that was a pitch i still think it is. i think it's going to break back over $100. facebook, i think it goes to $120. >> plus 280, best day for the dow jones since december. >> that does it for us. "power lunch" begins now. oil takette away and oil givette. the dow is higher by nearly 300 points, oil's 5% rebound one big reason why. every single dow stock is higher. hello everybody. and welcome to "power lunch" where it is not just all about oil today. lots more, including the federal reserve and why apparently tonight is a very important one for apple. and melissa lee back from her vacation. >> jaunt to florida, back here in englewood cliffs a. nice rally today. we are watching the biotechs. that is one sector sitting out

of today's rally. look at the xpi, the spider biotech indeck. showing a lot of .6 pierzynski%. had been down more than 1%. it is worth noting the components are different than the ibb which is the one we often talk about. some of the holdings are not large cap cell jean amgen kind of stocks. they are more speculative names. >>ish innel, before you came back you would say selfia and ago yoes. that's win for me. >> from the bioparticulars to the -- bgi. it has fallen every single day since christmas eve. yesterday it stopped falling. it didn't go up. it just stayed flat. today it is flat again. let's see if it actually moves higher today. this is the price of shipping goods all over the world.

it has gotten pummelled. look at that. that's a 20-year chart. up into the sky and then down again. >> e-mail to the team this morning, i said this may be the most important index that few people ever heard of or had reason to talk about. >> it's granular. it tells you how much does it cost to ship stuff around the world? the cheaper it is. the more it tells you about global trade. it is a down. >> ibb. bbi. a month ago tomorrow's fed meeting was seen as a nonevent. the fed would make no news, we'd briefly mention it and move on. after this year's indicate i don't care it start, suddenly the fed has become the most interesting thing in the world. our own interesting man of the world joins us. want to share with you the part of the survey where we get at the issue that's been wantied around for weeks and months now. how much is the fed to blame for

this rate hike? we went to our panel. 40 people responded. about half of them are economists. fund managers and analysts in there. where do you think they would rank melissa? >> on a scale what have? >> one to five. out of six factors where would you put the fed. >> i would say they would say low. >> smart woman as we knew already. take a look at the chart here, folks. the oil price decline on a scale of zero to five with five being the most influence, the oil price decline is the highest at 4.1. the chinese slowdown is the second at 3.8. the global slowdown. and then you get to -- what, two, three, fourth number there to get to the forecast from the fed, that they would hike four times. that's 279. normal market val tilt, 276, . d in fact when we asked was the rate hike a mistake or not, 80%

say it was the right move, 15% say it was a mistake mostly because of the affect on the economy. then when we look at what is policy now, too hot? too cold? most say it's just right with a big increase compared with the prior survey. kind of a hawkish tilt to this crew here. did you want to comment michele? >> when you finish. back to the first chart. >> first i want to he show you the rising stock optimism. unlike some. other folk out there, these guys have gotten more bullish on stocks. take a look. 1877 when we made the chort. higher right now at 1904. look of the the forecast for 2016. 2035 and 2158. all the experts are saying this is a world of low returns. look at the percentages. 8% for 2015 and 15% for 2017. i would take that if we can get it. i'm not sure this group has been

remarkable about forecasting the market, although they have been great at, forecasting the fed and interest rates. >> couldn't they all be related? >> they are, you know, it is a one of those. >> the expectation that the fed is going to raise rates -- >> you are asking people to give you, what we aid is from one to five rank all of these. these are the numbers they came up with. oil, china, in fact there is another skreltive question we asked, tell us what you think the biggest threats are to the u.s. economy are. for the last several months every single one of them has been outside the borders of the united states. it's china. it's global slowdown. then we ask about things that are wrong in america and they don't rank them highly. for years, the answer was tax and regulatory policy. that's gone away, and really the threat, at least according to this group -- and i know it's a subset of justways out there on wall street, has been outside the u.s., not not internally. >> i agree with michele. you are looking at it in a

vacuum. the fed policy has a direct impact on what's going on outside the borders of the united states whether china or emerging markets. >> particularly emerging markets. >> absolutely. >> when u.s. interest rates are up or expected to go up, all of their interest rates must go up as well because they have to be competitive to attract investment. >> only 15 basis points. oil is like the bernie sanders of the stock market. a year ago nobody was talking about it except for insiders. suddenly it's on the cover of every magazine. >> hold on, we have to get to -- news alert in the bond market. two year notes up for auction. rick santelli, are they dieing to get the juicy two-year yield? >> you know, they are not. but it wasn't a bad auction. i gave it a b minus, b, as in boy, minus. there were good aspects to this $26 billion two-year notes hit the street. the dutch auction yield 86 basis points. .86.

let's look at the good news. issue was offered at 86.5. priced right. 2.9 bid to cover against the 3.22 ten auction average not so good. the bid is to cover outside of last auction in two years. which was 278. you have to go back to august of '09. best part. 57.9 on indirect. that was the best same year, '09d. in june, directs were light at .03. biggie take no less than 50% of the auction. tomorrow the most important ther of the three auctions, notes at $35 billion. i couldn't help but receive your discussion on the fed survey. always well received. i'm in chicago, if i polled people to find out who is going to win the world series, what answer do you think i'm going to get? >> not the cubs. >> probably would. >> they dream about the cubs. >> they say it every year.

>> rick, what is interesting here is that these guys are sticking to their guns. they called for this rate hike. at least the members of the panel thought that the fed should hike. and now that it's done, what they are saying, rick, i think think you would applaud what they are saying. >> i do applaud night look through the market volatility, they are telling the fed forget about it, keep doing what you are doing. they have dade the hike to may but not saying the fed shouldn't hike. >> i agreed with that part. the questionable part was the number one reason was energy. where did the energy money come from? >> i get where you are going rig. there was a lot of money poured into that area because of low interest rates. >> they were another geranium plant under the fire hose. >> rick we have got to leave it there. let's bring in steve blitz of itt investment research. want to get his input on whether or not is fed is behind the selloff. what do you say, steve?

>> no, they are not behind the selloff at all. it's a tough line to draw from what the fed did thinking that's the reason why the markets are down. you know, the part of the survey that i would agree with, and the part that's probably hard for us to get used to is that 30% of usgdp is in the tradeable goods sector. that means when the rest of the world slows down and contracts, especially that part of the world tied to the dollar, so they are importing the wrong monetary policy at the moment the u.s. economy is going to slow down a little bit. that's essentially what's going on. and to get growth at the kind of pace that the fed would like to see in 2016, you are really talking about getting an acceleration, consumer spending and in housing. i'm a little bit on the fence in that to think that we are going to get that much of a pick up to hit the growth rate the fed is

expecting in 2016. >> steve, apple boom in the new york times yesterday wrote there was a new thinking about oil, that oil is no longer -- lower prices are no longer a positive for the u.s. economy n. our survey, basically we have half the people saying it will lead to a decline in a decline in the u.s. gdp, the other half saying it's an increase. are we changing our minds? i'm ready to change my mind. i've argued with sully for a long time. and sully, it's looking like i was wrong about this. and i was waiting for the pop on u.s. consumption from the lower oil price. i operated under the assumption that give a u.s. consumer an extra dollar, he or she will spend an extra $1.10. if not 1.10, they would at least spend the r dla. that is not the case. it seems like somewhere along the line our economy became saudi arabia. where we are linked to one

commodity. yoent to overstate it. but it may be time to give up the fact and go for the ghost waiting for the oil-led consumer rebound. >> i think the part that everyone is missing on the consumer aspect of the drop in gasoline prices is that while gasoline prices went down, the presumption was always that okay so there is this fixed basket of man that can now go to buy stuff. but people weren't -- what people weren't fully accounting for is while the gasoline prices were going down, the price of rent was going up, health care insurance was going up. anything attached to health care was increasing. and this is taking money out of the household budget when nominal growth in average hourly earnings is only up 2 to 2 1/2 percent on the year. >> real inflation and adjusted wages the had their beside year last year so the consumer spending power did go up pretty good last year.

