gained yesterday and then something, and there are a number of developments that we're following going into this final hour of trading here. >> and so, let's take a look at where markets stand with the dow jones industrial average off 165 points this hour. it was down almost 200 at the lows just a little while ago. remember, anything below 75 points means we've given up yesterday's gains and returned to the lowest level since at least may 20th, perhaps going back into the red for the year. in any case, this is a broad-based sell-off, and the dow off 1% at this hour. same goes for the nasdaq, which is off 42 points. the s&p 500 off 1.15% or 22 points, down all the way to 1, 916. the dow, going into the week, it had shed about 600 points in ten trading sessions. so certainly a sharp sell-off. >> let's try to make sense of it all. rob morgan, sam stovall from s&p capital iq, frank rad yok from jhs capital advisers, danny hughes from divine capital here at the big board. our own michelle caruso-cabrera on the international watch and rick santelli on the markets. michelle, let's start with you. i mean, one of the stories that's out there is the russians massing troops on the eastern border of ukraine, but you know, that was in "the new york times" this morning, it was in the "washington post." we knew about that, but suddenly, when word was coming out about that again to remind us at 1:30 eastern time, we had this sell-off. >> you know, what specifically happened, all of the intraday charts you just rolled through, it was very clear that there was a moment today where we had a sharp decline, and that was one line hit the wires where the polish foreign minister suggested that russia was about to invade ukraine. that was the phrase. when the full write-up came through, it said, based on all of the build-up of troops on the border and what they're doing, russia plans to either escalate, or it could be a prelude to an invasion, which is a completely different conversation and different level of tension, certainly. so, i think that's why we saw the averages move off of their lows. but you're right, bill, it highlighted the concerns there. and then in addition, today we keep getting different ripple effects from the sanctions, right? now there's talk that russia's going to force european airlines to fly around their air space. they're starting to -- now there are reports coming out of moscow that there's a certain bourbon from kentucky they're going to prohibit, not because of the sanctions, but because they don't meet quality control measures. but it's starting to happen. we're starting to see effects in germany as well. so, that's reminding everyone of the economic impact of what's happening over there. >> oh, sure. and you know, some of the pushback, rick santelli, to this idea that the sell-off is all about these geopolitical tensions, though, comes from the fact that it doesn't quite square with what we're seeing in other parts of the market today. look at oil, which can barely catch a bid. gold just barely moving higher in the session. even treasuries aren't catching that much of a bid on the safe haven move here. >> well, on the treasuries, that's a bit of an exception. remember, there's two ways to evaluate the impact of treasuries. one is how much distance they've covered. and yes, not a lot. we were up at 2.52 high after the two-year high on nonmaferg sm, but this level is hugely significant. it represents the low yield close for the entire year. so, it's going to take some horsepower to violate that. but in the end, harken back to a year ago when the stock market was bullet-proof. no matter what you threw at it, it bounced off. this is the other side of that mountain. >> yeah. i mean, dannie hughes, that is a highlight. if it tells us anything, it shows how vulnerable this market has become at these valuations when we've gone this long without a correction. you know, all those things we've highlighted for the last couple of years here. now the market is starting to feel pretty vulnerable, doesn't it? >> we've had 5 1/2 years of excess credit, and you know, we're used to it. that's what made us complacent. we've had a lot go wrong with this market. in fact, we've had good news happen in the past couple days. june factory orders, the ism, as rick has said. but you know, i think that we're seeing a lot of people waiting for the other shoe to drop once again, and we haven't seen a lot of follow-through. we've seen a lot of people pull money out of the market. and don't forget, we're in the summer doldrums, too, so that's never good for a market. >> no, and i was going to ask rob, frank, i don't know who wants to weigh in on this. rob, maybe start with you. what's liquidity like out there? do you think that's exacerbating either because this is august or because this is a secular trend, these little sell-offs we're seeing? >> yeah, i think liquidity's a big part of it, since we're in the summer doldrums, kelly. and you know, obviously, we've got technical damage to the s&p 500. we're below the 50-day. but the 200-day moving average could give us some pretty good support. so, stocks are still not really expensive here. i continue to be a buyer. >> and sam stovall, our earnings watcher, i mean, i keep highlighting this, every bull that comes through here inevitably says to us it's all about the earnings. it gets back to the earnings. but it's about the earnings until it isn't. earnings have been pretty good this reporting cycle, and now we face this vulnerable market here. >> well, they sure have, bill. as christine short said early on -- she's our earnings guru from s&p capital iq -- we could be seeing this earnings period show as much as a 10% increase year over year, and we are approaching that number right now. but because about 80% of the companies have already reported, i think most of that is now in the rearview mirror, except for retailers, and we have to go forward now looking for a new catalyst to help push prices back toward their all-time highs. >> you know, seeing you there, sam, just reminds me, this is the three-year anniversary of the u.s. losing its aaa credit rating from standard & poor's three years ago. it's so interesting to go back and read the news coverage from that time when people talked about how it was the end of an era and what knock-on effects it could have throughout markets -- >> and what happened? yields dropped. >> nothing! exactly, exactly. granted, sometimes it takes two out of three for these on average to get back to flows. i want to get back to the assumptions we're making, whether it's about credit ratings or what's happening in the credit markets today. what do you think is behind this sell-off? >> you know, kelly, at some point, i think part of this is just the market returning back to where it's been. i think folks may be making a little bit too much. i'm maybe a little bit more sanguine than most. you sit and look at it there are all these reasons for the market to pull back, and we still, in big reasons, haven't done that. so, you look at july 17th. you have a jetliner shot out of the sky, you have the israelis invade gaza. what's happens the next day? market moves up. i think we've got to look at it and step back and go, you know, yeah, there are a lot of reasons to sell off, but we are seeing some good things going forward. and one of the guests said earlier, the market really is not all that expensive. you look at the pe, the pe on the s&p here, we're at about 19 this morning. you look back to 2005, it was about 19. you know, i think folks need to maybe step back and reassess. >> i hear what you're saying, frank. where, then, do you see opportunity for people who say, all right, then what do i do with my money in the market? what do you tell them? >> i'm very much a dividend investor, i'm very much a conservative investor, so we look at that for clients, we look at value. not to say there aren't growth opportunities that are out there, but i think when you start to see volatility pick up, and i would expect to see that between here and the end of the year, i think you want to look at value, give yourself a little bit of a margin of safety. relative to treasuries, you know, i've been pretty laid back on that really for the last year. i think i see us trading somewhere between about 2.6% and 3%. i really don't see a lot to happen to take liquidity out of the marketplace, and i think the fed, rather than ratcheting it down, is starting to raise rates, i think we may be looking at more liquidity. >> dani, what's your strategy to make money right now? >> david, in investing, i echo that as well. another thing to keep in mind is the workforce of the equity capital markets, those secondaries and follow-ons and blocks and overnights. that market has been extremely hot. this year, year to date, 560 deals compared to last year, 475. that is incredible. and that's where we're still seeing follow-through from investors. >> so, give me a sense, whoever wants to take this. i mean, what do we watch, then? what's our new -- rick, i missed the japanese yen. that used to be our reliable friend for market direction, at least for three or four months. what is it now that's going to tell us where we go from here? what seems to be the most sensitive? >> that trades freely, that is, right? >> i'd say the dax. watch the dax. i'm telling you, if the dax starts to close under 9,000, pay attention. i like what our one guest said, be more sanguine. if you could beam all of these metrics back into the '90s or '04, i'd agree, but these aren't those times. we have big central bank activity, some getting bigger, some getting smaller. this could have very strange behavior to the marketplace. >> plus, it's the economy over in europe most exposed to russia. >> and we're seeing that again, whether it's airlines or companies that you mentioned, if there are retaliatory measures that russia's hinted at, it will be greater all the way around. >> indeed. thank you for devoyour thoughts today's market action as we try to make sense of this. nding lower. >> the dow up 180 points, 16,389, just above 17,000 a couple weeks ago. we have about 50 minutes left on the session, the nasdaq off 1%, the nasdaq off about 1.25%, looking for the resting point on the sell-off today. we have a giant wave of earnings heading your way wouldn't you know after the bell tonight. disney, activision, blizzard, groupon, fireeye and zillow among the big names reporting tonight. we will preview those numbers, bring them to you the instant they are released and tell you how they affect the markets and how they might affect your portfolio tomorrow as well. something you cannot afford to miss, coming up. >> speaking of which, disney's ceo, bob iger, is on deck, speaking with us on a first on cnbc interview right after posting results. find out if earnings got a boost from the world cup and "captain america." also ahead -- >> if you're basically still an american company, but you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country and by the american people. >> strong words from the president with our steve liesman a couple of weeks ago, but now an even stronger reaction on wall street. punishing one stock by dropping it about 10% for not pursuing a tax inversion strategy. the ceo of that company spoke with our jim cramer. jim will be here in a few minutes. we'll talk about that coming up on the "closing bell." e financial noise financial noise financial noise financial noise 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. welcome back. here's a look at markets under significant