Transcripts For CNBC Closing Bell 20140707

Weve seen a selloff. We were down 76 points at the low, but weve come off those lows and were at 17,010 right now. And were keeping a close eye on the tenyear for that reason, too, watching a 2. 6 level as it also expresses, perhaps as art cashin was saying, a reassessment of the strength of the payroll report. Yes. Maybe its european concerns, maybe its the typhoon in japan. All of that well get to in just a moment. Meantime, the watch for the apple watch continues. The shares of apple higher again today in the range of 1. 7 . They are inching towards 100 a share. Thats near their nominal high, both before and after the split. The company poaching a Top Executive from luxury watch maker. Just how much is on the line for apple whenever it does unveil this watch . Well take a closer look. I guess they really are going to bring out an iwatch, arent they . Theyre talking about the fall. At this point. Look, if they can get it down to not having to be bulky and be with the phone right there and charge it so much and interestingly enough, and this is what well have to ask our guest later if they make it in switzerland, that could be a development that gets people interested. Im just interested if it has a physical keyboard, then im sold. No, theres a casio all right you can get one on ebay. Yeah. Of course, its the event everyone is waiting for. Not one kardashian, not two kardashians, we have all three kardashian sisters with us today here live. Kim, kourtney and khloe will be talking to kelly. They have a new line of clothing for children, called kardashian kids, sold at babies r us exclusively, and the Three Sisters are going to talk about that exclusively here on klosing with a k, closing bell later in the program. And Courtney Reagan is on the scene. Well see her later on. Want to tell us about the market here . The dow is down 57 points, off the session lows where we were down about 76. So, 17,010 is the level were watching right now, off about 0. 33 . Take a look, meanwhile, at the nasdaq, this one outperforming. Last week it was in the range of 2 or higher in the shortened holiday trading week. Today its giving up 35 points to the down side. Finally, the s p 500 off about nine, 1,976 is the level there. Keeping up with the Closing Bell Exchange with die yawn, Peter Anderson from Congress Wealth management, hank smith from heatherford investments, steve sax from pro shares advisors, and our own robert pisani. Peter anderson, at least two houses on the street are now, as a result of the jobs report on thursday, saying that they think the fed will start to actually raise Interest Rates sooner than expected, maybe as soon as next year right about now. Would that be good or bad for stocks . Well, it depends. It depends on how earnings are going to come up, bill. You know, if earnings look really strong, which i do think is going to happen this quarter and the next, then you would expect rates to increase slightly. Thats all in alignment with the perfect picture of recovery. I think whats happened, though, is that many people are confused. We dont have clear signals yet. Weve been saying this now for several years, but i just dont think we have acrosstheboard, clear signals that we are in clear air, clear sailing. And you know, i also get a sense that if you pull on this earnings thread a bit, you might actually unravel more fabric than you think. But in my case, i think most companies that are strictly research and have good prospects will have very strong earnings, and perhaps, you will have an increase next year, yes. You know, if we want to look at signs potentially of trouble in these markets, we only have to look so far as the shortterm funding markets or repo lately, steve sax. Rick santellis not with us today, so ill ask you, how concerned are you in some of the failures in repo funding in this part of the market where we saw stress in 2008 . I dont think its of a big concern right now. I think youve got lots of different factors flowing into the credit markets in general and overall into however you want to refer to it, the shadow banking market or just the overall capital markets, right . The fact of the matter is, weve gone through a significant transformation in how Balance Sheets are managed on the street, particularly as it relates to Global Investment banks. So, the stress that we may or may not be seeing in the shortterm funding market right now, weve seen that before. We saw it historically before 2008. You get these blips. I am not overly concerned. I dont think it has a big impact on fixed income or equities. So, you dont think this is an early sign, for example, that if rates do suddenly move higher, they could gap higher because there will be nobody there to take down inventory or because these shortterm markets will struggle with some of the inventory on the market . No, i really dont think so. I mean, right, the whole debate about, you know, the Interest Rate hike, its like the debate about the yedie right now, right . Some believe, some dont believe. I think the fact of the matter is were still a ways off from that first Interest Rate hike. And again, no reason to believe that the fed is not going to do this in an extremely orderly fashion with plenty of transparen transparency, thus no stress in those funding markets. I want to meet the person that believes. Diane garnick, 17,000 on the dow. Do you believe . Yeah, you know, its so interesting. I think one of the things we have to remember is never underestimate the power of the american consumer, right . So, for a long time, when the dow 10,000 hats came out, we hit dow 10,000, we lost it, it came back. I mean, it became a fashion staple. Were likely to see that again but heres my question, does it raise earnings expectations that much further when we are in this territory where weve never been before . We start the earnings parade tomorrow. Do you think those expectations are going to be met this time around . This time around, this earnings season right here, right now, i think we have upside risk in that lots of companies have pulled down their estimates, so much so that i think the up side is really where were likely to see companies outperform, in particular in Consumer Discretionary space. Now, hank smith, were going to talk to jeff about his call that the 20 correction could be happening, could be starting now in the markets. Or in any case, he was talking about that on cnbc earlier today. Right. Hank smith, do you agree with diane that theres more upside risk heading into earnings season or are you in the kind of jeff saut camp here . I definitely agree with diane that, look, the economy is starting to reaccelerate. I think youre going to see that in secondquarter earnings, third and fourthquarter earnings that are both going to come in ahead of expectations. The chance of a recession is very, very low. Are we going to have pullbacks . Of course. A correction, maybe. But if we do, i think its going to be relatively shallow and very quick, because theres a ton of money on the sidelines that hasnt participated in this market that wants to get in, and maybe is just reluctant to constantly be looking at a market at alltime highs. So, thats been the case for the past, oh, i dont know how many months. These pullbacks are very, very short lived. I dont see why its going to be any different Going Forward. Bob, whats the mood of the traders here . Youve been walking the floor, as you always do. What are they thinking about as we head into earnings season here . Its getting more bullish. And remember, its been tremendously skeptical. For two years, the professional Trading Community has hated this rally. Weve called it the most hated rally ever. I think whats interesting here is its not surprising that people like jeff salt make calls that were in an unseasonably weak period, markets are at highs, we might correct. Thats not the bold call. The bold call is that the consensus is wrong, that the seasonal weakness will not occur. Laszlo was on earlier. I think he had it right. Markets are improving because the economy is improving and we see flows into stocks. Thats a good sign. And i cant figure out why the tenyear yield is doing what it is. After having the weekend to digest that strongerthanexpected jobs report to digest the fact that markets have been resilient here. Why not see that moving higher, especially as jpmorgan, goldman are calling for earlier rate hikes . Why is it just sitting here, and if anything, kind of drifting lower today . I think its the biggest drag on the bull argument right now, and i agree with you. For whatever reason, they still dont particularly believe and whats amazing to me is that this is not a part of the market that the Federal Reserve controls, not the tenyear. They only control the shortterm. So, i would have anticipated and i have been wrong on this that the Interest Rates would have been higher right now. But for whatever reason, thats not happening. All i can tell you is look at the headlines over the weekend. Look at fridays headlines. We talked about this morning, stock market up on strong jobs report, or the other way, jobs report strong, stock market at new highs. Now theyre combining these two events. They havent before. Thats another reason why investors are going to start noticing. Well, we get earnings coming out as well bill, if i could add here real quickly. Yeah, you know, the fed, it isnt irreversible, also. If they raise rates and get bad data, then they can always reverse rates. Sure. I think sometimes we lose that focus that they can do that. That was the case with the taper, too, they could always ratchet back up. Got to go, but nice to see you this week, on a monday where were kicking off with markets to the down side after a historic run. Lets send it out to Mary Thompson with a market flash on petsmart. Hey, look at an intraday chart of petsmart spiking on a defiling by shareholder longview asset management. The company sent a letter to the board suggesting the company consider putting itself up for sale. Last week, you might remember activist hedge Fund Shareholder Jana Partners suggested the same thing. Earlier today, the company said it was reviewing its capital structure, focusing on possibly returning cash to shareholders. Its stock right now trading up just over 2 , up 1. 40 at 68. 68. Kelly, back to you. All right, we will keep watching it. Thank you, mary. 15 minutes to go into the close. The dow off 50 points, off session lows, but pressure on stocks across the board today. Coming up, who doesnt love a good bargain in the summer, right . Well, wait until you hear the stocks still trading at discounts, despite the markets recent run into record territory. Dominic chu has our bargain list coming up. And apple defying gravity again, hiring a top Sales Executive away from a luxury watchmaker as all signs point to gearing up to its launch of the highly anticipated smartwatch. Well talk about apples makeorbreak smartwatch, coming up. Better have a physical keyboard. Plus, inside the mind of a trader. I love this story. Meg terrell puts a new study under the microscope showing how brain activity differs between high and low earners on wall street. Fascinating stuff, and the results may surprise you. But actual traders who will learn about this study at the same time as the rest of us, and they will join us, coming up. And we will debrief their brains when we come back in a moment. Stay tuned. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ 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. Yeah, citi mobile. Pay the dog sitter . My mom works at ge. And deposit that check . Citi mobile. Pack your bathing suit . Wearing it. Niiice bank from almost anywhere with the citi mobile app. Slight pullback in the markets today on this first day back from the fourth of july holiday. You know, as we like to say, we assign a mindset to the market, and theyre rethinking, i guess, the strength of the jobs report and whether or not it means that theyre going to raise rates sooner rather than later, and is that good for stocks or bad for stocks . So, today its down, but we are holding above 17,000 on the dow right now. Psychology is important to markets and know that. Absolutely. In fact, lets talk about trading as well. Beautiful mind or not so much . A cal tech study now showing brain activity, how it differs between high and lowearning traders on wall street. Meg tirrell joins us now with the revealing details, and then we have some traders here to react. So, what are you finding out, meg . Kelly, this research were looking at takes a look at two areas of the brain and how they react to market activity. Now, one area, its a part of the brain associated with reward. It shows higher levels of activity during price runups. Researchers say it could be a good bio marker for irrational exuberance. So, when that area of the brain lights up, we could be heading for a bubble. The other area of the brain they looked at may actually act as an internal warning signal. Traders who sold before the market peaked in the study showed activity in that area of the brain, while low earners didnt have that same activity. Researchers from cal tech and Virginia Tech say the work sheds light on what contributes to market bubbles and could give us clues about how to potentially mitigate them. They also cite warren buffet and his advice, to be fearful when others are greeding and greedy when others are fearful and say his research at least has got neuroscience on his side. Meg, thank you. Appreciate it. Love this lets pick the brains of a couple of traders here to see what they think. I was watching your expressions as you were listening to meg there. Weve got kenny from oneil securities with us and peter costa from empire executions. So, the premise is that something goes off in your brain when you guys sense that we are in an irrational exuberance period, things have extended themselves too much and its time to get out. You know, you have that innate ability that us mortals do not have. Do you agree . I definitely agree. I think theres certainly in a type a personality, kind of a broker thats been in the thick of it. I think its either something you either develop or you just have it. I think its innate, right . Your ability to respond. Yeah, the ability to respond and to think rationally when everyones not rational. And be able to make a decision but heres the thinking i go through, not that i can trade, because i cant in this position. But i worry that if i sell, im going to sell too soon. Right. And the markets going to keep going higher and im going to drive myself crazy worrying about that. Do you guys think that way, too . No, because you see, what are we talking about . My personal account or from a professional perspective . It matters . I think it definitely matters. Talk about your personal experience with when you directly have to decide to get out of a trade or not. As a professional representing a customer or myself . Just, in either case the case where most clearly you have to decide whether to ride that wave or get out, and whats the difference between yourself personally and professionally . In which case i would imagine professionally, maybe thats true, maybe thats not, are you more cautious . No, i have to tell you something, i think when youre doing it professionally, youre right in the thick of it and youre representing institutional interests and youre so engrossed in the trade at that moment, its almost easy to be able to make a decision. First of all, because youre getting direction. You know what your customer wants to do. Youve had this conversation. Youve got them kind of sitting here on your shoulder, so you know what they want to do and you just do it. And sometimes even when your customer wants to do something, you might have another feeling about it. This is where it becomes more of a trader and an instinctual type of thing. They want to get out. If they need to raise money, thats one thing, but if theyre not sure, thats what they leave it in our hands for. And they expect you, they expect you to kind of, to be able to control that, right, be able to go to them and walk them through it, have that conversation. And as long as youre all on the same page, it works. From a personal point of view, i think like everybody else. You always say to myself, oh, did i sell it too soon and did i buy it too soon . Right, right. Is this the result of experience or did you bring it to the table to begin with . Its from experience. Because i dont think when i first came into this business, i didnt have any instinctual feel for the market. And over the years, you develop that. Feel the ebb and flow . Yeah, the ebb and flow, you feel it. And there are some things you just cant quantify. There are times when, and i said this two weeks ago when i told you that my costa family fortune was getting out when the market went over spa p 1,900, so i misd out, but it was the right thing to do. Thinking about the implications of this research, heres the big brother scenario for you. At the Federal Reserve, are we setting ourselves up for a crash . Cant i scan your brains now and figure out whether the kind of activity youre engaged in is triggering the kind of endorphin adrenaline pro bubble kind of activity, or, you know, does it override that part of the brain thats telling you that markets, that here the rational thing to do would be to stop the trade . Thats a very interesting question, because if you scan my brain right now, i would tell you i think we are getting very close to a bubble, if were not already in one. I tend to be more cautious because i think fundamentals are on the line. Both of you. With where the stocks are trading. Youve been this way for years. That was bobs point. And weve been talking about it, the higher we go, the more cautious i become. Now today, this morning youve had how many people come out this morning now and say were cautious, were nervous, were concerned . Right. So, it just which tells you its still a healthy market . Because if everybody instead was either identifying this and saying jump on the gravy train anyway or not identifying this at all, that would be indicative that were in more of a bubble . True, thats very true. You need buyers and sellers. I mean, there are people that feel that the market is topee. Theyre going to be the sellers. And there are going to be people that think theres still another 10 or 15 on the upside. Those are the buyers. Thats just the natural flow of trading and investing is there are buyers and sellers. You know, the way we look at it is a little more you know, were more cautious as weve seen new peaks. Thats just a natural thing for us. But youre also driven by customer flow. You have to understand something, if im representing a customer that needs to sell stock right now, my mind is in the sell mode. Thats where youre going. Therefore, im sensitive to that. If im in a mode where a customer wants to buy it, its the opposite, right . Well, as you guys know, im a huge student of market history. This is fascinating stuff and i appreciate you coming along. Thank you. Combined you have how many years on the floor here . 30. Im 33. Okay, so a few years. A few. See you guys later. Appreciate it very much. Heading towards the close, minor pullback. The dow is down 57, 60 points right now, but still above the 17,000 level here. Coming up, were going to look at sweet gains for candy crush maker king digital. It is off today, but its been lately going back above the 22. 50 initial public price offering on the heels of an analyst upgrade. The pros are going to weigh in on kings chances of tumbling back to where it came from when we come back. Also coming up, as tensions in the middle east continue to rise, why arent oil prices continuing to go up more . Were going to get answers from an oil industry veteran. Do not go anywhere. Stay around. In india we have 400 Million People who dont have electricity and i just figured that its time i do something about it. What were doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System is made with the ibm cloud. Welcome back. Heres where we stand across the major end dindexes with the dow 50 points. Interestingly enough, the nasdaq and russell are capturing the worst index, worst session in two months. The russells off more than 2 . Mary thompson, whats moving the markets right now . Familiar names, bill. Well begin with apple moving higher at levels it hasnt seen since october of 2012. The Company Hiring a Senior Executive from the luxury watchmaker tag heuer ahead of the anticipated launch of the iwatch, up 1. 75 . Blackberry also moving higher as the stock pushes past the 11 share level. The stock is up nearly 50 over the last month. A different story for tesla. It dropped in the aftermath of one of its model s cars being stolen. It then crashed, split into two and erupted into fire over the holiday weekend. Its shares down 3. 3 . Gopro rebounding from thursday after doubling its ipo price from the week before. It began options trading today with a little fanfare at 5. 33 . We end with king digital, maker of candy crush, marching above the ipo price at the open before profit takers moved in. Its trading down 1. 8 at 21. 47. Back to you. Mary, thank you. Earlier today it was on session highs on an analyst upgrade. So, where does king stock go from here . Should you be betting on it or could your portfolio be candy crushed . Well brawl it out. Weve got ross gerber from gerber kawasaki. He thinks king is the new king in casual mobile gaming, while andrew keen from keen on the markets says about investors finally getting to break even from the ipo might be wise to sell the stock and move capital elsewhere. Good to see you both. Thanks for joining us. Ross, do you think this is for real . I mean, the stock got killed when it opened at the ipo price. Its come back. Do you think it will continue higher . Well, it came out at a pretty good valuation in the first place. I think its one of those types of things, theyre in the right place at the right time making the right product. Everybodys playing these casual mobile games. Theyre easy, theyre fun, theyre distractions, and theyre making a lot of money doing it, an ungodly amount of money doing it. So, the real issue why most people dont like the stock is can they keep doing it, can they keep doing it . And my answer is, thats all of hollywood, thats all of the entertainment business. Its a hitandmiss business. And they seem to have the management teams thats doing it right. So, i think its a good investment. Okay. Andrew, what about you . Youre more cautious here, i understand. Yeah. I mean, right now as you look, theyre a one trick pony. 70 of their revenue comes from candy crush. They need to come out with another product thats going to consistently move in the gaming space. Rovies tried it for seven years, trying to find a game thats going to compete against angry birds, and they havent been able to do it, so theyre a one trick pony. Revenues are