Stock . Take a look at what its doing right now. Its up nearly 5 . Of course, it already has a big buyback and the thought of it being bigger is something the investors like. Arguably the most successful of all of the activist investors going after one of the Largest Companies in the world and pushing it up 4 . Even apple responded. They said that, quote, we appreciate the interest and investment of all of our shareholders. Tim had a very positive conversation with mr. Icahn today. I tweeted out a little while ago that the translation of that is, simply, gulp. And to think this was one time a target of shorts. You had David Einhorn in there last year. Exactly. Shorting the stock. And now to think carl icahn is calling it undervalued. Certainly one to watch today. Much more coming up over the next couple of hours, im sure. Also, its called the hindenburg, and it has the Trading Floor buzzing, because the omen is back in play right now. So even as stocks are rebounding today, you can find out why some are predicting a stock market disaster is looming. We will look carefully at that coming up a little bit here. And one merger is grounded. Look at the stocks of American Airlines and u. S. Air, both depending on a deal to go through. American airlines down 48 . U. S. Air down 11. 5 . The proposed merger, the department of justice says consumers would be hurt and is suing to block that deal. So far, only investors are getting crushed today. Well talk to a few lawyers who have opinions on that deal. Lets get you caught up on the markets, how weve been trading so far this tuesday. The dip in the morning happened again, and then it returned. The market up 47 1 2 points on the dow at 15,467. That has been the trading pattern of late. Nasdaq, higher. Apples helping right now, up 17 points or about. 5 at 3,687. And the s p 500 index is up 5. 8 points at 1,695. Bob pisani, apple story is a good one. Reporter apple will normally do about 10 million. Icahns definitely having an influence on the stock. Were probably at the highest level since january right now. Heres the tweets here. Had a nice conversation this is carl icahn with tim cook today. Discussed my opinion about a larger buyback should be done now. We plan to speak again shortly. We currently have a large position in apple. We believe the company to be extremely undervalued here and the first part of what i was saying, mr. Icahn tweeting it out. I know this is a love fest here going on between mr. Icahn and mr. Apple. But people down here were really amazed. Look at whats going on in this day and age. An activist investor talks to the ceo, the investor tweets hes pleased, he has a position in the stock, the company says nice talking to you, they issue a statement, the stock is going up. Everybody is treating it normal, but its rather remarkable to see what is going on in the modern world. People down here talking about how different the stock trading has become in this day and age. And looking at the dow jones industrials. Bill is right. Whats interesting is Dennis Lockhart, with the federal reserve, of course, in the middle of the day noted that the economy was uneven and the data does not show a clear economic picture. That put down on whether the tapering would occur. The bond market has no part of that. If youll notice, weve seen an elevation in bond yields all throughout the day. The bond market believes tapers is coming and i would put more in stock with what the bond market thinks. If you dont think its the case, look at Home Building stocks. Theyre concerned about tapering because cutting off purchases of mortgagebacked securities would raise mortgage rates. So weve seen homebuilders fall throughout the day. These are off of the lows. And Real Estate Investment trusts also very much dependent on interest rates, also among the weakest groups today. Got a lot going on down here today. Guys, back to you. Thats for sure. Lets talk about this what has turned out to be a newsy. Joining us is david from mainstay, tim from tamron, david from convergeent, and our own rick santelli. Anybody own shares of apple . Rick, youre out of this, i know. Anyone . No, we dont. No one holds apple here. We own some apple. Oh, well, you didnt raise your hand. So what do you think of carl icahn going after apple here . I think its very interesting for the stock. Certainly has a longterm history of Success Stories and even more recently taking the position opposite bill ackman on herbalife. So its positive news for apple. Weve seen the nice bounce for the stock. Certainly a holder of the stock. Would you like to see a greater, larger Share Buyback as carl icahn is suggesting . We would. We would. Yeah, and, bill, what i volunteer is it speaks to maybe the dynamic marketplace we all sort of operate in. If you dont execute, theres capital, and capital comes after you. And more often than not, its a good thing. It speaks to the competitiveness of the economy. You know, we talk about the dynamic marketplace. But it seems like a lot of the activist investors are going after bigger and bigger names. You have carl icahn and apple. You have bill ackman going after proctor gamble, Ralph Wentworth went after pepsi. These are names with giant market caps. Is the state of activist investing changing, tim, ill throw that question to you. I dont know if its changing. I think the economy is bigger, the market is bigger and the games gotten a bit bigger. Thats not what we do here. Were fundamentally driven and bottomup. I think it speaks to the nature of the economy. I think its a good thing. If you dont allocate capital well, if you dont produce returns that are outweigh the cost of capital, you know, there are people out there that do that and do it well. And i think on balance, its been a good thing for the economy and its been a good thing for u. S. Capital markets. David, what do you think of all of the but i think hang on one second. Would you own apple here . I mean or what do you make of what carl icahn is doing