Transcripts For CNBC Closing Bell 20140722

Weve got an allstar team lined up to get you the numbers, and more importantly, what they mean for stocks in the broader market. Stay tuned in about an hour when the action heats up. An impact on tomorrow, without a doubt. You know the saying buy the rumor, sell the news . When it comes to bill ackman and his reported takedown of herbalife today, it was more like sell the rumor and buy the news. I mean, big time. His presentation didnt tank the stock, as expected, it did just the opposite. Herbalife is surging right now by 18 . Why does the market think that hes so wrong about this company . Were going to take a closer look at that. Its an intriguing story. It is. Now, lets look at where we stand in the markets. The s p 500 at 1,982 is currently three points away from trading at an alltime closing high. Now, the Dow Jones Industrial average not far behind. Its at 17,110. Its High Water Mark is 17,138 for the close, 17,151 for the intraday high. And finally, the nasdaq doing reasonably well today, in fact, outperforming the other two, up about 0. 6 or 26 points. Reacting to big news after hours yesterday on the earnings front there as well. Exactly. Lets talk about all of it in our Closing Bell Exchange with monica meta, rob morgan, jeff reeves, sam stovall and rick santelli, of course, from cnbc in chicago. Sam stovall, you get the word from my favorite line of the day regarding the market. You say the s p needs to rest, but not necessarily rest in peace. How are the earnings doing right now, sam . Actually, the earnings are doing quite well. S p capital iq consensus numbers now showing a 7 increase for the Second Quarter versus the 6. 6 gain expected at the beginning of the quarter. And if history repeats itself, we could end up seeing that number possibly even approach the 10 level, because the reality usually beats expectations by anywhere from 2 to 3 . Rick, i want to go to you on this. Yesterday we were talking a little bit about the tenyear, but its extraordinary to watch that yield go below 2. 5 . You have to think maybe thats a tailwind for housing, which, by the way, this morning had a pretty strong report. The market didnt Pay Attention to that, didnt really Pay Attention to the recent fed surveys. Maybe the cpis spooked, maybe its geopolitical. What do you think . Where do rates go from here . I think all the topics and sectors that you mentioned are kind of painted in to a boundary. So, yes, housing might not necessarily be reacting to the notion that were just a couple of basis points away in 10s from 13monthlow yields. 30year bonds are already there. But we were at 5 million existing back at the end of last year. It definitely is more than Interest Rates. And remember, onethird of all transactions are cash, so take the theory of low Interest Rates helping people who cant get credit, since that really isnt a main underpinning now. Thats where the headwind is coming in the economy, and all the other issues seem to make sense by looking at the yield curve. Rick, hang on one second here. Weve got some breaking news. Herbalife is now responding to bill ackmans latest accusation that the companys a pyramid scheme. Scott wapner has that now. After bill ackmans twoplushour presentation in midtown manhattan, one followed by herbalifes stock now having one of its best days ever certainly in six years. Herbalife says in part, once again, bill ackman has overpromised and underdelivered on his 1 billion bet against our company. After spending 50 million two years and tens of thousands of man hours, bill ackman further demonstrated today that the facts are on our side. They go on to say, among other things, we recognize that he is running out of time to make good on his bad bet against herbalife. Today is evidence that bill ackman will not succeed. So, these the first comments now from herbalife itself following bill ackmans presentation in midtown manhattan. The most notable news today arguably whats taking place on wall street with herbalifes stock. As you see, shares up more than 19 . It will go down as one of herbalife stocks best days ever, certainly in the last six years. So, these the latest comments now, guys, straight from herbalife following ackmans presentation. Scott, remind us of the guest you had on earlier today who said he was liquidating other positions so he could get further long herbalife, that he thinks now this company is one of the best poised hes seen in his investing career. It was another investor who has long traded in and out of this stock, a gentleman by the name of robert chapman. He has been buying aggressively herbalife. He said yesterday and today as well, he thinks the stock could go to 300 bucks over the next five years, assuming that it remains a Public Company. Of course, theres questions, and there have been speculation for many months, if not more than a year now, as to whether herbalife would eventually remain a Public Company for that duration. But its an interesting story today after bill ackman himself came on cnbc with me yesterday and said this would be the most important presentation he would give in his entire career and maybe he didnt nineteen quite like this. He was probably right. He certainly raised the bar on the expectations. And at least wall street seems to be voting today the other way. They do say as well, remember, todays presentation was mostly focused on herbalifes nutrition clubs, in which, in part of the statement they make today, they say the claims made by ackman today are completely false and fabricated. So, were going to continue to follow this story. Herbalife makes its comment. The stock has added tremendous volume in herbalife shares, as you can see on the bottom of your screen, guys, and this may very well go down as herbalifes best day ever as a publicly traded company. Well, you have to believe that a few shorts have been taken out today and you wonder how much pain bill ackmans feeling as a result of all that, too. Thanks, scott. Anybody in our panel want to touch this hot potato . I wouldnt blame you if you dont. No way. Rick, before we stop with you, a little bird on the Trading Floor pointed out that the euro is at a low today. Who should mario draghi send the thankyou note to. I dont know that he should. I think the euro is finally catching up with the bad fundamentals of europe. They might celebrate because germany likes it with the economy, but in the end, should the euro get under 1. 33, i dont think it will, i dont think that will send a solid message regarding the outlook. By the way, to ray dalia out there talking about the contagion risk across europe. Monica, digesting earnings, digesting some stock battles, digesting the macro environment, where do you see opportunity in these markets . Well, i think with earnings, everything looks good in terms of profits and sales, but i think it comes back to the broader economy. Will the economy actually rebound from corporations doing better . And im still not convinced that they will. Because if you look at the sectors that are performing well, energy, for example, the jobs that are being created in energy dont necessarily come down to the folks that are in the unemployment lines. Theyre very specialized skills and we see that skill gap. Wait a minute, i just read about a pizza driver in north dako dakota, lasting for a driver taking 56,000 a year plus benefits. And im sure theres millions of people who would love to fill that one position i mean, thats not a very specialized skill, is it . Well, i think that just the fundamentals it is in north dakota with all their shortages. The fundamentals do show that there are millions of people who are out of work, theres millions of people, i think more than 3. 5 million, who are working parttime that want to work fulltime. If youve found a great listing, maybe make 3. 5 million copies of that and send it out. But i think broadly on the whole, its a weak job market, and the performance of the s p corporations isnt necessarily translating into something that boosts up the economy in jobs and wages. Rob morgan, i know youre keeping an eye on apple. Weve got earnings coming out at the top of the hour. Do you like apple at these levels . Yeah, bill, i certainly would. I like the technology space, and really, more the largecap growth names like apple and microsoft would be names that id be looking at. I think staying away from the social media. Now, obviously, Janet Yellens group was telling us to do that as well. So, yeah, well see how apple comes out today, but i do like that stock. Jeff reeves, what are you keeping an eye on, which earnings here . And again, still just this morning, a lot of the Consumer Staples names arent perform thaeg well, mcdonalds, coke, kimberlyclark. Chipotles a different story. Yeah, true. Yeah, i think earnings across the board are pretty good, though. I mean, theres a couple stocks here and there where you could say valuations are stretched or a couple stocks are going to tank on earnings, but broadly, i think the market is doing really well. I think earnings season is going pretty good for us. I would disagree with the notion that the labor mark is weak out there, aside from the 6. 1 Unemployment Rate. I think its a question of demographics. I think people are leaving the labor force. Again, thats another reason im long equities. I think the s ps going to finish the year in the low 2,000s, maybe 2,100, because we have a lot of baby boomers without incentive a lot of 25yearolds are retiring. Thats exactly right. I hope [ everyone talking at once ] 25yearolds dont have any money, though. Yeah, go ahead. And that helps the economy . If youre just looking if 25yearolds have money . I mean, if the Older Americans do leave the workforce, the younger americans get jobs, sure, but from an investing perspective, talking about buying pressure from the market no, you were saying that the Unemployment Rate shows its a good labor market and that is completely and patently untrue. Thats all right. The Labor Participation rate has been falling because people have been leaving the workforce, in part because of obamacare. But its not only demographics. Even janet yellen is finally admitting the structural issues that we have of people, 58 million, to be exact, that have all the parts on their body to work, except for theyre not. Rick, can i ask you a question . Theres a disconnect in the labor force between the skills that we talked about earlier in the segment, the skills and the wage. Dont you think part of that is because corporations are trying to get people to work for 35,000 a year and people arent inventiveized to take that job . No, its about education. We spend more on every pupil than any other country and the risk on investment makes it look like chipotle. Just because american universities cost so much money and why do they have to take Student Loans out that they cant pay back . The game spirals out of control because theyre taking money because the government is giving it to them no, weve sold millennials on the notion that they have to go to college because if you really want to unravel this yarn, its because Community Colleges anymore dont give people vocational degrees. Not true. They want them out in two years so they can go to a fouryear institution and graduate with 100,000 in debt. I graduated with 100,000 because of that. In illinois, they got jobs because they got a good education. Both sides are clear at this point. We have to go. Good discussion. Thank the rest of you. Rick, i dont think theres any truth to the rumor, jeff reeves is not related to jack bouroudjian. Well move on from here. Thank you for joining us today. Lets check out the family tree. Yes, we will. On to another story. Obamacares been in the news today and it remains a mess. Yeah, were keeping an eye on hospital stocks. Bertha coombs, can you sort this out for us . Its one of those situations if you dont like an obamacare ruling, wait a minute. At issue, are obamacare subsidies legal for those who got them on healthcare. Gov . A threejudge panel in the d. C. Circuit court of appeals said no. The Affordable Care act specifically states irs subsidies go to residents in states that set up their own exchanges. The ones in blue here on our map, like california and new york. So, states like texas and almost three dozen others, including florida and pennsylvania that were all part of the federal exchange, if todays panel ruling is upheld, subsidies for 4. 