Transcripts For CNBC Closing Bell 20160802

Numbers for july auto sales. Some under pressure today. Well bring you those numbers as soon as they cross the tape, kelly. Also, coming up from atlanta, over the next two hours, ceo of home depot, initiated that stock with a buy and shares at an alltime high and the cfo of u. P. S. And delta with that stock going the other way, dropping on the back of weak passenger revenue numbers out this morning and an exclusive interview with Dennis Lockhart. A lot to get to over the next couple of hours but lets start with the markets and Closing Bell Exchange today, we have jeff reeves, steve grasso sitting next to me at post nine and Rick Santelli checks in from chicago. Steve, so we mentioned seven consecutive declines for the dow and finally, this is the first meaningless selloff. Whats going on here . I feel like everyone so focused on the fed and so focused on a bunch of other things, earnings, obviously, for the right reasons. But now, you looked at the italian banks, those were in full focus this morning. Japan, whether it was a lackluster Stimulus Program that they were working on. You would think they have it down to a science by now, right . So, and i think the big catalyst is oil. I think oil falling off the table today was a little bit shocking to the overall market. You have nigeria back online and libya and canada coming back online. Theres a lot of things to support the supply glut and spooked the market. Jeff reeves, we are seeing the yields globally moving higher especially in japan and could be a number of reasons why thats happening but do you think it persists and see things drift up more than so far the small move . Short term maybe a little but, you know, i think its difficult to believe anything happens to force the Interest Rate environment higher in the western world or in japan any time in the near future. It is just not where Monetary Policy is headed and big demand for the safe haven assets and continue to see yields under pressure long term. Maybe a little bit of a rise in short term but i dont anticipate anything to go much of anywhere. What do you think, rick . Earlier today art cashin called it a global reassessment of Interest Rates seeing the yields rise and we have come back in the 10year. What do you see going on here . I think, unfortunately, i have to agree with jeff on this one. Listen. Everybody was on side of the ship. What we learned from the first chapter of the relative value trade was when europe rates dropping we were glued at the hip. Well, the japanese rates moved up 23 basis points in a matter of several trading sessions from minus 30 in the 10year to around minus 06, 07 where it is now. Everybody on the ship front learning. They lernled it from the ecb and made a lot of money doing it but retribution was swift and fast and i think conventional wisdom fell in on the weight of itself and what we experienced today in the last couple of days. But as jeff pointed out just because didnt add to the stimulus, didnt lower Interest Rates doesnt mean they have seen the light even though we all wish they would with regard to negative rates. But theres a lot of talk and we continue to see the markets influence by some of the bigger thinkers. I would point out that the drop in equities also put a little bid back in the treasury market. Boon yields still havent gone, what . One settlement positive down to three decimal points about two weeks ago so its been five weeks since a real close in positive territory. We need to monitor that and lets not forget you get a lot of volatility in treasures with supplies and everybodys reading the text, for second day of august, we have a boat load of aggressive supply yesterday alone was 23 billion with a b. You know, steve, what are you listening for with all of this going on speaking to dennis l k lockhart in just a bit . It is odd to me because we were so focused, myopic on the fed and now moving away from the fed, realizing that they cant or wont raise rates and maybe its a longer, you know, a time horizon for it. I think if you really look at the market, the market good friend of mine derek says flat is the new down. We are not down 1 and the marketplace and everyone feels like everyones throwing the market out of bed. I think you have to look at the dividend plays. People are going to be looking at utilities, staples and everything that they thought they were throwing out because of m a probably going to gobble up. Goldfish, we adapt to whatever size tub were in right now an its been a pretty small one here, jeff. Do you we make much of a small move right now, you know, its been go with the cyclicals that seem to be coming back or go with the yielding stocks, defensive plays. Where do you find opportunities in the market right now . Yeah, right now i agree with the notion that technology has a little bit more upside. Im personally not buying utilities with a forward earnings multiple of 20. Theres a couple i would. Facebook is far and away one of the best companies to own right now and be realistic about what people get in this market. Mckenzie said for 20 years investors temper expectations. We wont see 9 , 10 annual returns. We are not. So i think this kind of churn we see maybe it is a little bit of that whole mentality that flat is the new down and everyones upset or wrapped around the axle in the short term. Things are not necessarily doom and gloom with 5 to 7 instead of 7 to 10 a year and feels like it should be more. We want it to be more and take the opportunities where you can find them. Im not saying its facebook or some of the other Technologies Companies going to give you a doubler but you got to take what the market gives you in situations like this and you can do worse than 12 a year. I was just going do say if you go back to the crisis, people thought theres a new permanently lower plateau for the u. S. Stock market and continues to rally and defie expectations or calls for its death and thats true for a lot of individual companies, too. Doesnt seem like theres really any change today relative to already the dramatic environments we have been through, right . Yeah. I agree with that. I think thats the important thing to remember. Im not saying the world is perfect out there. We have a complex Global Economy and the kind of two steps forward, one step back, this is the story we have seen since 2009 and taking a step back, a lot of times people jump on it, really upset. 1. 2 gdp growth and then, you know, jobs come roaring back. Gdp improves a little bit. Jeff, jeff, jeff central bankers are giving you equity return and it has a price. Okay . And the price is productivitpro the bad regulation. Theres no way to make 1. 2 look good. Period. It isnt good. Just because its better than everybody else it isnt good and the problem is investors arent going to get used to 1. 2 growth and theyre going to show that at the ballot box. Its just a smaller Goldfish Bowl i was talking about. Kel kelly . They have gotten used to it and flooded so many people into the equity markets and thats why the equity markets will not crack. And to jeffs point, 20 times on utilities, maybe thats not the right multiple to look at but a multiple expansion and the fed mushed everyone into the same boat. Thats right. They left only one tunnel open and it was to your exchange, buddy. Thats right. I have an easy pass. Whats the alternative, though . None. Should the fed just raise rates 200 basis points . Why do the fed that certainly could help. That would do the trick. You would see everybody jumping into the Housing Market because they dont think rates go up in anybodys lifetime. Yes, exactly, thats exactly what they should did. You dont think it makes people conserve capital more . This is supposed to get people old people. All that capital theyve preserved. Their savings financed the experiment. We did your method. Its a failed policy. We have already done your way so whats the alternative . We have to go at this point, guys. Alternative is do something new. Raise rarts. Everybody get together for lunch. Id love to see this conversation continue here but we cant right now. It will be free probably. Yes. There are free lunches out there somewhere. Moving on, president obama going after donald trump today one day after the billionaire investor Warren Buffett challenged trump to release the tax returns. John harwood has the latest developments of the campaign trail today. John . Bill, Donald Trumps been in some significant fights lately, maybe not as intense as the one you were just presiding over a moment ago but hes been in an argument with khan the gold star parent, an argument with Warren Buffett challenging him to return the tax returns. Today, the president of the United States jumped in. Heres what he had to say about Donald Trumps fitness to serve as president. I think the republican nominee is unfit to serve as president. I said so last week. And he keeps on proving it. There has to come a point at which you say, somebody who makes those kinds of statements doesnt have the judgment, the temperament, the understanding to occupy the most powerful position in the world. Now, donald trump fired back in an interview just a few moments ago on the Great Television broadcasting company. He said that president obama would go down as one of the worst president s in American History and he would take the president s condemnation as a sign of honor. Guys . Thats exactly what i was going to ask, john. I mean, the fact that president obama thinks that donald trump is unfit may only increase trumps appeal to some voter who is like him here. Well, thats possible. But remember, the president of the United States has an Approval Rating of 51 and we have seen in the last few days the polls have turned sharply against donald trump. Dont know if thats going to persist but donald trump has not been winning the argument in recent days. The side president obama is on is making headway in the arguments. All right, john. Thanks. Well see you later. Those polls, we love them. We hate them. We cant