instance, in this case, you know, adsb may or may not show you where the airplane is at this time, and how often does this happen? once a year, once every two years? so the cost of this system as compared to what they get out of it is a factor involved in this, too. >> all right. probably one of the most important factors. thank you for helping to give some context around that. we hope more information can be learned or that it turns out very soon. denny kelly, thanks very much. the biggest junk bond offering ever. up next, puerto rico's treasury secretary plus the head of the puerto rican government development bank speaking with us exclusively about the $3.5

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welcome back. this was a big day for puerto rico. the u.s. commonwealth making history and borrowing $3.5 billion in one of the largest junk rated municipal bond offerings ever. joining us now in a cnbc exclusive are the treasury secretary of puerto rico, david chafee, chair of the puerto rico government development bank here as well. cnbc's international correspondent michelle caruso-cabrera. michelle, we've talked already about how significant this deal is to investors and what a day, a bigger offering than expected. >> yeah. $3.5 billion. you guys originally only intended to borrow $3 billion. >> exactly. >> huge demand for a commonwealth that already owes $70 billion. why does a place that already owes $70 billion need another $3.5 billion. >> it's mostly refansing debt that is already there. it's not necessarily increasing the amount of debt that puerto rico has.

>> it will only increase mildly. >> that's only because there's so much of it already. >> yeah. >> no, because the bulk of what is being utilized for is to pay down 16 lines of credit. therefore, other than the original issue discount and other amounts related to capitalizing the interest, everything else is going to be utilized for -- >> should we think of it like when somebody decides that they're going to go from a 15-year to a 30-year and they reduce the amount they have to pay up front. >> obviously equity is important. it's important to put the debt out into the right maturity so therefore, we said we needed the funding and obviously we were very happy with the results today. >> but what can you tell us about puerto rico's long-term viability here to service this massive debt load? >> well, i mean, as we said, part of the debt that we issued today is to pay a deficit financing from prior years. that has been something that has hand and we are eliminating that. the next fiscal year budget, we're working to have a balanced budget without any deficit

financing, and, therefore, we're not going to be -- we're not going to need any more debt like the one we're taking today and when we go to the market, we want to issue them only for capital structure. in regards to the payment, the first -- which will be the next fiscal year will be around $10 billion. they want $205 million and then $280 million. it's viable. we're working towards that. >> within our constitution, debt service can only be up to 15% of our total revenue. >> one five or five zero. >> one five. so obviously we think that general obligation bondholders right now are fairly comfortable. >> still, you hired a restructuring expert to advise puerto rico. >> for financing matters, exactly. >> people are going to look at that and say, wait a minute, you hired a restructuring expert, they must plan on restructuring. >> that's not correct. we've hired plenty of good financial advisers, legal advisers, and bankers. it should provide the market comfort we've hired teams of that caliber. their team has been looking at our liquidity situation, cash

flows, projusts, and should provide market participants we're aware of our situation. >> would you put this bond in your mother's portfolio? >> yes. >> really? even though it says you have to be worried about price declines and have to be worried you might not get paid back. >> the official statement was a very good document that explained everything to everybody. that clarity was something which is i think investors appreciate it. >> final question, who showed up and purchased this debt? was it the retail guy? was it -- here in the u.s., was it a lot of the institutional more sophisticated crowd? >> it's fair to say it's institutional and hedge funds. over 270 of them were interested in participating and so we had interest for over $16 billion. so we were pleased with the results. we were on the high range of the amounts and the low range of the pricing. >> david and melba, thank you for being here on an important day in this space. >> thank you very much. >> as the bridgegate scandal

turns, chris christie's former aide bridget kelly appearing in court today. she hasn't been talking. they're trying to make her. we'll have the latest developments after this. also ahead, a new study shows handsome men are more successful getting people to buy into an idea including investing money than women, even beautiful ones. marcus lemonis has something to say about it next. say about it . our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line, anytime, for $15 a month. low dues, great terms. let's close! new at&t mobile share value plans our best value plans ever for business.

