Transcripts For CNBC Closing Bell 20140801 : comparemela.com

in delivering on what we said we would do. we can't control how mr. putin thinks, but what we can do is say to mr. putin, if you continue on the path of arming separatists with heavy armaments that evidence suggests may have resulted in 300 innocent people on a jet dying and that violates international law and undermines the territorial integrity and sovereignty of ukraine, then you're going to face consequences that will hurt your country. and there was a lot of skepticism about our ability to coordinate with europeans for a strong series of sanctions. and each time we have done what we said we would do, including this week when we put in place sanctions that have an impact on key sectors of the russian economy, their energy, their defense, their financial systems. it hasn't resolved the problem yet. i spoke to mr. putin this morning, and i indicated to him, just as we will do what we say we do in terms of sanctions, we'll also do what we say we do in terms of wanting to resolve this issue diplomatically, if he takes a different position. if he respects and honors the right of ukrainians to determine their own destiny, then it's possible to make sure that russian interests are addressed, that are legitimate, and that ukrainians are able to make their own decisions and we can resolve this conflict and end some of the bloodshed. but the point is, though, bill, that if you look at the 20th century and the early part of this century, there are a lot of conflicts that america doesn't resolve. that's always been true. that doesn't mean we stop trying, and it's not a measure of american influence on any given day or at any given mom t moment, that there are conflicts around the world that are difficult. the conflict in northern ireland raged for a very, very long time, until finally, something broke where the parties decided that it wasn't worth killing each other. the palestinian/israeli conflict's been going on even longer than you've been reporting. you know? and i don't think at any point was there a suggestion somehow that america didn't have influence just because we weren't able to finalize an israeli/palestinian peace deal. you know, you will recall that situations like kosovo and bosnia raged on for quite some time, and there was a lot more death and bloodshed than there has been so far in the ukrainian situation before it ultimately did get resolved. and so, i recognize with so many different issues popping up around the world, sometimes it may seem as if this is an aberration or it's unusual, but the truth of the matter is, is that there is a big world out there, and as indispensable as we are to try to lead it, there's still going to be tragedies out there and there are going to be conflicts. and our job is just to make sure that we continue to project what's right, what's just, and that we're building coalitions of like-minded countries and partners in order to advance not only our core security interests but also the interests of the world as a whole. >> do you think you could have done more? >> on which one? >> on any of them. >> well, look, you know, i think that the nature of being president is that you're always asking yourself, what more can you do? but with respect to, let's say the israeli/palestinian issue, this administration invested an enormous amount to try to bring the parties together around a framework for peace and a two-state solution. john kerry invested an enormous amount of time. in the end, it's up to the two parties to make a decision. we can lead them to resolve some of the technical issues and to show them a path, but they've got to want it. with respect to ukraine, i think that we have done everything that we can to support the ukrainian government and to deter russia from moving further into ukraine, but short of going to war, there are going to be some constraints in terms of what we can do if president putin and russia are ignoring what should be their long-term interests. right now, what we have done is imposed sufficient costs on russia, that objectively speaking, they should -- president putin should want to resolve this diplomatically, get these sanctions lifted, get their economy growing again. and have good relations with ukraine. but sometimes people don't always act rationally and they don't always act based on their medium or long-term interests. that can't deter us, though. we've just got to stay at it. wendell. >> president, republicans point to some of your executive orders as reason they say that they can't trust you to implement legislation as they pass. even if you don't buy that argument, do you hold yourself totally blameless in the inability, it appears, to reach agreement with the republican-led house? >> well, wendell, you know, let's just take the recent example of immigration. a bipartisan bill passed out of the senate, co-sponsored by not just democrats but some reconservative republicans who recognize that the system currently is broken. and if, in fact, we put more resources on the border, provide a path in which those undocumented workers who have been living here for a long time and may have ties here are coming out of the shadows, paying their taxes, paying a fine, learning english, if we fix the legal immigration system so it's more efficient, if we are, you know, attracting young people who may have studied here to stay here and create jobs here, that all is going to be good for the economy, it's going to reduce the deficit. it might have forestalled some of the problems that we're seeing now in the rio grande valley with these unaccompanied children. and so, we have a bipartisan bill, wendell, bipartisan agreement, supported by everybody from labor to the evangelical community to law enforcement. so, the argument isn't between me and the house republicans. it's between the house republicans and senate republicans and house republicans and the business community and house republicans and the evangelical community. i'm just one of the people they seem to disagree with on this issue. so, that's on the comprehensive bill. so, now we have a short-term crisis with respect to the rio grande valley. they say we need more resources, we need tougher border security in this area where these unaccompanied children are showing up. we agree! so, we put forward a supplemental to give us the additional resources and funding to do exactly what they say we should be doing. and we can't pass the bill. they can't even pass their own version of the bill. so, that's not a disagreement between me and the house republicans, that's a disagreement between the house republicans and the house republicans. the point is that on a range of these issues, whether it's tax reform, whether it's reducing the deficit, whether it's rebuilding our infrastructure, we have consistently put forward proposals that in previous years, in previous administrations would not have been considered radical or left wing. they would have been considered pretty sensible, mainstream approaches to solving problems. i'd include under that, by the way, the affordable care act. that's a whole other conversation. and in circumstances where even basic, common sense, plain with no other legislation can't pass because the house republicans consider it somehow a compromise of their principles or given obama a victory, then we've got to take action. otherwise, we're not going to be making progress on the things that the american people care about. >> -- action on the border supplemental? are you going to act alone? >> i'm going to have to act alone, because we don't have enough resources. we've already been very clear, we've run out of money. and we are going to have to reallocate resources in order to just make sure that some of the basic functions that have to take place down there, whether it's making sure that these children are properly housed or making sure that we've got enough immigration judges to proce process, those things will have to be done. we're going to have to reallocate some resources. but the broader point, wendell, if, in fact, house republicans are concerned about me acting independently of congress, despite the fact that i've taken fewer executive actions than my republican predecessor or my democratic predecessor before that or the republican predecessor before that, then the easiest way to solve it is passing legislation. get things done. on the supplemental, we agreed on 80% of the issues. there were 20% of the issues that perhaps there were disagreements between democrats and republicans. as i said to one republican colleague who was down here that i was briefing about some national security issues, why don't we try to pass the 80% we agree on and try to resolve the differences on the 20%? why wouldn't we do that? and he didn't really have a good answer for it. so, there's no doubt that i can always do better on that end, including making additional calls to speaker boehner and having more conversations with some of the house republican leadership. but in the end, the challenge i have right now is that they are not able to act, even on what they say their priorities are. and they're not able to work and compromise even with senate republicans on certain issues, and they consider what have been traditionally republic republican-supported initiati s initiatives. they consider those as somehow a betrayal of the cause. take the example of the export-import bank. this is an interesting thing that's happened. i mean, this is a program in which we help to provide financing to sell american goods and products around the world. every country does this. it's traditionally been championed by republicans. for some reason, right now the house republicans have decided that we shouldn't do this, which means that when american companies go overseas and they're trying to close a sale on selling boeing planes, for example, or a ge turbine or some other american product that has all kinds of subcontractors behind it and it's creating all kinds of jobs and all sorts of small businesses depend on that sale, and that american company's going up against a german company or a chinese company, and the chinese and the german company are providing financing and the american company isn't, we may lose that sale. why -- when did that become something that republicans opposed? it'd be like me having a car dealership for ford and the toyota dealership offers somebody financing and i don't. we will lose business and we will lose jobs if we don't pass it. so, there are some big issues where i understand why we have differences. all right? on taxes. you know, republicans want to maintain some corporate loopholes i think need to be closed because i think we should be giving tax breaks to families that are struggling with child care or trying to save for a college education. on health care, obviously, their view is we should not be helping folks get health care, even though it's through the private marketplace. my view is that in a country as wealthy as ours, we can afford to make sure that everybody has access to affordable care. those are legitimate policy argumen arguments, but getting our ambassadors confirmed, these are career diplomats, not political types, making sure that we pass legislation to strengthen our borders and put more folks down there. those shouldn't be controversial. and i