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>>> AND WELCOME TO "THE CLOSING
BELL" ON A TUESDAY.
I'M KELLY EVANS HERE AT THE NEW
YORK STOCK EXCHANGE.
>> AND I'M BILL GRIFFETH.
AGAIN, HERE WE GO AGAIN.
AT THIS HOUR WE'RE ON ALL-TIME
HIGH WATCH FOR THE STANDARD &
POOR'S 500 INDEX, JUST LIKE WE
WERE YESTERDAY.
IT WOULDN'T TAKE MUCH TO GET IT
DONE FROM THE PREVIOUS CLOSING
RECORD OF 1,848.48.
WE'RE MAYBE TWO POINTS BELOW
THAT.
BUT BIAS FOR THE LAST HALF HOUR
OR SO HAS BEEN TO THE DOWNSIDE
SLIGHTLY, BUT THAT COULD CHANGE
AS WE GO INTO THE HOUR.
>> AND ALSO OUR OWN JIM CRAMER
IS WORRIED.
HE WILL JOIN US HERE IN A COUPLE
MINUTES TO TELL US WHY HE
DOESN'T LIKE SOME OF THE
PATTERNS HE'S SEEING ACROSS THE
STOCK MARKET, AND IT IS CHANGING
HOW HE'S INVESTING.
FIND OUT TO SEE WHAT HE'S DOING
AND WHY.
>>> ALSO, IN ARIZONA THIS NEW
LAW THAT WOULD ALLOW BUSINESSES
TO DENY SERVICE TO GAY PEOPLE
MAY NEVER BE SIGNED BY THE
GOVERNOR BECAUSE BIG COMPANIES
ARE NOW SPEAKING OUT AGAINST
THIS LAW.
SENDING LETTERS TO GOVERNOR
BREWER.
ONE OF THOSE COMPANIES IS
PUSHING BACK AGAINST THE LAW AND
WILL JOIN US ON "THE CLOSING
BELL" TODAY.
>>> LET'S TAKE STOCK OF MARKETS
HERE.
WE ARE SEEING SMALL DECLINES
ACROSS ALL THE MAJOR INDEXES.
THE DOW OFF 20 POINTS.
THE NASDAQ OFF 5.
THE S&P 500 OFF 1.
AS MENTIONED YESTERDAY AT THIS
HOUR, IT LOOKED LIKE WE'D BE
CLOSING AT NEW HIGHS.
WE'LL SEE HOW THE FINAL HOUR OF
TRADE PANS OUT RIGHT NOW.
>> ALL RIGHT.
LET'S BRING IN OUR GUESTS FOR
OUR CLOSING BELL EXPLAIN.
DANNY HUGHES, REX MACY, DREW IN
ORDER -- NOR DLIKE AND RICK
SANTELLI.
EVERYBODY JOINING US TODAY, RICK
ASIDE, IS CAUTIOUSLY OPTIMISTIC.
DANNY, THE CAUTION.
WHAT IS THE CAUTION ABOUT?
WHAT ARE YOU CONCERNED ABOUT
EVEN AS THIS MARKET DOES TRY TO
POWER HIGHER?
>> SO MUCH CAUTION ACTUALLY AND
WE'VE KIND OF HAD OUR FOOT A
LITTLE ON THE BREAK FOR A WHILE
BUT YOU STILL HAD TO PARTICIPATE
IN THE MARKETS LIKE WE'VE TALKED
ABOUT.
YOU KNOW, THE FED AND THE
GOVERNMENT HAVE REALLY
INCENTIVIZED CORPORATE CASH
HOARDING OVER THE PAST FEW
YEARS, AND CORPORATIONS HAVE
FOUND BETTER ROI IN DELIVERING
BUYBACKS AND DIVIDENDS, AND, YOU
KNOW, AT SOME POINT THAT'S GOT
TO COME TO AN END.
SO THAT'S A BIG WORRY I THINK
GOING FORWARD IN THE MARKET.
HOW DO YOU INVITE INVESTORS INTO
YOUR STOCK?
SO NEW INVESTORS.
AND HOW DO YOU KEEP THE GUYS
INVESTED IN YOUR STOCK THAT
WOULD TRADITIONALLY BE IN FIXED
INCOME PRODUCTS IF IT WEREN'T
FOR THE FED?
>> SO ARE YOU -- LET ME PUT THIS
THIS WAY.
YOU'RE INVESTING BUT HOLDING
YOUR BREATH.
IS THAT IT?
>> WELL, NOT HOLDING OUR BREATH
EXACTLY.
WE STILL HAVE TO REMAIN ACTIVE.
