tv Closing Bell CNBC June 23, 2014 3:00pm-5:01pm EDT
you took that up a notch. >> i kind of did. that came out from nowhere. thanks for watching "street signs," everybody. >> "closing bell" is next. and welcome to the "closing bell," everybody. i'm kelly evans down here at the new york stock exchange. >> welcome back. >> well, it's good to be back. i just wish you were down here. >> if you're real good, kids, kelly's going to speak portuguese for us today, too. >> no, that was butchered spanglish, unfortunately. >> i'm bill griffeth at cnbc headquarters because i'm back on "nightly business report," but we'll talk about that later. last week's rally sent the dow into record territory, as did the s&p, but we were on dow 17,000 watch on friday. looks like that's going to have to wait at least another day here, kelly. oil prices also falling a little bit today, despite the continued fighting in iraq. where will oil and gasoline prices head from here?
former shell oil president john hofmeister is here to weigh in on that. >> oil's also a hot topic at the university of dayton. the school is going green after divesting all of its fossil fuel investments. you're going to hear exclusively from the school's president about why he is doing this and his plan to have other university follow dayton's lead as well. >> yeah, bill, potentially a lot of money at stake here. they're doing it for ethical reasons, but they're also under pressure, like other universities like stanford, that have done this, from students. all right, want to see what's happening with the market right now? here's what we're doing today. as you can see, kind of a meandering session. sell-off on the open this morning following what happened in asia and europe overnight and this morning. nasdaq is up just a tiny fraction right now. it's the only of the major three averages that's actually in the green at the moment, while the s&p is down a point and a half at this moment at 1,961. let's talk about it in our "closing bell exchange."
paul dietrich from fairfax global markets, jeff cox from cnbc.com, meg green, who coincidentally works for meg green and associates, and of course, our own rick santelli joins us. >> what a concept. >> yeah. how about that? uri, what do you think about this market right now? you think we're going to see a correction, as much as a 300-point decline in the s&p between now and september. why? >> well, a number of reasons. this market has basically been a straight rocket shot for almost 5 1/2 years right now. and so, i think there needs to be some regression to the mean. i think the market is priced for perfection here. any bad news i think could rattle people. i think you could see just a normal kind of correction of about 150 points, and i think that will panic people into selling off an additional 150 points. >> i mean, yeah, if you're talking s&p points, it would be significantly more than that on the dow, or have you been positioning for a sell-off, though? haven't you for a while been expecting a correction? >> yeah, so, we were on
essentially a market-neutral fund, so we aren't really taking long-short bets versus the market. i have been looking for this correction for a while. it's been a very, very strong market because of the fed, because of acquisitions and because the lack of alternatives, but i think that those will cease to carry the day and that the factors i cited beforehand will eventually spook this market in the next couple of months. >> meg, for you, it's about inflation. we've got to keep an eye on what, on oil, on gold, on those things that the fed seems to be okay with right now, yes? >> well, you know, the cpi index doesn't have food and it doesn't have energy in it, the two things that we're all feeling inflationwise is food and energy. but you can't have the fed keep interest rates higher because of a drought. that's not going to work, or because of what's going on in the middle east. so, we're having inflation. it's just that the numbers aren't showing that. and as far as i'm concerned, i do not see a big correction.
i see a lot of confidence, a lot of people -- look, the vix is way down. i mean, the last time it was at its low, which is before 1997, we had three years continuing of a bull market. i think a lot of traders are in the hamptons. i think people are comfortable. i think there's a lot of cash on the side, not only in investors but in corporations, so -- >> that sounds complacent to me. >> -- where is this correction? if we didn't have a big scare in the middle east, which scares me, actually, not out of the market, though, where are we going? >> is this complacency, though? >> i think some of it is complacency. i think it's a wait-and-see. i think there are a lot of people from, you know, five years ago that are still on the sidelines. but if you take a look at what's happening in europe right now, i mean, $500 billion worth of stimulus? it costs banks to keep money in banks overnight. what's going on here? i mean, we're not in a highly inflationary environment, except the inflation that we're all feeling, and that, again, is
disruption and droughts. it's not the cpi and it's not that pce, which is what the fed uses, personal consumer expenditure. >> and that's going to be one -- yeah, paula, i see you're also looking for a pullback here, thinking a 10%, 15% correction would be healthy, but i just want to go back to the data this morning, kind of to meg's point, which is the flash pmi, the manufacturing gauge for the u.s. rose by a couple of points to 57 1/2 and the existing home sales report was a pretty solid "b." >> i think you have to make a distinction between the stock market and the underlying economy. the underlying economy is doing just fine. it's expanding and it's growing. but as yuri said, this market is overvalued. it was up, you know, the dow was up 26% plus last year, and we are going to see a correction of 10% or 15%. we're value investors at fairfax global markets, and i do a screen every week where i'm looking for low-pe stocks, high
return on equity stocks, high free cash flow stocks and littler, no doubt. a year ago, i was finding 100, 150 stocks i could buy. last friday i could only find 15. >> wow. >> what that's saying is that there are no undervalued stocks in this market. and whenever that has happened in the past, we've always seen some correction, and i think the correction will be very healthy, to have a 10% or 15% correction. >> okay. >> we'll go back to mean and we'll start back up. and i actually think that after the elections, we're going to see, you know, 10%, 15% gains on the markets from the beginning of the year. >> jeff cox, you have the rise in gold, you have the situation in iraq, you have oil going higher, you have, you know, all these potential disrupters. and yet, the market just continues to meander on here. >> yeah, well, here's the great equalizer, bill, something i reported on today. first quarter this year, companies bought back $160
billion worth of their own shares. that's a 60% increase. it's the second highest quarter ever. now, i think a lot of folks thought that going into this year we'd start to see maybe a little bit of unwinding of this trend, where companies devoted so much cash and so much borrowed money to share repurchases and share reductions, but we're not seeing that. so, who's that good news for? it's good news for people in the equity market. i mean, you know, you could say maybe we pushed on the string a little bit, but it puts some type of floor under the market. who's it not such good news for? it's not such good news for people who thought that maybe companies would put that money towards hiring, towards r&d, the things that grow an economy organically, rather than just push asset prices higher. >> rick santelli, get in here, sir, if you would. what do you see on your dashboard today? as we almost close the second quarter, which looks like it's going to be another winning quarter for the market, what about the rates outlook? what about some of the moves in forex that we're seeing? >> first of all, to build on
jeff cox's comments, he's absolutely correct, of course, on the buybacks, but as the "wall street journal" pointed out five days ago, add in dividends, and the first-quarter number shoots up to 241.2 billion usurping -- that's a record -- usurping the previous record, which i can't say enough. fourth quarter of '07, remember, that was like looking over a cliff when you think of '08. as far as let's look at existing home sales today. we put up a chart. it was the best number since october, which means it's seven 400,000 handles in a row. october was a 500,000 handle and we had six of those in a row. so, as the chart clearly shows, we may be on top of the market with regard to equities. we're not with many metrics regarding housing or the general economies. our guest two guests ago was correct, there's the level of stocks and the economy. as far as interest rates go, yes, we moved up a bit late in the session. since the fed meeting, this looks to be the third close between 260 and 262. and if you look at european,
bund yields in particular, very close to 1.30, as you see on the chart. you know, we continue to see lots of pressure with low european rates, which will, for all practical purposes, put a lid on ours as well. >> rick, if the economy, like you're saying, isn't as strong as to be believed from some of these headlines, does that mean this rally, supported by the buybacks, and all of that's been discussed, can keep going at pace here for equities? >> you know, my new theory is that we're not going to get any major corrections. we're going to die on the vine at very lofty levels with no volatility and very little buy rate for many traders. >> where are you going anywhere? >> what would be the spark, in your view? what would cause the kind of correction you would expect between now and september, do you think? >> it's hard to say. certainly, the geopolitical situation in the middle east is something that could be an issue, especially if -- >> we've had a crisis in
ukraine. we've got a crisis in iraq. i mean, there's crisis everywhere and it's still not -- >> don't forget syria. >> zero. >> but there hasn't been significant oil production taken off from any of these. >> tell that to the oil market. >> if that could happen, that could be a spark. >> it's interesting -- >> i wrote in late january that i think headline risk -- i think -- i agree totally with rick that the notion of a correction, i don't think we're going to get one. i think headline risk is basically out of the market for this year. and i think, you know, we just keep pushing -- i hate to use the cliche, but kicking the can down the road. and the big thing's going to be when interest rates come up. when's that going to be is anyone's guess. people i talked to weren't happy with janet yellen's conversation about the inflation data and if anything can bring this down, it's the fed being behind the curve. >> paul, where were the names you saw value in on friday? >> 1 of the 13. >> i see agriculture as a long-term trend upwards, mainly
because we're just having quarter after quarter export growth, mainly to asia, and i think this is a lock-term trend that will continue, and i think the best way to play it is through the power-shares, db agriculture, sanderson farms and pilgrim's pride. both of those companies have very low pes, very high return on equity, very high cash flow, and these are companies to watch and i believe that whole sector's going to grow for a long time. >> tastes like chicken. >> thanks for now, guys. >> thank you all, guys, for your comments. >> all we need is water. >> there you go. just add water and you've got a growth there. >> just add water. 50 minutes to go into the close, water's another huge investment theme this year, bill. anyway, the dow's off about 28 points. the s&p's sitting at 1,960, off by a couple, and remember, it's
closing high here. i believe it's 1,962, so we're not far off. but again, looks like we're going to go out here with negative days across the board. the nasdaq's also off by a couple. all right, secretary of state john kerry on the ground in iraq today to meet with government officials. we're going to have a special report on the latest developments there. we'll speak with a former executive at shell oil about higher oil prices and how high they could go as this conflict continues. also ahead, will nike go from zero to hero? the athletic apparel-maker one of the worst performers on the dow as the industrials catapulted from 16,000 to 17,000. by the way, that was just since february. two nike pros are going to weigh in on the stock and see if it can turn things around during the market's next leg up. then there is lululemon spiking on reports that founder chip wilson is working with goldman sachs and others to explore options for the yoga gear maker. we'll speak with a corporate governance expert and a retail specialist about the power struggle and whether lulu is heading for a major tumble.
