Transcripts For CNBC Closing Bell 20170511

Well see. I think people were talking about that at the time. Yes. Well do aldi versus walmart. And trade secretary mnuchin in italy to find a way of trillions of dollars in foreign earnings to be brought back to the United States. We have it live from the g7 summit. We begin with macys crushed on weaker than expected earnings. Courtney reagan with more. Once again, courtney, retail in a reluctant spotlight today. I know, isnt that the truth. Theres no signs of a turnaround for Department Stores today. Almost across the board, macys shares down 115 . The disappointing results were in line with the expectations. On the call, the cfo said she only expected the First Quarter to be the weakest. Despite its ninth straight quarter of misses, she is reiterating the full year forecast. She acknowledges the challenges, but financials will improve the rest of the year because the benefits of store closures. The full roll yacht of new shoe and fine jewelry category, and new marketing coming targeting their most loyal customers, and also some further digital improvements, like buy online, pick up in store. The profit beat the street handedly, but revenue short, and samestore sales slid more than expected, down for the fifth straight quarter. Kohls marketedly improved, athy are going after sales and markets where competitors are closing stores. Nordstrom after the bell, investors price in disappointment with shares down 6 today. Matt boss saying on power lunch, 91 of what they sell, you can buy elsewhere. He doesnt think things go well after the bell for them either. Thats the point, courtney, not so much Department Stores versus others. Its the fact they dont carry and sell exclusively their own brands, so at this point, anything you get somewhere else online like amazon, thats the issue, right . Exactly. Not to mention convenience from online or whatever. And pricing is another issue for them. Two of the most important things for shoppers are value and convenience. Right now, amazon is hard to beat with convenience, even macys, a strong onli online offering, and when you talk about value, its hard to price those away from t. J. Maxx or outlet malls. Macys tries to grab them with their price concept and stage concepts, but it takes time. They are expanding. They think its working so far, but not enough to move the needle. But heres the question i have, were going to talk more about this later this hour. Where does this go . Whats the end game . We showed four of the five Department Stores, stocked crushed overall for several months. Do they go away . Whats the final end result . Courtney, heres my theory. Heritage, thats the Sears Real Estate spinoff that now was highlighted the other day, but taking real estate, redeveloped, leasing out to stores and other things. Whats macys following suit. Key points there. Reali real estate in retail needs to be reexamined. Its being reexamined. Estimates said somewhere between 25 to 50 of the stores in the United States need to close. Theres too many stores, and you just cannot keep up with online with that amount of product. It doesnt make sense. Theres value in the real estate if you own it like sears did, and in some cases, macys, trying to redevelop properties, thats not the case with everyone. So then you have leases for stores that are just under performing, and it makes more sense to close them. So i think were not everybody owns it. Exactly. Not everyone owns it. Thats the difference. Thats a problem for them. Thats the dilemma faced. Thank you. Thank you. See you later p. Closing bell exchange, what a day. The dow down 144 points. Am i allowed i woke up with a cold. Im aware. Im trying to keep my back to you so we oh, go this way. Cant afford to have that. Oh, stop. The market has come back today like kelly from the lows of the session, down 31 points. Joining us at post nine today, oliver porsche, and cnbc market analyst steve grasso, and Rick Santelli who is comfortably ensconced in chicago away from kellys germs. Away from the spray. At the cme. Oliver, what about retail . How are you playing right now . So, we like the Consumer Discretionary space as a whole, but we dont like apparel. So amazon . Well, amazon, but home depot. Theres a number of different theres a number of companies in segments in there. To your conversation before, retail the whole landscape and Business Model changed, and so the old World Leaders such as macys, we just dislike that Business Model, and we dont see how they are going to win in the new landscape. Back to the question i asked then. Yeah. Meaning every Single Department store goes out of business . Somethings got to survive. You youd think. Im sure. Youre not going to try to pick it. I dont know which one. Well stay away. Theres better values in other areas within the Consumer Discretionary space where we know theres winners and where the momentum and Business Model fundamentally is more sound. Home depot, by the way, steve, another under the radar story, oil up 5 in six days. Yesterday, we had our inventory numbers, most bullish draw we got in the inventory since january, but its not out of its own way. This, to me, as i said, a contrived bet on oil with the saudi deal. What do you mean . The opec meetings, production cuts, supporting it, then a bunch of selfdie banks, they want a piece of the 5 deal, and they dont know they are doing it, but maybe they give out rose colored glasses with the direction of oil. For me, i think you have to look at supplydemand. We know theres going to be an overproduction in the United States of oil. We know that is coming down. Theres a glut of oil. It tells us something about global demand, about global growth, and i think the path of least resistance is much lower on oil. The head fakes, blitz up, selling opportunities. Okay. Eventually, drags the market down, but right now, the overall market is hanging on the face of that. Meanwhile, rick, 30 year treasury option like the three and ten earlier this week, is soft. Clearly, investors reluctant to step in at these levels expecting the fed to raise next month again, right . Yeah, no. When you really think about it, its pretty amazing, weve had a real snapback in the not viewed as an opportunity that the yields would ease back a bit. Seems as though investors shunned it as you pointed out completely. This, at a time, when the equity markets have plenty of room, go to lower, they do, but dont stay low. I think the data today was exceptionally important, and mild cti at all with the todays ppi, i think that maybe the markets maybe taking more notice. Lets not lose sight of the fact today and the last couple days, tenyear at 240, yields not closed at since the very end of march, and, you know, theres plenty of reasons, you know, just think of the drama seen now this washington, the hunt for red november, and it still cant get the markets higher up. I continue to think that the market looking past this is not anything small, and it needs to be considered. Im not sure exactly how anyone would like to read it, but i know one thing of four decades watching markets, markets dont watch bad news as a result go sideways. Rick, are you talking about the ppi number still in that regard . You mean the fact its interesting. The political land scape, but oh, got it. I was talking about whats going on in politics more, but i think that if we turn our, you know, gauge away from that for a minute, the data is starting to heat up. And, steve, what do you think of that . So, you have the Producer Price ind index, import prices coming in strong, consumer prices, you know, thats there too. The wage number was not great in the jobs report, but, again, its not really reflected in the bond market right now. I think to ricks appointment, the market is trading off macro. Yesterday, there was the comey news break, and then the market dipped a little bit, and then they ran off those invenn story numbers where they just grabbed ahold, oh, oil is rallying. That means that theres an allclear, and the market just rejected the lows and just ran higher, but if you look at to ricks point, if you look at the market, its been digesting everything, waiting on these pro growth policies. Whether they pass, just the event of having a Friendly Administration after the last eight years, is deemed as a welcoming mat. All right. Have to go, guys, thank you, all. Appreciate your thoughts on todays market, and another interesting day here on wall street. In 50 minutes to go until the close, dow down 27 points, steadily moving from the lows. Thats the pattern as of late. Start weak, make it up as we go here. The s p down six points today as well as the nasdaq, down a quarter of 1 and russell down half percent. Buy the dippers other than a company like snap, tumbling to the lowest bubble since going public in march. When we come back, whether millennials who piled into the stock in the early days regret that decision now, and what that may do to the thoughts about investing in the future. Also ahead, attention shoppers and investors, a European Grocery giant is ramping up plans to beat walmart at its own game on u. S. Turf no less. Youre watching cnbc, first in business worldwide. Have a tissue. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. 