>> cisco, this thing has broken out massively on a multiyear basis. >> up 7% >> joseph? >> twilio, crm owns 1% of. >> it thanks for watching, "power lunch" starts right now >> i'm michelle carew suso cabr. the dow and the s&p recovering 60% of the points they lost. the nasdaq recouping 75% is the rally back on track one stock that's fuelling the comeback is boeing, already up 20% this year alone and more than doubling over the past 12 months can boeing keep flying high? ceo lays out his flight path and think you didn't have any exposure to all those crazy volatility trades? think again. how some of the biggest pension funds can be making risky bets to get that alpha. wait until you hear about this "power lunch" starts right now

>> good afternoon, glad you could be with us on hour one of "power lunch." i'm tyler mathisen the dow on track for its first five-day winning streak of 2018 after that historic january. the dow, that index along with the s&p on pace for the best weekly gains now best weekly gains since november of 2016. the nasdaq on track for its best weekly gain in nearly three and a half years now cisco systems rallying on its earnings beat, teva pharma soaring on news warren buffett's berkshire hathaway is going to take a stake there and trip advisor is higher. the company be buy back stock and gave an upbeat forecast. and for more on these markets, let's go down to the new york stock exchange bertha coombs is here today standing by.

>> the dow trading above 25,000, the s&p above 2700 the nasdaq recovered three quarters of the losses trading above 7200 the five-day winning streak is putting these indices on pace for their best weekly gains in forever. take a look at the mass in dnasq it's up over 4.5%, that's the best weekly gain since back in october of 2014. that's a huge recovery considering where we were last week it's been those megacap tech names which weighed us down, fell into direction down more than 10% from their all time highs and have made a really great rooefr look at apple up 14% low of that low of $150 a share. back with 5% of its all time

high amazon within 3% of the all time high near $1500. up 15% from the lows alphabet has been the laggard, 8.5% from the lows and that remains near correction territory. one of the things a lot of things, these recoveries make you feel considering we have moderate volume and steady uptrends feel like maybe we've hit a bottom but look at this chart this is the volatility index versus the s&p intraday today they look like mirror images, don't they when you see the volatility spiked up there to 20, you saw the s&p fall into the red a bit as it's recovered, the s&p has come back so it's like the flu, tyler, i've been saying this volatility spike we've seen. it takes about two weeks to get over this horrible flu this year, michelle, but in that second week you start getting a little bit better, it's not as

violent. >> don't need as many kleenex, thank you, bertha. >> exactly. >> bertha mentioned the inflation data the markets don't seem too freaked out about it today even though we've had several reports pointing to inflation heating up steve liesman joins us with more steve? >> heating up in the flu we are happy to introduce the inflation thermometer, it's become so important to markets that we have this new way here we'll try to put it into context. here's the inflakes thermometer looking at the data month over month. let's start first with -- what are we going to start first with i think the core producer price we got this morning. it's in the middle, well above expectations but not out of line with volatilities. minus 0.1 so we'll put in the the middle the next, the empire state, that was hot, 48 plus 12 points, the hottest prices paid reading for the empire state manufacturing index we've had in five years. philly fed manufacturing index prices paid. we got that this morning, too, hottest in six years, 45

and hottest was the core cpi that was the hottest in 11 years. sol that's -- those are the three we got today plus the one from yesterday but let's look at the year over year and you can see they're more moderate. the core cpi running about 1.7%, 1.8% the core ppi is hotter over time on a year-over-year basis so tyler, we'll keep watching this stuff. put it into the thermometer and give people an idea of where we are relative to past inflation as well as where we think it's going from here. >> i like that thermometer, steve, thank you very much. what a difference the week makes, the dow and s&p have recovered about 60% of the points they lost at the peak of that early february selloff. the peak being the -- the trough being february 9 the nasdaq has recovered about 75% of its point loss and all three are headed, as we mentioned, for a fifth straight day of gains if the current trend continues.

is the rally back on track let's bring in the chief investment officer with janney, montgomery, and scott. all three of them. and michael jones, chief investment and chairman with riverfront investment group. michael, i'll start with you you say an important all-clear signal has been passed in just the past 24 hours. what is it and what does it tell you? >> i think yesterday was the critical signal for equity investors because you got some pretty tough news for the narrative that droif the selloff. you got a disappointingly strong inflation read and then you had the ten-year treasury break through 290. if you think about the theme of the selloff, it was inflation driving yields high cher means equity prices have to drop yet the market was able to recover from its early selloff and close up more than 1%. good news for the economy is bad

for bonds but it's increasingly being seen as good for equities and that means we're through this correction in my opinion and we've had a nice normal pull back. >> he's put the stake in, he says the correction is over. he says the bear market is in bonds not stocks do you agree? >> i do agree. i think perhaps we've seen the worst of this corrective process occur within the last couple weeks however it's not unusual to see a retest not necessarily take out the lower lows we've already had but nonetheless challenge investors who think it's used at this juncture so i would think if we get a pullback to the 2600 or something. we know today we've seen pushback at the 2720 level around the 50-day moving average suggesting investors may digest

some of this violent bounce we've had in equity prices before we can continue to see equity prices advance. we're still bullish on stocks over bonds so in that respect i concur. >> so michael, you did put the stake in the ground saying you think the correction is over but has anything changed what are you investing in? do you use any of the inflation data we've seen to make you reallocate or do anything differently? >> it's a great question because i do thing something has changed but it's not the wiggles in the cpa or wage gains what has changed in the last few weeks is the outlook for fiscal policy in the u.s. we have a clear blueprint for the budget and the budget deficit is going to double from last year to next to about $1.2 trillion that's a lot of fiscal stimulus to drop on an economy already growing at 3% and unemployment is at 4% it's likely to force the fed's

hand to move faster than they would have liked on raising interest rates and importantly is you'll have to fund in a world the central banks are no longer funding deficits, you have to find real buyers for $1.5 trillion to $2 trillion in incremental treasury ebt. >> so all that sounds bearish for the stock market where you were bullish. >> it's bearish for the bond market without question. >> so interest rates will rise sharply. that doesn't worry you when it comes to the stock market? >> not in the least. until you get interest rates up above 5.5%, there's really no correlation with pes in the market and all of this stimulus is also on top of a lot of great tax policy for earnings so you'll have more than enough earnings to offset any winds from the bond market. >> mark, you concur basically that interest rates are going higher so you say avoid interest rate sensitive areas, tell me

which ones and tell me which areas you are leaning towards in this environment. >> tyler, it's the fab four if you will, it's the four lagers already and we haven't waiver t ever that they'll be under pressure so it will be real estate investment trusts. the second so the seconders we like are more economically exposed. those include financials, industrials, software technology, select consumer discretionary and even energy which we think is fundamentally supported by increasing demand around the world gentlemen, thank you very much, we appreciate it. >> there is some disagreement. we'll have somebody bullish on the second hour of the show. in the meantime, president trump

addressing the nation following the deadly school shooting in florida. amm eamo eamon javers is live in the white house. >> the president said to answer hate with love and answer cruelty with kindness, the president framed the issue as one of mental health concern, he said the united states must take action on this here's the president. >> it's not enough to simply take actions that make us feel like we are making a difference. we must actually make that difference. >> notably the president did not mention gun control or guns at all in the course of his remarks at the white house but his treasury secretary steve mnuchin keeping on capitol hill did. here's what he had to say. >> i will say, personally i think the gun violence is a tragedy what we've seen yesterday and i'd urge congress to look at these issues.

