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tv   Closing Bell  CNBC  May 19, 2016 3:00pm-5:01pm EDT

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billion dollar in a day. >> we'll talk about that and along with the ceo of domino's pizza who will hopefully join us on the set with some pizza. >> except it's 2:00 pacific time. >> thanks for watching "power lunch." >> "closing bell starts right now. hi, everybody, welcome to the closing bell, i'm kelly evans at the new york stock exchange. >> i'm wilfred frost. stocks in the red but off their lows after the new york fed president said a summer rate hike could be on the cards. >> walmart the biggest winner on the dow after its stronger-than-expected earnings. this after target's disappointing numbers yesterday. what is walmart doing right that target is doing wrong? >> phil mickelson ordered to pay back nearly $1 million related to an insider trading case. we have the details and the impact on the mickelson empire. plus, what some are calling the anti-heart attack gene. we'll tell you what it is and
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whether it could lead to the next blockbuster drug for amgen coming up. first, though, let's get to the latest fed speak and retail earnings with steve leaseman. courtney reagan is monitoring that walmart earnings blowout. steve, kick things off for us here. >> president bill dudley in a press conference earlier today following up on those sprys minutes yesterday suggesting a rate hike is possible and even likely in june or july if the economy cooperates as expected. now, day after the minutes dudley said pretty much the same thing. he suggested that his base case is for a kind of -- for improvement that would warrant a hike. >> if i'm convinced that my forecast, my own forecast, is sort of untrack then i think a tightening in the summer, the june/july time frame is a reasonable expectation so it's a question of whether the economy is sort of cooperating and performing in line with my personal expectations. >> he did say the british
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referendum on brexit is something the fed is watching. that's eight day that was fed's june meeting could affect the fed's decision. he gave us three things to watch. one is the probability of the leave vote. the second is the impact on financial conditions and the third is the strength of the overall u.s. economy if it can withstand any fallout from a negative vote there. let's be careful. fed officials are quick to cautious they aren't making a promise of a hike. intentions to hike have been derailed by weak u.s. growth or global financial turmoil so the best you can say is fed officials think the data will break their way by june and they'll hike around then if it does. >> steve, thank you very much for that. now let's get to walmart's strong earnings. courtney, what is walmart doing right that target isn't? >> you know, target's quarter wasn't bad but it wasn't as strong as walmart's. target exerted more caution than walmart lowering the second-quarter guidance while the midpoint of walmart's second quarter guidance is above the street. they'll both beat on the bottom
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line and kept full year earnings forecast intact. target's comp improved 1.2%, underperforming expectations, walmart's u.s. comp improved just below at 1% but that outperformed expectations. both retailers comparable sales improved for the seventh straight quarter with traffic growing for the sixth consecutive quarter. merchandise likely accounts for much of the difference. more than half of walmart sales is grocery while apparel, shoes, and accessories combined are less than 8% of sales. apparel, which has been weak throughout the industry is 20% of target sales however the signature style category saw comps three times better than the total store. target did add a thousand new grocery items while also reorganizing the space. the ceo said those were short term disruptions for many consumers. on average, walmart's core consumer has a lower income than targets so macro factors like higher minimum wage, relatively low fuel prices likely help ls
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walmart shoppers more. and another point of differentiation is the sales and traffic trends. on the phone, walmart cfo brett biggs told me most were good throughout the quarter. that differs from target and what other retailers saw with the april weakness. kelly. >> let's get to the closing bell exchange now. also we want to get to breaking news on oil, okay we'll save that and get to the exchange. susan fulton is here, peter costa from empire executions and our own rick santelli. welcome, everybody. susan, talk to us about these markets and how you'd play them given these reports about retail in the consumer. >> well, first we do not think there's going to be a rate increase in june. we don't -- we have a low gdp, we have nothing showing us that momentum has begun. so we think that the fed is being politically wise by saying there might be but we don't think they're going to be.
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two, in terms of retail, you know, the monster is amazon so we like retailers that don't have to go into the battlefield with them. lowe's, for instance is a home improvement stop. has lots of people to help you figure out how to do that, tjx is a clothing store that has lots of fun kinds of things you can do, treasure hunts you can do in the store, both of them continue to beat. we think those are the people that are going to continue to beat. >> hang on for just a moment. we're going to break in with breaking news on oil demand. susan lee has more on that. >> the american petroleum institute came out saying that april demand, they're seeing the strongest april demand for petroleum in eight years. looks like deliveries were up 3.6% in the month, this comes off the api report that said supplies were down last week so crude oil meantime we're looking at prices closing close to the highs of the day. back to you. >> thanks for that, susan.
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let's get back to the exchange. rick, i'll come to you. if we look at may as a whole, we've had the dollar strong and oil strong, two things you don't usually see hand in hand. do you think one will have to break down pretty soon? >> i'm one of the few people that would think the dollar has a huge impact obviously in dollar denominated commodities. but commodities can and have many times in the past gotten a life of their own so i think the commodity story isn't necessarily only an affect story but i think dollar story itself is hugely a fed story and to listen to all the remarks today, i was so happy yesterday that the word "likely" was there. i think everybody should have turned the microphones off right then because now it seems we're debating likely and we're right back to the same game. i don't know about anybody else but everybody, take a breath. after what? over six years of virtually zero
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rates with one tightening, the head of the new york fed wants us to swallow the idea that he's going to have an epiphany in less than a month about a tightening. i'm sorry but it just seems ridiculous. ridiculous. >> ridiculous that they are now suddenly going to go or ridiculous -- what do you mean? >> ridiculous that we went from likely to all of a sudden data dependent in three and a half weeks. either it's likely or it isn't. this game of words, it isn't -- it's worse than the emperor has no clothes, it's the fact that we have a litany of tailors for a naked emperor and it gets bigger and the comments get crazier. >> all right. peter, with that cautionary as we ask you to comment, what is happening? how are people trying to make sense of all this? >> kelly, i think a lot of people are -- i think the expectation is that we are going to have a rate hike in july. i don't think june but i think it will happen in july. that's where you've seen the volatility in the market based on that. until they come out and the fed
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says no, we're going to put this off until we start talking about in the september, whatever the reasons are, going back to rick's point, you're either doing it or not doing it. but they may say something in the interim that will make you believe something will happen later rather than sooner. that's what the market is reacting to, dudley's comments this morning. retail sales are good. why would at no time market be up far? it was more about the rates than anything else. >> we've seen markets sell off a bit in reaction to the fed developments in the last couple days but it's not been the same across the board. retail, as you've already touched on, one example. what about the banks? is this a time to dip one's toes back into that sector? great performance in them yesterday. >> oh, no, no, no, no, no. do not get back in the banks. the banks have a number of regulatory issues, they have a lot of problems with balancing and they're trying to play a game that isn't popular anymore. i mean, the brokerage industry has changed geometrically in the
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last five years. that's why we aren't in any of the big brokerage firms, we're in td ameritrade and schwab because they buy and sell on the margin. they're not trying to create product or pay expensive salaries. >> susan, i want to show a pair of graphics here which you'll probably be familiar with. they show how risky bonds have become. it's from the "wall street journal." a one percentage point increase in yield the u.s. ten year loses 9% of the value. van knees 40-year is down by a quarter. you don't see that rate hike coming but when people are looking for safety in these markets do you put them into bonds and fixed income or shift them into stocks? >> right now we're in very high quality we're certainly short and we certainly have more of our bond allocation in cash than we would normally have and we are able to get a pretty decent
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dividend yield out of a high quality stock. >> rick, how much flatter can the yield curve get? we've seen it flatten recently and in the last 24 hours. do you think the short end has priced in a june or july hike or just the fact that we will now get a hike at some point this year? >> with two years definitely has a good nose but it's still blindfolded like everybody else in a dark room groping to handicap what the truth is and it's had a big effect. but wilfred, think about this. this is fascinating. the curve wiggles a lot, trying to nail it down is like trying to hit a fly with a dart if 20 paces. if you considered today to be the close of the week, the yield curve steepens, two years as they set up about a dozen basis points and the ten year is up about 14. to answer your question more specifically, i don't think the yield curve means what people think it does but i think every time the war of words versus actions is aimed at tightening, the two year note-year-old goes
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up and vice versa goes down. is that a reality? after listening to the fed speak, i'm not sure. >> peter we've seen a big move in the bond market. some reaction in equity bus do you think the fed will take comfort from the fact that they were flat and today they were down less than 1%? we haven't fallen out of bed with markets even though a hike is back on the cards. >> i think this is again we're going to be responding to everything the fed says. they may -- i don't know how much they really base their decision on what the market is doing and how the market reacted to whatever they say. i think they're looking at a much bigger picture. i think they look at the -- they're data dependent. looking at equities to me is a small part of that picture. so i don't think it's really -- i don't think they're worried about it that much what the response here was. >> all right, rick what was that blind -- got a good nose?
