Transcripts For CNBC Closing Bell 20140611

Just the fact that markets have come so far. Dow down triple digits. Yesterday the dow was slightly negative. Finished the session slightly positive. Boeing and nike, leading us lower. Some say Market Sentiment heard as eric cantors stunning defeat last night. Hell step down in his majority leader role, that announcement coming the next hour and well have full development. Barney frank joins us, larriy kudlow and republican pollster coming up on the show and well debate the house Leadership Conference when it begins. Stunning news. Making sense of these markets is nonother than the legendary vanguard innovator jack bogle who joins us exclusively for his take on these markets and what investors should be paying attention to right now. The dow is off its lows and still down more than 106 point. Take a look at nasdaq. Outperforming as of late. Down about 12 point. Thats a little more than a quarter of 1 . Finally the s p 500, thats giving up almost eight points this hour. 1942, scott, is the level. All right. Joining us now in our closing bell exchange, Abigail Doolittle from peak theories, gemma god freed and Jack Bouroudjian from index financial partners, Keith Fitzgerald from Money Map Press and great to have all of you with us. Gemma, i begin with you. Whats this about today . More about the world bank taking down its world growth or the political shocker that all of us, wherever we are around the globe, are trying to get our hands around . Trying to get our hands on it because volume is low and i got stuck in traffic from uber, the protest on uber to try to get here, but the interesting thing were looking at at the moment is the world bank came out and cut Global Growth forecasts but only seem to be telling us half the story. They talked about the turmoil thats going on in russia and the ukraine. What they didnt mention was the 200 billion euros worth of capital going into europe out of russia, and thats propping up the euro and really meaning that europe is struggling, and secondly, they are talking about this risk of expectations for the fed to raise rates, hitting emerging market, but they are not talking about that actually affecting high yields because invested and pike into high yields for protection against an Interest Rate rise and yet because obviously as short a duration and will be affected less and yet the market has increased and doubled in size since before the crisis but dealer inventory has been cut by twothirds so when they all want to go for the door it will be hard to get that access. You know, david, if you wanted to talk about cat lifts for a little bit of a market correct here one of the things that we havent discussed yet is the downward spiral. I dont know how else to describe it, whats happening over in iraq. Not actually seeing Much Movement in the oil space with you i might expect to be one of the most significant areas expressing concern here. Is all of this contributing to the markets nervousness today . I think it is contributing to the market owes nervousness today, and were also seeing the energy sector, one of the s p 500 sectors holding up quite well probably due to that, and we can talk about shale oil and Energy Independence for the u. S. In the future, but we still depend on the middle east for oil right now. And this is a pretty big event with what the isis, the fraction of arc did a that controls part of syria, controls part of iraq. In the city of of mosul and is coming south. This is not only about iraq but instability in that entire region and geopolitical tension like this tends to price we tend to price that into oil and also it does cause anxiety for the markets. I think thats part of whats happening today with the selloff. Jack, gough political tensions, our own political tensions, the uncertainty of not knowing that it means politically, whether gridlock is once again on the horizon. What do you make of it . I dont buy, it come on. This market is not nervous. Were at alltime highs. Weve come up ten s p points after the World Bank Cuts its forecast a little bit, thats nothing. Look, if we were down 3 or 4 off of that kind of a forecast cut, then i would say yes, weve got something to worry about, but nothing has changed here. Look, weve got Central Banks who said what are you looking for, 3 to 4 pullback not a day and that makes us nervous . If that was going to be catalyst for a real move would you see much more of an effect, a bigger bid in bonds and a lot more selling. What we have right now is a welldeserved pullback. People fail to realize five short weeks ago we were trading under 1825 in the s p. Wow. This market has come a long way very quickly so one of the things that i will point out is the quadruple expirations and one next friday and that are notoriously strong for equities. Weve made new alltime highs the last two quadruple expirations so be careful and one of the other things, and we have to betoreally be cognizant of this fact is that youve got so many unbelievers. Keep talking about this being the most disrespected rally. But we also know jack, i dont think i dont think that that kelly or scott or myself are saying this is the beginning of a correction. Were talking about Market Action today, and with the world bank forecast, with eric cantor, that political what that means to politics here we can talk about. These are buying opportunities. These are buying opportunities. Look, you have got a Federal Reserve that is telling you that they are 100 behind this market, and on top of that youve got the ecb and draghi thats not hang on one second because theres still a reverberation from the piece in the journal last week about whether or not the market is too complacent. I dont know if you can say the Federal Reserve is entirely now behind this market. I absolutely agree with you, kelly. I think the Federal Reserve is trying to back away here, and i think that were really looking at a matter of trust and confidence. I think that many investors are out there do not trust this market. They do not trust the fact that the s p 500 is up nearly 200 in five years. Meanwhile, the economy is standing still. We still have a tremendous disconnect between main street and wall street. Plus, you have investors, if we keep it simplistic, especially retail investors, who were burned, not just burned but badly in 2000 and in 2008. That memory lingers. Its very hard for them to get involved. Abigail, that is that has been the argument thats been the argument time and time again. In fact, thats been the argument that has kept the general public out of the market. Jack. In cash. You guys are making a mountain out of a molehill here. Jack, that would have been the argument youre making a mountain out of a molehill. I think, yes, all these things play in. You know, dont forget were in summer, near record territory. That speaks to a period of digestion, havent had a meaningful rest in the markets for a long period of time so whether its uncertainty, whether people have just checked out, i think its immaterial. What people need to do right now is simply watch and let time take its measure. The middle east has not proven to be a big event yet because most of iraqs Oil Production is in the south. It hasnt been a problem for the last five years. Why should it be a problem now . Thats really moot. The point is its natural for markets to relax, especially in the summer. Right, right. A lot of traders have already checked out. I think that thats a good point so this is normal. People need to Pay Attention to the message of the bond market. If we look at if we look the bond market has been wrong. Keith this, market this market has come a long way and and its looking for a reason we havent had a 10 correct in more than two years. Im not calling for a 10 correction now, but to get a pullback after the major indexes, the nasdaq, s p, emerging markets up 4 to 5 in the past month. Weve had a good market this year after a fantastic market last year. Right. It will be geopolitical tension, it will be political uncertainty, Something Like that that will give us a meaningful pullback. Wait a minute. No, no, you guys wait a minute. Gemma, i want to ask gemma a question sitting there nice and patient. Gemma, do the markets feel a little tired . Is that it . There are two dynamics that were missing here. First of all is the fact that markets might be hitting highs but volume is low and when volume is low have you to question conviction, and secondly within the market theres a rotation. Youre seeing a rotation from small caps back to large caps, from growth to value. Now what we have done is we are getting a bit more cautious busy with ear also seeing opportunity as, you know, if you look at tech sector, things are starting to rebound, so we think you have to be smarter and there are opportunities but youll have to be more selective because all the bad quality thats risen up alongside the good quality is at risk when valuations become rich. Take a look at whats happening in mike ron today, that stock up 5 . Analyst on the street have been doubling almost their price targets in the last couple of days talking about being uber bullish on enterprise, in other words, business demand. Thats Credit Suisse. David, last word to you. Are you buying into tech names here as well . Buying into tech names. We like the triple qs, especially bigcap tech, and the we like india for some foreign exposure. Great to hear from all of you. Thanks, everybody. 50 pints to go before the close. Dow still looking at a tripledigit loss, down 106, led by boeing, one of the big stocks on the drag tied along with ibm, visa and goldman sachs. Coming up, the story of the day. House majority leader virginia primary defeat to tea partybacked dave brat who spoke with cnbc earlier. Im not antiwall street. Im antidistortions to free markets. So who is dave brat, and what is the fallout for wall street and investors . Well have a special report from john harwood in washington and speak with the pros about what lead to the House Majority leaders demise. Also ahead, new data shows Investors Holding an average of 40 of their assets in cash what. Will it take to get them back into these markets . Maybe vanguard founder jack bogle has the answers. He speaks to us next. And big trouble may be around the bend for uber. You heard gemma just mention it. Protesters protesting all over today. Cabbies trying to push tougher rules on uber saying otherwise they will lose their jobs. Back with more on that in a moment. Here at fidelity, we give you 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. Call or click to open your fidelity account today. I cant wait to get to mattress discounters because the tempurpedic bonus event ends sunday. Choose 300 in free gifts, and, get up to 48 months interestfree financing with any tempurpedic mattress. Mattress discounters yeah, citi mobile. Pay the dog sitter . And deposit that check . Citi mobile. Pack your bathing suit . Wearing it. Niiice bank from almost anywhere with the citi mobile app. Welcome back. Theres picture on wall street with 45 minutes to go. Red arrows across the board. The dow down 109 point led by boeing which was downgraded today