Transcripts For CNBC Closing Bell 20150512

Back after the tenyear hit a sixmonth high earlier in the session. We talk to pimco chief officer scott mather in just a few minutes. And treasury yields across the pond as well have had a huge gain. Also that picasso painting sold at auction last night, a record 179 million. Economist norle ra lle lle Nouriel Roubini will be here. He thinks some people use expensive art as a form of Money Laundering, unquote. Hes at it again. Hes dr. Doom of the art market. With an hour to go in the trading session, the dow is down about 18 points. Again, fall back into positive territory. An ounce of downward pressure only a little bit. The s p and nasdaq giving up 0. 2 right now. 4 points and 10 points respectively. That level for the nasdaq 4983. Lets talk about this in our Closing Bell Exchange for this tuesday. Chris ressler is with us rob morgan checks in from sethy financial and Kevin Guinness from Raymond James is with us so is ken moret. Kevin, youre head of fixed income there at Raymond James. I asked the gang if they could give us a chart of the tenyear bund going back a month. Thats been a huge gain there. And now weve got the tenyear here in the United States moving back up as well. Whats going on in your view . Why now . You know bill its been an interesting last couple of weeks as you mentioned, german tens went to 70 basis points in a real short period of time, two weeks time. In dealing with that the long end of the treasury market where a lot of that money came went back to work across the pond. So while those yields back up they were buying along the way. That continues. Today was a breakthrough day for the bond market though. We were dependent upon what happened in europe overnight, kind of the weaker open this morning. If we didnt get a good threeyear note auction he can gould to to 3. 40, 3. 50 quickly. It was exciting. Are people suddenly waking up and realizing the fed will start raising Interest Rates or is this responding to better Growth Prospects . What do you think is the reason here . Yes no, i think that the european markets are probably moving our treasury markets here. We had a tailwind for quite a bit of time. You know theyre setting out over there. I think money is just coming back to more normal markets right now. Let me bring you in on that one. What do you see happening here . I think its mostly market mechanics. I like to call it market logistics. I think, you know it was exactly two weeks ago today, bill, that we closed yield above a 29 session closing tenyear note range from 186 to 199. Ive said this many times. The minute the day, two weeks ago you closed above that 2 close. We havent looked back since. Right. That consolidation gave you a good glimpse that the market was tightly packed with the long bias the reason yields couldnt go any lower is because they had security stuffed in every box. I think the leadin to eurozone qe also packed the world pretty tightly. Everybody offsideses, global market,en call i think it makes sense. The next issue is mario draghi will probably address this with more fine tune purchases. In the end, i wouldnt dismiss the notion that two levels 2. 17 where we closed the tens last year, 2. 24 theyearold double top until midlast week should we start to settle above those levels we could see the foot come off of this margin call scenario. Right now i would look for the wee hours of morning to be potentially traps for illiquid moves, a lot like last night and a capitulation move will give us a clue as to when this ends. My own opinion, i dont think weve seen it. One thing for sure i dont think it has to do with Global Economic growth. Market mechanisms last week you said you felt maybe the range on the tenyear had moved up. Maybe the 2 would be the new support level there. What about on the tenyear bund now that weve had a huge move there. Are you setting a new range there, do you think . No. As a matter of fact, we think alike, bill. I told leslie my producer to have a chart starting april 1st of bund yields. Does that look like a chart thats going to turn off now . I dont think so. That raises the question of how european and u. S. Equities will perform if this continues. What do you see happening . I think whats going to happen is the u. S. Economy is going to continue to show signs of improvement. I think probably towards the latter part of this year we might see the fed say theyre going to raise Interest Rates. If they do i believe that will bring money over here to the United States for both reasons, our economy is Getting Better and, therefore, they want to buy our stocks. In addition Interest Rates are higher over here than they are here. Theyre looking foryearold. Theyll come over. In both instances it will benefit us. The volatility were seeing is a precursor for a breakout on the upside when it comes to the stock market and the downside potentially when it comes to the bond market. Rob morgan what are you going to do with u. S. Equities if we see a rise in the yields if that continues . I would agree with ken, bill. With the caveat though that at some point the fed is going to take the punch bowl away and stocks will come back to earth. Typically that happens well that a fed rate hike campaign. Six months to a year. When the fed does raise rates, thats when im going to take a little bit off the table, go from an overweight in stocks to a market weight and start to see signs that the party is coming to an end. I think the stocks u. S. Stocks in particular still a good place to be right now. Anthony chan our friend was making a point on the show yesterday, rob, there are two different ways that stocks perform when rates are moving higher. One is the bad way when its because of inflation. The other is the good way when theres no inflation, theres better economic prospects. He thinks were in the latter cycle and that will make stocks continue to be attractive for a couple of years. Do you disagree with that . No. I agree with that kelly. I think in a low Interest Rate environment, the stock market can support higher p es. We saw this many times in the post world war ii period. I do agree with that. Im not sure thonns a good friend. Im not sure that i agree that that will continue for several years but certainly at least for the next 12 months and perhaps a little bit longer than that. Its okay anthonys used to having people disagree with him, thats for sure. Kevin guinness what about your view on inflation and ricks contention . What were seeing is more market mechanism than any response to fundamentals right now. Yes, bill totally agree with what ricks position on that. This is really nothing about fundamentals. Its all about market sentiment. I do think that tomorrow is another big day with the auction of the ten years. Weve seen twos to tens spread out 35 basis points in about ten days which does make them attractive. So well see whether we find buyers again tomorrow. The range is so much different than where we wanted it to be maybe 2. 30 to the high and just under 2 to the low. I do think inflation will remain under control for quite some time that that could go well into next year. Okay. Right now i dont see the fed acting at all in 2015. Chris, do us a favor. I was going to say to chris, if you dont mind wed love to hear names, ideas, that people can use for opportunity regardless of this period that were entering. Companies you see as disruptive innovative transformative enough to be Good Investments regardless. Were very positive on equities. I think its obvious that the fixed income market is at risk if rates are rising. Equities are the place to be. We Like Disruptive Technology companies. One name ill put out there, super microcomputers does a lot of the engineering behind the big data the cloud, great product lines, has traded off here in the last earnings season. We think its a great value relative to growth. Fireeye, secure plays. We like semicap equipment as moores law gets pushed out and further into capex, we think its a good second half setting up from guys like taiwan semiand samsung. Wed be remiss to let this segment end without addressing the u. S. Budget surplus that we just posted. I think it was the fifth biggest in history. What surplus . What surplus . Truly federal budget surplus. Theres no surplus. Yes, for the last month. Theres no surplus. Yes, yes. Certainly, certainly, for one month. Sometimes i pay my credit cards off one month out of 12 too. I understand its tax season but theres more money coming into the treasury than most people realize. I think thats true for a lot of municipalities like it is true for the federal government. Look at the picture starting from 2020 to 2022. This is a stall. Yes, we have smaller budget deficits because they were so high, close to 1. 5 trillion. The debt keeps wracking up. That hasnt slowed down. As far as the tax revenues, were collecting a boat load of taxes but yet the economy in terms of its efficiency and productivity continues to go down, not the kind of recipe for success i would have signed up for. All right. Had to mention it. Thanks, everybody. What did you expect . I wanted to hear 50 minutes to go till the close. Appreciate it this afternoon. The dow is trying to turn positive for the second time today. Its down about 9 points as we speak. The s p a little bit closer down 4, the nasdaq down 8. Coming up, when these guys speak, wall street ened its to listen. Pimco chief Investment Officer scott mather will be here, plus Nouriel Roubini. Up next what does verizons 4. 