think you'd be hard pressed to find an example of where i wouldn't welcome some reasonable efforts to actually get a bill passed out of congress that i could sign. last question, michelle kosinski. >> thank you. you made the point that in certain difficult conflicts in the past, both sides had to reach a point where they were tired of the bloodshed. do you think that we are actually far from that point right now? and is it realistic to try to broker a cease-fire right now when there's still tunnel operations allowed to continue? is that going to cause a change of approach from this point forward? >> well, keep in mind that the cease-fire that had been agreed to would have given israel the capability to continue to dismantle these tunnel networks, but the israelis can dismantle these tunnel networks without going into major population centers in gaza. so, i think the israelis are entirely right that these tunnel networks need to be dismantled. there's a way of doing that while still reducing the bloodshed. you are right that in past conflicts sometimes people have to feel deeply the costs. anybody who's been watching some of these images, i'd like to think should recognize the costs. you have children who are getting killed. you have women defenseless who are getting killed. you have israelis whose lives are disrupted constantly. and living in fear. and those are costs that are avoidable if we're able to get a cease-fire that deserves israel's ability to defend itself and gives it the capacity to have an insurance that they're not going to be constantly threatened by rockfire in the future. and conversely, you know, an agreement that recognizes the palestinian need to be able to make a living and the average palestinian's capacity to live a decent life. but it's hard. it's going to be hard to get there. i think that there's a lot of anger and there's a lot of despair. and you know, that's a volatile mix. but we have to keep trying. and it is -- you know, bill asked earlier about american leadership. part of the reason why america remains indispensable, part of the essential ingredient in american leadership is that we're willing to plunge in and try, where other countries don't bother trying. i mean, the fact of the matter is that in all of these crises that have been mentioned, there may be some tangential risks to the united states. in some cases, as in iraq and isis, those are dangers that have to be addressed right now, and we have to take them very serious. but for the most part, these are not -- you know, the rockets aren't being fired into the united states. the reason we are concerned is because we recognize we've got special responsibilities. we have to have some humility about what we can and can't accomplish. we have to recognize that our resources are finite and that we're coming out of a decade of war and our military has been stretched very hard, as has our budget. nevertheless, we try. we go in there and we make an effort. and when i see john kerry going out there and trying to broker a cease-fire, we should all be supporting him. we shouldn't be a bunch of complaints and second guessing about, well, it hasn't happened yet or nitpicking before he's had a chance to complete his efforts. because i'll tell you what, there isn't many other countries that's going in there and making those efforts. and more often than not, as a consequence of our involvement, we get better outcomes. not perfect outcomes, not immediate outcomes, but we get better outcomes. and that's going to be true with respect to the middle east, that's going to be true with respect to ukraine, that's going to be certainly true with respect to iraq. and i think it's useful for me to end by just reminding folks that in my first term, if i had a press conference like this, typically, everybody would want to ask about the economy and how come jobs weren't being created and how come the housing market's still bad and why isn't it working? well, you know what? we did work and the economy's better, and you know, when i say that we've just had six months of more than 200,000 jobs that hasn't happened in 17 years, you know, that shows you the power of persistence. it shows you that if you stay at it, eventually we'll make some progress. all right? i thought that you guys were going to ask me how i was going to spend my birthday. what happened to the happy birthday thing? >> democrats have called for your resignation -- >> i won't address two points. i'll address -- [ everyone talking at once ] hold on, guys. come on. there's just -- you're not that pent up. i've been giving you questions lately. on brennan and the cia, the rdi report has been transmitted. the declassified version that will be released at the pleasure of the senate committee. i have full confidence in john brennan. i think he has acknowledged and directly apologized to senator feinstein that cia personnel did not properly handle an investigation as to how certain documents that were not authorized to be released to the senate staff got somehow into the hands of the senate staff, and it's clear from the ig report that some very poor judgment was shown in terms of how that was handled. keep in mind, though, that john brennan was the person who called for the ig report. and he has already stood up a task force to make sure that lessons are learned and mistakes are resolved. with respect to the larger point of the rdi report itself, even before i came into office, i was very clear that in the immediate aftermath of 9/11, we did some things that were wrong. we did a whole lot of things that were right, but we tortured some things. we did some things that were contrary to our values. i understand why it happened. i think it's important when we look to recall how afraid people were after the twin towers fell and the pentagon had been hit and the plane in pennsylvania had fallen and people did not know whether more attacks were imminent and there was enormous pressure on our law enforcement and our national security teams to try to deal with this, and it's important for us not to feel too sanctimonious in retrospect about the tough job that those folks have. and a lot of those folks were working hard under enormous pressure and are real patriots. but having said all that, we did some things that were wrong, and that's what that report reflects, and that's the reason why after i took office, one of the first things i did was to ban some of the extraordinary interrogation techniques that are the subject of that report. and my hope is that this report reminds us once again that the character of our country has to be measured in part not by what we do when things are easy but what we do when things are hard. and when we engaged in some of these enhanced interrogation techniques, techniques that i believe and i think any fair-minded person would believe were torture, we crossed a line, and that needs to be -- that needs to be understood and accepted, and we have to as a country take responsibility for that so that, hopefully, we don't do it again in the future. now, hey -- >> okay. >> i gave you a question. >> -- after the u.s./africa -- >> we've got a u.s./africa summit coming up next week. it is going to be an unprecedented gathering of african leaders. the importance of this for america needs to be understood. africa is one of the fastes growing continents in the world. you've got six of the fastest growing economies in africa. you have all sorts of other countries, like china and brazil and india deeply interested in working with africa not to extract natural resources alone, which traditionally has been the relationship between africa and the rest of the world, but now because africa's growing and you've got thriving markets and you've got entrepreneurs and extraordinary talent among the people there, and africa also happens to be one of the continents where america is most popular, and people feel a real affinity for our way of life. and we've made enormous progress over the last several years not just in providing traditional aid to africa, helping countries that are suffering from malnutrition or suffering from aids, but rather, partnering and thinking about how can we trade more and how can we do business together. and that's the kind of relationship that africa's looking for. and i've had conversations over the last several months with u.s. businesses, some of the biggest u.s. businesses in the world, and they say, of that's one of our top priorities. we want to do business with those folks. and we think that we can create u.s. jobs and send u.s. exports to africa, but we've got to be engaged. and so, this gives us a chance to do that. it also gives us a chance to talk to africa about security issues. because as we've seen, you know, terrorist networks try to find places where governance is weak and security structures are weak. and if we want to keep ourselves safe over the long term, then one of the things that we can do is make sure that we are partnering with some countries that really have good effect with security forces and have been deploying themselves in peace-keeping and conflict resolution efforts in africa. and that ultimately can save us and our troops and our military a lot of money if we've got strong partners who are able to deal with conflicts in these regions. so, it's going to be a terrific conference. i won't lie to you, traffic will be bad here in washington. i know that everybody's been warned about that. but we are really looking forward to this and i think it's going to be a great success. now, last thing i'm going to say about this, because i know it's been on people's minds, is the issue of ebola. this is something that we take very seriously. as soon as there is an outbreak anywhere in the world of any disease that could have significant effects, the cdc is in communication with the world health organization and other multilateral agencies to try to make sure that we've got an appropriate response. this has been a more aggressive ebola outbreak than we've seen in the past, but keep in mind that it is still affecting parts of three countries, and we've got some 50 countries represented at this summit. we are doing two things. with respect to the summit itself, we are taking appropriate precautions. folks that are coming from these countries that have even the marginal risk of having been exposed in some fashion, we're making sure we're doing screening on that end as they leave the country. we'll do additional screening when we're here. we feel confident that the procedures that we've put in place are appropriate. more broadly, the cdc and all our various health agencies are going to be working very intently with the world health organization and some of our partner countries to make sure we can surge some of our resources down there and organization to these countries that are pretty poor and don't have a strong public health infrastructure so that we can start containing the problem. keep in mind that ebola is not something that is easily transmitted. that's why generally, outbreaks dissipate. but the key is identifying, quarantining, isolating those who contract it and making sure that practices are in place that avoid transmission. and it can be done, but it's got to be done in an organized, systemic way, and that means that we're going to have to help these countries accomplish that. all