That drone that Kara Swishers showing you. Does it have seven tamcameras or something on it . It is fascinating. Any anybody familiar with the Drone Industry knows about those cameras. It could really take off. A new report says jpmorgan could lay off 5,000 people by next year. Is this a broader issue for the Financial Sector . Many parts of financials have suffered the last couple of years. Is there normore layoff to come . Going to the front lines, we have the ceos of three major banks all here exclusive on closing bell. We begin with the markets. An hour to go to the close, the dow is down about 40 points right about the middle of the trading range today. Giving up. 2 . Caterpillar interestingly the big weigher there, down 2 on the session today. The s p weaker by 2 1 2 points. The nasdaq which yesterday closed at a record high today giving up a little bit of that. Down about nine just below 5,100. One featured market were following closely today, natural gas sinking like a stone around 10 30 when inventory reports came out showing a bigger build than anticipated. But it is not just this weekend. You can see today alone, natural gas is down 4. 5 . Just in the last month or six weeks. That commodity is down sharply. Wouldnt it be nice if that was gasoline prices that were coming down that much . You never know. We have seen it happen before bill. It wasnt that long ago. The good old days. On our Closing Bell Exchange this thursday Heather Hughes from sun america funds, rob more gone and our own rick santelli. Heather hughes where are you seeing opportunity right now . Clearly volatility is back in this market just this week. Does it present an opportunity for you folks or what are you doing right now . Yeah youre right. It definitely could. I mean i know the banks are getting hammered with excess regulations, fines and so forth. But if as we do see a rising rate environment, even if rates are rising very slowly that will fair better for it the banks Going Forward as of course it would increase their profitability profitability. Moab is looking at banks right now for the potential for upside in all the scrutiny theyre under and constant News Headlines regarding fifa doddfrank, et cetera. But as rates rise theyve underperformed the markets last year so as markets rates rise they may outperform other sectors and indices. We already saw that on rbcs results. Thats a harbinger for a lot of the big u. S. Banks here as well. Rob, what about the point about rates rising . What happens if there a he no rate hike until next year or what happens if we see a 25 or 50 basis point increase and thats it . Well i would tend to think that even if we push off the rate hike until next year were still going to be baking in the expectations of that. I think it is going to continue to cause the dollar to nudge up and building a little bit on what heather said, thats kind of my big theme right now. Investing more in small caps versus large cap multinationals that get hit with the rising dollar. Really underweighting a number of the u. S. Investors investing overseas. But i do like stocks in general and my favorite sectors are cyclical sector. Couple cyclical sectors, technology and consumer discretionary. Even if the rate hike has pushed off, i think we will continue to see this gradual nudging up and rates in the market. A weaker dollar would also help the banks, of course. And we havent seen that trend play out just yet. But eventually we had the cpi data last week and inflation looks like we might get an uptick here in the u. S. But again, it is all relative so on a global scale, our dollars very strong on a relative basis. Rick do you see that stream continuing soon from the dollar or do we have to wait for liftoff from the Federal Reserve first . I think there was a period when the liftoff was believed, and that was the underpinnings and reason why the dollar was improving. But i think what were seeing of late and i draw exhibit a, the dollar yen i think it is now more about other economies and other currencies being a bit more proactive. Yesterday, we were talking about why so much drama with the Federal Reserve. I offered the notion it is from within. So you have one person saying next year one person saying watch the data janet yellen not talking about Realtime Data and basically still promising were really serious about this. So the drama does continue. But i think were in idly mode. Everything im seeing in the market place, you can explain it any way you want certainly seems though nobodys anticipating anything aggressive in the foreseeable future. And interest ratsz, my rates, my opinion, reflecting that. The dollar yen in china is the rates buyers are paying most attention to. Rick what happens if they raise rates only once or only twice and were only talking about 0. 5 at the end of the day . I think the idea of normalization is going to be bumpy. We all know that. But i do think youve hit on a very important point. That this is just a little bump for a variety of reasons and i dont really think it is going to make that much difference. I think seven years after the crisis. The real issue is if were where we should be at 1. 5 . Would we be lowering . I would think the answer is no. So there is a lot to reconcile here. No. When else in history have we raised rates just one time though . Usually when they start, i know the consensus is as you said kelly, 25 basis points increase maybe throw out a trial balloon and maybe see what happens with the markets. Maybe theyre watching the markets, maybe we shouldnt be. And is that do you really think that they would then if the armageddon situation plays out and the markets drop dramatically would they then pull back again . You think of qe4 or would they just stop at one rate hike . Nowhere else in history have we ever raised rates just one time. Thats a great point heather. Thats what makes it so interesting. If conditions only really warrant doing it a little bit or a couple of times, the impact that would have relative to the stair step were used to in the past. I think rick hass the point there. Were in idling mode right now, everybody just waiting for that first shoe to drop or to rise as the case may be. But well see what happens when in fact it does happen. Thank you all. See you three later. Meanwhile, weve talked a lot about the rally in the chinese stock market lately. Chinas stock market opens in about six hours after getting crushed last flight. Shanghai index was down more than 6 . To put that in perspective, a 6 move on the dow would be about 1,000 points. Big, big number last night in shanghai. Guys 6. 5 certainly gets your attention but the context is key here. The market the chinese stock market, up 43 . So far this year. And up 140 over the last 12 months. That plunge overnight came on the back of a sevenday winning streak. Few factors being discussed as the trigger for what we saw. Number one brokers tightening margin trading it requirements. The central bank continuing to drain liquidity. And theres also talk in the markets of a state Investment Fund selling shares in big banks. But the real question here is is china in a bubble meaning has the market run so far ahead of itself and ahead of reality, which is actually a slowing, growing inging chinese economy slower growing chinese economy. Bubble or not, last time chinese stocks plummeted like this they bounced right back. Same goes for the china etf. In fact a number cruncher found that over the last decade every time the chinese etf dropped more than 3 in a day, investors would be richly rewarded over the next 90 and 120 days talking returns of as much as 30 if they stayed patient. So guys the lesson may be here to buy the dip if you follow history. Obviously if it is in a bubble it cant go on like that forever. Your results may vary too, by the way. Individual results. Thanks, sara. The Chinese Market has been quite volatile lately. Something fast money brought up with Dennis Gartman just last week. I would not buy klein herechina here. Not with the shanghai up from 2,000 to 4,000 in the course of six months. But i think this is kind of a circumstance that will send people to the sidelines, let prices go lower from here let prices go down 10 , 15 , 20 on the shanghai index. Tlen illthen ill be interested. Is dennis buying now . Dennis, is this enough to get you involved . Not yet. But certainly it has my interest. My interest is obvious piqued on this sort of correction. I think youve got another 3 4 , 5 on the most to the downside. The trend is clearly from the lower left to the upper right. I think president xi has really done a great job with the economy over there. Hes making sure that this economy changes from one thats export driven to one thats consumer driven. I think theyre doing all of the right things. The only problem that i have is their military adventureism thats taking place in the South China Sea which is also i think one of the reasons why i had a correction overnight. But giver prices another 3 4 5 to the downside, take me closer to the upward sloping trend line and ill be a buyer. I think things are changing in china for the better not the worse. But it still has to go down just a tad more. We had a bull and a bear on china the other day. The bull, whether he was in denial or not, said you cant fight the fed in china. The Chinese Government in this particular case. As long as they are still doing things to try and foster growth there and move chinese shares higher, why would you want to sell this market . You wouldnt, bill. You would not want to sell the market. Im sorry. A lot of smart people have tried to sell the market. Everybody wants to call it a bubble. I think this is just a change in the psychology after having a bit of a bull market move this is a very healthy correction. I dont think you want to sell it at all. I think the chinese officials are doing all of the right things. Some of my good friends will take me to task for this. Very sophisticated people will say that that is naive. But i think really changes are taking place. I think president xi really is doing all the right things of attacking corruption as he should be doing, and the monetary authorities are still going to be expansionary theyre still going to push reserves into the system. The trend is from the lower left to the upper right. Dont fight the fed. Dont fight the peoples bank of china. If it keeps going, dennis well have you back. Dennis gartman, for now thanks very much. Appreciate it. Thanks. 