THERE'S STILL INTERESTING
INVESTMENTS TO BE MADE OUT
THERE, BUT IT'S THE GOING
FORWARD ISSUE, BILL.
>> THERE'S ALWAYS A BULL MARKET
SOMEWHERE.
>> WHERE DO WE GO FROM HERE?
>> I THINK JIM CRAMER COULD TELL
US ABOUT THAT IN A LITTLE BIT.
REX, IT'S INTERESTING TO LOOK AT
THE DISPERSION OF WHAT PEOPLE
THINK IS GOING ON IN THE
ECONOMY.
I HAVE PEOPLE TELLING ME YOU
HAVE TO LOOK AT HOW MUCH MORE
SLUGGISHLY THE U.S. ECONOMY IS
GOING TO GROW OVER TIME AND HERE
ARE ALL THE REASONS WHY GLOBALLY
WE'RE IN A DELEVERAGING PHASE
AND INTEREST RATES ARE HEADED
LOWER.
AT THE SAME TIME PEOPLE ARE
PASSING AROUND THIS NARRATIVE
ABOUT 1996 AND SAYING AFTER WE
HAD A MISS IN JANUARY ON
WEATHER, WE HAD A STRONG
FEBRUARY PAYROLL NUMBER, AND
THEN THE TEN-YEAR WAS RALLYING.
IN OTHER WORDS, PEOPLE DON'T
REALLY SEEM TO KNOW RIGHT NOW
WHAT THE PARADIGM IS.
WHAT'S YOUR READ?
>> WELL, YOU KNOW, THAT SHOULD
GIVE YOU A LOT OF CONFIDENCE AND
COMFORT.
THAT IS -- WHAT YOU HAVE JUST
DESCRIBED IS A BALANCE IN THE
MARKET.
YOU HAVE GOT, IF YOU WILL,
BUYERS AND SELLERS ON BOTH SIDES
PEOPLE MAKING GOOD CASES FOR IT
TO MOVE HIGHER AND FOR IT TO
MOVE LOWER.
IT'S NOT A ONE-SIDED MARKET
WHICH IS WHEN YOU GET EXTREMES
EITHER ON THE DOWN SIDE OR UP
SIDE.
IT MAKES ME FEEL MORE
COMFORTABLE.
I'M COMFORTABLE WITH THE EQUITY
MARKET.
I WOULD BE SHORT ON THE BOND
MARKET BUT WE SEE THE ECONOMY
GETTING BETTER SLOWLY.
ALL THE DATA YOU'RE POINTING TO
REALLY GETS TO THE FACT THAT
WE'RE GOING TO HAVE THREE YARDS
AND A CLOUD OF DUST.
>> THREE YARDS AND A CLOUD OF
DUST?
WHAT WAS THAT REFERENCE?
>> THREE YARDS AND A CLOUD OF
DUST.
IT'S AN OLD FOOTBALL REFERENCE.
>> OKAY.
>> BACK BEFORE THERE WAS A LOT
OF PASSING.
THE IDEA IS WE'RE GOING TO GRIND
AND MAKE FIRST DOWNS, BUT IT'S
GOING TO BE SLOW GROWING IN 2014
AFTER A STUPENDOUS YEAR IN '13.
>> SUPER BOWL DID SET THE TONE.
>> NEVER HEARD THAT ONE.
DREW, YOU WOULD LOOK AT FIXED
INCOME, IS THAT FOR SAFETY
REASONS OR DO YOU THINK THERE'S
GROWTH IN FIXED INCOME?
>> FROM OUR POINT OF VIEW WE
WOULD SUGGEST MAINTAINING YOUR
ACTIVE DIVERSIFICATION.
THERE ARE NICHES WE ARE ACTIVELY
INVESTING.
WE THINK INVESTORS SHOULD
MAINTAIN THEIR BROAD BASED
DIVERSIFICATION.
WHAT WE LOOK AT IS WE THINK THE
ECONOMY AND THE STOCK MARKET ARE
TWO SEPARATE ANIMALS ON THE SAME
SA VANNA.
THE FEDERAL RESERVE HAS BEEN
PUMPING LIQUIDITY INTO THE
MARKET.
WITH THE EQUITY MARKET, WHAT WE
SEE IS THE FEDERAL RESERVE IS
TAPERING, BUT WITH THEIR $10
BILLION PROGRAM OVER THE NEXT
SEVERAL MEETINGS, IT'S STILL
GOING TO TAKE TO THE END OF THE
YEAR FOR THEM TO BE DONE WITH
THAT PROGRAM.
THAT'S $315 BILLION OF NEW
LIQUIDITY BEING INJECTED INTO
THE MARKET AND AN EXPANSION OF
THE BALANCE SHEET.
