Transcripts For CNBC Closing Bell 20150514

Look at the other markets as well. Weve got the nasdaq, the russell, and dow transports for everybody to keep an eye on. The nasdaq having a great session, um 1. 25 . Good enough to puck it back at 5,043 for the level the. The russell, the small caps doing pretty well, up almost 1 or 11 points. The transports are lagging a bit, up half a percent. They have suffered this year, especially, coming back a lit there will. In the midst of all this real action, there was a seemingly phony bid for avon. Halted shares of the cosmetic maker. More on that story later. What a crazy story that was midday at the New York Stock Exchange. Lets get to our closing bell exchange, talk about this rally the Economic Data, and a lot of other things. Heather hughes from sun america funds joins us today. Jacob jordan from hd best Financial Services with us, jason tried from glen meade is out there and so is Rick Santelli. Rick, youve established that you believe the rising yields in the treasuryies is what you call a market mechanism. You know, its the market moving it, not so much the fundamentals doing that right now. What about this rally today in the stock market . The Economic Data was decent. It wasnt incredible. We know the fed has an impact on the markets, but yet we are still near these alltime highs as jack likes to point out all the time. There is no alternative. I dont suspect that equities are just going to roll over and die and go away. Thats not going to happen. As a matter of fact i think when the guns are hot in the treasury market, meaning were in new territory, above 229 on the settlement bases in tens, above the 309 in 30s, stocks pay more attention. Even when treasury rates come off a little bit they pay less attention. I think theyre moving to two different dynamics. Eventually theyll have to reconcile and as i proposed to jack yesterday in the bigger picture, what equity holders need to consider is if this adjustment process going on in Global Fixed Income for a variety of reasons from scarcity to liquidity to margin all of that when it gets done, its going to be very hard to tell when theyve reconnected in a fundamentally logical fashion. And i still say that even though a lot of important data comes out at 8 30 eastern an hour before the Big Stock Market opens, the cash stock market in new york, that things like retail sales being weak yesterday and how the market responded in rates and how it ultimately closes gives us lots of ammunition that there isnt a fundamental argument here. It really is kind of a personality change and a mechanical adjustment of a market that in pip was a little bit in bubbleicious territory. Why do you think we are seeing this rally today . Just a coincidence that the u. S. Tenyear is down a little bit, that the yield is a little lower on the session . Yeah. I think were coming off of heavy supply from the treasury market and i think the market is kind of taking a break. Weve traded from a pretty big streak from down about 186 to the mid220s and i think market is kind of taking a break at this point and saying lets just sit on this and then het gete back to the economic fundamentals and get back to the idea of when is the fed going to take action. We still think that will be later in the year. Heather, are we wrong to match fundamentals with Market Action these days . Retail sales yesterday weak yet today the jobless claims were better than expected, lower than anticipated. The Producer Price index lower at this point, which would seemingly be good for the stock market as well. But, you know, are we wrong to match those up at this point . There are a few conundrums going on right now, and theres a tug of war. I think when we look at wider yields down today with the weaker dollar and we can attribute some of that to the retail sales that you just referred to possibly, also potentially the Producer Price index and just global yield around the world still putting pressure on our yields here in the u. S. Right now. So while the market is nearing alltime highs i want to know if we can possibly hit it within the next hour today. Thats yet to be seen. It seems like the bond markets there could be were hearing liquidity issues and the bond markets are five times the size of the equity markets. So, i mean that will be a big deal. I know all eyes are on bond yields and rates more than the equity markets right now. Were going to talk more about that next hour. Jason pride, for right now, looking at alltime highs on the stock market, where do you see the most opportunity for investors here . Well, look, i think we have to recognize that valuations in equities are a little above fair value, meaning that its harder to get a really solid return of equities. But nevertheless, you know were at levels that still historically have produced positive returns. When youre at about 18. 3 times normalized earnings where we are currently, that has produced a 4. 5 return Going Forward even from that more lofty level. Thats eus. If you look abroad, theres a lot of problems abroad, whether we talk about some of the cyclical issues with emerging markets or the structural issues that europe and japan are still trying to fix. But their equities are in a discount to those in the u. S. And youre getting paid longer term by owning those securities with the ability to appreciate more from those more discounted valuations. So we think thats one area. The other thing that you can do is, look you do need some u. S. Equities. You can tilt towards the quality side of the equation the defensive side of the equation pick up that longterm equity appreciation thats still going to come but be more safe along the way. Can i ask everybody even you, rick, about polls far second . You mean the retailer. The retailer not mineral. Anyway that black stuff. Exactly. Might have expected if we got a huge drop in oil prices to benefit most from a little extra money in consumers pockets. But theyre not. Evidence today of the exact opposite, heather, exactly. Weakness in the oil region where is they had negative comps more than outweighed it. Down more than 12 . What does that say . Were not spending. Were not shopping right now. We thought that lower gas prices would equate to higher spending and that may still take effect. When you look at behavioral economics, it sometimes takes six to nine months for this to play out, but we are looking since, what last summer, it probably has been about nine months now since oil prices have dramatically dropped even though were holding about 60 a barrel right now. It has not translated to the consumer. So obviously the Retail Consumer is still on the sidelines even though household net wealth is precrisis levels right now. Theyre not spending. Go ahead. Sorry. I agree with heather there. I would she kind of mentioned the behavioral aspects and whats important is theres a difference between handing somebody 200 and saying heres free money, go and spend it versus going to the pump and saving 10 here, 10 there. Theyre not really recognizing that they have this money to go and spend despite the fact that everything is pretty rosy from a consumption perspective pip think that will still happen. Jaco go ahead, jason. I was going to say theres the additional factor that people may not simply be believing that the oil prices will stay where they are. The equity market, when you look at oil stocks are already reflecting this idea that oil prices are going to be higher. Those stocks have already rebounded. So maybe consumers are in that doubt mode of, you know, really are these Oil Prices Going to stick around for a while. Maybe takes a little more time for that to seep in and maybe it just doesnt because the oil prices do rebound. Jaco, jason feels internationals are a better way to go, where the value is, and clearly that was a favorite play the beginning of the year. You feel like europe has caught up with the u. S. At this point. Do you still see value there . Absolutely. From a trailing valuation perspective, europe has definitely closed the gap. But if you take a look at you know, the European Union just came out and upgraded the Growth Expectation for both the eurozone and many of the countries in the European Union. Thats going to translate to higher earnings expectations. So on a forward basis, european stocks actually look pretty attractive. According to facts that youre looking at high doubledigit Earnings Growth for both 2015 and 2016 relative to here in the u. S. Where youre looking at 1. 5 for 2015 and maybe about 12 if we can get there for 2016. So from that perspective on a forward basis yes, very attract toich take a look selectively at europe. What are people saying about the u. S. Dollar meanwhile and where it goes from here . Are we unwinding theres a trend, kelly, also not just with the u. S. Dollar but when you look at the markets as both guests are alluding to, european markets may be undervalued, as their economies do better and pick up in europe, japan and china, since the markets have done well in a weak economy, youll wonder if the reverse would be true as their economy improves, their markets actually take because maybe the Central Banks around the world globally pull back and thats what has created some of these equity uprises globally. Rick how about that question from kelly . Where is the dollar going here . Its still stalled at this point. Id like to hit both those real quick. In my opinion, the dollar is also off in its own world like the equity markets and the fixed income markets. And it is more handicapping what is going to happen with the fed and the ultimate tightening. I think thats whats moving it while its in the tight range. As to the other question, about why people arent spending or oil and gas and the savings i think on a macro level retail sales it wills you the answer and that is weve pulled so much Economic Activity forward we have forgotten that this in lowInterest Rate environment where anybody with a pulse could buy a car, i just think weve arrived at the place that fed models never went to. Those economic models did not envision so much activity pulled forward. So i think youre going to see softness in the retail area in many areas not only the savings that may have been spent due to lower gas prices. Cheap vacations. Rick, you buy, i fly when youre ready pap dollar is still strong relative. There you go. All right folks. Thank you all very much. Appreciate your thoughts on todays Market Action. Thank you. I suspect by the time we get back, someone will have tweeted out where coal sits on the periodic table. I will be let down if we havent received that. 50 minutes to the close here. The dow is up 193 points this hour. The s p up 22. The nasdaq up 65. Its the outperformer today, up 1. 