to rbc. Airlines are down across the board. Youve got weakness in united and delta. American jetblue is down more than 1 . So theres weakness in the transports today, and thats helping lead the declines on the street. Tell us more about this big movers. Kelly, scott, were going to start with boeing, the biggest lagyard in the dow. Rbc capital is doing it from to a sector perform to outperform rating and cite valuation at least for boeing. A very turbulent day for them. Also for the airlines on news that germanys lufthansa issued a profit warning due to labor strikes and unexpected weak Revenue Growth in its passenger and cargo business which is translating over to other Airline Stocks here in the u. S. Also nq mobile is falling. Insiders said Price Waterhouse coopers resigned as the auditors but the validity of a twitter account and the fake account was taken down and nq mobile shares recovering a little bit of that downside move. Well end with h r block moving higher on better than expected Quarterly Earnings and company ceo jim cobb is going to be jim cramers guest tonight on mad money beginning here cnbc 6 00 p. M. Eastern so well want to tune into that and see how this tax season went. Kelly, scott, back over to you guys. Dom, thanks very much. Meanwhile, the u. S. Budget deficit improving. Thats not unrelated, but heres a look at whats happening in the markets. Weve had an upswing to new highs but new data showing investors are holding 40 of their assets in cash. For more on what it will take to get individual investors to trust the market again even though we continue to trade near alltime highs, joined exclusively today by vanguard founder and cnbc first 25er jack bogle. Always great to talk to you. Welcome back to closing bell. Scott, thank you for that nice introduction. Why are People Holding so much cash, jack . Well, first, im extremely dubious about the 40 figure, but let me just see what do you think its closer to then . Probably 20 maybe. Huh. I mean, i dont know whether the individual sample includes institutions, but usually when people talk about cash on the sidelines, and this is really an important point, scott, let me say i look at a number like maybe 300 billion is said to be on the sideline of cash. If every penny of that gets invested today how much will be on the sidelines when the market opens tomorrow . 300 billion, the exact same amount because they are going in and buying stocks, and the people that are selling stocks now have the cash, so i dont give much credence to this money on the sidelines thing. I think it skips the next step which is it doesnt change very much, even if the people that are there now invest it and and in equities, lets say. The equity people that buy it disinvest it, so its not a very complicated system but one that has been beaten to death in our thinking. Jack, i want to bring up something that was said on scotts show earlier today. Josh brown was talking about harvards endowment noted for alternate investments saying they failed to keep pace with the s p 500. Why dont they put a big chunk of their money into a fund like your stock fund, and he said maybe its just simply that thats not how things are done, that they dont make for as good a conversation around the dinner table, for example. Do you think that all of this allocation away from u. S. Pure vanilla equities has done more harm than good to participants in Financial Markets . Well, let me say this pretty clearly, kelly, and that is im tempted to say after you and your commentators of this morning, where were you when they need you . You mean in 2009. Yeah. We weve gone through a tremendous more than 100 gain, 125 gain in the u. S. Equity indexes and the and thats the most underexposed sector of the entire endowment picture. They are a little overexposed relative to that, relative to u. S. Equities in international and emerging markets, and its cost them a lot. I mean, it doesnt make them look very good. Right. When things go the other way, but they had a decade when things were going their way, and they were skunking the s p 500, so nobody can i think i can guarantee you nobody is good enough, even these endowment managements, a pretty darn good group, nobody can keep changing their strategy day after day or year after year. They have to sort of stay the course of where they are. Its something thats actually important globally when you look at japan which has roughly 11 of its pension allocations in stocks as well. Is it better long term if we just invested retirement money and institutional money into stocks instead of into the complex, for example, credit funds that wind up serving to distort i dont know how to say, it extract higher Management Fees but not necessarily give us the same kind of benefit of longterm performance . I i agree that thats the case. Youre going to be better off in stocks over the long run than anything thats crazy than in commodities, than in gold and in other offbeat investments because stocks have a wellknown internal rate of return, and so stocks have earnings underlying their value, and they pay out dividends that we underrate greatly year after year, usually in a very steady forum, 200 was an extension to that, of course, and whatever is left after dividends are paid out is reinvested in trying to grow the business. So if you dont have an investment that does that, it becomes pretty much of a speculation, and if you know your cash flows and real estate, direct real estate investment, you have a pretty good idea of your cash flow, once you extize that in a real estate fund, youre then in the market again with valuations changing all the time so i like the idea of stocks. I like the idea of owning business, and i dont like the idea of looking over every day and wondering if the market is up or down. Well, the markets been up a lot lately, you know that, jack, keep hitting these new highs. Youve seen a lot of markets. What looks more expensive to you right now . Stocks or bonds . Well, i would say they are both not to weasel out of the question at all, scott. I would say they are both around fair value. Stocks are up 6 this year and thats not an awesome number. Bonds are up 3 this year. Bond yields are down which means to lower future returns. The yield is a very important part of determining the future of that, either the future returns of bonds, and the tenyear return in a bond has like a 90 correlation with todays yield. You know pretty much what youre going to get which is going to be in corporate and government combined portfolio without too much in governments, 25 , 35 maybe. Youre going to get maybe about a 3 return over the next ten years, could be 2, could be 4 but 3 is a good central number n. Stocks i think the return will be a little better than that, maybe 6 to 7 because the dividend yield is 2 and earnings could grow at 4 to 5 and i look at valuations as not being excessive so i see a reality in the stock and bond markets and an inability to step out of there. Usually usually when you go beyond you say i have to have more income. I have to have a higher return. Its a little like saying i lost in the first seven races at the horse track so im going to bet every penny i have left on a long shot in the eighth race. Well, i wouldnt do that, and i wouldnt recommend that you guys do it and i wouldnt recommend that your listeners, your reviewers do that. All right. Just accept the market return for what it is. Which would be good enough if what youre saying is the case for the Pension Funds that need that 7 to 8 anyway. A great reminder. Thank you so much this hour. Good to be with you both. Great to be with you as well. A little more than half an hour to go in the trade here. Dow down 107 points. Dom was mentioning boeings a big drag on the downgrades. Airlines are getting hit. Abem is down and soft industrials are weak, too. Matt miller tayback, some speculation that airlines, will they go the way of biotechs . Has there been such a runup and overvaluation of that space that that it looks vulnerable which may be part to blame of all the skittishness. Is all the happy talk of the u. S. Recovery premature . Find out what is driving some pessimism. Upping the game, a conversation next about the video game developer making grand theft auto 5 more widely available over different gaming conso consoles. Wait until you hear how big of a boost hes expecting. Back in a moment. Ablet approved to treat symptoms of bph, like needing to go frequently. 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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Yea, and these ideas are across the board bullish, bearish and neutral. I think you need a bigger desk, pal. Another one . Traders love our trading patterns, now with options patterns. Whats not to love . They see what others are trading like the days top 10 options trades by volume and get ideas yea i have an idea how about trading that in for a salad . So come trade at a place thats all about options and futures. Optionsxpress. Open an account today and get a 150 amazon. Com gift card when you call 18883303137 now. Optionsxpress by charles schwab. Welcome back. Take two interactive making some big announcements at e3 in los angeles. Yeah. Were joined now by our own Julia Boorstin and take two ceo. Great to have you both with us. Julia, start us over. Thanks so much for joining us today. You Just Announced grand theft auto 5, your big hit game from last year, will be available in the next generation consoles. What will that expansion to this next generation mean to your bottom line . Well, weve already guided for the year, guided from 80 cents to 1. 