Transcripts For CNBC Closing Bell 20140819 : comparemela.com

same. >> we're pretty much at session highs. at the high today, the dow was up 90 points. so, again, we are at 85. yesterday we saw some buy orders on the close, so we'll keep a close eye on it here, and on apple, tyler, in particular. >> yeah, it could close at $100 or so for the first time since splitting 7 for 1, and that means apple would be back at $700 on a presplit basis. say that five times fast. we'll monitor how apple finishes during this final hour of trading. and could we see dow 18,000 this year? professor jeremy siegel thinks so. he's here exclusively, with no surprise, a pretty bullish market call for this year, and for perhaps beyond. we'll get into the details with him and talk about valuation as well, coming up. and how about that new deal from sprint? did you hear about it? 20 gigs a month of data for $100, but there is one catch, you've got to be a new customer. so, what about someone who's been with sprint for years? why do they have to pay more? and this isn't unique to sprint. longtime customers get the short end of the stick from their insurance companies, maybe even their cable companies. today we will find out what you can do about it. >> yes. and here's where we stand in markets. as mentioned, the dow back above 16,900 as it eyes that 17,000 mark again. the s&p 500 up 10 points to 1,981. the nasdaq at another, i believe, tyler, here during the trading session today, booking another 13-year high at 4,527. 14-year, excuse me. >> and joining our "closing bell exchange," peter anderson from congress wealth management, quincy krosby from prudential financial, john rutledge from safanod and terry dolan from benjamin and gerald brokerage, and our very own rick santelli. one and all, welcome. let me begin with you, peter. the market seems extraordinarily, maybe even unnervingly resilient right now. is there anything out there that is worrying you? >> well, of course. i mean, we're all worried about something, right? but let me just first say that the optimism is promising, because we've got pretty good growth today, right, with low inflation. however, and that's a big however, let's not let that get to our heads. that's just one data point. so, i think further down this year, what we will see is some tips of inflation, and that's what's going to cause us some worry, tyler, is how are we going to react on that? are we going to react to that in a calm fashion or are we going to really have our head spun all around? so, the market has to factor that in, and we should start thinking about that now. i mean, it's great that things are looking great today, but let's talk about the next couple of months and how we are going to be prepared to respond when we start to see some inflation picking up. >> you know, the amazing thing, and we'll get into some of this with jeremy siegel in a bit, but john rutledge, the concern on a lot of equity investors' minds, given that everything else looks benign, is well, what if we get higher growth and higher inflation? today the cpi index retreated relative to the growth we've seen in the past five or six months, import prices, producer prices, you name it, the pipeline pressures are pretty weak. so, what's it mean if the inflation we thought perhaps that was finally starting to pick up a little bit is acquiescent? >> well, like arnold schwarzenegger said, it will be back. and so, this is a temporary respite. you know, we've got a gulf stream force working here, which is $4 trillion of bank reserves being turned into loans. that's what's making the economy grow. that's what's making the pressure on wages and prices that we're starting to see. we're going to see more of that later. on top of that gulf stream, we've got these little waves we see. throw a dart at a map today and you're going to hit a revolution or a civil crisis of some kind in the world. so, the market goes up and down with that. but the pressure is for the market to rise and will continue being so. at some point in the next year or so, we're going to see that pressure show up as rising pricing power for companies, which will give them rising margins and better earnings growth. that will give us more support. so, a choppy market, but up is the direction. >> so, john, let me just follow up on that. you seem to be implying that it's not -- with all of that reserves on bank balance sheets, excuse me, the reserves in the system flooding the system, that you don't think it's going to end well. do you, or can it? >> well, it starts out well. it's like drinking too much at a party. it feels really good in the beginning and you have a headache at the end. the inflation will come sooner or later. the best asset class today for me is real estate. the number two asset class is private equity. why? because graham dodd has killed small banks' ability to lend to small businesses, which is why the job numbers are so weak and the fed's so nice. but big banks are gushing out money to private equity firms, hedge funds and m&a borrowers. so, the best bet to do is to buy somebody who borrows money from big banks to buy little companies. those are companies like private equity firms, you know, blackstone, apollo, kkr, carlisle, those kind of guys. >> that's an interesting point. and terry dolan, let me turn to you. i'm so glad that john just mentioned real estate, because i remember the ceo of cantor fitzgerald, howard lutnik telling us this program, once it dawned on him that we could talk about a better growth environment without necessarily a big increase in rates that real estate was a no-brainer and they've moved aggressively into commercial real estate. you're starting to see it across cities that aren't just top-tier cities in the u.s. benefiting with cranes all over the place. what do you think the outlook is for real estate and commercial real estate here? would you be as bullish? >> well, i am very bullish on real estate as a result of a natural hedge against inflationary expectations in the future, as was pointed out. i think right now we're in a luxury situation where, you know, consumer prices have been really benign and we're looking now at wage growth as our benchmark for inflation, at least from the fed's standpoint. so, when you look out the time horizon, and again, i'll go with the idea that inflation will be back, real estate has always traditionally been a great place to have your money. it's a tangible asset and it bodes well with inflation. >> rick santelli, tie it all together for us. the other guests seem to be concerned about inflation. it hasn't been around in a long time. we've been talking about it for a long time. what do you think? >> well, i think inflation reminds me a bit of the stock market. if you look at the ppi index or the cpi index in many of its reconstituted forms over the years, it basically always goes up. it's one of the few areas we don't allow a correction. the minute you get a correction on an index, all central bankers start crying 1930s again, deflation. i don't think we're ever in my lifetime in a developed economy going to see deflation. i do think, not the kind that we had in the '30s, anyway. i think the healing process needs lower prices, especially in europe, to get competitive. so, central banks are working at odds with a significant component of the healing process. the model's still in place. we have jackson hole. i am sure janet yellen can find something in slack in the labor market or the tame pipeline on inflation, even though cpi headline has been at 2% or higher now four months running. and i once again contend, if you look back at the very first fed organizational meeting 100 years ago, since then, the dollar's had 2,225% inflation. let me ask quincy on this. quincy, it's true there are places like peripheral europe where deflation could help to be part of the solution here. and again, on the consumer side, as we see with sprint today, it can be good news. the trouble is when you have high debt levels across the society and you have to pay down those with dollars that are losing their value. again, as tyler was saying, kind of help us get some perspective on this and the fact that inflation here in the u.s. still is and remains quite low and what that does mean for investing in equities here. >> well, you know, it becomes attractive, but you know, the small business owners have been telling us in their surveys that they are actually going to have to raise wages. and they usually come first. and then when you tie it in with housing, let's just face it, when we see those housing numbers move higher, it is based on, it's predicated on consumers saying that they are feeling better about their own situations. we are seeing fewer purchases from institutional investors in housing, and that usually is a precursor to higher wages and inflation. so, it is in the pipeline. the question is where in the pipeline is it. it's not a science, and that's the key. and i think once lending picks up, it is telling you that we're seeing inflation. we're seeing pickup in lending, by the way, which means borrowing demand from commercial real estate. that's the first time we've seen it in many, many years. it's been about 30 weeks now where that has picked up, telling us that at the very core that we're going to start seeing prices start to pick up and wages, and that is inflationary. is it good? well, ultimately, higher wages is good. it's what the fed does and their reaction that could create the volatility for the equity markets. >> you know, peter, i think it was you who said that, actually, a little more inflation isn't necessarily a bad thing, because it will mean that companies will have some pricing power. that can turn into higher profits, so long as they manage their costs, most especially their labor costs well. did i hear you right on that? and that could be good news for equities as earnings go up. >> yes. yes, you did hear me right. that's one of my fundamental tenants during this whole troubled times is, you know, a little inflation is not a bad thing. and i'm looking forward to that, because that will be pricing power. now, the next step in that calculus is to ask yourself, well, where would i go, what kind of companies would i buy that might have the most exposure, positive exposure to rising prices. and those, of course, are the companies that have high fixed costs, or what's known in our business as high operating leverage. so, you look for companies that can raise the price of their revenue but not have additional variable costs, and that's going to go more to the bottom line. so, high capital-intensive companies, such as caterpillar, for instance, or united rental equipment, any of those companies should do better once we start to get even a 25 basis point hike. you know, that's kind of small, but that will signal to the rest of us that the economy continues on the upswing and those companies should do better. >> and it's funny you mentioned caterpillar. that's one that has rebounded nicely here in the last couple of sessions. guys, we'll leave it there with a big thank you for the perspective this hour. good to see everybody. we have 50 minutes to go into the close and the dow's up 88 pin points, pretty much at all-day highs. that's 0.5%. same for the s&p. >> wharton professorer eer jere siegel will speak to us exclusively on whether the bulls are here to stay and why he sees dow 18,000 this year. aeropostale is doing is, so is jcpenney. the revolving door in retail and if bringing back former ceos can fix the stores and reinvigorate cash registers. later, meet the mom who got sick of her kids ignoring her phone calls, so she developed an app to make them call her back by disabling their phones so the only number they could call was hers. that mom is here. don't touch that phone, remote, whatever. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding. ink from chase. so you can. all right, there you go. dow industrials up 87 points, 19 points higher for the nasdaq at 4,527 and the s&p at 1,982, a almost 11-point gain there. kelly? as the old saying goes, one man's junk is another's treasure, that holding true in today's market as well with a different kind of junk, as retail investors ditched high-yield bonds, institutional investors are snatching them up. that's what the "wall street journal" is saying adds up to over a net $13 billion of late. >> joining us now to take a deeper look into why retail investors are steering clear of junk bonds while institutional money is diving in is michael cassner from halliard asset management, and our jeff cox, who is writing about this topic on cnbc.com. michael, did a dog whistle go off? why did retail investors start to shed junk? >> well, i think there was a couple of things going on. if you look at the high-yield market relative to the s&p two months ago, both were trading at highs. both took a nose-dive, and since that time, the s&p has rallied up to almost the previous high, while the junk bond market has only retraced about half of those gains. so, i think that retail investors were spooked by the illiquidity, while institutional investors still see this as a relative profit opportunity versus stocks. >> should we trace this back, jeff, blame even janet yellen and her testimony on capitol hill, when between that and other comments, i believe she specifically called out high yield by name as a sector she was worried about. did that spook retail? >> it's a -- >> i don't think , as much as te relative valuations. i think retail expected the market to trade in a very more even fashion. and when we saw the illiquidity in july and the sheer velocity at which the market fell, i think that spooked investors. >> i think it's a great question, kelly. one of the things that caught my eye -- first of all, let me just say that this is part of a summertime of derisking for retail investors. we talked friday about the fund flows coming out of mutual funds. one number that really caught my eye is 63%. that's the amount of recent junk bond issuance that's been ccc-rated. ccc bonds are just above the type of bonds that would come from companies that are on the verge of filing bankruptcy. so, i think what the market's going to have to -- well, one other point, too, is that when you look at the spreads, the spreads on ccc bonds are actually at post-crisis lows. so, when you bring in the fed, the question as far as the fed goes is are these things priced correctly or are they priced incorrectly, the victim, again, of price distortions from ultra-easy fed policy? >> michael, who got this right, the retail folks or the pros? and who'd get it right right now? is now the time to go buy junk? >> well, to answer the first question first, i think that the retail investors got it correct. and i think what janet yellen did, by keeping interest rates so low, the investor looks to the treasury market and sees a 10-year yield of 2.25% and you add 50 basis points on to that and that's where you are in investment grade. in the junk market, the average yield is between 5% and 6%, so they move towards that market. institutional investors need to be invested, so they will look for opportunities to buy, whereas retail can be actually a little bit more smart about their investments and exit that market when they think it's too expensive. >> yeah, and you've got to -- >> but wait a minute, i mean, is this really the right thing for those individual investors to do, jeff, if we -- some of the other institutions buying in include people like pimco, who said they sold out of the wrong stuff. they loved the prices and the yields that they were then able to get in and buy this stuff up at. >> well, you have to extrapolate this, kelly. if you're trading these things, if you're the short-term view on them, yeah, you want to take advantage of price distortions. but if you're looking at the longer-term picture, the saying what warren buffett talks about, you don't know who's swimming naked until the tide goes out, well, the tide could start to go out on these in a hurry and if you start to see some of these companies that are basically zombie companies who have been able to come to the market and borrow cheaply, now all of a sudden those bonds start to mature and they can't borrow at those levels anymore, you start to have a real problem in this market. and i think that's what the retail investor is reacting to. >> michael, junk has been a great place to be over the past five years or so, out-performing equities. in fact, are you buying it now? i take it you're not. >> no. we're at a very low level and just a few issues in the junk market. i mean, the market's come from a yield to maturity of roughly 2% to 5%-6% currently, so we think there's a lot left in that market. to add to the previous point about retail investors' concern is there's a dramatic drop in liquidity in the junk bond market because of dodd/frank. what we saw in july is when investors wanted to cash in their bonds, the street didn't want to buy them, and you saw an exasperation in the price drop. >> yeah, as one smart guy has recently put it, the credit market is always liquid as long as you're a buyer, and that seems to have been true again in july. so, fair point, and we'll watch those conditions there carefully. it's going to impact everybody. michael kastner, thank you. jeff cox, thank you as well. >> thank you very much. we've got about 40 minutes before the closing bell. the dow is up about 87 points. the s&p with about a 0.5% gain as well. up next, do former ceos have the right stuff to breathe new life into struggling retailers? the pros talk pros and cons. and later, renowned wharton professor jeremy siegel will talk about the markets and economy, and we'll find out why he sees the dow hitting 18,000 this year. you won't see him anywhere else on television today, so keep it where it is. rapid prototype a lot of ideas. being able to pay as we go was crucial for a start up. having to fork out a lot of money up front was risky. you can launch a feature really quick, and if the feature doesn't work, we haven't lost anything and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. ideas can be tried and tried again on the ibm cloud. the ibm cloud is the cloud for business. frothere's no reasonn average 17 we can't manufacture in shuthe 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. 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. welcome back to the second day in a row, a broad rally for equities here. today it's adding 0.5% on top of yesterday's bounce. that's put the dow jones industrial average back above 16,900. it's at 16,920 currently. and the nasdaq again at a 14-year high. so, in retail, can prices change pretty frequently? yes. but what about ceos? well, it appears that, too, tyler. >> it's very true. it began with jcpenney's ron johnson, hired from apple, replaced then not that long after by the company's former ceo, mike allman. meet the old boss, same as the old boss. famously, american apparel's dove charney replaced. target replaced gregg steinhafel, a career target person, with brian cornell who recently served as ceo as one of the top executives, not the ceo of pepsico. then, walmart u.s.'s bill simon stepped down and the international ceo, doug mcmillon, stepped up to the plate. and the latest casualty just yesterday, aeropostale's thomas johnson now replaced by the company's former ceo, julian geiger. >> wow. who can keep track of it all? what's going on in the retail suite? david strasser and denise leone are joining us. she is a brand-building consultant and author of "what great brands do." welcome to you both. david, are you surprised? i've heard people likening this to deck chairs on the "titanic." >> i'm sorry? say that one more time? >> are you surprised at the volume of turnovers in retail or should we listen to those who say it's rearranging deck chairs on "the titanic"? >> well, a lot is changing in retail. the internet has just changed the world of retail a lot. and you know, what you need to spend money on, you know, what gross margin should look like, what product margin should look like, what you should be selling, what the store should look like, everything has changed in the last couple of years, and i think we're seeing a reaction to this by bringing in ceos who have a better understanding of that. >> but the irony is that you're bringing in people who had left in the past in a lot of cases. so, what is it about the old guard that gives some sort of new ability to grapple with this extremely difficult and fast-changing environment? >> well, i mean, if you look at, for example, walmart, you know, with bill simon leaving, greg foran is coming in from china, coming in from asia. we'll see how he does. brian cornell coming into target. i mean, he was a great leader when he was at sam's club and when he was at walmart. i don't know him as well during his pepsi days, but i think that's what they were looking for was some leadership, because they were behind from a dotcom standpoint. now he needs to bring the right team in. you know, there are a group of people already there that are very strong, but he needs to figure out how to replace people and what he needs from a dotcom standpoint to be relative online. >> denise, i think think of two great merchants today. terry lundgren at macy's and the other is mickey drexler at j. crew. why does it seem there are so few right now? >> well, you know, as the gentleman said, there's a lot of changeover in retail right now, and e-commerce is certainly the tsunami that has really changed everything for shopping. and so, i think there's a need for a balance of being able to evolve and maintain relevance with customers while still being very true to the brand and understand what your brand stands for and never losing that core. >> denise, here oots's my question, what is the new skill set for retail? in other words, are we seeing these changed because different skills are needed right now and it's about finding people that have that? or are we just seeing these changes because they're desperate to do something that makes it look like they're fixing a problem that's not fixable, perhaps? >> well, i don't know if it's not fixable, but i think a lot of the changes are just about stability. mike ullman coming into jcpenney was just about righting the ship and making sure jcpenney could survive. and i think the same is true with julian geiger coming back into aeropostale. i'm not sure either one of those leaders bring any new ideas or breakthrough innovations. what they're doing is just reassuring everyone that things are going to be okay. what i'd like to see them do is bring in someone who has some more of that innovation, bring in someone from the internet world, like from gojane or topshop, someone who really knows how to balance both the brick-and-mortar and the e-commerce. >> david, who's getting it closest to right from where you sit? and basically, where do you shop? >> you know, i'll tell you, i think one of the great changes in ceos that happened was at best buy. there was a company people thought was going out of business, that they didn't understand the internet. they brought in a guy who nobody heard of, a turnaround specialist. he brought in sharon mccullen, who is at williams-sonoma, really