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until last week's rally that took the dow and s&p to new all-time highs. oil's been lower as well today, and bond prices, too, yield on the ten-year nudging above 2.6% today. the dow right now down 26 points, kelly. with 45 minutes to go. now, secretary of state john kerry meeting with iraqi government officials today as isis reportedly has captured one of iraq's largest oil refineries as well as several more towns. ayman mohaddin joins us now with the latest developments. ayman? >> reporter: kelly, it's a diplomatic, uphill battle for secretary of state john kerry. he's trying to push iraqi officials to try and form a new government that really represents the cross section of the ethnic and sectarian groups in the country. now, that's going to be an uphill battle because he's facing two major challenges. one, the timeline. the united states does not want this process to drag on. there's some concerns that according to the iraqi constitution, now that they've had their parliamentary elections about a month ago, that this could drag on for
almost another 75 to 85 days, and that's time the u.s. says iraq simply doesn't have because of the gains that isis is making on the ground. but at the same time, some are beginning to question whether prime minister nuri al maliki is the right man for the job. in fact, even people from within his own political party are still saying that while he is the prime minister, they are willing to have other names floated about. so, it's an uphill battle to see whether or not a new leadership can emerge in this country, one that can bring the sunni arab community to the table, one that can bring all the other parties as well. but meantime, on the ground, the fighting continues as isis tries to push further and further towards baghdad. they now control one of the major crossing points along the syrian/iraqi border, and that has a lot of people concerned that they will be able to bring in weapons and fighters without any type of hindrance from any official army on either side to slow down their advance. but at the time being, tablgtically, at least, seems like they're trying to
consolidate their grip on power around the capital baghdad, but the key is that this movement has morphed. it includes not just the isis militants, but a lot of former members of saddam hussein's army and ex-military officers. back to you. >> ayman, thank you, for now. let's talk about the impact of this turmoil on gas prices at the pump here and what a capture of an oil refinery by isis could mean for oil production generally. >> joining us in an exclusive interview, jeff hofmeister, former president of shell oil and now with citizens for affordable energy. john, good to see you. welcome back. >> thank you, bill. >> we see the price rise in oil lately. we say it's because of the skirmishes in iraq, because they are the number two producer in opec, but you're saying wait a minute, we're not seeing a cutoff in supply. prices shouldn't be going this much higher. why? >> well, at this point, there is no shortage of supply in the world, not with the increased u.s. production of recent years and not with the fact that the oil fields in south iraq are not
impacted yet, but we don't trade oil today's reality, we trade oil on tomorrow's reality, and so, the fear is that we will see two things, one, a diminishment in production, and two, a setback in the oil that iraq is predicted to produce in the years ahead. we know that the ex-pats are being evacuated from iraq. that is the intellectual horsepower, the technical capability that would enable iraq to not only sustain 3.5 million barrels a day, but also to double that to 7 million barrels a day around 2020. and if this disruption goes on for a long time and if these ex-pats don't come back, then the traders will have a lot more psychology of fear on shortage to trade on and the price will rise. >> and john, that's what is interesting to hear from shell's head of iraqi operations right now, who said, look, you know, the iraqi government's willing to do a lot more investment to build out this capacity but may
put that on hold, unless the situation stabilizes. so, if, for example, if they're expected to go from, i don't know 3.5 million barrels per day to 6 over the next decade, if that increase to 6 doesn't happen, do you think that 2 1/2, that 3 million barrels can in from the u.s. or from other countries ramping up supply? >> well, there's always increases and decreases over time. yes, the u.s. could increase another couple million barrels a day. canada could increase another couple million barrels a day, particularly if we have the keystone excel pipeline and the northern gateway pipelines, in order to invest more in the oil sands. so, i'm not worried about the world running out of oil. what i'm worried about is whether government in the united states takes this as a serious issue and does something to protect americans from this kind of volatility and uncertainty, because a $25 or $30 increase in the price of oil due to iraqi
shrinkage would just derail the u.s. economy, and that shouldn't happen. >> do you think -- i mean, at some point, you know how human nature is. we don't act until we feel the crisis at our own doorstep here. so, if we did see gasoline go that much higher because of this, do you think that could become a tipping point of sorts? and there are a lot of questions in the air about energy policy in this country, as it pertains to the keystone pipeline, as it pertains to drilling five miles off the coast, you know, and so forth. the production of ethanol in this country. could this become an opportunity to try and get an energy policy finally put together in this country? >> well, bill, it should have happened years ago. >> like i said, you know how it works, it doesn't until we start paying much, much higher prices, right? >> well, we could actually rely on common sense once in a while, instead of political nonsense, but we've been led by political nonsense, and i'm not blaming any one party. i'm blaming both parties, and
the current incumbent and the previous president. we have had years to prepare for this, and we have not. so, let's not waste this opportunity. let's focus on what we can do. >> john, just a quick question for you. we're going to have the university of dayton president on later. their endowment is divesting from fossil fuels. what's your reaction to that? >> if they want their endowment to suffer the loss of economic gain, that's their choice, that's their prerogative. i followed this whole mess, this whole discussion about shifting funds, and people do that all the time. pension funds do that all the time. but the world is going to use hydrocarbon energy, and so, the endowment at dayton university will suffer the consequences of not having that investment. now, good luck to them. maybe they'll find other, even better investments, but i just don't think that anyone in their
right mind, who cares about growing economies, thinks it can be done without hydrocarbon energy. it won't happen. >> yeah, okay. just curious. >> they may lose sleep at nights, i guess, is the thing. thanks, john. >> thank you. >> see you later. john hofmeister. here's a look at the market before we head to close. 40 minutes left in the trading session here. if you're just joining us, minus signs, minor ones. the dow's down 24 points, fractional minuses as well for the s&p and the nasdaq. here's one stock moving higher. cubis pharmaceuticals spiked on friday after the new antibiotic to treat skin infections were green-lighted, including mrsa. cubist's ceo will talk about the drug's bottom-boosting potential coming up. and wait until you hear about other new drugs in the pipeline. also, up next, nike spending millions on world cup advertising, but the global soccer tournament may not actually help the athletic apparel giant's score on wall street. we'll look at whether or not
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welcome back. all day on cnbc, we've been looking at stocks that have missed out on this latest equities rally since the beginning of the year. nike has had its up days, but it has been down significantly compared to the dow. >> so, with the world cup under way and nike invested heavily in the event, will this loser be one of the winners in the next leg up? joining in the conversation, ross gerber from gerber kawasaki and andrew keen from keen on the markets. a lot of economists, investors, anyway. welcome to you both. ross, do you pick nike for your portfolio from here? >> yeah, i like nike a lot. it falls into a lot of categories of the type of company we like to invest in -- large cap, growth, global brand, and they have some great things going for it by getting so into the soccer business, which they've really smartly aligned themselves with some great teams, including the united states and brazil, which i want to shout out to our brazilian friends and wish them luck
today. but you know, the truth of the matter is, this is the greatest global sport there is. it's soccer. i love football and i love basketball, but they don't play it in most of the world, so by investing in world cup -- and they've spent a ton of money, which will affect earnings on this call, but i think longer term, they have so much room to grow. i'm a big fan of a company like nike, and they have very little competition. >> on the other hand, andrew, and i apologize, but i'm sure you've never heard this phrase before, you're not exactly keen on nike, are you? >> no, there's a lot of things i don't like about nike. if you looked at how the stock has been performing this year, it's down 4%. the s&p's hitting all-time highs almost every single day, and you have nike which is actually down. so, we actually have a correction that people are talking about over and over. nike's going to get sold off as well. technically, it is not very strong. on the daily chart, it has pushed up against $77 four different times, not been able to test through there. then on the weekly chart, it gets up to $80 and it's been sold five times. so, technically, it looks very, very weak.