3 and back above the 5,000 mark. The dow and the s p chasing records, especially the see. The dow has a ways to go but you never know. That could happen today. Theres the s p, three points inside record territory. Well see how we do as we go to the close here. Up next, does he see sunshine or dark clouds ahead . The ceo of Marriott Vacations gives us his take on the Global Economy and where hes seeing the fastest and slow growth. And ringing the closing bell, as a matter of fact. Another train tremendous death railment involving nonpassenger cars. It happened in pittsburgh. Well talk with the head of the association of american railroads about how Technology May help prevent rail disasters in the future. When a moment spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . 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Com can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Female announcer the mattress price wars are on at sleep train we challenged the manufacturers to offer even lower prices. Now its posturepedic vs. Beautyrest with big savings of up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Plus, free same day delivery setup, and removal of your old set. When brands compete, you save mattress price wars are on now at sleep train. Your ticket to a better nights sleep the bizarre story of the day if you havent heard it involves Avon Products. Around midday word got out that a company, an entity, if you will called pt g Capital Markets have made a bid for avon of 18. 75. Stock was up 20 just like that and i happened to be walking through the newsroom kelly, when one of our assistant managing editors was doing some Research Online to find out what this group is all about. He said i cant find a thing about them. So everybody was on guard at that point, and weve since figured out that there doesnt appear to be any ptg Capital Markets group. But it is still factored into avon shares so as soon as people get to the bottom of that well bring it to you. Bob pisani more or thatn that later. Exactly. Marriott vacations is one of the leading time Share Companies in the world getting ready for its investor day tomorrow. Youll see them in just a few moments up here today. Joining us for more is the companys ceo Stephen Weiss from post nine for his take on the economy and the companys growth plans. Good to see you. Thanks for having me. We were having this debate about kohls, the retailer which actually saw more damage from the drop in oil because of the weak growth in that particular part of the company then benefit from consumers. What are you seeing . Well, were reasonably bullish about how we see this year kind of framing up. Our sales on our First Quarter were up 9. 5 . And all of our pointers and indicators we typically work at are things moving in the right direction for us. Are people more inclined to go to your resorts with Lower Oil Prices . Keep in mind, most of the people that travel to our resorts are people who own and people who bought and are going regardless of oil prices. How they get there is a cost factor. Right. Typically we have a combination of drive markets and fly markets, but even with oil as it is today relative to where it was last year things are still a lot better than they were. Most of your locations overwhelmingly are in north america, in the u. S. You have a cup until europe. Does that mean the strong dollar is hurting you . We it hasnt hurt us materially in terms of the fx rate, a little bit of a nick but nothing thats too substantial there. Were pretty much winding down the sale side in europe as a result so now were just managing the resorts there, so we have less of an impact. Are time shares back . Im imagining youll say yes, they are. When they were first introduced years ago, they were hot, hot, then notnot. But i guess theyre coming back. Thats a great characterization of it. The High Water Mark of the time share business was in 2007 when the industry did over 10 billion of sales here in north america. That dropped to about 6 billion in 2009. Last year about 8. 5 billion. So its on its way back. Why now . I think people still see it as a great way to prepay their vacation. When you to stop to think about it, its not a real estate investment. Thats certainly not the way we present it. Its more a case of if you buy it today you can use it for a lifetime and you fix your vacation costs. Is that a boomer trend or are the millennials no its interesting theres recent research that came out that say very much its becoming a millennial trend as well. Oftentimes people that had been exposed to it by virtue of their parents or relatives that owned the product, they got to see it, they thought, hey, this is kind of nice, i have a multibedroom unit, living room, dining room a place to go highly amen tized. They like it. Im thinking about the original share. Were talking act the sharing any economy. In a way, you guys are the pioneers. How much different might this look, the time share of the future, versus the past and what kind of millennial demands, if you will, are reshaping it . One of the things weve seen and responded to is that there has been a shift. It used to be you bought a week in this resort and went there every single year. Right. We moved to a floating week, floating unit, and floating within a portfolio. Now people are buying on a points based system such as what we have, you can go to any resort in our system. If you dont feel like going to one of our resorts, if youre going to take a cruise, use your points that way, if you want to go to a Golf Tournament you can use your points to do that. You want to go on safari, we can put you on a safari. That really resonates with people. Quite frankly of all ages. Theres a lot more variety and the other nice thing about it, is you didnt have to used to take a weeks vacation at a time. If you want to go three days one place and two days another you can do that with the pointsbased system. Certainly has changed. It has. Stephen weisz of marriott vacation resort good to see you. Well let you get up to the podium to ring the closing bell. We look forward to it. Thank you very much. You bet. 40 minutes left, trading continues here with the dow up about 185 points. Its the s p thats in record territory right now. If it closed right there we would have a new alltime high for the s p 500. Up next, bob pisani giving us the lowdown on todays broad rally and that take takeover bid for avon we just mentioned. Plus the head of the association of american railroads tells us whats holding back the deployment of existing technology. Its out there now, that could have prevented the deadly train crash in philadelphia a couple days ago. Here at Td Ameritrade, theyre always working. Yup, were constantly making thinkorswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. New york state is reinventing how we do business by leading the way on tax cuts. We cut the rates on personal income taxes. We enacted the lowest Corporate Tax rate since 1968. We eliminated the income tax on manufacturers altogether. With startupny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. All to grow our economy and create jobs. See how new york can give your business the opportunity to grow at ny. Gov business [ 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. Welcome back. The s p 500, the broad index advancing to its alltime closing high snapping a threesession losing streak to close comfortably in record territory. Bob pisani, what made the difference . We need to get the bond market to be to behave. If we can do that, the stock market comes down a little bit. In the last few days weve had some reasonably successful bond auctions, three of them. Bond yield have stopped going up. Theres a onemonth on the tenyear. Basically weve stopped going up in the last few days and the market vbs more stable. Certainly helps when you have those april ppi, that Producer Price index, no evidence of rising pries at the wholesale level, good for corporate margins, poor retail sales bottom line, no rate hike in june going on. And theres the pa magic number folks. 2,120. Because everyone has been saying that would be decisively a new high, we get there a couple days and now weve got a breakout. Weve been waiting for a breakout. This would be big news if we closed over 2,2120. Interest ratesensitive stocks are outperforming today because bond yields have behave, reith, home builders, usual suspects of those are doing well. What im not happy about how is it the dow industrials are sitting at a new high or close to one and the dow transports closed at a new low yesterday, and they are underperforming today. Look, only up half a percent when we have the dow industrials up 1 . That is not a good sign. Were down 7 this year in the dow industrials excuse me, the transports with industrials sitting right near a new high. Its not just the airlines folks, its the logistics companies, the trucker, the railroads. Look at Kansas City Southern today. They withdrew their 2015 revenue and volume guidance because of uncertainty around the energy markets. Well, thats a big issue for them. And when youve got a big stock like that, a new low, thats a bit of a problem. Watch this very carefully. Back to you. Their biggest cost right there. That stock down 22 this year. Ouch. Well stay on this for a moment. Banks, bob. Whats wrong with americas rail system . Thats a question we haveve been asking, more so with another derailment earlier today. A Freight Train overturned in pittsburgh, pennsylvania. Luckily the carrings were all empty. This on the heels of wednesdays amtrak tragedy. But heres a question would all of this have been prevented in ed hamburger is president and ceo of the association of american railroads. He joins us today from washington. Good to see you. Thanks for joining us, sir. Glad to be here. Thanks for having me. We hear that the head of the ntsb pointing out that there is technology thats going to be installed on the tracks in the northeast corridor at the end of the year that could have prevented the tragedy that happened wednesday. I mean, the technology is there. Why is that being installed more rapidly here . Why arent we investing more in our infrastructure in that regard . Well americas freight railroads are investing rapidly. In fact we will have spent at the end of this year 6 billion, b as in boy, 6 billion. We will have outfitted about half of our locomotives, installed thousands of antennas along the roadside. Weve got a 60,000 miles of track that we have to equip with positive train control. So we are moving quickly. The end of this year well have about 8,200 miles in operation. I saw where joe boardman committed to having the northeast corridor operating at the end of year and thats a great commitment. Right. I was just going to say, even Warren Buffett has bet big on freight railroads. Obviously a Burlington Northern there from a couple years ago why is that it moving freight on rail in this country is so much more profitable for industry than any attempt over the years has been to move passenger by rail . Well, the fact of the matter is there isnt a profitable Passenger Rail system in the