4 billion purchase of aol mean for the Telecom Giant stock. The pros will hash that out. Stay with us on the closing bell. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. Welcome back. One of the other trends we were following is a snapback rally in energy prices. Wti and crude, up almost 3 . It was up 4 earlier in the session. Pulled back just a little bit. A healthy gain of 3. 6 . That has taken a toll on the dow transportation average. Also looked to as a bellwether. Shares of rack space are getting slammed, they with warning their Current Quarter revenues will fall short of estimates. At least four brokerage houses have cut their price target on the stock by as much as 5 to as low as 50 here. Watch those shares down by 13 . Vhp trading up 1. 5 . It plans to slash its iron ore production costs further and cut spending to better withstand a downturn in Commodity Prices overall, those shares up by 1. 5 . Then there are shares of aol, of course hitting a 15month high on news its being bought out by Telecom Giant verizon. The 4. 4 billion deal will give verizon access to aol successful Digital Advertising service as well as content including at least for now, the Huffington Post and mapquest. Well see those shares moving today on that news. Back over to you guys. In the weak of today, a surprising aol deal is it time to dial up verizon stock . Thats brawl that out. Marian montane. Good to see you both. Maryann you like verizon for a lot of reasons, dont you, including this deal with aol . Yes, we do. We bought the stock for the 4 plus dividend yield at our income and Growth Portfolio but we think that this acquisition, you know at just 7. 5 times ebitda is an attractive way to add to what they had already started in acquiring some small digital type of plays. Digital marketing plays. Kevin, maybe you can help explain to me what verizon is doing getting into the advertising business. Well verizons core mobile Broadband Access business is showing seens of a maturity and pressure caused by tmobile and more recently sprint. We think that business goes exgrowth, verizon is trying to diversify into advertising, internet of things and other Revenue Streams to try to make up for the slowing growth in its core business. Youre skeptical this is going to work right . You know look i think lets put in perspective, this is a small acquisition for verizon. Its a little over 1 of the companys ebitda. Frankly a one dollar price decline in core wireless business has roughly double the ebitda impact on an annual basis in the entire aol transaction. Its going to be years before we understand whether the ad tech theyre purchasing here for video works and theyre going to be competitive against the established players, the titans in that industry, google, facebook. These are really the leaders in the mobile ad video ad business. And verizon has never really been in this business before. And its really going to be butting heads with the googles and facebooks of the world going forward. And were not sure that verizon is going to win that battle. Maryann, same question to you. Does buying aol, does it make sense . Are the synergies there, do you think . Yes, first of all, just with data delivery, verizon has fios or fiberoptic system to swiftly move the pay tv type of programming into issue gadgets, wherever they may be, however large they might be. And then really i think the core crux of the deal though is on this ad procurement business. And i think verizon has been in the business. Theyve been studying this business. Theyve made these other acquisitions, they know they want to go after this. If by chance they have the opportunity to sell off huffington at a later date for rumored as much as a billion dollars, its like so be it that could be growth. These are still small relative to verizon. This is an enormous company and to kevins point, how much are these going to move the needle unless you expect more to follow . I do expect more to follow. I think that it may be the key Delivery System for the future utilizing verizons asset base. And unlike that deal with at t and comcast, this is a very low infrastructure type of line of business. So there wont be a lot of cash required and well still see you know, cash dividends growing to the shareholders. Kevin, what would have to happen at verizon for you to raise your guidance on this company . Well i think youd have to see a more constructive Competitive Outlook in the wireless space. I think we have tmobile rolling out 700 which is our top pick in the space, rolling out 700 mega hertz lowband spectrum. Theyre going to be targeting lowprice enterprise customers like quarry and others. Theyll also be going out suburban family plans, four and fiveline, fiveline. We think theyll be going after these subscribers. The wireless landscape for the incumbents particularly verizon gets worse and they have about 85 of their ebitda in the u. S. Wireless market. We think they made a mistake doubling down on the vodafone transaction early in 2014. Right. This just compounded their problems at the top of the wireless market cycle here. As, you know we have very high limited growth left in the market and pricing in the marketplace today is very, very aggressive and verizon is driving some of those pricing promotions. By the way, i mean just looking, maryann makes the point, she buys it for the yield as well kevin. Its yielding 4. 4 . Thats pretty attractive right now, dont you think . Wow. We prefer at t with a 5. 7 yield. We think that theyre very close to getting final approval for the directv transaction. We think institutional active ownership of at t is at very low levels and very high levels at verizon. And youre getting about 140, 150 basis points more yield at at t. We expect upward consensus revisions for at t and downward revisions for verizon with the sale of the frontier assets which is expected to close in q2 of next year. We have an underowned stock in at t where we think numbers are going up. And a more of a consensus idea in verizon where we think numbers are going down. Thats why we very strongly prefer at t over the next 12 months. Very good. Understood. Thank you both Maryann Montagne and kevin smidgen with mcquarry. We have a market thats still trying to turn positive. The dow is down a couple of points. S p, same deal nasdaq down 0. 2 . Big comeback when you consider the low of the day was down 100 points. And scott mather pimco ceo. Find out where scott thinks it goes from here. Welcome back. Honing in on markets here just about half an hour to go in the session. Heres a look at what has been driving the action today, in large part its been the yield and the tenyear note. When it hit 2. 36 thats around 9 30 mark that was a sixmonth high on tenyear yield and the dow was down sharply as a result. Then you saw the yield move lower on the tenyear. U. S. Markets have been more volatile lately. Theyre not alone in that. Weakness is winding its way through government bonds across the globe and thats putting pressure on equities too. What lies ahead. We welcome back scott mather the chief Investment Officer for u. S. Core strategies at pimco. Welcome back. Good to see you again. Thanks. Good afternoon, bill and kelly. What is your version of why yields have been rising as much as they have . Especially on the tenyear bund in germany which has since the beginning of april has risen appreciably . What do you think is going on here . Thats right. Surprising as this global selloff has been its equally surprising to see the narratives out there in the marketplace used to explain it. Many are inconsistent with the price action weve seen. For instance, one idea is that well maybe its inflation. People are betting after all this easy Monetary Policy beginning to see the markets price in successful reflation if you will. When you look at equities which should do well, theyre having trouble as well. Thats not very consistent with the price action either. You know another idea is well maybe its because the fed is closer to moving. While we believe that is true probably this summer and there is grains of truth in that thats not really very satisfying looking at the nature of the global selloff. Its been led, as you mentioned by the bond markets moving in advance of the u. S. We think its more likely there are other factors, supply is one big one that is not talked about very often. We have a record amount of corporate supply perhaps over 150 billion or so in the last month or so. Its well above expectations. It will be negative heading into the summer. This is a week where we see the treasury refunding, too. On top of all of that another big factor that doesnt get enough attention is what happens with the trend following community . By that i mean those strategies that employ quantitative models to follow trends . And things like value risk models and ctas and risk parody models. Its a large pool of capital that we think has shifted from being long the bond mark tote following a trend of short the bond market. I take your point about explanation, though i still dont quite follow the supply argument. I dont understand why the models would shift. Everybody is saying were in this trading range because were in this trading