05 in nongo eps and thats part of our very robust release schedule for the year, so we have High Expectations for the year, and if e3 is any guide, consumers feel the same way. Now, this video game business is obviously a very hitdriven business. How can you follow up on the success of grand theft auto 5 . Can you make that kind of video game magic again . Its our goal to delieutenant governor consumers with everything we do, and our creative teams are hard at work on creating that magic every day. One of the great things about the company now is that we have about ten big franchises that have each sold over 5 million unit and weve already announced some new intellectual property for this year so weve evolved coming out and were really excited about that and that comes out in october. We have a 30foot statue of the monster involved at e3 and the crowds seem to be real, really excited. Hey, strauss, its scott wapner. Can you help me and my fellow xbox 1 buyers. Why its taken so longforyou guys, Electronic Arts and others, to come out with titles for that console. Its been an excruciatingly long wait and i just dont understand why. Well, we want to please you. We dont want to torture you. The truth is all of us have to moderate the size of the installed base with the desire to bring products to market quickly. So we brought a product to market very quickly with nba 2k, our first title for next gen and at this point its the number three rated and selling title across all titles, sports and all the forms of entertainment, but all of us look at the market as the intersection of what we have the Development Time to do and the size of the market, and the good news is the installed base for these new cop soles is god now and growing rapid will you and expected to be very significant by the fall. Do you think its hurt xbox 1 sales . Im sorry, julia. I beg your pardon . Do you think thats contributed to hurting xbox 1 sales, the lack of games . I i think that the more software that you have thats high quality, the better your platform is going to do. I think the fact that xbox 1 has essentially announced a price cut is essentially going to help them. Just a final quick question about the competition youre getting into. The launch of evolve puts you in much more direct competition with ea and act and activision. How do you xoet . This is not like the toothpaste business, like crest or colgate. Hopefully have one, probably dont buy both of them, when you run out you buy more. Consumers dont make a substitution. If we give them what they want, they come out for it. If our competitors give them what they want they come out for it. It is a thinner field than it used to be this. Transition eliminated a lot of contestants and right now were fewer than a handful of key market participants, major Interactive Entertainment conscience and we feel good about the competitive lineup. Great. Well be watching how the launches do this fall. Thanks so much for joining us. Scott, back over to you. Thanks so much. Xbox guy. My sons are for sure. Okay. Waiting for the games. Its all about the games. No games, no play. 30 minutes to go. Dow has cut its losses. Were down 93. Up next, our special report on who the world dave brat is and what he said and did to defeat House Majority leader eric cantor in the Virginia Republican primary. Plus well have cantors press Conference Live in just about an hour. Plus, former massachusetts congressman barney frank weighs in along with our own larry kudlow. You do not want to miss that. Well be back in a moment. Life with Crohns Disease or Ulcerative Colitis is a daily game of what ifs. 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Someone whose poor performance is slowing down the entire organization. Im looking at you phone company dsl. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business built for business. All right. Theres picture. I said its been a down day on the street. The tripledigit loss for much of the day. We are cutting that a bit with 25 minutes to go. The dow is still down 89 point. The s p 500 is down a little more than five. Against this backdrop its the talk at water coolers and diners across america. House majority leader eric cantors stunning defeat to tea partybacked dave brat in the Virginia Republican primary. John harwood joins us with a closer look at who exactly dave brat is. The story of the day no doubt. Scott, this is one thats stunned everybody in washington from eric cantors staff to all of us who cover politics, and before we even get to the question of david brat, everyone is trying to answer why did eric cantor lose . Lets look at some of the factor, one, youve got huge discontent with washington. He was a member of the leadership. Secondly, when youre in leadership youve got to try to straddle the line between services idealogs and also governing with the senate and with the incumbent administration. Youve got personality issues, taken away from the district, raising money and trying to help his colleagues and political expert charlie cook said he thought all of those things were much more important than anything dave brat did. I dont think this was about david brat. I mean, i think that this was about sending a message to washington, sending a message to congress and that any degree of even modest support for immigration can be effectively cast as proamnesty. David brat is an economics professor at Randolph Macon college and said this morning hes a free market guy, opposes an increase in the minimum wage. He opposes immigration amnesty, as charlie cook indicated one of his big issues but well have to see how his track record develops over time. Somebody who doesnt cotton to the idea of big business colluding with one another, a pure free market guy, doesnt think wall street is always right in that regard but the reason we dont know that much about him is he hasnt Held Public Office before. Ran for the house of delegates in the state of virginia three years ago and lost that race and tonight he is the conquerer of the House Majority leader, guys. And hes going to face a colleague, Randolph Macon, which is interesting in and of itself. Though hes quite likely to roll over that colleague because this is a very republican district. We want to talk more about this. Well bring in sarah fagan, a partner at ddc advocacy. First, i would like to play this sound bite. I spoke with Julian Robinson who runs Tiger Global Management about the eric cantor defeat this morning. Hes a big gop donor and want to get his reaction and heres what he had to say. I was shocked by that. I think eric is a very fine man. I think eric was too busy doing his job of running helping run america and he didnt didnt pay quite enough attention to the electorate and he lost and that happens sometimes but i think eric has not been heard of for the last time. We heard lloyd flankine say he was stunned, Julian Robinson shocked. Why didnt eric cantor see this coming . I think that eric broke the Cardinal Rule of politics. He did not Pay Attention to this district and he did not take this opponent seriously. The nrcc, the National Republican congressional committee, all the Republican Leadership had been preaching to all their members to run serious races, that these Tea Party Challengers needed to be taken seriously and he didnt do that, and as john said there were personality issues here. Eric can be brusk. He can be arrogant and when you have those personality dynamics and youre not campaigning, it will catch up with you, and it caught up with him last night. Kelly, i also think that its relevant that he did take it seriously to this extent. He raised and spent a heck of a lot of money, 5 million but thats not the same thing as providing personal attention to those constituents and those voters that you need. And he did raise johns right. He raised a ton of money and distributed a ton of money through his leadership pac. He was focused primarily on running for speaker, not running for reelection, and that is also a huge challenge for him, you know, as he tries to straddle these very controversial issues with primary issues like immigration. Julian robinson says its an eric cantor issue. Sara has made the issue its more of an eric cantor issue and others are making that same sort of claim as well, including charlie cook who you interviewed. Are we certain that this is not a reemergence, if you will, of the tea party, a knock on the door to say reports of our death are greatly exaggerated. Were still we are still here and were going to be a force come november regardless of what anybody thought. Well, they are certainly not dead and they can be a force in particular races at particular times. Its just that the way the Tea Party Wave that existed in 2010 doesnt exist in the same way anymore. Li Lindsey Graham won a contested nomination and Mitch Mcconnell beat his Tea Party Challenger in kentucky earlier this year. Its a mixed back. Look, the hard right in the Republican Party is driving the train and whether whether establishment figures move to the right and beat their candidates or lose to them, in some ways the stakes in that are relatively low but its going to be a problem for republicans if in fact the this takes the house in the direction where they are seen in even lower regard by the American People than they are right now. To johns point, what i read today is that in terms of the Republican Party you have a deeply divided caucus obviously, Establishment Republicans against firebreathing conservatives. Is that how you would sort of characterize things . Well, i think theres some element to that, but i think that the mainstream conservatives or the establishment conservatives would consider themselves quite conservative. John boehner is very conservative. A lot of this comes down to personality and tactics and more most importantly rhetoric, and many of these establishment conservatives do not use the same language and the same rhetoric that the Tea Party Conservatives do, although they are not that far apart on issues with the exception of a few, immigration being the main one. Thats a good point. So i do think the party is pretty united, more united than is being reported today, but there are a few elements on both sides, establishment and tea party, that cause this schism to be much more pronounced than it actually is. Have to leave it there for now. Thanks for your perspective. Tune into closing bell tomorrow because well have much more in our exclusive interview with julian robertson, some really interesting stuff. I wish i could share more of them right now. Again, that will all happen tomorrow. Look forward to that. News on sprint coming in. Lets get to Michelle Caru carusocabreraor, who just interviewed the ceo dan hessy in new york. Thanks so much, kelly. Sat down with him a few minutes ago, singularity, talked to him to explore why isnt there more innovation coming out of Big Companies and we wanted to ask him about all these rumors and these reports, some of them coming from cnbc, that hes trying to buy tmobile, and when i and so i asked very specifically are you trying to buy the company, and he said he couldnt comment, but then he said this. Ive been pretty straightforward that i believe that consolidation in the industry outside of the big two would be very good for consumers and good for the competitive marketplace and would allow us to invest in this Great Network for building now which is spark more rapidly and broader, and it would be better with three strong competitors. His rational was that the duopoly means actually theres less competition in the high end because those two just battle it out. If you have three strong competitors, verizon and nidal ayyad would be forced to compete even more than just the two at the top and then the two weeker companies tmobile and sprint at bottom. Shares down 1 . Michelle, thank you. Appreciate it this hour. Scott. 15 minutes to go before the bell rings on the day in the street. Still coming off the worse levels of the day. Mentioned some of the weaker space to talk about today, industrials, discretion any materials among the weaker sectors. Up next, robots coming to get you. Just bob pisani bringing you highlights from the same conference. He just finished speaking with someone who says in 15 years it will be an entirely different world. 