world. And so if you want a 21st century Passenger Rail system, the government, the taxpayers are going to have to decide that thats what they want to do. The freight rail system, when it was deregular rated in 1980, has been able to plow back into the infrastructure 575 billion. Private sector money. Not public taxpayer money. So to rebuild the infrastructure. We can now offer trucklike service and so we are able to earn some money so that we can reinvest it and that is a virtual cycle that we want to keep going. Im going to sound a little naive asking this, but im going to ask it anyway. Why not privatize amtrak . Especially when you consider the record passenger flow that theyve got in the northeast corridor right now, yet amtrak ran at a deficit of 227 million last year, last fiscal year, and its being run as a forprofit entity, but it hasnt been profitable as you point out. Why not privatize it and let the private sector turn it around like they have with the freight . One of the reasons the freights were successful, of course, was in 197 11 they were able to get out of their common carrier obligation to move passengers. Again, nowhere in the world is it profitable. There are a couple of very interesting efforts going on one in florida called allaboard florida which is a private sector rail from miami to orlando. Anxious to see how that turns out. In general we believe that amtrak is the operator of choice for our inner city Passenger Rail network. Ed let me ask an unusual question, maybe. Im just thinking through the profits that the freight rail system has been able to generate, the investments theyve been making to the entire system. Anything like the nba or the wnba they could sort of subsidize, improve, enhance the operations of the Passenger Rail system in a way that complements or offsets the government, the publics ability to do so . Well, i guess my question is why would it be the obligation of freight rails to do that but let me be a little bit more forward leaning. We in fact, operate every day and move hundreds of thousands if not millions of commuter passengers around the country. Amtrak operates the freight rail system everywhere other than the northeast corridor. And what we are what the freights are able to charge amtrak is less than the market rate for if it were a Freight Train. So in fact, there is a bit of a subsidy going on for amtrak from the freight rails or only the freight rails can only charge avoidable cost. Thats in statue, avoidable cost, as opposed to a full cost for what you would normally charge. All right. Ed hamberger ceo of the American Association of railroads. Thanks for your insight. Thank you. Time for a cnbc news update with sue herera. Sue . Hi, bill. At this hour, a federal Law Enforcement official says a man has been arrested after trying to launch a drone right outside the white house fence. Look at this video. It shows people being cleared from lafayette park, which is right across the street. The incident comes four months after a drone piloted by an offduty intelligence employee landed on the white house lawn. Avon says it has receive nod takeover offers after a purported 8 billion bid for the company was filed with federal leigh or thes and led to its shares being halted three times. The company says it cant confirm that the company calling itself ptg Capital Partners even exists. Duke energy has pleaded guilty to environmental crimes and will pay 102 million in fines. The investigation started last february when a pipe chanced under a coal ash dump in North Carolina coating 70 miles of the dan river in thick gray sludge. And director spike lee addressing concerns surrounding his upcoming movie that highlights gun violence in chicago. The name was coined by local papers and rapper who is compare the citys crime rate to that of an iraqi war zone. The mayor rahm emanuel says the title denigrates the president s of that neighborhood where that movie is expected to be filmed. Back to you. Sue herera back at hours for us. We have 30 minutes to go until the close. The dow is hanging on to strong, solid gains, 178 points, and the nasdaq in record territory up 21. President obama hosting this summit with members of the gulf cooperation council. You think the touchy subject of Oil Production came up already . We veal the latest developments. Well also get exclusive reaction from shell oils president to all of this when we continue. It took tennis legend serena williams, fencing champion Tim Morehouse and the rockettes years to master their craft. But only moments to master paying bills at chase. Com. Depositing checks at the atm and transferring funds on the mobile app. Technology designed for you. So you can easily master the way you bank. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. There is an ancient rhythm. [ ] that flows through all things. Through rocky spires. [ ] and oceans swell. [ ] the endless. Stillness of green. [ ] and in the restless depths of human hearts. [ ] the voice of the wild within. Welcome back. 25 minutes to go and were watching for some headlines. The s p and dow could be in record territory, the nasdaq back above 5,000. When we were in the break we decided were going to start our own railroad. Somebody out there has to find a way to make it profitable to run a Passenger Rail system. Come on. If you can do profitable freight, but not profitable rail . Something is missing. India and switzerland might be two place where is rail systems are profitable. Are working. At least generating revenue. But we digress. Kate rogers, what movers do you have for us in this final hour of trade . I like that idea. Kohls, the worst performer in the s p today, shares getting hammered after the Department Store operator reported weaker than expected same store sales for the First Quarter down by around 13 . Apple shares up around 2 after ubs raised its earnings per share estimates for the company due to higher iphone demand and shares of puma biotech down sharply today. A latestage trial of its experimental Breast Cancer pill showing it approved diseasefree survival for patient bus only by about two months. That stock down by 18 . Back to you. Kate, thank you. 25 minutes to go and still green arrows, broad rallies across the board. Brace yourselves for another barrage of after the bell earnings tonight. Kelly will be working on applied materials, nordstrom, plus two companies that came public in just the past year. That would be El Pollo Loco and party city. Get those two together. That would be a heck of a party. Well bring you the numbers the second they hit the tape coming up on closing bell. Welcome back. Avago has contacted another company about a potential takeover. Back to you. Thank you very much kate rogers. 20 minutes left in the trading session here with the dow up 174 points. Its the s p were keeping an eye on right now because that is in record territory, and weve got oil prices that have been moving lower today. Thats exactly right. And this comes with president Obama Meeting with six gulf state leaders at camp david. John harwood joins was the latest developments on this contentious meeting. John . Everywhere he looks, president obama encountering skepticism about this deal with iran that he is trying to negotiate and conclude by june 30th. In the congress, from u. S. The u. S. Congress, sunni states concerned about the rise of shia iran. Those states dont dispute that the nuclear deal itself could stop the Nuclear Problem or at least freeze it in its tracks far while. Theyve got much broader concerns as a white house aide said at a press conference this afternoon. To be fair, theyve also made very clear that their concerns go much broader than the nuclear issue. So if i were to characterize the tenor of their comments theyre focused largely on not so much just the details of the Nuclear Agreement but what does it mean for other iranian actions. Reporter now of course, the king of saudi arabia, king salman, is not attending this meeting, neither is the king of bahrain. We know that some of those gulf states had wanted a written defense treaty from the United States to reassure them that by making an accommodation with iran we were not putting their security in danger. But ben rhodes said that is not going to be forthcoming and well hear from president obama at a News Conference late they are afternoon, guys. And Something Else to be talk about, john, no doubt is that trade pact the Fast Track Authority cleared a Senate Hurdle today. Where does it go now . Are we likely to see much progress on this down the road . Yes. The democrats had filibustered and held up this priority of the president s that he shares with Republican Leaders including Mitch Mcconnell in seeking to get continue skegss on other issues. They reached an accommodation yesterday, cleared the filibuster. Now we have a debate thats going to go on for a while but i expect in the end we will get Fast Track Authority through both the senate and the house of representatives which is likely going to lead to that transpacific trade deal later this year. John harwood as always, thank you. See you later. 18 minutes left in the trading session here. Thats right. Up 175 points right now in the dow, the s p up 20 good enough to put it in record territory for the close. The dow is about 50 points shy of the level it would take. The nasdaq below that as well back above 5,000. Weve got big earnings to watch for ahead on the closing bell that could move markets and avon shares spiking big time on a hoax and barney frank on the funding for our nations crumbling infrastructure. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Breaking news on tom brady. Sue herera stepping in with that. Of course this concerns the deflategate controversy. The Nfl Players Association has filed an appeal on behalf of tom brady. Theyve filed that appeal of the fourgame suspension of tom brady which was handed down by troy vincent. They say given the nfls history of inconsistency and arbitrary decisions in disciplinary matters it is only fair that a neutral arbitrator hear this appeal spop theyre asking for a neutral arbitrator and they say if ted wells and the nfl believe, as their Public Comments stated that the evidence in their report is direct quote, and inculp toir they should be confident enough to present their case before someone who is truly independent. So once again the Nfl Players Association has filed an appeal on behalf of tom brady on that fourgame suspension because of deflategate. Bill, back to you. Yep. Thanks, sue. He had until 5 00 today to file that appeal. Exactly. Rather than doing it himself hes letting the Nfl Players Association do it for him. Yep. Thank you. See you later. So the s p still in record territory here as we head toward the close. We have 12 30 left in the trading day. Two points above that alltime high was last set on april the 24th. Just in case youre wondering, nasdaqs not there. Theyre still 40 points away. The dow still about 50 points away from its alltime high. Joining us with their thoughts on this market, david sherman, and david darst on a thursday. Welcome you both. Good to see you both. David sherman we saw your notes, a name we were talking about earlier in the hour, kohls. Do you think theyre a microcosm of some of the things happening in the market today . Youre short the bond is that right . We were short the bonds. We actually just covered a little bit recently, made a little money on the spread but actually we were quite surprised. Kohls did a really good job with their operating numbers showed good cash flow, actually showed some positive trends that we werent expecting. Were not sure why. We think maybe the attribution would be people wanted to show but they needed to go down. You look at the Gross Margins they reported, look at some of the lower sg a expenses and see positive trends where everybody else said shares down 13 and the oil im sorry from an obama perspective its all about the cash flow. And, you know, i dont love the company, but they certainly deliver and i have to respect management for that. Another retail theyre i was bearish on was mays becausecys because i think the company is great but they missed numbers, and talking about equitizing real estate for the benefit of the shareholders. But as a bondholder you cant be happy about that. David, Technology Leading the way today. Thats the best performer among all the sectors. I know youve been high on that sector pap lot of people are right now. Weve liked apple, ive liked apple, we like financials right now. We like the energy sector, bill kelly. The reason the market is doing so well, and its ignoring the sloppy part of the unemployment report, its ignoring the gdp is going to be 0. 8 for Second Quarter after a negative 0. 7 for the First Quarter. Its the four or five ss. Stimulating. China continues to statement late. Greece is squaring up its debts. Europe is strengthening okay. And the house prices are stabilizing. You could say also that the dollar is slipping if you want to add a fifth s. Thats why the market wants to lift. It wants to go up. The word dole drum comes from the old english word for dull and were in a dull period right now. It cant break out. If it starts to move, people are going to come rushing in. Threatening to over the last five years only,e[ zi hahp hc 600 million has been put into equity mutual funds 1. 3 trillion into bond mutual funds. They fought this the whole way up. They did. Well hear from nordstrom after the close. Do you think theyre better positioned relative to some of the retailers you just mentioned . Well hear from nordstrom. I havent looked at nordstrom. Theyve always been a wellrun company and their Shoe Department i hear is fabulous from my wife. Speaking of real estate, you have an anecdotal case of someone close ong a house. Do you have better feelings about the market as david darst just mentioned . Its interesting. Certainly these low Interest Rates are stimulating a lot of acquisitions not just the activism but acquisitions. Bond in our mutual fund we recently had long was myelin because its investment grade. People worry theyll lever up maybe become junk trade at junk bond levels but if fifa gets aheadaa hold of them theyll come back. The stock market being robust helps that activity. 179 million for a suggested picasso. The buyers not going to do as well as the seller. Well, we are you know, christies turned over a billion dollar of art just this week. Are we sensing a top in that sector . In modern and contemporary, old master, impressionists, post impressionist impressionists, nobody cares. The compound rate of growth in the last ten years 0. 2 compounded. But these andy warhols picasso, sharks floating in formaldehyde by damian hurst, be careful. Caveat emptor. David sherman, before we let you go darst just mentioned all this money that hasnt gone into equities. Do you see at all a sea change if the fed, everybody says, is about to begin raising rates or Interest Rates start drifting higher . You have to believe eventually theyll do it. The question is where are they going to be able to control the market . They can raise the short end of the curve, but as long as europe is committed to negative yields and buyers are willing to buy negative yields as a store currency, im sitting overseas an insurance company, i can buy nestle eurodenominated debt or Procter Gamble u. S. Denominated debt and ones going to stable. Im buying the higher yielding bonds. The two davids. Thanks for joining us. Well come back with a closing countdown. Art cashin just stopped by and we have no bias to the buy or sell side right now. Theyve pared off going to the close. Theyve made their bias clear. Yes, they have. Well see if we can go out at record levels. After the bell earnings flooding wall street again. Well bring you those numbers sure to move stocks and have analysis from the pros as well names like nordstrom El Pollo Loco, party city, nordstrom. Hello. I am a fully automated Investment Advisory service. I can help you choose investments. Monitor them. And rebalance your portfolio. I can do a lot of what humans can. Except have a real conversation. If youd like that, you can always speak to someone at schwab. They arent algorithms. Try not to hold it against them. Say hello at intelligent. Schwab. Com theres some facts about seaworld wed like you to know. We dont collect killer whales from the wild. And havent for 35 years. With the hightest standard of animal care in the world, our whales are healthy. Theyre thriving. I wouldnt work here if they werent. And Government Research shows they live just as long as whales in the wild. Caring for these whales, we have a great responsibility to get that right. And we take it very seriously. Because we love them. And we know you love them too. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Let me show you the Companies Reporting earnings after the bell in just a few minutes. Lot to come. Good Cross Section for kelly to keep an eye on here. Applied materials and technology, nordstrom among the retailers today which is down 2. 5 going into that report. El pollo loco, one of the casual Fast Food Companies thats become public in the last couple years here thats done well up almost 3 today then party city is virtually unchanged going into the close for this thursday. Very quickly, then, Avon Products really the crazy story of the day. That move higher on this report that somebody had made an offer for them the somebody turned out apparently its a bogus report. But at any rate it did move the stock and its come back a little bit but still a 6 gain there, which well talk about, bob pisani. Keith bliss, what are you going to do here . Im going to keep buying because we think it moves higher. Why . There are some bullish technical formations that have come into the market at this point in time. Since the lows in december that we had around 1975 the s p 500 has formed a consolidation phase right now. So about the middle of june we think that plays out and thats bullish signal. We think it goes higher. Were that overhead resistance place right now. If we hold it, that rally this keep going. The russell and the dow are following suit from the technical stand point and, again, theres a lot of things in favor. The one thing you need to bear in mind is rates and the equity market have been inversely correlated pretty tightly since may 6th. You can really gauge whats going on. The bond markets flattened out this week as we had the disappointing ppi was poor, retail sales were poor this week. Wouldnt you trade 10 of the stock market for better Economic News better wage gains, better job growth . I would, personally. Well, certainly. It depend on your time horizon. For the longer term youre right, bob. One of the things thats troubling about the recent Economic Data were getting is you did see the banks sell off. They tear ones under pressure. We need financials and banks to lead us in this market. We want to go to higher highs. If you get that, you need higher rate, though. The good news is 2,210, thats the breakout point. If we can stay above that, it looks like we are right now, 2,120, if we can go do that again tomorrow, now were desis live above the old high at 2,117. Now were not in the trading range, the horrible word we keep using. Early march, been stuck in that range from top to bottom. Avon. One thing on say ai von, what bugs me about this, how in heavens name did a phony filing get in an s. E. C. Database . Now, all of us use the database to determine whats going on. Its supposed to be official and weve all assumed its vetted by the s. E. C. Yet immediately even while this stock was halting there were three trading oh look, the spelling is weird, theres misspellings, it doesnt look quite official. How did that happen . The s. E. C. Has not had any comments but thats very disturbing, because we need to know that those are official filings. Thats for sure. More questions than answers on that one. Well get that coming up. Keith, thanks very much. My pleasure. Bob see you later. Going out with very good gains and new record for the s p 500 index. Does that lead to higher prices as we break out of the recent trading range . Thats a question to be answered. But right now stay tuned for a whole lot more earnings and barney frank on investing and infrastructure in this country on the second hour of the closing bell with kelly evans. See you tomorrow. Thank you, bill. Welcome to the closing bell. Im kelly evans. The s p 500 today reporting an alltime high, a gain of 22 point, good enough to put us over the previous High Water Mark from late april, 2,120 is the level. The dow meanwhile having a banner day, the nasdaq doing well. It was the outperformer of 1. 