right? >> happy birthday. >> there you go, april. that's what i was talking about. somebody finally wished me happy birthday, although it isn't until monday, you're right. >> happy birthday. >> thank you so much. bye-bye. >> the president wrapping up what was a hastily called but wide-ranging news conference on a number of issues, both domestic and international. we welcome you to the "closing bell." i'm bill griffeth along with kelly evans. john harwood, it's become an annual right for this president on august 1st, the day that congress goes out for their five-week summer recess, for the president to come out and highlight all of the things that weren't accomplished. >> well, he did that. there were really two purposes to this long, rambling news conference, bill. one was to try to take advantage of the good employment report today and the recent good run of economic news, including second-quarter gdp, and also, at the same time, to hit republicans at a moment where they look very bad for their inability to pass their own slimmed-down border bill yesterday. so, that's really what the hour was about. however, he did make some news toward the end of the news conference on a question that wasn't asked until the very end about the cia and the new allegations or the new report buttresses allegations that the cia had spied on senate staffers, had misled the media about its interrogation techniques, and the president expressed full confidence in john brennan, the cia director, but did say the united states did things that were wrong after 9/11, that we tortured some people. he tried to put that to a stop, but he stood behind john brennan, and we're going to see how the senate reacts in the coming days, because this was a very damning report for the cia, bill. >> john, thanks very much. all of the questions, it seemed, from reporters were about international concerns, where the president wanted to talk about domestic concerns, including that jobs report today. >> and he made the point, four years ago, this news conference would have largely focused on the economy and housing market. taking credit, by the way, almost personally for the improvement we've seen, saying, now, this is the power of putting pressure, positive pressure, he means, on the policy front. whether people will think that's positive, bill, coming from the white house, or that the improvement in the economy has been in spite of that, of course, remains open for discussion. >> let's, brief "closing bell exchange" heading toward the close with the dow down about 40 points right now. it's been a volatile day in the morning, not so much in the afternoon. joining us, anastasia omarosa from jpmorgan funds, david khan from convergent wealth advisers. thank you, both. michelle caruso-cabrera's with us to talk international issues. and rick santelli, let me start with you and the market response to that jobs number this morning and how we've done. i mean, we were on track for the worst week in stocks in two years, but things have settled down a little bit this afternoon. what do you make of the market today? >> well, i agree with the president, i don't think it was a bad number at all. and from a jobs standpoint, there could be greater jobs, there could be greater wage gains, but it definitely is an improvement. so, i think maybe that speech ought to be mailed to janet yellen so she can square the president's comments regarding the good news that we had today. and even, of course, what we saw with the other reports showed some good dynamics for the economy and yields were moving higher until stocks, of course, started to move lower. i continue to think that the message of the stock market is going to be to try to transition into a world with less fed, and the treasury market's already given us its opinion on that, because the 2.44% low close yield for the year is very low and next week is light on data. but one week from today, we do get a productivity number, and i think that's going to be very important, because a lot of the issues of the day aren't helping productivity. >> michelle, the action today almost seems like goldilock and the portuguese bear, you know. the goldilocks employment report from the market's point of view as jpmorgan was quick to point out, quickly overshadowed by events in europe. how much pressure on the markets and tenure would you put on some of the espirito santos. >> a very large bank in portugal that's been troubled for a long time. the question about that bank, even though it's not very big, or at least certainly not huge when it comes to the european markets, is what is it saying about the quality of assets within europe? that's why the market got nervous in europe today as well. and whether or not the european union is going to stick to its guns and not lay a bailout of this bank on to the european taxpayer. if you remember the big drama that happened in cypress last year. they came up with a plan where they were going to punish all bond-holders and everybody else within the structure of a bank if it was going to fail. this bank now needs to raise capital, and there are questions about whether or not the taxpayer's going to be on the hook. so, there are two things we're worried about as we look there. how is it this very troubled bank got missed by regulators in the first place, and does that raise questions about other banks? two, how are they going to fix it, and are they going to be consistent in their policy approach? so, i think that's part of the problem. plus, this issue with the russian sanctions nicking away at earnings over in europe, particularly germany i think is also an additional worry. >> oh, yes, absolutely. >> we were just showing that weekly chart there, bianco banco espirito losing on that. david, this market was on track back in the u.s. to have its worst week in two years, the s&p specifically. down 2% to 3%. but you don't think we'll see much more down the road in terms of a decline here. why not? >> not really. i think the economic fundamentals as the president highlighted recently are actually quite strong. jobs. the ism manufacturing index was at the strongest it's been in three years. jobless claims, new citizens applying for jobless benefits is at a three-year low. and corporate earnings -- the s&p is going to look like they're going to generate 10%, 11% kind of year-over-year earnings growth in q-2. so, overall, the environment's pretty good. and what really has us constructive on equities is there is not a lot of froth in this market. put call ratios spiked this year. hedge funds, their average equity exposure is relatively low. so, there's not a lot of excitement about this equity market, and i think the flip side is, that means this correction is not going to go very far. >> last question for you. is it goldilocks in the jobs number or is it the bear? >> yeah, i think it was definitely a goldilocks report, right? because it confirmed what janet yellen has been telling us for quite some time. what she would say is that if the economy continues to improve, then people will start coming into the labor force. and they may not necessarily find jobs right away, but that's exactly what we've seen happen in this report. so, i completely agree, the fundamentals in the united states are improving. otherwise, it was a solid report number. so, this is why she is not rushing to raise short-term rates just yet. so, but what i do want to say is that goldilocks for the united states does not mean goldilocks for europe. and i think they do have issues that they now need to address in light of the new sanctions just imposed on russia, because those sanctions can come right back to western europe, as we're seeing not only through the companies but also through the banks. >> and we'll see if that tension remains in europe. bill, that will be the key to watch, can u.s. markets detach to some extent from the pressure in the german, but it will be a new week. >> thank you all and thanks for your patience during the news conference. >> only 20 minutes until the close now. so, the dow jones industrial average off 33 points. it was off 100 points at the session lows this morning, following yesterday, one of the worst sessions we've had in some time. we'll have much more ahead on just how bad a week it's been and how things look heading into the weekend. when we come back, the cfos of td ameritrade and adp. they are members of cnbc's cfo council. they'll weigh in on the jobs report this morning. we'll find out if they are seeing more jobs being created in this economy and if they think wages are rising. their observations actually may surprise you, so don't go anywhere. we're coming back with more "closing bell" after this. she's still the one for you. and cialis for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. welcome back. the u.s. adding 209,000 jobs in july, a decent clip, but a bit less than expected. for more on how america's corporate leaders are viewing this number and the current state of the economy, let's bring in two members of cnbc's council of chief financial officers. >> bill gerber from td ameritrade and jan seeingman from adp, cfos of those companies. bill gerber, i found it interesting -- and by the way, i have to apologize, we have to keep this trump triumph indicated because of the conference. you have a large number of positions open at td ameritrade. are you on a hiring binge or what's going on there? >> it's not really a hiring binge, bill, but yes, we have had that number probably for the better part of a year. we've continued to have some turnover, and that has added to what we need, but we're very positive about the hiring. >> so, are you hiring more for a reason right now or is this normal procedure? that's what i'm getting at. >> no, we are hiring a little bit more right now because we have needs in technology, et cetera, and that's very important to us. so, yes, we are hiring more. >> okay. good. >> jan, what about you guys? how much help is wanted and are you having trouble filling positions? >> no, we don't, really. we have regular hiring and no problems filling our positions today. >> so, why aren't you more aggressive on that front right now? >> i think it's just a regular, steady expansion that our company has, and in a steady state. we have been performing well for a while, so we are on a regular clip to just expand our labor force in the u.s. >> statistically, what we're hearing from the government is we are growing steadily, slowly. the job picture is improving. do you see that as well? >> yeah, with our national employment report, of course, we look very closely, and we kind of anticipated this number for friday, and we have been optimistic and feel really that this is a solid number. it's broad-based. small and large companies are hiring. it's a number of industries are expanding. so, that steady pace i think is encouraging from our perspective. >> and a quick question to you both on wages, which is so important and the focus of so much debate right now. bill, first to you. how much are you raising wages here for your workers on average and how much are you paying the new talent you're trying to bring through the door? >> the new talent we're bringing in the door, certainly, we are seeing wage pressure for the skilled people that we're looking to hire. we are probably going to increase wages by a couple percent, at