range. Maybe thats it. Maybe its just that simple and theres nothing more to it. It seems like something has fundamentally change. Maybe it is as imsimsimple as people believing in brighter plans across europe. As soon as they see a certain draw down they reverse in takeoff positions. When volatility picks up even if its a directionless back and forth type of movement they derisk. Thats behind what they see in the strategies changing their behavior. If europe is, you know a couple years behind us in trend, in terms of the impact that quantitative easing has on the markets, yields on our longterm treasuries stayed very low for a while as the quantitative easing was taking an impact. Why would the tenyear bund be moving higher as theyre just beginning their quantitative easing process right now . That doesnt make sense. Well, thats right. Thats why we think a lot has to do with the trend following commune. Its been a popular position for them to have to be long european bond for those fundamental reasons we all know of. The european cycle is lagging. We think theres probably a bit of an overshoot where european bonds have shot up too far relative to the rest of the world. Undoubtedly, low global bond yields are here to stay. That will be an influence on the u. S. Market. One of the reasons we think were probably through the worst of the selloff. Sounds lake youd be buying tenyear bunds right now . Theres a number of strategies. I mentioned before, inflation linked bonds, a sector that should be ignored by the mark the. Certainly all themes that corporate or equity names that would benefit from u. S. Dollar strength. We think thats a trend that will reassert itself. There are a couple of things that have people scratching their heads, one is whether this movingyearold continues. It sounds like you think this is pretty much the end. Ultimately if were talking about maybe were not talking about better fundamentals. Can you clarify whether you think this is all because of better Growth Prospects in europe and the u. S. Or not . If its divorced from that and purely based on other factors in the market. Yes, we dont think there hasnt been much in the way of news to support this move from a fundamental basis. It is our expectation, it was the markets expectation going into the year that there would be a higher trend rate of growth in europe and the u. S. We got off to a slow start in the u. S. We still think growth will be trending higher here and in europe. Its hard to say thats really a reason for this type of bond market move. We think the answer is a lot more to do with the technicals, as i mentioned, the supply picture changing so dramatically in the course of a few weeks. We still have to ask about the outflows of the total return fund. I mean, im not going to answer the question for you but it occurs to me as i think about that, it might take manufacture the heat off of you guys not being number one anymore and is it easier to manage the smaller amount of money than it was when it was the behemoth that it was . Were always focused on performance delivering excellent results to our clients. Its true when we were smaller and larger weve been able to do that historically in various sizes. Were used to managing large flows. Its part of our daily business. Were confident in our ability to continue excellent results now and in the future. On the 20th anniversary of that total return fun. Congrats on that scott. Thanks for being here this afternoon. Thank you. Thats scott mather, the chief Investment Officer at pimco. Time for a cnbc news update with sue herera. Heres whats happening, president obama took part in a Panel Discussion on poverty at Georgetown University saying recent unrest in the u. S. Has increased awearness of income inequality in america. He added theres no reason to think the cycle of poverty cannot be combatted effectively. Dramatic video shows a land slade following the 7. 3 magnitude earthquake in nepal. The death toll rising. Now it stands at 66 including 17 in neighboring india. More than 1,100 people have been injured. A choking hazard has appropriated the recall of more than 13,000 toy cars. The recall involves shillings police press and go toy vehicles. The hat on the toy can detach from the policemans head, cause problems for young children. The flight of the century generated record pay per view revenue in the u. S. The fight bringing in 400 million, smashing the old record of 150 million from a previous mayweather bout. There were 4. 4 million buys another record and worldwide receipts are expected to top 500 million. Thats your cnbc news update this hour. Back to you guys. Thank you, sue. I know we were part of those dollars. Were you . You know ill be frank. I tried to buy it and i couldnt. I got caught in that whole cable thing where i couldnt get in. No kidding. That figure could or should have been higher. Sue, did you catch it . I did not. Maybe i had been covering it for too long and decided im done. Ill read about it in the morning. Totally understand. It was tough staying awake at the end for a number of reasons. Even for manny. Thank you very much sue. Sue herera back at headquarters. 030 minutes to go a little bit less than that until the close. Coming up Nouriel Roubini also known as dr. Doom hell be with us. Well talk markets, plus why hes raising this red flag lately in the multimillion dollar art market. And wealthfront, the ceo, cannot wait for this. Find out how his automated Online Investment Services company is challenging traditional Wealth Managers and reshaping the industry. Were back in a moment. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Welcome back. Were looking at the components of the nasdaq 100 and with the nasdaq down 20 points below the 5,000 level but the 100 isnt even close to that. Were at 4,426 right there. Most are red right now. About 41, 32 decliners outpacing advancers today. Find out who is breaking the mold in established industries from aerospace to retail. The address is disrupter50. Cnbc. Com. Four of this years disruptor 50 are making Financial Options affordable and accessible at the same time. Personal capital provides free tools for higher net worth investors. Investing styles and models for low fees. Well fund targets millennials and vertically integrated platform for a mass audience. These companies prove such a threat in the past year that Charles Schwab this year launched a competing product while fidelity has teamed up with betterment to meet the growing demand for Technology Driven Investment Tools which in some camps are called robo investments. Simpler way to put it right now. Joining us is someone who is no stranger to the disrupter list. Adam nash, down here for the first time here at the new york stock exchange. Exciting to be here. Welcome. Were an s. E. C. Registered investment adviser, so we provide full fiduciary service to our client. With doing it in software, we dont have the high anymore minimums and fees. Its actively managed or passively managed the better way to go . Youre somewhere in the middle. Were squarely in the passive camp. Bert malkio is our chief v officer. Were big believers that most individual investors have a tough time beating the markets and actually its almost a fools errand for them to do so. A pass efly managed portfolio suggests youre buying an index and you hang on. You guys are trading etfs using your algorithms, right . Theres many different Asset Classes. Wealth Fund Solution covers 11 Asset Classes. We use all 11 different Asset Classes. We do try to find the cheapest and best performing index funds for each asset class. The personalization comes into play by looking at your financial situation, figuring out what risk youre comfortable taking and finding the right portfolio for you. Theres been a big success obviously in drawing money in here. You have 2. 3 billion now and assets under management in just a couple years time. What do you think it is that is the Main Attraction for the clients who are signing up for you . We really see this as a generational phenomenon. People forget the last time we saw this much innovation was in the 70s when the baby boom generation was hitting her 20s and 30s. Were hitting that same moment again but for the millennial generation. Were discovering not only do they prefer a lowcost passive solution they prefer automation. They grew up with technology and they believe in their lives they want to focus on their careers, on their friends, on their families. The idea of an automated solution thats low cost that takes all the best advice that academics have been giving us for decades about why we done the do the best we can with our own money, putting that into software is a better solution for managing their longterm financial health. Im intrigued by it even though i am a baby boomer. How does the algorithm decide when to sell. Its not a fun. Its actually your account. Wealthfund trades the account on your behalf. We dont charge commissions. A lot of the trading is simple things, rebalancing the portfolio. Youre rebalancing based on performance, if you take an upperforming index, how much longer do you hang on . Those of us who do the active management ask ourselves all the time. I guess the algorithms do that automatically. Rebalancing the portfolio should be mathematical. You wait until the portfolio deviates a certain amount and then you put in back in line. Dividend reinvestment is the same way. Theres no law of nature that says if real estate pays a dividend you have to reinvest in real estate. Maybe emerging markets are down. Thats different for each of us because we put money in and take money out of the accounts at different times. So the tax status the cost basis is different. For a computer this just isnt a problem, providing that personal level of service so youre always making the right trades at the right time is just very easy for an Automated System to do. What are you shooting for in terms of performance . Obviously when the last generation of Fund Managers developed, there was ways to go back and track their performance and figure out who is actually giving you good returns and who was actually hampering your investment goals. Right. What are your own targets and how are those going to be evaluated . The great advantage of investing in the bench machines you tend to track the benchmarks. The truth is what were finding with our young clients, 60 of our clients are under 35. 