live without them. Thats for sure. We have 50 minutes to go in this session today. And, bill, how are the markets looking . Well, as we mentioned, we have been lower today and we are off the lows right now. The dow was down 157 points at the low, down 104 right now the s p down 15. The nasdaq snapping a fiveday winning streak down 43 points right now, kelly. All right. There we go. We have a lineup of heavy hitters coming up for you live from the Metro Atlanta chamber. Top executives of home depot, u. P. S. And dell they airlines speak with us exclusively about the Biggest Challenges facing their company and Dennis Lockhart tells us how many Interest Rates hikes he expects this year and the ceo of Atlanta Falcons, rap star ludicrus and Jermaine Dupri stops by. Thats live coming up on the closing bell. My mom lov giving me advice. She even gives me advice. About my toothpaste and mouthwash. But shes a dentist so. I kind of have to listen. She said jen, go pro with crest prohealth advanced. Advance to healthier gums. And stronger teeth from day one. Using crest toothpaste and mouthwash makes my. Whole mouth feel awesome. And my teeth are stronger too. Crestpro health advanced. Is superior to colgate total. In these 5 areas dentists check. This check up . So good. Go pro with crest prohealth advanced. Moms right. Again welcome back. Story were following right now, biogen shares spiking on the report that merck and allergan may be eyeing the bio tech giant as a takeover target. This as the Big Pharmaceutical Companies continue to search for new avenues of Revenue Growth and biogen is at the peak or at the highest level today, up 10 right now, kelly. Big boon for wall street there, too. Big deal that would be. Home depot with alltime today after a buy on the stock setting a bullish case. Shares at 137. Joining us now in atlanta is home depot chairman and ceo craig minier. Good to see you again. Good to see you. You have a high class problem. Your shares trade at alltime highs and must be encouraging on some level how do you kind of move forward from here able to show people growth in an environment where you have amazon, you know, dramatic changes in the way people are buying homes and how long theyre living in them . Whats the strategy for home depot Going Forward . Well, weve been fortunate in a space customers are willing to spend, clearly. Willing to spend on their homes. The housing environment has been a tail wind for us for about 24 months. And it really revolves around home value appreciation, housing turnover and household formation. All of those have helped our business. Those are three things people are worried about for a while. What does that tell us about millennials or the economy . Whens going on here . Again, i think, you know, overall environment and housing hand been good. When you think about the millennials and where it goes from here, we see some positive signs as it relates to millennials, as well. So, weve done a lot of work and a lot of study about the millennial generation. Theyre now the largest generation. Right . And what we see in everything that we have researched is theyre going to follow previous generations. Its kind of a sixyear delayed process. So if i in the past by now would have already been living in the house in the suburbs now youre saying its just add six years and still going to see the exact same kind of behavior . Pretty much. If you look at whens happened over the past several quarters, about 35 of all new household formation in terms of homes has been coming from the tail end of the millennial group. Bill . 34. Yeah. Craig, Bill Griffeth here at hq. I keep reading about one of the problems of the Housing Market is builders arent building enough new homes right now. Not enough people wanting to buy the firsttime home and people are not selling their home. Theyre kind of hunkering down. That would seem to help your business. I mean, is that a benefit to you guys to have people staying in place rather than wanting to move and fixing up what they have and how long do you expect that to last . Well, bill, i think it is a positive factor. If people arent moving, theyre clearly investing in their homes. Theres about 4. 6 months supply on the market right now which is below the historical norm of about 6 months. I think thats been a factor that has helped with home value appreciation which, you know, that is a project driver. No doubt about it. So we definitely have seen a benefit from that. And home value appreciation is expected to continue for several years. One of the positive things that the Analyst Community cited with home despoe the way you held off competition of amazon and bulked up the ecommerce and changed the store experience a little bit. What changes are we likely to see at home depot in the new retail environment . Well, last time you and i were together here in atlanta, you were in one of our facilities. Our direct fulfillment d. C. S. We have completed that network and so were running with a capability of shipping direct to home with parcel shipment. In 48 hours or less for about 90 of the u. S. Population. Youll see us continue to invest to allow for a seamless experience for the customer whether they start their shopping process online and finish in store or vice versa. We know that the customers blending the new customers. Not just the customer doing things at home and a big part of the push is do it for me category with the pro services that you offer alongside just some of the traditional merchandise. So hows that going to continue to evolve . We have a great opportunity to continue to grow the business with the pro customers. We have an aging population base and more people are choosing either a pro or home depot through our Services Business to have it done for them. So thats an opportunity for growth for us Going Forward. And finally, you know, a lot of people are concerned about growth broadly speaking in this environment. We have an election coming up that plenty of people are uncomfortable. Theres uncertainty in trying to get a read on the consumer is tough so while youre in a category with positive momentum behind it what do you think is going on in terms of at your stores, the kind of confidence people have, the ways in which theyre spending . What can you tell us about the environment out there . Well, if you look at what we have reported in the last several quarters, our strength really is across the store. Its across the store and its across geographies. So we really dont see at this point customers concerned about that. At all . Not at all. Not about politics . Not about the economy . I mean, are things in america doing much better than certainly a lot of the rhetoric would often seem to suggest then . If you look at it, we have steady growth. Not robust growth but steady growth coupled with tail winds of housing. People are willing to invest in our space. And as we look over the business for the past several quarters, we have seen gwth in both large ticket, both in transacti transactions, growth in small ticket, the customers been shopping across the store and really the geography variations havent been that significant. Returning a lot of capital to shareholders, too. We are. Another reason why the stock continues to move higher. Craig, thank you for joining us. You bet. Ceo and chairman of home depot. Sfwhil. All right. Thank you, kelly. 40 minutes left in the trading session here. A down day on wall street. Coming up, more from atlanta, the president of the atlanta fed giving us his exclusive take on how many Interest Rate hikes he is expecting this year. Its more than a lot of people are expecting. Then Outgoing New York City Police commissioner bratton in the first interview since announcing to step down a few hours ago. An exclusive interview you dont want to miss coming up. Stay tuned. Approaching medicare eligibility . Dont put off checking out your Medicare Options until 65. Now is a good time to get the ball rolling. Medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement Insurance Plans insured by Unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement Insurance Plans, they could help save you in outofpocket medical costs. Taking informed steps really makes a difference later. Thats what it means to go long™. 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Terrorism issues dealt with effectively so its the right time and so grateful to have the opportunity to respond to the offer that teneo made. Give me some sense there. People say, for example, protests yesterday at city hall not far from here and saying bratton resigned a day after a big protest there. Obviously, these things are in the works for a while and give me sense of how you came about wanting to go to teneo and right move for you. Protests, 200 in a city of 8. 5 million. That protest not particularly significant. But teneo, its exciting for me. One, the world they focus on advising ceos of fortune 100, fortune 500 in the wide range of risk issues that the ceos face today. Im being asked to create a new division to join the 12 other divisions they have and teneo risk and build the company out and in a position relative to the current threats that businesses face around the world. How to identify them. How to prevent them. And if necessary, how to respond to them. Risk mitigation. Right. Of course, cyber is an area that, well, 20 years ago we rarely if ever talked about. Now a huge issue at the ceo and board level. How do you see your work at teneo evolving . What does it involve in terms of how you go about a conversation with the ceos about the priorities should be . Its exactly that issue. 