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blindfolded? the analogies are the best in the business. rick, peter, susan, thank you guys, we'll leave it there, appreciate it. we have a little less than 50 minutes together-to-go in the markets. the dow is down under 17,500, s&p is giving up nine and the nasdaq is the worst performer down 32. still to come here, a gene mutation that reduces the risk of heart attacks. how amgen could use that information to create a blockbuster drug. and we'll go live to charles de gaulle airport in paris for the latest on the missing egyptian airliner. you're watching cnbc, first in business worldwide. ♪ ♪ (singing) you wouldn't haul a load without checking your clearance. so why would you invest without checking brokercheck? check your broker with brokercheck.
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man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems.
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welcome back. watching markets here which green in selloff mode. the dow is down 90, act half a percent, the nasdaq is down 29 but check out urban outfitters and american eagle. we brought you their earnings last night. both are soaring in the market today. urban outfitters revenue beat street estimates and same store sales surprised the upside, shares up 14%. american eagle also reporting better-than-expected bottom line. its profit margins improved an
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those shares are popping 18%. >> certainly differentiation to talk about, not just fed-related? >> you have arrow postal going bankrupt on the one hand, american eagle doing better. amgen has discovered a gene that reduces heart attack risk and this could lead to interesting results. >> this is a relatively new way drug companies are going after new targets. they sequenced the genomes of thousands of people and compare genetic differences they see between people to what happened in their lives in terms of their health. in this case, they looked at the risk for heart disease and heart attack and they found in sequencing a lot of icelandic people through their subsidiary was that people with a certain genetic mutation had a 34% lower risk of heart disease and heart attack which conferred into a year longer of life span. we talked to the ceo of decode genetics about how amgen will turn this into a drug. take a listen. >> the mutation we found is a
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so-called loss of function mutation, it damages the function of the protein made by the genes so what amgen has started to do is develop an inhibitor of that protein hoping to basically simulate the fact of the mutation by a drug directed against this protein. >> so we've seen this happen at least once before with amgen and regenron's cholesterol drugs known as pcsk 9 inhibitors. amgen says it's about two years away before they test this new drug in humans. >> are they the only ones on to this? >> they are the ones who have identified this gene but since they published in the the "new england journal of medicine" the doors are open and anybody can start developing drugs targeting this gene mutation. >> i wonder if this is the first time something like this would be attempted. what kind of peres accident there for identifying and trying to mimic a gene like this? >> drug companies are doing it many much mar targeted ways.
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region ron has an effort but in the past it's been on an academic level. for instance these cholesterol drugs, this mutation was discovered at the university of texas that people naturally had a lower heart attack and heart disease risk who had this pcsk-9 regeneration. it takes a long time to develop the drugs but they've seen they can genetically validate the targets and they're starting to do it in house. people are excited about this and that's what president obama wants to do with the precision medicine initiative. >> is fda approval harder when based on a human gene? >> probably the opposite. the fda likes the genetically validated targets so what people say is so exciting is this started out in people. normally you're looking for these targets in nice so in people this genetic mutation confers a risk of heart attack. you would hope you would have a higher likelihood of translating that into a medicine that works
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on people. >> thank you very much for that. we've got minutes before the bell, the dow is down just shy of 100 points, about .55%, similar moves in percentage terms for all three indices but we're off the lows of the day. more after the bell retail earnings. also heading your way, the gap and raw stores are on deck today. we'll tell you what analysts are looking for as soon as they hit the tape. >> also the latest developments on the egyptair plane that crashed in the mediterranean sea earlier this morning. don't go anywhere, you're watching "closing bell" on cnbc.
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you guys have been doing buying during the break. we're down only 70 points. about .4% for the dow, the s&p is down about six or seven points. there's the map for you. half in green, utilities and consumer staples leading the charge up .8%. the likes of industrials and health care offsetting that down .8%. >> now to the latest developments in the investigation of the egyptair plane crash. hadley gamble joins us from charles de gaulle airport in paris. what's the latest there, hadley? >>. >> reporter: what we know is that the white house, at least, is watching this situation very closely and they even say it's just too early to tell what happened to egyptair flight 804. we've heard multiple conflicting reports all through the afternoon that there was debris found, the possibly of a life
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jacket. now we understand from greek authority, they're telling the associated press and afp that that debris found off the coast of crete was not a part of debris from an egyptair flight. this is interesting because what we know today is that this flight originated overnight here at charles de gaulle airport and they lost contact around 2:30 a.m. local time, it slipped off their radar. we've been told this flight began to make serious swerves before it plummeted but no further word yet from french, greek or egyptian authorities as to what has happened to this aircraft, this airbus a-320. another thing to note is this is another major blow for the government of president al sisi in egypt. this is the third incident to involve an egyptair flight in the last year alone. and of course that will have major implications for that country's tourism sector, this is a tourism sector that support te s the egyptian economy. so major implications for egypt and also major implications
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possibly for the french government as well. earlier today, the french decided they would extend -- this was a scheduled vote but they decided to extiend the current state of emergency powers and that's been in place since the attacks last year. guys? >> hadley, thank you for now. hadley gamble. let's go to colonel jack jacobs, a veteran of the u.s. army, also denny kelly, a former pilot now principal at kelly james and associates which is an aviation accident investigation firm. guys, thank you both for being here. denny, beginning with you because this investigation is still playing out, what do you think the next steps are? >> the next step is probably what they've already started and it is they're going to look for wreckage. the water there is very deep and it may habe very difficult to find. if this wreckage is on top of the water and floating the current will take it away from where it originally impacted so it will be difficult to find the
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wreckage and they'll need to find the major part of the wreckage to determine what brought this airport down. was it an explosion? and if so where was it located and they will be able to tell if they can find that, they'll be able to tell what kind of explosives were used and that kind of thing. >> colonel, the fact that there was a relatively recent isis-claimed attack on a russian jet in that vicinity, only a few months ago, people are drawing comparisons. are those comparisons too early or is that a possible cause? >> colonel jay zmobs. >> oh, you were talking to me? sorry, i didn't hear you. no, it's not too early. look, isis is extremely active and they're active across borders. they've decided to fragment their operations so they're not as vulnerable as they have been on the battlefield.