then we have earnings. earnings comes out later this week and it sold out four of the last eight quarters and it has sold off the last two quarters, even though their revenues should come in very strong. i'm thinking that maybe their guidance going forward is what's going to make nike take the next leg down. >> at the same time, ross, there's some research i think from canaccord pointing out that in a world cup year, nike does tend to underperform during the event and a little bit after, so why not wait until the fall, for example, look for a territory point? >> well, i think there's two issues brought up. i was always taught to buy stocks low and sell them high. so, the fact that it's underperformed actually is an opportunity to get into the name. now, part of it is it does have a pretty full valuation, and once again, we don't invest for the next six months. we invest for our future. and you've got to think out a year, two years, five years. nike is going to be a big contributor when you look at global growth and the emerging markets and the investments they're making in soccer. this is a company that will directly benefit. i tell this story all the time.
when i was in africa, when i was 16, i was wearing my nikes and i was in this village in the middle of nowhere, and all the kids wanted was my shoes. they wanted it so bad. and if they could afford nikes, they would buy them. so, that's what we need is the global economies to grow and nike will grow nicely with them, i think. >> what about that, andrew? aren't we just talking apples and oranges here in terms of time frame? are you just looking at a short-term time frame, when in fact, if you were looking longer term, you might like this company? >> i was always taught 52-week highs usually go higher. i like to buy a stock that is out-performing the market and is moving higher. i don't want to find a stock that's stuck in the mud. if you look, it's traded exactly like starbucks, whole foods. you know, the consumers' discretionary spending might be cut back if oil prices continue to move higher, too. so, as an entry, i want to buy it as as going higher. i don't want to buy it now where it's stuck in the mud. >> i don't think that's such a horrible strategy that he's saying either, but you can't do that with every stock that you're buying. you know, what you really have
to think about is on a bigger level. when you're only a technical guy, you've got to think fundamentals and on a bigger level, brand awareness and quality, and you've got to buy some of these stocks, like starbucks is another stock i really like. i mean, these are great bands. they have not done well and you want to own those names. >> maybe two to five years down the road, but right now there's no reason. >> are you going anywhere? i have nowhere to go. i'm going to be here in five years. >> you're just going to sit and hold it four five years, that's fine. i'm a trader. i trade put on positions. right now nike, i don't want to be long on it. >> great brands you mentioned, ross, but are they making money off those brands right now or has their growth rate slowed down for whatever reason? are you willing to be patient if nike's dead money for the next couple of years, as andrew seems to think it will be? >> well, i'm not patient for a couple of years, but i'm willing to be patient for a few months or six months, you know, maybe even a year. it sometimes takes a little time to make some money in the market. what i think you have to think
about when you buy an investment is where is it going over the next few years and on the macro as well as the micro level, how will this company benefit from that? and that's the thing that the nikes and the starbucks have that so many companies don't have, not to mention they could make an acquisition, an under armour or lululemon, for example, and can expand through that strategy as well. >> well, if they buy under armour or lululemon, that's going to crush their pe. they have a decent pe at 25. if they go after lululemon or under armour, their pe's going to move higher, so i don't think that's necessarily good for them. >> andrew's not giving an inch. >> i want to say, ross -- >> that's not bad in theory -- >> did you leave the shoes behind? that's what i want to know. >> no, i didn't. when i told them how much the nikes cost, they looked at me like i was absolutely nuts. >> well, there you go. >> i was in a village, you know? but that's what they wanted. that and they wanted laker gear. and you know -- >> i like those kids. >> yeah, me, too. i liked the kids, too. they were awesome.
and you know, i only had that one pair of shoes. otherwise, i would have left them. >> all right, good to see you guys. thank you. that was a good discussion. it was fun. heading toward the close, 30 minutes left, a little less. the dow holding steady. it's been a meandering day. we had a sell-off in the opening session and it's been down since then. down 20 in the dow, the s&p also relatively down. ralph acampora's call to the s&p dropping 10% by october, find out if he's still bearish, coming up. also, ceo on biotech getting approval for ant boltics for skin infections like mrsa, that and more coming up. when you run a business, you can't settle for slow.
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some of those meanderers for us. mary? >> more than meanderers, kelly. let's start with utilities. inintegrity rios is being acquired in a $5 billion-plus deal. as you can see, it is up over 12%. wisconsin energy one of the worst performers in the s&p 500 while integris is one of the best performancer today. parkervision is up $3.10, this after a judge threw out a big patent settlement parkervision won against qualcomm. lastly, we've been talking about it this hour, cubist pharma is under pressure despite fda approval for a new drug treating skin infections, off 1.5% right now. and of course, bill, i think you're going to be speaking with someone involved with cubist. back to you. >> right now. i love when a plan comes together. thanks, mary. speaking of cubist pharmaceutica pharmaceuticals, the bio international convention is happening this week in san diego. one of the attendees is cubist
pharmaceuticals, where, no doubt, its latest fda-approved drug is the talk of the town. >> with us now with an exclusive interview, ceo michael bonney. michael, welcome. >> thank you. good afternoon. >> it sounds like you guys, both with this latest drug and a couple other things you've been working on, are really a significant player right now in the antibiotics space. just how much of a progress does this represent and what does it mean for people who might be exposed to staph, for example, when staying at the hospital? >> well, there's a lot embedded in there, kelly. we are, i believe, the largest antibiotic research and development commercialization house in the world. many of the large pharma companies over the last 25 years have left this space. sivextra's a powerful drug, an iv and oral agent, both fight against infections including
mrsa. with all the pressure on costs in the health care system, having an oral option, so folks who have these very serious infections potentially don't have to go into the hospital, that they can be treated as out-patients we think is a big advance. >> you know, i was intrigued when reading about the number of companies that have left the antibiotic space. why is that? are the margins not good? too much competition? what's going on there? >> it's a couple of things, i think, bill. primarily, it's economic. you know, sivextro's a great example. the phase three data, the approval for this drug is for a six-day course. and yet, the costs and risks associated with developing new antibiotics are much like they are for chronic care meds. there are some differences, but you know, you look at total cost, it looks very similar. >> okay. >> so, if you're a large pharma company and you have a choice of betting on a cholesterol lowering agent, where a patient could be taking it for the rest of their life, or an antibiotic, which, you know, six days, maybe
two weeks in a really severe case is all the use it's going to get of it? people have made that decision. cubist, on the other hand, has been built right. >> why are you hanging around then? why does it make sense for you? >> we were built to be an antibacterial company. so, if you look at our financial profile, we spend less on sg&a and more on r&d and i think that's a critical component of our success in this area. but between the two, we're able to generate reasonably good margins, and that allows us to attract the capital so we can be competitive for capital with the chronic care companies. and clearly, there is a large unmet medical need here. we have seen resistance to the current range of antibiotics grow continuously over the past years. it appears to be accelerating. the cdc, world health organization, any number of international public health bodies are ringing the bell very strongly that we need new antibiotics to deal with these resistant bacterial infections. and cubist has stepped into that breach, if you will, very
nicely. we have very strong signs, very strong development activities, and this is our third marketed antibiotic. >> i was just going to mention the gain act, too, which seems to be helping nudge companies along this line, michael. i'm also curious, when it comes to the development of antibiotics, what it's like from your point of view with regard to is each successive antibiotic creating problems that it then has to solve with a tougher one to respond to, tougher types, tougher mutations, i guess we should say, for some of these diseases it responds? >> great question, kelly. unlike most therapeutics, most medicines, every time a physician makes the decision to use an antibiotic to treat a given patient, that physician is trading off what's best for the patient versus what's best for society. the more exposure the bacteria have to an antibiotic, the greater the likelihood is that we're going to select out resistant clones. and with bacteria, they can