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. I got more advice than i knew what to do with. What i needed was information i could trust on how to take care of me and my baby. Luckily, unitedhealthcare has a Simple Program that helps moms stay on track with their doctors and get the right care and guidancebefore and after the baby is born. Simple is good right now. anncr vo innovations that work for you. Thats health in numbers. Unitedhealthcare. Welcome back. Heading into the close here, its going to be a negative session barring a significant change. The dow is off 90 point, off lows of session but seen the nasdaq and s p come under more president bush our than we certainly thought at the beginning of the trading session. Some support in the tech names helping the nasdaq outperform while as you mentioned some of the industrials and cyclicals and financials underperforming. Top wall street pros rubbing elbows at the finance conference in new york city to discuss how the latest advancement in high tech could impact finance and the world. Our bob pisani just finished speaking with a very special guest. Bob . Well, the great futurist just had a wideranging discussion with hill on the stage, talked about genomics and 3d printing and thats going on with Artificial Intelligence and will change the way we live and work. Google is working on a natural language Search Engine. Youll be able to talk to the Search Engine and computers will achieve human level intelligence before 2030. In my time line is that computers will be at human levels such that you could have an emotional relationship with them in 15 years from now, 2029. He talked a lot about the movie her and said it was a very realistic depiction. Youre going to fall in love with your personal digital assistant before too long. A big technooptimist and hasnt changed at all. 3d printing, personalized 3d printing for clothing by 2020. Solar power is underrated. Power is doubling every couple of years. He thinks solar is going to be a big force within the next couple of years and Medicine Within a few years, well understand diseases like cancer and he says well be able to reprogram our cells. Its not just sequencing, its reprogramming and understanding the process and being able to program our way away from cancer and Heart Disease and all of these other processes including the aging process. Its not just one thing. Personal Digital Assistants are all the wage here. Several companies are working on then. In fact the head of watson from ibm was here yesterday describing how they will break watson out, the remember the part of ibm that won the jeopardy contest. They will break that out and be in medicine and finance and will eventually sell personal Digital Assistants. Youll be table have a little Online Presence thats going to be a little you online that will be able to do tasks, do missions and basically be a digital you online. Thats what the future is going to look like, they say, within the next five to ten years. Guys, back to you. You know, bob, if you want to talk about trying to improve your life, if you want to talk about extending your life even, im with you, but when it comes to loving the machine . Yeah. You lose me. You know, my theory about this is within ten years 25 of the United States population, the Adult Population also, name a personal digital assistant as their best friend. I know it sounds strange. Seen this before. 8 of the population name their dog as a best friend. At least a dog is still a creature. All right. We have to go. We can save this for later. Thank you, bob. All right. Seven minutes to go before the close. Positives on the dow today instead of the negatives. Exxon is a winner today as is united health, merck in the green as is cisco and chevron. And mike ron. That one is still a big mover, up 5 . House Republican Leaders will meet at 4 00 p. M. Eastern. Its expected eric cantor will step down as majority leader after losing last nights primary and well bring you the latest developments in the next however the show. That includes what youre looking at here. An expected News Conference from cantor himself. Well bring it to you live. And well get reaction to the virginia primary shocker from none other than barney frank. He is the outspoken former massachusetts congressman. How do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted cnbc n barney cnbc but he just cant get out. With theechnology of cloud, we change all that. I can sing something into my device. Up to the cloud it goes. Back down it comes sounding better. We break down the walls of creation, and we give music creation for the masses. But were not in the business of spokespenaming names. Kswagen passat is heads above the competition, the fact is, it comes standard with an engine thats been called the benchmark of its class. Really, guys, i thought. It also has more rear legroom than other midsize sedans. And the Volkswagen Passat has a lower starting price than. Much better. Vo hurry in and get 0 apr for 60 months on 2014 passat gasoline models plus a 1000 contract bonus. Okay. Welcome back. You can see how the markets look with just a few minutes to go here. The dow is still down just about triple digits, off the worst levels, down 93 point. Joining us now is Randy Frederick from charles squash and robert sew adunis from jenson investment management. Welcome to you both. What is today about, world banks taking down growth forecasts . Is it a little bit of surprise at the political shocker of eric cantor loseing . Im not so sure its so much the politics of eric cantor losing but certainly the growth has a lot to do with it, and i think that when you get an announcement like the world bank and everybody sort of expecting the banks market to shift from sort of momentum pe expansion to earnings, then you get an announcement like that, youll get a reaction like this. Randy, who you do you feel about the market right now. Its come so far. Were approaching these round numbers of 17,000 and 2000 on the s p. Is the market tired or not . Just taking a break . Its tired. A combination of market at record highs and just a couple of days ago youve got volatility and sevenyear lows and youve got that confluence going on where youve reached that summer sloep slow period so when you put all those things together were probably in for a very long slow slog throughout the next couple of minute. Not a lot of political will in washington to get things done before the Midterm Election. The debate is whether theres value left in this market and maybe that has poem sitting it out because they are afraid to get in given where they are. That fear is understandable and with the earnings driving the markets right now you really have to dissect the market, and there are companies that are really faster growers than others and have great earners and we look at Jensen Investment Management and consequently you have to be more specific and more active in your investment. Okay. Sit tight. Well take a quick break. You guys will be back with me for the closing countdown and thats coming up after the break. After the bell london calling, calling uber unfair. Thats why traffic was halted today. Were going to have a special report on the push back to the Carsharing Service thats spreading across the globe. Youre watching cnbc, first in business worldwide. All stations come over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. So the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with thinkorswim from td ameritrade. We are back and on the floor of the closing countdown. Looks like the Dow Jones Industrial average is going to go out with a tripledigit loss. One of the culprits, right there on your screen. Boeing got downgraded today. The stock has been down all day, three bucks, a little more than 2 and the airlines, lufthansa had weak earnings, really a drag. United, continental, american, southwest and jetblue all giving some money back today. We are back with Randy Frederick and robert zagunis. You care about round numbers of 17,000 and 2000 on the s p . No, were very fundamental, and i think one of the important things to note is that if you look at the market as a whole, have you to look at individual companies, those that are actually very, very strong and have a lot of capacity to continue with their growth and thats what we look at. What seems to be more expensive these days, bonds or stocks . The question i asked jack bogle. Everybody has a different perspective. Looking at stocks from a trailing earnings perspective not all that expensive but from a forward earnings perspective they may look more expensive. Value depend on how you value it. Thank you so much. Theres the bell. Dow is going to go out with a tripledigit loss. Kelly evans has the story in the second hour of the closing bell. Thank you, scott. Welcome to closing bell. Im kelly evans and this is certainly the story today on wall street. Red arrows across the board and the dow giving up just about 100 point on the close here. Remember this after eking out a small gain yesterday. One of the most negative sessions weve seen in some time, the nasdaq giving up its part for the s p, losing seven points, a third of a percent. Lets talk markets, politics and so much more. Cnbc contributor howard dean joins me on set along with stephanie link and Sharon Epperson and eamon javers joins us from washington and brian kelly will join us with his thoughts on the trading session. First of all, welcome to all of you. Is this the beginning of a bigger move downward . What is everybody saying . Whats your gut feeling . 07 off an alltime high for the s p so we need a deep breath. Not in panic mote mode by any stretch of the imagination and what happened today is you have concerns about washington, political gridlock. You have the World Bank Lower their Global Growth rate, right and some of the leadership like boeing and some of the airlines really take a dive. Now a dive, again, 2 off of highs is certainly nothing really to be a worried about. I still think the u. S. Economy is in very good shape in terms of recovering. Encouraged to see energy and health care be leaders today. We tubing advantage and bought some financial and industrials but i think the economy is certainly getting a little bit better. The u. S. Is definitely on the right track, i think. Taking a breather is key here. I think you made a very good point. It was necessary for the market to do so. A lot of Financial Advisors im talking to are saying and saying now is the time if we continue to see a little bit of a slide that will be good news for their clients in the long run so that they realize now is the time to kind of look at taking some of that money off the table and rebalancing and reallocating because after all look at what weve seen over the last several days and the market cant just keep going up. Brian kelly, how do you see things here . I was actually amazed by how much people tried to make out of this kind of slide, if you will, they are calling it a slide. Were saying is this the start of a new thing. Just a down day, but everybody is saying weve had two months of no down days. Now everybody is saying oh, the market always goes up. Thats an unsustainable path when this market does crash. I do not think the money on the sidelines coming in, but its way too early to say that this is the beginning of something big. Totally fair point. You want to see a healthy market. Does go two ways. I could stitch together a story into something more. One has to do with the Federal Reserve, maybe look at some of the comments from bellard, et al who might do something more significant on june 18 to wake