going to be flat year over year, and also we see users starting to decline. The fact of the matter was the stock got up above the ipo price and couldnt hold it. Technically, today was an awful day. It traded about three times its usual volume in stock volume, and a lowvolume day, it got up to that 23 and found a seller. I think the short top is on and its an opportunity to buy on a pullback at 20 or 18, but i wouldnt allocate any new capital right here. What i hear both of you saying is one of you is betting on management to come up with another hit like candy crush. The other is very skeptical that they can do that. Ross, you think they can. Yeah. I think theyre in the right space. Remember, video game business is a Huge Industry in many different areas, and the console makers in my mind are really struggling today because its really gone to a mobile environment. When you look at the international market, how many children and women who used to not be gamers at all are now playing these games, were talking 400 Million People play these games just with kings products every month. Theyre making hundreds of millions a month, and its a huge profit margin. So, theyre going to make huge amounts of profits even if revenues dont grow this year. Theyre monetizing so well. You want to be in this business. Just like in hollywood, its a fad. Its a gold mine. Its a fad. Yeah, revenues are great right now. The problem is theyre declining. You can see it flatlining on their revenues. Whats a fad . Candy crush last time it sold off on earnings, too. I think they could possibly come out with a new product, but why invest right now if i dont know if they can do that. They have four out of the top twenty games right now. Theyve got four or five top twenty games they have two in the top ten, but they have to consistently keep that. But they very well could, and thats where the money could be made, because the moneys being made on mobile social games, and theyre the best player right now in this business. If im activision or im ea, im not really in that business that well. This is a great addition to my portfolio. How about microsoft some. Thats interesting. See, its such a profitable business and its such a great business model. They have to invest a very little amount of money to test games, where if i make a call of duty, ive got to spend 25, 30, 40 million just to make a game. How do you explain the price action today, though . Look at the price action. It got another analyst [ everyone talking at once ] the markets been week. But this morning it was up 1 premarket at 6 00 in the morning central time. The stock was up 1, and it completely rolled over all day today. It couldnt hold the ipo price. And technically, thats a big, big reversal day. Thats a good point. Ross, final word . Youre right, but you also said the same thing about nike two weeks ago and were totally wrong. Dont dodge it answer the question about king today, ross. Im sorry, but you know, i think king is valued correctly and i think it will go higher over time, and i dont care that much about charts. I care about valuations. I think some traders snaps i had to pull that out. I had to bring that out because you told me nike was going down. All right. I was wrong on that one. Weve got to go. Thank you, both. Good discussion, actually. That was fun. Thank you. I think they could be, like, one of these movie series that keeps going, we have version two, version three to come. But who knows what stock brawl will have next, but king has been interesting to watch today. 30 minutes before the bell here. Markets are under pressure, as they were saying. The dow is off 55 points, the s p 9, the nasdaq 36, and the russell having its worst day in two months. Coming up, you say youre worried stocks have become too pricey . Never fear, dominic chu has a list of shares trading at a discount that could be in for big gains. You cannot afford to miss that, coming up. Also later, why the super typhoon halfway around the world could affect your investments on wall street. This bad situation in japan could get worse. Well have the latest straight ahead. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Welcome back. Well, crude oil prices are also under pressure today as we kick off the new week. Bertha coombs, why is that . Well, you know, part of it is that weve lost a little bit of that geopolitical premium. Traders basically say the situation in iraq appears to be on hold for now with production in the south not being impacted. You have libya bringing back some supply online, lifting forfeiture on two ports there. So, that essentially eases supply concerns. But the big areas that were seeing a down drop, not so much in crude, but take a look, its the more domestically oriented parts of the energy spectrum. Were looking at gasoline today down 1 . The fact is that most likely, hurricane arthur did dent demand over the holiday weekend, which is one of the Major Driving holidays of the year. And then, the domestic forecast is for not a whole lot of hot weather. Despite the fact that we are seeing 90plus temperatures here in the northeast over the next couple of days. Thats expected to ease fairly quickly. In the midwest, its not that much. And bill, you know, that next named storm, which does bear my name, is nowhere to be found. Back to you. Well, we know where you are, bertha, and were glad for that. Thank you. Thank you. With new tensions in the middle east and americans approaching peak driving season this summer, where does that leave the outlook for oil prices . Our next guest says despite the looming factors right now, the worst may be over for gas prices. Tom petri, formerly with bank of america, america lynch. Thanks for joining us today. Great to see you, bill. Lets talk Bigger Picture here. Depending who you ask, were at a big Inflection Point in terms of the energy life of the united states. Beholden to middle east oil, even as the price goes higher, because of the fracking going on here in the u. S. Where do you see prices going as a result of all of that right now . Were definitely going to build more supply, and that will back out some imports. And boone spoke about that this morning, as you know. But basically, that should loosen up the system globally. Its not big enough by itself to drive prices meaningfully lower, but its certainly on the margin beneficial to keeping prices in a healthy range, which is what weve been in recently. Lets take a quick listen, if we can, to what t. Boone pickens had to say about oil and production in this country this morning. We can get off opec oil. Were down to 4 Million Barrels a day of opec oil. At one time, we were over seven. So, weve come down to four. And we can knock that out within the next three years. You agree, tom . I do with one caveat, and i think boone developed it a bit, too. In my book following oil, i speak to this. Basically, the kind of oil were producing on the margin is going to exceed the capacity of our refiners to optimally run it, so we need some exports while we reconfigure our refineries. That said, financially and barrel for barrel, were in a position to back out the bulk of the remaining imports over the next three to four years. Yeah, we need more refineries, anyway, too, to help with the demand for gasoline. Does all of this necessarily mean lower prices down the road . I mean, that seems to be the promise. As we get off of the middle east oil, start to develop more of our own, prices can come down. Is that a pipe dream . Well, it depends on the geopolitics, bill, and that is something that its hard to take to the bank. But theres been a fair amount of geopolitical risk premium built into oil prices for the last two years, in my view, probably 10 to 15 . Some of that may welcome out if we get some of these issues that have been in the news lately settling down some. You know, tom, its interesting to look at the aspect of prices on the one hand, which may not come down much further, even as this production boom continues, and the geopolitics on the other. The implications here is the u. S. Maybe has less interest in this part of the world, and as the russians and chinese move in, what do you see happening there . Well, obviously, it is a reorienting of power centers. And as i think senator kerry pointed out this morning, theres more interest, more of the u. S. Interest in that part of the world than just the energy. So, its going to take an Effective Leadership Program where we do work with our allies on how to have that be an orderly transition to a different set of power centers. I think that could be a real challenge. You know, a related question im curious about, both for individual states like colorado, which may become energy sufficient, and for the u. S. As a whole as this transition happens, should we be developing a Sovereign Wealth Fund . Well, certainly, wed better make good use of the financial benefit of this. Whether its large enough, considering our population, to be thinking in terms of Sovereign Wealth Fund is a bit of a stretch when you think of the one thats in alaska or the middle east or other areas. Theyre usually large benefits for a fairly small population. Were going to, i think, basically need to make good use of the benefits to the trade balance and the benefits to our foreign financing needs as we enjoy this, but i doubt that a real Sovereign Wealth Fund is in the cards. One more wild card pretty quickly here, tom, if we can. What about alternative energy, as automakers are doing more with hybrids and electricity and fuel cells and things like that. What role is that going to play in the future of all of this . You know, one of the big surprises here is a lot of this was not predicted. It certainly wasnt benefited by any great government policy. Similarly, in the alternative energy area, i think private Sector Innovation will surprise us somewhat on the upside in the alternative energy, but the realistic time frame is multiple decades, not a few years. Yeah. And so, you know, we just have to keep that in mind. Yeah, i think we have been impatient in that regard. With that transition. Tom petrie, thank you so much. Good to see you this afternoon. Real pleasure. 20 minutes to go before the close. Markets havent moved much this hour, so barring some unforeseen change, it looks like were going out here not necessarily on session lows, but still under pressure with the dow off 54. When we come back, dominic chu has the list you need to know about. These are cheap stocks with the biggest potential for gains. Do not miss it. Get pencil and paper ready. Hell be here in a moment. Also ahead, reality tv stars turned business women, kim, kourtney and Khloe Kardashian are going to talk about their ever expanding Business Empire in the next hour of the show. Now theyre launching a new clothing line in super small sizes. The kardashian sisters explain. Thats all ahead. Is kathleen. Setting up the perfect wedding day begins with arthritis pain and two pills. Afternoon arrives and feeling good, but her knee pain returns. Thats two more pills. The evenings event brings laughter, joy, and more pain. When jamie says. Whats that like six pills today . Yeah. I can take 2 aleve for all day relief. Really, and. And thats it. This is kathleen. For my arthritis pain, i now choose aleve. Get all day arthritis pain relief with an easyopen cap. Dad hes our broker. He helps . Look after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. But ive managed. I got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. When i finally told my doctor, he said my crohns was not under control. He said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohns disease. And that in clinical studies, the majority of patients on humira saw significant symptom relief. And many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening Heart Failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. If youre still just managing your symptoms, ask your gastroenterologist about humira. With humira, remission is possible. Welcome back. Heading into the close, the dow at 17,011. Were looking to see if that will breach to the down side at the close. Its off about 0. 