to apple shares . We tend not to focus on individual stocks. The things were tending to focus on now are things that are sort of unloved and undervalued. Well, thats what he says apple is. Sure, sure. Some of the things were focusing on are emerging markets. Theyre undervalued relative to the u. S. In fact, theyre kind of at a point where in the last five years this is the most undervalued theyve been relative to the u. S. What catalyst, then, do you expect to move the emerging markets . I mean, weve heard from some other contrarians out there that are looking to that very unloved group right now. So what do you expect to happen . I think its just the normal capital flows. So at some point, the market wakes up and it realizes where value is. And i think its the emerging markets. Equities have been left on the side of the road. Once people start paying attention to them and understand what the value is there because they have strong earnings, theyre on the same debt levels that the u. S. Has, theyll flow back into that space. Rick, the other piece of news is the comments from Dennis Lockhart in the middle of the day saying whether theres not enough data to taper in september, october could be on the table. This goes against what he said even just a week ago. What are you seeing in the market . Is it reacting to those comments at all, or is it just in one ear and out the other, at this point . Over than 2. 71 . I think that the market definitely was helping the equity markets, based on his comment. As a matter of fact, if you look around 10 15 to 10 30 eastern, the stock market was sold off. The fed did a practice round or technically a practice round of reverse repos, and it seemed as though that was it. The stocks went down. Mr. Lockharts comments, kind of the dog ate my homework, not enough time, the heart isnt in the taper anyway, that pulled the day out. Interest rates through all of this . Well have the secondhighest yield close in two years, 2. 74, is the only higher yield close from the day after the fourth of july. And ill tell you what, as i look at stocks and everything weve said about the Stock Movement today, you know, itll settled at 15,420, went down 80 points and made the low, went 80 points up and made the high, i would think the old trader in me would look for an unchanged close, 44 points on the table. Yeah, the bias is to the downside, art cashin tells us, although not by a whole lot. David, whats your best investment idea right now besides apple . Well, we like we like the regional banks in this environment. We continue to think that this what weve seen in interest rates, the most recent move, the steepening yield curve, that improves Net Interest Margin for the regional banks. Currently and going forward. Because we think that rates continue to go up. Okay. Tim holland . Yeah, to piggyback on what david said, bill, were pretty constructive on the smaller banks, as well. One we own in the small cap fund, the diversified fund, first merit, northeast ohio, did an acquisition that gets them into wisconsin. The yield curve is helping. If you go through the quarterly results, credit continues and loan growth is okay, and that speaks to a decent economic environment here at home. Very quickly, david. Anything domestically you like here . I tend to focus on the things that are the most uncomfortable to own right now, which are Natural Resource equities. Some of those are trading six to eight times earnings, to give you an idea of how oversold those are. The gold miners in the past three days are up 15 . So theyre starting to become comfortable. They are well, i dont know if theyre comfortable yet, but theyre starting to come in the news. You are the great contrarian, arent you . Thank you, gentlemen. Thank you for your thoughts. Thank you. Thank you. Heading toward the close. 50 minutes left in the trading session. The dow is up 43 points. Right now, the s p is up just about 5. 5 points, nasdaq up 16. Apple the big news of the day. Well have much more on that news, that carl icahn is taking a big stake. Up next, the Justice Department filing a lawsuit to ground the 11 billion merger of u. S. Airways and American Airlines. Both airlines are vowing to fight back. But their stocks are getting rocked today. Well find out whats behind the governments decision. Then, is it ever too hot for Fried Chicken . Yum brands is blaming poor sales on warm weather in china. Well take a closer look at that claim, and also ask if the stock has room to run, weather permitting, of course. That and much more coming up on the most porch hoimportant hour trading day. Stay tuned. Farmers presents fifteen seconds of smart. So you want to drive more safely . Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. [ shouts over music ] turn it down and, of course, talk to farmers. Hi. Hi. We are farmers bum pa dum, bum bum bum bum another big story today. The Justice Department dropping a bombshell on the Airline Industry by blocking the merger of American Airlines and u. S. Airways. Phil has the details. A shocking story, here. Phil. Reporter yeah, nobody saw this coming, certainly within the Airline Industry, it was unexpected. It comes down to whether or not you believe the merger will hurt competition and result in higher fares and fees. Heres what happened today. The doj filing an antitrust lawsuit, saying it will hurt competition. The lawsuit will slow down amrs exit from bankruptcy. Remember on thursday, creditors were supposed to vote on a bankruptcy exit plan, which would be contingent on the merger. U. S. Airways Ceo Doug Parker says this merger will no longer happen in the third quarter. Theyre not giving up on it completely. In fact, they say they plan to fight the doj lawsuit. Both parker as well as tom horton, the ceo of american, are out with letters to employees today, defending the benefits of this merger. So for the time being, instead of these two airlines combining and becoming the largest in the country, they will remain where