Transcripts For CNBC Closing Bell 20140521

Strong day, cisco doing well. One of the most actively traded stocks. And caterpillar which was yesterdays drag is one of todays leaders. A herky jerky motion. Bill miller said yesterday on the show its a great market for anyone with a home towardson longer than half an hour and is very positive on apple saying that stock will go past 700 bucks, this as some were saying apple may be releasing new hardware sooner than later. Well hear the bull and bear talk on apple. Any time after 4 00, about an hour from now, Chinese Ecommerce Company j. D. Com is set to release its ipo, 15 times subscribed, a huge ipo to watch in its own right but takes on added significance because it comes ahead of al bal of ali. Fallout that will ensue with the chinese prices and could be the third biggest ipo of the year. Heres where we stand in the market. Dow up 153 points. Today were only 200 almost 150 points off its alltime closing high. The s p 500, meanwhile, up 13, 1886 is the level there and nasdaq up 30 or almost lets see, about. 75 of 1 . Bill . Lets kick it around. We have Abigail Doolittle from peak theories, lindsey from stern and keith fitz jaild and Jack Bouroudjian from index Financial Partners and rick santelli. Lindy, youre the the resident economist. Did you see anything in the fed minutes . Seems more about logistics, looking ahead to the time that they will have to raise rates and they are trying to figure out how they are going to do that, right . Thats exactly right. The most interesting part was the forethought to discuss how they will move away from the accommodation and back towards normalization n. No way does this signify a readiness of fed officials to move rates any time soon, but what this does say is that they want time enough to consider a whole host of opportunities and different pathways to raise rates, and they also want to signal to the market that they will have a plan in place when its appropriate to begin to raise rates, so adding some more confidence back to the market. As this is happening, the dow didnt move too much. We added about ten points. Keith, thats a change from the recent past anyway when any time the fed minutes came out, even if they didnt say anything, wed have big selloffs . I think so. The danger here is that we confuse having a plan with actually doing something about it. I think the fed is buying time and underestimating some of the key factors they are looking to so that does concern me. Abigail, the herky jerky market, youre not a fan of stocks, but you have to admit it has been relatively resilient here. Every time we get to the low end of a trading range it bounces back. Yesterday and today is a good example of that. Good point, bill. It certainly has been a herky jerky market. Lots of volatility here, but i think that we want to keep it simple and that means, first, when we look at the fed and everybody watching what they are going to say, its unlikely at this point that they will be able to say anything new relative to their dilemma. A 4 trillion Balance Sheet, plus ultra weight policy, how can we unwind from this without causing massive volatility in the market and more importantly in the economy and this ties into what were actually seeing this year. Its still paying out, a repricing of risk. Bonds are rallying, did hit the bottom of a sideways range, but i think were poised to go lower. If you look at the comps. Abigail, just hang on one second. How long have you been thinking that the market is going lower here . For for quite some time, kelly. I will be the first to admit it. For years at this point . Im not sure two years ive been expecting a massive correction. I still think that we see it. The higher the markets go, the more conviction i have in this correction. Were looking at smoke and mirrors. The fed has done a great job of restoring confidence coming out of the financial crisis, but whats behind it . Yes, the economy has improved to some degree, but its certainly not really strong. If you look at Capital Expenditures, still have not seen a recovery there, and when you look at the velocity of money, money is not moving. Its sitting on the Balance Sheets of banks and corporations. Until it moves to the economy, again, its a smoke and mirrors anemic economy. Let me bill miller yesterday said hes worried about a melt up in stocks later in the year, in other words, if we can get through some of these keep climbing the wall of worry and keep turning in place and all of a sudden things do look okay, then you start to have the condition where all of a sudden things rocket up and then rocket lower. Is that a possibility here . Oh, absolutely. In fact, one of the things Pay Attention to 1900 in the s p. If you see a sustained move above, that a lot of indexers and Pension Funds that will readjust. Youll see moves, large asset allocations, and you know where that money is going to come from, from fixed income . It will drive the rate in the tenyear kelly, kelly, kelly. You gave the other guest a hassle for saying how long you been bearish stocks, why dont you ask how long jack the pool in the fixed income is going to end up in equities, fair is fair. Wait a second now. Ive been saying that for a while. Dont take sides. I also said it when we were at 1. 8 , rick, and you and i had the debate back then because i saw the same thing happening then that i see now and you listen to the lee coopermans of the world. A fed that says go home. A fed that is patting themselves on the back. Come on, rick, youve got low Interest Rates. Youve got low inflation. But you cant be bullish stocks without the fed, and thats the problem. Come on. And whenever you if thats such a come on, call up janet yellen and say its overkill. Shut it off. Companies earn money, come on. You know that and i know that. The fed is not the Reason Companies earn money. Im sorry. I dont know that, jack. Hang on, hang on, hang on a minute. Bill, you want to throw yourself in the middle of this . No, im not going anywhere near any of this. Lindy, what do you expect Interest Rates to do between now and the time when the fed is expected to finish the quantitative easing, probably october, maybe november . Are we going to keep at the low rates while they continue to peel back on the number of bonds they are buying . I think they will. Given the very uneven recovery in the economy. Relative to the weakness we saw at the start of the year, there has been market improvement, enough to keep the path of taper in play, but there hasnt been that relative momentum recapturing those previous postrecession highs to suggest that the fed can begin to move away from this path of accommodation, so, again, while we do expect the fed to continue tapering, were likely to see the fed on hold much longer than expected, well into 2016, maybe even into 2017. Whats the impact of that going to be because, by the way, theres all of this talk to the extent to which bernanke is out there to think he never thinks Interest Rates are going back to the level they were. The 250k comments, oh, yeah. Over and over again talking about even larry kudlow was saying it on this show. A lot of class there. That Interest Rates wont rise in his lifetime. 75 of tenyear note owners or treasuries in general dont care about the price, so youve got a tremendous imbalance between supply, risk and demand. Its artificial at this standpoint so ceos, yes. Is that because of collateral. Yeah, theres klattization issues, demand issues. The fed hasnt got a clue what its doing here. What its doing is hoping that this thing doesnt unwind when its not looking or its got its eyes off the ball so they have to inject certainty. This is the only card that they can play right now, and it speaks to the fact that the economy is not yet presenting all of the things we would see in a true recovery. That having been said, is it generally good for stocks . Yeah, as long as can you deal with this risk dark on mentality and watch your ps and qs you go along. The reality is weve not had had a major correction since coming off march 2009 lows which means that albatross is still lurking in the background. Youve got to simply be careful in here, but you cant afford not to participate. The tenyear note is the truth serum. Abigail, is that the components that youve missed, youre not alone in saying weve got to have a correct at some point. Is the fed the bogey thats keeping this market from correcting here . I think to some degree it is. The fed, to use that phrase, the new normal, the new normal is the idea that the fed is in there and the fed put, they wont let the stock market its allowed investors to get lazy. They are not doing their work. Everyone is going to ride the feds coattails. Thank you, abigail. But if theres a shock to this economy. Exactly. Youre welcome. If theres some shock to this economy its going to be a rude awakening for stocks, and when you look at the tenyear, the fact that it is rallying in the face of the fed tapering, it tells us not all is well out there. This is reflected in my view in the nasdaq examines it, the high flyers and small cap. Why its not reflected in the s p, dow and transports, i dont know right now, but i continue to believe that disconnect will connect and people are talking to me about my bearish view. So many levels of correction, but i ultimately believe we could truly go back, unfortunately, to the 2008 lows. I hope thats not the case, but, again, this is an artificially propped stock market, artificially propped economy. Hopefully it takes off. That is my greatest hope. I hope i am wrong on my correction views, but when i look at the technicals and when i look at the tenyear and this risk safety dichotomy going on i still think that were looking at a pretty serious correction and one that people should be prepared for. Its not something to be afraid of. Its something just to take it could be used profitably if youve ever learned buy low, sell high, corrections are not fun, psychologically difficult but the reality situation if youre a trade, even investor, if you have a buy list and get stuff on sale, thats the time when you hold your nose and you start to wade in. Youve got to youve got a multiple that makes sense. Its right in line. Everybody keeps talking about a correction. Ear focusing on the s p, but if you think what about the multi hang on a second. If you think about the russell 2000. If you take the top five stocks in the s p. Im with you, bill. If you take the russell 2000, they have this their correction, there it is, abigail. It is the smaller cap stocks that have seen the high momentum stocks that have seen this correction in the last few months here, so, you know, take that and run i guess. Youre right about that, bill. All right. But i think thats just the start. I think that theres a lot more to go. Thank you all. Out of time. Good to see you all, as always. See you later. You were thinking i was going to get in the middle of bouroudjian and santelli. I bruise easily so i dont get into those romps there. Heading to the close, look, getting close to the highs. Day. As we were speak, the dow a moment ago up 160 points. 