33 at the moment, the s p off 1 and the russell off 1 at a twomonth weak performance spot. The markets are still entering record highs, despite the pullback, but dont let that fool you. Dominic chu says there are still plenty of bargains to be had on wall street with big potential gains, right . You know, its interesting, because nobody wants to buy stocks at record highs, but there are always places of opportunity. So, one of the places people look towards is the value side of things, right . Which stocks have not participated in the rally . Well, some stocks have actually gone up in value but are still trading at multiples or valuations slightly below where they have been in the past. We looked at a handful of them throughout the course of the day. Our first one for this particular hour, weve highlighted a lot of them, is berkshire hathaway, of all companies, right . So, this is a stock that trades at 16 times earnings now. So, you pay 16 for every 1 of profits berkshire generates. Heres the interesting part, because over the course of the past five years, it trades normally at 20 times earnings, which means if you look at it from a sale perspective, its being marked down 17 . So, you can see berkshires shares, theyve done pretty well over the course of the past year, but just not as well as the rest of the market, perhaps. Now, another stock you want to Pay Attention to, at least from a valuation standpoint, is a financial. Weve been talking a lot about these financials. Regional banks in particular. Fifth third bank is one of the larger ones in the united states, based in the midwest. It trades at 11 times earnings. It normally trades at around 20 times earnings. So, again, a 41 discount to valuations. And of course, Fifth Third Bank is a stock, you can see there, has been in an upanddown ride, as have all the financials. Theyve been a lagging sector. Our final one to highlight here is one that perhaps some investors have fallen out of favor with and maybe or maybe not for good reason. This is Weight Watchers, a stock that trades at just six to seven times earnings. Again, it normally trades at around 13 times earnings, which means its 50 off, if you look at it from a valuation perspective. Now, some would say, bill, kelly, that this particular stock is down for a reason. Maybe there are demographic or secular trends that are working against Weight Watchers. Still, as a value investor, youre looking for those stocks that maybe havent been identified or spotlighted or focused on as much by certain investors, and those are three of them, big names we all know that are trading to discounts from where they normally trade. Very interesting. Typically, Weight Watchers likes to lose 50 , but not in this metric. Maybe theyre a seasonal play, right . Maybe just around new years . Not in the summertime. Dom, see you next hour. Heading towards the close, 13 minutes left. The dow is down 50 points. No followthrough to the rally of thursday that took us to record territory, but i guess you could also say at least were still above 17,000 right now. Yeah, weve got that. Now, weve all heard about driverless cars, but how about driverless trucks . And we mean 18wheelers. Germanys biggest truckmaker, daimler, is demonstrating one on the oaudio bon. Would you feel safe driving next to one of these . Tweet your thought thoughts cnbcclosingbell. 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About ten minutes left in the trading session. Coming back a little bit. The dow is down a little less than 50 points right now, but still above that 17,000 mark. Joining me, chris hizie from u. S. Trust and rich peterson from s p capital iq. Good to see you both. Good to see you. Welcome back from the holidays there. 17,000, does that matter at this point . It matters to day traders, weekly traders, et cetera. Technical levels, things like that. But overall, over the next 10 to 12 months, youre still looking at a 8 to 10 gain. Grinding it out from here. Grinding it out from here . Grinding out period. Thats the thing with the market, were hitting singles, no home runs here. Thats the reason why its confusing a lot of people. You know, when you grind it out, you have Economic Data going back and forth, you get mesmerized by certain things, then you pull out of the market, go back in the market. Drip, drip, drip, and you look six months later and weve added that much more water to the bowl. Here we go. We get earnings tomorrow with us above 17,000. Does that add to expectations. For me, my numbers 2,000, because im the s p family. Right. Obviously, youve got earnings kicking off tomorrow with alcoa. Expectations from the s p capital iq numbers, 6. 5 for 2q, up 3. 4 in the First Quarter. Were moving ahead. The grinding up, you know, 8 over in the Third Quarter up to 11 in the Fourth Quarter, fullyear 2014 looking at about 7. 6 Earnings Growth. Should help the market move ahead. Earnings, cash, accommodation from the fed, all that put together shows a bias towards equities. You think earnings will meet expectations, then, this time around . Thats whats been the typical game plan. Obviously, we start with a little bit of trepidation and, overall. You agree . Its baked in the cake for this year and looking forward to next year, 126 to 128 is almost already baked into the cake. Those numbers being . Earnings for the s p. In other words, 126 per share for combined s p, for those of you wondering what those numbers were wanting about. Theres a feeling that if the jobs numbers continue to get stronger, the fed will have to raise rates sooner rather than later. At least two houses think theyll be raising rates later this year. Weve been earlier than that for a while, between the first and Second Quarter of next year raising rates . Theyll be raising rates, tapping on the brakes. Technically, theyve already started to tighten, if you consider the taper starting to tighten. The risk in the market is similar to the taper tantrum. Now it will be the tantrum around a nudge in shortterm rates. Thats the next time to buy into the market for investors that invest only on a 12 to 24month period. And the fact that we have any rate increase up from a low, low level, its not really going to harm the market. But companies are going to have to start to prove themselves with earnings down the road even more, arent they . Plus, they have to prove it on the top line. Were seeing 4 expectation for Revenue Growth in the Second Quarter, up from 3. 9 and 1. 9 in the Fourth Quarter of 2013. All right. Were going to take a quick break. Youre going to come back with me. Well get to the closing countdown here. It looks like were going to stay above 17,000, but weve got some other averages we want to look at as well. Then, after the bell, kelly will be speaking with the kardashian sisters, all three of them, about their new clothing line, which may not be what you think it is. Weve got kim, kourtney and khloe all here to explain this new clothing line that they are introducing right here. Youre watching cnbc, first in business worldwide. The cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. 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And so, weve followed that with our own market this morning. The dow coming back from those highs that we set, the alltime highs on thursday, but still above 17,000. Weve been kind of bumping along that number all day. Here we are down 48 points near the close at 17,019. Yield on the tenyear, which had been moving up because of the jobs number on thursday, moving down today, just by three basis points, but were still above that 2. 6 level there. Heres Something Interesting today. The secondary stocks, the small caps have had a pretty big selloff today. Thats where the sellings really been. The nasdaq and the russell 2000 both have had their worst day in about two months here, and you wonder. I mean, they have been the leaders to the up side lately. Whether this is a signal of things to come here. Theres the nasdaq down 36 points, and you saw the russell down there. What do you think, chris . Leadership, now theyre laggards here. It was simple a couple months ago, as you mentioned. Seems to be a big head fake. Youre going to see the rotation go on in size and style throughout the rest of the year underneath the broad market, which may rise only another 3 or 4 before the peak this year. Its going to be major growth themes. And it may not just be the big pocket of small caps. Rotation of the high beta names into the industrial, the energy, the laggard cyclical growth names. Energys been a leader this year, but industrial stocks have lagged this year. You talk about energy. Energys expected to be the second best performer in earnings for the Second Quarter. In terms of the small caps russell, i think theres concern about the rate increase, concern that maybe the fed is going to be moving more aggressively, given the jobs number last thursday. A rate increase would have a bigger affect on smaller than larger companies. Exactly. A company well focus a lot on tomorrow, alcoa. Theyre the first to report earnings, as always. Theyre not the bellwether they used to be, but theyre still but again, materials, again, it could be the second best performer, according to the s p Capital Investments up 2 for Earnings Growth for materials. Again, the theme there, slow and steady. So, 3 First Quarter, over 6 in the second, moving higher, better improvement, better on the topline numbers. And while theres still concern about financial engineering, how buybacks, m a has helped the market, companies do what is necessary to meet those numbers. Is alcoa the kind of industrial youre looking at right now . It actually is. World trade growth in april was the best its been in a year coming off the terrible gdp print of the First Quarter. Exports coming out of emerging markets boomed this past quarter. Should be a good result. Even if rates continue to move higher here . It should be, because again, its off of a very low base. The concern will be initial, and then measured rises through the next year or so. Well move into a higher market in that. Good to see you both. Thank you for joining us today. So, were going out with about a 50point decline on the industrial average. And again, its the small caps that are being hit harder today in this modest selloff on wall street. Stay tuned. Kardashians join kelly coming up on the second hour of the closing bell for this monday. Ill see you tomorrow thank you, bill. And welcome to the closing bell, everybody. Im kelly evans, and heres how were finishing up the day to kick off the week on wall street. The Dow Jones Industrial average off 45 points there at the close, at the market lows today it was off 76, so a little bit of a rebound towards the back half of the session. But across the board, selling pressure today after we hit that 17,000 mark for the dow last week. Other indexes notching higher. The s p 500 last week went out at 1,985. Today it gives up about eight points to 1,977. And the nasdaq the underperformer, off 0. 