>> well, then the only thing i have to say is we are where is the spending? spending is basically improved with average -- with gross employment and wages wage and salary disbursements. and it hasn't gone up more than that. >> steve thank you very much. and steve liesman, i appreciate those comments. listen, thing the thing we tried to highlight a year and a half ago on this show is that this was not like the older times because this was not the debt that fell. when oil fell it was also a debt crisis. not 2007, 2008. but it is more pervasive than people think. also when you look at where jobs come in america the oil industry could not be overstated in its importance. that is being gutted. gutted. >> thank you, steve. >> good to have you on. >> i'm giving the wrap. i've got a big response to that for another day. >> melissa, i want to draw your attention to shares of weight

watchers. up about 10% after oprah winfrey tweeted a video where she says, quote, i lost 26 pounds, and i have eaten bread every single day. now the media mogul does have a nearly 15% stake in the weight loss company as well as a seat on the board. that announcement made in october. since then, the stock has climbed about 90%. and we're seeing that oprah effect in today's trade as well, up over 12% on this oprah tweet. melissa. >> oprah effect again. thanks. she is eating bread. let's eat some apple. the neck giant getting ready to report earnings after the bell. amid questions about whether or not iphone sales are peeking joining us are an investor with a hold, and an investor with a buy on the stock. this is the first year we are going to see a decline in iphone sales. there is a core concern here that iphone sales have peaked.

why do you have a buy? you don't believe that to be the case? or you don't think it matters? >> i guess starting off, i hope oprah gets on apple's board, too. help the stock more. >> just lost 26 pounds using my iphone. >> i'm sure she was using the apple iphone app. i hope she was. on the buy rating. i hear you, the concern everyone has on the iphone sales having peaked. here's a fundamental belief. 2015 was a really good year. a haerng in 2016. at the end of the day, i think the reality is an ill eye phone units will go higher over two to three years. >> that doesn't mean the stock goes up. i mean, what i've seen is iphone sales have been good so far and we are expecting to climb. the stock has gone down. the next calculate list, you either believe the iphone 6

cycle is going to continue, or the iphone 7, there is some answerery stock move ahead of that launch. >> i'd say it is the iphone 7 cycle. everybody on the iphone 6 cycle will be on the cycle. >> tim, you have got a market perform. not a sell. but not a enthusiastic buy. why is that? concerns about iphone or more than that? china? is it transitioning to becoming this value stock like microsoft back after the dot com double? it was dead money for ten years. >> no. i think to me, apple really has entered this period of transition. and you know, you had this very, very big cycle with the six. i think that the compares are obviously more difficult here with the s. seven i think will help because you will be basically two years on from that big cycle.

i think you can sort of retap the buyers of that big six cycle. but i think the big your issue is china. it is a issue of near term versus longer term. if you look at china -- china -- apple has 75% of the premium smart phone market now in china. that market is not going to grow that much over the next couple of years. over the longer term it will. over the next few years they have harvested much of the premium share in china. >> can't they do other things, though? i mean what about -- if they are transitioning and they become this value stock, they have got a lot of cash, could raise dividends, could they do other things to make the stock more attractive and settle into being this different kind of company than what we've been used to for the last decade or so? >> definitely. the install base is huge. the iphone install base is 5 to 550 million. it's huge. i think it's interesting to noed

noted if you draw a straight line from the 5 cycle into the 6 and the 6s cycle sales are growing double digits. it's not like you have to separate the compares from the actual growth. market. i'm not saying apple won't grow. i'm just saying we are in a period of transition and we are going to have the next big thing. i'm optimistic about india. it's going to take time. it is a lower price point. i'm ultimately optimistic about other products. i think the iphone 8 to me is an interesting product because when they get o-led that gives people a reason to buy the phone. >> i would love one. can't wait to see one. back to seema. another news alert. >> shares of, the erex. the company says it hasn't changed their recommendation to

the deal but they are in discussions with zoom line. before the stock was halted shares were up by as much as 10% on reports the company turned down the takeover approach from zoom line. shares still halted but up 17%. more on today's market coverage after this short break. #

. hi everybody. tyler mathisen here in choinl. i came for the nice warm weather and the lack of snow. i'm not kidding. it is warm here. and there is no snow. really i'm here for the morning

star awards of the 2015 mutual fund managers of the year. and over the next two hours, you will meet four individuals who have piloted their funds to the highest accolades in the fund business. and in the fund industry, these awards are really the golden globes minus the alcohol. and that would make me, i suppose, ricky gervais. it's not just that these funds had a great 2015, which they did. but that they have demonstrated over the time, the past three, five, ten, 15 years, even 40 years in one instance, excellence, sustainable performance, and a real compatibility with the interests of shareholders. it's an involved process. as i mentioned it's not just a hot 2015. it's much more involved with that. let's look at how morning star picks the managers of the year. >> one of the secrets to success in 2015 was conservatism. we had low commodity prices, low

energy prices, difficulties in china, impending interest rate increases. so it was difficult for a lot of stock and bond funts for that matter to produce returns above zero. a difficult market environment is actually kind of an interesting opportunity for us as we select fund managers of the year because it allows us to really focus on more conservative managers, those that have managed risk well in a difficult environment, milligram managers whose strong year they have just had really exemplifies their longer term record. these are managers we have a fair a. conviction in to be able to continue to perform well over the long haul. >> and now, et cetera let's get this party started. let's meet the winner of the domestic equity manager of the year, 2015. >> the 2015 morning star domestic stock manager of the year award goes to keith lee and robert haul and their team at brown capital management small

company. >> the brown team is he everything you want in an investment team, stable, long tenured. they are very experienced. instead of looking at certain market cap they are looking at companies with annual revenues of $250 million or less per year. and beyond that they are looking for companies that save time, lives, money, headaches. that really puts them in a lot of techie health care names. within this fund i think icyte was a big helper. it gained 45% in 2015. it was in the firework since 1997. back then it was under $1 million. now it's close to $19 million. it has done well for the fund. >> keith lee joins us now from brown capital. congratulations on the atoward. >> thank you. >> you have been there since the inception of this funt fund in 1992. you must like the place. >> i started when i was two. this year will be our 25th anniversary. before we get started tyler, this is a team effort.

so i would like to acknowledge the small company team, bob, damian, and andrew as well as our other colleagues at brown capital management. >> congratulations to all of them. it has been a rough month for the fund. it was very good 2015. you had positive returns. you whipped the pabst off the category average. and longer term, top 1% in 2015. top 1% over three years. top 1% over five and ten years. that is consistency. and you do it often bien keep, risk down. how did you avoid last year the troubles that hit the russell 2000? >> i think in order to answer that question let me back up for a brief second. even though the industry would call us a small cap fund we are a small company fund. we define smallness in terms of revenues as opposed to market capitalization. we are benchmark agnostic. we are long term investors.