45 minutes to go until the close. The dow is down about 41 points. S p giving up 2 1 2. The nasdaq is down about ten. Weve seen unusually heavy volume in the final hour of trade lately. The pros will explain why it is. It turns out it is so crucial to pays tension to the last hour of trade. Thats coming up. Also the ceos of wells fargo, royal bank of canada and td bank are all speaking with us exclusively. Lots of territory to cover. The crazy markets. The housing recovery. Or lack thereof and jpmorgans potential layoffs. Digital wallets. Something royal bank of canada is very much into. Here come the gopro drones. The Ceo Nick Woodman talking about the action cameramakers pipeline. We have the cool cool latest developments on that coming up. And find out if gopro is a stock you need to own. It is popping today, up 7 but still well below those 52. Week highs and it is heavily shorted. A stock brawl after the break. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Female announcer through sunday its posturepedic vs. Beautyrest with up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Mattress price wars ends sunday at sleep train. Your ticket to a better nights sleep welcome back. The ceos of twitter and gopro headlining the conference in california. Josh . Bill today the talk was about the ceo of twitter. He was on stage with kara swisher. We know hes been the subject of criticism, even speculation about whether hell stay on the job. Swisher asked him very bluptly lyly lylybluptly. Youll be there at the end of the year . I have to focus on my job and what i have ahead of me. I dont worry about am i going to be working here on this date or that date. I focus on my job. You feel youre in sync with the board . Well i dont feel like im in with my board. I know im in sync with my board. The bord and i communicate very regularly. One of the things i probably do is overcommunicate with them and were thoroughly in sync. Now besides costolo, the biggest news had to come from the gopro ceo mick whitnick whitman. He introduced two products. One is the gopro drone. A red hot market. Analysts think that drone could generate nearly half a billion dollars in revenue. Also introducing this new sixcamera spherical array. Allowing users to shoot footage for virtual reality. It could set stage for new partnerships between gopro and all those tech titans involved in virtual reality, from facebook to google. Gopro not yet announcing the price of those two products. Guys, back to you. You wonder how long dick costolo will keep answering that question. Are you going to be there at the ends of the month. Are you going to be there at the end of the year. I guess josh couldnt want to answer that question either. Im sorry, bill. I didnt know that was directed at me. She certainly pressed him on that point. It caught up with him a couple times but he stuck to his guns and said listen he believes in the strategy theyve laid out. He believes in order to get wall street on word theyre going to come around to that recognizing the breadth of that platform right now focusing on that strategy and focused on remaining very much in sync with this board. Josh lipton there in california, thanks. Only marissa myer has to answer that question more often at this point. Should investors be getting on board with gopro, and now their drones . Love this story. Joining us Brian Hamilton from stage works. Hes bullish. Jason rodman whos bearish. Welcome to you both. Do you think the drone business will be as big for gopro as nick whitman is saying . I dont know to be honest. This company compared to when it went public they were three times trailing sales then. Theyre five times trailing sales now. Theyve got products. Theyve got cash flow. Theyre buying new things. Theyre selling internationally. I still like the company. Jason, why dont you like it . Well listen. Let me count the ways. I guess i could start with first of all, gopro is not a bad company, clearly. But to keep this short and to the point, there is a company out of china called dji innovations. Heres an interest region gaktfact. Gopro has a 7 million market cap. There are gopro is a baby in the drone world. A baby. Dji innovations, 10 billion private valuation. They sell a fanphantom 3 quad copter which is onethird of the price of gopros. Gopro is a great company. However, i still believe they are a baby in this new space, that dji is going to crush them. Is this a zero sum game . Well no of course not. Of course not. I think the overall trend in sales over the next several years in these drones is clearly going to be higher. However, thats not even necessarily good for go pro because right now the major factor in go pros growth has been their high margins. I think as the competition gets more stiff, their margins are going to have to come down. It is just not good for gopro. Jason, staying on this theme about them getting into the drone space. Bills point is an important one. Were in a nascent stage here. This is probably going to grow quite a bit and goprotechnology, the cameras, are always involved in the dji drones. If theyre just going to get more involved in it, isnt that ultimately going to be better for their Sales Outlook than if they just stuck to the cameras . Better for the Sales Outlook . Probably. However, an interesting counterpoint is that the most recent phantom 3 from dji comes with its own camera. So i think dji is extraordinarily competitive. The ceo is crazy competitive. And hes known for squashing prices and squashing competition. So again, djis dangerous. Jason, i guess thats my point. At some level, if gopro is at any risk of dji, the biggest player in the space elbowing their technology out of it all together, arent they making exactly the right move by trying to punch back and try to get in by developing their own drone in this case . I dont really see that. I think theyre devoteing too many resources to a space in which theyre not too proficient. Brian you had some audio problems. I guess youre back. Im back. Jason, jason, jason. Look. It might be true lets say that what you say is correct, that they dont make it in that market. I give the guy credit for going out and trying new things. This is the problem with the ipo market. We keep getting distracted. This company grew 54 so far this year over last year. Theyre profitable. They have cash flow. Take some chances. If you bomb in the drone plashth, i dont wantn the drone market, i dont want to say so what but Tech Companies need to try Different Things and while theyre doing it theyre still generating cash. So Many Companies are out there in this realm that are not making money. Lets go for those easy targets. This is definitely not one of them in my mind. The last word is that thats a very weak argument. In my humble opinion, the stock does not deserve to be up 7 on trying new things and taking chances. No. They should be on cash. On cash brian, since the ipo, this has been an incredibly volatile stock. Its been both a big winner and a big loser. So market cant decide which way it wants to go on this one. Yeah. So we have to look at whats actually happened in the company. Bill, you are exactly right. But remember the stock has doubled since its ipo debut. Again, the company is doing what it needs to do. Lets go after easier targets. They are growing revenue. They are going international. Thats a really big and very important point. I give them credit for taking advances. Theyve got to do that. Letsthanks for joining us today. Heading to the close with, we got 37 minutes left in the trading session. The dow down 47 points. Transports have been a big part of this day as well. Been testing support and a lot of triggers on the floor here have been watching the dow transportation average for some guidance today as well. Transports year to date are down 9 while the nasdaq is up about the same amount 7. 5 . So again, watching closely for any signs of a Broader Market breakdown. Today though only giving up a little bit of ground. The largest ever chip deal in the space announced this morning. But broadcom the takeover target is now selling off. Two wall street pros weigh in coming up. Also ahead, our trio of ceos from north americas leading banks. The heads of wells fargo, royal bank of canada and td bank will be here exclusively. Find out which of these ceos is trying to get their branches to look more like an apple store. That will be interesting. Coming up. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. By the time Police Arrive on a crime scene they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. Welcome back. There is a look at that benchmark philly semiconductor index. Officially known as the sophlx. The biggest chip deal ever announced was just this morning. Talking about the broadcom deal now lower after yesterdays huge rally. Is this now a sign after that threeyear run up entirely of a top for chip stocks . Lets talk about it. Christopher roland. Lou basney is with us as well. Do you see a top in semis at this point . No. I think the rate of consol consolidation will throw and there will be a strong backdrop of contoll days of year to come. We dont see classic signs after semiconductor top like large inventory builds double ordering people building safety stock. No. Were really in that perfect temperature for semis right now. Things arent too hot, and theyre not too cold. It does seem like these deals are motivated by a desperate search for growth when pcs arent selling like they used to. Id love to be controversial and disagree with chris, they are searching for growth with you some underlying Growth Trends are going to persist. Mobile communications are just eating the world, not just from smartphones and fab bletstablets, not just the device side, but providing that infrastructure for it. On top of that we get to layer on all these new Growth Opportunities that are really an extension of mobile or leverage mobile technologies. Im talking about the internet of things. Drones even. The connected car. You have apple coming out saying thats the ultimate mobile device. These are really ripe opportunities for these Chip Companies to go in to. I do think, though in this world youre going to see more consolidation because the Device Manufacturers want system solutions. They dont want multiple parts. Think thats a key driver. One of the other big things thats going to drive consolidation i think is trying to get rid of and slough off that reputation of being really cyclical. Youre see something evago merge with broadcom to get into more of the wifi space. Youre going to see other companies doing the same thing to smooth out the lumpiness in those revenues and cycles tradition traditionally associated with semis. Well, he gave you a lot there. What do you see there . Are these mergers strategic or defensive . Whats motivating them right now . Yeah. So Semiconductor Stocks are cyclical and we cant forget that. We didnt see some of the classic signs of a top like large inventory builds and over ordering. As far as the cycles concerned, i think were okay. What were seeing right now is top line growth thats anemic for these guys. So theyre going out and theyre looking at ways to drive from the bottom line. A lot of these deals arent strategic. Theyre purely for financial reasons. But semiconductors can be a scale game in many cases and thats what were seeing here were seeing guys scale up. Where specifically do you think this swas withpace can continue to grow . Were moving from a phase where they were only looking at subscale companies. 1 billion, 2 billion mr. 2 billion 3 billion companies. Now what were seeing with the potential intelaltera tieup were seeing these deals are getting bigger and bigger and bigger. So a guy like t. I. Could be next. They could buy a abi, microchip, a maxim. Our favorite takeover candidate,. I think there will be bigger deals but i would still look at a company like maycom. A pure play leader in highperformance semicondumbers across the entire spectrum trading at about a 2 billion market cap. Thanks all, for joining us today. It has been a hot market. Sharon epperson has a cnbc market update. Were looking at whats happening this hour starting with former president bill clinton who made an impassioned appeal at the United Nations for modern health care in the ebola stricken areas of africa. He urged ear mashing of 15 of their aid money over the coming years to build Health Systems in the region. Prosecutors have charged a plan with arson for allegedly starting a massive fire that destroyed an unfinished Apartment Building and damaged nearby Office Towers in Downtown Los Angeles last december. The defendant remains in bond on more than 1 million in bail. A fast driving taxi can soon hit the roads. It can charge in just 15 minutes. It runs on lithium batteries that can be actively cooled. Incredible footage of a church being hit by lightning in maine last night. The st. Gerald mt. Caramel church had some shingles knocked off in addition to some electrical damage. It is the second time the church has been hit by lightning. Thats the cnbc news update for this hour. Somebody doesnt like the sermons being delivered there. Thats what i was thinking thank you, theron sharon. 30 minutes to the close. The dow is down about 50 points. The nasdaq were watching because it is giving up ten after closing at a record high yesterday. The s p down about three. Speaking of the last 30 minutes, check out this headline from the wall street journal. Traders piling in to the close. Is this simply for procrastination or is Something Else going on . Well talk about a very interesting study that has to do with the busiest times of the day in the trading day. Plus the man behind the fall of Lehman Brothers. Former ceo dick fold making a rare public speech today. Well bring you those highlights and get reaction from wells fargo ceo john stumpf coming up. [container door opening] what makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. So these next few minutes are going to be crucial to the trading day. A new wall street journal article arguing the last halfhour of the trading session is the most important one. Didnt we know that already . It took a Credit Suisse report. Tle did a study that says there has been increasing number of trades occurring in this last halfhour of trading. Largely due to the rising use of index funds, algorithms, computer models that prefer to trade at the close of day and it has trades between 3 30 and 4 00 p. M. That have increased nearly 5 since 2007. With more than 1 in 6 trades in s p stocks taking place in these final 30 minutes. Lets give you more now from two traders who have been on this floor for some time. Guys, welcome. Peter, how much activity how much more concentrated is this activity now than what youve experienced in the past . Actually i think that the numbers probably dont really truly reflect the close. I think that if you look at volumes right before the close and after the close, think it is a lot more than what that report says. I think it could almost border on 20 of the Trading Volume of the day is done in that last minute. So i do think that it becomes very, very important. I mean our firm has built a whole business around it and a lot of other firms have as well. So it is typical of New York Stock Exchange brokers, they will reinvent themselves as the market dictates. Do you agree, and does this present an opportunity for individuals out there watching . It is an opportunity for very sophisticated individuals. This is not a childrens game. This is a selffulfilling prophecy of a style of trading that goes back my 30 years in the business. This was a model that was used by the traders inside mutual funds who were gauged on their cost of trade versus the closing sale. So all day long you would be working the volume weighted average price, trying to beat it on behalf of that mutual fund. At the end of the day that mutual fund trader needed to be done and youd slam the stock and all of a sudden their average price looks spectacular against the closing price. That again, as that continues into the etf and indexing trading where it is all marked to the close. There is not a stock etf thats hedged during the day. Thats why the close is so important. Okay. Wait a minute. The vwop. The volume weighted average price. If you have 100,000 shares customer says sell 100,000 shares and try to beat the vwop chances are the first halfanhour of trading youre going to do 15 of your order or 15,000 shares. Until 11 30 until the close of europe, another 15,000. 30 . Youre going to save 25 this is the way Credit Suisse and most other algorithms are based from round numbers. 25 of that order will be saved, be executed in the last five minutes of trading. That only leaves 45,000 shares for that 3 1 2hour segment or 4hour segment. Peter, whats been lost in this move to the close . Im sorry . Whats been lost . Well i think that the ability of a broker to some of the skills that brokers have almost an innate ability to read markets, thats going further and further away. It changes the rhythm of the day. The thing is there are people that try to game that close. Try to judge. We at 3 40 we have the imbalances imbalances change at 3 55, they reup. And people will trade against that. Then they try to game that particular close. It doesnt always work. Its a great deal of risk capital. You will see that in play a very big way tomorrow. Youll have a reweighting of the russell 2,000. Thats all being traded against already. As we speak. And an expiration. Youll see it live and in person tomorrow. Great insights. Thanks, guys. Well let you go beat the vwops while you can. I Love Learning stuff like that. We have a developing story on questionable Economic Data from the government. Steve leisman joins us now with those details. Hi, steve. Hi kelly. Critical government reports on the nations productivity growth appear to have the same seasonal problems that cnbc uncovered in the gdp data. Looking again over a 30year period cnbc found First Quarter productivity running nearly a full percentage point below the average for the economy. Productivity is a measure of output per hour or efficiency in the economy and it is a Critical Data series looked at by policy plashgs policymakers to judge economic health. The most important factor determining Living Standards is productivity growth. Over time sustained increases in productivity are necessary to support rising incomes. Here the recent data have been disappointing. Yet there could be some statistical noise in the data. First quarter productivity averaging 1. 1 over the past 30 years compares to overall productivity growth of 2 . Over the past six years, the efficiency if the had country in the First Quarter has been nothing short of abysmal. Shrinking 1. 2 . Here are the five biggest productivity declines since 1985. 4 of the 5 are in the First Quarter. Minus 4. 