09 are under 50. For young investors theyve been through two market crashes. I cannot tell you how many of them are cynical about the idea that you can beat the market or protect yourself in the downturn. It seems more prudent advice is to focus on your career spend less than you make and save into the market through good times and bad. Are these all equity instruments or do you employ fixed incomes and other options, Asset Classes as well. . We cover a wide range of equity classes, fixed income Natural Resources as well as real estate. Thats why i raise the point about performance. Even though your equities may be in an index fund if youre giving people a portfolio across a wide range of assets and making decisions by these algorithms, over time what is going to be the benchmark or yardstick for which we decide whether you have done a good job of giving people the kind of performance they need . Theres a lot of different techniques to do asset allocation. Wealthfund is based on prizewinning research noblization. We have ph. D. S led by dr. Dr. Makial. Those numbers dont actually change frequently. And so were always looking to improve the asset mix for our clients, lets not forget the real reason most individual investors trail the professionals is because they spend too much on fees and make behavioral errors trading emotionally. These are the two things we think computers can help with. Well leave it there. Adam, thank you so much for being here. Adam nash is the ceo of wealthfund and once of cnbcs disruptor 50. Jay kaplan the ceo of synack, catch that interview later at 5 00 here on cnbc. The humans continue to trade. Or do they . The dow is down 23 points at this hour. Well have much more ahead in these markets. Later, is it pass or fail . How does your suv stack up in the latest safety test . Phil lebeau has a list of the best and worst performers. Thats all ahead. Stay with us. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Why pause the moment . Ask your doctor about cialis for daily use. For a free 30tablet trial go to cialis. Com being a keen observer of 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. Theyre not exactly Oscar Madison and felix unger but president obama and Senate Majority leader Mitch Mcconnell are gaining a reputation of sorts as washingtons new odd couple. On the heels of attorney general loretta lirchlsynchs confirmation, the pair have been working together on a trade bill. Oscar and felix had a setback this afternoon. The Senate Democrats who are concerned that trade deals are bad for American Workers and the environment held together to block Senate Consideration of trade promotion authority. They hope the setback will be temporary but Mitch Mcconnell when we sat down said that he has increasing pressure as president obama winds down his term from the democratic left. You mentioned hillary clinton. Is it not perfectly obvious to you whatever she says now she is for this deal having promoted it as secretary of state . The energy is on the left in the democratic party. And i dont know what she really thinks but shes being pulled in that direction because of her campaign for president. Politics. You can see the rest of my speakeasy with Mitch Mcconnell tomorrow morning beginning on squawk box. Meantime there will be negotiations between trade authority and republicans in the white house to try to figure out how to get past the democratic objections. We love the speakeasy series. Its like politicos getting coffee. Exactly. Great interviews. He gets politicos to open up the way they never have before. Great stuff. See you later. Thanks very much. Ten minutes to go until the close. The dow down 21 points and the s p is down 4. The nasdaq down 12 19 points below the 5,000 level again. And Nouriel Roubini will be here and pat benatars neil geraldo. Hit me with your best shot fire away financial noise financial noise financial noise if youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Welcome back. Joining ug right now, jeremy hill and bob pisani is here as well. I was reading your notes about the market. One of the questions youre asking are whether Central Banks are losing control over global bond markets. The cynics will say did they ever have control . Yields are rising right now. Do they want that to be happening. I dont think they want that to be happening but theres a lot of evidence they have control over global bond markets. The bond yields have sold off enough where well see buyers come back. What i mean is the circularity of credit you have to fulfill certain statutory obligations. Buying a treasury bonn at 1. 9 is worse than buying it at 2. 2 which is where we are today. Bob, what kind of impact is this having on stocks . Its really causing traders to get confused because the exact cause of it is difficult to figure out. Is it the german bund market the fundamentals in the u. S. . Is it a problem with liquidity in the bond market . Its hard to sort out the thread. You can see the influence. Look at the threeyear option. At 1 00 the option came in pretty well. Rick gave it an a. The stock market moved up on that. Yields moved down. The stock market moved up on that. All throughout the dayyearolds were calmer the stock market was calmer. Tomorrow we get a 10 and 30year auction. If demand is strong there, i anticipate rates will calm down the stock market will calm down. Well bring these two back here. Well talk more about this on the floor. Well come back with the closing countdown countdown. You folks who follow us on twitter already got this information, art cashin said the imbalance is to the sell side by 200 million, lightly imbalanced right now. I believe we have meg tirrell joining us with news at headquarters. Never mind. After the bell Nouriel Roubini on the markets and the economy. Rockers pat benner it and neil girrono right here at the new york stock exchange. Doug. Youve been staring at that for awhile, huh . Listen, Td Ameritrade has former floor traders to help walk you through that complex trade. So youll be confident enough to do what you want. Ill pull up their number. Blammo. Lets get those guys on the horn. Oooo looks like it is time to upgrade your phone, douglass. For all the confidence you need. Td ameritrade. You got this. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. The pursuit of healthier. It begins from the second were born. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. Using wellness to keep away illness. And believing that a single life can be made better by millions of others. Healthier takes somebody who can power modern health care. By connecting every single part of it. For as the world keeps on searching for healthier. Were here to make healthier happen. Optum. Healthier is here. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Welcome back. This is the yield on the tenyear this morning hitting 2. 36. 2. 36 , highest level weve seen since last november. Then it came lower. Now, remember this trading pattern. Lets show you the dow and what happened today. The industrial average mirroring this, it opened lower, down over 100 points on the open this morning as that yield was at 2. 36. Yield came down, stock prices came back. We did go positive briefly, hour and a half or so ago. We are going to finish the day minus 29 points here. Jeremy hill what are you going to do with equities if we are going to see the gradual rise in yields here . There are areas you can buy. One of the areas we like a lot are health care stocks. We think they got punished unduly over the last 30 days. Even more impressive than earnings have been topline revenues which bodies well for the immediate future. There are areas of credit that are more attractive after this selloff. Like . Surprisingly well look at high yield bonds here. They havent participated in the selloff you would have thought. Theyve been trying to buy Regional Banks. You get a steepeningyearold curve there. They would benefit. The kre, the Regional Bank etf hit new highs as people were trying to buy into this. Thats been moving up since the end of april. The problem is traders have no way of knowing what the right price is for the tenyear yield right now. If its a fundamental issue, are they telling us they are confused about what they should be doing. They have to figure out the price of the tenyear tomorrow. And 30year on wednesday. On the next day as well. Thanks very much. Well check with you later come off the lows of the day appreciably as the yield on the tenyear called the shots. Well see tomorrow when that tenyear is auctioned off by the treasury what kind of yield we get on that one as well. Stay tuned. A whole lot coming up on this second hour of the closing bell with kelly evans and company. Ill see you tomorrow. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans. Lets begin with how were finishing a session on wall street that had the dow down 180 points earlier. Going out with a decline of only 37. Larger were the declines across the s p which gave up 6. It is down back at 2099. 4,976 is the level on the nasdaq. We have cnbc krber of evan newmark, sayre are eisen and kenny polcari. Tim, everybody welcome. Let me start with you, evan. For at least seven years youve been saying Interest Rates are going to rise. Seven years. Now its going to happen. How much are you making a move today . I think its significant. I said last week when you were on vacation, a significant week for you to be off, i said the story of last week was the bond market and its continuing last week. I was here. You were here sara. I remember. What i would say to all you bond market bulls, stop being such a bunch of cry babies. Theyve had 30 years of a bull market and all of a sudden the bond market backs up and theyre freaking out. Im not sure anybody is freaking out. Did you hear scott mather from pimco. He said the selloff is over he didnt seem too bother by it. Your viewers should be fully aware that scott mather and everybody who appears on cnbc talks their own book. One of the Worlds Largest bond managers is not going to come on and say, guess what selloff has only just begun. They have unconstrained funds where they can short funds. Theres no way i just told him, everybody comes on and talks their own book. I do think its significant. For viewers out there, they should keep in mind the following. First of all, there doesnt need to be an exact reason for bubbles to be popped. I do believe weve been in a bond market bubble for some time. All right. Second is things can happen really fast as the last couple weeks have shown people. The third thing i would advise people to really understand what it means to hold the longterm bonds and what the exact nature of the risk reward tradeoff is. People dont really understand that. Well come back to that last point in a sec, kenny. Im interested what effect this upward move in yields that were talking about is having on stocks. Obviously this morning it had a big effect. It was initiated by the dudley comments and the Goldman Sachs note on all of a sudden there was an excitement overexuberance cause be stocks around the world to sell off. I think theres a shortterm effect. I think the minute they bring it up, it creates all this excitement. In the long run, i actually think its okay. Theyre handling it pretty well, you say . I think the market handled it pretty well. Thats what youre reading in the research. I think it started with the japanese bond sale that was disappointing overnight. This is fairly a global move. And its a little unsettling to see such outside moves in bonds just like it was in currencies a few weeks ago when we saw those crazy moves. The fear broadly speaking is if this is a position unwind a correction or a fundamental change in the bull market the question is on liquidity, which is something new for the markets and given all the financial regulars, whats that going to mean when you have some of these positions unwind . Sure. The fed can fix the liquidity problem really fast. Theyre holding up 3 to 4 trillion of longterm paper. They could fix the liquidity problem. They wouldnt dare do it. Its defined by buyers and sellers in a market. If all of a sudden everybody is a seller wouldnt that make it worse . It would drive markets higher. Kenny. If there are no buyers you have the vicious, violent moves. You can also end up getting that in the stock market as well. When you talk about a liquidity problem, lets not just talk about the bond market. It could easily hit the stock market when you see it start to fall out of bed. If people think were overvalued, the buyers will pullback. Theyll be there but it will be at a much lower price. Nothing fundamentally has changed with the u. S. Economy, this is not a u. S. Driven move. Nothing fundamentally has changed you say. Youve had people buying european bonds with negative yields. I mean do people ever stem back and go wait a second thats crazy. Its not people. A lot of its institutions. Jump in here. Thats the view here. And evan makes a decent point or hes getting to a point where this adjustment, its coming from europe. If you look at the move at the same time the bond has moved 65 70 bits in the last two weeks, so has the spanishten year. Europe is readjusting right now. I would make an argument that a lot of this is from the move in oil. Remember, oil pushed the ecb to be much more aggression knife january. A lot of this is just an unwind an adjustment. Getting the tenyear back to 250 to 275 doesnt do anything to equities or the cost of capital or the risk factors. Thats what were doing right now. Hold those thoughts for just a second. We have breaking news in a multimillion dollar cancer drug to get to. Meg tirrell joining us with the details. Were looking at vertex which just had news. Looking at whether to approve its isis tick fibrosis drug orkambi. That should be positive for vertex. There was discussion during the day, tough questions to the panel and people have really said this may get approved. Analysts coming out, giving this a near 100 chance of approval by july. Good news for vertex for its Cystic Fibrosis drug there. Well watch the trading action on that tomorrow. Meg, thank you. Tim, want to get you back into this conversation. If a lot of people are starting to move their money into the u. S. Because of better prospects, higher bond yields relative to other places et cetera, what does that mean for the emerging markets who benefited from the whole low rate we badly need return anywhere we can get it period. Is it over for them . Emerging markets were trading very well in april and the early part of may, i should say the last part of march and all of april when the dollar was going a lot of dodge. They were trading i think with an expectation that the fed will love and that emerging markets have been waiting for the first rate hike. That ill with be a time to be almost all in on the em asset class. I think were in a place were starting to see better growth around the world. Weve talked about china. What theyve been doing over the last three weeks or even over the last month and a half is not necessary. Its also not a reason for doom and gloom. Their Monetary Policy has been too tight. Theyve been adjusting Monetary Policy. It hasnt been a fiscal policy response. Thats very good. Theres even talk today theres an ltro program happening in china. If you look at emerging markets as a place for capital, yes, its underperformed over the last four years assen aasset class. The commodities are also a place youre starting to see people see commodity price basing. That will mean that the underlying producers can underperform. You dont need a super cycle again to see that allocation make sense. Ltr, that was the reference there which europe did a few years back. Kenny, what were you going to say . Wouldnt the initial tags of an ltro program talk about the weakness in china, not the strength in china . People want to believe and on some level you cant deny china has a credit problem. Its a Systemic Risk thats about to play . I say absolutely no way. I say china is in a better position to pay for their mistakes than any other economy in the world. An ltro will allowed Government Debt to be use as collateral. I think its a very positive event. Its not a reason to be fearful. I want to go back to europe for a second. Guys, it does seem like europes Growth Prospects are kind of driving the cart right now. Evan, because youve been so critical over the years about europes general Growth Prospects, i wonder if your argument about the bond market is true does europe have to be turning a corner here and putting in several quarters maybe several years now . Im just you know i step back and i go what are the prospects globally . I go kind of market by market. I think the u. S. Has a lot going for it. The u. S. Can grow 2 1 2 to 3. 5 a year. Its hard to envision italy or france growing at 3 or 4 a year. Its hard to see it. I think the key thing will be greece in the short term. The sooner greece gets thrown out of the euro, the better for everybody. I think europe can then move forward. I think the euro would strengthen. Weve seen an improvement in europe. Theyve exited from this deflationary spiral as the European Central bank has revved up and bought bonds. With this slow growth thats another case. You see mohammed al aryan saying global yields will stay low. Its a question of what is the right price of money. Weve had for the last few years is the central bank messing around in the words of chuck berry, too much monkey business. I dont want to get involved with it. I think that was chuck berrys line. Theres too much tinkering by all the Central Banks. The price of money globally has not been set. Until you have the Central Banks step back we dont know really what the yield should be on bonds. Tim, ill give you the last word here. Lets not try to condemn Central Banks. It is what it is. If europe and the euro are 30 cheaper than a year ago, thats a major elixir for a major part of the economy. This is positive for europe and you will see it in Second Quarter earnings. Thats a great point. Tim seymour, appreciate it. Catch much more of tim coming up with the fast money crew at 5 00. Theyll be asking kara fisher what they thinks of verizons 4 billion purchase of aol today. You dont want to miss that. Today the deal finally happened. It was verizon buying the company for nearly 4. 