20 years ago i created a division. And then 250 detectives to deal with the explosion of cyber crime. The private sector experiencing that issue. Also coupled with the issue of terrorism. Terrorism, cyber crime, really 20 years ago policing didnt spend much time on it and the corporate world didnt spend much time on it but to survive in todays world you have to have advice, skills, how to identify that youre having an issue, how to respond if you have an issue, and secondly, how to prevent from having an issue. Right. If im the ceo of a company, why am i particularly more concerned with terrorism than oi other citizen . The issue of workplace, keeping the employees safe as they travel around the world, keeping them safe from terrorism, keeping them safe from kidnapping, workplace violence, the active shooter. So terrorism manifests itself in many forms. We tend to think of isis and lakt. You have the you are began terrorists and seen in this country recently the mass shootings. So how does a company protect itself, it employees from those type of threats . The threats if you will are almost limited in terms of them out there. Quite a few of them. Speaking of threats, i mean, is new york city a less safe place because youre no longer the Police Commissioner . Not at all. I hope its safer because of the three years i have spent there. We have expanded the capabilities of the Department Building on the platform of ray kelly built and now added whole new layers to deal with the constantly morphing terrorist threat. Isis two years ago didnt exist effectively and the mastery of mass media, spread threats without train anybody, to enable, to inspire, to direct, its a whole new world and the nypd we have kept ahead of the curve rather than just responding to it . How . We created a new 550person Critical Incident command. Those are officers highly trained, equipped to respond anywhere in the city five to seven minutes of an active shooter or terrorist incident. All the studies indicate that most casualties occur in that first five to seven minutes so thats one layer that we have built on top of our already very highly Skilled Service unit and we have another 800 officers soon to be 800 similarly equipped and trained to deal with crowd management as well as backing our officers up if were to have an active shooter or terrorist incident and one example of how the new York City Police department had to change from just dealing with traditional crime to dealing with the issue of terrorism. And similarly, i now have at the fbi we have a Cyber Crime Unit at the fbi. We have a Cyber Crime Unit and basically District Attorney of mantd. Yep. I have a 250person grand larceny unit thats expert in dealing with Cyber Technology related issues. So the expertise that weve had to build in policing is expertise that the private sector really desperately needs. You served 27 months under mayor giuliani. Quite sometime back at this point. This time a bit longer under mayor deblasio. 31 months. 31 months. Kind of in that. Which was a harder tenure for you . The issue in 94 was crime. Crime and disorder. Issue today is still crime although its down 80 , disorder still down dramatically, but the population of new york today is not old enough to remember how bad it was in the 80s and early 90s and concerned with issues of street people, homeless conditions but the new element is the issue of terrorism and cyber. Didnt exist back in 94. So for me, the excitement of coming back to the nypd was to work on those areas and excitement of going to work for teneo is teneo is significantly expanding its muscle if you will to advice the ceo population. They advise most of the fortune 100 and a large part of the fortune 500 ceos and a whole myriad of issues across their 15, now excuse me across 12 and soon to be 12 divisions. Once you decided you no longer wanted to be in this job of other potential jobs, so why would you go to teneo opposed perhaps to a large bank . I can remember ray kelly made choices when he stepped down. Why them . Having done this twice before in 96 and 2009 pretty experienced as taking a look at whats out there so when the discussions began with teneo, i look at the leadership, three founding members of it, extraordinary individuals. Look how its grown in five years. Imagine advising the majority of fortune 100 and fortune 500 companies, the expertise that the ceos saw in teneo, with the 12 divisions, also with the ceo advisers. Looking at the senior advisers, headed up by senator george mitchell, extraordinary array of expertise. Thats a team i want to be on. I assume it has to do with economics. I dont want to be presumptuous and spent 45 years more or less in the public sector. Thats correct. Is it time to make some money . Its time to make some money again. I had a taste of it in 2009, 2014. My wife will tell you we gave up quite a lot to go back into the public sector. It is more for me the excitement of new challenges, excitement of building something, excitement of managing something. Im a manager. Im a leader. Im a creator. A collaborator. Wrote a book. So teneo is offering all of this, the extraordinary leadership, the Extraordinary People across the company. You know, look at the world they interact with. This world. You know, every one of the companies they interact with on the boards around this room. Right. Finally, any thoughts of getting back into politics some point many. Not at all. 45 years of shown how smart i am never basically crazy i am to go into politics. I avoided every working in washington 45 years where nothing gets done and politics and argued almost nothing ever gets done. I like policing to get things done. And going with teneo thats a company that clearly with a fiveyear track record gets things done. Commissioner, appreciate you stopping by. Thank you. Thank you. Appreciate it. William bratton. Bill . David, thanks very much. Commissioner bratton, good the see you. Hes not going in politics any time soon. 27 minutes left in the trading session. The declines continue on wall street today with the dow down 104 points. A leading trader will tell us what hes watching into the close. Still ahead, top executives of u. P. S. And Delta Airlines give uls their take on economic head winds confronting their businesses and head of the atlanta fed will tell us how many more Interest Rate hikes he thinks are in the cards this year. Coming up. Ashant bhuyan. Cofounder of the Fintech Services startup. Hello watson. Your analysis of social media and conversations on various trading floors, helps us uncover insights. Insights that help investors predict market closes, well before markets close. You know, your analysis has helped us improve our predictive accuracy by over 500 . 550. 2, to be precise, but we can always do better. I like your attitude watson. 550. Narrator kubo est place we ccome on, this way. E. Narrator . Is in the forest. Kubo wow. Narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo its beautiful. Narrator visit discovertheforest. Org to find the closest forest or park to you. 24 minutes left in the trading session here with the dow down about 100 points but gold continues higher. Mark newton joins me here to look at that. And where you think it goes from here. I mean, were at a couple of year high here, right . Looks attractive. Still one of the things outperformed in 2016 so you look at the chart. Really over the last few months, see gold is up about 300 or so from the lows we saw back beginning of the year and now approaching this 1375 level and really important and near term, you know, been in a little bit of a range above 1375 and will help it to accelerate up to 1485 and clears the down trend from 2011. So a lot of reasons to like gold here. Obviously an environment, Interest Rates continue to plummet. The dollar rolling over a little bit and makes a lot of sense right now to consider owning it. Could you see it going back to the old high . I think its tough right away. Thats tough to make a longer term call like that. I think the u. S. Eventually probably start to stabilize and the dollar will eventually rally. But for now, its more of a near term over a couple of months. Gold is a bullish time usually july to october and so it makes sense to consider owning it not only in u. S. Dollars and other currencies, as well. With stocks starting to wobble a little bit, it makes perfect sense. Its had a good ride as you saw there at the beginning of the year. Thank you. See you later. Kelly . Up next, were going to be back live here for a conversation with the cfo of u. P. S. On the heels of last weeks earnings. Talking about the increased competition big brown seeing and stay with us for an interview with atlanta fed Dennis Lockhart. S team to state for the first time. Gilman go get it, marcus. Go get it. Coach gilman used his cash rewards credit card from bank of america to earn 1 cash back everywhere, every time. At places like the batting cages. [ crowd cheers ] 2 back at Grocery Stores and now at wholesale clubs. And 3 back on gas. Which helped him give his players something extra. The cash rewards credit card from bank of america. More cash back for the things you buy most. 20 minutes down. The dow down even 100 points today. We have had a wider trading range than normal recently. S p down 14. And the nasdaq down 45. By the way, atlanta based Delta Airlines is under pressure today. Passenger revenue for each seat mile flown declined by 7 in july. Compared to last year. Delta blamed the low prices for lastminute flights, wrong way bets on currency fluctuations and excess supply on transatlantic flights. Deltas ceo will speak with us exclusively coming up next hour of the program right here. Kelly . Now the transport sector taken a hit since the start of the year and made a recovery lately. Up over 1 on the year although down 2 today and while transportation and Logistics Company u. P. S. Weighed down with a sector, it made a 11 recovery and in an exclusive joined by the cfo and a member of the cnbc global cfo council. Welcome. Good afternoon. Are you already in Holiday Seasonsome is that how it works for your company . We never stop planning. We start the next year. This is a sore spot in the for you guys, too, especially with the changes happening in terms of transportation and delivery on the doorstep today. What is what are you guys focused most on right now . In 2015, we actually had a very successful peak season and it started with collaborating with the customers