Today. And someone investors believe a lot. Jeremy siegel calling for dow 20,000, sounding a cautious note despite the big rally. Find out why. Exclusive interview with him coming up. And can we get to his target . Twitter, by the way, have you seen that . Up 8. 5 right now, popping on news of more insider buying. Plus this partnership with the Company Announced this morning with the nfl. Is this the comeback that the beatendown stock has been waiting for . We have both sides of that were bringing back an analyst we had on last week who was skeptical about twitter. Shares hovering around the 30 a share mark. And shake shack will report its latest Earnings Report. Its the third time reporting since going public. The first two reports missed wall street estimates. Well bring you the numbers and tell you what it means for the restaurant space coming up. And this stock is up more than 200 since its ipo. And they only have 30 stories 71 around the world. 40 in the united states. Still, not many. Need to grow this company. Lets get to the days rally. And bob pisani is back and tracking the action so far here at the new york stock exchange. Welcome back, robert. Thank you very much. The rally is holding up. Theyre not selling off Energy Stocks in the middle of the day. We havent seen that in a while. Take a look at our screen. Why the rally . The most simple explanation is an oversold condition for a while. Every day, energy and industrial stocks down. Finally reversed some of this. Some of it is on hopes for more stimulus in china. They had very poor economic numbers over the weekend. Bad news is good news. Everybodys talking about more stimulus in china. Take a look at the s p 500. We have been strong right at the open. And theres been no attempt throughout the day to take down any sector but particularly the global names. Your materials, your industrials and some of your energy names. I want to show you something right here. Come back to me. Ill show you some stocks that have been beaten up. Chevron down 14 for the quarter. But etc. Up almost 2. 5 . No particular news out. The whole complex is up about 2. 5 . Theyve all been so beaten up. Another one, dupont, take a look right here. This is another one down 11 , 12 , 13 . No news but a terrible situation for the global Materials Group on weaker demand that theyve been going nowhere throughout the day. Another one, industrial name, United Technologies, very quietly down 10 for the quarter. Theyve got a major problem. Theyre all over the world. The slowdown in china, slowdown in brazil dramatically affects them. Today theyre rallying along with the rest of the market, the first time in a while this has happened. If you look at the oil and exploration and production etf, thats bouncing nicely today. Semiconductors are bouncing and the metals are also bouncing today. The one thing im not seeing i would have liked to see is a little more volume, indicating more Short Covering. People saying, we may be into a bottom and long term coming off those bottoms. I dont particularly see that today. And thats why im reticent about saying weve hit a bottom in these names. But for the moment, well take it. You mentioned materials, best day since back in february. Materials, industrials, energy, some of the most hated groups out there leading this rally today. I guess the question comes back to the sort of theme of your report there, is this a bounce or is this a rotation into some of the most beatenup names of the year . You could make the case there are fundamental reasons to why this sector, including industrials . Anything in the aerospace area that metals like precision cast parts and allegheny technologies, theyre doing well today. But the other ones, a big debate. Investors got burned badly trying to buy oil stocks in february and march. Everyone said, oh, weve never seen a 50 drop in oil. Its always rebounded six months later. Now its six months later, theres no rebound. Vul as a result, a lot of people are badly burned. Thats why were not seeing a bigger volume today. People saying, didnt this happen before . We tried to buy this at the bottom . More of a waitandsee right now. Thank you very much, bob. Meanwhile, Warren Buffett was on squawk box this morning talking about berkshires deal with precision cast parts and weighed in with his thoughts on where stocks are headed overall. Stocks are going to be higher, perhaps a lot higher ten years from now and 20 years from now. Im not smart enough to pick times to get out and get in. If youre in something thats going to be a lot higher over time. Lets get reaction on our closing bell exchange. Joining us, john manley, ben willis and sam stovall. Its nice to hear the optimism on stocks and to see buffett put his money from his mouth is with the biggest takeover ever for berkshire. I think so. To paraphrase st. Paul, if Warren Buffett is with us, who can be against us . Hes buying. Very difficult to time these things. Says to me that stocks are not outrageously expensive. Hes been known to pass when things are expensive and it says theres a need to put money to work. So specific to him but theres more generalities behind it. It seems Warren Buffett is always buying. Long term, you should be thinking that way if youre an investor. But on this network, we go short term because it would be boring if every day we came on and said, well, stocks are going to be higher 10 or 20 years from now. I happen to agree with him. I could learn to live with it. Ben willis, is this rally for real today . Its very real. We are in a way oversold condition i dont know how much i can add to this conversation. Bob pisani nailed it. You had a major oversold condition in the broad market, a bounce coming in on multiple levels, not just because of the oversold. You had the china where the perversion of wall street, whats bad is good. It was so bad theres nothing else to look for than a stimulus package to reinvigorate the chinese economy. Our own market is Warren Buffett. I know he has a great spokesman for the American Industrial complex. Heres a guy who has told the american investor that they should be putting their money into an index fund yet he has created his gigantic wealth by buying individual companies, by doing his homework and finding those companies that are going to be in 10, 20 years extraordinarily profitable. I dont know why he doesnt want to teach that lesson to everybody else. I guess it would make the field too crowded. But watch what he does, not what he says. Good point. Sam stovall, watching the s p right now, up 1. 26 . If we could just look at an intraday chart, its up 26 points. Last week was a brutal week for stocks but all in all, the s p lost 26 points. Were making it all back today. Does that tell you something . It tells me that that volatility is certainly with us. That investors really arent sure which way to go. Last week we basically lost everything we gained in the month of july. 70 of the subindustries in the s p 500 were in negative territory. And i think what we have a new story to tell is that if youre an incomeoriented investor, then put one hand over an eye, that eye that looks at stock prices and focus on the income stream. If you are a landlord, youre not going to price your condo every day. So dont price your stocks every day. But focus on the annual income stream. And in most cases, that line will be very attractive, Something Like a Department Store escalator. Wow. Im counting all the metaphors in that answer. Sam, where do we stand on earnings as we make our way through the Third Quarter here . Were borrowing from peter to pay paul, another to put on the list. Basically whats happened is we came into the Second Quarter thinking the s p earnings would be down by about 4. 25 . Yet the Third Quarter is expected to be off by 3. 25 . Fourth quarter up only 2 , et cetera. So the 12month forward number is pretty much the same as to where it was at the beginning of the reporting cycle. So not much growth 12 months out. John manley, the commodity question, barrons put it on the cover. The gold miners having their best day in a long time. Do you dare go in and buy some of these beatenup stocks . Its not my favorite. Theres some longterm attraction there because they are relatively cheap. But theyre cheap for a lot of reasons. You could soo e the dollar weaken a little bit. May be a little bit toppy versus other currencies. But theres a lot to happen on the industrial side. In stock market america, before we get to the commodities. The dollar is pulling back a little bit today. Euro over 1. 10. Had to get it in. Who had ten minutes 35 seconds before sara mentioned the dollar. John mentioned it first. Gentlemen, thank you all. Thank you. We do have 50 minutes left in the trading session here on this rally monday. The dow up 242 points. Thats not even the high of the session and it is the best performer of the three major averages right now. Coming up, Jeremy Siegel sees a correction coming around the bend. Find out why. Thats unusual for him. Hes usually very bullish. Well talk about that. Coming up next, though, twitter recouping much of its losses from last week. This new deal with the nfl could bring significantly more football highlights to your twitter feed than ever before. Details on that. Plus talk about what the deal is enough to put twitter on a positive trajectory finally, coming up. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Everyone is looking for ways while to cut expenses. S unique, and thats where pg es Online Business Energy Checkup tool can really help. You can use it to track your Actual Energy use. Find rebates that make equipment upgrades more affordable. Even develop a Customized Energy plan for your company. Think of it as a way to take more control over your operating costs. And yet another Energy Saving opportunity from pg e. Find new ways to save energy and money with pg es Business Energy checkup. Welcome back. Its rally day on wall street. A number of things but really the overriding issue, i guess, is were coming off an oversold condition. You also have m a continuing to heat up with Berkshire Hathaway and a 30 billion deal. China and breaking a sevenday losing streak for the dow. Up 239 points, a gain of almost 1. 4 . Alibaba is also rising after the ecommerce giant took a 20 stake in Chinese Consumer electronics. Alibaba will pay 4. 5 billion. Twitter also up today, another bright spot, in an overall up session, reclaiming much of last weeks losses, up 9 . Tz a new deal out with the nfl to put more football highlights out. Julia boorstin has the details on that. Reporter twitter shares are doing a total 180 after last weeks declines. As you mentioned, soaring 9 on what is twitters biggest, longest content deal yet. Twitter partnering with nfl for a twoyear deal to deliver about 100 nfl clips a week to twitter. Thats more than twice the amount of content in nfl and twitters previous deal. This content will be focused on ingame highlights as twitter works to show its power to drive conversation around live events and the nfl looks to make more money from its valuable content. Twitter will sell ads for the nfl content and the partners will share the revenue. This is a departure from previous deals where both partners sold ads. Twitters nfl deal is not exclusive. Nfl has details with facebook and youtube to distribute content but it is a sign of twitters ability to draw highprofile content and it comes as twitters insiders bet on twitters stock, which has been down over the past year. Interim Ceo Jack Dorsey tweeting this morning hes investing in twitters future with his purchase of 32,000 shares. And on friday, a board member purchased 9,200 shares. But analysts point out these purchases are dwarfed by insider stock sales in recent months. Hot stock to watch, guy. It is for sure. Thanks, julia. Lets bring in ed monday lee and max wolfe. Max joining us here at the new york stock exchange. You were on the show on friday where you talked about twitter and after the republican president ial debate, we were talking about the terms of the the fact that they missed out on a great marketing opportunity. Baseball was a big part of that. We want to remind you what you said about twitter and what needs to be done there. Listen to this. From a wall street perspective, they have to figure out a selfserve ad platform that allows them to cash in on the huge influence. I think we all agree they have that, a la last night. So now weve got this deal with the nfl. We brought you back. What do you think . Is this the kind of deal you were looking for . This is great news. I have a lot of respect for the company. Its as though someone listened to me. I forgive them that weird mismanaged appearance for a moment. They were built to do this and built to do it better than their bigger, more expensive rivals. Its certainly getting a lot of buzz today and it popped up quite a bit. But i like this. I want to see 25 of these and i think we stop talking about how they can become facebook and how facebook can become more like twitter at that point. Edmund, were on constant watch for rumor or speculation when it comes to the management or leadership of this country. You guys have done a lot of reporting on whats going to happen with the board and whose names are out there as frontrunner. Bring us up to speed on the latest. They still have a leader in place, jack dorsey, hes the interim ceo. Weve been hearing that hes still on the ticket. He still wants to be considered for that job. Whats complicated that is he already runs another company, square, which he also founded and theyre about to ipo some time maybe this year. So you cant have it both ways. Ive said it before. Despite his pronouncements, i think people liked his forthrightness on the last Earnings Call and maybe probably what people needed to hear from leadership. They need to be clear about what they want. Whoever is going to be running it cant be running two separate companies. He should say that outright, whether he wants one or the other instead of playing it both ways. Jack dorsey is to busy he clearly doesnt have time to shave right now. A tragedy. Ed, max would like to see 25 nfl deals. What do you make of this nfl is this as good as it gets or can they do many more like this . I think they can do more deals like this whether its with other sports franchises or big events like oscars, big live events that people tune in. Twitters basically become water cooler for a lot of people, as its happening live, they want to sound off and it compounds where people will say one thing and other people will chime in, unlike facebook which has more of a long tail sort of discussion, over the week, two weeks or even a month, the conversation will just continue on and maybe an aggregate might even be higher. But for the spikes, the immediate mass spikes, you only see those things on twitter. And advertisers like that, reaching a whole lot of people at once. I watched your interview the other day, you said they wrote the first draft of history. But the question is, can they make the most of that from a monotire perspective. Theres money behind this deal, isnt there . Yes. They have huge traction, huge engagement and theyve gotten all the exhibitionists. They just need to load up on the voyeurs. Can they come up with a revenue model as intensing as their communication model . So far. Thats been hard. Theres a buried lead here in the nfl story. Part of whats exciting is the way theyre monetizing this. New good partner, the nfl is a sterling brand. They can pick whoever they want. They picked twitter. I think this is the beginning of a very nice monetization run. Im shocked there are no rumors floated about who could be the ceo . Other than jack dorsey cant, hes too busy adam bain runs their ad business and were talking about the ad business, which is what fuels his company. Hes very competent. Madison avenue likes him a lot as well. His name is still on the list. But the board isnt indicated one way or another. They need to make a decision soon otherwise this 9 pop isnt staying around. Wh who do you think i think its dorseys job to decide on. The only thing i think is if its not him, we need to see an outsider with the question is, how do you value a company like this . There were always Monthly Average users and convincing wall street it was sort of the facebook model. Do you have to look at it a completely different way . Yes. I think this is fundamentally not facebook. Facebook is where to go to hang out. Its your social life shared with advertisers. Twitter is where you go to learn about the world and try to get people to learn about you. Its playful without being ludicrous. If you want to share a picture of macaroni and cheese, thats facebook. If you want to talk about whos got the best mac and cheese, you put it on twitter. I think in the long term, twitter has a lot more to recover and make its own bones. Facebook, the street loves, and the price tells you that. Thats the best explanation differentiating between facebook and twitter. Thank you both for joining us. Nbc news group is a minority stakeholder in recode. We have a content sharing partnership with them on that deal. We are watching the markets. Comeback monday across the board. Most Industry Groups are higher, in rally mode. Less than 40 minutes to go before the closing bell. 240point gain on the dow. 1. 3 higher for the s p. Thats the best day since may 8th. And the nasdaq also coming back. 1. 18 at this hour. Up next, when it comes to hedge funds, be careful who you invest with. Our kate kelly tallies the winners and losers. And wharton professor Jeremy Siegel speaks with us exclusively. Find out why hes got a shortterm bearish message. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. Holding onto gains near the high of the session, the dow up. S p 500 gaining 1. 25 with the nasdaq up 1. 15 . Best day for the s p and for the dow right now since early may. Apple is also gaining ground in what is a comeback monday pretty much across the board after a barrons column suggested that investors should buy this stock. Apple, somewhat disappointing on the iphones. Barrons noted that investors typically get nervous during the lull periods between Iphone Models which we are in. And they sold, what, maybe ten apple watches, too. Yeah people were underwhelmed by those. Didnt hit their number. July was either great or terrible for hedge funds, depending on which one youre talking about. Kate kelly has the tally for us. Its been a tremendous month for some hedge funds who are performing far above the yeartodate average of 2. 