7 million americans would go away. But hold on. A virginia court, the full 4th Circuit Court of appeals ruled that the federal Exchange Subsidies are legal. That could help the Obama Administration in its appeal to the full bench in d. C. Now, professor ken thorpe says the issue could be resolved in congress, but both sides are wary to do that. Thats been a real challenge about opening any aspect of the Affordable Care act back up, because it would open up a whole range of opportunities for people to make a wide range of changes in the legislations. Ultimately, it could end up at the supreme court, but insurances rallied off strong earnings from sentine. A lot of folks say this is going to be a long process. Meantime, subsidies will remain in place until appeals are done. Guys . Bertha, thank you very much. What a story. Heading toward the close, weve got about 45 minutes left in the trading session. The dow hanging on to gains, off the highs of the day. The industrial average was up 81 points, now a 67point gain. Coming up, Td Ameritrade ceo fred tomczyk talking earnings and if Mainstream Investors are jumping back into the markets. Remember, were at or near alltime highs here. Thats ahead. Also around the bend, toys for rich people. Polaris explains why the motorcycle maker just raised earnings outlooks for the year as rival harleydavidson lowered estimates. Thats revving up polaris shares big time today. And up next, how much debt is good to have . A Financial Planner and Steve Liesman have very different ideas about this and theyll hash it out. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The ibm cloud is the cloud for business. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. 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The socalled credit boom, meanwhile, is said to have helped the economy recover but some warn it could lead to another crisis down the road. So, when is getting credit, or more to the point, going into debt, a good thing for you and the economy . One of our next guests says almost never. Financial expert chris hogan. And taking the other side of that trade is our senior economist, Steve Liesman. Chris, you dont see the merits of credit in a consumerbased economy. Why . Other than for a mortgage, we should point out, right . Well, i look at it this way, that interest that you have to pay is a penalty, but interest that you earn is a reward. So, i dont want people to penalize themselves. I want them to reward themselves by having a game plan, avoiding debt at all costs. Is that the right way to look at it, steve . I dont think so, because you said penalty and reward. I look at both as a cost, right . The cost of taking on credit now to buy something, thats the price you pay for current consumption versus future consumption. To save money, the opportunity cost of not consuming something. Theyre both sort of a privilege. Im not here to argue anybody should take on debt they cant handle. Im here to say that a person has a right to ask his future self to pay for some of the consumption that they will enjoy based on todays purchase, and thats what debt does is sort of takes the payment and spreads it out over time. It says, if you buy a house, as the simplest example, well, future steve should pay for some of that consumption rather than current steve paying for all of it. You know, chris, youve said that you think a mortgage is pretty much the only debt a household can ever justify. So, in an economy when precisely the opposites happening, people are taking out loans for their education, for their cars, for all sorts of things, including vacations, but not for a house these days, you think we should completely reverse those activities here and that would make for a better longterm outcome . Well, i just think people do better when they have cash. And so, if im not having my money become see, debt makes your income out gone. And its going to all these other things. So, i think people could have a better quality of life if their income is staying with them and theyre able to do things for their family, instead of making the creditors rich. Kelly, the data show that consumers have really been on a serious deleveraging streak here. Now, some of that deleveraging has come from default on debt, others comes from paying down a debt and others from growth in the economy with less debt. But were down to levels some of my data doesnt go back far enough to find a level low enough when it comes to debt service ratio. Some of that as welcomes from low Interest Rates engineered by the Federal Reserve, but it is probably fair to say that this economy would be healthier if consumers were more confident and took on somewhat more debt to reflect confidence in the economy, which creates more confidence in the economy see, i would totally disagree. Because see, as i travel the country and i speak, ive met with john and sally. These are people from main street. Now, steve, i know youre from wall street. Youre an economist. But being from main street, i meet with people that are feeling the crunch, people that have their backs against the wall trying to make ends meet. And so, i want them to get a game plan. The last thing they need is another payment. They need a plan. What about for education, chris . Because we should differentiate by type here. And its one thing to use credit to bring forward a purchase that you otherwise couldnt afford to make. Its another thing to use it to invest in yourself so youre more productive and earn a higher wage longer term. Well, i think weve all seen what the student loan situation has gotten us. And believe it or not, there are ways people can get Higher Education without going into hundreds and thousand dollars worth of debt. So, i would encourage people to have a game plan. Plug into the Community Colleges. Go there, get your associates, then transfer to that school. But heres another tip, get a job while youre in school. Dont incur debt. Its going to steal from the quality of your life later on. Is there middle ground to be had between the two of you . Yes. And is that word manageable, in terms of manageable debt . Chris, what i hear you saying is dont take on debt that you cant service properly or that is going to sacrifice your lifestyle at the same time. Well, i would tell you this, the only debt i want people to take on is for a mortgage, and with that, i want them to get a 15year fixedrate loan and attack that bad boy as fast as you can. There is no other debt i want people to have, not credit cards, car loans, nothing. Buy it with cash. Steve. I think chris and i both agree that one should be prudent about it and aware of the cost. I think we disagree on the issue of spreading out payments over time and the ability to use debt to bring forward certain consumption, which i think in a limited and prudent way is okay to do, but people being educated to my feeling, weve swung all the way to the pendulum that all debt is bad. I dont think thats true. I think some debts okay. Good to see you both. Thoughtful conversation. Thank you very much. Thanks, chris, for joining us today. A quick market flash. Kelly, bill, this is a name that a lot of equity traders all want you to be familiar with, itg, which is Investment Technology group. I remember i used these as a broker back on my time on wall street. The stock is spiking up as philadelphia Financial Management discloses a 6. 3 stake in the company and is calling for a new ceo as well as a possible sale of the company. You can see there those shares just off session highs, up probably 4. 5 in the trade. So, bill, kelly, itg, wellknown broker. The deposit system used by a lot of traders on wall street. Still they are at least the target of one investor group. Back to you guys. Thank you, dom. Breaking news on Deutsche Bank. Mary thompson, what do you have . According to dow jones, an examination by the Federal Reserve bank of new york, according to dow jones, says Deutsche Banks u. S. Operations suffer from a wide variety of serious problems, including shoddy financial reporting, inadequate auditing and oversight and Weak Technology systems. All of this, again, coming from a letter that was written by the new york fed. In the letter, according to dow jones, it says that some of the banks u. S. A. R. M. S are lowquality, inaccurate and unreliable. These are the Financial Reports produced by the u. S. Arm of Deutsche Bank, of course, one of the Worlds Largest banks and a germa germanbased bank. The letter says Deutsche Bank has made no progress at fixing previously identified problems. And then the report goes on to say that the letter, which hadnt been previously reported, ordered senior Deutsche Bank executives to insure steps were taken to fix the problems. It also said, this being the letter, that the bank might have to restate some of its Financial Data that it had submitted to regulators. The report quotes a deutsch spokesman saying the bank is working diligently to further strengthen systems, but it is affecting the stock right there, as you can see. Back to you. Mary, not that you would know this off hand, but why do you think its the case . Or wouldnt somewhere in its financials since december, deutsch had said something oblique about a reference to this letter. Why is this the first were hearing of it . Im not sure that they would have said Something Like this, unless there was some kind of civil action. Usually, banks are pretty quiet about what their conversations are with their regulators. Yeah. Interesting. Thank you very much for bringing that to us. Thank you, mary. Deutsche bank shares lower on that. With 35 minutes left in the session, watching financials generally here. Dow sub 66 and the s p just shy of its closing high here. Hot earnings, hot stock, Polaris Industries surging after they raised earnings estimates for the rest of this year. And the companys ceos going to speak with us exclusively right after the break. Were going to get his take on the economy, the weather and what people are buying. And where he went to high school, too, by the way. 