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they continue to attract people from over place, particularly europe to trade them and send them back to where they came from with new and deadly skills. i think it's a perfectly reasonable comparison to make. >> denny, now people are going to obviously be asking if it is an explosion, how did it happen and how does it continue to keep happening? >> well, first of all this airplane originated in tunis, with ent to paris and took off for cairo. this device if it is such a thing, and i believe it is, could have been secreted on the airplane in tunis. gone through patience, nobody looked for it, it could have a barometric fuse on it that went off the second time, not the first time, but the second time it descended so it's very difficult to find that kind of thing and security is -- i don't care where you talk about in the
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united states or europe there's some serious lapses in security. especially in places like tunis where you can get devices like this on the airplane. >> denny, you've also flown a plane of this type. what can you tell us about the aircraft involved here? >> well, the airbus is what we call an electric airplane. everything is controlled by computer. there have been numerous crashes in the last few years of these airbus airplanes because things go wrong with the computer and the crew can't handle it. but in incident appears to me from what i've heard and the explosions that we're seeing that it was not a fault of the airplane, it was an an explosive device that was set off. basically, it's a good airplane, it's an easy airplane to fly and it's a nice airplane. >> colonel, even if we take today's incident and naught to the side, recent attacks seem very much focused in europe and north africa.
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one would think, though, that the likes of the united states, perhaps the united kingdom, too, they would be more high profile targets for these terrorists? why are they not being hit? is it down to the strength of their own security services or are europe and north africa more high profile targets these days? >> well, those two things and there's a third, yes, we have fairly robust security. i think it might be interesting to note that in cairo security is extremely robust. you can't get anywhere near the terminal until you've been searched and your bags have been searched. paris is a lot easier to get to. and, yes, these are high profile targets but i think more important than that is the relatively large number of disaffected people in places like europe and the middle east. we have far less of that. yes, we do have people who are disaffected and who from time to time leave and go to the middle
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east but they have scads of them in europe and scads of them in the middle east. it's just a hotbed of radicalism and it's much easier to recruit from there and much easier to attack there than it is to recruit and attack in the united states. >> denny, one quick final question. almost 15, 16 hours since this plane went down. in this day and age with the level of surveillance and communications we have, why does it take so long to get answers when these sort sorts of things happen? sometimes planes go down and we don't get answers ever. >> well, if you're talking about locating the wreckage, it's very difficult. i've been on accident investigations where we know precisely supposedly where the airplane went down and it took us days to find it, again, this thing went in the water and with the currents and winds and that kind of thing, the wreckage could be floating anywhere. the water in that part of the world is 17,000 feet deep in the mediterranean. it could be all the way to the
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bottom and while it's going down to the bottom the current could have carried it anywhere. so it's very difficult to find these things, a lot more difficult than it sounds and i would like to add one other thing and that is the security in these countries for the people, for the baggage and the people themselves may be great but the security for other people that work on the airplanes, that fuel the airport, kater the airplanes is not any good and that's the way they can get these bombs on these airplanes. >> denny, thank you very much for joining us, also thank you to colonel jacobs. time now for a cnbc news update with sue herrera. sue? here's what's happening at this hour. secretary of state john kerry attending a nato foreign ministers meeting in brussels. topping the agenda, how to handle security challenges facing the alliance, from afghanistan and the middle east to a resurgent russia. rescuers struggle to find hundreds of people missing after landslides destroyed at least three central villages in sri lanka. fresh rains triggering smaller slides forcing rescuers to
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briefly suspend their efforts. so far, 18 bodies have been recovered but at least 220 families are unaccounted for. a baltimore judge hearing closing arguments indward nero, six baltimore officers charged in the death of freddie gray. the judge giving each side 45 minutes to sum up their case. he will announce his verdict on monday. and this story intrigued us, google has been granted a patent for an adhesive front end. it's designed to limit the injuries of a pedestrian if struck by a cash. the theory goes a pedestrian would become stuck to the hood and bumper to prevent a secondary blow to the car's windshield, the roof, or the road. but i'm wondering what happens to the pedestrian if the car careens into something else like a wall or another car. i don't know, brings new meaning to the word hood ornament. >> we've had 100 years to test automotive technology. it's interesting this is not coming from one of the established companies.
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>> it's like fly paper. you stick it on there and that's it. >> and this is for the second impact. the first impact presumably is what does most of the damage anyway. >> one would think. >> it's a blawhacky one, tacky . sue herrera. minutes to go before the closing bells, we're staring at a 90-point decline for the dow. the other indices doing better than that around .4%. coming up, a trader tells us what he's watching into the close. and golfer phil mickelson paying back what the s.e.c. called ill-gotten gains. and charles davis charged with criminal insider trading. we'll discuss the potential impact on mickelson's brand. stay tuned.
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i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that
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information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.
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welcome back. markets are headed back down towards the lows of the session. the dow is down 98 points. cisco and sales force, check these out. they're higher on better-than-expected earnings. we brought those to you last night. cisco is seeing strong demand for its security products. it's up about 3%. sales force raising its full year forecast on rising demand for close based software. those shares up 4%.
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>> i'm with tim ansome from tjm. we'll discuss today's market moves. bigger action to the fed over the last 24 hours or 48 hours. have they put june on the table as a possibility but still unlikely to use it, do you think? >> well, they've definitely put it on as a possibility and i think that it very well could happen. you have to realize that their comments obviously came out of their april meeting and at that point in time in late april the s&p 500 was within 1.5% of an all time high. i think there's part of the fed that would love to pull off a rate hike when the market lets them get away with it. so since then we've had decent numbers on the economy, they're almost could justify their inflation target of 2% and it depends on a couple other things falling into place and you have to remember that brexit vote the following week probably gives
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them an out to not hike. >> does this now change the sector plays? did the market have to move around in terms of what goes up and down? do you buy banks now? >> we saw a lot of they had that yesterday. bank investors got trapped at the end of last year because they thought the curve is going to get steeper and it didn't happen that way. now rates will go up. we get a hike in june or july, another before the end of the year, the curb will get steeper and banks are so underowned that people can increase their exposure a little bit. hopefully not get caught like they did in january and february. >> aim anderson from tjm. bank having a couple good days already. kelly, back to you. a little more than 20 minutes to go still. dow is down. we'll play another game of retail roulette. gap earnings are on the line. maybe the clothing game can change the game. plenty of wall street deals have been made on the golf course but a deal involving superstar
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golfer phil mickelson has led to federal charges for two others involved in the deal. those details next. [engine revving] [phone buzzing] ♪ some things are simply impossible to ignore. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility. this is the pursuit of perfection. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out
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monsanto is higher 4%. the world's largest seed producer is receiving an unsolicited takeover bid from german chemical company bayer. neither company has released terms of the deal yet. >> the former chairman of dean foods and a well known sports gambler were named in an insider trading case that also benefitted golf superstar phil mickelson. >> this case involves the former chairman of dean foods, as you say, thomas davis, and also well known nevada gambler billy walters. preet bharara, the u.s. attorney in manhattan laid out the government's case here that they participated in an alleged insider trading scheme. here's how preet bharara described it earlier today. >> armed with inside information from davis, walters traded in advance of good news and bad news alike. it was all good news for walters because he had the information before everyone else. he had tomorrow's headlines
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today. >> here's what we know. according to the u.s. government documents unsealed today, the charges have been filed against former dean foods chairman thomas davis and gambler billy walters. now davis pleaded guilty and agreed to cooperate with the government. walters, however, his attorney says the accusations are false. now, davis is charged with tipping walters off about the spinoff of a dean foods subsidiary called white wave foods and other dean foods corporate activities, including look-ins to corporate earnings calls. walters also said to have profited by $32 million here and avoided losses of $11 million. now, how phil mickelson gets dragged into all this, the professional golfer, the s.e.c. named him as a relief defendant in a civil suit that was unsealed earlier today. s.e.c. says mickelson profited by up to $931,000 as a result of a tip he received from gambler billy walters.
