Transcripts For CNBC Closing Bell 20140822

The labor market. I heard comments such as wishywashy, you know, maybe she moved back to the center, it wasnt nearly as dovish as it could have been. They dont knoech. Theyre saying it wasnt hawkish either. Weve seen those before. Instant reaction just ahead from pimcos bill gross. Were going to find out what the man they call the bond king makes of todays comments from the top two central bankers in the world. Cant wait for that. And just when you thought your privacy couldnt be violated any more, comes word that if you have gmail on your smartphone, there is a weakness that allows malicious apps to obtain your personal information only more than 90 of the time you heard that right, more than 90 of the time. Were going to talk to a Cyber Security pro to find out what, if anything, you can do to protect yourself. Right now, were watching markets. With an hour to go after hearing from both janet yellen and mario draghi, the Dow Jones Industrial average is off 27 points. Its hovering around the 17,000 mark. Well see if that holds as we head into the close. The s p also negative on the session by 2 1 2 points. The nasdaq, though, slightly positive, helped by some strong earnings that we were First Talking about here yesterday during the program. All right. Joining us now in our Closing Bell Exchange is jim kan from weather enhancement advisory services, rob morgan from v2v associates and kenny pulcari. Also joining us from jackson hole is Steve Liesman. Kenny, i want to begin with you. Did you hear what you were expecting or had hoped for from either ms. Yellen or mr. Draghi . No, you said it, it was just lukewarm, right . It wasnt super dovish, but nor was it super hawkish. They both remain concerned. What did we learn out of it . Not a lot. So, i think for the most part, i think most of the time, jackson hole is really used for more academic, broad economic discussion and concepts. And so, you know, rarely are you going to get something so marketmoving, and if it was, it would have been, you know, dissected and pulled apart and then redissected and reanalyzed. So, quite honestly, im not necessarily surprised that we didnt get much. I dont think the markets are necessarily surprised. I think the market still thinks its steady as she goes, easy money going out for as long as we can see. You know, its so interesting to contrast, Steve Liesman, how the u. S. Is doing in this economic recovery with europe right now, because mario draghi sounds almost desperate for europes politicians to help them out and get their recoveries back online. I think thats right, kelly. I think what he said here is ive got a bunch of stuff in train. Ive got the ltros happening in september, were working hard, fast on the abs purchases. I dont think there was any reasonable expectation that draghi was going to announce anything new. He did say, as he said before, they stand ready, if needed, to do other unconventional measures, including, he didnt say qe, but thats implicit in what hes saying. What he wants is for the fiscal side to step up. He wants to stop the deficit reduction going on over there, and he compares and contrasts the u. S. With europe and finds that the u. S. Backloading its fiscal deficit reduction had a much better effect on unemployment than they had in europe. So, hes exactly right. I think hes begging them to do more, because he says hes not really doing more beyond the substantial measures announced in june. Steve, as people are reaching for their acronym playbooks looking for ltro, they have no problem understanding qe, okay . And if they wanted an announcement today or any sort of leadin to fullblown quantitative easing, the proverbial bazooka from draghi, they didnt get it, yet. No, but that was silly, scott, because draghi is not going to come to wyoming and announce qe here. He would announce it at a meeting that would follow a central bank ecb meeting in europe. Thats where and when he would do it. And he didnt even hint at it here in the sense that he just used language that theyve used in the past. That was not coming today, and i think it was wrong to have expected it. There is, rob morgan, though, a sense that just going back teach the people invited to jackson hole. Remember, the list changes all the time. They even like to pretty much keep the itinerary close to the vest, because there may be discussions that bear fruit in the months ahead with regard to central bank policy. And look, theres an argument right now that perhaps there needs to be more global coordination. Are you sympathetic to that at all in that sense . Do you think there might be more to come out of jackson hole than we can sort of see on the surface of things . Well, certainly, kelly, that could be the case, but even though draghi didnt mention qe explicitly, their Unemployment Rate is still attractively high. It seems obvious that theyre going to have to bring out the bazooka. And even though no news came out of today, from a market standpoint, that implies that the euros probably going to be weak, the dollars going to be strong. That means u. S. Small caps should do well and u. S. Commodities in the energy and materials space probably suffer. So, even though there wasnt a lot of news today, i think that underscores part of our investment thesis. And yes, hopefully there can be more global coordination. What is that thesis . Basically, we like, we prefer small cap u. S. Stocks here that are growthoriented, and we like the cyclical sectors, but we would underweight some of the defensive commodity sectors, as i said, like energy and materials. Hey, jim, love the name of your firm, Wealth Enhancement Advisory services. So, on a day like today in a market like the one were talking about with stocks basically at new highs, the s p, what advice would you give me to enhance my wealth today . Well, the best advice we can give you is to, you know, be smart with your tax planning and save, but besides that, we would tell you that u. S. Large caps look relatively attractive. So, evaluations have gotten a little bit stretched. Contrary to what the last guest was saying when we look at valuations on small cap stocks, we think they look pretty expensive, and weve been rotating out of small caps. When we look more globally, we do think that a stronger dollar bodes well for emerging markets, and we certainly heard today that the dollars likely to be stronger. Thats going to encourage exportoriented economies like china and india, to some extent, thats going to encourage growth in those places and some of the malaise weve seen in emerging markets we think will come to an end as the u. S. Strengthens and the recovery here gathers strength and the dollar strengthens relative to some of those currencies. And wed also like to bring in Sharon Starks into the conversation from d. A. Davidson and company. Sharon, do you still think the 10year is going to 2. 35 . Its not a far distance from about 2. 4 now, but do you still feel that way, like Interest Rates are headed even lower . And if so, what does that mean for investing here . I think there is a possibility, simply because theres still some buying that needs to be done of accounts that, frankly, were shorter duration than they needed to be, and also, they need yield. You also have banks that need to prepare for the liquidity coverage ratio requirements that are going to be put in place in 2015. So, i think there is still some buying that needs to be done that could take it back down to that key resistance level. But then, of course, going into next year, hopefully as the economy continues to strengthen, we are looking for rates to rise through 2015. Hey, steve, you know, we wrap things up from jackson hole and try and figure out what ultimately the biggest takeaway is going to be. And by virtue of the way that janet yellen spoke today, some saying that she moved back towards the middle, acknowledged certain views that had already existed within the fed. Does she at least increase the debate, if nothing else, inside the room, as to the best course in the nearest term for Interest Rates, given real concerns over unemployment, whether the labor market is suffering cyclical or structural issues . I might just tweak what you said. I dont know if she agrees to it. I think she reflected the debate thats going on, and we learned more about that debate in the minutes this wednesday, scott. I think what happened was i was a little bit surprised yellen didnt give more of a defense of the notion of labor slack in the economy, and i think its somewhat significant she moved to the center. I think the significance of is that is it increases her flexibility to move if we do, in fact, get an increase in the reduction of labor slack in the economy. I dont think there is any plan to do that right now. We talked to a bunch of centrists. We interviewed five fed president s here, including, you know, John Williams, jim bullard. Jim bullards one of the ones that wants to go earlier, but John Williams and Dennis Lockhart from atlanta, theyre still in mid2015. In fact, Dennis Lockharts quote was im still a mid2015er, so we get that. And ultimately go ahead, scott. I was going to say, steve, i heard you said, it could have been six months ago or every month there out, that what the fed does is going to be datadependent, right . And we leave jackson hole with essentially the same scenario in place. Everything is datadependent from here forward. Nothing has dramatically changed. No, you sound disappointed, scott. Im sorry about that. We do our best out here to give you the information, but no, no, i think the market is looking for a little bit more. Would you have it any other way . Would you have them be dogmatic about it, rather than be datadependent . No, im not disappointed at all. I mean, i would expect i say it somewhat sarcastically, in that of course im joking. Everything is going to be dat datadependent, right . But some people were expecting her to be a little more dovish, there were risks in the market that perhaps she was going to be a little more hawkish and they really got a vanilla speech. Look, what we got was follow the u6. What we got was follow parttime for economic reasons. What we got was watch this debate internally about how much is structural, how much is cyclical. I mean, personally, i dont want the fed to do anything but that, rather than stick to the ideas theyve said. Fact is, shes ready to change hir her mind if data changed. That doesnt appear to be the case right now. And remember, scott, these guys have been burned by predicting this turnaround and backing off repeatedly. They dont want that to happen again. I agree with you, steve. Quickly, we have to go, but let me ask you about this. Steven stanley raised it in his note this morning. He says at least a handful of