Transcripts For CNBC Closing Bell 20150521

Not moving it these days. Also fed chair janet yellen shes already required to appear before the house and senate twice each year to test a Monetary Policy. Apparently thats not enough. Coming up, House Financial Services Committee Chair Jeb Hensarling to explain why he wants to see her double her appearances on capitol hill. Hewlettpackard and gap, well have the incident analysis of all the numbers as soon as they are released. Both those sectors. Hewlettpackard has turned out some great numbers the last cup of quarters. Gap, retail been very mixed. And hewlettpackard. David faber will join us on that one as well after the bell. First, lets get right back to this market. The dow up 17. The s p adding six points. The nasdaq 20 points. The nasdaq by far the outperformer today. Lets get to our Closing Bell Exchange for this thursday. Joining us cnbc contributeor heather hughes. How are you . Good. James lu is with us here at the new york stock exchange. Joe duran from United Capital Financial Advisers is with us. And so is rick santelli. Joe, two sectors that are so important to the economy. Housing and retail. Both have been so herkyjerky recently. One number thats so encouraging and then some retail Sales Numbers that are not so encouraging. What do you make of those and what it says about the economy right now . I think what were seeing is the economy is still in reasonably weak shape. What were seeing with housing prices, its one place where maybe theyre keeping rates really low. Increasing demand. Its increasing home values. And its making people feel wealthy. Its not translating to retail. Where people are spending is different than it was in the past. Its very technologyfocused. Its very luxury focused. Trips, vacations. So not as much in clothing and apparel. So the way the consumer is spending is very different. Do you guys like the Home Builders here . Yeah. Again, i think there is when we look at the weaker retail sales right now, theyre not buying sweaters, theyre buying autos. Theyre buying a lot of cars and they are buying homes. Although existing homes, the data was a little bit softer this morning. Were still seeing the average trend a little bit higher. Which would help the Home Builders, as long as the trend in home sales remains higher. But the Housing Market let us into the recession in 2008. So we need the Housing Market to lead us out into the recovery that were on now for a sustained recovery for the markets to sustain higher highs as we might hit again today. Thats just not happening. Although there are anecdotal signs of some really hot markets in real estate right now. Well be covering that a little bit later when we look at Silicon Valley is now becoming too expensive. Theyre coming to a neighborhood here with you. Where do you look to buy right now . I do like equities. Have some upside surprises, but it was still a failing grade for the earnings season. Information technology is still pretty much undervalued. Consumer discretionary. I think its the same story. Our view is retail sales and consumer pocketbook is going to be strengthened later on this year despite the weak First Quarter that were seeing. What i dont like are utility stocks and bond areas of the market. Theyre very very expensive at this point. In the Energy Sector youre seeing stability in oil prices. Only about 20 of stocks in the Energy Sector are cheap relative to their husry. Ryhistory. I would have thought that number would be much higher. Only 20 of Energy Stocks are historically cheap after weve seen about a halving before the recent rebound in the price of oil there. Rick santelli whats on your radar today . We havent seen too much in the way of Economic Data this morning. Whats going on in your world . I like the comment about cars. But consider this. If you have very low standards with regard to getting a loan for a car, you now can space them out 72 months and sometimes beyond. I have daughters in college. When i talk to their friends that have graduated who have no credit score to speak of and i see some of the rates some of these dealerships are giving these kids, its really high. I dont think its a big stretch thinking yeah the cars are good. The payments are long. And everything suffers. Whether its a sweater or whatnot. I think it makes perfect sense. If the Housing Market wasnt good in Silicon Valley that would really speak volumes about the economy. Rick i was looking through this auto trader magazine at the diner the other day. Every single page it was probably a 40page document was beginning by advertising just how low their rates were. How credit was available to everybody. Competing with 1 handles on it. It was astonishing. I was amazed. The Housing Market and the sub prime market and the auto loan space today. Not as we were in 2007 with housing. Were not with housing overlevered, oversupply and low quality loans, due to the restrictions in the financial sector. Imposed on higher restrictions for people to get mortgages. Which can you blame the banks for doing so. But yet ricks point is that we are seeing that in the auto loan space. Anyone with shoes on that speaks english, i guess. Im just trying to picture this picture of kelly sitting in a diner reading an auto trader. I took a picture of every single page. Where they all break into song like that commercial. A hemingway short story in there somewhere. Lets talk about another important part of the economy. That would be crude oil. Thats been building on yesterdays gains. Jackie stepping in from the nymex a couple blocks from here. A 3 jump in crude oil prices today. We closed over 60. That was a key psychological and technical level. What happened here to give us this little pushup . You had a little bit of a weaker dollar. Thats supportive. The markets digesting the production declines the inventory declines as welch thats part of it. Also, were going into a holiday weekend. That causes a little volatility. Traders like to you know, make some money. Buy, sell get their positions settled before they go away. Meantime, most traders are still saying to the upside the upper limit is probably around 65 this summer. And lets talk about gasoline for a moment because it continued higher as well. Aaa saying the National Average 273. That seems a little bit high from some of those numbers under 2 that some states were seeing, but at the same time that is 91 cents less than it was a year ago. So maybe some of that money will start to go to spending. Well see. Joe duran, a lot of talk over the last 24 hours about the transports yesterday. What do you think is going on here in the overall market in terms of the rough patch theyve been in and the fact that meanwhile were at alltime highs. I think what youre seeing is a lot of cross currents. So oil, it has been going up. That obviously hurts transports. Now theres a concern that instead of ending the year in the mid 60s, we might be heading to the low to mid 70s. Thats a huge cost burden and the economy is still not really strong. When you price in that it might be a good summer but after that what happens, i think theres a lot of uncertainty about just how much stability and traction the economy really has. And i think youll get one rate increase before year end. A small one. That will be it. I think we still are not out of the woods. And what youre seeing everywhere is where do i invest to make sure that im protected if things continue to be a little bit messy. Where are you going then . Weve had a very interesting shift in Interest Rates. But not a commensurate move in the stock market. So what you have to think is if rates continue to go higher where do you want to invest . You want to invest with Large Companies with very flexible Balance Sheets. I think weve got much less Interest Rate risk than we used to have. As far as how it affects currencies i think you want to be larger cap. Really good Balance Sheet. Thats an interesting area. Stay away from longterm debt and risky debt. So really pulling a little as far as Risk Appetite goes. Heather, what are you buying . Well wrap it up with you. There are two key catalysts on the horizon other than housing data. Thats yellens speech tomorrow and the jobs data. The may jobs data june 5th. I think right now Money Managers in our industry are sitting on their hands. If you look at this notion of a rational exuberance in the marketplace and does it exist, i will tell you in the mutual fund and exchange etf fund world april had the largest monthly outflows in the equity markets that weve seen in any month since 2009. That skepticism might be the markets best friend for the short term. Well leave it right there. Thank you, everybody. Good to see you this hour. Take a look at that auto trader magazine in the diner. Yes, indeed. Fascinating reading. 