5 billion. Few saw this union coming. It could be a way to jump start verizons move into content and mobile ads. Well talk how and why, next. And Nouriel Roubini will join us to talk when he thinks the fed will raise Interest Rates and how it will impact the bond market. Youre watching cnn, business worldwide. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . One company was known for youve got mail the other asks the question can you hear me now . Today, verizon and aol will have to come up with a new advertising slogan after announcing the phone giant will buy the online pioneer for 4. 4 billion. Plus as part of the deal aol has reportedly been in advance talks to spin off Huffington Post content. Were joined now by frank adonte ceo of Rubicon Project and betsy morgan ceo of the blaze and the former ceo of Huffington Post. Welcome to you both. Betsy, huge news. What do you think verizon has planned for aol . Clearly, verizon is all about mobile and content. Tims got a great mobile strategy. Hes got a great video strategy and he has a fantastic content strategy and a phenomenal asset in Huffington Post. We understood that aol has put itself in an attractive position, i guess, as a media and advertising platform. Why is this company a logical fit for verizon. As verizon moves toward a mobile first strategy and focuses on video content, what tims done and arianna has done with huff post live theyre going to get a fantastic amount of content. Is that what you think this is all about, ultimately . Well see a lot more of channels like the Huffington Post . The con ten is the important and the Advertising Technology assets aol has. The Advertising Market is a 300 billion and growing market. The automated part of the advertising is the Fastest Growing segment of that. Aol has invested heavily into their assets. I think thats an important part of this deal as well. Half the revenue comes from the advertising assets. Sure. Kenny . I think its a great i think it caught the market by surprise. Look what happened in the stock today, it traded above the price, closed above the price. Aol did, youre talking about. Aol traded above the bid price. The market tells you it suspects that theres a better deal coming, that theres a better price coming because why would people people be maying 50. 50 for it today when the deal was 50 at the end of the summer. Keep your eyes open for another piece to this story. Evan . I think it could just be a low premium deal. So a lot of the institutional shareholders may be going, you know what for verizon, this is chump change. Im not trying to diminish the great achievements of the aol board and ceo but in the scheme of things for verizon, its chump change. Its a cheap option for them. And if youre an institutional shareholder thats been holing on to your aol, youve been taking out with an 18 premium. Youre going, you know what we may be able to hold verizon up for a little more money. 18 times ebitda is how they valued it. Which is narrow. The institutional shareholders are going, you know what we dont know why verizon do you think Huffington Post is worth a billion dollars . Maybe huff post will transact after this. They were told to aol for a little over 300 million a few years ago. Its a grow is asset. Theyve been extremely well overseas. Theyve done extremely well with huff post live. I think were seeing that content matters. Theres a value to con ten. It would be extraordinary. Does content matter . Absolutely it matters. What evidence do we have that Huffington Post or any of the publishing people go where the shows are. You watch shows on you go to netflix if you want to watch orange is the new black. Have you watched a show on Huffington Post . I have not. Do they make money . All ad supported businesses and all ad supported businesses doing well in the marketplace. Do they make profit . I dont know frank . I think this is where the automated advertising portion of this is important. Verizon has the pipes for both mobile as well as video and television. Aol has content but aol also has the monetization capabilities for that. Making money in advertising is certainly challenging without having these Technology Capabilities where this market is moving toward programatic and automation. Its a key point, betsy. People are wondering whether ultimately the idea is to keep Huffington Post as part of this combine or spin it out, let it do its thing, if this is a stand alone platform. Whats the better option here . Huff post did very well under aol. It grew tremendously. Tim gave arianna and the huff post Team Autonomy to run their business and they grew because of it. I think in a multiscreen, multiplatform universe it could do even better. I would be surprised if verizon would do anything but want to keep it after this. Its a fantastic asset. I hear you. Its such a great asset. If verizon is transforming itself into a company thats more about this programmatic automated advertising, thats a big transition for verizon to make perhaps its that technology as opposed to a delivery platform. As till said this morning, theyre betting on ott, over the top. Over the top for audiences that matter, whether thats a huff post audience whether thats a blaze audience audiences matter. I think on this the ad tech point, interesting point, frank, it seems like youre following this side of the story. Are there any other independent Ad Tech Companies that would be worth a lot more for instance . Does yahoo have assets that are now valuable because of this . I think, again, the Fastest Growing portion of the Advertising Market is the automated or programmatic portion of the market. Its grown to 30 billion of this 300 billion market has become automated in the past few years. Wow. Companies that have these automated capabilities certainly. Yahoo has assets on the buy side of it. Its an area they havent been particularly strong to date. I think its an area theyre trying to invest in. Google has done a great job. Theyve invested billions of dollars in advertising Advertising Technology stocks. We pioneer these whole category of programmatic capability eight years ago when we founded the company. Only eight years ago. Betsy, before we go do you think that verizon is the best owner for aol at this point . I think verizon is a terrific owner for aol. And id love to see verizon buy more content offerings and double down in the mobile space and the content space. Such as the blaze . Such as the blaze. Id like to see verizon fix fios that should be going into my building. So privileged. That should be verizons priority instead of buying the Huffington Post. Thank you, everybody. Appreciate it. Betsy morgan ceo of the blaze. It was a record night in the world of art. A pa cassicasso painting selling for a record 179 million. My next guest isnt impressed by the soaring art prices. Nouriel roubini said some people use art, especially expensive art as a form of Money Laundering. He explains why, straight ahead. And bigger doesnt necessarily equal safer. In the latest round of suv crash tests, well tell you which automaker make the grade and which are failing. Thats coming up on the closing bell. Its time for the your business entrepreneur of the week. Christina sheldon and her mother have always been close. It was only natural that she started helping out christina with her jewelry company, christina v. Neither one of them ever guessed that she would become the biggest employee. It was a historic night for christies. Here in new york city selling this picasso painting for 179 million. But dont go thinking art should be your next big investment. Joying me now for his take on this market and many more here in a cnbc exclusive is Nouriel Roubini, cofounder of roubini Global Economics. Welcome back. Good being with you. You have said we shouldnt necessarily read into these art prices as some kind of asset class. This is frankly Money Laundering. In some cases, there have been cases in which art has been use as Money Laundering or tax evasion. What im saying is that this asset price is high for art becoming an asset class, many asset prices are too high. You have 2 trillion to 3 trillion equivalent of government bonds. Equities are expensive, real estate is expensive, credit is expensive. A different kind of Money Laundering. Is this the only asset class where you see evidence that people are using it for ill and that we shouldnt be looking at the prices themselves as indication of markets, you know assigning the correct value . Or are there others . There are many other places other kinds of hard assets theyve been investing heavily into. When you have in some Financial Assets either by Money Laundering or tax evasion, a variety of financial centers, i think its the fact that we have zero policy rates in the u. S. , in advanced economies were still doing quantitative ease easing. Those liquidity is not going to credit to the real economy as being part of the surprise its going to asset deflation. Increase home prices equity prices, keep people from being under water. Soon enough actions of inflation, and eventually and the tools to try to control the credit bubbles are not going to work. If were going to get into a bubble willing not this year but the next two years, the question is what do Central Banks do. We have the stock market and the bond market. Lets start here in the u. S. For example, do you think either one of those has been one of these bubbles . I would say that in the case of a stock market, i wouldnt call it a bubble today. P e ratios are slightly above historical assets. Biotech and tech valuations look funny this terms of whats happening right now. So there is certainly fraud in it. Theres not a bubble today. Suppose the real economy justifies the fed acting slowly maybe starting in september and by next year 1. 