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welcome back. bra bridget kelly involved in the george washington bridge lane closures appearing in court today. john harwood joins us. she's a central figure in what's going on and what this could mean for christie's ambitions in 2016. >> exactly right. the principal develop was a visual one. we saw her. she went into court in trenton. her lawyers were arguing to try to prevent a state legs lay tif committee from forcing her to turn over e-mails. remember, it was an e-mail in which she said time for some traffic problems in ft. lee that was the crescendo of the scandal for chris christie that's hurt him so badly for 2016. the legislative committee in trenton wants more records. bridget kelly is arguing that that could incriminate her, trying to resist unless the legislative committee gives her immunity which they're loath to do. they are also seeking records

from a political adviser to christie, but we did not get any resolution of that issue today. we expect that in a few weeks, but just seeing bridget kelly, who has been a secluded figure ever since she was fired by christie after the disclosure of those e-mails was a development in the story and chris clipshri is struggling to regain his footing after that scandal. >> another high profile case invoking the fifth amendment. what are christie's ambitions in 2016? how severely have they been dented and how much momentum is behind rand paul right now? >> christie's ambitions have been very severely harmed by this. this is a governmental failure that can be exploited by his opponents in 2016. there was just fresh evidence of that today when it came out in a "new york times" story that governor christie and his aides at the port authority had orchestrated an increase in tolls that allowed christie to appear as if he was opposing the

increase. that is not going to be helpful and you could expect that rand paul or ted cruz or jeb bush or any other candidate running against him would give him a hard time about that. you know, it's a long way away. we don't know whether he can recover, but right now he's been severely wounded by this. >> and bridges and tolls are issues that seem to hit every driving american, john. they can all relate. thank you, john harwood out of washington with the latest as we handicap that early race. here is a theory put to the test every day on shark tank. investors are more likely to invest in business ideas pitched by handsome men than by handsome women. wait until you hear what lori greiner has to say about that. we'll be right back. 'll be righ. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees.

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welcome back. a perfect story for lori here and marcus, you too. a new study by researchers from harvey, m.i.t., and wharton show handsome men are moreli likely get investment collars than women. how much do good looks factor in. >> i think good looks do matter but i don't buy that it's good looking men that get ahead over women. especially if anybody watches shark tank, if a good looking

woman comes in and wants an investment, i watch my fellow sharks change like that. >> you think beautiful women have an edge? if you had to say if you think one cohort have an edge you would say that's the advantage. >> i think beautiful people have an edge, i think smart people have an edge. i think you can't make it gender biased or looks biased. if you're really brilliant and you have a great idea, people will go with you. >> that's what we hope. but sometimes it's a beauty-ocray? what do you think, marcus? >> we talked about this on an earlier "power lunch." it's ridiculous. to think we're going to write a check because of someone's gender or looks, at the end of the day the check is written because the product is right or the people is right. >> come on. how many times, and there have been studies about ceos where the more attractive ones -- >> two people of equal quality, one is better looking, the

better looking one gets the money. that's easy. >> but the other factor that i think is just as important, if you're going to give someone money, you want to be able to believe they're going to deliver on what they say they're going to do. that's what people want to know more than anything, and perhaps if you're good looking and you present yourself well, that's all part of believing -- >> presenting yourself well is important. >> yes. >> being well kempt. >> there's a great deal that's said for charisma. i talk about that in the book. charisma is everything. you can be an unattractive person but become extremely attractive because you have a lot of charisma and power and confidence. >> you're saying it's not just conventional beauty, it's actually something that's a little bit -- >> it's from what's in. >> is charisma something that gives you an unfair advantage? do you know what i mean? is that something that reflects on the quality of the idea or is that something that kind of lets you get away with a little more. >> you have to have both. you have to be able to know the pitch, right? the pitch is important. and you can make yourself shine

and not necessarily be perfectly physically attractive. what's attractive is what's from within, and i hope we're getting to a new day and age with that so if you have a lot of charisma, you know how to have you have confidence, how to exude -- how to express what your idea is, i think people will go along with that. >> it doesn't have to happen right away. you talk about this in your book. there's many programs out there, specifically for women, for people of color, to help you get to that place, to get that confidence, to get the skills. and the organize that i love that does this, count me in, which i'm sure you're aware of, that has worked with thousands of women, a nonprofit agency, to help women get into the pipeline. >> is it really, be cautious of a good-looking guy who is trying to sell you something. >> yep. >> that's the point. >> look, i want to go on the record about something. if i'm interviewing two people, one's a man. one's a woman. and they're absolutely equal, i will hire the woman, hands down. there's a couple reasons why.

they're better listeners. they're more compassionate with the employees and they're better multitaskers. >> that's true. >> all true. >> i was saying generally. >> the basic question, is a better-looking man sell more than a better-looking woman? >> yes. >> that's true. >> and they say the answer is yes. >> what do you say? >> a resounding no. >> looks don't matter? come on. >> they absolutely matter. >> you work in television. >> looks do matter. but you can make yourself really beautifully if you're not classingly good-looking by what you exude and what you say. >> there's an implicit message. beware the good-looking male messenger. >> stop. >> i'm not good looking. >> ever wanted to read faster? there's an app for that. we'll speak to the person behind that app, next. don't go anywhere. we'll be right back. ♪