75 to 4,451. The russell 2000 was one of the worst performers today. Lets talk with our panel. Joining me is elan moy from the washington post, cnbc contributor michael of destination wealth management. Our very own dominic chu and jane wells with us from california. Also with us for more on todays Market Action is fast money trader tim seymour. Hey, kelly. Welcome to all of you. You know, we had an historic week last week. Were above 17,000, michael, and we started off today, things dont necessarily look as up. Why is that . Because we had a fantastic month. If you really think about whats been happening, the markets been rallying significantly so. We dont have any real stimulus out there to really push the market higher at this point. We need Something Else. Oil prices have been going up. Granted, they came back a little bit, but i just dont think theres enough of a stimulus right now to chase the market up until maybe we have earnings next. Earnings, by the way, we will have alcoa on the show to talk us through what they see in terms of demand tomorrow. But tim seymour, theres also a couple confusing things happening in the market today. At least help us understand, if you can. I will try. Airlines under pressure, united, delta selling off, on the same day that oils moving lower and people are talking about whether its time to pile out of the energy trade. Whats going on here . I think its rotation. If you look at the airlines, the dynamics that have driven the airlines much higher i think are still in place. I think you have much better run companies, you have market control which is adding to 400 or 500 basis points just of earnings multiples that these guys should take on to their Balance Sheet. But if you look at whats happening across the space, its been a crowded trade, its done very well. Going into earnings season, i think people are looking for places that they can find some value. Theyre also looking for sectors that are typically outperforming in this type of an environment. You also have a backdrop where people are concerned about inflation. And i think theres been a number of strategists and economists that have at least after last weeks data points have said youre going to have to see the fed come back to play faster than expected. Fed fund futures have priced this in. This is why i dont understand the action today, because i take your point, and yet, you have the tenyear Interest Rate which has barely moved and the sector leaders are telecom and utilities. Thats hardly a ratesinensitiv play. I think if you look at what the market is doing, people are starting to position back into utilities and back into things that will be more defensive, if, in fact, this is the environment that we get. I think if you look at where we are right now, last week there was a lot of easy gains, it was a low volume week, it was a week where we had also the First Quarter, first week of the Third Quarter where there was a lot of allocations that took stocks to fresh highs, and i think its going to be a tougher week this week as we face the realities that earnings are coming here. I think earnings are going to be actually a surprise to the up side in the Second Quarter, but i think people are worried. Yeah, thats what one of our guests last hour said as well. If we actually highlighted where the push and pull is, what youre really saying is, if inflation is an issue, people should be getting out of defensive stocks. Right. Now we hear, if people are concerned about the market rallying so high, they should get into defensive stocks. So, thats really the push and pull that youre really seeing right now. Which side is going to win is anybodys guess, but thats really the sort of schizophrenic market right now. Jane wells certainly can tell us. Jane . We look at different numbers out here. You follow those metrics. Out here, we have different inflation. For example, the price of marijuana is falling and is expected to skyrocket this week as Retail Stores open in washington. But ive been watching two numbers today. The price of corn is at a fouryear low. Wow. And beef is at an alltime high. Now, i realize there are fewer cattle and demand has held up pretty well, but corn has been low for some time. 4 corn is the old normal. And at some point, that low feed cost has to trickle into beef prices, and it hasnt yet. And people, you can talk about inflation, whether food prices are volatile as much as you want. Food prices have been elevated for a long time and they arent coming back down. They have. And jane, by the way, when i was out and about over the weekend driving around, i didnt realize just how pervasive ethanol is as a fuel now. Im surprised that hasnt made corn prices structurally higher. Oh, yes. Well, it used to, but there is so much corn now, and it looks like its going to be a good year, and there are so much fewer cattle from previously high corn prices and drought, and its taking a while to rebuild that herd up. But i still think these beef prices cant stay that high for that much longer. But jane, this is important for another reason, too, because were talking about the outlook for inflation. And what youre describing are some of the inflation components that consumers are most sensitive to. So, it sounds like a lot of the price increases that weve seen in food, to your point, may be more in the past than they are in the future, or is that overstating it . I think, look, its got to be supply the cure for high prices is high prices. People wont continue to pay for beef and pork. Theyll buy more chicken. At that point, there will be more supply and then the feed price will get through. I dont know how long its going to take. I feel like we should have seen it already. Elan, what do you see in terms of price pressures and what do you make of the call for goldman being the latest, now saying, look, we think the feds going to raise rates the Third Quarter of next year, Fourth Quarter of next year . And the reason is actually because of the Unemployment Rate. I think the focus on inflation as a concern for the fed moving sooner than it would have otherwise is actually misplaced, that the real issue here is how far is the Unemployment Rate going to fall, even while we see anemic job growth and possibly anemic inflation. Its going to be anemic job growth . It might force the feds hand to move. Michael . Yeah, i think thats true, because remember, what the fed has been saying bernanke actually said this before leaving the fed. His position was, were going to let inflation run longer than people expect us to let it run there is a willingness to overshoot the target. Because where we want to have unemployment be so entrenched, or new employment so entrenched, that theyre not going to do the double dip depression situation. So, i think thats happen. Its important to note the comments made on cnbc earlier this morning. You have to remember, hes a good friend of janet yellen and her husband. And his main message was actually not that hes uncomfortable with stocks but that he felt the recovery is still pretty weak. And so, thats the message that the fed i think is really sensitive to right now, worries that the shadow Unemployment Rate is still much higher than it needs to be. So, heres what i dont understand, though, is the Employment Situation in this country moving along better or worse than the fed expected . In other words, even if they want to get the Unemployment Rate down as much as they can, where do we stand right now . Well, we stand at a good spot in terms of the overall macro view of things. Unemployment is coming down. If the Labor Participation rate pretty much stays kind of where it is and we still see those numbers get better, then maybe theres a case to be made that the Employment Situations getting better. But lets not forget, the shadow side of things, like ylan was saying, thats still big. Yeah. I still know plenty of people out there who have been out of work for at least six to nine months, if not longer. So, thats going to be the real key. But the markets i mean, people always say theres a difference between the markets and the economy. I mean, they are intertwined in some way, but yes, the markets are doing a lot better, despite the fact that we still have some unemployment issues in this country. But what you are seeing is at least investors act in a way that seems more fundamental. Theyre looking at stories, theyre making concerted Investment Decisions based upon the data that they get and theyre making say utilities, right . Utilities may not be the best play overall for a rising rate environment, but theyre doing pretty good this year because they want but defensive. But defensive when you have alltime highs in the market. Right, so theyre making some focused plays using story lines and expressing those interests, and thats big. Tim, last word before we let you go. Whats your favorite trade of the moment . Well, i think materials are a place that in the Second Quarter, you actually look at the data i kind of disagree with whats just been said. I think the datas been pretty strong in the Second Quarter. I think youre going to see that feed through. Also, look at multinationals, the weakness in the dollar. People talk about Dollar Strength and headwinds on multinationals when its there. Lets talk about the weakness. A lot of these companies, and take some of the staples companies, even a coke or mcdonalds, but look at some of the companies, even the Auto Companies that have a lot of exposure, i think those are places to look. Tim, thank you. Thank you. Stick around, everybody. Catch tim seymour coming up with the rest of the fast money crew at 5 00. Theyre going to ask a top analyst why he thinks apple is the stock of the summer. Dont miss that. Now, another factor weighing on markets. Japan on high alert as a potentially devastating super typhoon is heading towards its shores. The weather channels kelly cass has latest details for us now. How bad a storm is it, kelly . I do have good news, kelly. This system has weakened a little bit over the last couple of hours. Its no longer a super typhoon. It is still packing a punch, though, although it has been downgraded to the equivalent of a category 3 hurricane that we would have in the atlantic basin. But still, you can see it is very close to the Southern Islands of japan, right near okinawa where cadena air force base is located, but fortunately, winds have dropped below 150, making it a category 3. 