the markets up so were waiting for that and theres really troubling developments today in iraq. Governor, i dont know what your take is here, but this situation seems to spiraling out of control. Well, unfortunately, were representing what we sowed 12 years ago when we 11 years ago when we went into iraq, and theres a situation that is out of control. Iraq never was a real country. It was a series of lines drawn by the great powers after world war i, and and this is the result of this. Malaki is essentially an extension of the Iranian Regime and the kurd are wanting an i independent area and they have one because they are doing direct oil deals with turkey and nog not bothering to go through the Central Government so i think were in for a rough time in iraq. Interestingly enough i think the kurds could end up in the middle of this fight as well, but most of mosul is a city they are very interested in with huge oil reserves. Thats why were seeing oil at neither highest levels of the year. A lot of concern what is happening there with al qaeda in the second largest city in iraq moving into another area, a key pipeline there has been shut down there for repairs since march. Add to that we got the inventory report today from here in the u. S. Showing a decline in the supplies in oklahoma in the middle of the country. All of this is pushing up oil prices and what does that mean for the summer driving session . Eamon, go ahead. Look, would i say the political aftershocks here in washington today, but i wonder how much this has all played into the market slide today. I mean, you talk about fears of gridlock here in washington, fears of nothing happening, but its hardly like they were doing a whole lot anyway. I mean, eric cantor loss is certainly dramatic. Theres intense focus here in washington and a press conference at the bottom of the hour at 4 30. Well take a look at that but i dont think wall street should look at this and say now this whole font of legislation that was going to happen was is no longer going to happen. Theres political certainty that they wont do a lot between now and the end of the career. What do you think of the European Central bank is doing as they reduce their Interest Rates, essentially to zero. That has to raise a few alarms about potential deflation in the eu. I think they are trying to fight that. Thats the point, and they just started to do these aggressive measures and he hasnt implemented qe and thats going to be the bazooka should deflation spiral out of control but hes on his game. Mario draghi is probably one of the best central bankers when it comes to talking the market in directions. He took Interest Rates in italy and france and portugal and spain to record lows without buying a single bond. Just by doing whatever it takes so this guy is a master at it. I think the market responded in a sense it a they were afraid they were a step behind. Draghis actions last week, the ecbs actions last week have them a step ahead, i think, at this point. Kelly, if i could just jump in here with one other thought about whats going on here in washington. A lot of focus has been looking at Immigration Reform and how thats going to play out over the coming here or so. It is absolutely a key issue for big business. I had a chance to go over and talk to john engler this morning. Hes the head of the business roundtable, former politician himself, former governor. He knows this issue backward and forward. They have been pushing from a big business perspective for Immigration Reform. He was trying his best to keep a really good face on this but they know their job in selling Immigration Reform from a business perspective up here on capitol hill has just gotten a lot tougher because a lot of these members of congress are going to look at this election last night in which eric cantor lost his job and say, you know what, were just not going to touch Immigration Reform, despite what were hearing from the business community. This is a plusten republican district. I would not make the assumption that republicans are going to win the seat. In the fall . You think theres a chance that democrats can win one of the most conservative parts of virginia at the Midterm Election in six months time after just having named dave brat to betobeat eric cantor in the primary. A plus ten republican district. Not one of the most conservative districts, though it is conservative. Cantor had 5 million in the bank. I dont know anything about the democratic candidate, but i do know that the Campaign Manager for mr. Brat just took down the Facebook Page and took down his youtube and they are now not available. Guess what, theres no such thing as not available. Whatever is on those youtubes and on that Facebook Page is going to be Public Information very soon, and ive seen some of it, and its not pretty. You dont think they are going to necessarily be able to stand up to the increased scrutiny hes said, done, beliefs he might hold, et cetera. We dont know. Dont count this seat out in terms of a switch. And thats why theres so much chatter here. Traders are definitely talking about, surprised everyone and that uncertainty, we all know. Markets dont like uncertainty. That kind of uncertainty i think maybe also a reason for pause here. You know, you would agree that it is a long shot for any democrat, an extreme long shot for any democrat to win that . Heres why i dont agree. Heres why i dont agree. We know we know virtually nothing about either one of these candidates. Thats right. What we do know. They will both have statements in their past that will come to light and in what will be a hard fought campaign. We expect mr. Brat does have those statement otherwise the utubes and facebook wouldnt have disappeared. These are both the early indications that mr. Trammel on the other side, both of these are professors at Randolph Macon which i find ironic, has actually been somewhat of a conservative democrat and a deficit hawk. If theres one place you can learn politics being a college professor. Thats a good point. A lot of practice. Well have much more coming up on this race just before we get out of this segment. I want to get some thoughts on the moves that we saw today, stephanie in tech, do you see strength here . Look what was happening with mike ron, Credit Suisse talking about enterprise demand, what do we do now in markets here . There are pockets of tech that have been acting quite well so kind of Old School Tech has been holding up, but today what i thought was interesting is you had some of the internet stocks and some of the high flyers actually do quite well. Amazon and price line in service now and even google outperformed on a relative basis so i think technology can still be owned. Were adding to oracle today. I think that these are the kinds of markets that that they are volatile. We dont have a lot of earnings ahead. Unfortunately, were subject to these other headlines, right, that kind of spook the market, the macro, but i do think the economy is on the right track. This investment is on the way up and you want to own industrials. B. K. , do you agree . What are your trades here . I took some of the risk off on the u. S. Equities. Its hard to say if this was the top. What i thought was interesting today was the bond market reaction. If this really was a riskoff stage, you wouldnt have seen the bond market move a lot. Yields moved lower and markets moved higher, and it doesnt, not as much as i would have expected. The news in iraq is huge news, and, yes, oil is at highs, but today it barely moved. I think the market is missing something there, and the next couple of days you might see some movement in that sector. Thats why you want to move higher. Thanks for sharing their thoughts. Catch b. K. Coming up with the rest of the fast money crew here at 5 00 p. M. This afternoon they are speaking with the ceo of synaptics, rick bergman. They just acquired chipmaker renaissance for almost 500 billion. More on the tech spot to be discussed. Bond yields continuing to move lower despite this years stock rally, generally speaking. Are investors worried the economy isnt as rosie as most now think it is . Thats coming up next. Also, Investment Bankers responsible for the financial crisis, should have gone to jail, actually the belief of the Tea Party Candidate who just defeated House Majority leader eric cantor. Should that have wall street worried . Barney frank and larry kudlow weigh in. 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. Youre looking at capitol hill. Were about 15 minutes away from an historic announcement. The House Majority eric cantor unseeded by a challenger in the primary apparently for the first time ever, about to announce that hell in fact be stepping down from that leadership position. Well take that live as soon as it happens. Meantime, well send it out to dominic chu who has an earnings alert for us. Dom. Watching shares of Restoration Hardware which is speaking up about 9 in early afterhours trading, this after the Home Furnishings retailer reported earnings and sales that both beat analyst estimate. The company also boosted its fullyear Profit Guidance above what wall street was expecting. That was a huge part of the 9 move. The company also saying that it continued to outperform the whole industry by a wide margin in the First Quarter and net revenues increased by 22 on top of a 38 increase last year so Restoration Hardware shareholders at least happy with todays move, a 9 boston move right now on the heels of that. Beat for earnings sales as well as a forecast raise. Back over to you. Another clue, too, about whats happening in the housing space. Thank you, dom. The world bank cutting its 2014 Global Growth estimate to 2. 2 and many on wall street saying that was the main driver for stocks going lower. How much is that downgrade a threat to Global Growth and has there been happy talk about the economy . Lets ask jeff cox who has a piece today about the factors that could stall a growth rate, especially around 3 here in the u. S. Our panel is here to weigh in as well. Jeff, whats top of the list of concerns here . Well, i think its generally, kelly, two things. Number one thing being the Housing Market problems that we dont sort of know where things are going here. The data has been mixed, you know. I think theres still optimism that the Housing Market and, of course, the weather factor. I think that that was the main factor that was cited in the World Bank Projection that they believe the bad Winter Weather continues to be an overhang and the thing you is wanted to throw one other thing in there. Just simply the problems in emerging markets and just the kind of foreign markets in general that growth hasnt been there good enough so, is you know, were not you know, nobody is sounding big alarm bells but theres concern that growth is not going to be what we thought it was going to be at the beginning beginning of the year and what the Federal Reserve hats been telling us its going to be. Yeah. Thoughts from the panel. I mean, the weather issue, look, we note First Quarter was bad, we know it was terrible because thanks to the Services Survey we could have seen a gdp drop of 1 to 1. 