4 adding 69 points. And clowing back above 5,000 50 50. Now about 40 points shy of its own record high. 1,8248 a gain of 187 on the session today. Hots more on tap with big earnings reports. But first todays panel. Michael san tolly is here from yahoo finance, danny hughes and eric chene. Also with us fast money trader john najarian. Welcome, dr. J. What do the record highs mean . Were here again. This is like the fifth time weve hit 2,120. Weve landed right on it it seems. If you had to make a call up or down from here ultimately it probably breaks up. I think its probably good that once the sloppy kind of other Capital Market moves like the yields surging and Everything Else goes away the default mode in u. S. Stocks is to get a little bit of a lift. The jury is still out. Danny took us i think we had a foursession losing streak on the s p before we got this breakout. Do you trust this is the trend reasserting itself . You cant ever really trust the market but the cap on the u. S. Equity market has been Investor Sentiment that things would break out to the high side, wed see better retailers, actual increase in the economy so that would mean the fed would put a halt to that. Thats kind of kept a cap on things. But with the Economic Data that weve had that hasnt been so great, i think thats why the market has done this. Sales reports disappointing, e rick it is what you make of it. I like what you said, you cant really trust the markets. Thats the best advice ive heard in a while. If you look at we had those down days and finally made it back, thats the only way youll gate new high because would have had that high yesterday. If you look at the lows, theyve been going up and up and up. There was only one direction that this could go and it was up, because we were not making lower lows. Thats not just a onemonth trend. Thats a oneyear trend, a twoyear trend, a fiveyear trend. Why so much weaker . Weve been stuck in this range for a while. Is today significant somehow . Not really, because its only been a quarter and weve been basically at a 4 range going back three months. That 2,040 to 2,120 and keep bouncing. Unless we see 2,130 or 2,140 or 50, were no different than we were in february. Mike, what would you say . In past periods in this bull market, had a soft patch, a growth scare, the yield sensitive stocks could come out and lead. You had the staples hit nug highs, the utilities leading. Now that we have rising bond yields, those guys are back on their heels. I think off Leadership Void to some degree except for the big road stocks. Thats why i think weve ban little thwarted by that trend. I like that. Dr. J, i was going to ask who do you think can assert leadership here . Well, some of the hottest sector vbs in the energy space for the last two or three weeks. You take a look at drillers, deepwater drillers in particular. We were talking about those today, because pick it whether its rig, transocean or diamond offshore, mcdermott, these are stocks, kelly that are up anywhere from 15 to 30 in ten trading days. Phenomenal performance there and of course crude oil hanging in 60, theyre hoping of course to get more rigs back. These arent frackers. These arent those kinds of companies, but thatll be interesting to see if that turns around, how quickly the frackers start coming back online with 60 oil. Its a great point and well talk to shell oil about its deep water plans a little later, but danny, if this is where were seeing some of the strongest performance, does that feel to you like it can maintain leadership of this market . Do we have to see oil outperforming, do we have to see 15 to 30 gains in the names like that . We dont necessarily, but i think what caught a lot of traders off guard was they thought oil was going to go much lower. So youre seeing sw somewhat of a Short Covering here which i think is flowing over the some of the bigger names like bp as weve seen that stock go up pretty dramatically over the past few sessions. I think it can withstand some differential, but i do think that Going Forward were going to see more money go into energy. Hold that thought everybody for just a second. Our earnings are starting to come out. El pollo loco with its quarterly results. Kate rogers has those numbers. Hey, kelly. So eps coming in at 18 cents a share adjusted beating estimates of 17 cents. Also revenues coming in at 90 million versus estimates of 88 million. Comp store estimates were for about 5. 5 , coming in at 5. 1 , slight miss there and also 2015 eps guidance coming in slightly below estimates at 67 to 71 cents a share versus estimates of 70 corrects and the stock continuing to fall in the afterhours down by nearly 10 for El Pollo Loco. Back to you. Kate, thank you so much. By the way, everybody be sure to tune in to closing bell tomorrow because El Pollo Locos ceo, steve sather, will join me in a cnbc exclusive to discuss these results. Dont want to miss that. That tells you how sensitive this market is to some of these growth names. They missed their guidance a little as kate said. Look at the share reaction. The share reaction is what it is. We think about, i mean, this was the story from a mu noes ago when gas prices were lower and we saw some of the research we talked about on the show they were putting it into fast food. People were saving money on gas, buying fast food and now youre saying maybe thats running out a little bit. With what does that mean for the rest of the year if people have gotten used to that and now the spending isnt going to change more to El Pollo Locos favor. Mike, we know as well from kohls and ill repeat it because i find it interesting negative comps they indicated in some of the oil regions texas stores and elsewhere. Perhaps more of a sting were getting from the drop in oil prices than a real benefit to consumer names. I would be more concerned with the pure retail names with people selling clothes and stuff you walk out with in bags. The fast food store remains on a macro basis remains okay. Can you carry a burrito in a bag . Absolutely. The problem with this one is it was an overpriced ipo ran real fast, its come back and rebuilt a base, but i dont think this was one of your value names. That shake shack that was a similar story. Doubled their comps. Comp estimate was almost 12 . That things being squeezed into the stratosphere because you cant short it. Interesting to look at the difference. Shake shack the best performer i feel of 2015, up more than 200 . El pollo loco, this is only their Fourth Quarter as a publicly traded company. Theyre not able the put up those numbers i guess. Danny, where do you fall when it comes to the consumer space . Whats an investor to do . You cant trust the consumer. Can you trust anybody . Exactly. Cant trust the markets, cant trust the consumer. Cant trust anyone. If somebody says dont trust the government next, youve got them all cover preponderance of the evidence. Surprise, right . The consumer is not stepping up like we thought they would, or like she would. Nordstrom earnings are out. Lets see if they can do something about the consumer. Rag Courtney Reagan has those numbers. Nordstrom turning in mixed results. Earnings per share 66 cents falling short of Analyst Consensus of 71 cents. However, there is a beat on revenues. Nordstrom reporting 3. 22 billion compared to 3. 16 billion consensus. Same store sales up a pretty strong 4. 4 comparing with street estimates of an increase of 3. 3 . Fullyear earnings guidance, however, a little bit light. That range a little bit lighter than analysts consensus. I do want to point out womens and mens apparel were the Top Performing categories, interesting because we of course have seen strength in accessories and shoes but it looks like mens and womens apparel, Top Performing categories for nordstrom at least for the quarter. Back to you. Thank you. I find this one fascinating. We have the rare eps miss, revenue beat. That is the complete opposite of most of the trends weve seen throughout this earnings season and the last several. Theyre looking for sales growth of 7 to 9 Going Forward. So theyre actually betting on the consumer doing a little better. Dr. J, were you surprised by this one . Well, knock on wood and right here, too, there was a pretty good option tell in both stocks. El pollo loco they were buying the june 29th puts in j. W. Nordstrom selling the 75 puts which were in money basically at the end of the day and buying 75s and 77. 50 calls. In other words, nordstrom, after a dismal first half of the year or first, you know year to date numbers down about 6 on the stock, they were looking for upside breakout looks like theyre getting it back a little bit right here. Good point. Mike, what do you make of this . You know, i really have to know exactly where theyre missing along in the income statements to see exactly whether this is something you want to extrapolate. 4. 4 comps mature higherend Department Store seems like you cant sneeze at it. 79 top line for the year. And the market seems to agree, by the way, much better afterhours reaction, some of the other big names of course are down. So where does this leave us now . We were just talking act where do we look for leadership. Sounds like its not the consumer. Probably shouldnt rely on the energy space. Do we look to the financials . I was going to say, the banks may be breakout has people excited. I dont know how that depend on the yield curve continuing to steepen but those big banks have shown theyve not been a Leadership Group during most of this run. Dr. J, your thoughts on this one before we have to go . Absolutely love the move by jpmorgan today, kel, that hit 66 bucks a share, highest price since i think 2000 and goldman sachs, Morgan Stanley i think throw bank of america in there as well if you have this higher Interest Rates going up. Thats going to be really good for the brokers. All right. Well leave it right there. Thank you, everybody. Stick around to catch more of john coming up with the fast money crew at 5 00 here. The s p hitting a record close but its a trifecta that really rocked the street. The Details Behind three names of the biggest moves coming up at 5 00. Straight ahead here, the markets with a monster rally today. Up next were hitting the floors with all the exchanges today to get the market moves. And coming up the tragic am strak crash has many wondering if congress is underfunding the nations rails. Well go behind the scenes with barney frank. If youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Bulldog whats this . Mattress discounters Memorial Day Sale ending . Oh boy a queen size serta mattress and box spring set for just 397. Mattress discounters has the Largest Selection of memory Foam Mattresses under one roof well ill be. Up to 300 off tempurpedic breeze. And wow get up to four years interestfree financing on the entire tempurpedic cloud collection the Memorial Day Sale is ending soon mattress discounters welcome back. We begin with earnings still rolling in. Kate rogers has results from king digital. Hi, kate. Another beat on the top and the bottom line for the mobile gaming company. Theyre reporting 61 cents a share versus estimates of 53 cents a share. Also revenues coming in higher than expected at 570 million versus estimates of 563 million. But as you can see, the stock is getting hit down by nearly 11. 