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welcome back. this is the app that the internet has been buzzing about for the past few days. spritz is a boston-based start-up that hopes to reimagine reading as we know it. the company has created an app, that streamlines reading and lets the user read as much as 1,000 words a minute. with us all to explain it all is frank waldman. he's the co-founder of spritz. welcome. and you brought a couple products with you. most people might be looking at this on a mobile device. what we're talking about here. how does spritz really work? >> the way spritz works is it focuses your eye in a special place on that small display, 13 characters wide. and you keep your eye focused and you never move your eyes from the hash marking. we position each word, one by one, so you can read with high comprehension. >> we're showing on the screen a little example of this. you have boiled down the essence of reading to recognize that

it's character recognition. and you don't have to bother with the other text on the screen, do you? >> and it's focus reading. the idea is that you comprehend better. >> that's my question. i want to make sure that people have actually understood what i've reason. and if it's somewhat complicated, can they go back and look at it? that's my concern. >> sure. with this reading, it's easy to flip back in time. you can flip back to a sentence or a paragraph. but the idea is when you're focused on reading and your eye isn't moving at all, you're able to remain information much better. >> is there scientific proof of that? >> just our testing. >> your scientific proof. >> well -- we do have academics in the company. but we were in stealth mode. we couldn't go to university and do large-scale testing. >> because you were afraid that someone else would get on to this. >> certainly. >> can you adjust the speed? >> the speed can range from 100 words per minute, to 1,200 words

per minute, which the fastest folks can actually read. >> have you tested this on attention deficit disorder? >> the original research started on dyslexics. it started in the '70s. we took something old and put it with something new. >> how large was your test group? how many people did you test? >> we tested only 40 people in a structured test environment. but we had a beta of a news app, which we gave to everyone. >> cnbc, of course. >> yes. in secret. all these people were reading stories from our stream. we have a lot of data on how they read. >> why do we see a watch and glasses? >> absolutely. for samsung, we developed an e-mail app. >> up here, what we're talking about. >> right. >> so, the idea is that you're reading your e-mail on the goo. and so, spritz is about focused reading on the go. it's not about laying in bed

reading a big book. it's about how can you consume information wherever you are. i have a few minutes. i'm on the subway. i'm able to start streaming my e-mail, using this technique. if i, you know, pick it up and decide i want to read it on my phone, i've got a matching app -- >> how do you acquire content? how do you acquire the actual book itself? and can textbooks be translated into this, as well? >> absolutely. >> how do you acquire content? >> the publisher does it. spritz is not an app. spritz is an engine. and you integrate it into your web page, your web browser. >> okay. >> can i have it on my kindle? >> absolutely. >> and -- >> if amazon. >> if amazon does it, they would be able to read it. >> that's right. and so, i'm reading my book, in my kindle app, with spritz. >> do you have a deal with amazon now? >> no. right now, i cannot do it.

>> no. only samsung has taken the lead. but then, you can read your book in google glass. this, you can read in bed because you don't need to hold anything. >> but just those few letters flashing really fast. >> one word at a time. >> and you remain it better because it's one word at a time. >> it's amazing. as old as humans are almost, can be improved upon with technology. i remain dubious but also fascinated. real quick. when someone can read 1,000 words a minute, how quickly can they get through "war and peace" example? >> that's a ten-hour book. most people don't finish books, professionals. so, this is a way you could actually get through it. >> thank you so much for being here to explain it to us. will be fascinated to see how many adopt it. and see what they think about laurie's book. >> and tune in to cnbc tonight. you can catch a "shark tank" minimarathon. and following that, mark is on

"the profit." and he's going to tell us what happened. >> no. watch it. >> "fast money" is coming up in a few seconds. what's on tap? lion's gate, got the pop. we have the vice chair of lion's gate, michael burns, on-set. >> over to you, guys. "fast money" starts right now. we have two developing stories in the auto sector right now. general motors and tesla. reports that the u.s. attorney is launching a criminal probe into gm's recall. and tesla under pressure, as new jersey commissioners ban sales direct to customers. let's start off with the latest on gm. go straight to cnbc's phil lebeau. phil? >> the investigations are mounting for general motors. two were announced. let's start off with the a.g. office