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Have to be a real fan. Also, golf . Then i would pay attention. Because youre a real fan. Zb exa exactly. Maybe thats next. I suggest that with you at the hel helm. I have a day job. Speaking of which, lets do more of it. Snapchat down following disappointing numbers. The investing app, core demographic is mill len yenials 1824. Retail investors took the opportunity to buy into the dip that we saw. That the buy to sell ratio is six times more buying than selling it on the dip. Crazy. Wow. Well, continued stock drop, joining us now is edge wealth management, along with michael santolli. Welcome to both of you. People buy this dip in snap . Anybodimey menwant to believe t break the ipo price or stay down . Its early for snap, first ipo, visibility not as frequent, reporter, now, the markets getting, you know, bit more from management, so i think as we seen structure shift from sourcing for the social media space, just not uniquely positioned, user face, looking at, you know, a third of the user face not on facebook, 45 is nonoctober instagram, i think you add overflow to snap chat. Often times, see how the manager scales up the business, and marketers follow suit. The data team put this together, i dont know if we have a graphic on this, but the first full day of trading after the first Earnings Report after they became public, theres facebook, which fell 11. 7 the next day. Twitter fell 24 the next day. Gopro fell 14. 5 the next day. The performances right there, folks, are the day after they reported first Earnings Report after going public, and now we see snap down 21 . Consistency across the companies is not so much unproven Business Models, but metrics nobody was quite sure how they would be judged. How the companies would be judged. How they report. What metrics to emphasize, and whether, in fact, they transition to a Public Company was going to come along with a willingness and ability to please investors on a threemonth basis. I think that maybe you can take comfort from that. Im not particularly surprised that those robin hood numbers in terms of the ratio, heres why. If you are presumably relatively new to stock investing, theres loss aversion. Theres some resistance to booking a loss. Youre more likely to say i hope it coming back if i already own it, and, therefore, not sell, and maybe you think its a discount you didnt already own, do some buying. I know you like the stock. I quote james here, who also likes it, but said, what we didnt want to see was the material drop in backtobackdrop in aggregate revenue. Thats what happened. Do you expect it to reaccelerate from here . Yeah, the key to the story is revenue per user. By the way, down 14 . Down quarter on quarter, but also seems better, so that the key is how much it monetizes the business over time, and with the revenue, its between 6, 70 year and year, through 18, and over time, reaches 20 over time. I think thats key how the ad dollar employees the business, and this is an active light business. Its not just using google platforms, i think that key to the story. Theres another energy and tea company. I know after facebook came out initially, they had everybody saying, you got to go mobile, guys, missing the boat there. Twitter, find a way to monetize and raise revenue. Snap, they are facing this onslaught from facebook where facebook uses some of the strategies that snap has on instagram. Sure. And they are beating them at their own game here. That is the challenge. I think over time what happens is snap has to be able to turn to advertisers and stay, theres something fundamentally different about how our product is used, and the distinction might be that its actually built for this kind of distracted fleeting way that people absorb information with social media. I still think facebook is built on the premise of, hey, we people absorb themselves in this stream, in this content, spend a lot of time there in one sitting. Go to advertisers, say, look, you can haved video contenter, other messages built for this kind of quick back and forth,ic thats something you make something out of. Thing is but also over time. What if that is not the strategy they follow . They are looking more and more like a traditional media platform instead of the site that they that was a phenomena. It doesnt have to be the content at its root, but it basically has to be something thats built for people who are just kind of, like, checking in all the time. Zr rig right. How much time to turn it around . Is evan the guy to do it . I think he is. He has the patience to take the company forward. Give the company time. I would give it four, five years, and then well four to five years, we have well know in that much time . How much time do they have, mike . They probably have another two, three quarters before people sort of write look, look at gopro, you can see, thats a bad product, thats the worst case scenario, which shot up to 90 and collapsed. Yeah. Basically people said, it doesnt work. Im not saying thats where its going, but you have quarters before people give up. Thank you. Good to see you. Thank you. Mike, next hour. Closing with 40 minutes left in the trading session, dow down, 44 points. S p, nasdaq, russell, all lower as well. And nasdaq after a record close yesterday. Right. Up next, european giant chasing walmart down the aisle, but who gets crushed . Later, modern medicine, mit Computer Scientist uses her skills in big data to battle cancer. Thats still to come. Aldi takes on u. S. Giant, walmart, they want to beat wall mat at its own game of low prices, right . The company specializes in private label brands that account for about 90 of the 1300 items inventory carried. There are currently 1600 aldi stores throughout the United States. Companys looking to expand that number by 400 stores, mostly in florida, texas, and on both coasts, and it wants to add more private label goods to appeal to price conscious consumers, which is pretty much everybody right now. Walmart has over 5,000 stores by comparison. By the way, not many may know this, but aldi is the Parent Company of trader joes as well. I was just looking at that. Aldi brand stores or i think they are. I think they are. I did not realize they had that many u. S. Locations. Aldi has 1. 5 of the u. S. Grocery market, growing by 15 a year, whereas walmart controls 22 s of the grocery market, and its growing 2 a year. The law of numbers caught up with them there. Aldi is a fast growing company. One in connecticut people go to, and inventory turns over quickly. Its not just grocery but other stuff. They want to expand products. The ceo says they want to be the only place people go for the groceries. Now they just have private labels. They did that in europe. In u. K. , same debate happened with the established supermarkets and low cost guys. Listen to us, were talking about another growth in groceries, in retail, this happens to be groceries, but at a time when Department Stores are imploding and other retail outlets go out of business, grocery is growing now. Well, then theres whole foods. The question is, whats the future of their business . Is it for prepared foods . Can the grocery chains look back in ten years, why do we have so many chains when theres meal kits at home . I just received an email from our colleague, yes, im reading your emails, will, he say, the company has killed in the u. K. Since the financial crisis because they are insanely cheap. They bring low prices, something they want to go after walmart on as well. Remember, heard it first here. Aldi. And, thank you, will, for the contribution. 34 minutes left in the trading session. Here, the dow is down 36 points. When we return, youll hear what the president told nbc newss lester holt about firing james comey as fbi director. Later, the College Public Investment Club beating out vard and columbia. Theres live pictures. More about this coming up. Theres a look at the average, about one to three advancers today, led by exxon, mentioning surge in oil. Still, only 1 gain marked behind them on the aprover, bottom line, laggards are microsoft and home depot, one of the most wellperforming stocks. Everybody for the major averages still in the red as we speak, bill, but the dow down, oh oh,. 