50 minutes to go into the close. The dow hanging on just about a onepoint gain. The s p is up four for the broad index. The nasdaq there just about four points shy of closing above its recent alltime high. A lot of pictures in that thing. Mixed messages on which way oil may be heading in the longer term. Goldman sachs predicting a drop. So whos right . Our transport experts will put the pedal to the metal. Soaring costs are driving startups away from Silicon Valley. A top real estate pro tells us just where theyre migrating in maybe youre neighborhood. Were back in two. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. We live in a pick and choose world. Choose choose choose. But at bedtime . Why settle for this . Enter sleep number. Dont miss the memorial day special Edition Mattress with sleepiq technology. Sleepiq tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store. Save 500 on the memorial day special Edition Mattress with sleepiq, plus 36month special financing. Ends monday know better sleep with sleep number. This year of Home Building stocks. This is one of the etfs that tracks Home Builders. A pretty good first couple of months, but its been sideways since then. Yes, up 6. 6 year to date. But much of that was achieved early in the year. Home builders have strayed in the last few months. Even as we just saw a 20 pop in housing starts. A lot for people to think through there. The ideas may be flowing, but talent is fleeing Silicon Valley right now. According to red fin, the median sales price in Silicon Valley just crossed 1 million. The median. And many cannot afford to stay as a result right now. For more on where theyre going, were bringing in red fin ceo glen kelman now. Welcome to the program. Good to see you. Thanks for having me. Where for the most part are you finding people priced out of Silicon Valley going and how is that affecting other communities . Theyre going everywhere. Denver, Portland Austin seattle. Theyre absolutely changing boston. Theyre coming onto these markets with different expectations and buying 500,000 homes so theyre just blowing them up. Im sure theyre skewing those markets where theyre going. But let me ask you more about Silicon Valley first. I mean did this happen during the dotcom boom as well . Why is this happening now, do you think, where the markets are pricing a lot of people out . Well i think weve run out of room here. Theres just nowhere to build. If you look down by the bay bridge, it looks more like manhattan. Youve seen home prices rapidly accelerate much more so than the rest of the united states. So people are just beginning to make sense of the madness by looking elsewhere. We saw one in seven people looking outside the bay area. Now that number is one in four. So approximately double the number of people are looking to leave Silicon Valley. You still have plenty who are coming in. Would you call this a bubble and how does it compare with what happened during the dotcom era . I dont know if its a bubble, because people are making so much money in Silicon Valley. Facebook is a very valuable company. Linkedin. Google. Its just that the wealth is becoming much more evenly distributed across the rest of the country. You can write code anywhere. Theres so Much Technology for engineering teams to work virtually. You have people saying why do i need to buy a milliondollar house here that isnt very nice when i can get a mansion for half the price somewhere else and google has an office there. Linked in has an office there. I just think youre starting to see the wealth of Silicon Valley, which was so concentrated. Thats going to allow these tech giants to grow even more. They were bumping up against the physical constraints of this place. What do you think will happen to those other places . Bostons, denvers, seattle. Will people eventually be priced out of there . In seattle, there are cranes everywhere. Buildings are going up as fast as they possibly can. And still, prices are shooting through the roof. Many people in seattle, which was once a middle class city where regardless of your income you could really have a nice house, are now looking to other cities. Youre seeing this gradual migration to the center of the city, because the coastal markets are being priced out. My twin brother in boston says this place is totally changing because there are so many folks from the valley from california coming and changing the landscape. Its not just the Residential Real Estate market. Its the coffee shops. Its the pizza parlors. Its everything. Glen, is it just this exodus or sit the fact that some of these other cities theyre probably going there because there are other real hot beds of innovation and technology in this country, arent they . What ultimately drove it was the housing crisis here. Finally people are saying i can build a startup anywhere. Evan spiegel going to l. A. Its starting to be a meaningful amount of money to stay here. So people are asking can we do the same thing, but in seattle. The same thing, but in portland. Increasingly, the answer is yes. Very interesting. Good to see you. Thanks for joining us. Thanks for having me. Thanks. There are plenty of countries around the world that would love to create just one other Silicon Valley. Were lucky to have so many. Were going to head to the close. 40 minutes left in the trading session. The dow has turned negative now. S p up three. Same thing for the nasdaq which is up 15 now. Five points shy of the record it needs there. Coming up is it more of anything really is good thing . Jeb hensarling making the case of janet yellen to double the appearances on Monetary Policy. Keep it right here. Transportation stocks indicating a sharp rooigise down the road but goldman still predicting a decline to 45 a barrel by october. So weve got a debate on oil coming up. Stay tuned. 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. 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 . How does 60 gains sound . Thats what shopify is doing. Lately you see that. It can be a rough one, but a strong start. Dominic is covering the other movers for us. Lets start here with lumber liquidators. Robert lynch has unexpectedly resigned from that post. This comes amid a government probe into the safety of some of its flooring products. Shares of shake shack hit another record high. More than quadruple its ipo price. The company filed for a trademark for chicken shack. It could be adding chicken to its menu. We dont know yet, but its causing buzz. The deal is valued at about 10. 