least, for the new year, which for us will be, of course, january 1. but right now there is definitely wage pressure in the industry. we're losing good people, too. >> losing them to where? >> losing them to some of our competitors. so, we've lost some people to a few of our competitors. some have opted to leave the industry and go elsewhere, but we are definitely seeing some wage pressure. >> competition, that will do that, right? what about you, jan? >> it is interesting. we look at our client base in addition to the overall employment number for the u.s. also and wage growth, of course, and we have seen about 2% wage growth throughout the year. but the interesting thing is really when you dissect the numbers during the last couple of quarters, you have seen really an increase in real hourly wages creeping up, and it had been really flat throughout recession. so, i think this is going to be the topic for the months to come, wage pressure. >> are your wages going up? are you expecting a raise? >> yeah, we are -- >> no, you personally. >> as a company, we'll hopefully be able to -- >> i guess you'd know better than anybody. >> yeah, both of you are free to negotiate -- >> yeah, i'm not expecting an increase. >> thank you both. again, we'd love to talk longer, but we had to truncate the interview at this point because of the president. thank you. >> thank you so much for having us snp some investors have been predicting a correction because of what they see under the hood in this market this year, with soldiers retreating, if you will, meaning the small cap. the russell 2000 has been losing ground lately and the general's advancing with the large cap s&p 500 gaining, at least until this week. >> is that disconnect finally manifesting itself with a market correction? bob pisani, what do you think here? >> no, i don't, because this week the s&p and the russell are both having trouble, and the last couple days about equally. i just want to summarize what happened today, because we have three very, very important events going on here. first, the jobs report, weak, but not too weak. and i think the market greeted that fairly well. i think we also had the manufacturing report that was excellent. we tried to rally and we couldn't. i think the reason we can't is because of real problems that are in europe. and i completely agree with michelle caruso-cabrera's comment earlier. if we take a look at the s&p 500, we just nose dive right into the european close at 11:30 and only bounced after europe closed. now, look what's going on in germany. germany's had a horrible week, horrible day, horrible month. we know that there are problems with german companies with exposure to russia and just in exposure to europe. adidas was a big wake-up call yesterday. when adidas came out and said, hey, we're having problems, not just in russia, but all around, in europe and in a general weak retail environment, that's an alarm that this may start to spread and start showing up in global earnings commentary. that's what the problem is. of course, you've got the banco espirito santos issues as well. the s&p, dow, nasdaq all down terribly. and this is your worst week since, pick your date, april, january, or april. back to you. >> thank you very much. we are heading towards the close with ten minutes left in the trading session. the dow well off the close. we were down 125 points at the low, now down 54. we have more on the markets as we wind down what has been a rocky week, coming up here. another story we're following, v anvaeant respondin a lawsuit. ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. over 1.2 billion eyeballs are on us during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive. we rely on the cloud to provide that immersive digital capability. give fans more then just the game with the ibm cloud. the ibm cloud is the cloud for business. machines will be sprayed to be made. and making something stronger... will mean making it lighter. one day, factories will work with the cloud. one day... is today. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. let's begin here with morgan brennan for a quick "market flash." morgan? >> thanks, kelly. check out valeant, currently trading up 1%. the company responding to allergen's suit that it violated securities laws by saying the suit was "frivolous." it also said "allergen's true purpose in bringing the allegation is an attempt to interfere with calling a special meeting." allergen is trading down just under 0.5%. kelly, back to you. >> morgan, thank you for now. >> look at the market, heading lower here as we head toward the close. >> quite abruptly. we should mention we've just taken a leg off, about 40 more points on the dow, which until a few moments ago was only down 30. now we're down 70. >> maybe some investors are saying good riddance to this week. david darst will join us next with his views on what could move the market in this week ahead. it's going to be a very busy week for earnings. we'll talk about that when we come back. ♪ during the cadillac summer's best event, lease this all new 2014 cts for around $459 a month or purchase with 0% apr and make this the summer of style. 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(soothing sound of a shower) with millions of reviews, tripadvisor makes any destination better. when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with paper money to test-drive the market. all on thinkorswim from td ameritrade. all right, a couple minutes left in the trading session. very volatile week. we probably could have expected this, given all of the earnings reports that were out this week. the fed met this week. a lot of things going on for the markets to think about, and especially international concerns as well, the argentinean debt default. here's the s&p. this is what traders watch. ordinarily, i would show you the dow for the week, but the s&p is what the traders watch all the time. they took out what were considered support levels of 1,950. we took out 1,930. we're right now 1,925 and down 2.65% for the week. this is the worst week for the s&p in two years, for whatever it's worth. when up, yields on the ten-year for a time very volatile week, especially after the fed meeting. a lot of the data coming out, that second-quarter gdp report that came out on wednesday as well. but today, coming back again with that less-than-expected job growth number that we got this morning from the federal government. and for the week, the ten-year yield is up about 1%. one more thing, volatility, the fear indicator, also big move higher, and it's up 34% on the week at 17. independent investor david darst here. crazy week. >> bill, you've got a seven-point correction checklist that investors need to watch going forward. china. green light. china's doing well. you've got the geopolitical situation you just highlighted. >> right. >> that is a yellow light at best, maybe a red light. >> okay. >> thirdly, eurozone inflation, very low this week. >> right. >> flirting with inflation again. that's a red light. >> right. >> in the united states, housing, corporate earnings and average hourly earnings. housing, red light, not doing so well. corporate earnings, green light, doing pretty well. and average hourly earnings, yellow light, not doing so well. the last one is that trio, puerto rico, portugal and argentina. >> argentina, right. >> that's at best a yellow light. so, it's a good idea to stay, it's very, very rational and it equitied itself very well today. don't you think? you talked about it earlier. it started down and came back. >> you always ask, when we're down this much for a week, is this the beginning of more selling? you know, we'll find out. you know, and the other thing i keep hearing, and i keep mentioning this week, the bulls will always say, it's all about earnings. you know, you can talk about fed policy, you can talk about geopolitics, but it all comes down to earnings until it doesn't, because then, once in a while, geopolitics takes a toll on the markets and that happened this week. i think you can agree. >> bill, the holy trinity going forward, the thing that will make this market really fall from just a correction into a bear market would be sharp rise in interest rates. don't see that. >> yeah. >> secondly is fundamentals. they're okay with the earnings. and then thirdly is valuations. they're a little stretched. but this is actually making things a little bit better. move from small cap to large cap. it's time for that. >> all right. we'll see what happens. we have a lot of earnings coming out as well next week. david, thank you, as always, for your words of wisdom. as we go out here, crazy, volatile week, the dow down 68 points. the s&p below a couple of key support levels. we'll see what happens next week on that. the ceo of reynolds american is ringing the closing bell. she'll be joining kelly evans coming up here, among other things, as they look ahead to next week on the second hour of the "closing bell." have a good weekend. see you monday, kelly. >> thank you, bill. and welcome to the "closing bell" on this friday. closing out a tough week for the markets. i'm kelly evans. and here's exactly what's happening on wall street with the dow jones industrial average, after shedding more than 300 points yesterday, down another 68 today. we were down as much as 125, but we are going out lower than it appeared we would an hour ago. that may have to do with some orders, some sell side orders art cashin mentioned that people saw going into the close here. in any case, that index shedding another 70 points or thereabouts. the s&p 500 off five. a week ago we were talking about the s&p going to 2,000, now the nasdaq off 17 to 4,352. we have a great panel. jeffrey rosenberg from blackrock, lindsey, our own robert frank. and for more on today's markets, martin fritsen and "fast money" trader brian kelly. welcome to everybody. marty, we wanted you today to kick us off talking about some of the pressure in the junk bonds space. is it your sense that that's a symptom of some of the broader troubles here for the market and what does it tell you about what happens come monday here as people evaluate over the weekend? >> well, high yields did especially poorly. i think people are concerned about the fed accelerating its timetable for hiking interest rates. ordinarily, that would actually favor high yield relative to high-quality bonds, but in fact, they did worse for the month. >> they certainly have. jeff, what is your view on this space and what's happening across credit? should people be worried about credit right now and what it portends for the stock market? >> what marty just said is that usually that should be good, but this is hardly any kind of usual credit market. what's happened here is that the valuations of the market have gotten well ahead of the fed. we're at a very different late-cycle valuation area. i think really what happened this week in high yield is you've had long-running concerns over valuations. they got very stretched. you can't really call a high yield high. it's very low, hit sub 5%, and i think we're seeing the necessary pullback in valuation. next week, people will look at their statements, the july 31st print negative 0.33%, down on high yield. i think you'll see more flows come out of the asset class. that's going to be the story next