17 . Well see. Yep. 30 minutes left in the trading session for this thursday, and joining me on the floor of the New York Stock Exchange is matt, and here we go again. Yesterday, down 90 points on the down, snapped back, today, declining 144 points on the industrial average, and snapped back. Who is buying, do you think . I hate to say buy the dippers, but individual stocks are taking scrutiny after earnings. Yesterday, we saw disney, obviously, the leader, and boeing was midday, and after that macys today. And snap today. Snap i thought would have more followthrough than it did. Saw it in the morning. Snap has not seen the rally, but the market has. I think theres underlying good to the market. Were not really taking into account whats going on in d. C. And circuits there. Thats good. The markets focused on what it should be focused on, earnings and fundamentals. Oil, where does that fit in the priorities of catalysts . Oil is the most unloved sector, most upside potential. Theres big components in the dow, some of the s p, and they are oilrelated. So that could be very strong as we go forward, and that could be something oil breaks out, im not certain it does, this is a oneoff inventory, you know, blip. Event. Right. Im not sure thats it. Look if it breaks through, 48, maybe 50, but im not sure. Has not done that right now. No. Thanks, matt. Kelly . Thank you, guys. Time now for the cnbc news update with sue. Heres whats happening at this hour, everyone. The acting fbi director, andrew mccay, testifying before a panel this morning, a panel thats former director james comey was scheduled to attend until being fired two days ago. Mccabe disputing the assertion he did not have fbi employees. We have a diversity of opinions about many things. I can confidently tell you that the majority, the vast majority of employees enjoyed a deep and positive connection to director comey. The trial against a white Police Officer who fatalal shot an unarmed black man comets today. The jury heard from several witnesses who said they did not observe threatening behavior. A new study by the cdc shows one in three High School Students drank alcohol in 2015 and more than half drinking were binge drinkers, consuming eight more or drinks in a row. Many say they got the alcohol from other people. Thats the news update for this hour, kelly, back downtown to you. All right. See you next hour, sue. Thank you so much. President trump speaking exclusively with nbc news lester holt a short time ago, and eamon is here to recap that and fallout. Theres always fallout. Always. Kelly, thats absolutely right. What weve seen over the days here is an evolving series of criticism of former fbi director james comey from the white house and evolving explanations for his firing, but in an interview today, the president made a new charge, simply one against his personal style. Heres what the president had to say. Look, hes a show boat, a grand stander, the fbi in turmo turmoil, Everybody Knows that. Look at the fbi a year ago, it was in turmoil, less than a year ago. Its not recovered from that. The other comment that the president made thats going to be skrcrutinized and picked apa in hours and days, in fact, had three conversations with director comey in which the director told the president that he was not under investigation. According to the president , those involved one dinner and two phone conversations, and at one appointment, the president said he asked director comey whether or not he, the president , was under investigation. The president said director comey at the time assured him he was not personally under investigation as part of the broad russia probe into russian meddling in the 2016 elections, so that was something that the standards, the white house spokeswoman was under pressure to defend as appropriate behavior in the White House Briefing awhile ago saying it was legal and appropriate for the president to ask the fbi director if he was under investigation, in no way meddling in the ongoing investigation. The white house coming under criticism because President Trump last year as a candidate very harshly criticized the meeting between the then attorney general and former president of the United States bill clinton saying that was horrible and terrible. The white house wrote today saying, it was entirely appropriate for the president to call the fbi director and ask him if he was, in fact, under investigation. A lot of new material here to go over. All of it being analyzed here, kelly. I will point out, our Keith Williams in washington where you are was telling lester holt after the interview aired he talked to a number of legal officials who said its not illegal for the president to call up the fbi director and ask questions like that. Its, obviously, controversial, you know, but its not illegal to have that done. Right. Yes. He made that appointment. Absolutely thee most important point to make about this, but theres questions of why the president would have asked that question, what impact that had on the investigation, and at the time, the way the president described this meeting, it was a dinner meeting. The president said the fbi director was coming there to see if he could remain on as fbi director, that the president was considering firing him at the time, and so these two conversations, apparently, according to this version of the events, happened at the same time. The president asking, am i under investigation, and comey saying, can i stay on as fbi director . That got peoples attention. They were asked if that was a conflict of interest in the Briefing Room today, and she said, no, it wasnt. All right. Before we lot you go, can you confirm for us the heritage of your last name . My last name . Yes. My first name is irish, and my last name, javers, is i think that side of the family gave up mentioning they were german after world war i. They are usation. I would have lost that. I thought french. Thank you. Thank you. By the way, cannot wait to see the rest of lesters full interview with the president tonight on nightly news on your local station on nbc. Looking forward to that very much. Heading to the close im still thinking about aldi. More on aldi coming up. Something to correct. 23 minutes left in the trading session with the dow down 29 points, treasury secretary mnuchin in italy for the first g7 meeting, live report from there coming up. Also still ahead, sears in a tail spin for years now, and you know who the ceo says is to blame . A familiar whipping voice. You can guess it. Well reveal it later this hour. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. All right. We need to clarify something. If youre just joining us, boy, you missed a conversation awhile ago about this european grocer called aldi, which is its got 1500 stores in the United States, but going after walmart with lower prices. Now we mentioned also that aldi owns tr trader joes. Right, but not right. Theres two different aldis. Theres aldi foods, a german company, the one that owns the Grocery Stores here in the u. S. , aldi stores. They dont own trader joes. Aldi nord broke off. Are you following this . They broke up years ago, and they own trader joes. So theres two different aldis. North and south. South owns the grocery chain. North owns trader joes. All well say is they are doing well in the u. S. Right now. Yes. All about the prices there. There you are. Lets look at other movers in todays market action, shall we . Pharmaceuticals lower with quarterly profit falling less than street forecast, but quarterly revenue missed interim ceo also raised the Cost Reduction goal to 1. 5 billion this year, and they announced plans to sell the Global Womens Health and european cancer and pain treatment units in order to cut debt. The stock, though, is now up 2. 1 , trading low eri, interest. Merck approved use of therapy in combination with chemotherapy to treat lung cancer. That stock up a fraction. Thats a story weve been following for quite a while now. Yeah. One of the leaders in the dow today. The treasury secretary is in germany, and hes there with a mission, and cnbcs ylan is traveling with him. Whats he looking to accomplish, ylan . Reporter kelly, one of the big fears among officials here is the United States might implement a border adjustment tax raising cost of foreign goods, but a treasury official told me today that a border adjusted tax in the current form does not work. That is some of the strongest language weve heard out of the Treasury Department on this issue, and it should be a relief to officials here as they convene for the g7 finance ministers meeting, but it does not solve the bigger frustrations that many countries have over u. S. Companies, particularly in the tech sector, shifting profits to low tax jurisdictions. Italy has been one of the countries thats been cracking down on this issue. They settled with google recently for 334 million in back taxes. They did the same with apple just a few years ago. Meanwhile, france is now charging air bnb to collect tourist taxes, and apple is locked in a court battle with the European Union over 13 billion in taxes that the eu says is owed. As a post country of the g7 meeting, italy decides the aj agen agenda, and tax reform is a top priority, kelly, bill, well keep you posted about the meeting. Remember the good ol days, all they did was get together and complain about the others currency levels. Currency wars. So much more complicated these days, wh. One area they agree this time, agree that currency volatility leads to financial instability, bad for the economy, so its one area they agreed on early on. Where is barre, italy . Near rome . Another part of the country . Reporter it is in southern italy. Its a poor town, nice and mild here, lovely springtime breeze over here. Wish you could be here, guys. Oh, im sure you do. Thank you, ylan. See you later. You could be in vegas. We you everybody will want to stay tuned for more on whats coming out of vegas in a little while. You will. 15 minutes to go, dow down, nasdaq down, and russell as well. Etail overtaking retail, Department Stores look like dinosaurs, but we found a bull that said not so fast. Bull and bear debate on department stocks coming up. Times up, insufficient were on prenatal care. Es. And administrative paperwork. Your days of drowning people are numbered. Same goes for you, budget overruns. And rising costs, wipe that smile off your face. Were coming for you, too. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. Art stopped by, saying the market on close order show imbalance of 500 million to the buy side, almost as much as we saw yesterday, and the dow is down 22 points right now. The s p down 4. 