Transcripts For CNBC Closing Bell 20140630

I know. Were expecting big ideas out of aspen from you folks today and, i mean, if nothing else, the view is spectacular as we always know this time of year. Yes, i am Bill Griffeth here at cnbc headquarters, where we are watching a final hour of trade not only for this day, for the, month for the quarter, for the first half of this year on wall street, and kelly, as we know, the markets have continued to move higher. This will be the fifth consecutive month where the dow and the s p have moved higher. And by the way, eighth consecutive quarter for russell 2000. I believe thats unprecedenunpr. Well follow these markets here. Well hear shortly from the president as well. Lets tally up the gains this year, take a look at our lineup of heavy hitters as well including David Rubenstein, former treasury secretary Larry Summers. Thats all from aspen. Later on the program, john calmo joining us. Could you want anybody else . Well, yes, were awaiting the president. He is about to make a statement on Immigration Reform after word came out today from the Speakers Office that there would be no vote in the house this year on Immigration Reform. Of course thats more fallout from the loss by eric cantor earlier this year not too long ago, as a matter of fact, in that primary election there in virginia. So as soon as the president makes his statement there in the rose garden of the white house, we will take you there live. Lets take you live to wall street and show you how the markets are trading as we head toward the close with the dow down 22 points. We were briefly positive a couple times this morning but generally weve been hovering below the unchange level right now at 16,829. Doesnt look like well make 17,000 this Second Quarter. Nasdaq today, though, is up another ten points. The Technology Stocks have been standouts the last few weeks even as the blue chips have lagged a little bit. Nasdaq at 4408 right on a 14year high. The s p 500 index is down a fraction, down about a half a point at 1960. Joining us now in our closing bell exchange, scott wren from wells fargo, mark lucchini, Hugh Anderson from hightower and bob pisani and rick santelli. Just to remind everybody, if the president begins speaking well have to be very rude and step in on the conversation to get to that statement there at the white house. Scott wren, im looking at the leaders, sector leaders for this quarter that were running out here. Energy leads. Utilities. The laggards in the s p. Consumer discretionary. Consumer staples. It is clear defensive was the play this Second Quarter. What do you think the play will be in the Third Quarter . I dont think its going to be defensive, bill. As a matter of fact, when we look out, i think its going to be more cyclical. Utilities had a great year so far. I think youre going to see more industrials, more technology. You might even see a little bit of Consumer Discretionary up as well. So i think weve been mixed to defensive the last three months have been a little more cyclical you could argue. But certainly it hasnt been as cyclical as we had expected. Hugh anderson, speaking of ideas, what are your big ideas for the second half of the year . Hold down and enjoy the run. We think that the momentum is definitely engaged with the equity market. Obviously the consensus is that its the only place to be currently. Theres no alternative with Interest Rates being so low, which is a cautionary factor because what is the bond market telling us . But thats a story for another day. The reality is the mark is not cheap by any measure but also not that expensive and we think the momentum is with the wind at our backs. Mark lucchini, energy the best performing sector this Second Quarter. That is a concern for you. If oil does continue much higher. Right . Well, it is in the sense of not necessarily working against energy stocks. It would be good for them and thats an overweight position for us, but our concern is on the oil price. Mark if you see a spike upward as we said, we have to step in at the moment. Heres the president with his statement on Immigration Reform. Labor, law enforcement, faith communities, came together to pass a commonsense immigration bill. Independent experts said that bill would strengthen our borders, grow our economy, shrink our deficits. As we speak, there are enough republicans and democrats in the house to pass an immigration bill today. I would sign it into law today. And washington would solve a problem in a bipartisan way. But for more than a year, republicans in the house of representatives have refused to allow an upordown vote on that senate bill or any legislation to fix our broken immigration system. And i held off on pressuring them for a long time to give Speaker Boehner the space he needed to get his fellow republicans on board. Meanwhile, heres what a year of obstruction has meant. Its meant fewer resources to strengthen our borders. Its meant more business free to gain the system by hiring undocumented workers, which punishes businesses that play by the rules and drives down wages for hardworking americans. Its meant lost talent, when the best and brightest from around the world come to study here but are forced to leave and then compete against our businesses and our workers. Its been no xhans for 11 Million Immigrants to come out of the shadows and earn their citizenship if they pay a penalty and pass a background check. Pay their fair share of taxes, learn english, go to the back of the line. Its meant the heartbreak of separated families. Thats what this obstruction has meant over the past year. Thats what the senate bill would fix if the house allowed it to go to a vote. Our country and our economy would be stronger today if House Republicans had allowed a simple yes or no vote on this bill or for that matter any bill. Theyd be following the will of the majority of the American People who support reform. And instead theyve proven again and again that theyre unwilling to stand up to the tea party in order to do whats best for the country. And the worst part about it is a bunch of them know better. We now actually have a humanitarian crisis on the border that only underscores the need to drop the politics and fix our immigration system once and for all. In recent weeks weve seen a surge of unaccompanied children brought over the border brought here by smugglers and traffickers. The journey is unbelievably dangerous for these kids. The children who are fortunate enough to survive it will be taken care of while they go through the legal process, but in most cases that process will lead to them being sent back home. Ive sent a clear message to parents in these countries not to put their kids through this. I recently sent Vice President bide on the meet with Central American leaders and find ways to address the root causes of this crisis. Secretary kerry will also be meeting with those leaders again tomorrow. With our International Partners were taking new steps to go after the dangerous smugglers who are putting thousands of childrens lives at risk. Today i sent a letter to congressional leaders asking that they work with me to address the urgent humanitarian challenge on the border and support the immigration and Border Patrol agents who already apprehend and deport hundreds of thousands of undocumented immigrants every year. And understand, by the way, for the most part, this is not a situation where these children are slipping through. Theyre being apprehended. But the problem is, is that our system is so broken, so unclear that folks dont know what the rules are. Now, understand, there are a number of republicans who have been willing to work with us to pass real commonsense Immigration Reform. And i want to thank them for their efforts. There are a number of Republican Leaders in the senate who did excellent work and deserve our thanks. And less visibly there have been folks in the house who have been trying to work to get this done. And quietly, because it doesnt always help me to praise them, i expressed to them how much i appreciate the efforts that theyve made. I believe Speaker Boehner when he says he wants to pass an immigration bill. I think he genuinely wants to get something done. But last week he informed me the republicans will continue to block a vote on Immigration Reform at least for the remainder of this year. Some in the House Republican caucus are using the situation with unaccompanied children as their newest excuse to do to nothing. I want everybody to think about that. Their argument seems to be that because the system is broken we shouldnt make an effort to fix it. It makes no sense. Its not on the level. Its just politics. Plain and simple. There are others in the Republican Caucus in the house who are arguing they cant act because theyre mad at me about using my executive authority too broadly. This also makes no sense. I dont prefer taking administrative action. Id rather see permanent fixes to the issue we face. Certainly, thats true on immigration. Ive made that clear multiple times. I would love nothing more than Bipartisan Legislation to pass the house, the senate, land on my desk so i can sign it. Thats true about immigration. Thats true about the minimum wage, about equal pay. There are a whole bunch of things where i would greatly prefer Congress Actually do something. I take executive action only when we have a serious problem, a serious issue and congress chooses to do nothing. And in this situation the failure of House Republicans to pass a darn bill is bad for our security, its bad for our economy, and its bad for our future. So while i will continue to push House Republicans to drop the excuses and act, and i hope their constituents will, too, america cannot wait forever for them to act. And thats why today im beginning a new effort to fix as much of our immigration system as i can on my own, without congress. As a first step im directing the secretary of Homeland Security and the attorney general to move available and appropriate resources from our interior to the border. Protecting Public Safety and deporting dangerous criminals has been and will remain the top priority, but we are going to refocus our effort where is we can to make sure we do what it takes to keep our borders