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We havent even gotten to the betterthanexpected housing report, some stronger Regional Economic reports, a soft cpi, and on the back of that, Interest Rates are lower today and markets are slightly higher. Theres a look across all the major indexes and the dow transports, by the way, which is up 1 . Alltime high. Speaking of the transports, by the way, polaris makes motorcycles and lots of socalled toys for the wealthy. Today its trading up after beating street estimates on its earnings report, trading up 9. 66 . For a cnbc exclusive, we welcome ceo scott wine. Scott, welcome back. Thanks, bill. You raised estimates for the year. Give us a sense for how that quarter went. We had a phenomenal quarter really across the board. Teams executing at an extremely high level. Our offroad vehicles are expanding our lead as number one in the powersports industry. We had a great quarter in motorcycles. Indi indians been well received and we offseted a tough situation with the canadian dollar. Across the board, one of our best with retail sales in north america up 15 . One of our best quarters in almost a couple of years. Scott, you may be the lone ceo who could cite weather as a positive for the quarter. How sustainable do you think this outperformance is for the next couple quarters . By the way, youll be facing tough comps next summer, if the weather isnt quite as bad. No, well, you know, we face seasonality and weather comps all the time, and the difficulty we had in the first quarter, you know, with weather, we saw that really dissipate a little bit in the Second Quarter and the motorcycle environment got better. And we saw sequential improvement throughout the first half of the year and we expect that to continue. Weve got our annual dealer show coming up to celebrate our 60th anniversary next week, and we have just a plethora of wonderful products to introduce, and we expect momentum to continue into the second half. So, are you saying netnet that you think weather actually hurt your performance instead of helped it . Because i know that even though we talk about you as a motorcycle company, thats Something Like less than 10 of your business, right . A lot of it is snow bikes and snow machines well, our products yeah, motorcycles and snowmobiles together are still only about 15 of sales. Our largest business where were a strong number one is offroad vehicles with our sportsman atvs, our ranger and raiser sidebysides. Weather was difficult for everybody in the industry i think in the first quarter, but as the Second Quarter came around, we did not see a negative impact from weather, and quite frankly, we dont like to use anything as an excuse. We have to work through lots of issues all the time and weathers always going to be one of the variables we have to deal with. As you point out, harleydavidson was still citing weather. Inevitably, there are going to be comparisons between you and harley. Tell me, i often think of harleydavidson as for the older demographic, and youre for a younger demographic. Am i wrong about that . Well, we certainly have a much younger buyer in many of our product categories. Certainly, i think indian buyers in general are probably closer to the harley age, but you know, across the board, our victory motorcycles, and really some of the indian bikes that we bring out are at a price point and a styling that really attract a different and younger demographic. Scott, before we let you go, can i just ask, in light of the move across the industry, would you guys do electric vehicles, make that a big part of your business, especially on the bike side Going Forward . Well, i dont know that were going to make a bet that its going to be a big part of our business, kelly, but we do have an investment in a Company Called bramo, which has arguably the best power trains for our size of vehicles, and we certainly think that that lithium ion power train is going to be a part of our power Train Solutions in the years ahead. Wow. Scott, good to see you. Thank you. Continued success. Thank you very much. Have a great day. Scott wine of yep, you, too. Look at this, more breaking news, this time on the hedge fund front. Kate kelly with that story. What do you have, kate . Thanks so much, bill. Another lawsuit seeking to defend a hedge funds rights as a bond holder has just been filed. In this case, its Blue Mountain capital. The 21 billion asset manager in new york seeking to defend itself as a creditor of the puerto rican electric authority. The puerto rican electric utility, which has been struggling of late to meet debt payments. And Blue Mountain believes that a recently passed law in puerto rico that gives Certain Companies wider latitude to renegotiate debts is essentially going to allow Companies Like the utility to perhaps avoid their constitutional obligations as an issuer of public debt, among other things. They have hired ted olson to represent them in court. They filed in u. S. District court in puerto rico, kelly and bill. And its sure to be another interesting case as we watch elliott in argentina unfold, fannie and freddie litigation unfold, et cetera. The whole industry watching it carefully, kate. Thank you very much for that update. With 30 minutes to go here. Yes, indeed. 30 minutes left and were starting to gravitate higher again. The dow up 74 points. The high of the day was about an 81point gain, so were getting back there. Were watching the s p, though, as it moves ever closer to an alltime high. Were less than a point away now with a gain of almost 11 points right now. Much more ahead on these markets. Td ameritrade ceo fred tomczyk speaking with us on their brokerage earnings and find out if the Retail Investors is getting back in the game as the market continues with new highs. And stand by. Two of the biggest names in technology, apple and microsoft posting results after the close tonight. Well get you the numbers, the analysis and the important market response and the guidance as well, coming up here on the closing bell. Stay tuned. Welcome back. Plus signs today for the major averages. You see the dow up 71 points. Thats the one everyone keeps an eye on, but the traders watch an s p, close to an alltime high. 1,975 is considered resistance to a lot of traders and we are just a bit away from an alltime high on the index, as you can see. July 3rd, after the strong payrolls report. Meantime, trying to get back to that level. Td ameritrade moving a leg lower today. Earnings roughly in line with expectations, revenue beat, but the firm says its not as confident as how active the Retail Investor will be, and thats weighing on shares. More with fred tomczyk, ceo of ameritrade, sitting with us at the new york stock exchange. Welcome back. Great to be here. That was a quarter of low volatility and low volume. Is that what you were looking at . And do you expect that to continue . Is that whats happening here . 401,000 trades is a pretty good quarter. We have what we call an activity rate, which was 6. 5 , which is pretty much on the average of the last three or four years, but i think were coming off a quarter where we had record trades close to 500,000, so people have definitely seen them come down close to 100,000 trades per quarter. So, i think thats what people are seeing. Theres no question, we had 62 Straight Days of where the s p 500 didnt move a percent. Thats the longest period of time at that kind of volatility since 1995. So, it was pretty low volatility. What do you think happens for the next couple of quarters here . You know, i dont know whats going to happen in the next four quarters. Retail investors are still engaged. Theyre still engaged, still logging in every day. So, theyre still watching things. But theres just no volatility. And you know, when you look at it today, if you would have told me a year ago that, basically, we would have had whats going on in ukraine, in the middle east, and wed have no volatility, i wouldnt have believed it, but i do believe volatility will pick up as the fed starts to pull it back a bit. Theyre logging in, theyre watching, but are they investing . Are they part of this market right now . They are definitely part of the market. So, our Investor Movement index continues to show the people that are investing are very bullish. So, theyre bullish. Theyve been invested all the way through this. Theyve done well. But without volatility, theyre not going to trade much. Does that mean weve become a nation of warren buffets . Everybodys just buy and hold . This might be a headwind for you guys as a business, but for the investing public, do you see worrisome trends or weve been shifting to be much more of an assetgatherer, so you should expect it to shift and see more longterm investors. Weve been making that move. But the active trader part of our customer base, which basically will dominate our trading volumes, they need volatility, and we look for the volatility. And were just not seeing that right now. Yesterday we were commemorating the fourth anniversary of dodd frank, the Financial Regulation bill thats still making its way through into the industry. And we had both senator dodd and congressman frank on the show, and i asked him, if you had to do it over again, what would you do different . And both of them right away said we would change the regulatory structure of the industry. We wouldnt have what chris dodd called this alphabet soup of regulation. There are too many regulators out there. Do you agree . Oh, i absolutely agree. When you look at if youre somebody like in our shoes, were just a broker dealer, but dealing in the futures market, the Foreign Exchange market, the options market, the equities market, fixed income market everybodys got a regulator. Everybodys got a separate regulator, and the markets are getting more and more connected. And you see trends that may start in the futures market move into the equities markets or vice versa. So, theyre definitely connected. I do believe having one structure would make life a whole lot simpler for everybody. Did your Second Quarter get hit at all, from what we could call the Michael Lewis effect . In other words, all this discussion about market structure, and as you made more money from pay for order flow and the publics learning more and regulators are looking more closely at the transparency here between how you guys make business and where you send your orders, do you expect, do you have confidence that that level of income will be at or above the secondquarter level Going Forward . Revenuesharing, as we prefer to call it, payment for order flow, thats going to be highly dependent on volumes and trade mix. And you know, it did go down quarter over quarter, because trades are down. But you know, that mechanisms been around for a long time. I think its been looked at many times and its still around and seen as a better way than other ways in the market. And it did change a lot of what we used to do, you know, 10, 15 years ago. We will do some things to increase that transparency. We dont think its affecting our business at all. Just to give you an example, since we had the last hearing in washington and this kind of stirred up again, weve had 19 phone calls on this subject from our clients. We keep saying this is a wall street issue. Its a battle between wall street participants. Its not a main street issue at all. So, it hasnt affected no. You dont think its affected your individual customers out there . No. All right. Good to see you, fred. Nice to see you. Fred tomczyk, ceo Td Ameritrade, joining us at post 9 of the new york stock exchange. The dow almost at session highs, again, shaking off news from around the world as we continue to get it. Watch the air space closures as well. And well all be talking about apple and microsoft. The results will be out at the top of the hour. Jon fortt tells us the numbers to watch out for next. And of course, well bring you those earnings the instant that they hit the tape and bring them down with our full team of analysts and shareholders. So, dont touch that remote. 