5 . Of those issues that jeff just raised, housing one of the most important. Where does it go from here . Have we been too optimistic . Housing is mondayling along. If rates stay along those levels, drift to 3 , tenyear, i think theres still demand because its still the afford ability issue is still out there and its attractive. Consumers are definitely okay. Pockets where they are good and pockets where they are bad. If you have the product in the stores, people are going to them, right. Look what you just said about Restoration Hardware or williams snoem ark. Look at the may auto sales and look at gm, look at ford, across the board. They were all Pretty Healthy so i think we need to see wage growth to get Sustainable Growth and better growth in the economy and thats what im looking for and watching. Thats been the frustration. When youre making 200 creating 200,000 jobs a month, which is twice what we were creating, thats got to do something. By the way, keep an eye on the oil price because to the extent that thats going to add to the taxed share on household income. When you are looking at the rise in what is being eaten out of their disposable income in terms of Energy Prices and you dont see the wage growth, even if there are more jobs being created, if they are not making what they were making before or not able to make a livable wage, then thats the issue. Eamon . To the governor eats point about job growth. We are seeing 200,000 job growth figures out there each month, a healthy sign, and in the last report we actually had finally made up all the jobs that we lost during the recession. Thats good news as well, but the bad news is that the u. S. Population is much greater now than it was at the start of the recession and until we start to eat into that gap, the difference between the number of jobs that weve created so far and where we would have been had we had a healthy economy all the past year where theres a recession, if we start to increase jobs into that zone youll start to feel it in the economy and the economy will start to accelerate but until people feel confident and see their brotherinlaw getting a job and back to work wont see that acceleration of spending and people will stay tight. Consumer confidence is at near highs. Business confidence is very good and if you go to the manufacturing side, listen to what any of the companies are saying about may, may data is Getting Better because the weather was so poor. Maybe its a snapback in the Second Quarter. I mean, the numbers are all kind of okay. When you talk about the 200,000 a month job figure, saw the sim is a thing back in 2011 and when you put it all into a big context youre not seeing this kind of robust growth and the problem here is that it figures into Monetary Policy and i think thats what i think theres half the people in the market who are afraid that the fed is going too quickly and half afraid the fed will exit too slowly and they are getting this being were. They are consistently getting this wrong in terms of Global Growth. They are much too optimistic so you have to wonder, garbage in, garbage out. The fed is getting wrong . No, i think the fed is getting it wrong in terms of of their economic projections. They were looking at 2. 8 to 3 growth for this year. With a negative 1. 5 print you cant get there from here. A lot of the softness is coming from if you look at the data. You almost have to throw the Second Quarter data out. China information came the growth came down. Japan came down. Europe came down. Right. That we already kind of know and the u. S. Has kind of stabilized here. How much can you trust the secondquarter data though because i think this is just kind of stuff that was, you know, kind of pushed backwards from the bad winter so i think its naturally youre going to see a snapback in the Second Quarter. How far does that carry over . Well, i just know what the companies are telling us, and they are saying there was certainly a progression of better strength throughout the quarter so far this quarter. If i can just make another point on companies. Some of the frustration that you hear here in washington and we heard from the secretary of the treasury jack lew just this week in a speech, is that companies have so much cash. They are sitting on it and not spending it and part of it is that confidence issue. Companies are really confident that this economy is Getting Better, then they will spend some of that cash and try to develop and grab some of that growing market share and that frustrates policymakers here in washington. Theres concern this is a longterm change in the Way Companies hold cash, deploy cash. Creighton christianson has a pretty interesting piece in the Harvard Business review. Consumer numbers are high but consumers are having more real expectations now of what is going to happen in terms of their own personal wellbeing, Financial Wellbeing and that may have something to do with, yeah, the numbers are high but relative to what. Thank you, jeff. You bet. Confusion in washington after House Majority leader eric cantor shockingly lost the republican primary. What does this huge upset by Tea Party Challenger dave brat mean for both wall street and washington . Barney frank and there he is larry kudlow will join me with their inside takes just ahead. Eric cantors News Conference starting in eight minutes time and speaking of underdogs, how some Industries Plan to take away market share from harleydavidson. E, e, and i loved every minute of it. But then you grow up and theres no going back. But its okay, its just a new kind of adventure. And really, who wants to look backwards when you can look forward . Welcome back. Tea Party Candidate dave brat is shocking everyone from wall street to capitol hill when he upset House Republican leader eric cantor last night in their virginia primary. One of brats campaign issues, that cantors too close to wall street banks. In may brat spoke and sounded more like democratic senator elizabeth warren. Take a look. We actually broke the financial system, broke the banking system, all the investment banks up in new york and d. C. , wherever, those guys should have gone to jail. Instead of going to jail, where did they go . They went on joining me now, barney frank, former massachusetts representative and chair of the House Financial Services committee and our own larry kudlow, cnbc contributor. Welcome to you both. Larry, one of our viewers said he thought dave brat sounded like a young larry kudlow. Really like what im hearing from brat and think hell come around on Immigration Reform, a free market economist and one of the issues regarding wall street and fannie and freddie which he singled out is he doesnt believe in k street cronyism or wall street cronyism. I think hes 100 right. Delighted to see it. Dont you think that he just said about the investment banks needing to go to jail is actually a line that sounds straight out of like what we hear from somebody like barney frank . Barney frank. Well, first, im sorry you started out kind of misquoting me. I havent made such generallized statement. I have to think when larry says hes sure hes going to come around on immigration, theres actually no basis for that except that it would make life easier for people like layer who want to support a guy who is very conservative on some issues and get him into a more centrist position on immigration, but i think that this is a very surprising investment and one thats frankly going to cause the republicans problems. They have this dilemma now. There is clearly a significant segment of the republican primary electorate, the primary, not the general election, that holds some views that are not all that popular with the other electorate like on things like immigration and raising the debt limit and two other issues in which they apparently attacked cantor. So this exacerbates the republican dilemma about how they resolve this trouble. Well have to wait and see about the dilemma in all these future votes. Frankly i think nothing is going to get down between now and election anyway, okay. I agree. I want to go back to barney frank who is an old friend and frequent guest on the kudlow report. The reason, barney, that i think brat is going to come around on Immigration Reform is he is a free market economist and he will in the calmness of the light of the new day realize that immigration is progrowth, that in fact both the brainiacs and the lowskilled workers will combine to help america grow, create new businesses and create jobs. I just wrote a couple on this subject and i think hes going to surprise a lot of people. I think what immigration need right now, barney, and this is unfortunate for eric cantor. This whole fiasco on the border of the 60,000 kids, okay, eskort the, unescorted trying to get out of these horrible countries, honduras and what not, this really had an impact. The media didnt cover this near enough and what impact are you talking about . I agree with you. Go ahead, barney. I assume that that got Republican Voters to turn out. I understand you would like him to come out, but if hes such a brilliant free market economist how come he hasnt figured that basic fact out until now. Thats what you would like to have happen. Hes a very smart man apparently. He knows about immigration. Maybe hes just catering to his base which won that election but, again this, notion that he somehow is going to see the light after the election, theres no basis for that. Well, catering to his base at end of an election is not unheard of, so ill leave that where it is, but barney, what you didnt put in your calculation is i havent sat down and talked to him yet. When i have a cup of coffee with him, well walk through the whole free Market Economics of Immigration Reform, including border security. Why are we focusing so much on Immigration Reform . Should we not look past this potential issue which could be used, interpreted and reacted in the wrong way instead of focusing on the fact that this is dave brat who ran against an established candidate of eric cantor and wrong on that basis and that basis alone. What made him hes not for higher taxes, he doesnt want to do what obama wants to do about the climate. Two of the other issues were that he voted to raise the debt limit so we did not have that shut down and helped open the government. Those are all kind of extremist issues i believe as seen by the general public. Those politically those hurt the republicans. Larry and this is this is the price that eric cantor is paying, i think, for having been responsible in those two instances. Were expecting him to step to the microphone any second. Just before he does hes expected to say hes leaving his leadership position. What does a person do on this issue with regard to the divisive issues that were faceing . Theres a lot of movement today, and my phone calls continue this, towards Jeb Hensarling, a very, very guy and another free market devotee against cronyism. Theres an emigh ma of what paul ryan wants to do who has brought support inside the caucus and other names surfacing but those are the two names that are likely. You just dont know. Well know. Mr. Cantor may announce that