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but phil mickelson's attorney put out a statement saying that mickelson feels vindicated he's not being accused of violating the securities laws in anyway. what the government said was that fill mickelson benefitted from the tip here but he's going to have to turn over the ill-gotten gains of the profits from that tip but that he himself is not being charged with violating securities laws. >> it seems lenient. he just has to pay back the money. he doesn't face accusations of wrongdoing. so he did this by mistake, he didn't know he was profiting from insider trading? >> authorities were faced with that press conference again and again by reporters today saying, hey, look, aren't you favoring the famous golf celebrity by letting him off with paying back the money but what they kept coming back to again and again at the press conference was what we've done is charged based on the laws and the facts of the case, we have brought the charges we think are appropriate. so that's the situation in this case. >> thank you very much for that.
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let's get to jane wells, she's got more on the impact to the phil mickelson brand and empire. jane? >> it could be beyond the courtroom. he's worth an estimated $180 million, but could he lose some of if sponsorship money because of this bet he made which netted him almost a million dollars? the s.e.c. is claiming mickelson made that after getting a tip from billy walters because mickelson, a well-known gambler, owed walters money. so the golfer bought nearly $2.5 million worth of dean food shares, that's far larger than any other investment he had in his portfolio. he had to borrow money from his broker on margin loans to do it. a week later the stock shot up 40%, he cashed out and paid his debt off. now, this is important here, you touched on it, mickelson is going to have to pay back that -- those profits plus interest. but he's not being charged with insider trading because apparently there is there isn't enough evidence to show he knew the tip was illegal.
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but listen to, this again and again they were asked was he getting special treatment. >> i don't think it sends that message. i think it sends the message we make charging decisions based upon the evidence and the law. >> as you heard, mickelson released a statement taking personal responsibility, expressing regret. sponsor kpmg which had its own insider trading scandal a few years ago tells us "we appreciate that phil's statement makes clear he respects and shares the values of kpmg." calloway says it has no comment on the case but it values their long standing relationship with mickelson, pga has no comment, just saying he will play in the memorial june 2. guys, back to you. >> jane, there's obviously the precedent of tiger woods and what happened there. i don't know how applicable this would be in this case. maybe it depends on if there's anything further that were to come to the surface about phil mickelson's investments? >> this has been going around for a long time, this investigation. we've known he's been attached to it for a few years now.
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the sponsor stood by it when it first happened. so far they're standing by him now. apparently because he's not going to be charged with a crime and even in -- he's not even being charged with insider trading on the civil side, either. so perhaps there will be some hits with the fans, we'll have to see. he's a very, very likable golfer but this is pretty amazing stuff. kelly, to me the most amazing thing is before he made this $2.4 million investment using margin loans from his broker, for a guy worth $180 million, he only had a total portfolio invested in the stock market of $250,000. that was it. >> wow, you're right. what is he doing with the rest of the money? i don't think we're taking investing tips from him. >> he's amassed $180 million from golf. stick to the golf is probably the lesson. >> but those figures. it's like an aggregate number. you don't know how much you're getting at any one time. still we'll see what kind of impact it has. 15 minutes to go go here, dow is down 80, s&p is down 7.
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vix was higher. a lot of the big moves we've seen in the markets have moderated throughout the session in terms of the dollar, but the nasdaq still down 23. still to come, getting dangerous for fixed income. that's right, dangerous. so says jim kahn, the cio of wealth enhancement group. he'll explain that word and why he thinks it after the break.
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edition mattress with sleepiq technology. know better sleep. only at a sleep number store. as watch the markets, we're pretty paired off, the dow down about 76 points. we it's been a grim earnings season. the gap an ross stores are going add -- >> we could see results on stock reaction move in of posing directions. consensus for ross stoers, earnings of 73 cents with a comp sales of 2.5%, that would be better than what the retailer forecast itself for comps. the off-price sector has been mostly strong this season. so hudson bay company was a weak
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outlier. gap, inc., shouldn't very much, the april sales report revenue $3.44 billion, a lower earnings guidance to between 31 and 32 cents. back to you. >> courtney, thank you very much. joining us on the floor is jim kahn from the wealth enhancement group. good afternoon yesterday and today in the face of a stronger dollar. >> it's an interesting market. good news is bad news again. any time we see anything positive on employment, even commodities, we hear talk of a fed rate hike. with the falx of fed rate hikes, we end up with a market selloff. the last three tightening cycles have been positive for stocks. in the short term probably more volatility as the fed readjusts
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expectations about what they expect to do in june and later this year, longer term probably more optimistic. >> does it mean on a ten and 30-year basis, the rates on bonds are moving higher, too? >> it decreases future inflation expectatio expectations. the fed pushes up the federal reserve rate. we could see the ten-year to stay con stapt or decrease a little bit. that said, i do think we're in a period where we could start to see inflation expectations creep up which means interest rates are likely to rise. that would be fairly devastated if you own long bonds in this environment because durations are so long with rates so low. >> top sector pick in light of the developments on the federal front over the last couple days? >> don't necessarily have a top sector pick, but i have a sector i'm particularly suspicious of. we've seen lots of bond
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investors pile on high dividend stock. low volatility is the hot factor. once interest rates start to rise, a lot of investors that favor these consumer discretionary and also utilities stock will pile right back out and back into bonds. that's an area we're watching for potential sell-off on the back of higher interest rates. >> if people say wait a minute, if you think the market is going to do okay and interest rates are going up, don't i still want to be in these? >> you probably want to be in the market broadly. the federal reserve isn't stupid. they don't hike interest rates unless the economy is showing strength. that tends to be good for revenue and for margin. that said, these low volatility stocks which have done so well over the last 24 months have been the safe haven. they've been the place traditional bond investors are going. i think they might be in trouble. i would say broadly diversify and don't concentrate all your eggs in those low volatility
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stocks. >> jim cahn, thank you very much. the dow is down 82 points. >> after the bell we'll talk about a story that could drive senator elizabeth warren mad. this lobbying group being put together by hedge fund managers. we'll find out why heez hedge funds need a lobby. you're watching cnbc. first in business worldwide. no one speed... no one way of driving on each and every road. funds need a lobby. you're watching cnbc. first in business worldwide. hee funds need a lobby. you're watching cnbc. first in business worldwide. ehee funds need a lobby. you're watching cnbc. first in business worldwide. she hedge funds need a lobby. you're watching cnbc. first in business worldwide. ehe hedge funds need a lobby. you're watching cnbc. first in business worldwide. he funds need a lobby. you're watching cnbc. first in business worldwide. lease the c300 for $359 a month at your local mercedes-benz dealer.
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welcome back. the closing countdown. looking at the dow down 81 points, about .5%. we paired losses throughout today's session which we did yesterday as well, don. markets aren't too spooked by the idea of another rate hike. >> no. the whole idea about what's happening in the markets, you an environment where traders and investors are not feeling negative enough to push this thing ain't full-blown sell-off. there's no real compelling reason to buy stocks. we did see a volatility, a trade happened in some of the financials. they're giving back some today. we're seeing the utilities and consumer staples start to do better, that's because interest rates are taking a little lower. the interesting thing about this whole thing is what's going to happen with regard to capitalist going forward. for the most part, some traders consider walmart ears earnings
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to be the unofficial end to the season. people will start taking stock in what's happening. you've only got about 13 reports from s&p 500 companies on the earning site as well. >> is walmart down to a management and execution question rather saying it's staples versus discretionary or online versus high streak? >> there have been winners and losers which means some people are operating or executing better than others in terms of the overall environment. walmart was set up for what some traders call a real bounce. the stock entering today down 20% over the last 12 months. it was a stock a lot of people had given up for dead or looking the give up for dead but has shown signs of live. the real issue is whether that's indicative of the overall retail theme. it's been negative over the course of the past few weeks. walmart is the huge kpechgs because it's the biggest retailer out there.