7 that is the record in the 30year period there. Moving on here cnbc in april uncovered a 30year problem in the nations gdp showing that the First Quarter was far weaker than the other quarters. The bureau of Economic Analysis put together gdp. They have since acknowledged problems and pledged to revise some of the data with the july 30th release of Second Quarter gdp. Given cnbcs research on gdp, findings on productivity are not that surprising because productivity relies on the gdp data. It provides the output part of the output per hour contemplation. John glazer supervisor of productivity at the bls told cnbc today anything in the bea data will be in the productivity data. The bls will have to revise the data when the bea does. The gdp story remains unclear, should productivity growth be higher or just redistributed from other quarters . Glazer from the bls said the best way for markets and investors and policymakers to read their productivity data is over long time spans. Use at least four quarters. When looked at that way, productivity has still definitely been weak. Steve, perhaps this will give people more to think about before jumping to any conclusions about the First Quarter. I think thats right. Well call it the leisman anomaly at some point. That he uncovered that. 3 43 here. 17 minutes until the close. The dow is down about 50 points on the session. Caterpillar in particular is kind ever weighing on things there. This after china had a really tough overnight session. Here the s p 500 only giving up 3 1 2 points on the broad index. The nasdaq down about 11. Weve been looking forward to th. The head of rbc will be here to talk up his banks record earnings. Well talk about what the rbc bank of the future will look like. Theyre into some very hightech stuf john stumpf is coming up. Over 20 million kids everydain our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy affordable, kidinspired chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. Royal bank of canada better known as rbc, reporting another Strong Quarter of earnings. Profits were up 14 . Now the bank is tackling new innovations with what are called digital wallets and Retail Branches that in some cases look like apple stores. Thats right. Joining us right now in an exclusive interview, rbcs ceo, be dave mckay. Thanks for joining us. Lets begin with some of the trends you saw that might have a lot to bear on how u. S. Banks are fairing as well in their trading businesses. Some strong trading revenues for you guys. Where in particular are you seeing areas in this market whether its from deal making activity, or whatnot, about performance. We certainly had a record quarter that were very happy with. We had outstanding performance, as youve references in our Capital Markets operation. We really saw broad based strength across all our Capital Markets divisions, particularly our dcm and ecm businesses and origination businesses. Our trading businesses had broadbased strength. Thick. Particularly in u. S. And emerging in europe and good m and a activity. So very strong results across our Capital Markets business. Really in the u. S. And now more emerging in europe as we start to see some european strength. The second driver of our success this quarter is really our core Canadian Retail business. Strong growth but a very benign credit environment in canada. Despite the Oil Price Shocks to the canadian economy, it is not manifesting itself in credit loss right now. Kelly and i want to talk about your futuristic branches and the Role Technology is playing. The digital wallet and so forth, not only for your banking enterprise but for banking in general. Where are we going with this . Well you look at particularly on the digital wallet side and the payments business youre really seeing trends driven by the convergence of the physical Payment World with the ecommerce digital Payment World and it is converging around things like in app payments and the battleground and really the test for customer centricity and customer relevance and trying to link that to your digital wallet and create a holistic Customer Experience of the future. We are investing a lot of money at rbc and all banks need to Pay Attention to that Digital Payment space and how it links to the overall wallet. Very impressive and a lot of people are doing it. How safe is it though . Are we playing with fire given the Security Breaches that we keep hearing about, not only in your industry but elsewhere . Thats a great question. Weve taken a very measured approach in rolling out the new technology. In fact we patented a proprietary technology called secure cloud that stores the minimal amount of data on the phone and in a secure private cloud environment. That patented technole gi will form our foundation of the solution to the market well unveil later this year. Security is paramount to the confidence in the Payment System and therefore we have to take a person measured approach to rolling this out. Comments from jpmorgan today indicates well see fewer employees at their branches around the bank generally over the next few years. What is theank branch of the future for you guys look like . There are a number of headwinds facing Retail Branches in general but they are still the foundation to the Customer Experience and the manifestation of your brand in the environment. Theyre still relevant to the customer but they have to change and evolve their role in the future. But headwinds were facing is Customer Choice and let foot fall in a branch reducing revenue streams, low demand for credit products. All that are driving revenue and cost challenges to the bank so you have to reposition your branch for the future. Reduce the food print. You have to move it from a transaction centric to a sales and advice centric. That was really the journey that we started almost six years ago at rbc. And we hired a firm who had never built a branch before. We asked them with a clean slate start with the customer and build their retail store that will create an heengaging experience. Thats the product of our jour in nen n journey over the last six years. Dave, thank you so much for being here. Dave mckay, ceo of rbc. Nine minutes left in the trading session here. Not Much Movement in the markets in the last few minutes. So far, the dow down 41 points. You heard traders saying though probably a lot of volatility tomorrow with the rebalancing coming in some of the major ind disease indices. The ceo of wells fargo will discuss what the biggest Mortgage Lender sees for the housing market. Back in two. Welcome back. The dow transports tumbling back into correction territory today. Yesterday we had a respite for the transports which actually finished higher. But with todays decline up 78 points, that means it is in correction territory. 10 below its recent high of 9 3 9310. 33. The 10 line is 8379. As we sit it is 8,366. The pullback in the airlines and ral railroads and concerns about capacity and energy impacting that sector. Today, delta is under pressure. Ual pretty much flat. Alaska airlines, among the airlines thats been one of the better performers. Off of their 52week highs, about six members of the dow transports thats down less than 10 from those levels. So again today with the selloff, we see the transports fall back into correction territory. Back to you. Mary thanks very much. Well come back with the closing countdown and see how we close things out. Stay tuned, youre cnbc, first in business worldwide. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies plus energy support. Its a new fiber supplement that helps support regularity and includes b vitamins to help convert food to energy. Mmmmm, these are good nice work, phillips the tasty side of fiber, from phillips. announcer you run a business. Could be any kind of business. And every day, youve got important decisions to make. Like hiring. Where are you gonna find those essential people you need . With ziprecruiter, its simple. We post your job to over a hundred job boards with just a single click. So you can reach millions of qualified candidates. Then well give you the tools to help you manage, screen and rank your applicants. All so you can find the right one. Try ziprecruiter for free today. 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. Inside the twominute mark. The market were going to watch very carefully tonight. The shanghai market down 6. 5 last night. That set the tone for our market opening this morning. How will it do . Bounce back . Continue the selloff tonight . Well find out in a few hours. Meantime, our market one thing thats been a hallmark of the dow, this trading range weve been in since march 2nd when it hit that alltime high. We just kind of meandered sideways idling. Weve been in this trading range for a while. Whats going to pull us out . Really it is kind of stalemate so far. On the bearish side youve had two consecutive quarters without earnings growth. Were looking at flat gdp in the first half the of the year. You sound like you expect you to break to the downside. Baes the bearwhats going to break us out of the range here were thinking it is going to be changes in that expectations. We are starting to see signs in the market where utilities are starting to leave, Long Duration treasuries starting to leave. The last few weeks were indicating a more defensive position is warranted. Weve been aggressively positioned for the last few months. Were very close to switching here. Ben bernanke said yesterday when they do start raising rates it will be a good sign for the economy. But will it be for the markets . The stock market and the economy are two Different Things. Just get the first one out of the way. Charlie, thanks very much. Were going out with minor minus signs so far for the Dow Jones Industrial average and other major averages. The ceos of td bank and wells fargo coming up on the second hour of the closing bell with kelly evans. See you tomorrow. [ closing bell ] thank you, bill. Welcome to the closing bell. Im kelly evans. The dow closed down about 36 points. The s p giving up 2 1 2. Nasdaq down 8 off that record high close we saw yesterday. Lets bring in todays panel. We have more earnings on tap. Michael santoli. Fast money trader steve grasso will join us off the floor in a moment. Jim lowell. Michael, record high for the nasdaq yesterday. Today we are talking a little bit about the chip names and whether they might be at the top here. How do you read the trend line . I think you have to look very closely at todays action to anything that changes the story of just a stalled market. Yes, youd like to see semiconductors build off that merger news. But really not telling you much because from day to day theres really not a lot of a thread being pulled through. Seems like weve been in a Holding Pattern for most of the year. I hate to spoil all of the excitement over