secure. Ive also directed secretary johnson and attorney general holder to identify additional actions my administration can take on our own within my existing legal authorities to do what congress refuses to do and fix as much of our immigration system as we can. If congress will not do their job, at least we can do ours. I expect their recommendations before the end of the summer. And i intend to adopt those recommendations without further delay. Of course even with aggressive steps on my part, administrative action alone will not adequately address the problem. The reforms that will do the most to strengthen our businesses, our workers, and our entire economy will still require an act of congress. And i repeat, these are reforms that already enjoy the wide support of the American People. Its very rare where you get labor, business, evangelicals, law enforcement, all agreeing on what needs to be done. And at some point that should be enough. Normally that is enough. The point of Public Service is to solve public problems, and those of us who have the privilege to serve have a responsibility to do everything in our power to keep americans safe and to keep the doors of opportunity open. And if we do, then one year from now not only would our economy and our security be stronger but maybe the best and the brightest from around the world who come to study here would stay and create jobs here. Maybe companies that played by the rules will no longer be undercut by companies that dont. Maybe more families who have been living here for years, whose children are often u. S. Citiz citizens, for our neighbors and our friends, and whose children are our kids friends and go to school with them and play on ball teams with them, maybe those families will get to stay together. But much of this only happens if americans continue to Push Congress to get this done. So ive told Speaker Boehner that even as i take those steps that i can within my existing legal authorities to make the immigration system work better, im going to continue to reach out to House Republicans in the hope that they deliver a more permanent solution with a comprehensive bill. Maybe it will be after the midterms when theyre less worried about politics. Maybe it will be next year. Whenever it is, they will find me a willing partner. I have been consistent in saying that i am prepared to work with them even on a bill that i dont consider perfect. And the senate bill was good example of the capacity to compromise and get this done. The only thing i cant do is stand by and do nothing while waiting for them to get their act together. And i want to repeat what i said earlier. If House Republicans are really concerned about me taking too many executive actions, the best solution to that is passing bills. Pass a bill. Solve a problem. Dont just say no. On something that everybody agrees needs to be done. Because if we pass a bill, that will supplant whatever ive done administratively. Well have a structure there that works. And it will be permanent. And people can make plans and businesses can make plans based on the law. And there will be clarity. Both here inside this country and outside it. Let me just close by saying fridays the 4th of july. Its the day we celebrate our independence and all the things that make this country so great. And each year michelle and i host a few hundred Service Members and Wounded Warriors and their families right here on the lawn for a barbecue and fireworks on the mall. And some of the Service Members coming this year are unique because they signed up to serve, to sacrifice, potentially to give their lives for the security of this country even though they werent yet americans. Thats how much they were prepared to fight and die for an american they did not yet fully belong to. I think theyve earned their stripes in more ways than one, and thats why friday morning were going to naturalize them in a ceremony right here at the white house. This Independence Day will be their first day as american citizens. One of the things we celebrate on friday, one of the things that makes this country great is we are a nation of immigrants. Our people come from every corner of the globe. Thats what makes us special. Thats what makes us unique. They come here wave after wave from everywhere understanding that there was something about this place where the whole is greater than the sum of its parts. Then all the different cultures and ideas and energy would come together and create something new. We won this countrys freedom together. We built this country together. We defended this country together. It makes us special. It makes us strong. It makes us americans. Its worth celebrating. Thats what i want not just House Republicans but a all of us as americans to remember. Thanks very much. And obviously frustrated president there responding to Speaker Boehners decision earlier today not to bring the Immigration Reform bill up to a vote in the house this year. John harwood stand big there outside the white house. Clearly the loss by eric cantor this month in that primary made Immigration Reform to deal with this election year. Reporter yes. It was always doubtful they were going to do it. And president obama reflected as you said incredible frustration hes feeling throughout his entire second term because hes just running into a brick wall. Now Speaker Boehners aide put out a statement a few minutes ago which cast the speakers comments in a little bit less clearcut light than the president did. He said that as Speaker Boehner has been saying publicly, that he the house wasnt going to act until there was a great amount of trust in the president to enforce the laws. But in any event, this is a president who is finding himself roadblocked on one issue after the other. Hes going to try do what he can. He cant do all that much without legal authority, but we need to get used to this because especially if republicans take over the senate theres going to be more of this for the next two years. John harwood, before we let you go, can i ask quickly about this naturalization the president said hes going to do for these Illegal Immigrants serving our troops this 4th of july in how much power an latitude does the president have to naturalize citizens . Reporter i dont actually know, kelly. I was struck by that as well. I suspect he wont be challenged on this one in any case. But i think he has some discretion. I just dont know the extent of it. John harwood, thank you, at the white house. Let me just show the wires for a second. Are we going to the break, guys . We are. All right. Were making it up here as we go with all the breaking news right now. So with about 40 minutes left in the trading session, kelly, as you sit there in aspen, im here in englewood cliffs, new jersey, watching wall street carefully as they close the books on the Second Quarter of this 2014, the dow is down 13 but it will finish the quarter positive and the month as well for this year. Yeah. Well talk more about markets but also up next, Colorado Governor John Hickenlooper is going to talk to us about marijuana and money. Hes also going to respond to new jersey governor Chris Christie, slamming colorados legalized pot law, christie questioning why people would want to live in a state with, quote, head shops popping up on every corner and people flying into your airport just to get high. Hickenlooper when we come back. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. 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Joining us with more, fist on c nbs we welcome your host in colorado, kelly, Governor John Hickenlooper joins us today. Thanks for joining us today. Glad to be with you. You probably have heard in the annual cnbc survey of the states that are the best place to do business in, colorado overall came in number eight. You were number one in access to capital for businesses to do by, they have to have capital. Youre number one in that category. Youre also very high in the cost of living category. Its expensive, relatively speaking, to live in colorado. How do you assess the state of your economy in your state there . Well, what weve tried to focus on is entrepreneurs and young folks just building their businesses. We are more expense thaichb siv of the other midcontinue negligent states but when you compare us to either coast i think were still a bargain. Then you look at the quality of life. Here we are in beautiful aspen, i mean, you cant have a Higher Quality of life and have, you know live the the life you want to live. Governor, interesting you chose that phrase. It reminds me of what governor Chris Christie said attacking your legalization of marijuana where it is ultimately a way of states going the easy route to raise money for their coffers while destroying over the long term their quality of life. Again, our voters voted for it because they didnt like the war on drugs. I opposed it, almost every elected official did, but it passed 5545. So were regulating it as tightly as anybody ever dreamed of regulating alcohol. The licenses are very rigorous. Were doing background checks of everyone connected with it. And really focused on how you keep it away from kids. We dont see a sudden spike of kids using it and parents but so far the regulations seem to be doing well. What impact realistically do you think this will have on your economy . Purely from the standpoint of revenue generation. The possibility exists that you could have a windfall from the legalization of marijuana in your state, wouldnt you . Certainly we could, but thats not the way we look at it. And we tried to say we really are worried about kids. This high thc, marijuana, a lot of neuroscientists and theyre serious about the potential to diminish longterm memory permanently. When kids brains are still grow, theyre 14, 15, 16, 17, they think its legal and harmless. A lot of neuroscientists, there are longterm studies that show if a child has an inclination towards schizophrenia or severe bipolar disorder that spoking highthc marijuana even just a few times can really accelerate the onset of those symptoms and exaggerate their effect. Were taking it very seriously. That windfall, were going to make sure we have the resources to have a fullblown Advertising Campaign to make sure kids