WHAT WE FOUND STATISTICALLY IS
GOING BACK TO 2009 WHEN QE
STARTED, FOR EVERY $100 BILLION
OF QE THAT'S ENTERED THE
MARKETPLACE, THE S&P HAS MOVED
HIGHER BY 42 POINTS.
SO THAT TRANSLATES TO A 1976
TARGET ON THE S&P WHICH IS
ANOTHER 7% FROM HERE.
SO AS LONG AS THE FEDERAL
RESERVE IS STILL IN THE
MARKETPLACE AND REGARDLESS OF
TAPERING, THEY'RE STILL PRINTING
MONEY, THE BALANCE SHEET IS
STILL EXPANDING, WE WOULD BE
ACTIVE INVESTORS IN EQUITIES.
WE THINK THERE ARE CHALLENGES IN
THE ECONOMY AND CHALLENGES WITH
THIS QUARTER BUT IT IS GOING --
WE THINK IT AK SELLING RATES.
>> I'M CHUCKLING BECAUSE THERE
SEEMS TO BE A LOT OF COUCHING
GOING ON, A LOT OF FANCY WAYS OF
SAYING WE'RE NOT SURE WHAT'S
HAPPENING.
AND TO REX'S POINT, THAT'S FINE.
THAT'S WHAT MAKES A MARKET.
I WANT TO KNOW WHAT SOME OF THE
HIGH CONVICTION TRADES ARE RIGHT
HERE.
DREW, ANY THOUGHTS?
DANI?
>> SORRY, DID YOU SAY DANI?
>> DANI, GO AHEAD.
>> SURE.
YOU KNOW, KELLY, I THINK THERE'S
A LOT OF THINGS THAT YOU CAN
LOOK AT OUT THERE, PARTICULARLY
COMPANIES THAT ARE ACTUALLY
INVESTING IN THEIR FUTURE.
SO CAP EX INCREASES.
THERE'S AN AWFUL LOT OF
COMPANIES THAT ARE ACTUALLY
INVESTING IN THE FUTURE IN 2014.
BIG INCREASES IN CAP EX.
>> YOU WANT TO INVEST IN THOSE
NAMES.
>> IN THOSE NAMES AND IN NAMES
THAT ALSO -- THEY COULD ALSO
HAVE BUYBACKS AND DIVIDENDS AS
WELL.
THEY'RE NOT MUTUALLY EXCLUSIVE.
I THINK THAT, YOU KNOW, U.P.S.
IS A BIG ONE.
$2.5 BILLION IN 2014.
T-MOBILE.
ENERGY IS A BIG SPACE AS WELL.
>> GOLDMAN'S WHOLE NOTE FOCUSES
ON THE PICKS AND SHOVELS PLAYS
THAT MIGHT SUPPORT A CAP EX
BOOM.
>> RICK, IF THERE IS A
CONVICTION BUY RIGHT NOW, GOLD
WOULD BE ONE OF THEM, WOULDN'T
IT?
WHAT DOES THAT SAY ABOUT THE
MARKET?
>> YOU KNOW, I THINK GOLD COULD
EASILY GO UP.
I THOUGHT IT WOULD MAKE A BOTTOM
EARLIER THIS YEAR, BUT I GUESS
I'M STILL THINKING ABOUT THOSE
YARDS OF DUST BECAUSE WHEN I
THINK OF GOING YARD, I THINK OF
A HOME RUN, AND I THINK THE FED
HAS ALLOWED CORPORATE PROFITS TO
GO THREE YARDS.
WE'RE TALKING 900 FOOT HOME
RUNS.
SO CORPORATE PROFITS ARE GOING
GREAT.
DANI IS WORRIED TODAY.
I HAVE BEEN WORRIED FOR TWO
YEARS.
BUT BEING WORRIED IN THIS
ENVIRONMENT DOESN'T MEAN YOU
NECESSARILY SHORT THE MARKET.
BUT AS I LOOK UP AT THE FIXED
INCOME AND I HAVE BEEN HARPING
ON THIS, HERE WE ARE, WE'VE SEEN
A 2.69% YIELD IN TENS WHILE THE
S&P IS FLIRTING WITH ALL-TIME
HIGHS.
I KNOW YOU HAVE JIM COMING UP,
AND THAT'S GREAT, BUT I THINK I
HAVE THE BEST SOOTHSAYER IN THE
WORLD.
JUST LOOKING AT THESE INTEREST
RATES THAT FAILED TO FOLLOW THE
STOCK MARKET UP TELL ME THAT
IT'S ALL NOT GOOD IN INVESTMENT
LAND, BUT PICKING TOPS AND
PICKING BOTTOMS IS ALWAYS A
DICEY ENDEAVOR.