>> do you propose us to do something? >> i assure you appreciate the severity and the tragedy and i will speak to the president and the other cabinet members. >> the president staying out of the tricky politics with gun control in this country. president trump comes to the presidency with the support of the national rifle association and gun rights advocates so it makes it even more difficult, political waters for him so interesting to see that division between the treasury secretary and the president. >> thank you very much eamon javers on the north lawn. boeing stocks have tripled can that company grow fast enough to push the stock even higher we'll hear from the company's ceo. and should you change your investments now that interest rates are rising we've been talking about that a lot and we will hear what one

hedge fund is doing right now. "power lunch" will be right back experience lexus safety system plus standard. in the 2018 lexus es and es hybrid. lease the 2018 es 350 for $339 a month for 36 months. experience amazing at your lexus dealer.

welcome back to "power lunch," we want to highlight the s&p and nasdaq which hit session highs. nasdaq up 1.25%. bowing the biggest gainer in today's dow coming after cisco, which had a nice report and apple. jim cramer and david faber spoke with boeing ceo on "squawk on the street."

there's so many squawks i can't keep them straight it's "squawk on the street." we produced a record 763 commercial aircraft. this year we've guided 810 to 815 aircraft by the end of the decade, we'll build more than 900 airplanes a year so you can see it's significant top line growth. passenger traffic around the world, we see new passengers entering, that will drive that growth every year we have a hundred million people that travel for the first time in asia investors have noticed boeing's growth potential. the stock is on fire, already up about 20% in this very bumpy year it's more than doubled over the past one year and tripled over the past two but can it keep flying so high >> i think what you're seeing now is the market is responding to what is fundamentally a very strong airplane market, aerospace market globally and the fact that we're delivering on our commitments, we had promised production rampup, we're now delivering on that rampup and you can see the

profitability that's hitting the bottom line as well so it's efficiency in our production line, efficiency in our supply chain. so you got top-line growth at the market, bottom-line growth -- >> so just the investment community catching up to a certain extent. >> that's part of it and part is the recognition that this has changed from being a high-cycle business in the past to a long-term sustained growth business and i think that's changed the attitude and perspective on the street. so that's boeing' ceo laying out his case where does the stock go from here let's find out with guy adami and carter copeland. guy, it wasn't just the plane orders that will be so consistent over time because so many more planes are needed in the world but also talked about defense spending which is going through the roof all over the world and, by the way, they're involved in rocket science and thinks they'll be first to mars before elon musk everything is working for this company right now. >> which makes them from a cyclical stock to just a stock that's slow and easy wins the race and if you look at

valuation, 21 times forward earnings, giving the guidance they just gave and given about a 20% eps growth you can see how you'd get to a $430 stock. so although the move has been quick for a $200 billion company, it's not unjustified with their cash flow, with their margins and, quite frankly, with their eps growth. >> carter, you heard the ceo make a case that the stock has fundamentally changed to one that is cyclical to one that you can depend on for steady growth for a long time. do you buy that? >> i think to a certain extent we do. look, there's an incredible amount of growth here but what's more powerful behind what you're seeing at boeing is not just top line growth, don't get me wrong, the airplane market is fantastic. we saw airbus report this morning the stock is up almost 10%. they're telling me the market is great, too, but what's going on at boeing is a transformation in the profitability of this company. this is -- the airplane business made about 5%, 6% margins for the last 50 years. boeing did 10% last year, they're guiding to 11 this year.

they target 15 by the end of the decade, we think they can go to 16 or 17. >> how how is that growth sustainable >> really it comes down to a fundamental shift in the model, right? the way the airplane business is the way it works is you invest billions of dollars to lose billions of dollars in the hope you'll make billions of dollars and so for the last 30, 40 years you've had good programs and bad programs and they average out to a mediocre return but at the beginning part of this decade, boeing decided you know what we'll take our two cash cows, the 737 and the 777 and put new engines on them. we won't develop new clean sheet designs, we'll take the risk down, give our customers what they want and we'll go build new planes at higher prices on production lines that are already in place and a work force that's already capable of making those and so you're no longer averaging a good plane and a bad plane to get a mediocre margin, you're shipping everything out of production lines at a high margin and as you grow that business and grow that number of airplanes on a fixed-asset base,

it's massively powerful to the bottom line. so dennis hits at that, but i don't think it gets to the real point here which is this is a 2.5 standard deviation move upward in margins for a business that's had pretty stagnant and moderate margin levels for 50 years. >> guy, when you look at the ten-year stock, if the control room can bring that up again, talk about a move. the stock looks almost parabolic on a ten-year chart. i get all the good things, i hear about the increase in margins. but like david faber said this morning. when everything sounds so good -- >> right. >> -- don't you get nervous? >> i do. then you look at the middle of the ten year chart, there's a middle two or three years where this stock basically went sort of sideways. the moves only really happened in the last year and to carter's point, yes i get nervous when i wake up in the morning number one so i would be nervous about a company of this size moving to this magnitude but now you say wait a second, the street is catching up to what boeing is. it's not just a commercial

airline company, not just an aerospace defense company, there are a lot of things going on here when you have that kind of cash flow, half a trillion dollar backlog and valuations that in this market are somewhat reasonable 21 times forward earnings you could see why this stock still has some runway to the upside. >> this is mr. wonderful's favorite stock. >> who is that >> o'leary dennis o'leary mr. wonderful. mr. wonderful picked it, carter, he won the stock-picking contest based on what boeing did and he keeps coming back to their avionics business and their services business. and free cash flow. >> look, i think boeing is extremely forward-leaning in their posture and how they want to leverage their ip and leverage their market position looking at the services market and looking at insourcings more of the stuff that they do is meant to take a business that has a lot of ip, has a big market position and say, hey, are we getting paid for the risk we take and are we getting compensated for what we know

and i think that's a big shift in behavior from what this business was for 30 or 40 years where it was about making the next airplane, the next cool airplane so now, you know, the incentives have changed, the way these guys get paid is based on revenues and earnings and cash. that only changed 18 months ago and you foe what incentives drive outcomes. if they pay the organization to drive higher profits and cash, you'll get higher profits and cash. >> carter, really quick. guy thought $420 a share what do you think? >> i think that's a completely reasonable number if what we've talked about in terms of making this a less cyclical business, 500 is not out -- totally in the cards. that's a 6.5% free cash flow yield on the numbers post-tax so i think there's a lot of upside room in this stock. >> a lot of bulls on this stock. thank you, guys. >> makes you scared, i can see there's fear in your eyes. >> after a huge move like that and you're telling me i can get anymore. i don't know.