early and often and means starting in like march, starting to talk to them. And were talking to them all the way through the Holiday Season and what between the technology and the communication with our customers, we were able to move our peak season up a day. Which gave more capacity to the network in the last week of christmas. To what extent are the customers businesses and the actual customers, you know, the people who are buying the stuff and my point is this, more and more when everybody wants that u. P. S. Package on their doorstep in an hour or in a way, whatever the case may be, how much of a challenge is that for you . How much more expensive for you guys for packages instead of going to more of a warehouse or retail sore . Sure. About four years ago we started down two different paths with technology. The first one was engaging the end user and we have an app. There are now 27 Million Consumers communicating with us as the end user even though the companies, the Retail Stores and things like that are the ones hiring us. Were talking to the end user and therefore they can get some convenience control and choice of where they want their package. At the same time, we introduced Access Points where we have about 27,000 locations where they can pick it up so people in new york city who used to not be able to participate can now have it sent to an access point when they dont live in a doorman type building. Like a locker. Exactly. You have saturday deliverly, right . We are testing in it a few cities with the change of b to c or business to con susumer. Do you think the United States post office has to raise what its charging people or make additional changes . Kit afford to keep up with the times here . Explain how the Competitive Landscape with you guys, fedex, the post office and, yes, amazon is changing. You know, we all compete for and provide a service. Whens special about u. P. S. That End Application of my choice and really making it more convenient for the end user. The post office does have a product that delivers to home but its a different kind of experience and what u. P. S. Is concentrating on is end user experience. At the same time, we have implemented technology within the operations that have helped as the structural change of business to business goes business to consumer, so now that we can be more efficient at deliveries and make it the right decision both for u. P. S. And our customers. Mr. Perez, Bill Griffeth here at headquarters. My questions about Free Shipping. Do you develop a tick when they mention that . Or, does that eat into your margins to the retailers margins . Paying more for that . What are the economics of Free Shipping so pervasive these days . Is it an illusion . Well, i think the short answer is that obviously someone is paying because u. P. S. Is a public corporation. But its also a substitute. What used to be Massive Distribution Centers for many retailers is changing. And so theres a lot more direct to the end buyer and so theres a lot more movement directly from warehouses that are much larger than they Regional Distribution Center and some stores are using something called omnichannel to use the stores as inventory. And that in itself helps them to reduce the inventory without having to put them on sale to get rid of it in the store and its really through the logistics and the software and Technology Integrated together that its successful that way. I think that means people still have to pay for shipping. Yes. Okay. Just making sure. Of these three, quickly, before we let you go, what is the bigger challenge, the dollar, strong dollar or fluctuations, low Interest Rates and perhaps relatedly, pension costs . Which of those is most likely to make you want to scream at the end of a quarter . It depends. Long term, discount rates are something ive always got to continue to look at it. Looking short term, and we talked about this in our call last week, its the volatility of fuel really that was, you know, its not linear, not going up or down. We saw dramatic switches in the second quarter. We saw actually fuel prices go from 37 a barrel to 49. Right. And so are you hedged for that at all . We have a fuel surcharge and cover our costs. The problem is it lags two months and not in the same direction you have opportunities lost but at the same time we manage efficiently. We have Just Announced we have a billion miles in alternative vehicle that are reducing the fuel use and because were doing that were managing fuel cost, as well. Going solar if this volatility keeps up. Thank you for joining us. Thank you. The cfo of u. P. S. Bill. All right. Thank you. 13 minutes left. The market has come back a bit here and art just pointed out to me that the market on close orders 200 million to sell right now but the dow is down 85 points. Our next guest is following an artificial stock he thinks bears watching and what it is after the break. And coming up next hour, rapper and actor chris bridges, also known as ludacris, talking about his investments a enthe investment in the fast furious franchise. Youre here to b nine minutes left in the trading session here with the dow down 92. Joining me on the floor of the New York Stock Exchange right now, jeremy hill. Everybody loves the dividend payers these days. You are going with some of the etfs that invest in the dividend payers here, right . Well, actually, no. Were looking at the etfs as a proxy to measure our own success. Thats what i mean. You are not investing in no, no. We dont do that ourselves but we do like the dividend payers. Whats the yield above which you wont go then . Well, first of all, i think you have to look at Interest Rate differentials. A market fiction out there is Interest Rates are absolute versus relative and looking at differentials it is clear to us, the u. S. Stock market is really all about a market that is better than other asset classes. So its relative value market. Got it. I mentioned the Artificial Intelligence stock you like right now. What is it . we like orbcom. Its basically machines that talk to machines through satellites. Its an interesting play. Youre going from a defensive you like the yields and going for something risky, as well, here i would imagine. Its a high risk high reward stock, for sure. Looking for growth. Hard to find growth in this environment, bill. Its easy to put assets in utilities and Telecom Companies and hard to put assets in growth stocks. You would rather go with an orbcomm or a big bank stock, for example . Our portfolio is balanced and we have different types of companies but yeah, i mean, we are underweight financials and i think, you know, the Interest Rate environment is yet to play out. It could take years for this to play out. There are those that Like Technology in part because of the yields you can get there right now. Well, thats an interesting play and we also agree with that. I mean, you could look at some of the old tech companies. I mean, look. 70 of the s p yields more than the 10year treasury. Thats not happened before. Not hard to do right new. For us, stocks are the new bonds. This is a common story. It is not a unique narrative but it is not something we see changing materially over the next time frame either. When do you see yields going up at some point . I mean, you know, we will have Dennis Lockhart next hour and how many more times to think about raising rates this year. What are your expectations . Listen. The credit market, the bond market, the sovereign market is based upon Interest Rates, Interest Rates are based upon obviously inflation expectations. Inflation expectations are very low. Core pc came out today at. 1 so its not we have a little time. I would think so. Good to see you. Thank you. Jeremy hill here. Kelly . All right. Well have the closing countdown up next when we come right back. Then, after the bell, the brexit vote may seem like its in the past now but very much on atlanta fed president s mind for the future and about that and much more exclusively in a few minutes. You are watching cnbc. Gain the freedom to fumble with the new water and shatterresistant Samsung Galaxy s7 active. Exclusively at at t. The check they sent isnt enough to replace your totaled new car. The guy says they didnt make the mistake. You made the mistake. I beg your pardon . He says, you should have chosen fullcar replacement. Excuse me . Let me be frank, he says. You picked the wrong Insurance Plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, well replace the full value of your car plus depreciation. Call and if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call Liberty Mutual for a free quote today at thats liberty stands with you™. Liberty mutual insurance. About three minutes left in the trading session here with the dow down 91. Interesting day. Let me showou a couple of influencers on the market today. Oil continued lower. Were still hovering around that 40 a barrel level. Traded below that for part of the day. And were going to show you that. Then well look at the rise in Interest Rates. Started overnight in the markets and the yield on the 10year higher. Theres the price of crude oil this afternoon now at 39. 55. The yield on the 10year to 1. 57, bob, and then pulled back and then as art cashin calling it a reassessment globally of the Interest Rate picture here. Oil moved down. We saw rest of the market move down. We have had a number of head winds today. Oil among them and i think the auto stocks were the major problem for the consumer names throughout the day. First 100point decline for the dow in a little while. Down 94 right now but biggest oneday decline in little over a month and stuck in the trading range ever since the brexit low. One story were following still right now thats developing, o biogen popped in the last hour that word maybe merck or allergan, were looking at that as a possible acquisition target. Just off the high right now. Hard to get these new drugs, you want to buy into existing drugs there. One way to do it. Certainly. You can see the premium on biogen. We had an interesting debate about whether the consumer is slower. Big consumer names got the stuffing kicked out of them today. Phil lebeaus talking about the disappointing auto numbers overall and we had some of the big, big retailers down. Dillards and macys down 5 or 6 overall throughout the day. I think followthrough disappointment on the autos, as well. Airlines down. Delta disappointing in the commentary. Restaurants down. Texas roadhouse disappointing and a lot of a darling of the momentum names. I dont know if the consumer is slowing down but a tough time today for the consumer names. We have earnings coming out in a few minutes following these carefully. Etsy and Electronic Arts in a moment here. And fitbit, of course, a very tough year. 11. 