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Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Welcome back. Its turnaround tuesday, and not just for shares of herbalife. As markets are rallying here, the dow to the tune of about 69 points. 17,120. The record close high for that index is 17,138, so were not far off. Of course, as we said earlier as well, not far off for the s p, only about two points away. The nasdaq the outperformer, up 0. 7 or almost 30 points today. Well, we could get movement after the close, because apple and microsoft will be posting their results at the top of the hour. Pencils and papers are poised. Jon fortt, give us the numbers. Reporter bill, apple first. Wall streets looking for around revenue of 38 billion. The high end of apples range. Eps of 1. 23. That translates into around 35, maybe 36 million iphones would make the street happy. On microsoft, revenue 23 billion, eps maybe 60 cents, but the analysts didnt factor in nokia, the acquisition along with that. So, the estimates arent really clear. It could be 60, 63 cents, depending whether youre including it or not. Nokias going to bring down that eps number. And devices and consumer and commercial will factor in there as well, looking for a commercial revenue number of around 13. 2 billion in that mix. Well see how it shakes out, bill. All right, good stuff. Thank you, jon. Keep it right here for all of the apple and microsoft action after the bell with 13 minutes to go. Were going to hear from those companies right after the close. Meantime, when we come back, home sales hit their fastest pace since last october, but how long can that upswing last . Real estate developer don peebles will weigh in when we come back. Ten minutes left in the trading session with the dow up about 68 points. The one were watching really is the s p, very close to an alltime high. We may not get there, but you never know. 1,985 and change is what were looking for. Transports, that is an alltime high. And its going to be a squeaker for the s p. Along with stocks, home sales rose again today. Up 2. 6 for the month of june. That was an eightmonth high. But sales themselves overall had been slowing since they peaked in the summer of last year. Joining us now for the Bigger Picture on real estate and the economy is don peebles, chairman and ceo of the peebles corporation. Don, its great to have you back. Maybe you can help us sort through the myriad reports out there about the economy that seem conflicting. What is your read on housing, how strong it is, and how sustainable this recent uptick is . Well, i think the Housing Markets very strong right now, and it will continue to gain momentum. And i divide the markets up into a couple of different segments. We have the global gateway cities like a washington, d. C. , miami, new york city, san francisco, los angeles. Those markets, they are so supplyconstrained that theyre getting tremendous pressure on pricing. And so, while volume is slowing down a bit, its only because theres a lack of inventory. And then the better ashry markets, boston, massachusetts, those markets are having continual, strong appreciation. And i expect those levels of appreciation to start getting larger. And i think that were going to see a lot of activity over the next couple years. Okay, what about the demographic play, though . What we hear anecdotally and what seems to show up most often in the firsttime home buyer segment is they are struggling at this point. They are the ones that are not being able to afford that new home, and we have a very strong rental market as a result. How long do you see that continuing . Well, twofold. One, i think that its jobdriven, of course. The economys Still Producing at a slower pace in terms of job generation than wed like to see. But also, theres an inventory question. The challenge is that those people who are in the starter shoemz right now, theres not a lot of affordable or new inventory for them to move up. But as the market continues to recover, more homeowners will put their homes on the market as they find new places to move into. And i think its those two things that need to happen for the firsttime home buyers to get into the marketplace. And then, of course, theyve got the big risk factors where Interest Rates going for those buyers. I want to go back to the first thing you said, which is that the Housing Market is very strong. I think thats an outofconsensus view. Are we on wall street missing the real story out there . The statistics in the gateway markets, the statistics are not all accurate, because whats happened is there is a tremendous amount of presell activity going on, say in south florida or miami, ft. Lauderdale, new york city. All these new projects that are getting developed, especially in the condominium side. Those units havent gone to closing yet, and thats where a lot of the activity is taking place right now. So, as they come on market, which will be next year and the year after, youre going to see some amazing price increases and a lot more in terms of activity thats just right now, you know, hidden from the marketplace. But what happens when, inevitably, quickly if we can, don, what happens inevitably when rates go up because the fed is taking the punch bowl away . Wont that slow things down eve more in the Housing Market . It could, but i think that also rental rates are going up so much now, were at a time in the country where its now cheaper to buy in many of the markets than it is to rent. And i think that will be a bit of an insulation for that. Don peebles, thanks for being with us. Weve got the closing countdown coming up in a moment. Yes, we do. And after the bell, closing bell will be earnings central. Apple and microsoft post results. Well talk through the numbers, tell you what they mean for markets tomorrow. Dont go anywhere youre watching cnbc, first in business worldwide. Developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. With a new volkswagen turbo. Turbocharged reward card why are we so obsessed with turbo . Because we like giving you power, but we also like giving you fuel efficiency. Like the sporty jetta. And the turbocharged passat tdi® clean diesel. Okay. And the iconic beetle. And the powerful tiguan. Okay you cant forget the cc. Guys, this is going to take a while. Avo hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 jetta se for 199 a month. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. About 2 1 2 minutes left. The dow is up 62 points. Its 12, 15 points away from an alltime high. The one were watching is the s p. It doesnt look like were going to get an alltime high, but were very close, 1,985. 44 i think is the old high, and were about two points away now as we start to pull back a little bit. Lets keep an eye on earnings, set to come out tonight. In a few minutes, well be hearing from microsoft. Theyre expecting a profit of 60 cents on 23 billion in revenue. Apple, theyre looking for 1. 23 on 37. 9 billion in revenue. And Electronic Arts, theyre looking for a profit of 4 cents no, excuse me, a loss of 4 cents on revenue of 713 million. Bob pisani. And we notice that oldschool tech, like microsoft, like intel, like cisco have been doing great this year. So, the important thing today is we saw i know it was a little sideways most of the day, but we saw big groups in materials move to the up side, we saw iron ore stocks, aluminum stocks, steel stocks moving up, the dbb, which is the etf thats dbb for base metals is at a new high for the year. We saw other groups moving up. Emerging markets, eem, thats the etf, thats at a 52week high right now. We saw all those groups slowly moving up. The important thing about this market is sometimes it moves sideways so much that you can get kind of a little dozy if you dont Pay Attention. Stuff breaks out and you dont notice it. As fred tomczyk pointed out, 62 consecutive days for the s p not to move 1 one way or another, which hasnt happened since the mid1990s. But my point is dont let your eyes glaze over. Absolutely. Things move in between, so watch the metal stocks, watch emerging markets, which had a big plunge in march and april and now has come back all of the way. And the stock of the day i think had to be herbalife. Bill ackman took his biggest swing at it and it went up today, biggest day ever, maybe. They will study this in business schedule as a study in hubris, meaning pride. Be careful about overclaiming. Make modest claims and then overdeliver, not the other way around. And well be looking at that coming up in this next hour. A fascinating story. Bill ackman versus herbalife. Stand by meantime for those very important earnings reports from microsoft, apple and Electronic Arts. Its the second hour of the closing bell with kelly evans. Ill see you tomorrow. Welcome to the closing bell, everybody. Thank you, bill. Im kelly evans and heres how were finishing up the winning day across wall street, but it doesnt look like the s p 500 there was going to close at a record high. Its at 1,983. The Highwater Mark 1,985 from that jobs report released on july 3 that was stronger than expected. Markets have been trying to get back to those levels. Today a little bit of a turnaround tuesday as the dow adds 60, closing to talmost the alltime high. Nasdaq up 0. 