>> i'm not telling you anything. who am i toll-t tell you anythig just opinion on "power lunch." >> all righty. what changes should you make to your portfolio right now if any? up next, the cio of double line capital will tell us what his firm is doing and mcdonald's announces changes to the happy meal. >> that's fantastic move. >> it's going to make it healthier and you'll be happier. >> it's impossible for me to be happy right now. i'm with mccm, i'm with you, it's thursday, come on. >> look at those fries they look good, man. >> the nuggets >> got to love the nuggets

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so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

one of the biggest money managers around says it is keeping its foot on the commodities gas pedal. on the phone, double line deputy cio jeffrey sherman. welcome, good to hear from you. >> thanks for having me. >> delighted to have you is your call on commodities an economic growth call or an inflation call or both. >> it's both what you've seen is that everybody's been talking about the narrative going around is there's coordinating global economic growth in terms of gdp expansion in the emerging economy and you started to see signs of inflation not only did we get a surprise uptick in the cpi trend earlier this week but if you look at ppi final demand that came out today you have above expectation and that producer price index versus the consumer price index tends

to lead as does the cost of final goods going on so you're seeing it on both fronts, not just the economic side but also a piece of the inflationary story coming there and not to mention also commodity prices are not at their elevated levels that they were a couple years ago. >> and the commodities boomed a couple of years ago. in your fund which had a good growth, double strategic commodity fund, what's in it >> it's a pure commodity play so unlike other commodity funds the double line strategic commodity funds invest in portfolio of commodities by futures. so we have a different diversification impact than just buying traditional equities. >> so if i'm an investor and if i want to hear from you i want -- i'm trying to get an idea of which markets you're exposed to is it oil?

is it agricultural kmod 's the or what? it's benefitted quite well from this robust movement off the low levels as we've seen under supply in the markets where demand is starting to pick up on the industrial and the energy side so you're getting a kick from both sides of the portfolio there. >> that one-third, one-third, one-third allocation, is that always the case or that your view of the market right now and how you should be invested. >> it's the way that the fund should be invested today we also have the ability to introduce a short position so it tends to be long bias for investors and that means we have an exposure to this one-third, one-third, one-third exposure and we have 50% of the portfolio

in that. so when we built this strategy we built it to be more clever about the way to allocate commodities, not just having the long exposure but today the portfolio is almost practically 100% long. >> tell me about your exposure to energy because we frequently see, for example, we're looking at wti, the one-year chart, it seems to be rolling over it's this whole new dynamic created by shale producers in the united states, opec used to be able to control supply and now what do they find? they cut their production, the price goes up and american drillers drill even more and bring the price down how do you manage that when you have a bullish outlook for commodities? >> well, i mean, what you've seen is that that is not something that happened overnight and that's already been baked into the marketplace. yes, oil had a rough few days or a rough week and a half in the markets but we're still slightly

higher than we were to begin the year however, there are still issues with the opec side of the equation there are some of the players that may not even hit the production quotas they're trying to achieve there and don't forget if we have a pickup in demand, that's what's been driving the oil market and so to have a bullish call on energy, if you look at what's called the term structure of energy prices, you price different months for delivery, it has the secretive component that actually does resonate, the idea is that there is stress on the supply-side of the market, that mean december man is outstripping supply so although you see news about u.s. record production, there

still are strains on the overall marketplace so you don't have to have prices going up because the curve is acreted to commodities returns. >> jeffrey, thank you very much. jeffrey sherman, deputy cio at doubleline, thank you. >> thanks again. thanks for having me. >> to sue herera with a news update sue? here's what's happening at this hour, everyone. the leader of a white nationalist militia says florida shooting suspect nikolas cruz was a member of the group and participated in paramilitary drills in tallahasse he told the associated press his group wants florida to become its own "white ethnostate. earlier, federal and state officials held a press conference to talk about the shooting. >> i want to make sure that my children, my grandchildren, yours, everybody in this state can wake up and be safe. the violence has to stop

we cannot lose another child in this country to violence in a school. >> meantime, former white house chief strategist steve bannon is back on capitol hill meeting with members of the house intelligence committee he will be questioned about russian interference in the 2016 presidential election. an explosion at the u.p.s. facility in rock island, illinois, injuring three people. investigators believe that it was caused by a forklift that was being started at the beginning of a shift one of the injured was taken to a local hospital. you are up to date that's the news update back to you guys on the anchor desk michelle, back to you. >> thank you very much, sue. from harvard to hawaii, many investors were hit by the sudden spike in volatility. coming up, why the supposedly safe investors were making rkyis bets what's going to happen now "power lunch" will be right back

the dow has been up as much as 226 points before dipping negative we're higher right now by 149 points, two-thirds of a percent. the s&p is higher by 16 and the nasdaq by 70 that's a gain of 1%. if the averages finish higher

the dow, s&p 500 and the nasdaq will rack up a fifth straight day of gains it would be the first five day win streak for the dow in 2018 emerging markets are rallying as well sand bitcoin is rallying back above 10,000 on the exchange that's the highest level in more than two weeks scott is joining us now to help us go through the next 90 minutes. >> thanks for having me. >> good to have you here. havolatility in the markets which could be problematic for thenation's pension funds whic added riskier bets to their portfolios look at this headline on the front page of today's "wall street journal" "wagers on calm market turn sour." joining us now is greg zuckerman, special writer for the "journal," one of the lead authors of that article. greg, good to see you again. this tells you the lengths that

pension funds are willing to go in the current environment we've been over last many sanguine years in terms of volatility. >> we look for dangers and where they might come and we traditionally look in the rear-view mirror banks have trostronger than thev been in years, but when you look at pension funds and endowments, family offices that are traditionally for safer minded investors, they have been stretching for yield and doing this volatility trading which we write about today. >> what did you find out about harvard specifically, one of the schools you mentioned for their endowment. >> harvard is among those that own this index fund betting on the vix, that the vix would be lower or stay low. it's not clear they own it today but there are many and what i find fascinating is one of them blew up but the other is seeing

surging interest in the past few days so everyone feels like it's time to put risk on again and bet on volatility. >> harvard's endowment has had such an up and down history over the last ten years if not more than that. do you have any idea how much they may have lost in this particular trade >> it's heart to tell but more importantly is this theme we talked to when we talked to pension funded a v fund adviser treating volatility as an asset class, i'm going to invest in volatility and yeah it works and has for years but if we get increased volatility -- and not sure why we wouldn't, the fed is going to raise rates, they said they would raise rates, we've never gone such a long period

without tremendous volatility so if we are in a era of increased volatility, those investing in low volatility may not looked a good as you might hope. >> greg, if you dive into these endowments of pension funds, charitable funds and so forth, it would be surprising to investors to know what's in there and why the funds are holding them i forget which one, maybe it was harvard, was a huge holder of timber some years ago. >> and they were proud of it. >> so what would people be surprised to learn about those investments because you may be a police officer and have money in the police officer's pension fund. >> sure, today they don't look dissimilar from the traditional hedge fund they have a range of investments, it could be unusual debt, products from countries

with low ratings but in their defense, they have 7% to 8% a year and if are a expect fund with another country with negative rate what is are you going to do? you lose your job if you keep in the cash or you buy sovereign debt at those low rates you've got to invest and you have baby boomers who are retiring and they want their pensions so those guys and women are under all kinds of pressure, it's not that you want to see them gambling but they'll be more aggressive than they were if interest rates were much higher. >> i'm conflicted in the next question i want to ask you part of me wants to say should pension funds and endowments be investing in this type of stuff? and then the other side of me says what do you mean this kind of stuff no one has a problem when the gains are great, when the markets are fine, when the returns are pouring in and there are so many investments that you could deem quote/unquote risky or speck

speculati speculative. so why single out these particular ones? >> sure, you could argue that some of the things we're getting into are less risky than being long only stocks and obviously we saw what happened in 2008 so if we're saying don't do some of these aggressive strategies but instead own a long only portfolio of stocks, i'm not sure that's the best idea either you don't want to sell volatility when volatility has been at all time lows to me but you can do some of these trades, some of the times when you're selling puts, it's getting constant income and you can do better in a downturn as long as this is replacing something else risky. so if you're replacing plain vanilla debt, that's what i worry about. >> great, thank you very much. is. >> you see odd products like this throughout this time when interest rates have been low do you remember the daily auction rate securities that got

completely frozen and comptrollers and companies had been in them, you're like what are you doing in these things? well, you're looking for yield wherever you can find it, right? and so when you have this low yield environment you stretch nickels on volatility. >> and the regulatory nature that the business has changed itself into into these types of products may be controversial but they'll never go away. >> on the manufacturing line. >> and ocean rate securities, collateralized debt obligations, those products that were manufactured synthetics problems that were often levered, that caused the last one now you have volatility products. >> and they pop up in weird places. to the bond market we go mr. santelli is tracking action at the cme, hi, rick. >> high, tyler as we speak we've lost the 290 handle, dipping slightly to 289.