here. But it is interesting because were seeing m and a on track for its best year in tech since 2000 and announced m and a this month is supposed to be the best on record. It is incredible to see all of these companies doing deals, trying to consolidate, trying to build scale in a market where profits are hard to come by growth is slowing. And it just seems like thats the activity that we should be talking about. Steve grasso hello. We were just talking today in particular about how much trading activity is happening in the last 30 minutes of the session. Most of it is happening just in the last minute as all of these flows are calculated. What about today . Whats moving the needle for a markets . Im sure you guys already kicked off the show if you look at the market early on the day, it was the housing data. Just couple minutes before the housing data the market fell off a cliff. Was it greece . Was it a headline . Or was it housing data. Was the housing data thinking that the rates would be pulled forward. And it spooked the market. I think it is a combination of probably greece japan, china, take your pick. But the most related event that happened was the housing dayta that was going to be announced. Jim lowell do you agree with that . I think the prospects are probably still pretty good. Weve seen a reasonably good go in terms of the spring bounce for the housing market. If prices were a little bit lower, if inventory was built up a little bit better i think wed get a better bounce than we are a currently seeing. The market is still up 3 1 2 so far this year. Overseas the market is up 12 in u. S. Dollar terms. Its hardly been a stagnating market despite the fact that right about now it feels like we are in that stair step pattern. I think either a step back or a step forward is the day that dictates. It has implications for Monetary Policy and for how well the stock market does or looks or appeals to investors around the world. Not a big move today, therefore we get not a big move in equities. Yes, that has been the big headwind. On one side you have the macro stuff which is basically drown grading growth. Then you have the Financial Engineering piece which is still available. And you still have the markets wide open for business on that front. I think thats why this market is where drama goes to die. You have all this dramatic stuff happening around the edges and it kind cancels itself out in the middle. Does it drive you in a vested interest in the euro to collapse . These greece headlines, it seems sort of contrived to me at this point. You want it just bad enough right . The goldilocks. Draghi has the goldilocks scenario. Greeces exit doesnt have to mean the end of the euro. Theyre walking a fine line. I think they have a vested interest. If greece does exit the euro will spike higher. We saw what mario draghi did when the euro started to rebound in europe relative to the u. S. He started talking about front loading their bond buying program. Jim lowell how much will we be able to see the dollars strength persist against the euro for example and how much might policymakers on that side of the pond have to do . Maybe the dollar guess to parity against the euro. The accelerated race of dollar versus euro in particular probably slows off its First Quarter pace which was absolutely horrid. The greece exiting wouldnt be the real trauma but we did see antiausterity elections in spain. If its only greece thats going to be a wrinkle. Maybe exactly the kind of catalyst for the pullback of 10 that were long overdo for which will be a buying opportunity. But if we see more members inside of the zone politically moved more and more towards antiausterity platforms that could definitely be something that upsets the apple park. Just thinking back to whats happening in the oil and natural gas space. Obviously there are multiple contributors to that but could it bode well for people thinking maybe well continue to get relief at the gas pump or no . It obviously would. Weve really been a little bit of two minds about the oil price. We want to see it strengthen because we dont want to think of anything breaking in there and compromising the health of the u. S. Economy. But on the other hand we kind of got used to this idea if we get a little bit of the tax break. Stocks have done well Energy Stocks in recent weeks. The dow hitting its lowest points since 2009. Banks are saying we dont want to lend to someone that could potentially be over leveraged if their job is at risk. Thats a Ripple Effect that i think a lot of people didnt expect out of that. Especially because those marginal dollars in a way mattered more to this economy. You had the oil and gas kind of gold rush the boom. And if that has helping us to move forward and we lose that really going to feel it. Youre sort of perplexed as to what youre really hoping for. Specifically to energy companies, all these e and p Companies Got ahead of themselves and started to refactor in 85 a barrel oil. Thats why you see underlying issues arent doing that well. Oil here at around 60 probably longer term probably moves lower from here. Jim, what are your favorite ways to play this market broadly speaking . We continue to like europe and japan especially in the small mid cap space and japanese markets. We understand the stimulus safety nets of both of those economies are providing for their marketplaces will have to pay the piper some time down the road. We think the bend in that road is likely years away. So while others probably fear stagnation in europe and japan, we continue to think that behind a good manager like at Fidelity International growth, well overturn good interesting stones good valuations over the next year or two. In the u. S. Just homing in on transports this he really underperformed, does that worry you at all about prospects for u. S. Equities . That does not worry me but were not overweight transports nor energy. Were definitely overweight health care where we really like the Broad Spectrum of sectors in health care. Whether it is medical equipment and systems. Even some biotech if we can just get a nice healthy swoon in biotechs. Wed find them attractive. A healthy swoon. Lets get out to the gamestop earnings with kate rogers. Were looking at the beat on the top and bottom lines for the First Quarter for video Game Retailer gamestop. Reporting epf of 68 cents versus estimates of 59 cents a share. Revenues came in at 2. 06 billion. Thats compared to estimates of 2. 01 billion. Theyre also giving very strong guidance for the Second Quarter. In the after hours the stock is up by nearly 9 . Noptt too shabby. What do you guys make of this gain . 9 move after hours. They put the nails in this coffin so many times before. This is one that has a high shortage risk. Lots of guys are forced to cover off of print like that. Theyve been able to sort of look at the used game market. We see walmart try to imitate what theyve done with the used game market but they still seem to hold those maybe the margins better than anyone else can at this point. I dont think it is a screaming buy Going Forward but it is definitely a Short Covering scramble when you see a print like this. I like to play on the handheld here, trade stocks all day long. If that calls me a gamer. Thank you, everybody. Well leave it there for now. Stick around and catch more of steve grasso on fast money at 5 00. Is a major auto deal in the works for gm . Theyll have the latest on that story. Our thanks to jim lowell as well. Its been nearly seven years since Lehman Brothers collapsed under the weight of the subprime mortgage crisis. Former ceo dick fold is getting back in the real estate business. Would you give him money . Shark tanks kevin oleary is here next. You know he has a lot to say about fold and his adventure. Then well take the pulse of the mortgage market. John stumpf will be here. He runs the nations largest mortgage originator. You are watching cnbc, first in business worldwide. It can quickly become the only thing you think about. Thats where at t can help. With Innovative Solutions that connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. Female announcer through sunday its posturepedic vs. Beautyrest with up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Mattress price wars ends sunday at sleep train. Your ticket to a better nights sleep former Lehman Brothers ceo dick fold has rarely been seen. At the microcap conference dick fold did speak today. Really speaking publicly for the first time in nearly seven years with the exception of some congressional testimony shortly after the financial crisis. Fuld declined to talk in too much details about his personal failings about the Lehman Brothers bankruptcy or what exactly went wrong. He did give almost what was like a macro economics lesson in the environment from 2007 and 2008 giving his sense of really la went wrong and what led to that fateful bankruptcy filing in september of 08. He talked about lower credit standards, fed tightening consumers being overextended and banks like Lehman Brothers being over leveraged and what happened as a result of all that. The rest he said is history leaving us hanging a little bit. But he did talk generally about some things he wished he had done differently or missed. He talked about the violence in the market in that firdthird quarter of 08. How the contagion spread from one asset class to another. He talked about also being confused or uninformed about exactly where he stood when it came to the government and some of the options that they had. Obviously he wishes that it had gone differently, kelly. He said he still thinks about Lehman Brothers every single day but he still has moved on and at this point hes advising Small Companies on m and a and other strategic issues. Kate, thank you. Well get more reaction from shark tanks kevin oleary. He was very disappointed not by what fuld had to say but rather kevin, by what he didnt say. Explain. Heres my feeling. Of all the men in the world that would have a unique perspective of what happened to the fixed income