4 billion. Thats without the debt side of things. Cvs says the acquisition will significantly expand its ability to serve the senior population. Back over to you guys. That will do it, dom. Thank you so much. Mixed messages. Whos got this one right . Lets talk about that. Jason is joining us. Thank you for joining us today. Which way do you see oil going right now . Our view on energy is pretty simple. We just look at energy to continue the climb. Im not looking for any material spikes. Thats what we have in our model. I think as energy rises, youll probably see the railroads as one potential beneficiary as they haul more Energy Related items and they see potentially some creep on the intermobile side. Donald, what about you . Im looking for moderate oil prices as well. I would tell you theres two ways to dissect this. One is to look at the cost input. One is to look at the economic benefit or deterioration of the cost, the price of oil, and natural gas. Right. So moderate. You say moderate. Do you disagree with goldmans assessment that it could go down to 45 . Are we going to continue to pump that much more oil in this country and outstrip demand right now . What doo you you think . As rig count continues to fall, its hard to argue that well see more gushing of oil coming out of the ground. On the other hand, demand looks like its moderating, as it trips over the higher price of the dollar and the cessation of fracking activity. So jason, which names appear to you most attractive regardless of the wiggles and the price of oil between now and year end . You know i think over the long run, the rails are a pretty good place to be. On their worst day. The weakness in the near term i think thats just more of where you are in the cycle. Difficult year over year comparisons for volumes. So the rails have taken a breather here. I think its potentially a good spot for investors to become involved because the storys not broke. Were still seeing rails raise their prices. This quarter, rail pricing ticked a little bit higher. I think also over the next few years, on the truckload side of things, i think were gearing up for sort of a multiyear cycle on the truckload side despite the little bit of a slowdown that don referenced there as well. I think we have a pervasive problem with attracting qualified Truck Drivers in this country. I dont think thats going to change. And that could potentially change for the worst if you start seeing Home Building take off. One, it takes away potential drivers for the trucking marngt inging market and it adds demands for the trucking market. Donald, who are the winners and losers those that benefit from the price of oil . What about airlines too . Doug parker of american seemed to suggest a little softness was coming here. I dont follow the airlines. I dont follow anybody that moves people. Its a lousy business. That said we respectfully disagree. We think the value of the dollar accelerating the way it has, we think the cessation of fracking activity, and the cessation of all the other industrial activity that follows that is a death nail for the rails in the short to intermediate term. Weve gone through 11 straight weeks of negative rail volume. Petroleum volumes are down. Ag volumes are down. No matter how you slice it and dice it, whats happening with the lower relatively low price of oil and the strength of the dollar is a death nail for the u. S. Based railroads. Donald can i just ask you you said i dont follow anybody that moves people. Its a lousy business. We heard this from ed hamburger when we were talking to him about freight rail and asking why isnt Passenger Rail profitable. What is it about Passenger Rail or Passenger Airlines if you will, that you think is just never going to be a Good Business model . Well i hate to reduce people to chatle but if you looked at the yield to fly any of us across the atlantic or the pacific, and you looked at what we weigh and what our baggage weighs and you reduce that to a per pound yield and you compared that the per pound yield that fedex or ups gets, they get a much better yield. By the way fedex and ups can stack their packages like cord wood unlike us. And fedex and ups dont have to water and feed their packages. They dont have to let them go to the restroom. I get it but at the end of the day, if its valuable for us as people to be moving around, arent we going to pay for that . Yes. The historical pattern is no. Look at trailways and greyhound. Bankrupt. What a moneymaking operation that is. Look at the billions and billions of dollars that have been destroyed over the year. Its been run by the government of all things. Tell me the last thing the government ran that was profitable. I mean were out of time on this. Theyre going crazy in the booth. This is a bone of contention for kelly and i. We think that you could run a railroad profitably. Youre mistaken. The reason the governments involved in it is because the regular freight railroads didnt want to do it anymore. Moving people en masse is a lousy business. Thats the longterm historical record. Jason, last word to you. Anything you want to disagree with on this front . Well listen. I actually done think don and i are in a different boat. Weve been saying the railroads in the near term are going to run into trouble. But if you look at the next 12 months, i think well be in a good position in 2016 and i agree with him. I dont think freight transportation for people excuse me, Passenger Transportation is really a good place to be. Thats why you see it all over the world, pretty much heavily subsidized by governments. If something came out of Silicon Valley that solved this one, render me really impressed. Somebody get elon musk on the phone. Thanks guys. When this tv thing doesnt work out anymore were going to start a Passenger Rail. Time for a cnbc news update with sue herera. Town me in on that one, bill. Heres whats happening this hour. The state Department Says it will release some of Hillary Clintons emails relating to the attack on the u. S. Embassy in benghazi, libya, very very soon. Senate lawmakers holding a hearing on the president s policy in iraq and syria. Senate armed Services Committee chairman john mccain criticizing the Administration Policy for failing to adopt what he calls a successful strategy to defeat isis. Japanese Prime Minister shinzo abe announcing japan will give 110 billion over the next five years to develop infrastructure in asia. The move is to try and counter chinese influence in the region. And doctors in california are roreporting a major advance in prosthetics. A paralyzed man is able to move a robotic arm just by thinking about it. The video is of 34yearold eric soto drinking a beer by himself. A gunshot wound left him paralyzed from the neck down when he was 21 years old. Pretty amazing stuff, guys. Right . Thats it for me. Back to you. You got it. Thank you very much. See on the back here . 30 minutes to go until the close. The dow is up about seven points for the moment. The s p up five. The nasdaq 19. Just about two points shy of its closing high. Maybe well ask Jeb Hensarling about running rails. House Financial Services Committee Chair Jeb Hensarling will speak with us exclusively. Find out why hes pushing for fed chief janet yellen to double her congressional appearances on Monetary Policy. And then another flood of earnings after the bell. Hewlettpackard into it. We will preview the numbers for you and deliver the results the moment they hit the tape. Were back in two with more 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. Capitol hill wants more janet yellen. House and Senate Republicans leading a charge to bring the fed chair before congress more often, ip creasing her current appearances from four to eight a year. Joining us we welcome back the chairman of the House Financial Services Committee Representative Jeb Hensarling. Chairman, thank you for your patience. Thanks for joining us. We always appreciate having you on. Youre welcome. Glad to be here. This goes back to a provision in dodd frank that would create this vice chair of what oversight and regulation, and that person hasnt been designated yet, so you want janet yellen to fill that position in the meantime right . Correct. In many respects this is not your fathers fed. Whether youre a fed admirer or barber their powers have been vastly increased beyond their monetary powers. One little attempt to show some accountability was for the president to appoint a vice chairman for supervision over their role. Now huge swaths of the committee. This is separate and apart for Monetary Policy. But five years later, the president never filled that position, so congress has not had the ability to have