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maybe they signaled something about the economy, that's different. the naysayers will go on and say walmart doing well or better than expectations is not a great sign for the overall economy. they cater to a very specific part of the income spectrum and do a lot of work with people who don't spend it at places like nordstrom, michael kors and luxury items. >> they spoke at walmart. is this a dead cat bounce? >> it's interesting. i would say this. i would say if you have a walmart situation, you're not only looking at just to cost side of the equation but also perhaps what's going to happen with consumer wallets as well. you have gasoline prices on the rise, mark edly so and people taking the purchasing power away. walmart has to see whether they can navigate through that where perhaps the buying power of its core base is not going to be as strong as it was say this time last year. >> quickly, we had a strong
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dollar anyway this month being reinforced with talk of rate hikes. how important is oil strength to keep equities going? >> the correlation is still there. we'll see if it starts to break down in the coming days. >> that's the closing bell for you. down .5% or 93 points on the dow. that's it for this hour of "closing bell." the bell rang there by hormel foods. welcome to the closing bell. i'm kelly evans. we were in negative territory most of the day, the dow declining 92 points, about .5%. the s&p 500 gave up a little more than a third. the nasdaq gave up about .5%, about 27 points. retail earnings, brace yourselves. courtney reagan will be covering gap and ross stores. susan lee is following chip
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equipment maker. we have mike san tolly here along with rob cobs, reuters breaking news. guy adami joins us as well. mike, start us off here. there's a sense yesterday with all the discussion about the fed that, would the market be able to withstand this major shift? is the answer starting to be, well, maybe not? >> maybe not so much, but i also don't think the reaction has been particularly violent or dramatic. basically this new picture of the fed is looking for an opportunity to raise, wanting to get on investor's radar in june or july is a live time when they might raise interest rates. it didn't strike a market that was already giddy, already at highs. i think we continue in that mode right now. we have to test the market for whether it was just the soft dollar, just oil rally. all these forces that were
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compatible with the fed on hold, if the market can withstand that right now. i think the question is maybe. the fed is coming at a time when earnings are not necessarily growing right now. it's a leap of faith to think they're going to come back in the second half. the economy is growing fast enough for the fed to hike, not fast enough to please investors that profit growth remains on trend. what do you think, rob? >> when you find in london and they also say ground control puts us in this circular pattern and you go round and around. >> is that just london, by the way? >> definitely at heathrow. the reason i ray that analogy, i think all this stuff like brexit, the fed doesn't want to do anything before london or the uk throws everything in disarray. >> that's why the july thing is interesting. >> come july, we'll have the u.s. election, spanish elections. you have so many of these
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events -- >> you're not saying the spanish elections. >> mott the spanish elections. the italian referendum in november. >> there's always something. >> this year is full of them. i think generally until brexit is out of the question -- >> watching the exit polls before that. >> you can't tell. they're in over three points, out over 15 points. who knows? >> guy adami, the futures market were pricing about a 28% chance for june. better than half, 5% for july, 100% for november. >> i think we're talking about all the different reasons why they would, why they shouldn't. there's so many bogeys out there, maybe they shouldn't be looking at all that many stuff. if you think about it, the more they look, the less inclined they are to move. there's always a reason not to do something. i'm not saying they should do it now. if they do hike, they're hiking
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in what i believe to be an earnings recession and revenue recession. that won't help. hey have they have to do something at some point. they've hit their yardstick, the goal posts are there. my point is there's never a right time. they might as weld do it in june. >> hang on. ross store earnings are out. courtney reagan, what can you tell snus. >> we have numbers from ross stores, it operates much like a tjx. earnings coming in in line, 73 cents per share on revenues of 3.79 billion. that's a little light. ross stores is reiterating its second quarter same store sales increase for one to two percent. as you can see, shares are
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moving down, possibly a little disappointment from this off-price retailer. possible weak spot in a space that's been otherwise fairly strong. remember we got those numbers from sachs with comp stores down 5%. >> i wonder if we can see tj maxx move down in sympathy. there's always going to be a best operator in this space, so net necessarily is tj maxx going to suffer the same thing. when everybody starts to realize, hey, we better get on with this discount program, take the inventory, do whatever the nordstrom rack and all these things -- >> ross stores has traded tick for tick almost with tj maxx. tjx gets more credit because it's bigger. ross is more regional. the thing about it is, this is a 20 times earnings stock, a growth-priced retailer. therefore, it cannot withstand what courtney characterizes as a slightly light top line in
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comps. >> this is the area, rob, where everyone is going in retail trying to find again the business model that still works in this environment. >> like mike said, tjx -- it's flattish over the past year, but that's not bad when you look at the rest of the retail landscape. you've got -- i think nordstrom came out last week with crumby numbers. that stock is down like 50% over the past year. there seems to be the bifurcation -- i don't know if you call it cheap and cheerful versus expensive and sobering. i don't know. it's played out in the market. i'm not exactly sure what the trends are. we may have conversation about that in the next hour. >> cheap and cheerful. cheap, cheerful and quick would be the third part of that, right? >> you just described me in a nutshell, cheap, cheerful and quick. mike hit the nail on the head. a retailer trading at 20 times earnings whose stock has been -- in a word, parabolic over the
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past couple years, when you cut guidance like they cut guidance, you'll suffer the consequences. that's what's going on. people are taking the shoot first ask questions later, the valuation is going to get recalibrated, probably closer to 16.5, 17 times which is probably where it should be trading. if you can pull up a chart of the stock over the past three years, it's probably gone from 30 to 59 in two years. it's been a huge move. now valuation is getting in the way. >> tj maxx down about .5% on that news as well. let's get to applied materials. >> strong report card, strong guidance. let's get to the earnings. in the quarter fiscal, a mat at 34 cents apiece. still in the range of what they guided. when it comes to revenue, it comes in pretty much in line, a little beat, 2.45 billion for the quarter.
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margins higher-than-expected, 42.7%. here is why we're seeing the shares rally at this point. the guidance forward for the next quarter, it's up to 46 cents to 50 cents apiece. ammists expected guidance to come at 36 cents apiece. that's a huge beat. we heard from a. mat calling for record earnings per share in the third quarter. there you go. back to you. >> those shares up 3% as well. it's a different name. we've been focused on the retail part of this earnings season, but this is a huge part of the economy. >> semiconductors up close to 2% this week. it's been one of those stealth strong areas people are looking for one of these subgroups of cyclical names you can get ahold of. >> we look at semis as the leading indicators' gauge. >> there's a way of thinking that they're kind of the new industrials or the industrial components type company in which case i don't think it's like the
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early 2000s where the idea was the market couldn't ramally unless the semiconductors did. but i think they're a little bit of a tell on whether investors want to bet on an up turn. i want to bring you more details when it comes to guidance. ross stores is forecasting second quarter earnings to be in a range of 64 cents to 67 cents. the street has a consensus of 70 cents. that's weak as well as the full year earnings guidance. ross stores is looking for somewhere between $2.63 to $2.72 while consensus from analysts is for $2.73. so that also could be additional reasoning for the shares being under pressure after hours. kelly? >> courtney, thank you. we expect gap stores to report the results here momentarily, too. let's bring into the conversation chris johnson from j.k. investment group. he's been watching technical moves in the s&p. you say they might be sending a warning sign here, right, chris?