know the science isnt done yet, that we dont want our kids to be lab rats and test tubes. So were not look as a wind first of all in any sense. We want to make sure we have the resources to regulate it as early as possible. Speaking of protecting children, governor, the other big issue is the tough gun laws that you enacted last march, has generated a lot of the controversy. A lot of the county sheriffs tried to come after you saying they werent constitutional. You walked your views back on that a little bit in a kind of confusing exchange with those sheriffs a couple weeks ago. All of this comes as youre facing reelection in the fall. As other states look at the reaction within your borders to some of the policies, whether its marijuana or tightening gun law, how secure do you feel are your reelection prospects . And in colorado, the colorado voters reaffirming some of those very important legislative moves that youve made. I think the voters look at things like universal background checks. Each one of those gun laws, if it came again id sign them again. Right . There were 38 people convicted of homicide, 133 people convict ld of sexual assault. Over 1,300 people continue vick ld of felony assault. That shouldnt be part not trying to take anybodys guns away. Were trying to make sure we have a shared responsibility to keep our communities safer. Certainly looking at polls, 80 , 85 of the voters support universal background checks. I dont think thats going to affect the other piece of it, somewhat more controversial, was outlawing i might get the terminology wrong but its weapons with magazines of more than 15 rounds. Certainly that ones not as i i didnt care as strongly about that. The bottom line is a third of the cop killings every year are from magazines with more than 15 rounds. Right . And this is a hard one. You know, somebodys out there trying to shoot coyotes or whatever, its an inconvenience for them. Were talking act a Police Officers life and in the end were pretty much always going to come down on the side of Public Safety where the chief of police comes to you and says, hey, this is serious. My guys are at risk. Again, a harder decision to call but still i think we made the right decision. And, you know, the campaign, the campaigns what the campaign is. I love a good campaign. You know, well get a chance to discuss the ideas and well look at how the states done economically and our Jobs Creation and, you know, our quality of life. And well have that discussion. Bill . All right. Governor, were so pleased to have you with us and thank you for join us. Thanks for having capitol hill there in the game at the aspen ideas conference. Thanks for join us. Thanks for having me on. Appreciate it. Bill, if i dont show up tomorrow youll know why. Ill be out here camping out and underneath the stars. Hiking. They dont rate them on views but colorado is very high in spectacular views. Thats for sure. I couldnt believe we were only eighth. I want to check the stats and go back and recap. Think of it this way. Youre top ten, so youve got that going for you. Thanks, governor. Speaking of new jersey governor Chris Christie, he will be on squawk box tomorrow with the gang. Stay tuned for that. Meantime, 30 minutes left, a little less than that right now, as we head toward the close and the dow is down 13, but thats not the whole story. The nasdaq and the s p are slightly positive and were going through the numbers to see who the best and worst performers were. Well get to that in a few minutes here. And coming up next, former treasury secretary Larry Summers sits down with me here in aspen. He is never shy with his opinions on the biggest issues of the day. Stay tuned for what promises to be an interesting interview when we come back. Plus, two wall street heavyweights weigh in on the markets and where they see the opportunity the second half of the year. David rubenstein and john calamos coming up. [ male announcer ] the mercedesbenz summer event is here. Now get the unmistakable thrill. And the incredible rush. Of the mercedesbenz youve always wanted. But you better get here fast. [ daughter ] yay, daddys here here you go, honey. Thank you. [ male announcer ]. Because a good thing like this. Phew [ male announcer ]. Wont last forever. See your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. But hurry, offers end soon. Share your summer moments in your mercedesbenz with us. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. About 25 minutes left, going on quietly, but anything but a quiet quarter to close out. Nasdaq up 13, and the s p is virtually unchanged right now and will be reviewing the best and worst performing sectors in and stocks coming up here as we head towards the close of this hour of the closing bell. First special guest, kelly. My next guest is an outspoken economist, concerned rapid Economic Growth could lead to bubbles. The Student Loan Debt is holding back the housing recovery and that robots will be taking jobs from ordinary workers. Larry summers, former treasury secretary under president clinton, former director of the White House National Economic Council under president obama, former harvard president , now a harvard professor. We could go on. Thank you for being here at the aspen ideas festival. Good to be with you, kelly. What Economic Development in the near term do you think will surprise people the most . I think theres a prospect that the economy could accelerate quite substantially over the next couple quarters and i think that would be important and obviously a positive development. No assurance that that will be the case. But i think that could be a surprise. If that happens, what does it mean for markets which we kind of alluded to this, youre worried were in some sort of bubble again . I dont think that were yet in a bubble. I think obviously credit spreads are narrower and thinner than they used to be. Certain asset prices have inflated. I think we have a real challenge, which is that its not clear given the way the economy is structured what the longterm normal level of Interest Rates is going to be. And my suspicion is that its going to need to be lower Going Forward than it has been in the past, and obviously when you have lower rates that creates more capacity for people to overstretch themselves, for people to reach for yield. So i think the challenge of managing adequate growth and Financial Stability is going to be a serious one Going Forward. Thats why i think its so important to find ways of accelerating the natural rate of growth, whether its Immigration Reform, whether its tax reform, whether its substantial and necessary investments in infrastructure. In other words, to almost bring the rest of the economy along with where markets are right now as opposed to having markets correct back towards what might be the real health of the economy . I think that just as devaluing your way to prosperity by cutting the value of your currency is not the healthiest way to get to prosperity. I think liquidity driven prosperity is probably less healthy than more fundamentally driven prosperity. And thats why i would emphasize the importance of infrastructure investment, the portauprince of removing regulatory barriers to investment, taking advantage of our vast energy resources. Theres a lot of potential in Immigration Reform to spur entrepreneurship. You sound like a supply cider, like a reagan ooit almost. No, no, no. My emphasis is very substantially on the need to promote demand. Okay. A substantial part of whats important is here we are sitting with unemployed resources and were sitting with Kennedy Airport looking like it does, and were sitting with an Interest Rate of 2. 5 . And how can we not borrow for the long term, put people to work, and set Kennedy Airport right . And thats an example of the kind of tublts that are all over the economy, not just in the public sector. Opportunities in the private sector to exploit our energy resources, to improve our telecommunications. Is this the capital so Clay Christianson at harvard famously declared this innovators of the 90s, an important way for people to think about things, hes talking about the capitalists, the incentives arent just there on wall street among the Investment Community for businesses that increase earnings as oppose to create capital ratios. Im not sure, you know, it should be the case that very low Interest Rates should make the present value of the returns on investments higher and that should be calling forth more investment, higher asset values tend to call forth more investment. My sense is that we need to get more demand in this economy, that people will expand their stores if they have more customers. People will innovate new products if they foresee larger markets. So i think issues on the demand side in many ways relate to the issues on the supply side. Indeed, guy so far as to say lack of demand today creates lack of supply potential in the future. We have to go. I just want to ask you about this headline. Its in politico magazine. Its called to my fellow zillionaires, he says, i see pitch forks, wake up, i have a message for my fellow filthy rich, for all of white house live in our gated bubble worlds, it wont last. Is he right . I dont know how to assess that. If we could find a way to include a more inclusive prosperity, goes to the questions of creating jobs for everybody, a more inclusive prosperity would be a healthier prosperity. Thanks for being here this afternoon. Good to see you. Bill, back to you. Thank you. 18 minutes left in the trading session here. The dow is down 26. Were just moving slightly lower here as we head toward the close. The s p has moved back into negative territory but the nasdaq still up ten points. Cnbc continues celebrating its 25th anniversary, we continue to look ahead the next 25 years. When we come back, the helds of three top stock exchanges tell dominic chu what trading might look like in the year 2039. 