the formal hearings twice a year. So myself and senator shelby the chairman of the Senate Banking committee, are simply requesting that chair yellen start to fill in the role. The fed has had their powers vastly increased due to dodd frank. But the transparency and congressional accountability to the American People has not commensurately increased and it needs to. I would note that a lot of the questions do seem to revolve around this when chair yellen does appear. Would this be a patch . As soon as the position is filled, you wouldnt expect the fed chair to continue to appear more often, or would you like it to be that the fed chair is the person who we do hear from more frequently on these issues as well . Well this is one more instance where we wish the president would actually follow the law. I dont know again why its taken five years. I do think that the fed should be testifying before congress more often. People often interject questions about independence. I would note. By statute, meets with congress four times a year versus a weekly meeting with the administration. And so particularly when this is not your fathers fed, and we have this kind of gray area between Monetary Policy and fiscal policy. When youre sending so many seniors on the historically long artificially low Interest Rate environment, the fed needs to be accountable. I want them to be independent but they need to pull back the curtain and let the rest of us know what they are doing. And so number one, independent from their supervisory role so they are in charge of dictating what happens in large insurance companies. Maybe asset managers. So we need more testimony on Monetary Policy. But right now, were just asking that the law be followed and if it cant be followed literally, if we cant make the president follow it literally, figuratively we want to follow it and we need the fed chair to testify on these supervisory matters. Its Just Congress doing what were supposed to do and that is our oversight. And as you know mr. Chairman not all of dodd frank has been implemented yet. Its still being formulated right now. Oh i know it better than most. Yes. I think of the volcker rule for example, which has been you know kicked down the road. Whats taking so long on that and do you expect it to be eventually introduced . I think the volcker rule is incomprehensible to the mind of man. You know the only way i think to implement it is to have dr. Phil at your trading desk to ask you what were you thinking and what were you feeling when you made this particular trade. But put that aside, dodd frank is a completely complex piece of legislation. The sheer weight volume complexity, uncertainty of this load on the financial institution. There is a reason that we are mired in essentially two, two 1 2 percent gdp growth. Thats one of the reasons the fed, they need to testify before congress and they need to tell us whats happening on the bond markets. On that point, to what extent can you just compel the fed chair to appear more often. Are you doing this as a gesture of deference to some extent to them, or do you have no power to bring them more often to perez them on these issues . Well we want to be respectful of the fed. Want to be respectful of the fed chair. But i would remind them that the fed is a creation of congress dating back to 1913. Within our constitutional power is the power of oversight. So we are making a formal request. I would see no reason why the fed chair would not comply. If she doesnt, then were going to have to cross that bridge when we come to it. Last question for me at least. I know that you i mean youd rather just see dodd frank go away in its current form. Its way too complex. Its way too far reaching. But yet the climate, anecdotally we hear on wall street hasnt changed a bit. You know youve still got the currency manipulation charges that have been settled. A very serious charge. Fines are being paid there. We just had a survey out yesterday that suggested that people on wall street are still witnessing unethical behavior out there. If regulations cant do it how do you change the climate on wall street . Well again, i think it goes to the fact that dodd frank on many levels hasnt worked. Its been a huge burden on the economy and low and middle income people are suffering. Understood. It supposedly angered wall street and it has failed. What would work . I think number one what we need is high levels of capital. Prudent levels of leverage. We need Greater Transparency as you know a lot of these vehicles that were used before the crisis were off Balance Sheet vehicles. In many respects, the regulators didnt do their job, but theres no substitute for having the appearance and reality of your own money and risk and having a very competitive, transparent, Innovative Capital market thats vigorously policed for force and fraud and deception. We want robust capital markets. And we need greater economic growth. And what we see is after almost five years of the passage of dodd frank, the big banks have gotten bigger. The small banks have become fewer. And middle income people are falling behind. Im not sure there could be a greater indictment of the law than that. Well leave it right there, congressman. Thank you so much for being here. Thank you for having me. Jeb hensarling. We have some breaking news on General Motors. Phil lebeau has details on that. Theth inth in National Transportation and safety board has announced it will extend its oversight of gms Vehicle Safety program. Communications, recalls, how they handle safety issues. They will extend that oversight for another year. Remember, it was a year ago that General Motors entered into a consent agreement. Basically a Consent Order saying that it would agree to have oversight in terms of how it was handling recalls, and then gm went forward from there by recalling having 84 recalls last year totaling more than 30 million vehicles in north america. Now the federal government is saying theres been some progress here but they still want to have General Motors under their watch for at least another year. One last thing, guys. This is the third announcement this week from the national Highway Traffic Administration saying it is serious about safety recalls. Big week in terms of sending that message. Back to you. Yeah, we would hope. Thanks very much for now, phil. Were going to flip it over to dominic for a quick market flash. Tobacco companies are spiking here although modestly here at the end of the day on a dow jones report saying that the federal trade commission is expected to clear a deal between the two tobacco companies, possibly as soon as next week. Renee zellweger announced its 25 billion acquisition last july combining the nations second and Third Largest cigarette makers. Major changes to the merger details arent expected in the companys settlement with the fec to get approval of that merger, so thats why those stocks are moving toward the end of the day. Back over to you guys. Thanks very much. Heading to the close. 15 minutes left. Speaking of modest. Modest gains. The dow is up 20 points again. The s p up seven. And the nasdaq up 24. Almost half a percent now. And it is in record territory now. Up next, dom will come back. Hes going to run through the names and numbers to watch for. 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Gov business here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. Another wave of afterthebell earnings heading wall streets way. Dominic is back with the names and numbers to watch. Lets start with hp analysts predicting earnings of 85 cents a share. Hp has warned the stronger dollar on its results. Those are the shares to watch there. Intuit also is projected to post a quarterly profit of 2. 