we don't sector rotate in and out of areas to try and determine what will do well over the short-term. what we do -- we are if you know, bottom-up company -- >> stock pickers. >> we like to say company evaluators. we go out and the identify those companies, put them in the portfolio, continue to analyze them and stay with them. >> one of your best performers last year is incyte pharmaceuticals. and tyler technologies. incite has been in your fund since 1997. it had $1 billion in market cap then. $19 billion now. so basically you've made 19 times your money on that. do you hold these stocks for that period of time typically? >> our holding period is north of ten years. so we like to identify exceptional small companies that we think have the wherewithall of becoming an exceptional larger company. both sigh letter and incite are

excellent examples of that. >> there is a concentration in the fund in information technology and health care. >> yes. >> is that something that you go out searching for or is it sort of a consequence of your company evaluations that you end up with of 0-some percent in those two areas. >> it's more the lath latter. we think those two areas really are where you find some really exciting interesting growth companies that are able to sustain growth over long periods of time. >> give me a classic holding apart from tyler or incite that you like right now and has been part of the portfolio. >> manhattan association has been a long term holding in the portfolio. and when you look at our portfolio, we like most of the nails in there. i'm not going to say all because there are about seven or eight that continually are on our challenge list. but manhattan technology -- i'm sorry, manhattan associates have been in the portfolio since 2000, 1998, i mean a long time

as well. it's in the supply chain management focusing on the warehouse base. we think that is a great space and will continue to be. >> are you worried about the market right now? >> we are long term investors. so, you know, we think, and particularly in our area valuations are stretched. but they have been stretched. not as much as they were at the end of the year. but we don't put a lot of emphasis on trying to determine what the market is going to do. we focus on those things that we can control, the analysis, analyzing our companies. >> right. >> so in a nutshell, no. >> you are not worried about it. >> no >> you are going to do what you do, stick to your it in. congratulations keith and team. i should point out brian sul have a and is a wahu, uva, double wahu graduate. later in the hour we'll meet next the winner in the international equity category. interesting fund coming up a little later on. from chicago, back to you.

>> owe with a hue interviewing owe with a hue. and as a hochie, i sla aught to you both. congratulations, keith. a big rally on the street right now. the dow is up triple digits. oil is rallying as well. but not, too, because oil is the reason that stocks are probably up. oil first, stocks second. coming up, we'll fine america's great entrepreneurs and business owners. that guy on the screen, that is the profits marcus lamonis. he will join us. hey kids. behind you. wave. ferndale school, wave. >> wave, guys. >> everybody wave. cnbc first in world markets. after the break. paradigm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping.

the all-new glc. mercedes-benz resets the bar for the luxury suv. starting at $38,950.

can a a subconscious. mind? a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul?

can a business be...alive? welcome back to "power lunch." rick santelli live on the floor of the cme. post two year note auction. let's look at the intraday two year. it came down a bit in yields, little bit of buying. down the curve, it wasn't immediate but we are down. testing the magical 2% level. look at the two day. 4:00 in the morning last night, we hit 113 basis points. open the chart up, ufd new year's eve's half day in 2007. we are comping in terms of how flat that trade is getting. which is very interesting on the first day of a two-day fed

meeting. chicago's my kind of town. but today it's tyler's kind of town. we're going to go to the fund manager of the year, tyler at morning star. >> rick, i wish you were here. i'm in rick's town. and also in the town of our next guest a dear friend and a great member of the cnbc family, marcus lamonis. finding america's next great entrepreneurs is something marcus knows a lot about. he is launching a knew deal with universal orlando resorts to develop a series of workshops for entrepreneurship at orlando. the launch of that is getting started today at ferndale high school in the detroit area where marcus is joined by some budding entrepreneurs. marcus, you issued a challenge to these students at ferndale about a month ago to come up with business ideas and business plans. what did they show you? and have you picked some

winners? >> tyler i'm here with my future boss, your future boss, and my future boss is probably somewhere in this crowd. about a month ago we lauchbled a program that challenged these entrepreneurs with the ability to come up with the next great idea or next business. it wasn't about creating a business, it was about creating the discipline and giving the platform to display their ideas. when universal and myself partnered together we wanted to create a business learning series that allowed people to have fun but learn at the same time. and so the profit, and cnbc along with universal orlando has launched this program. i chose detroit as the place to do it because frankly these are some of the best young entrepreneurs i've ever met. unbelievable. she how excited they are. say hi to tyler. >> high! >> hello ferndale. marcus, who ideas did they come

up with? and have you picked a winner? i think as i understand it, you surprised them -- at least some of the winners by announcing -- they thought they were going to get to have lunch with marcus, which is great enough. but some of them are actually going down to florida, which is nice place to go. >> so first of all, all of the young entrepreneurs had fantastic ideas. but there were two that were chosen by a rigorous judging panel. the first idea was a concept where kids would teach people in the area how to rent their parking lots -- excuse me, their driveways out when there was a big event, a sporting events, a concert, where individuals could load their information on to an app and respect out their driveways. i thought that was a great idea. the second was utilizing sort of older buildings in the community to turn them into community centers and we've had some unbelievable entrepreneurs with some great ideas. but these two may be worth investing in. >> let's talk a little bit more -- and congratulations to

those folks there. let's talk a little bit more about the program with universal. it's going to be a series of workshops. you can go there and have some fun, we know that. but you'll also get to learn a lot about the sort of three ps in the lamonis vocabulary, product, process, and people. what are you going to teach then down there? >> when we first sat down with universal, when i first sat down -- a big universal studios, orlando fan i like to go there and ride the rides. i wanted to find a way to connect the fun and we created a curriculum around the three ps but also around career development and studies and learning and putting plans together. they will go to universal studios orlando, anybody from 8th grade to 12th grade and be able to enroll in the program that's very affordable. you will be able to enroll in this program and you will get a halfday of education and a half

day of fun. it was my way of make learning more fun. but with these entrepreneurs i think they are going to be the ending up teaching us something. >> it is a wonderful program, a contest. you can find out more about it on the cnbc website. people, process, product, and marcus don't mention the fourth p, profit, because you don't have the first three you are not going to get to the fourth. but you will get the fourth tonight on a new edition of the profit, 10:00 p.m. tonight with marcus. marcus, congratulations to the kids at ferndale and to the others who are really showing us the way in terms of entrepreneurship. brian, back to you. >> tyler, leave it up to you. you are the one person who will go to chicago when i'm not there. you don't have to buy dinner tonight. you are off the hook. >> i got you, good to see you marcus. >> back to headquarters. >> imturn it over to seema modi.

>> shares of terex have resumed for trade after the construction player confirmed it received an unsolicited proposal from chinese investor zoom line for $30 a share. it has not changed its deal with cone cranes, the merger announced back in august of 2015. news of this bidding war has moved sharesu of, the erex up by as much as 50% on the day. >> another example of chinese money coming out of china. gold closed moments ago. prices hitting new intraday highs 1120. closing in on the november 4th high of 1122. "power lunch" is back in two minutes. serena williams. hi watson. you are a fierce competitor. i've heard that. i have analysed your biggest matches. oh really? when down a point, you serve an ace 5.8 times more than other top players.

you sound like a coach. i am not. but i can customize training programs based on biomarker data. watson, that's pretty impressive. you might say i am the serena williams of cloud-based cognitive systems. nah, i wouldn't go that far.

♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time.

that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. hello everyone. welcome back to cnbc, i'm sue herera. here's what's happening at this hour. military authorities responding to a report of gunshots at a building on the naval medical center campus in san diego. however, the navy reporting in

casualties, injuries, or evidence that a shooting had been taking place. gop presidential candidate drump won the endorsement of evangelical leader jerry fallwell jr. for the party's 2016 presidential nomination. fallwell is the president of liberty university in virginia and the son of televangelist jerry fallwell suhr. flint residents taking to the streets calling on the governor to resign and claiming they are still being billed for water they can't use. they are pledging not to pay until the problem in their city is resolve. french fire fighters striving to clear a roadway after striking taxi drivers upset over uber coincided by a walk out with air traffic controllers. causing flight interruptions. that is the cnbc news update at this hour. back to you melissa. >> high yield bonds have sent

slivers to the market. down 16% over the last year. how big a threat is it? bob is in hollywood, florida, with the man in charge of the etf as well as many others. bob? >> his name is jim ross, the global head for spider etf. as well as jnk, the high yield fund we want to talk about right now. there has been concerns about volatility in high yield funds, bond funds in general, liquidity issues, can you tell us how jnk is trading? have there been problems? do you have concerns? >> lemg get to the liquidity question. it is a fair question. they are definitely concerns about liquidity in the brad brond market. understanding the etf is important here. when you go back to when the have tilt and liquidity started to happen in november. high yield etf traded very high volumes that resulted in $1.6

billion of transactions back to the high yield funds. what people don't understand sometimes is that the trading on the exchange does not always result in an outcome coming back to the fun. and that's actually very healthy thing for the investment market. it shows people can trade risk throughout the day. >> the key point here is you don't control the prices of the bonlds. the bobds are down. that's not your purview. but what is, is making sure the fund is liquid and that it can meet redemptions and creation demands. how has it been trading? are you satisfied? do you have any concerns with with way it's trading. >> we are satisfied with how the high yield jnk has been traded. it's able to meet receptions. all redemptions and high yield and etfs are done in kind. so when we are delivering out the bonds it's to the redeeming party.

when you converse this to a mutual fund, the mutual fund has to sell bonds to raise cash and then deliver out cash. the etf structure -- >> you don't have to do that. let me ask you about third avenue, supposedly a high yield fun. suspended resemgs. any parallel between what happened there and the jnk? >> the funds are very, very different with their holdings. jnk is based on a high yield -- liquid high yield benchmark. so it skews to a more liquid high yield bond. my understanding is the third avenue fund had significant amount of triple cs traditionally the etf market wouldn't hold. another huge difference that i think is important is the etf is fully transparent. and they were not. >> they were not. and that's traditional in a mutual fund. you can see your risk. >> mutual funds -- high yield mutual funds for 50 years

around, is there a number compared to the high yield etf market? >> yeah the high yield mutual fund market is $240 billion. the high yield etf market is $43 billion. >> six times as many in the mutual fund business as compared to the etf business? >> yes. >> that's a useful number. jim ross, if there is any change in the liquidity problem or issues, let us know. we'll be giving you a call on that. thanks very much. >> guys we're here all day at the etf.com conference. >> we have got a decent rally on the street right now. even with today's gains, the dow is still down more than 1200 points so far this year. check out some of the most widely held stocks. alphabet, apple, microsoft, jp morgan. three are up. google is down. "power lunch" will be right back. you both have a

perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company would cut you some slack, right? >>no. your insurance rates go through the roof. your perfect record doesn't get you anything. >>anything. perfect! for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claim centers are available to assist you 24/7. for a free quote, call liberty mutual at switch to liberty mutual and you could save up to $509 call today at see car insurance in a whole new light. liberty mutual insurance.

back at the moderning star mutual punt manager of the year award. it is time now to meet a model of consistency, the winner in the international category. >> the 2015 award goes to robert love lays and team at american funds new perspective. >> they avoided emerging markets and treaded lightly in energy and basic material stocks. and leaned more towards consumer staple stocks and health care. >> in the last ten years, it hasn't had a calendar year falling into lower half of the category. it's been really consistent fund. some very good stock picks for them were novembero for disk, amazon and rejenneron farm executeceutical. at least three of the seven listed managers have more

unanimous $1 million alongside share holders. >> david pollack joins us, an investmentor director for american funds. a big company. this fund has been around 43 years. there are not a lot of mutual funds that have that kind of long term track record. what is the advantage that that gives you? a lot of the managers have been there more than 20 years on this fund. >> yes, thanks for having us, tyler. back in 1973, when we launched the fund, the focus was very much on companies that we thought had terrific long-term opportunities. and because they were doing -- well, they had a substantial amount of their business outside of the home market, we thought those opportunities would be diversified. and that's played out over the 40 years. >> this is really what i think of as a global fund. about half of the stocks receipt now are u.s. stocks. but what is the requirement of those u.s. stocks? that they doll more than 25% of their business overseas? >> exactly right. we look at revenues and assets.

we are looking for companies that will leap that hurdle, that will be substantially ahead of that. >> typically, what percentage would be in american stocks? what's the range, let's say? >> over the last ten years we've been as low as around 35%, and about 48% is the high that we've been over those ten years. >> let's go to michele, who wants to ask a question. >> good to have you on. for a long time, investing international especially in the emerging markets was about investing in bonds rather than in the stocks there. do you do that at all? sore is it strictly stocks at this point? >> so this is a strictly stock fun. the way we get emerging market exposure is through around 6% fttle portfolio at the moment is multinational domicile in places like taiwan. but we have substantial revenues coming from multinationals in u.s. and europe and japan getting their revenue from places like china. >> even though it says you are

6% emerging markets that kind of understates the real exposure to the emerging markets? >> it understate the incorrect exposure. around 30% of the refuse niece of all the companies in the fund come from the emerging market. >> this is an all equity portfolio. >> it is, question. >> amazing consistency, three, five, ten, 10:15 years in the top tenth of its category. last year you beat 93% of the peers in a year that was very difficult to do that. you made money. others did not. 43 years you've been around. on lost money in seven of those years. how do you get that kind of consistency and protection again risk? >> a number of ways. firstly, the objectives of the fund. companies that have a substantial diversified base tend to ride out the storms well. but secondly, our process is to have multiple manage erls. in this case, seven, investing alongside the analysts. and they bring different

perspective, pardon the pun. >> they each had an amount of money -- a sleeve -- how do you weed out the overlap? if everybody wants to own amazon or everybody wants to own novembero for disk? >> that's right. around a fifth of the assets are in the hands of the investment analysts. the rest is split between the seven portfolio managers. the job is to make sure they have different views so you don't have the overlap. but if it happens and everybody falls in love with the same idea we have guardrails. >> that's probably what you do. >> there is a team that does it. >> david, thank you for coming. >> thank you for having us. >> we don't hear a lot from american funds group. flattered you would choose to be here today. model of consistency, top tenth, one, three, five, ten, 15ers yao. a 43-year-old fund. you don't see that a lot in this business. folks, back to you. >> tyler, thanks so much. we had a rally on wall street. the dow is just off the session highs right now, 280 points. a lot of that being driven by

earnings stories, 3m, johnson & johnson, proctor and gamble posting better than expected results. chevron as well as exxon up by more than 3%. much more on this rally in two minutes. here at td ameritrade, they work hard. wow, that was random.

random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. thanks. ♪ [ male announcer ] fedex® has solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪ cut it out. >>see you tomorrow. ♪

that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse.

x1 from xfinity will change the way you experience tv. oil rallying right now. in fact, it is up more than 5%. beaten down energy names are having a pop of a day as well. range resources, chesapeake, nrg and williams up 7% or more. "power lunch" back in two.

welcome back to "power lunch." 2:00 p.m. on wall street. stocks in rally mode. something is going on with the brazilian stock jbs. the world's largest meat producer. not widely known here but the stock is off by more than 8% in brazil because of a round of arrests that happened there, j adds to the whole malaise that has been going on with brazil. they are engulfed with a scandal with the state owned oil company. the dow jones industrial average, the nakds and the snp are in positive territory by more than 1%. the russel small caps are higher

by nearly 2%. do you buy into it or are they going to fade like last week. matt and mark join us. guys good to have you here. mark what do you think this rally at this point? the last two we looked at least last week, everybody was skeptical. they were right to be, we saw a selloff. what do you do today? >> i think it is a little bit of a show-me situation given the fact that you are ride we have had a couple of feigned attempts to rally off of oversold occasions. and they have given up the ghost in each occasion. i think we're primed to see a more solid rally. i think we should take advantage in terms that nothing is infallible. therefore take advantage of good quality names selling at reasonable valuations. >> matt you have heard the criticisms of the spikes we've seen. brian calls it a garbage rally