5 through july. Citadel equities is one of those. Though its hard to know whats driving it. Amazon and Dollar General helped somewhat, pushing it up 3 for the month and 14 for the year. Pershing square also doing great, gaining 7 in july and finishing the month up 10 overall. That may be part due to their new holding but also due to restaurant brands. Other funds are having a rough time. David einhorn saw a reversal of 6 in july bringing his fund down 9 for the year overall. At least in part seems on some long choices. And astenbeck capital fell as well. So a mixed bag in the hedge fund face. Seems like it was a story that had a lot to do with m a. And i wanted to point out that when it comes to the macro hedge funds, ive been watching the speculators data for foreign exchange, its interesting with the dollar at multiyear highs, and everyone saying its the most crowded trade, it remains so. Theyre really staying bull niche this trade and the dollar continues to strengthen. I wonder how leveraged some of these big names are to that. I checked around with some people today. Obviously theres a question as to whether were topping out and especially with the possibility of a rate hike in september, how does that affect the picture . So just anecdotally speaking, i spoke to some macro traders i know in the Hedge Fund Business and they still like it. One was a little moderate saying, were expecting it to be a little sideways but see further strength. Others say, we really like it especially when you compare it to the emerging market currencies. That may not be a hard comp but in general im hearing theres still room to run. Thank you very much. Thanks, kate. Time now for a cnbc news update. Heres Courtney Reagan with that. Good afternoon to you. Heres whats happening at this hour. Air Traffic Controllers Work Schedules lead to Chronic Fatigue making them less alert. And thats according to a study the government has kept under wraps for four years. The Associated Press reports a draft it obtained also finds nearly two in ten controllers committed a significant error in the previous year. And donald trump may be holding onto his lead after last weeks debate. In a flash reuters survey, trumps gop support remained unchanged at 24 . Chickfila has a new york city movein date, planning to open its First Freestanding location in the big apple. It will be the biggest in the united states. And two pairs of newborn panda twins today passing the critical sevenday period in china. A total of 11 panda babies have been born there since the beginning of the year. Ten of them are twins. Thats our cnbc news update for this hour. Lets get back to the closing bell. Thats amazing. Theyre adorable. They look like hamsters. Tiny little things. Well just chopin das all afternoon. Next time a guest doesnt show, well just show a panda video. Thats cute. Were heading to the close, 30 minutes left in the trading session here. The dow Holding Steady here, the gain is up 234 points. S p up 25. And the nasdaq up 57. Big market day. And a good day to talk to university of Pennsylvania Wharton School professor Jeremy Siegel sounding off on a correction he thinks could be coming over the next six to seven weeks. Find out if hes giving up his bull hornes for good or still predicting dow 20,000. And later, phil lebeau tells us how much money tesla loses on every model s electrical sedan that it sells. Is it really more than 4,000 per car . Well find out coming up. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Were in the midst of the last half hour of trading. And im joined by stephen gilfoy gilfoyle. Are you participating in this rally . I am. Energys been doing very well today. Im watching the 2,102 level. If we dont hold onto that, we could be talking about like 29 to 4. A bull pac. Oil, were in a range now. Little lower range here. You think were going much higher . The level of support for oil is around 43, 44. Which is why i like energy right here, not to mention the high dividend yields that go with it and the low p e ratios. With oil, we have a chance to go a little higher. But i wouldnt trust it for too long. I think i might get a chance to buy this Energy Sector lower than i already have. For right now, i like where im sitting. Quickly, you buying the commodity or the stocks . The stocks. Sarge, good to see you. Thanks. Investors may want to buckle their seat belts because Jeremy Siegel says we are due for a rough few weeks ahead in the market and he is warning of a possible correction. Thats an aboutface for a man known for his optimism usually on stocks. Mr. Siegel joins us now in an exclusive interview. Good to see you again. Happy to be here. Lets just be clear. Are you sticking to your dow 20,000 call in the long run and just warning that near term were in for some bumps . Exactly. I still think dow 20,000 is possible by the end of the year, certainly not a sure deal. But the next six or seven weeks, i think, are going to be very rough and for the following reasons first of all, of course, the fed hike. Everyones waiting for the first time in eight years, nine years, what is going to happen then . And with the fed hike, what do we have . We have a stronger dollar. We have weaker commodities. And both of those are the reason why earnings in 2015 are basically going to be flat over 2014. And so thats why the guidance was not very good for the Second Quarter that we recently got from the firms. So that combined with the fact that the end of august and september have notoriously been weak months seasonally for the stock market, so im beginning to think, wow, this rally is a good one today. But its very hard for me to see the stock market really working much higher in the next six, seven weeks. That said, one knows in the short run, predictions are very, very hard to make. And i certainly think am bullish in the long run. I think after the fed moves and i do think theyre going to move in september and the world doesnt end and people look around and say, were still standing, that we could have a nice rally in the fourth quarter. So what you seem to be saying then, jeremy, is were going to see rough waters leading up to the first time they raise rates. But afterwards, then you are still seeing this rally thats going to take us is it 20,000 by the end of this year . Well, thats going to be pretty hard right now. But not impossible because i think what we can see is earnings would have been up 8 , 9 , 10 without oil going down on the dollar. If the dollar stabilizes, even at current levels and oil can find a platform we had previous traders saying it might be near the low 40s. But if we can get to 60 on oil and stay there, those two sectors wont be a drag for 2016. And i can see 8 to 10 Earnings Growth and more in the stock market and you get near that 20,000 mark that i certainly do expect some time within the next year. And not impossible by the end of the year. We calculated that. That would be about 13. 5 higher from here. Jeremy, question to you about the meaning of correction. Typically it means 10 off the highs. We have not seen that for the u. S. Stock market since back in 2011. Lately a correction has been 2 , 2. 5 off the highs. What exactly are you talking about and is that a healthy thing, that the corrections or the pullbacks seem to be only a few percent off record highs . First of all, youre absolutely right. A correction is between a 10 and a 20 decline from the previous peak. Below 20 , then at this time gets into a bear market. From 5 to 10 , thats sort of called a pullback. Weve morphed into those ranges in terms of describing the market. Depending on whether you look at the dow or the s p, 3 to 5 off the peak, if we get in correction territory by the way, we just missed it by a smidgen last october with the ebola scare. I think we got Something Like 9. 9 on the s p 500 as a decline. So i think that as you mentioned, 2011 were already four years thats a long time for the market not to have experienced a 10 decline from the previous highs. Now im not necessarily one to believe that were always due for something when it doesnt happen. Thats like, weve had red on the roulette wheel for the last ten times, were due for a black. I realize those probabilities. But one thinking that we might be forming a basis for a correction in the next five, six, seven weeks ahead of the fed action. Again, nowhere near a sure thing and anyone whos a longterm investor out there and that includes me, i wouldnt try to play it by saying, im pulling it out now and get back in at 5 . Thats much too much trading in the market. But just to be prepared and not to be scared. We heard the same thing from a strong pullback from the current levels. Heard the same thing from Warren Buffett this morning. Concerning the earnings question, plenty of Money Managers say, forget about the fed, forget about the greek drama, all the other headwinds that seem to create the volatility in this market. It comes down to earnings. Thats the fundamental that this market moves on. But lately, the latest earnings quarters have not been all that great. So you must see a pickup in earnings down the road. Whats going to cause that . Well, certainly as you mentioned earnings and interest rates. Both of those are very important. But on the earnings front ands that dominant. Again, the bad yeartoyear comparisons are due to oil and the dollar. Dont forget, we were near 100 a barrel a year ago. And the euro was much closer to 1. 30 than 1. 10. And those two developments probably shaved 10, 15 off s p earnings. Thats why i mentioned earlier, we dont need to go back to 100 oil or the dollar being down to 1. 30, 1. 40 against the euro. All we need is some stability into 2016 to begin to see earnings rise again. But continuous strength of the dollar, continual fall of oil prices, that will spell trouble for earnings, to be sure. Quickly, jeremy, do you need to see apple rally to see the Broader Market rally . Up 3. 