understood the internet world, and they've done remarkable things at that company. it's still a very tough business, but they had three things going for them. they had a brand, still a very strong brand, maybe a bit tarnished, great real estate, and they had a great balance sheet, and when you have those things, a lot of good things can happen with the right leaders. >> but david, what about the boards here? because so many of these companies, the other ones that haven't done as well, and often seem to be pushing people out with no succession plan are surprised by the departures and there's just not -- i mean, who in retail should -- i mean, everybody right now, i would hope, would have some sort of idea of how to deal with successi succession, even if you're just throwing the guy out in order to, you know, buy some time. >> well, one that's a great succession plan and they reported earnings this morning, home depot. when frank blake came in, it was a little bit of a tough moment, when bob nardelli was kind of pushed out. he was a controversial ceo at the time. you're now, i guess it's seven or eight years later, something like that, and frank, it seems like he's getting ready and he's setting up a new leadership style at, a new leadership team at home depot. it's the same people, but he's kind of setting it up for his eventual departure, which maybe seems like it's going to come a little sooner than later. but you watch the transition going on there and you feel a lot of confidence that they know what they're doing. >> absolutely. we were just in atlanta talking to one of the guys potentially rumored to have that spot. point taken. david, denise, thank you both. >> all right. >> appreciate it. >> thank you so much. >> 30 minutes into the close. dow's up 84, tyler. >> that's right. closely followed wharton professor jeremy siegel will be up next. he says this bull market has a lot more to go. wait until you hear how much more he says. and later, google's been trading publicly for ten years. how many billionaires has the company created? our wealth editor, robert frank, will have the numbers, and they may surprise you. dsl myth #1. it can help your business save money. false. the truth is when you compare our fastest internet to the fastest dsl from the phone company, comcast business gives you more for your money. why pay more for less? call today for a low price on speeds up to 150mbps. and find out more about our two-year price guarantee. comcast business. built for business. welcome back. so, it's been a pretty strong session here with markets up 0.5% on top of yesterday's gains, and some notable out-performance lately, tyler, from the nasdaq. >> and seema mody has been watching that very strong nasdaq market all day long. five-day winning streak, first since april, and a milestone for apple, seema. >> that's exactly right, tyler and kelly. the nasdaq and the nasdaq 100 trading at new highs for the second consecutive day as geopolitical tensions ease. we're seeing this flow of capital into tech, but there is one tech stock that is garnering a lot of attention and pushing the nasdaq higher, and that is apple, trading above $100 a share, back in triple-digit stock territory and above its split-adjusted record close. analysts have become increasingly positive of shares of apple ahead of the 6 launch. in fact, morgan stanley recommending clients to at positions into the iphone 6 and iwatch product cycle. morgan stanley also citing low institutional ownership, increased cash return and a stronger and broader management team as reasons to stay bullish on this stock. of course, when it comes to the iphone 6, with all this hype and excitement ahead of the launch, which is expected to be in september, it will be interesting, tyler and kelly, to see if apple is actually able to surprise to the up side and actually beat expectations. back to you. >> all right, seema. thank you very much. we've got about 25 minutes before the closing bell. the dow up 81 points, the nasdaq up about 10 at 1,981, and the nasdaq is -- i said the s&p up 1,981 and the nasdaq at 4,587, a 19-point gain. as we watch for the next-round levels on these indexes, coming up, wharton professor jeremy siegel tells us why he's still bullish on this market and why dow 18,000 could happen this year. and later, is the housing market strong or isn't it? that topic's stirring up feisty debate across the country and on this show yesterday. >> i don't think the housing market is as soft as people think it is, because if you go to look for a home today, the supply isn't nearly what it was five years ago. >> yeah, but i don't think you can really look at the supply, though, and really say that the housing market is strong just because there's a low supply. >> who's right? our housing pros will hash it out. back after this. where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com no question about that. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. all right, there are the markets. the dow industrials up about 80 points, 79, to be exact. the nasdaq composite up 18 points, about 0.5%. and the s&p 500 also up about 0.5%. >> yeah, and let's look at some of the big movers in this market today with our courtney reagan. >> we've got a number of big movers on the day. petsmart sparking on a reuters report that it may explore xreejic alternatives, including a potential sale. we know there's been activism there from jana partners. you can see shares trading up more than 2.5%. home depot of course moving higher after posting better-than-expected second-quarter earnings. also increased its full-year earnings outlook. home depot shares trading up nicely and gaining some ground here up almost 6%. mcdonald's, too, gaining ground on word it plans to sell packaged coffee to supermarkets across the country by the end of the year. mcd's shares also trading marginally higher. and salix pharmaceuticals raising on a report that allergan has reached them with an acquisition. allergan is fending off a hostile bid from valeant pharmaceuticals. and the beauty products maker posted a wider than expected loss, blaming weak sales for its justin bieber and taylor swift fragrances. i'm a swifty, so i took that one to heart. kelly, back to you. >> courtney, thank you. our next guest remains bullish on the market, saying the dow could cross 18,000 by the end of this year. >> with us now, a cnbc exclusive, professor of finance at wharton, the wharton school at the university of pennsylvania, jeremy siegel. professor siegel, welcome, as always. nice to see you. make the case for dow 18,000. >> thank you. >> by year end. >> it's not a very hard case to make. we're about 7% away. we're selling right now. the market's at 16 1/2 times 2014 earnings. so, 17 1/2 times 2014 earnings, which i state is a very reasonable multiple given the interest rates, will give you dow 18,000. and then you've got a kicker. 2015 earnings are expected to increase by another 6% to 10%, some even think higher. so, any way you look at it, this is not an overpriced market, in my opinion. >> i imagine that would be your response to robert shiller, out again talking about overvaluation in stocks, not saying it's a new thing, but how remarkable it is that based on trailing earnings, the repressed earnings ratio is still so high here. >> well, remember, bob's measure is ten years of trailing earnings, and that includes the financial crisis and great crash, when, you know, write-downs caused earnings to virtually go to zero. now, that happens about once every 75 years. it's in bob's data. until that gets out of bob's data, i think he's going to continue to show overvaluation in the market. so, i think there's a distortion there. >> are you saying that we should throw out the fact that the financial crisis happened, that's not relevant? >> no, no, we certainly shouldn't throw that out, but the decline in earnings that we saw during that crisis was the worst ever, even worse than the great depression of the '30s. so, is this something that we want to factor in the next few years as happening again? i don't think so. so, my feeling is, once you take those tremendous declines out, you don't get anywhere near the degree of overvaluation that bob's measure shows. i've been doing a lot of research on it. it's a very good measure, except when it includes that particular period. i think you're going to get this distortion. >> so, it overstates the overvaluation is basically your point, right? >> absolutely. overstates the overvaluation. if you just take a normal decline in earnings that happens in the average recession, that overvaluation goes down dramatically, so that's one -- >> he argues it's overvaluation. you do not. >> the second factor is low interest rates. the low interest rates i think are a very positive for the market. >> let's turn to that. in the last half hour, when we spoke with our beginning panel, a fair number of them were concerned about renewed inflation and how that might ripple through the system, number one. number two, i think implicitly, that means that they're concerned about rising interest rates. could that, do you expect it to derail what you otherwise see as a rising market? >> if you would have asked me this about two months ago, i'd have said i'm a little worried because the price indices were getting hot, both the commodity-rated price indices, the ppi, the cpi. but take a look at data last couple of months. it's really gone soft. the crb index, which is a very forward-looking index, is hitting new lows. we see gasoline down, oil down below $100. i don't have the fear of that inflation at all now. i think the fed was right. they said it was temporary factors. and i think the markets are saying, yeah, we believe that that is the case. >> professor, with all due respect, one of the ways in which people pushed back on your arguments often isn't so much the substance of what you're saying but the fact that you're saying them. in other words, you know, you've had a bias towards being bullish on stocks for so long now, it almost seems like it's about the argument to fit the viewpoint as opposed to vice versa. >> well, first of all, i haven't always been bullish, and the peak of the market in 2000, i was very, very bearish on stocks, and particularly the technology stocks. i will admit, i didn't see 2007 as a peak, but i look at earnings and interest rates. those are the ingredients of market prices. and given those two levels right now, i think our bull market is still intact. >> do you then also see some of the exogonous threats, the geopolitical stuff from the south china sea to ukraine to gaza or the economic concerns of europe? do you think the market just whistles past those cemeteries? >> well, first of all, the geopolitical uncertainties, i think we've all learned to live with them over the last several decades. i mean, i lived through the 1960s, the cuban missile crisis, my goodness, which seemed so much severe than where we are now. we live in a world of uncertainty. and bull markets actually climb the wall of worry. when we see nothing in the future that can worry us at all, i'll get worried and i'll probably tell people to sell stocks. >> one other point that you raised earlier is about the rarity of financial crises. so, do you think it could be 75 years before we have another one like what we just went through in '07-'08? and if inflation is the other boogie man, then what's that mean for stocks? >> right, and i think we had a perfect storm. i've done a lot of research on that, what suddenly came together to produce that, similar to what happened in 1929, '30, '31. again, these are not common events at all