week. >> brian kelly, we've got those worries on the one hand. but if you, you know, people ask you what happened in the markets today, what are you going to say? was it the jobs report? was it, you know, some of the worries about banco espirito in portugal? >> i think it was the jobs report. it wasn't as good as everybody expected. we had a 4% gdp print, much less than people expected. so, i think the market had to readjust to the fact that perhaps the fed isn't about to hike rates. i'm not saying that the fed has taken the foot off the gas pedal. what i'm saying is that the market just got a little bit ahead of itself. so, now equities have to readjust. we're going to have lower rates probably for a longer time than we expected. the question is, the signal coming from the bond market, does that now mean the economy is continuing to be stagnant, continuing to be sluggish, and that's not going to be great for earnings growth? and that's probably what happened over the last couple days. >> lindsey, what do you think the signal is from the bond market? do you see a disconnect here? >> well, i think the market's really trying to figure out that the slew of economic data that we had this week, it wasn't clear one way or the other. on the one hand, we had 4% gdp coupled with a 2% decline to start the year, meaning less than 1% on average. we also heard from the fed, a more optimistic assessment of current conditions. at the same time, that added addendum of language pointing to the underutilization of resources. and of course, we had this morning's nonfarm payroll report, the sixth consecutive rise above 200,000 should be a stellar sign that the economy is recovering, but when we look at the composition of jobs, it's part-time, low-wage, temporary workers, which is not translated into wage pressures, which is a presumed prerequisite for the fed to raise interest rates. >> we did anecdotally, i asked our guests a few minutes ago about wage pressures and you heard td's cfo saying, well, he's starting to see it. they're seeing some competition across the industry. maybe it's just a matter of time. >> which is, let's face it, a good thing if more workers are making more. but i think there's this hope for sort of this immaculate correction where just the parts that are overvalued correct. so, we'll get junk bonds correcting, we'll get sovereign bonds in europe correcting, we'll get the ipo market to rationalize. but corrections don't really work that way. we sort of saw a taste of that yesterday, where some companies reported some terrific earnings and then just got their stocks clobbered. so, i just don't know how orderly this will be. everyone agrees it's coming and it's inevitable, but will it just be the sectors, the immaculate correction where just the bad parts get flushed out? i don't know. >> you're terrible. hey, marty, do you think this is what janet yellen wanted specifically, some of the outflows we're seeing some one of the areas -- in other words, junk bonds that she had warned were looking a little bit frothy? >> yeah, i think that the overvaluation was a concern. it has taken some froth out of it. you see here big outflows, which we haven't seen in a while, in the high-yield market. these are flows coming out of the high-yield mutual funds. so, mission partially accomplished. we still have a long way to go before we can say that high-yield bonds are cheap. >> yeah. >> kelly? >> yeah, go ahead, brian. >> listen, the high-yield market is a problem. i mean, how do you think all these companies are financing their buybacks? if you get this acceleration in high-yield rates or in corporate rates, you have a problem with financial engineering, and i've been saying it for a while. you know, kelly, that the balance sheets, the dealer balance sheets have been cut in half since the crisis, while debt has almost tripled. so, there's a massive mismatch. and when people start coming out of this market, it's going to be a problem. watch the high-yield market. >> okay, so you're sounding cautious on it. jeff, would you recommend that people look after this sell-off as an opportunity to get in? and by the way, where do you see opportunity across your space right now? >> you know, it very much depends on the individual and how much exposure they actually have. i think what's happened is that a lot of people got over their hesitation to high yields. they have had a great performance since 2009, many years of double-digit equity returns and i think what's not caught up is the risk they're taking in high yield. so you have to look at this pullback and you'll see it in the flows as to what kind of tolerance people really have for that kind of risk, and that risk went up as the valuations compressed. so, i think the pullback here in the broader space is relatively small from where we've been. you know, high yield a couple years ago was yielding 8%, 9%. we got sub-5%. so, there's a long level of valuation to retrace here in high yield. >> do you think that's what's going to happen, that we're going to retrace all of that? >> i don't think we're going to retrace all of that, but i think what we're going to have is a period of indigestion. and i think what the period this week is all about is better economic data. today was a little disappointing, but in the broad scheme, that's a 200,000k job print. this is an economy that's gaining traction in all markets, not just the high yield market, but the stock market, the interest rate market have to come around to the idea that we're going to be leaving the era of zero interest rates, and that's a very big deal, more than just the high yield market story we're seeing this week. >> so when people ask you this weekend what happened in markets, that's what you'll say, adjusting to that new paradigm? >> absolutely. i think you had a gdp print, a not great jobs report number, and it's really about turning the corner on zero interest rate expectations. >> lindsey? >> i don't see the fundamental growth there. we're still seeing a lot of headwinds for the consumer, for investors still sitting sidelined, very hesitant to invest in equipment, software and in employees. and even the headline growth that we are seeing in terms of that 200,000, again, it goes back to the composition of the jobs that we're creating. so, in today's world, a 200,000 print on nonfarm payroll does not mean what it has in the past. i don't think we can take that as a signal that the fed is going to be anywhere near raising rates. >> by the way, speaking of the fundamentals here, which as mentioned, at time like this, people will be saying how steady, how strong are they? we're talking about jobs, an important one. earnings are another important one we learned about this week. just so people are aware, the news on aggregate has been pretty good. this is according to facts that the growth rate for the second quarter, 7.6%, up almost a full percentage point from last week. it was only 5% at the end of june. and for revenue growth, to that point that, you know, is this just a phenomenon of earnings? the revenue growth figure looks like a plus 4%. it was only about plus 3% last week, brian. >> yeah. they don't matter. if they mattered, we wouldn't be down in july. i mean, nobody cares about the earnings and revenue right now. that's old news. everybody's looking forward. you know, i would just be -- i'd be more concerned -- listen, i'm with jack. i think we're adjusting to secular stagnation. i think we're adjusting to this slow growth market, which we've had for five years. >> wait, how can we be adjusting to secular stagnation while we're adjusting to a fed that's going to hike sooner than expected -- >> no, i don't mean to put out the wrong impression. i think they're further out, as we saw in the market today. >> lindsey, you agree, but jeff, you think this is a speed-up kind of phenomenon. >> i think we saw it today, but i don't think you want to get lost in the short-term movements. the big issue about how secular stagnation factors into interest rate expectations is that if the economy's growing at a slower rate, then we're actually a lot closer to potential growth, which means that the fed is closer to both of its objectives. the key point here is not tightening, but do we need the degree of accommodation that we needed in 2009 in 2015. it's way too accommodative of a policy. >> is this a slowdown or a speed-up scare? >> i don't know that it's either. it's more about the fed. and what i think is interesting about the fed narrative is that, actually, the janet yellen narrative is proving to be very accurate right now. i mean, her whole theory is based on the fact that we're going to see more searchers entering the workforce, so that slack is going to start getting picked up by more jobs. therefore, everything's going to be just about right. inflation's going to be -- there's going to be some pressure there, but it's not immediate and it's not urgent. and the workforce, there will be more job creation, there will be more people entering the work force, but not so much that it sort of derails the whole program. so, i think, again, this sort of reaffirms the fact that they've been right! and that's hard for a lot of people to admit, but so far -- >> and last point just before letting marty go. marty, do you think the worst is behind or ahead right now in terms of what's happening right now in high yields? >> well, i don't think we will see quite the volatility that we've seen over the last week and over the last month, but we have a ways to go. by our reckoning, at this level of risk, we should see about a 5.5% premium yield over treasuries. it went up from 3.5% to 4%, but that leaves a ways to go. >> it certainly does. we'll leave it there for now. thank you for joining us, as we watch so many different parts of this market. brian kelly, appreciate your time this afternoon. brian will be coming up with much more on "fast money" at 5:00 p.m. they're also going to be talking about the chief income strategist at janney montgomery scott about what the bond market is telling us, so don't miss any of that. straight ahead, here's the market all about the fed? jeff cox says yes and that something this morning proves it, and that's next. and it's been a busy couple weeks for tobacco giant reynolds american. they were slapped with a $24 billion smoking death-related lawsuit. coming up, ceo susan cameron speaks exclusively for the first time since that court ruling came down. keep it right here. you don't want to miss it. you are watching cnbc, first in business worldwide. developers are all about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can make gamers happy, you can make anybody happy. speed is made with the ibm cloud. the ibm cloud is the cloud for business. in a we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. television announcer: mattress discounters' $197 mattress sale $197 mattress sale is ending sunday. bulldog: mattress discounters' $197 mattress sale! television announcer: that means sunday is your last chance to get a serta mattress any size, for just $197 each piece when you buy the complete set. bulldog: any size mattress - twin, full, queen, or king - for one low price! and they'll deliver it free. television announcer: the $197 mattress sale... bulldog: oh boy! television announcer: ...ends sunday. ♪ mattress discounters welcome back. earlier