pressure today. yesterday we saw a late-day rally. today the opposite may be true as the dow sheds 174 points. the s&p 500 at about 1,915 here could test earlier session lows of 1,913. you can bet people will be watching closely to watch what happens if it does. >> a lot of chatter, bob pisani, on the trading floor about the sell-off that began at 1:30 eastern time. a lot of the guys on the floor here are convinced that was just a technical sell-off here. >> well, maybe. >> well, i'm telling you what they're saying here. >> put up the chart. put up the s&p. the immediate cause, the headlines came out. polish minister, russian units poised to pressure or invade ukraine. we'll get more when we have clarification and the markets should react to that. we moved down. that's not an intraday, but i'll tell you what technical might be important. the s&p did drop below friday's lows when we got the jobs report, so we're essentially at intraday a one-month low. that's technically a little important, but that didn't cause a 100-point drop in the dow. it's the headline that caused it. put up the intraday. there you go. that didn't happen on just a technical thing. that was a headline. and yes, we did drop below friday's lows and we're about at a one-month low on an intraday basis, so that's important to bring up technically, but don't confuse the causes and effects. there are sectors that have been weak for days on end. the market's weak internally, talking about oil. the drop five, six points, 45 points in dow? that's part of the decline these two stocks weak for days. oil and energy stocks have been weak. then ibm. i think this is the sixth day in the row they've been to the down side. there it is over the last few days. so, that's an issue there. finally, even some of the financials. goldman's down again today. that's prettying some pressure on the dow as well. that's been weak as well recently. so, there's some trends here in addition to some intraday stuff going on. >> thank you, sir. i'm sure you'll be approached by the traders coming over in a moment here. thank you, bob. see you later. >> which is the beauty of being down here on a day like this. >> exactly. the second of those two american aid workers who were infected with the ebola virus in africa are now in atlanta. eamon javers has the latest for us. >> that's right. she's at emory university hospital in atlanta, georgia, and you can see hospital workers taking every precaution here to make sure that that ebola victim is taken care of and taken care of in a very secure way as they transport her into the hospital. meanwhile, today the white house saying that the united states is surging its response in africa in order to help contain this outbreak of ebola. the white house saying that the centers for disease control are sending 50 additional experts to africa. the usaid is sending what's called a disaster assistance response team also to africa. and additionally, $5 million in further aid. meanwhile, the faa is helping african nations with exit screening of passengers who are leaving some of the nations that have been affected here in west africa. homeland security is training border patrol agents to spot ebola victims and other people who might be seriously ill and then make an effort to quarantine them as they come into the country, if they do. and also, we've seen earlier today british airways suspending flights to and from liberia and sierra leone, saying that they'll revisit reopening those flights when the pattern on the ground changes. but meanwhile, for safety, they say they've just got to stop flights altogether for now. no word on additional carriers making the same decision just now, guys, but clearly, a massive effort here from the united states. >> indeed. thanks, eamon. see you later. so, as another patient is brought into the united states, we ask a business question. we want to know at what point do pharmaceutical companies begin to think about investing in a vaccine for a rarer virus like ebola. >> dr. daria long-gillespie is an emergency physician at emory university hospital and executive vice president of sharecare. doctor, thank you so much for being with us this afternoon. >> thank you for having me! >> do you expect the silver lining from all this could be new, i don't know if cure's the right word, but treatments, vaccines, to address this problem with ebola? >> well, it's possible, and that's something that we're seeing is that funding is coming from the government and the department of defense because ebola is being seen as a potentially national threat. >> so, i mean, that comes down to dollars, as we know. and you know, companies are reluctant to invest in a product that they don't think they'll make a lot of money on. and they consider a blockbuster drug to be that which can make $1 billion. could you see an ebola virus vaccine being a blockbuster drug? >> no. an ebola vaccine is not going to be a commercially successful vaccine. it would be done for the reason that we discussed earlier, because the government sees it as a national threat. but if you look at why companies choose drugs to manufacture, they look at three big factors. one is is there a demand? and at number two, is there a high price that they can command, even if there is a low demand? and lastly, what is the regulatory environment? will there be some fda fast track, or on the other hand, will it be a very long, onerous clinical trials policy? >> this is all a piece, though, doctor, isn't it? because if there is a national threat that would imply significant exposure among the u.s. population that would perhaps require some sort of treatment, so what would it take for ebola to become a national threat? what does that mean? what is the threshold? >> you know, there's not a number, per se, when drug companies look at them. for instance, companies like genzyme have treatments for conditions that only 2,000 people suffer from. so, they view that, however, as having a very high price that they can command. so, it's not necessarily a number if the number can be countered by a high price. on the other hand, ebola. you have to look at it as what is the risk to united states and our people here. right now it's not necessarily presenting an outbreak situation. so, would the government want to pay to treat people in africa? and the problem is there, you have still a fairly low number of people, only, you know, a low number of people who are suffering from the ebola virus and a low ability to pay. so, the funding will have to come from some sort of government entity or non-governmental foundation. >> before we let you go, since you're there at emory, could you give us a sense of the working environment now, how it changed since the two patients arrived? and you know, there is understandably, perhaps, some apprehension about them now being brought to american soil. put that in perspective for us as well, if you would. >> well, sure. i went to work in the er last friday, which was just after we found out they'd be bringing in the patients, and there was definitely some trepidation and questions that i had, and i asked our leaders of our institution, what are our procedures if somebody were to get exposed in addition to this patient, and i was really comforted to know that they have extensive procedures in place to protect not only the staff but the patients there, their families and the greater city of atlanta and the united states overall. so, really, what people feel -- i'm really proud of the staff that we have at emory and the amazing work they're doing right now. >> and doctor, last question for those of us who aren't involved. what do we need to know about ebola as it is today, the potential for it to spread? i understand it can only be spread through liquids? is that right? >> yes. >> is there any prospect that this would become a disease more easily transmuted, transmitted? >> right now it is only through body fluids. so, what i even tell my patients is unless you have been in physical contact with a patient that had ebola or lived in a home with somebody who had ebola, you are not at risk for being exposed to ebola right now. if you did have one of those things, then it's a different situation. but even so, ebola is still a very rare thing and not in the u.s. >> all right, dr. darria long gillespie, appreciate your time, emergency room physician at emory university hospital. coincidentally, "closing bell" is going to atlanta tomorrow. speaking with a number of businesses down there, the federal reserve as well and talking about this and the impact it is having. heading to the close, we have about 40 minutes left. the dow, we're down 150 points, was down virtually 200 points at the low of the session. wondering what's going to happen this last half hour. do they push it back to that low of the session or do they try and bring it back? we'll find out. we have a busy afternoon in the markets. more coming up here. and later, disney's ceo, bob iger, giving us his take on earnings minutes after the media giant releases them. it will be another first on cnbc interview you won't want to miss. that's all coming up. d has gott, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. 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[ woman ] take the next step. talk to your doctor and visit humira.com. this is humira at work. welcome back. a sell-off today. we're watching this market carefully this last half hour to see whether it goes back to the lows of the session. what was that art said? it was 1,913 on the s&p. we're five points aweey from that right now. the dow was down 199 points. anyway, we're off the lows. we'll see what happens here into the final half hour. trading swrrks dominic chu has the big movers for us. >> energy was a big loser in sectors, but talking about target here, losing ground after slashing its second quarter profit estimate, citing costs related to a security breach and higher promotions and bigger discounts, all of that taking a toll on target. cablevision sliding after the cable company said it lost twice as many video subscribers than it did in the previous quarter. cablevision is the biggest laggard in the s&p 500 today. they're down about 7% in trading. then there's walgreens, which is lower. sky news out of the uk is reporting that the company will buy the remaining 55% of the british drugstore chain alliance foods for about $8.5 billion, but it says the company will still headquarter itself in the united states, so possibly not a tax inversion scenario. walgreen's down 0.5% on that. on the flip side, abercrombie & fitch rising after jefferies added it to the franchise list, saying management positioned the company for significant profit margin expansion. and we're going to end on another retail-type name here. coach moving higher after the luxury goods maker reported better-than-expected fourth quarter results helped by strength in international markets. coach up 4.5%, bill, kelly, on today's trade. back to you guys. >> best move we've seen on that stock in a while, for sure. thank you, dom. let's talk more about the broader market and how we're trading. david nelson with bellpoint asset management is with us, so is guaordon charlop from rosenblatt security. is this a technical sell-off? what do you make of what's happening right now? >> first off, early in the session we thought it's a retrace from yesterday's gains. we haven't been able to establish a couple winning sessions in a row now. >> light. >> so, it's sort of like this is the way it's been going. seems like it's been towards the low end of the range. >> a zag for every zig we've been getting lately. >> i like that, bill. that's impressive. >> thank you. >> so, now we're looking at the imbalances going into the close, are not seeing anything remarkable. they are slightly tilted to the buy side, but volumes are still muted, and we're going to have to wait on that, too. >> okay. >> david, what say you? >> i think you've got russian troops massing on the border and that's probably got investors nervous and it just pushes the psyche over the edge. you add to the fact that last week investors had to move up their timetable for a fed hike. i thought it was very telling, this huge debate going on within the fed. richard fisher was on cnbc friday morning and he said that more and more fed governors are coming over to his line of thinking. he's certainly a hawk. i'm expecting a fed hike as early as first quarter, possibly as early as january -- >> david -- >> put it all together and it's hitting. >> this would be a convenient theme for the market today, especially in conjunction with the stronger ism services number. the treasury curve in general just isn't reacting, certainly isn't bringing forward any timing of a hike in the fed funds rate. >> i would have to say that that's probably more of a safe haven trade, and that i think is much more related to the fact that russian troops are massing on the border. 