75 a share. You can see those shares up by three quarters of a percent. Gap stores. Analysts are estimating 56 cents a share. The retail reported a fall in same store sales earlier this month. Gap has been struggling with slower sales as well as banana republic. Its focusing more on its old navy brand. Back over to you. All right thank you very much. Almost ten minutes left in the trading session. Just signaled 300 million to the buy side as we head toward a close. He didnt think it was going to have much impact. True. The dow is up about 19 at the moment. The s p up seven points. The nasdaq up 23. It has to hold about 5092 to notch a high closing today. Which it may be poised to do. Kevin oleary will be here to share his thoughts on a host of issues from the state of play in retail to a new app developed by a graduating College Student who did appear on that shark tank show we all know and love so much. Kevin oleary coming up. Were back in two. We are near closing highs for the nasdaq and the s p right now. Not so for the dow. Its got a little ways to go. See how we close here. Joining us weve got jim keenan and larry mcdonnell. Welcome, guys. Welcome back. And you both have high yield on your minds right now. But what happens when the fed starts to raise rates . Does it become less attractive . What do you do with that . Our basis is that the fed is going to start to raise rates. The economy is still in pretty good shape right now. That bodes well for corporate earnings and high yield spreads are pretty decent. Youre not the only person who points out the fed is going to gradually raise rates but that wont be lost on all the Market Participants who are going to want to get out the exits. Some of its around transparency and what the fed is going to do. If the fed was to tighten rates to a level that was going to squeeze the economy enough that youre not going to see growth thats going to present certainly the equity market as well as the high yield and corporate spreads. If the market is improving, thats how we view it. Theres been a lot of deleveraging going on. Rebalancing of the leveraging from the private sector into the public sector. And so if the economy is marching along at a 2. 5, 3 inflation number, its still leading to good corporate earnings growth. Would that ultimately support stocks here . I think stocks are supported by the feds guidance and the fed has been obviously weaker. The stocks have been very strong knowing that the fed is out further. Theres an interesting divergence between the hike. So what are you saying . Whos most vulnerable to a rate hike by the fed, equities or treasuries right now . And that would include high yield in that. I think equities because weve done some math. Some people make the argument that 42 , 43 of earnings have been through Financial Engineering over the last five years. So rate hikes are definitely a problem for equities. A little bit more so than bonds. Thank you both for your thoughts on todays markets here. 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Theres some facts about seaworld wed like you to know. We dont collect killer whales from the wild. And havent for 35 years. With the hightest standard of animal care in the world, our whales are healthy. Theyre thriving. I wouldnt work here if they werent. And Government Research shows they live just as long as whales in the wild. Caring for these whales, we have a great responsibility to get that right. And we take it very seriously. Because we love them. And we know you love them too. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Constipated . Yea dulcolax tablets can cause cramps but not phillips. It has magnesium and works more naturally than stimulant laxatives. For gentle cramp free relief of occasional constipation that works mmm mmm live the regular life. 90 seconds left here. Bob pisani is with me. Look at this bob. This is todays alaska of the dow transports and of crude oil. You would think they would move in opposite directions. Look at how they track each other very carefully. Goldman sachs saying it sees oil down to 45 a barrel by october. And they thought the selloff in airlines was overdone. That put a bid under the transports at that time today and they track pretty evenly here. Its pretty remarkable. I think the amazing thing is what happened yesterday with the airlines highlights the fact that a lot of people are hiding out in certain areas where they anticipate business is going to be fairly good. Biotech is another area with a lot of small cap and mid cap names. These are not huge companies. So you have a lot of people just sort of sitting there waiting for them to move up and then you have certain problems here. By the way, best buy is very interesting because it indicates our online buying habits. People will go to stores and buy phones appliances televisions, but they are not going to buy tablets or computers or games anymore. Best buy really was completely lyly lyly bifurcated on those lines. Not so good in games or tablets. Very good. See you later. Bob pisani there. Stay tuned. A lot more earnings. Gap and hewlettpackard coming up with their latest Quarterly Report on the second hour of the closing bell. Welcome to the closing bell, everybody. Im kelly evans. It looks like weve got some new highs for the index. Lets see how we finished up the session on wall street today. The Dow Jones Industrial average needed a level of 18,312. Didnt quite get there. Were about 22 points below the high that was notched on may 19th. The s p 500 looks like were going out at a new high. Actually correct. A record close here. The nasdaq just shy a little bit more rare for the nasdaq which hasnt hit a closing high since april 24th. Not quite enough to get there, closing at 5090. Courtney reagan has the numbers. Gap is reporting its First Quarter results with earnings coming in at 56 cents, exactly in line with what analysts had been expecting. Gap reaffirming its range of 2. 75 to 2. 80. We already knew gaps revenue of 3. 66 billion for the quarter compared to analysts estimates of 3. 75 billion, we also already knew those comparable same store sales down 4 because remember gap does still report on a monthly basis for those comparables and the revenues. Kelly, back to you. All right, courtney. More retail earnings to come. But for right now, lets look at the gap reaction after hours and bring in todays panel. Joining me around the set is michael santoly from yahoo finance, and kevin oleary. Guy adami joining the fray. Guys not there quite yet. Let me turn mike to you. What do you make of the gap earnings . Shares are slightly higher after hours. Yes, slightly higher. The rule with rule tailers is it didnt have any visibility at all. This is not really a growth name. It got a little bit of a reprieve with the new ceo. The stocks really been for sale for over a month now. So it seems like you know taking a little bit apart in the outlook to firm up the stock a little bit. Not really a big surprise on any front. The big story still remains the record highs. Almost there in the dow and the nasdaq again. What do we make of this . Record highs with lack of conviction. Really on buying or selling. We were just talking about this all week with these fractional moves in either direction. The path of least resistance, though points to the upside. I would look for the action in m a. We came into another more than 10 billion deal with cvs this morning. At least if were not getting a straight picture on the Economic Data, you are getting signals like that. Given the expectations were pretty low. To keep this market churning. Kevin you like it . I do. I look at where else can i deploy capital . Youre an investor and getting 2 . And it looks from these numbers so deep into the quarters earnings now. We can look to 5 inherent growth in this calendar year. Things stay just relatively calm. That to me is a 7 return. I cant get the fixed income. I cant get it anywhere. You sound like rick santelli. Thats the feds fault. And you can blame yellen for that. A lot of people are bonding outside this country. The u. S. Has been an afterthought on global asset markets. Europes been the story, both bond and stock side. It also makes sense for the u. S. Market to hold in here. We have the holiday tomorrow. It seems like this