13. Probably down 50 for the year. Etsy, little bit different. We have air castle ringing the bell here at the big board and home trust bancshares. Kelly evans has more. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans in atlanta. We have another big lineup for you this hour and heres the day on wall street. Declines across the board with the dow down 90. S p down 13. Nasdaq worst performer down 46 on nearly 1 and losses kind of across the board. It was a seventh consecutive loss losing session there for the dow. Of course, comes off a big win streak and just yesterday the s p 500 trading intraday in positive territory. Other parts of the market also still saw alltime highs. We spoke with home depot ceo last hour, that was one of the companies. And we do have a big hour coming up. Dennis lockhart. Ed bastian. Ludacris and we have a barrage of earnings after the bell. Courtney reagan is standing by for etsy. Josh lipton all over fitbit. Morgan brennan with aig and Julia Boorstin from Electronic Arts. Thanks, guys. Out with you in a bit getting the numbers. Joining us for the hour is senior markets commentator Michael Santoli with guy adami here and, bill will be back with us shortly in a moment, as well. Mike, what do you make of the declines we saw today . You know, probably felt like a bigger shakeout than it was because we were in a tight range and maybe after the oil markets closed at least the floor market closed there. Seems to me this backup in treasury yields getting a little bit of lift has us a little bit sort of shaken up and trying to figure out whats driving that in terms of Global Capital markets. Oil below 40 and matters. I dont think its decisive. High yield credit market not at all panicking but i do think you have a defensive tone, a feeling that the economy here not really set to accelerate again and bob pisani mentioned the weakness in the consumer geared names conspicuous. I dont know if you saw but Forbes Magazine with the highest hollywood stars of last year. Im not one of them Ironman Robert Downey jr. Was number one. Youre in good company. One thing, bill. Yes, sir. Brian kelly finished lake placid ironman and next time hes on, give him kudos. Well add that thats a herculean effort by him. There you go. Where are you seeing opportunity right now . What scares me, bill, think about a couple of things real quick. Look at whats going on with the auto stocks. Over the last three years, gm and ford have traded basically sideways to lower. You can make the argument that these three, three and a half years some of the best for auto makers in 50 years and a Broader Market thats done nothing but go up. Thats concerning. Where do i see opportunity . Look at the rally we have seen in bio tech over a month, month and a half. Not a lot of people talking about them. We did with kelly over last couple of weeks and in a meaningful way, obviously talking about biogen now i understand that. Theres something going on in bio tech. None of the politicians putting them in crosshairs far couple of months and i think theres an opportunity in bio tech to the upside. Really . Maybe a reprieve there. What about the airlines, mike . We are going to speak with dell thes ceo in a bit. But that index was down today. Theres a couple of Different Things of zika to just the general environment here. By the way, i dont think we have the auto sales figures yet. We have not. We have not. No. Kelly, actually, it is interesting. Airlines very similar to the auto stocks. We talked about these very low pe stocks, very cheap looking stocks that have performed very badly and i think it is a concern as guy says when you have these cyclical stocks appear to be inexpensive and keep going down and it is the market telling you they dont believe theres a lot of life left in the cycle and think theres Downside Risk to those earnings. And i think we have seen these kind of rolling cycles and sectors of the economy and the markets running through this Overall Economic cycle. You had a steel cycle within this bull market in stocks and a broader cycle and me, they got crunched, as well. Seeing something similar in airlines. People feel as if, you know, they dont have a lot of lift in revenue passenger per mile down the red. Mike, are we getting to what should we call it . Monetary fiscal stimulus fatigue or are we becoming immune to all of that . We saw initially today the rise in yields but then they started to drift back lower again today. You can make the argument with the news coming out of japan and really is kind of a front lines of experimental Monetary Policy. When you dont have much of a reaction to what they at least intend to be an effective stimulus package and the world kind of shrugs and raises that question. Earnings to get to. Heres the first one out of the chute. Electronic arts. Julia boorstin, how did they look . Ea beating on the top and bottom line reporting adjusted earnings per share of 7 cents. Analysts expecting a loss of 2 cents per share. That is, though, down from 15 cents in the year ago quarter. Revenues also beat estimate comesing in at 682 million versus expectations of 651 million. Again, that is down from 693 million in the year ago period. Now, one negative bit here for Electronic Arts, the company did cut the fullyear gap earnings per share guidance. So lower guidance for the full year. In terms of some of the color here, Digital Business drove the quarter particularly outperformance of fifa, ultimate team on console and star wars on mobile. Strong quarter but not as good of a year as people liked. Back over to you. Stock up roughly 1 right now. Guy, are you a gamer . No. What do you think . Theres no shot of being that was the rhetorical question of the day. You know the answer. Absolutely not. Listen. I dont think its all that expensive. Mike can speak to this. Probably trades 19 times or so forward earnings. But i think the problem with this quarter is it gives something to both sides of the equation. I think it gives a little bit to the bulls and the bears. Id rather wait and see how it shakes out on guidance before i run in at this name at this point. You know, slightly surprising really pokemon go. I mean, go ahead, mike, yeah. No. I was going to say, yeah, i think its slightly surprising that the guidance was light and the stock actually bounced a little bit because by the way, the quarter just reported is not a particularly important one in the scheme of the fiscal year for Electronic Arts and kind of a Fourth Quarter story and 40 of the annual revenue in that holiday quarter. So it seems as if people braced for something worse. The stock up 1 , down 1 and a round turn there. We have the auto sales. Phil he bro, the final number . Final number for the pace of sales last month, bill, better than expected. 17. 88 million. Thats according to Research Firm auto data. Most on wall street expecting a sales rate of 17. 4 and 17. 6 million. But again, the sales rate for the month of july, 17. 88 million. Bill, this is sort of one of those weird months, good news, bad news. Overall sales rate better and incentives of average transaction pricesality the highest since november of 2010. Theres a lot of mixed messages within this Monthly Sales report. Mike, how do we square it with phil, what was that you know what . Go ahead. No. Go ahead. Well, i was going to say i was going to ask. Theres a bit of a delay here and making it tricky to have a fiveway discussion. No kidding. Phil hit on the incentive question. The market is broadly asking what it takes and you have a kind of perceived wave of off lease vehicles down the road. It seems as if theres just not a lot of momentum to count on in the year or two to keep sales fresh. I would agree with this. That was that level of incentives . If you look at the percentage of the incentives as a percentage of average transaction price, so what you and i end up paying at the end, forget about the msrp. But in terms of what you and i actually pay, what we pay is little under 33,000 on average for a new vehicle. The average transaction price as a percentage of it, this is according to rdc, they did the calculation. Its 9. 9 last month. That is the highest atp versus incentive or incentive of atp ratio since november of 2010. Its been moving higher and concerns people is, okay, does it go over 10 next month or the Fourth Quarter . At what point do we hit a limit there . Guy, so is this an auto specific story or as bob pisani pointing out, is this a consumer story right now . Bill, thats the question, right . Figure it out. Consumer names bounced since may though so lets put it off to the side for a second and to your point is it peak auto . Thats a lot of people talking about. Some of the housing numbers may be starting to disappoint some folks and maybe theres chinx in the armor with the consumer and after doing this show over ten years is never count out the u. S. Consumer. Every time you do that, its the wrong thing to do. Ill say this. And also, dont confuse the Consumers Want to spend which is always there with their ability to spend. I think theyre two entirely Different Things but to write off the consumer right now is i think a dangerous game. Its been a dangerous game for a decade. All right. Phil, thank you for those auto sales. Lets get to fitbits earnings. Josh lipton, how did they look . Bill, fitbit reporting, bill, eps of 12 cents verse expectations of 11 cents. On revenue, 587 million. Versus expectations of 578 million. Just looking through the release, bill, units sold, 5. 