you see an interday chart, watch that chart carefully, what you don't see is what we saw at 8:30 when cpi was stronger we spiked and held it, today we had a hot ppi but came back off. is much of the inflation worry may be priced in when the catalyst was volatility, everybody might have thought it was more rates than volatility speaking of a which, any anxieties in the market you look at investment grade corporate securities to that end, let's look at pairings, these charts start early october, 2016. first barclay's, these are actual security and the tighter the margins, that's the happier the market is. they don't look too bad but if you look at the lqd etf, it's the same type period the price has gone down a lot more than the spreads have held wide same can be true for barclay's

high yield then you go to the hyg etf. the point is, securities and etfs aren't exactly the same and that's important after the volatility we had two weeks ago. tyler, back to you. >> rick, thank you very much want a warm jacket that doesn't have you look like a marshmallow? the michelin man you will be in on today's "power lunch. that is next ns that you on the bike >>o.

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small business program and now an entrepreneur. we make jackets using nasa developed technology the technology is a silver lining that is in our patent pending fabric the silver lining retains 90% of your body heat, keeping you warm our jackets are water repellent, packable and weigh less than one pound, making them the perfect jacket for travelers and outdoor enthusiasts who like to travel light. i was inspired by this technology when i completed my first half marathon and was wrapped in a heat sheet. we launched our jackets six months ago and we sold over 800 units to our kickstarter campaign, our web site and wholesale. we retail the jackets for $145 to $175 in three different styles our customers love our jackets and we want to see them in airports, hotels, cruise ships and, if we're lucky, going to the moon one day. >> you just saw 13 one's pitch let's meet the panel joining us on set, angel investor alicia sorett and from san francisco venture capitalist

david we you're in the hot seat. >> the pitch had a lot of great investigation, i would have liked to hear more about the target customer so i will give you an a minus tell me who is the target customer for your product? >> the target market the anyone who loves outdoors and traveling light. the target market is from 35 to 60-year-olds and we're also saying traction with one of our styles, the pullover half zip for high school kids and college kids. >> love to see the innovation you're doing in this space, i wanted to hear more about the grand plan, where you're heading with this so i'm giving you an a minus as well. what's the best climate to wear these jackets in >> this is a go-to jacket for three seasons, anywhere from 40 to 70 degrees. when you're comfortable and you want to have a light jacket this is the go to jacket you can use. for winter season you can also use this as a layer. >> i wanted to hear more about the brand attributes and how customers will integrate this into their daily lives i'll

give the pitch a b how do you plan on acquiring more customers at scale? >> i would go to trade shows where people are looking to buy these things and invest more in digital marketing. i think that's the way to go right now. i've done a few facebook marketing ads and i've seen great traction for a minimum amount of money. i think that's where digital marketing can help me. >> how are you protecting your competitive positioning with this technology? >> i filed for a provisional patent this technology was used in space and is still being used in space so now it's for everyday use. >> where do runners find these where would they buy them? >> 90% of my market is online on my web site. there's a few travel stores carrying. >> it could you see yourself selling your company to an rei or larger apparel maker? >> down the road when that time come, sure, i would entertain it. >> we heard what hema had to say, now we want to know the if the panel is in or out. >> i'm impressed with what she's accomplished as a solo founder and i've used the product as a

consumer hiking and traveling and i loved it so i'll go in. >> kelly >> i'd like to know more about what they're going to do in the future with brand alignment, maybe looking for acquisition potential but i really think it's innovative an a unique product i haven't seen before so i'm in >> david >> i'm not sure there's enough there to build a lifestyle brand. i would offer congratulations on the product launch and the first product. but i'm going to be out. >> okay, that's two ins and one out. hemia, what's your reaction? >> i'm thrilled to be here to get feedback it motivates me to just keep going. thank you. >> thank you to hema of 13 one, and thanks to our panelists. that's today's power pitch >> okay, so you heard what the panel had to say now it's time to find out if you are in or out on 13 one. you can follow the conversation on twitter using th the #powerpitch. and for more, head over to

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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them.

uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. amazon shareholders receiving good news yesterday. the company surpassing microto become the third most valuable company behind apple and alphabet let's trade three big as with the fourth a, for adami. >> i figured that's quick. i learned in school as well. >> let's take amazon first >> so these three stocks you mentioned, they each have something working for them amazon, to me, it's a moat they have the biggest, the widest, the deepest moat, and they proved they can turn the dial what is the dial margins. they went from 2.2% to 3.5%. to me, that shows that any time they want, they td kern the screws and make this company

profitable love amazon. >> did you get a chance to come in when it came back it's all the way back within 3% or so from its high. >> i don't think this move to the downside is over if you look at the s&p today, the move we saw today is a 50% correction of the all-time high of twakt 2872 i think you'll get another chance >> the nasdaq has come back 70 odd percent? >> 70% >> of its loss >> 70% of its losses >> which is remarkable >> would you rather amazon or apple? >> amazon. and listen, i know all the apple fans out there we play that game on fast money. no, i like amazon more listen, i get apple, and i love the fact that they're going into a services business, but we need the services revenues to be north of 20% they're not. when it gets north of 20%, we can have the valuation talk. >> you know who else has a lot of services business, that would be amazon.

>> amazon is crushing it on the service side i think they're beating apple. and google, well, what do we call it, alphabet. >> sticking with the as. >> there's the valuation play. of those three names, the most reasonable one and compelling one on valuation is alphabet, is google, and that's the one that's probably giving you a 20% retracement and it's bouncing now. >> amazon versus alphabet, you would choose alphabet. >> for the title >> i would choose alphabet, and i have to tell you something you know what else happened last night. when you were busy at the opera, the providence flyers were beating villanova. i was out with providence fans they're winners. alphabet is a winner, and you all three are winners as well. >> you take alphabet as the stock out of the three >> on valuation. you have to give it alphabet i'm a value guy. you know, karen is a value gal i'm a value guy. alphabet, one. amazon, two. >> apple is not expensive.

dm not expensive, but is it a software company or hardware are they moving into the services then it's not expensive. if they're still a hardware company, it is expensive >> okay, thank you >> don't be -- >> i have to get out of here >> bye, adami. >> all the way back to last week, can you think back that far when the dow had not one but two 1,000-point drops. since then, it has recovered much of that decline so will this be a simple v-shaped rebound or is there another downswing coming, and will inflation cause it. much more on the markets when thsend he coour of "power" begins right after this.