market does nothing unless its grudging. Guy, you feel any differently about all that . I think everything you guys are saying is okay. Ill add a couple other things. Weve been talking about the weakness and transports for a while. That came to a kri schenn doe with the move in airlines. Couple that with the move in rails. That is somewhat concerning. What is good on the other side of the ledger is the fact that the russell, the iwm, held that level that we talked about numerous times on your show. Transports need to participate at some point. Otherwise were going to have an issue. The fact that the russell holds in there gives me some optimism on the upside. This transport one is interesting. Just to explain to people whats going on. We have the market at alltime highs. The transports, especially yesterday with the airline action at sixmonth lows. We asked people about this and its not often that this happens. It does tend to coincide with market tops. But you do have the airlines responding to some capacity issues. How much of a tell is that for example, about a bad economy. If anything it sounds like it bodes well about how they perceive customer demand. You heard doug parker the other night on jims show talking about the fact that theyre going to start adding capacity. Its not just the airlines kelly. Go back and listen to some of the things that Federal Express has said. Couple that with the fact that the railroads have been under significant pressure. If it was just the airlines for the reasons you cited, i would agree. But since november the transports have not participated in that so its not just a now phenomenon. Yeah. Mike, would you agree with that . I would agree with that although i would hesitate to say the transports in their behavior are telling us anything we dont already know. We knew about the oil crash. And we kind of know whats beginning on in terms of the dynamic with airlines. So im not that concerned from a very technical perspective. But its a narrow kind of rally. Not had universal participation. Its certainly more negative than positive. I just dont think you have to be that alarmed. For anybody wondering about the fundamentals is this market supported by fundamentals . What happens if the economy or the consumer is topping out . Its kind of pointed in every which direction. Retail earnings and sales. Its been a foggy picture of the u. S. Consumer. I had the kroger ceo on yesterday, asked him about it. He said youre still seeing a pretty bifurcated consumer. Doing well at the high end. Some strength at the low end. Nothing really going on in the middle. Thats going to be the biggest question about whether a lot is riding on this idea that the economy rebounds. Very weak First Quarter. And the view on wall street is that it still will. And that the earnings recovery will happen and the economy will pick up because thats what youre hearing. Hold that thought for just a moment. Hewlettpackard resolves are hitting the tape now. Hi, sue. Heres what we know. Hewlettpackard on its earnings has beaten. It came in at 87 Cents Per Share adjusted versus 85 cents, which was the estimate. In terms of the revenues though, it looks like a miss coming in at 25. 5 billion versus an estimate of 25. 64 billion. And also hewlettpackard issuing some guidance that is a little bit on the weak side for q3. Now, in addition to that there is a new Hp Enterprise company thats being created, and hp cfo will become the cfo of that new Hp Incorporated company. And in addition to that they are naming not only the new cfo, but also a new coo of that enterprise company. Dissynergies will come in at 400 million to 450 million due to that separation. Its a beat on earnings. Its a miss on revenues for hp. And there you can see the reaction in extended hours, a little bit to the upside there. Kelly, back to you. Thank you very much sue. We want to bring david faber in now for more context on these results. The street taking it pretty positively. Some more information in here about the splitup. Exactly, and my apologies for not being on time. Dont ever get stuck in a stairwell at 30 rock. You may be there for quite some time. But you heard, of course a lot of the headline numbers from sue. Lets drill down on a couple of things. The separation for this company is in the offing. They still say they are confident that they will complete the separation into hp ink, namely the personal Systems Group in printing, and Hp Enterprise, all the other businesses by lets call it november. And for the first time they gave us these dissynergies numbers, namely listen youve got a higher two of a lot of things. Two treasuries, two this. Frankly, that number is less than many people who followed the company closely had anticipated. That would be an annual number split between the two companies. But they also for the first time are starting to give us a sense for the cost savings that they see from the separation. And kelly, they point that towards about a billion dollars a year when fully realized. Now, its going to be a number of years before they fully realize those cost saves of as much as a billion dollars. Lets call it by 2018 2019. Nonetheless, theyre going to start to creep up enough to offset these socalled dissynergies that theyre seeing. The big overhang for this Company Continues to be the dollar. It was last quarter. It is once again this quarter. Down 7 overall in revenues. 2 in constant currency. Really impacting some of their businesses in terms of their price competition. For example, in printing where the japanese given the weakness in the yen have been able to be very strong competitors. So thats an overhang as well. Not bad in printing. Not bad in pcs in terms of market share gains. Although overall, things are not moving very well in pcs in terms of the growth or lack thereof with that business. And Industry Standard service was okay. David, we didnt hear how you got out of the stairwell. I went all the way down to the bottom floor. To the street. I just walked out on to the street finally. The elevators are not working here at 30 rock very effectively today. So i thought i would get here more quickly, but hey, we appreciate your effort. I was wondering if it was a cell phone thing. David faber thank you so much. Dont miss davids exclusive interview with meg whitman tomorrow, 9 00 a. M. On squawk on the street. Well leave it there for the time being. Guy, thank you. Were coming up with guy and fast money at 5 00. Theyre going to be talking to the ceo of shazam about whether they plan to go public. You dont want to miss that one. Gap the latest big retailer to release their results. But what are they saying about the state of the consumer and the economy . Well talk more about that. A california Auto Dealer Group suing true car for allegedly acting as an auto broker without a license. Well hear from true car in what is shaping up to be a bitter battle. Youre watching cnbc, first in business worldwide. Small businesses every day through programs like mission main street grants. Last years grant recipients are achieving amazing things. Carving a name for myself and creating local jobs. Creating more programs for these little bookworms. Bringing a taste of louisiana to the world. At chase, were proud to support our grant recipients and Small Businesses like yours. So you can take the next big step. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. Female announcer through memorial day at sleep train, get up to four years interestfree financing or save up to 400 on Simmons Beautyrest and sealy posturepedic. Even get four years interestfree financing on Serta Icomfort and tempurpedic. Plus, free same day delivery setup and removal of your old set. When brands compete, you save but this special financing offer ends memorial day at sleep train. Sleep train your ticket to a better nights sleep welcome back. Gap now just the latest retailer to report its earnings. Courtney reagan wrapping it up for us. We had a couple more including gap, but lets start there. Gaps earnings in line. Also reaffirming their Guidance Range for the year of 275 to 280. We knew previously that the First Quarter revenue was 3. 