48 minutes. I think the point of all of this is just to try to figure out what is the dynamic driving the market, healthy or unhealthy, by the way . Part of this is actually saying if theres a credit boom thats contribute together fact that we havent had a correction for a couple of years, what does that mean . What does that tell us . How badly could that end down the road . Anyway. Yeah. So up 160 points with about 45 minutes to go. Pretty broadbased gains across the s p and the nasdaq today as well. Bill miller sounding a bullish call on apple right here on the program yesterday. Take a listen. Apple is a major position for us, still worth 700, 750. And now a report that apple could have new hardware much sooner than anticipated. Stick around for the latest on the tech giant and where the stock is going next. Also ahead, were watching target. The interim ceo spoke with cute any reagan in the past hour on cnbc. Well talk about the state of play in retail and how brick and mortar retailers can bounce back. Hacking america. Ebay telling users to change passwords after its site was compromised, what went down and if you should be worried when we come back. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Okay. Markets are higher today, the dow essentially gaining back what it lost yesterday, up 162 point right now. About the high for the session as we go into the final hour of trading, nasdaq doing better percentagewise. Up 35 points, the dow is the big performer rightno now. Apple is a major position for us and costs are probably in the low 400s, not as attractive as it was but still worth 700, 750. If that is the case, how so and how soon . Tom forte joins us from chelsea advisory group. 650 will be hit in the next year. Couple to you both. Only the mid60s. I think that the next 12 months should be good for apple shares. Can you live with incremental divisions. If you look at the core product, the iphone, this upgrade should be a larger screen size and i think theres a lot of pentup demand like there was two years ago when they rolled out their first 4g phone. Incrementally better, larger screen size i think could be enough to draw significant renewal demand for the iphone later this year. Alex, why do you remain cautious, and do you think apple is headed back below 600, below 500 again . Right, kelly, i think it comes back to that fear or question of getting incremental innovation from apple this go round. I think well get a larger screen iphone. Thats a good thing. Why didnt that happen years ago . Left tens of millions of units on the table and let the competition get stronger. We think were going to get an iwatch, that theres something inters of refreshing apple tv, not sure what. The problem is its not happening faster, and they are ceding the initiative to a lot of their rivals out there and thats dangerous for a company that, yes, still number one in terms of hardware manufacturing, but in terms of software and in terms of igniting the imagination they are falling behind. Alex, at this point, im no expert on apple but i watch it as much as everybody else does. No pun intended. Should we get past the notion that innovation is the future of apple just because thats how that worked, they did buy beats, all scratching our heads over that one and now we have the incremental gains and the market is suggesting maybe there is a future for this company as the stock continues to rise here. I think absolutely no. We cant get past the notion that innovation is key to this story because its about earnings growth, and we know what happens when innovation stagnates with hardware companies. The margins go away first, and then the growth goes away and apple as a stock has a multiple that bakes in growth for this story, so with most of the growth in iphones, now expected to come out of china, and that being a hyper competitive, hyper cost sensitive market, i think they are going to need something in terms of the new product category, the new usage category software, something that sets them apart so that they can sustain their Gross Margins and get back to consistent growth because they have only just gotten back on the growth train. What if apple were to do something significant in the mobile payment space . Do you a, think thats likely and, b, how much value could that add to the shares . If you look at mobile payments its clearly a low hanging fruit opportunity for apple. They have all the as nets place to make it happen, more than 800 million itune users, the hardware, the tablet, the esphone and then the Fingerprint Recognition Technology and the iphone and 5s. The way i look at it theres enough near term opportunities over the next 24 months to apple adding the new categories and mix that with the product research, a 90 billion repurchase program and i think the stock is in very good position here. What do you want to see them buy . Everyone is questioning the purchase of beats but they do have a lot of cash on the Balance Sheet. They can buy whatever they want. Well, they do. Dont have as much domestic cash as they used to. Thats one problem, but i do think if they were to do something a little bit more imaginative, i dont know if its like the facebook move in getting oculus. I dont know if theres something in the line of mobile payments where they could be innovative, we do know its interesting and there could be an opportunity in china, but because we havent seen that imagination from apple heretofore some think its safer to play the component vendors, the arm holdings, the sky works, suppliers that will win no matter what apple does. Thank you for now. We have a news alert on the fed. Steve liesman has details for us. Hey, steve. An idea floated yesterday from bill dudley, the new york fed president , its gone coastal now, bicoastal here because San Francisco fed president John Williams is new on board with the idea. Whats the idea . The idea that the fed should not let the Balance Sheet wind down before raising rates, before the markets seem to think, and maybe he was told by the Federal Reserve that they were first going to let the Balance Sheet winds down, ending reinvestment and then raise rates, now they are talking about doing it the same time. Williams very much echoing comments from bill dudley yesterday, the new york fed president , saying that its best to raise rates before ending the bond reinvestment program, this in an interview with the dow jones. Hes worried that ending it will send a hawkish signal. Im not sure that theres very much economic value in this. I think its symbolic value. Sometime before the fed was scheduled to raise rates this year, the fed was going to let bonds that matured run off and not reinvest the proceeds and that would send the symbolic tightening signal and the fed says we dont want to do that. We want rates to rise when were ready to raise rates. Well let them wind down. Whats interesting about this is by doing what they are now talking about, it will it will require them to keep buying. Right. Each month. So the size of the values wont increase but there will be a flow situation happening. Absolutely. When a fiveyear treasury matures, they will take the money they get back from the government and will buy another fiveyear, depends upon the duration that they want. Will keep reinvesting t. Depending upon how long this lasts, this could extend, you know, for a while, how long it takes for the fed to get back to a normal Balance Sheet, already estimated to be sometime like 2023 now. Oh, for the love. Thank you, steve. My pleasure. See you. Yeah, right. He did say 2023. Bill, were going to be talking about this for a long time and weve got 35 minutes to go before the close. Im still thinking about it. Thats all. Federal reserve chairman janet yellen, she was delivering the commencement address for nyu, New York University grads at Yankee Stadium earlier today. Did she talk Interest Rates with that crowd in the market is still fixated on Interest Rate questions. Well have the latest Smoke Signals out of the fed when we come back. Plus, are retailers fighting a lost cause about it comes to getting consumers back into their stores . Pros will give us their two cents on state of play in retail next. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back. Heres where we stand in markets heading into the final half hour of the trading session, a strong one across the board. Led, here we go, bill, a difference from the last couple of sessions, led by the dow, not russell or the nasdaq this time. Blue chips are leading the way. Meantime, target reporting lower than expected earnings and the expectations were not very high but the retail giant did beat street estimates on samestore sales. And Courtney Reagan spoke with targets interim ceo in a exclusive interview about an hour ago. She joins us now with the highlights. What did you think, court . John mulligan addressed a lot of hot topics, including when target will know more about the potential cost to estimate their Party Liabilities and operating expenses related to the data breach. Currently our view is that will likely happen late Second Quarter, could be in the third quarter. Of course, as we know more well provide that perspective to our investors and to everyone else who is interested. Target samestore sales have fallen for a year now. Traffic negative for six straight quarters. Target has a number of initiatives to work on turning around those trends. Well continue to use promotions as we go forward but we want to narrow the focus of those promotions and get back to and remind guests why they fell in love with target and thats about newness in our stores. Youll see us bringing great new merchandising initiatives and apparel and mom and baby over the course of the next year. When i asked mulligan about what it would take to exit the so far dismal canada business, he says were focused on improving our business in canada. Doesnt look like hes thinking about exit. Lets talk more about the state of retail, where it might be headed and bring in Deutsche Bank analyst paul trussle who watches retail closely. The fed has said the First Quarter we can write that off because of weather, thats what the slowdown is all about, but are we seeing signs that things are picking up in the meantime . Weve seen an improvement over the last few weeks. April was better and the early results out of may is that traffic has picked up across the mall and off the mall as well. But i think the First Quarter woes are more than just weather quite frankly. I think theres a lack of fashion newness and in many cases i think you have a consumer thats focused elsewhere, perhaps taking the family on a vacation, quite frankly i think that people are are pretty happy about whats already in their closets and theres less of a need to go back and replace those items. Paul, is disney killing the mall . I think weve seen much better numbers out of travel and lodging. Yeah. Than we have seen in discretionary retail. Remember, coming out of the recession when things were on shaky ground, the easiest thing for a consumer to go out and buy from a Retail Therapy standpoint was a handbag, footwear, clothes, and quite frankly now that we have a more stable Housing Market and now that were in a better labor environment, i think were seeing a focus and shift more towards bigger ticket purchases so whether its Home Improvement or a trip, i think thats taking a little bit more of a share. Why arent the dollar conscious retailers doing better . Walmart, thats a big question right now, execution i hear is a problem. Target is a special situation. But you would think as we continue to improve very, very slowly and job growth is not there people are watching their pennies right now and you would think that these offprice retailers would do better. Why arent they . I think its a confluence of factors just like paul is saying. Folks are spending the money elsewhere, the money they do have. Wage growth is stagnant and the labor market is tight. Its better, its not great. People are watching their dollars. I think in general Discretionary Spending has shifted. Buying less sweaters and spending more money on the cell phone bills. Auto parts sales have been strong, maybe were spending money on things we had to neglect over the last couple of years because they were simply too expensive to focus on. Newness is also a problem. Target and walmart have their own special issues that are going on, too, so we have these macro factors and micro factors. Its just really tough. That being said, it seems like brands are doing better than retailers right now, and i mean the nikes, the under armours, much better than say the retailers that sell them. Paul, how bad below the surface do you think it is psychologically for some of these retail chains even and how much more consolidation might we be talking about . How much more different will the industry look in a couple years time . The retail environment is changing rapidly. Theres been an infliction in online spending, the consumer, especially the younger demographic prefers quite frankly to shop not just via their computer but via their mobile device and big box retailers have to adjust, but i dont count them out, quite frankly. They have a lot of free cash flow. They have the ability to integrate the online model with the brick and mortar and were hearing more about this omni channel. Who is best positioned in your coverage space right now . I think nordstrom does it the best. Macys also does a great job, but the ability of a retailer to have an individual shop online, pick up in store and have that product shipped from store, to have free shipping, to have free returns, those are the advantages this a brick and mortar can have relative to an amazon. Thank you, folks. Paul, thanks for joining us. Courtney, see you later. Great perspective. Really appreciate it. By the way, im here at headquarters, not because i wanted to miss out on fleet week in new york city today, but im doing nightly Business Report again tonight on pbs so check your local stations. Dont miss it. Heading towards the close with about 30 minutes left in the trading session, the dow hanging on to those gains. Thats the leader today, up about a percent, a gain of 157 points. Yeah, and its that time of year again. Pomp and circumstance, words of wisdom from top influencers from all walks of life and fed chief janet yellen addressing New York University grads earlier today. Listening to others forces us to recognize with humility that we dont have a monopoly on the truth. Yeah, we dont have the monopoly on the truth, but the truth is the central bank will start raising Interest Rates at some point. Whether we have to wait until 2023 or not, but question is when, and we have some fed pros coming up to talk about that next. Stay tuned. Sfx car unlock beep. Vo davids heart attack didnt come with a warning. Today his doctor has him on a bayer aspirin regimen to help reduce the risk of another one. If youve had a heart attack be sure to talk to your doctor before you begin an aspirin regimen. 20 minutes left, the leader of the dawe, how is the volume down there, kell . Second lightest trading day of the year on monday . Bill, it is so light. The guys down here. I was just asking them about this, about the extent to which this is seasonal. No, its gotten quieter, a month, two months earlier than usual and by the way, if you want to talk about vol, its not that theres no vol, check out whats happening with the vix, below 12 today. I mean, its sort of this massive drying up that you seem to hear. Very, very interesting here. Yeah. Dominic chu. Theres the vix right now. As it continues lower, contrarywise that could signal sort of a top for the market, but thats just me. Were down 7 right there. And dominic chu is tracking those movers for us in this market today, dom. Volatility has been low, guys, like you said, and we didnt get back all the points that we saw in yesterdays trading session in the dow. Well start with tiffany moving higher after the luxury goods reported better than expected First Quarter profits and 9 to the upside for tiffany. Netflix gaining ground, the Video Streaming Company is going to launch operations in germany, france and four other European Countries later this year as it looks to expand internationally. You can see netflix up 5 also towards session highs. Trina solar, posting a quarterly profit. It had a loss in the same to ima year ago, being helped by rising prices and solar panels. You can see a sharp upside move, 32 to the upside and on the flip side youve got pet smart in the dog house, yes, i said it in the dog house, with investors after cutting its fullyear outlook as fiscal First Quarter sales missed expectations. They are down about 8 and a tough day for sears as well after its Canadian Unit posted its stoppest fall in sales in five years. Sears shares are down about 3. 5 overall in todays trade. Like you said, bill, kelly, a low volatility environment could be a warning sign for some. Back over to you guys. Lets talk about the fed. The minutes came out of their most recent meeting revealing they talked about rate increases and showed no intention to act any time soon. The fed also talked about housing, china, tensions in the ukraine as growth risks and the market seems okay with it all right now, right . Yeah, thats unusual after the minutes. Joining us now with more on this reaction and what to make of them gemma god freed with Donald Brooks Asset Management and also with us the chief International Economist at Deutsche Bank securities. Great to see you both. Gemma, this does buck the recent trend of selling off after the most recent fed minutes. They are saying that they that they will take more time, so the words that they use, more testing, more review, continue reviewing, more analysis, and they are going to make sure that they give markets a heads up so they are removing the risks of markets being shocked by anything and they have said that theres downside risk, as we mentioned. They mentioned housing in china and the ukraine and housing specifically was a focus, but what they are doing is they are pushing out that risk of a rate rise further out which obviously markets are welcoming. Why is that . I mean, why are they dragging their feet on this . In the past when they ended quantitative easing programs, they just stopped on a dime. Now they are tapering here and, you know, pussyfooting on when they will start the rate rise. Seems like they are concerned about markets now. Is that your read or whats going on . I think thats true. In my interpretation, whats clear is they can always take the punch bowl away, if you will, so i think that they feel as long as theres not much sign of inflation, theres not broadbased wage pressure, theres not any strong inflation in any pceocpi, they are saying lets leave the punch bowl a little bit longer. The thing is that Financial Stability is becoming more and more worried in what they are talking about and thats something we should all Pay Attention to. Are they really saying that its not only inflation and unemployment that they look at and Financial Stability and we have to weigh these things on the scale of figuring out how important are these three things relative to each other. And let me read a line that perfectly gets to what more people in the markets are talking about, from jpmorgan. They