75 . Right now, no records for the major averages today. Few points below the levels. Department store stocks lower, macys, kohls sinking on reports of earnings. Nordstroms taking a hit, down look at that, 7. 5 , reporting earnings after the bell today. More on if the dip is a buying opportunity for the Department Stores, bringing in liz, and david, bullish. Interesting to hear a bull case for the Department Stores, asking earlier, i guess, them bought is one, but its a near term play, isnt it . What are other reasons there are value in the spaces right now . Well, i think the opportunity is, look at walmart and what they did with investing and buying platforms online. The one thing good of Department Stores with cash, theres opportunities out there. I was at a Board Meeting today when i heard from you guys, a Company Called frame bridge. They do online custom framing. I mean, its a great way to connect with customers. Theres a lot of companies out there that can leverage that connection. I mean, the thing of facebook and google, all of those guys bought a loft of the research and development, theres an opportunity system in the companies with the cash to buy research and development. What do you think . Clearly, the current Business Model is not working for the current Department Stores. Change or die . What are you seeing . They have to change. Its not a Good Opportunity for investors. To davids point, if they throw capital around at new Business Models in hopes of salvaging what they have, thats challenging. The business is clearly broken. Retail, you know, organized around a lot of different themes. Department stores, express, and thats not something that they can really accomplish in the stores at this point. Question from earlier this hour, do all Department Stores go away, then . Just the model itself thats bro broken, or some unfairly painted with the same brush . They dont all go away. I think there still will be Department Stores. They dont make investments right now. We have fewer of them. Companies are not overstored, so nordstrom is not overstored. They are experiencing challenges and i dont think they are going to go away, and i dont think ma macys or kohls goes away, just smaller companies. Would Nordstrom Rack and other brands save their parent chains . Become a way to get that t. J. Max demographic thats holding up well . I think so. Its bigger than that. They have to rethink businesses entirely. Look whats out there, the opportunities to buy innovation and customer relationships. It takes money, but stocks trade as if they are going to die. Theres opportunities out there if they listen. I mean, when i talk to all the Startup Companies out there who have some of them are, you know, different sizes, theres a lot of energy out there and a lot to bring to the bigger companies. Its a matter of the companies of accessing that and being willing to listen to it. David, just as simple as reducing the footprint, the number of stores out there, and building a robust Online Presence in order to compete in todays market place . Yeah. I mean, just for todays example, whole foods, one thats up when others are down. Look what they did, talking about 365, millennial new brand. Look who they brought on to their board today, ron, both digital people, both understand digital commerce. Look what was done at panera, and look what sharon did with Williams Sonoma and best buy. Making the best, were going to make changes, and they made a bold statement about it today. Liz, shaking your head. Presented that question to david. You dont think it works . Reduce footprint, go online more. Working for the survival, but to the a more profitable model. Less profitable, going to generate less returns, and so thats what we look at with Department Stores, generating smaller returns on invested capital and center margins. Thats just the reality we have to look forward to in order to survive. All right. Thank you, both, very interesting, liz, david, appreciate your thoughts on retail, and we have what did you say, nordstrom after the bell. After the bell. Down 7 today. Dow down 27 points, back with the closing count doup in a moment. After the bell, talking about aetna, Third Largest Health Insurance bails from exchanges all together. What it means for the fate of obamacare and health care stocks. Youre watching cnbc, first in business worldwide. My business was built with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Stay with me, mr. Parker. 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Com some of this inflation data this morning, the macys report, the snapchat earnings, you know, all of that is the market chose to respond to, and we went lower on open this morning, but then it came back again, and the selloff did not last long. We are finishing with about a 30 point decline on the industrial average. We had three treasury option stocks, threeyear note on tuesday, tenyear yesterday, and 30year bond auctions today, and all three of them were very soft. Not much demand, yields a little higher, as you can see, down on the 30 since then, but the point is youre seeing reluctant bidders right now because they feel like maybe theyll get higher yields down the road after the fed starts raising rates in earnest and maybe as early as next month. Dont know, but thats what seems to be going on in the treasury market right now. Crude oil after a huge rally yesterday, you did not see a pullback from that, so it is holding its own right now, a gain of almost 1 today on top of yesterdays big rally, but, still, as steve pointed out at the top of the hour, still stuck in the range, get up to 50 maybe, they pull through the range, but right now, still at 47. 75. Now, bob, we get to retail earnings. We got nordstrom after the close tonight, and then jcpenneys tomorrow. Retail very much in the spotlight today. The problems facing macys, kohls, and all the others. Same store sales down 25 overall. Generally weak, cant compete against walmart as well as amazon. That trend is clear. If there ever was a day to be down 250 points, this was it. We were headed straight down for 250 points, then just stopped, just completely turned around. It was a good day for a selloff. It was not like, usually theres a change in the tenor of the market when europe closes at 11 30. This was before. 10 30, wells fargo had an investor todday today, and the market turned around. There was billions in additional cuts in the market, market liked that, but the banks turned around, wells turned around, and the overall market lifted. Im not blaming the fact it did not go down because of wells fargo, but turn around at that moment. The point is, the amazing resilient market. Very much so. A lot of uncertainty in washington, not sure about trump agenda, and it didnt happen. All the concern. The volume here, just, again, normal, not heavy selling at all. Oil has been big support, a lot of relief, finally, we find support for oil around 47, and closed below 45, oil up a little bit, but its not big moves. They didnt drag all the oil stocks up with them. The overall market stability. Thank you, bob. Kbr ringing the closing bell at the New York Stock Exchange. National Meningitis Association over at the nasdaq with the dow down 23 points. Stay tuned for the earnings from nordstrom and more on the second hour of closing bell with kelly evans. Ill see you tomorrow, kelly. Feel better. Thank you, bill. Welcome to closing bell, everybody, im kelly evans. A dip on wall street today, look how we finished up here with the Dow Jones Industrial average closing lower by 40some points last check. Down a tenth of 1 , down 23 points to 20920. S p lower by five, 2394. Nasdaq, a record close yesterday, dropped a quarter percent today, and russell, small caps, the worst performers, results didnt help yesterday, but in this case, 2 drop to 1390, and speaking of earnings, its been a rough day for retail today. Macys reported disappointing results this morning with the stock down 17 on the bell, dropping 5. Thats about a fiveyear low for macys. Look at kohls, which has results, too, not nearly as bad, but down 8 , and in ordnordstro down 7. 