5 right now, such a big stock, such a sentiment barometer, does it have to participate for the market to go lau higher . It is. I dont follow individual stocks. Apples p e ratio is 10 12. I think when yahoo was selling at 600 times earnings and then i was very worried. So when we have tech at 10 or 12 times earnings, i dont see that as being a big threat to the market. Good to see you, jeremy. Thank you. Thanks for having me. You bet. Jeermy siegel of wharton there in pennsylvania i always feel selfconscious hes a College Professor and im asking questions hes a College Professor that picks round numbers on stocks. But i always expect him to correct me on something. Youre wrong about that, mr. Griffeth. Good explainer. Thats what my professors did to me in college. 17 minutes left in the trading session. Dow up 233 points. We saw the rally this morning and its stayed at these levels. Importantly holding onto its hefty gains here. S p up 1. 2 . Just ahead, would you want the ceo of a company that you own pulling a stunt like this . Well, one highflying industry titan did something just like this, raising all sorts of questions about corporate responsibility. Well tell you who it was and what the fallout could be when we come back on closing bell. Thats not actual video, by the way. Choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com just minutes away from shake shacks third Earnings Report since going public. The stock has soared since the ipo. But will the company keep up with analyst expectations and Investor Expectations which are pretty high this time around . Here with what to expect, Morgan Brennan. Lets get to the headline numbers to watch here. Analysts are looking for earnings of three Cents Per Share adjusted on revenue of 43 million. Thats according to Thompson Reuters. The other key metric, Comparable Store sales growth. Looking for 8. 5 increase on that front. During the last Quarterly Report in may, the fast casual burger king estimated to be in the low to singledigit percentages. And said it would open just ten Domestic Company owned restaurants and five International Licensed one. This is their third Earnings Report since going public in late january. It beat Thompson Reuters expectations two times and the stock has soared to more than 225 from its ipo price of 21. And you can see right now, coming into earnings, down about 2 today. But we get those earnings right after the bell. Back over to you. And once again, im behind the curve on something. The same shack sales. You did that well. You obviously did not read the perspective. It was very funny. Thanks, morgan. Love that. A little over ten minutes to go before the closing bell and the dow still up nicely, up 226, off the highs. More than 200point gain. S p up 1. 2 and the nasdaq up a little over a percent. While oil also saw a bit of a rise today, some market watchers are seeing buys in the oils stocks. Well talk about it next. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Joining us is j. J. Canhan. You see oil stocks moving higher. Its amazing because our clients did this. They bought oil for two reasons. Number one, theyve been so beaten down, synthetically buying the yields. Its a great way to play two things at the same time. And although the fed has talked about raising rates ad nauseam and you guys talk about it every day, overall they havent done it yet. So people are still searching for yield. Interestingly utilities are the only skeshector in the red t now. Energy, also material and industrials in the lead today. Those are other sectors that have been beaten up. Are your clients looking for value there, too, or is this just a bounce . One of the other particularly popular stocks that was beaten up last month, apple. This is the number one held stock at ameritrade. And when you get a stock like apple beaten up, people will step in to buy it because its very popular. They understand the product. I think one of the other stocks that was really interesting that was purchased heavily last month, netflix. Why . At 700, netflix isnt affordable for the average retail trader. At 100, all of a sudden they can play it. It becomes affordable for them and its a product they understand just like apple. They have really good interactions with it. So they can buy stocks like that when they become sort of more available. I dont want to see its an ipo. But if you think about how the stock splits work, theyre similar to how ipos work because all of a sudden its available more affordably to people. J. J. , good to see you. Thanks, bill. Were coming back with the closing countdown and have a lot to talk about in terms of earnings. Also after the bell, cocacola is in the spotlight over the fight over obesity. Some experts say the soft drink giant is backing some misleading research. Interestingly, coke is one of the only dow stocks in the red today. Those details all coming up. Youre watching cnbc, first in business worldwide. Nough cash bk from bank of america to buy a new gym bag. Before earning 1 cash back everywhere, every time and 2 back at the grocery store. 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For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Three minutes left in the trading session here. This was one of those days. This is the dow today. This is one of those days where we saw the rally and it just never pulled back. We didnt get the sawtooth trading range we get once in a while. Held onto those gains. Going out with a gain of about 230 points or 1. 3 . One of the stocks that set the tone today was precision cast parts, the company that Warren Buffett announced this morning they were buying for 37 billion. So were going back to july as we get a onemonth chart here. Up 19 today. A 21 gain overall for that last month. This was one of the reasons that we saw bob will tell you the other reasons in a moment. Earnings coming out tonight. We mentioned shake shack, the others coming out, kraft heinz announcing, rackspace and live nation as you see a mixed bag of stocks response ahead of those reports today. Weve come back from this oversold condition here. And thats the main reason. Youre down seven days in a row, gotten industrials beat up, energy beat up, materials beat up, a horrible quarter. Eventually theyre going to bounce. What they didnt do particularly was see really strong volume. If you would have, you would have say, guys are coming in and doing Short Covering. I didnt particularly see that. That kind of makes me think a lot of people feel that we not necessarily are at the bottom right now. Thats my only hesitation. But its a nice day overall. Great to see some of the beatenup names United Technologies down 10 . Had the stuffing beaten out of it because of the slowdown in brazil and in china. I want to mention something about shake shack. Weve been talking about marketing to millennials. Antibioticfree, its better for you burger. They went public you sound like you believe in it. 70. All about the concept about this relationship you have with the company. I feel better eating shake shack burgers. The competitors are coming in the fall. Smashburger is a big competitor out there. Theres a uk sandwich thats ready to eat theres one across the street. That make sandwiches on order for you. What a concept. They love this new market well see. Thank you, gordon ramsey. See you later. Stay tuned. Here we go, a lot of earnings coming out. And who was the ceo doing the wingwalking over the weekend . Well tell you coming up on the second hour of the closing bell. Welcome to the closing bell. Im sara eisen in for kelly evans. Bill griffeth will rejoin us in just a moment. Finishing up a strong session on wall street. The dow closing up 241 points, the first 200point gain for the dow since back on july 13th. Best day for the dow since back in early may. The s p 500 up 1. 3 . And erasing all of last weeks losses. The nasdaq composite up 1. 15 , bringing up the rear. Now investors getting set for another dose of earnings. Morgan bren seasnan is all over shake shack results. L and Courtney Reagan is waiting for kraft heinz. Joining us for the panel, cnbc contributor dan greenhouse and david seeberg as well. Dan, the big debate is whether we saw a bounce from an oversold condition last week or if there was really investors stepping in and some of the beatenup groups like materials and industrials with a new bullish position. I know that bob has been talking about that all day. And it was not just energy and materials. It was the semiconductors, some of the industrials like the capital goods names. So certainly the Leadership Today were those beatendown sectors. Whether that means something or not is an entirely separate story, especially in light of the berkshire news. But a lot of these areas have been beaten down over the last one to three months. So some bounces not entirely unexpected. But is this the start of a resurgence higher or just a bounce . David, were you buying in on this rally or are you fading this rally . Questi we saw a lot of Short Covering today. But light volume. People covering shorts. Mostly hedge funds involved here. Bottom picking names that have been beaten up all year since the beginning of the year. I look at some of the sectors that we saw, its everything that underperformed. Tremendous amount of covering. A lot of the names weve been sticking by didnt move that much to the upside. In some cases, they were down. So it confirms absolutely nothing. Its just a great day to get behind us and to move on to hopefully higher levels in the market. It did start with a nice rally overnight from china even in the face of bad economic numbers on wholesale inflation and exports . China is a problem economically. There is concern the economy is slowing down to a greater degree than some of the headline numbers are suggesting and certainly i think at least for the optimism with respect to equities in the morning, a Strong Performance from china, one of the strongest weve seen in some time, bode well for u. S. Equities and indeed that carried over. Hard to disentangle what happened this morning in the u. S. From what happened in china. But carnage has been unleashed on that market over the last few months. Morgan, how does shake shack look . We have a beat on both top and bottom lines. Shake shack reporting nine cents were share adjusted. The street was looking for three cents on revenue of 48 million. Analysts had expected 43 million revenue. So a beat there as well. Heres the standout number, same shack sales, the companys samestore sales coming in at 12. 