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good day, everybody. i'm tyler mathisen welcome back here's what's on the menu in the second hour of "power lunch. the road ahead have we experienced what is known as the rare v-bottom in the market or is the rebound moving just a little too fast for comfort. we'll debate that. >> and what's the smart money doing in this recent volatility? how hedge funds have positioned themselves for better and sometimes for worse. >> and grab a napkin james beard award winner david chang tells us why he chose not to franchise his new special

and the treat he made for chloe kim. >> power lunch starts right now. chloe kim does love to eat woe know that from her twitter feet welcome to "power lunch. i'm michelle caruso-cabrera. stocks in the green, but off their session highs. the dow has been up as much as 226 points in earlier trading. right now, the industrial is higher by three quarters of a percent. the nasdaq is higher by more than 1%. russell 2,000 by a half a percent. treasury yields continue to rise the ten-year hitting another four-year high at 2.98% the two-year sitting at its highest level yield since 2008 among your stock movers, sisco is higher on the back of strong results. berkshire hathaway announces a new stake in the company, and netflix continuing its win streak it's up 10% this week.

names at all-time highs, cme, pnc financial, and raytheon. >> ten days since the markets started to tumble on february 2nd. more than hathe index losses have now been recovered in just the past four days but could the market retest the lows mike santoli rejoining us from the stock exchange with a look at the recovery, and michael, some questioning whether it's all happened too fast? >> his mike no good? >> all right, i think for the second day in a row, folks, we have lost the audio at the new york stock exchange. we'll come back to michael as we can. but meantime, many companies on the road to recovery, but how many have made a full comeback since the markets sold off dominic chu is here, we hope, with the numbers >> yes, he will be >> that doesn't mean certain individual stocks or parts of the market aren't getting close on their own, so let's take a

look at some of the ones who have had a nice rally since the lows over the past couple weeks. we looked at the s&p 500, and then found that 93 companies within there are within 5% of their multi-year 52-week, or record high levels 81 of those companies hit 52-week highs just in 2018 alone, and 13 s&p 500 companies have hit their high levels, 52-week or better, just this week alone some of the names we're talking about to give you an idea. we have nortlup grumened so just about a quarter percent away from record high levels pnc financial, about a half a percent away from its record high levels. then tapestry, the company formally known as coach, cme group, about a percent away from its record highs, and estee lauder as well these companies right here represent some of the names that have gone on investors' shopping lists. whether they stay that way

remains to be seen, and this push back toward their recent highs may not stick, but it gives you an idea where some people have been putting their money to work. >> as we mentioned, the major market averages recovering more than half of their losses from the lowest point of the selloff, but with rising rates and inflation fears, should investors be worried about an overheating economy and what that might do to stocks? jeff is with columbia thread needle, and austan goolsbee is currently a professor at the university of chicago's booth school of business gentlemen, good to have you here are you worried about inflation rising rates where do you think the ten-year is going >> i'm a little worried about it, but i feel like people have gotten way out ahead of themselves from one month of data if you don't see this for three straight months, it's not yet a thing on both the wage side and the inflation side and with the inflation number we

just got, let's remember, that implies real wages are actually going down the real wage number we got was smaller than the inflation number, so the fear that costs are going to spiral out of control, it feels like it's still somewhat overblown or at least unproven >> jeff, are you a sanguine? >> i guess i am a sanguine i look at the rising yields as a sign actually of economic healing, not economic distress there's limits to that process, but i think it's compatible with a robust economy and that that's generally supportive of risk assets, nauta threat at these levels >> you have to do asset allocation what do you think is the future of the ten-year at this points and how do you calibrate that versus what you think will be earning expectations for the next year? >> yeah, i still think it goes higher this is the first year where the forces of deflation kind of go away enough and in the context of strong recovery and in the

context of stronger commodity prices, we will see a little bit more inflation, and we'll see long yield adjust to both that and to the action on the short end. but again, i think that's all signs of economic healing more than anything else so that from an asset allocation perspective, it probably means you don't make a lot of money going long treasuries, but that other parts of your portfolio can do well. >> no duress in stocks you're not worried about a stock selloff due to rising rates? >> not at thesis levels. i don't think we'll get what we got last year. we go up every month i think this year is a much less productive in terms of trajectory and with more volatility around it >> you know, i think over the past decade, for much of the time we fretted about the fact that the economy wasn't growing fast enough, it wasn't growing fast enough. wages weren't growing. we fretted, we worried, we whined now we have an economy that is

growing a little faster, close to 3%, let's say, for argument's sake we have wages that seem to be growing a little bit, as you predicted they would and we whine and worry about that so - >> what are you saying we're a nation of whiners? >> i guess i guess this is the classic wall of worry another way to ask it is, is there any danger that the economy could, in your view over the next 12 to 18 months, quote, overheat >> yeah, that's my first reaction was i worry about that some personally, i think that the stimulus increment, if you want to call it that, from the tax cut and from the spending deal is not as big as might at first glance -- as it might seem to be >> because >> because a, i think the history shows that tax cuts aimed at the high end tend to be

saved, not spent and the real question for how much do you think overheating might take place, is what are businesses going to do with their money. so they have a big corporate tax cut. it feels to me like they're much more likely to pay out the money in dividends or even use it on m&a as opposed to rapid expansion of capital investment, which is what it would take. >> but the tax cut isn't the only part of the equation tyler was asking about there's also going to be much more government spending as a keynesian, i think you might like that, no? >> look, though the spending, if you look at the spending, the breaking of the sequester, as they call it, a, was expected. the amount that this is in addition to what the market has already priced in, we don't know but i don't think it's that big. >> jeff, you worry at all that the fed is a danger to investors? >> i'm more worried about the

fed as a danger to investors than an economic overheat. so more than i am about runaway inflation, i think not that i think that they're not being careful and circumspeth, but if they were to fall under the spell of the thesis of overheating and were to tighten too much, it's not completely unthinkable that we get an inverted yield curve or something like that happening suddenly in the back half of the year >> i agree with that i think that's insightful. i think the fear that the fed convinces itself and the governors convince themselves, oh, there's imminent danger, let's start rising the rates too early, is more of a fear >> what's too many times, then, jeff, for you this year? the market seems to think that three is on the table. and that four may be a little bit of an outlier. >> yeah, so to take the easy way out, i would say five is too much at the moment, but i think three could turn out to be too much if we're misreading the tea leaves on the economy.

that's the risk, is it's not a sure thing what too much is, and you probably wouldn't recognize it until after the fact, so keeping an eye on long bond yields and short rates and how they move with relation to one another i think is the key thing to watch >> austan? >> i'll say for 2017, as much as everybody wants to -- is encouraged by growth, the gdp growth number for 2017 was 2.3%. so that's a little bit faster than it has been but it's not that much faster. so if the fed gets really juiced up, i think there's a chance they get too far out in front of their skis >> got it. thank you. >> thank you and here, folks, is what's coming up in the 50 minutes or so that remain in "power lunch." most of us like to travel, but is the sector a good place to invest right now plus, will the recent volatility give a boost to active fund

managers we'll get a read on the health of the hedge funds >> and could inflation and the market volatility send a chill through the retail sector? we'll ask the former ceo of hudson's bay all that and much more coming up on "power lunch.

at a high school in florida yesterday, you have probably heard 17 dead.