share those resistance genes across species. and that's one of the challenges. one of the reasons we need to have a steady stream of new antibiotics to deal with these very serious infections, which, frankly, prepenicillin, you get a nasty wound infection, very high likelihood you end up dying from that. and of course, today we don't expect that at all, and it's because of effective antibiotics over the last 70 years. >> crazy stuff. i mean, i'm a capitalist as much as anybody, but it's crazy that they can't develop -- or they choose not to develop just simply because the income won't be as much down the road. but that's how it works these days. >> and can we -- michael, before we let you go, real quick, are you getting a ton of bankers coming by and trying to push you guys to do an inversion or look at the tax implications of.com s domiciling elsewhere? >> we have had those conversations over the last several months as this has become a hot atomic in the
financial markets. we're headquartered in lexington, mass, where we do all of our research and the bulk of our development. and frankly, if there is a strategic opportunity to buy an offshore company, we would be interested in that, but we don't believe that we go out looking for m&a specifically for it because of a tax -- >> well, the investment bankers will find them for you. you don't have to go out and look. they'll do the leg work, i'm sure. michael, thanks for joining us. >> thank you. >> 15 minutes to go into the close with the dow off 20 still. both the s&p and nasdaq are fractionally lower on this monday. >> so, if the consumer is back, no one told the market. consumer discretionary stocks have been the worst performing sector in the s&p to date. seema mody will try and explain why, coming up. and "jersey boys," the clint eastwood film based on the hit broadway show finished fourth at the box office this weekend. >> i can tell you why, too, coming up. ♪ >> will the state of new jersey fair any better in our annual "best states for business" series. we'll give you a hint, the first
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[ male announcer ] see if your business qualifies. and now you get hit again.asis. this time by joint pain. it's a double whammy. it could psoriatic arthritis a chronic inflammatory disease that attacks your joints on the inside and your skin on the outside. if you've been hit by... find out more about psoriatic arthritis. take the symptom quiz at doublewhammy.com and talk to your doctor. welcome back. a touch more volatility in these markets today, a little bit more
volume, but for the most part, we're seeing markets move off their recent highs with the dow off 16 points, although it is, bill, trying to make a bit of a comeback here with 15 minutes to go in the session. >> yep. by the way, i just tweeted out my review of the "jersey boys" movie, to explain why it came in number four this weekend. >> uh-oh. >> go to twitter and get my review there. consumer discretionary stocks are the worst performing sector this year, despite gaining ground this month, but mixed opinion on whether these stocks can rebound. seema mody, as you can see, is here to give us details. >> bill, that's right. broader concerns over the state of the consumer have dragged down the consumer discretionary sector, and some of the biggest losers include bed bath & beyond, best buy and staples, all of which have been hurt by bad weather as well as online competition. but can the sector stage a comeback? well, experts say it really depends on the economy. steven wood of russell investments says a slack in the labor market has posed a significant challenge for consumers. and when it comes to the economy, analysts at
"morningstar" say analysts are watching wage growth and home prices to gauge consumers' willingness to spend more on products. now, upcoming earnings will also play a critical role as the two previous reports were clouded by bad weather, but estimates have come down a lot to 6.1% from 13% earlier this year. that according to thomas qulon ro thomson reuters. keep an eye on carnival, bed bath & beyond and nike. >> seema, thank you for now. 10 minutes until the close. and on this monday, it looks like it's going to be red arrows, but time will testimony. >> and there's always turnaround tuesdays. so, looking forward to that. >> what happened to front-running that? i think it turned to fridays. last i heard, they were the best performing day of the week. >> art cashin would know. still ahead, find out if technical strategist ralph acampora has turned bullish following last month when he
talked of a coming correction. plus, veteran talk show host regis philbin called micron's recent spike. we'll get his take on that company and what else he's buying in the next hour of the show. we'll be right back. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,
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welcome back. about 8 1/2 minutes left in the trading session here, as we see some minor minus signs going into the close. joining me right now, anthony chan from chase, jeff reeves from investorplace.com, and i know, anthony, i'm playing into your argument because you've been bullish on this economy. you're expecting an appreciable pickup. those home resale numbers were very good today, but you still have a fed that's kind of wringing its hands over the pace of the growth rate here, don't you? >> well, i think so, and the reason for that is that we still see a lot of slack in the overall economy. remember that when you look at part-time workers for economic reasons, we have over 7 million of those jobs. the last time we had at the peak of the last expansion, we had less than 4 million of those workers. so, that's one of the reasons why janet yellen wants to hold on a little bit longer to try to trim those 3 million people that are working part-time for economic reasons, in line with that study that was recently released by the federal reserve. >> jeff, do you like this
market? do you just keep buying here as we go incrementally higher or what do you do? >> well, i think you do. i think it's hard to argue the fact that eventually we're going to set another record in the dow, the s&p's going to hit 19. it's just the way that it goes. i think there is probably a short-term correction that's going to happen in the summertime, but the fed has reason to be skeptical or wring its hands about the rally. i mean, we all do. look at the stats a couple weeks ago about how we made back all the jobs we've lost since the financial crisis. well, we're 1.6 manufacturing jobs short. so, if you look at the details of everything, it's like the keynesian best of times, worst of times stuff. you see what you want to see in the market. so, i am buying still, but you know, i'm not all that super confident that we're going to be nothing but blue skies ahead. i think we could see some speed bumps along the way this summer. >> the other thing that raised eyebrows, anthony, last week was when janet yellen was saying she didn't think stocks were overvalued or in bubble territory, which is rather unusual for a fed chair to say publicly. is that a green light just to buy stocks here?
>> well, i think it's a sign that the federal reserve doesn't want to cause any panic, so i guess she was probably coerced into answering the question that way. but when you look at stocks and when you look at consensus earnings, we are really looking at price earnings ratio hovering very close to 16, and we know the 15-year average is about 16.3. so, against that backdrop, i can't disagree with that view. >> you, too, jeff? >> well, i would argue, too, that i mean, multiple expansion is kind of the hallmark of a bull market, so i wouldn't hate too much on the fact that we're slightly above the normal. an average is an average, a mean's a mean. sometimes you're a little higher than that and it's not a big deal. my concern, though, is that from sector to sector, there are things that look not very good to me. for instance, the gopro ipo that's up on the books right now, or uber's valuation, it's like things like that really bother me because it doesn't look like there's a lot of profits there and investors are just throwing money around. i think you can't say about the market broadly that just multiple expansion is a bad idea, but i think if you look in a lot of subsectors, we are
seeing a lot of froth, and i think that's where investors need to be careful, need to be selective. >> where would you be buying right now? what do you like? >> personally, i like enterprise tech. it's odd that oracle made their acquisition today. i think that long-term, enterprise tech is a great place to be. the valuations are great there. companies like oracle, cyisco, even microsoft. decent yields. if you believe in the market long-term, there will be short-term trouble, but eventually, businesses will spend more on technology and that's going to help the large-cap enterprise tech companies. if you have a horizon of 12-18 months, i would consider buying enterprise tech on a dip, maybe even oracle today. >> quickly, anthony, if oil goes much, much higher from here, does that put a crimp on your growth rate for the economy? >> oh, absolutely. when you look back historically, any time oil prices have risen 28% or more, it usually causes an economic slowdown. the only silver lining is that if we start to see oil prices accelerating tremendously because of geopolitical risk, we
still have the strategic petroleum reserve. we saw that during the libyan crisis. we saw a release of the strategic petroleum reserves, and we even convinced other countries around the world to do the same. and you saw oil prices quickly go from $100 to $80 a barrel. so, i think if you start to see oil prices move sharply from here, that can happen and we won't see the 28% increase, but if it goes that way, it would be a red flag. >> gentlemen, good to see you both. thank you for joining us today. appreciate it. >> thanks. >> we'll come back with the closing countdown for this monday. and after the bell, google's nest labs is buying home monitoring cameramaker dropcam for more than $500 million. should consumers be worried that google will know too much about them? we have the privacy experts weighing in on that issue, coming up. you're watching cnbc, first in business worldwide. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.