Bank President epresident s, and includes bullard in this is statement, saying we should forget about the labor market and focus on u6, theyre as agitated as ive ever seen anyone on the fomc. He thinks theres actually a lot more internal unrest here than meets the eye. I think there is unrest, and i think thats part of the reason why janet yellen has moved a little bit more towards the center of the debate, giving a very evenhanded discussion here. But i dont know how much thats going to change policy. Remember what theyve said, that theyre going to wait a considerable period after the end of qe before they raise rates. I just dont think theyre in a position now, or even that the data support going back on that pledge right now. Right. But that considerable period, maybe its march as opposed to june. Thats a distinct possibility. And i walk away from this meeting thinking march is a possibility and junes a possibility, whereas maybe before i gave less probability to march. Well, i hope you got some good hiking in, too. Thank you, steve. Thank you, everybody, we should say, this hour. Weve got about 45 minutes to go here into the close. Look at this, the dow trying to make a comeback here, only off about six points now at a level of 17,033. At the highs of the session today, we were up 25. Well keep an eye on it. S p is down about half a point. Any positive close for the s p, kell, is going to be another record high after hitting that mark yesterday. There is a look at the picture. S ps virtually flat right now with about 45 minutes to go. Up next, pimcos bill gross gives us his exclusive reaction to the jackson hole speeches just delivered today by fed chair janet yellen and European Central Bank President draghi. Wait until you hear what the head of the Worlds Largest bond fund is reading between the lines. Also coming up, what will the changing of the guard at home depot mean for its stock . The Home Improvement giant naming u. S. Retail president craig menear, who i interviewed a few weeks ago, as the next ceo. Well hear about that and whether home depot is a musthave stock. And later, what can you do to safeguard your email account, which researchers say can be hacked . Your email account. What did i say . Gmail, email . Your email account. Isnt that what i said . I dont know. Email, gmail, everything. It can be hacked with a 92 success rate. 92 . Theres like a voice in my ear. Email, gmail. Were back after this. Once there was a girl who never settled for ordinary. Even in her laundry room. With downy unstoppables, she matched her one of a kind style with one of a kind scents. Downy unstoppables in wash scent boosters wash in the wow. I make a lot of purchases foand i get ass. Lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Welcome back. The big event of the day, Federal Reserve chair janet yellen speaking in jackson hole, focusing much of her commentary on the labor market, which she says still isnt where it needs to be, but an economy that is getting closer to where she wants it. Well, the bond king himself was listening intently today, and pimcos bill gross is here with his reaction. Bill, welcome. Good to welcome you back to the closing bell. Thank you, scott. Nice to be here. All right, so, you heard from ms. Yellen, mr. Draghi. Whatd you think . Well, i think, you know, weve heard talk about twohanded economist and vanilla. I think the best description in terms of today is all hat and no cattle. I mean, theyre out there on the ranch, and ive been out to jackson hole, not at the fed meeting, but riding horses at the grohan river ranch, which is close to steve. And so, todays discussion from draghi, from yellen, you know, basically all hat, no kettle. They talked about things theyve talked about before. It doesnt mean that the fed and the ecb arent in a position to do additional things. They are. But at this point, we didnt learn much that was different relative to what we knew yesterday. You know, its funny, bill, i hear a lot of people, and obviously, you do as well, that the fed is behind the curve. And i just wonder if we come out of mr. Draghis speech and im already hearing from some people that the ecb, in fact, theyre the ones who are actually behind the curve, that maybe people were looking for mr. Draghi not to announce any sort of thing here. We know thats not the forum. But do something more than just urge fiscal lawmakers to do more over in europe. I think so. Again, the market wants to hear quantitative easing. It wants to hear deimplementation of the ltro. They want to see something that in effect, scott, drives the euro down and the dollar up and makes euroland more competitive on a currency type of basis. I mean, there are limitations in terms of what draghi can do. The german 10years at 0. 98 . The u. S. 10years at 2. 4 . And so, you can see the room that draghi has to move, and in terms of the margin relative to zero. So, what draghi can do in terms of quantitative easing is not necessarily buy a lot of bonds but suggest to the marketplace that the ecb will be where it is for a long, long time. While theyve done that with the ltro and basically, you know, guaranteed financing for three to four years going forward, but whats really needed here is a policy to drive the euro down, and you know, perhaps structural reform can do that to some extent, but i would think it involves more of a longerterm promise that financing will be kept really low for a really long time. And longterm refinancing operation is what ltro refers to there, for people who are following along. Bill, so, i wonder, weve seen this massive compression trade in european Government Debt as a result here. Were seeing, as you said, they would like the euro a little bit weaker. Thats been accomplished here on the back of a stronger u. S. Dollar. I mean, is janet yellen the new face of the strong dollar . I think she could be. And of course, as steve mentioned earlier, you know, its down to whether its march or june. And then there are arguments for either one. I think most important, though, and many would agree, that its not just when the fed starts, but its the slope of the increase going forward. I mean, we know that the sun will rise in the east, and usually its around 6 00 in the morning, but we dont know in exactly what season it is, whether its summer, fall or winter, and you know, the slope of the sun over the horizon. And so, thats the critical element. Thats where pimco believes that with our new neutral, which basically says the fed, yes, will increase Interest Rates, yes, will strengthen the dollar, as you mentioned, but you know, will stop somewhere around 2 as opposed to 3. 5 to 4 , which many fed officials which is different. We asked whether its goldman, where they still think its going up to 4 , we asked Dennis Lockhart about this. He says its probably 3. 75 . I mean, nobody else really has this view that you guys do. Well, they dont, you know, except for and lets insert mr. Carney at the bank of england, who suggests that their longerterm new neutral is really 2. 5 , as opposed to 4 to 4. 5 . In other words, he says half of what it was. And so, we have some academic and policymaker, you know, coordination with the pimco view that, basically in a highly levered economy with structural headwinds as the fed has submitted, that its more appropriate to approach real Interest Rates and to approach the fed funds nominal rate at a certain percentage of what it was historically. Its hard to believe to our way of thinking that, you know, given the leverage that we have and the sensitive nature of unemployment and consumer purchasing power that the fed could really raise Interest Rates to 4 , which would mean Mortgage Rates at 5. 5 , and we could have a thriving economy. Thats the ultimate debate. Bill, ms. Yellen could have been more dovish today, right . She wasnt. She moved more towards the center, people say, not that she was hawkish in any stretch of the imagination. But at what point does the market start to react from a bond perspective and yields, that it perceives her to be moving away from this uber dovish tone that she delivers on a fairly regular basis but chose not to today . Well, she will get closer to that. I mean, if june 2015 comes closer, and that does every day, then janet yellen will move to a more neutral stance relative to that point in time. But to my way of thinking, to pimcos way of thinking, her ultimate focus is on wages, its on main street as opposed to wall street. And going forward, you know, the Interest Rate trigger for her is the level of wage increases. She and other fed officials, such as John Williams of san francisco, you know, they need to see compensation approach or exceed 3 growth rates annually before inflation poses a threat. And were currently at 2 . So, you know to my way of thinking, it is a considerable period of time, and that is, you know, at least six to nine months before, you know, yellen and others at the center of the fed, at the center of policymaking are willing to take that first step. You know, bill, youre always good at the naval gazing stuff. And as we head back to school here, i just wonder, what did you or what did we all collectively learn this summer from the behavior of these Financial Markets . Well, i think we learned, and i think its an affirmation, at least to this point forward, of pimcos new neutral thesis, which basically says that, yes, prices are artificially high, Interest Rates are artificially l low, all assets, you know, are in those, not the stratosphere, but in the, you know, at a certain elevation that isnt normal. But if Interest Rates can stay relatively low, can stop at 2 to 2. 5 in terms of fed funds, as opposed to 3. 75 that you mentioned, then pes can be supported. And weve seen that with the stock market, despite the, you know, the slowdown in terms of retail sales and the growth rates of the consumer, which buttresses the main part of the economy. So, i think the new neutral really is taking effect not just in bonds but in all asset markets and sort of stabilizing volatility now and going forward. Thanks so much. We appreciate your time exclusively today with us on cnbc. Youre welcome. Thank you, scott. Thank you very much. All right. 35 minutes to go before we close it up here. Dows still down 15 points. Remember, any positive close for the s p, which is currently off a point, would be a new record high. Yes, it would. Up next, the market may not be moving much right now, but some bigname stocks hitting record highs today, and Morgan Brennan will round up some of the movers. Plus, home depot names a new ceo. Were going to hear from him in an interview that kelly did earlier this month, and were going to take a closer look at the stock as well. The pros tell us where they see it going with craig menear at the helm. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Is caused by people looking for parking. In a city thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years. We wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information, sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small start up to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Drivers want to go further with their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant recharge along the way. The green emotion project, funded by the European Commission is using the ibm cloud to make this possible by creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go. Take your business further with the ibm cloud. The ibm cloud is the cloud for business. Welcome back. Lets take a look at the dow as we wind down the week, and what a week it was. Weve seen the dow now climb back above 17,000 for the First Time Since late july, closing at that level yesterday. Today wasnt quite clear a few minutes ago if we were going to hang on, but so far, being off only 18 points leaves us at 17,020, down about 0. 1 . Same for the s p 500 at 1,990. The nasdaq is again bucking the trend, up about 0. 25 . Morgan brennan rounding up todays movers for us. Morgan . Thanks, scott. We begin with carriage Green Mountain on news it signed a deal with kraft to sell coffee packs with its brewing machines, up about 14 . Deere moving lower, laying off another 460 workers due to weak demand for its agricultural products. Mcquarry also downgraded them from underperform to neutral and cut its price target by 10 bucks to 75 a share. So, deere is trading down about 1. 5 . Meanwhile, foot locker gaining ground after the Athletic Apparel and footwear retailer posted strongerthanexpected secondquarter results. Foot locker is trading up a little over 3 , nearly 4 . And we end with three big names, apple, disney and macys, all hitting record highs. Apples up about 0. 75 , disney up just about 0. 5 , and macys is trading 2 higher. Kelly and scott, back to you. All right, morgan. Thank you so much. Thank you. Meanwhile, home depots stock today moving fractionally, but investors are still buzzing about the announcement that its u. S. Retail president , craig menear, will become ceo effective november 1st. I spoke with menear at a Home Depot Fulfillment Center in atlanta earlier this month, and heres a reminder of what he told me. The future i think is incredibly bright for the home depot. We look at the interconnected retail world as a Growth Opportunity for us. If you think about 2013, our company grew 5 billion in total, and about 900 million of that came through homedepot. Com and our interconnected retail opportunities. And i think as you look forward in the future, thats really an enormous opportunity for the home depot and its shareholders. Well, for more on the future of home depot and the outlook for the stock, were joined by Laura Champine and cnbc analyst stacy widlitz. Laura, should investors expect home depot to miss a beat without blake . You have the team in place, carol tomei backing craig up. There is a new head merchant, ted decker, and has tough shoes to fill reporting to craig. Hopefully, craig menear can help him on the merchandising front. Ted is more of a numbers guy. Well be watching that role very closely. And stacy what do you think craigs Biggest Challenges are as he inherits this mantle . Yeah, as laura said, really big shoes to fill here. Expectations now for home depot are extremely high, as high as they were coming into the quarter now that they blew away the numbers, you know, also considering that there have been some mixed numbers in housing out there and from some of the retailers, you know, that, again. But we look at a twoyear trend in the comp. It was the highest in over a decade. Its phenomenal. Laura, what did we learn this week as we heard from both home depot and lowes . Home depot just continues to take share, and theyre taking share in some key categories, like appliances, where they dont have a history of being a leader. So, home depot Getting Better and better at what they do, which is accept reasonable margins and use those excellent price points and good cost structure to put pressure on everyone else in the space . Because let me flip it around, stacey, then ask the which, which is, what are the biggest risks here in a strategy that right now is paying off quite well . So, again, its the expectations are incredibly high, and also, its the transition here. There is always transition risk. Obviously, craig has been around a long time, since 97, but you know, well see what happens with the culture. There is a lot of investing to do here to keep the momentum at home depot and also think about lowes. Lowes has really been a big laggard. Theyve undercomped home depot by about 2 for about five years here. So, if they get their act together and nip at the heels of home depot, thats a risk. But also, dont forget, sears is under intense pressure. Will they even be around in five years . And they have a Big Appliance business, so. Laura, moving beyond just the immediate issue of a ceo transfer, which stacey accurately obviously says is fraught with risk at some point. Is there one area at home depot that they really need to watch out for where lowes is looking and saying now is a real opportunity for us to pick up some lost market share or anything . Lowes seems to be working hard on an ecommerce strategy and becoming more of an omni channel retailer. Frankly, i think that can be a distraction to whats happening in the stores. Home depots been very successful online, and its still 4 of revenues, just not enough to move the needle. So, no, i dont think anyones nipping on home depots heels in any real way. But you have a buy on lowes or whats your rating on lowes . We have a accelerating on lowes. You have a sell on lowes and a buy on hd . We have a neutral on home depot. Theyve had a great couple of years. I think frank is going out on top. Wow. Stacey, you want to just echo that, lowes versus home depot . Yeah, i mean, i would stick with home depot here. You also have to remember that they have that probe business, the highticket business, a much larger percentage versus lowes. And the bigticket business, the comps were up about 8 . So, thats really driving the stock here, too. Great point. Stacey and laura, thank you both. Good to see you this afternoon. Have a nice weekend. You, too. You, too. 30 minutes to go. Dows off three points, the nasdaqs positive by nine. And guess what, home depot is the biggest leader for the dow this week. Its up more than 8 . Up next, its vegas, baby, not atlantic city. Jane wells hits up sin city, where shell speak with hotel king sam nazarian, whos opening a new property, very different from south of here in new jersey. Well find out why vegas is thriving while ac is dying. Stay with us. Financial noise financial noise financial noise 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. All day our very own jane wells has been living it up in las vegas. She joins us now from the new sls las vegas, which is the first hotel casino, in fact, to open on the strip, scott, in five years. Jane chilling in a cabana earlier today. Jane is out of the cabana. Now shes in a casino, joining us alongside sam nazarian, founder and ceo of sbe, the group behind the sls chain. Guys, its great to see you. Mr. Nazarian, ill ask you first, does vegas really need another casino . Well, did you hear that . Well, i think, you know, vegas is coming back stronger than ever. And what weve done is weve taken an old casino, a historic building, and really brought it back to life. Weve infused it with over 314 million of true equity. Weve on the other hand wned it. And the fundamentals of vegas are stronger than ever post 2007. Unemployments down, the local economys up, and were also delivering a connectivity of Southern California and l. A. And new york, miami, that really is unrivaled. With the hotel brand and a company. You know, you got in here in 2007, the worst time. Youre on the north part of the strip, the worst place. Things are changing, but there must have been a time when you thought, im out of here, this is not worth it. You know, ive got to tell you, there were many times where people questioned why were still here. Our partner, Capital Partners out of san francisco, held on, we held on. We held the hurricane that came through las vegas, the north end. But you know, ive got to tell you, whats happening now and the good news on the eve of opening up 1,600 rooms and 2. 5 million square feet is really the Convention Business is up, spend per day is up. People call it the north end of the strip, but were in the center of las vegas, and between the connectivity of summerlin, downtown vegas, the revitalization theyre doing there and also ultimately downtown, the strip south. So, we think were in the heart of it. We love our position, we love the economy, we love our product. We couldnt be happier. You know, you are expanding all over the world, but youre such a believer in vegas, you are now a nevada resident . Yep. Tell me why. Well, i think for me, more importantly as an entrepreneur and as our company now is international, were in the middle east with our restaurants, were in china with our hotels, you know, nevada really brings a quality of life to our employees that really, i cant, you know, bring employees on board, you know, executives on board. Vegas is exactly the epicenter of what we do as a company. You know, were a campustype effect. All of the brands in this building are ours plus, the taxes the taxes help, and also, its a much more probusiness state from governor sandoval down, earlier today, we had governor reid here today. Across party lines, everybody wants you to do really well. Ill give you an example. We have 3,400 employees that we put to work today, well, a couple days ago. We had 117,000 job applications. In context, when city center opened and jim, my mentor, told me this, city center with 12,500 applications, about 62,000 applications. Wow. So, right now were very excited where we are. The whole north end is changing. Theres already new capital coming here from malaysia, to australia, from mgm. So, were cautiously optimistic. Were hat in hand humble and excited to open. Sam, is the cocktail, so to speak, for success in las vegas still has to include much more than just the gaming, right . I mean, im looking at the list of the kind of restaurants and the kind of Celebrity Chefs that youve involved yourself, some very wellknown chefs, very wellknown concepts. Youre obviously well known for the nightlife gig and that youve brought to various casinos around las vegas. Is that still the key to success . Well, its a great question. I think, really, its become kind of polar opposite. Were now most of our total revenue, if you look at a