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>> kelly, there's all kinds of them right now. i think it's interesting today we saw the s&p 500 go to a low of 2025. where did it close? 2040.04. 2040 has turned into such a critical level for the s&p 500 that everybody needs to be watching that one point right now. >> there's also been talk about a death cross and these things happening again, chris. it often feels like these are more coincident that leading indicators of the market. >> you know what? in some cases you're correct. we don't put too much credence in the death cross and some of these other figures. what we're watching right now with that 2040 level is a level of the 20-month moving average. when you look back historically on the s&p 500, that's a great line between trading in a bull market and bear market. below that in december, we saw the circumstances for that. before that, it was 2008 before we saw a meaningful cross between the 20-month moving
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average. the trend is your friend until the end. there are signs out here if we move much below the 2040 we're going to see active selling and that trend is not going to be so friendly to us. >> chris, i wonder what you think about how people are kind of setup right here. of course, that 2040 level is no surprise. these moving averages are pretty widely followed. it seems as if a lot of traders have gotten hedged up. i don't know if that's going to be decisive in terms of how things played up. that might have been the case in december, also. how do you think people are situated right now? >> if you look at indicators of sentiment by the traders, i mean large short interest activity, we've seen a decline of that coming down with s&p 500 companies. that tells us the sentiment is getting less pessimistic than it was before. the other great gauge is going out and looking at those investor polls, investor intelligence, et cetera.
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those are mixed right now. we saw them drop low in february and bottom out. they shot back higher not necessarily to over thought levels, but nonetheless everybody getting bullish very quickly. the other thing i'd point out on the sentiment side is the vixx. we've watched it move across the bottom at 1416. if we get many more closes you'll see professional traders hedging against volatility. >> i was going to ask, rob, what's on your dashboard? when we talk about gauges and ways of trying to understand which way we're going here. >> as much as i love talk of necklines an heads and shoulders, i don't understand them fully. i think tissue of earnings. we have peak margins. how you get out of that and as i think guy called it an earnings recession, how you get top line
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growth, all of this is a big mystery to me at the same time the fed is trying to figure out, as we've just discussed, reasons not to do things. again, i look at the fundamentals of it. i just don't see anything out there that counteracts this idea that things are going to be -- >> guy, a quick last word. >> in terms of how people position, mike, you know the answer to this. when the market goes higher, people are not long enough. when it goes down, they're not short enough. you talk about high-frequency trading and the algorithms, that's what we're talking about. 2025, that's where it stopped today and bounced. we'll see what happens tomorrow. i'll say this, though, the vixx to me is way too cheap given some of the headwinds i'm seeing. >> guy, thank you for joining us. >> later, kel. there's much more coming up on "fast money" at 5:00 asking ceo patrick doyle how he's using tech to corner the market. we'll break down retailer
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results. on the flip side, posh mark which help people sell their own clothes online are taking a bite out of the retail pie. later, elizabeth holmes supposedly throwing out two years of test results. is this the beginning of the end for what was once the darling of the health care startup world. you're watching cnbc, first in business worldwide. ♪jake reese, "day to feel alive"♪
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gap's earnings are out, straight to courtney reagan. >> i want to tell you gap has said they're going to be closing 75 total stores by the end of the fiscal year, 53 will be old navys located in japan, about 22 that means will be banana republic stores that are mostly international, this plus an additional streamlining of the operating model will save $275 million annually in pre tax savings for gap, inc. if we can get to the earnings, remember gap did warn on may 9th its first quarter earnings would be between 31 and 32 cents. they did come in at 32 cents, also gave us revenue of 3.44 billion. that stands. and comp sales is down 5%. again, that also stands from
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what we were told by the gap on may 9th. if i can get to the guidance, this is very interesting. for the fiscal year, gap says consensus of $1.92 is doable, but not reaffirming its prior guidance or indicating where its expectations would call compared to the consensus of $1.92. they're saying that because of trends and apparel retail environment would need to improve from the first quarter offi fiscal 2016 in order to achieve this estimate. a very interesting way of not reaffirming their prior guidance. if i can give you a little lit more color, there was traffic pressuring gap and old navy. the gap's conversion started to improve, but it's hard to see because of the traffic problem. and then customers at banana republic are unwilling to buy clothes unless they are at a very deep discount. that could be a big problem going forward. kelly? >> they had things 40% off for
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like a decade now. courtney, thank you. those shares a little higher. they've fallen so much. >> it seems like obviously people are a little bit relieved. things didn't fall off a cliff since they reported comp store sales. the big question surrounding this as an investment, are they resizing this company fast enough. 75 store closures on a base of 3300 stores worldwide doesn't sound like radical surgery. it seems like that's the obvious question. >> retailers hit hard this quarter. the rise of social commerce may have something to do with it. as fashion resale apps for your phone ap tablets gain popularity, creating even more competition. for more on this now, and its impact across retail, we're joined by man nearby chandra, founder and ceo of poshmark. welcome. >> thanks for having me. >> poshmark allows me to sell my
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garments to someone else. how big is this industry? >> it's massive. we grew threefold last year. today one in 50 women in america are selling on our platform. we have at any given point in time 18 million different items available for sale. there's an order placed every second on the site. it's moving very fast. >> are these items from banana republic, for example? >> they are from banana republic, they are from chanel, from forever 21 and thousands of brands that you may not have heard of which are up and coming brands, fringe and leather, tj designs, april spirits. we have over 5,000 different brands. >> the reason i raised banana republic because we're talking about gap, going to close 75 stores. perhaps it's a branding problem with the way people are shopping today. how would you describe what's ailing gap and aiding your
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startup business? >> i think people social and realtime. we're moving from an age of reading newspapers and magazine to looking at instagram and snap chat. that's what people want. people want what chrissy teigen and john legend wore last night. that's what moshmart provides. brands have been very slow to act. >> i'm just chuckling thinking of what chrissy teigen and whoever are wearing. seriously, though, what does that mean for these existing struggling retailers? >> he just made the analogy with content creators, those of us in the news media. ultimately content is king. i do think fashion is part of this. gap's problem isn't just that people are buying online. it's that people don't -- it hasn't been cool since "friends" was on the air. that's a long time ago. if you look at fast retailing,
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japanese company owns uniglobe. that stock is up like 125%. you can just track that against gap which is down, whatever, 30%. this is just -- the content is king. they've come up with better content. it's not that people stop going and shopping and having the experience. they're going for something else when they walk into the store. although there are greater trends, i don't disagree with that, it's not just a question of changing habits. they want to go somewhere where there's something cool to wear that maybe john legend was wearing. >> it's been going on forever. is it a permanent change that people don't seemingly care much about labels or is that a phase? i think that's a real challenge for the established brands, they have to try to freshen up their labels or go away from them. >> i completely agree with the power of content. you have to increase the velocity of content. if you look at what's happening,
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the inventory is constantly changing. we have people cure rating our inventory 4 million times a day. you have to compete with that and provide content for that. the second thing is that you have to create a way for people to participate, people to solve of evolve your brand, manage your brand. it's no longer about being away from your brand. it's about opening up your brand, lady gaga taking the chanel bag and taking a market and changing it. these are anti theet cal to the brands an magazines. if you look at your channel, you have realtime content that's changing fast. that's why it's so engaging. if you look at poshmart, we have products changing by the second. that's where brands have to move away from a million sacred cows, a million beliefs and really guesstimate them and change them to evolve themselves. it's not about the fact that people are moving away from big brands. people love nike, lululemon and
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banana republic, but they need to evolve it. >> man nearby, thank you for joining us, founder and ceo of poshmark. we'll move live to paris into the investigation of the egypt air crash. find out what we know about the safety record of this plane model. that's after this.