7 . Were waiting for a couple key tech bellwethers to report, microsoft and apple. Before we get to them, lets get straight to the closing bell panel. Jerry bernstein, our own sharon epper stone, shark tank investor kevin oleary, and fast money trader bryan keian kelly. Before we get to the Companies Due to report any moment now, brian kelly, can we talk about whats going on in the commodity space right now, why all of a sudden, all of these different sawoffs are getting wiped out . Yeah, its interesting because theres a lot of cross currents, right . Bob just talked about some of the base metals are doing really well, but when you look at the week and oil and gasoline over the last month, theyve come in. Youre seeing companies, bigger banks getting out of this business. But whats interesting, the guys who sold at the top, like a glen corps, theyre in there buying these businesses now. So, it wouldnt surprise me that this kind of rotation or this is a trough in the commodity space. Sharon [ everyone talking at once ] yes, well, its money. Its money changing or not changing and not so much the fundamentals, and that has been the case so much for the commodities market, and particularly for the Energy Market for a long time, but now we really see that it is the Trading Community much more so than what were seeing on the geopolitical front or what were seeing perhaps even in terms of the fundamentals, in terms of supply that are weighing on the oil market at this time. Because jared, you could easily envision a scenario where with the news flow weve had, that 104 would instead be up at 120. Exactly. Getting back to fundamentals, if you look at this mornings Consumer Price index, not too strong. If you look at real earnings year over year, flat. So, id be interested in trying to kind of map the flat earnings story on to the commodities story. I think there should be some kind of weakness there based on generally weak earnings of much in the labor force. And thats where it shakes out, kevin. Back to that tenyear interest rate, below 2. 5 . Maybe its a little bit of europe, maybe a little flight to safety and maybe a little bit that the inflation monster that people have were starting to see out there is quietly receding a bit for the time being. Im coming to a new conclusion. I believe that the fed is actually getting behind in a wrong way that really true, full employment is going to be north of 5 . If thats the case, one day were going to wake up, the feds going to say, yikes, theres labor cost inflation, were in trouble, and were going to ramp this sucker up at a pace that will catch long bond and duration investors offside. Watch it coming. Hold that thought. We have a mover here. Electronic arts out with Quarterly Results and Julia Boorstin has the numbers. Looks like a beat, julia. A beat on both the top and bottom line. The company reporting earnings per share, excluding items of 19 cents. Wall street had been looking for a 4cent loss, and that is up from a 40cent loss in the yearago period, so big beat there. And revenue coming in higher than expected at 775 million compared to 713 million estimated. They also confirmed its guidance and talked about strength in mobile and digital revenue from services that it sold in addition to those core console games. Back over to you. Okay, julia. Thank you. Any thoughts here, guys, on are you big gamers . Not a big gamer. I was going to make a comment about i thought kevins fed point was really interesting. Look, im dovish on inflation, im dovish on full employment. I think theres a lot of slack in the labor market. But productivitys been kind of weak, and that actually supports your story that higher labor costs in weak productivity climate means higher unit costs, so that could create inflationary pressures. I dont see it, but it could be happening. Theres such a shared economy, things like air b b and all the stuff that occurs online that really isnt watched by the fed in terms of what real employment is. Theres people like my daughter making money off her apartment in new york. Shes not in any labor track, shes in school, yet, she is pulling in money the shadow labor force . Ill tell you, it matters. How much is she making . You know, shes making enough not to have a second job, because i make her have a first one. So, the point is, shes not around. This labor that is occurring quietly and in the shadow actually is a form and a statistic that the governments not measuring. Yeah, but kevin, then how come prices arent going up, if thats happening . Im telling you, its going to happen at the labor front. Nobody cares right now unless labor and wages start to inflate. Right, but if its already happening, that should be affecting the economy. You dont want to be long here. Listen, if thats already happening, that should be reflected in the economy hang on, i have to break in. Im getting nervous. You should kevin, i want to know exactly how youre positioning the funds, but hang on for one second because we have microsoft hitting the tape. Jon fortt is with us. Question mark . Jon fortt, what can you tell us . I can tell you this, microsoft revenues are 23. 38 billion. Thats just about in line, a little bit higher. When it comes to eps it gets a little bit tricky, because a lot of analysts did not factor in the nokia acquisition, which actually exerts a negative 8 cents impacts on eps. So, from a nongaap perspective, microsoft turned in 52 cents. That includes nokia, because thats now a part of microsoft. So, if you were to back that out, it would be 60 cents. Thats probably close to in line with what analysts were looking for, but some included nokia, some didnt. Really hard to get a read on that overall. But youve got to also consider microsoft is going to talk on the call about its guidance and also to what extent the cuts that they have already announced will impact Going Forward. What they said and what continues to be the case from what i hear from within microsoft, is that 13,000 of the employees, the total 18,000 that will be cut, will be cut in the quarter that were currently in. Thats not the quarter that they reported, but the quarter were currently in that they will report. So, all of that has got to factor into wall streets thinking about how they digest these numbers and hear the impact of nokia Going Forward. Again, microsofts cfo as well will detail that on the call, kelly. Jon, thank you. And stay with us. Because the eps number moves around a bit on those components, lets look at the revenue number. The estimate was for 23 billion. It looks like they did about 23. 38 billion for the quarter. Shares are slightly positive. Are we going bring in these analysts . Lets do it. Max wolf is with us from the Milano Graduate School and max gerber from gerba kawasaki to talk microsoft here. Max, your thoughts . I think the revenue number is impressive. We thought it would probably miss, but theres an adjusted miss on the whisper number, and the whisper expectation was more in the 64 handle range on eps. And so, i think it reminds us both of the potential of this company as well as some headwinds, especially as we go into a call here, which will determine the real outlooks, getting the granular and getting an idea of what microsoft thinks is in store in the next quarter. Its really the beginning of 2015, their fiscal year, thats going to get us most interested. Strong revenue, weak earnings. Ross, do you guys like microsoft . Do you own microsoft and what do you think of the quarter . We own a little bit of microsoft because we bought it a little bit ago and it was a cheaper stock, but now that its moved up, i think the quarters boring. I dont see anything about the quarter thats exciting. And backing out nokia is basically like, they bought nokia for whatever reason. They just fired everybody and now are losing money because of it. Microsoft needs to detail what their strategy is. Morale is down. They are firing a ton of people. The way he did it was very harsh. And you know, nadella has to tell us, where is microsoft going . Whats the future growth for this country . And thats what were looking for in microsoft. Other than that, theres nothing new or exciting to talk about there. Sharon . It looks like that in the stock price. If you look at how stocks are moving it looks like investors are waiting to get answers to questions on this conference call. And to the point of what the focus is. Hang on one second. So people know, pretty much the focus of the quote from nadella, im proud that our move to the cloud is paying off. Our commercial rate increased. Brian, i know you just moved out of microsoft. Does anything about this quarter, about their cloud efforts change your mind . Not now. All this news were seeing now really was out last week. I sold it on that big spike up when they announced the job cuts, and i think thats the news. Now, as we go into the conference call, perhaps they talk about some kind of a pc upgrade cycle. Perhaps they give some positive guidance. Then that might have me take another look at it, but right now, its last weeks story. Kelly . Yeah, well, thats interesting. Look, were also going to be talking about a mobile world, jon fortt. Are those criticisms you heard from ross there accurate, you think . Not quite. One thing i would point out. The commercial business outperformed 13. 48 billion in commercial revenue. The street was probably expecting in the area of 13. 3 billion, so a bit lower. Thats significant considering a server and commercial cloud outperformed. We had seen some enterprise strength from intel. But look, everybody expected that Satya Nadella was going to cut staff at nokia. Rumor is he wasnt in favor of that acquisition, he went in, cut half and now will simplify the structure as far as management goes. Nothing im hearing indicates that morale is down at microsoft. On the contrary, theres a sense of a new energy there and bold action right off the top, though he doesnt have the same kind of aggressive tone that some of his predecessors, both of his predecessors might have. So, i think it is really important to listen to the call. I suspect hell give more detail on the strategy. Well get some specific numbers on the nokia impact and what to expect Going Forward as far as the cuts and how to factor in an eps Going Forward, which is really muddy right now. Waiting to hear from apple. Dont forget apple and ibm are partnering in apps. What do you think . As an investor, with microsoft, this is where money went to die for a decade as it sat around, 33. No disappointment about it. This new sheriff in time is bringing something i like. Hes focused on the bottom line, focused on cash flow. Hes basically telling us he doesnt care anymore, he wants to change the direction, whether you like it or not, and i like a guy like that and ive been awarded with 10 since hes owned the company as a reward. This things not the most exciting name on the street by a long shot, in the sector by a long shot. When it meets expectations, its probably pretty happy, given that sort of lack of sizzle. Ross, last word to you. I think kevins right. I really think they need to shake this culture up, but you could shake up the culture of the titanic all you want, it still went down. And i think the issue is they need to do something bold. I think it should be in the video game business. Ea just reported a great quarter. They would make a great merger there. And i think that either yahoo or something they need to do to get their business growing in much, much better areas of the stock market to be in than microsoft right now. What say you, jon fortt to that . I think theres a history of counting companies out too soon. Apple was, again, a mess before steve jobs came back. There was a number of things that needed to be sorted out. Yes, he did change the culture. He changed a number of other things, too. Microsofts not nearly in that kind of shape. All right. Again, look at this commercial business. Its nearly twice the size of the devices business. It is growing in double digits on multiple line items. So, i think if youre going to give intel the benefit of the doubt, and theres debate on whether you should or not, you certainly have to give microsoft the