5 . That means likely on comments they expect the midyear period to be seasonally softer returning to Growth Trends in the latter part of the year. Back to you. All right. A tough aftermarket session for the candy crush maker down about 11 on those results. See of green the s p closing at fresh record highs at 2,121. Our market pros wrap up the day, bob pisani from the New York Stock Exchange Bertha Coombs at the nasdaq and Rick Santelli from the chicago bond pits. Bertha, the nasdaq was the big e performer of the day. What were the outstanders there . The nasdaq may have closed at 50 50 but people were all in when it came to bigcap tech today. You take a look at facebook, for example, trading at huge volume. This is a stock that last week had touched and dipped below its 100day moving average, technically weak, and today it just surged right up. Maybe its Mark Zuckerbergs birthday pap lot of traders saying as people got out of consumer they moved right into tech. This has been such a sort of confounding consumer cycle. Everybody expecting that consumers were going to stake the savings from gasoline, putting it into shopping putting it into going out and eating. Maybe they did in some places but that trade got so far ahead of itself, people are coming back to some of the trades that they move away from. So they were back into apple today, for example. Big time. Im glad you bring up apple. Bob pisani am was the propeller of the dow today as well. Tech stocks did very very well. I am very happy about the fact weve stopped using the phrase trading range and now using the phrase breakout. With the that unfortunately, thats all for the wrong seasons, ppi not very good, receding sales. I would gladly trade 10 on the stock market and a quarter of a point rate hike in june. Id gladly have that with we got better Economic News. Wait a minute though because Rick Santelli i dont understand if all the data is so bad why are bond yields creeping higher . Was it that they took a pause today that made all the difference . Well, you know, its interesting, just by the way you said because they took a pause today tells you whats going on with the bond market. Yesterday we closed at 229 and 10s. Were two basis points away in 30s, about four or five away in tens. Thats not a big moderation. The data is weak and rates are going up mostly because i think theyre out of kilter with most of the fundamentals and its just a reckoning day with the marketplace as weve seen, you know, what took five months for rates to get down especially in europe, that was motivating all global Interest Rates, and only has taken them two to three weeks to recoup all that and get back up to 70 basis points. I think this is an adjustment. I think its a personality change temporarily for the fixed income market. At some point theyll relink. How much of this, mike, do you think is europe ultimately . Come back to brighter growth prospects, sell off in the bond markets there. That was the anchor, the near zero yields in the anchor and a big part of it was the positioning related to lower for longer all over the place mostly got disturbed in europe and i think we have obviously seen the adjustment here. I personally dont like to see the facebooks and the apples popping that much more than indexes on no real news mostly because it says like its a chase. Its basically like let me buy the big e, most liquid thing just just to get involved as opposed to that suggests theres a small leadership and its not a broad based rally even though today we saw all ten sectors in the s p positive, 29 of 30 dow components up. But youre right when you see a couple eric, is it leadership or just the herd mentality . You know, before as the dollar got stronger everything went into small caps again. Now the dollar is weaker, theyre back out of small caps. Small caps kind of just pacing the market. So theyre looking at what can perform if indeed europe gets better, what can perform if were looking at a slightly better macro picture. I think what mike is saying that if youre going to get small caps or midcaps or large caps overall as opposed to just like mike said a couple of the biggest name stocks because theres so much liquidity just in two names, thats scary. Thats not the only reason those stocks were up. Facebook accounted according to jpmorgan for 24 of all smartphone activity in the United States. That is a huge number. And those smartphones are apple phones probably so, the same two companies. Compare it to all the other social media sites that account for about 5 all together, and apple paid a dividend and a lot of people reinvest their dividend and thats the bump in bob . Can i point out the rally is pretty broad. This is not just two or three stocks. We had a 41 advancing to declining stocks today and generally the advance decline line the cumulative advance decline line has been going up for a while and i think thats a fairly good sign for the overall markets. I dont like the fact that transports are not participating in this. Again, today they underperformed. Im not sure what it means. But the whole sector has been terrible this year. Trying to say generally a narrow rally. Im saying on the day the suspense was about do we get over 2,120 and you see the big index stocks get the push, that tells me it was more people anticipating a breakout as opposed to anything more being put to work. Duly noted. Thanks for joining us, everybody, at this hour. The first two drilling rigs that shell is out, oil explore exploration in a remote arctic ocean on a rig as we speak part of the obama administrations conditional and controversial approval to drill up there. Up next well talk to shell president marvin odum about his companys plans for the great white north. When a moment spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . 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Welcome back. President obama approved oil drilling in the waters of arctic. Shell oils pioneer rig is making its way towards ak atbats north slope. Joining me in an exclusive interview is Shell Oil President marvin odum for more on all of this. Welcome. Good to be here. What is that rig going to be up to and how much is it costing up there . So, this is not an inexpensive program. A drilling season in alaska, basically takes place over the summer, is over a billion dollars expenditure for one year. 1 billion in expenditure for one year. Yeah. Its a big commitment. Why do that when you could be fracking wells at a cost of what is it down to, tens of millions . The thing to think about when you think about exploration in alaska is its a longterm gain. These are potentially very large resources, but resources that would come online 10, 15, 20 years from now. The Current Oil Price is somewhat irrelevant. The size of the resource is whats important. So the expirationloration program is about identifying how many resours are out there. How much more product you havi might a rig like this be over long period relative to some of the fracking wells today that are so active . Theyre very different. The profile of an joan shore fracked well is you get a lot of production up front and then they fall off very quickly and then they have a very low production level for a long period of time. Alaska is much more like an offshore Deepwater Program or something where you can actually get very strong rates for a very long period of time which is why even in a place like alaska where its remote, where you go to great expense to make sure you do things exactly right, to protect the environment and otherwise, it still makes economic sense to do it. How do you make sure and im sure this must obsess you every day, i hope it does yes, it does. That theres not another deepwater horizon incident . Its something we think about every day because of the operations we have around the world but its a matter of bringing that expertise to bear in a program like alaska and doubling everything. We seriously think about whats every possible thing that could go wrong how do we mitigate that to keep it from going wrong, but also if it did go wrong for some reason, very very low probability but if it did, are we prepared to respond to it . Do we have technology now that can at least shut off these wells that are pumping oil . Yeah. I mean, theres a tremendous amount thats been learned since the incident but theres Something Else to keep in mind about alaska and that is the primary challenge is that its very remote. Its an absolutely pristine environment. And thats the way we approach it. But the technology involved in the drilling, the pressures you see in the reservoir and so forth are pretty typical. Theyre not very high presh pressured like you saw in the deepwater gulf of mexico incident. In some ways its a more technical environment but a remote location. Are you guys investing in this project on the sheer size of the discovery and some of the Technological Capabilities you have now or are you pushed into these areas by the lack of ability to tap whether its regulatory or otherwise some of the territory in the continental u. S. , for example . No, so were not pushed to it. This is a matter of again thinking over multiple decades and thinking about the fact this could be an enormous resource. Its very specific why we call it an exploration program. The two years of drilling that we want to do up there will be to identify how many resources are there. Once we know that, then we can think about a Development Program and think about all the, you know, technology and the regulatory permits and Everything Else that goes into a development. I know you said because of the longterm nature the price of oil doesnt matter but if there werent a price for oil, you wouldnt be in the business. How much lower does the oil price have to stay to renlder Something Like this unprofitable or not worth the investment . I get the question all the time, why are you doing this now when oil prices are 50 a barrel or 60 a barrel . Why now . This is a very important point because you dont just decide one morning youre going to drill in offshore alaska. Ipts something you prepare for for years. You build up the equipment you need, you educate the people train the people so, theres an enormous system required to do this the right way. Weve been doing that over the last number of years. Now were ready to go do it just because oil prices has gone through a psych where will its dipping down, you cant afford to step away from this. So well move forward with this program regardless of the Current Oil Price. And in the meantime the Oil Price Environment being what it is the innovation being what it has been, and the number of smaller fish out there perhaps for the taking how do you guys think through some of the opportunities you still might have while youre focusing on this project back here in the u. S. In terms of acquisitions or increases or decreases in activity . We have of course a huge global program. And so, you know, Something Like exploring in alaska actually competes on an annual basis with all of those other opportunities around the world. So were very active in the deepwater gulf of mexico, for example, if we just stick to this continent, very active in the Unconventional Resources onshore so, we play in all of those games liquefied natural gas, the new business thats coming into north america. We have to leave it there, but do you think these waters are about to be many a lot more crowded with rigs in the years to come . In alaska . Well, i think theres really the opportunity for very select developments associated with the reservoirs well probably find. So i dont think it will be like the gulf of mexico where theres a vast number of companies and opportunities. There will be a few players who really know how to do it the right way. Marvin thank you for being here and explaining it all to us. Marvin odum is Shell Oil President. Really appreciate it. Thank you. Time for a c nbs news update with sue herera. Hi kelly. The s. E. C. Is charging a Father Son Team with a 1. 