market in that period at that time like many other investors, i was stunned at how much capital was lost and i will that sense of panic. He was at the epicenter of it. Ive he a always felt by the way, i think he is a great man. He created something unique in the world. If you trade bonds, credits, floating rate loans, any form of fixed income all roads led to him. Lehman was the internet the core of it all. Everything traded through there one way or another. And anybody in that period knows this. What i wanted from him was actually some recommendations from his own individual perspective of what we could have learned from that that we dont do again. Hes the only person to give that advice to both the government and the institutions that we now live with because if you really go through it all, having lived through the lehman collapse, the bear stearns collapse, the trauma lack of liquidity in the fixed income market, dick knows things and has recommendations hes not talking about. And i think he has the credibility, he should have given that to us. Im disappointed. I mean in a way, he did say no one thing caused the crisis to kevins question. Do you feel as though he should have addressed it more specifically kayla . Not necessarily. What i took away from it kwas a little bit of remorse. He did know what he needed to address to sort of get the elephant out of the room. I really paid attention when he said liquidity is important. Of course liquidity was the Biggest Issue for lehman in its final days. It is juxtaposed this week at the conference every single ceo on the record saying our institutions have never been safer than they are today and we have so much capital backing us up. It really sheds a contrast against where lehman was then and even where some of those institutions were then and how safe they actually are today if measured by nothing else other than liquidity. One of the quotes from fuld today, we dont put up capital a lot of merchant banking, his new business. He says we dont put up capital because i lost a fair amount of that. I dont know how much credibility he has with the rest of the world. We kind of know the details. Too much leverage in a period of no liquidity means they were kind of the sacrificial lamb for the entire system to finally have a break point where we had this bailout process and everything else. Would you say he screwed up . Look. He screwed up to the degree that he actually had more leverage and was slightly worse market position. There was no accident in terms of the sequence of firms that were under the most pressure when it went down. Now bear stearns, they found a home for it. We didnt really know the rules of the road. You can give them that. Kevin, id love to know now, given what dick fuld is doing in some of his businesses and getting into real estate would you give money to the guy now . Yaees, i would. He was a genius at what he did. You got to remember the peak and growth and power lehman had in the fixed income market. We know how that story ended. I understand that. But why does why is it right that one firm is given life and another isnt . Why arent they all let to go to the lehman extreme, let them all collapse and be built up from the protein thats left. Why is it that lehman wasnt given the handout from the government and others were . There was no question Goldman Sachs should have faced liquidity crisis if it wasnt going to get bailed out. Something still stinks about it. Im surprised you used the genius term. Why if you are singling him out why you are as a paradigm of that era. Im just saying he was dealt with unfairly. I would have loved to have heard from him today three things that either he would have done differently or we should have done differently. Because, kelly, i remind you now, world is more concentrated than it ever has been. We havent really fixed anything yet. Weve given a lot of guarantees and delevered banks. But theres fewer of them. Theres more Systemic Risk in the fixed income market. It is hard to get liquidity in the fixed income. After lehman failed and after aig was on the ropes, we still had Congress Vote down the t. A. R. P. Bailout once. Especially you needed to have that point of pain to actually lyly cat cat cat catatlyze. By picking winners and losers, we end up in a more precarious position by some metrics. Were more concentrated and theres less liquidity in fixed income than ever before. Thats the beef i had and dick did not address that today. I wish he had. Thanks so much kevin. Appreciate your thoughts this hour. Thats kevin oleary of shark tank. Jamie dimon saying banks should only do buybacks under certain circumstances. Well be right back. Later, the ceo of td bank tells us why he just purchased nordstroms credit card portfolio for more than 2 billion and what that deal says about the health of the u. S. Consumer consumer. Back in two. Blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. At a time when people are doing most of their banking on their mobile devices these days the traditional Retail Branch isnt questioned. Jpmorgan Ceo Jamie Dimon saying branch head count will come down an average of Something Like one person over the next two years, or 5,000 people mostly by attrition. A big move. Will other banks see the same future . Joining me now in a closing bell exclusive, td banks ceo is here. Our Branch Networks pretty stable. 6,200 branches. We like them because our customers like them. They might use them less not as often per month. But it is important part of the eco system ecosystem. If we dont have branches, we frankly dont have customers who are happy and we want them to be able to have delivery where they want it and how they want to use it. Are we going to see more or fewer wells fargo branches over time . I think over time youll probably see a similar amount. Probably incrementally more but not in a big way. We think a lot about how do customers want to access us. And if they want to do it more through online, thats terrific. If they want to use the bramplnch, thats also terrific but the branch is important to the overall system. Important for mortgages. How are people accessing mortgages these days . If i want a mortgage from wells fargo, how do i get one . Or how does wells fargo get me . We do business with realtors with builders. We have our branch or our store network who refer customers. But it is interesting going back to your first question about branches. Most customers, even millennials, open their first account, no matter how they do it with a location or branch that was within two miles of where they grew up. It means more than just doing transaction business. 75 of them do it once every six months. It is a reminder of where their money is. It reminds them that theres security, that the companys invested in the community. So it has a lot of other attributes besides just doing business there. What about buying a house . We continue to get housing data a little bit mixed. Youre the biggest Mortgage Shop in the country. What kind of trends are you seeing . I would say im cautiously optimistic about this business. We just got numbers out today on eist exing home sales. Fundamentals are starting to line up now. Household formation is highest in ten years. The gscs are doing some reforming. Rates are still very good. Unemployment is down to 5. 5 . Thats on the good side. On the notsogood side from housing, most of these households are going into rental units. We need. You think we should try to push those rent yours into housing . We saw some of the push policies last time around. I dont think we should ever do that. Home ownership is down from eight years ago, i think it is probably too low. As these new households move into rentals over time some of them will want to own a home. A survey recently the love afay irwith affair with owning a home is unabated. It may be a cost issue for firsttime buyers. What about moveup buyers . Where is the traditional demand we typically see from this group gone . First with respect to renters, and become buyers rental rates are actually going up. Rental availability is coming down. It is actually a fairly tight market. At some point in time when people feel comfortable with their job and about the cost of financing and what the cost of the house is they will buy. Not everybody, but as far as moveup buyers some of the challenge is when you move up you give up sometimes a lower rate than what you had in your new house. Even the rates are still so low today . Well they are low today but most people who have refinanced have done it a number of times and they have the alltime record low rate. They are clinking to that property. Sometimes thats true. Sometimes unlike back when i got my First Mortgage in 1976 it was 8. 5 . Two years later it was 11. 