8,000 troops were added today. those are big numbers. >> i mean, we're not getting that safe haven trade. gold is flat. oil is at a six-month low right now. the dollar, you know, has done okay but is not zooming right now, as you might imagine, if we were heading to the hills in safety, right? >> that's the way it's looking, bill. everything is dead red across the floor on all the different sectors. the guys on the floor saying, look, i get the ukraine thing, certainly, the geopolitical climate is something that has to be a concern to investors, but what are guys looking for down here? what are the veteran traders saying? we hope they wash them out a little bit. we're looking to buy them on the dip. it hasn't happened yet. let's clean that thing out, and when it goes down, these guys are going to be stepping in here. hasn't happened yet. guys down here are looking for it and are going to take advantage of that. >> i think he's right. and so far, earnings are pretty good. 75% of the companies so far that have reported for the s&p 500, the median is 5% sales growth and 10% earnings growth. that's not bad. there's a lot of stocks out here that are still very attractive. so, while this could possibly be the start of a correction, it's not a bear market by any means. >> you have a list here. so, the kind of buy on the dips here, david, that's worked for some time is going to continue to work? >> that's tougher for me, kelly, because i'm pretty fully invest ad at this point, only about 6%, 7% cash. probably what i do is upgrade the portfolio, get rid of what's not working and keep the things that are. >> i will ask a seemingly naive question, david, but this does not discount the importance of the russians amassing those troops on the eastern border of ukraine. but even if this skirmish intensified, what direct impact does that have on our economy that would cause the markets to go lower, do you think? why is the amassing of troops there causing a sell-off, if that's what's going on here? >> i'm not saying that's the only reason. i just think it's another weight on the market. today's an excuse to sell. i think you're right. i think for a lot of companies, it ultimately means nothing. i think if you own a home depot, you have to ask yourself, does troops massing on the ukrainian border, is that going to affect the earnings of these companies? and many companies, it doesn't. certainly, it affects europe, so that might in turn affect us. i think it's more psychological than it is anything else. and so, in that sense, i would agree with you. >> okay. last half hour, what do you think's happening here? >> i think they'll stabilize. they have been stabilizing them. i don't see that we see much of a sell-off or carry-through until tomorrow. i think cooler heads will prevail. >> thank you for your insights into this market day here. we are heading to the last half hour of trade. the dow's down 150 points. the s&p right now down 20 with the nasdaq down 41. now, this is another theme we've been following. investors ratcheting up pressure for companies to do tax inversions. that's when they buy an overseas firm, use its address to save taxes owed to uncle sam. eaton's ceo complaining about that to jim cramer yesterday and jim will be here to weigh in next. and disney ceo bob iger will be here with instant reaction to disney's results, due out at the top of the hour. find out if "captain america" gave the media giant a superhero size boost in the latest quarter. don't go anywhere. coming up. 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. starts at 6:30 a.m. - on the (vo) rush hounose.und here but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours. welcome back. yes, we've had a sell-off today, as trader gordon charlop was just telling us here, the imbalances going into the close here were to the buy side. so, we are starting to see the market come back. the dow was down when we went into commercial, down 150 points. now we're down 128 and the nasdaq and the s&p are also starting to come back a little bit here as well. now, while president obama's pushing to prevent u.s. companies from doing deals with overseas companies to avoid u.s. tax rates, shareholders are pushing back. take a look at eaton corporation in the last week. the stock punished for not pursuing a tax inversion. and on last night's "mad money," eaton corporation's ceo, sandy cutler, vented to our jim cramer. >> in every public setting since may of 2012 when i announced the cooper transaction, we've emphasized that it was not our plan nor our strategic intent to divest our vehicle business. unfortunately, i think over the last couple of months in what i would call inversion mania, there have been a number of investors who have indicated they thought it would make sense for us to lay the ground for someone else to invert their business. >> yeah, we're calling it invasion mania. joining us, jim, we want to talk about the big-market sell-off in a moment here, but what about this? you know, and it happened again today, walgreen with this acquisition they made, announced they're going to keep it in the u.s. headquarters and that stock's down 5% today. >> well, i mean -- >> what do you make of what's going on here? >> it's kind of an oddity. you can understand why some people felt that sandy cutler, the ceo of eaton, may be interested in doing something. why? while his company's based in cleveland, the location, the location, dublin 2, so, he already moved his headquarters to ireland. so, the idea might be that people thought he would certainly be game. he obviously was just talking about this one division, which a lot of people have been saying would be spun off, but walgreens is actually kind of the opposite. because here walgreens is buying a company from overseas, and if anybody has a right to change their tax domicile, it would be walgreens, but the comments are very clear, they're not going to be doing it. that will make oxip management, corvex, others very angry because they presumed this would be a way to get the tax bill down. >> jim, the incentive is there. if you're a shareholder in one of these companies and you look at the fact that you can have a significant tax savings -- by the way, this isn't the easiest thing for the biggest u.s. corporations to do. you have to have a significant overseas business. that's exactly what walgreens would have with boots. in other words, to play devil's advocate, is it against shareholder interests to bow to u.s. political pressure and not pursue the tax inversion? >> you would be hard pressed to figure out in this one why not be there? kind of like royal dutch, they beat in london, should beat in the netherlands. unilever. this is one that you could actually argue should be over there, and you could easily make a case to the president, look, we're not like that. the president who knows what the president might be thinking behind the scenes. obviously, walgreens was caught with an equivalent of government contracts, given the prescription drugs and the way they're dispensed, but walgreens had a chance. and i think a lot of people expected they would unveil this. they also had a great quarter and i see money going out of walgreens into cvs now. >> the political pressure wasn't just the president. dick durbin has put a ton of pressure on this company. he's written them a letter saying something to the effect of, you know, the shop on everyone's street corner shouldn't be headquartered in switzerland. >> well, and he's written a bill to prohibit companies that do the tax inversion to get government contracts. >> right. we asked him about this on the "closing bell" the other day. take a quick listen. >> if we start rewarding companies that are dreaming up ways to leave america, push jobs out of this country and avoid their tax responsibility, shame on us. >> jim, isn't the answer here ultimately going to be corporate tax reform? or do you think -- and this is important for all these investors and all these different names bid up on the prospect of a tax inversion -- do you think this will effectively put an toned this trend? >> it seems like the high water mark with eaton saying, listen, you assumed we would do something and with walgreens saying no. perhaps the statements about the president i don't care if it's legal, it's wrong, are starting to have an impact. if you're walgreens and you hear this, maybe you're thinking, next thing i know, the president's going to be saying, you know, walgreens does get to take advantage of a lot of things that happen in america. maybe we should look at that. treasury secretary jack lew said that would not be the, the economic patriotism card would not be played. at the same time, remember, if the irs started doing some rule-making, as much as anyone thinks that wouldn't matter, there isn't a general counsel in this country who wouldn't say, wait a second, we've got to be careful, because right now the irs just said we're looking into it. we're looking into your dibblin headquarters. the irs doesn't work the way the rest of the government does. you're guilty until proven innocent if you're in irs court. >> yep. let me ask you about the markets today. a lot of chatter on the floor today about whether this is just a technical sell-off or a reflection of the tensions between russia and ukraine. you actually think that we've underestimated the impact of the downing of the malaysia flight 17 a couple of weeks ago, right? >> yeah, it was a game-changer. plus, i watched the coverage, and here's what i think. i think putin -- look, people are going to say, jim, stick to stocks. okay, actually, i was a historian before i went into this game, but here's how i look at it if i'm putin. listen, i'm backed into a corner you think economically, but ukraine's mine. i'm going into ukraine. try to stop me, see what you can do. how many divisions does the federal reserve have? we keep talking about the federal reserve. i mean, look it, the federal reserve were really the issue, interest rates would be higher! that's just a complete kinard. this is about a major country going into another country that we have pledged to back because he doesn't want nato in ukraine. and what poland comes out and says, listen, how's the eastern flank of nato doing? i don't know, i'm back in 1939ville! >> what do you do, though, what does an investor do, because who knows how this plays out? >> in the end, it does get resolved. so if you're going to blow out everything and ring the register, pay capital gains and then get back in, i don't think it's right, but i think it's important not to put new cash in until you get more clarity. because look, i think putin does win. it's just that what is winning? does he win by saying, listen, i'm taking crimea and i'm just going to leave ukraine government but i've got all this border? but you know what, the west thinks it has a lot of cards. they don't have the cards. they don't have the horses. >> thanks, jim. always good to see you. >> thank you guys. >> appreciate it. >> good to see you. >> don't miss "mad money" tonight. jim will be speaking with the ceo of concur technologies. and it is also the continuation of chart week. it starts at 6:00 p.m. eastern time here on cnbc. meantime, we're heading to the close. 