7 million, a bit better than expected. Gross margin, 42 . That verse estimate of 48 . Just spinning ahead, it looks like the outlook for q3, theyre giving us guidance of 490 to 510. Revenue is at 497 million. Eps guide there for q3, 17 to 19 cents. Analysts modeled about 17 cents. Finally, for the full year, the revenue guide here of 2. 5 to 2. 6 billion. Now, on the call, obviously, analysts will have more questions about units and average prices. As well as how those newer products like the alta performing and finally any hints, colo about the Product Pipeline of features and functionality at 5 00 p. M. Eastern. Guys, back to you. The stock down 1. 2 right now, mike. Yeah. Looks like the guidance for the full year sales is right about what the street was looking for and not awful lot of new information there. Again, this is another company of 40 of the sales expected this year in the Fourth Quarter. So this was not necessarily a make or break. This stock just settled into the zone of looking cheap, showing that basically the fever has broke. Obviously, very strong stock after the ipo and now the street is waiting to hear if, in fact, this is going to have multiple product cycles, really life in the ecosystem here. Kelly . Yeah. Might have expected more movement in the shares, guy. If theyre heavily shorted. What do you think . Thats exactly you took the words out of my mouth. 40 Short Interest on a forward pe, not expensive. If the stock cant rally given the two things we just mentioned, you have to ask yourself when does it rally . Maybe one of the most commodityized stocks out there or products out there. I would stay away. Big guy, good to see you. Thank you. Love you all no, no. Love you more. Guy adami there and stick around and catch him the rest of the crew on fast money at 5 00 p. M. Eastern time. Dennis gartman with a warning for investors and find out why he says there could be big trouble ahead for stocks and how hes trading the market right now. Kelly, i know, its this is Live Television but its tough for you being two seconds in the past joining us here. Yeah. I just realized i might have been singing over the ludacris song earlier. Were just three days from the july jobs number looking ahead to friday. Up next, atlanta fed president lockhart will join me with how that number could affect the time line and the outlook on the general time line. And etna backing off the planned projection. Well hear from the insurance giants chief executive later. You are watching cnbc, first in business worldwide. Guys, whats happening here . Hey nicole, this is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. [rock music playing] announcer dont let e. Coli mosh with your food. An estimated 3,000 americans die from a foodborne illness each year. So, always separate raw meat from vegetables. Keep your family safe at foodsafety. Gov welcome back. Live from the Metro Atlanta chamber. We are less than three days away from the allimportant jobs number which could determine the feds next move, especially after the mixed bag of economic reports in the last couple of months. In a cnbc exclusive, im now joined by atlanta fed president Dennis Lockhart. Welcome. Thank you. What a crazy environment its been in many ways and asking home depot ceo last hour and said the trends with the consumers look great and yet we have a dismal gdp number and maybe the business thing side of things isnt so hot. I think you have to look into the gdp number. Looking carefully what you see is consumer activity remains very strong. What we call real final sales is strong and actually accelerating and the inventoryses a suspect what really made the report look dismal to use your word, to look not so good. But theres underlying information that is more encouraging. So does that mean, you know, paths clear for the next rate hike . Oh, i dont know. Its quite a number of weeks before the next meeting, the next fmoc meeting is 20th and 21st of september. We got a fair amount of data to come in between now and then. As you mentioned earlier, we have an employment report on friday and a second one in early september. So well see what the data tell us. But its pretty clear that britains vote to leave the European Union happened and no great lasting aftershock to the u. S. Anyway. Maybe the dollar if you want to argue about that one but with that out of the way, with the consumer hanging in there as you call it, why not i mean, do you wish that rates were simply higher at this point and cant get them from here to there . Well, let me just first make a comment on brexit. The way i read it is nearterm questions probably have passed. There could be some maybe delayed reaction but overall near term not a big effect. But there are risks associated with the medium term. And well just have to see how those things play out and they could influence the u. S. Economy. At this point, i dont rule out a rate increase at the next meeting or later in the year. We just have to wait and see how the data come in. The situation is maybe a little bit ambiguous. But i think i can imagine conditions in which we could have a rate hike. Yeah, well, is it a regret of yours that we havent had that yet . The reason i harp on this is there are people watching who will say if Interest Rates were 2 , 3 , 5 , think of the returns to get as a retiree, think of the savings i would have and how much better my outlook for the pension plan and you know, think of what maybe a better environment that would imply. So, do you agree with that way of thinking . Well, certainly, there are people who are not earning a lot on their cds or on their bonds or whatever at the moment. And havent been for several years. And thats a concern. For people who are in retirement, as an example. Monetary policy, unfortunately, has to be for everyone. Its only one policy an its got to be the best policy for the economy overall. And we hope for as many people as possible who live in that economy. So, do i regret that we havent been able to raise rates . Thats not quite the right wofrd. Im not sorry for it. I simply would like to see the conditions justify getting to something that looks a bit more normal. Sure. Which would mean better growing economy. Exactly. I would like to see the economy tell us its okay to raise rates. You bring up the sort of limits of Monetary Policy and thats been a big debate and recently and japan overnight doing a lot of things on the fiscal side to try to deliver what it cant do more on the monetary side and only so many government bonds to buy and turning towards other approaches. Is now the time to do the same kind of thing in the u. S. . Well, first of all, fiscal, major fiscal initiatives are no doubt going to have to wait for the election to pass. And for the new administration. We have said many times, members of the fmoc and i remember chairman bernanke making this point several times, it would be best if Monetary Policy had a fiscal partner. It would be best if everyone were rowing in the same direction. And so, yes, id like to see some fiscal measures taken in the next administration that will help the economy overall get its best possible positioning for growth. And if that doesnt happen, it maybe doesnt happen right away, what does that mean . Does that mean then that kind of a fed reached the limits . But that theres, you know, kind of stuck or feeling like you have to act when maybe its better if somebody else were the actor . I dont think the fed reached the limits but close to zero at the policy rate level, that close to zero, our options are more limited than if the policy rate is set higher. Why not sell bonds out of the portfolio when the world is clay mors for more bonds . Well, selling bonds would be part of a tightening cycle of some kind and i think we would have to make the judgment that the time was right to begin to tighten a little bit. And so far we have not made that decision. You if you were to sell bonds out of the portfolio, you think it would definitely be tightening, even though it wouldnt imply that things were moving around and talking about sort of a reserve, holdings of the banking system, it would tighten things that way . Depends on the overall stance of policy at the time. But taken in isolation, i have to think that selling bonds from the portfolio would put upward pressure on rates. Do you have any concerns about the Financial Markets . So we have talked about the real economy and maybe how it could be better and in your view it looks okay. Financial markets is almost the other side where they have maybe been performing too well in some ways. Returns in areas of commercial real estate maybe. We have huge issuance in corporate debt, maybe you can point to some parts of the stock market an people pointing to bond market in a number of ways lately and municipal debt and doesnt trade more cheaply than treasury debt so do you worry that Financial Markets are becoming complacent, overheated or out of whack here . Ill make two comments. Asset valuations are something we have to continue to monitor and watch. And, at the moment, i would say they particularly deserve watching because theyre relatively buoyant or high. The second point is, its an important channel through which Monetary Policy is expressed in the economy and encourages people to consume, this morning we got very good consumer numbers. Keeps that domestic demand going. One of the big problems in the world is weak demand. So, they are important to having Monetary Policy work. But at the same time we have to watch valuations. Very, very quick final thing. People started to say they think pensions are the next crisis, underfunded and looking for culprits in five years, the feds kept rates so low its your fault, mr. Lockhart. Is that something that should be on the feds mind and anything to forestall Something Like that . Pension solvency and pension fund levels, relative to their future obligations are, in fact, a very important issue. I have a team here in atlanta, its actually studied this to some extent. We have concluded that its not likely to be a Financial Stability question thats sort of overnight hits the u. S. Economy. But its a slow problem that could grow. So, yes. Public officials and for that matter corporate chieftains should be making sure the Pension Funds are appropriately funded. We all hope they are and same way we hope growth comes back. At my age, i hope they are. Thats a good point. Thank you for joining us down here in atlanta. Gdp now index, too, and people follow so closely. Dennis lockhart, president of the atlanta fed. Thank you. Bill . All right. More earnings coming out. Aig just now reporting. Morgan brennan, how do they look . We are wading through the results, for example, waiting on the revenue number to be published on the website and earnings per share number, 98 cents adjusted, a beat by 5 cents versus 95 they were expected. A few other key metrics here. To note, that actually a big thing to note is aig has said to pledge up to 25 million of stock buy backs and dividends through next year and the last quarter returned 3. 