5 . I thought those were barring rns. So if youre under 40 years old, you think 3 or 4 is normal. It is not. There was a point in the wall street journal today about how Business Loans are set to surpass Mortgage Loans being the bulk of what banks are doing. Is that true in your business and why is this happening . Small business lending is an important part of what we do. Were up over 20 year over year and Small Business is really the engine that drives a lot of the growth in jobs in the country. One of the challenges about Small Business is that if you look at the age of Small Businesses, for 25 years weve had fewer Small Business starts on an annual basis. For 25 years this has been happening . Yes. So if you look at the average age of all businesses those less than two years old, in other words your new businesses have become a smaller and smaller percentage. Thats worrisome for the economy because thats where a lot of the growth is and thats where a lot of the jobs are. Even today as the economys showing signs of recovery the new business formation isnt there . Its less than it has been in the past. As a percentage of all this is a ratio. Obviously we have more business in america but as a percentage it is smaller. But as far as businesses go they are theyre doing better, their confidence is much higher. But the trend is worrisome. Thats true for most first world economies across the globe. So it is not just the u. S. For people who would say it is a regulatory issue or a cost issue. Its happening in other places as well. Theres no u. N. Namty typossibility maybe it is online. It is hard to start a retail shop today because you can get a lot of things other places. We do know one area where theres tons of growth. Thats construction. You travel all over the country. What are you seeing out there . I see cranes. I see a crane convention every city i come into. Actually what youre seeing is the private side of infrastructure spend is happening. It tends to lead the public side of infrastructure spend. So whats happening . The urban core residential development. I was in minneapolis last week. I gave the commencement speech for the Carlson School there. I had left that community 25 or 30 years ago to go to other places with our company. And i get back once in a while. I had not thought about housing. There is a whole Housing Community there now. People are moving into the urban core. You guys do a lot of business in commercial real estate. Were the largest on the planet. Are you going to look to add to that to grow that . It is a wonderful business. In fact we added a little bit with when we bought a portfolio along with blackstone from ge. That was an important thing. But we like that business. We understand it well. Weve been in it a long time. But youre seeing it not only in Residential Housing or multifamily housing, you are seeing it in things like office building. Industrial. It is really happening in lots of places. When we talk about whether to invest in certain parts of the business or use the capital elsewhere we had some comments again from janie dimeon saying people who participate in these buy back programs are misplaced. It should really be investment, investment investment. Others say listen if my shares are trading below book value, then i better spend a dollar there. Whats your philosophy about buybacks . I think about dividends and buybacks as a return for capital shareholders. Both are important. Dividends speak to confidence of the company in your earnings stream. I think buybacks speak to excess liquidity or capital allocation. We try to blend both of those. I think both of them matter and i wouldnt be antibuyback if i think i can buy back shares at something less than the Intrinsic Value of the company. I dont necessarily look at book value. But you guys will continue to do that . It is part of our way we turn capital to shareholders. What is the biggest risk that you guys are thinking about . Is it Liquidity Risk . Is it the first Interest Rate hike . Is it the strength of the u. S. Dollar . Is it Something Else entirely . From it is probably Something Else entirely. First of all, capital, liquidity, were at the numbers, and more so than we need to be with our internal buffers. I think about Cyber Security a lot. Because when you think about some of the breaches that have happened around the country, should you think of those cumulative not in an ebbpisodic, not, oh we got through that one. It is all connected. Whether it happens a the a retailer federal government, white house or whatever the case is, it is cumulative in its risk. So i think about that a lot. I also think about the payments business a lot. About the change a lot of new technology on that front. Especially us being headquartered in San Francisco with all thats happening in that area. Theres a lot of change going on. And sometimes the first movers are thinking about things in more of a social way and we need to think about that were putting peoples capital and their money at risk. So were trying to understand how we can provide products and services and be relevant and yet be safe. A lot of Different Things for you guys to consider. Before i let you go though should we think of wells fargo as an entity thats going to continue to grow bigger to be number one in this business in that business and everywhere that you are or should we think about it as with some of your rivals and other Financial Institutions as a machine thats getting smaller, leaner and more efficient . We think were already fairly lean and efficient, though there is more work to do. Our efficiency ratio, were almost in a class by itself in terms of long institutions and efficiency. But i dont ever think about being number one in anything. I want to be most relevant to our customers. If that makes us bigger, thats terrific. You dont get better by being bigger. Its the other way around. Even if it means doubling down on those branches. Well, i dont foeknow if were going to double down. We surely like them. Theyre integral to our distribution. Fascinating point. Thank you so much for being here this afternoon. John stumpf ceo of wells fargo. Time now for a cnbc news update with slarn ep erharon epperson. At this hour president obama visiting the National Hurricane center in miami talking about the importance of being prepared for natural disasters and climate change. He mentioned the flooding in texas saying his thoughts and prayers are with the communities that are have been devastated. Embattled fifa president spoke at the opening of the conference in europe. He said the Corruption Scandal surrounding the worlds soccer body has brought shame and humiliation and demands change. He says they have a long road ahead rebuilding trust. Google kicking off its annual Developers Conference where it officially introduced android m. The next version of its mobile operating system. Among the updates, new ways to gather information and a longer battery life. And some extraordinary pictures of a place in the universe some 1,500 light years away. The european southern observatory in chile captured the most detailed images to date giving us a glimpse into the destiny of the sun. And thats the cnbc news update for this hour. Back to you, kelly. I always like when it ends on a cosmic note slarn. Haron. First tesla gave away its electric car patents for free. Now ford following in its steps. For a price though. Phil lebeau has that story when we come back. Later find out how you can help save for your Childs College Education without risking your own retirement. Female announcer sleep train challenged its manufacturers to offer even lower prices. But the mattress price wars ends sunday. 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 ends sunday at sleep train. Your ticket to a better nights sleep 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. Welcome back. Were getting a ton of after Hours Earnings news. Kate rogers wrapping it up for us. Luckily for these companies, all good news. Gamestop, a beat on the top and bottom line. Revenues coming in at 2. 06 billion mr. Thats versus estimates of 27. 01 billion. Theyre also giving strong guidance for the Second Quarter of the year. The stock up over 6 now. Deckers outdoor, the footwear company, reporting epfs of 4 cents a share. Forecasts were to break even. Revenues coming in at 341 million. A beat on that as well versus estimates of 321 million. Very weak outlook for the First Quarter but strong outlook and guidance for the full year. That stock up over 4 . Finally, splunk the software company, epf was for a loss of 1 cent is what they reported. They were expecting a loss of 3 cents. Revenues coming in 126 million. Thats versus estimates of 118 million. Theyre also raising their full year outlook and giving strong guidance for the Second Quarter of the year. Though splunk is getting hit after hours, it is down over 3 . Back over to you. Kate thanks for rounding that up for us. Ford meantime joining tesla and opening up its electric vehicle patents. Unlike tesla, ford wants to be paid. Phil lebeau how much . Theyre not telling us what the price will be for access to these patents. Whats interesting here is we could perhaps be getting to see a move within the Auto Industry for more automakers to follow the lead of elon musk and allow others to have access to their patents when it comes to electric vehicles. In fords case it is going to be offering these patents up to outsiders to have an access for a price. More than 400 patents were filed by ford last year. More than 600 in total and another 1,000 patent pending. Goal here spur ev development. When you look at shares of tesla over the last year we are saying, didnt elon musk announce doing the same thing, only giving them away a year ago . Youre right, he did. A year ago he said hey, anybody who wants to have access to our patents, have at it. The goal spurring development for electric vehicles. You need to give a jolt to the market that is not developing as quickly as everyone throughout it would. In 2014 123,000 electric vehicles were sold in the u. S. Thats less than 1 of total vehicle sales in the u. S. And this year sales are up just 2. 