hes stepping down, but we may not know who is going to take his place. I just want to let that out there. As barney knows, each party has to caucus and i dont know when the election will be. Barney frank, as we do wait for this in the meantime, curious on your read of how this changes the calculus for the fall and Midterm Election. Well, its going to help the democrats some, i think. Momentum is an unusual factor, but, first of all, it means it clearly means there will be no activity on immigration, that the Republican House will not act on immigration, that will free up the president to take some actions in the immigration area and that will be, i think, on the whole damaging and helpful to the democrats and it will also help some democrats in some areas with the notion that voting republican and continuing a Republican House means the kind of irresponsibility that you saw with the shutdown of the government and with the and with with the they made a deal. Look, ryan made a deal. Excuse me, but eric cantor lost and thats thats why he lost, larry, thats my point. The sarturday that eric cantor lost larry, i never met a smart man who could think what he wanted to think rather than the fact as much as you in this conversation. Look, i respect you, you know i respect you, even while we disagree. This election, in my opinion, was about immigration. It was not a single issue. It was also about it was also about shutting down the government. You know more apparently than mr. Brat and the people who were voting. You can want to think that, but thats not the facts. Look, im proImmigration Reform but this is about immigration. I want to say one other thing. I dont agree with barney on another issue. I think that prisoner swap is a very big negative for president obama and the Democratic Party. I think the v. A. Problem is a huge negative for the Democratic Party and i think obamacare is still hugely unpopular, and i think, really, regardless of the outcome of this election, look, this is one election, fine. A smart guy won. Eric cantor didnt do his work at all. One other factor. I think the republicans will carry the senate and they will do very well. One other factor, and Jeb Hensarling and i had great personal relations when i was chairman of the committee and he was a high Ranking Member but jeb is very much in the extreme, wants to do away with export and import banking, wants to block terrorist Risk Insurance and did not want to soften harsh impacts. If Jeb Hensarling emerges as the majority leader and everybody expects john boehner to step down after hes had a normal speakership tenure, Jeb Hensarling a very able and charming guy but with very, very pronounced views considerably right of center more than the electorate. The other factors you mentioned will hurt the democrats, no question, but i think brat brings the momentum back the other way. House of representatives leadership elections will be held june 19th, and to your point this, announcement today representing eric cantor stepping down from a leadership position but that leaves us what, about a week, eight days to go before that election . They will vote next week. They will vote next week, and theres a certain shock effect that has to wear off. They have to do their business, go two it. Its a complex problem. I just want to say to chairman frank, i dont mind calling you chairman frank. I thought you were a pretty good chairman of the Financial Services committee. I would just say, sir, that i agree with Jeb Hensarling. Id like to get rite of the xm bank and i want to hold you, you told me on the kudlow report a couple years ago that it was time for fannie and freddie to be dissolved and to go into the private sector. Jebs hensarling agrees with you. Do you, mr. Frank, still agree with that . I do, but heres the point. If jeb help,ling agrees with that why during the chairmanship has he not moved towards it . In fact, Jeb Hensarling made that point 2010. I was ready to do that in 2011 when the republicans took over congress. The republicans controlled the house from 95 to 2006. No legislation passed about fannie and freddie. It wasnt until i became chairman under the democrats that we worked with paulson to put them into conservatorship and then in 2011 the republicans took over again and three and a half years since then they have done nothing so jeb talks a good game on fannie and freddie has literally, including his chairman, done nothing to advance that. I just want to make sure youre still on board because now well have a chance to move on this. Im sure jeb Still Believes that fannie and freddie have to be dissolved. I dont know what his agenda will be. Well see about that. We know what it isnt. Larry, we know what his agenda isnt, and it apparently isnt to do anything about fannie and freddie except talk about them. Want to bring in eamon javers in here from washington as we await this News Conference. Were expecting to hear majority leader eric cantor stepping down and now word that the vote will be taking place in a weeks time for his replacement. Thats correct, and youre talking about Jeb Hensarling as one. Potential candidates. Hensarling, of course, runs the Financial Services committee now that congressman barney frank used to run when the democrats controlled it so what wall street is watching right now is whether hensarling gets into this race in a big, by way and if so does that touch off a concession battle over the Financial Services commit, a committee that wall street watches very closely. Theres a potential handful of candidate for that chairmanship and the wall street lobbyists are sifting through all of the names to figure out exactly who they would like to see take over that panel but thats one of the subplots. Who is the next in line . Who is the next in line, eamon . I dont have that in front of me, unfortunately. Eamon, could i go ahead, barny. Could i ask you a question. Was i on that list of people they want as chairman . No. I pretty much can guarantee that. Barney frank, you may actually know that. Who is next in line after hensarling, do you remember . The high ranking ed royse, and he went over to do foreign affairs. Scott garrett would be pretty high up. Right, right. And then one who would be a problem for them, and im sure they wouldnt put him in is peter king, because peter is more to the left on that, but they dont go strict seniority on that committee. Kevin mccarthy also has a lot of seniority on that committee. Hes now the majority whip. Also subwho is running for majority leader at this point. Is he . Thats a good point. One of the people. Could see a deal. Talking about him as majority leader. Mr. Frank, youre right. There could be a deal, youre quite right. You know, Jeb Hensarling was offered and turned down a higher position in the Republican Leadership in order to become chairman of the Financial Services committee, so youre quite right, sir. Could you both, larry and barney, say what you think would happen in that scenario. What does wall street need to be watching for in terms of potential options here if that leadership changes . I think what wall street disagrees, they dont like a lot of the regulation, but they also like terrorism Risk Insurance and like the Export Import Bank so i think wall street would not want to see someone who would be quite as pure a free marketer as larry would like. Thats what and i also think this. Theres also a concern amongst some in the Financial Community that the attack from the more free market selfdescribed conservative on the Federal Reserve has been excessive, and i think will be some concern about not overdoing what they would see as the undermining of some independence of the Federal Reserve. I just want to say, you know, on this point, and actually i agree with Barney Franks analysis. An important theme running through the Republican Party today, particularly in the house, is the rejection of whats called crony capitalism, k street lobby. That would include wall street lobbying. You really hear this time and again, not just in Tea Party People but from everybody, and, you know, ironically eric cantor had a whole lot of things, policy issues prepared for him, and one of the big themes in that, hell never get to use it, was crony capitalism. I want to get rid of crony capitalism. No handouts to the rich and famous. But, larry, look at the top donors if you look at eric cantors top donors going into this year in 2014, his top three donors were private equity firm, a hedge fund and goldman sachs, so i know. This is a guy who has very close relationship with wall street and wall street made a big investment in her. I think it hurt him. And its not panning out. Absolutely. And i think also the fact that eric, im a friend of eric cantor. I think the world of him. Hes a very smart man. He is conservative and hes done yeomans work but he got knocked off in this election. I dont think, eamon, his trips around the country, including the trip to the seacoast of florida with people who were against the tea party, i dont think eric attended to the home fires until it was too late and i think thats one of the main things that brought him down besides the more immediate immigration. Here we go. Eric cantor, majority leader. First of all, i just want to talk a little bit about what happened last night and then going forward. You know, growing up in the jewish faith, you know, i grew up, went to Hebrew School read a lot in the old testament, and you learn a lot about individual setbacks, but you also read and you learn that each setback is an opportunity and that theres always optimism for the future, and while i may have had suffered a personal setback last night i couldnt be more optimistic about the future of this country. I couldnt you know, im honored that ive had the privilege to serve and represent the people of virginias seventh district. You know, people often last what is wrong with this town, but i want to remind you of whats right. You know, ive had the honor to serve with so many distinguished colleagues, you know, these are the people who fly across the country every single week trying to do what they can to help their constituents live a better life, and these are members on both sides of the aisle. I can tell you i have more than honored to serve as a part of the republican conference and serve as their majority leader for the last several years. My colleagues and i are also admirably served by a tremendous group of staff who put in tireless hours with the same novel intentions of trying to help the constituents of ours live a better life. These staffers are the backbone of this institution and im proud to have gotten to know them and their families and actually call them part of my family. I also like to recognize the sergeant at arms, the Capital Police and in particular the Dignitary Protection Division who ive come to know personal ly and ive gotten to know their often unheralded services that are really second to none and its been an honor to be in their company. Its been especially a privilege to get to know so much thousands, tens of thousands of swen constituents, of neighbors who make up the community of the greater richmond area. You