benefit of the doubt, considering the results theyre putting up right now. And sharons point, investors still trying to make heads and tails of it, it seems, as the shares moving around between positive and negative territory this hour. Well look for more detail on the call. Thank you, everyone. Brian kelly and the fast money crew at 5 00 will be going through the latest from apple and microsofts earnings conference calls, as mentioned. We want to hear what tim cook and Satya Nadella have to say about this quarter. All eyes on apple as they get set to release the latest earnings. The numbers due any moment. Well watch for iphone and ipad sales, see if they can drive the stock to new highs. Weve got analysis and reaction the second apple hits the tape when we come back. And bill ackman making his case for why he thinks herbalife as a company is a fraud. Promising his presentation would lead to a collapse of the Nutritional Supplement firm, it didnt quite work out that way. Bill ackmans bad day is next. Welcome back. Yesterday, activist investor bill ackman threw down the gauntlet on one of his favorite targets, herbalife, saying a presentation he would make today would expose the company once and for all as a sham. Youre going to learn why herbalife is going to collapse, and thats a pretty strong statement, but this is the largest fraud, public fraud, in terms of scale of countries involved, harm to people. So, this, however, was the reaction on the street to that presentation. Herbalife shares, that is not a misprint, up 25 today. More reaction now with cnbc contributor herb greenberg. Sorry, herb, i keep doing that. Who fronted the critically acclaimed documentary beyond herbalife spilling the american dream. He joins us now along with our panel. Herb, 25 . Well, that is the stock speaking for today, and i know its a big gain, but i always look at people and say, remember, theres the stock and then theres really whats going on and the noise of the stock will drown out. Forget what ackmans saying right now, its the broader question of whats really going on. The stocks telling you that there was great anticipointment, if you will. He set the stage for something big. If you know the story the way i do, he had some really good information there, but it wasnt the gotcha, hammer you over the head kind of thing with the internal documents that would prove beyond a shadow of a doubt that this is a pyramid scheme. So, what youve done is you now are back to he saidshe said. The companys out with its comment, which doesnt really deny what he says. Its a classic pr spin on what he said, saying that hes not right. So i think thats really whats going on. Kevin, i think this is totally bizarre, this whole thing. I dont know why he would put out the statement yesterday and then the presentation which really didnt have a gotcha at all. This is unprecedented to me after watching the market for years that a claimed short position gets National Platform to discuss the case and ends up 25 more offside. So, somebodys right. I dont know whos right. Im starting to look at this thing, saying this is really, full disclosure from both sides and its not working for ackman. If i remember, he was short at 40something. This guy is way off side now, ad this must be very, very painful for him. And i think you either are right or youre wrong when youre short. The trouble is, its an if anytime perpetual loss i will take this to the end of the earth. Herb, as you know, he spent 50 million investigating it already, going back to december 2012. Let me ask you something, because kevin, this is a great question for you. You have been on the other side of short sellers in the past. Youve fought this battle. Youve been, you know, i chased you for two years on a company at one point, you know. The point is, what is it like to be on the other side, and what do you think . If youre herbalife right now, what are they thinking, really thinking, especially in the face of what he likely presented . Theres a perverse alternate world being created here with all the press this company is getting. And to a certain extent, its actually getting more interest from investors, as evidence by what happened. They keep saying the same thing over and over and over again, as they have for the last year and a half, as the onslaught from this intelligent long investor keeps going after them on the short side. Its not working. Im enjoying this. This is the best entertainment in the stock market you can buy right now. When you go to assassinate the king, youre not supposed to miss. When you do, the king tends to get a little bit stronger . Seems to me thats what were seeing here. Herbalifes the king . It is the king in a number of 401 k plans, actually. A lot of investors watching this, constantly saying i dont own it, i dont know much about it, but you have it, because its in microsofts 401 k . Its in a number of fortune 500 companies 401 k plans as a top stock. So, Institutional Investors are still, whether fidelity or other firms, are still buying this stock. And when you see it up 25 , perhaps theyll be buying more of it. Let me ask you a question. What you are so good at, when you look at companies, is going back to the cash flow. You cant lie about cash. Well and, wait a second. Either youre getting cash flow and youre adding debt, you know the end games going to blow up. Ackman doesnt have that smoking gun on the cash flow on this deal. This Company Keeps delivering. Well, in this case, when you talk about the cash flow, the company delivers, but the question hes raising, is it delivering that cash flow based on a model that is based on something that is illegal . Right, right. So you know, theres an old let me tell you a story. There was a company, American Capital strategies. It was a big, short, bullbear fight a number of years ago. And the ceo came out and started talking about, his motto was short and distort. Then he paid a big dividend. He used to say you cant restate a dividend. Guess what, hes right. You cant restate a dividend, but when his company blew up, the dividend was eliminated. So, you know, when you look at this, you have to look at everything involved, not just one days stock performance, which, honestly, is intriguing, and i do think he set people up. He set himself up for a big disappointment. Got to leave it there. Bill ackmans bad day getting a little worse. Turns out he may have misspoken during his presentation. Thank you, herb, for now. Scott wapner joins us. Scott, what did he allegedly get wrong . Among the many assertions that bill ackman made today was one about a former Research Analyst named tim ramie, who left d. A. Davidson some six months ago to take a job with bill steerts at post foods. Mr. Ackman today saying that mr. Ramey may have been fired from his research position. Ramey heard that, of course, and released a series of emails to me, which he says prove otherwise. And then ackman told me, when i reached out to him about this, i received an email from tim ramey complaining about a statement i made in the presentation that suggested that he may have been fired by d. A. Davidson. Tim has told me he was not fired. Please make sure to correct the record. You may recall, kelly, tim ramey, a longtime bull in herbalife, considered the most bullish guy on the street at one point before he left to take another position. Scott, quickly for people all right, weve got to go, but well try to follow up with this as soon as we can. Thank you, scott. Okay. This is because, guys, we have more breaking news. Phil lebeau joins us now. This one, another major auto recall, phil. Perhaps per training to well, why dont you just tell us . Its another one pertaining to ignition switches. This time it is from chrysler. Chrysler is recalling an estimated 792,000 older suvs. Were talking about 2000 and 2006 and 2007 jeep commanders, 20052007 jeep grand cherokees. What is the recall involved . They are investigating whether or not the ignition switch, if bumped by the drivers knee, will move out of the on position, therefore cutting off the electronics, ultimately, the power steering as well as the airbag. Similar to the General Motors recall. We should point out, they know of no related injuries and only a single reported accident. But again, chrysler recalling 792,000 vehicles to investigate whether or not they have a faulty ignition switch. Kelly, back to you. Okay, phil. Thanks very much. Microsoft just one of the big earnings movers after the bell. Up next, dom chus going to round up the action for us, and then its on to the big one, apple. Were going to have full coverage of those results coming up. 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So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Welcome back. The news has been coming in fast and furious after the bell. Several key earnings reports hitting now. Dom chu rounds up the big movers as we await apples results. Lets look at whats happening first of all with microsoft, get you back up to speed with whats happening here. You can see with microsoft shares, we did see a little bit of an earnings miss heerks but sales did come in a little bit better than expectations. You can see with microsoft shares, theyre up about 0. 5 in the after market. Then you look at Electronic Arts, really soaring here in the aftermarket session, up about 1. 5 . Well call it just after its aftermarket highs. But again, you can see with those particular results, they handily beat expectations on profits and they come in with better sales as well. So, those two stocks showing a bit of action in the after market. Well, of course, be covering every single one of these stocks going into their particular earnings reports, but up until now, weve seen some pretty, pretty marked results coming out of these two companies, guys. Back over to you. Dom, thanks very much. Now, of course, were waiting on apples results. They were about to hit about half past. Our own jon fortt is standing by. Also brian blair from rosenblatt securities along with a panel here. Brian, there are a lot of numbers to watch for, the earnings figure, the revenue figure, iphones, ipads. What to you is the first number youre going to look for when this hits . Im going to watch the iphone number, because thats actually what surprised last quarter when they reported and i think what has the most opportunity to see up side this quarter. I think analysts have been conservative with what theyre expecting, around 34, 35 Million Units, and thats where we could see some upside and thats what will drive any upside to the top line. Whats your estimate . Im looking at a number of 36, just an average. What do you guys have modeled in . I think it will be better. I think its likely to be closer to 38, 39 Million Units for the iphone. Prior to this report, whats your view . So, we look at this stock in increments of 15 right now. Used to be increments of 100. So, right now i think its actually likely to trade off a little bit after they report, because its run quite a bit. We could see conservative guidance, but i think this could be 115 stock into their earnings, into rather their product event in september. And i think that it will be a question of what we see then that