project this size, 70 is coming non gaming and coming from hospitality, which is your main profitability driver at 70 . Food and beverage, entertainment are huge. One of the things we do, we are known for entertainment and food and beverage. These are all our brands, so we can bring these brands that are well known, that are approachable, affordable, more importantly. We have a burger for 10, we have griddle thats 10. We have unbelievable food known around the world, but we own them all. From an roi standpoint, we have 4 kitchens delivering 14 restaurants. So, from that standpoint, its helped us grow our company around the world, but from an entertainment standpoint, nightlife, vegas is the center of nightlife. We dont have to outsource anything. Theres nothing in this building outsourced. Its run from one group from an roi and a customer perspective. Sam, if i could, kelly here, i want to ask you a Little Something unorthodox, but as you talk about the nightlife and the restaurants and all of that, i wonder, especially as you get older, do you have any qualms ethically about being in charge of a huge hospitali hospitalityentertainment, sort of face of las vegas kind of company and brand . Its a great question, and i dont go to nightclubs anymore, very rarely. Oh, come on, youre not that old. Its not about my age. Literally for me, the way i run my company, i have president s that run each vertical, and entertainment is one. The guys who run that division have been with me for 14 years. And it is, you know, youve got to stay relevant. Youve got to understand trends. Nightlife and entertainment to us, whether its on sunset boulevard or on collins in south beach or a new hotel on park avenue, gives us really a view into the future. So, as were building these billiondollar projects, we have a little context of what this next generation likes, wants, likes to communicate, socialize. But to answer your question, you know, it is a fine line to walk. Compliance is a big issue. Were probably the only l. A. , vegas and miami Nightclub Company that has a full compliance team, and, you know, weve got to be very conscious of that. For all the development on the north end of the strip, there is one big, empty building right out front, the fountain blue, which carl icahn really wont say what hes going to do with. Whats going to happen with that . Its just sitting there. I can tell you that, obviously, the fountain blue is the tallest building in nevada, 57 stories. And around it, the good news is, the skeletons around it, the old echelon now is going to be resorts world. Across the street, it was going to be a 6 billion project, is going to be a crown hotel by packard. Both announced since we started construction. And theyre all going to be between 1. 3 and 1. 7 million at key. Another was acquired by blackstone. The old hilton was acquired by westgate. All right. So, my point is, thats next. Our friends over with icahn say that they bought it cheap and theyre going to do some good stuff with that. Scott, ask carl that next time you talk to him. Back to you. Sam, real quick before we let you go. Atlantic city. If you were a consultant, can it be saved, fixed, or not . I think, you know, were the king of adaptive reuse and, really, were like the dance team in neighborhoods. We went there in hollywood when hollywood was nothing in 2004. Now its the center of l. A. And here, obviously. You know, it depends property specific and your demographic and loyaltybased system and also the integration of the flow. Were talking about revel, and revel, the one big issue with revel was everything was outsourced. So, the continuity of really trying to cut costs, cut labor, some of the rooms online. We have 50 of our business here in las vegas is the Convention Business. Convention business is up. 41 Million People came here last year. Its going to be higher this year. You know, im not an expert on atlantic city, but i think really its a propertybyproperty conversation, and i think, you know, maybe well look at that down the line. Thank you, sam. Sam nazarian and our jane wells, we thank you both so much on the eve of opening that hotelcasino. Scott, are you going to be paying a visit . I wouldnt mind. Be sure to tune in. Believe me, he knows i think we have a reservation for you for tomorrow night. Scott, youre coming in tomorrow night, right . Yeah, him and aaron. I may have been to hyde before. He knows what hes doing. Lets put it that way. Thank you both. Be sure to tune in to closing bell on monday when keith smith, the ceo of boyd gaming and the pioneer of the borgata real money Online Gaming site will be joining us here on the closing bell. All right, 15 minutes before we close it up here on this friday. S p losing a little bit of steam here, down about 4. 33 points. The dow is moving the negative way as well, down 40. 5. Coming up, a wall street pro gives us his backtoschool list of gradea stocks that could score high marks for your portfolio. And dont miss diana olicks list of the hottest real estate markets for home flipping. And you may be surprised, but homing is not only back, it never left. Were back in a moment. Where the reward was that what if tnew car smelledit card and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com we do . I took the trash out. I know. And thank you so much for that. 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The dow here trying to stay above that 17,000 mark, but art cashin just telling us, dom chu, athat it looks like weve got more selling orders coming in on the close here as the dows off 38. Yeah, as we head toward the close, there is at least a bunch more in terms of sell orders to try to match off at the close, so you might see a little downward pressure. But still, again, its been a light week of trading so far. A lot of vacations happening right now. And despite the fact that we had both yellen and draghi both speaking, the central bank doubleheader, it didnt give traders that much of a reason to really, really pull the trigger on any kind of sell orders that they had. So, again, were drifting kind of just off the lows of the session. But lets be honest, guys, its been a nice run so far this week for the stocks overall. If you look at where the action was on the winning side of things, industrials, tech and financials. Thats a nice thing to see if youre bullish in this marketplace to see those particular sectors doing well. In terms of the laggards, you saw energy because of Oil Prices Still near their sixmonth lows, material stocks, also telecom stocks, the relative underperformers this week. But overall, again, lighter volume trading. We can move things around a little bit. Generally, the tones been to the upside. Remember, were just maybe four or five points away from alltime highs on the s p 500 and still hovering at that 17,000 level. So, guys, it would be tough to say that this is a down, down day. We had a lot of catalysts that could have forced it lower, but we held up pretty well in todays session, guys. Sounds like the theme year to date, dom. Thank you very much for now. Only ten minutes to go. Dows just lost that 17,000 mark. Later, defense secretary chuck hagel with a sobering warning about the terrorist Group Islamic state or isis, the same group which murdered kidnapped journalist james foley. How worried should the rest of us be, from main street to wall street . Were going to talk that out with defense experts coming up. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. All right, welcome back. Theres your picture on the street. About six minutes to go. It has some work to do if its going to get there. Lets bring in david darst, our good friend, of course, an independent investment consultant. Whats on your mind . Pretty good week for the markets. Excellent week, scott, and an excellent month. And a lot of the things the dow transports have done well this month, mass limited partnerships have done well this month. Many investors are looking for yield right now, would like to get some yield out of the portfolio. And ive said and many of the people ive talked to have said mass unlimited partnerships are yielding 5 right now. Telecoms 4. 5 . Europe 4 , okay . Utilities 3. 8 . Consumer staples 3. 5 . China 3. 4 . And Real Estate Investment trusts, scott, are yielding close to 4. 5 . You put that together, you get those seven little groups together, you get a 3. 8 yield out of all that. Are you still pretty positive on the market . Right . Jackson holes now out of the way. Market wants to lift. Market wants to lift. Next week well get the second quarterfinal number for the gdp. Yeah . Youre going to get the caseshiller earlier in the week. Youll get two measures of Consumer Confidence. Basically, people are now going to start looking into the second half of the year, the profit picture. I was amazed 12 profit for the second quarter. Nobody was looking at it. Basically, the cylinders that are not hitting right now china, europe, japan and the consumer in the u. S. Manufacturings doing well, chinas exports are doing well. Chinas real estate is not doing so well. So, youve got a very, very the market wants to lift. Look at the way these transports look. I want you to save some of your best material. They say youre coming back for the closing countdown. Thank you so much. Youre going to hang around . Ill be right here. Well be back in two. And after the bell, what can you do to keep your Gmail Account safe from hackers . According to a new report, not much. Well fill you in just ahead. D with a new volkswagen turbo. So why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. 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Liberty mutual insurance. [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. , were back on the floor for the closing countdown, having way too much fun down here. Dow had a pretty good week. Dow was up about 2 for the week, and theres home depot, the best performing stock this week within the dow. Had pretty good earnings as well. David darst, independent investment consultant, adviser, is back with us right now. Lets talk about the financials, david. Financials one of the best performing sectors this week. If you can get some juice behind the financials now that youve got some more of the risk out of the way, the bank of america settlement, right . 