9 . The expectations had been for 8. 5 . Looks like the companys also raising its fullyear revenue guidance. There are other numbers in here. Well dig through the report and get you more headlines. Shares of shake shack are up about 6 in after hours. Back over to you. The stock is up 4. 75 right now. David, you like shake shack . They have to grow into this valuation. Execution is so important. I think theyre comping 11 or 12 stores out of the 31 stores. Those are mostly new yorkbased stores. The growth for this company is predicated on nonnew york growth but people have been saying that since this ipo. Theyve been saying it only has under 100 stores and theres only so much room for growth. And then if you would have been listening to people like dan, you would have missed out on a 200 rally i totally agree with that from that perspective. I love the highoctane names. But i cant get my arms around this. I remember what happened to the krispy kreme stock. Its a different model but the reality is you are putting a lot of emphasis on their Growth Opportunity and the execution of that Growth Opportunity. I just cant get my head around paying this multiple. For names like shake shack or anybody else in that elevated valuation level, isnt it fair to say that valuation is not helpful, that this isnt a name that the traditional metrics by which you would value stocks comes into play . Not to say that fundamentals dont matter for shake shack just that expensive can become more expensive for a lot longer than a lot of people i start to develop a tic when i hear that kind of argument. That takes me back to the 90s when we said the valuations didnt matter anymore. Hes 100 right. You look at netflix and say, i could make the argument why netflix is going to go higher. I could see the pathway to them actually performing here and accelerating growth. I dont see the real the opportunity, outside of the new york base for shake shack, the way the market is sort of predicating it. So im just concerned. Its my personal opinion. I just dont think the stock warrants a buy here. 12 plus samestore sales growth is exceptional for the Restaurant Industry in general. Thats a robust rate of growth. And maybe its more of a statement about the overall environment when it comes to growth and we have not seen Revenue Growth this earnings season that large. Thats why these valuations that can be eyepopping continue to soar because theyre just so few of them. You look at a company like under armour, the normal metrics valuations dont apply. Shake shack is unrated so im neither endorsing or dissuading you from purchasing the name. In a general sense, when you look at names like were talking about now in addition to others, what youre seeing and what youve seen for some time now is that it appears as though investors are paying for growth where growth can be found. I think its 400 times forward earnings. I just get nervous when you have to adjust the traditional metrics to suit your argument. Thats when i get nervous. Timeout. No one is saying fundamentals dont matter. Over time, fundamentals win out there has to be a discipline at some point when a stock becomes beyond the traditional valuation that we call good value, you have to say to yourself, is it really worth thats perfectly fair. Lets remember when for instance google went public in 2004 i think it was. All the same types of things were talking about now were in place then. It was about 80 a share and it was valued in a different way. No one is saying fundamentals dont matter. But for these types of companies, fundamentals are different, albeit maybe temporarily. Clearly. We have another earnings alert. Lets get to josh lipton out in san francisco. Rackspace just reporting. So lets get you those numbers. Rackspace reporting 20 cents on 489 million. The street was looking for 20 cents on 491 million. Rackspace expects revenue to grow between 2 and 3. 5 . Also Capital Allocation news. Board directors increasing the companys Share Buyback up to 1 billion, decision to the 200 million of repurchases already carried out. And they intend to complete 5 50 million of the new buyback within under a year. That stock had been down hard, year to date down 30 heading into this print. But popping now in the after hours. That call starting at 4 30 eastern and well be on it. Back to you. Another earnings alert, this one from kraft heinz. The results are out, first time as a Combination Company. Courtney reagan has the numbers. Did they break i. T. Down as a Combination Company . We have numbers for kraft and for heinz. Ill give you krafts numbers for the Second Quarter. Revenue of 4. 52 billion. Thats down 5 year over year. And then the secondquarter revenues for heinz, 2. 62 billion. And thats down 4 year over year. We have an eps number for kraft at 92 cents. But not one for heinz. And, again, the company reporting still those two segments rather than together. The quote from the ceo basically just says they are going through the difficult and challenging process of integrating our two businesses. Thats from the kraft heinz ceo. Thats what we have for right now. We have a lot of digging to do through these results and what it means for the company as one entity. This is just a mess. If theyre admitting it, thats amazing. Because the deal didnt close till early july. This is a major endeavor, combining these two food giants. And the stock hasnt risen this much as a result of this quarter. Nobody was really looking at these numbers. This is a bet on 3g capital, an Warren Buffett, and on a bigger International Player in the food space. Theyre not even holding a Conference Call today. Thats going to be on friday as the 3g folks come in and start to execute on this. Its interesting with kraft heinz, theyre breaking these down as two separate companies, thats going to be a much longerterm story if it does happen as buffett told becky quick this morning. Im not weighing in on the specifics of the company. But that whole concept of combining for efficiencies is a good one. I dont think if this particular combination is a good idea or some of the other combinations are good ideas. But in general, thats what youd like to see in a slowgrowth environment. Companies coming together. Increased efficiencies and drive bottomline growth. What about topline growth, dave . What theyre doing is creating efficiencies through costcutting. The margins are going to reflect it. 3g came in and theyre sharks. Theyre going to make sure this gets done right. I look at kraft and the combination of kraft costcutting is the most important thing for them right now and showing it from a margin perspective. If they can continue to do that, the stocks going to continue to work. Why is it not driving topline growth the 3g model. I think in general, theyre going to come on friday and make commentary and thats going to get the stock moving. Until then, it will bounce around until people can get their arms around that. What would be the better thing to do . Delay the Earnings Report until you can report something that is more coherent and understandable or do you just throw it out there and let people figure it out . I think the market hates to be confused. This throws confusion into the mix. I think the confusion aspect of it is unsettling to me. I wouldnt want to play this name until they came out on their call. It is a longterm story. The Company Expects to save 1 15 billion by 2017. This whole idea of consolidation, really brings us back to the first story of the day with the buffett biggest takeover ever by Berkshire Hathaway, is all of this fuel for a market rally . Were up to now 1. 3 trillion in announced deals so far this year in the u. S. In the general sense, this is what a lot of people refer to as the deequitization. Ultimately there are fewer stocks and fewer shares floating around and ultimately that helps drive stock prices higher. For better or worse. Usually for better. Thank you, everybody. Stick around and catch david coming up on fast money. 