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♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade. > heading toward the close, earnings expected at the top. micron technology expected to report on revenue of $39.8 billion. so, watch for that. and bob pisani, we have a lot of ipos out this week, too. >> we do, 18, including two that didn't price last week. so, today i was encouraged by existing home sales, much better than expected. china pmi better than expected. you see the airlines down, bill? i think a lot of people think that low volatility in oil is sort of a thing of the past at this point. that's something that bears a lot of watching.
impact on the stock market could be very obvious. >> that's for sure. thank you, robert. see you later. that's it for the first hour of "closing bell." stay tuned. lots coming your way, including those earnings from micron momentarily in the second hour of the "closing bell" with kelly evans and company. i'll see you tomorrow, kell. welcome to the "closing bell." i'm kelly evans watching the s&p 500 like a hawk, because it looked like here at the bell, we might have turned positive, and if that happened, it would be starting off the week in a new high, but looks like we're falling just shy of that. take a look at how all the major indexes are finishing up the session. after staying in the red most of the day, the dow jones industrial average staging a little bit of a comeback. looks like it's going to close off by 11 points. the s&p 500, yeah, not going to make it. oh, almost there. off by about half a point. the nasdaq did squeak into the green at the very end, up 0.6 points, 4,368 is the level there. let's get to today's panel. as we await earnings from micron, phil orlando is here
from federated. our own dominic chu, danny hughes, kevin roos from "new york" magazine, and also with us for more on today's market action, ralph acampora. ralph, good to have you this hour. last time we talked, you were worried about a correction. what about today? >> well, kelly, that was about two months ago, and everything has changed, and the optimum word is change. when things improve, you can't fight the tape. about 63% of the dow components are in strong, strong trends and no topping action. and about 80% of the sectors -- that's eight out of ten s&p sectors, are doing very, very well, they're saying. so, of course, the market is extended and should be correcting, but i can't fight the tape and i love what i see. >> so, would you describe yourself, ralph, as -- well, i don't know if this is exactly appropriate, but remember the term fully invested bear that's been popular for the last couple of years? does that sort of sum up the mentality? >> not my mentality, that's for
sure. >> all right. danny, phil, what about you guys? >> well, you know, we've been watching this market go steadily sideways and up and melt up, as we've talked about, kelly, many times. and make no mistake, the window is open, so that means ipos, follow-ons, there's a lot of supply coming out and there's certainly a lot of demand for that, and we think that's going to continue. i think the risk that we have, particularly this week and going forward is vol, volatility and low volume. when you have low volume, you've got a lot more volatility at stake. so, things are going to move this market this way and that, but i do think we'll continue to see that melt-up going forward. >> phil, the point dannie makes about ipos is important because we're having one of the busiest weeks in terms of numbers than in a decade plus. what do you make of that and what about the quality of some of these offerings as well? >> well, the quality is very good, the volume is very good and i think they're very much taking their cues from the macroeconomic fundamentals. it's a huge week for the economy as well.
you look at this week, you've got a bunch of housing data points, inflation, you've got consumer confidence, and we got out of the gate this morning with the existing home sales numbers up 5%, well above expectations. every number that we're expecting is weak, based upon the bloomberg consensus, is going to be relatively strong. so, the reason the market's moving up, the reason why the ipo calendar i think looks as good as it does is they're taking, you know, their cues from the macroeconomic fundamental. >> is one of the reports this week going to be the revision to q-1 gdp? because look, that's going to be the exception to the good data rules, for sure, although granted, we're now talking about, you know, months and months behind. >> well, i mean, if you look at the overall macro picture for the economy, that's always going to be a concern. the gdp is just one measure of it. like you said, we've got housing data coming out, and housing has been a soft spot, i guess, for those data junkies in the markets for at least the last couple of months. the real question then becomes whether or not you have these
record highs being hit and they can be sustained. there is a sense that if energy continues to do it, it may not be a longer-term play, but what you are seeing is specific stocks that are doing very well in this environment. i mean, who would have thought that since dow 16,000 to dow 17,000, the single best-performing stock in the dow would have been caterpillar of all stocks? i mean, an industrial, in manufacturing, in mining, in construction equipment. obviously, it had a bad year maybe a little bit towards the end of last year, end of last year, but still, it just goes to show that if you pick the right stocks, if you go and do some homework, you make some calculated risks and bets, you can out-perform the market, even with the market making these record highs. >> kevin, what about you? you know, what's the view from the west coast these days? >> well, there was a period there maybe about a month ago when it looked like we were at the end of the tech rise, when lots of tech companies were showing high single-digit or low double-digit dips. now that looks to be stabilizing, so i think we're going to see some of these companies that have been waiting to go public, companies like
box, which is waiting for favorable market conditions for its ipo. i think we're going to see them start to come off the sidelines if we don't have a correction here in the next few weeks. >> and ralph, going back to just positioning here, what would you recommend investors do at this juncture? >> well, i'd look for stocks that are not overextend ed. and the names i come up with are the old names, names that people are not that familiar with, like microsoft, ge, texas instruments, cisco, intel. they're just starting to pick up, and i think they're playing a game of catch-up. >> you're laughing, dom. >> you know what's interesting about that is they are among the best performers in the dow since dow 16,000 as well, microsoft, intel, cisco, large-cap tech is great, not just because maybe the fundamentals are getting a little better. remember, intel boosted their revenue forecast in the coming months because they think pc demand's getting better. but also, these stocks all have a 3% to 4% dividend yield for the most part. >> right. >> so, i mean, that's another
investment thesis for why you want to be in large-cap tech. >> and i think, too, you know, the key here is stabilization. we're seeing a lot of companies and the market in general find a spot, and individual investors are feeling more confident. they were waiting for the other shoe to drop for so long. i think that's gained a level of credibility for the market, even though we still have a lot of trust issues. but the fact that the only way to play is to put your money into dividend stocks. you can't put them in the bank. that's really where you've got to be. >> ralph, good to see you this hour. thanks for updating us with your views, ralph acampora. as we await -- actually, i think we have the results from micron. john ford is joining us with the details. >> the stock up slightly after hours. expectations were pretty high and the stock has been on a tear lately, but eps comes in at 79 cents versus 70 expected, revenue at $3.98 billion versus $3.89 billion expected. the company had guided to sg&a
of between 170 and 180 million. that came in at $174 million. also to r&d costs of $345 to $355 million. those came in right in at $349 million. so, across the board, right about as you'd expect. capex appears to be right in line with expectations as well, if not just a little bit low at $576 million. it appears that they are keeping their full-year capex guidance in line. so, expenses under control, which is what investors wanted to see, higher eps than expected, revenue just about in line, maybe slightly higher. and the stock trading up slightly after hours from what i can see. >> it is, john, up by about 1%. stay with us. we want to bring in steve grasso for more on these numbers. micron, the view is pretty high going into the quarter. they've managed, as you can see, to beat. the shares are doing pretty well. what do you think happens tomorrow? >> well, you know, with micron, obviously, it's been a favorite
stock amongst the investment community itself. i guess over 45% year to date before this print. so, if you thought about micron, you always think about deran pricing, but with lapping a year now of that alpida takeout, they expose themselves to nand and nand flash used in mobile and ipads. so, it's not just the dram story. this could be another leg going forward. also, pcs, not as bad as we all thought. we heard from intel. so, you get that dram, you know, push. so, that could be the last leg of it, but anyone who's bet against micron going higher, it's been a losing bet for quite some time now. >> yeah, well, and the shares are moving around a little bit after hours. of course, we'll await more detail on the call. phil, people are curious about some of the pricing that they have to share on these key components about their capex plans, which as jon fortt kind of said might be a little bit shy, but looking for expense control here as well. what do you do with a name like micron with the sector, phil? do you like it? >> we do.