17 billion this week. Is that the group thats going to take us . The financials have always been, you and i have discussed for years and years, scott, the bodyguards of the market. And if they are underperforming, its very hard for the market to do well. Theyve been aided quite a bit by this tremendous performance of the Real Estate Investment trusts, which are in the financials. Theyve been benefiting from these low Interest Rates. That helps the valuation of the Underlying Properties and those stocks have been lifting. These low Interest Rates are a very, very good boom for financial stocks if you want financial stocks to do better, people have been waiting and waiting for the pure financials, the banks to start doing better. Well, the regulatory clouds beginning to lift. What you just said, with settlements out of the way, that helps the financials. The european financials, on the other hand, have had a hard time of it this month. You still Like Technology . Yes, i do. Apple. Buy apple. What about microsoft . I dont have a positive view, the same view all right. Have a great weekend. Thank you, scott. Second hour begins now. And welcome to the closing bell, everybody. Im kelly evans. Its 4 00 here at the new york stock exchange, and the Dow Jones Industrial average is just barely going to hang on to that 17,000 mark. Lets take a look as we wrap up. It was in the end a pretty good week for wall street, all things considered. Dow off 38 points. Similar decline for the s p 500, which yesterday set a new high. The nasdaq bucking the trend. Lets talk about it with the panel. Larry glazer from mayflower adviser, Christopher Wayland from control control bond rating agency. Our own robert frank and to wrap up the action on the markets, fast money trader guy adami. Welcome, one and all. Kelly hey hey guy, youre always rearing to go. I mean, look, it was a pretty good week for markets, all things considered, right . Yeah, it was a fine week. I mean, the s p impervious to everything. Youve got the fed, youve got janet yellen, youve got their dual mandate working, making sure the s p and the nasdaq go higher. And theyve done that really well. And if you dont think thats really what theyre trying to do, then think again there, folks. Lets dwell on this for a second. Their dual mandate making the s p and the nasdaq go higher, fair . Its been that way for a long time. Hold on quick. I say that somewhat tongue in cheek, but actually pretty seriously. I know. Because Consumer Confidence is key. And to me, the only thing that Consumer Confidence is driven by is the performance of the market. If you go back and look, the market goes higher, Consumer Confidence does well. Robert frank, youre shaking your head. Consumer confidence is high, it all makes a lot of sense. The wealth effect from the market has been very limited. The top 10 of americans own 80 of stocks let me just mention one thing. I agree with that. Its not about that. Its about people feel richer when the market goes higher, regardless of whether or not they own the stock if you dont have money. But there was some amazing numbers this week from the census. Very Little People reported it. But get this, 60 of americans have a total net worth of less than 68,000. Thats a net worth. Thats not income. By the way, only the top two quintiles experienced net worth growth between 2000 and 2011. So, we talk about a Balance Sheet recovery . Its really just been in the top. We talk about an income recovery, unemployment. So, were just waiting for the rest of this economy to pick up, and its not happening from the stock market and its not happening with help from the fed. And Consumer Sentiment numbers did take a step back there, larry, lately. Certainly. Look, today was the single biggest economics feature of the entire summer, and in a word it was disappointing. This was an opportunity to get clarity, insight, get conviction on whats going to happen on the balance of the year and we got none of that. Thats only the case because we made it the case. Janet yellen never promised to do that. Our expectations were simply too high going into the speech. Everybody had stars in their eyes, going to pop the champagne corks, and of course, were disappointed because of it. But contrast that to draghi, who said help is on the way, im going to rescue everybody. No, he didnt what are you talking about . Theyve got big problems in europe and hes going to bail them out and shes going to pull away the punch bowl here. Where would you rather be . Hes done a good job of saying hes going to to do it, whether he actually does it like a good european all these oldfashioned metaphors dont mean anything. He solved the National Governments this is basically draghi saying austerity doesnt work. No, look, all the Central Banks are still working to prevent deflation to avoid restructuring, and thats why theres no growth. The economys running at half the leverage it was at before the crisis. Thats why theres no job growth. Very simple. On the flip side, though, there does seem to be messaging from our own Steve Liesman and from other fed members that there could be a bias toward earlier rate hikes than the previous bias. I was a little encouraged by how well the market took that. I mean, yeah, we didnt have a big runup today, but on the flip side, i was expecting a little bit worse from the market, given that all the indications now are earlier, rather than later. Yeah, but weve been through this before. Its not going to happen. Look, gradual is good. Anyone whos building a bond portfolio in this market knows you want gradual rate increase, visibility, certainty. What you dont want is a sudden leap in rates and everyones caught basically chasing their tail. Let me bring chris into the discussion. I was going to to just raise the question about the fundamentals, because the u. S. Economy in light of all this has looked more resilient lately, although to roberts point, its pretty uneven out there. Well, absolutely. Look, there was a lot of good signs of things that are happening in our economy, not the least of which, of course, consumer credits expanding nicely, you see wages continuing to grow. Of course, you have good data coming out of those labor markets. Its pretty clear that the consumers going to be i big source of growth in the second half of the year, and it looks like even housings starting to do a little better. Candidly, its the rest of the world thats the problem and we have to look to the European Central bank and hope they get that stimulus going over there because thats going to make a huge difference for our economy in 2015. But for the second half of this year, i think the u. S. Economy will be close to 2 growth are you talking about quantitative easing for europe . I think they have to go that way. The banks arent lending, theyre perilously close. They need a kick. Its the one central bank out there among developed economies that hasnt actually done it yet. Itd be very surprising to me if they didnt get into the game right now. Well, look, but theyve been bailing things out in europe for how long . For years. I mean, theyve been printing money in europe for a long time. Doesnt that mean a weaker euro as a result of all this, which would be good for european exporters . That would be one of the consequences. And of course, that would tend to lift everybody at some level, but germanys going to gain the most from that. But again, ultimately, i think its really about getting the credit markets moving. Far more reliant on banks than we are, and the Banking Sector is clearly more at this point in time. But chris, why do you think housings improving . I see housing prices starting to fall. Oh, no, absolutely not. Really . Look, were coming off the whole wave of the first bounce in the market really coming from investors, but what youre starting to see now is the return to what i would call the retail buyer. Remember, housing equity in the u. S. Right now is about 14 trillion. Compare that to 2005, when it was 16 trillion. They have all that money. Youre starting to see Credit Conditions start to loosen up and youre starting to see the first sign of the retail buyers moving back in. Were looking for decent numbers in the Housing Market next year, and we think 2015s going to be a great year for housing. And weve actually seen some movement, and well talk more about housing, but i want to bring dominic chu into the discussion, because the homebuilder stocks have been stirring this week. They have been. And theyre not the only place where youre seeing some kind of action. What you have overall is a week that weve seen over the course of this past week where a lot of traders here on the floor, at least, have discounted some of the price action. Now, we can pretty much say safely right now that when volume starts like they have now, the bias has been to the upside. Stocks have drifted higher. Today was a bit of an anomaly, but even then, the s p is down 4 points, the dow 38, 40 points on the day so far . So, weve had a nice bit of a run, almost 1. 5 , 2 for the major indices, at least the dow and s p. Ironically, you talk about the homebuilders. Yes, they have been a focus. Another place of focus has been biotechnology stocks, one of the best performing all day today. And it wasnt long ago, and i say this tongue in cheek because i love guy adami and we talk all the time, wasnt it janet yellen who said biotechnology stocks may be overvalued . Yet, theyre some of the standout performers right on d. Chu. You got that right, brother. I dont know. Janet says they may be overvalued, but they still push stocks higher. I dont know what this markets saying. What you will want to Pay Attention to is after the labor day holiday, when more participants come back, art cashin always tells us, right, you dont want to see an election won with just a couple hundred people voting. You want to have an election thats won decisively with a lot of people participating. After the holiday happens when people start getting back to their desks and trading volumes tart to expand, thats when you will see perhaps a more definitive view on what the real bias of this market is. Remember, light trading, bias upside. Wait until september and see what happens. Guy, what do you think happens come september . I think janet yellen doesnt know the difference between biotech and biodegradable, thats what i think. How about that . What happened to fight the fed, right . What happened to that . Listen, biotech and ill say on a serious note, there are patches of real strength. I think biotech continues to show you that. Valuations to me are not stretched at all, and there are obviously some really interesting single stock stories, but if you dont think most of this market move has been driven by actions of global Central Banks, then i think youre just not paying attention or youre choosing not to Pay Attention. But im going to take issue with that, because go thats what makes dialogue. I dont mind people beating up on me. I understand from the getgo, if you want to go back and say that the u. S. Recovery was helped by the actions of the Federal Reserve, that the fed has still supported the recovery in contrast to europe. I mean, its pretty easy if you just look at the central bank Balance Sheet to draw that conclusion, fine. But its not to say