in the markets. and certainly, when i'm looking over the next ten years or even twenty years, i think it's wrong to factor anything like that. recessions, of course, normal business cycles, but that confluence of that sort of crisis i think we are just not going to see. i certainly don't think in my lifetime in many of our lifetimes we are not going to see it again. >> bankers do do stupid things, though, sometimes, don't they, professor? >> they do. and they've done it in the past and lost money. but to cause that total panic, where you know, basically, we didn't know whether any of the banks would survive, the money funds would survive, credit stopped everywhere. wow. you know, in history, we just don't have that sort of crisis very often. >> and so, with that, you know, risk off the horizon for now, as you've put it, and inflation the other concern, which you did flag a couple of months ago, also kind of off the radar screen for right now, what does that mean? you know, forget the year-end deadline. what do you think is really the next leg up here for stocks? how high, how significant are we talking then? >> well, i call it 18,000 by year end. my calculations could go a little higher. i would now call around 19,000 fair market value. now, we're still relatively close, within a couple thousand of that. given the fluctuations of the market, people say, jeremy, can we go to 16,000 by the end of the year? of course. we all know how volatile it is in the short-run or even the immediate-run. but right now, when i'm seeing the confluence of those lower inflation rates, still low interest rates and earnings came in one of the best quarters we've had, second-quarter earnings, i think that's an ingredient for continued upward movement on this bull market. >> jeremy siegel, thank you so much for your views and for your time this afternoon, outlining the case for dow 19k, tyler, 18k by year end. i appreciate it. and we've got just about 12 minutes to go into the close here with markets near their highs of the day. 16,917 is the level for the dow as we speak. and later, it sounds like a great deal from sprint, 20 gigs of data a month for $100. that is, unless you already are a sprint customer. then you can't get that deal. should you be ticked off? that story's just ahead. all right, the markets, another very tidy day in the green with the industrials up about 80 points, or roughly 0.5%. 1,981 is the quote on the s&p 500. that's around 0.5% gain there. and the nasdaq composite up 19 points at 4,527. joining us from the floor of the new york stock exchange to talk everything about the markets is steve sax from pro shares advisors, and our very own mary thompson. mary, i had a wonderful conversation with a business school professor from your alma mater, notre dame, today. we didn't talk much about the market. so, fill us in on what the buzz is down there today. >> well, you know, i think today is pretty much a replica of what we saw yesterday, tyler. it's kind of a low-volume day. yesterday was one of the lowest trading volumes of the year. it's going to be similar today. the drift continues upward in large part because we've seen an easing of geopolitical tensions. and then you mix in some good economic data that we received on the cpi as well as the good news on housing starts and some decent earnings, and that allowed the bulls to keep the markets going. you know, as it stands right now, the s&p is just about ten points from a record high. >> steve, you just, i hope, heard professor siegel talking about his argument for dow not 17,000 but dow 18,000. he basically says the market by his measures is not overvalued, that the climate is very positive, that the geopolitical asts are things that we'll just have to deal with and will. how do you see it? >> yeah, you know what, it's tough to argue right now with that. in fact, mary and i were just talking off camera for a moment. when you look at the broad fundamental picture, not just here in the u.s., but globally, you've got the cornerstones and the building blocks are there. to the point, earnings in particular, you know, we had a very good earnings season this past quarter, we had surprises to the upside, both on the bottom line and the top line. revenue growth wasn't as robust as we would love to see at this point, but you're still talking about an average of about a 2% surprise to the upside on revenue, which means earnings and revenues estimates will be going up and not down. same for gdp in the u.s. and looking globally, it's really tough to see a lot of headwinds from a fundamental perspective. certainly some geopolitical risks, but the fundamentals are strong. >> all righty. we're going to take a quick break and come back as we count down to the closing bell. and both of you guys will join us. and after the bell, we'll speak with the mom who was getting blown off by her kids when she called her cell phones that she was paying for! i know a little bit about this. now she developed an app to put an end to that. she's here to tell us about how it works. stay tuned for that. i'm going to watch this one. we started zya with the thought that the kid on the back of the bus might have a song that he has in his head but he just can't get out. with the technology of cloud, we change all that. i can sing something into my device, up to the cloud it goes, back down it comes, sounding better. we break down the walls of creation and we give music creation for the masses. ♪ ♪ unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business. in a we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. i make a lot of purchases foand i get ass. lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding. ink from chase. so you can. 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. i don't know about you, but it seems to me the past couple of days, the market has kind of gotten to a level that it is comfortable with and sort of likes to stay there. this day, the dow industrials have been up between 75 and about 81 points all hour long, about a 0.5% gain at 16,914. i'm not being critical here, folks, not at all. s&p 500 in 1981, about 0.5% higher, and the nasdaq also about 0.4% higher. we've got about three minutes before the closing bell, and that means it's time for "the closing countdown" once again. back with us from the floor is steve sax from pro shares advisors and mary thompson. steve, you make the case that the market's overall tone looks pretty good. are there particular sectors that look awfully juicy to you right now? >> yeah, tyler. i think that if you look at the landscape from a sector perspective, really going back to january and over the course of the year, my opinion is what has worked over the course of the first eight months of the years probably continues to work in the third and fourth quarter, namely two spaces, tech and health care. health care in particular saw some of the biggest upside surprises in this past earnings cycle, as well as in the first and second quarter at the end of last year. so, ultimately, we think revisions are probably higher in that sector than anywhere else. and tech overall has performed very, very well over the last eight to nine months and performed very well last year, but valuations there, strangely enough, are fairly compressed, particularly relative to a few years ago. so, we ultimately think money continues to flow to those two spaces and you continue to see performance chasing there. >> mary, what, if anything, are you hearing about janet yellen and the jackson hole conference, or about tomorrow's release of the fed minutes from their latest meeting? are people talking about that? >> yes, they're definitely, certainly tomorrow's fed meetings along with lowe's earnings, those are two key things that people will be watching. and then on friday, i think the question is, does yellen say anything that would be contrary to what she said before, and is there any surprise factor in that speech that could somehow disrupt the markets? and so, that's what traders, at least the ones that i spoke to, will be watching for when she makes that speech on friday. it will be interesting to see. but steve and i were talking about it, that the market is kind of in a relatively mellow place, of course, ahead of a volatile month, which is typically saturday. and steve had an interesting thought on that, given that there's been such an underperformance from some of the actively managed funds going into september, that they'll still be chasing that performance. so, to go back to what you were speaking to professor siegel about, we could see the markets, or at least those managers pursue that performance and help support a market in september which typically tends to get a little jittery. >> how about that thought, steve? i mean, the next two months, as mary points out, tend to be jittery times, but you know, a lot of those mutual funds do close their fiscal years october 31st. >> they do from a fiscal perspective or an accounting perspective. and right at the end of the day, we all are still judged on our annual or year-to-year performance and individual and institutional investors alike tend to look at the calendar for that performance. and the point that mary made and the fact that, ultimately, i think that we've been lulled into a lower volatility environment over the course of this year that probably changes. we probably have higher volatility, but again, at the end of day, i think there's still performance chasing to the up side, which helped fuel the rally even more. >> well, they're applausing that point of yours, steve and mary. that's very nice of them down there. thanks, guys. >> thank you. >> ten seconds left to trade, so if you want to file, do it now. kelly will take you through the next hour of the "closing bell." for bill griffeth, i'm tyler mathisen. thanks for watching. >> thank you very much, tyler, and welcome to the "closing bell." i'm kelly evans. quite a crowd at the new york stock exchange and quite a day on wall street, second in a row with green arrows across the board and a rally of about 0.5% or 78 more points for the dow on top of yesterday's gain, putting it right at about 16,918, as things shake out here. looks like the s&p's going to close at 1,981, the nasdaq at 4,527. i believe, again, that's a 14-year high for that index, as the others remain within inches of their all-time highs as well. joining you are "closing bell" panel today for some thoughts here, cnbc contributor carol roth, author of "the entrepreneur equation." herb greenberg from thestreet.com, and cnbc's "shark tank" investor kevin o'leary. also joining us to wrap up today's action on the markets is "fast money" trader brian kelly. welcome to everybody. a pretty extraordinary bounce off the lows here. herb greenberg, we've been having this debate with a couple of investors on this channel today --. robert shiller says everything's pricey. we just heard jeremy siegel say no, it's not, this market's totally rational. what say ye? >> they don't know. they're all taking a good guess. and in the end, now we're going from geopolitical to geopolitical situation. you know, we're going from ukraine now to what's going to happen in jackson hole. you have to really question the most important thing here, whether stan druckenmiller, as he said at delivering alpha a few weeks ago, whether we're really going to end up in a hyper inflation phase and whether the fed is just holding back, holding back too much. >> you know, it's an interesting question, especially in light of some of the data we've gotten lately on the inflation front, right? because if anything -- and brian kelly, you can speak