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This is the age of taking action. Viagra. Talk to your doctor. The s p slightly lower, this will be the fifth no, the sixth consecutive quarterly encrease for the s p and the nasdaq. Listen to, this kelly. The last time the s p had a longer increase, quarterly increase, was the mid90s. It was up 14 consecutive quarters and we think we have a big bull market on our hands right now. . Thats right. I think rich peterson reminding us of that yesterday, six is a lot but could go to 14 if history repeats itself. Right. Cnbc celebrating its 25th anniversary. Dominic chu sitting down with the heads of three top exchanges to find out how they see their jobs changing in the next 25 years. The concept of exchains is simple. Thats where price is discovered. That is a democratic process to fair access to allow all people to express their opinions. Trading is a very democratic business, oddly, and everybody has a say in it and the collective wisdom of the market will put it in the right place. The democratic nature of marks will go hand in hand with technology over the next 25 years. Youve seen that is the market going to become more electronic, its more democratized. Technology and smart entrepreneurs are finding ways of putting networks together almost overnight. There will be a network that will allow us to transact stocks, bonds, and financial institutions. What started off as a gathering of brokers under a buttonwood tree in 1792 has turned into a market that connects millions of people and ideas. The size and scope of Financial Markets is only expanding with new products being constantly introduced. And the level of investing sophistication is bound to grow. If you want to invest in starbucks but negate the risk of the price of coffee or admx, the price of corn, new products will allow you do that. And ma means lots more transaction volume and the need for expanded market infrastructure. 25 years from now you have to have the bandwidth and capacity because the volume we see today will be several orders of magnitude higher than that in the years to come. It also means a lot more focus on cybersecurity and securing the stability of Financial Markets. Were going to have to be hypervigilant about true to protection, true to prevention, incident management. In the end, everyone will have to embrace change but at the right pace. Youre two steps ahead, then your invasion or where you are is probably not accepted by the marketplace. If youre a step behind, youre toast. If you done change from within youll find a group of, you know, 20yearolds, smart 20yearolds in Silicon Valley will suddenly create something that will be disruptive. So disrupp tif, kelly, bill, in the spirit of the aspen ideas fest valg and everything going on over there, wall street, theyve got their own ideas. Go to cnbc for all of this about the markets in 25 years, guys. Breathtaking changes the last 25, thats for sure. Thanks, dom. Good job. Down 35 point, kelly. Plenty of activity here at the aspen ideas festival pshgs worlds top thought leaders hashing out innovative ideas that could change business strategies. Tomorrow, Carlyle Group cofounder David Rubenstein is coming up, he made a lot of money and is looking for new investments. Youll hear about those and legendary investor john calamos tells us where hes looking to make money in the second half of the year. 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. 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Mainly driven by the prospects of lower yields off of the bond portfolio, so weve been significantly underweight the bond sector for some time now and were trying to grab yield where we catch it. You dont think the dividend play in the equity market is a crowd trend right now as they say . It could be coming a crowded trade but we have some proprietary investments that we use to really screen out for lower volatility names and some more off the beaten path names within the sector. So were drilling down to about, you know, 60 to 80 names where we see continuing value. Actually were really focused on people that can grow their dividends, not just that have a high difr dend right now. Is this because youre not expecting the economy to pick up that much in the Third Quarter . Weve been hanging out. We have an overweight cash position on right now. We do expect there is going to be some slight corrections in u. S. Markets especially considering where evaluations are right now. And were just, you know, waiting to see how it all plays out but we have cash on the sidelines to invest when and if we see a downturn. Got it. Michael, good to see you. Thanks for joining us today. Thank you. Michael leer from Athena Capital advisers. Quick break, come back with the closing countdown for this last trading day of the month. Plus a busy hour after the bell. Dave rubenstein from Carlyle Group, legendary investor john calamos and a lot more coming up with kelly from the aspen ideas conference there in colorado. Love the view. Cut [bell rings] this. Is jane. Her long day on set starts with shoulder pain. And a choice take 6 tylenol in a day which is 2 aleve for. All day relief. Hmm. [bell ring] roll sound action if yand youre talking toevere rheuyour rheumatologistike me, about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. 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But the best performer of the major averages up almost 5 on the nasdaq over that time. The sectors for the s p, all ten sectors are positive this time. The best performer was energy as we pointed out earlier in the section and the laggards this quarter were the consumer players. And show you the best and worst performing stocks within the s p 500. The best performer is regis philbins favorite of all things, micron technology, up 39 , and coach the retailer down 31 this quarter, the worst performer this year so far as well, but yet bob pisani, weve got the sixth quarterly sixth consecutive up quarter for the s p and the nasdaq. The fedinduced rally continues. S p up , emerging markets up significantly, europe is up significantly. The bond market is up so far. This has been the most remarkable few months. By the way, bill, you mentioned the s p up 4 . Most of the gains for the year that weve had for the whole year have come in the last five or six weeks as weve seen this remarkable rotation where energy and financials have sort of powered forward. Earlier in the year it was Technology Stocks. Some of the tech names and biopharmaceutical tech names gave a chance for other stocks to come to the floor. The tenyear yield at 2. 5 , nobody had that. Ive been wrong about that for a year now. And very, very low volatility too. A hallmark of this quarters trade too, bob. Thats right. May volatility and volume started dropping. I keep emphasizing this was not a seasonal thing. We had decent volume and decent voltd in the first quarter. Then about may it just sort of drooped off. Hopefully well see better in the second half of year. Second hour of the closing bell with kelly evans and company. Hard to believe but we are halfway through the year. That was the closing bell. The bulls have a slight lead since january 1st. Welcome to the closing bell. Im kelly evans from aspen, colorado, today. Heres how were finishing up the session on wall street. The quarter in fact the first half of the year. Our own robert frank, our Patty Edwards from u. S. Bank, fast money trader guy odami. Guy, let me throw it to you first for some thoughts. I guess the headline despite todays mixed session is how well the major indexes have managed to do here again for the quarter. Amazing. Couple, three weeks ago or so i said theres a good chance we see 1860 in the s p by the end of the month. Clearly that was wrong. Bad job by me number one. Number two, what was interesting today. The comments out of the base i thought were really interesting because theyre saying similar things that ive been saying to you the last few months, all that Means Nothing has no effect whatsoever on the broader market. The third thing that sort of dawns on me, as we get to the second half, probably jumping the gun, but i think energy is going to continue to be a theme. I know its gotten beat up a little bit lately, but i think you ore in for sommay maye fields in the Energy Fields that may make people stand up and take notice. There were rumors today and i dont like to talk about them, but apache had rumors that maybe exxon was interested but i think that space is going to heat up on the m a circuit in the second half. Patty, do you think energys interesting here . Do you think investors are going to rotate in the back half of the year . What are the major themes as you see them . Well, we do think energy is interesting. Its one of the plays were looking to put in our portfolios, probably in more of an unconventional way. Well be rolling that out shortly. But beyond that were looking at Information Technology. We expect that corporations are going to have to continue to invest. And were going to see greater things there. And then on top of that were looking once again to the emerging markets. Yes, theyve had a built of a run here but we think that will continue. We also like developed markets, specifically japan, and we would also be looking to shade everything really towards smaller caps rather than larger caps partly because of what guy was talking about. Theres a lot of Corporate Cash out there, more than weve seen since the 1960s. And given that theyre going to be looking for m a deals. And robert frank, were expecting to hear shortly with more on what exactly the details are for this settlement with bnp but its quite clear a lot of people, banks despite investment in the Financial Sector that remain vulnerable to extremely high litigation fees Going Forward. What do you think about the way in which that may weigh on markets here in the back half of the year . Yeah. The financials are under huge regulatory pressure right now. First i want to say this seems a little mixed up. Youre in aspen, colorado. The wealth reporter this is here at the new york stock exchange. Somethings wrong here. What does it feel like out there . Seriously, what does aspen feel like right now . Well, you know what, we should ask the man sitting with me right here, john steinberg. Youre here to soak up the ideas as much as anybody. Whats catching your attention . Well, its amazing how many new Media Companies are here. Im on a panel tomorrow with policy vice and the New York Times is moderating it. Theres a whole new age of Media Companies coming to aspen this time of year. If you look at the haney report out this morning about the media budgets being shifted to social media, theres a fundamental shift. The old are embracing the new. What is it all going to look like . I think fundamentally, despite the area of decision going the way it went, well see a debundling and it will happen fast now. The video will all be delivered over the top. Web publishers will be indistinguishable from Cable Networks and i think that happens quickly. I want to bat that around with the panel. Kenny, what can you say about volume and activity as we close out the first half of the year . Its interesting, right, because the first half of the year were up 6 on the s p, 1. 