1 million Insider Trading scheme. Sean stuart, the son worked in the Health Care Investment group of jpmorgan and another bank where he allegedly tipped his father, robert stuart, about upcoming mergers in the health care sector. An American Airlines jetliner bound for st. Louis returned to Los Angeles International airport because of a bird strike. Flight 1258 with 132 passengers on board landed safely this morning and taxied to the gate. The strike happened just minutes after takeoff. Abc news anchor george step nop louse has apologized for not notifying his bosses and viewers about two contributions totaling 50,000 that he made to the clinton foundation. The Network News Division says it, quote, stands behind him, end quote. And the nfls Players Association has filed an appeal on behalf of patriots Quarterback Tom Brady on the fourgame suspension that he was given for deflating footballs. It is calling on the league to appoint a neutral arbitrator to hear that appeal. And that is your cnbc news update. Back to you. If theres more to that story, well certainly find out from this appeal. Thank you so much. Sue herera back at headquarters. Up next, the financial crisis is behind us, but coming up, well be joined by one researcher who says were still at risk for another one. Stim ahead 8 million student loan borrowers in default and according to Consumer Financial Protection Bureau, a lot of those defaults could have been avoided. The agency opened an inquiry. Well talk about what it can accomplish. Plus the House Appropriations committee approving a deep spending cut to amtraks budgets on the same day of the derailment in philadelphia. Ba timing bad politics, or both . Former congressman barney frank joins us next. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. It took Tim Morehouse years to master the perfect lunge. 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Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Welcome back. Stocks hit new highs today but my next guest says Systemic Risk may be back on the horizon. Joining us chris wheelan. Youre talking about a liquidity crisis. We put out a note this week that talks about the regulatory changes, low Interest Rates, and how this has affectedly quid ti for investors. The fed is somebody you may know has already said if we have a crisis next time around theyre not going to let them run for the door theyre going to expect to have them sit and hold onto those securities. The other ironic thing is street firms. You know, they dont make any money on carry anymore on clearing balances, so theres no meat left on the bone to justify them making markets especially in things like treasuries and agencies. Theres just no capital there. So the buy side has kind of won in a sense. They have the resources and the liquidity, but nobodys going to make up a price. If you go back to 2008, a lot of big hedge funds were providing liquidity to the market during the worst days but i think whats going to happen next time is you wont be able to run for the door it will be shut. Do you agree . I definitely agree you have the capacity for more air pockets, a lot more jagged trading when this all happens but i think other side of it, havent we spent the past few years reducing hedge fund flench the brokerage channel, more capital with banks, in other words, is the aggregate risk still as heres the irony. Look at the Mortgage Market. The increase in capital for firms that are in the fannie, freddie and ginny market has reduced their profitability, their liquidity and you have less turnover in the secondary markets. Theyre down dramatically. You have less turnover everywhere actually. Right. Less in the equity markets, less people willing to extend credit. Right. I think too that more and more because of this artificial environment with Interest Rates youve got more risk on the table. Precisely. Think of it from a traders perspective. The fes been taking duration out of the market for years. Now they want people to be willing to come in and take risk and make markets when were at the extreme end of the curve. No. I think if anything people know that that blackscholes model doesnt work when Interest Rates are near zero. You mention Mortgage Market. If you look back in 2008, we had so much liquidity, so much money floating around, part of the problem. We went from one extreme to the other. I like you mentioned blackscholes, people trying to use these models. In your note you said when the numbers get to zero the math doesnt work. Sit almost a good thing that if we know that model doesnt work then lets not try to use it . Because we used so many models in 08 and thats why we blew up. I agree but in the real world, for example, a Mortgage Market when people have to hedge in the tba to have another cash to close the mortgages every month, remember Ben Bernankes press conference the temper tantrum . They got annihilated in the tba market. Is that a learning lesson now . It is. There wont be a temper tantrum because we had it a couple years ago and people are ready for pit. They need to have the cash when they cant hedge floif because they dont know what the ratio is. What happens in a liquidity crisis, the whole street knows whats exposed so the liquidity comes out of market because Everybody Knows to step away from the keyboard so, to speak. That happened with Lehman Brothers in 2008. Everybody knew where they were. So everyone pulled out of the market at the same exact time. A lot of times in a liquidity crisis its because its out loud all of a sudden. Sure. Mike, last word. Do we see leading indicators of a catalyst . Is the fed hike in itself going to raise that transaction tax just enough to make a difference . Briefly. I dont think they can hike. They can raise the rate they pay on bank reserve bus fed funds, no. Look how many bitters s bidders there were for the last auction. Not going to happen. Thanks for being here. Appreciate it. Coming up after we take a short break, well talk about 40 million americans holding more than a trillion dollars in total Student Loan Debt and those loans arent serviced by the learns but by Processing Companies charging a monthly fee for an account. Customer doing as little as possible to help pay back debt. And fewer robbers bursting into banks and cleaning out cash drawers because cybercrime is becoming the preferred criminal method. Bank stickups arent what they used to be. Welcome back with now an eighth death confirmed in the philadelphia amtrak derailment. Questions are engulfing the trains engineer, questions he may not be able to answer. Eamon javers has the latest. Eamon . Reporter yeah, kelly, youre right. Philadelphia mayor Michael Nutter increased the death toll in that tragic accident tuesday night now to eight after investigators found what appears to be a final body in the wreckage today. They say now all the people who were on that train are now accounted for so, they dont expect to find any more casualties here. Meanwhile at amtrak, they say they expect they will be able to have modified service in the northeast corridor up and running by monday. They say full service will be in place as early as tuesday. They say a key issue there is just getting the cement to dry on the new track bed and getting the new tracks in place here today and then over the weekend. Also here in washington, speaker of the house john boehner reacting angrily after a reporter questioned him act amtrak funding. Thats become a big piece of this debate whether theres enough spending on infrastructure for amtrak. Heres the speaker after he got asked that question. Are you really going to ask thatssuch a stupid question . Listen, they started this yesterday, its all about funding, all about funding. Well obviously its not about funding. The train was going twice the speed limit. Adequate funds were there. No moneys been cut from rail safety. And the house passed a bill earlier this spring to reauthorize amtrak and authorize a lot of these programs. And its hard for me to imagine that people take the bait on some of the nonsense that gets spewed around here. Reporter and, kelly meanwhile the National Transportation safety board says that a system called positive train control could have prevented this accident by regulating the speed that the train is traveling whether or not the conductor send it at that speed. But they say that system was not in place on this section of track, kelly. Eamon javers with the latest, thank you so much. Just hours after the amtrak crash tuesday the House Appropriations committee cut amtraks funding. It was incensive to say the least, did raise the issue of the challenges the rail service faces on capitol hill amid the budget sequester. Joining us to take us behind the scenes of what the funding debates have been like, barney frank, former chairman of the house Financial Services committee and c nbs contributor. Joins us now. Well coverage back to the show. Thank you. Listen, were trying to separate, you know, how much of this to blame. Is it fair to say that this vote was an insult if it was a previously scheduled vote, where this is a small piece of amtraks funding, much bigger pieces wouldnt have been touched and you could argue as john boehner there just did that this is the drivers fault not one of infrastructure . So is it fair to categorize this as an insult, the fact theyve voted to defund or move this bill forward to defund amtrak just after the crash . No. I wouldnt say it was a specific insult or insensitivity after the crash. Its something more serious to me, more frightening. It is a systematic underappreciation of the importance of our coming together as people and doing those things which you can only do if we come together through government to improve the quality of our life including the infrastructure. As a National Transportation safety board report you alluded to makes clear thshgs something that could have been much less likely. You dont have yes or no abc lupts here. This could have been made much less likely if we had some safeguards, and, yes, it is true it is the drivers fault in part but it is also true that we have tried when we are dealing with dangerous highspeed equipment to put in machinery that reduces the likelihood or the negative impact of human fault. So, yeah it is important to try to get people to be better. Its also important to have systems that say whether youre driving your car we want a seat belt, an air bag, other factors. Part of this the problem is this the amtrak situation, were not talking about people going to the seashore for a weekend. Amtrak, the northeast corridor, in particular, is a vital part of americas economy. We now have a disruption in our economy. People arent going to