would determine i think price targets from there. Kevin, whats your view on apple . I own apple. I dont think you own it for what this quarters about. Right. I think this is the transition quarter between the legacy of jobs and now firmly control of a new ceo with a new vision. I am buying into the upgrade cycle, emerging markets, dividend increases, stock buybacks, all the stuff that i love to hear about. I think thats what im going to be getting. I would add enterprise to that. They made an announcement with ibm and this partnership will actually be very meaningful for apple over the next few years. Were seeing iphones and ipads in these fortune 500 companies, but now theyll be brought in the front door with ibm as a partner and thats a Growth Opportunity for apple. Between the july report, i think the stocks gone up 18 on average. Any reason to expect anything more . Do you own shares of apple . Maybe a few. Theres always a big runup after they give guidance for the june quarter. Until their Product Announcements in the fall. Theres always a lot of anticipation and were going to see the exact same thing this year because apples introducing a new product category for the first time in four years. Where are you on the wearable stuff . Thats just it, we are going to see this wearable product. I think it will be announced in tandem with the new iphones and i think it will probably come out shortly after late september, early october, but we know its been in production to some degree, or you know, pretooling since the first quarter, since about january, february. So, we all know its coming and thats what i thinks going to cause a lot of excitement. We have to get out to josh lipton now, the earnings everyones been waiting for, apple reporting results. Josh, what can you tell us . Reporter well, kelly, apple just reporting, so let me get you those numbers. Apple reporting eps of 1. 28 on 37. 4 billion. The street was looking for 1. 33 on 38 billion. That growth rate highest in about two years. Now, i just had a chance to sit down and speak with apples ceo, tim cook. Cook telling me he couldnt be happier, that this was the best execution of any quarter since hes been at apple, he said. So, walk through some of these product categories, kelly. Apple sold 35. 2 million iphones in the quarter. The street was looking for about 34. 8 million. In terms of where their demand was, cook telling me it was really about the bricks. Iphone in china specifically up 48 . Developed markets, cook telling me the growth was a bit less. He chalked that up to consumers putting off a purpose as they wait for perhaps a new device to hit the market in the fall. Turning to ipads, 13. 3 million ipads. Thats a bit less than the street was looking for. They were looking for about 14. 2. Again, cook talked about the strength in the emerging markets, but the developed markets not as strong. However, he said he was comfortable with what he called that bifurcation, that usage on ipads was off the charts and that they were excited about what they had planned in this category. Macs, 4. 4 million, better than expected. Cook point ad out theyre growing in a category that is not. And apples closely watched gross margin 39. 4 . That is better than analysts had anticipated. Cook chalking that up to execution and cost. He called that a blowout number. Kelly, back to you. Josh, great stuff. Thank you. So, to our jon fortt now, tim cook says he couldnt be happier, jon. Well, i think, of course, he could be happier, but these numbers overall decent. You know, the eps shows the Gross Margins are holding up. The ipad number being light might explain the eps strength, because the iphone mix was relatively strong. The release here structured a little bit differently than it has been for several quarters, many years up to this point, not breaking down the specific product categories that josh was good enough to bring us. Now we do see that it is in the companion to the release. Interesting that the brics in particular were strong. Were going to want to hear what they have to say about inventory. Also interesting that the holdoff to the next iphone started again a quarter early. Its happened that way in the past. I believe it happened last year as well. But the fact that theyre already seeing consumers in developed markets curious about the iphone 6. And yet, the iphone number still holds up decently well. All of those things are for investors to consider after hours. Brian blair, what do you do now with this . What jumps out to you . Now that we know the quarters out of the way, numbers are out of the way, now is the time for investors to buy this thing. As you mentioned earlier, well see a massive runup into this next Product Announcement. But whats interesting, ipads were weak. And thats been a trend. Thats an important trend why are you so confident well see a runup into the next Product Announcement . Because if you look at the last five years of apple Product Announcements into the fall, the stock does that 95 of the time. It actually sells off once products are seen. Theres no risk coming right now. Well see numbers grow on all of these fronts. Low risk . Theres very low risk. Dont say that with all these Retail Investors now anxious to get in now that its more affordable. Thats right. I wonder if you think that will drive the stock price too Going Forward, but what weve seen typically with stock splits, have we seen the growth youre saying . On one hand, you have the apple story, but also the market story on these stock splits. Thats why the stock split was so important because this is a more palatable stock, who can look at this stock as opposed to a 700 stock. So, i think well see Retail Investors come into the stock again. Should that make the institutional crowd nervous . I think it should make them excited because theyre the ones that have been buying it since march, they bid the stock up. Numbers arent the same as presplit, but theyre the ones who came in on the buyback, came in on the split. Retail investors are watching this, but they will come in next. Whats also critical is the Gross Margins. Apples Gross Margins were weak for the whole of calendar 2013. Were seeing a return to this near 40 range and investors love to see that, especially as Institutional Investors. Kevin . Theres an institutional stumble that actually helped apple. If you think of dollars allocated to samsung, you didnt like that last quarter by any metric at all. You took your dollars out and you moved them back into apple. Right. Because youre in the beginning of that cycle weve been talking about. Thats another reason that apple looks good for the next quarter. Thats correct. I like their story right now and i want to see i dont care about ipads, because frankly, a larger format iphone displaces my ipad. Im not going to carry that around. Its too heavy. Thats actually a very critical point in terms of the global market. Samsung has done well over the last two years because they decided that the global marketed wanted largescreen smartphones. Apple went the opposite direction and now theyre playing catchup. Even if theyre late to the party, theyll hurt samsungs market share in the back half of this year and next year. Apple proving its never too late. Thank you. Our coverage of apples earnings will continue. Were going to take a quick break here and well be right back. Are you sure we should take this billboard down . 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Our josh lipton doing more digging through apples results, which have just hit the tape here. Josh, what else can you tell us this hour . Reporter kelly, lets also talk about some guidance from apple. Apple giving q4 revenue guidance in the range of 37 to 40 billion. The street, at least estimates i was seeing, calling for about 40. 6 billion. Apple also talking about its capital return program, saying they return about 8 billion to shareholders through the june quarter. Kelly, back to you. All right, josh, thank you. Apple shares trading off about 0. 5 after hours. Lets bring in a pair of apple shareholders for analysis. Jaron sheshts joins us along with tim lesko from granite investment advisers. Are you adding to your positions here . Darren, you first. No, we have a full position in the company already. Its one of our top positions in the internet fund. And frankly, this is the most meaningless quarter in recent apple history. The numbers getting existential now. It really is unimportant. And even the guidance, which isnt particularly strong, is really meaningless as well, because who cares that the product, the new iphone 6 is going to be delayed . Wait a minute, meaningless, unimportant, who cares . Tim, what do you think . Well, id have to actually echo some of his comments. We have a full position at apple, so certainly, wed be buying it for new clients but dont have any plans necessarily to add to it. If we saw a substantial weakness in the stock, we would add to it because the longterm story is probably more intact now than it has been. If you want to read into the numbers, if you look at it, essentially, you have a company who now has emerging markets are starting to fire a little bit faster than it had been. Meanwhile, youre now in developed markets have a refresh cycle thats more meaningful than it has been in past years. I think its a pretty good cycle for apple right now. One thing i would add to that is actually going to be china. This is going to be the first year that apple has launched on china mobile, the Worlds Largest carrier, with over 750 million subscribers concurrently with other carriers around the globe. The two variants of the iphone 6 will launch to that important market simultaneously and that will be additive as well. The other thing i would point out is that weve really seen all of the big hitters this year in the android space. You know, samsung, sony, lg, htc, and then really, theyve been lackluster, new devices. So, i really think people, the pentup demand for the new iphone and bigger screen is just going to so, you guys dont think theres any Downside Risk to apple coming out with the bigger screen . How do we know this isnt going to tank or flop or Something Like that . Tim . Why isnt this more exciting and interesting . Well, certainly, it could flop, but i dont see why with all that they have coming out and the existence of the existing phones that theres going to be some sort of big product flop risk. In emerging markets particularly where people are more likely to carry one phone as their whole computing life, it seems like a pretty good spot for them. I would concur with that being available in china will be a big deal. So, what about that Retail Investor carrying that one phone . This may be their second or third iphone, but they dont yet own apple shares. I mean, is this the time to say maybe you dont need the iphone 6 but you need to own apple . Darren, what do you think . Oh, i think investors should probably own both. Im an android user, but i think my wifes an apple person wow. And i absolutely think the new device is a flop . I cant remember the last time an apple device flopped. Well, the last upgrade was pretty boring on the iphone. I have an anecdotal story which makes me