to this as well -- you know, consumer price data this morning a little soft. producer price index, which passed almost without anybody even noting, was pretty soft. import prices weak. you know, oil's been moving lower. the dollar's strengthening. commodity complex is weak. where's the inflation? >> well, that's where the risk comes from, right? because we saw the housing market actually pick up a bit. we had homebuilder sentiment yesterday was quite good, housing starts today quite good. so, potentially, that spring slump we saw has ended and the housing market's highly correlated to economic growth. so, if you start to see some wage increases, and you're starting to see it in some of the minor indicators, that being the small business association indices on whether or not small businesses are going to hire, those type of things are starting to turn up and they tend to lead. so, if you start to see that and you get a fed that says, hey, you know what, we're going to keep rates low, even though we'd rather overshoot the inflation target, then yes, you can get what stan druckenmiller was talking about, something that gets out of control. to be clear, we're not even close to to that right now, but the biggest risk is the bond market has mispriced some of that inflation fear. >> the challenge, though, brian, is that we're in a situation where there are more jobs coming down the line, but we're not seeing anything that's close to wage inflation. in fact, wage growth i think has been pretty close to flat for like six months now. and so, i don't see where that opportunity is going to come from. and i think the big issue that we're seeing once again is this disconnect between main street and wall street. you have far too many of the main street consumers who are not doing well. statistics came out yesterday that over one in three of them hasn't saved a dollar for retirement. i think that that is going to be the big issue and the big drag on this market for a time to come. >> there are two indicators that are showing that potentially the wages could be increasing. jolt's job openings came out at a 14-month high. and then also, the small businesses are saying they are going to hire in the next three to six months. >> but going to hire does not mean that they're going to hire at a higher wage. and i think there's a huge differential between the two. >> kevin, are you paying anyone higher wages these days? >> stop looking at those indicators that are starting to turn up. >> okay, both of you guys are chicken littles. you're worried about the wrong things. here's the scenario -- >> whoa, wait, this is the bond guy that tells me rates are going higher? >> wait a second. thank goodness i'm here. ready for this? maybe what's about to happen here is, let's all agree that right now consensus, we start to worry about halfway through the year, is about 15. and we're trading at 17. maybe what's happening is that we're going to now start to add the new multiple. nothing's going to change. earnings are going to stay at 1.15, but instead of trading at 17 times, we're on our way to 20 by december. get on board in equities that pay dividends, avoid anything that doesn't, and you're going to make a 20% year this year. yes, my friend, that could happen. >> listen, i'm not -- i agree with you, and especially if we got some inflation pressure, you actually might be able to see companies expand margins, which everybody's concerned about. >> i think, though, the reality of this situation is that you're going to see that because of the fed intervention. i don't think it's because of what's happening in the broader economy. and to have a 20 times multiple that is sustained on a long-term basis, you have to have serious growth. at some point, that has to come from actual real organic growth in the economy, kevin. >> let's say we have inflation, you don't have to be in a 10-year bond to get yields. you can look at corporates that are short-duration loans, floating rate loans right now at 4.5%. that's where uncle kevin has his money, and i feel very safe. i sleep at night with equities and dividends at 4.5% yield. stop your whining. >> i don't know. uncle kevin, i -- >> it's like uncle money penny from monopoly. >> if i may whine a little bit, i would just suggest that the reality -- you know, we talk about what's going on in the economy and i look at still companies that are still trying to get to their earnings, their real earnings growth by cutting. they're trying to cut their way to prosperity, as they've been doing all along here. we're not seeing the topline growth we need to see for many of these companies in america that are driving this market because people are piling in, they're afraid they're going to get left behind, and you know what happens when that happens? >> what happens? >> people tend to get in at the wrong time -- >> or? >> right now, especially when we're talking this way. >> or we'll trade at a 20 pe, which has historically happened when things get comfortable and you take all of the geopolitical risk out of the equation -- >> you're not going to take the geopolitical risk out of the equation. >> right now it's not affecting the markets, so -- >> it is today and it was two days ago! >> i'm not saying they aren't terrible, but i'm pointing out here that the more you get a weekend story of tragedy, it somehow doesn't manifest itself into a big decline on monday. >> well, true, because everything is now short-term. >> f-e-d, three letters, the fed. that's it. bottom line. >> so the fed has become our first line of defense? that's pretty pathetic. >> yes. >> my point is, there's room for optimism. if i'm going to be the optimistic person today, it's about pe expansion, not earnings growth. i think companies are going to continue to cut. they'll keep cutting, but earnings growth, if we get 115 out of the s&p and trade it at 20 times, we'll all make 15% to 20% this year. thank you. >> so, there's two scenarios for the bull case. one is multiple expansion, like you're talking about -- >> i think we're getting it, kelly. >> the other is earnings growth. >> i don't see it. >> and you can have a little bit of both. >> herb's saying no earnings growth. can't throw any more bodies out of the big buildings. >> well, you will, and they will. >> here's the interesting thing about the top line argument, which is, yes, it hasn't been as good as earnings growth, but you have probably seen the best quarter for revenue growth in what, a couple years here? so, in order for this not to generally propel -- in other words, you can start to get earnings growth now because you have a top line that's growing a little bit. again, i'm not saying that goldilocks scenario isn't necessarily going to happen, but it's looking a whole lot more realistic than it would have a year or two ago. >> as i would say, we're through this quarter, now we're into the next quarter. let's see if it's sustainable. >> that's the key word is the sustainability of it. absolutely -- >> didn't you love those housing numbers? >> loved the housing numbers. >> big part of the sector, big part of the economy. they really m matter. >> i think we're going to be talking more about the housing sector coming up. we'll get into that. >> that's true. because look, the residential construction rebound is an important story. whether or not it's been or going to be this year anything like what some of the bulls in the homebuilder stocks would like, there is some momentum there, and at least it seems like it's coming from the non institutional segment of the buying -- >> i think it's still very heavily investors in foreign money coming in and it's not a lot of the people on main street who are rushing in. you look at that -- even though it's come down a little bit, look at the all cash buyers. they're still near record highs. >> if we wanted, brian kelly, to raise a couple yellow flags, you could look at the very things we were talking about off the top. in other words, the fact that oil prices are heading lower, commodity prices heading lower, even to some of the declines we've seen in other equity markets in other parts of the world, or maybe even, again, the yields here in the bond space. all of those factors could point to a rosy outcome for equities, or they could be perhaps warning us of something here. in other words, that demand isn't as strong as everybody seems to think. >> they certainly could be warning us of something, but the stock market doesn't seem to care about those, any of those things. and to kevin's point, you know, we do have a lot of geopolitical hotspots now, but they seem to be one-day events. some day they will matter. today they don't. >> i remember a time when any one of these geopolitical situations would have driven oil to 150 bucks. today it completely ignores it. now, either it's because we've got so much oil that we're looking to store it in salt caves under houston somewhere -- >> no. >> or the world has begun to realize that these are very regional conflicts and that we aren't necessarily at -- >> there's a third reason, it's twitter. it's everybody's got a.d.d. and they're only focused on something for the time being until it becomes a big issue. i agree, i think there's some room to run this year, but i'm very worried about everyone being penny wise and pound foolish and that we're going to end up paying for this. >> by the way, look, let's take a look at home depot shares today. okay, they're already trading at a 52-week high. company comes out with earnings, granted in a big buyback program, but still there is some momentum here. they're up 6%. unbelievable. >> that's an example of a company that's actually doing very well. and this is a occasion of great execution by a really fabulous ceo. and you know, this is what's interesting, where's their -- this is the retail funk we're talking about? three weeks ago, four weeks ago it was container store and the retail funk? now we're home depot, which is not the retail funk -- >> t.j. maxx. >> did they lower originally? did they beat lowered expectations? more importantly here is are we in a situation where we're differentiating now between the really great companies, like a chipotle, like a home depot, and all the others that have been able to sort of get brought up by just -- >> hangers on. >> yes, the hangers on in this market. >> absolutely. >> it's interesting. so, let me put a final word on it. if this is the case, we're separating the wheat from the chaff, so to speak, does that still work, brian, for a broad market strategy or do people need to get selective and look for the winners? >> in my world, you could buy the s&p today at a 17.2 pe, approximately. and if i'm right, we're getting pe expansion, including all of the things we're talking about, good companies performing, et cetera, but i'm just talking about pe expansion. you could own the s&p and still make close to a double-digit return by back of the year if we're going to a 20 pe. that's what i'm talking about. >> brian kelly, you agree? >> certainly. this market's on fire! the biggest risk, again, is kevin's floating rate notes. if yields start to go much higher, then this all unravels, but until that happens, sure, we could get multiple expansion. people want to believe things can go higher, great. unicorns might exist, too. >> brian kelly, thank you very much this afternoon. more of brian coming up on "fast money" at 5:00 p.m. they've also got four stocks which are set to break out. so, don't miss it. now, as we mentioned, new home construction surging nearly 16% last month. will that spark the next leg of the housing comeback, or will the threat of higher interest