Transcripts For CNBC Closing Bell 20140627

Legend bill miller. Well discuss his long bullish eye on amazon. He recently called the company the best run in the world. And we have david faber on that coming up as well, looking forward to that. Heres how weve done so far today. A bit of volatility here and there, but for the most part, just down 48 points on the Dow Jones Industrial average, now trading at 16,798. 17,000 a mere 110 points away. Weve got the nasdaq up, though, up seven points. The Technology Stocks doing well again today relative to the other blue chips, and the s p is down 2 1 2 points right now, trading at 1,954. Lets get to our Closing Bell Exchange for this friday. Rich peterson from s b capital iq, joe duran from united capital, diane jaffray, mr. Arthur cashin from ubs joins us, and we are always pleased to have Rick Santelli with us as well. Arthur, we talked in this program yesterday around this time about the futility once in a while, trying to assign meaning to days activity in the markets here. But you know, lets face it, there are crises in the world that in the past might have affected the market, but they dont seem to be doing it right now. Do you have a meaning for that . Well, it may be that there are a couple of things going on. With these investigations happening, some of the highfrequency traders may have decided that discretion is the better part of valor, and theyre not playing. You have certain other sectors that may have stepped back. And you know, some of the people said, you know, we had an okay first half of the year. Maybe we can switch out of equities and into, perhaps, yielding instruments and see where they go. So, im not sure all the players are on the field right now, and that may be helping to distort things slightly. Rich, whats most encouraging to you in this market . Not all the players are on the field going into the holiday period next week with a shortened trading period. We look forward to the jobs numbers on thursday being reported on, and friday, the fact that we have 200,000 new jobs, that will be the 50th consecutive month of over 200,000 new jobs. Gains in the s p 500, this is a stretch since the mid1990s, i believe 95 to 97, the growth for the s p 500. Earnings look good. I think we had gains from nike earlier this week. We saw betterthanexpected housing numbers. Obviously, the gdp numbers earlier this week, negative 2. 9 was sort of a downkick, but the market is shrugging it off. Its a big market and someone has to buy it. Joe duran, even though we hover close to alltime highs for the dow and s p and 14year high for the nasdaq, you can still make a case that this market is inexpensive, yes . I think with what weve seen of this incredibly low Interest Rate environment around the world, i think we have a bubble in Interest Rates, and thats creating a lot of opportunity for people to refinance. And the amount of debt burden people have it lower than its been since the early 80s as a percentage of income. Thats supporting real estate, which is the biggest driver of spending in america and with consumers. So, its hard to be too bearish, except for the fact that theres a lot of complacency, and on the short term, it just feels a little fluffy, but as long as Interest Rates stay where they are, i think thats where the big risks lie. Equities are expensive, but frankly, given where they are, they continue to look like the best game in town. Joe mentioned real estate and kb homes is up after betterthanexpected earnings. Were seeing signs of life across the housing sector, even as the concern has been that this is losing momentum. Youre exactly right, kelly. Inventory has come down. Earnings for lennar and kbh are better than expected. We think were due a second run in the homebuilders. Really . How much further do you think they can go . They still have significant upside. The fund that youre manager for is the relative value large cap fund. Homebuilders would seem to me to fit none of that criteria, but perhaps they do. Relative to history, their price to books is still attractive and lennar recorded an increased book value this summer, given that it was a moderate selling season. And Rick Santelli, im hearing a bond bubble right now. What do you think . I think its very fascinating, because the treasury complex in some ways is nervous about the fundmentals of the economy based on the Federal Reserve and zero Interest Rate policy. Now, if i take mr. Durans comments, should the bubble pop, i certainly wouldnt think that a long equity positions going to fair very well, personally. Right, right. I just remember what happened when there was credit anomalies in a world thats based on repos and shortterm funding and commercial paper. So you know, youre damned either way. But i will point to the fact that one of the big stories today, theres so many subsets of why investors buy treasuries, and the newest subset is not new, but its new in terms of the intensity of the conversation, exit fees being tied with the shortage of treasuries, maybe because of the big ownership of the Federal Reserve and the repo market, and it all makes perfect sense. And the band plays on. Theres a lot of reasons to think Interest Rates may go up, but in the immediacy of the next couple of quarters, it just doesnt seem like a good bet. Yeah, that was a little bit troubling news. Can we talk a little bit about what to expect when the bell rings today at 4 00 . What does this mean . What are you hearing . Well, the rebalancing will be very large. Viewers should expect to see several hundred million shares trade between 4 00 as the bell is ringing and about 4 10 when the runoff proceeds. On an ordinary day, people put orders in for market on close. And what happens there, kelly, is they kind of wait in a small queue. When the bell begins ringing, the Market Makers begin executing them, and usually on a normal day, we have 100 to 150 million shares. You could see upwards of 500 million done today because the rumors are that anywhere from 40 billion to 50 billion worth of transactions may occur. Do you think its going to live up to that billing, 40 to 50 billion . I think we will certainly see probably double what the volume is when you have it going in. Right now, the early look and the viewers should be very careful with this because there is a little gameplaying, people can always cancel, but it seems to be tilted slightly to the buy side. And with an order of a billion, maybe close to 2 billion shares. Okay. Art im sorry, 2 billion. Arthur, those folks who have been around the block a few times on wall street often look to history to try and find a correlation, try and make sense of whats going on right now. Does this period of time were going through of low volatility right now, thats been a hallmark of trading the last several months, does this remind you of another period in time and can that help you figure out whats going to happen from here . Well, weve had several of these periods. The difficulty is, you know, everybody whos got their own little ax to grind will find a period that then evolved into what theyve been preaching about. Right. And you will hear a good deal of people saying that this much calm and complacent market will spring out in a negative fashion. Thats certainly been true in some of the recent past, but there were stretches back in through the 50s and 60s where you had relative calm in the market followed by a rather better market. So, i dont think that the record is clear enough that we could extrapolate from it. And whats interesting, weve had six quarters in a row where the s p 500 has rallied. First or longest such stretch through the 90s, but that period went on for a 14quarter run. So, it kind of reminds me a little bit about what Robert Shiller was saying the other day, which is that, you know, you can kind of look at how remarkable valuations are or how the market has been on a relative basis and could see it still has room to grow here. The punch bowl is still there and the punch bowl is being filled by the accommodation from the fed. The fact is, as you look out to the Second Quarter earnings expectations, exfinancials over 8 . Look at the third quarter, exfinancials are going to be burdened by litigation costs, mortgage charges, over 10 in financials. But for the full year, looking at about 7 growth from a record level in 2013. So, you look at valuations a year out, and our 12month actually, our targets were 2015, 2,100 on the s p 500. As well as earnings keep going, the stock market should be edging higher. And its not just the fed. 56 of the Global Economy is operating at a zerorate environment. Wow. Any rate hikes that happened are incremental. Theres no ratcheting up. I mean, in may of 2013, we went from two on a tenyear to three at the end of 2013. You know, the market still rallied. But joe, some have said, looking back on that temper tantrum, maybe that was the move in the bond market. Maybe that was it. I dont think thats it. I think the big question, to address what rick was saying, is what drives rates higher . Is it an aversion to risk and not willing to lend money at these rates, or is it the economys growing and we start to get some actual, not just asset inflation but actual inflation. And that is the big dilemma. Its either going to make equities a great place to be or a dreadful place to be, and it really derives around is the economy actually going to get topline growth . But a dreadful First Quarter. It doesnt look like well hit 3. 5 growth in the economy. Its almost impossible. And so, the question is, what causes rates to go higher, should it happen . And id add one other thing. The market did nothing for a decade. That was basically flat for 12 years. So, theres plenty of room, because weve done nothing for a very long time well, there were some ups and downs in there. But japans quite happy. They have huge amounts of inflation. I want to talk to the bank of japan in five years, see how they enjoyed the ride. Yeah, there you go. Thank it all. Put it on the call sheet. Thank you, guys. Art, thanks as always. See you later. All right, how are you, ms. Evans . Bill, you missed cake friday. Oh, and there wont be many more. I think some of those guys are leaving, i guess. Yeah, i know. Were going to talk amongst ourselves for a moment here. We dont get to see each other anymore right now. 15 minutes left in the trading session. The dow is down 41 points, but again, were heading towards the rebalancing of the massive russell indices, and we could get some volatility. Were certainly going to get a lot of volume at the close here. A reminder, bill is in englewood, cohosting the nightly Business Report tonight on pbs. Dont miss a moment of that. Thank you. Have another piece of cake on me. Coming up, Legendary Fund manager bill miller speaking with us exclusively. Wait until you hear if hes still banking on financial stocks hitting it big. Were going to talk to him about amazon, maybe toss him a question on homebuilders as well. Plus, find out if bills still bullish on amazon, which he pumped up right here on closing bell just before fathers day. Tough year for the Online Retail giant right now. So, feeling hungry . Add amazon to online Meal Delivery services, like grubhub. David faber has a report on amazons ever growing empire. Well be right back. My motheits delicious. Toffee in the world. 