we like the semiconductors right here. ralph talked about a couple of them, texas instruments and intel. we like mu in the mix. i think you've got a couple things going on. technology's not dead, certainly not pcs. we now know that that story is on ascendancy, rather than in decline. the other issue, and ralph made a great point before, is that these stocks did not get hit by that air pocket back in march and april, in part because there's pretty good demand, valuation is more attractive, you've gotten very good yield support. these stocks are the stocks that right now are serving as core portfolio holdings within the technology sector. >> and dom, i love this line from teern ray at "barron's," writing ahead of the results today, pointing out again how positive the analysts and hedge fund community has turned on a name like this, quoting drexel hamilton, saying micron's two-year quest to rationalize the market has come to age, just as we can't fathom how equity
markets have done so great, neither have they come to grips with micron's power. >> it's defied gravity for so many investors not just because it's been a favorite of some hedge funds. david einhorn's greenlight capital has around a 4% stake in this company and has done very well by it, but what it comes down to is fundamentals for certain parts of the market. with semiconductors, there's a case to be made for certain products. dram or dynamic random access memory, a fancy way of saying this type of memory chip may have fundamental support to it, as opposed to other chips others makes. this is a day when aindividuala is down on analyst comments about possible inventory build-ups and what not. so, even within industries, you have to find exactly where strength can lie on a relative basis, and that's where some of these guys have out-performed. of course, i am not smart enough to know exactly where those places are but certainly, some of the smarter investors and analysts out there have had their fingers on the pulse of this trade for a while now. >> steve grasso, before you go, what else? do you build on the back of this
report to trade tomorrow or are you looking at other areas of the market right now? >> i'm looking at energy. i think energy is overextended, and it's based on the tension that we see in the mideast. and i think that if iraq, if we get a hint of anything positive coming out of iraq, you see gold -- i'm sorry, you see oil start to come back and you'll probably see gold start to come back in as well, even though it's more of an inflation bet. but i think the market as a whole, we do need a test of that 1900 level, which is the 50-day moving average. that's only a 3% move lower. and how long do we stay there, or is the move a much bigger thing? who knows? >> kelly? >> yeah, jon fortt, you want to add one more thing on micron before we go? >> one more thing on micron. you've got to contrast them with sandisk and take a look at what's happening overall in hardware right now. enterprise hardware tends to be stronger than consumer. a lot of people hoping that in the call, micron will talk about moving more of their supply to crucial, away from some of those taiwan flash chip providers,
where it's lower margin. they need to show that they can exercise a little bit more leverage in pcs, in servers, the area of the enterprise that's hot, where sandisk is doing well and where they're trying to gain strength with fusion io. >> yeah, you can see the two companies neck and neck this year. jon fortt, steve grasso, our thanks. everybody, stick around and catch steve coming up on "fast money" at 5:00 p.m. they're going to be talking to the man with the scoop on gopro ahead of that expected ipo. we have quite the deluge this week. don't miss it. talk about hot yoga, lululemon founder chip wilson may fight the board to regain control of the company. will he win this fight and is the struggling retailer better off with or without its controversial founder? that's coming up next. also, why is the university of dayton divesting its portfolio of fossil fuel assets? we'll hear exclusively from the university's president on the move. and google can already tell when you're home and how much energy you use with its nest smart thermostats. now it's buying home video monitoring company dropcam.
is this a big brother-like move or is this giving consumers what they want? or is it both? you're watching cnbc, first in business worldwide. ♪ and if i tap my geico app here i can pay my bill. tap it here, digital insurance id card. and tap it here, boom, roadside assistance. on'tday ooklay, it's axwellmay. the igpay? otallytay. take an icturepay! onephay, onephay! really, pig latin? [ male announcer ] geico. anywhere, anytime. just an aptay away on the geico appay. pcentury link provides reliable yit services like multi-layered security solution to keep your information safe & secure.
lululemon. they were higher by about 2.5% today as rumors that a boardroom shake-up swirl. according to the "wall street journal," lululemon founder and former chairman chip wilson is reportedly working with goldman sachs to regain control of the company. for more on how this may all play out, let's bring in two retail veterans, don peebles, ceo of the peebles corporation, and dana telsey, ceo of telsey advisory group. it's good to see you both. don, you know, there's also, of course, a battle separately at american apparel for control of that company. what do you think is happening with the board, having been familiar yourself with a few, you know, with the board room setting, what do you think is the conversation they're having about chip trying to regain control now? >> you've got tug-of-war. you've got entrepreneurs are innovators, they're transformers. then when you grow a company, it needs great management to grow it to the next level. and what's happening now is you're seeing this tug-of-war between the innovator, you know, chip being the innovator, and the transformer, and then investors on the board who want
to see quarterly growth in the stock price and not looking at the longer run, per se, and that's where the tug-of-war's happening. and you know, it's a typical challenge that entrepreneurs have when they're handing over the reins of their company that they've created to good management. >> dana, do you think the share price movement today reflects the hopes of some investors that this will be a case of, for example, howard schultz returning to starbucks? >> i think it's the case of a hope that you can have a brand where the focus is on the customer, store experience, the product and the product quality. don't forget that chip wilson, he had been chairman. his role was minimized to being a board member. yes, he's the significant share owner, but what you really should focus on is what's the brand, what's the customer experience to allow the company to continue to grow both here and domestically, because what made this company great was that focus on the quality of the product and the store experience. >> and don, that's why i wonder how much of a distraction this will wind up being for a company that right now has to remake or restate its case to shoppers.
>> yeah, you know, look, i think it's a good opportunity for the company to get its brand back on focus, as dana said. i think a good example is look at what happened to apple when steve jobs built the company, then he went into retirement. the company kind of lost its way, lost its customer base. it wasn't an innovator anymore. and then steve came back and bilked it into one of the greatest companies in the world and one of the greatest companies the world will ever see. and now it's going to -- >> so, dana, do you -- >> i'm sorry, go ahead. >> no, please finish your thought. >> and now apple is set to continue to prosper and innovate without him. >> i want to just -- i'm sorry. sorry, don. what was that? >> apple's positioned to innovate without him now, and that's i think, you know, in this case, chip needs to get back into the company to get it back to focusing on its customer. >> i'm curious what you guys have to say about lulu. do either of you hold it? >> i do not. no.
>> i'm not a yogi. i don't have pants. >> i don't think you have to be into yoga necessarily to be a holder of this stock. i mean, innovation was the name of the game for lululemon. they had great quality for a while, but there were a lot of gaffs. and i think that that made not only people stop shopping, but also, you know, deteriorated sales and sales quality. so, but i do agree with dana and don. i mean, the company has an opportunity, a huge opportunity to really speak to its customer base and remake the brand. >> these are expensive brand name clothes. they don't cost -- they're not cheap, let's put it that way. and if you buy them, how many more pairs of yoga pants do you want to buy? i mean, what's the growth potential, if they really are that well made, i don't know where you would want to own ten pairs of yoga pants. >> especially if you stay in shape. >> there you go. >> yeah. they were also transformative when they first burst on to the scene, and now a lot of companies have quickly caught up. phil, do you guys like the name?
>> we owned lulu a couple of years ago. we have not been in the stock for the last year or so. the stock, you know, has been cut in half, as some of the other panelists have said. significant quality issues. there's been a lot of sort of saturation in the marketplace. is chip responsible for some of that? at some point, you've got to be able to separate, you know, ego from the quality and success of the business and determine whether or not the stock is going to move up because of some private equity deal or whether or not they're going to be able to sort of restore some mojo to the underlying zest to the business, if you will. >> no, that's exactly it, kevin. a lot of people are looking for what kind of positioning chip may be interested in as an independent player, as a potential takeover target? >> lulu, for reasons that have nothing to do with chip wilson. i think it's a fad product. i think it's commoditized. everyone makes these yoga pants now. will y
lululemon's aren't necessarily better than others. remember jazzercise, pilates or the p-90x? these things are going out of style. >> that's tough words. the black yoga pants, people wear them around these days. >> yes. >> they're a new wardrobe staple. part of the problem, as you said, too much of a staple. you can find them everywhere. thanks, appreciate it. you may know him as the host of talk and game shows. did you know regis philbin is also a student of wall street? he's been bullish on micron, which just reported earnings, by the way. coming up, he'll tell us what other stocks he likes right now. plus, google's got its eye on you. the company's nest unit, which makes those smart thermostats, is buying home video monitoring company dropcam. we're going to talk about whether google's home data collection is just getting a little bit too personal. ♪ we're moving our company to new york state. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies
welcome back. google owned nest labs which makes smart thermostats and just purchased dropcam, a firm that makes security devices. while the devices can keep tabs on your family and valuables, google is also potentially watching you. is this a little bit too big brother? with us now is ben parr from dominate fund. ben, what's your reaction to this news, to this deal? >> i think google has to be careful with what they do with dropcam, because while dropcam itself might be a good business for them, if they make missteps or they violate people's privacy, it will be a big issue. >> phil, do you think, look, dropcam's going to exist with or
without google, and i'm just curious if you see this as a burgeoning space. >> i think it's a burgeoning space and there are practical applications to this. you know, people talk about, you know, going on a trip and thinking they've left their stove or their iron on. now maybe you've got the ability to remotely rectify that problem without having to turn around and come home. so, there could be a practical application here that people will grow to like. >> yeah. ben, do you think there is a way to get the practicality of this market without the privacy invasions? >> oh, absolutely. and part of google, what they're doing with dropcam is they're making it so that they don't collect the data themselves 37 it's actually going to be controlled by nest as a separate division, which is a good move to make. with that said, they have to make sure they stick to that commitment, because if they ever violate that, that could be a bigger issue on the privacy side. but as a business, it's a great idea for them to acquire dropcam. >> by the way, we've seen other companies moving into this space. honeywell is going to develop its own kind of smart