>> last wee. >> last week. what do you make this move? good time to get back in? or perhaps wait for another spree point? >>ic there will be another entry point. but we could have some upside on the near term. last week the oversell was overheated. and we got a wash out move yesterday followed by yesterday's decline this was a low volume decline. i think we could see each more upside than we had from today and get into the mid 19 hubs or high 1900s. but my certain over the longer term is that the whole thing with the oil crash has a more to do with the credit markets than it has in the past. therefore there will be repercussions down the road even if oil bounces back. i think you want to go to the quality names with good dividend yield. >> and when you talk about the

ripple equity if, banks i think you are talking about. is it that simple? or when we see houston losing jobs like crazy that means the restaurants and the retail shops and that spreads across the country. is that what you are talking about? >> a combination of both. i'm more concerned about the banks. the exposure there. you can see by the way the bank stocks have acted. the cre regional bank index and the kbw, symbol bkx. both down 25% solidly in bear market territory. telling you something more is wrong than just problems with oil prices being lower and the slowdown of the economy. they have got some credit issues there. >> in fact, mark just in yesterday's session we saw the financials crumble toward the end of the session along with oil stocks. a lot of people are making the point that in the earnings calls the big banks were making a point of having having credit

deterioration specifically from energy that would be worrisome. but they are trading it seems on more than fear of a flattening yield curve. do you think this could be a shoe to drop? >> well, i do worry a little bit about the fact that we haven't had the part face in the fngs. we have had a couple big moves over the last four or five trading sessions and the financials either haven't participated at all or marginally. i think that may be telegraphing something either related to a shoe to drop in the energy patch that could have repercussions in the financial services sector. or it could be signal pg concerns about deflation. we know that's a big concern as it relates to global economic activity and the prospects of china further devaluing the yuan only sets up greater opportunity for that to have an impact here in the u.s. collapsing interest margin and flattening yield curve would work towards the yield shares. that forecast that bancshares are -- at the moment is not

particularly optimistic. >> matt i could make every fundally positive argument he want to for stocks. but if most of the major companies and sovereign wealth funds and hedge funds in the world are selling as we suspect they are to raise money why would anybody buy in a market? why would one guppy go goins 40 whales? >> exactly right there. the thing, as you say, when you have forced selling which causes crashes and mini crashes and thing like that, they are not caused by poor earnings or higher interest rates. they are caused by margin calls and things like that and they take place when the market is already down. they don't take place from highs. as the market cascades it becomes very, very difficult to want to catch the falling knife. that's why i think you have to really look at the high quality names with difficult endyeels and raise carbon the kind of bounce we are seeing right now to take advantage of things when they do kind of get washed in and out a more substantial way. i think you will have to see the vix get above 40 before we see a

more meaningful bottom. >> we hear that from a lot of market analysts, watch for that moment when it occurs. matt, mark, thank you for joining us. >> thanks michele. >> thank you. the countdown is down to apple's earnings due out after the bell. the stock has been under serious pressure the last six months down nearly 20%. two things to watch when the company reports. >> number one, iphone sales and two, is there a slow down in demand out of china. john, i'll pose to you the first question, iphone sales. not the concern that they are stalling, it is the concern there is nothing else in the pipeline. eye phone 7 is not out until the fault and they are primarily a hardware company right now in terms of revenues but not a services company, a subscription company. >> it's funny that we worry about this. this is the way it's always been with apple. at least for to the last five years. we know the iphone has its big quarter in the holidays.

right now the stock is down and people worry there is no more gas in the tank. tim cook has said to expect revenue on the iphones to be higher. i think the question is what happens in the march quarter. also looking at inventories, in the last couple years they have been inventory constrained in the holiday quarter. this year their target inventory level is five to seven weeks. so the question is, do they have to get into that target inventory level in order to meet the expected iphone number and show growth? and what impacts to that all have on the march quarter? >> the concern josh is a lot of the suppliers have calked down the march quarter which is the real source of concern. it's not the holiday quarter. it's what's going to happen in march. we heard from tyrone semisaying they are not getting orders that are up quarter on quarter. what are you hearing at this point? >> lirngs john is absolutely right. all attention is on the march quarter. you have heard, melissa, from about ten major apple supply

chain partners who are seeing current quarter weakness. that's why you are seeing financial analysts cutting their estimates for iphone demand. i talked with pipers. he thinks for q 2 you will see 55 million eye phones that's a drop of 10%. but that doesn't mean they are cutting their rating. 90% of the analyst have a buy on apple. that might be because they see weak innocence q 2. but they are betting that tough comps get easier, there is a pipeline with the iphone 7 expected this fall and they will argue at least the iphone business analysts will say is fundamentally healthy, fun lee sound a. record rate of android switchers. a lot of people on 4s and 5s that would imply potential upgrade head room. we'll wait and see. >> the eye phone is a great product, changed the world. apple heavily promoting apple tv right now.

any impaction apple tv is gaining traction or has an impact on the revenue needle. >> it's so big because of the iphone it's hard for anything like apple tv to move. that said when you look at numbers from folks with good data like adobe, what is driving that trend, apple itself and apple tv do very well. you have a number of smaller initiatives within apple, like apple pay, apple tv, and the. >> phone upgrade which have the potential to make revenues more reliable, even raise average selling prices. under the upgrade program you might see people on thing for more extense spencive or upgraded technologies. we'll see whether that drives

some growth. but that's why it all comes down to the i-phone in a quarter like this. maybe you get a little upside from the mac. i expect that to do well based on sben intel's commentary on higher enmachines doing well and apple having beat rivals looent recent as far as pc sales. >> i guess we are all products of the crises we've been through. imer inside and cisco. they were such huge, high flyers. and then boom, and they were for ten years dead money, right, just sitting there. and i don't think i -- i don't know if anybody here can answer it. i think what we're trying to get our arms around is are we at a transition moment for apple where they become this kind of, you know, slow grower over time, and you -- >> michele -- >> you harvest the dividends. i mean it can't come down as much as cisco did. they were turning in an p/e of 32 and apple never got that multiple. we are at a moment of

inflection, around we. >> the question is what's the giant that's going to slay apple? you look back at cisco, it was the dat calm bust. some of the other pc makers, it was the coming of mobile. a lot of people expected samsung to take apple out. that didn't happen. >> i think apple slays apple. >> when anybody else comes in, they are just there, and they muddle along. >> and apple slays apple, does that look like the same sort of destruction? does it bleed out the same way some of these others did? or is it just a smoother or different transition? i don't know. >> dead money doesn't mean going to money heaven, it just means it's flat for a very long time. >> those profits, though, is the money really dead if you continue to make that much? and even if you are growing average selling prices. >> the stock went dead. >> yeah, but is the stock dead? i don't know. if you are not growing units as quickly when your revenue and average selling prices continue to go higher as they have been recently. >> but there is one big

variable, black swan, whatever you want to call it that maybe people around talking about enough. do you remember what microsoft did a number of years ago? they didn't have any use for their cash so they gave everybody a giant one time dividend. you wonder what the chance is that apple will say we've got 200 did dollars in the bank we're going to give everybody $20 a share. i wonder if this is an ash tros reason to own the stock because you wonder if they are going to give you a generous gift. >> we asked about that in the first part of the show. they weren't enthusiastic. >> outstanding shares down 10% over the past two years. thank guys. good discussion. we will be breaking down apple as earning tonight. we are trading the conference call highlights as well. >> on deck, heading back out to high letter in chicago, crowning another winner of monk star's up the fund manager of the year. plus why canada is crushing one

american company. it's not about oil. oh, there is the name of company. on down days or up days, we are exclusively bringing you the five big analyst calls of the day. stories you need to hear, coming up. performance... ...reimagined. style... ...reinvented. sophistication... ...redefined. introducing the all-new lexus rx and rx hybrid. agile handling. available 12.3-inch navigation screen and panorama glass roof. never has luxury been this expressive. this is the pursuit of perfection.