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Mixed day on wall street today. Technologys doing pretty well. The nasdaqs up ten points right now, the dow down 36, off the lows of the session that was set about midday today. And once again, if youve just joined us, there will be a rebalancing and some buying and selling of the components of the russell indices coming up on the close today, so a lot of volume, could be some volatility as well to look forward to. Kelly . And already a couple standouts in this market. Dominic chu has the big movers. You cant talk about movers today without getting or at least mentioning goprocee. Its day two of its public life, up pretty big. On todays session, up 16 , and thats off session highs. Thats after racking up a 31 gain yesterday, its first day as a public company. Even with this afternoons pullback, gopro shares are still up 50 from the ipo price. Thats a big deal, at least to gopro shareholders. On the down side, dupont falling 4 and accounting for a third of the dows decline today, even though were getting back off those lows. Dupont has cut its profit guidance, blaming weakness in its agriculture business. Finally, well end here on amazon, which is edging lower as it prepares to expand its local offerings with a food Takeout Service that looks a lot like grubhub, a lot like sceneless, so another big competitor getting in on a slightly smaller competitor, well call it, in that marketplace. Back to you. Amazons transformation into one of the Worlds Largest Online Retailers began with books. Yes, it did. David faber joins us now to preview his special documentary about amazon. Its called amazon rising and premieres this sunday. Good to see you, david. Good to see you as well, kelly and bill. Of course, amazon now offers an array of astounding products, selling books though still a key part of its dna, given its history, as you mentioned, of having started there. As it has gained power in selling so many things, it always continues to press its advantage and play business hardball. I talked to publishers about doing business with amazon and within that amazon oouuniverse they tell me it can be a tough place to get anything done, including making profits. They control the marketplace. Theyre the big guy. Theyre the big kid on the block. You cant piss them off. Theyre a huge gorilla. Reporter for Dennis Johnson and david goedine, book fairs like this one are a battleground. We have people who come here with their cell phones and theyll scan the barcode of the book and theyll compare the price im charging to what they could get it for at amazon and theyll walk away. Reporter amazon accounts for a third of both godine and johnsons sales. When you get together with other publishe publishers, do you guys talk a lot about dealing with amazon . Is that a subject . We do. Reporter at his Melville House imprint in brooklyn, johnson told us what happened when he crossed the online giant. We were asked to pay additional money, which would have put them getting a total discount beyond what we thought was not only workable for us but legal. So, we protested and refused to pay it. Reporter and what happened . Our books were pulled off of amazon until we did pay it. Of course, most publishers are not even willing to come out publicly, but recently in public, of course, has been the dispute between hachet, the Large Media Company that owns a number of publishers and amazon, with stephen king, j. K. Rowley, james patterson, who we spoke to for the piece as well, all of whom are having a very hard time selling their books on amazon, because right now amazon is making it very hard to get delivery of those books as it tries to get hachet to bring down its price of its own offerings for amazon. Do you sense an arrogance within amazon now with this hardball theyre playing that could come back to haunt them . You know, i do wonder about that, bill. And you wonder if Public Perception of the companys changing at all. So many people are delighted with the service, of course, every single day and how quickly they get things and the incredible diversity of products available, not to mention the price. But i do wonder whether that will be the case, whether there is a good amount, perhaps more hubris now. Its always in their dna to push their advantage. By the way, theyre not looking for higher prices, theyre looking for lower prices. Right. So, their claim would be, were only looking out for the consumer, but many people say books, at the very least, where you started are different. Its not like selling any other commodity. David, thank you for now. A lot coming up in this documentary. Catch the premiere of david fabers amazon rising this sunday at 9 00 p. M. Eastern time. Looking forward that to that very much. 40 minutes left in the trading session here. See how we are doing as we head toward the close. The dow down 40 points. Maybe it is a tightly coiled spring ready to go here as we get ready for that rebound im seeing at the top of the hour. Time warner clocking its best level since december of 2001, just one of the many Media Companies thats enjoyed a banner year. Well speak to a couple pros coming up and see how long the industry can stay hot. Also, the situation in iraq and the effect on oil prices. The u. S. Sending armed drones over baghdad. Were back in a moment. Seeing the world in reverse, 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 . Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. 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Remember last week there were reports the isis insurgents stole 400 million from a bank in iraq and that they may be worth as much as 1. 5 billion from their oil sales in the seized wells in syria . Nbc news reports its not true. Citing sources in the u. S. Intelligence service, its believed isis stole millions of dollars, not hundreds of millions of dollars, and analysts also dont think isis has enough money to control the vast swath of iraq and syria that theyve taken over, a scenario of 8,000 people in an area the size of wyoming. If you focus in on just the part of iraq they control, that area is used to receiving 12 billion out of iraqs annual 120 billion budget. Roughly, 1 billion a month from baghdad, covering food subsidies, government salaries, hospitals, among other things. Those payments have now stopped. Former ambassador charles reese, who is now at the rand corporation, says isis doesnt get enough revenue from other operations to make up for that. While isis is quite entrepreneurial, they are doing kidnappings and they are robbing banks and they are charging taxes on trucks crossing their territory. But 500 million to 1 billion a month is quite a large overhead cross of maintaining the population. And as we mentioned, isis does control some oil in syria, but the revenue from those wells not nearly enough to support the sunni territories in iraq. You can read more on cnbc. Com. Guys, back to you. And michelle, just before we let you go, wouldnt this be a worrisome development, potentially, if it leads to more kidnappings. Sure. The typical way isis has been raising money . Sure, or if the sunni population isnt used to getting the payments, they could be going to other parts of iraq. The u. N. Has documented huge displacements already. Michelle carusocabrera, thank you for now. Crude oil was down today, despite the latest turmoil, but its been on the rise since isis embarked on its mission to destabilize iraq. Gas following a similar path heading into the travel season. Joining us, chris faulker. We get mixed reports on exactly the impact all of this has had on the supply out of iraq. Weve heard from people who say its had no impact and that oil has no business going as high as it is right now. You beg to differ on that, though. Why . Look, i think that we have about 10 to 12 built in right now as a premium because of the isis situation, folks thinking that isis could make their way down south to basra, where about 2. 5 Million Barrels of oil are exported out of iraq every single day. I think now the market is responding, thinking that may not be the case, and i think the 10 to 12 premium was fullfledged civil war in iraq. So, i think we might see oil retreating just a bit as folks think now isis might be contained in the areas where theyre in currently. What about the longer term damage this has potentially done to iraqs supply of oil, which was supposed to be the bulk of the opec supply coming on the market over the next five to ten years . I was in iraq in december and it was unstable then. I think now things have gotten worse. This is going to be a big year for iraq. There are 4 billion barrels of oil a day, theyre at 2 1 2, targeting 9. 9 . 