5 on the dow, kind of moving in line with what analysts and strategists had been predicting all year, wed probably end somewhere between 8 and 12 so it feels like thats where were going. I think a lot of people might have been a little bit disappointed that we never had that correction that we talked about in april. You never know whats going to happen in july. But the market does feel like its on better footing. Now volume is a whole other issue, where have they gone, the institutions, are they being less daytrading mentalityish . Are they sitting back and just playing that longterm the longterm investment manager role which is really what they should be playing all along. And thats what it feels like. Thus weve seen kind of a loss in volume. Weve also seen a loss in volume due to a lot of the conversation taking place in the industry right now. All the other stuff is causing some asset manager to pull back and take another look. Yeah. Guy, you want to react to that . Kenny makes great points, but ill push back and say, kenny knows this, the lack of volumes been an argument for bears for four years now, and if youve been trying to short the market based on lack of volume, youve been getting your head handed to you for about a thousand or so s p points give or take. So, you know, its just different world we live in now. Value manifests itself in the options market. I know you talk to pete and john all the time. A lot of volume has gone there. In terms of the broader market, its amazing, continues to shake off anything remotely negative market shakes off. Very difficult to trade in that environment but the old thing the trend is your friend, that is as true as it ever was in terms of the s p. Pass on that note from matt, go ahead. And dont fight the fed. Yay. Yeah. Theres that too. Fundamentally disconnected market, right . You have the real economy where gdp is weak, then you have indeck which is keep going to alltime highs. I looked at the nasdaq, if you look at the blown out chart of ten years, nasdaq 4,400, its just below 5,000, where it was a short time ago. Its true, but at the same time couldnt you turn it on your head and say to some extent weve had 12, 14 years since some of the markets were at their prior highs . And thats a significant amount of population growth and Economic Development thats happened in the country in the meantime. Almost like an inflation that goes into the index as well. You could make that argument but it seems like were continually having macro data that composite out that misses expectations or is down right negative and at the same time we see the stocks at all time high. It is a fed induced fake stock market. Kenny, do you think this is fundamentally fed induced and fake as john was alluding to . Also, what about media and this debundling that sounds like its going to just keep accelerating here . So when you start looking at the stock market, on the earnings front, we have just now caught up to where the earnings were in terms of price multiples from 2007. I think Going Forward this market is going to be very earnings dependent, but as far as being overextended or anything, we really just dont see it. Yes, the fed is behind it but its not the only thing behind it. In terms of new media, thats i think going to be an interesting space to watch, especially on the technology side. Thats part of the reason were interested in the Information Technology right now. Robert frank, ill say hi to your buddies out here. Please do. Everybodys asking, where is rob snert where is rob snert cant ask down the street. Its one of the richest towns in america. The average home price there is twice what it is in manhattan, so you guys are in my stomping grounds. Yeah, and the governor told us he thought colorado looked cheap, but he said relative to the coast, and i think pretty much anything does by that measure. Guy, well let you go. Thanks for being here. See you later. Theyll be asking the president of tru truecar about what he thinks about gms recall today. Coming up on this important market day marking the midyear point, well bring in calamos investments. Are we doing that here, guys . John calamos, good. He joins us now. John, apologies. Were covering a lot of ground here. Really want your perspective on markets here. Weve turned in the first half year performance. What have we learned and where do you see opportunity now . I think kelly were all surprised by the lower Interest Rate environment we near right now. What weve really seen if you look at the markets going back 12 months, just not the first half of this year, is that the dividend pay and the utilities have all caught up to the marks. So we feel were in a midcycle of the Business Cycle we have room to go here. Were positive looking forward. How much room to grow . Were already having this discussion about frothy valuations across the stock and bond market and credit space. Im still worried about the bond market more than the equity markets here. We have hoe lowe Interest Rates not only in the u. S. But around the world. And i think the marks, if you look at it from an inflation point of view or the current treasury yield, the marks relative to that are very cheap in here, maybe relative to history theyre normal in here from a multiple, but i dont think theyre overpriced in here. So being in the midpart of the cycle in here, we think we have room to go. And then if you look at growth in here, growth is still priced very cheap to the market so we think theres room for growth this here and growth typically means a more multiple expansion so, that could be a positive Going Forward here. Thats an interesting point that you make because a lot of the sort of discussion is around these growth or momentum names, high levels and valuations weve seen, but from a historical point of view, youre saying their premium over the value guys is not that extreme. Obviously theres a few that are, but if you look at it overall, theyre not that extreme. In fact, theyre really below the average over time. So we think theres room to grow. Typically, i guess were still positive on the economy growing at a maybe close to a 3 rate. As those numbers come out i think thats a positive Going Forward as well. I think whats really got the market confused in here is really the low Interest Rate environment. The fed wants inflation. The goal is 2 inflation. If they achieve their inflation rate and the economy gets going it just seems to me were going to have a normalization of Interest Rates in here and, you know, thats probably not good for the bond market but thats very good for the equity markets. To get more specific, weve heard people like the energy space. There could be potential across the media space as this shakes out. Financials coming up, well hear from David Rubenstein who thinks financials are an opportunity here. What about you . I would agree with that. We think financials are an opportunity in here. Tech is still undervalued some areas. So we feel very similar there. Its going to be a more stock pickers type of market Going Forward. It seemed like the market all came together if you look at especially over the last 12 months. But i think Going Forward is going to be much more of a stock pickers market Going Forward. That makes the stock pickers more important. Thanks for joining us this afternoon. Thanks, kelly. Good to see you. Breaking news now, speaking of financials, u. S. Government issuing that massive find against bnp paribas. Kate kelly has the details. Thanks so much. Breaking news from a Downtown Manhattan courthouse right now. Prosecutors in court with bbnp, the french bank, agreeing to pay 8. 834 billion, with a b, no guilty plea yet although one is expected but paying this amount, nearly 9 billion, to settle charges of providing business to sanctioned nations far period of time. This case has been in the works for some time. Were xing to hear more from the attorney general around 5 00 at washington, but the jurisdiction here kelly is new york state, specifically the Southern District of manhattan, and in an Ongoing Court hearing, prosecutors have said that bnp agrees to this find, also that it engaged in a longterm multijurisdictional conspiracy to violates sanctions laws by facilitating actions involving sudan, cuba, and iran, kelly. So the first headline detail a nearly 9 billion fine. And im just told by our news desk they have pled guilty to two felony counts as part of this case. Back to you. After Credit Suisse has pled guilty as well. Certainly a new day for financial regulation, and 8. 834 billion being the final number. Thank you for now. This number is three or four times as high as the Credit Suisse case so obviously tougher sanctions. I think well see more details in the next hour or so that will show what a tough stance the government is trying to take here. All right. Our kate kelly following that story for us. Its been a great first half of the year for the s p 500. Why is the dow getting left behind . Well break down this divergence next. Also, where is one of the worlds biggest investors finding opportunities right now . Coming up, well hear from Carlyle Group kol ceo, David Rubenstein. Are you sure we should take this billboard down . People find out state farm does car loans as well as they do insurance, our bank is through. Good point. Grab an edge. Look theres two guys on the state farm borrow Better Banking sign. Nope for real theres two dudes on the state farm borrow Better Banking sign. [ reporter ] breaking news from the state farm borrow Better Banking sign. Were seeing two men that have climbed the borrow Better Banking sign gentlemen please get down from the state farm borrow Better Banking sign. Phil get the hose. Okay hes getting the hose. Alright, lets go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. Thats borrowing better. Thats why i always choose the fastest intern. R slow. About car loans that can save you hundreds. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. 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. Welcome back. Stocks wrapping up a pretty good first half of the year for the bulls. Eel look at the divergence between the dow and the s p 500. Whats going on . Thats right, kelly. Despite tensions overseas, mixed Economic Data and earnings its paid to stay bullish on this market after a strong june. The dow is up 1. 6 in 2014. The nasdaq up 5. 5 . The s p up 16 . We continue to see this widingening divergence between the dow and the s p 500. One said this morning focused more on the new and old economy and so that its been able to get a lift from both while the dow more focused on the old economy. In terms of the s p 500, its being led by utility stocks. Pepco holdings and exelon among the biggest gainers this year as investors bid up dividendpaying stocks. Energy, the S P Energy Sector in second place and health care is the third best performing sector in 2014 led by forest labs up about 65 , allergan up 52 and technology catching up as well, the fourth best performing sector in 2014 getting lifts from Electronic Arts and chip stocks like sandisk, powering the nasdaq to a 14year high. Lastly, the biggest losers on the s p 500 so far this year, think retail, think consumer, whole foods, staples, and bed, bath beyond, all reporting disappointing earnings and are trading down double digits so far this year. But again, a notable gain for the s p 500, 6 so far in 2014. This despite hawkish banter from the fed, of course now focus turns to secondquarter earnings. Kelly . That is coming up before we know it. See ma, thank you for now. He runs one of the Worlds Largest private equity firms and yes, up next ill pick the brain of David Rubenstein to find out where he sees the biggest Investment Opportunities around the globe. And president obama is expected to ask former Procter Gamble chairman bob mcdonald to run the Embattled Department of Veterans Affairs. Thats live as soon as it happens. Youre watching cnbc. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Really. So our business can be on at ts network for 175 dollars a month . Yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. 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And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. Jo welcome back. Marks are tame today but were closing out a strong first half of the year if you consider the challenges the market has dealt. Bertha coombs wrapping up the movers and shakers tuesday for us. Well start with general motors, which moved lower after being halted on news it was recalling yet another 7. 6 million cars dating back to 1997 to fix faulty ignition switches. The automaker says its aware of three deaths, eight injuries, and seven crashes involving the recalled vehicles and its going to take a 1. 2 billion charge in the Second Quarter to pay for those recalls. Meantime, bank of america, new york mellon moved higher on nelson peltzs fund has build built nearly a 2. 5 stake in the Company Worth over a billion dollars. Piper jaf ray saying the companys stake in ali baba is undervalued. And go pro rose for the third consecutive session since going public. Its up about 75 from its 24 a share price offering. Well end with allergan, which lost ground after the fda delayed a decision on its application for new acute migraine aerosol. But standing where you are, that probably clears your head of all problems. Thats amazing. Go pro, up another 14 . Earlier today i saturday down with Carlyle Group cofounder David Rubenstein and i asked him about the news of the day. The wall street journal reporting that blackstone is going to launch a product akin to a hedge fund and if hes worried about new competition for clients. Well, as you might not be surprised to hear, blackstone hasnt confided in me about their plans so i read the article but dont know more than what was in the article. Clearly hedge funds have come back from the Great Recession and while they went down a fair bit after the Great Recession in terms of dollar volume and their ability to track capital, its now come back. And i say private equity and hedge funds are attractive to investors now because theyre looking for higher returns. Blackstone has done very well in its hedge fund and funds business and i think will try to leverage that credibility into a hedge fund itself. But its becoming conventional wisdom these days that the fund to funds business has no future, that the fees are too high and its been a lagging in terms of performance. You guys operate a ton of these fund to funds. Is there a future for this business . John Kenneth Galbraith once said conventional wisdom is almost always wrong so it might be wrong here as well. The fund to funds business has been declared dead several times over the last several decades but its always come back because some investors feel comfortable having a smart investor managing different investments for us. I dont think its dead. There has been some feed pressure perhaps but i dont think its dead. Blackstone runs a very Large Hedge Fund to funds business, we run a Large Private Equity Fund to funds business and both are doing pretty well, i think. The reason i asked what your competitors are up to is in the past private equity had the advantage of being a new model, coming into a space, disrupting corporate america, and getting massive returns because of that. Today is a crowded space. It seems like the valuations of some of these companies are so high. How are you table to generate high returns, justify the fees in the business when there are so many other ways that investors can look for returns and that corporate, america, by the way, has learned from the very tactics you guys once pioneered . Not as if were putting a gun to anybodys head saying you have to fwhvs us. People are deciding to invest because the returns the pretty good. Even if theyre not 40 per annum as they might have been in the early days of private equity, theyre still attractive. Compared to anything else you can do with your money legally youll probably do better in an alternative fund like a private equity fund or a hedge fund. Investors are running with their money to private equity and hedge funds now in part because the last couple years returns have been very good and we suspect while its challenging to invest now, returns will probably be pretty good. Returns may come down and its not easy to make the money as high a return as we would like, but still i think returns will be pretty good. Certainly carlyle did well on the bates deal, 80 , i think, rate of return for that investment. And apple, of course, coming in to swoop it up. Do you think more tech deals is the future here . Look, theres plenty of Venture Capital firms here. What role can private equity play . In that particular deal it was more of a latestage capital deal. Its not a small Venture Capital deal. It turned out to be a very good deal for everybody and were pleased with it. We will be doing more Growth Capital deals like those and weve done a fair amount already and have funds to do that. So i think we will be doing a fair number of those around the world, not just the United States. We see a lot of opportunity in europe and asia through those Growth Capital deals as well. Your colleague recently mentioned that credit markets are, quo, unquote, ebullient. Do you think credit markets have gotten more ebullient since he made those comments last quarter . How worried should the Federal Reserve be about this and the rest of us . With a credit cycle that could rival the last one . Bill is saying marks are inexpensive to borrow money but you have to wonder if it can continue and people are giving lots of money to borrow. In other words, we can borrow more than we need because the markets are liking the kind of returns we give to sflors these highyield funds. I dont know how much longer kit continue. The fed will finish its tapering probably by the end of this year and i suspect as the fed has said by the middle of next year, they might increase Interest Rates. I suspect at some point we wont see an ebullient debt market but right now its attractive. What keeps you up at night . Well, everything. You know, at night you worry about everything, but right now i do worry about whats going on in the middle east like everybody. We have a lot of uncertainty there right now in iraq in parts of the middle east. I wish those things would be resolved more favorably. I wish the congress and the administration would be able to find ways to Work Together better. That would be good. I think regulatory certainty in washington would be very good for People Like Us. But i also worry about fact we havent had a slowdown in the economy for a while. Remember, the Great Recession began about seven years ago. We do have recessions more or less every seven or eight years. I dont see any evidence of this but right now we should recognize in a couple years or there probably will be some years to slow down. Right now a good time to invest. You have to be cautious abprices. Theyre not cheap. You raised a big fund to go after financial firms. Correct . Correct. Do you see opportunity in that space . We do. Financial Service Space is very attractive, one of the largest parts of the u. S. Economy, has more money invested in than many other parts of the economy but not as much private equity money invested in it. Most important point though is you cant get high returns all the time of 20 , 25 , but investors are happy with returns if they could get them at 18 or 19 or 20 so, if we can get those returns net to the investor, thats still pretty good and we think we can do that. Youre active around the world, europe in particular pap lot of banks are getting rid of a lot of assets over there. Is europe now the big opportunity where the u. S. Again might have been in the past . Yes. We think europe is among the most attractive places in the world to invest now. Corporate assets are trading about 20 discount to comparable assets in the United States. Secondly, banks have large assets they need to sell and delever and are doing that. Thirty, a lot of people in europe before have pulled out so theres less competition for People Like Us than there was before and europe is coming back. The euro has not gone out of existence, the growth rate will be lower than the United States but not negative. I think the union has resolved some of the problems they had before so its a safe and attractive place to invest but im hesitant to say that because i dont want my competition showing up. So please ignore what i just said. That was Carlyle Group cofounder coceo David Rubenstein speaking with me here at the aspen ideas festival. Will this strong first half of the year for marks get Retail Investors off the sidelines or are they worried about a selloff on the horizon . Our investor roundtable is straight ahead. Facebook has been trying to manipulate users emotions. See what theyre trying to pull. And well head to the white house where president obama is expected to nominate bob mcdonald for the department of Veterans Affairs. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. In a 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. President obama announcing his new nominee for the department of Veterans Affairs. And i am grateful as well. But were here today because of problems that have outraged us all. That is the inexcusable conduct weve seen at too many va health fails. Im here for two reasons, to update you, the American People, how were fixing these problems, and to announce my next choice for secretary of Veterans Affairs to help move this sfward. The first thing everyone should know is those responsible for manipulating and falsifying records at the va and those who tolerated it are being accountable. Some officials are being relieved of their duties, investigations are continuing and as i said where we find misconduct it will be punished. I made it clear i expect the vas full cooperation with all the ongoing investigations into wrongdoing. Second weve reached out to 135,000 to get those veterans off wait lists and into clinics. Weve added more staff than mobile medical units and are making it easier to use hospitals and clinics outside the va. Were going to keep at it until every one of our veterans is off the wait list and have received care they have earned. Third, were moving ahead with urgent reforms at the Veterans Health administration. That 14day scheduling goal has been removed from employee evaluations, so there is absolutely no incentive to engage in inappropriate behavior providing the highest quality care when our veterans need it, thats your incentive. There will be new measures of Patient Satisfaction from the veterans perspective, and todays outdated va scheduling system is going to be overhauled with the latest technology. More broadly the review that rob nabors conducted of the vha found, and im quote, significant and product systemic failures including too little responsiveness, transparency, and accountability. That is totally unacceptable. It recommends that the vha be restructured and reformed with stronger management, leadership, and oversight as well as more doctors and staff. And i totally agree. And were going to make that happen. Ive asked rob to remain at the va for now to help move these reforms forward. Hiring of new vwa leaders has been frozen vha leaders has been froze on the make sure the new team were putting in place is the right one. Based on the recommendationings of our panel of experts i will be nominating the next leader of the vha. I want to get the very best leader on the job and get going with these reforms and well work with congress to make sure the vha has more of the doctors and resources it needs to deliver the care that our veterans deserve. Fourth, were instituting a new culture of accountability. The very idea that senior vha executives would receive bonuses this year rightly appalled Many Americans and those bonuses have already been canceled. A review is now under way to make sure that when employees speak up about a problem action is taken, not to intimidate or retaliate against the employee but actually to fix the problem. Everyone is going to be held accountable for doing better. And congress can help by giving the secretary more authority to remove senior leaders. Finally, were rebuilding our Leadership Team here at the va. I want to thank sloan and others here who have stepped up to serve in new roles during this critical time. Well be relying on your steady hand during this period of transition and through your continued service as deputy secretary. I know all of you will have an outstanding partner and secretary in my choice to lead the va Going Forward. One of our nations most accomplished Business Leaders and managers, robert mcdonald. Hes come to the white house to share his perspectives working through complicated issues. Hes no nonsense, pragmatic, does not seek the limelight. He repeats a japanese saying, he worked and lived in japan for six years while at Procter Gamble. He who climbs mt. Fuji is a wise man. He who climbs it twice is a fool. Now, bob actually climbed mt. Fuji once. Bob is a wise man. His family is wonder eful and have served with him in the past. His father served in the Army Air Corps after world war ii. Dianes father was p. O. W. Her uncle received treatment for agent orange and still receives treatment from the va. So this is not an abstract mission for them. Bob is a veteran himself. He graduated from west point where he and sloan were classmates so this is a bit of a reunion. Bob served as an army ranger in the 82nd Airborne Division. Back in cincinnati at home he and diane have teamed up with the uso to honor our veterans. But what makes his choice to lead the va is three decades experience in building and managing one of the worlds most recognized companies, Procter Gamble. The va is not a business but it is our largest departments. Some 340,000 employees working in more than 1,700 facilities serving nearly 9 million veterans. The work load at the vha alone is enormous. Some 85 million appointments a year and some 25 million consultations. As ceo of Procter Gamble, bob oversaw more than 120,000 employees with operations around the world selling products in more than 180 countries in more than 2 million stores, reaching some 5 billion customers. In other words, he knows the key to any successful enterprise is staying focused on the people youre trying to serve. Hes renowned for his operational excellence. He started his career out in the field and worked his way up, serving at virtually every level of Procter Gamble. He understands the grand plans are not enough, what matters is is the operations that you put in place and getting the job done. Bob is an expert at making organizations better. In his career hes taken over struggling business units, he knows how to roll up his sleeves and gets to work putting an end to what doesnt work, adopting best practices that do, restructuring, introducing innovations, making operations more efficient and effective. In short, hes about delivering better results. He also knows the importance of building what he calls a highperformance team. Putting the right people in the right jobs, rewarding them when they do well and holding them accountable when they do not. And finally, bobs known for his integrity. Hes still got it by that cadet prayer from west point choose the harder right instead of the easier wrong. He served our country in uniform. Hes now prepared to answer the call once more. So let me stated the obvious. This is not going to be an easy assignment. Bob knows that but like any Army Airborne ranger, bob has a reputation for being ready, jumping into tough situations, taking charge and going all the way. So, bob, on behalf of all of us, to you, to diane and your family, thank you for your readiness to serve again. My bottom line is this we have to change the way the va does business. Over the past five years this agency has done some excellent work in dealing with a whole range of real difficult challenges. And i dont want people to forget that. Had a huge influx of returning iraq and afghanistan veterans. We have had i think had to manage what was a good decision to make sure that folks who previously had difficulty accessing va services were finally admitted, whether it was because they had ptsd or folks with cases previously of agent orange, all of which meant more people coming into the system. We have had to get up and running and now were doing quite effectively work in terms of the post 9 11 g. I. Bill to make sure that our young people are able to get the training they need after they leave our military. So across the board theres been some terrific work. But theres a lot more that has to be done. Weve got to fix some things that are broken. And sloans started that process, but were going to have to keep on driving until we get it done. Weve got to regain the trust of our veterans with a va that is more effective, more efficient, and that truly puts veterans first. Bobs the manager we need to help get this done. So i urge the senate to confirm him as soon as possible. I also urge the senate to finally confirm my nominee for cfo, helen tierney, my mom knee for assistant secretary for policy, linda schwartz, my nominee no lead the veterans aboard of appeals, constance tobias. They have all been waiting and waiting and waiting for a vote. In constances case for more than a year. We need them on the job now. And Congress Needs to ask and help us do right by our veterans. Weve got to do right by veterans like Corporal Kyle carpenter, someone you may have seen the story of kyle, i recently had the privilege of presenting kyle with the medal of honor for his actions in afghanistan where he used his body to shield his best friend from a grenade blast. Kyle spent 2 1 2 years in the hospital. He endured nearly 40 surgeries to rebuild his body and his face and hes gone through excruciating rehab. And to see him standing in the white house strong and proud receiving his medal of honor was something i will never forget. It was an inspiration. Today kyle was medically retire sod part of his journey of recovery has