18 minutes left here. gordon charlop called it, imbalances were to the buy side and we've come back, the dow down 132 points, well off the low right now. >> and after the close, disney will release its results, and ceo bob iger speaking with us shortly after that in a first on cnbc interview you won't want to miss. also on the docket, more earnings. activision blid blizzard, groupon, zillow among others. dominic chu will have those numbers to watch coming up. from 2000 to 2011, on average 17 manufacturers a day shut down in america. there's no reason we can't manufacture in the united states. here at timbuk2, we make more than 70,000 custom bags a year, right here in san francisco. we knew we needed to grow internationally, we also knew that it was much more complicated to deal with. i can't imagine having executed what we've executed without having citi side by side with us. their global expertise was critical to our international expansion into asia, into europe and into canada. so today, a customer can walk into our store in singapore, will design a custom bag and that customer will have that american made bag within a few days in singapore. citi has helped us expand our manufacturing facility; the company has doubled in size since 2007. if it can be done here in san francisco, it can be done anywhere in america. welcome back. 15 minutes to go. it's been a volatile session here. in fact, the vix is up about a point and a half above 16. the dow jones industrial average down almost as much as 200 points, now off 125. >> and we're not finished yet. another maelstrom of after-the-bell earnings making a beeline for wall street. >> maelstrom and beeline, two great words. i've got to find a way to use them in a sentence later today. a lot of action after the bell, but the big one of course is disney, which is already as a stock trading near its record highs. now, the street's going to look for $1.17 in terms of earnings per share for the third quarter. revenues are going to be about $12.2 billion, analysts think. it's expected to show strength across its divisions with its media networks, including espn, always one of the most important parts of that network and that group of entertainment companies. so, that's going to be big. also, check out what's going to happen with groupon, because it's coming out with second quarter results. the stock got a lift monday in anticipation of a solid earnings report. the street's looking to see how well it's remaking itself from the daily deals website into an e-commerce overall company. consensus views call for a penny in terms of earnings per share on sales of $762 million. then there's video game-maker activision blizzard. it's expected to earn 2 cents a share on sales of $608 million. and we'll end here with zillow. analysts are looking for the real estate lender to lose 6 cents but will look closely at whether mobile users will surpass desktop users in the quarter. zillow is in the process of buying rival trulia. with groupon, the options market already pricing in a 16% move in the stock up or down after earnings with zillow. the options market with a 6% move. >> thank you, sir. maelstrom and beeline, words you only hear right here on "closing bell" every day. that's it. coming up, disney's ceo, bob iger's speaking with us on a first on cnbc interview after posting results. it all starts in about 15 minutes' time. keep it right here. we've got 13 minutes left in the trading session today, and what a trading session it's been, as we try to make heads or tails of the sell-off. we're still deeply in the red with the dow off 128 points. the nasdaq and s&p also under pressure. >> stay with us. we've got 13 minutes left. we'll see how we do, coming up. t new car smell and the freedom of the open road? 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>> what do you think about this action, worrisome? >> down day. well, everyone's blaming ukraine, right? i think i heard mr. cramer yelling upstairs it's all about ukraine, but i would allude to two other factors and reasons we're seeing. number one, i think the divergence in the russell has been happening for some time, and two, transports are weak. over the past two weeks, seeing some recent weakness in transports. and energy and crude are down. >> right, right. >> so, it might not just be ukraine. you've heard this before. >> i think markets are digesting a lot of news of the last two weeks. you have some sparks of inflation. you also have kind of concerns that the job numbers are picking up reasonably strongly. 20% year over year improvement in average job creation on a month-to-month basis. i think the signs of growth are picking up so you've got to think about what's going to happen with the fed come october. >> you think this potentially speeds up scares? in other words, it's a fact that momentum's kind of moving in the right direction? >> i think you're getting to an inflection point at some point between policy-driven markets, domination by the central banks, and fundamentals, which are about wage growth, inflation, revenue lines growing. notice the companies that have been punished over the last few weeks, they have might haved revenues, not earnings. >> what's the individual investor to do? buy this or wait for the dust to settle? >> no, i would be cautious still. you alluded to the fact that the economic indicators are getting better. we had the manufacturing index and ism best level since 2005? yet, we're seeing a down day. i understand there are geopolitical tensions and rifts, but if you look at the fed's program and the two gauges that judge the credibility or efficacy of their program, unemployment and inflation, both of them when we're reaching our targets, maybe not inflation yet, the markets may be scared that, ah, we know that we may have to raise rates sooner rather than later. >> investors don't like that. >> i think that's the transition moment. that's going to create a little volatility, it will be a little messy through the end of the year, but ultimately, the fundamentals win out. there's a lot of operating leverage by companies. they have margins high, stubbornstubborn ly so, and they've turned revenue growth into earnings growth and are likely to do that into next year. >> several of our guests said their favorite way to play the markets was to buy dividend names, the yielders. >> yeah. >> still the defensive play, basically. >> so, dividends i think for their own sake are nice, but the reality i think is companies are more and more thinking of where the capex cycle goes. there are a lot of nonbelievers out there -- >> willing to take on more risk now? >> a little bit more and return on investment is picking up. typically when industrial production picks up, capital expenditures follow, 9-month, 12-month lag to start to pick up. look at the gdp reports. i think there's reason to see a little capex improvement going into next year. >> all right. we'll take a break and bring you both back. as we head to the close, we'll see what happens. we'll have the closing countdown. then, the barrage of major earnings after the bell. disney, activision blizzard, groupon and zillow among the names reporting. we'll bring you the numbers and what they mean for the market. plus, disney's ceo, bob iger, will be here as well with instant reaction to the media giant's results. you don't want to miss that coming up. you're watching cnbc, first in business worldwide. ♪ 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. we get about 3 1/2 minutes left here. come on in, ladies. come on. here we go. you get tourists, you've got the members of the homeland security team, they're ringing the closing bell today. it's always very busy at the close, and we've had a very busy close as well here. it was kind of meandering along. the dow was down about 80 points. we had pretty much lost what we gained yesterday. and then 1:30 eastern time hit, and a big sell-off. we were down almost 200 points at the low here on the industrial average. we've since come back and we're still trying to figure out what it's all about, down 120 points right now. earnings coming out in a few minutes. it will be a very busy hour and it could have a big impact on tomorrow's trade. disney, of course, the big one here. we're down a fraction right now. bob iger will be along to talk about their second quarter and the outlook for the third quarter. then you've got activision blizzard, the gaming company, the security protection software company fireeye, groupon, and the real estate website zillow as well. and of course, guys, earnings have been pretty good this quarter, haven't they, chris, right? >> interestingly enough, earnings have been on an uptick here. analysts did a good job putting expectations down, guided by companies, but -- >> always set the bar low. >> yeah, but the surprise has actually been on the up side. like we mentioned earlier, the idea that companies meet revenues is good enough, but earnings numbers are coming in better than expected. i think that's a sign of the companies picking up their capital expenditures, but also the story about fundamentals improving this year. >> but isn't it ironic, though, about how vulnerable this market feels just as the earnings are starting to pick up a little bit? >> even when you see corporate profits, you're right. we're having, what, 10% or beating, 10% year-over-year corporate profits and a 5% increase, even on the revenue side, on the top-line side, but corporate profits, just because they're up year after year, does that signal a longer term trend? i don't know that high earnings power is here to stay if we keep just cost cutting. we're becoming more efficient with technologies, i guess, and less -- >> but you can only be so efficient, right? >> margins aren't going to pick up a lot from here. >> exactly. >> they'll probably stay where they are. one thing that's interesting, multinationals, able to subsidize globally. more challenging in small caps, where we see growth in the u.s. still low and slow. so, the ability to invest globally i think is going to make a big difference. those tend to be a little cheaper. i think the market starts to separate. we've already seen underperformance by small caps this year and i think that's set to continue. >> look, august is one of the weakest months of the second half of the 20th century. in the beginning of the 20th century, farmers were harvesting, right? 