9 Million Barrels a day is a huge amount of oil. If we lose that production, the elastic production in saudi cant make up for that, so we could see Oil Prices Surging if they were to get toward the basra region. Thats yet to be seen. 30,000 troops in iraq protect that region. Even now if that worstcase scenario is taken out, which, obviously, well only find out as this carries on if thats the right assumption or not, but for the longer term, do you think this has dealt a serious blow to iraqs ability to meet that increased Production Target that has been priced into the market . In other words, could prices be structurally higher because of that, even if they come back off look, i think iraqs been damaged. Its not stable, major stability issues. This draws the picture very clear that iraq as major issues. To make it to 9 Million Barrels, maybe, but not with the situation theyre in and with the infrastructure challenges ahead. I think iraq is at 2 1 2, 3 Million Barrels, lucky to get to 4, unless Something Else changes. We left iraq in 2011. It wasnt stable then, and i think things have gotten worse now, and i dont think things are going to just tomorrow go back to the way they were. I think well continue down a road thats not in a positive manner at all. And for that reason, weve talked on this program for the last few weeks of the impact this could all have on u. S. Energy policy. Obviously, youre a big fan of wanting to increase production in this country, release the Keystone Pipeline and so forth, but do you expect, trying to be as objective as you can, that this could have that kind of an impact on the administration . Look, i think its obvious the United States needs to be energy independent. We need to shield ourselves from a lot of this stuff going on in the middle east and the volatility. The keystones a nobrainer. Its been a nobrainer for almost six years. I dont know why we still havent been abe able to deal with that. Allowing the definition of condensate to be a process weve had people from the administration on who insist there was no change in policy. Look, the policy was altered from the word process, making that condensate is considered a process because it goes through the stabilizer through the head and purize it, so they made it a dislate fuel. It is a change. It got killed on the news. All refineries will. Theres a rational reason for that, in other words. Sure, because they want cheap feed stock. I think this is one step short of a full export crude ban being you think it starts something bigger. I think it starts a conversation, which wont happen overnight, but we should be exporting condensate today and thats starting to happen. An administration will not go from a to z, exporting crude oil overnight, but i think it starts the conversation. And i think we saw in september, we saw oil gluten up in the coast and we had to discount oil 12 bucks off brent. I think it woke people up to, look, if you want this party to continue, we need to be serious about this. I know we have to go if we allowed tomorrow the u. S. As much export crude as they would like, wouldnt the price for our crude go up immediately . I dont think so. Its a worldwide given commodity. You cant base it on gasoline prices in the u. S. Its gasoline worldwide. Oil is coming online. Look, will it be a lot cheaper than it is today if it wasnt for all the volatility in the middle east. Our Oil Production is surging. If we were 8. 6 million in iraq and all of the libya and nigeria stuff wasnt going on, oil would have already come back down. I dont think it will impact it in a major way. Thanks. Appreciate it. 30 minutes into the close here. Lets switch from oil, take a look at how markets are doing, and the dow still off 30 points as the nasdaq does try to hang on to positive ground here. Its up 14. They are back and they are bigger than ever, i am told. Its the transformers. Were not talking about electrical, were talking about a movie. If critics hate or love this fourth installment of the media series. Well talk to media pros next to see if viacom, the studios parent company, is itself transforming the stock to his buy list. Also ahead, bill miller will share his list of stocks to own right now, and you may be in for a few surprises. Dont go anywhere. You . 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So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. All right, 25 minutes left. Were starting to see the market perk up a little bit here as we head toward the close and this rebalancing that is going to be taking place within the massive russell indices. The dow now down just 14 points. The nasdaqs moving higher, up about 17. And the s p up almost two points right now. Now, all day weve been giving you the outlook for the next six months. Yes, and now we want to talk media, so lets get some predictions now from cnbcs julia boorstin. Heres what to watch for in the media sector in the second half. The music and video streaming wars are sure to intensify as amazon, yahoo google and others ramp up their music and streaming tv options. Speaking of streaming, we can expect the if he cfcc to settlet neutrality debate. Youtube battles comcast and Time Warner Cable about paying for faster speeds. And get ready for more merger and acquisitions as media giants look for more digital growth as disney did with their purchase of baker studios. Thats your second half media outlook. Im julia boorstin. All right, so against that back drop, which media stocks are poised for a great second half of the year . Lets bring in a couple analysts. David nelson from bellpoint Asset Management and jason moser from motley foal. Good to see you both. Good to see you. David. Theres consolidation in the industry, always the disruption of technology. You hear content, distribution, so forth. What are the trends you see for the second half of this year . Well, we just got past a big hurdle. Obviously, we saw the Supreme Court decision against aereo, and thats good new for the industry. And most of the stocks are up on that for pure play. Cvs, which i dont own, was up the most on that, but its not a name that i own right now. Its not a name im looking at right now. Jason, where do you see the most opportunity . Ill tell you, one opportunity that i see just seems every quarter in and out is walt disney. I just got back from taking my family to maleficent the other night, thinking they knocked it out of the park again, but the movie studio only accounts for about 8 of the companys profit. Its like Cable Networks like abc and espn and really the crown jewel at espn that brings in about 65 of the operating profit. And sports is obviously a realtime dynamic that i think theyre going to continue to exploit, and i see no reason for disney not to perform well over the second half of the year. David, you also like disney. I do. Were going to have a lovefest here around disney. Ive always loved the mouse. How can you not love the mouse . You love the mouse but i think he hit the nail on the head. Sports is where its at the disney. And you know, we live in a dvr world and we timeshift everything, but when it comes to sports, we want it in realtime. I dont think you can watch monday night football on tuesday on your dvr and get the same effect, and thats great for programming, its great for advertising as well. And people are even remarking on the picture and picture offerings for the world cup streaming on espn. Com. All right, jason, so what else . Well, i think you maybe have to look at something many people might not consider a traditional media play today, but amazon. Com, which has gone beyond, well beyond just being, you know, americas biggest book store. Now, i mean, theyre offering all sorts of different video offerings with their prime service, producing and developing their own content. I think that the deal that amazon signed with hbo to bring that content over to their prime streaming service was genius, because essentially, now theyre giving prime members an hbo subscription for firstally nothing. I mean, its an 8 a month subscription cost for the prime membership. So, between that, and then look at the fact that with an amazon relationship, you can actually get a la carte movies to rent or purchase, and its rounded nicely with the fire tv device, which i think will prove to show some modest success. And just as someone who has used the fire tv device, i think it works very well. So, i think when you look at amazon today, the bets that its making and the money that its spending, its definitely becoming more of a Media Company every day. And jeff bezos is a ceo that you just are crazy to ever bet against. All right. And david, youve got a more traditional pick in viacom, which has kind of lagged this year, hasnt it . It has. It was a great performer last year. And viacom admittedly has some hair on it. Theyve had some troubles with nickelodeon, but i think its priced for that. I think for your viewers, one of the things to focus on is for all intents and purposes, management is taking this company private. 30 of the float has already been taken in. 850 million last quarter, 3. 25 billion for the year, and they still have 8 billion left on their authorized purchase here. So, i think that spells higher prices for this name, and its trading at 14 times next years. I love the point that you brought that up because were seeing the effect across the market, but is it fundamentally a bullish sign, if as you say, theyre spending a lot of capital to buy back a lot of shares . Its one way to keep a floor under the share price, i guess. It keeps the floor to keep another point, a lot of people buy viacom because of the dividend, and by buying in those shares, it lowers the cost of that dividend, so it could possibly raise it further. I think its a real capital return story. The tax incentive is also pushing a lot of people to pursue a buyback over a dividend, but they do both. Thank you, gentlemen, for your opinions on media stocks. News alert on at t. Michelle carusocabrera back with details on that. Also, watch for an announcement after the bell today related to at ts 8. 3 stake in amx, America Movil, controlled by carlos slim in mexico. There are reports that carlos slim is going to buy back that stake. Remember, because at t wants to do the directv acquisition, they have got to divest their stake in America Movil because America Movil has a relationship with dish network, so there was a question of what was going to happen. At t moving off the lows of the session, not a big mover compared to amx, which has shot up sharply higher. Watch for a possible announcement after the bell related to more specifics on what is going on here. Guys, back to you. Michelle, thank you very much. 20 minutes left in the trading session and we are continuing to move glaraurlly higher on all t major averages. Dows down, the nasdaq is up 17 1 2 points with the s p up two. The s p has turned positive, and as art cashin pointed out top of the hour, there are a lot of people anticipating buys, or significant buy orders on the close. That could be one reason why were seeing a comeback. Of course, we just have to see what exactly happens when the bell sounds. Are auto stocks facing an uphill battle in the back half of the year, especially General Motors . Our phil lebeau will drive by an an update. And meet the press moderator David Gregory tells us what he thinks about the reported icy relations lately between the obamas and the clintons, coming up. About speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. 