5 to 2. If at 0 policy rate you have incentive, its not going to be much of a difference when Interest Rates are 1. 5 . During the last cycle we with the from 1 policy rate to 5. 25. Long rates were not going higher as they should be. You had a subprime bubble a housing bubble, a credit and equity bubble. My worry is that the real economy justifies low exit low growth, unemployment is still high but then all this liquidity will go into asset deflation eventually and financial bubble. Were not there yet at least in terms of the stock market. No. The bond market its actually the opposite question how much have prices now over the last 30 years or what have you been high . And now the fed starts to raise rates, what happens . What do you think, for example, just to take one, the u. S. Tenyear Interest Rate do you think it keeps moving higher and this is the end of the bull market and bond . Theres a global element. Bund yield in german has fallen. Even 2 on a tenyear treasury was more than 0. 2 on bunds. Were too low in terms of the yield and now inflation in the eurozone is going higher. Some of it is global factor. It will depen on liquidity. The ecb and boj and other Central Banks do. I expect bond rates will go gradually higher. I dont expect a repeat of what happened two years ago. In may of 13 when bernanke spoke about tapering was a surprise. This time around the fed telegraphed what theyre going to do. We dont know if it will be september or later. The fed told us once he starts hiking rates it will be done gradually. Most of it is already expected. Its not going to be a significant surprise as inflation goes higher gradually longterm Interest Rates will go higher. In the short term lack of market liquidity, Market Makers can be a surprise or otherwise. In inflation, you have a volatile environment. The funmentals suggest a gradual increase in the United States and europe. If we had a more abrupt one, would that be more disruptive . There are guys around here that are worried about that. Certainly the fed and janet yellen has said she has some concerns about this tantrum occurring, call what whatever you want to. They didnt start tapering until september of that year. Too sharp of a backup in longiels that will force the fed to exit lower and later and that will push further down bond yields. If they go up too much too fast too soon compared to what their fundamentals justify, the list will push those yields lower. I dont see a persistent tantrum occurring in this case. We have to leave it there. Let me close on a simple yes, no question. A year from now, is greece still in the eurozone . I would say overall, yes. All right. Well see if that one bears out. Nouriel thanks for being here. Nouriel roubini is the cofounder of roubini global financial. Heres cnbc news update with a sue herera. Only one Senate Democrat tom carper voted for a motion to start considering mr. Obamas request for fast track trade authority. That would let the president present trade agreements. Congress could ratify or reject but not amened. President obama has officially chosen the south side of chicago for the sight of his president ial library. Rahm emanuel making the formal announcement at a youth center on the south side. This is a historic day for the city of chicago. And its an incredible honor. I wanted to begin by thanking the president and the first lady for choosing to build the library in their hometown, the city of chicago. A dean at the university of virginia is suing Rolling Stone magazine for 7. 5 million over the gang rape on campus story which was later discredited. Associate dean is the top administrator at uva dealing with sexual assault. Two men soared through the skies over dubai in a thrilling ride that made them look like superheroes. They jumped out of a helicopter powered their wings and flew for about ten minutes, diving and performing acrobatic stunts up to 186 miles per hour. Not for me kel, not for me. I could barely do the White Water Rafting last week. Me too. Beautiful, though. Its true. We can look at the video without having to do that as well. Exactly. Back to you. Shocking new suv crash test data released today. Nearly half the vehicles tested performed poorly in a key test. That includes one of the hottest selling suvs on the market. Husband and wife duo pat benatar and neil giraldo have been rocking america and putting out the hits for more than 35 years. What a better place to celebrate their anniversary than here at the new york stock exchange. Thats coming up. Youre a heart breaker well, sir. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent i plan to retire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Many drivers consider su vuxtsuvs to be safer. A report is saying not so fast. Phil lebeau has this story for us. Hi, phil. These crash tests focused on seven midsize suvs, some of them among the most popular model when you look at this video its pretty clear that the crashes here the small overlap crashes among the most frontend collision. Its where your front corner hits another vehicle or a pole at 40 miles per hour. It raises questions about some models, in particular were looking at those jeep and dodge models that were tested. Four of the seven were jeep and dodge models. Heres how the results turned out, good for the Jeep Wrangler the fourdoor version but marginal for Dodge Durango and the jeep cherokee. A poor rating went to the dodge journey. They say vehicles meet or exceed all applicable federal Motor Vehicle standard. However, we continually evaluate the safety performance of our vehicles in realworld crash situations. How much is this going to slow down the momentum of jeep in i dont think it will have much incompetent impact at all. Theyre coming off a record sales year in terms of global sales topping 1 million vehicles. And the renegade which is the small crossover Utility Vehicle just rolled into showrooms over the last couple months its off to a strong start. Take a look at shares of fca usa. Were showing you since the ipo that happened last year. This is a stock in a company thats on a roll kelly. Yes, these are not good test results in terms of the latest series of crash tests, particularly for the dodge brand but at the end of the day, im not sure this is going to slow it down a lot. I think wed like to quibble with that. Jack neerad. Lets begin with how much people follow the rollover crash test results. Im thinking back to a decade or so ago when suvs were first hitting the market and popularized. It became clear they did have risk. At the time that seemed to turn a lot of people off. Can that happen now . This isnt a rollover crash were talking about. This is a crash test thats an offset crash test. It simulates a headon crash. Its actually very high speed, too. Its not federally mandated. So theres a lot of factors going into this and some manufacturers, frankly, pay more attention to this test than others do. Because its not federally mandated mandated, some feel they dont have to pay a lot of attention to it. I have a question for jack phil, maybe you want to take this as well. Do Consumer Price safety into the vehicle . My question is the chrysler brands here jeep and dodge, im going come out and say, i guess theyre lower priced vehicles than the japanese midsize suvs. Are people basically saying i dont care not as safe but its cheaper. Between this and verizon fios, im starting to wonder about you. Any vehicle they would buy new from any manufacturer. I think that is factored in. Certainly safety is considered by all kinds of suv buyers. In fact, theyre particularly concerned about safety. It is only one factor they look at and we at Kelley Blue Book find they look at quite a few other factors as well. Certain brands have a safety reputation. Honda is a good example. If you go into most showrooms right now, the honda lineup is not exactly the freshest lineup out there. In fact many look at it and say, its pretty stale. But theyre bringing new product to market. Having said that when you ask people what do you think of honda automobiles . You universally say people say, safe, theyre safe vehicles. It does register to buyers to a certain degree. One other thing to keep in mind i think theres an element of recall in safety fatigue in this country right now. Amongst buyers where they hear about a recall or they hear about crash tests and they go again, another story . And that doesnt excuse it but i do think theres an element of that. Last word kenny. I think its interesting you ask the question. When i go in to buy a car, the first thing unless youre going to buy one of those tiny ones be if youre going to buy a jeep or one of those cars im not thinking i wonder how this does in the safety rating compared to its peers. If i want that car i want that car. If i want that brand, i buy that brand. Do i make that do i say that to myself now when i go to buy a car . We want to hear from everybody on this. Send us your thoughts. Well leave it right there for the time being. Appreciate it guys. We have breaking news on American Express to get to with dominic chu. American express has authorized a new Share Buy Back program for 150 million shares. Theyve also announced a 12 increase to their dividend. Now, this 150 million Share Repurchase authorization replaces their old program that still had 45 million shares left on it. You could think of it as a net 105 million Share Repurchase authorization. Thats new. Current market price, that does translate into about were running the calculation, 8. 