37.5% of the population was a farmer! yes, and now people don't even mow their lawns, so at 2% -- >> once again, blame the farmers. >> less than 2% of the population farms. august since then has become historically the worst performing month. >> slow month, yeah. >> but we've got a busy hour coming up in the meantime, guys. thank you. >> still very safe right now. >> we have homeland security agents ringing the closing bell here at the new york stock exchange. guys, thank you for joining us here. we're going to head to the close on what was a volatile day. so, yesterday rally day. today sell-off day. what happens on wednesday? that could be determined by a lot of these earnings that are coming up in just a moment leading the way, disney and ceo bob iger joining kelly evans and company on the second hour of the "closing bell." i'll see you tomorrow. thank you, bill. welcome to the "closing bell," everybody. i'm kelly evans. it's been a tough day on wall stre street. here's how we're finishing up the session with the dow at its lows of the day, off almost 200 points, but it looks like we're going out with a decline of about 141. the nasdaq giving up 31, the s&p about 19 to 1,920 this hour. joining us to talk about the withers and whys, carol robb, eli moy of "the washington post," cnbc's own kate kelly, and with us to break down today's action in particular, bob pisani and "fast money" trader brian kelly. welcome to everybody. so, bob, it wasn't quite as bad on the close as it was at the lows. which matters more? >> i think the close here at this point. look, we have had a lousy start to the month and largely it's about ukraine. remember last thursday, kelly, we were worried adidas came out and said they're going to get hit by what's going on in russia, worries about portugal. europe and the ukraine are clearly moving this around. they did again today. and with good reason. there's a lot of uncertainty right now. >> do you agree, brian kelly? >> yeah, absolutely! just take a look at the bond market. that tells the whole story today. you had the bond market sell-off in the morning on better-than-expected or good economic news, and then about 1:15-1:30, we had news from the polish minister that russia might invade the ukraine. we have found out there are 15,000 more troops, up to 45,000 russian troops on the ukrainian border, and boom, the bond market took off. it's all about geopolitics and what's happening in europe. those stock markets are not doing well at all. >> brian, all the same, there's been pushback on the floor here, people saying, look, if this were all geopolitics, we'd see, first of all, more of a bid in treasuries, you'd see more of a bid in gold, see more of a bid for the dollar. why don't you think we're seeing that? >> well, one, if you're seeing a bid for a dollar, then that's going to hurt gold, so, gold's been in a tough area. >> i understand the dollar's been a big move for a little bit now, but it's not as if it's suddenly breaking out aggressively to the up side here. >> no, a completely agree. you're not going to have that big move because you also have lower rates, so you're not going to have the rate differential buying coming into the dollar, so you'll get a little bit of a bid and you'll get a little bit of a bid in gold, but not massive. >> kate? >> i'm not necessarily disagreeing with the geopolitical theory, but perhaps another possible explanation for the weakness, the junk bond markets and concerns we're seeing there. i mean, jnk's been off since late june. some people short junk bonds actually think we'll see a move down as well in equities, that the two may be connected, and that we could even be at the very onset of the equity market correction that some have been predicting. now, lots of debate, obviously, about whether the market's fairly valued, whether it's overvalued. one hedge fund manager i respect thinks we'll see support levels here at 1,880 or 1,850 in the s&p, but others think we could see a bigger drop than that. >> a ways to go, below those levels. >> yeah. >> and of course, being the contrarian i am, i think the fact that there have been some strong economic news is part of what's bringing the market down. i think that that brings to the forefront here fears that the fed are going to raise interest rates perhaps sooner than everybody had anticipated. and so, any time that there's something that's good news it ends up being bad news for the market. >> i'll be the middleman here, kelly. >> yeah, go ahead. >> and say that today is a really good example of the two dynamics that are going to shave the macro economy going forward over the next two years, which is a download whammy of the potential of higher interest rates and advanced economies and slowdowns in emerging markets. the imf is saying that the spillback effect into the u.s. from emerging markets could lower growth in the u.s. by a percentage point over the next two years. so, you're really seeing two things come at the same time, which could be bad news for the u.s. economy. >> i agree with the main point. ism services today was spectacular. every single part of it, every metric was spectacular. that follows on the good ism manufacturing last week. we are seeing better economic data, and it's a good point -- >> but we've been going back and forth on this, it hasn't really moved market expectations for when the federal reserve raises rates. in other words, it's fine to have this discussion, but it's not actually changing the assumptions people are making in the market, at least today. so, there seems to be a disconnect there. >> but what you say, kelly, it's not necessarily changing the date of the rate hike, but the pace -- >> the mentality. >> -- going forward. richa they may be underestimating even though they may be in line with the -- >> but that's lacker being lacker. >> and plosser being plosser. >> sure, but this may be a time of the hawks, if we're in an environment where we're seeing stronger economic data. maybe they're right this time. >> but that's not going to be the case if you have a massive slowdown in europe, which we're starting to see. and russia's not going away. they're going to go all the way to hungary. so, i think the bond market has it right here. i would agree that the stock market probably has it wrong, but for the wrong reasons. >> but this is where kate's point gets really interesting. bank of america merrill also writing about high yields or junk bonds, says a lot of inflows -- by the way, friday was one of the biggest outflows from this space ever, and they say a lot of it's been the retail investor and that, frankly, if the fundamentals look better and the fed isn't about to go anywhere, then this should be a great time for returns -- >> keep in mind, the junk bond market also depends a lot on the stock market. when you have volatility in the stock market, you have volatility in junk bonds. they do not act like bond funds when there's volatility. they act like stock funds -- >> and this could be a cyclical setback as well. that trade has been awfully crowded. i was looking at the issuance data for high-income corporate debt and as people look desperately for yield, it's been a -- >> low yield. >> right, and issuance has gotten higher and higher and may now be topped out. one hedge fund manager told me that shorting junk bonds became too expensive to do within the last couple months for institutional investors. so, maybe we're seeing some necessary giveback there. >> it kind of reminds you of the argument about stocks, which is going into this year, after the year we had in 2013, people said, ah, this can't keep going, it's overvalued. and then basically it kept going and caught a lot of people wrong-footed. maybe now that trade starts to work, but it would seem we would have to see a pickup of the outflows we've already seen from this space or another round of nervousness, mr. b.k. you know, to make -- >> well, why wouldn't you see another outflow? >> you know why, because people have learned that from every dip, whether it's on the bonds side or the equities side, has been an opportunity to go long. >> but not with the dip we've had in the bond market. and if you look at the economy -- there's two things that are going to happen. we either get a strong economy and yields go up. i don't want to be in junk bonds when yields skyrocket. number two, we're going to have a weak economy and you're not being compensated for the credit risk in the bond market. >> right. >> there's no reason to buy high-yield bonds. >> but wouldn't you trade that any time, a stronger economy and a little bit higher yields and maybe a better stock market to have a better economy? >> sure. >> and maybe wage growth? wouldn't that be nice? i'd trade that any day. >> and rates stay low. there's a third option everybody's starting to consider, that you get the positive macro and you don't get the higher rates. >> that's a little bit of goldilocks. i think that's going to be very unlikely. i'd take that, for sure, but i'd be perfectly happy with -- what will kill the stock market rally is a sudden, sharp rise in interest rates. if we go from 2.6% to 3.5% on the ten-year in a month, it's over. but if we go -- >> on the ten-year, we went from 1.6% to 2.5% in the span of what, six woonz weeks? >> and look what happened to the stock market. >> exactly. >> it tanked. >> well, wait a minute -- >> for a time. >> job realized that was prematu premature. >> and we went back to 1.6% on the bond market again. it's all about the bond market, ball interest rates. >> bob pisani, do you think we'll see a big leg down, and are we in the first few days of it now? or is it coming later in the year? >> the problem is, how do you feel about how the ukraine is going to play out? if we do not see any, heaven forbid, a ground invasion of that, yes, i think stocks can weather this. if we don't go from 2.6% to 3.5% on the ten-year, absolutely we'll be higher, but those are two big ifs. >> it's possible higher rates are actually pro-cyclical for a time. in the past, they've generally, even if they've happened late in the cycle, not been the end of the rally for stocks. by the way, if you own a lot of bonds and take losses on those because rates are moving higher and you want to get returns, sometimes you pile it into bonds with a higher yield on them. i mean, that's what this kind of pro-cyclicality can do sometimes in an expansion. >> on the micro side today, even though we had from a macro standpoint things going down, it's interesting the names oversold, like coach -- >> sorry, guys, we have news back at headquarters and we want to get straight to dominic chu. what's going on? time warner shares as well as 21st century fox shares you have to watch. right now time warner shares are down 12% in the after market, and the reason is because 21st century fox has pulled its bid to acquire time warner. again, in a statement, 21st century fox chairman and ceo rupert murdoch saying, "we've reviewed a combination with time warner as a unique opportunity to bring two great companies together, each with celebrated content and brands. our proposal had significant strategic merit and compelling financial rationale and had always been friendly. however, time warner management and its board refuse to engage with us and explore an offer which was highly compelling. additionally, the reaction in our share price since our proposal has made undervalues our stock and makes it unattractive for fox shareholders. these factors, coupled with our commitment to both discipline and our approach to the combination and focused on delivering value for fox shareholders has led us to withdraw this