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Hitting buys that Arthur Cashin was pointing out earlier. Weve seen breakdowns in biotech, social media, internet stocks, wondering whether semiconductors could be next. Seema mody has the breakdown from the nasdaq. Thats right, other areas within tech have seen this reset in valuation, but semiconductor stocks, companies that power smartphones, tablets and pcs with chips and memory devices, theyve been able to overcome Broader Market volatility, the sector up about 17 over the past year. But some Market Participants believe this group of stocks are due for a pause. The index on track for its first weekly decline in nine weeks. Technical analysts at mpm partners say expect further consolidation as the semis are the most overbought since the tech bubble in 2000. Goldman sachs also cautious, writing that semi stocks are trading in dangerous territory. But some see further gains. B. Riley analyst craig ellis telling me that the fundamental story for chips remained favorable, thanks to the adoption of smartphones in emerging markets and the lure of the dividends some of the stocks paid. In fact, the average dividend yield of semis is in line with the s p 500 at around 2 , so that might be a way to play chips, especially if rates do, in fact, stay low in the near future. Kelly and bill . All right, seema, thank you very much. 15 minutes left in the trading session here. What do you think, finish positive for the dow . Its the only one of the major averages still negative, but just by a fraction right now. Were watching it closely, thats for sure. I can feel the anticipation building in here, by the way. Is that what im feeling . Yes. Its not just that friday feeling. Much more ahead on the markets is coming up, including bill miller, and how about cruising in on one of these this summer . There it is. The ceo of thor industries, hes going to tell us if he sees a jump in Consumer Spending on bigticket items. And we might just, well, maybe well circle the block in this baby. Well be right back. Id like to see you take that down broad street. I want to live in that. She keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. 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. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about experiencing cialis for daily use and a free 30tablet trial. Coming up on the last ten minutes of trading, and in fact, the dow has now turned positive. This biased to the buy side that Arthur Cashin was talking about, about an hour ago, as a result of the rebalancing thats going on in the russell indices has turned out to be a reality. We are positive now in all major averages here. Joining me, independent Investment Consultant david dorst and james liu from jpmorgn funds. David, were already looking to the second half, what trends do you see and how are you positioning yourself . Look at profits. You want to see with the slowdown in the First Quarter, how are the numbers going to look for the Second Quarter . One thing of concern to me, as you saw, the personal consumption number which came out yesterday, only up 0. 2 . So, thats profits. Number two is iraq. You want to see iraq and its effect on the oil price, bill. Number three is t, treasury bond yields. And the treasury bond yields are frighteningly low. The 30year bond right now is at a 3. 35 yield. That is very, very low. It is saying something thats inconsistent with the way the markets been acting. And finally, oil, is the oil price, and the European Central bank, thats the e, is the European Central bank. Are they going to, in fact, add stimulus . Bill, this month, the banks in europe are down 5 , whereas theyre up 4 in the United States. So, theyre acting well, as well as the small caps are acting well. So, the market continues to want to lift and see this, the glass is half full, rather than half empty. To this point, yes. James, youre the Global Investment strategist there at jpmorgan funds. What opportunities do you see overseas in the second half of the year . I see a lot of opportunities. Europe, Manufacturing Activity is still doing well, despite perhaps lower gdp numbers. You see the same thing here in the United States. I still like the developed world, generally. If you look at emergent markets, if you have that longer time horizon and can really ride out volatility later on this year when Central Banks normalize their policies, at least here in the nalts, maybe the bank of england, if you have that longer time horizon, emerging markets make sense in a diverging portfolio. Chinas growth rate has been a question mark the first half of this year. What do you thinks going on . Their growth rate has been in question. Gdp growth rates rates are slower so far this year, but if you look at Manufacturing Activity, thats picking up. If you look at loan growth, actually, things are turning a bit more positive in terms of slowing down the massive amount of credit thats been building up in china. So, i still think its part of a diversified portfolio. I think we still watch it with caution. And i wouldnt be massively overweighted right now. Youve been a fan of japan for a long time. Are you still . I would imagine. Yes, we are. And you know, japan is up 5 , bill, youve seen that this month. Its coming on, its closed the gap from being down about 8 for the year. The msci index, which is not the one in dollars, the msci index is down 1 , so its had a very, very nice rally. Now we need to see further action on the structural reform front by mr. Abe. That would lead so, hes talking about taking corporate taxes down, as you know, from 35 down to 30 . More structural reform things like that will help japan continue. Its been all done, all the heavy liftings been done by the monetaries side, by the cheaping of the currency, by the huge expansion in the bank of japan balance sheet, bill. So, you need to see the structural reform. Wheres the beef . Show me the money. So far, its been good, but lets see what the second course is, the second helping. What do you think of japan, james . I think, i agree with david. I think the problem is that most of the gains that weve seen in japan, up 80 in the course of 2013, were mostly on the banks of qualitative and quantitative easing. Essentially, we prethe playbook in the United States, they borrowed it and they did well with it. Im not sure they have Structural Reforms in place. They put out proposals last week and theyre pretty much in line with what was expected, maybe a little lower. Until they have a plan to fix the economy, im not sure i would be overweight japan at this point. Well takebreak and come back with the closing countdown, see how we do with this rebalancing. And bill miller will give his take on the markets right now, the financials, amazon, which hes been very high on lately, and a whole lot more. Youre watching cnbc, first in business worldwide. Ood seeing the world in reverse, 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 . In a we believe outshining the competition tomorrow quires 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. [ bell ringing, applause ] five tech stocks with more than a 10 . 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The 2000 is up about eight points right now. Bob pisani is joining our group right now. Explain whats going on. Every day, the russell indexes rebalance. There are many russell indexes, but the russell 2000, the small cap, and the russell 1000, the big cap. A lot of money to these indiceses, about 5 trillion in the russell. So, there are thousands coming in and out and those in, like the s p rebalancing, to the russell indexes have to buy and sell the various indexes going in. Delphi automotive is behind me, coming out of the russell indexes because its considered domicile in the uk. Some are coming in from outside the United States, so theres a lot of movement. You can see guys lacking at the stocks and trying to figure out. All the actions going to come in the next two minutes. Bill, we had 400 million shares changing hands here on the floor of the New York Stock Exchange up until a couple minutes ago. I wouldnt be surprised if we got 800 million to a billion. We may do 400 billion shares. It sounds remarkable. Well double the volume for the entire day in the next two or three minutes, but there will be an avalanche of orders coming in just in the last two minutes. Well see how that shakes out. And next week we have a shortened week because of the fourth of july on friday, and its a half trading day on thursday as a result, too. Bill, youve got ism manufacturing and nonmanufacturing. Its a short week, but a very dataheavy week. Youve got Motor Vehicle sales, youve got Chicago Purchasing Managers index. So, youre going to see, i think, a lot of indication as to whether the underlying economy is still strong or not. Happy 238th birthday United States next friday. Lets not forget, of course, the jobs number. I believe that will be thursday. 200,000. It will be a very unusual day, thursday for the jobs report. 200,000 plus is what im looking at, which would be five months in a row above 200,000. And james lu, certainly keeping an eye on the middle east and whats going on over there and the impact on the price of oil. What do you think of that region right now . Absolutely. I really think its great to see the Exchange Come to life. I think we should rebalance more often, if thats what it takes to get volumes up. In the case of volatility in the markets, i think syria certainly is causing volatility, isis in iraq are causing volatility. What im trying to tell my clients who are mostly longterm investors, volatility up or down 60 basis points in a single day is not unexpected. Lets balance out the complacency weve seen so far with a sense of composure. All right. Its true that oil prices are up, but markets can still do well, even at higher levels. Very good. Thank you all. Have a good weekend. Coming up, the legendary investor bill miller joins kelly and the rest of the game on the second hour of the closing bell. See you later. Have a good weekend. And welcome to closing bell, everybody. And what a big friday its going to be. Im kelly evans. Heres how were finishing up the session on wall street, but with the sound of that bell, thats to some extent when the action heres going to begin. So, the Dow Jones Industrial average turning green in the final moments, up about 4 points, the nasdaq adding 18, and the s p 500 adding about 4 to close at 1,960. We heard from art cashin at the beginning of last hour, we could have 1 billion to 2 billion more worth of buy orders on the close because the russell is doing its annual rebalance. Unconfirmed, but again, i can tell you there are upwards perhaps of 2 billion coming into this space on the bell, so well see as we close here just what kind of effect thats going to have. It could take a couple more minutes for all of it to shake out. Well keep an eye on it but lets get right to it now with todays panel. Joining me is susan ots from the oshman institute, Zachary Carroll of evest net and cnbc contributor sara eisen and kayla tausc tausche, and also fast money trader jon najarian. Good to see everybody. Dr. J. , the russell rebal, is this mostly priced in . Well, i dont know a lot of folks that are trading that, kell, but ill tell you, for the week there were lots of movements, quite large movements. 