5 , but results from nordstrom are not even out yet, due any moment now. Interesting read on the consumer, state of Department Stores, so much more coming up. Joining me for all of that is Senior Market commentator, and with us to kick it off, tiaa investments, and kevin oleery. Its been awhile. Did great to be here. I think you are not a snapchat guy. Absolutely. When i saw that down 20 , i went on snapchat and learned to use it. Snapping like a bangi all day long. Shares down 20 and thought i have to use it, didnt think i have to buy it . No, i did not buy it. Im like everybody else. Perplexed and amazed what happened there. Thats the ratio of that many bidding of market cap instun ne great lesson. Snap a platform or teach . Right. Thats what mike said, is it gopro, a onetrick pony or a twitter or facebook where theres longer term platform. Has to prove itself. Last night we talked, kelly, theres a question, i think, a reluctant Public Company. It was from the beginning. It did not court wall street. Was it a hurried Public Company . In other words, did they realize if the numbers are slowing so much, we have to get out now. Well, it was an earlier phase on the business side than most of the companies had been, but, you know, the report last night did show you they are not really built or tuned into try to please the street in the short term basis. This is not impression they were there trying to walk the walk and talk the walk. No. I mean, their whole brand is the Counter Culture brand, not part of the establishment. When you have an ipo and miss out of the gate, that is a drating right away. That is a i have no confidence as a Portfolio Manager to even step up, especially when you look at the metri metrics. Most importantly, revenues, daus, the high cost, lack of profitability, all of that combined, you say, you know, i dont have to sell my facebook to buy snap. I want to hold on to the facebook, and i might add to it because they have a better platform and better Business Model. And, by the way, theres just, of course, cult of jeff bezos, and the fact from day one, im not doing anything to please wall street or short term earnings. You look back, that was the right way. Theres a sense of how unlikely the past from 0450 billion market cap that amazon was. Also, exercising, were focused on the absolute level of Free Cash Flow generated. Youre not hearing snap put that and customers the customer how important is user growth going to be in the next quarter . That slammed them. Incredibly important. Bring home the bacon on user growth and time this platform used by all the users, 30 minutes, 40 minutes a day. This will be single digit. [ inaudible ] you got 30 of the float coming out. How quickly does that happen . Quite soon. So you have that as a big overhang in addition to the fundamental questions, and just naivety of the Management Team to get on the Conference Call and not comprehend what they just did. The lock effect expiration was the moment to buy facebook looking back. Who thought it would be a deluge of stock down below the ipo price. Always concerns. Kevin, briefly mentioned amazon. We talk about the big winners this year. You know, there was a period of time last year, last year was the income play, dividend play, stocks doing well, now back to 2015 where apple and amazon and these are the companies sucking all the oxygen from the room. Whats your strategy in the market . Ive watched the vix go to the lows again down below 10. More money offshore into europe where you had more excitement with the french both bringing down valuations and pas. It felt like she was going to lose, and now we got new italian votes coming. Buy stock at 17 to 18 p forward basis, and same sectors pay 20 more stateside. I put more money in europe, boy, rewarded, up 14 this year. Nordstrom we dont have the full results just yet, but the stock down so much today, before we get into that, though, what do you do about Consumer Discretionary about retail right now, i mean, as sort of conservative do you have to take that stuff out of the portfolio entirely, or what happened. This is a secular problem for the Department Stores, and one thing you cant do to extrapolate what happened at the Department Stores as meaning a whole bag of consumers. Theres goods going on. This is an important point. You can all kinds of places, and our reports did it last hour, talking about Companies Like home depot reporting next week, areas of investment nothing to do with apparel. It goes back to more jobs created, wages are not great, but they are headed in the right direction, and you have some spending on homes and home values are actually more, so its they really are just choosey where they spend. Thats the theme for the last year and a half, so i dont think you necessarily have to sort of buy any of the departments, or maybe you trade them if they get oversold, but in terms of investments, i have way better areas as to where to buy. You think about whats doing well this year, its arguably apple, amazon, netflix, consumer plays. Not like people buy apparel at macys, therefore, the u. S. Is in recession. Exactly. Hotels, home builders, they are all in Consumer Discretionary. Airlines are not technically. Our favorite under the radar consumer platforms are not to shop. Nordstroms results, Courtney Reagan with the full numbers. Its a beat . Yeah. We saw the shares bounce around after hours in response so for nordstroms First Quarter, reported earnings of 43 cents a share adjusted, beating analysts estimates handedly, and revenues coming in slightly stronger than expected at 3. 35 billion. Comparable store sales, key metric at retail all the time, down 0. 8 , that is worse than what the street was looking for, and if you break out that comp sales number, remember, two components for nordstrom, the full line, regular full price stores, and then the Nordstrom Rack in the online component. The Nordstrom Rack comp sales up 8. 7 , but the nordstrom full line stores down 2. 8 . The stock is now lower as you can see. We saw that initial reaction higher and then adjustment and now lower. Kelly, back over to you. To clarify, you said nordstrom kind of own stores down 2 , but the Nordstrom Rack was up 8. 7 . Thats right. Nordstrom rack, both stores and nordstromrack. Com component, those comp sales up 8. 7 , and then nordstrom full line stores and website down 2. 8 for the comp sales. Again, you see that consumer really moving towards those outlets, offpricing names in retail. That is for sure. Courtney, thank you for the time. Nordstrom down 2 after hours. Full line comp basically in line. The rack much better, double expectations. Definitely encouraging. If you have an excuse to buy t. J. , ross, burlington, this is it, showing where people are going for sure. Expectations were higher. All the stocks hit so hard, but because they had a different distribution platform, meaning offprice and regular and spending so much on omni channel and ecommerce, its a bigger business and people thought it would be a bigger number. Its not a disaster relative, but not quite a hit. If i ran nordstrom, were turning everything into Nordstrom Rack tomorrow. Its difficult. Youre stuck with the real estate youre stuck with, right . Thats your store base. Youre actually on a net basis in high quality malls. One of the other reasons that maybe nordstrom gets benefit of the doubt is less than half as many stores as macys, 350 in fewer dying malls. You make lemonade into legacy and put capital in the part thats growing like Nordstrom Rack. Kevin, do you like the idea, talking about the sears strategy, spinoff real estate and lease to other companies. Thats what they do with heritage. Is that the type of thing people need to think about if they do own this real estate in the Department Store space, whether youre in order stronordstrom . Youre not getting diversity away from the basic problem of retail. Just because you spin into a reit and offer me what if the tenant changes . Thats a delicate ballet. Look at the numbers and impressed with stability to control inventory and cost. These are not horrible numbers. Its a tough environment, and they delivered pretty good numbers here on cost control side, so they are probably one of the best of the worst sect s sectors, but never going to have a good run here because everybody hates the sector. What were you going to add . Truly is. Of the houses in the neighborhood in a bad neighborhood, its the best one, but its a challenging environment. When i i could go elsewhere as a consumer, apple, for example, and i know you like apple as well, easier story to understand and grasp, but theres so many stories. Theres experiences. It is technology. It is a lot of the themes that will continue to work. I just dont see that changing any time soon. Shares down 5 after hours. Add that to the session today, down 12 . That is a huge i mean, its that is a big move. It is. Obviously, they are losing again, its weird just a sympathy vote, isnt it . Not an operation one. Stock up 17 since last quarter. Built in this slight relative premium. Just looking at the exact same market cap as macys, half of the number of stores, the enterprise value including that is three quarters of macys. Theres more money attached to each store and same amount per sale. Basically, theres a premium in there. By the way, nordstrom down 6 after hours. Kevin, saks is rolling out advertisements in the paper today, this new word for it, wellness, basically, center within the store. Theres athlete leisure a golf sauna, all of these Different Things, which is just trying to get out what is working for the consumer now. Men, too. Theres an idea thats where the dollars are going, and its might look different. If you offer Services Like that, you capture the custom for a longer period of time to shop aisles. Think about that. They draw you in the store for 70 minutes, better than running in and buying makeup. I think at some point in the next quarter or two, this sector will become a buy because its getting the living stuffing knocked out of it. Is it i i hate to use that phrase, the dead cat but can you buy it for a couple quarters and hang on to it or what . Better operators to give store experience, because i dont believe you will ever, ever go into a Department Store again well, saturday i went shopping for clothes this weekend because i walked around looking like im in high school most of the time, and i went to athleta and j. Crew and made, you know, which was interesting, i i made some purchases i rest my case, your honor. I hope they are value plays and better operators are going to get attention. In the