5 00 p. M. All the latest headlines from the shake shack call as the stock moves higher in the after hours on the beat. And knowing them on fast money, they might do a taste test as well. They do that, especially with burger results. They deliver in new york. Much more on shake shack. Their earnings, well talk more about that coming up. Should you take a bite out of this stock following this beeff result . Im just reading, dan. We have a shake shack bear to give us his take on that coming up. Also, tesla reportedly losings 4,000 for every model s it sells. Could the loss be higher than that . Phil lebeaus been digging into this and will break down the numbers later on closing bell. Youre watching cnbc, first in business worldwide. Investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Were showing the wires. Got a little behindthescenes growing here. Thanks, guys. Shares of shake shack growing after quarterly numbers better than expected. Well get reaction from d. R. Barton from moneymorning. Com. And on the phone is paul hickey from Bespoke Investment group as well. Good to see you and hear from you. D. R. , you have not been all that hot on shake shack. What do you make of this Earnings Report . Youve got to give them props. They blew out the numbers. But im not hot on this space in general. The fast casual market is one of the most overbought markets out there. Shake shack, give them props for hitting the ball out of the park. But they still have 7 of their 71 stores are manhattanbased stores. Their number might be fairly priced if they execute perfectly until 2020. Other than that, i dont think you can get much appreciation from here although it will trade a lot. Its Short Interest is somewhere in the 30 range right now. So youll get a lot of volatility in it. But i just think tomorrow is a great selling day for this stock. Well, it is up now almost 12 in the after hours. Paul hickey, whats your reaction to the numbers and to the reaction . Well, when you look at the numbers, same shack sales were much stronger than expected, earnings stronger, guidance is great. Whats not to like about the stock . But as you were talking earlier in your discussion about how valuations per growth stock are always high, they are always high. Its hard to buy youll never get a good growth stock at an attractive multiple. But right here with the multiples were at now, its a name were sitting on the sidelines right now. We bought this stock after the ipo. Up to around current levels. We were looking for it to go into the low 40s and we just missed it at 48. But 48 to 78 in the process of about two weeks. Its prudent to stay on the sidelines. This is like the nitroglycerin of Growth Stocks here. Im just looking at the market cap on this stock. With this 11 gain, its above 900 million right now. When you consider there are 71 stores out there, do the math. Whats the market breakdown per capita, per store on this thing . This is a hamburger stand were talking about here. Its not quite a hamburger stand. You know what im talking about. I get what youre saying. D. R. , you mentioned the fast casual space more generally. How do you view whats going on with burgers in comparison to whats going on with the pizza names . Do you have sort of a feeling of one over the other . Well, dominos still continues to have great same sales store growth. I think burgers i cant say its a passing fad. Its a longterm food. But having a, quote, healthy burger or a sustainably sourced burger appeals to a certain demographic for a certain period of time. But look at some of the other people doing good things like zoes, going into the mediterranean space, everybodys looking for the next chipotle. And with this bump, theres about 5 million per store where chipotle is down much lower than that, about 2. 4 . These guys are priced about 3 to 5 per store. They move out of these population centers, they cannot sustain these numbers. Paul, what are we missing here . Clearly youre hearing a bunch of skeptics here. Were skeptics at this level. But the fast casual area, while there are a lot of entrances, consumer incomes are rising. Theyre not spending on goods aat retail. Seeing dismal numbers there. The talk is spending more on experiences and going out to eat, social occasions. So i dont think the area is oversaturated at this stage. But were skeptics at close to 80 a share. Down in the 40s when options start trading and we see more supply, it wouldnt surprise me to see the stock with a sharp correction because it is a very volatile stock. Two weeks ago, it was in the high 40s. What does it tell you about the restaurant space in general in term of valuations youre seeing on some of these fast casual and you could limit it further to burger chains. There are so many others that have had such hot ipos. Yeah. They have had some strong ipos in the sector and also some havent done so well over the last year or so. So i think it is mixed. But shake shack has shown its only been public a few quarters. But every quarter, theyve put up good numbers. I think as long as they can continue to execute fundamentally, its a good story except the valuation is, again, the concern we have here. We have more ipos coming in that sector, too. Bob pisani was saying smashburger is coming up pretty soon. Thanks, guys. D. R. Barton, paul hickey. Thank you both for joining us. We already know elon musk is a risktaker certainly when it comes to new businesses. But he just took part in an extremely risky stunt that had many Investors Holding their breath. Well tell you about it next. And Planet Fitness is the latest company to try to cash in on the fitness ipo frenzy. But should investors be concerned about a fitness fad . Thats coming up on the closing bell. We hear about the luxury auto market being red hot right now. So why is tesla losing 4,000 for every model s it sells . Phil lebeau breaks down the if you remember for us. I guess youll tell us just how accurate that is. It is accurate, especially when you look at the nongap income, or loss, for the second for tesla. Add up the numbers and this is how you get to a loss of a little more than 4,000 per vehicle. When you look at the number of vehicles that were delivered in the Second Quarter, 11,532, you take into account the nongap loss of 47. 8 million and we wont get into the debate about gap versus nongap comes out to a loss of about 4,144 per people. But look how the numbers have kaslated wildly over the Second Quarter over the last couple of years. 4,144 this year. Last year, it was a little over 2,100. Heres the chart that concerns investors with tesla. Its the Free Cash Flow and how quickly tesla is burning through cash. Elon musk said weve still got over 1. 1 billion in cash and if we need to raise equity, we can do that although they havent committed to that at this point. But its that trend. The trajectory all the way down to a Free Cash Flow loss of 564 million last quarter. Thats what worries people as you take a look at shares of tesla. People are going to be talking about this for some time. You have a companies that investing so much money in expanding production to bring on the model s on the giga factory. Theyre going to be burning through cash over the next couple of years. Thats what worries people. But theres no other way to grow an automaker. You have to invest in the infrastructure. Thats whats going on with tesla right now. Which is why a lot of people expect them to go out and have to raise money through their capital markets, right . Right. And elon musk did not definitively say no. He didnt say they were considering it. He said, if we have to, it may happen. But as of right now, they feel comfortable with their cash position. Lets see if that changes in the Third Quarter as we start to see the model x come out. Phil, stay with us. We want to bring in the panel for this one. That wingwalking stunt that elon musk pulled over the weekend. If youre an investor, do you want to see your ceo, especially if the ceo is elon musk, such a big part of this company and the strategy and the investment, doing this . Thats elon musk right there. How crazy is that . Listen, shareholders have the right to sell the stock whenever they want. And if this is something that a shareholder doesnt want to see out of their ceo, then they have the option to go and sell it. Far be it from me to say what he should or shouldnt be doing. Last week on this very program, you said with a little practice you could ride the waves on a dirt bike. I dont think i said i needed practice. Well, lets see that exchange between you and kelly evans. Took me, it looks like he stuck my daughters kickboard to his back wheel. Looks like something i could do. Did you just say that . I could do it. It took two years. Dan greenhaus has until the end of theres nothing i believe i cant do. Well, you laid the gauntlet down. Could you wingwalk . I believe i can. Whats the big deal . Strap your feet to the top of the plane. You stand there and enjoy the breeze. Phil, youve covered this company and youve covered elon musk. Is there a cause for concern here for investors . Not in my opinion. This is part of the reason people like elon musk. This is part of the reason that people are attracted to what elon musk does. He takes risks. He looks at things differently. There are other ceos who probably have risky habits, hobbies or have taken different types of adventures that people might sit there and say, is that the best idea . It didnt bother me. When i heard about it, i thought, thats elon. And i think a lot of the i dont know. I thought, does this company have a Succession Plan . Look seriously, thats the first thing you thought . I think its a valid concern for people to get worried if im on the board of tesla, i want to know what the insurance policy is on my ceo if this guy is out wingwalking on the weekends. What about a ceo who goes out hunting on weekends . People are buying because of elon musk what about ceos that race cars on the weekend . Not every ceo is elon musk. But this is the point, you know what youre getting with elon musk if these types of things upset you, you shouldnt be a shareholder in his country. This looks more dangerous than the typical risky activity. Well leave it there. Eating at shake shack is probably more risky than that. We know youre the ultimate daredevil. Funny you should mention that. Phil lebeau, thank you very much. Lets get back to Morgan Brennan with more on the shake shack results and the stock moving up in the after hours. We have an earnings beat for shake