3d printers, broadcasters. Of course, broadcasters reacting to that Supreme Court ruling that you and i talked about two days ago. Yep. Those stocks were just on fire after that, and had he theld most of those big gains. So, a very active week for trade, kell, and next week, although it will be shortened, most of the activity will probably be monday, tuesday, wednesday. By wednesday afternoon, it will be a ghost town. Yeah, its going to be a packed week for Economic Data. And guys, monday the 30th closes out the Second Quarter. It closes out the first half of the year. Kay kayla, what have we learned . I dont think weve learned all that much. People have been nay saying, theyve been saying the data would not be good, and sure, the data wasnt good when you think about the First Quarter, but people have been buying anyway. And i think in addition to the rebalancing, we have a little bit of profit taking, but you also have a little bit of window dressing, some investors that maybe havent bought the market before that are using now as a time to get in. And zach, what about the rebalancing effect not of the russell, but of a lot of pension funds, who at the end of the quarter, is this not probably going to be the case, right . Theyre marked up a little bit on the equity side and perhaps the rotation to what, fixed income . They only do that if they have an automatic allocation that says theyre run and they have to reallocate into fixed income. Were finishing another week and probably finishing another quarter of just amazing volatility in the markets, up and down. No. I mean, this is a period of time where, you know, we keep expecting that shoe to drop, keep expecting something to puncture it, whether its crisis in iraq, whether its a negative 2. 9 reading on gdp, which two years ago i think would have created, you know, extreme market anxiety dislocations, yeah. And i think, you know, there are two options here. One, were complacent because were overly complacent, and two, were complacent because there are reasons to be complacent. Im certainly in the latter camp, but well continue to have this debate over what looks to be a relatively complacent summer. Sara . On that note, techniciit is to watch the equity market, the most hated rally we have. It speaks to the sent meat out there. Kayla mentioned the Economic Data. We were talking about the economic surprise index tracked by citigroup, which measured lower. And they measure data releases relative to the expectation on wall street, and were back to may levels. So, some disappointments on the Economic Data thinking about personal spending yesterday. And yet, the market continues to march higher, which is a completely different story than what we saw this week for the bond market, where you just see money continuing to pour into treasuries. 251 i think is where the tenyear yield settled, a threeyear low. You continue to see this appetite. And there was a great article earlier this week, mcintosh was saying there are few periods in history where there is no way you can lose money. Basically, everything you put your money in, its going up. This is one of those quarters. And those always end so well, susan, dont they . Death now to me. Im not so concerned with where we are right now, to be honest. I think the Consumer Sentiment and confidence numbers this week were both good and above estimates, where people are talking about buying large appliances and cars and houses, and thats going to spur the economy in the way we want to see, so im less pessimistic than others are from that gdp number. I dont have any particular pessimism in that i dont think there should have ever been an expectation that this was going to be an incredible economy. Expectations of 3 growth were much more hopebased than realitybaylessed. The fact is, well probably have an economy between 2 and 3 , whatever that means, and that matter doesnt matter a whole lot to these companies. Because amazon can do really badly because its taking share. So, you dont care about the quality of earnings . It is an interesting debate right now, right . Because the earnings are better and Profit Margins stay high, but the quality in terms of Revenue Growth and guidance isnt that great. I think we havent had great Revenue Growth for years. We have companies learning to be more efficient with technology, learning how to be more efficient with the goods and services they offer, and that is a kind of quality. It certainly is not what people think of when they think of quality earnings. So, question is, while i thought this was revealing talking about viacom last hour, the guest we were talking to, david nelson of bellpointe, pointed out that this company, as he put it, is effectively going private because they bought back 30 of the float. Thats an important component, dr. J. , of the market here as well. Absolutely, kell. And an awful lot of these companies have not bought 30 of their stock but have bought billions and billions of dollars worth of stock as part of share buybacks. So, obviously, youre a share shrinker when youre in that category, and thats a lot of the kind of stocks i look for. Im going to be looking for some sort of washout in these refiners, kelly. I dont think weve got there yet, but they did have a virtual monopoly on u. S. Crude oil. Of course, it could not be shipped out. Its not being shipped out yet, but soon it will be in all likelihood. And i think that continues to pressure these guys. But i think another 10 to the down side would be my target before i invest. Well, thats interesting, because again, you know, we saw what happened with valero and some of the others the day that news, which was news, even if the administration saying it wasnt news, it was news. And the real important thing that happens from here, i guess, is whether or not thats the opening of some more significant loosening of export policy, dr. J. So, our guest last hour seemed to think yes. Im hearing from you, it sounds like yes. How do you think these refiners respond . I think the refiners, like i say, its become a lot more competitive for them then. Look at marathon today. Its, like you say, not just valero. Theyre the biggest, but then you look at marathon, philips 66, you look across the board at all the different refiners. Instead of just getting that, not free, but that very low competition trade out of the bocken and marcellus as well as texas and louisiana light sweet, i think they have more competition from outside our borders thats not here yet, im not saying its here yet, but it is coming, and investors are already ratcheting down their outlook as far aprofitability for the refiners. In the meantime, even as the energy piece is one side of it, well get auto sales next week. It indicates, susan, like you were saying, to what extent are u. S. Consumers, to bring it back to the consumer here, able and willing to buy bigticket goods . Well, you know, were starting to see an increase in credit card debt. Were starting to see loosening of some credit standards. And so, youre starting to see, i think, people starting to borrow more and moving more in that direction. It still hasnt hit, obviously, levels precise, but i think some of that is going to start to pick up again. Whether or not thats a good trend, you can kind of decide. Maybe bad for individuals, good for the economy, and well have to find the right balance, but i do think there are positive signs on the horizon in that respect. Not to play devils advocate, and i think thats kind of the environment were in. For every positive data point you can find a negative one right now as well. Interesting chart circling from yield data. Renaissance macro, an economist looked at spending on bigticket items versus just food and clothi clothing, the basics, and theyre spending more on cars than the food and basics. And it speaks to this discrepancy that youve been seen in the Consumer Spending recovery, and that is more expensive items at the higher income level. Much better recovery than what youre seeing at the lowend basics and consumer staples. You see it in their earnings reports. And the only cautionary piece of this, perhaps, kayla is, whether its a rerun of the subprime housing crisis we saw in the past, but perhaps this time with regard to autos, theres a lot of subprime auto refinancing activity going on today. The housing data today shows its encouraging because it shows its not just in the auto space. Jim cramer will always say, someone about pay off their car before their morning because they can live in their car, but they cant drive their house to work. As jim knows firsthand, right . Yes. And without the derivatives being piled on those subprime if it had just been a subprime morning issue, 20072008, we would have had a dent to our Economic Growth and people would have been in a world of pain. It would not have imperiled the whole financial system. Unless there is massive pressure piled on Student Loans and auto loans, which to our knowledge is not, youre not in the same systemic danger. The structure of the subprime auto loans is not as alarming as the Mortgage Loans were. These were not interestonly loans, they were not ramping up over time. Its simply people whose Credit Scores have been dinged over the past few years lower than they have. And theyre not dipping down the scale nor are they being repacked into aaa securities because the bulk of them at least not yet. As far as we know. Im like, let me google that. Dr. J. , before you go, payrolls next thursday. How do you think the markets positioned for it . I think overall, the markets in fine shape right here going into that. Now, we could get a surprise on thursday. We, of course, get the adp just 