say, look, perhaps the concern here is before cpi, in other words, general eninflation, has a chance to emerge, before Monetary Policy is back to neutral a financial bubble will have popped up somewhere else and will have corrected pushing the economy down. This is what has happened in the past 25 years. Will this time, gemma, do you think, be any different . Oh, wow, youre talking about different bubbles arising in different areas of the market. There is obviously the risk, and this is the risk that the bond market thinks that the fed is going to be behind the curve and delay to such an extent that you are going to see these bubbles, and the continued easy money is going to find another home. However, the equity markets think the opposite, and actually think that prices are going to continue to rise to justify, you know earnings are going to continue to improve to justify higher prize so what were seeing and the most interesting thing and the thing to be wary about is this divergence of market expectations, and this was one of the signs of the financial crisis. Im not saying anything as extreme as that. We do need to be cognizant of what all the different markets rex pect thing and what is very interesting is investors are coming out of small caps in the u. S. And actually instead going back into defensive stocks. Yeah. All right, folks, thank you. Good to see you. Thanks for staying late for us tonight, gemma. Have a good evening. Thank you. See you later. About 15 minutes to go here to the close and as we were just discussing, the market is up 159 points, bill, for the dow. A couple of components are even in the red. The s p adding 15 and the nasdaq 38 at this hour. What do apple, sandisk and netflix have in common . They have some of the stocks that have made stealth gains over the past month. Seema mody will round up whats been going on at the nasdaq. Later ill talk about the new nfl lawsuit involving owners giving players pain pills to keep them on the field. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Take them on the way you always have. Live healthy and take one a day mens 50 . A complete multivitamin with 7 antioxidants to support cell health. Age . Who cares. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Welcome back. Plus signs on wall street, one of the days when the tone was set on the open this morning. A pretty good rally. Up 165 point at the peak for the dow, and its been sideways action since that time. The blue chips, the leaders today. Not the smallcap stocks as has been the case here recently. Kelly. Yeah, believe it or not even as the nasdaq has traded lower as of late. Some big nasdaq names individually have made significant gains over the past couple of months. Seema mody, who were they . Despite the past month, there were some big winners, take a look at apple, up 14 over the past one month thanks to earnings, Capital Allocation program. Sandisk helps by earnings, another comeback name, netflix one of the best performing stocks on news that its launching its service in six European Countries later this year. J. D. Com, the chinese ecommerce site expected to go public on the nasdaq tonight. If j. D. Com prices at the midpoint, guys, it would be a 1. 6 billion ipo, making it not only the biggest chinese ipo in the u. S. But the Third Largest ipo so far this year so this is a big ipo, guys, similar to alibaba, its in the ecommerce space so for that reason you have a lot of bankers watching j. D. Com. Price performance tomorrow, of course, as well as its metrix and financial positions. According to sources close to cnbc, this ipo 15 times oversubscribed indicating strong appetite. Bill and kelly. All right. It continues. Thank you, seema. 12 minutes to go now until the close. I miss you, bill. Come back. Ill be back tomorrow. You can get more bill, people, by the way, nightly Business Report on pbs. Going to be a long day. The dow is up 150 points, the s p 15 and bond yields have moved a little bit higher here as well. Lets tell you what is coming up next hour. Are the makers of frosted flakes, cheerios and other products you love really responsible for Greenhouse Gas emissions . Oxfams ceo defends that claim firing up that debate in what is sure to be a lively hour on cnbc. Level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. music defiance is in our bones. Defiance never grows old. Citracal maximum. Calcium citrate plus d. Highly soluble, easily absorbed. Dont just visit new york. Visit tripadvisor new york. With millions of reviews, tripadvisor makes any destination better. [ male announcer ] since we began, mercedesbenz has pioneered many breakthroughs. Breakthroughs in design. Breakthroughs in safety. In engineering. And technology. And now our latest creation breaks one more barrier. Presenting the cla. Starting at 29,900. What is this place . Where are we . This is where we bring together reliably fast internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system. Only from xfinity. Tv and internet together like never before. Only from xfinity. About eight minutes left, the dow up 155 point, nasdaq up 34 and s p up 14. Joining kelly and me is Larry Mcdonald and mark lachiney from montgomery scott. Im going to sound flippant. Yesterday we were down 150 point. Today were up 150 point. Which market is right . From our perspective is were seeing a market struggling with the fact that we have full valuations and were got in between the lack of decisive evidence that the economy is accelerating at a pace that consensus held. So as a consequence the lack of news yesterday that sold the market off was the same lack of news today that caused a rally in the market which is to say its a technical tugofwar. Its not one built on fundamentals. Larry, is there a problem building up under the surface here . Well, its very disturbing how much influence fed officials, ecb officials, have on markets around the world. Its so disturbing. Everybody is playing into this ecb trade on june 5th and yesterday and today the dudley comments and the different comments from different federal officials are whipsawing the market around. Wait a minute okay, okay, okay. Today were up 140 point. All the fed minutes and were up 155. It doesnt exactly feel like its being whipsawed today but is your point more broadly about the back and forth activity . The market is a serpent, a beast, saw this in 2007. If you give the market too much visibility, if you look into the lbo deals, 40 of lbo deals in the last 12 months are done at greater than six times debt to deebda. Wow. If you look at the highyield bonds as a hole, 80 of all the bonds, yield less than 4. 75 , so, you know, the markets a beast and they are taking advantage of fed visibility. Mark, are you buying right now, is that what youre saying . We still are. The fact of the matter is equities remain the asset class of choice. Valuations are, again, not necessarily cheech. We like sectors that are going to benefit from Capital Expenditures which we believe the companies having the wherewithal to spend are now seeing it likely to revise and cap x facing tech and stlils, even the energy spacers because we like a cyclical stance given our bullish posture in the economy. Weve got breaking news involving lorillard. Weve known theres been deal talks and rumors surrounding Reynolds America, a u. S. Company and lorillard. Reynolds american is in advanced discussions to buy lorillard shares whose shares have spiked up to highs on that news. Reynolds american, again, the proposed deal could see British American tobacco take a major role back in reynolds in terms of the overall deal and that the companies are working to finalize this deal as soon as in a matter of weeks but many moving pieces remain and talks could take longer this, all according to sources familiar with the matter. Lorillard and Reynolds American according to reuters in advanced talks and a deal could happen within matter of weeks. Up towards session highs, upner 11 to the upside. Back over to you. Boy, these mergers just keep coming at us right now, kelly. They do, and this points to whats happening in terms of m a space. Whats that say about the market . Another big deal, yeah. All right. Were going to take a break and come back with the closing countdown and see how we trade here. Yeah. Also, more on ebay getting hacked and asking users to change their passwords that. Story is straight ahead. Plus, theres a she keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. 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And i just got a. Oh no, thats mom. Sorry. Claim status updates. Just a tap away on the geico app. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Welcome back. If youre just joining us, late news here, reuters saying that Reynolds America may be in talks, advanced talks with lorillard to buy lorillard, no price given at this point. Could take a while for this to happen but the stock responding, up 10. 25 at 62. 