thermostat, and that has a lot to do with being able to track when you're several miles from home to set the temperature right. this appears to be an important wave of consumer evolution. >> this is the next evolution for the internet of things. we talk about it as a buzz word or a term all the time, but what it comes down to is this idea that you want to be able to have everything in your life connected. but the drawback for that is, and i don't care what any company says, is that that data that's being collected is always going to be somewhere, and the technology that a lot of these storage providers are providing right now makes it so that you can have large amounts of this big data, everything that i've ever codone oint net or controld from my thermostat, everything is going to be out there somewhere at some point. i am not a conspiracy theorist, but i think whatever happens, the data is always going to be out there and there's always going to be somebody out there mining for it. and that's the reason why this is not a bad or a good thing, it's just the way that it's going to be in the next 50, 100 years, and maybe we should just get along and deal with the way it's going to be. >> kevin, what's your take on
this? >> well, i've actually tried one of these sort of internet of things systems, and it was okay. i mean, i set it up so when i walked into my office in the morning, it would play "eye of the tiger" over my stereo, get me psyched up for work. >> that's an awesome theme song, by the way. that's an awesome theme song. >> it is. i was very productive. but it was sort of a gimmick. i think there are two big applications for these suites of products. one is, as home security. if you buy a system from brinks or another sort of manufacturer of traditional security systems, you have to pay a monthly fee, in the hundreds of dollars per year. with this stuff, you can set it so that it locks your home automatically and alerts you if there's any motion outside the door on your phone. so, that's going to be one use. the other use is energy conservation, turning your thermostats down when you're out of the house. >> sure, but kevin, what about privacy? >> well, that's a huge concern. the stakes are so high. if facebook has a data breach, you know, you might get your password and maybe your credit card data exposed, but if you have a security breach on something in your home, a baby
monitor or a camera that's patrolling your house, that's a huge thing. so, these are high stakes, and google's going to have to do something proactive to insure that it's not using this data either to advertise unwanted ads to people or to compromise that data by allowing back doors into it. >> and dannie, there's a couple levels to this. there's one trusting the companies themselves and two, trusting there's not going to be a breach. >> right. i mean, a breach is one thing and we take that risk almost willingly, but i think, too, the thing we have to consider is, you know, take for example, the nsa has said big data and this information that we can glean from just your movements of how many times you open up the refrigerator or pick up the phone, that stuff can immediately identify you. so, that's number one. then, look at ibm. ibm has said big data is going to be a $20 billion revenue line for ibm in 2015. that's a monstrous business that we're taking on and we're giving up all of this information. so, i am not saying that machine-to-ma
machine-to-machine is something that's not investable. i absolutely think it is, but as a culture, we have to look at the trade-off. >> that's it, dom, you can invest in this, seeing the potential. ben, i want to give you the last word here. if people, investors, companies start to pile into this space, should there be some sort of response to insure that there are privacy controls, or is it just that we're going to have to cede that information, the information on our whereabouts and habits to these device-makers? >> two things. first is that consumers in general show they don't concern themselves as much with privacy as we might think, you know? how many of us read the privacy policies of these websites? >> right. >> if you ask someone, do i want 10% better google searches in return for some of my data, they will pick the google searches every single time. so, that's something to be aware of. and the only other thing i can say is that we need to be preemptive, and companies need to be preemptive about privacy and privacy concerns and security and protecting privacy, because when they break the
trust, that's when the real problems happen. >> that's true. it's in their own interests as well. thank you for now. ben, good to hear your thoughts on this. the dow hasn't even hit 17,000 yet, but famed finance professor jeremy siegel says janet yellen and the fed are giving the green light for 18k. that caused all the buzz on wall street. is it hot enough for the "hot list"? we'll tell you next. and who will take the coveted state for business award this year? scott cohn is in an undisclosed location with the first clue. you don't want to miss it. he'll reveal the winner right here tomorrow on the "closing bell." careful... careless... with our bags. and the room they gave us -- it was... beautiful. a broom closet. but the best part but the worst part was the shower. my wife drying herself with the... egyptian cotton towels... shower curtain... defined that whole vacation for her. don't just visit new york. visit tripadvisor new york. [ male announcer ] with millions of reviews,
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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. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business. built for business. welcome back. so, though yesterday's portugal/u.s. game ended in a tie at the last minute, there was one winner. for that story and the whole cnbc.com "hot list," we check in with the site's managing editor, allen wasler. who was the winner? >> the winner was buffalo wild wings! that was the winner, because their stock took a 5% pop after an outfit called wunderlich securities did channel checks on the restaurant chain during the game and everything, found standing room only, people screaming for pitchers of beer and for wings and stuff. so, they reiterated their buy rating on the stock and the
stock of course went boom. >> i think dom was there. >> great story. >> there's always a winner somewhere, even if it's a tied score, which it shouldn't have been, but that's okay. second story on the list near and dear to my heart. google. when they change their search algorithms, do you know how much business they mess up? i'll tell you. ari levy went and checked it out. all these small businesses rely on google to produce website search results? >> oh, sure. >> so, when google changes the algorithm out of the blue, everybody gets messed up. google controls 68% of the search market. that translates into $50 billion worth of advertising sales a year. big business, fascinating story. and number three on the list, franken farms. all right, farms now are using more and more big data, technology-type things to produce better and better crops and manage their systems more efficiently. we've taken a close look at that to tie into scott cohn's top states for business, which i know you'll be talking about with him later. >> and i'm trying to glean a
clue from this alone, allen. >> well, you know, we're constantly upgrading how we figure out the top states for business. agricultural research is now going to be included in the innovation category for how we do the calculations. >> nice. >> so, this is our feature on franken farms, rounds it out. and stay tuned for top states tomorrow. it's going to be a big one. >> i think it's iowa. based upon that food thing -- >> based on franken farms alone? >> on the food conversation. they're part of the bread basket of the u.s., and iowa, i saw in the commercial, was one of the states that might be one of the scott cohn top states. i don't know, i'm just saying. >> i'm going to laugh if that's right. allen, thank you. the university of dayton is going green. next, the school's president tells us why he's divesting oil, coal and fossil fuels and whether this is the start of a green investing trend by universities. green universities? well, something regis philbin knows about. the legendary talk show host is a famous notre dame graduate. we're going to ask him about this as well, what he's investing in right now and micron's huge rally, a company
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welcome back. the university of dayton making a big push for the environment, announcing today it's following catholic social teachings and divesting coal and fossil fuels from its $607 million investment pools. dayton is the first catholic university to do this, and the school has a plan that it won't be the last. it's also the latest college to go green, because last month, stanford vowed to stop investing
in coal companies. so, for more on this now, we're joined exclusively by daniel curran, president of the university of dayton. welcome. >> hi, kelly. how are you doing today? >> great, thank you. look, this is a big deal, not just because you guys have a big pot of money here, but also because others may follow in your wake. so, do you think, then, it's inconsistent with catholic teachings to invest in coal and fossil fuel production? >> well, you look at the comments of the u.s. catholic bishops, there's certainly been a trend as late as last month to say that it's very important for us as catholic institutions to be thinking about the environment, to be thinking about the impact of climate on many populations, and most significantly the impoverished population. so, i think that's, you know, very significant for us as a catholic university. and this year, pope francis even
commented on catholic peace day that we should be thinking about the environment, that we were stewards of there. >> understood. although i think at the same time, there are a lot of responses saying this is overly broad, that obviously, if you wanted to divest from fossil fuel production, you'd have to include pretty much every u.s. industry. >> well, i would agree with that, and that's why the process took so long. we were looking at this for more than a year. and the conversation really began around socially responsible investing and what we should be doing to meet our mission. and again, we already had many screens on our investment portfolio, and this came to the forefront because of the fact that it was a concern for the nation, for the world, and for our students. and so, our board looked at this seriously for a year. and i wouldn't disagree with you, you could take this throughout the economy, but this is a very focused approach. and again, looking at about 200
companies that we think, that we know hold most of the resources in this area, the reserves. >> we did ask the former shell president, john hofmeister earlier in the show. he's long been pushing for more investment in fossil fuels in this country, what we thought about this plan. take a quick listen. >> if they want their endowment to suffer the loss of economic gain, that's their choice. that's their prerogative. >> and so, daniel, he's clearly not in favor of this. what's your response to that? >> my response would be, if you look closely at our endowment or most endowments, again, we're talking about less than 5% of our endowment, $35 million out of $670 million. when we went into this discussion, there was certainly members of our investment committee who felt we had to do our due diligence. so, over the course of a year, we took our time and we asked
about screens, and we came after a year's deliberation to the position that we thought this 5%, less than 5%, we could place alternative investments in there, some of them being green, some of them being renewable, where we would not see a significant difference in the return. so, we're very comfortable with this, especially in light of the fact that when we look at our mission, we think we should be going in this direction. so, i understand the argument. we did our due diligence. we believe we have a path that can move us forward. and i can tell you, certainly, we challenged our financial advisers at every level. there was not consensus at the beginning of this process. it took a long time and a lot of investigation. and so, i have heard that argument. it's thwarted often, but we're in a position at university of dayton thinking that we can move forward down a path to, again, divest first in our domestic
equities, then looking international and then looking at other funds, that could do this in a sensible way, in a way that meets our fiduciary responsibilities. and again, it was a long process. >> yes, and your hope is that other catholic institutions will follow? because we're talking about billions and billions of endowment money that's potentially at stake. >> well, i think that every university has to look at this, you know, in its own way. certainly, with catholic universities, there's the challenge of being mission driven. and again, i'm aware of many catholic universities that are involved in this discussion already. and by the way, many other faith-based organizations are having the same discussion. this is not a cookie cutter plan. i mean, we put a lot of time into this. we would hope we would be able to help other institutions as they have this discussion. some will do it, some won't, but the fact is, it's clearly an issue that's emerged in higher education and in catholic higher education.