this week, our jeff cox went for a cnbc.com, making the case that the market is moving mainly on the fed and if or when it will raise rates. his case certainly was bolstered this morning when the jobs report came out. futures rallying off the lows because the weaker than expected number might mean janet yellen doesn't raise rates quite as fast. as the day progressed, though, markets fell on credit concerns in portugal and argentina, so maybe the reaction isn't all about the fed, at least this time. cnbc's jeff cox joins me now along with bankrate.com's washington bureau chief, mark hamrick, and the rest of the panel. so, jeff, who done it? >> good afternoon, kelly. one of the things i was drawn to this week was converge yix had a survey out and they talked to more than 200 of the market participants that they talk to. now, we're talking about pros. we're not talking about retail investors. but 51% of those folks said that the biggest fear that they have in the market is a misstep by the fed. that outweighed the ukraine, it outweighed israel, the central bank. they're just worried whether the fed takes a misstep. tie that together with what happened this morning, and a word that i heard after this report that we haven't heard in a long time has been goldilocks. some folks talking about whether this was -- this put the fed in a goldilocks position and the economy in a goldilocks position, where we're not growing too fast, but the fed's going to have to speed ahead its tightening, and we're not growing slow enough that we have to worry about falling into another recession. but i think overall, that sentiment is out there that it's all about the fed. and also, a worry about another expression i heard, a fed bubble about overconfidence in central markets, particularly the fed. >> mark, you agree? >> well, you know, that's great sort of a mark of spans, but since when has the fed not been a major factor in what's happening in washington and in the broader economy? it's been the case for a number of years now? so, a level of new caution about that seems to me to be a little late in coming. the other part about the goldilocks economy, absolutely, we're looking a lot better than we have for a couple of years now, but goldilocks lost a limb, so to speak, here, and i think we're far from a goldilocks economy right now. >> what does the panel think here as well? >> you know, i don't think this is about confidence in the fed itself, but i think this is about confidence in traditional monetary policy. if you think about it, the fed stimulates the economy as we come out of recession by drawing interest rates down to zero. the intention there, to spark investment, to spark growth. we start to see businesses expand, employment gains. we draw down the pool of available labor, and that's when we start to see these wage pressures. but years into this cycle now, we're not seeing the traditional reaction from the economy. so, i think maybe it's a lack of confidence that we need to be seeing in the traditional monetary policy or the way the fed handles stimulating the economy. >> does that mean, jeff, it's not working or do we just need to hold on longer? >> i don't know which jeff we're going to. i'll take that. >> it's an important point to make, if i could jump in really quickly. and i do think, yeah, we all know that the fed is a very big player as far as the market goes, but what this is all about, and i hesitate to use the term, but i'm going to anyway, it's a confidence game. does the market have confidence in the fed's ability to keep guiding the market forward and to keep doing the things that it did? you know, i think history is going to tell us who is really -- who really were the people who made -- who generated the comeback, and who were the ones who basically were the rooster taking credit for the sun coming up? >> what ever happened about the market climbing the proverbial wall of worry? that the market is concerned about not all cylinders firing together i would say is a good thing. i don't want to look at this as a pollyannish situation, but with the fed concerned the market is not getting it right is probably the right place to be. >> i think i have a different take on this and it's a lot simpler. the fed basically told you to go out and take more risk in your portfolio. zero interest rates was about the fed's portfolio channel. let's make bonds more attractive that people take on more risk in their portfolios. that's worked great with zero interest rates. the challenge for the financial markets will be running that policy in reverse. if you're going to raise interest rates or be forced to raise interest rates because the economy now justifies that, what happens to the portfolio rebalancing channel? it has to work in reverse, and that may not work so smoothly. getting everybody into the pool isn't as easy as getting everybody out. >> interesting data point about risk. reporting this morning about $24 billion of ccc -- that's ccc -- that's like super junk-rated bonds issued this year. that's a new record. >> we saw it this morning, i think, jeff. your piece was very prescient in that we saw this morning what the markets were about to do until that unemployment report came out. that was clearly the market saying, you know what, we've got one current going this, and the other cross current of the fed, which clearly is far more important. suddenly, the markets were placid. i think that was clear evidence that last week we sort of felt like earnings were getting front and center again. then yesterday, it sort of all started to fall apart. it's all about the fed and it's all about when that spike in interest rate hike's going to be. so, i think we're just not off that drug yet. >> yeah. we'll leave it there for now, guys. thanks very much for your perspective this afternoon. up next, an exclusive interview with the ceo of reynolds american. it's the first time susan cameron has spoken since the company lost a $24 billion smoking lawsuit. does she think the judgment has any chance of holding up? plus, we'll get her strategy on the fast-growing e-cigarette market. and later, people who buy a $200,000 car like this aston martin often tend to be big investors, so you'll definitely want to hear how sales are faring and what that says about the economy and markets here when we speak to one of the automaker's top executives later on the "closing bell." with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. weit's not justt we'd be fabuilding jobs here,. it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing. having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? 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>> i think for the industry, we're looking at consumers who have changing preferences, and reynolds american is committed to transforming this industry, which means offering adult tobacco consumers different choices. and that's why we call our strategy transforming the tobacco industry. and in that context, we have cigarette business, we have moist snuff, we have a new vapor product, which we believe is a game-changer. and as you know, we're looking forward to a successful acquisition of lorillard. >> kelly mentioned the fine. we haven't heard from you since that $24 billion fine. i know you're planning to appeal it. do you think expect it to be lowered? that is a whopper. >> yes. we feel this is grossly excessive, and in fact, we believe it is not legal in the state of florida nor constitutionally and that the court should and will set it aside. we've actually filed the motions. we expect to hear back from the judge in two to four weeks. and of course, we have the roots to appeal, so. >> still, the fact that that was even handed over from a jury. what do you think when you saw that headline? >> i thought it was really grossly overstated. i was very surprised, honestly, because it's just out of character for the cases themselves. but you know, you have a jury in a place, there is a moment in time, and they decided what they decided, but i have every confidence that this will proceed as many other cases have -- >> and investors didn't seem concerned about it all that much. i mean, much bigger deal here is almost the same price tag, but your purchase of lorillard, a $27.4 billion. there are concerns, though, about whether the ftc is going to let this go through. i know you've filed the paperwork -- >> yes, we did. >> -- this week. what do you say to investors that, by the way, have been selling the stock since the deal was announced, and some of the concerns are that it won't be allowed by any trust regulators? >> i think one fair to think about it is there was more media speculation on this transaction than anything i can come up with in the last two years. so, if you look at the speculation that broke in february, i do believe the speculators left the stock the day the transaction was actually announced. but i believe as people digest what is a very complicated four-party transaction, they will realize that strategically this is fantastic for reynolds american and it's great for all four shareholders. when you talk about the ftc approvals, we also remain confident that imperial tobacco, who operates in 160 countries worldwide, with ten share points of market in the u.s. -- >> that would be the number three player. >> yes, they would. they would be the number three. they would take winston cool in salem and maverick in blue. they have a player in the e-cigarettes, they have premium brands, value brands. they currently are in the market today with commonwealth and have two share points today. so, they will be an assertive ten-share point competitor. the thing to remember is the big player in this industry has over 50 share. i will come out of this transaction, reynolds american -- >> you're talking about altria. >> they still have over 50 and imperial will be a strong for. >> you've certainly been an invigorating presence since coming back to the helm of this company. i just wonder, why do you want to be the executive of a tobacco company? i mean, ethically. do you struggle with this question at all, especially in light of this lawsuit lately? >> i've been in this industry for 30 years. and certainly for the last ten sns since i've been a ceo, actually fifteen, i've been committed to reducing youth smoking, i've been committed to reducing the harm from smoking by launching new products and offering smokers alternatives. so, i love being in this industry because i believe i can make a difference and i can change -- i can't change history, but i can change the future. >> wow. >> but when it comes to some of your customers, i've been covering a lot of these consumer products companies lately, and the earnings are not great. they're having trouble finding sales growth. a lot of it is the middle to lower income consumer, which is your consumer. what are you seeing right now? >> you know, we have a broad portfolio. we have -- camel is one of our drive brands. natural american spirit is one of our premium brands. and we have the biggest value brand in the country with pal mal. so, i feel that we're giving smokers choices. we're seeing strong pricing gains, actually, in the sector. >> you're raising prices? >> well, you see consumer prices raising on tobacco. you always get small price increases because the volume's been declining for many, many