shack after the bell today, revenue better than expected. Samestore sales growth better than expected. Revenue guidance better than expected. We just got another announcement from the company. The company is announcing that a secondary offering, 4 million shares will be offered. The company will not receive any of the proceeds from the sale. This is shareholders selling, underwriters are also getting a 30day option to purchase an additional 600,000 shares. So in addition to that Earnings Report from shake shack after the bell, also getting this announcement that the company is beginning a secondary offering, 4 million shares. Back over to you. And that stock is coming off the highs set a little while ago, up 11 at its peak. Time now for a cnbc news update. Courtney reagan doing double duty for us. Heres whats happening at this hour. Colorados governor declaring a state of emergency in connection to a toxic spill from an abandoned mine. The order releases 500,000 to help clean it all up. The epa says the sludge which turned a river orange may be three times larger than the original estimate. The spill was accidentally caused by an epa cleanup crew four days ago. Prosecutors filing ten counts against 18yearold tyrone harris. It happened during a protest observing the oneyear anniversary of the fatal Michael Brown shooting. The counts include armed criminal action and firstdegree assault on an officer. Vermont senator Bernie Sanders picking up his first major labor endorsement. Its backing senator sanders on his record for expanding medicare and challenging wall streets role in the economy. And for the first time ever, nasa let astronauts today dine on the produce they grew in orbit aboard the International Space station. On the menu, freshly grown space lettu lettuce. Previously anything grown aboard the space station had to be sent back to earth for safety analysis. I dont think they sent it back to the space station. Imagine those shipping costs. Thats your cnbc news update. At least theyre getting healthier from the space ice cream to the space lettuce. Presumably, yes. Anything previously grown on the space station was simply called a science experiment. Now its good. Thanks. Warren buffett making a 37 billion bet on Aerospace Parts maker precision cast parts. Could that deal help jumpstart the underperforming industrial sector in the economy . Well go bargain hunting on that story coming up. And speaking of healthy, cocacola trying to shift the blame for obesity away from its products by funding scientists who say soda isnt the problem. We have the details on this coke controversy coming up. Jooirvegs and why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. 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Lets start off with kraft heinz reporting as a combined company. Kraft posting adjusted eps of 92 Cents Per Share on revenue of 4. 52 billion. Heinz revenue, 6. 62 billion. Shares are down about 1. 5 in after hours. Shake shacks shock is soaring, up about 8. 5 in after hours. The burger chain also raising its fullyear revenue guidance. The Company Also Announced a 4 million share secondary offering. Video game maker take two posting mixed results. Earnings per share of 30 cents. Revenue missed estimates. And Current Quarter guidance is way above estimates. Fullyear guidance for the company came in weak. And thats really whats sending shares of take two about 3 in after hours. And theres more. We have a news alert. Whats the latest . This is the ceo coming out to shareholders today reiterating the companys reasons for rejecting that 30 billion bid saying the proposal wasnt close to where we should consider it for a basis for engaging saying the feedback from shareholders has agreed with them, saying we are not entranced or intransigent. But our board made a correct decision not to engage based on it. Well see if shire comes back with a higher bid. Back to you. The negotiating has begun clearly. Thanks, meg. Warren buffetts Berkshire Hathaway is potentially making its biggest deal yet. The Company Looking to buy precision castparts, price tag over 37 billion. Shares of the Industrial Company soared on that news today and on squawk box this morning, mr. Buffett said he is looking at other smaller deals as well. Well probably be buying a few small things in the next six months. Were in negotiations on a couple. But in terms of a deal of similar size, it pretty much takes us out. So weve asked two top stock pickers to size up the industrial sector for us, find out if there are more deals to be had. Eric marshall and kevin caron join us. Kevin, clearly the industrials were standouts in todays session, beaten up lately on concerns about china. Do you expect the buffett effect to have more than a oneday move higher . Are there going to be more deals and another catalyst for this sector to go higher . I think there will be. You have to have a longerterm view, though. The things that are, no pun intended, buffeting the sector are all the things were worried about. Were worried about china, whats happening with the stronger dollar, Global Growth overall, emerging markets. All of these things have caused industrials to lag behind the Broader Market over the last number of months. It is creating some values there. If youre patient and youre willing to sit through a few more months of sluggish numbers and sluggish results, you can find very good values here. What do you think, eric . Warren buffett made it clear over the years hes not one to lose sleep over the headline risk that exists on a shortterm basis. Hes looking long term. If you do that, do you find value in the industrial sector right now . At the hodges fund, we certainly are. When you look at the industrial, its a very broad segment of the market. I think you have to look at everything on a casebycase basis. We like some of the areas in Building Materials and construction, pockets of transportation, as well as many Infrastructure Companies that are more tied to the domestic economy than international markets. So were finding opportunities. But you really have to look at it on a casebycase, stockbystock basis. Eric, sounded like you pretty much said the entire industrial sector. Is there a part of it that you dont like, that youre not finding attractive opportunities . Well, i think some of the areas where you have exposure to some of the multinationals, where you do have more exposure to deep cyclical commodities and stuff like that. But we like things like eagle materials, which is a cement and gypsum wall manufacturer. We think its very attractively valued. They Just Announced the 7. 5 million Share Repurchase authorization this morning. So they obviously agree that their stock is attractive. But opportunities like that exist in the market. You just have to look hard to uncover them. Kevin, the only pushback i would say is that some of the factors that have been weighing on these names have been a slowdown in china, which has been hard and somewhat volatile in the stock market, and the stronger u. S. Dollar has hurt a lot of these names. Neither of those two have really been resolved or seem to be correcting and going the other direction. How bumpy could it be as we wait to see these individual stock stories . Some of these industrials are in correction mode. You can certainly have bumpiness as you go through this. But youll be hardpressed to find a wellpriced asset where everything is going swimmingly. If you look at Companies Like emerson electric, for example, for raytheon, these are both companies we own in portfolios here at stifel for portfolios that we manage. When you look at these kind of companies, you Fine Companies with lots of Free Cash Flow, companies that when you look at where theyre trading on normalized number normalized cash flow earnings, theyre attractively priced. And in many cases, the Balance Sheets are very good. So you take an emerson, for example, their Balance Sheets are very good. Theyre refocusing on their core business. And raytheon has some very nice orders coming in on the margin. And some interesting new prospective businesses. These are two venerable names you could own but it will take a while. Good to see you both, eric and kevin. Thank you. Thank you. Staying fit is certainly hot with millennials, not just millennials. But certainly with baby boomers have given up. Wall street has noticed the trend with a host of new ipos. Could it become a fad . How do you invest in fitness . Rey new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Companies have been racing to go public to cash in on the huge demand we hear about for fitness products and services. What are the actual longterm prospects for these stocks . Bob pisani has all the details. Are these Good Investments . Its tough to say. What caught my attention, last week, amplify, a popcorn company, went public. Billiondollar capitalization skinny pop. Planet fitness did well. Marketing stuff to millennials. I want to show you some things coming in the fall that are potential ipos marketing to millennia millennials. In the fitness category, fitbit did very well recently. Another one is coming in the fall called jawbone. That one, same competition. Millennials love tracking their health data. We also have the gym business getting crowded. Planet fitness is only a few days old. But soul cycle is coming. This is an uber cycling firm, likely to go public in september. They have a cult following around the instructors. And this whole better for you category is exploding. So we talked about amplify, a popcorn company, chobani will likely be an ipo. You think this is a yogurt