the incident bringing back to life the debate over the ar-15 style semiautomatic rifles and the companies that produce them. contessa brewer joins us now with more. >> tyler, these guns are easy to get. they're easy to modify they're easy to shoot. in fact, the nra labels the ar-15 the most popular rifle in america, and estimates gun owners possess more than 8 million of them. they're used in hunting and sports shooting and massacres. again and again, from a grade school in newtown to a massacre of concertgoers at mandalay bay. semiautomatic rifles are manufactured by many companies some of the big ones you have heard of, sig sauer, colt, remington, browning, many others there are hundreds more smaller and lesser known companies that manufacture these guns and the accessories that go along with them plus, there are hobbyists and others who make one of a kind custom firearms. they can even be manufactured, get this, on 3d printers, so

these would be unregistered and untraceable. plus, gun makers enjoy special legal protection that other makers of consumer products do not. the protection of the lawful commerce in arms act was passed in 2005. it protects manufacturers and dealers from being held liable when crimes are committed with their firearms and since the assault weapons ban was allowed to expire in 2004, sales of the ar-15s and other semiautomatics have soared, peaking at the 26 murders at the grade school in connecticut at sandy hook. i reached out to the national shooting sports foundation, which represents gun makers and retailers to inquire about the industry's response to the florida school shooting yesterday. and a spokesman e-mailed me, our hearts go out to the victims of this tragedy and their families. out of respect for the families, the community, and the ongoing law enforcement investigation, we believe it would be inappropriate to comment or participate in media requests at this time.

the organization published a report in 2016 that showed the economic impact from firearms and ammunition grew from $19.1 billion in 2008, to get this, $49.3 billion in 2015. >> not just ar-15 sales? >> the gun industry overall. >> the gun industry overall. that ciron was badly labeled it said ar-15 sales. and that's not right that was total gun sales >> total gun sales grew by that much and they added 100,000 jobs that are related to gun making. there's a real economic impact with this rush to buy guns the question is, are the manufacturers part of a solution in gun violence? >> i guess some of them might come back and say, would you outlaw or would you have stricter regulations on cars because people get in accidents with them, right >> and that's part of it of course, part of it always has to do with freedom and comes back to the second amendment and the right to bear arms

and there is a push against even regulating things like bump stocks which were used in the las vegas shooting congress, although it seemed like there was a bipartisan effort to tackle bump stocks and the nra seemed like they would go along with it, there was a failure to act in congress against bump stocks that turn the semiautomatic weapons to weapons that can shoot on an automatic basis. >> in so much of this, setting aside the discussion of guns, which we certainly are not going to solve here today. there is a tremendous amount of undiagnosed mental illness in this country that is what frightens me as much as anything this kid, the 19-year-old there, was clearly unstable was clearly known to be -- to have issues. got thrown out of school for behavioral issues and other things >> you'll have people on the gun control side who just bristle when the mention of mental health comes up.

but we look at this and say, if you're mentally healthy, you don't go shooting people you have to talk about mental health problems. there are people on the other side who bristle every time gun control is brought up. and you have to say, you know, this is the country where it keeps happening. it's not happening in other places where kids also play violent video games, where kids also have mental health problems this is a complex problem. it's going to require a complex solution, not a simple one-answer solution. but i will say, again, i'm a mom of little kids i drop off my kids in the morning at school. and i realize i'm assuming i'm going to get them back safe and sound at the end of the day. that shooter, that alleged shooter, is an orphan. he lost his mom and his -- and the man who was married to his mom in november. and he had been a troubled kid his classmates said so, teachers knew so. i also am interested in the

solution involving us as a nation having the will to tackle the problem. that's me speaking as a mom. >> it has defied solution. i felt that in the wake of newtown, if there wasn't a consensus, that was the moment where i felt the country probably came closest to having one, but it didn't happen. >> remember, there were gun control laws passed in certain states, and nearly every single legislature who voted for them is now out of office it's a very unpopular thing to vote for >> it absolutely is. anyhow, it's our great national challenge. one of tm,he certainly thank you, contessa. >> "power lunch" is back in two minutes. mom and dad got a new car...

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trip adviser jumping on the back of strong earnings and capping off what's been a great week for the travel stocks seema mody joins us with more on that sector. >> it was the unique visitors at trip adviser, driven 17% year or year, but it reported a decline in revenue at its core hotel business it was up 15% on the day, but

it's now up about 5% on the earnings call. he failed to convince people that these two businesses offer longer term growth that can off' set weakness in hotels, especially when hilton, hyatt, marriott, all saw a sizable jump in bookings. this on higher room rates. it suggests more consumers are bypassing the online travel sites like trip adviser, expeople yeah, and priceline, and booking directly on hotel sites. on the earnings call, he says he sees this trend continuing, especially as loyalty programs become more attractive there is a more concerning story playing out that could affect future earnings for hotels according to the latest data, international arrivals to the united states is down, and it's really being led by the middle east and asia, travel executives will tell you this is due to the travel ban as well as negative rhetoric from president trump and immigration. thankfully, business is so strong that the hotels don't

have to worry about fewer foreigners coming to the united states, but if this trend continues, it could likely be a really big concern >> when you book travel, personally, do you use one of the aggregators like a trip adviser. >> i go directly to the company. >> i only go directly also >> i use it like a showroom. i see the best hotels, now i know, then i book directly on the site you want the loyalty points. typically, if you book a marriott hotel on an online travel platform, you're not guaranteed that. >> if you have a problem with the booking or the air or whatever, it's much easier to solve it if you're dealing right with that -- with marriott, with whom you booked, as opposed, because they're not going to say, oh, go talk to trip adviser about that >> that's why it's a huge challenge for the online travel platforms which have been a winning part of the consumer discretionary sector but in the past six months, you have seen disappointing earnings from the three big names

>> you changed from the segment. >> i know. >> just ahead, a look at how hedge funds are positioning their portfolios into 2018 plus, we'll take youto south korea where carl quintanilla sits down to talk food and a new netflix siri with chef didav chang. jealousy all around the newsroom today. i'm sue herera

here's what's happening at this hour suspected high school shooter nikolas cruz making his initial court appearance on murder charges this afternoon the judge ordered him to be held in jail without bond cruz has been charged with 17 counts of premeditated murder. >> attorney general jeff sessions says the justice department will study how mental illness and gun violence converge in order to prevent future school shootings. he was speaking at a gathering of sheriffs in washington. >> i think effective enforcement of our gun laws, focusing on criminals and dangerous people, mentally ill people that have been -- where we have the legal ability to do so, can reduce violence in our communities and

improve public safety. >> a little bit of good news here the flu shot appears to be working better than originally thought. the cdc says the vaccine is about 36% effective. meaning it reduces the number of flu-related doctor visits by just about a third the vaccine appears to prevent illness in young children 59% of the time so a little good news to end on today. that's the news update this hour michelle, back to you. >> got it, sue thank you so much. >> let's get a check of the markets. the major indices flipping back and forth between negative and positive territory a rally at the open. briefly crossed the 25,000 level before reversing, turning negative, and now, you can see rebounding again dow jones industrial average higher by 226 points s&p higher by almost 25. a gain of almost 1%, and nasdaq higher by more than 1%, a gain of 93 points utilities and technology, they are the leading sectors. energy, the only sector of the