24 hours ahead instead of 48 hours ahead like we usually do, but im optimistic about how that will be, and i think the gdp ticked this week. Ill bet zach has some thoughts on it. I think thats the low were going to see in almost forever out of the United States. Dr. J. , thank you for now. Great to see you. Stick around and catch jon najarian and the fast money crew at 5 00 p. M. Theyre going to be talking the amazon fresh expansion across the u. S. In which Grocery Stores are going to fall victim to the delivery service. Dont miss a moment of that. Lets send it now to dominic chu for a quick market flash. So, kelly, what were seeing right now is a big drop during the regular session in shares of mankind after the food and Drug Administration approved the companys inhaleable insulin product, afriza. It calls for more tests. Mankind must run additional Clinical Trials on its efficacy or effectiveness with children and evaluate its impact on possible functions in the cardiovascular system. Shares sank before rebounding to close out down about 5 as investors basically looked to evaluate the conditions of the approval. Theres probably also some kind of a contingency there to put warning labels on the labelling of the product. So, again, some interesting devel developments for mankind, a stock that was down 22 in the regular session, kelly. Back to you. Dom, thank you. So, its been a tough first half of the year for financials, significantly underperforming the s p in 2014 to date, but will this lagger become a leader in the second half . Thats coming up. Also, the amazon way. Up next, well hear from a former amazon executive on how jeff bezoss leadership style has turned this company from an internetbookseller into one of the largest tech and Retail Companies on the planet. And dont miss amazon rising, an inside look at the companys success, airing sunday night, 9 00 p. M. Eastern. Youre watching cnbc, first in business worldwide. Welcome back. Heres a look at the volume as we headed into the close and then just on the closing bell, the russell rebound seeing a significant uptick. Art cashin informing us about 900 million of buy orders were in there. Bob pisani joins us now with the details. Bob . You know, heres whats amazing. We sit on the floor, we watch whats going on, it all seems kind of quiet. We traded 1 billion shares, 1 billion shares in the final ten minutes of trading between 3 50 and 4 00. And after that, theres a few minutes where it all settles out. But a billion shares went through the pipes. And i dont mean all over, i mean just on the floor of the New York Stock Exchange. Thats an awful lot to put through the pipes, awful lot of stress on the system. But as far as we can see, and ive been Walking Around looking to see if theres any issues or problems, its about as flawless as you could have expected. A few minor things happened, but by and large, this went well. This is the biggest close of the year for the nyse, so they spend a lot of time preparing for it, making sure it goes smoothly. So far from what i can see, very, very smooth. Kelly, back to you. Bob, as mentioned, perhaps, starting to turn stocks around in the close. Have a good weekend. Amazon, one of the worlds most innovative companies. Now a former executive dishing. All the details about the company in a new book. John rothman spent years working at amazon with jeff bezos, author of the amazon way. Good to see you. Thank you for having me. Theres a lot about amazon, david fabers report coming up. Ive got the economist last week, where the cover and the question it poses is how far will amazon go. How would you answer that . Can you restate that again . How far will amazon go . They show a man on a moon with an amazon delivery box. Yeah, i would never underestimate their ambition. You know, they started as an internetbookseller to the Worlds Largest selection and ecommerce company, now are in the Technology Sector and are really looking to reshape many industries. Could you give us a sense from your experience there as to what other industries could fall under amazons purview or what this company, which again, began as amazon. Com, selling books, will look like if jeff bezoss ultimate vision is executed . Yeah, i think that they really look at industries and look at where, you know, the Customer Experience could be radically improved, where theres opportunity for digital disruption and how it can value their customer base. And then theyre willing to explore into those areas. And so, youve seen it in technology. Theyre the leader in cloud computing. Youve seen it in the publishing industry. You see it in grocery, you see it in apparel. I think theyll continue to explore new industries and new functions. And i want to just get perspective from the panel here. Susan . So, john, my question is, when you look at amazon and you look at the dominance they have globally, how can you really say jeff bezos is a paragon of leadership or holding himself out to be one when were hearing all these terrible stories about the conditions in their warehouses, that people are working this sort of backbreaking labor, you know, theyre not getting enough time off, theyre getting fired if they get sick . It really feels like those two are kind of incongruous. You know, i know that amazon is highly committed to meeting all of the standards that, you know, are set and are an incredible corporate citizen. So i cant comment deeply on the issues that are going on within their fulfillment centers, but i know its an incredibly well run company, and its competitive. And they compete on margins. So, they are always looking for how to do things more efficiently. So, on that, you know, theres the old apple way, which is this very closed system, where everything flows through it, as opposed to a more open architecture, you know, which is obviously the Google Android way. Where do you see amazon coming down on that in terms of its entire Business Model . Yeah, id say more on the open side. They view themselves as a Platform Company. And so, the Platform Company exposes services, allows others to innovate on top of their capabilities. And amazon the retailer is one of the big customers of that Platform Company, but lots of other companies can leverage their capabilities into new and innovative ways, which i think is really the definition of a Platform Company. John, weve got to go, but does this company deserve to be trading at the valuation it is . Yeah, i think its a great long bet, and again, i think they have incredible ambition and they are excellent at execution. All right, john rossman knows quite a bit about the amazon way. Thank you, john, this afternoon. Appreciate it. Thanks for your time. Weve got a news alert for you now on blackrock. Dominic chu, what can you tell us . All right, so, kelly, heres whats going on. Blackrock advisers, which is a subsidiary of the big Asset Management firm blackrock, has received a wells notice from the securities and exchange commission, the s. E. C. , and what this wells notice is, is in essence a headsup of a possible further action by the s. E. C. Its in relation to a former employee of blackrock advisers, a man named dan rice, a Portfolio Manager for one of the firms funds. There was a potential conflict of interest inquiry back a couple years back in 2012. The employee, dan rice, no longer works there and hasnt since december of 2012, but the s. E. C. Staff has taken the preliminary view that blockrock advisers disclosure as it related to this whole investigation situation was inadequa inadequate. Now, again, this is a wells notice. This is not a formal allegation or any kind of a finding of wrongdoing, a headsup, if you will, about a possible situation. So, well bring you more details, but for right now, the shares are down, but theyre down marginally in the afterhours session. So, again, a wells notice served for blackrock advisers, a subsidiary of the bigger blackrock organization overall, kelly. Back over to you. All right, dom, thanks very much. More still to come on amazon. Well talk to bill miller about it. Hes one of the companys biggest bulls. The sales growth will be probably 20 , 25 the next few years and the stock should at least double in that time. He called it the best run company in the world right here on the closing bell, but is it his top stock pick . Hell join us in a few minutes. And dont miss amazon ridsing sunday night at 9 00. Learn how jeff bezos created one of the most powerful. horn, ding, ding how long have i had my Car Insurance . I dont know, eight, ten years. 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Call the number on your screen to switch to the aarp Auto Insurance program from the hartford and be rewarded for your experience behind the wheel. Recovercare, Auto Insurance that helps take care of me. Now ive seen it all. You wont drop me, you take care of me as well as my car, and you offer savings to switch. Its unbelievable if youre 50 or over call now to request your free quote. Im gonna call. Im calling. Im calling. Im calling. Call the hartford at the number on you screen to request your free quote. Well even send you this free calculator. Call now. Why wait . Welcome back. Continuing our daylong effort to help you position your portfolio looking ahead to the second half. Now Kayla Tausche telling us what could be key here for financials. Heres what to watch for in the Financial Sector in the second half. Bulls will see Bank Earnings improve alongside the economy. Consumer banks will see loan demand keep picking up. Showing strength across all u. S. Districts. Investment interests as m as close. Costs will rise. Bond trading weak and the they may charge banks for the 2. 6 trillion in excess reserves. Bnp paribas and others could pay to settle legal issues. Thats the second half outlook. Kayla also on the panel with us. Rich peterson mentioned that the outlook for secondquarter earnings is for 6 growth or 6. 