66 billion. That was lower than analysts had expected. The team retailer down sharply. I do want to point out its just a 200 million market cap stock. A larger than expected First Quarter loss of 56 cents that is a penny worse than analysts were looking for. Comp sales down 11 . Thats about half a percent worse than consensus. Q2 guidance also worse than expectations. A much different picture. Earnings of 1. 37. Also stronger than expected. 5 comp increase. Stronger than analysts were looking for. But the Second Quarter comps and Earnings Guidance a little bit light there. But theres a lot to choose from. The losers keep on losing. If youre investing if retail you really have to be a student of this game and be careful what youre putting your money in. I like exactly how you put that courtney. Stay right there, were going to talk a little bit more about it. Stacy, my point is simply this. Is this a market you can do your homework on and try to figure out whats happening . Its not like it was three years ago where all that mattered was what the fed signaled or whether greece was going to exit the eurozone. So who do you think are emerging as the clear winners here . This is really Company Specific here. Youre seeing obviously the teen space really get hurt. H m opened their biggest store in the world yesterday. Youre seeing the likes of tjx and ross stores continue to outperform the Consumer Shopping differently here. You can really start to drive a mack truck between the winners and the lose ersrs. Best buy just put a great quarter. I will never know how much to extrapolate. I wonder if you have any insight about exactly how were seeing what could we see about what people want to buy, the whole question of are we buying less just clothing buying it in a different way . Yeah. I mean youve really seen apparel just lose market share the last couple years. Not only has it been a bad fashion cycle. Retailers need to breathe some life into what theyre doing. But people are shopping differently. Theyre shopping on athleisure wear. Theyre dining out more. Look at the retail sales. And the higher consumer continues to spend on their home on appliances and big ticket items. You know what they say. A lot of guys, maybe us girl tooss, too, just tend to wear the same thing. I remember the day that gap would get slaughtered. It doesnt happen now. Could it be that the Energy Dividend hasnt cycled through the consumer yet . I was saying look we had a horrible q1 weatherwise in the northeast. Thats huge for people like gap. It takes a couple of quarters for people to take the money theyre saving at the gas pump and redeploy it. These stocks do not get punished. You know, im glad you brought up gas prices because so far, i mean gas prices started to come down in november. Weve seen no flowthrough. And imagine how bad the numbers would be if we didnt have that gas giveback to the consumer. So i mean look at walmarts numbers. The comp was 1 . And by the way, these are against really really easy comparisons from last year. You expected that we just havent seen the benefit here. Do you think investors are giving some of these names the benefit of the doubt . I think interestingly on that gas price point, i think we are seeing some benefit. But again, its not in the traditional Apparel Retail players. We saw some of the movement in the governments retail sales number. In restaurants, bars. Those experiences which also hearken back to the structural change and what were choosing to spend our money on. So i think thats going to be a very interesting thing for consumers. And your other point about folks perhaps not buying what they used to or changing where theyre buying it i still think the dichotomy is so interesting, with many people, millennials or perhaps even baby boomers buying from h m or maybe forever 21, but also pairing it with a very expensive handbag. So you have the lower Price Players doing well as well as those higher end brands the brands that really stand out. But the guys in the middle are going to continue to fight for market share, especially as these structural changes just sort of exacerbate as we go into the future. So in this confusing consumer environment, i keep hearing more and more about this idea that a lot of these retailers could spin off some of their real estate into wreaths. Most of these retailers lease or storage. Theres definitely some value to be unlocked there. And despite the fact that they missed their quarter and they have seven major initiatives this year. So that raises execution risk. The stock is up. Because that real estate play is out there. Theyve got very valuable real estate. Before we go, quick question to both you and stacy. Who are we watching for now as we move through the rest of the retail reporting season . Were almost at the tail end, but foot locker is still to report. Thats a big one too for that athleisure trend. It also gives us an indication of whats going on with those brands. The nikes, the under armours of the world. We also have some executive transition. Thats one that well be watching friday morning. And weve got abercrombie next week coming up. So i spend a lot of time in europe and those comps have not turned the corner. And of course handbag market has decelerated. But i think its really in there in terms of michael kors. Okay, well wait. Well see. Mcdonalds has been serving up some big sales for a while now, but do the investors think the new ceo has cooked up profits at the fastfood giant . Were going to talk about that next. Also, Drexel University has a program paying students to build a business. One was so successful it landed a deal on shark tank. But it wasnt with our kevin oleary. Were going to hear from that student and find out why kevin didnt bite coming up. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. 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 . New mcdonalds Ceo Steve Easterbrook making his debut at the annual shareholder meeting, where investors are hungry for a turnaround. Kate rogers has been monitoring the events and joins us now with those highlights. At new Ceo Steve Easterbrooks first shareholder meeting, the biggest headline was a win for those shareholders in the passage of a proxy access bylaw. This allows those who have held at least 3 of mcdonalds stock for three years to nominate director candidates on Company Proxy materials, making the board more accountable to shareholders. The mcdonalds board did not want this to pass yet it did with 61 of the vote. But for the second day in a row, hundreds of protesters demonstrated outside of the shareholder meeting. The group is continuing to push for higher wages in the fastfood industry. Mcdonalds did announce in april it would be raising wages to an average of 10 an hour at its corporate owned locations by the end of 2016 but the move does not impact its franchise locations, which are the majority of its stores nationwide. Saying mcdonalds raised wages because thats what they could control as independent owner operators make their own decisions. The new ceo touted paid time off and high school degrees. Back over to you, kelly. All right, kate. Thank you for now. Lets talk about just what mcdonalds is doing right and what its doing wrong. Joining us now, josh mason. Economics professor at jon jay college, and the president of lake View Asset Management and professor at Seton Hall University and also mcdonalds shareholder. You guys wear a lot of hats. Scott, let me start with you as the shareholder. Are you seeing what you want . Not really. This company has a lot that it needs to do. I dont think that really theyre addressing yet. The big problem i have is that all these changes are coming from people who have been at the company for a long time. They really need to bring fresh thinking from outside the company into the fold. There are so many different aspects. What theyre doing with capital return. The store plans. The raising wages. The move to change its menu. What is it that you like and dont like about what theyre doing here . Well, what i dont like is that theyre not thinking outside of the box. Mcdonalds needs to cultivate some new concept that it can expand. Look they did it with chipotle and handed the keys to Chipotle Mexican Grill to shareholders and other people. A company that we own that we think is right for such an acquisition would be krispy kreme doughnuts. Josh, the merits of mcdonalds and doughnuts aside, what do you think theyre doing right . The bigger issue here is the change Many American finance from a system of getting money into productive enterprises, to a system for getting money out of enterprise. You look at mcdonalds. This is a company that earned 5. 