optimistic and makes me want to go longer apple. My sons 18, has the 5s, drops it on a roller coaster. Hes borrowed a blackberry to wait for the release with his own money. Theres a guy he would rather use a blackberry. And hes whining about it every day. He wants the new phone. He actually thinks this upgrade cycles worth waiting for and worth spending his own money on. I like that. My kids are younger are and one of their friends is waiting to get a phone, doesnt even want a phone, even though everyone else has it, because they want to wait for the iphone 6, so the Younger Generation wants it. Where do google and other Companies Stand in the middle of this . Fragmented. Google, first of all, is sitting pretty, because its apps also run on the iphone. Its managed to lock up a significant presence on mobile across the board, though, apple is pairing that back. I will tell you what is significant about this quarter. If they had missed on iphones in a really big way, then it would be significant. They didnt. They delivered pretty much across the board on all metrics. Yes, ipads were light, but no big reaction to that. We know that the news, the big news, the launches are coming in a couple months. This is a dangerous time to get into apples stock just calendarwise, but this is also somewhat unprecedented in this era. The number of new products that were expecting. Thats exactly right. So, it depends on how much risk you want to take on if youre an investor. And now the focus will turn to the wearable. As we get closer to its launch, we might see some leaked images of it, but this is when all the focus will shift to any new product category, what can it mean . Were telling our customers that apples initial production plans are 15 Million Units. So, whether they price this at 200 or 300, meaningful. 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Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account and earn 300 commissionfree online trades. Tdd 18003452550 call 18886486021 to learn more. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back. Apple earnings are out. Shares have moved around a little bit. Theyre currently off 0. 5 . Lets bring back the panel to see whats ahead for this company and what it might mean for markets tomorrow as people start to trade off this. Brian, do you expect any knockon trades here . I know youre positive on apple. Youve made the case. Before we talk wearables, talk me through what other impact you think this might have tomorrow. I think the fact that there was not a big beat on the iphone will be disappointing to some. The fact that its run so much this year, some traders may want to take money off the table, but the larger Institutional Investors who are buying this for the next product cycle, for continued iphone growth and whatever this new category can mean, theyre not worried about this quarter. It doesnt matter. Its a check the box, lets move on and see what the next 12 months look like. The miss on the ipads not a big deal . Its interesting because its the Second Quarter in a row weve seen ipads weaker, and i think that could become a concern if we continue to see those units decline, because this has been a big growth area for them for the last four years. And if its over and if were going to see that 13 million become 10 and 9, then this watch, this wearable better make up for it, or else its going it be a problem. The problem with that is there are many people, im going count myself in that i category, the only jewelry a man can wear is a watch. I collect watches. I dont want to look like a nerd factor 6 wearing something thats blipg thats fair, but if it looks like an elegant movado, looks like a great watch . If you can get me there on style and i dont have to look like a nerd hes raising the geek factor and its real. Motorola has the moto 360, a watch coming out this summer that looks like an elegant movato. Can you tell us to what extent the wearables factors into your longterm case for apple . Tim, go ahead. The wearables, mine, its really about the new operating system. And the beautiful thing about wearables and the new operating system is it gives developers something to develop to and to make money from. You know, youve got kevin oleary on the line here. Essentially, its follow the money. Somebody who talks about all that. If you can continue to help developers make money, youre going to have a very vibrant ecosystem and put your competitor somewhat to shame. And i think if you look at wearables, you have tory burch making a fit bit, motorola making something that looks like a movato. And you see plenty of executives with the wearables, whether ups or fit bits. Im not too worried about acceptance in the consumer. The big thing to us about wearables thats important is its going to prove they can innovate again. They can change the nature of the game. All of the wearables to date, besides maybe the fit bit, have been disappointing. The google watches i mean, samsung watches, the google glass. And really, so, apple could show, again in a postjobs era, that they can innovate, one, and that they can prove we wrote a white paper on jacobmutualfunds. Com about the power of the platform and proving that the wearables could work could really prove that the ecosystem is meaningful. Jon fortt, what about you . Kelly, i think the most [ everyone talking at once ] the interesting thing is the halo effect it could create around other apple products, not so much the money theyll make off the device itself. If they come out with a watch everybody wants to have, does that make them want to have an iphone more . And then on ipads, we have to listen to the call on what inventories did. If apple brought down inventories a significant amount, as they sometimes do, before a product refresh, maybe they actually sold they actually sold out sold through something closer to 14 million, which wouldnt be a disappointment. We have to see if they sold lou. Shares are up to the tune of 1 . Another earnings action we had this hour, tomorrow on the closing bell, were going to hawaii. Not really. Were being to have the ceo of Hawaiian Airlines to give us his take on the flight restrictions to israel. The airlines fly over war zones, changing flight patterns tomorrow. Well be back with an earnings recap right after this. We started zya with the thought that the kid on the back of the bus might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device, up to the cloud it goes, back down it comes, sounding better. We break down the walls of creation and we give music creation for the masses. Unlock the creativity in anyone. With the ibm cloud. The ibm cloud is the cloud for business. [b ll rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from Td Ameritrade. With diabetes, its tough to keep life balanced. I dont always have time to eat like i should. And the more i focus on everything else, the less time i have to take care of me. Thats why i like glucerna shakes. They have slowly digestible carbs to help minimize blood sugar spikes. Glucerna products help me keep everythibalanced. crash ugh im good. Well, almost everything. [male announcer] glucerna. Delicious shakes and bars. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. Welcome back. Between apple, microso forth, ea, its been an afterhour session for earnings. Lets start with this, kelly, obviously, with apple pofrtd a mauler than expected quarterly sales, ipad sales fael bit short of those projections. You can see the stock is off session lows. Still down about a percent. Microsoft is earning 58 cents a share. Thats 2 cents shy of what wall street is expected. Sales come in higher than forecast. Microsoft shares, theyre up now about a half a percent in the after market. Then there is Electronic Arts on the game side of things. Its off its high up about a percent. The video maker posted earnings of 19 cents per share. The street was looking for an actual loss of 4 cents per share. Easily beating the 24r50e7b pll the street was looking for. Then you see the ea trading shares a percent to the upside. We will start or end, losing ground in the after hours of posting much weaker tan expected ref few. The revenue guidance came if weaker tan forecast. Can you see the stock is down 9 just off its session lows, kelly, back over to you. All right, dom, thank you. Up next, we will wrap up the earnings day and market session and look ahead to tomorrow on knock on trades dom mentioned. Also in the closing bell, tomorrow Norfolk Southern will join us to discuss his companys earnings and what theyre saying about the state of the economy. Well be right back. Being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know . Welcome back. Lets get some final thoughts from the panel. Its been a busy hour, what is your first trade tomorrow . Are you trading tomorrow . Yes, i am. For me, i keep watching this market move north. I see its driven by earnings. I think we go higher. I say that with as a bond i say to myself, when is this going to change . Because it is, i think the fed is getting behind the 8ball. We have to raise rates higher than we think. Thats what i think. Are you changing the position in your funds . I have short duration 50 in the last 18 months. My average duration is 36 months. What about you . Im looking at as the market continues to go up. Water happening with the Younger Generation . Im looking at the millennials, theyre sitting on cash, missing out on all this. Who is participating on the runup is most interesting. I slightly disagree withpy friend kevin, like todays earnings reports, pretty mump steady as you go, microsoft, apple. Janet yellin is doing i think a fine job of trying to absorb the labor slack that remains in the economy. I think we will see rate staying low for a while. Inflation is not a threat. Shes doing the right thing. Apple is growing again, thanks for juan for woking through this, pos tiver cash flow over 10 billion returning 8 billion to shareholders. Kelly, im expecting differed increases, stock buy backs, im expecting wonderful things from this company. The only thing you would own it, everybody is detailing. This quarter is very boring. Its very listless, for me, the only reason i own it, its declared a dividend after jobs left us. They have to keep me a Value Investor interested. A busy hour, a lot going on, fast money is coming up in a few seconds, melissa lee, will you get details from microsoft and apple in the calls. We are trading the details. Also we got a big move in herbal life shares today. One trade is from 60 a share. We will get an update on how he is managing that. A lot of other people are on the boat at this point. I hope he is doing fine. Fast money starts right now. Im melissa lee. Apples conference call, the company beating still, shipping numbers for iphones and ipads, our own josh lipton spoke with him before apples call, josh will join us coming up, microso forth earnings fell short of expectations while revenue beat. That call at 5 30. Will they give details on the job cuts . We will bring you the headlines as they come in, our traders tonight, lets check it off here with apple. Listen, i dont think it was too unexpected here. I think the call is going to give us a sense for how