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a senior u.s. intelligence official says imagery indicates
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an explosion on egypt air. along with phil lebeau in chicago for a closer look at the safety record of this particular model, hadley we begin with you and the latest. >> hey, kelly. multiple conflicting reports from multiple confliauthorities. we heard that there was evidence that an explosion did take place. the white house coming out earlier saying it's too early to tell what exactly happened to egypt air flight 804. this is a flight that originated right here at charles de gaulle airport around 11:00 p.m., expected in cairo at 3:15 a.m. in the morning. it went off the radar between 2:30 and 2:40 a.m. local time as it was flying over the southern mediterranean. a couple things to update you on. greek authorities say debris found off the coast of crete
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earlier today does not belong that this flight. they say possibly a life jacket and large metal debris earlier in the day, it was confirmed as part of the flight. now they say it wasn't part of egypt air flight 804. we have to understand as weld that french authorities and egyptian authorities all day today being very, very careful not to confirm any of these reports. right now the egyptian authorities being very careful to say as little as possible. they say this plane is still missing until debris can be found. french authorities earlier extending a state of emergency in this country. they say it's too early to tell. kelly?hadley. let's take a look at the safety record. phil lebeau has more. >> it's a strong safety record for airbus's most popular plane, the a 320. many people refer to it as a work horse. it's extremely popular on medium haul routes and longer haul
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routes. this of this as the counter to boeing's 737. it's been flying since 1987, almost 30 years. right now there are just under 4,000 in service. more than 6700 have been delivered since 1987. there have been 31 fatal crashes. you might be saying 31 crashes, that's a lot. actually when you consider the tens of millions of miles that these planes have flown, that's a pretty good safety record. in fact, it's been vouched for throughout the industry by many people. two crashes that get a fair amount of attention, air asia in 2014 where the plane went down in the java sea during a storm. there's a number of reports about whether or not the pilots are ultimately responsible for what happened there. and then what you're looking at here is the debris from the german wings crash of an a320. that was pilot suicide. it was not a case where the plane was at fault there. the safety record, as i mentioned, is strong. remember, this is a plane that
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is not only built in europe, they also have a finishing center in china, and they're going to soon be having a complete final assembly of a320s coming out of alabama. so what you have right now are a number of facilities that will be building the airbus a3206789 as i mentioned, kelly, it really has a very strong safety record. it's not perfect. there have been problems in the past, but it has a strong safety record. >> phil, is there any reason to think it would have been impenetrable, if there was some explosion on board? >> no, no plane is impenetrable. depends on hat the device is. fire and explosions generally speaking on a commercial airplane almost always end with catastrophic consequences. if there was an explosion on board and given that there was no distress call and it plunged so quickly, that's why a lot of people are steering in that direction right now. >> guys, any thoughts on what -- would this give people pause traveling on an airbus craft
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like this or anything of the sort going forward? >> i talked to friends on wall street who thought after the paris attacks that that was going to kind of nix things like people's willingness to go to europe in the summer. i'm not sure that's going to play out. >> we don't actually know what happened. if it was a safety issue, then possibly you could answer that question. if it was, god forbid, a terrorist attack, i actually think that has bigger ramifications. that is the kind of thing that will stop people from, besides going the egypt. >> people from more than a dozen countries on board this aircraft including an egyptian who managed a french plant for prak tore and gamble. tragic. time for a cnbc news update with sue herera. >> a jury ruling that cinemark usa where 12 people were killed during a screening of "the dark
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knight rises" is not liable for the mass shooting. this is the first civil lawsuit stemming from the institute in a record rah, colorado. lawyers for the victim say they plan to appeal. part of a bridge collapsed over the northwest expressway in north carolina city this afternoon. a semi truck hauling a forklift ran into the bridge. no injuries reported so far. authorities have closed down that area. clashes broke out between police and demonstrators in paris during a protest against the new labor law installed by the french government. police used teargas to disperse rioters who were throwing stones and other objects. uber has outfit add ford fusion hybrid with radar, laser scanners and a high resolution camera saying it's still in the early stages of testing. we'll keep you posted on that. that's the news update this hour. back to you. >> thank you sue.
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theranos tossing out the results of two years investigations. activist investors are fighting back after increased pressure from washington. details on how are coming up. stay with us on "closing bell." the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing:
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dow down 91 points, the nasdaq down 26 points, big declines across the board. we had earnings after hours. let's take a quick check. ross stores down 6.5%. the discount space has been loved in retailing yet managed to underperform what the market was looking for. gap up 4%, and applied materials up nearly 5%. theranos has avoided -- the company provided the same statement saying excellence in quality and patient safety is our top priority and we've taken comprehensive measures to address the issues. these matters are currently under review. we have no further comment at this time joining us is the "wall street journal" reporter who broke the story back in
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october. john kerry radcaru. were they asked, it basically admits they were completely wrong. >> it's a stunning admission and probably unprecedented. there have been test recalls before of single tests by manufacturers of diagnostic equipment, but not tests put out by an entire platform. it's amazing. why are they doing it? i think because they're finally getting good advice from people who have dealt with federal health regulators and inspections, and their advisers have told them unless they do this, they're going to be shut down. i think that's why they're doing it. >> you say here a family practitioner in a suburb of phoenix said a theranos rep dropped off voided results for
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calcium,est general and test toft ron and one was for a patient who went to the emergency room. >> that's correct. >> this gets to the impact of these tests which is why regulator are so upset about this. >> absolutely. this is a patient who spent four hours in the emergency room in late 2014 only to then have her labs run again by the hospital she was at and the test come up normal. so this creates health scares for patients and then all the other patients who have made medical decisions, not necessarily going to an emergency room but perhaps had medicine prescribed to them or elected some kind of treatment or had a diagnosis not made because of erroneous blood test results. this is very serious stuff. >> is it game over for theranos. this company had a $9 billion valuation, albeit in the private venture capital market. is there any chance of them
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being able to raise another dollar from investors? >> well, we'll have to see. they certainly raised a lot of money in the first place. i'm not sure they've run out of those initial rounds of funding. in 2014-2015 they raised more than $6 to to million. it will take a while to go through that money. given this latest news and you have to wonder whether their edison proprietary technology works if they're now voiding two entire years of that technology's results. that is a central question. that was the technology upon which the company's $9 billion valuation was based. >> tim draper was an early investor. we spoke with him a couple months bag. he vociferously defended elizabeth holmes who had been a neighbor and even after further allegations and stories came out about what was gong on, was on the half-time report continuing to defend the company.
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take a listen. >> i wish her the best and i think this company could really be transformative, and the market is enormous. so, yeah, will be an interesting one to try to value right now. >> i've got to run. you think their nose survives. that's your bottom line. >> oh gosh, yes, of course. >> does that surprise you? >> i think tim draper is a great optimist, but i don't think he really knows what's going on inside that company or what's been going on inside that company for several years. unlike me he hasn't spent the past 16 months talking to a lot of former employees who saw with their own eyes the company's practices and all the quality control failures in that lab in newark, california. i think his take is based on much less information than i have. >> john, is there any way to evaluate whether this general line of approach that their nose is taking, thought they had something proprietary and special and different, anyway of
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knowing if that will lead anywhere? or was this just kind of a dead-end no matter what? >> the premise of the company's valuation and claims was hundreds of tests on a drop of blood, and that was an impressive claim because that's not something that had been achieved before. there are uses for that. small children or people who are elderly. you could really use something like that. the thing is, theranos isn't the only company or institution working on this problem. there have been academics and for-profit companies working on this for years. what i've heard is the technology isn't yet there where you can take a micro sample of blood and run that many tests on it and do it accurately. the company was claiming it could. >> as a corollary, labcorps and
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quest diagnostics, in the last three months they've added about $3.2 billion in market cap. somebody is going to figure that out. >> theranos could still be the one to do that, but that still remains sort of the core claim and challenge out there for people to take on. >> one of the things to watch is she's supposed to present the technology and some data at a conference in august. everyone will be curious to see what that data is. >> that's for sure, john. thank you for joining us, john carry radio from the "wall street journal". a lobbying group to stand up against increasing pressure benz activist investors. will politicians see the upside. amazon founder jeff bay sews is battling back against donald trump.