s&p 500 in the red at the moment sis koe, apple, boeing are your leaders now. >> let's go to jackie deangeles. >> crude pushing higher during this session to cross back over the $60 market the dollar index is a big part of the support and the move higher we're seeing. a solid session for stocks certainly helping too. traders have shifted their sweet spot for oil to around $60 a barrel gravitate here, plus or minus five, that's the consensus view for now. two weeks ago, it looks like $65 could be the sweet spot, so it shows you how quickly things can change meantime, back over to you >> thanks so much. >> a news alert out of washington the senate getting ready to volt on four immigration proposals. ylan mui has the details >> coming out for support of a bipartisan immigration bill that the white house has threatened to veto. this letter to congressional leadership came from the

coalition for the american dream members including google, facebook, microsoft, marriott, all backing a bill that would provide a pathway to citizenship for undocumented immigrants brought to america as children in exchange for $25 billion for the border wall and limits on family sponsorship this letter calls the proposal a common sense path forward, but the white house has ripped it apart. president trump tweeted it would be a total catastrophe, and senior white house officials this afternoon called on the 16 senators who sponsored this bill to withdraw their support. the senate is beginning to vote on an immigration package at any moment now the bill is not expected to pass, but it's just one more example of the rift between corporate america and between the trump administration, guys back over to you >> thank you very much ylan mui in d.c. for us. what's the so-called smart money doing in this market new clues on what some of the biggest hedge fund managers have been buying and selling in the last quarter green light's davidine horn

adding 13 new positions in consumer discretionary companies including sea world, shutterfly, and nordstrom. dan lowe bought 2 million shares of netflix, making it the ninth largest equity long holding in his fund bill ackman bet big on nike and added to his mondelez position let's get more insight into the health of hedge funds from ceo and president barry pisano, chairman of hedge funds for the firm and has new data on how global hedge funds are setting themselves up this year. >> nice to see you >> are we looking for a better year from hedge funds this year? >> i think we are from a capital flow perspective expectations on returns are a little lower so the survey we did with 460 investors, $2 trillion in aum, so two thirds of the industry reflected a real switch yesterday. $70 billion outflow in '16 $10 billion inflow this year they're predicting an additional

$40 billion in inflows in 2018 performance wise, about 8, depending on which metric you use, low 8% return, 5% volatility, which hit a lot of the metrics they were looking for in terms of composition of portfolio. >> i would imagine just given the environment we're in, long/short strategies must be coming back in favor it was obviously so heart to be short the market the last few years. >> i think you're absolutely right. last year, the most favored strategy searched for was discretionary macro. it's leapt to event driven and long short equity. exactly as you describe. going from a high correlation, high beta market with low dispersion amongst securities to one where they think the withdrawal of qe, you get more rewarded for good security selection. >> what about the volatility trade we have talked so much about recently this survey, did it cover any time period that related to that or can you give us any insights into how pervasive that might

be >> sure. interestingly, volatility was one of the third most sought after strategies that was done at the end of november so before what happened here so i think the cross over here was a couple things. one was the spike involved hurt a bunch of people who for almost ten years have been successfully harvesting volatility as a stand-alone strategy the second thing was the risk parity funds using volatility or risk as a way to balance their portfolio instead of dollars, because it was so low, they had to overweight their equity position, and that was a big unwind finally, it cascaded down to the cta world, where a lot are trend followers, had been long, and particularly for the last melt-up, so getting flat and turning around exacerbated that move >> how hmany of your survey respondents fit into those categories and are they done is there a sense of if there's more to come >> the survey respondents were the investors, not the managers.

they wouldn't have had a direct exposure to it i think when you look at the way the market behaves, certainly the first two weeks, it was confined to vol stage. you didn't see the contagion you typically would. you didn't see a rally in gold or yen you have seen a little bit in the least week but they're in unit. >> what are they doing how are they repositioning >> if you're a risk parity fund, what you do is look at volatility, the faster ones tend to be to exponentially wait their time, so that forced a quick unwinding for them to rebalance. lower equity portfolio to reflect the higher vol the vol sellers are a little quiet quieter. >> people look at the u.s. market, and there has been a debate as to whether stocks were too expensive before the correction relative to the rest of the world how is the hedge fund community looking at where to put their money?

europe, asia, versus the u.s.? >> it's a good question. geographic distribution has flipped 180 degrees from last year last year, the u.s. was the first and foremost destination for capital. i think it was on the back of fiscal stimulus, deregulation, optimism about the trump administration, et cetera. that's flipped the number it's the last destination now. the first destination is western europe i think it's driven on the back of, one, it had a good growth dynamic. two, they're probably the furthest away from quantitative tightening, and three, all the political turmoil that people expected, march italian elections not withstanding, the turmoil they expect from the macron election, the merkel election, didn't pan out last year >> you think the reset in fees is permanent in the industry, or once performance comes back to the level that investors think it should be for the amount of money they're paying, then you'll get another flip back to how it was >> look, i think there's real dispersion there's a subset of managers who

have terrific performance and persistently terrific performance, high alpha, low correlation, who can charge significant frees. what we have seen in the past year is a small reduction in fees, three pass points to 140 odd, and a small reduction, about 25 basis points in the production fee dispersion also that investors are happy to pay management fees to a company to fund managers who have expensive strategies to execute, where they're required, have a lot of technology, a lot of infrastructure, a lot of legal or operational resources they're less so, less happy in the vanilla things the other thing that's happened is all sorts of triggers leading to lower fees like as your assets glow, i withdraw some of the fee structure. i apply a rate to your return, so my net return for assets invested ends up being higher. >> what's that rate? >> i don't -- as a manager y wouldn't start receiving fees until i had exceeded a certain

risk-free rate or a benchmark rate >> i see good to see you. thanks for coming in again, deutsche bank securities president and ceo. >> let's go now to south korea where carl got a chance to talk food, franchising, and a new netflix series with celebrity chef david chang >> good afternoon, guys. we did sit down with david chang here in korea. he's probably one of the most successful young chefs in the world. he's won the james beard award five times now has restaurant in australia, canada, vegas, and l.a all of that growing, though, comes with challenges. we asked him how exactly you culture a business at scale. >> it's hard to open up the same restaurant over and over again i don't kneif that model works anymore. while you can, i voted opening up noodle bars now, you know, in hindsight, could i have made a lot of money opening a noodle bar yeah, i probably could have. there were opportunities for me to cash out, but it wouldn't have been right for me >> now chang has a new venture,

a docuseries called ugly delicious, it's about food, about culture, even race and we asked him what it was like working with the streaming giant in this new genre. >> the best way to describe netflix is they want you to define the sandbox they're still trying to figure out what's right and wrong and it's allowed us to create a show that i think is an honest representation of what we think is worthy of talking about right now. so they have been incredibly supportive, their whole team it's not like i have done this before so i don't really -- i can't tell you anything else >> again, the hshow is called ugly delicious they have high hopes for this series, a new way of talking about food on television if it's a success, you can be sure you'll see a lot more of david chang on netflix >> that would be fantastic remember how carl interviewed chloe kim the other day? she won the gold for snowboarding he asked her, churros or ice cream?

and she chose one but said, you know, i really like both well, guess what david chang, who carl just interviewed, made her a churro ice cream sandwich, so that way, she can have both. it's on his instagram feed isn't that great >> i would like one right now. >> i bet it was delicious. >> really good >> yeah. >> all right, if inflation increases too quickly, are consumers going to pull back on their spending that is a big fear for a retail sector already dealing with threats from online competition. we're going to ask the former ceo of hudson's bay what his rahthe o"pere s, and mor stig aadn ow." it's absolute confidence in 30,000 precision parts. or it isn't. it's inspected by mercedes-benz factory-trained technicians.