5 growth overall but 8 when you strip out the financials. In other words, theyre under pressure here. Theyre dragging down almost the entire economy right now. The wonders of live television. We can be there, we can be here, we can be all these places at once. Beam you around. But the point being, everyone thought banks were really going to be benefiting from a rise in yields as the economy starts healing, but bonds have just basically been trading sideways. And remember, the bulk of their earnings are in interest on loans to consumers and to businesses, so the longer yields stay low, the more the banks will make, not to mention these amazing legal settlements that keep coming in the tens of billions of dollars. And now the problem is that theyre starting to really keep chasing the yields and were seeing an erosion of credit standards. The eoc came out with a report this week saying theyre getting concerned about the accumulation of credit risk and how much were pushing into subprime borrowers. We were talking earlier in the show about subprime in credit cards, and 40 increase in issuance to subprime borrowers on credit cards in the First Quarter of this year versus last year. So, definitely some storm clouds on the hoarrizon. There is issues about the credit card of commercial loans some of the commercial loans will be going sour. The flip side is there are a lot of people still saying they cant get credit when they want credit. It speaks more to a confused system than one thats necessarily running away most companies can get credit, consumers cannot. The loan demand is picking up, though, where analysts are saying you could see a boost to the bottom line for the banks. And regulatory, you mentioned the legal fees, the regulatory overhang seems to continue, even with todays news on bnp pari s paribas, theyre approaching these cases more from a criminal perspective versus, you know, a civil perspective. Yes, its not related to the financial crisis, but it certainly puts banks in the hot seat. And we knew the residential fraud, the Mortgage Securities working group that eric holder has been spearheading, we knew that there was more to come from that group. But now that were seeing a guilty plea from bnp paribas, from Credit Suisse on all of these other seemingly unrelated issues makes banks here, executives are saying is this a dry run to see if in the future we can get a u. S. Bank to plead guilty on some of these . It was only a decade ago that the very notion of a criminal, what would we call it, i mean, of criminal activity could take a firm down. And now it seems like its routine for international banks. And thats what u. S. Banks have said they have long told the federal authorities. Look, we cant plead guilty, we can only settle for as large a sum as you want, but our customers wont do business with us if you make us do this. But now that theyre actually getting Credit Suisse to do this and getting bnp, and there havent been that many widespread effects the skies havent fallen. Right. Makes you think how this could play out domestically going forward, but thats not going to happen in the next half. Thats longer term, just a seed thats being sewn. Which wont make the executives feel any better. But thank you, kayla. Hillary clinton is the presumed democratic frontrunner for president in 2016, but is she out of touch with americans . She recently implied she is not truly well off, although her family has gotten millions in speaking engagement. David gregory just interviewed former president bill clinton, and he has highlights next. Then, hitting the road with the ceo of thor industries, one of the largest rvmakers. Thats right outside the Stock Exchange right now. See if hes seeing a pickup in demand as the summer heats up. Nice. Wrench . What . Aflac so this is who you brought to help us out . Oh yeah, hes the best. Hmm. He doesnt look like hes seen a tool in his life. Oh, he doesnt know anything about tools. Aflacacacacacacac but when i broke my arm, he lent a hand. He paid my claim in just four days. Four days . Wow its no accident aflac pays fast. Find out how fast at aflac. Com and remember,accidents dont hurt as much when you have aflac. Better. Seeing the world in reverse, 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. 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Paying ordinary taxes, secretary clinton did, unlike people who are really well off, who maybe just pay taxes on capital gains. Can you see that as a political matter it may strike people as being out of touch . Yeah, but shes not out of touch and she advocated and worked as a senator for things that were good for ordinary people. And before that, all her life, and the people asking her questions should put this in to some sort of context. I remember when we were in law school. She was out trying to get Legal Assistance for poor people. I remember she was working on trying to, believing in paid leave for pregnant mothers in the 1970s. See, so i think, if you dont give the most adept answer to a question because you immediately remember what you felt like the day we left as opposed to what it looks like to everybody else now whos having trouble, you can say, okay, ive got to clean that up, which she did. That was meet the press moderator David Gregory sitting down with former president bill clinton. His wife, former secretary of state Hillary Clinton, under the political microscope as shes expected to announce her intent to run for president in 2016. David gregory joins me now with more. David, that was a little bit of a cringeworthy moment. Theres bill clinton on stage, his wife, his daughter sitting there. Hes talking about her. And by the way, he seemed to almost indicate that she wasnt being very adept, in his words. Well, what he was saying is as a political matter, yeah, she had to go and clean up the comment that she made initially that they were dead broke coming out of the white house. What has struck me about this at the time i did the interview and as ive thought about it this week is that the clintons seem somewhat unprepared for this line of questioning about kind of who they are, how wealthy they are today. It is a different thing in their public life than where they started, but it is their reality today. The other reality today is that in politics, if you are an establishment entrenched politician, if youre a democrat or youre a republican, theres a lot of people who are angry at you who dont think that youre listening to them. And thats a bipartisan problem that the parties have. And so, for Hillary Clinton, she is a much different person in terms of how wealthy she is than when she got into public life with her husband way back in the 70s, as he talked about, and i think shes not been as adept talking about that so far. The former president defended her. She came out in the next couple days and said i dont need him to defend my record. Right. But the reality is its part of how theyre going to be scrutinized, who are they are and can they still stand up for these issues at a time of low wages, at a time of income inequality, when a lot of people within the Democratic Party are saying, you know, who are feeling more of that populist streak. And the contrast with Elizabeth Warren right now couldnt be greater. At the same time, just Hillary Clintons remarks alone on the heels of mitt romneys defeat last time around because he seemed to be out of touch with the way about these issues about his income and wealth were perceived is extraordinary. How much damage has been done to the ability of folks, do you think, to nominate a Hillary Clinton, to vote for a Hillary Clinton for president this week alone . Well, lets just remember that its june of 2014, and 2016s a long way away. Shes not even a declared candidate. But because of who she is, because shes written a book, because of the sort of expectation of her candidacy and how long shes been in public life and what a long record they both have, shes going to get this kind of scrutiny. The president said, president clinton said, look, people dont begrudge you if youre rich. They just want you to be transapparent. I would add on to that, they dont mind if youre wealthy, so long as you can really connect with them. And its that connection piece people are sort of asking about all politicians, including the clintons, and thats where its kind of a new game. You know, for the clintons at this stage of their life, getting into the potential of another run. And this is the likability piece. The other piece is how effective she is, how effective she has been, her track record, especially as secretary of state. Coming under plenty of strutny of its own. And look, i take your point, its mid2014, perhaps were dwelling far too much on this right now, but how much, especially after the midterms when they were likely to deliver a more gopheavy congress, how likely is it that that momentum could Carry Forward and put a member of the gop in the white house in 2016 . Well, were a long ways off, and the Republican Party is pretty divided right now. Hillary clinton is still a very Formidable Force politically within her party and more broadly, but i think that some of these questions speak to whether or not she could have more of a challenge on her left than people are giving much credit to at the moment. Because she has the potential to raise the money she can raise and because of her name recognition, she becomes this favorite. Again, i think shell be running against somebody. Its very hard to paint a contrast when you dont know who is on the other side. And at the moment, the republicans have a lot of division that theyve got to get through before they can start thinking about whos going to carry the banner for 2016. Yeah, sure. And now it appears perhaps more division on the d side of things as well than previously thought. David, thank you for now. Good to see you. Be sure to tune in to meet the press this sunday. You can catch the whole interview david has with former president bill clinton from cgi. Check your local listings for show time. Now, art cashins concerns about the Second Quarter all the rage on wall street today. Is he topping the cnbc hot list . Thats up next. And also ahead, bill miller here to tell us why he thinks amazon shares could double over the next several years. Well be right back. So what im saying is, people like options. When you take geico, you can call them anytime you feel like saving money. It dont matter, day or night. Use your computer, your smartphone, your tablet, whatever. The point is, you have options. Oh, how convenient. Hey. Crab cakes, what are you looking at . Geico. Fifteen minutes could save you fifteen percent or more on Car Insurance. In a we believe outshining the competition tomorrow quires 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. Schools out for summer. While many mba grads are looking for jobs, many arent even applying for financial positions. Allen wastler has that in the hot list. Thats our number one story. Its right up from stephanie landsman, one of our producers. She looked at what the mba market is doing right now, and its twofold. Because of the recent troubles on wall street, with banks getting into ethics issues, things like that, mbas arent so anxious to go to wall street, and in fact, with all the success of new Companies Like the googles and teslas of this world, theyre finding that theres actually a market for them beyond. And so, this is sort of making the talent pool shrink for wall street a little bit. Really fascinating story. Oh, yeah. Number two on the hot list is everett rosenfeld, one of our hardworking News Associates around here, managed to get the numbers finally from espn for the number of streams that they did. Oh, nice. 3. 