offer." so, that's why those shares are down 12.5%, basically fox saying it's a no-go, we're going to pull our bid and that's why shares are reacting the way they are. big news in the media space, right ahead of what's expected to be some pretty big numbers coming out of disney. back to you, kelly. >> kate, do you buy it? >> not for a second. i mean, this is a stunning statement coming out of rupert murdoch's company. this is a man with stick toitness, to be envied. "the new york times" this morning laid out how negatively time warner has come out against the idea of this deal. having said that, i would not rule out that he'll come back again with a sweeter deal or some other concept for putting the companies together. i wouldn't rule it out at all. >> not only will he come back because he's obsessive about these things, but it really has put time warner into play and there are a number of other companies who could potentially come to the table. i think if time warner doesn't make a offensive move, perhaps buying a smaller company like a scripps to bulk up, they're going to remain vulnerable. >> i would agree and i would be shocked if a man with rupert murdoch's resources could not find a alternative way to pressure time warner's board members and management to consider some kind of back-door offer or other kind of offer. i'd be surprised. >> we'll have more on this in a bit. guys, we want to mention, we may be taking it in stride, but time warner shares are up 11% after hours, 21st century fox rallying on the news. we'll get into more of this in a moment, but we have an earnings alert with jane wells on groupon. jane? >> hey, kelly, disappointing news on the revenues with groupon. they came in at $752 million and the street was looking for $762. however, everything else was either in line or better than expected. groupon is one of the companies that tells you its total billings. that was slightly better than expected. eps pro forma came in at expectations at positive 1 cent. active users, again, better. ebitda came in slightly better than expected at $59 million. here's one of the things they're trying to do is they're trying to make people come to groupon instead of having them to sort of lure you in with the daily e-mail, and that, what they call the pull now reached 10% of all transactions in the last quarter, which is an improvement. however, its outlook, again, a little on the disappointing side. revenues, it says, for the current quarter will be between $720 and $770 million. street looking for $761 million. ebitda they're saying is going to be between $50 and $70 million. street was looking for $76 million. and eps for the current quarter, kelly, they're saying will be between 0 and 2 cents, and the street was looking for 3. we will have more information for you shortly. >> jane, thank you. those shares down sharply, about 13%, giving up a big part of the rally they had into that report. our jane wells there on groupon. thanks, everybody, for now. be sure to stick around and catch brian kelly coming up on "fast money" with much more at 5:00 p.m., and we've got plenty more here on some of the news we're digesting this hour. more on the sell-off is ahead. the panel has some thoughts on what more is behind today's drop and whether we can rebound tomorrow. and walt disney, one of the best performing dow stocks this year. will blockbuster films like "captain america" and "malificent" help deliver a blowout quarter? let's not forget about "frozen," wracking up big bucks worldwide. next up, ceo bob iger breaks down media earnings, plus, his reaction to president obama's statement that ceos should stop complaining about government regulations. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. 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[cheering] the fastest in-home wifi for your entire family. the x-1 entertainment operating system. only from xfinity. disney earnings are out. our julia boorstin has the report. julia? >> that's right, kelly. disney beating on both the top and bottom line, reporting that earnings per share increased 24% to $1.28. it was expected to come in at $1.17. now, this is the company's highest eps in its history, and disney says it's now generated higher eps in the first three quarters of 2014 than in any previous full fiscal year. revenue at $12.446 billion. expectations were $12.16 billion, also up 8%. we're seeing strength really across the board here. operating income at the studio entertainment division up more than 100%. parks and resorts operating income up 23%. and we're also seeing the interactive division where revenue is up 45%, its fourth consecutive quarter of profits in that division. so, really a strong quarter. and joining us now to talk about it is bob iger, ceo of disney. bob, thanks so much for joining us here. now, what really drove the results this quarter? >> well, it was pretty much across the board. you just mentioned them. we had great results at parks and resorts, profitability at the interactive group, tremendous story at consumer products, and of course, the studio, which had great results from movies like "captain america," "malificet," and "frozen," the highest grossing animated film of all time. >> that clearly gave a big boost to your consumer products division. before we dig more into the results, we have to ask you about the time warner/fox headline that just crossed. what do you make of this news? >> well, i just saw the news myself. i never thought that the combination of the companies was an aforegone conclusion. i am only speculating here that news corp. or 21st century fox, you know, tried to do something under less than hostile circumstances. their offer or their overture to time warner was not well received and i think it's hard to do something of this size under hostile circumstances, and i can only speculate that rupert murdoch decided that that was not the way to go. and since he didn't really get much receptivity to what he was talking about, then he probably has decided not now. it doesn't necessarily mean they don't come back, but i won't speculate. >> you, i'm sure, have known rupert murdoch for years. do you think he has his eye on a different media asset? what do you expect him to do next? >> i really don't know, and rupert's track record is fantastic. i think this speaks volumes for the value of content. time warner certainly has great content and great brands. i think, obviously, rupert saw value in those businesses and those brands. i think as we know as a company, there is a lot of value in brand franchises and content. so, i can't speculate what any next move might be. >> with so much consolidation in the distribution space, comcast, time warner cable, at&t, do you think there is more pressure on companies like fox and disney and time warner to merge, consolidate? >> i don't know there's necessarily pressure to merge. i think in today's world, given consolidation in distribution, you are much better positioned if you have an array of a great content, great brands than if you have maybe just one. we're extremely well positioned as a company because of the franchises and the brands that we have, but it's, you know, it's still an environment that from a distribution perspective can be challenging. again, if you've got great brands, you're better positioned, and it could be that what rupert was seeing in time warner was the opportunity to bulk up, to get bigger, but also to get better because of the collection of assets. >> i want to toss it over to kelly, but one quick follow-up. you said that the distribution environment can be challenging. last quarter you talked about the pending time warner cab cable/comcast merger and said you'd be evaluating it and looking at it to see what you think. now that you've had more time to think of it, what do you think of that merger? do you think it changes your leverage in negotiating deals? >> well, we've chosen not to make any public comment about that. if that changes, you'll be among the first to hear. but we don't have anything specific to say about it. >> okay. kelly? >> thank you, julia. bob, i was just going to quote the "wall street journal," actually, saying that among fellow content companies, walt disney is the only one that clearly has the financial firepower for a time warner deal. do you think time warner could also make walt disney better? >> well, we don't comment about such things, potential acquisitions. over the years we've made some significant ones and we haven't commented before on them for obvious reasons. that should not in any way be understood to mean that it's something that we're looking at, just something that we don't comment about. >> and with regard to the specific pieces of time warner that could potentially be on the table, there are analysts who have covered your company for years that said maybe walt disney would be interested in buying cnn. would you? >> no comment. >> understood. president obama recently saying that corporate ceos should stop complaining. and i just wonder, amid the reaction to that in which we had steve forbes yesterday calling president obama in response the complainer in chief, what you think of this firestorm. >> well, i can talk specifically about tax legislation. i think that we're in great need of tax legislation as a country. the corporate tax rate is too high. there are too many loopholes. congress is not getting off the dime and addressing it, and they really should. i don't necessarily think that threatening inversion or essentially moving your business overseas or your corporation overseas is the right approach, but i'd like to throw the question back to congress and to the president, because i think there's general agreement that we need change. how are we going to get that done? how is the president going to help bring tax reform -- >> isn't it true that hollywood, though, is among those begging for a tax break in some states, including california, as "the new york times" recently reported? >> well, you're talking about two completely different things. hollywood, when it makes movies or television shows, specifically looks for some subsidies in exchange for essentially bringing their protection to various locales. we do that in different states in the united states. we also do it overseas, particularly in the uk, because we believe, and a lot of other people agree with us that that creates jobs and helps stimulate the local economy or the economy where we bring the production. what i'm talk being is the fact that we need tax reforms because the tax rate in the united states is among the highest if not the highest in the world. that should get addressed. we should be more competitive as a country. in addition to that, there are a lot of loopholes that should be changed, and the tax code is ridiculously complex. that might sound like a complaint, but i actually believe that what we're talking about is strengthening the u.s. economy and making the you'd more competitive internationally, which we're not when it comes to corporate tax code. >> oh, understood. and by the way -- >> i just throw the question back either at the white house or at congress, how are we going to bring about corporate tax reform? it is needed in this country. >> and i would just mention before i hand it back to julia here, but citigroup singled you guys out, saying you have 30% of your business overseas, a 31% effective tax rate. an inversion would make sense potentially for disney. would you categorically rule out doing one yourself? >> we do pay a high corporate tax rate. a lot of that is due to