a remarkable tool? do you like me? >>no. do you sleep with a teddy bear? yes. at compare.com we've applied the same truth inducing technology to

car insurance. just enter some simple info... and get up to 50 free quotes. find out who really has the lowest. then click to buy. hey guys...want me to come along? >>no!!!! gotta respect the truth. compare.com. saving humanity from high insurance rates. welcome back to "power

lunch." dupont topping profit estimates thanks to cutting costs ahead of its merger with dow chemical. dupont plans to trim $137 million in costs by tend of this year. 3m rt roing better than forecast profits. backing its forecast for the current year. that stock one of the best performers in the dow. up nearly 4 pr. harley davidson, huntington bank did a big merger today. all hit lows. it's now higher by 2%. even they it was lower than before. let's go back to tyler maegt son at the fund manager of the year awards. >> welcome back to kmoij where now it is time to meet the winner in the fixed income category for 2015. >> the 2015 morning star fixed income manager of the year award goes to jerome snider and team at pimco short-term bonds. >> i think it's surprising some folks to see a short-term fund

winning this year. the bond's performance stood out for making smart bets around duration, interest rates, bets on yield positioning too also stood out and helped the fund perform. all areas that did poorly in this year this fund avoided or did a good job investing in the space without feeling the pain. son top of that they made the right bets in avoiding the pain daused by the dollar strengthening and the volatility in the credit markets as well this year. >> with me here in kmoij is jerome schneider one of the team leaders at pimco short-term fun. congratulations on the award. >> thank you, great to be here. >> top 1% last year. top quarter practically every year in your category. that's not the fund let's be clear that's the fund that's going to make you rich, right? its returns are rather study and rather low, but it has a

distinct role in your portfolio, what is it? >> it has a distinct role in everyone's portfolio. what we see is with the market volatility generally speaking is folks are looking for a shield from volatility. an allocation to fixed income, short-term fixed income does that. it provides some income at low exposure to interest rates. what we found over the past few years, really for the past decades at pimco is a combination of focus on capital preservation is an essential agreed yep. er right, it won't make people rich per se but it will preserve capital with a little bit of income, which is exactly what folks need for their portfolios thesedays days. >> am i if you knowly hearing you say this is your cash cushion, but cash plus because the return is higher than you would get in a money market? >> sure. that's a great point. the money market yields 1/100th of a percent. this provides liquidity, cam tal

preservation and a lint of yield on top of. that what we see is the structural originalidities right now to manage cash is something people should be observant about. most importantly, when you think about how to manage cash and we see this in today's portfolios it is not an afterthought. it is a strategic allocation if you are a retail investor, an individual like you, i, a institution, a corporation or large pension fund your allocations to cash have grown in the last two years. >> you need to put that away and make a little bit on it. >> exactly. >> it's not dead money. the fed is meeting today. we'll know what they do tomorrow. you have recently grown over the past year or so cautious, more cautious, says morning star. you have take ten duration of the fun way down very, very low. is that a call on your part on interest rates? >> what it is really is a recognition that the fed is going to be tightening. they did that exactly in decemberful but they are going to be slow and methodical in that process.

when we look at the landscape what we are looking for is assets that produce income and also assets that produce the lease volatile returns. and when you weigh those risk weighted attributes are how we want to want to invest you don't want to buy the volatile attributes. having exposure during a hiking cycle is something you want to underevaluate. >> slow and methodical fed. i assume that means you don't think they are going to do ib anything tomorrow. >> they have given us a prescription that they are going to be slow and deliberate. they are going to be data dependent. we will see what comes out over the next few months and they will simply going to react to that over the next few months. >> thank you. >> i appreciate it. folks we have one more fund manager winner to go. that is in the alternative space, a very interesting fund that tries to balance and does very nicely at it, its short and long positions. we'll find out who is winner is and how they do it when we return here. up next, a big analyst calls

on egg mcmuffins and nike sneakers. we'll tell you about it in street talk. that's ahead. as we head out to break. chip stocks are big winners san disk, microchip technology, maxim integrated solidly in green across the board. "power lunch" will be right back. i've been called a control freak...

i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees.

and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

time now for street tauchlkt that is our daily dive into the stock calls you should hear about. >> i have got we are stocks today. >> really weird. i had to check twice. >> here we go. first stock is pg and e. yes, utility upgraded by two irms if. more of a sign of market concern. morgan stanley upgrading it saying regulatory risks remain but the stock looks oversold trading town 10 over last year's earning. 14% upside. ever corps isi also upgrading pge today. >> i don't know. interesting call.

a second stock, mcdonald's once again, positive sentiment around mcdonald's. it continues, credit swiss raising the price target from 120 to $138. it's not just all day breakfast adding to same store sales numbers, sales started to accelerate prior to the rollout of what the analysts are calling adb, all day breakfasts the margin safety for the story is high. and cs's bold case scenario, the stock will go to $140, 20 points higher. >> i need viewers or you to help me understand. j is that good. if i order a mcmuffin in the afternoon am i substituting that for something else? or new people coming into mcdonald's. >> people. >> volume. >> people who would not have eaten lunch at mcdonald's that now will because they can get breakfast. >> can onization of the burger

part of the business. >> or they have successfully created a fourth meal of the day. they have been trying that forever, have a snack at 3:00. by snack we mean a triple hamburger. >> or an egg mcmuffin. >> plaques reason toic. the analysts likes what he sees. ? 1999. >> i think. jabl, also. >> they have upgraded the stock from a buy to a neutral in december. they are upgrading from buy to a focus list. basically, do you like me to you really areally like me. 40% upside. >> yeah. >> you know those things like when you are in elementary school, do you like him? >> in and out, in and out. >> this stock, contract manufacturer is what you need to know about flexan troic. foot locker getting added to bank of america merrill lynch's us 1 list. a big part of the call, nike.

it's one of nike's main selling channels and nike has new products coming out. the loerk has been a beneficiary of the athletic shoe and threat leisure clothing trend where people wear yoga pants to the office. >> yoga -- i'm irish. nothing to see on the back end. small cap -- national general holding, a new york city based insurance company. appropriate. morgan stanley upgrading it. target is $23.5024% upside. but there is only four analysts covering the name. the average target price, $26-17. >> it's up 10% over the past 12 months. national general holdings is. >> the most bland name in the world. hey, making money. bland name or not. maxx making money is sexy. >> michele, back over to you.

>> check out what's happening in the oil markets, what's driving the stock market today. west sick's crude is pushing higher as final trades cross for the seg. $31 better barrel for wti. jackie tees up for the close. >> the oil market continuing to dish out volume tilt, big swings in oil today. opec headlines definitely responsible author this move higher. what's different about what opec is saying now, and the other producers out there. we'll have that for you when "power lunch" comes back.