years. so, the profitability growth comes from net price realization. but we continue to see that be progressive. and i believe if you look at the second quarter results, where we grew profits by 6%, the biggest driver of that actually was net pricing. >> we've seen opportunities that you're talking about out there as product mix changes and taste change. what about the challenge from the legalization of marijuana across the country? >> it's interesting, around people ask us in the tobacco industry, what are you doing? it's absolutely illegal for us to do anything because it's not federally legal. so, we are doing nothing. but you know, certainly, we see how that evolves. it's interesting, because they -- >> is it a competitive threat, though? is the person who may smoke pot the same person who's going to smoke a cigarette or are these two different groups? >> you know, i've never done any research to know the answer to that, but i don't believe necessarily one and the same. i'm sure there must be some overlap. i have no idea. but if you look at vapor, the development of vapor, where people are wanting, you know, smokers are saying i'd like an alternative that may be better for me. and vapor is the closest thing to being able to have the ritual of smoking, but to not be burning the tar, but you've got vapor where people can fill their own. our view cigarette is absolutely impenetrable, you know. it only works with itself and it truly satisfies the smoker, and we are launching that nationally as we speak. it's rolling out across the country. and i'm very excited about smokers having more alternatives. >> but there is some slowdown. i mean, i know that's a growth area, but lorillard, for instance, did see slower growth, and it missed estimates when it came to its blue brand, which i know you're not taking. you're conspiracy serrated on views. what do you make of that slowdown in e-cigarettes? >> i think e-cigarettes, there's been such a proliferation of choic choices. you know, a lot of things were launched in the last quarter, shall we say. and if you're lapping your own national rollout, it's difficult. views is just starting to roll out, and we have proven, where we test marketed in colorado, we grew the vapor sector by three-fold and got 70% share because vuse actually works. and so, i'm excited to see that progress and we'll keep you posted as it goes across the country. >> we'll all be watching. susan cameron, ceo of reynolds american, thank you so much for being here with our sara eisen. we really appreciate it. >> thank you for having me. a pleasure. allergen is fighting back against a hostile takeover bid by valeant pharmaceuticals. the botox-maker claiming ackman was insider trading while plotting to take over the company. will this finally get the s.e.c. to look into ackman's actions? that's next. also, technology and data have already transformed the retail industry and things will look a lot different in another 25 years. coming up, find out which retailers are best positioned to lead this change and dominate the new landscape. so we're all set? 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[cheering] the fastest in-home wifi for your entire family. welcome back. allergen suing valeant, bill ackman and pershing square for allegedly violating insider trading laws. allergen is fighting a hostile takeover bid. they allege pershing square bought allergen stock earlier in the year knowing about valeant's then plan for a takeover bid. it's taken valeant up more than $1 billion when they made the initial offer. joining me with more is mark lopresti, a lawyer that represents clients involved in these litigations. mark, thanks for being with us. do you think there's any merit to this lawsuit? >> good afternoon, kelly. thanks for having me back on. it's a very interesting case, because it brings forth allegations that are normally those that you would see in an s.e.c. enforcement action. and one of the questions we're going to see, or hopefully see answered as the case unfolds, is whether or not a private party in a very hotly contested activist battle is able to bring these kind of claims. but i think what it's really going to highlight is whether or not an activist's intentions as it relates to future plans for a target company can amount to insider trading violations. and it's something that, as we know, the s.e.c. is looking at very carefully. >> and robert, you've been covering deals for decades. what do you think when you saw this lawsuit? >> what's interesting is ackman and the allergen folks clearly expected this would come under scrutiny, and what they said from the outset, and we had them on "squawk box," and they said, look, as long as there was a contract, that said, basically, we're investing under the premise that you're going to make the same, we're going to be a partner in that deal. as long as there is an open contract explicitly saying it's a condition of this deal, it's not insider trading. and there are a lot of investors that are going to wait to see whether this clears the courts. if it does, there's going to be a lot of people that are going to mimic this, but you can bet that ackman and his folks had some very good lawyers look at this and write those contracts carefully to avoid it. so, i don't know that this is going to succeed, but maybe they were wrong in this analysis. >> marc? >> well, i tend to agree with bob. i think that this was a very calculated move. i don't think that the case would have been brought without a careful analysis. but at the same time, you know, ackman is a very cautious and certainly aggressive. but i don't think this is going to fly. my personal opinion is that this type of conduct -- >> you don't think the lawsuit's going to fly? >> that's right. that's right. >> yeah. >> i don't think pershing square's conduct amounted to insider trading. >> what would the bar be for it to amount to insider trading, marc? >> that's a good question, and that's one of the things that this case highlights, is that this is an area of the law that is still to be resolved. >> it has to be information that you knew you gained illegally, right? and if this information was part of a business contract, it just -- >> well, is it illegal or is it nonpublic? >> nonpublic and -- >> well -- >> well, marc would know. >> it has to be nonpublic, it has to be material and it has to have been received in breach of a duty, right? >> exactly. >> so, that's one of the questions in these cases, how can i be in breach if it's my own information i'm acting on as an activist and i have plans to take over a company -- >> it's more like an outsider trading. >> right, right. >> as long as it's in the open, it's fine. it's a weird thing. to everyone else, this looks like insider trading. everyone who looked at this said, of course, he had information that no other investor had. none of the sellers of the stock had. >> but it was his information. >> right! >> exactly. but it was his information, bob, right? >> right. >> and if you look at some of the cases that the s.e.c. brought recently, and not to mention the brother of roger rotman, who was -- >> who was cleared. >> the case did not fly. he was cleared, of course. there is definitely an inclination on the part of the courts to look at the scope and the extent of the s.e.c.'s enforcement and the doj's prosecution of insider trading cases, because i think that the overall belief is that they may have gone a little too far. >> marc, we'll leave it there, then. bob, thank you, this afternoon. and we hope you guys both have -- or you have a great weekend. you're going to stick around. we're going to go. technology and data already changing the way americans shop. which retailers are leading the charge and putting themselves into position to rule the retail world in 25 years? that's next. and are people who can afford an aston martin concerned about the health of the economy? we'll hear from a top executive at the luxury automaker, coming up. well, many say retail has seen more change in the last three to five years than over the past century. looking forward, the pace of change could be even greater as retail technology and data all merging to create a new shopping experience. who will lead the change and will they need a new skill set to keep companies current? cnbc's retail reporter courtney reagan and paul charan, former ceo of liz claiborne, currently chairman of campbell's soup and on the board of the fashion company escotta, here with me to discuss who we should be keeping our eyes on as retail leaders of the future. >> that's right, kelly. i have paul here today, a retail leader of this generation. who are you going to be looking forward to for the retailers to lead us into the next 25 years is the main question. but before we get there, are the skill sets necessary going to be different than what we need today to lead retail? >> i think they're going to be evolved in the sense that culture is the defining element in competitive advantage. it's not just what you do but how you do it and being able to bring the whole organization along with you is very important. i think the ability to bring high touch to every interaction with the consumer, with your associates, with your other constituencies is very important. the ability to move, to be fast and flexible and to bring the organization with you. you're going to have to be a master of the technological universe, certainly of contemporary technology, and you're going to have to have a truly global perspective, i think. while some of this isn't new, i feel that the day of the one man band is, in fact, over. the markets are too big, the challenge is too great. >> who are the one-man bands? >> the one-man band are people like myself and my predecessors who could kind of do a lot of it by yourself. that is over. everything is too complex. you have to have really deep skills to pull your organization along with you. i think that the time is too short for the masters of the universe approach. it won't be about teamwork, it will be about pulling the organization along. the organization's going to have to move, i think reflects -- >> it almost sounds like you're talking about a roving band of retail operators. >> no, it's not really a roving band of retail operators as much as it is a cohesive unit where things flow. do i think it's the end of the world for the merchant princes? no, but they're going to have to be princely across a very broad spectrum, and that has not always been the case. >> so, who are your names? i know you have some retail names that you're watching. we start first in sort of pure retail, who are you looking for to lead us through the next 25 years? >> anybody would have to start a list of this type with doug mcmillan, the new ceo of walmart. he is an extremely capable guy. he's grown up in the organization. he's run international. he's run sam's club. bright, charismatic, articulate. i think he's the real deal. >> you think walmart can be the future and not the past? >> oh, i think walmart will be the future, not the only future, but walmart will certainly be an important part of the future. and i think mcmillon is a wonderful choice to lead that. you've also got jeff bezos. whether he decides he's going to make money or whether he's not going to make money, i guess he'll reveal that to us at some point in time, but he's