they are, with american being the thirdlargest airline in the u. S. After united and delta, and there you see southwest is number four, and u. S. Airways the fifthlargest. According to the doj, this is all about a merger that would ultimately result in higher fares, higher fees. In fact, today, during a Conference Call, the assistant attorney general said we believe there will be hundreds and hundreds of millions of dollars in consumer harm if this merger goes through. Well, ill tell you what was really harmed today. Shares of lcc, u. S. Airways shares, down 12 , or almost 12 right now. The biggest single drop since august 2012. Its lopped off more than 200 million from the market cap. Bill, were showing you this chart going back to february 13. Thats when these guys announced their merger. After that, the airline had a nice little run. Today, everybody is pulling back. European officials approved this last week when the two agreed the two airlines agreed to give up some slots at heathrow and in philadelphia. Werent they willing to do the same thing for u. S. Officials . Wasnt there some giveandtake there, as well, dont you think . Reporter the doj wont discuss what kind of discussions were had between the airlines and the doj. But its clear by going with this lawsuit, and on the Conference Call today, bill, the doj said repeatedly we believe the best option here is a complete block. That tells me that its unlikely there will be enough concessions offered up here to salvage this, at least near term. Obviously, everything is up for negotiations. Okay. Reporter that was very clear during the Conference Call, that this in their opinion has to be stopped. All right, phil, thank you very much. Very important story. Well get back to more on that in a moment. But were juggling top stories right now. Back to the icahn apple story. Scott wapner is on the phone. I gather youve talked to carl. Whatd you hear . Reporter i did, indeed, bill. In fact, i just got off the phone with carl icahn a short time ago who reiterated a little bit of what he put out on twitter, that he had a good talk with tim cook, the ceo of apple. He also said in his call, you know, he believed that the nobrainer for apple to use either its extra cash or to borrow money and do a large buyback, and he said if he did a large buyback, the stock value would be enhanced, in carls word, tremendously. He reiterated the fact that apple is very undervalued, in his words, a company that has great product. He said they had a very amiable conversation, that carl speaking with tim cook, and that they do plan to speak again shortly. He also, you know, his comments [ audio difficulties ] on the program last evening, what apple is like now versus what the company was under steve jobs. So i asked carl about larrys comment that apple seemed to be going down without steve jobs, and carl would say a lot of people thought netflix was going down, too. That was his response to that. Of course, we know that carl has a big position in netflix, and one thats been incredibly profitable for him. Hes made, i think at this point, at least 1 billion. So thats been a big position for him. This is the latest one. This is creating the biggest wave on wall street. Thats carl icahn taking a very large position in apple. Speaking with tim cook, planning to speak again, and urging the company to do a large buyback. Bill . Well, scott, ill take it from here, because i have a question for you, which is that apple has become something of a battleground stock for a lot of hedge funds. I misspoke earlier and said that David Einhorn was short. Of course, my memory misserved me. He was actually long. And as far as we know, he continues to be long. Well get some 13f filings tomorrow. And i think a lot of people will be watching to see if other hedge funds have added to their apple shares. I know you talk to a lot of the hedge fund managers. Do you feel carl has momentum behind this trade, too . I think carl feels that anytime he does anything, he has his own momentum. He creates his own momentum. Einhorn has been in it for a while. Its large position for him. He made some waves several months ago where he was calling on the company to better utilize its cash, to increase its dividend. Im not sure of the other, you know, Big Hedge Fund managers at this point who have positions. Right. Carl creates momentum all by himself these days by taking these big positions in some of the stocks. And hes done so incredibly well this year on many of the names, whether its chesapeake or herbalife or, you know, obviously now he hopes to do the same with apple. But netflix and so many other names hes been in have done well. We should also say he does have a position in newance, which im sure has been mentioned already right. Which is obviously the maker of siri. Scott, you probably didnt get into too many details, but you did mention that he feels like they should do more to increase the chances of a Share Buyback, whether they should borrow money to do it or whatever. But theyve already done that. They issued a huge bond that was large very successful in order to increase their Share Buyback. And we all know that so much of the cash is overseas, and there would be huge tax liabilities to repatriate that. So i wonder how much maneuverability tim cook really has to increase his Share Buyback to please carl icahn at this point . Maybe if they could borrow more. The repatriation issue did come up in our conversation, and obviously, thats a significant issue not for apple not only for apple, but for a large number of companies and a large number of technology companies. Whats going to be really clear from this point forward, bill, and really interesting, i should say, is to see how this relationship now goes between carl icahn, a guy who certainly is not afraid at all to shake things up no disrespect whatsoever to David Einhorn, who got in and made waves and went public and urged the company to do it and took them on in ways that many inves