55. What does this say, larry, about all the mergers that are suddenly happening right now . What does it say about the market here . Very much like 2007, lock at last year, high yield bond issuance was supposed to come in at 20 billion and came in close to 32 so companies are accessing the Capital Markets aggressively, and they are taking that capital, and they are putting it into m a. Bob pisani, i guess, does that signal something about where the Market Companies think valuations are going from here . I think theres a little concern right now about ive been concerned about Capital Investment for a long time and rather disappointing that were not seeing more interest investing in capital at this point and i would like to see less interest in buying back stock. Another day, a big churn. Down yesterday, up today. Its driving the Investment Community crazy. Us, too. Thank you, gentlemen. Thats it for us. First hour, up 156 on the close. Stay tuned. Well get that pricing of the big ipo in china, j. D. Com, on the second hour of the closing bell. Ill see you tomorrow. Thank you, bill. Hi, everybody, and welcome to closing bell. Im kelly evans down here at the new york stock exchange. Its been a strong day across the board on wall street. Here is how were finishing up with the dow adding 157 points. If this looks like a mirror image of yesterday, by the way, it is, the dow is strong, nasdaq adding 35 points and the s p up to 1887. The blue chip index, up 150 parents, off its alltime high. Lets get to the panel, josh lipton is in town. Welcome, sir. Sarah eisen and stephanie link and our own robert frank. For more on todays Market Action ffun trader brian kelly. Brian, you mentioned this in your note this morning saying youre worried about target, about retail, about the consumer and s p more broadly. So then whats why today are we still so strong here . Why didnt the market care about the fed minutes . Why didnt it care about any of that and we just keep powering forward . The market keeps powering forward. I think a lot of it certainly has to do with you just had Larry Mcdonald on this hunt for yield so you certainly see some of the names that have big yields doing well. You havent seen the s p, the Broader Market adjust yet. I happen to be in the camp that i think we are going to see that adjustment. Not necessarily saying were going, to you know, fall into the abyss or were going into recession. Seems is to me that the s p price earnings ratio hasnt adjusted to the Slower Growth that were seeing. Do you agree, stef . Well, i think no, actually not. I actually think thats what makes a market. I think what today is all about is theres pockets of the consume their are okay and that yesterday we were all freaked out that we didnt know what was going on with the consumer because we had so many disappointments, one after another. Today we got tiffany, lowes and target, even the expectations were low, not a great quarter of guidance but at least it was a sigh of relief and add on costco and north strom and you have 69 of the gdp not falling apart. There are pockets and things to be look forward to and be encouraged about and ge and emerson, both companies noted that the u. S. Market in the industrial segment was seeing an improvement and both braced for upgrades in europe so the economy is okay. This fascinating, a westbound were debating it yesterday who is saying recession, but youre right. Thats the level of uncertainty that remains, sarah, in this market. Sews tea interesting, too, when you talk about the pockets of prosperity here. Theres been in narrative that the top the affluent consumer, top Luxury Companies are doing well, dont pick the bottom but even within the top, coach, you know, coach do pretty well, tiffany do well, berbury and ridge mont not do so well and when you think the affluent wealthy consumer is going to support that group. Some companies are executing with good products and some arent. I hate the phrase stock pickers market but it really is. You have to embrace that phrase. I dont know. From the fed minutes today i thought it was particularly interesting to go through some of the dialogue on the technicalities of when it comes to normalizing Interest Rate as far as an investor. You said why are investors ignoring the Federal Reserve . Their tapering program and scaling back the qe is pretty much on auto pilot and that was the signal today that the economy is not bright enough to consider actually raising rates, lets just talk about it because its going to be a tricky dance. If you saw the reaction, the dollar actually weakened on the fed minutes on the view that they are talking about Interest Rates, but there were no conclusions by any means when it came to how they were going to get this policy normalization going through. But its still this kind of grim gold locks from a couple years ago. Still so fitting. Kind of environment and where it gets into the valuation, wait a minute, companies are trading at insane valuations and fundamentals arent that strong. You know, maybe youre cashing up to some of the optimism thats out there. Some of the other indicators are interesting. Look at the nfib, Small Business optimism index ramping up and when you looked under the hood of some of those metrix, kind of interesting. Look at business openers getting more optimistic and what concerns them most. Its not sales anymore. Way down the list. What are they most concerned about, the government and regulation. Think about that as youre looking ahead. Whats concerning them is not how much they are selling to their users. Goldman sachs had an interesting report out yesterday to talk about spending and they did a survey of cios and it was actually very interesting that they are seeing an improvement from the april data, the data they just collected versus the february data, so if we can get cap spending and Business Investment to get started or at least improve, i think thats definitely not factored in. Along with the m a. Lorillard, that market cap, i believe pricing in this news potentially on reynolds, 22. 5 billi billion. And lorillard has bought back a lot of stocks so thats been a tremendous stock for investors and when you talk about m a, again, where are the companies putting and deploying capital . They are not necessarily finding new areas of growth but in the longer run in the broader picture the best thing for the u. S. Stock market, its kind of a gold locks slow Growth Scenario because think about it. If things get too weak, everybody is going to panic and say, wow, qe didnt work. If things get too strong then the fed has to raise rates and what we saw yesterday is when the fed speakers came out and were more hawkish the markets just tanked so we need to stay right down the middle here. I guess. Theres still the attitude there was an interesting survey even today of the longterm jobless that found i think more than half of them have just given up looking for work, you know, not surprising based on any historical experience with longterm joblessness except its higher in this country than it ever has been, no real sense how to address it or what to do about it, sarah, and the concern is if the recovery isnt Strong Enough those people will never be brought back into the labor force. Thats the big concern, the wall of worry. Great that companies are stepping in to put their money in and make deals and they had a sign of confidence but they need the demand, the economic demand and health of the consumer and when youre coming off a gdp report which looks negative from the First Quarter, a 0. 1 increase in retail sales theres serious questions, Housing Market starting to lose momentum and whether the breakout recovery that the ceos and companies are looking to can actually come through and how much is pricing in the stock market and whether thats looking like the best relative bet anymore. Thats why home depot rallied yesterday because they told us may was robust and thats very important an lowes, by the way, said the same thing, comps are running low Single Digits in may. It will take time to play out, to see if its really weather or something else. A combination of the both. Part of the autoparts story, people are hanging on to their old cars and old houses and they are fixing both rather than trading up with both. Josh, i dont know if you caught this. Im curious what you think last hour. Had a fascinating chat about retail, and i asked if disney was killing the mall, and there is some evidence that people right now having at first maybe spent on a handbag or spent on a pair of shoes coming out of recession are spending on things like take the family to disney, especially if its been cold this year. Disneys an interesting point because they just raised ticket prices. Exactly. Oneday ticket, if you want to see mickey mouse, it will cost you 96 which is really interesting. What happens to 100, some kind of psychological there, but the fact that you can do that and get people to bring the family and kids. Handbags or mickey mouse, make that comparison . If the whole pie, the consumer income or spending pie isnt growing that much, maybe people this year are taking that trip because they finally kind of can and are a little more difficult they are doing so, maybe thats crowding out spending at the mall. The Income Growth has picked up over the last two quarters. Income growth has gone up above 2 and i think whether you certainly see it on the wealth but among affluent and middle class, experiences in travel and family time have kind of replaced stuff and status as the bigger part of spend so i think this is a structural thing well see a lot going forward. This has huge implications potentially. I dont want to make too much out of it. Brian, what do you think . Well, i think youve seen it in some of the travel stocks, so look at expedia. They had a great quarter, so youre starting to see that flow over. You know, do is it an investable theme today . For me probably not. Am i going to take action on it tomorrow morning . Absolutely not, but put that on a piece of paper and watch it. Yeah. What are you going to take action on, by the way, before we let you go . I think the easiest trade right now is buy u. S. Bonds. Everybody wants yield. As long as we stay in the gold locks era i say buy bonds. Were back to that. Were just going to leave it there and i thought we wouldnt talk about bonds. Almost made it. Brian, thank you. Yeah. Stick around and catch more brian kelly coming up with the fast money crew here at 5 00 p. M. They will be asking eric jackson of iron fire capital what he thinks google should buy next, that Company Making some talk about a big acquisition maybe in europe. Dont miss a moment of it, and ebay admitting that it has become the latest cyber hacking victim telling users to change their passwords. Find out what else you need to know next, and democrats in Congress Introducing a bill that would limit the ability of u. S. Companies to technically move themselves overseas to avoid taxes or lower them, but does this adjust the real problem which is our tax code. Coming up, one of the lawmakers behind this push, congressman sandy levin will weigh in and former nfl players are suing the league for allegedly supplying them with painkillers. The lawyer leading the charge will be here later on the closing bell along with a former nfl player who does not support the lawsuit. Youre watching cnbc, first in business worldwide. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back. Lets start off here with dominic chu and a quick market flash for us, dom . Kelly what, we have, first of all, is net app, better better than expected firstquarter earnings. Guidance is also above wall street expectations, the stock in a volatile trade, spiking up and down, down half a percent rate now overall, and we want to bring you an update again to rehash again what we talked about with regard to lorillard and Reynolds American. Reuters citing sources close to the matter saying lorillard could be in a deal with Reynolds American as early as the coming weeks. Again, one of the big deals here is that, remember, British American tobacco owns a 40 plus percent stake in Reynolds American. According to the reuters report, this could be a threeway transaction involving Reynolds American and lorillard and, remember, with this company in a possible deal youve got Reynolds American, which is americas second biggest cigarette maker and lorillard which is the countrys biggest maker of Menthol Cigarettes so any possible deal hypothetically could create a real force in the American Tobacco market. Well bring you more details as they become available. Lorillard shares finish the session up 10 , spiking up to session highs on news from reuters. Back over to you. A 22. 5 billion market cap from lorillard. Thank you. Ebay says a cyber attack breached a database containing passwords and other Financial Information. Whats going on . Take a step back. Ebay comes out and tell its users, listen, you need to change your passwords, theres been a hack attack and ebay and users, talking about 145 million people. There was an attack, and ebay also importantly saying no Financial Information was compromi compromised. There may have been some confusion because the company also posted a similar message on the paypal site and that message was taken down. Paypal said as of right now based on this evidence no paypal Financial Information, credit card information appears to be compromised. Remember, that information is stored and secured separately. Its encrypted, so as of right now, kelly, no Financial Information from ebay or paypal has been stolen. Okay. Heres what i want to know, you guys. First for more reaction lets bring in, if we could, the president and ceo of temmon and company. To what extent is the onus on companies to make it clear in any kind of case like this to the public, to people affected, what is going on . The onus, kelly, is way more than they want to admit, i think. They have to let people know whats going on as early as possible and thats generally at variance from what the Security Experts tell them so Security Experts tell them take as long as you want, understand it, circle it, make sure that it doesnt go further and, therefore, they are keeping all this information from the public and you dont know what to believe. Exactly. Thats what im wondering. Do you think well have to start evolving towards some kind of standards with regard to transparency so that its not weeks or months after the fact that you dont know whats happening with your data . Heres my question. We have aol or target and paypal and ebay. To what extent do you think were Getting Better disclosure on things that might be happening behind scene for years . A lot of times these companies, it takes a while of they know they have been hacked and then you have a very interesting tension if youre in the c suite, especially a Company Facing different kinds of pressures and youre having Strategic Issues and financial issues, how much of an incentive do you have to put this information out there. Ceos have been ousted after thighs attacks, not necessarily saying these attacks, the reason they got ousted but it definitely didnt help. I think youve got to bring investors into this conversation as well. Stephanie, a question for you. They dont have to by s. E. C. Standards disclose to investors. Some of the Companies Directly targeted by chinese hackers did not because it was not considered by the s. E. C. Material information. Do they need to put a clause in there to get investors to start thinking about this risk . I dont think you want to alienate your customers and as soon as you find out something thats pretty negative, youve got to disclose it from a customer point view. From an investment point of view, absolutely. I want to know whats going to happen. Look what happened to target. Their traffic, their online traffic fell 17 in february and march because of this data breach, not all the reason but a lot of reason, so if i as an investor own target i want to know what i expect to see in terms of trend. This is the interesting tension that companies are dealing with. They know on the one hand disclosure will hurt business and they dont want to do it but there needs to be some accountability here so what is the only option effectively to do something across the boards so that starting tomorrow, for example, Everybody Knows as soon as something happens they have to tell the public. Theres got to be some standards, and they have got to be thinking about the long term and not just the shortterm hit. The long term is going to be far worse, and lets face it. This is happening everywhere, and our data is not safe, and its not clear when it ever will be safe because hackers, its a mega country business. Its not just a bunch of guys in a garage who havent had girlfriends. This is a major business. But, are there simple steps, recognizing that no business is immune . Are there simple steps when you listen to cyber Security Experts that companies can take, they say wheres the attacks coming in, thirdparty plugins, spam, weak passwords, simple steps to take . Its really hard to tell the whole public youve got to change all your passwords and dont use the same password from one account to another. How do you remember all this stuff . I think what it has to do is be a joint force with Law Enforcement, with governments, with specific companies, to go against this, but, on the other hand, i think they have to say to people your data is not safe. We cant promise you that. We can promise you that if it is ever breached we will make you whole. True. We will take care of you and then they better do that. Last question. Is this something the s. E. C. Could implement overnight, for example, at least with regard to the biggest publicly traded companies . I dont know if they could do it overnight. Theoretically could they . Theoretically they could put in some kind of a proviso, but they will to hear from all party and believe it or not Law Enforcement actually want it to take longer usually because they want to understand and they want to shore up the walls, so youve got a lot of different components, but companies have to put their eye on their consumer and if they dont there will be hell to pay. Thank you both for that perspective. Now, a new report says Climate Change can be primarily blamed on Food Companies. Up next well hear from someone who says Companies Like kelloggs and General Mills are the real culprits. Wait until you hear what they want these foodmakers to do and why not take a helicopter to your next beach vacation. Thats exactly when a new company is offering. Robert frank, did you really get a list out today . Somebodys got to do it. When a tough job. He got a lift out to the hamptons in one of these helicopters, and you wont believe how much the next big thick in Luxury Travel costs when we come back. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Welcome back. More retail earnings are out. Lets send it out to dominic chu for an earnings alert. Kell, what we have is Williams Sonoma moving higher in the after hours trade. The company is posting better than expected firstquarter profits and sales spiking up about 5 . It sees fullyear comparable brand revenue up about 5 to 7 and also said it bought back about 5 about3million of its own stock during that period. The stock is up towards after market highs, up 4. 5 to 5 . Back to you guys. Try to get some thoughts on that one. Big beverage and Food Companies are now in the Climate Change crosshairs because while they make a lot of grain a new report says they are not necessarily green for the environment. Companies like general mill, kellogg and pepsi emit large amounts of Greenhouse Gas and the companies in the opinion of this report are considered to be main culprits of Climate Change so lets bring in Raymond Oppenheimer president of Oxfam America and joseph bass, ceo of the Heartland Institute which takes issue with these findings. So, welcome to you both. Raymond, first of all, how much are you putting on these specific companies for Climate Change as you see it and what does that imply for the amount of money or the amount of changes that they need to make . Well, thanks, kelly. Glad to be with you today. Our report is basically challenging the ten largest food and Beverage Companies to step off the sidelines and to get active on Climate Change in a real way. As you just pointed out, 25 of Carbon Emissions globally can be attributed to Agricultural Supply chains which supplies that the food and Beverage Companies have annie normous responsibility to be active in the solution. Our belief is actually that as Food Production companies they are part of the problem in their carbon emission but we also believe they are part of the solution, and the thing that i think is real important for your listeners to recognize is that at this point in time most of the companies recognize that their supply chains are at risk. Their investors believe that to be the case and they have got an enormous responsibility i think both to communities throughout the world as well as investors to take action. Joseph, you feel differently . Yes, i do. I think ive looked at the oxfam study, and what i see is i think an overreliance on the ipcc which is the United Nations agency on Global Warming. I dont think that the evidence is anywhere near as clear that we have things to worry about on climate. The Food Industry in particular is doing a terrific job of feeding a growing world population, and its doing that using fossil fuels. Without fossil fuels theres no way we could feed a growing worldwide population. Are you taking issue with the presumption of Climate Change, or are you taking change of the role of the Food Companies in that . Well, i think one is a subset of the other, so if we dont have a Global Warming crisis, why are we asking Food Companies which are part of the solution, not part of the problem, to reduce their carbon footprint. Im kind of surprised because, you know, people who are familiar with the hunger problem and agriculture understand that Carbon Dioxide is a food fertilizer so the more we produce Carbon Dioxide into the atmosphere, the more it encourages plant growth and crop harvest. 