going to have a lot to say about what goes on in the next 20 years. there is a really, really good guy at macy's, jeff gannett, president of macy's, spent the last five years as a merchant. he's run several divisions. he's a stanford type, so a smart guy, a very contemporary leader. people generally like to work for him. he's got the goods. and then the fourth guy i would cite in this area is richard baker. richard is an unconventional retailer -- >> sure is. >> or he's a real estate guy, whatever. >> right. >> he owns hudson bay, lord & taylor, saks fifth avenue. what he does with that is going to have a lot to say about what happens in the next 20 years. >> we don't have a ton of time. can you give us some of the names to watch in fashion? because these are names, really that we shouldn't miss out on. we need to pay attention to these folks. >> you've got to watch christopher bailey at bushry. he's challenging the model that creators need someone alongside of them, like farrah and mickey drexler and the tpg group, who have been his part naerdz for the last ten years. so, i think that's going to be fascinating to watch. maureen chiquet went from mass at old navy to class at channel. she's been the ceo with the company for ten years. i don't know her, but everybody speaks very highly. her. >> we have probably time for one more. pick your favorite. >> neil blumenthal, warby parker and david neville. you have to watch people like that. >> a lot of good names to watch, kelly. are you up to the challenge for me for the next 25 years? >> well, if i have my glasses on, then i can navigate it the right way. thank you very much to you both. appreciate it. how will disney's "guardians of the galaxy" be? it scored the biggest thursday night opening night of any film this year. at some theaters, though, moviegoers paid for one "guardian" picture and got another, a cartoon about christmas characters. we'll explain next. and a programming note. i'll be talking to disney's ceo bob iger immediately following their earnings release with julia boorstin on tuesday. we'll be right back. (vo) watching. waiting. for that moment, where right place meets right time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours. if energy could come from anything?. or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything. well, imagine going to the movie theater excited for opening night for one of the most anticipated movies of the season, and the wrong film starts playing. that's exactly what happened at last night's midnight showing of "guardians of the galaxy," not once, not twice, but three times. instead of the live action movie "guardians," regal cinemas started playing "rise of the guardians." now, that movie, you may recall, is a pg-rated cartoon about jack frost, released back in 2012. so, naturally, angry fans took to twitter with dean tweeting "third time failed. guardans of the galaxy became rise of the guardians again." "guardians of the galaxy" poised to be one of the first real summer blockbusters of the season. now, while aston martin may be the car of choice for super spies like james bond, it's not your everyday family car with a price tag of $200,000 or even $300,000. so, we're going to ask how the luxury automaker is holding up in these up-and-down financial times. we're going to get a firsthand look at the model when we come right back. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. your studied day and night for her driver's test. secretly inside, you hoped she wouldn't pass. the thought of your baby girl driving around all by herself was... you just weren't ready. but she did pass. 'cause she's your baby girl. and now you're proud. a bundle of nerves proud. but proud. get a discount when you add a newly-licensed teen to your liberty mutual insurance policy. call to learn about our whole range of life event discounts. newlywed discount. new college graduate and retiree discounts. you could even get a discount when you add a car. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. so, in case you were wondering, this is a brand new 2015 aston martin v-12 vantage roadster, the fastest convertible ever built by the luxury carmaker. and here to tell us more about it and the overall state of the luxury car industry is jillian jenkins, aston martin president of the americas. along with the rest of the panel, some of whom are already in the vehicle. robert, do you care to explain yourself? >> no, i'm just waiting to go 200 miles an hour, which this car can do, probably not in manhattan, though. >> who is buying these cars, julian? >> well, it's a range of customers. it's very exciting times for us as a brand. we're expanding into different markets around the world as well as established markets and growing our presence including here in the americas. but typically, it's those that appreciate lifestyle, it's those that are already in the luxury sector, but there's also with aston martin the passion for the cars as well and a passion for the automotive industry and what we offer, which is a fabulous combination between power and performance and luxury and lifestyle. >> i know you've got jeff here convinced. >> i was wondering where i put the car seat for my little ones. i don't know if you have one of those. >> as we mentioned, we've got actually four cars in our model range and one of those is the four-door. that would be a perfect car for you. >> i want to ask you about something. our phil lebeau flagged this. claire mccaskill introduced legislation if that passed, carmakers who don't recall their cars could face prison in some cases. how do you feel about this. >> clearly, we are very conscious of the environment we operate in, and safety is of primary importance. to that extent, i can't comment on others, but certainly from our perspective, we're very diligent in it, and should we sense there is a concern, we would take prompt and immediate action. >> i know that lindsey here has her economist hat on, even as she's enjoying the interior features of -- >> i'm a bit distracted. >> -- the car, lindsey. this being one of the places we're looking for demand, whether it's the luxury part of this economy or the car-buying group out there in general. >> we certainly know autos was a very important point to second-quarter gdp. we talk about consumption up 2.5%, but durables was up 14% because people were out buying cars like these, contributing about 0.5% to the headline growth. so, certainly a very key factor in growth, not only for the first half, but looking out to the second half of the year. >> you know, and the luxury segment has just been gangbusters. i mean, i have a question. so, you guys are famous for the james bond car, the original dv-5, which was, you know, that car that now sells for over $4 million. how do you view that bubble of a collectibles market where your old cars are selling for $4 million, a huge multiple on your new cars, and how does that affect what you do now? >> well, it affects them in two ways. from an investment perspective, clearly that is one of the appeals and one of the attractions of cars of that era. there were very few built, very special, very few exist on the road today. that drives the pricing of those cars. i think today, again, if we put that in perspective, we built 4,200 cars last year over the four or five models that we actually produce, so the volume is very limited when you think about that as a global market. >> and you deliberately keep it that way to preserve that sort of collectible mystique. >> it certainly has that tendency to do so. even as we expand into new markets, we have got 149 dealers in 44 countries. so, when you think about that, the volume is relatively small, even in this market, which is one of the biggest, 25% of the overall number. >> and you're up against lamborghini, ferrari, mclaren. these are big companies that have more horsepower, sort of more comfortable in that supercar space. how are you going to beat them? >> well, we don't intend to beat them. i think you're sitting in a classic example here of that. what we try and do is combine the two. that's more about power and performance, but also luxury and lifestyle. this is a car effectively derived from oyer gt-3 race car, 6-liter, 0 to 60 below four seconds, over 200 miles an hour, but it's also a car you could very comfortably enjoy taking to dinner. >> comfortably get in and out. jack, you've got to try this thing. >> careful with your mike. i'm curious, because we were wondering the extent to which you have an overlap between your buying audience and people who are in the market. are you seeing people after having a good 2013 coming to you able to buy a car? >> i think concern that we saw that from 2012 to 2013, there was an 11% increase overall year to year to get to that number. and of course, as we continue to build new models and expand our own reach, that's part of the attraction. and today we range from a $99,000 vantage gt right the way through to a $300,000 vanquish. so, there's great stretch, there's great appeal. and for us as a brand, you know, our job is to really to create that enthusiasm and that drive. >> what do you say to people? we had an investor on yesterday who said he wanted to be an investor in tesla as well as owning a tesla because he thought it was good for this country to reduce our dependence on oil. what do you say to those people? >> well, i wouldn't comment on other manufacturers, but i think from our perspective in terms of our customer base, the cars we build -- and again, based on the number and based upon their usage, you know, people use these for special occasions. these can be everyday cars, but typically, they are, you know, one of a stable of cars that people tend to use. >> what percentage of your sales come from the u.s. right now? >> well, it's actually the largest region. so, 25% of the overall volume comes from the u.s. >> what's number two? >> number two is europe, and then followed by the uk. >> julian, we have to leave it there. it's time for "fast money" now, but julian jenkins of aston martin, we really appreciate your being here. >> thank you. >> and thanks for the car. >> and for bringing the car by. >> you're leaving it, right? >> you're welcome. >> and this guy over here says in 20 years, he's going to be able to buy one, so -- >> that's the dream. you've got to keep dreaming! >> thanks, everybody. now it's time for "fast money." melissa lee, over to you and the gang. >> thanks a lot, kelly. have a great weekend. "fast money" starts right now. live from the nasdaq market site in new york city's times square, i'm melissa lee. traders are tim seymour, brian kelly, steve grasso and dan nathan. tonight's top story, global volatility. stocks extending yesterday's sell-off on the heels of a slightly weaker than expected jobs report. the dow's lost almost 500 points over the last four trading sessions. the s&p down nearly 3% for the week, the worst in more than two years. in europe, major declines across the board on renewed concerns over russia and portugal. germany's dax breaking below its 200-day moving average for the fir time in two years. even asia under pressure today despite strong china manufacturing data overnight. what is going on right now, ambassad ambassador? >> i don't think things here are as bad as across the eu.

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