that there isnt a fundamental improvement in the u. S. Economy. Im not saying its game over or Mission Accomplished by any stretch, but youd be crazy not to look at the jobs that we have added, the momentum in different parts of the economy, the size of the economy and say that nothings happened. Depending on your dogma and this is just fact depending on your dogma, you can make numbers look like whatever you want them to look like. You know that because you have people on all day long well, month to month statistics, right . So, i think we are all recovering, but not nearly to the extent that we should be recovering five years down the road. When you look at this weeks data, so much bullish Economic Data points, jobless claims, leading economic indicators. Across the board, housing data it was all really strong, but dont you attribute, at least with housing, a lot of those asset price increases are driv by the fed. And its made housing less affordable for middle and lower class people. But half of the buyers are cash buyers. They dont use credit. I agree with chris, were not going to see a housing recovery youll probably see negative prints in caseshiller by the end of the year. Chris . No way. Sorry. Yeah, chris. We have two chriss here. Chris one and chris two. Why dont you think home prices are going down . I think theyre going up. Look, from a longterm standpoint, affordability in our Housing Markets is still very good. If you look at say the percent of income you would use to buy a home today, its about 30 of the Median Household Income in the u. S. Compare that to 35 if you can get credit. But you cant get credit. Thats just it, credits starting to loosen up. Look at the numbers. Say for example the average fico score for loans made through fannie, theyre actually starting to come down. Whats also happening is that were not going to do a trillion dollars in origination this year. Isnt that good news in housing, if you have to bring on more supply . When you look at d. C. , they say inventories are way up year over year, phoenix, some of these markets. Isnt that a concern down the line, that good news is bad down the line for housing . I cant imagine how inventories would be getting bigger when theyre not building anything right now, and we know overall number of households robert frank . So much of it now is multifamily housing. And if you look at some cities where the rents have just gone up double digits in the past year, i mean, we talk about a lack of inflation, but the things that people pay for, like rent. I mean, even places like memphis and small cities around the country, the rent increases are staggering and you look at a lot of the housing activity now is multifamily homes being built for owners who are then going to rent. So, i dont see again, we have sort of a dual speed recovery here, even in housing, where the renters who cant buy a house are taking on big [ everyone talking at once ] guys, just hold that thought because were going to pick up on this very point about some of the bifurcation in the Housing Market after the break. Christopher, stay with us. Guy adami, well let you go to prep right on robust conversation. I enjoyed that. You start it off well for us. Coming up at 5 00 p. M. , guy and the crew will be talking about apple, asking a top analyst if the iphone 6 delay rumors are true. Dont miss it. And coming up here, higher prices cooling off homeflipping for most people. I cant talk today. Highend home flipping is still extremely profitable in some markets. Coming up next, diana olick tells us where investors are finding the best returns. And backtoschool shopping is officially in high gear. Which names will be winners due to backtoschool shopping mania. One pro will give us his top three picks. And if you have a Gmail Account, pay close attention. Researchers showing gmail can be successfully hacked 92 of the time, if you have the account on your smartphone. Find out how to protect yourself later on the closing bell. You are watching cnbc, first in business worldwide. Ade ideas th spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18003452550 sharpen your instincts with Market Insight from schwab tdd 18003452550 experts like Liz Ann Sonders and randy frederick. Tdd 18003452550 get support and talk through your ideas with our tdd 18003452550 trading specialists. Tdd 18003452550 all with no trade minimum. And only 8. 95 a trade. Tdd 18003452550 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. Tdd 18003452550 so you can take charge of your trading. Welcome back. Its not 2005 again, but home flipping or buying a house and reselling it within a year, its getting hot again in certain pockets, that is. And our diana olick has the surprising details. Diana . Well, kelly, youre right, House Flipping was huge during the housing boom. It was gone during the housing crash. Then it came back again about a year and a half ago, as prices started to jump up. Now the price gains are easing, so house flippers are focusing on this, the milliondollar flip. This house was a total gut job. It was basically a disaster area, but it was in the right d. C. Neighborhood, where demand is high and home prices are still rising fast. So, Real Estate Agent crystal getz and her contractor husband, eric, paid 535,000 and then put about 250,000 into it after that. A highstakes risk that paid off. Its like any business, really. Do you go after, you know, the small, individual clients, where you have to do 100 accounts, right . Or do you go after, you know, as i used to say in the business world, the white whale, right, where youre getting five or six clients, but your profit margin is higher . Now, House Flipping, which is buying and selling within one year is actually dropping nationwide as home prices ease and the margins get tight. About 31,000 singlefamily homes were flipped in q2, according to a new report from realtytrac. Thats a bit less than 5 of all sales and down from just over 6 a year ago. But highend flips priced above 750,000 are up 20 year over year. And the markets with the highest dollar amount of profit, san jose, washington, d. C. , san diego, los angeles and seattle, all have an average gross profit of more than 100,000 on the flip. Now, obviously, you hear all these california markets where you can make the most money. California, though, realtors there tell me its tough to do the flips because theres simply so little on the market. Now, if you want to see what home flipping will get you in your area, go to cnbc. Com to the realty check page. We have this fabulous, interactive map of all the markets where you can see what the average home flipper gets for their home. Kelly . Wow. I feel like these guys are already going to be looking at it. Diana, stick around, because i want to bring back in our panel. Beacon economics this is hornberg is here still for his reaction. So, just starting out with this phenomenal, rob, i feel like is there something what does this say to you . You know more about this segment of the market than anybody. Dianes right, on the top end, its gotten frothey. 101030. Buy 10 million, put in 10 million and flip at 30. Thats the formula. When people talking about it being an automatic thing, its scary to me. Whos the 30 . The 30 is the foreign buyer from china or russia who wants a trophy home. Cash buy. And i guess i have a question for diana. The key to a successful flip is buying at a great price. What is the success at the top determined by . Oh, we lost diana. Well try to get her back. Rephrase that question. At the bottom, its all about buying it the a cheap price, and at the top, im just curious, is it convenience . Is it just getting a Good Property that you know a foreigners going to want in a year . But the timing of the flips at the top, its like six months later its 12 months. Its not that theyre not waiting two years anymore. But you can still make money in the top. Thats the point. Yeah, like every other market. The rest of the cohort has slowed down. Its interesting. If you look at weiss researchs data, hes one of the founders of caseshiller, he would tell you that home prices generally peaked last summer. Now, the highend markets are still going up because those are the most desirable properties. Its all cash. Its foreign buyers. Youre always going to have an opportunity there if you buy astutely. But the whole point to me, watching the market, is inventories are up, volumes of sales are down, and lending volumes are falling. Were not going to do 1 trillion this year. Thats a quarter of where we were a decade ago. The more i hear about this, i wonder, we talk about the Housing Market with such a broad brush, is that even relevant anymore . Look, its a local market in all cases. Its always been. But to use washington, d. C. , you buy a house inside the beltway for 500,000, youre definitely going to make money. No question. Also, investors are looking at the high end as almost a place to park capital. Its not even for utility value its safety deposit box. Its like, those houses arent for living, those houses are for trading or flipping. And when you hear that, its always very frightening. Its also benefiting in florida, its south american money thats hiding. In other places, its money from china thats hiding. Like new York Magazine said the other day, its the new swiss bank account. Its like a tbill. You put your money in a classa market. Heres the flip. In miami beach, there was a strip of commercial property that was purchased for 195 million two years ago, just flipped for about 350 million. Wow, thats amazing. So, thats a flip of commercial property in, look, miami beach is great. Sure. But thats all about foreign money. Its all about chris thornberg, let me get you in here before we have to wrap up. First, reaction to the highend flipping phenomenon, but is this partly why you think the Housing Market generally does well or what do you even mean by that . Living in los angeles, we dont have too many 30 million transactions, so i think that may be a little bit missing whats happening out here. Id say a lot. Not too many. Enough. Be that as it may, again, whats happening here, the slowdown in overall flipping occurred because theres candidly very few foreclosures left and thats what people were buying and flipping. But most demand has shifted to highend markets, the core inner city markets, a lot of foreign money, no doubt. But in general, people are looking for good neighborhoods, and thats the beginning of where i would say the retail surge in demand is starting to occur. Eventually even these properties will start running out and thats when youll see more Construction Activity moving on. Again, from my perspective, the Housing Market has a whole second wind ahead of it. I think 2015s going to be a good year. And candidly, if youre in this market, doing this kind of property, you have a Bright Future for a couple years. Chris wayland, do you think the second wind is not coming or is it just the prices you take issue with . In town, yes. Speaking with bankers, thats where they want to lend. Its the suburbs that are soft. Thats the story that really hasnt been fully talked about in the media is that people are moving into town and the smart bankers, they dont want to touch the sprawl. Theyre running away from it. Good point. Guys, thank you for now. Chris thornberg, thank you for sticking around. We appreciate it. Diana olick as well. Defense secretary chuck hagel telling americans how concerned he is about islamic militants in iraq. Isil is a sophisticated and well funded as any group that we have seen. Theyre beyond just a terrorist group. Up next, find out how worried investors should be about a possible Islamic State attack on the west and the impact it could have on the markets. Well be right back. Rapid prototype a lot of ideas. O being able to pay as we go was crucial for a start up. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. I make a lot of purchases foand i get ass. Lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Welcome back. Secretary of defense chuck hagel sounding the alarm on the terrorist group who beheaded american journalist james foley. And theyre beyond just a terrorist group. They marry ideology, a sophistication of strategic and tactical military prowess. They are tremendously well funded. Oh, this is beyond anything that weve seen. So, we must prepare for everything, and the only way you do that is you take a cold, steelyhard look at it and get ready. Joining us now is frank anderson, former chief of northeast and division of the cia and david, studying with human rights. You say we need boots on the ground in syria, why . There is a Kurdish Militia there, the pyd, which has been the point of the sphere, rescuing yazidis from mt. Sinjar. We should be working with them, arming and equipping them. We cant do this from air strikes alone. Were going to need to have Ground Forces. The kurds are there. Theyre capable, committed and ready. So, why are you drawing a distinction between Ground Forces and the military . Im only drawing a distinction between airpower and Ground Forces. We dont want to have boots on the ground. We already had a torturous war in iraq. There are kurdish peshmirga there. There are syrian kurds that are very capable. We need to work with them, spotting targets and let them go after the isis fighters, doing battle in the field. When you say Ground Forces, you dont mean u. S. Troops . I dont mean u. S. Troops. I mean Kurdish Peshmerga militia who are motivated and with the right weapons have shown they can take on isis and roll them back. Okay, thank you for clarifying. Frank anderson, what do you think is the best course of action here . Well, i agree with david that the peshmerga are motivated and capable and people with whom we should work. I think i certainly agree that we shouldnt have american boots on the ground. I caution that we need to make certain were working through the Iraqi Kurdish Regional Government. The relations with syrian kurds are very complicated because of their ties to what the turks and nato and we for a long time regarded as a terrorist organization, the pkk. But i think that the kurdish Iraqi Kurdish Regional Government is quite capable of balancing that a lot better than we can. And isnt it precisely because of the relationship with turkey that the u. S. Didnt do more to support the Kurdish Peshmerga in this region previously, and that being the case, has anything changed to allow us to do so now, frank . There were a few restraints related to turkey, but other restraints were that the peshmerga were, as far as american policy, which is developing rapidly into agreement with them, were a lot more interested in independence or autonomy from the government in baghdad. The kurds, and their friends and our friends in the region, have described their determination to work for independence as something that theyve put on the back burner for a while, while they deal with isis. Yes. David, same question to you. Does turkey stand in the way here . Turkey hasnt been helpful. But turkey is a nato ally. We have an interest in good relations with the kurdistan Regional Government. Theres a lot of commercial contact. There are energy flows from Iraqi Kurdistan to the turkish port of jahun on the eastern mediterranean, and the kurdistan region can be a security buffer between turkey and these isis fighters. So, theres a Strategic Partnership thats been established between the kurdistan Regional Government and turkey. Now that were in a crisis mode, turkey needs to step up, cooperate more fully. The u. S. Needs to support the iraqi kurds and other kurdish groups so they can do the fighting on the ground. And as we already see the battle of words between, for example, Hillary Clinton in some ways and barack obama with regard to the policy the white house did or didnt pursue at the time being more aggressive with air strikes in syria or other operations, david, you know, against this back drop already and knowing what we do about the possible intransigence of turkey here, whats the biggest obstacle towards moving forward . Do you think its likely that this scenario that you outlined is now one that the u. S. Pursues . So, isis just ignores borders. Theyve demolished the syrian and iraq border. Their goal is to roll back the sykes pico agreement from 1916 that divided up the region into mandates. We can use our airpower to strike isis forces in iraq, but they can always retreat across the border into syria, where they control territory. Thats why its important to recognize that this is a transnational conflict, and the kurds in iraq and the kurds in syria can both play a helpful role working with u. S. Airpower to take on these isis fighters. And frank, last question to you. Under what circumstances would you support Ground Forces again, even if they were kurdish Ground Forces in syria . Theyre kurdish Ground Forces . The circumstances under which id support is if they had the technical advantage. Our strategic objective should be to support kurdish and, once the iraqi sunnis get their act together again, as long as any forces in iraq or in syria who are battling isis should become our allies and can become our allies. Well leave it there. Gentlemen, for now, i appreciate it. David philips of columbia and frank anderson, formerly with the cia. If you or anyone you know uses gmail, you need to stay tuned for our next segment, because researchers have found a way to hack googles mobile email app with a 92 rate of success. Find out how worried you should be about your privacy and how this can be fixed. Stay with us. The world has gotten you far, but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. This toy is a reminder that someone cares. Ug. These are a chance to be part of a team. And this is a chance to succeed. Female announcer with your support, the employee owners of sleep train are proud to dedicate their time, hearts and resources to giving local foster children one important thing hope. Hope. Hope. Not everyone can be a foster parent. But anyone can help a foster child. Children sleep train child your ticket to a better nights sleep welcome back. Heres a pretty scary stat for you. Googles mobile gmail app can be hacked with a 92 success rate. Our josh lipton has the details. And the Gmail Account, josh . Well, kelly, this one is for all gmail fans. This is news you can use. A team of engineers, including professors at the university of california riverside, say they have now identified a weakness believed to exist in android, windows and ios mobile operating systems that allows them to hack into apps up to 92 of the time. Now, among the apps they easily hacked, gmail, chase bank and h r block. Amazon, though, with a 48 success rate, was the only app they tested that was actually tough to crack. Now, heres how the attack works. The user downloads a seemingly safe app, such as one for background wallpaper on a phone, but the app is actually malicious. Once that app is installed, the hackers can control your operating system without your knowledge or permission. In other words, they have basically taken over your phone. There are two doeyz the attack to make it work. One, the attack needs to happen at the exact moment the user is logging into the app. Two, the attack needs to happen in an inconspicuous way. Bottom line for viewers watching, what can you actually do to protect yourself . Dont install untrusted apps. Thats what researchers say. But how can you actually tell . Well, rob enderle of the Enderle Group says if youre paying for an app, its usually safer than a free one, and make sure its supplied by a bona fide company. By the way, google had no comment when we reached out to them. Kelly, back to you. Josh, thank you for now. For more on how likely this is to happen and how to protect yourself, mcafees senior chief of security, gary davis. Welcome. Thanks. First of all, this did focus on android, we should say, but its something that everybody who is familiar with apps or everybody that uses apps or a smartphone is familiar with, which is asking if you can have access to your contacts or to other features like that. So, are you saying if youre asked for that at all, you shouldnt download these apps . Well, you know, as the gentleman said before, determining which apps are good versus which apps are bad takes a bit of work. For example, one of the things that we recommend is look at the performances the app is looking for. If youre downloading a wallpaper app and its trying to access contacts or call members, theres something malicious in that app. What if gmail asks for your contacts, as it frequently does . Again, if you look at this particular hack it was a transa transactual hack, and theyre trying to get your gmail credentials and use that to logon to your Gmail Account. Once they have that access, they go to gmail, regardless of whether or not its an app or a pc. Once you have the username and password, chances are, thats going to get you into the gmail app. I see what youre saying. If one of your other apps basically isnt asking for access to gmail, dont give it. Correct. Gmail itself is very robust because google has created a selfcontained environment, which security vendors hate it. That you cant stand between, chrome, for example, and gmail. But the apps are obviously a major point of vulnerablity. Sure. As someone who works with client data every day, you have to safeguard where this information is housed. Arent there logical things people can do, like encrypting data, changing their passwords on a regular basis or even looking at biometric passwords to sort of safeguard