meantime, nike sales up mid Single Digits at kohls, not a bad place to be. Home at kohls, not a bad place to be. Offprices we talked about before. Theres Better Stories out there right now. I dont disagree that maybe at some point nordstrom is interesting. I dont think macys, they have a way to go to fix their problems, but, again, too many places to put your money. As a Portfolio Manager, i have a lot of names, why do something to speculate a situation. Absolutely. Can you do some kind of deal making that consolidates or transforms space . The thing missing in the entire cycle is buy out firms, private equity, putting in valuation tools. In past cycles, this was rich Hunting Ground for them. Exit at this point . Had a deal that somehow just puts even if its a distressed situation that you can work off of the rest of the cycle, you know. Gap stores on paper should work. You have this family control, but all the rest of it thats been the case for a decade and its not gone. The next is the reits that own these outlets and malls. Thats the thing to look for next. The weaker performers. All right, guys, thank you so much. I like this. We have to do this again. Thank you for joining us here, and, again, its a really tough after hours session for nordstrom on top of a difficult trading period today. The shares of ford, meanwhile, grind to a halt, closing in on their lowest levels since 2012. What the ceo thinks it takes to jump start the stock. Aetna officially out of obamacare by next year. Find out whether other insurers follow its lead and what it means for states left without insurance options. Youre watching cnbc, first in business worldwide. Ation to pri, dramatically increasing print security with enterprise printers by hp. Which is great, unless youre a corporate spy. Unsecured printing makes your network vulnerable. Enterprise printers by hp help prevent costly Security Breaches that can compromise your network and reputation. So im stuck spying the Old Fashioned way. Hey. Im not spying. Secure printing by hp. I. T. Orchestration by cdw. The shlike a bald penguin. How do i look . [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Welcome back. Ford shares are down 37 since ceo mark fields took over. What is fields telling holders after the stock . Lets ask phil lebeau with the headlights. Stocks did not perk up, bill. No. We listened to annual meetings, a web cast opposed to other annual meetings where youre there in person, and heres the questions heard from investors, basically comes down to this. Look at the chart here, see what ford stock did since the ceo took over relative to the big three competitors, gm and fiatchrysler, since july 2014. The company heard questions from people saying, well, what are you doing about the stock price . They are investing heavily in the future and believe not only they run the business of today as profitably as possible and second most profitable year ever last year, but investing in autonomous drive vehicles, electric models, and mobility solutions. They believe the future will pay off at some point, probably starting at 2020, 2021. Heres mark fields talking about the era of transition ford is in right now. Were going through the transition. We are embracing it. Youll see exciting news on this in times to come. We want to show you shares of ford and whats its done over the last year. We put up this, that the ford chairman is frustrated. Built ford was very point blank in saying, guys, i know youre not happy. Im not happy either. The ford family fortune are tied into ford stock, so we feel it as much as you do, we want to get the stock higher. The question, kelly, is, when will that happen . Right. Phil, did he make the choice at any time about what happens with, you know, turning over the ceo . Well, he has a big say in that. I dont think that he has lost confidence in mark fields, no sense of that talking with people inside the company, nor do i think the board of directors have lost faith in mark fields. That said, at some point, you have to ask, okay, how much are we investing in the future and when does the payoff come out . Yeah, i know. By the way, since we have you here, phil, what are you hearing about the possibility they ban tablets and laptops . I talked to one from the middle east, and he said flights were empty because they hate this, feeling they couldnt travel. Its impossible. I question whether or not the laptop ban is the reason you have empty flights from the middle east, i think theres other factors like the travel ban the Trump Administration proposed. This has been rumored for some time this laptop ban, right now coming from the middle east and United States that it would be extended to europe. If that happens, theres huge implications talking about flights now that are operated by delta, american, united, as well as lutanza, other european carriers as well. Could have a huge impact in terms whether or not we see less travel to and from europe because it increases the hassle factor. Asking people to sit on a plane for six, seven, eight hours, okay, bring a book. You cant have a laptop with you or ipod with you. Thats going to make people, perhaps, think twice when they travel. I know. A book, like a physical book, but i get it, when youre dealing with kids, if you cant have that option right. I dont know what you do. Bothers everybody else too. Safety comes first. Well see where they draw the line on this one. Phil, thank you. You bet. Have a great weekend. Phil lebeau. Hedge fund manager announced a merging of sears and kmart back in november of 2004. The stock of sears plunged 86 since then. Youll never guess who he blames for the retailers problems. Phil tells you next. How a Computer Scientist and Breast Cancer survivor uses ai to fight the deadly disease. We recently had a heart attack. But we are not victims. We are survivors. We are survivors. We are survivors. And now we take brilinta. For people whove been hospitalized for a heart attack. We take brilinta with a baby aspirin. No more than one hundred milligrams. As it affects how well brilinta works. Brilinta helps keep platelets from sticking together and forming a clot. In a Clinical Study brilinta worked better than plavix®. Brilinta reduced the chance of another heart attack. Or dying from one. Dont stop taking brilinta without talking to your doctor,. Since stopping it too soon increases your risk of clots in your stent,. Heart attack, stroke, and even death. Brilinta may cause bruising or bleeding more easily,. Or serious, sometimes fatal bleeding. Dont take brilinta if you have bleeding, like stomach ulcers,. A history of bleeding in the brain, or severe liver problems. Slow heart rhythm has been reported. Tell your doctor about bleeding,. New or unexpected shortness of breath, any planned surgery, and all medicines you take. If you recently had a heart attack, ask your doctor about brilinta. My heart is worth brilinta. If you cant afford your medication, astrazeneca. May be able to help. Welcome back. First up, going on a rant, blaming fake news for sears woes, saying coverage of the ailing chain has been, quote, irresponsible for too darn long. Mike, are we to blame . Certainly not we, no. Obviously not, its not the whole story. Its possible for both things to be true that sears has a decline more rapidly than most of the other Department Store industries. The strategies about disinve disinvestidisinves disinvesting from the retail chains and the rest of it. I noticed theres a strand of brands decline that goes around out there. When i was at yahoo anything like this store chain is near death radio shack is a good example. Spent the bulk of the 90 minute appearance talking about the news. Could have spent time better. Next up, social media is causing historic drop in volatility seen as of late. Yes, he said, quote, ironically, its having a combing effect on social media, and all confusing information, you dont know which is true and false, you say, to heck with it, i wont do anything. Is he right . Im having a hard time, you know, following that chain of logic, to be honest, really, were we have low volatility at all time highs, and at very small valuations. In other words, if you if you dont know information was new, you say, im going to keep more and get rich and not sell . Thats true. Also no evidence that markets are moving on new information. True. Firing of james comey comes out, i didnt get the sense people reacted. I dont know if thats true or not. Exactly. Not in the grand scale p things. The project of, look, theres periods in the past, past two cycles, when we have volatility this low. Increase social media. Do we have to reach for explanations . Finally, the bidding war for a tiny company. Verizon paying 3. 