rates derail it? we're going to talk about that next. also, sprint wrapping up the wireless pricing wars, offering 20 gigs of data for just $100 a month, double the data of its rivals for about the same price. is the offer, though, since it's only for new customers, going to hurt the old ones? we'll look at whether sprint risks losing its long-term customers as a result, coming up. and then we'll hear from one mom. you'll love this. she developed an app that allows parents to remotely lock their kids' phones if they ignore their calls. is this something kevin o'leary would invest in? we will get his take, and we want to know if you'd install this on your kid's phone. you can weigh in. cnbc.com/vote. you are watching cnbc, first in business worldwide. summer colle. ♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪ here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. stocks getting another lift today, perhaps in part because of more positive data from the housing industry. diana olick, round it up for us. >> well, kelly, leonard, d.r. horton, hovnanian, all turned to the up side after better-than-expected earnings from home depot and that nearly 16% jump in hotel housing starts, but the real play is when you break down the numbers. single family housing starts were up 8.3% in july from june and up 10% from a year ago. multifamily, which is mostly apartment rentals, up 33% month to month and up nearly 50% from a year ago, and that's why you're seeing apartment reits like avolon bay and equity residential hitting new all-time highs today, and they're significantly out-performing the s&p. now, construction is booming in most of the markets where the activity is largely in multifamily. there's a new report from trulia showing that new york, boston, houston, northern california, these units are directed at younger millennials and at those downsizing baby boomers. now, overall, of course, both single-family and multifamily starts were good. they were solid. but single-family is still running well below your historical norms and builders were so optimistic last year that they really jacked up prices and priced some of their buyers out of the market. so, you're going to start to see some incentives going into this fall. kelly? >> and diana, stay with us, because those are important points, and housing was a hot topic yesterday on the show as well when marcus lemonis and michael yoshikami had two very different views. here's a taste. >> i think consumers are pulling back because they want to steal something. they feel like prices have kind of driven up in the last 12 to 15 months, so the consumer's sitting back and waiting and maybe putting in a lowball offer. i don't think the housing market is as soft as people think it is, because if you go look for a home today, the supply isn't nearly what it was five years ago. >> but i don't think you can really look at the supply, though, and really say that the housing market is strong just because there's a low supply. you could very well have people that are still under water on their houses. and if you look -- >> california, yes. >> yes, in california, absolutely. >> in new york, no. >> so, who's got it right? joining the discussion today is sherry olafson, real estate attorney and author of "foreclosure nation," along with diana and the rest of our panel. so, sherry, welcome. listen, is the housing market healing, or no, are we being deceived? >> well, you know, kelly, any time we see over a million in new starts, we're happy. the magic number is 1.5 million, which would get us back in terms of historic numbers, but it's been over five years since we were at that level. so, when we see 15% or 20% increases in starts, really, that's playing a lot of catch-up. but i think diana hit the nail on the head with the problem in single-family, which really concerns me. we're seeing huge spreads between the number of single-family and multifamily new permits and new starts, and the problem is that single-family homes cost about three times what they cost a multifamily unit, an apartment unit costs to build. and so, the fact that we're seeing mostly multifamily means we're not seeing the jobs, we're not seeing the spending, we're not seeing the tax revenues that we'd be seeing if this was single-family increases -- >> you don't think this is what the buyer wants? >> and this is concerning. >> you don't think this is what people want? this is all people can afford, in other words, are rental units instead of a single-family home? should we not be building these? >> certainly, that's part of the issue, kelly. builders are building what they think the demand is there for, but the fact that they're only building the rental is further entrenching this issue. there's no doubt when you look at the new household formations, that's the key. until we see new households being formed, and that goes to affordability. until younger folks can afford to move out from their parents and pay less than first, last and security, this is the situation we're in. >> diana -- >> shari, you're still not seeing household formation. that consists of not just people buying a new house or becoming a new homeowner, it consists of new rental occupancy, and we're still not seeing that household formation come up because we still have a lot of kids living in the basement. now, you're going to start to see them move into these rentals, which is why you see these units going up behind me, as well as across the nation, but remember, the time horizon for home ownership is shrinking. people are getting married later, having kids later, and they're not looking to buy -- they will buy some day, but they're not looking to buy until later in life and are holding for a shorter period of time. >> let me ask the panel about this, because if that's a demographic or preference shift, we shouldn't necessarily be worried about that if we're talking about the housing market in the same way we should be worried if people can't afford to buy but the willingness is there. >> there's a precedent here. take switzerland, a population of 7 million people. there are no new standing alone homes on 1/4-acre lots anymore, because society has come to understand they're either going to rent, live in 1,000 square feet, or start a family in something that's multifamily, because that's what they can afford and that's exactly the way the mortgage market works there. why isn't that happening here? and it seems to be exactly the case. the society's adjusting based on people's ability to afford it and decide whether they're going to go into debt or not. in switzerland, rental is way hotter than home ownership. >> you can talk about switzerland or you can go back to where i live in san diego, which is remarkable. north county, san diego, to watch construction in housing starts there, and we're not just talking about -- >> single-family or multi? >> single-family, and not the 500, 600, 700s. the ones going up like hot cakes are well over $1 million. tract homes just right next to each other. >> mcmansions? >> no, they're not mcmansions. they're compressed on little lots, but they're just -- i'm amazed when i go by them. and i do the shopping. i'm around them. i'm looking at them. and i am stunned by the still affordability. a lot of that -- by the watch, when you talk to real estate agents, where i live, they're coming from china. there's a huge asian component in southern california, which is, again, driving this, which may counter the structural aspects that diana was talking about. >> but there is a break in the market here, and you have -- >> but can i come back that -- go ahead, diana. >> i'm just saying, you've got to know whether or not -- we talked about the chinese coming into southern california and we were in irvine. they were coming in droves to these new developments by kb homes, lennar, all the big homes were in there, building homes priced over $1 million, like you said. but there's a concern in the market now that some of these chinese buyers are not actually going to occupy those homes for many, many years, and they don't want to rent them out either. so, there's a question, are you going to start seeing vacant brand new homes in southern california? >> well, and the bigger -- >> go ahead. >> the bigger picture for housing is that we've got such differences between markets. i mean, to talk about california is to talk about just a fraction of what average americans are experiencing, because we've got just as many markets that are on the complete other end of the spectrum. and frankly, in the same situation that california was in five years ago. average homeowners have more in savings, they have higher confidence levels and they spend more than average renters. and we also know that our state and local governments -- >> let me ask you a question -- >> our local governments depend, 75% of their tax revenue comes from property owners. state governments it's about 35%, so that's going to be a painful shift. >> let me ask you a question. what happens if we continue this slow but steady economic expansion and the fed raises rates in the next 12 months by 50 basis points. does this put a huge stop into advancing housing prices? because we're doing it off the lowest level mortgage rates in history in this generation. what happens if it's up 50 vips in the next 12 months? >> it's an issue. it becomes an affordable issue. but i'm telling you, we're already seeing sellers now advertising that they'll buy down the rates for home buyers who are interested. so, that may be one model that we see emerge more. but certainly, more than even just the interest rates is affordability, because the biggest issue here is those new households being formed, which diana pointed out, we really need to look at the head of household, not new household formations, but i think -- >> and the biggest issue here is when you have those from china and russia who are bringing money over here and you have investors, is that a sustainable model? or will we have main street step up to fill that void? and i think that's the big question. >> yeah. and to some extent, perhaps real estate is becoming local again. but we'll have to leave it there for now. we'll pick it up. going forward, though. thank you. it's happened to almost everybody. you're a loyal customer to one company that offers a great deal to only new customers, and that is what sprint is doing with its new pricing plan, leaving many longtime sprint customers feeling betrayed because they can't get in on the deal. so, what kind of sprint backlash could we be seeing and what can customers do about it? that's next. and it's been ten years since google's ipo found two of the world's wealthiest people. we will look at the millionaires google's minted since going public, coming up on the "closing bell." welcome back. well, in case you missed it, there are shares of apple closing at a new high, $100.53, to be precise. it's the first time since its 7 for 1 stock that apple has closed above that level. let's send it over to courtney reagan for an earnings alert. >> not many earnings left after the bell, but la-z-boy moving lower in the after hours after reporting first-quarter operating earnings of 20 cents a share. that is a penny shy of estimates. revenue coming in a bit higher than street forecast. the company also said it would increase its stock buyback up to 5 million shares. as you can see, after hours, though, the stock currently lower by more than 4%. kelly? >> all right, courtney. thank you, for now. well, we see it all the time, company after company offering great deals for new customers, but what happens to the consumer that's