125mileperhour winds right near the center of our circulation. And its going to be moving just to the west of okinawa. Still, the Japanese Meteorological Society has issued its highest emergency warning, meaning there could be significant storm surge with this as well as 46foot waves offshore, and theres also going to be the threat for some of those outer rain bands to cause flooding rains and mudslides across the japanese islands. So, heres a look at our forecast, taking it just to the north and then eventually to the northeast, keeping it as a category 3 when it makes its closest pass to okinawa and then eventually turns to the right over toward the island of honshu here in japan. And by the time it reaches this area by about wednesday evening, the winds will die down to about 80 miles per hour. Its still a very dangerous storm, though, and its going to cause a lot of heavy rain. But fortunately, its not going to be as bad as the typhoon that devastated the philippines last year. Kelly, thank you. Appreciate it. Investors sent the dow over 17,000 after thursdays blowout jobs report. Former autozone ceo and chairman steve adlan says dont be fooled. The economy is actually in rough shape right now. Hell explain why he thinks so, next. Plus, apple approaching a Top Executive at tag heuer, but some people here are not sure that will turn the expected iwatch into a massive success. Speaking of big successes, kim, khloe and kourtney kardashian, they are minting millions. They are here with the latest expansion of their fashion empire into Kids Clothing. Thats straight ahead. Youre watching cnbc, first in business worldwide. Welcome back. Despite dow 17,000 and the lowest level of unemployment in years, my next guest warns the economy may not be as good as you think. Joining me now with more, steve oglin, president of the committee of economic devel development and former chairman of office depot, former ceo of autozone. And with us, cnbcs own Steve Liesman. Welcome to you both. Steve oglin, first to you. What is your main message about the economy . Kelly, i know some people feel very good about the economy because weve had market highs and weve got some good job numbers from last month, but i think when you get in underneath the fundamentals, they dont look good, because nothing has really changed. Weve been skating sideways here for nearly five years. We were down nearly 3 in the First Quarter with gdp growth. The experts say that were going to grow 3 in the Second Quarter, but that will give us a flat first half it. Then if you continue that in the second half, we have only 3 gdp growth for the year. That will be the worst since the year 2001, and this will be this First Quarter was the worst since the depth of the Great Recession in 2009. So, this is not a great economy, and Consumer Spending is not picking up here. So, were worried about the consumer and the economy. Is he right to be worried, Steve Liesman . I think so, and i think it little depends on what you expect. I dont think anybodys out there saying its a great economy. I think its more of a mystery right now. What you have is two competing sets of data, kelly. I think you have the strong job growth, seems rather imutable, it really did happen. Were averaging 272,000 over the last three months, the best threemonth average weve had in a long time. And as steve said, gdp growth was minus 3 or nearly so in the First Quarter. Looks like were going to bounce back. Most of the economists who im speaking to, kelly, right now are writing off that First Quarter as an anomaly and not a sign of the weakness in the economy. Then again, i dont think anybodys out there saying its really a 3 r or 4 economy. Theyre saying its a 2 economy. If thats steves point that were going sideways at 2 , i think id agree. Thats what i want to ask the panel as well. Ylan, sideways at 2 , is that roughly the consensus at this point . Because it seems like actually, the two competing schools of thought are on the one hand that the economys about to seriously pick up, and on the other hand, that all of this has been some sort of mirage. I mean, 2 for the rest of this year i think is a pretty strong consensus. The question is, how much better can it really get . And the longer that we stay at this position, the less likely it is that there will be a pickup in the future, the less likely it becomes that discouraged workers move back into the workplace, the less likely it is that involuntary parttime workers can move into fulltime work and the shadow unemployment becomes permanent employment. Thats really the issue, because we dont have the next industry to soak up all those jobs. Were in transition right now into something. Whether its energy, technology. And if you have taxi drivers that are actually attorneys because they cant find other jobs, yeah, theyre employed, but in the end, thats got to hurt gdp. Dom some. The interesting thing about this discussion about whether or not it relates to the markets or not is that there is a sense of optimism about what things can happen, even if there are headwinds economically speaking. And if you look at where the real gains have been, you look at some of these high beta sectors, like chris was talking about this last hour during closing bell. There are places where optimism can abound and profit and sales growth can still happen, and they are in some industries that are more volatile. But if those are the industries that really start to drive the economy, then maybe thats eventually where things go. Weve been talking so much about the oil and the shale gas boom in america, and theyve created jobs, but is there Something Else out there that can be what technology was in the late 80s to mid90 . And we dont see that yet. What do you think, jane . I think we have such a psychological problem. I dont care how good you tell me the economy is, i cant believe it. We have been so burned by this recession, i feel its like when our previous generations came out of the depression and never quite got over it. My motherinlaw would never throw anything away again. Shed take the whole turkey and everything down to the bones keep it. I feel like we just dont want to believe good news because weve been so badly burned. And whats interesting about that point is that if you look back on how the stock market behaved after the great depression, it was like that for decades before it got back to prior highs. This has been so different, yet the psychology seems to be the same. Well, and i would just say, and i know the other guests have mentioned it, dom has, too. People here are going back to work and theyre making less money. And people are still not keeping up with their mortgages, even though new homes are available at lower prices. Its just this really difficult, difficult transition, at least here in california, although our Unemployment Rate has come way down, too. Right. Steve o ghgland, what are the prescriptions, if any . I think janes right on the psychology of it, but if you look at the job numbers, they look like strong job numbers, but nearly twothirds of those jobs created are parttime jobs, and you need something between 200,000 and 250,000 jobs a month created just to absorb the new entrants into the marketplace. Remember, weve got about 1. 6 million College Graduates alone this year. So, again, its not improving and its not improving. Then look at the cash on the corporate Balance Sheet sorry, steve, thats not accurate. The number is more like 100,000 to 125,000, given that immigration has slowed, Household Information is slowed. You need about 100,000 to 125,000, which is why the Unemployment Rate is actually coming down. And the job growth has been strong. Some of its been parttime. The parttime numbers are very volatile. I wouldnt really hang your hat on the quality of the jobs report. We have other data showing that the quality of jobs is actually improved in the past year after being at a low level for most of this recession. You can talk about the quality of the jobs improving, but theyre still parttime jobs, and for those people. [ everyone talking at once ] for the full year, for people who are carrying two parttime jobs, you can tell them they should feel better, but they dont. Fundamentally, its got to come down to government policy. Youve got 2 trillion worth of cash on corporate Balance Sheets right now that are not being invested. Our ceos are saying they have more confidence investing in china and other places overseas because government policy is more secure. And in this case, you know, we have a tax policy situation. The aca laws and rules are still being written. You have a situation with, you know, this great influx of debt coming on, and we simply need to revise our Government Policies and we need certain [ everyone talking at once ] for governments to invest. Government policy is part of the issue, but as jane puts it it comes back down to psychology. I speak to investors all the time in speeches. And if you ask people in an audience, i dont care what the job numbers say, if you ask people in an audience, do you feel better off, to use Ronald Reagans line, do you feel better off now than you were in 2007, no one raises their hand. I dont care if their mortgages come back, i dont care if their 401 k s come back, and thats wow. I dont know that the answers necessarily government policy, considering the level of inaction weve seen in washington lately. Well, yeah. We can talk about government policy, but is it going to happen . My question for steve odland is in the action of progress in washington, what are some things that your members are looking at and doing to help improve the economy improve the state of hiring . Last word . Yeah, and i think youre right that, you know, the question is, is there going to be action . But i think you just have to look at whats happened in december with the Patty Murray Paul Ryan bill, which removed the sequester for two years and put debt caps in place. I think you need some small steps like that. Were seeing some. We need more. What about steps from your organization . Besides the government. Lets assume the governments going to try hard thats what ylans saying. How can you help us and give us light out of the tunnel . Briefly. We were working behind the scenes for that december deal. We continue to work right now with both sides. Most people in washington say that a deals not going to happen until after the president ial election. We believe its possible for people to act sooner. Thank you, steve odland. Thank you, Steve Liesman. Good to see you. Appreciate it, guys. You may be out of luck if your cell phone or tablet is out of power next time you fly because regulators are now requiring you to turn on your devices before you can board a plane heading to the u. S. From overseas. Up next, well look at whats behind this change and how it could impact the future of flying. Meanwhile, on the ground, some new tech sending travel shock waves. Check out mercedes new selfdriving truck. It could be a boom for shipping across the country, but would you feel safe driving next to driverless big rigs . We want to know your thoughts on this. cnbcclosingbell is how to reach us. 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. 