3 billion in terms of new authorization for a buy back. Still, remember this maybe was telegraphed a couple months ago. At that time American Express did say the fed approved their Capital Return Program plus an additional boost to their dividend authorization. Again, were getting news here. It was anticipated by some people out there but still, an additional 8. 3 billion net being added to their buy back authorization at amex. Back over to you. Shares popping on that news dom, as well. Pennsylvania or bust . Coming up thats where starbucks is moving its bottled Water Operations after californians complained about bottled water complaints using local water supplies. If its a problem, how are Companies Still allowed to operate there . Well get those answers coming up. First, though, russia with its vodka, ireland with whiskey and germany with its beer all have reputations as countries with people that like to hoist a few. Well tell you which country has the heaviest drinkers that story is the toast of the town on the hot list. Stay with us. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. It took Tim Morehouse years to master the perfect lunge. But only one attempt to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. A downward spiral in china, drinking around the world and disruptors in business. Those are the stories buzzing on the hot list. Allen wastler has those stories for us. China is back in readers attention today. We are a had a featured piece. Things that Research Shows when you have a big dramatic spike up in gdp, 70 chance of a financial crisis following. So have a nice day with that one. Now, we also had another feature that got a lot of attention. Which countries do the most drinking . Its based off an oecd survey. They were serious about it because theyre worried about more drinking hurting productivity but everybody is interested in the list. Estonia, austria, france. We want to know who number one is. Estonia. You totally called it. Youve obviously not spent a winter in the baltics. You have. Not a full winter. If i was there, id be drinking too. Our disruptor list tearing it up 50 hot moving companies, thats getting a lot of attention, too. Thanks very much. Its interesting that hes talking about the china story considering what tim seymour just said. It runs in complete contrast to tims view which i think is interesting. Water, water everywhere. Well, not in california. There are still drops to drink. Companies are using californias supply for their bottled water. That is under fire as a state experiencing one of worst droughts on record. How much h20 is the golden state supplying . Jane wells will tell us after this quick break. Welcome back. Just about five minutes ago, the shares up by about 5. 5 . A descent amount of after hours on vertex. It did fault the news that the fda panel approved or recommended approval for one of the Cystic Fibrosis drugs. Like she said. With the bit of news about the Panel Recommendation the stock was halted. It is now reopened for trading up by about 5. 5 . For those waiting for zillo, its to open at 5 00 p. M. For trading. Back to you. Thank you, questions about that one as well. Moving on california has been dealing with a record breaking drought for several years now and thats working outrage against bottled Water Companies to. Hi jane. Maybe i could water my lawn with this. Im outside a plant owned by nestle. Why are we still bottling water . Its not that simple and once again, were learning what we dont know. What we do know is theres over a hundred facilities bottling water. They be get a lot of it from lake shasta. Starbucks is now leaving california for its water. Nestle is the biggest player in the state and theyre along with the protesters who dont like bottling water at all. We do not know how much water in california is going into bottles but based on Industrial Water use estimates, it is only a fraction of 1 . So a near drop in the bucket but right now, every drop is getting scrutinized even if that drop is nowhere near the grid that brings water to consumers. People are wanting to protest outside the governors residence. The problem is whats the difference between water i get in a bottle at starbucks and water in an iced tea. It is concerned about the situation and this is happening, by the way. Wall street journal reports nestle want to expand u. S. Bottle operations. I guess if people wants to charge 10 a bottle keep the price on water, thats a positive thing instetd of just giving the stuff away. Jane wells. Water is cheap here. It is amazing. Jane, thank you. Im sorry we have to leave it there. Jane wells out in california staying well hydrated for all of us. Pat benatar sang love is a battlefield in 1983 but her and her husband are still going strong. Theyre here to talk about their upcoming tour celebrating 35 years to go can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. Rock super stars pat benetar celebrating a milestone. 35 years in the industry topping the charts with hits like heart breaker. The dual has seen it all. Welcome, its great to have you. Thanks for having us. 35 years in the music business itself but 35 years together you guys walk in here holding hands. Were newlyweds actually. Its so inspiring. Thats a rock and roll history record. Its a record. The entire history of rock and roll. I dont think theres been a couple together for 25 years. Whats the secret . It wouldnt be a secret no more. Whats the magic formula . Theres not a formula. What we like to say im a fighter but not when it comes to a relationship. I like easy going. I dont get trapped in things. I put all my energy on stage and the studio. Thats why i can do all my stuff. When we have a life like this im happy to be here. When we think about some of your iconic music videos that helped define the whole Music Industry when it was forming, times have changed. 30 years later theres streaming websites available and people doing innovative kinds of things and maybe to the point of what youre doing going on tour. What do you think it is thats most relevant for artist today in terms of getting their Creative Genius across . Same as always. You still have hone a crack and how you get it out there is the part thats changed but the principal is the same. I have a lot of your songs downloaded on my spotify. Did you pay for them . I have a membership. How do you as an artist feel given that weve seen others like taylor swift protest that because they want to sell albums . Everyone would like to see that change because it doesnt make sense. Yeah we like the one for free and buy one. One for free and buy one. Then everybodys happy. It mostly hurts song writes. Whats it like to tour now days . Youre probably closer to my anyone right. I cant even imagine. You tour on a bus . You go on a bus . Thats your little house on wheels. Its beautiful. We love the bus. Its comfortable. We tour in the bus. Because weve been around so long its so relaxing. Sometimes we walk on stage and were yawning before we hit the stage. Okay, we got to hold back our energy. Its fantastic. There is enough sort of emphasis on the song writing and new material, do you stay current with all of it or do you dismiss a lot of it . He stays current. Im too busy doing everything else. I like it. I like whats available for all the young people starting and for us as well. I dont mind giving music out for free for people. It makes them more interested and gets them engaged. Whose your favorite pop star these days . I love jack white. What about you . Im still into theater. Hey, we love that too. Thank you so much for being here this afternoon. That does it for us on closing bell. Theyre going on tour and were all going to have a drink. Thats a good idea right. Fast money starts now. Live from the nasdaq markets overlooking new york citys times square im melissa. Tonight topping 60 bucks a barrel. Golden not buying. Why goldman is getting this hot trade wrong. Plus the real winner of todays multibillion dollar deal. Its not aol and not verizon. Could be the guy smiling there. First on the day when the markets were flat one