this information . Wont those help . Gary . Gary, will those help . Yes. In essence, there are a number of Different Things you can do. As you mentioned, going to multifactor authentication will be a big step in preventing an attack on this type of application from having from the more dire effects that it could have. So, yeah, this industrys evolving quickly. You know, one of the things i saw in the article was that they did this on android, which, arguicallabl arguably, its been the most exploited mobile operating system, because its been the most open, whereas windows and ios have been more controlled and its harder to do this in an ios or Windows Mobile phone. I was more concerned about chase being the number two. I mean, fine, people can read my gmail. Its really boring. Youre welcome to read all you want. But chase, you know, thats where youre talking people are stealing money. Right, right. How vulnerable is the chase app . Well, its hard to say from the article, but it looked like it had to actually do the deed when the app was being used. So, you had to have some way of stalking user to know whether or not theyre using their blinking app or Something Like that. So, the transactional nature of the hack would appear to make it somewhat difficult to do. Then you have the added complexity of actually getting the mall weware on to the devic and thats not a trivial thing to do. You really need to give considerable thought to how you can embed malware on to an advice, be it coming from an app store or a website or other means. If they found out this can happen in a couple of cases, understood, but 92 of the time, doesnt that tell you that despite everything you just mentioned, this is apparently a pretty easy thing to do . Yes. It looked like this was a very easy thing to do, but theyre probably doing it in a laboratory setting, right . Where they had both apps running at the same time, so it was pretty easy to do in that environment. When youre getting into the real world and youre trying to, a, get the malware on the device, then b, try to have these transactions, thats not necessarily very easy to do. Meantime, what are the steps we should take at home, gary . Well, you should, again, make sure when youre downloading apps that youre looking at the performancmission s for that ap make sure youre applying all system and application updates when theyre made available. Those are the two things consumers should most be doing to prevent these types of attacks. Duly noted. Gary davis, thank you very afternoon. Mcafees chief security evangelist. Backtoschool shopping season is in full swing. Which retailers are making the grade . Next, the backtoschool stock picks you cant afford to miss out on. And how about this for an alternative investment, wine . Coming up, the head of the big wine club giving us his take on this tasting investment, and the panel might get to sample some of his goods. Welcome back. Backtoschool shopping season in full swing. The malls and stores seem crowded, and all this, after all, is the biggest shopping season of the year, next to christmas. Joining us with three picks is sam poser from stern ag. Welcome thank you for having me. Lets cut right to the chase. What are the three names you think we should be buying . Foot locker, ginnesto and skechers. Which is . Journey stores, they own a Company Called shoe in london, a retailer, and johnston murphy. What do you guys here think . These are all shoe companies. The only thing you need for school are good sneakers . What is this . Like for gym, i get it, but what about books, bookbags, clothes . Computers, ipads, phones . Im a footwear analyst, so got it. Let me ask you this, though. I have two daughters, and interesting going to target, some of the other places. It doesnt seem like there is a season as welldefined as it used to be. People are kind of shopping for this stuff all summer. Is it earlier or is there as much of a season as it used to be . Theres actually more of a season than there used to be. Is that right . Were seeing basically three events throughout the year easter, backtoschool and christmas. Whats happening, though, when your daughters are shopping and lets say theyre not looking for sneakers. Unfortunately, in womens or girls footwear, outside of sneakers, there havent been a whole lot of trends this year. So, its sort of, oh, stlz nothing there, theres nothing there, but thats happening across the board. I just came back from the shoe show in las vegas yesterday, and i mean, theres just really no direction. But in athletic, in this casualized product, theres some sparkly sneakers with lights, those are big in my house. And thats skechers. Skechers, yeah. His daughters are another story. Dont Lower Oil Prices benefit the consumer going into backtoschool . Yes, they do, but i mean, we can talk about macro events all we want. Sure. But i mean, im the kind of person, i hold these companies responsible for doing what theyve got to do for their own customers. Sure. So, when we look at those three companies, theyve really changed, theyve evolved over the years, theyre executing really well. The trends happen to be in their direction. But just from being on target with the product, on target with delivering the product on time, having the right stuff in stock and being where the consumer is, thats what its about. And those who are not doing that will struggle. And im seeing here in your notes, on foot locker, you like, again, the basketball, the retro running, the jordan shoes, skechers. Youre talking about the appeal of 50 to 70 price points and offerings across more categories than weve seen. And then with regard to journeys benefit potentially from dr. Martins, timberlane and ugg, all of which chris owns. What do you think about the volumes this year compared to the last couple of years . Up, down, flat in the shoe segment, especially for children . Well, in athletic, its going to be up. I mean, its climbing. You saw foot locker with a 7 comp and the u. S. Business was significantly up more than that, and theyre running up high Single Digits quarter to date. So, i mean, theyre ripping. But in athletic and athleticinspired stuff, its good. I mean, trends are sort of casual, comfort, retro. And so, on one side, you have like birkenstocks doing exceptionally well, going through the jordan shoes, vans and converse. And then on the other side, you have like the gowalk shoes from skechers. Its sort of, its crossing all of those categories. Weve got to hop, but just a last question here, because a lot of these companies, especially foot locker, which did note a really strong august, whats the biggest risk in owning these names right now . Theyve all had a good run. I mean, i guess the lease expensive one is genesco, but theyve all had a really good run. Just continue to watch their execution. I think the trends are in place and theyre all but theyre all continuing to improve the execution. All right, sam. Thank you. Appreciate it. Good to see you this afternoon. Sam poser from stern ag. Tensions between ukraine and russia heating up again. Russian president Vladimir Putins actions are worrying investors, but is it dominating the action on cnbc. Com . The hot list is next. And tune in to closing bell on monday when i sit down for a cnbc exclusive interview with boyd gaming ceo keith smith. Well be right back. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. So think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. 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See Car Insurance in a whole new light. Call Liberty Mutual insurance. Welcome back. Youll just have to wait and see why were outside right now. Were going to go back to allen. Well, a surge in highend House Flipping. We have a neat graphic, you can check everything out, very cool. And our regular column by ben white. Looking at why obama needs to Pay Attention to his critics, because it could start to hurt his base. Finally, a neat little feature on north dakota fracking. Releasing all this natural gas, flares all over the place. Missing at least 100 million in profit there. Back to you. Appreciate it. Have a great weekend. In the meantime, im out here because were going to be doing a little wine tasting. A little wine tasting . Theres six bottles here. You guys better be careful, all right . This is a family program. Were going to ask them about wine in cans. Coming up. Data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System is made with the ibm cloud. The ibm cloud is the cloud for business. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. I make a lot of purchases foand i get ass. Lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Welcome back. A lot of us know about drinking wine, but how about investing in it . Is wine investable . No one better to ask than these guys. Lets hope the rain holds off. You know about the wine club industry, how is the business and how is it as an investment . Well, any wellbalanced portfolio should consider wines. They perform remarkably welcol compared to gold and stocks and bonds. Its the very top. The ultimate liquid asset. Hot chinese money, that wanted a place, a safe deposit box, a bottle of wine. We had a correction in 2009. It was mostly in bordeaux. And china, getting up to speed in fine wines. Whats the most ever paid for a bottle of wine . Drc could go for as much as 80,000 to 100,000 a bottle. Wealthy . Well, there is a certain amount of capital that is involved. Is this a tenyear, 30year trade . Well, you do have to Pay Attention to each harvest and the global trends. And the bordeaux, how long do you keep that . Well, it depends on the vintage. They could store for decades. Can we just start drinking . What do you have here . Well, we have five clubs, starting at 15, 17, 20, and up. 100 chardonnay here. Im not even holding the glass right, am i . Thats all right. Some apple, some fruit. Heres to liquid assets. What do we have here . Well, roset sales have been phenomenal for five or six years. Well, what im holding is a can of wine. Our squawk box viewers will be familiar with it, made by union wine company. What about the cork . Kegs. Wine in kegs is the newest thing. Would you ever drink wine out of a can . Well, the better perspective is, think about the level of access the consumer can have to the proteduct. Fast money coming right up. I think thats the nice way of saying no. Time for fast money and melissa lee. Were talking about wine in a can. Talking about apple. Are we all in a tizzy about all the possible iphone delays . Fast money friday starts right now. Im melissa lee. Heres our traders. Tonights story, tech on a tear. The nasdaq hitting a high today. Plus, apple hitting another alltime high in todays session. What did you make of apple . Well, you look at big cap and small cap tech, theres a di