company. Theyve been very successful. Their idea, its better for you yogurt. L and thats important when youre marketing to the millennials out there. That you have a brand name recognition. And that theyre doing the right thing, theyre socially engaged somehow. So there are other ones out there that are happening in the near future. Thats just a couple of examples. I have to be honest, this is usually where i would chime in as the youngest person on the panel. But im upset because sara is meaningly younger than me. Sara, tell me how the millennials view these. I have a lot of greek yogurt. And soul cycle reminds me a little bit of shake shack. It has a strong brand in the new york area. Unclear whether this can translate into expansion around the country. But its not just better for you and millennials as buzzwords. Its a good investment. Thats the important thing here. Heres the problem, you look at an amplify, plenty of competitors out there who want to get into that space. Thats the problem youll have. Bob, thank you. Very interesting story. We have pretty big breaking news right now on google. Jon fortt, tell us about this. Reporter this is pretty important. Its news on google. It is restructuring in a pretty dramatic way. Bottom line is this, beginning in q4, google will report as a differently structured company. The ceo of the part of the company that will retain the name of google, overall the company is as an entity is calling itself alphabet, thats a new company theyre creating that will include google along with a number of other different pieces. So examples colluinclude life sciences, calico. This release is on googles site. Its written in a narrative format. No bullet points here. So its going to take a while to go through and bring out the specific points. But important Google Properties like youtube will continue to run, it looks like, as they have. Susan wojiskie, whos the ceo of youtube, will retain that title. But the main thing that investors are going to be focused out of this is Sundar Pachai who has been a chief operating officer of google at this point quickly rose through the ranks after running chrome, then running the Android Group and getting purview over google will become the ceo of the part of this Bigger Company that will be called google, including the Internet Companies within the group. But they have to go through this and of course talk to google to get clarification on many of the paints in here. A big restructuring for this company. It will be called alphabet and part of it called google will be run by sundar patchai as ceo. Of course larry page and sergey brin will continue to have oversight over the larger company. But a big restructuring for google. We all know, jon, that every time you turn around google is in a new venture, farflung ventures, using all the cash that theyve generated through the years here. Now it sounds like theyre trying to make some sense of this corporatewise so they can generate some synergies. It sounds that way. But some of the questions investors will have and i will have is google just did this split, splitting into goog and googl, which was largely seen as an attempt for larry page, sergey brin to retain voting control over google given some of the dilution from eric schmidt, cashing out some of his shares, some other things theyve done. How does this affect the stock structure of google . How does this affect the funding of some of those Strategic Imperatives . And some of those far afield projects they like to invest in . Lots of questions investors are going to want to answer in this restructure. Jon, real quick, were going to do more of this after the break. Is that what were doing . All right. Were going to do more after the break. We have to get this break out of the way. Jon fortt, stay there. Weve got more of this restructuring. And weve got a google blog post. Well bring you some quotes after the break as well. Care of my heart. Thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. Is. All right. We want to get more on this very big news on google, essentially creating a new corporate entity called alf xwet that will oversee all of the various farflung businesses theyve gotten themselves into, of which google will become one of those businesses but alphabet will be the new big name. Karen swisher, our friend at re code, is on the phone right now. Help us make sense of this, kara. I cant right now. Its kind of nutty. Its fascinating. Its a new its almost leek a Berkshire Hathaway type structure. Where theres all these companies within a company and larry and sergei are both the company and Sundar Pichai, whos running great parts of google, runs what he was running before but now he gets to be he ceo of google, which is the stuff they already do, like search and things like that. Looks like theyre moving from what i can tell, it will replace google. After that it will be google. And then google will be within google. The only thing i can think of is they separate their more farflung and crazy stuff in a separate area so they can be judged differently. I was going to say they used the word accountable in the blog post, which is sort of what this is about. Larry page also says our model is to have a strong ceo who runs each business with sergey and me in service to them as needed. Really forming a conglomerate, kara. It kind of is right now. Thats how theyre sort of running it. Sundar has been running those businesses. Wojieski has been running youtube. Google x. Im not clear what the impetus is right now. Theyre sort of Google Search will presumably remain under sundar and the phone stuff and the feteos aphotos and things l. And youtube seems to be within google but susans running it. Its fascinating but i think theyre probably trying to get people to focus on each section of the company. The most profitable part. And then their crazy stuff. Kara, its bob pisani. Weve been trying to figure out here what keeps trading . Its clear that alphabet is the publicly traded company but in the press release they make it clear that the two old separate classes of stock, googl and goog will continue trading. Thats whats got us confused. Google will become a wholly owned subsidiary of alphabet. I guess goog p is stuff you know google to be, like search and things like nap and then alphabet they still control the company. Thats the best thing. Larry and sergey and the special class of shares. They can do stuff like this. Theyre calling it alphabet because of all the letters they can assign to this. They say here we like the name alphabealphabet. It means Alpha Investment return above benchmark. Which we strive for. How do you see this inflection . Do you think its about changing the culture and really getting focus on each individual business . Im not so sure about that, sara, and the reason why is theres not that much structurally that seems to change here except that Sundar Pichai gets the title of google ceo. He was already seen as the heir apparent. One might wonder was he being recruit add way potentially to do Something Else . His name has come up in a number of searches including microsoft. But whats not part of google but is also under alphabet is things like, as kara mentioned, google x, also Google Ventures and google capital. Other things like that. The life sciences. None of those things make any money. So the way thats different from Berkshire Hathaway, its not like theres a number of revenue producing, profit producing businesses under al bette including google. Theres pretty much google which is the business, and there are other things that cost money. And thats the way its been up to this point, guys. So okay. Kara sara used that word accountable she saw in the blog there. Do you think its starting to impose a discipline on each of these farflung business theyve been trying to start up here . No. Because theyve been running them like this before. They just have given people like, this as jon was saying, maybe sundar had a job offer. I dont know. I guess its keeping the executives excited aboutar this individual companies within a company. But its still overseen by larry and sergey. Sergey gets a job. Thats nice. He didnt have a title before. I think its sort of the same. Just a different name, it seems like. Giving these people individual control, very clear control over their businesses. Which they kind of did before, the senior vice president. Just gave them different titles there. Kara, thanks. Appreciate it. Jon, you too. You go and try to figure were still clearly in the headscratching phase p all of this announcement from google here. Investors are buying it looks like in the after hours, with google shares up about 4 1 2 . Melissa lee, i know youve got much more on this coming up here. Yeah, well continue the head scratching and hopefully answer some questions about this. Thanks, guys. Fast money starts right now. Live from the nasdaq marketsite overlooking new york citys times square, im melissa lee. Your traders on the desk are tim seymour, david seaburg, Karen Finerman and pete najarian. Today on fast, bullion bounce. Dennis gartman says the bottom is in for the precious metal. Find out how hes playing it now. Shack attacks the haters. The burger joint reporting its top and bottom line beats. One wall street insider says dont buy into the hype behind this special sauce just yet. But first to this breaking news on google, announcing plans for a new operating structure. Cnbcs jon fortts got all the detai details. Jon . Reporter well, melissa, this is one we havent seen before
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