the fact that we house a lot of intellectual property under essentially the u.s. copyright regime. and so, we pay full taxes, even though revenue is reaped from selling a lot of this product globally, we pay the corporate tax rate on a lot of that product. we don't get the benefits that certain other companies or businesses do, like manufacturing in that regard. so, that's one of the things that we've looked at really for change. as it relates to inversion, whether it's off the table, i can tell you that walt disney company is not considering moving itself outside the united states. we have huge business globally. the world is our marketplace. and in fact, our international businesses have been growing nicely. that's been a strategic priority of ours. we have a lot of development overseas, including the construction of shanghai disneyland. we do a lot of business in our movie business consumer products outside the united states. but i don't really think moving walt disney company outside the u.s. in order to save taxes is an option, nor do i think would it be the right thing to do for the company or for this country. >> got it. julia? >> now, just a quick final question. i know that president obama's very interested in hearing from ceos -- on this topic before more earnings -- interested with hearing from ceos. have you given him your thoughts? >> i haven't spoken with him, but we have had conversations with the president and the white house on this subject specifically. there's general agreement that we need corporate tax reform, but that doesn't seem to be any movement in that direction. we obviously have an issue with congress that's not getting many things done, for instance. well, let's put pressure on them. let's ask the white house to help us get something like this done. i think it's very important for this country, not just for this company. >> shifting over to your earnings and the strength of your studio, in particular you have "guardians of the galaxy" poster behind you, record-breaker for august. you've had such a strong streak, and marvel has turned out to be such a wise investment. bhar y what are you doing to make sure that the studio winning streak continues? >> well, i was wondering whether we would get back to earnings or talk about "guardians of the galaxy." "guardians of the galaxy" and marvel's a wonderful story. we believed when we bought marvel in 2009 they had great intellectual property, great characters, great stories and a very, very talented group of people working for them. we did not think that a spotlight had been put on the marvel brand and we thought with their continued success in terms of producing movies, and with disney as a partner or with them being part of disney, that we could burnish the marvel brand. i think we've done a good job of that. i don't mean to sound overly concrete eco conceited about it, but i think "guardians of the galaxy" speaks volumes in that regard. this is not only about a good movie, but about the fact that the marvel brand has arrived and is very healthy. and if you look ahead to "avengers 2" and "antman" and "captain america 3" and the sequel to "guardians" in 2017, the pipeline there and across the studio is in great shape. we're making "star wars 7." we have some great pixar movies coming up, a disney animated film this christmas and live action. "maleficent" a great example of the disney brand in action, business, and great stuff coming up. so, we feel that the studio is back and should be back for a long time. >> of course, everyone is obsessed with "star wars." is there anything you can tell us about the j.j. abrams film in the works? >> i can only tell you that production's under way. we had a very brief hiatus -- we have a very brief hiatus, due in part to the fact that harrison ford broke his ankle. but the footage we've seen is very, very exciting to us, and i think there are about 500 days left between now and december 18th, 2015, when the movie comes out. that doesn't seem like very long and there's a lot of pent-up demand. so, we're just as excited as the fans are about it. >> well, if you want to give us a sneak peek of the footage, we wouldn't say no. moving to the parks and resorts, i understand you raised prices a little bit earlier this year, but what's driving that up side, both in terms of the revenue and operating income? 23% increase in operating income. >> we had great success domestically, higher attendance and higher spending. clearly, demand for the parks in the united states and in other places around the world, hong kong and tokyo, very, very strong. great intellectual property there. fine operation, a great experience. their business is very, very strong and looks to be for the foreseeable future. >> does that mean we might see more price increases? because obviously, consumers are willing to consume them. >> i can't comment on it because there's nothing imminent in terms of pricing increases. >> espn got a boost from the world cup and what are you seeing in terms of the content costs for sports rights? >> espn's revenue for the world cup xeeted our expectations. we haven't said by how much and ratings were also better than expected and we had unbelievable results on the streaming side. i think the world cup had more than twice the streaming of the olympics this past winter. there's been competition in sports rights. that's existed for a while and it's gotten more heated recently. espn has done long-term deals with the nfl, major league baseball and u.s. open tennis, et cetera. so, they're extremely well positioned long term in terms of their menu of sports rights. >> unfortunately, we're out of time. there's so much more to ask about, including the strength of your consumer products division, but we will have to save those for later. thanks for joining us. we appreciate it. bob iger, ceo of disney. kelly, back to you to you. >> julia, great stuff. thanks to bob iger as well. i wonder if he can turn a wrinkle in time into the next big blockbuster franchise, for those of us who dearly loved the book growing up. that could be a mixed blessing. watching disney shares on those earnings and ceo bob iger's comments this hour. now breaking news from the federal reserve. mary thompson with details. mary? >> this is from the federal reserve and fdic. regulators weighing in on the living wills submitted by the largest bank for 2013. regulators saying these living wills need improvement and they have sent letters on the shortcomings of these living wills to the 11 banks involved, including j 36k morgue, bank of america, citi, goldman sachs and morgan stanley. they say shortcomings include unrealist assumptions about clients and counterparties and that the firms failed to identify needed changes within the organizations for an orderly dissolution. the regulators say the firms should address these shortcomings in the 2015 submission of the living will and failure to do so could lead to a forced sale or restructuring at the banks if the regulators feel this is needed, but that would be a couple years down the road. the harshest criticism coming from thomas honig, who said each plan was deficient and criticized big banks, saying they were vel overleveraged and bigger and more complicated than before the financial crisis. kelly, back to you. >> mary, thank you. i wondered, kate, if this was telegraphed by the questions elizabeth warren had for janet yellen during her latest appearance on capitol hill. she pushed hard on the issue of whether the fed had looked through the living wills submitted. >> you have to wonder if that was a catalyst. i think one lesson is we're still very much recuperating from the financial crisis, and not just in the obvious ways. the capital expectations set are now changing fundamentally the way wall street banks do business. they're cutting back on what they're willing to do for hedge funds, especially when it comes to holding their assets, which give them a higher leverage ratio, and they're not going to do that now as freely. so, fundamental changes are occurring, perhaps sales of different units, and at the same time, regulate yofors saying yo haven't gone far enough, you're making overly rosy assumptions. >> and it's bad news if you're an investor in the financial services company. the way they're trading, one times book value, versus multiples back in the day, the book value is probably the new normal, and so we can get some of this regulation off the table, because unfortunately, all these financial services companies are spending too much time mired in regulation that's very unclear, and frankly, not a good thing for business. >> as mary pointed out, this will be a very long-term process, only the first step in the sort of regulatory oversight. they have until 2015 to try to revamp the plans. then supervisory actions take into effect and then you talk about divestitures two years after that. so, you're looking at 2017 for some type of real action. >> a large overhang on the part of shareholders. we'll leave it there. red arrows across the board today for markets. tech led the sell-off. let's head to the nasdaq now and check in with seema mody. seema, a lot of pressure today. >> there was, kelly. and the headlines out of ukraine adding a certain level of nervousness to this market, and that could be felt by risk-averse sectors like tech. the s&p tech index down about 1% in today's trade. a lot of semiconductor names were under pressure. intel, a standout so far this year thanks to better-than-expected earnings, a recovery in the pc market, this rotation into large-cap dividend paying tech names, but intel a loser in today's trade. lastly, with markets focused on tensions between ukraine and russia, russia's telecom player victim pa vimplecom down about 1.5%. >> thank you, seema. time warner to the down side. up next, the latest on fox withdrawing its bid for the kpp and from disney to zillow, dominic chu wraps up the after-hours earnings action when we come back. what if there was a credit card where the reward was that new car smell and the freedom of the open road? 