be able to travel. The travelers on amtrak i ride that train regularly, youre basically talking about business people, people who are doing this for business reasons, and slowing down as they have been doing systematically not just this one time, that barney, unless this is in the hands of a private company, though, it is going to be up to the government and to congress to have to continue to decide how much to fund amtrak isnt it . Yes. And you know why its not in the hands of a private company . Because nobody will take it apparently. By the way, not because theyre amtrak 100 years ago you had a municipal 110 years ago you had transit was private. The private sector said you cant make a profit off of that. In fact, if you look at the economic benefit, the externalities to economists of a good rail system, its something that the public has to do because if you did it only maximize profit, it probably wouldnt work very well. Nobody expropriated the private Rail Passenger companies. They walked away from it. Right. This is a factor this is something that has to be done by government. By the way let me hear what the argument so inefficient i wish my republican colleagues reacted to inefficiency at the pentagon which costs megatimes more than any other inefficiency in any other part of the government the way they always do when things go wrong in any other program. Bernie, should amtrak be moved to a different part of the government or protected from the skweser . Oh, i dont like the sequester, but i dont think they can start to protect any one person, the sequester. I think the problem is with the sequester in general. It was an effort to threaten part of to some extent the annual deficit is less than half what it was when the sequester was put in. My own view, by the way, lets stop doing wasting the money were wasting in iraq and afghanistan in a futile effort to build coherent democratic societies there and use some of that money back home. The defense budget, you mean. Absolutely. We are spending enormous amounts, much less efficiently, for much less potential good. Well leave it right there. Thank you. Congressman barney frank this afternoon. Appreciate it. The College Loan Crisis shows no signs of abetting anytime soon. The College Board wants to hear from garage walts about problems with their loan providers. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. We live in a pick and choose world choose choose choose. But at bedtime . Why settle for this . Enter sleep number. Dont miss the memorial day special Edition Mattress with sleepiq technology. Sleepiq tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow now we can all choose amazing sleep, only at a sleep number store. Save 500 on the memorial day special Edition Mattress with sleepiq technology. Know better sleep with sleep number. The Consumer Financial Protection Bureau opening a Public Inquiry into student loan as much asing practices today. The Watchdog Group says practices can create tough roadblocks for those trying to repay their debts. Joining us is the First Student loan ombudsman for the Consumer Financial Protection Bureau. Welcome. Thanks, kelly. How are you . Good to have you with us. Who exactly who do you think are the worst actors in this space . As you said, there is more than 8 million americans in default on student loan. Many of that could have been avoided. And the Student Loan Companies who are responsible for making sure borrowers can enroll in payment programs they can actually afford may not be living up to their expectations. And this is something thats not just bad for consumers, its bad for investors. And maybe the economy as a whole. Before we bring in the panel are we talking about loans that were provided by the government or loans that were provided by private entities . So loans provided by the government, private entities, all of those loans are serviced by private companies who typically contract with investors or the federal government to collect these loans. And just like we saw in the Mortgage Market, some of the incentives between servicers and the owners of those loans may not be well aligned. And its leading to unnecessary defaults. In the mortgage crisis we saw so many unnecessary foreclosures which was really bad for everybody. Yeah. I was just going to say this sounds familiar. Its a narrative we heard from the mortgage industry sburg that crisis. If you look at Student Loans thats the debt thats been going up. Its four or five times bigger than it was ten years ago. My question for rohit is if you look at the government side of this one of our 50 disrupter companies when i talked to them in the past they say it is the government who is the biggest predatory lender in education. I know you went to harvard. Your Interest Rate if youd gone there is the same that somebody who went to a lesser school with a lower Graduation Rate lower job prospects you guys are forced to pay the same Interest Rate regardless of the quality of the student or the school. As a result all these other schools can charge 50,000 a year for an education that might be worth 5000. So maybe the problem is they just have too much debt the schools are charging too much. Forget the servicers. They just have too much money. And then the rest of it is just not going to be able to get paid. Well, theres no question that our student loan system needs reform. But addressing the cost of college and underwriting is important. But its not going to do anything for the 40 million american who is already have student debt. And we need to make sure just like we need to make mortgage lending safer and stronger, we also need to address the people who have that debt and see that they can actually pay those loans back. And what we have now is we see complaints from borrowers where theyre not getting accurate information, their payments arent being appropriately processed. And these are people who want to make good on their obligations but are finding themselves getting the run around. Mike . Are these servicers breaking rules that are on the books or are there just not standardized procedures that they should be following . Well, last year regulators reached a settlement with a major student loan servicer for violations of multiple laws. And in our own oversight work weve seen a number of real challenges. So today we launched an inquiry on this industry to determine how we can strengthen student loan servicing. We saw how the breakdowns in Mortgage Servicing had catastrophic effects and we see an uncanny resemblance here. And theres no question theres room for improvement. Weve got to go, but who are these servicers . Are they independent, housed within banks or bigger Financial Institutions . Theres nonbank companies. Theres ones housed in banks and there are ones that are nonprofits. Theyre all shapes and sizes. But it is something every investor needs to do Due Diligence and make sure their servicer is doing their job properly. All right. They have been put on notice. Thank you for being here. Rohit chopra this afternoon. For those of you who arent up on your criminal history, heres a refresher. Im miss bonnie parker. And this here is mr. Clyde barrow. We rob banks. The original bonnie and clyde may have robs banks in their day but heists are now a thing of the past. Now its cyber crime becoming prevalent. Well bring you the details next. Stay with us. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Welcome back. You are looking at a live shot of camp david where president obama is expected in about half an hours time to make some public remarks after that summit of gulf state leaders of course. As soon as he begins, we will bring you that address. In the meantime though, its jesse james Pretty Boy Floyd and bonnie and clyde. Bank robbers becoming a thing of the post. Why bank holdups are coming to a halt. Really, jeff . Yeah. I heard you talk about Systemic Risk. We talk about too big to fail. Heres one way that banks have become safer since the financial crisis. Fewer of them are getting robbed. And actually bank robbers are down about 35 just over the past year. Theyre down about 49 over the past ten years. Now, a couple of reasons for that happening one being that banks Surveillance Systems are Getting Better. The cops are Getting Better at catching these guys once they do these things. And also some of this activity has moved online as well into the cyber sphere. A couple of points to make. A couple of interesting factoids about bank robberies. The most popular time for banks to be robbed in the Morning Hours when banks first open. Also the most popular day to be robbed payday on friday. Now, maybe you dont want to make too light of this but some of these guys arent terribly bright. Just a few days ago there was a fellow accused of robbing a bank in virginia beach, virginia. Handed the teller a plieltly worded letter with smiley faces on it saying please give me your money. The mistake was after it he posted his note on instagram. So it wasnt too hard for the cops to catch this guy. Okay. Yeah forgetting that one, does it seem as though the criminals in the banks today are the cyber criminals. Its the cyber criminals. But if you go back back to wells fargo when they were founded because of the gold rush they were getting their stagecoaches robbed because of they had the gold bars there. If its a digital account, they rob the digital account. Thats a great point. And think about the bitcoin. People robbed that too. There was a big story back in 2013. So i think those Virtual Currencies are the ones that are kind of at the gate right now of that disaster. Because thats where the money is. Its like she said. Trust nobody, right . Dont trust the consumers or the markets. And theyre robbing starbucks. Our jane welles, her husband was a victim of that crime. Jeff, thank you very much. The world is changing sort of. Time now for fast money with melissa lee. Whats on tap . Hey there. Its all going to be about the earnings reported this evening. And of course as you know president obama expected to address the nation. Were also expecting a press conference at any moment. So we will bring that to everybody as we have it. Lots of developments in the next hour. Great stuff. My thanks to the panel this afternoon. Over to you guys. Thank you. Fast money starts right now. From the nasdaq money site im melissa lee. John najarian brian kelly karen finer man and steve grasso on the panel tonight. All the afterhours action you can handle across all sectors. Well tell you how to profit from all the news ahead of tomorrows open. Plus call it the tech trifecta. Facebook, apple, google all rallying 2 or more on this day. Well tell you the name that could soon follow them higher and what it means for the tech rally. And youre looking at a live shot of camp david where president obama will be holding a News Conference immediately following a summit with six gulf state leaders. Weve got Team Coverage as that event happens