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retail sales dropped a little bit in january, according to data from the commerce department and indicators show inflation is on the move higher is this bad news for retailers following the gangbusters holiday season we have jerry, former ceo of hudson's bay company with us today, and your current company is -- >> storch advisers >> cleverly named. >> thank you >> you spent a lot of time on that one >> we did. >> a decline in retail sales doesn't it always happen in january? >> january just doesn't matter

the reality is what we're comparing is seasonably adjusted sales in january to december, and the seasonable adjustment is more than the difference they're talking about. if you look at year over year sales from last january to this january, they were up. and beyond that, it's a very sort of messy time of the year a little bit like thinking about the preseason of football or practice squad compared to real retail season. >> some retail sales is gasoline that's included in the federal numbers. and gasoline prices are higher today than a year ago. now there is talk, possibly, of a 25 cent a gallon federal hike to the gasoline tax. it doesn't take much of a genius for me to think that that comes right out of the pockets of people who would be otherwise spending money at stores is that something that retailers would worry about, number one. and what the government giveth with one hand in the form of a tax cut, they may take away with the other in the form of a gas

tax hike >> gas prices are still low by historic standards you take a look at the burden, in terms of how much people spend on gasoline, it's peat low, it's declined sharply and we thought we would get a stronger windfall as energy prices decline, but we saw in retail, there's some cross, and it's clear gas is a necessity and you're going to spend on that first, but it doesn't really add up to much at the end of the day for each individual consumer i'm not worried at that magnitude. that proposal, by the way, has been around since i was a child, i think. we'll see. >> you seem dismissive of the worries in the declining in retail sales from the last numbers. i ask because people saw that in conjunction with the inflation numbers and thought, oh, my gosh, are we getting inflation and a weakening consumer >> at this point, i think it's a bunch of poppycock one of the strongest holiday seasons in many years. there's many reasons to expect there will be inflation because the economy is strong, inflation is low, people will get more tax

breaks there's no doubt in my mind is economy is going to be supercharged that could lead to inflation as a retailer, inflation is good as long as it's moderate i say that because what happens is you get an increase in your prices pretty rapidly and you can pass that along to the customer pretty fast, but your factor costs are sticky upwards. your wage rates, and most particularly, the rent you pay is very sticky because that tndz to adjust on five or ten-year increments, a long time before it comes back. in a period of modern inflation, retailers do better. >> a heavily indented retailer would like it even more. >> there are many more deflectionary factors that continue to lead me to believe it's not going to get out of control in the near term for example, you have globalization, so many products shifting to offshore that tends to lower the price and keep it down apparel flights have been

deflationary for years that moves around the gloek like a circus automation and artificial intelligence is taking over many office jobs even where it's done by essentially robots or programs doing the work people used to do digitization in the work place is driving costs up. >> did you just laugh when the markets sold off because of inflation fears? because you sound so dismissive of it. >> at that level, it's ridiculous it's whether over the long term, mortgaging our children's future for today's success, but with this level of stimulus in the economy over the next year or two, i have almost no doubt that it's going to be sort of happy days are here again. >> are we going to be an expe expeerential spending society? >> there's a permanent shift and things that are very expensive sort of like your smartphone, which is a big increase, and that all counts in retail sales, but it certainly goes away from the economy of things the to buying experiences, hotels, as

we heard earlier, the travel business is up people love those, so there definitely has been a shift, and i would expect that to continue for the long term. >> thank you very much >> a pleasure. >> utilities have been hit hard this year. down more than 6%, as rates continue to rise ahead, one investor makes the bullish case for that sector ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

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all right. take a look at the markets right now. we are back, i want to say near the highs of the day, if not there. dow is at 25,127, retaking that key level earlier today. it's been a bit of a wild day. the s&p is positive by 1%. the nasdaq is currently higher by about -- >> 96 points they switched it on you. >> thank you speaking of boeing, the ceo appearing on squawk in the street earlier to talk about his company's success. hello. >> hey, guys

a lot of the success is tied today the commercial side of the business boeing's ceo is not backing down listen. >> elon and the space x team they're adding energy to the space market we like the attention that's generating it's good for the country. i prefer to put our focus on performing, operating, delivering for our customers we are building that first rocket to mars it's about 36 stories tall. >> 36 stories? >> we're going to first flight, test flight in 2019. i still firmly believe the first person to mars is going to get there on a boeing rocket. >> the rocket is being built for nasa for deep space travel it would become the world's most powerful rocket. that's a title currently held by space x's falcon after its first successful flight last week. boeing is developing, but elon musk is developing a new more

powerful rocket. this is going to come down to cost, also timing. falcon heavy all in, $150 million to launch estimates for sls, while much more powerful, put the launch there at a billion dollars. >> i hesitate to ask what that stands for >> big f fill in the blank rocket. >> big rocket. >> insert expletive here. >> okay. >> i mean, it is rocket science, so -- >> quite literally and i've seen sls, they're building it outside new orleans, it's huge. i will say that. >> took a long time to get to mars and back. very long time. >> would you want to go? >> most people are not coming back, not anytime soon. >> thank you >> time now for trading nation, we're going fto take a look at utilities. one of our next guests said the group is a screaming bye

larry, why are you so bullish on utilities here when everybody is saying, a rise in interest rate environment, run from these things. >> i think we could have a pretty sustainable counter trend rally that could last two, three months trading utilities and trading bonds, it's all about anticipating narratives on wall street if you think about five months ago this week, we had the president's business council disbanded. we had missiles that were flying over japan's north korea the narrative pressure was extremely high wall street was saying no chance at all for tax cuts. none guess what we had tax cuts, now we're talki talking about infrastructure there's too many people in the inflation boat now we've gone from disinflation being a massively crowded trade

and now we're really too bought into inflation at this moment. >> they could rally as a result as people figure out maybe they overreacted too much what do you think of that analysis >> i really think that utility companies, i mean, they've been safe stocks for years. everyone knows it, no doubt about it you know, the deal is, is that first of all it's cost of capital. it takes a lot of flow of funds to maintain and grow projects. most companies get is paid out in dividends rising interest rates is going to cause the cost of capital to go up. because of the rising interest rate environment, utilities are going to face direct competition with bonds you know, when you start looking at dividends versus coupon payments, it may not make sense to take that extra risk here with the fed going to raise rates three times this year, i think there may be a better investment out there you've got to keep looking for

it. >> that's been the traditional view, let's see who turns out to be right in the future thanks guys. head to our website, tradingnati tradingnation.cnbc.com don't move because check please is next. now the latest from trading nation, and a word from our sponsor.

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the ice cream sandwich he gave to chloe kim so she wouldn't have to choose between ice cream or churros. >> i'm very happy for chloe. i'm happy for the norwegian team norway is leading with 17 medals they finished 1-2 for the first time in that country in the men's downhill yesterday very dominant in cross country skiing. >> i thought you were from norwe norwegia. >> only 5 million people in

norwegia. >> the bfr that we mentioned, that is the elon musk rocket, we thought it might stand for something else it's big falcon rocket >> everything you need to know >> closing bell starts right now. hi, everybody, welcome to the closing bell. >> yeah, look at the boards, stocks are up for a fifth straight day is the rally back in style. >> 218 points, pretty much highs as the s&p is up about 25. transports during the green. nasdaq composite look at that one. >> the strongest, technology cisco the big earner there. >> the russell