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david faber has more on fox withdrawing its bid for time warner. he's on the bat line. david, what do you make of this? >> some ways, i guess, kelly, surprising, but in other ways, not. as you know, every morning discussing much of what i was hearing from many of the same advisers who i've now been speaking to for the last 20 minutes or so since this news became public. discipline was the word they'd use often. and many i think fox shareholders and certainly some who believe time warner didn't believe it when they heard that word, given rupert murdoch's history. perhaps you can't forget him for doing so. but in this case, it appears the number from the time warner camp, if there was a number, so to speak, was certainly one approaching $100 a share. and as i've reported any number of times over the last couple weeks since the bid was first made public, $100 a share was not something that fox and its advisers, at least were giving real credence to. again, people can be forgiven for thinking that was simply a negotiating tactic, but in the phone calls i've had in the last 20 minutes or so it was not. it was not a number they were willing to go to. and given the time they met from time warner's board and its ceo, perhaps a bit of surprise, frankly, based on what we thought they might have expected from the first forays they maid made back in june. nonetheless, they decided now's a good time to move on. they were not going to be able to get this rock up the hill in the way they needed to if they were not willing to pay at least a number close to triple digits, which apparently was the case. fox says we just heard, of course, putting in that $6 billion buyback and more focus on getting its stock price moving in the right direction instead of down, which, again, that weakness can also lend psychologically at least a bit to them thinking the time is ticking away and wanting to perhaps make the decision quicker than we might have thought in terms of exiting this situation. >> david, it's kate kelly. i just have a quick question. when we were delivering alpha not too long ago and the news broke that very morning, i remember i had ken griffin on the stage and he was a shareholder in both companies. he predicted the deal would get done and one of his key points was there's no controlling shareholder on the time warner side. given that, are you surprised that they were able just the board's reluctance, for example, was able to fend off this deal so relatively early on? >> you know, i think a lot of that, kate, has to do with the lack of any -- the resoluteness. and again, this is something i've been reporting in the morning of the time warner board has looked at this point. the language in the very short press release that came from time warner saying, basically, there is no offer that fox could make that would be the equivalent of what time warner believes is the value that it can create over time. i think that that made it difficult for fox to operate. the fact that they actually eliminated their ability to call a special meeting, even though i don't believe that fox necessarily would have gone down that road, perhaps activist shareholders might have chosen to do so. you would have had to stay in there for a very long period of time, until the annual meeting, which would take place may, june of next year. that's a lot to ask when you don't have any sort of a dialogue and you're not necessarily getting the reception you might have expected, not just from the board and the ceo, but perhaps from some of the large shareholders who also were probably telling the fox team, led by, of course, rupert, along with his son, james, and chase carey, that, hey, you know what, $100 is going to get it done. $100 was simply a bridge too far, it would seem, for fox, who perhaps we can now believe them when they talk about discipline. >> david, we'll leave it there for now. thank you so much for calling in with that perspective, again, following your reporting on this for the last several weeks. david faber. we'll get thoughts from the panel here on this as well. what would happen... if energy could come from anything? 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[ male announcer ] talk to a state farm agent about car loans that can save you hundreds. that's borrowing better. snwlt welcome back. in case you missed it, fox has said it is abandoning its bid for time warner. and "skeptical near term, we don't think a deal will be consummated any time soon." joining us with a buy on fox and hold on time warner. let me start by asking you, now that it appears fox is walking away, why do shareholders seem to believe that this is really it? and is it possible, or isn't it, that another bidder will emerge here for time warner? >> well, that was our view in the note you referenced back in mid-july was that time warner would not significantly engage in negotiations with fox without being able to coax other bidders into an auction-like situation. and we walked through sort of all the possible players out there and the reasons why they were unlikely to step in. i think, you know, the short-term reaction to the stocks here is in both of them is about the near-term and the deal not being on and the share buyback program announced at fox. i wouldn't put this subject away, to bed permanently. i don't think that fox would show that sort of interest and not be serious about thinking about it over the long term. but clearly, for the near term here, it's not going to be a short-term issue. >> let's get perspective from our panelists as well. >> from my perspective, i may not be buying the story, but i'm buying time warner stock, because i don't believe this issue is going onway. i think this has put time warner into play and i think it shows that a lot of different parties, including the company itself, value the company at a higher level than it's at today, given the fact that it's selling off more than 10% in the after hours on this news. i think it creates a great opportunity. and as i said at the top of the hour, i think if time warner doesn't take corrective actions to bulk itself up and perhaps buy some smaller media companies, it will remain very vulnerable to some threats from folks like fox and other -- >> dan does run through in the list that includes, kate, at&t, amazon, apple, comcast, disney, facebook, google, private equity consortium. we asked bob iger if he would be interested, because he did say from fox's point of view, this could improve their content. >> and this is such an interesting content distribution sort of story here, right? i would say to you, kelly, and you, ylan, even though our beloved print organizations are sort of margin challenged, it's good to know that good content in general still commands a high valuation. thinking of an asset like hbo, that's a driving force, one of i'm sure many, behind fox's and other suitors' interests. iger said at disney, content across the board has been a key driver of our results. however, distribution remains a challenge. and that's of course a problem that all the big media companies will be looking to either address, if they haven't yet, or expand upon in emerging markets. >> dan salmon, thank you for calling on. we move on to rich tulio at albert freed and company. rich, by the way, you have to give a hats off. they can create more value on its own or wait for another bidder offering more. this was before the news announced here, in other words. so, do they go it alone, rich, or does somebody else emerge here? >> i think they go it alone. at the end of the day, you know, this is kind of a 48-hour deal situation. you wait 48 hours, see how bad the stock really drops in the absence of a bidder. you know, give yourself some time to look at your estimates and valuations and comment. now, why is this company worth more in the management's view than what news corp. was willing to pay? okay, you have hbo with roughly 80% of the subscribers as netflix being handicapped by its attachment to the cable industry. that's changing in europe. and just like netflix changed it in europe and then started doing the united states, i think the same thing is going to happen with hbo, all right? why that's great for investors is this hbo and cinemax business is 100 times more profitable than netflix's streaming business. this cinemax and hbo business supplies by quality rating points, hands down more quality tv to the u.s. public than any other cable operation going, all right? even including disney and fox. so, this isa very high-quality organization. it's also an organization that's been handicapped in the past by traditional media and two or three channels that have been underperforming. cnn, pbs, tnt. okay. if they can turn around those, you know, other cable assets, okay, turn that from being a drag on revenue growth to being added to revenue growth while also taking advantage of the ip over the top opportunities as represented by amazon, then you have a situation where the valuation is a long term and we've always said three-to-five years is much northern fox bid. this is a company that was really on the outs, following the merger. it's come back to $70 a share. you know, this may be another leg up. >> we'll see. rich, we'll leave it there for now as time warner shares are tradeling down 11% after hours. fox shares are moving higher. again that buy back dom mentioned is a beg factor as well. we will round up the after hours action and circle back to this story when we come right back. when you run a business, you can't settle for slow. that's why i always choose the fastest intern. the fastest printer. the fastest lunch. turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. . welcome back him it's been a wave of earnings after the bell. >> i'm going to take a brett first. let's start with disney, the media giant is boosted by stlong results when its movie studio and consumer products division, disney is down flat now, groupon plummeting after second quarter revenues. it's earnings matching street expectations. groupon shares after market lows down 17%. first solar is moving lower after reporting a 86% quarter drop, largely due to project delays, those shares off by 5%. activision beating them by strong sales of its call of duty and world of war cap game franchises. that stock is up 3% in trading. take 2 interactive after posting better than expected first quarter sales on strong demand for it's gta, grand theft auto 5 and we're going to end with zillow, moving lower after posting a wider tan expecting second quarter loss, the revenue the stock you can see there down 12.5% -- 2.5% trade. >> the panels thoughts when we come right back. . welcome back. we got earnings and major corporate news where do we begin at this hour? >> the disney stories at this hour. this is a company trading at a premium and deserves to do so. i think the stock goes higher from here. bob eiger has done such a phenomenal job of creating a foundational business. i think you look towards the future. the shanghai opening, "star wars 7," the "avengers" the only thing they should be worried about is bob eiger's retirement in 2016. >> wow, kate, really remarkable words going on there. >> i think i have a lot on banking land. i am getting a bunchf e-mail from sources i have in the banking world saying the will be a real issue for us. we are capital constrained. there with will be more twins in the prime brokerage service, more issues with regulators when we discuss what we're able do. >> is it an intended circumstance? >> part of the bank that provides services to hedge funds, one key service is lending them money to make trades or helping them find stock to borrow in shorts. >> is this nothing else a hedge fun business, in other words? >> well, maybe some of the smaller hedge funds. assets under management in the henl fund world has topped out at close to 3 trillion this year and arguably there are too many of them. around, this may not be a good way to sort of call that sector. you will see. >> i'm from washington. so what we're paying attention to are the mid-term elect, there are four key areas. key primaries happening today including one in kansas in which you have barak obama's 2nd cousin trying to present himself as the next ted cruz of the tea party. that's interesting to watch. >> wow, talk about both sides of the aisle. guys, topping this hour. so much to get through. fast money coming up in a few minutes, mellition sa lee with so much more. >> thank you so much, "fast money" starts right now. in new york city's time's square, dan nathan, karen finerman and guy adami are my panel. the dow and s&p dropping to its lowest level since may. remarks from polish officials warning about a russian invasion of ukraine winning on sentiment. the volatility index spikeing 10s%. what happened today, b. kchl? >> well, listen, if the bond market told you the whole story because we had good economic fuse in the morning, bond market sold off, the instant we have

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