2 billion to shareholders. Also, noting that aig, the company, has authorized repurchase up to 3 billion worth of stock in the company. The one other item that i would note here is return on equity was 8. 6 , thats up from 6. 8 a year ago and that normalized roe improved to 8. 8 so as i mentioned still waiting on the revenue number and a beat on eps a fen you take a look at aig stock up 2. 5 after hours. All right. Yep. There it is. Thank you. Be sure to tune in squawk on the street for peter hancock, talking about those results, presumably, the revenue by that time at 9 40. How do you report a bottom line without the top line . It is interesting although a big Insurance Company, revenue, not necessarily the very most important thing. You want to see the return on equity and create more revenue by just going out and just writing more policies at a loss but, no, i think probably somewhat encouraging on a net basis and at least i tell the return on equity figures seem better than were anticipated and might be why the stocks rallying a little bit. Very good. Okay. We have more earnings and later. We can wait for those. Cdc issuing a traveling warning for a small part of Miamidade County after the zika outbreak there. When we come back, chief executive officer of Delta Airlines joins us, how it could affect the travel plans and his companys bottom line. You know him best as ludacris. Actor and rapper chris bridges gives us a look at the newest movie of fast 8 and the latest business venture, as well. Welcome back. Shares of delta were down today about 7 , almost 8 , actually. There was news that the passenger unit revenue was down 7 for july compared to last july. Joining us now in an exclusive interview here in atlanta, ed bastian of Delta Airlines. Thank you for your time. Thank you for coming to atlanta. I was joking about how my flight on another airline delayed. Should have flown delta. What can i say . What is happening with passenger passenger revenue per airline seated you know . Whens going on with your unit revenue here . Your unit revenues in july down 7 which is a large number. The flip side of that is fuel prices are down substantially and what happened in the industry is not just delta we the industry as a whole is when you have fuel prices which are the largest cost side of over 100 a barrel to 40 barrel is a big disrupt iive effect and the industrys been struggling with represent to being positive and we have a path to back to positive trajectory by the end of the yore and the good news is that were saving about half of those fuel savings, bringing to bottom line and the Current Quarter for the September Quarter we expect a 20 pretax margin and alltime high. A different way to put it maybe is with the big drop in oil prices, you are taking is it taking fares down . What is happening in that unit level . Fares are coming down . People are traveling less . Demand is great. Fares down. Consumers deserve a price participation. About 50 the Airline Delta saved. We have invested in product, the people, earnings gone up. Share buybacks as a result of that, as well. As a consequence of that, people focused on the top line because its a top line pressure concerned about the future and managing to bringing that unit revenue back to positive by the end of the year, first part of next year and thats the goal. What about the challenge here in front of us, the zika virus in parts of miami, concern about people traveling to the southeast part of the United States to the caribbean. You know, throughout latin and south america. What impact are you seeing in terms of those changing flowing and demands in terms of the virus . No impact. Last week, we set an alltime record high in terms of passenger volumes. Last thursday, over 600,000 passengers on the day and alltime record for delta and people are traveling. Dehand is very strng. Any indication its weakening in the future . No. Its been out far better part of year. We have travel waivers so if they want to change their flights because of concern, we can do that. What about going to europe where i think you mentioned that you did see some people pulling back, searches about terrorism there, the impact of britains vote to leave the European Union. Whens happening with those channels . In europe, the issue is more the overall level of capacity. The seats in the market up about 10 as an industry and driving weakness with respect to pricing, more so than security or more so brexit and we havent seen an impact of brexit yet. We are anticipating seeing one looking forward. We have taken the winter schedule down by 6 in the uk and europe, but again, europe is a strong money maker for us. It is our next to the u. S. Market, the second strongest margin and travel flows has been really, really strng. Real quickly. Why not take fares down more . If youre the best operator in the space, for example, and take the fares down, doesnt that weaken your competitors without the same benefits . Within the industry theres a balance. Theres a supply and demand to maintain. We are the best in the industry. We have had 130 days this year to date without a single cancelation. Keeping track. Never been done. We count every single day. If you add the other guys together, about half a number. Thank you for being here. Thank you. Bill . All right. Obamacare participants in new jersey and indiana will not have the option of coverage from etna any time soon. The insurer is pulling its Affordable Care act expansion plans for next year making it the fifth to do so. Fifth company. Well have details on that decision. You pay your Car Insurance premium like clockwork. Month after month. Year after year. Then one night, you hydroplane into a ditch. Yeah. Surprise. Your Insurance Company tells you to pay up again. 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And im going to do all that i can to lower their bills and to help their situation. To choose the rate plan that works best for your family, visit pge. Com rates. Together, were building a better california. Affordable care act known as obamacare took a hit today when etna said it would stop its expansion plans. Bertha coombs has more. Bertha . This is a story of earlier this year of united health. Etna expected to break even this year on its obamacare plans. But now it says its going to record somewhere in the range of a 220 million loss. Etna ceo says that Exchange Plan members this year are using a lot more medical care. They m in so need more medical care and part of that fueled by high cost drugs. Before we were, you know, 100, 150 million in losses. That was sustainable. Now, we have got 320 million in 2016. And unless we get in front of it for 17 with changes in the risk adjustment mechanism, we cant afford it. We wont be able to support it. He says not only is the company not going to expand but look at all of the markets in which it operates, 15 right now and may be cutting back in some of the markets and particularly the heavier losses. He says this is not direct response of the government blocking the etna humana deal and admits that some of the synergies they might have gotten from the deal and anticipating from that deal would help offset the lossing on obamacare plans and want do go through the deal and fighting it in court and to that end they did reach an agreement to sell off a number of medicare plans representing nearly 300,000 lives to try to come up with a good enough remedy to get that deal approved. Back the you. Bertha, thanks very much. Mike, its called Affordable Care act and in the affordable for everybody. Exactly. The exchanges are not representative a representative pool. There has to be a recalibration here. Different subsidy formulas . Maybe more pressure on drug prices or provision of drugs in a different price to the exchange. Who knows . Seems as if the private industry cannot make a return it feels is necessary and serve this population. All right. Well take a break. Come back, 1. 5 billion, thats the cost of the new football stadium being built not far from where kelly is in atlanta. Future of the home of the falcons could when all is said and done be the most expensive stadium ever. The ceo of the falcons joins kelly after the break. And ludacris selling out concerts around the world. Hes also invested in the road. As part of the Investment Syndicate behind the atlantabased shipping marketplace roadie. Well talk about the startups, the music and the politics when closing bell continues. When it comes to medicare, everyone talks about what happens when you turn sixtyfive. But, really, its what you do before that counts. See, medicare doesnt cover everything. Only about eighty percent of part b medical costs. 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The Team Currently with a new stadium under construction for the 2017 season worth 1. 