1 billion because they want the spectrum for the 5g, do you know how many that is . Nine. Less than ten. Nine. Nine. 334 million a person. That was in october. Clearly, its an asset, right . Its kind of, you know, the steal company, the old days, had to buy the iron ore field, the raw material, thats what this is now. Kind of a veracious appetite, has to continue, more options. Instagram, only had x employees, nine employees. Amazing. Bidding war. Exactly. Up eight times over the last seven months, the valuation of the company. President trump and Congressional Republicans said obamacare is failing. Now, aetna says they exit obamacare next year. Up next, how that impacts the insurance industry. Move over, harvard, yale, a Public College here in new york city has thee best student trading clubs, and we are going live to the Trading Floor to learn the secret to their success. Whats her problem . Apparently, i kept her up all night. She said the future freaks her out. How come no one likes me, jim . Intel does just think of everything intels doing right now with Artificial Intelligence. And pretty soon ai is going to help executives like her see trends to stay ahead of her competition. No more sleepless nights. Were going to be friends im sorry about this. Dont be embarrassed of me, jim. Im getting excited about this we know the future. Were going to be friends because were building it. A look how we finished on wall street, not positive on the close, dow dropping 23 points, well off the lows of the session, down 150. The s p 500 down five points, a quarter percent drop, same for the nasdaq down about that much after a record day yesterday, and russell, the worst performer. The worst performers today in the Retail Sector thats continued after hours here. Nordstrom down 3. 5 after the Earnings Reports, and disappointing same store sales especially for the nordstrom brand, and they are down 7. 5 in the session today. Time now for a cnbc news update with sue. Hi, again, sue. Hi, kelly. Senators richard burr and mark warner, chairman and vice chair of the Senate Intelligence committee, meet privately. Afterwards, burr said russia investigations will continue. The vice chairman and i still have 100 agreed, regardless of what happens by the Justice Department or by the fbi, that the investigation thats done by the Senate Intelligence committee will continue on its current course as aggressively as were able to. The cdc reporting the number of hepatitis c infections hit a 15 year high because of the opioad epidemic. Infections in pregnant women double and drug use is the reason for the transmission. On a lighter note, a solo official visit to luxemburg to celebrate the treaty of london that established independent and neutrality. That is the news update at this hour. Kelly, back downtown to you. Love kate middleton. I know. She walks around looking like a high schooler. So pulled together. So amazing and classy. Helps to have a team of people to pick things out. All that. Starting small with the tinyist country. Very important. Dont scale it up. Right. All right. Sue, thank you. See you tomorrow. Aetna announced for 2018 no longer offering individual Insurance Coverage under obamacare in any state. Interestingly enough, shares trading alltime highs today. Humana said the same. They were weaker on the session. United health pulled out in 2017. The new repeal and replace Health Care Bill approved by the house, sent to the senate, but its a long ways from becoming law. What if means for health care and insurancers and the pick, we are joined by paul howard, senior fellow at the manhattan institute, and senior Equity Analyst at morningstar. Guys, thank you for being here. Paul, can you just give us a sketch of where things stand where the changes stand across the country today . I read we are down to one or zero plans across some states, asking for a 40 rate hike. Whats the state of play . Its fragile. Obviously, the obamacare network varies by states. States with a lot of providers, pro bust competition where they are profitable in states like new york and california, snurpers stay. Other states with rural populations and sicker populations, they pull out. Counties with single insurers, few choices, less hospitals, few physicians in network, and higher cost for taxpayers. With the repeal and replace in the senate now, peopleinsurers. Well come back to that. Can you blame companies for pulling back . Sounds like they are going to be a losing money or cant get the rate hikes to justify it, so, you know, are they making a p e purely rational decision here . How much more can they continue like this . Yeah, definitely, they are making rational decisions by far. Its a very tough market to operate in. Very low profitability to come by. Whats in the Public Exchange market is older and sicker, and theres restrirkss in terms of their underwriting standards. Theres restrictions in terms of growth profit caps, and restrictions in terms of the rate hikes. So its not a good its not a good mixture for profitability for the company. Obviously, they are going to lose money, shouldnt really get involved in the markets at all until they mature. Obviously, theres plenty of variation among states depending among their approach in terms of whether obamacare and different provisions have been successful or have failed, theres other obvious ways to alter the law nationwide, whether its the level of subsidies or loosening some of the restrictions, outside of what the hda is contemplating, that you think could work to Keep Companies in the markets. Look, absolutely. The biggest challenge is to get younger, healthier people in the market. They stay out in droves. They wanted 44 of the population to be in the exchanges, now its 26 . If you lower the cost of the plans plans, make it like true insurance, other approach is high risk pools or reinsurance. Take the highest cost, the federal government can pay for some of those costs, making it more profitable for insurers, by also lowering costs for younger healthier people which lowers risk and premiums across the board. So, palm, now, you know, kind of bring that together with us for whats happening with the bill. Trying to make its way through congress. You know, some conservatives upset, hey, youre basically leading obamacare in place, right . You can use the exchanges to buy coverage on the individual market. Is that the case . Would all of this these stats were showing that look so horrible actually look better under this version of the plan . Look, i think the senate has said they will basically do their own bill, address what the real problems in the market are right now, again, high cost of people who are not getting any federal subsidies, higher costs for younger enrollees. If you bring costs down, best thing to do, again, talk about reinsurance, work on high risk pools, and give them flexibility in how you design Insurance Coverage, giving them power to run their own markets, hold them accountable for outcomes. Thats the right approach to direct both concerns on the left and right, affordable and coverage. Meantime, charlie over the weekend suggested go to a medicare for all type system, and medicaid, itself, is at the heart of the negotiations, seeming to pick up a lot of the coverage where current offerings, you know, current offerings leave off, so are either one of the two options, you know, now looking more likely because they are such difficulty in the individual marketplace. I dont believe so. I dont believe theres enough capital in the hill, i dont think the Current Administration wants a medicaretype system. I believe theyd like to see more private, in reality. Just takes a lot for us to implement a medicare for all system. If you think back to when the aca was first rolled out, we couldnt roll out a private exchange or a web site for individuals to get insurance properly. Yeah. Theres a lot of structure issues. A lot of issues in terms of capital, capital from the hill, and just not happening at the moment. Paul, same question to you, so, you know, for all that should be done, the failure of the current, you know, exchange marketplace, make it more likely that we end up with Something Like medicare for all . Look, i dont think so. Hes right. Look at how, aca passed by the skin of the teeth, the vote in the house this time of the house still narrow. Senate has its own conclusion. The cost of single payer would be so enormous and disruptive. The approach is, fix this part of the market. Its less than 10 of the u. S. Population. Getting that right does not need massive changes. Thank you both, gentlemen. Thank you. Thank you. And well see what continues to happen with the Health Care Bill. Harvard and columbia send graduates to wall street, but the best performing student traders club, members are here at the New York Stock Exchange with ideas coming up. And mammograms have been vital in diagnosing Breast Cancer, but computers may have the key to detecting the disease earlier. Well tell you about that next. You are watching cnbc, first in business worldwide. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov you get to do the dishes. Ed. Bring em on. Dawn ultra has 3 times more greasecleaning power. A drop of dawn and grease is gone. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade this is where i trade andrs. Manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Mammograms ra the traditional way to detect Breast Cancer, but computers may find it earlier now. Meg has the story. Guys, all day today in the series modern medicine, we talk about Artificial Intelligence and health care applicatio applications. This is a story with a resear researcher with a personal reason to improve detection. She teaches computers to learn, the work focused on areas like translation of languages, until a Breast Cancer diagnosis three years ago. Going through it, i realized that today we have most sophisticated technology, than to adjust treatment. She set out to change that, using her expertise in Artificial Intelligence and machine learning. In collaboration with doctors at mass general hospital, she train computers to analyze mammograms. The hope . Detect signs of cancer earlier than the human eye is capable of. And i was wondering, you know, looking back, no human, but was there something in this very complex image that would teach us, the wrong development, human who looks at it, and says a change, but a machine, looking at images, people like me, this is how they learn. Shes Teaching Computers to read Health Department records to help doctors incorporate all Data Collected on patients to make personalized treatment decisions and improve the practice of medicine. Now after seeing a patient, i really very strongly feel that, you know, its my duty to go and change it. Thats what im trying to do. This is in the early days, but, you know, she was a Computer Scientist working on translating ancient language, and got the diagnosis and applied that to medicine and health care. What is it she does thats different from what they are able to do in the past by looking at the mammograms . Right now, we hear about radiology that these trained doctors use their eyes and ears of expertise to use an image, that looks like cancer. Theres variability in what they look at. They are using the computers to see images, use deep learning to understand what is and is not cancer and maybe Computing Power finds something the human eye does not notice and detect earlier. Pattern recognition. Exactly. They are not in a way teaching the computer what specific elements to look for, its saying, here are just a flood of images, and we know which were and were not. Powerful, actually, kelly. You cannot imagine the lineup we have for you from las vegas, a rare and exclusive entire. First quarter earnings, talking about vegas, how trump impacts business here and what he sees for mccau in china, mark cuban interesting conversation as well, and we are back in twitter, use of Artificial Intelligence. You cannot believe who has the encore, kelly. Found mr. Las vegas himself, wayne newton, and hes joining us, and we have a special surprise for you later on. Woah. It is going to be an actionpacked fast money tonight. Mel, melissa, guy tried to serenade wayne newton years ago. I hope theres a consummation on the show today. Putting that out there. Interesting word you used, kelly, consummation. Bring it to fruition. Oh, lordy. I only mean the full expression of their duet nevermind. Its getting worse. Full expression, yes. Keep going, kelly. Gentlemen, we look forward to it, melissa, and, oh, boy, thats quite a tease. Fast money in ten minutes. Itll be something. Thinking of the college clubs, you think of harvard, but it is a Public College in new york city. Students beat out Top Business School programs, and believe it or not, most of the students in the trading club didnt have an internship in finance. Joining us on set are two of the clubs members. Along with dan, the coach of the trading club. Welcome, everybody. This is a great story. As the reports indicated, you guys playing first, second, and third place at the annual ninth annual trading only, 9th annual trading faceoff in the fall. Who wants to gin . Do you want to explain how you pulled this off, coach . Well, we have an exceedingly deep pool of talent. I we heard lebron james he up worthed everyone every day. They outwork everyone. They are crazy talented. Our job is to feed them the talent and make sure they have great trading opportunities. Eventually, kevin, incidentally is working. He is still finishing, taking four courses and he is working every they for group one each on the noor here. Guys have so putting many etoo shame. I want to go back to college, bell, claimed 1st place in the Market Division in the algorithm trading competition 2016. What is involved with that . Tell us what its like to work on these programs and take them to competition . How did they work . So these programs try and like mimic like a trader would see on the floor. So a lot of programing goes into it. A lot of Computer Science . Yeah. You essentially are creating one of these algorithms that will be smart enough to hand him options, which is one of the more challenging areas. Have you so many different quotes of all the times and the rest of it. One of the things i read in competition, since you guys had so much practice. Lets take a classic example of what we see all the time. Lets take snapchat, something goes wrong, so to speak, what you guys have learned through experience is stick with the formula, stick with the the algos, dont change it up. Usually it takes a long time to get to that understanding. Definitely. During the competition we saw examples of that. One thing dan stressed before is stay and we plan for in advance, so the week leading up to the competition, we put in a lot of time and try to figure out strategies we would use during the competition, even though during the competition, we werent as popular at certain times. We stuck to those strategies, they ended up working in our favor, for all of those rounds, your score is relative. So if you are not doing very well, its likely that your competitors are not doing very well. Few stick to the strategies that you are currently using and you plan for and you prepared for, you are more likely to keep that correct frame of mind rather than panicking. So you guys are seniors right now, did you come to this club, did you recruit, how does that happen . Did you have an interest in finance before you got involved . Do you go to the club because you we heard about it or how does that work . So, weve actually known each other since freshman year, we have taken math classes all throughout. This summer i worked at Credit Suisse and their program. In the fall, i recruited again. Yeah. Dr. Dan, how do you know there will be these bright kids doing math, if they arent exposed like you were to finance, do you go out and find them . Recruit them . Not by trading. We have been coming to these competitions for a while, we actually had the 2nd placed team as well. Its kind of we had our first spring competition last year. Just to put the rest some of the comment out there, the winners or spring competition were two young ladies who i expect well see based in this place. Baruch is not baruch. A famous trader and adviser to six president s, an influential man. Its all coming full circle. Congratulations to you and what you achieved on the program as well, everybody will be following along. Its all them. Everybody used two, well change and kevin change and kevin stefanica. It was a short trip with new york city. Were bringing in media chairman john malone has a suggestion how disney should mapping it broadcast business. Well tell you right after this. Whether its connecting one of the worlds most innovative campuses. Or bringing wifi to 65,000 fans. Businesses count on communication, and communication counts on centurylink. Welcome barks espn pay tv shrinks at an alarming rate, 700,000 cancelled their subscriptions in q1, they have lost millions over the past five years, they have a suggestion for bob eiger according to an interview, separate espn and abc from dis fis movie studios and theme parks, michael. Yeah. Obviously, he moves several moves ahead. Assets are moving and where they have a proper home. Is there some logic to it . Verizon, espn, abc business. He sees verizon buying dish. There is a lot of Different Things in there. Cbs and lyons scape. Its always about distribution plus content one way or another for him. It does make some sense. I think this is more the advice for disneys next ceo for robert eigers successor. I dont think there will be much in the short term flu is wont dismantle his legacy . I dont think in the short term. It will force the hand of the ceo to essentially craft the company past. Meantime, there is this push ultimately, if you will be verizon, all of a sudden you are competing against the entire industry, who is all in the same space, what is your competitive advantage . It sounds like they are coming to realize the content is that. Competeing is not a future really in their view. Especially when you are talking about content programing being over the air, if have you 5g, in other words, you dont have to be plugged in potentially down the road. Thats the future that people are maneuvering for. Kudos to the Financial Times and always good to hear whats on john malones mind. Ceo unilever, pullman weighed in on warren buffet saying it was not a hostile offer. Take a listen in the end, our strategy, investing and my returns have been higher in the last eight years tharn warrens returns, so i think its better if he leaves us with what we know how to do well. Whoa, my returns have been higher than warrens. Pretty bold comment. Obviously, he has deflected that bid, of course, we can say, we deserve to be independent. One thing to deflect it. Its another to say personalized and kraft warren, disingenuous as well. You can catch the full report on mad money at 6 00 p. M. Eastern. Fast money begins right now. Live in the strip in beautiful las vegas, nevada, the encore hotel, a special fast. Starts right now and fast money starts right now we are moments awhat from a rare and exclusive interview with ceo steve wynn, mark cuban will be here with the legend, himself, wayne newton and perhaps its a surprise or two. Trust me. You dont want to miss a second of this show. Welcome to it. Im mellissa lee. We are at the