16 of the increase in Food Production in the 20th century was due to Carbon Dioxide levels rising in the atmosphere and why punish an try for that . Raymond, do you want to quickly respond to that . I think joe clearly represents a minority view. We stand with the 1,500 or so climate scientists from around the world who have really made the case that Carbon Dioxide is actually an important contributor to Climate Change and that weve got to begin to take action on that and its humanly induced, and i think maybe its also important to indicate that as an International Organization were working around the world on the ground dealing with poor communities that are actually living the experience of Climate Change today. In Subsaharan Africa drought cycles have been reduced. Im curious as to why you pin pointed the specific companies of kelloggs and General Mills and whether theres specifics of companies that are getting it right or that get it . Well, i think all of these companies in the in our overview, which are actually the ten biggest food and Beverage Companies, are ones that are actually have actually recognized the climate problem and recognized it has its roots in carbon and recognize they need to take action and they are all are doing something. I guess our challenge to the companies is that the biggest that the 50 or more come from their Agricultural Supply chains and thats the area that they are not disclosing in terms of impact so what were challenging them to do is to fully disclose theop emissions in their Agricultural Supply chains which are the biggest part of the contribution and actually set targets for reducing those proportional to their potential target. Here are some of the Biggest Companies in america . I think some of the companies are taking the right steps. Could they do more, certainly, but at the same time they have an obligation to focus on profitability and balancing that near term versus longterm kind of strategy so i dont think they are perfect. Certain areas like efficiencies, processing efficiencies that they can focus on, using more solar, lighting efficiency, we talked to the h vac companies all the time and thats definitely certainly a trend thats starting to happen that these companies are going after, but, you know, they have an obligation also to focus on shareholder value and being profitable. Joe, weve got to go, but do you think that that focus that stephanie is talking about is all mistaken or mislaid . I think it is a mistaken and unnecessary. I think it hurts the profitability of a company to do unnecessary reductions in its Carbon Dioxide emissions. Theres no science that says that this is necessary. The Food Industry is doing a terrific job. We owe them a huge debt of gratitude, and a lot of that is because of their Carbon Emissions. Some of the companies themselves have said that this is something that they think is an issue and one that they want to work on. For pr weve learned for pr reasons every Company Wants to paint itself green. They are going to say that they are doing everything they can to reduce their carbon footprint. That doesnt mean its good science and it doesnt mean its good for investors. I think a lot of money is being wasted by a lot of companies trying to fight this this goblin called Global Warming when in fact we know now the science is definitely out on this. Its not a crisis. Look. Raymond, joe, i knew you guys fundamentally disagree on this. There are some Big Companies in the middle. Well have to leave it there. Thank you both. Agreed. Congress trying to make it harder for companies speaking of companies, to take advantage of lower tax rates overseas now. Should lawmakers be more focused on fixing the tax code thats driving companies into the arms of other countries . House ways and means Ranking Member sandy levin is here next, and coming up well hear from the lawyer suing the nfl on behalf of former players who say the league illegally supplied them with painkillers to get them on the field sooner than they should have been and others say the lawsuit is about merit because players knew exactly what they were doing. You dont want to miss this discussion. Press your tongue against it, like this. It moves do you feel it . It can happen with every denture. These movements may irritate your gums. But you dont have to bear with it. You can try fixodent plus gum care. Thanks to its formula, your gums become one with your denture. This helps stop movement and helps prevent gum irritation so you can keep enjoying life. [ apple crunches ] fixodent. And forget it. Welcome back. A lot of merger news hately is about companies hoping to put down roots overseas hoping to pay less tax here in the u. S. Pfizer and walgreens two recent examples of companies who may be looking to go down that row. Some say this shows the tax code needs fixing. The democrats in both the house and senate rin stead proposing bills that would change the rules so companies have a much harder time making that move overseas. Representative sandy levin is cosponsor of the house bill and joins us now in an exclusive interview. Hes a democrat from michigan, Ranking Member of the house ways and means committee. Its great to see you, sir. Great to see you. What would this bill do, first of all . What would it require or what would it Keep Companies from being able to do . Essentially they cant just easily renounce their citizenship, keep major activities here and essentially pay very low taxes in some tax haven. You know, individuals cant really do that, and i think the public thinks it isnt fair for corporations to do that. It means essentially avoiding taxation. Also it can mean jobs in the u. S. Thats really what this is all about. And we had a couple of congressmen from the other side of the aisle who when pressed on this issue said almost the same thing except they say theres no reason that legislation can move forward because the white house doesnt support it. Is that true . I dont think thats true. This bill really tracks what the president has proposed. It very much tracks it. Theres only one difference in one case. The bill in the house is very much like the president s proposal. So whats the issue . Or is this going to move forward . What likelihood do you put on this moving forward . I think the issue is this. I think there are some people in this place that dont see that escaping taxes, moving to tax havens is a problem, and others say lets wait for tax reform. Im in favor of tax reform. I think we need to lower the corporate rate, but lets remember joint tax told us if you reduce the rate to 27 or 28 , you have to eliminate all of the tax provisions, the manufacturing credit, accelerated depreciation credit and r d tax credit so it isnt so easy to get down. We need to move in that direction but carefully remembering what the issues are and what the objectives are. In the meantime youre having this doubling in the last seven or eight or nine years of companies that are essentially saying were going to give up our citizenship but not our major activities so we can pay less taxes some place else. Thats tax avoidance. Individuals cant benefit from that. I dont think corporations should either. Congressman, what if you just got rid of the Corporate Tax, raised the tax on dividend and Capital Gains and we found that the companies stayed here and companies elsewhere wanted to move here. You know, thats been proposed by some but it isnt so easy essentially to say corporations should pay no taxes and raise the tax on dividends. Thats a very controversial proposal. It isnt in the camp in the chairmans proposal at all so just to say lets do that and escape the need to look at these inversions where companies are essentially taking advantage no, but thats addressing the inversions instead trying to do it piece by piece fix to what is still going to be a problem. I think thats very controversial. Isnt likely to happen to eliminate Corporate Taxation all together. No, i dont think thats going to happen. What we need to do is face up to the present issue of tax avoidance, of moving to tax havens and eventually also moving jobs overseas. Representative, thank you for your time this afternoon. Thank you. Lets see what the panel thinks about this. Also joining us now is our own eamon javers from washington. Your thoughts first here. The congressman kind of flicked his idea in the interview you just did which is interesting is a lot of people in washington want to wait on inversions and do it is a part of a broader tax reform proposal. Senator wyden said he wants to tackle the inversions issue but do it as part of a broader tax package and whether that even happens so you could be waiting for a train thats never going to come along to hook your wagon up to and theres no appetite in congress to do this as a oneoff. Will this get done is a really open question and the answer is likely no. To me it seems like a bandaid, not getting to the root of the problem, overhauling the complicated tax system. The companies have gotten around the fact that they would have to high one of the highest Corporate Taxes to bring cash back home. It makes sense doing that. Blocking that would just paper over what the actual problem is which is the Corporate Tax rate and some of the other onerous problems. The Obama Administration had a proposal on this in their budget earlier this year. What they wanted to do is tinker with the ratios of corporate ownership right now that allowed this to happen. They would say that you