>> YES, IT IS.
AND, LOOK, THAT'S WHAT IT COMES
DOWN TO.
GOING BACK TO THIS QUESTION AS
WELL, SO, DANI RAISED AN
INTEREST POINT, PICK THE
COMPANIES THAT ARE DOING A LOT
OF INVESTMENT, A LOT OF CAPITAL
EXPENDITURE.
REX, WHAT ABOUT YOU?
WHAT'S YOUR WINNING STRATEGY
HERE?
>> WELL, I THINK IN THE BIG
PICTURE YOU WANT TO KEEP SOME
POWDER TRY BECAUSE I THINK THERE
WILL BE MORE OPPORTUNITIES IN
THE MONTHS TO COME.
>> SO CASH IS YOUR ANSWER?
>> NO, NO.
I WOULD BE MORE AT MY NORMAL --
CLOSER TO OUR NORMAL ASSET
ALLOCATION.
WE'RE A LITTLE HEAVIER ON STOCKS
THAN BONDS JUST BECAUSE AT A
2.70% TEN-YEAR WE'RE NOT TOO
FOND OF THE BOND MARKET.
>> WHERE I COME FROM, DRY POWDER
IS CASH.
>> WELL, YOU CAN LOOK --
>> KEEP THE POWDER DRY.
>> WHERE I CAME FROM IT WAS DRY
POWDER, TOO, BUT WHEN YOU DON'T
GET ANYTHING ON YOUR CASH, I'M
NOT SURE IT'S GOOD DRY POWDER.
>> THAT'S EXACTLY THE POINT I
THINK WE'RE TALKING ABOUT HERE
IS THE FED IS WANTING TO FORCE
EVERYBODY INTO THE RISK ASSETS
BECAUSE YOU'RE NOT GETTING
ANYTHING TO HOLD CASH RIGHT NOW
EVEN THOUGH SO MANY COMPANIES
ARE.
DREW, YOUR CONVICTION IF THERE
IS ONE.
>> THAT'S THE KEY ISSUE.
YOU'RE BRINGING UP THE EXACT
POINT I THINK EVERYBODY ON THE
PANEL IS TRYING TO SUGGEST IS WE
ARE IN AN ENVIRONMENT WHERE THE
FED IS ONE OF THE BIGGEST
PLAYERS, THE FEDERAL GOVERNMENT
AND NEW LEGISLATION IS A BIG
PLAYER.
THE ECONOMY ITSELF HAS NOT FOUND
VERY SURE FOOTING.
WE'RE NOT IN THE 1990s WHERE
WE'RE SEEING 5%, 6%, 7% GDP
GROWTH RATES.
YOU HAVE TO ADVISE LOOKING AT
MULTIPLE DIFFERENT
OPPORTUNITIES, DIVERSIFICATION,
RISK REDUCTION, NOT PILING INTO
A SINGLE TRADE BECAUSE THE
REALITY --
>> YOU TRY A LITTLE BIT OF
EVERYTHING.
>> NOBODY KNOWS THE EXACT
FUTURE.
>> SAY IT AGAIN.
SAY IT AGAIN.
THE REALITY IS NOBODY KNOWS THE
FUTURE.
EXACTLY.
>> WE'RE IN AN ENVIRONMENT OF
HIGHER RISK AND HIGHER
VOLATILITY.
THAT'S THE REALITY.
WHEN YOU HAVE A PLAYER THAT HAS
INTRODUCED $4 TRILLION INTO THE
MARKETPLACE, YOU KNOW, ASSET
PRICES GET SKEWED AND YOU HAVE
TO INVEST BASED UPON WHAT ARE
THE KNOWNS, AND WE KNOW THE FED
IS THERE.
WE KNOW THEY'RE GOING TO BE
THERE THROUGH THE END OF THE
YEAR.
I KNOW OUR PANELIST, RICK
SANTELLI HAS HARPED ON THAT
BEFORE, BUT THAT'S THE FACTS,
THEY'RE THERE.
WE NEED TO ADVISE AND INVEST
BASED UPON THAT.
>> THERE YOU GO.
THANK YOU ALL, FOLKS.
>> THANKS.
>> THANKS FOR YOUR THOUGHTS
TODAY.
I WONDER IF ANYBODY WOULD
CONSIDER BITCOIN A CONVICTION
BUY RIGHT NOW.
>> YEAH.
PART OF A DIVERSIFIED PORTFOLIO?
>> WE'LL GET TO THAT COMING UP.
HEADING TO THE CLOSE, WE'VE GOT
50 MINUTES LEFT IN THE TRADING
SESSION.
IF ANYTHING, WE'RE SLOWLY MOVING
SOUTH.