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Government says Electronic Devices now must be powered on or will not be allowed on flights to the u. S. Some believe this is in response to whats been going on in iraq involving the group known as isis. This video, which iraq and nbc are trying to verify, purportedly shows the head of isis issuing a call to arms beyond iraq. For more on whats behind this move at the airports, we are joined now by anthony cordsman, former pentagon director of intelligence now at the center for strategic and international studies. Thank you for being here. Its great to have you with us. First of all, whats your reaction to this move at the airports, requiring people to turn their devices on . Would this prevent some kind of new type of bomb potentially being developed by this group, do you think . In general, if the device is active, there is too little space to put enough explosives to really be a major threat. So, theres a very good reason for using this test. And while we do pay a lot of attention to isis, id suspect that the main threat may actually be coming from al qaeda in the arabian peninsula. Its based in yemen, but it has perhaps one of the most skilled bo bombmakers in terrorist hands. His name is seri, and hes certainly seen as a key threat in developing new technologies. And is this viewed as developing separately from whats happening with isis in iraq and across that part of the region . Well, isis is no longer affiliated with al qaeda, but the fact is, were not talking about any one center of expertise. You have groups in pakistan, you have groups in syria and in iraq, you have groups in yemen, you have groups in north africa. And for anyone without access to intelligence to speculate as to exactly which group is involved simply misses the point. Were no longer dealing with the central structure, and we certainly arent dealing with the threat that has the most visibility at the moment. Were dealing with a network of different groups, and each of those poses a threat. And that being said, for people now looking at this travel advisory and trying to figure out how pressing the threat is to this country, without access necessarily to intelligence directly, what would you say to them . Well, i think the fact is, do you really want to be on a plane where someone can potentially set off an explosive, depressurize the aircraft and kill you . It may be an annoyance to spend an extra 30 seconds or a few minutes, but it is rather nice to be alive. Thats typically seen as, yeah, certainly a positive. Last question, anthony, before we go, though, is what does this mean for flying, for the future of flying, do you think . Its been over a decade in this country since we have had an attack, although many have been thwarted in the meantime. Is the threat level today as serious as it was before 9 11, in your opinion . I think, if anything, it is more serious. I suppose the good news is that this threat has been largely directed against other targets. And most terrorist attacks are actually conducted against muslims in areas where the terrorists are based. The bad news is, there are far more centers of terrorism, we havent defeated this at all. Weve seen, actually, the centers proliferate. And people have to face the fact, this isnt going to go away, and we do have to take account of that threat and live with minor inconveniences in the process. Okay. And we will. Thank you so much for explaining it to us this afternoon, anthony cordesman. Apple lured off a Top Executive at a watch making company. Its a move that has some betting. Apple will transform the smartwatch industry in the way the ipod came to dominate the mp3 business. There were others that beat them to the business, but that story is next. Also, the kardashian sisters. Their brand is everywhere these days. Now theyre getting into the Kids Clothing business. What is next on their agenda . The trio join us exclusively in just a few minutes. [ 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. Thats why i always choose the fastest intern. R slow. My mom works at ge. 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. In the wearable tech world, a war on watches is ticking. Last fall, apple rated burberry, now its adding another fashion executive to its team. Patrick pruniaux, a executive from luxury watch maker tag heuer is cupertino bound. So, as apple gears up for the iwatch, should investors gear up to buy the shares . Were bringing in colleen taylor, tech reporter. Good to see you both. Lance, this move by hiring the representative from tag heuer tells you what about the iwatch . Apple is trying to build in as much wearable and design expertise as possible in the runup to delivery of the iwatch. And if its already in production or very close to production, and this guy i know his expertise is in retail, this is about how to sell these things sort of as a fashion accessory, because its not just technology, its stuff youre wearing. And colleen, the iwatch at this point sounds like its a foregone conclusion. Analysts are already including it in their models. What, though, if this watch were swiss produced . Is anybody seriously talking about that possibility . If this watch were what . Im sorry, i missed the question. Swiss produced, if it were made in switzerland instead of china . That could make a big difference. We know that watches are a status symbol. This is a luxury market. This isnt just another gadget. And so, apple knows that it has to go about this in a different, more creative way with some finesse. I think that these latest executive hires from eve st. Laurent, bushesh erie and tag hr show that. I think these are smart moves. Samsung has already come out with watches and they havent been the biggest hits. Theyre technologically impressive, but we at tech crunch in our reviews have said design is the weak point here with the wearables weve seen thus far. Exactly. Right. Its interesting, this when i saw the news reports about the tag heuer executive being hired, and all of a sudden, now its swiss made. Just because he worked for tag heuer can really, really actually take that leap that its going to be made in switzerland . No. That would be a pretty major leap, wouldnt it . And to be clear, this is pure speculation im engaged in, but its interesting to read the reports and tag has tried to develop a smartwatch. It has. The reports i saw that were some were actually saying that they had to hire this guy in order for it to be swiss made. So, i dont really quite get what thats all about. I guess you could say designed in switzerland, manning in hong joe, i guess . Its just i really truly doubt its going to be swiss made, but it is, as everybodys saying, its about the expertise, its about his knowledge of the industry. Selling, you know, selling a watch to people is so different than, for example, selling an ipod, right . The ipod arrives, everybody recognizes it as the best music player. Is there a single best watch out there . They are so personal. I mean, were figuring that apples going to deliver multiple designs. And what apple wants to know is how do you sell those products to people when theyre not looking for function, theyre looking for something beyond that, that is an intangible that you cant explain, but oh, my gosh, it looks so gorgeous on my wrist. Oh, and by the way, it does all this other stuff. Lance, are we glossing over the function here, actually . I mean, what are these watches actually going to be able to do . And some of the reports i read mention that the battery life is a real issue here. How likely is it that were going to have to take them off, recharge them every few hours . What advances have been made on the functionality that will convince us to buy it in addition to the fashion. Jane . Im wondering first of all, i think its ironic that apple, which probably singlehandedly did more to hurt the watch business is bringing it back. Im no longer wearing one. Is anybody bothered by the possibility of wearing a processor against your skin, kind of like google glass, all day, hours and hours and hours right against your body . No. No. Am i we should be more concerned that were carrying it in our pocket. I mean, seriously. Okay. Or your purse. I dont carry it in my pocket. But youve got your phone in your pocket, but just answer that other question about battery life is a huge concern. I wear a pebble watch, all right . Ive been wearing it, and why do i wear a pebble watch . Because its great battery life. Because you have to . Its great battery life. Anything that doesnt deliver multiday battery life that you wear on your wrist i think is going to be a problem. Colleen, i mean, heres my question. I mean, the design im with you here, the design thing is going to be the key Sticking Point for me. I wear a watch because i still like wearing a watch, but its a very personal thing for me. My younger brother doesnt wear a watch and only uses a smartphone. Right. So, when you hire somebody like a tag heuer Sales Executive, you are obviously targeting at least an area of expertise about trying to get people to buy a certain type of product, so what does a smartwatch then have to be so that it can be something that we would all want to buy and not just an accessory piece . Last word, colleen . I think it has to be the kind of device that would bridge someone like you and someone like your brother and make them want to buy something kind of new. I think that the watch space has been a space thats been very profitable for hundreds of years here, and so, we need to have a device thats going to bring some new people into the fold that still respect that old tradition. And i think apple is going about this, if anyone can really make this work, i think its going to be apple. Were all sitting and waiting to see what they come out with, and i think its going to be something pretty good. Jane, is that your watch . Its a really big watch. I can tell time from across i dont need glasses. Its incredible its so heavy, though. Beautiful. What time is it . Got to be heavy after a while, though. Samsungs making phones bigger. Maybe thats the next version looking better and better. Lance and colleen, really appreciate it. Daimler is rolling down the highway with a new truck, except this one has no driver. The socalled future truck is an 18wheeler that could revolutionize trucking, but what could it mean for those of us driving cars . Tweet us your thoughts about this cnbcclosingbell. Well share your tweets later. And next, they parlayed a reality tv series into a brand worth millions. Up next, the kardashian girls tell us about a new clothing line, this one for the next generation. Details just ahead. Kid hey dad, who was that man . Dad hes our broker. He helps look after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. horn, ding, ding how long have i had my Car Insurance . I dont know, eight, ten years. I couldnt tell you but things were a lot less expensive back then. If youre 50 or over you should take a new look at your Auto Insurance. You may be overpaying. Actually that makes a lot of sense. Old policy. Old rates. And thanks to your experience behind the wheel, you might save 404 by switching to the aarp Auto Insurance program from the hartford. Plus, youll get benefits that reward your driving record, like our promise that you wont be dropped. Wait, you wont drop me . Seriously . Thats right, you wont be dropped. 