know, richmond, virginia, the special place that ive called home my entire life, and i know that some of you, my friends in the press corps have joined me there recently, but i encourage everyone to make a visit soon. You know, we House Republicans have made some tremendous strides over the last few years. We fought for every child, regardless of their zip code to go to the school of their choice and to receive a quality education. Weve prioritized medical research and innovation and have led the way into an unprecedented area and era of technology and its breakthroughs. Weve forced the reduction of spending in washington in consecutive years for the First Time Since the korean war, and we fought to protect people from losing their insurance or facing Higher Health care costs due to obamacare. We passed bill after bill that would increase takehome pay and reduce costs for working middle class american families. Now some people think washington gets nothing done. Well, theres a stack of bills sitting in the senate that shows House Republicans do get things done. We get a lot done, and our priority is building an america that works for the middle class families who are struggling in had country, but there is more work to do. Conservatives have solutions that can help alleviate the middle class squeeze and provide opportunity to all regardless of their circumstance in life, and i will continue to fight for each and every american who is looking to better themselves and help their families by pursuing the american dream. While i will not be on the ballot in november, i will be a champion for conservatives across the nation who are dedicated to preserving liberty and providing opportunity. Truly what divides republicans pales in comparison to what divides us as conservatives from the left and their Democratic Party. I hope that all republicans will put minor differences aside and help elect a Republican House and senate so that we may all benefit from a proper check and balance that leaves our nation more secure, more prosperous and freer. The United States of america is the greatest gift to mankind, and im confident that our nation will overcome every struggle, exceed every challenge and share the message of freedom, prosperity and happiness to all libertyseeking people around the world for decades to come. Now while i intend to serve out my term as a member of congress from the seventh district of virginia, effective july 31st i will be stepping down as majority leader. It is with great humility that i do so, knowing the tremendous honor it has been to hold this position, and with that im delighted to take some questions. Mr. Cantor, why did you lose last night and what can the party learn from your loss last night . You know, im going to leave the political analysis to yall. I know that my team worked incredibly, incredibly hard. They did a tremendous amount of work. Im proud of their work. Im grateful for what they did, and in the end the voters chose a different candidate. Dana. Mr. Cantor, you are youre going to leave the political analysis to oh, but you personally im sure youve done some reflecting in the past 24 hours. Do you think that maybe you spent too much time here with your job as leader tending to your rank and file and not tending enough to the constituents back home . You know, i was in my district every week, so, you know, theres a balance between holding a leadership position and serving constituents at home but never was there a day did i not put the constituents of the seventh district of virginia first, and i will continue to do so. Mr. Leader, what message do you believe that this sends about the future of Immigration Reform . Should it be stopped at this point, or do you think it should go forward, and would you what would you talk to Speaker Boehner about . First of all, what i would say again on political piece of that, ill let you all do the analysis, but i will say that my position on immigration has not changed. It didnt change from before the election, during the election or the way it is today, you know. I have always said the system is broken and it needs reforce. I think it is much more desirable and doable if we did it one step at a time, working towards where we have Common Ground and believe things in common. I dont believe in this my way or the highway approach that the president has laid out, and ive continued to take that position. Ive said that theres Common Ground at the border. Theres Common Ground. I would like to see the issue of the kids addressed by those that didnt break any laws and come here unbeknownst to them, so, again, ive always said that there should be and is Common Ground if we would just allow ourselves to work together. Who do you want to succeed you, and how divisive will the election be within your conference . Well, i dont know who it is that will actually be running. I can tell you that if my dear friend and colleague ken mccarthy does decide to run, i think hed make an outstanding majority leader, and i will be backing him with my full support. Im curious. A lot of focus has been on the politics and on the policy side people are wondering what that means for the import export Bank Reauthorization and you talked about immigration and other things going on. Is this sort of the end of the legislating of this congress, or do you think the congress can still get those things done . Weve got, you know, obviously this month and next. We are very full on the floor with appropriations measures that my team and the committees are working on. We have got cftc authorization, some energy bills that will speak to bringing down costs for americans who are facing the summer driving season. Weve got a of bills. Probably another group of Human Trafficking bills to be done. The chairman of the House Financial Services committee i believe has announced a mark upon the tria bill. Well look to do that this summer. We will continue to work and hope any the senate will reciprocate so we can get the work of the American People done. Thank you. Can you talk for a minute about all politics a local here. Why shouldnt some republicans be scared where you spent every week where you feel they shored up their base . Why shouldnt somebody be running scared after an unprecedented loss by a majority leader . As you rightly suggest, all politics are local. And there was obviously a lot of attention that was cast on our race. But again. I think that our members are in good position in their districts and again ill leave the political analysis of what happened to yall. Democratics said you were too extreme and what what advice do you have for your successor . Maybe we had it right somewhere in the middle. I have always said its better if we can agree to disagree but find in areas which we can produce results. I have said this before and talked about my wife and i almost married 25 years and we dont agree on everything and we have managed to raise our family, have a wonderful marriage. She has stood by me throughout this Public Office stuff and been a strong advocate for me and not always believing in everything i believe in but we managed to raise our family and do well. I dont think thats too unlike life or the legislative arena. I think more can be helpful. What do you think your loss says about the partys direction for 2016 . On some colleagues are saying it m emboldens the tea party. Im going to leave the political analysis to yall. The tea party, remember what the acronym means, taxed enough already. All of us conservatives and republicans believe in that. I believe it was largely in reaction on the part of the Obama Administration on the stimulus the attempt of cap and trade in the house. The country rose up and said enough is enough. I do believe that what we have in common as republicans is a tremendous amount of commitment to a better and Smaller Government and greater opportunity and growth for everybody and the differences that we may have are slight and pale in comparison to the differences we have with the left and those expressing support for liberalism and a more expansive government. If you have the elections on july im sorry june 19th and youre stepping down july 31st, can you have a leadership in waiting that long or will that create more friction . Again, i think you have to speak to the speaker about the timing of the leadership elections. I will say that we have got a very busy floor period. I have announced ever since the beginning of the year. We have got a lot on the floor. My team has been heavily involved with the committees and drafting legislation and making sure we can run the floor and be expeditious in the legislative process. We look forward to a productive june and july. Thats eric cantor formerly the House Majority leader announcing he is stepping down after losing in the primary race last night. Ba barny, what you have heard, anything new, change your view about whats happening in the months ahead here . First let me express my admiration personally. Hes in a tough business i was in. He was gracious. There was no temperamental outburst. Im not sure i would have been personally good. Secondly, i am surprised that he not surprised. I guess i expected. Hes trying to minimize the Party Differences too much. All our differences are minor. Well a majority leader doesnt get defeated by a significant margin over minor differences. The Republican Party is more split over fundamental issues and also this whole question about whether you try to make the government run better, or whether you regard the government almost a hostile force, the people to his right blame him because he allowed the government to keep functions. I think that is a more profound difference. The last question was, i just practically having him be the majority leader for another month and half, that seems odd to me. It may be the staff will do the technical kinds of but we also now have a fundamental issue about who is going to be the new majority leader. What youre going to see in that is to some extent a forerunner of the 2016 republican nomination process with the more conservative wing against the moderate conservative wing. Okay. I hear him and respect him. I dont think the civil war is there. I dont think its near as devicive. I think this was a specific election. Eric cantor, gracious, gracious, standup guy. Give him a lot of credit for that in his conference. And final point surprised me. He basically endorsed kevin mccarthy. It just surprised me he would weigh in. Howard . I do think this is a problem for the Republican Party. Its likely that a very far right Tea Party Guy is going to he is a states men and these guys are going to run some pretty far right people and we are going to spend some time branding the Republican Party with mr. Brat and mr. Mcdaniel. I will say i support mr. Mcdaniels. Senator cochran is a big spender and if hes reelected and take to senate hell be the head of the Senate Appropriations committee which would be a disaster. Thank you for being here. Thanks to the panel. That hes it for us here on closing bell. Fast money begins right after the break. Ature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. 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