would not be able to do an inversion unless you were transferring more than 50 of the companys assets overseas. That would change the likelihood that inversions would get done at all that. Would probably be a very effective way to stop this. The choices are basically between a series of poorly designed moves to try and sort of keep this from happening versus a fundamental overhaul thats never going to happen, so robert . I think the easy answer is to say, well, lets just do Corporate Tax reform because thats what needs to happen and thats what this is a loophole but that is not going to happen. This rule that allows you to have only 20 of your activity overseas yet be based there for tax purposes, thats ridiculous. I mean i think the halfhalf rule is sensible, generous and could happen and Corporate Tax reform cant so lets just do this. Anybody that looks at the ratio thats in this rule that companies are dodging, 80 20 is a ridiculous ratio to have. 80 of your company in the u. S. Yet still be based overseas, thats ridiculous. People cant do that. People, individuals cant do that. Probably not going to get passed anyway. The inversion is not going to get passed and youre not going to get Corporate Tax reform. Youre not going to get any of it which is why were going to see ate lot more inversions coming forward and for investors thats something that investors like because its a tax savings for these companies. Eamon, i would totally agree with you on that. Weatherford international did it, eaton did it and those stocks flew when they made those announcements that they were moving to ireland. Thats the incentive, the carrot. And the reason its not going to happen, eamon is because who is supporting this to not happen. I mean well, theres the ever present gridlock in washington and the question is youve got some people out there who say that they dont think this is a problem ultimately because the real blame belongs with the tax code itself, taxes being too high and the others who say this is just a failure of patriotism on the part of these companies that they should be loyal americans, like the rest of us who pay our taxes. We should voluntarily pay more tax than were required to do. The rhetoric of the congressman was along those lines, right. Renouncing your citizenship, turning your back on america. Comes down to just incentivizing these companies, right. Eamon, so frustrating. I hope everybody in washington is listening to this. Just the fact that there are no Interest Groups specifically looking after it shouldnt preclude something that makes sense and would be good for everybody from happening. Well keep hammering away at it. Washington doesnt always make sense. Aint that the truth. Thanks, eamon. Lets send it out to dominic chu. Another earnings alert. The consumer theme conditions. L brands, the Parent Company of victorias secret and bath and body works. The womens specialty retailer posting better than expected firstquarter earnings on sales that pretty much matched wall street estimates. Its Second Quarter estimates were conservative lowering the upper end of its fullyear Earnings Guidance citing noncore categories and the exit of certain categories within victorias secret to redeploy those assets towards faster growing and more profitable product lines. The stock is down. 02 and l brands coming out with a better than expected sales report on matching sales and does lower the end of its fullyear outlook, kelly. Back to you. The other big story. Saw a spike in the lorillard price target. Something that analysts were speculating a lot about in this industry and im just going back on the interest. Nick modi of rbc put out a note saying that this is potentially likely to happen. He put a price on this at 70 share, as you can see. Lorelei shares are actually spiking on the news of the deal talks. Perhaps thats why those kind of prices are out there. The combined companies, chief synergies and cost savings of 900 million and the big question mark, whether the regulators would sign o. According to nick modi who follows this of rbc, he says, yes, there would not be a lot of regulatory hurdles in terms of this deal and he doesnt see any of them needing to divest any brands in terms of a deal as well. Tobacco has been a hot sector and a lot has been on this m a speculation. Have to watch a lot more reporting on the price. Theres still room for it to run. Are markets taking center stage on cnbc. Com. 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This is to fix a feature that could prevent the alarm from actually sounding immediately, and what the feature is theres an alarm that goes off, and a feature that allows to you kind of wave your arms near the machine and it silences the alarm. Well, nest is going to roll out a safety a Software Update for this particular product on the home monitoring device side of things, 440,000 Smoke Detectors and alarms and Carbon Monoxide alarms is affected by this recall. If you have one of these products, go on to nest. Com or it says here connected to the nest device and your nest wave nest sense on your account settings to go over whether or not this recall can affect you. If you have a nest product check to make sure that this product is going to get the update that it needs for this particular Smoke Detector and Carbon Monoxide device. Back over to you guys. Dom, thank you. Now, a big selloff dominated cnbc. Com yesterday and today we have a comeback. Whats the hot list to do . Allen watsler joins us now. A look at why a big market correct may not be in the offing. Instead shes talking about a rangebound sideways movement. My favorite quote, the market isnt correcting in price. Its correcting in time. How do you like that. Our number two, one of the entitlement programs big in Social Security, the Social Security Disability Insurance program. Less than two years worth of money left. Its running out. Whenever we do Social Security coverage, people dive into that one, and finally my favorite story of the day, the french Government Order 2,000 new rail cars that dont fit their rail stations. Too wide. Over 28,000 people have read those already. Those are my top three. Brutal. Good to see you, sir. Did the nfl illegally give players pain killers to keep them on the field . Up next, well hear from a former pro who says these drugs always had a presence in locker rooms and players willingly took them knowing there could be drastic consequences. The lawyer bringing the suit also joins the conversation when we come back. Welcome back. The nfl is involved in another lawsuit that could damage its reputation and bottom line. Last time it was about cobb discussions. This time eight former players filed a lawsuit allegedly saying the league supplied them with painkillers to get them back on the field. A former nfl receiver and now president of academy securities. Thank you both for being here. So phil, i want to ask you first because you say you dont support this lawsuit. Why not . I did not say that i dont support it. All i said is that i didnt have the same experience that some of these other players are currently having. When i played unfortunately for me i didnt have injuries which had me get shot up before games. Although i did see from time to time not with the new york giants but with other teams i played with, i saw trays of needles and guys being injected before they went out on the field. Is that what this is about, steve, those trays of needles, those shots, those pills . How serious a problem was this according to these players . Its a very serious problem and our clients lives have been decimated as a result of the nfl putting profits before players. Im not sure if phil was an every day player or not but our every day day players are telling us they were banged up, severely injured at times and these injuries were kept from the players by the team doctors. They were administered narcotics, prescription drugs. And antiinflammatories without any indication whatsoever of what the warnings were or the mixture of these drugs and had they known about it. They might have taken a different course. Stephanie, youre one of the most active people i know on the street. But you say that people in other words, this is something that they the risks should have been apparent . I think theres a big difference between not being told that your leg is broken and being given a drug that you dont ask any questions about. Its their responsibility to understand what it is theyre taking. I know the pressures of keeping your job and staying healthy as best you can. But they are two different things. These people have to know percocet is not a good thing. Would you say you had this 22yearold quarterback who is getting injected, would you think some of the responsibilities if these allegations are true, that is so beyond the pay on the limits of just basic medical professionalism. Also, some of the clients, are you seeing addiction rates . Do they get hooked on the drugs . Steve. Yeah. Janeny hill for example never took a drug in his life for seven years. Got shot up given every kind of pill you could imagine and left the league a junky. I talked to jeremy today. He spent one season where he was an all pro center and walking in a boot on crutches and the team told they told him we got to get you out there on sundays, you dont have to practice and they shot him up with toradol before every single game. And jeremy asked the team doctor, what are the ramifications of this. They said youll get some bruising because of it. But thats about it. What they didnt tell him is that it causes internal organ damage and now he has stage 3 kidney failure as a result. 38 years old. And many people beyond the nfl following this because it was hardly just the Football League involved in these kinds of practices. Unfortunately, we have to leave it there. For those of us in new york. Heavy traffic. For those who are going to the hamptons. If you dont feel like sitting on the crowded roads, then get to the chopper. A new company taking new yorkers to the skies this summer. Back in two minutes with the details. Whats seattles favorite noise . 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