been loyal for years? you usually get nothing! sprint today joins the list of companies wooing the new and leaving the loyal in the dust with lower pricing for users who dump at&t or verizon. they're offering 20 gigs a month for $100 for people who join them now. let's bring in harvey rosenfield from "consumer watchdog." for thoughts here. lance, are they leaving the existing guys out in the cold here? >> yeah, this is pretty typical. first of all, there isn't as much flexibility in the mobile phone space to move from company to company because you have to pay off that phone with the old company, so, they almost work on the idea that people will forget by the time it's time to upgrade their phone that they were kind of, well, screwed earlier by the original company. >> harvey, to what extent, though, are these introductory or special offers all that they seem on the face of things? >> yeah, well, i mean, it's all part of the seduction of the american consumer. you see this attractive introductory offer. you buy into it, and in the case of sprint, unless you buy all your phones outright, which most people don't, you end up stuck in that contract. you have to pay a $300 to $500 early termination fee to get out of it. so, they get you in, they suck you in, and then when you realize that other people are getting a better deal than you are, you can't get out. >> correct. >> well, i'm not sure that's always the case, though. by the way, a lot of these guys are now offering rebates for people who switch to cover some of those fees. kevin, if i with your cell phone company, oh, my goodness. do you negotiate with them for, like, every time you see an offer to bring down the price of your existing service or anything like that? >> i don't do contracts. i like the ability to move. >> period? >> i just buy out the hardware -- >> what do you mean? how does that work for your mobile phone? >> you walk in and say look, i have an unlocked phone, never mind how i got it and i want to buy your plan. >> i can afford it. >> i have three devices, an apple, blackberry and ipad, all unlocked. i want to talk about this particular offer, though, because i saw this buzz online when this first came out, and i'm going to argue, this has been very successful. there are so many unhappy customers tweeting about this and thousands and tens of thousands more learning about it. we're talking about it right now. this was frigging brilliant! i think they're going to roll their business dramatically and keep all those customers -- >> the only thing that's brilliant about it is that we don't have to listen to those trippy family commercials during the entire football season. but the reality of the situation, you never, as a company, you never want to compete on price. you always want to compete on value, which includes what you're offering, customer service and the like. the challenge is -- >> still has value, though. >> consumers look at price -- >> look at price, yeah. >> they are focused on price. and believe me, you know, the cost for mobile phone use in a family of four, it's really gotten out of hand for people. and they're spending well over $200 a month, sometimes over $300 -- >> because they don't have a lot of choices, and that's the challenge with a company like this. in other industries with other companies, consumer companies, you cannot act like this, because the consumer has more choice. >> herb? >> let me tell you why this is not going to work -- >> hold on, i want to hear. herb? >> two things. first of all, i want to know how kevin got the unlocked phone, because that's probably the most important part of this discussion and i'm going to find the answer to that. the second thing is, this deal, though, is the oldest known to mankind. that's what companies do. we're sitting there, whether it's a subscription, whatever it is, you're getting the regular price unless you want to go through the process of renewing and -- >> but that's exactly it. >> and threatening to quit. threatening to quit. >> let me give you a little anecdote from my grandfather, which i love to do, but it's a telling one. he recently was trying to consolidate his tv and phone and internet and was going to go with at&t, which would save him like 60 bucks a month to do the bundle. he went back to cablevision, his existing provider, told them, and they matched the rate. why couldn't every existing sprint customer go to them and say, harvey, i'm going to leave if i don't get the rate, and they'll probably get it, right? >> that's exactly what they should do. >> pick up the phone and do. >> that's what people should do. every one of these companies has a customer retention unit. and if you say the magic words to the customer service representative, i'm thinking about leaving the company, i'm thinking about canceling my account, they'll switch you over to the customer intention unit, and then you can usually negotiate the same deal that all the newcomers are getting. and then eventually, of course, it will expire, but you'll be in the same boat as those newcomers. >> i can support that thought, because i used to own stream, where we had the call centers. you just utter the word, let me speak to a retention officer, and we put you into a fast track. trust me. >> there is something to keep in mind here, though, you know. it gets a little confusinconfus because verizon and a ate have the triple play, they have bundle plans because they're also for internet and telephone and television, but sprint is not in that space. so, if you're going to try and say to sprint, i'm going to leave, or say to verizon, i'm going to leave for sprint, they're going to go, oh, so, you're going to spend more because you're dropping out of the triple play. so, it gets harder to move about the building in the mobile space. >> that's another reason why they're trying -- exactly, they're trying to make it harder for precisely that reason. i think we've given people good ideas on how to combat this and we'll see. send us your stories. we want to know how it works. lance and harvey, thank you very much. appreciate it. today is the tenth anniversary of google's ipo, up 1300% since going public and robert frank will look at the millionaires that's created. plus, tired of your kids ignoring their phone? no comment. well, just lock their phone. a new app does just that and we'll hear from the mom who came up with this idea. and we want to know whether or not you'd buy it. your chance to vote is coming up. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding. ink from chase. so you can. that's why i always choose the fastest intern.r slow. 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. there's something fishy going on at darden restaurants. that's the company behind red lobster. and we're not talking about the menu offerings in this case. allen wastler joins us with "the hot list," and more on that story it. >> hey, kelly. that's our number one story. we found this memo that seems to indicate that when darden restaurants was trying to sell the red lobster restaurant chain, it was telling its shareholders one thing, namely, that the prospects for the chain weren't that great and that they should probably get rid of it now, but they seemed to be telling fed investors something different, that the prospect for the chain was actually pretty good, and therefore, they should buy up the bonds. so, this all ties into the ongoing fight darden has had with a couple activist investors in the company. it's a fascinating tale. john's laid it out pretty good, and a lot of our readers are checking it out. >> he's been following it well and may join us tomorrow in fact, with more. >> okay. number two, we did a survey in conjunction with the financial planning association, checking out small business owners and what they think their biggest problem is right now. it's actually retirement. so many small business owners put all their money into their business. they didn't really think about things like retirement plans and, you know, elderly care and things like that. so, they're kind of stuck. so, that's concerning. that has people checking out a lot of our details. and then finally, number three, this is the one that's been rattling people all day. mothers, school lunchers. nutella. there might be a price hike coming there. >> yeah, no, the hazelnut shortage in turkey. >> turkey provides a fourth of the hazelnuts to the world. nutella relies on that. already a 60% price hike in hazelnuts. that's coming to a nutella jar near you. >> as mentioned, this could, and i emphasize, could be a boom to the state of oregon, which is the big u.s. hazelnut producer, if they can offset some of that shortage, anyway. >> or substitute goods. people could go back to peanut butter. just saying. >> i know. personal favorite. allen, thank you. >> take care, kelly. it was a day that changed a lot of lives. in fact, you can google it. today marks a decade since google went public. so, how many billionaires besides sergey brin, larry page and brit has the company created? it's a long list and it may surprise you. also, you heard of "the parent trap." now we have the parent app. if your kids constantly ignore your phone calls, now it's a tap of a screen and $1.99. parents can have the ability to lock their kid's smartphone from af afar. a dream come true? well, the evil genius mom who came up with the idea will join us. time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade. over 1.2 billion eyeballs are on us during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive. we rely on the cloud to provide that immersive digital capability. give fans more then just the game with the ibm cloud. the ibm cloud is the cloud for business. welcome back. there's a look at shares of google. it's been ten years since it went public and its return about 13% in that time. cnbc's robert frank has an inside look at who's cashed in on that rally on those shares since the ipo, and in a very big way, robert. >> yeah, kelly, a big, big way. on the day google went public, its market cap was $27 billion. now it's $391 billion. so, that's created over $360 billion in shareholder value and personal wealth. the biggest winners, of course, larry and sergey. in 2004, they were worth only $3.8 billion each. ah, those early struggles. ceo eric schmidt was worth $1.4 billion. now larry and sergey are the 12th and 13th richest people in america with $32 billion each. aside from the billionaires, google's become the biggest millionaire machine. estimates say with that ipo, about 900 employees became millionaires overnight. everyone from the company's masseuse to the early hires. get this, the company's chef at the time, charlie ayers, owned shares that ultimately became worth $46 million. that was for their chef. since the ipo, an additional 1,000 people have become millionaires. so, all told, 2,000, at least, millionaires created by google. in addition to these guys, the google alumni have left or started other companies since they made those millions. there's this whole generation of people known as the google angels, investors who funded start-ups. i spoke with elad gill, a google alum who estimates google angels have funded hundreds, if not 1,000 start-ups. now, some companies that had google alums or angels include twitter, evan williams and biz stone, both having worked at google. pinterest, ben silverman was a googler. and the clyman corps, david freiberg also of google. that day really changed the landscape of wealth because it set a new speed record for how quickly and how young people can become billionaires and millionaires. guys, back to you. >> wow, robert. i'm going