2 million streams they had. Now, admittedadmittedly, the se crashed briefly, but they got back up. As someone in the streaming business from time to time, im kind of jealous. Raising eyebrows. Of course, they have a great soccer match, i have fed hearings. Okay. Finally, number three on the hot list you were just talking about, our writeup of what was originally covered by the new york post, the book blood feud and reportedly hillary making comments about president obama, mainly that he was incompetent and feckless. Thats according to the book and according to an anonymous source, apparently she was out drinking with friends and got loose lippy there. Anyway, thats our number three. Pretty hot hot list today, even for a friday afternoon. I was going say, thank you, allen. Great to see you. Have a great weekend. Take care, kelly. By the way, this is the case for disney. Espn being a core part of that, what was it . 3. 4 Million People watching that online, even though it admittedly did crash. Its interesting to see soccer explode in this country. It was never a popular sport. Actually weve been covering nike and adidas and what we saw out of nike earnings last night, theyre relying on the Global Football market. Football is very popular. Soccer was very popular in 2002 when the u. S. Did well in the world cup and they fell. One thing on hot list, good thing mbas are not rushing into the wall street market. There is a world of need for confident talent and entrepreneurial people, the degree to which they pooled into wall street in the 2000s was distorted and i think very good for the economic outlook. Morgan stanley put out a memo, bloomberg picked it up, the ceo saying they got 90,000 applications for the summer internship and accepted roughly 1 of them. Thats harder to get into than any ivy league school. Clearly, the banks are saying we have no issues in attracting people. I agree with you, but for a different reason. I think its great there are fewer mbas going into finance because then you weed out the people that are mercenaries and going for a big paycheck and get people who believe in the industry no, they know the big paycheck is in tech. But its not an entrylevel. It will help the banks get their cultures back in shape. Or the expenses down. That was the cap half full and the cap half empty in one brief second. Thats how we do it at the kk kk. Last time with talked to bill miller, he said amazon was one of the best out there. Take a list wren. I think amazon has a small market share in a giant global market, it has a sustainable competitive balance in cost and consumer loyalty. Its got a ceo, jeff bezos, who is brilliant, who is relentless and whose wholly rational, and thats a deadly combination. Is he still bullish on the business . Back with us exclusively is legg mason chairman and ceo bill miller on the cnbc news line. Bill, it is great to talk to you again, and at a time when people are looking at amazon wonderi i if its broken because of the performance in the first half of the year. Are you still positive on this name . Yeah, kelly, i think its one of the best names in the overall market. And if youd ask me if i could only put my money in one spot for the next ten years, it would probably be amazon. What you quoted in the earlier segment is still true about amazon, but i think what people may be missing about this is just how large their sustainable competitive advantage is. So, if you compare them to walmart, the most efficient retailer in the world, amazon has about 117,000 employees on about 100 billion of revs in the next year and a half. Walmart has 2. 2 million employees. Amazon employers are about four times as productive as walmart employees and Profit Margins are about 400 basis points greater than walmarts, so an enormous competitive advantage. Theyre taking the gross profits and investing them for growth. Ill read a line from the economist piece on this, where a week or so ago, they put this on their cover. They say to your point about comparing it with walmart, even after this recent slump, shares still cost more than 500 times last years earnings. Thats 34 times the multiple for walmart. So, what do you say to those, bill, who say this company is and always has been ridiculously overvalued . Well, its gone from about, i dont know, from maybe 1. 50 or 2 max when it came public to 300 . So, about 150 times your money. I think the market has, its been 17 years, the market has had plenty of time to assess amazon, and the market what i find interesting is that people somehow say amazon gets a pass in profits. Well, it would be quite extraordinary for the market to pick Just One Company and say for all the thousands of companies were going to Pay Attention to profits, but this one were not going to. What the market actually is, is very rational. Amazon is a lot like telecommunications inc. Under john malone. So, if you bought that when john took over and he sold it to at t, you made 900 times your money over that 25year span. And they almost never reported a profit in that entire period. All that happened was the debt went up and the stock went up. But hes actually creating enormous amounts of value, which is whats going on with amazon. Do you, and do you have to as an investor, understand everything that jeff bezos is up to and the wide array of industries that hes experimenting with in order to understand the value of this name . I think its really important to understand jeffs psychology, decisionmaking approach, how he thinks about the world, because ultimately, whats going to happen is all the capital thats being deployed is being deployed based on his vision. But fortunately, we have, as 17 years as a public company, to get a sense of how that previously has worked out. And what we can see there is that the capital deployment has really been quite amazing. And we did a mathematical analysis, a regression analysis of what actually the best predictor of amazon stock price is, and its obviously not profits, reported profits, because that only is about a 0. 2 correlation coefficient. It is, though, it is gross profit dollars, though. Thats the key. And gross profit dollars last quarter actually accelerated to a 31 growth rate. So, if that relationship holds without getting too math speaky here, if its got a 0. 96 correlation, which means it explains almost all of amazons stock price growth. If that correlation continues to hold, then the futures very, very bright for amazon over the next year or so. In other words, we have to go, but do you think investors have paid too much attention to ratios and not enough attention to the, as you said, the gross profit dollar, that a 20yearold company like amazon is still growing 31 in the past year . Amazon i think will be the Fastest Company in World History to 100 billion of Revenue Growth. In 17 years, about 100 billion, probably sometime late this year, early next year. It took walmart, one of the Fastest Growing retailers in history double that amount of time to reach that. Ibms been around 100 years. Amazon will probably pass them in revenues next year. So, i wouldnt say so much you hit a good point about profits versus ratios, to clay christensens point, but i would just say people are focused on the wrong numbers at amazon. They should be focused on the gross Profit Growth and sales growth. Bill, fascinating and another thing for people to think about as they get ready for the documentary coming up this weekend with david faber. Bill miller of legg mason. Have a good weekend. Recalls have taken center stage for the gm industry this year. What will drive the industry for the second half . Phil lebeau is here to tell us. And what rv sales are saying about the state of the consumer, coming up with the ceo of thor industries, when we come back. 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The shares gaining much back of the losses we saw. Lets continue to look at the second half of the year. Phil lebeau with auto makers and sales. General motors is expected to see the pace of resales go down. Meanwhile, investors will be focused on the sale of fiat. And a yearend total coming in above 16 million vehicles. Thats the look at the auto sector. Im phil lebeau. Recreational sale when we come back. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Welcome back. Were outside the new york stock exchan exchange. Thor industries, joining us now to talk about this is bob martin, the ceo. Great to see you. Thank you. How much does this retail for . Its very affordable for a complete rv. How many are you selling in this country . Well, we had to open up a new factory, so hundreds of thousands as we continue through this year. And People Living in the rv communities. Well, we definitely sell to the baby boomer community, but a lot of our products are going to the mill lennials to gen x. How are you seeing customers finance these purchases . In the last four years Retail Financing has come back strong. But they need a good credit score, and 15 to 20 money down. Prerecession, they didnt. They need to have money down, but long term, they will actually have equity in their rv. And how is this a good investment for those trying to finance it . Well, an investment into your family, your health. It does depreciate like a car. But you can finance it for longer terms as well. Are you seeing it higherend stuff, or more to the middle . Right now, motor home growth has come back stronger, 20 , 30 in the last couple of years. But right out of the recession this thing is huge. How long does it take to manufacture. About a day, this one. Whats your sense of american manufactu manufacturing. In ten seconds. Were building in elkhart, indiana, and we have high confidence. Im going to take this home. Thank you, everybody. Time for fast money with melissa lee. Over to you guys. Its fast money. Apple fire sale. Find out why theyre cutting prices and making friends with costco. And the energy fade. Falling