>> and how much of this pressure is coming from students? is that why you felt the need to respond? >> actually, there was not pressure from our students. other than the fact that our students are very involved in sustainability issues. we have students that major at the graduate level on renewable energy. we have sustainability clubs. we have many students looking to the environment in different ways. so, this was not an orchestrated protest. this was just the fact that our students care about the environment, that they're asking the right questions, and it was becoming a significant import of their education. so, now there was not a student protest, although i already know that so many students support this issue about protecting the earth. so, ours was basically around the discussion in our investment committee and our board about what we should be doing to live up to our mission. and again, this is a very focused approach to this, because again, as you commented
earlier, this could go all the way through the economy. but these 200 corporations do hold a major segment of the reserves, and again, we do have, we believe, a social responsibility, but we're realistic about our approach. >> daniel curran, we'll leave it there. the president of the university of dayton, as they move away from supporting fossil fuels. thank you so much for being here. 50 governors anxiously want to know if they run the top state in business for 2014. they'll find out tomorrow when we reveal the winner right here on the "closing bell." but first, scott cohn is in that mystery state and he'll give us the first clue about his location when we come right back. when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars.
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welcome back. in 24 hours, we will know the answer to this question -- which is america's top state for business? scott cohn is in that state right now with a look at what this annual study is all about without revealing it for us just yet, scott. >> reporter: that's right. we're going to keep the suspense up over the next 24 hours or so. this is the eighth time we've done this.
56 metrics for all 50 states in ten categories of competitiveness. here's how it works. the competition is growing. >> this is texas governor rick perry. >> reporter: growing nasty. >> when you grow tired of maryland taxes squeezing every dime out of your business, think texas. >> reporter: which states back up the tough talk? >> why is our arizona-based company relocating manufacturing to upstate new york? >> reporter: we put all 50 to the test in our exclusive study. we measure the cost of doing business, including taxes, wages, utility and rent, the economy, where are the jobs going, which states had the healthiest housing markets and the healthiest balance sheets, infrastructure, roads, rails, ports and airports. which state has the best workforce and the best quality of life? we look at technology and innovation, including scientific, medical and
agricultural research, patents and more, business friendliness, including the legal and regulatory climates, education from kindergarten through college. which states have the resources and the smarts? the smarts? we measure the cost of living and access to capital. and we will give you the product of all of that measurement starting tomorrow. our countdown begins on "squawk box" around 8:00 eastern time, and we'll count down five, four, three, two, up, right here on "closing bell" tomorrow. we'll reveal where i am, america's top state for business. so, here is your first diabolical hint. let's look at it. don't cry for me. don't cry for me. that is your first hint. we'll have more as the day goes on, may have a few special things on social media. follow me on twitte twitter @scottcohncnbc, use the #topstates and go to our special website topstates.cnbc.com where 20 "24"
hours from now, kelly, you'll be able to see where your state stacks up. >> we're scrutinizing the trees in the background. >> i don't know if it's iowa, way too much green. >> almost looks like pacific northwest. >> maybe an oregon type feel? >> it could be chicagoish, illinois. >> don't cry for me. >> it's not argentina. >> argentina is not a state. >> go to washington, state. >> is there a cry me state? >> kevin, i'm going to washington state. >> what do you think the connection is don't cry for me? >> i don't know. maybe there's a large argentinian population in washington state. >> all right. we'll keep guessing. scott, thank you for that. don't forget he'll reveal the top winning state for business right here on "closing bell" tomorrow, and you'll get more hints, more clues throughout the day, but i agree. pacific northwest. >> seems like pacific northwest. >> probably way off. don't know our trees.
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. my next guest has been an outspoken bull for a long time in the name. let bring in tv legend regis philbin. he joins me now on the cnbc news line. great to have you here. did you see the quarter? >> yes, i did. thanks very much, kelly, for inviting me. i appreciate it. i don't know what all the hysteria is about this mike ron tech. i know it's down a little bit.
>>. >> i've seen it for years but i don't know anything about it. i want to hear from your guys, phil and dan and done. they are the pros. let me hear what they are saying today about mike ron tech. >> what about on the weakness? >> it's a good opportunity. a nine cent both. as reg said, the revenues look fine. the sector, i think, is very much in vogue. weakness could be a buying opportunity. >> well, that's exactly what i'm hoping. would i love to see it go down a little more, yeah, but not as much as you want. i'm going to buy some more, and i'm not going to be surprised that mike ron tech hits 40 late this fall. now write that down, guys. >> love that, reg. i miss seeing you all the time. you know, i think -- i think that you're right. you're going to get your way. i think the stock will probably back off a little bit here so you might be able to take another look at it and put some more money where your mouth is,
but you know that whole semiconductor industry, the fundamentals are actually catching up with -- with what's going on in the marketplace, so you might be right going forward. that $40 number doesn't seem that far away. >> regis, here's the thing. it's so cyclical, right? are you betting on mike ron because they are in the sweet spot right now? i mean, how long do you think this can last? >> well, i think it can last into the 40s. >> wow. that would be pretty good. >> we've seen it come from 15 up to 30. >> yeah, yeah. >> regis, kevin here. i want to know what other tech stocks do you like because i base all my investments on your your advice. what other tech stocks have you got right now? >> i think amazon has some steam going. you know it was in the high 20s last month. here it is about -- going on 330, whatever it is, and i think it's going to go higher, and then there's tesla. tesla has picked up 40 points since april.
i -- i think that's going to be a nice source of some money. >> regis, how many different stocks do you invest in at a time? >> about five. >> wow. >> and i just named three of them. >> you know, i think joe biden today says he doesn't own any stocks or any bonds. i think perhaps he might in some sort of retirement portfolio, but he says he doesn't even have a savings account. >> well, he should call me. i'll put him in touch with the right stocks. i want to introduce him to -- to molly corp. for the last 30 days it's gone up three times the average volume of its usual volume so let's see what happened. >> my old boss back when i was on wall street said the sell
philosophy is almost more important than the buy philosophy so tell our viewers this. when do you either cut losses on something like mcp, or when do you take profits on a company like mike ron? when do you get out of a stock one way or the other? >> i take the mike ron when i'm sure that it's going to be-to- -- it hits 25 and then i say, okay, it's going to go back down to 18, so i do sell there, and i -- i still have got some more now as it's going into 30, but molly corp, i just can't let it go. can't believe it will go down that far and stay there. >> thanks so much for calling in this afternoon. >> listen, you guys do a great job. my privilege to be a part of it, thank you so much. >> good luck with it. >> okay, hon. bye-bye. >> you got your list? >> i got my list. we're going to go and start buying all new tomorrow. >> thank you, everybody, for being here. kevin, good to see you as well. we'll see you guys next time around. for now it's over to "fast
money" with melissa lee. >> hey, there, kelly, you know we love regis, absolutely, and the other stock that he knowns, by the which, lululemon which is having a nice job. in terms of today, we've got the commodities teen. dennis garvin sees oil going higher but it's not iraq that is driving the price action. it's another risk factor so he'll name it. >> over to you, melissa. >> live from the nasdaq market square in new york city i'm melissa lee. who says there's no volatility in this market? the vix may be low, but there are lots of big movers in today's session. tes larks general motors, f-mcmoran, 3-d systems breaking out to the upside. tesla on a tear for the last five trading days. up 15%. let's bring in ben cowan who joins