2 . Kelly, it will be interesting to see what comes of this if anything. I do think that we will likely see other automakers now follow the lead of tesla and of ford and say, okay lets make this open architecture as much as possible. Mike are you surprised that ford is pursuing this and that theyre pushing Ev Technology . I dont think surprise. I think it is a matter of trying to find a return on a lot of investment thats gone on without an obvious payoff. The government is kind of mandating this research. Theyre kind of forcing the industry to at least look for clean energy very efficient ways of doing business. Is it like the Google Android strategy . I dont know put it out in the world and hopefully somebody has a probablye use for it. The Developers Conferences going on this week you think how theyve basically put themselves out there and say, hey, developers you take the platform weve built and you run with it. I just fell like this is the you a thoughyou a thoughmakers response. How much of this is just building out a traditional charging platform as opposed to i understand the more technology, the more cars the more likely you are to get that but at some point dont we need that first . You do. But i think mike hits on the key point here. This is such a capital intensive business to begin with now you add in the cost of developing electric vehicles . I think ford and other automakers are going to eventually say we need everybody to put in the effort here. We cant get their by ourselves. Td Bank Reporting better than expected earnings. Up next the ceo joins us to tell us why a looming Interest Rate hike will likely boost the banks bottom line. Also families struggling to save for both retirement an College Education. Which one should you prioritize . Weve got the answer coming up on the closing bell. Qo e d8j8j8j welcome back. Td Bank Reporting earnings earlier today beating on both earnings and revenue, finishing the day in it the red about 1 . Lets bring in the ceo of the td bank group. Welcome. Good to see you again. Great to be here kelly. Thanks for having me. We just heard from your colleague dave mckay over at rbc that theyre not seeing too much of a crimp yet from the drop in oil and gas activity in canada. What are you guys seeing in the business . We havent seen any material drop in business. But inevitably canada is a net exporter of energy. I think at some point there will be some impact but today we havent seen any Material Impact in our business or in any of our numbers. All right. Youre putting money to work elsewhere meantime buying up that portfolio with nordstrom. That because you are more bullish on prospects of the u. S. Consumer here . Thats a terrific traffic transaction for us. Nordstrom is a highquality brand, highquality retailer. It is great, great that we were able to strike a deal here. It is a space we are very very high on. Our partnership deals in the u. S. , we continue to expand on that. And we feel very comfortable with it. The all the metrics that you would want in a credit card portfolio, you have them here. So very happy with this transaction. And does that say anything about your plans for the kinds of expansion you might want to do in the u. S. . In other words Something Like this on the sort of wholesale level as opposed to purely through branches . We are actually a full Service Player here. Td securities is a Large Business for us in new york which does a lot of wholesale banking. As you know. We also have an interest in Td Ameritrade and of course td bank dchlt bank bank bank, americas most convenient bank. We are not just focused in one area but without a doubt we have an asset thats very attractive to us. Credit cards are something weve been working on a while and great to see that we made good progress. Im wondering though what you see coming down the pike for margins. If theres one metric that banks and investors are really focused on especially as we await what the Federal Reserve does is margins. You actually said you expect margins to decline. But im wondering what your outlook is and how any changes across the yield curve will affect you. Well without a doubt, general rate environment is not friendly from a margin perspective. This quarter for our u. S. Business we did see a debt. We feel relatively stable for the rest of the year. Yes, it would be great if there was a rate move sooner rather than later. But we keep on working at it. Our whole core strategy is of organic growth. Without a doubt theres keen competition but theres still Good Business to be had. Yes, margins is a problem but we are offsetting that for the most part through higher volumes. To circle back to the point mike was making as well and to comments from jamie dimon, should we expect to see you guys closing branches consolidating, perhaps even staffing them with fewer workers . Or no . In the years ahead. Without a doubt, part of the Retail Banking business is to optimize your distribution. So we have been consolidating some of our stores in the u. S. In fact this quarter we announced that we would do that as well. But at the same time where it makes sense in the markets where we are keenly focused, we are opening new ones. In new york weve got more than 125 stores now. This year well open 21 other stores in our markets as well. So ours is a monthly channeled strategy, but that does not mean we are not focused on looking at new formats, Smaller Stores more selfserve stores. It is part of our program, but stores and branches continue to be a core part of our offering. Ill take note of your use of the word stores. That is telling. Kind of what we were hearing earlier from david mckay. Hopefully youve been to one of our stores and know it is not just a bank branch. Youre correct, i have. The record stands corrected. Thank you so much. Thanks, kelly. Ceo of td bank this hour. Think a little while lie cant hurt . Think again. Up next well hear from an economist that says it is the little lies that have the biggest impact. Also why Airline Stocks are still getting crushed even as Oil Prices Slide this week. The back in 2 00. 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. Ends sunday know better sleep with sleep number. A fascinating new cnbc documentary exposes the liars and cheaters. So what is dishonestys real life toll. Dan arielli says little lies cost us a lot. Yes, theres some big cheaters out there, but they are very rare. And because of that the Overall Economic impact is relatively low. On the other hand we have a ton of real cheaters and because there are so many of us the Economic Impact of small cheating is actually incredibly, incredibly high. Its an important point from any point of view. For more on liars big and small, tune in to cnbc tonight at 10 00 p. M. Eastern. Tune in for dishonesty. Is it possible to save for your kids College Education without jeopardizing your retirement . A closer look at the savings catch 22 when we come right back. A tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. Welcome back. Financial advisers recommend prioritizing Retirement Savings over paying for your kids College Education, but is it possible to do both without jeopardizing both. Sharon takes a look for us. Hi, sharon. Kelly, it can be tough to juggle saving for college and saving for retirement at the same time. Many parents dont think theyll be able to save enough to cover either one. Theres some pretty startling statistics here. More than half of parents surveyed by t. Row price say they would rather dip into their Retirement Savings than take out student loans. Its understandable the parents are concerned about the long term debt. Sally mae says parents plan to use their Retirement Fund and nearly 1 3 of the parents in the t. Row price study are actually doing that theyre using their 401 ks to save for the childs college. Some are using a 529. Only 28 said they dont know what a 529 is. Without sufficient Retirement Savings, most parents know theyll have to retire later. Theyre okay. More than half said they were willing to delay retirement in order to pay for college. But we know, kelly, the problem is theyre likely jeopardizing their own Financial Security in the future. Sharon, i want to get some reaction from the panel here. Mike, can you do it all . Is that the equivalent of doing it all . Most parents cant do it all. Most say they cant do much of either one. The standard advice here is to prioritize your Retirement Savings. There are other options. Theres more time to catch up if a student has to take on more debt relative to a parent that might not have time to refill the retirement. You can borrow for your education but you cant borrow for your retirement. I agree with mike. Sharon . The way to do that is to definitely fund the 401 k. Is first. Get the free money from the company match, pay down your debt build up an Emergency Fund and think about the college savings. Open the 529 plan. Get the tax advantage in your state if you can get them. Thats a great place to save. You can do it. You have to divide that pie, even if its a small pie, into a couple of different parts. Mike im sure there are plenty of people who think theyre doing the right thing avoiding their kids taking out debt especially with it in the headlines every single day. Being a parent is a bit heroic. This fits into that idea. Its a completely natural response. Most people are willing to do a i lot, but the retirement account specifically especially a tax advantage one where you have penalties for withdrawing, that shouldnt be the first resort. You have perverse incentives. They try to plug some of those gaps. Its a very confusing process. This is another reason why we have to do something about the cost of College Education. Which is going in one direction. Sharon, what would you recommend people do in this case . Think about if you do have to take out a student loan be realistic about the federal loan rates and where they are. If you have the Credit Card Debt at 13 and a parents plus loan is 7 youre doing better to borrow that way. Consider the fact that as kayla mentioned, of course you can not borrow for your retirement. You can borrow they can work they can work hard probably just like you did to get through college. The hope is you dont have to pay for it all. Work so you can pay for your kids college. Thank you, though. Its a really important point. Sharon epper son. Mad money, cramer has an exclusive interview with the ceo of southwest airline. Hes firing back to american about capacity. Hear what he has to say at 6 00 p. M. Eastern. Thank you for being here. Really appreciate it. That does it for us on closing bell. Fast money coming up. Melissa lee, whats up. They might have a new drug to be the best catalyst. Straight over to you. Fast money starts right now. Im melissa lee. Traders are dan nathan brian kelly, karen finer man and steven bros so he. Tonight on fast, go pro revealed their new product. Well hear from the ceo. Plus google and show me are making moves into googles core business. Well ask the top analysts who might be on the fence there. First, the developing story on general motors. Morgan stanley has some comments having some investors wondering if a mega auto deal is in the works. Phil lebeau has the story