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then atm's. today it's their mobile app running on the ibm cloud. across every transaction, the hybrid cloud helps their data move quickly and securely. our clients are building out features and pushing updates faster, on five continents. with the ibm cloud, they can move at the speed of any start-up. form ag lobby group to make sure they're helping and not hurting the economy. kenneth squier from 13d monitor.com. you know the space well. do you think this lobbying group will help the public understand this space a little better? >> i think what they're trying to do is get the facts out there. the activist defense, attorneys
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advisers and corporations have been lobbying themselves to congress about the 13d rules and about activism. the activists want to get the facts out there, a balanced decision and informed decision can be made. >> ken, how are you doing? what's the actual potential threat they saw that might pinch their activities? >> one of the things that the activist activists, right now you have to follow 13d if you go over 5% and trying to influence management. you have to file within ten calendar days. there's been talk about that being shortened to two calendar days. i would mention 13g which is a filing you can file in some instances up to a year and 45 days after owning 9.9%, and 13 fs are 45 days after each quarter.
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the 13-d rule is the shortest time period. >> larry wrote a letter to 500 ceos saying we believe companies are better served when ideas for value creation are part of an overall framework rather than foused upon them in a proxy fight. he might be putting out this perception that activism is harming companies. frankly his firm needs these guys out there making sure to keep an eye on companies and shaking things up. >> that's absolutely correct. i would take issue with the characterization of forced upon. all activists are doing a giving another plan, another idea and majority of shareholders have to vote for it in order for it to be enacted. those shareholders are generally the black rocks and the van guards and stake streets and t rose. i think i agree with you, blackrock i think is happy with
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the level of activism in the marketplace right now. by shorting the ten-day period, you're probably going to reduce the level of activism. i don't think that is something that would be in their benefit or something they would be happy about. >> this ten-day period, reducing this has been in talk for years now. i think walk tell lipton went down and quietly tried to get congress to change the law five, six years ago, didn't get anything done. i sort of see this a bit like -- remember the private equity industry did this. they put together a private equity growth council, as cynical as one can be, it actually has forestalled any change in the taxation of carried interest. so it did work to some degree. i suppose even though these guys have pretty big mouths -- >> this could work, too. >> it doesn't hurt to have another bull horn. >> last word ken, quickly. >> this circa it's referred to is not thank you knew.
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it's been around for over a year. it's not a super pac. they are trying to get the facts out so there can be a well-informed debate. >> thanks for joining us, ken. >> thank you. >> ken squier from 13dmonitor.com. remember amazon's fire smart phone? it was such a flop. if you blinked it, you might have missed it. jeff bay sos is speaking out about this costly mistake. you might be surprised by what he says about it right after this.
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the war of words between likely gop donald trump and ceo jeff bazos took center stage held by the newspaper he owns, "the washington post." he addressed allegations that
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amazon has a huge anti trust problem. >> my view is that's not an appropriate way for a presidential candidate to behave. i'm very, very comfortable with all of amazon's approaches and behaviors the way we pay taxes, the political positions we take are very focused on our business and i think highly appropriate. >> bezos was asked about the fire phone experiment. amazon reportedly lost hundreds of millions of dollars. here is what he said. >> if you think that's a big failure, we're working on much bigger failures right now and i am not kidding. some of them will make the fire phone look like a tiny blip. a small number of winners pay for dozens, hundreds of failures and so, you know, every single
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important thing we've done has been -- has taken a lot of risk, risk taking, perseverance, guts and some have worked out. most of them have not. >> i love that. he says the bigger he gets, the bigger he wants failures to get. is that true? is that what really has to happen? >> i think this is right why he's a cold hero. that's the way they want to think about then selves and you saw these comments got passed around everywhere. that's exactly the expression of the idea way to look at the world. most companies when they get to the size of amazon and success of amazon and have conknstituen don't feel it. >> i think too about apple and the fact after they launched the first devices and phones the way they did, there was so much pressure and scrutiny on every launch of that and seemed like they couldn't risk one wouldn't go over extremely well.
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>> it's too bad in a way. we don't know what they are doing at apple with cars. there is talk with manufacturers in the automotive industry. there is possibly a giant failure or giant success inside of apple. when you think of amazon web services, you think of something like that, that could have been a moon shotty type ideas. it makes you think of the show -- >> i think that was almost -- >> silicon valley where they do have things. i love the fact he's doing it. i'm glad i'm not a shareholder of amazon and waiting for a profit because it hasn't come. he's creating value with the kinds of swings for the fences. >> i guess like a michael cow c of the world, more that are like amazon or more cautious. >> relatively speaking, the reason he's able to do it is the top line growth, they are growing so fast that nobody is saying hey, hold on a second, let's reign in these ambitions.
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what did alphabet have to do? they were growing slowly and people weren't happy about other bets. they had to carve them out and be more transparent. that's not complete but it shows you that the rules will change as a company matures potentially. >> it doesn't hurt jeff bezos owns whatever it is, 20% of 100, $300 billion company. so he can kind of -- he doesn't need a shares and b shares, whatever it is to do this at the moment. >> no need to spend a quarter of a billion on a newspaper. >> the trump part of that is actually fascinating. that's all because he's -- that's just because he's a newspaper owner. not because he's a successful capitalist. >> it's been a volatile week. when we come back, we'll look ahead tomorrow and see if it will bring back more of the same. stay with us. ♪ the first stock index was created over 100 years ago as a benchmark for average.
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that was a leap. but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed. our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at open.com welcome back. stocks are on track to post the first losing streak since 2014. the dow is down 91 today. what should we expect tomorrow? my favorite is the hot stock, which is drum roll, please? >> campbells soup is one of the hottest when the consumer staples and defensive stocks were really hitting new highs,
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campbell soup was up and up and paying stable stock and of course, canned goods good for hard times. honestly, i think that trade cooled off a bit. we'll see if results have anyway of substantiating what the stock has done. >> we get john deere tomorrow. that will be a good read. >> that will be interesting. a window into the global commodity story, which is a tail wagging the dog. but the other thing i'm looking at is of course, to see what happens at the stanley cup. [ laughter ] >> i don't know that's happening. we have to talk about the warriors, okay? >> we can do that to. on ice disruption, we may have a winner never had won a stanley cup in the next two weeks, that's my hope. >> who is that? >> it will be the blues or sharks. >> that's very exciting. >> tonight they play. >> we know where your head is at, rob. footlocker, is that a segway to talk about the athletic footwear business? >> that's a favorite of the growth stock. little reads and existing home
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sales. watch the dollar index if that really starts to keep levitating, it's going to bring a lot of markets into a little bit of an easy place. >> and there is buckle, our favorite team retailer. thank you guys for joining us. rob cox, michael, that does it for "closing bell." "fast money" begins right now. "fast money" starts right now live from the nasdaq overlooking new york city times square, i'm melissa lee. tonight on "fast" a top technician says the market is do something it hasn't done in three years and it could have big implications. we'll tell you what that is plus, big box, big return, everyone is calling for the death of brick and mortar retailer, two are bucking the trend and could prove to be, get this, amazon proof. we'll give you the names and later, right now it appears that phil mickelson is in the clear but one event could land him in hot water. a top attorney will way in. first, we start off with the markets becauor

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