to bring in the panel. let me just get this straight. probably 2,000 billionaires at google alone, plus maybe another 1,000 spread around in terms of these angel investors you're talking about? >> 2,000 millionaires, plus -- >> millionaires. >> right. plus, hundreds of companies that have used their money. i want to ask kevin, if these guys came to him in the very early days on "shark tank," what would he have said to this crazy notion? well, we've got a search engine. we don't know how it's going to make money. what do you think? kevin, what do you think you would have said? >> i think we would have explored that for a long time, because if i don't understand how to make money, i don't invest. but having said that, this is one of the most, and the greatest success story that captured what the value of the internet was. and i think there's no bad news in it. one thing we should realize, this is creating about $150 billion under our current state tax laws that's going to go back to american society when these people pass. now, i don't think that's necessarily fair, but it is something that is going to occur. so, a lot of this wealth is going back to the state, and that's a debate worth having, because never before has a company -- >> what do you mean you don't think it's fair? >> well, you know, i don't think estate tax is fair, because these people -- >> are you stating estate? >> estate tax. when you die, if you're a founder, anywhere up to 55% of this, after you've paid all your taxes on it, after you've contributed to society -- >> no, kevin, they're just going to set up trusts. >> it doesn't work. trust me, i know the trust structure, my friend, it doesn't work. >> but let me just tell you one other thing, which does raise an important point. in 2004, and i know this, i talked to someone in california, they received a check from a single person for $200 million just to pay the state california portion of their share options exercise. so you know, the amount of taxes -- that was just one person paying $200 million check to the state of california -- >> but you made a great point. you said they took some of these profits, put it back into the economy by starting companies. >> yeah, right. >> would you rather have the government take the money back or give it to new entrepreneurs? that's the point i'm trying to make about this taxation. these are great entrepreneurs, and they funded many other great entrepreneurs. it's better keeping this money out of government hands is my point. >> let's leave it there for now. pick it up when we have more time. robert, thank you. >> thanks, guys. >> astonishing number. while it's called ignore no more, maybe it should be called mom's revenge. it's an app you can download for $1.99. you can lock a child's smartphone, so the only function available is dialing your number or 911. the mom who came up with this app, she's next. there's a gap out there. that's keeping you from the healthcare you deserve. at humana, we believe the gap will close when healthcare gets simpler. when frustration and paperwork decrease. when grandparents get to live at home instead of in a home. so let's do it. let's simplify healthcare. let's close the gap between people and care. where the reward was that what if tnew car smelledit card and the freedom of the open road? 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that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. go to comcastbusiness.com/ checkyourspeed if we can't offer faster speeds - or save you money - we'll give you $150. comcast business. built for business. welcome back. one mom was so sick of her teenager ignoring her phone calls that she took matters into her own hands and created an app that's becoming a hot topic among parents. sharon standifird is a former teacher turned app developer and creator of "ignore no more," which gives parents the ability to lock their kids' phones so the only function that works is to call them back or call 911. she's joining us from her home in houston. sharon, wow, what a story. thank you for being here. before we get into this, just so everybody knows, we want to hear from you, so go to cnbc.com/vote and let us know if you'd buy sharon's app. so, sharon, how many kids do you have? >> i have two kids, kelly. >> okay. so, you created this app, which basically lets them either call you or call 911. how long have they had this on their phones and what's the experience been for all of you? >> we've developed this app -- it's taken about a year to develop, and my kids have had it on their phone for approximately a month now, i would say. and it's worked effectively. i've only had to lock my son's phone once since ignore no more that has been on there. >> how old are they, resultan? >> 17 and 19. my 19-year-old, we chose not to use it on her, she's away at college. my son is 17. >> i will bring the panel in, in just a second. how does this work? you pay $1.99, you download the app. do you only have to give the app the phone number of your child and walk us briefly how it works? >> you download it onto the parent phone and the child phone, once you've set up that account, the parent phone can lock the child's phone by simply entering the four-digit password. from so, mom, i got to ask you a question, do your kids hate you? >>. my son knew that this was coming. because he helped us in the development process. so he knew that he needed to start answering my calls and texts. >> i predict they were probably about a month away from a 12-year-old genius creating an app called i'll do what i want hacking into their parents' phone. i love this i think the technology allows parents to abdicate. i think it gives parents a little more control. i think it's a great idea. >> when is it coming to apple, charron, to the iphone? >> we are working on that, we hope to have it out. >> why couldn't you use this to lock the phone, for example of your spouse of a friend or of anybody who's behavior you wanted to control? >> you have to actually have that phone in your possession. to set up the account. you continuer couldn't give it to anybody you wanted to. >> i have a big problem with that. i think if you get away from kids, boyfriend, girlfriend situations, they get into a relationship. they think this is great. suddenly, i have a problem with privacy issue. i think in the end you have to trust your kids, if they're not going to do it, what do you do? it's called grounded. it's something along the lines of, you know, i don't need an app for that. >> i disagree with. go ahead, resultan. >> at what age do you think you can do this to? >> i disagree with that. because cell phones these days, parents give it to their kids so that they can keep in contact with them to know that they're safe. so when a kid chooses to ignore those text and calls, they're breaking the deal they have. ignore no more is a tool for parents to use that to get that behavior back in control. >> we know it doesn't allow them to call anyone else other than a parent. can they use their phones, generally? it seems people are messaging or an different apps and don't want to stop engaging in that behavior. does it lock the phone altogether or prevent you from making a phone to somebody else? >> it locks their phone altogether. kids can't text. they can't surf the internet. they can't play any games. they can't do anything with it until they call the parent back to get the pass to unlock it. once they the and the parent is satisfied, you know, why they have been ignoring them, then they can unlock their phone and have full features again. >> resultan, have you had pushbacks from the carriers? you are basically making this an unproductive account. they're not selling any data or doing anything with the data when you locked them out. that's not good news to me as a shareholder. >> i'm sorry, can you say that again? >> my concern is if i have a bunch of phones out there, if this takes off, i want to sell them da that that's how i make money as a shareholder, i don't want them to not be able to browse or send texts, that disturbs me. >> do you think teenagers will wait to call back? they need to use their phone. that's the lifeline. it won't be idle very long. >> has any carrier given you grief on this? >> resultan? >> no, i haven't had any carrier give me grief over it. in fact, i've had other business people calling me, giving me another ideas and ways actually i can use this app in things i never even thought about before. so we're going to take that to the next level, hopefully. >> we have been asking the viewing public during this conversation whether they would buy the app. the polls are closed. vacate% said they would make an app that makes your child call you back. you are clearly on to something here. just before we let you go, how many times in your son's case for it to call you as soon as you lock his phone? >> oh, my son, i only had to lock it once. that's it. just the threat of it being on his phone. he calls and texts me back almost immediately. >> resultan, i'm going to make a prediction you will become enemy of the state number one to 15-year-olds after the interview. >> that's the role of the mom already. >> watch out for the believers. >> sharon, thank you so much for joining us. and telling us about this app. good luck with it. i think. on behalf of everybody. >> i appreciate it. >> up next, the panel's final thoughts on other encouraging day for the bulls on wall street. wreak. be right back. . >> welcome back. >> the only thing to watch right now will be the fed if you are watching the market. >> that will rule the market with jackson hole. >> on friday that's the speech to watch for? >> exactly. she is not going to make doves cry. she is going to make doves sing. >> by the way, we should congratulate kevin o'leary here. >> i'm so excited about "shark tank" winning an emmy. we won twice in a row. we won corrects choice and fastest growing audience is 8 to 19-year-old women. it's family values. it's about money. it's good for america. >> i love hearing that. so we got a couple second here. i want to bring it back to the markets. kevin. we talked earlier about your floating rate funds. >> yes. >> in other words, this is the concern if interest rates, you feel protected, though? >> it's a 90 day duration, kelly. my floating rate products are 90 day duration. the downside is i'm only ever going to make 5%. never anymore. a great start movb moving. if you look at the history of floating loans, 5% every year. >> mr. negative right here. >> he has his investigative hat on. i'll look forward to the fruits of that investigation. thanks, everybody, for being here. tune in tonight, kevin o'herery and "shark tank" are coming up. it is "shark tank" tuesday. sarah eisen, what's up, what's on tap? >> we got traders worked up about apple at the highest levels since september 21st, 2012. they say its very significant. we have one that will be short. we'll see if he will be covering that short tonight, kelly. >> i think i know who that is. over to you guys. >> thanks very much. "fast money" starts right now in new york's time's square, i'm sarah eisen in today for melissa lee. tim seymour, dan nathan and guy adami are traders in tonight. home depot shares soaring today of posting strong earning, raising its forecast for the year. that was after strong home builder confidence numbers came out yesterday and a strong number for housing starts this morning. so is the housing market officially recovered, mr. beaks? >> it learnly looks like it. there is only one month data but we had that spring slump that had everybody concerne

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