♪ every insurance policy has a number. but not every insurance company understands the life behind it. for those who've served and the families who've supported them, we offer our best service in return. ♪ usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. ♪

welcome back to "power lunch." i'm melissa lee. that's what it says on the teleprompter. >> you have got say it like this, i'm melissaly? >> markets higher. want to show you shares of jbs. not widely held here in the u.s. this is a brazilian company. it's the biggest producer of meats in the world. chicken, pork, beef.

now embroiled in scandal in brazil. there has been a series of arrests this morning. that's why the stock is down 8%. it's down 41% since october. sue herera has a news update. here's what's happening at this hour. new orleans police say a sheriff's deputy is in critical condition after getting shot five times this morning. steven arnold undergoing surgery after being wounded in a drug raid. police identified and arrested the suspect, 26-year-old jarvis hardy. gop presidential candidate john kasich campaigning in new hampshire says his endorsement from the boston globe is awesome. he has tried to appeal to voters with what he says is a practical problem solving approach to key issue. a fugitive new york real estate heir being held in louisiana willer in a plea next month that will allow him to return to los angeles to face a murder. robert durst will be rearraigned

on charges of illegally carrying a 38 caliber rifle. the 178 halton bridge in western pennsylvania is no more. the state's department of transportation imploding the steel structure this morning. the bridge was destroyed because a new $66 million bridge right next to it has now opened for traffic. you are up to date. has the rnbc news this hour. >> brian was making the point that was the second newest bridge in pennsylvania. >> the one they tore down. [ laughter ] >> anyway. i love you, pennsylvania, but, yeah, your infrastructure, not ideal. >> thank you, sue. >> oil markets close forth day. let's go to jackie deangelis. we have come off the high. >> we did come off the session highs to close at $31.45. what was remarkable today was the swing and the range that we saw in oil prices. the session low, $29.25. $3 higher was the high at 32

high pressure $41 we started negative, ended positive. it shows you the volatility that's in the market right now. definitely opec headlines were responsible for it. you had the kuwaiti opec governor saying the cartel would cooperate with those outside the group. we have heard this before. what is different now is that russia is starting to perhaps talk about cooperation as well. there is chatter about that in the marketplace. of course you would need all of the players to come together to actually see reduction in supply. but that is something that could potentially happen. remember, when we go back to the fundamental story here, nothing has really changed until we see something happen. and helima was telling me $25 could be the target. still to the downside. back to you. >> jackie, thank you. oil dropped once hitting investment and jobs in a big way. hess saying it will cut by $1.6 billion from last yooek. a 40% drop, and 20% less than the original spending cut

projection this year that the company gave just back in october. a very clear sign of how little visibility eve the biggest companies have. cutting spending doesn't mean cutting oil production. hess's production forecasts are the same they gave back in october. production not down, in other words, despite falling prices. let's stay in the oil trade as we bring in the trading nation. today that is phil streebl. i'm never going to ask anyone ever again if oil is at a bottom. it's clear that nobody really knows. when you look at the future's market what is the market saying is most likely to happen? >> i think we are tracking the equities here today. i think the fed is going to cop out with a dovish statement. that's why the equities are going occupy. opec -- i'm sorry that the oil market is in sympathy with that. opec, i think that's a lot of job owning. we've heard that so taen many time out of them. they can't cooperate.

they have got their own ideas. their own budgets they have got to ballness. even if they did, the problem is the nonopec nations. they never cooperate as well. they always cheat. i think oil prices still have a ways to go lower. we have 129 bearels over the five year average in storage. eia will probably show another inventory build tomorrow. i think there is too much supply out there at the moment. once we get the credit crisis coming out of the u.s. shell producers, then we start seeing that west texas come off line, the production levels come down quite a bit. then i think we are closer to that bottom. something i don't like, you mentioned $25. that strike in the march options has 29,000 as the open interest on those options. remember the rule of thumb, 8ol 0% of the options bought and held and expiration are worthless. i don't know. i think that's a lot of options out there that could have that opportunity. >> boris, is it going to be your

feel the currency market that is going to drive oil in the near term or supply/demand. >> i think oil drives everything. currencies today and oil is driving stock. it's not the other way around. not the tail wagging the dog. listening to the opec ministers this morning, the old song enough is enough, that disco song kept going through my mine. i think saudi arabia has decided this is it. 30 has got to hold. they can't have it lower than that. i don't think it's going to be a supply and demand issue. it is a psychological issue. if they decide they are going to contain supply that will be enough for a short squeeze. as he was saying there are so much options on the short side that the most natural move is to the up side. >> we have got a view there. thank you boris and ill if. folks a reminder we do two additional trading nation segments every day. go to the interwebb for it. >> let's look at the widing held stocks that you may have in your

portfolio. cisco is up by 2%. wells fargo, gilead and comcast the parent of this network, comcast is up 1%. you are watching cnbc, first in business worldwide. now the latest from trading nation.cnbc.com and a word from our sponsor.

>> health insurer centene announcing it is missing six hard drives containing personal data. however it says the drives don't contain financial or payment data. staple replacing its north american stores chief. he will depart stores on the 31st. wlets' go to tyler mathisen at

the morning star fund manager of theier awards. >> winner in the alternatives category for 2015678 take a look. >> the 2015 morning star alternatives managered of year go to vanguard market neutral. >> in a year like 2015 where it was val tile it was hard to find positive returns in a lot of asset classes. we were looking to see particularly in markets that were down did they provide good draw down protection and did they provide that concorrelated exposure investors want. the s&p was down 6% in the third quarter. this fun was up 7%. that's mostly where the returns for the year came from. their short positions went down more than their long positions did when the stock market was falling. that gave them excess returns relative both to to stock market and other market fuel funds. >> and john amarickss, the head

of the equity group joins us now to explain how this fun works. it is not easy for me to wrap my head around it. what does market neutral mean? what is the role of a fun like this in one's portfolio? >> i'll do the best i can in four minutes to cover. that first i want to say it is a tremendous honor to be here and accept the wordan the portfolio management team and the research team. without them we wouldn't have the signals for the pmst to use. market neutral, it means we have designed the strategy so it should not have a systematic relationship with the market. >> so you don't -- you are agnostic on what the market does, fundamentally? >> that's right. in this fund we are agnostic. we would like for our long portfolio, when market are rising we want the longs to do better than the market does. we want the shorts to trail that a little bit. in a falling market we want the long not to fall as much, we want the shorts to fall further. >> so you want -- in a bad

market like we've had over the past month you want your shorts really to be bad? >> they should be worse than their counterparts. >> are they performing on schedule? >> across industries we have a bit of variability in performance. generally what we try to do is not just track the market but for us it's important that within industry we see that relationship as well. it's not just the market that we need to control for but also the industry risk. >> one thing -- this is kind of a henl fundy kind of fund. >> that's the original original, and that's where that term came from, hedge fund. it was supposed to take the market out of the equation. >> but i did get this fund for a quarter of a% in expense a year. that's an eight of the of what comparable funds do. and that has to help your performance. >> that's the theme in vanguard. it's something we have done 20 years now in terms of quantitative strategy. and we do it at low cost. >> you have a fun, a universe of

500 stocks roughly call between shorts and longs. >> uh-huh. >> how do you decide which are which? what is the process. >> the process is based on a quantitative model a quantitative set of indicators that we think -- we take from upd ideas. we are looking at ratios be that recognizable to any fundamental manager, looking at return on equity. looking at valuations but we do that in a systematic way. for every stock, for every night we create a ranking. what we want to do is have the ones that we think are most attractively ranked in the long portfolio and the ones that are least attractively ranked within industry in the short portfolio. >> do you want to name names? who is long? who is short? >> we talked about this in the break room. again the process is such that we like characteristics. for us it doesn't make for great tv. it's not about names, it's about characteristics and a firm as a whole having a good combination of characteristics. our portfolio turns over about 75% a year. we are not there for long term stories. we're there because we like the

strength of the firm, we like the set of indicators. >> that's relatively low portfolio turnover for this kind of alternatives fun right? >> depends what you compare us with. for a fundamentally oriented strategy like ours it's higher. >> you are not rooting one way or another the way the market goes? >> that's the point. you would like to have something in your portfolio that doesn't have that relationship with the market adds diversification. that's what the fund is for. >> john congratulations on the award and to the team ativan guard. we appreciate you being here with us. a couple of final notes. another fund category the winners were not able to be here. that was in asset allocation category. john keel and michael wreck wire of the vanguard wellesley income fund, a long standing fund, been around since the 1920s if i'm remembering correctly. and morgue star designated their ceo of the year. and the winner there, john stump of wells fargo. not able to join us either.

that's it from chicago. i'll be back tomorrow, flights willing. >> keeping the run ways clear for you, my friend. >> foam them up, baby. >> safe travels. all right. what is not taking part in today's rally? let's take a glass half empty look at the s&p 500, underhadding ton bank, harley davidson. intuitive international, netflix. "power lunch" back in two minutes.

♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing".

>> let's look of the the three major thing we are watching for you. going into tomorrow's session of course the big thing will be the fed meeting. the fed started its meeting officially this afternoon. we'll be watching that especially as we go into the 2:00 hour. that should be a very -- i was going to say interesting meeting. but then i stopped myself. because it's probably not going to be. >> that's the way to sell the show. >> not long ago. >> i want to be honest with america. >> "power lunch" is now a two hour thing, so you need to -- >> remember we we are saying when the fed finally hikes rates then we can stop talking about when is the fed going to hike

rates? never stops. all the time. >> back -- >> what. >> the fed raised rates to what, a half a percent. >> no, a quarter. >> we're still so slow, i don't. there are expectations they may raise more. there's no way that -- can the federal reserve really let the stock market direct what it's going to do? the federal reserve -- >> it shouldn't but i think it does. >> here's my view in the federal reserve, i was watching football this weekend like everybody else in america and i thought the federal reserve should be like nfl referees become too much a part of the game. we know their names and there's commentators on them. the federal reserve should be like nfl refs, an important part of the game but unknown -- >> i disagree. i disagree completely. >> why? they become -- everyone is like a third fed speaker of the day is talking and may raise rates or cut them. >> it's an academic discussion at this point because they are the game the story. >> unless we choose to ignore

them. we are the worldwide leader in business news. >> indeed, what would steve leisman do all day, come on? >> other thing will be apple, we get the results after the bell and what they say about iphones and tim cook in october talked about china saying based on the number of customers going to stores he does not see any evidence of a slowdown. we'll see if that is going to be backed up in the conference call tonight. that should be a really interesting one. >> people are starting to hang on iphone number like hanging on the price of oil. they are guessing a number, up or down, everything dumps or gets bought. what about the trend? i iphone has only been out nine years -- >> that's past, you want to move forward. >> that's my point. >> you need forward. >> maybe let's use another word for apple, a dirty word, annuity, is apple an annuity?

>> harvest the dividends. >> okay. oil. that's the next thing to watch. why is the market so correlated with oil? >> 97 correlation to the brent move over the last trading sessions. >> because energy led us for so many years. >> quickly, take a look at the transport chart, this was interesting. it was out in the today's session up 2%. it formed a bottom, one-year bottom on january 20th. this is a multiyear low, three-year low on the transport, showing stability off the january 20th level. so this is something we'll be watching and it's been an awful trade even with decline in oil prices over the past year. transports are down more than 20%. >> looks like bdi too. >> as we head toward the final hour of trade, the dow and s&p and nasdaq, all in positive territory. let's see if the rally holds towards the close of the session. you can see decent percentage moves today. we're going to sit down with the ceo of polaris, snowmobiles, how

is that going with a winter with almost snow except last weekend. how the company is faring in the middle of this unpredictable winter and i am packed by energy prices. "power lunch" is back in two. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.

the access informationlows us to from anywhere. the microsoft cloud allows us to scale up. microsoft cloud changes our world dramatically. it wasn't too long ago it would take two weeks to sequence and analyze a genome. now, we can do a hundred per day. with the microsoft cloud we don't have to build server rooms. we have instant scale. the microsoft cloud is helping us to re-build and re-interpret our business. this cloud helps transform business. this is the microsoft cloud. weyoung company around but if we want to keep the soda pop flowing we need fresh ideas! >>got it. we slow, we die. >>what about cashing out? no! i'm trying to build something here. >>how about using fedex ground for shipping? >>i don't need some kid telling me how to run a business! i've been doing this for 4 long months. >>fedex ground can help us save money and deliver fast to our customers.

not bad, kid. you remind me of a younger me. >>aiden! the dog is eating your retainer again. let's take a short 5-minute recess. fedex ground is faster to more locations than ups ground. iall across the state belthe economy is growing,day. with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov motorcycles good, snowmobiles in canada bad. that pretty much sums the last few months of business for polaris and we're joined by the chairman and ceo of the company. scott, i mean, listen, leo

dicaprio tells us this is the warmest year on record and no snow anywhere. how much has that walloped your business? >> it doesn't help when we don't get snow. we're back to number one in the mountain, we were the number one share gainer in snowmobiles, the rest of the industry was down 25% season to date. we're only down about 15%. we're doing okay. it's not great but snowmobiles are only 7% of the business. we have a lot of big bets on our motorcycle business and the largest in off-road vehicles, a lot on that as well. >> talk to us about canada. i hinted they were bad and it's not because of oil, it's because of the canadian currency conversion? how much has that hurt you guys? >> that's amajor impact. it's the largest single currency impact to us and we had almost 100 basis points hit because of currencies last year, big, big head winds, this is the third year into next year that

currencies will be an impact. we're taking that in stride. it's in our guidance and we're still looking to offset the cost as much as we can but clearly not helpful in canada where our goods or more expensive and we get the translation cost coming back. a big head wind for us. >> in the united states, it's michelle, thanks for coming on. the offroad vehicle sales are down in places like texas, oklahoma. what's going on in those places? >> well, imagine that, we talked about oil today, actually for past several months. about 17% of our sales are sold in what we call oil producing regions and that part of our business was down 10% last year. so the rest of the u.s. is up about 5. you can see the big dichotomy there and we're obviously going to cycle through that this year. we don't expect it to get significantly worse but it's not been helpful to our business. men and women working on oil rigs, we're not gets as many of those anymore.

>> there's so much head winds and then if the fed does keep raising rates, i assume you finance a lot of the product as well. how do you get growth back when you're facing all of these issues? fwl there are a number of head winds but that's the nature of our business. we're in somewhat of a discretionary income sector. we believe if we continue to drive innovation and provide better service and solutions to our customers and dealers we have a concept we call making growth happen. in certain environments that is much more difficult. we saw that in second half of 2015 and we're predicting additional volatility and head winds into 2016. i can tell you there's 8,000 employees at polaris working every day to find new ways to create customers to join in the power sport industry. we tend to win when that happens. >> you have leading brands but inventory problem, reduced output to deal with the inventory problem and allow dealers to sell through the inventory. how much of an overhang will

this be into the current quarter? >> going into the current quarter, i wouldn't say it's immaterial but it's small. 1,000 or 2,000 units we would like to get out of overall inventory. we can do that in the first quarter without too much problem. but we took our medicine and saw demands slowing down and we cut quite a few high value rangers from our production schedule and inventory ended up. we really took our medicine in 015 and that won't be much of a overhang in 2016. >> scott, what is the best single thing going for your business right now? >> the best single thing is without a doubt indian motorcycles, that business is still small, a lot of opportunity for top line growth and significant opportunity for margin expansion. across the board i believe our business is under valued right now and we see a lot of opportunities to not only grow over the next several yeersz and expand margins but create value as well.

>> praying for snow as well. scott, thanks, appreciate it. >> folks, thank you for watching. >> i'll see you on "fast money." closing bell starts right now. >> hi, everybody, welcome to the closing bell. i'm kelly evans. >> stocking staging a major comeback after the late day sell-off yesterday. i heard that was quite a deal. >> glad to have you back. >> investors brushing off china's big decline overnight, focusing on promising earnings numbers and of course the big surge in oil again. there are reports that opec and nonopec members could be open to a coordinated production cut as unlikely as that would seem. >> i'm not sure. opec, this smells like a lot about the fed but we'll see. >> yes, we will. we'll following this action into the close today. we'll see which way we tip today.