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Well even send you this free calculator. Call now. Why wait . Welcome back. Some say theyre famous for being famous, but thats not why theyre making millions of dollars a year. The kardashian sisters are making the case that they are fast becoming financially savvy businesswomen, and now kim, kourtney and khloe are expanding their multiplatform brand into a girls clothing line in a collection called kardashian kids. Our own Courtney Reagan is in new Yorks Union Square at babies r us with the famous trio here in a cnbc exclusive. Courtney . Reporter thats right, kelly. I am joined by all three kardashian sisters. Its quite a treat today. Were sitting in the babies r us section of kardashian kids, one of your new lines and some of the new items. Weve got some new mom, the new mom, kim, right here, and of course, weve got an expectant mother sitting here with us as well. So, kourtney and kim what makes the kardashian kids collection so special . You know, i think we were really wanting to bring fashion and high fashion to a babies line but still keep it really affordable. And you know, kourtney started when we thought of the line, she was pregnant with penelope. So, she had a really big hand in designing our first collection. And now since ive had my baby, i really understand how important it is to have pieces that are extremely functional, a certain kind of fabric, so you kind of have it all mixed in, right . Id say you definitely have some baby experts really helping design this line. Thats true. And kourtney, theres a lot of retailers that im sure would love to work with you. So, how did you pick babies r us . Why babies r us . I think babies r us is definitely the experts when it comes to babies, and they allowed us to keep our clothing at an affordable price, which was one of the most important things to us, and still trusted in us and believed in us to have these highfashion pieces. So, i think it was a perfect fit. So, we were thrilled to, you know, partner up with babies r us with this collection. And khloe, this is certainly not your first foray into clothing. There is another womens line you have at sears, the kardashian collection. I understand youre wearing and tweeting and instagraming some of the collection today as well. Yes. So, sears has struggled a bit with sales, but your collection has done well. Do you define that relationship as a success . Yeah, i mean, for us, i think sears was the perfect fit for our clothing line just as babies r us is for kardashian kids. I think with that as well, it really let us express that we wanted to have the same thing, really cute, great fashion and affordable price to hit our consumers all over the united states, and i think it really did that. And were international in other stores as well and online, and you know, our kardashian collection just does extremely well. So, thats why we really saw the response from launching it at sears, and we really, really wanted to do a kids line. And now we kind of partner up and do our, like, khloe kind of calls it our mommy and me, where we take our womens collection and kind of just shape it down and make it into a baby collection, so its the same prints and patterns and color palette, and it kind of just looks really cute if you and your baby want to dress alike. Its definitely working for you. I think kelly has a question. I do. I do, courtney, thank you. And its good to see everybody. Kim, i just have a question, which is, you guys have already sold so much merchandise, kind of to your point you were just making, youre all over the world. You are, in fact, a businesswoman, but yet, even when we talk about having you guys on the program, people kind of roll their eyes and they dismiss you guys as just reality tv stars. Do you struggle with getting taken seriously as a businesswoman . And is it your effort over time to become more and more of one . I mean, absolutely. We started it is a struggle, and we started off working opening up our dash clothing store, you know, a decade ago, over a decade ago, and thats you know, we really started off in fashion. Weve always been really hardworking girls, and we were fortunate enough to have a tv show. And when we started filming, we did it for the thought of bringing publicity and awareness to our clothing store. So, fashion has always been our number one, and its always been you know, we are businesswomen, were entrepreneurs. And i think when you do have a reality show, people assume that its just a ton of bar fights and it has this negative connotation, when in actuality, thats you know, we definitely do fight and were really honest and really open with our family life, and we pride ourselves in doing that as well, but i think that you can be both, and theres so many, you know, i think grounds that we want to cross or lines that, you know, people think that you cant really be both and do the same or do both at the same time, but we do our best to kind of break that. Kourtney kardashian, what is the kardashian brand . What does it stand for . That was for you, kourtney, yeah. Okay, sorry. I think that we only take on projects that were really passionate about and we always say were a brand for our fans, because through social media, were so lucky to see what people are asking us for, what theyre looking for. And so, we really design what we like but also take our fans in mind, you know, their opinions but i think our brand is, you know, were all about empowering other women to be success fful, and you know, we encourage our Little Sisters to work hard and be successful, and i think were a beauty brand and a fashion bra brand. And yeah, i mean, like she said, a brand for our fans, but we love fashion and beauty, and thats, you know, who we are and what we work towards. And khloe, just a question for you along this line as well. I mean, i can remember the early days when touched spend a lot of time in the store, and retail definitely was number one for you guys. Is it your priority Going Forward that thats how you spend your time and what you build your life around . Definitely. I think my sisters and i, our focus is always going to be about fashion. Its going to be our first and foremost, and that was here before the shows. Its going to be here after the shows. And you know, were really in the process of trying to expand our dash stores and focus on that and take that international. And yeah, thats our baby and thats something that weve put our heart and soul into and we want to continue to do so. Kim, do you think that theres a point at which the kardashian brand or empire gets too big, where, perhaps attaching your name to a product or endorsing a kind of Service Loses its cacheache . Are you careful about that . Absolutely. Were real careful about that. I think last year we reevaluated what our brand is and what it stands for and we stopped putting our name on things. We really wanted to be only involved in things, like kourtney was saying earlier, things were extremely passi passionate about and something we own. Not just putting our name on a brand and another product. If we genuinely love the product and it makes sense, we would totally be open to some sort of collaboration, but we genuinely only want to take part in things that really we own and we have ownership in and that means something to us. And now i think when you do have kids, you totally reprioritize your life. You know, now that im married, i would so much rather spend time with my husband and my family and my baby than run around the world working for other people. So, i think that we have really prioritized and made that. I think kelly has a question, almost hitting on that point. Exactly. So, kim and everybody, theres been this debate back and forth for some time about whether women can be successful in the workplace and raise families or whether those two things are fundamentally at odds. One of the most highprofile female ceos, indra innooy, recently made comments against the fact that you can have it all. Take a listen and then i want your thoughts. I dont think women can have it all. I just dont think so. We pretend we have it all. We pretend we can have it all. You know, my husband and i married for 34 years . And we have two daughters. But if you ask our daughters, im not sure they will say that ive been a good mom. Im not sure. In the sure they will say that i have been a good mom. Im not sure. Oh. I think thats not really like a positive outlook and for me like my mom kind of taught us girls we could have it all. She worked hard. She taught us if you work hard, its all ability prioritizing and i think that, yeah, it could get tough and after you have a baby, there are so many times i didnt want to get up and work on something and i wanted to be home with my baby, but, you know, for me, i think i can speak for my sisters, it makes us feel good when we are out working and we can provide something for our friends and products that, you know, we cant find that we really want. It just makes you feel productive. So if anyone really feels like they cant do it all, i feel like its a little bit discouraging to say that, even ficould be and it wasnt possible, i would try and i would try my best to do it all. I do. I think my biggest struggle as a mom has been balancing the two. But i do think its possible. I just think its like you feel guilty. You have to balance. To find that balance. I used to feel so guilty every time i left and, you know, you but. There is no cookie cutter way. Its whatever works for your life and your kreerd and your family. No two families are the same. No two wants are the same. I think you have as to find what works best for new your home. Hopefully, we can figure out how it all works for you all. Its been a treat. For now, back to kelly at the new york stock exchange. Courtney reagan. Our thanks to you for all of that now. Imagine flying from new york to beijing in two hours. Such trips could be making suborbital space flights by Virgin Atlantic by the end of the decade. Thats on cnbc. Com. It was a popular story on the website today. Was it hot enough to crack the hot list . We will find out about that next. Daimler has a driverless 18wheeler ready to hit the road. Some believe it will make drooifr driving safer. What say you . At the cnbc closing bell your to the later. [ music playing ] you do a lot of things great. But parallel parking isnt one of them. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. Welcome back. Obamacare has been under fire since the Health Care Legislation was passed if 2010. Now the law facing a threat thats drawn plenty of interest on our website today. For that, our editor alan was ler joins us now. Obama carry is back with a blast. Over 73,000 people have read this story. Basically, the court of appeals in d. C. Has a big case for it, which could shoot down a lot of the federal subsidies. Our second on the list is Raymond James usually a bull predicting a 10to12 pullback. Number three, burning it up right through the rafrgs, tgi fridays, endless appetizer promotion. 10 bucks a piece. They love food and restaurant strategys. Thats very good. Good to see you. All the more reasons obamacare is stuff to do well. When you think of mercedes, now german automaker is debuting a self driving truck. This can be a game changer for product delivery. Would you feel safe driving next to one, though . Well reveal your next tweets when we come right back. With fidelitys new active trader pro investing platform,. Welcome back. There with it is, mercedes recently demonstrating a self driving 18wheeler. They say it could be ready for the road by 2025. We ask you guys on twitter what this means for road safety and whether you trust driving next to it. One of our favorites trep said as long as it is not putting on the phone, putting on makeup, switching lane, so forth, yes, its a human error which is responsible for the vast majority of car accidents. Innovation like this saves like. Will drivers i driveless 18wheelers programmed by men refuse to ask for directions . As acts comic of a bunch as are you. No kidding. I love it. Yeah. Its good the see everybody. Thanks, for being here this afternoon on closing bell. We appreciate it. Fast money is coming up. We have to hand it over to melissa lee. Whats on tap . You can be talking about cell phone restrictions for the tsa . Did you know they will double in a few weeks. We will be told which Airline Stocks will be hit the most by these fees. Over to you guys. Fast money starts right now. In new york city square, im melissa lee. Its a down day for stocks. The nasdaq popped in as this worst performer after last weeks recordbreaking rally, one name bucked a broader downtrend, apple, close at its highest level, in fact, since december, 2012. Shares are up for the year. Since the split, pete the stock is up