5 billion. The Mercedes Benz stadium will be home to the falcons and soccer team. With us now in a cnbc exclusive is ceo of the tlantd falcons, rich mckay. Welcome. Thank you. Happy to be here. You guys, the cranes around the city are unbelievable. Hows the construction process going is this. Really well. Its unusual to have a construction of a new stadium to house both Atlanta United and falcons and braves and we have a lot of construction in atlanta. There is a lot of cranes at work. Its going to be host to the scc champions, host to the final four. Its host to a super bowl. College football championship. We have a lot of things. We always say theres three anchors. Falcons, Atlanta United and all the big events. And that drove a lot of the design. And that drove the location and why were downtown. Not easy to push to get a stadium built and people are resistant to the idea that this money thrown after them, the tax breaks and then really doing any good for the community is. One of the things we were able to sell on this project that worked really well for us is just construction. Economic impact. From this project is well in excess of 30 million and before you open the doors, and then that idea that atlanta could stay at the top of the event business, we could attract the super bowl, we could attract the final four and then thankfully able to book them and line them up in 18, 19 and 20. Stadiums are not easy steells a can have a true economic impact. This isnt stadium related but the game, first monday night game, falcons against the saints. That is big one for you anyway. Its now also the night of i think also the first debate between donald trump and hillary clinton. Be assured of this, we wont be real concerned with that. Well be real concerned with saints and seeming to play them, its a war in and of itself. Wait a minute. This is potentially one of the biggest nights in television. Could you sort of in a way try to what will you do . People have to choose to watch the Football Game or the debate. Which one is dvrd . Whatever they like to do, i think the nfl tends to draw enough eyeballs. Well be just fine. But for us, thats a Division Game that means a lot. So whatever may happen on that Television Night well level it to them. You know donald trump said the nfl wrote him a letter saying that, you know, maybe had something to do with trying to steal the limelight of the debate schedule. I dont know. Maybe that happened. Maybe it didnt. That would be something for the league office. I think in our case, we dont get caught up in the swirl of that stuff by trying to play the game. You know and hope many, many people tuning in. We do. We want eyeballs an ensee our product and team. We like our Football Team this year. We like our chances so we definitely want them tuning in against the saints. Good luck with the season. Good luck with the stadium. Thank you. We are looking forward to it. Thank you for joining us here. Happy to do it. Rich mckay of the falcons. Up next, fast and furious, atlanta native and rapper turned access ludacris will join us to talk about his tech investments and whats next in the movie franchise. Right after this. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. You may know him best as artist ludacris and chris bridges made the move from rapper and actor to entrepreneur and investor, out with the latest project, the delivery app of roadie. Chris joins us now to talk about that and music prokt and joins o talk about that alongside him is road dis founder and ceo. Thank you guys for joining us. So youre mr. Investor. Why roadie . First of all, they look to silicone valley for the tech stuff, but they dont understand how powerful atlanta, georgia is when it comes to this and the whole start up community. I wanted to take advantage of this. Im all about whats to come and just looking at where i can employ individuals and do something for, we can do something for each other. I call it friendshiping. Are you saying theres a little Silicon Valley here in atlanta . We dont are to call it little Silicon Valley. This is atlanta, georgia. We have our own thing going here and i think over the year, people will understand how powerful we are, especially with Something Like roadie. Youf done plenty of damage, left a huge impact on the interindustry already. Looking at your previous companies. Youve cofounded cabbage. Back to the privacy protocals there are still relevant. You can look at it that way but, its like the roadie for delivery. Its matching people with stuff to send with drivers going in that direction and really taking advantage of this Natural Resource of where everybodys going every day, putting them together and its something that really, as chris said, the sun doesnt rise and set in Silicon Valley. Rooted in southern hospitality. Thats what were all about. Now is the perfect time where i know a lot of parents are taking kids to college and having to move a lot of Different Things. This is the perfect time to utilize roadie. Were you getting a cut . Im not really suppose d to tell you those particular, but just say im very involved in this particular thing. Are you calling the shots . Were talk more off the air. Have you guys worked together before . How did this come together . We both live in atlanta, georgia. I knew him from past inendeavors and some of the things hes done and i just felt like it was a Smart Business move and everything has been rollinging. In the meantime, youre filming fast 8. Yes. This is the eighth part of the franchise. Were almost done shooting and we are again shooting here in atlanta, georgia. So thats good for me since this is my home. I couldnt be happier right now. Theres a couple of mores. This is like harry potter. The more that the fans continue to support this franchise, you Better Believe we will continue to make them. The moment they stop going to the movie theatre, then maybe well consider not doing it. Youve seen a lot of things go positively, but we like to ask people, the mistake theyve made has been. What would you say have been extremely big jewelry. Thats why ive got this little chain. I let my money speak for myself. It doesnt have to speak on my chest anymore. Mark, what about you . Same question, actually, given the career youve had. Its all about people. Its the people you involve yourself in and whatever youre doing. Its not that any economy, you find the smartest people all the time. With roadie, its a big sense of community out there. Chris, partners that we have already believe in community. We first started meet with him, every time his mom call, he answers the phone and thats more important than anything. Not going to talk about that lamborghini you bought . I bought it from you. Go to commercial. Youre a family man. Got to can ask you about something more controversial. Some of your lyrics about hillary clinton. This goes back eight years. President obama, youre giving him glowing reviews. He now throws his weight behind hillary clinton. What do you do . Like you said, that was in the past and thats where were going to leave it because we are eight years into the future. Keep it positive. Weigh in at all on this crazy Election Year . Just keeping it positive. Thats a live and learn going to continue to do that. Zpl i think your mom would approve. I think everybody would approve because i wasnt negative at that point, i swrus think things were misunderstood. Theres a lot of political satire that comes with the music i do and i think people misunderstood it. At that time, i was all about positivity and right now, i am. Which is why were here and doing Something Like roadi eric, which is offering positive jobs to people. Sure and showcasing what atlanta has to offer. On the Music Industry, a lot of changes happening now. You can listen to it on an array of different streaming sfs. All different compensation ch o schemes. I think the internet has changed the Music Industry tremendously. Youre able to listen to so many different generas of music when i think you have these streaming companies and its not just about downloading one album. You can listen to what you want. I think tha a positive thing. Whos doing the best in terms, tidal whos got better terms for artist . Zpl i wouldnt be the person to ask that. I use them all and just cater it to what i like. What about money coming in . Is there someone doing it better . Humbly speaking on an artist thats bless ed enough to have large catalog of music from over 15 year pan and people are listening to it on all different fronts. Just happy that publishing checks are still coming in. What about the prospect of going public . Were pretty early in the process. Were working on deals with lots of retail partnership, but were really just helping regular folks. Actually, were helping folk, theres a guy on the set, he takes old bicycle parts, turns them into tricycles. Were doing it. We perhaps will see you both at the New York Stock Exchange up on that platform. Mark, chris, thank you. Thank you. Good to see you guys here in atlanta. Fun interview. Another look at this hours big earnings, next, coming up after this. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Another busy earnings hour here. Mike, what did we learn . I think the iig reaction is spresing. They added to the buyback. Had a better return on equity. Seems as if people were braced for not so great news. I dont know if thats an lick bable. We go to the ceo tomorrow morning. Things look busy in hotlanta today, kelly. Oh, boy. Yeah, it was interesting to hear big comment frs the atlanta fed president , from home depots ceo, especially, guy, so thats the view from here. Thanks for yoining us. Fast money starts now. See you tomorrow. Fast money starts now. Live from the nasdaq overlooking new york citys times square, im melissa lee. Your traders are tonight, something happened in the market a. Plus, one of them for the market. Well tell you why some major ceos are concerned and late e. Cant buy them, beat them. Facebook taking ape at smap chat, but is Mark Zuckerberg going down the wrong roa