involved the va. On the one hand, hes now in college and with the help of his va educational benefits. And its an example of the good work that the va has done. On the other hand, his experience with Va Health Care has often been frustrating. He said it was okay that i share this with you today so i just want to use kyle as an example. Heres an american hero. By any definition. Sometimes we use that word too loosely. This guys a hero. And deserves everything we can do. But like other veterans, kyle sometimes had trouble just making an appointment or had to wait a month to see his doctor only to be referred to another doctor and wait another two months for that appointment. He often felt like a number, he said, being passed between doctors p who sometimes didnt know his situation or why hes needed certain medication. Hes relied on the help of a patient advocate but at so many steps along the way its just been a lot harder than it should have been. As his advocate said, it shouldnt be this way. So the va does many things well, like delivering kyles educational benefits, and we need all of you to keep doing that important work like reducing the disability claims backlog and improving care for posttraumatic stretsz and traumatic brain injury, building on the good work thats already been done and reducing homele homelessness among our veterans, helping finding new civilian jobs so they can enjoy the American Dream they helped to defend. Its a good time to mention the great work the va has done with joe biden and michelle in partnering with the private sector so that that transition from military to civilian life is a lot easier for our veterans. But when it comes to delivering timely, Quality Health care, we have to do better. We have to do better for kyle. We have to do better for all our Wounded Warriors. We have to do better for all our veterans, from all our wars. Theyre looking for us to fulfill lincolns pledge, to care for those who have borne the battle and for their families and their survivors. Im confident we can do that, and so long as im president were going to keep doing everything in our power to uphold what is a sacred obligation. With that i want to invite bob to say a few words. Thank you so much, bob, for taking on this assignment. . Thank you, mr. President. Thank you so to much. [ applause ] mr. President , thank you for your confidence in me that this nomination demonstrates. It would indeed be an honor and a privilege if confirmed by the senate to serve as the secretary of Veterans Affairs to improve lives of our countrys veterans, and to help change the way the u. S. Department of Veterans Affairs does business. Mr. President , in your remarks just now, youve made it clear what you expect. A va that is more effective, more efficient, and that truly puts our veterans first. If confirmed by the senate, my priority would be to lead that transformation. My lifes purpose has been to improve the lives of others. I went to west point to be an officer in the army to try to help free people who were living in nonfree societies. I became an Airborne Ranger infantry officer in the 82nd Airborne Division because i wanted to be on the front line in leading to be on the front l in leading thatening cha. I joined the proctor and Gamble Company 34 years ago because of its purpose, which is to improve the lives of the worlds consumers mr. President , thank you for mentioning my father, deanns uncle. We need to put care for the veteran at the center of everything that we do at Veterans Affairs. Atmosphere at Procter Gamble. We always foss cuss on our customer. At the va, the veteran is our customer and we must all focus all day, every day, on getting them the benefits and the care that theyve so earned. Thats the only reason were here. I look forward to working with the dedicated men and women of the Veterans Affairs to accomplish this mission. Id like to thank my family for supporting me throughout my life, but especially during this next chapter. My wife, deanne, my daughter jenny, my soninlaw, scott. And my son rob are all here todaych my parents and deanns mother could not attend today. But thank you for your love and support. Thank you again, mr. President. I look forward to transform Veterans Affairs to better serve our countrys veterans. Thank you. Pla [ applause ] thats bob mcdonald, president obamas nominee to lead the Embattled Department of Veterans Affairs. Lets get some reaction from our john harwood on a busy afternoon at the white house, john. Kelly, i think you heard from the description of Bob Mcdonalds life and his words and the president s words why this is a sensible choice for the president , who is likely to be easily done firmed by the senate. This is somebody whos run one of americas largest corporations, essentially the va is is a management bufr kratic jumble that needs to be sorted out. Part of that involves legislative authority in giving the secretary more authority to replace people, but part of it involves simply Good Management and this is suspect that bob bhk donald, who was also a west point student, also an army ranger, of course, the ceo of Procter Gamble can presumably bring to that task and it is an added bo pus that hes somebody who has supported republican, john boehner, mitt romney, got parades be i the republican senator from ohio today. This is somebody who is going to have a broad appeal and the question is how intractable are these problems at the va . Reporter john, is anybody saying he might not get approved at this point in the president , of course, mentioned several nominations that are still held up in congress. There is no chance bob mcdonald would not by a proved. I suspect his appointment will help pull some of those nominees held up over the finish line. We dont foe that yet. But this is somebody who will have bipartisan appeal. We have already seen that on reaction from the hill. John harwood, good to see you again. Thank you. Up next, a look back ahead and here at as pen to close out the first half of the year and look towards the second. Make plans to tune into tomorrows show, we will be right back. [ radio chatter ] [ male announcer ] ike. Andrew. Rita. Ivan. Sandy. Meet chris jackie joe shannon. Minor damage, or major disaster, when you need us most, were there. State farm. Were a force of nature, too. Welcome back. I want to get final thoughts from the panel. So much new, so much activity at this hour to go back to the last hour with the president discussing how he will push for Immigration Reform as much within his power. Is that something where you think he has wall street support . He absolutely has wall street support. He has business support. Its been many in the republican party, especially in the wake of some recent primaries that are now more reluctant to pass that compromise. The other thing want to mention thats important this week is tomorrow marks the start of the biggest regulation which youve never heard of the foreign compliance tax act. Any foreign account holder by an american, they have to start declaring that. That takes place tomorrow this could have huge ramifications not since weve seen the number of americans renouncing their citizenship at record highs. Thats number one, also the ability for banks to operate globally with american clients has gotten a lot tougher as of tomorrow. Yeah, and as of today with the news as well. John steinberg, is any are people, if you want to talk about people affected by this, it will be some of the crowd here. Are you hearing about this or is it other things . I think the big theme is the big change in media. I ran into the ceo of box, another up and coming media company. Katie couric is here. The intersection of technology and media, media being facebook doing this study in conjunction with kornell university. Aspen is a place where you have a dissection of policy issues. Would you support the daily mail doing anything like that . No, i wouldnt. In college you learn what are ethical studies to learn on humans, placebo type things, i dont see how people would think this was an appropriate thing to do. First of all, why do you need to do a study . If you surrounded by nothing by negative comments, if you are surrounded by nothing but negative comments, you tend to be more down and more necessarytive. If you are around posty, you tend to be a positive person. Why do they need to create this study under the radar that nobody knew, what was the point of creating that study . At love 23450e789 there was a fear of missing out. So i think actually they were the trying to disprove that and in the process gave a lot of people not a lot of happy content to see how unhappy they could get. Are you a fan in terms of facebook as an investment. What did you think about them engaging in this experiment . We dont talk about individual stocks. I cant comment on that. That being said, as the mother of two boys, i tell my children to be very careful what theyre posting out there on facebook, because its going to be there forever, whether you were happy or sad. If you cant say nothing nice, dont say anything at all. I think that will solve the whole problem. We got to leave it there. Guys, thank you so much for bearing with us, a busy couple of hours out here at the aspen festival. Great to be here. Great to meet your parents, it was a family affair. Fast money is coming up in just a few seconds. Lets send it on over to melissa lee. Thank you so much. We start with breaking news out of washington, d. C. , the Justice Department about to begin a News Conference on its 9 billion fund for breaching u. S. Sanctions, we will take you live to that press conference as soon as it begins, our traders are dana than and guy adami and we have utility, fern, healthcare, they have been the leading stocks to record highs, consumer discretion avenue names have been lagging behind. Its not about where we have been. Its where we are going. We want traders to give tear best bold ideas for the second half of the year. Guy adami kikt off. Bold. I will be bold. Its something i have been saying, its bold. But Interest Rates will continue to go low. I think the tlt is headed north of 120. Now i think it goes north of 1 when the want. I think tenyear rates will trade down to 2 . Look at japan, they look at frg they can to