5 billion last year and paid out almost 6. 5 billion to shareholders. Let me just jump in. Because critics would say that mcdonalds is not necessarily being productive with this capital. So they might as well return it to shareholders. Do you disagree . If you want to rebuild the business, you need to invest in the business. Youre not going to make the business succeed to the tune of a billion dollars out the door for shareholders. Thats bad news for businesses that want the business to succeed. The people who want to be paid more need to see this business successful. Its bad news for franchise owners who are putting their life savings, sometimes putting a lot of hard work on the assumption that this is going to be a successful business. That mcdonalds, the corporation, is going to do its part to build it. If every dollar puts in just goes out the other door to people like scott, it doesnt seem very wise. Kevin oleary . I dont want an expanded cap ex program at all. The reason i own that stock is the succulent dividend payout. Its a hamburger. What i want is to take the existing budget get the right people in place to make a fresher burger. Dont even think about dropping that dividend. I would dump that stock so fast and so would a lot of other investors. That i dont like as an idea. I think what we saw at the meeting here is a lot of Institutional Investors think the pendulum swing too far in that direction. A company thats focused too much on payoffs to shareholders and not focused enough. You want him to buy krispy kreme . I hate that. Thats just deep fried bread. The whole trend now is we need healthier options, so 18yearolds that i know in my family go back to mcdonalds. Theyre going elsewhere because they care about what they put in their bodies. I dont. They can figure that out. They have the distribution. Theyve got the brand. Dont cut the dividend. I dont want stock buybacks. Scott, you were trying to get in there . I love the stock for the dividend. We own it. I dont think that mcdonalds as a brand can bring unhealthier options and attract people. I also dont think we stopped over on our way here. We got a sweet tea on the dollar menu. How much are they going to make by selling more things off the dollar menu . Not much. I think they need to come up with a concept which can compete against the shake shacks the innout burgers. All of these new higher end fresher concepts. And doing it with the golden arches over a restaurant is not going to do it. They need a fresh concept they can roll out. They have the sirloin. I think the question here in time how much time do you give the new ceo to do this to see if menu simplification can turn a mark cap of like 100 billion around . Well, if they want to reinvest in the business by coming up with new concepts then theyll need some time to incubate that. I will give them some time. If all theyre going to do is take the current menu and tinker with it and maybe change the fat content of foods and change how much salt theyre putting on the fries, thats just not going to do it. You might as well just get rid of them. Im hoping they can take a fresher look at everything. In the meantime allow the cash they have from their franchise business and from the real estate to help feed growth in the future. Josh last word to you. You know the other thing we saw are these workers demanding higher wages. The truth is you can pay people higher wages and benefit from that in terms of greater loyalty, reduced turnover. But you have to be committed to people. You cant do that with the mindset that says were focused on what happened six months or the next year. You need to be focused on building this in ongoing ways. Fair point. Well leave it right there. Thank you both for coming. Appreciate it. Josh mason on mcdonalds this afternoon. And its time now for a cnbc news update with sue herera. Hi, sue. Heres whats happening at this hour. Reports filed with federal regulators show that plains all american has reported 199 accidents and being subjected to 22 Enforcement Actions since 2006. The Company Operates more than 6,000 miles of hazardous liquid pipelines in at least 20 states. Two people were killed in a suicide bombing attack in libya, isis claiming responsibility for that attack which targeted forces whose troops are allied with a selfdeclared government controlling tripoli and western libya. The florida man who landed a gyrocopter on the u. S. Capitol lawn pleaded not guilty in court today. 61yearold doug hughes was indicted on six charges. He could face nine and a half years in prison if convicted. Afterwards, he said he would never do it again. I bet. North Carolina Governor Pat Mccrory signing a bill into law that will ban all teenagers from using tanning beds in the state. Doctors say there is a direct link between indoor tanning and increased risk for skin cancer. And that is your cnbc news update this hour. Back to you. It feels like weve known about that one for a while. Absolutely. Seeing some movement now finally. True car being sued for allegedly operating as an auto broker without a license. Does the lawsuit have any merit and how will it impact against the company. Later, you wont believe how much money banks are now raking in from Overdraft Fees. The eyepopping stats coming up on the closing bell. 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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. True car, the online car shopping company, had a lawsuit filed yesterday by the california new car dealers association. The suit stating that crew car is breaking state laws regarding dealer licensing and Consumer Protection by acting as a car dealer without the proper registration. With us now from both sides of this case we have the executive Vice President of truecar, and brian moss president of the california new car dealers association. Welcome to you both. Brian, why dont we begin with you. Are you saying that true car is in drek vieirect violation of the law . In our view true car should be licensed as a dealer and auto broker in california based on their business activities. And the lawsuit merely asks the court to declare that thats the case. Okay. Brian. Why not be licensed then . Johnny im sorry. Because were not a broker or a dealer. The statutes in california are very clear about what it takes to be a broker or a dealer. We dont do those things. The lawsuit thats been filed is wrong both factually and legally. We dont sell cars. Our dealers do. We dont set prices. Our dealers do. We dont offer guaranteed savings. Our dealers do. We are the Communications Platform through which our dealers communicate with users as a new way of doing business. I understand a lot of dealers would prefer this new way not come about, but it is. 50 of the members of the trade association have filed this lawsuit do business with every day. They are our partners. So brian whats the issue . The issue is respectfully we disagree with mr. Stevenson and truecar. Weve done extensive legal analysis. Weve distributed memoranda on two occasions, in 2012 and 2014. Had outside council look at it. The Litigation Firm we hired to represent us in this case and all have agreed that based on true cars activity theyre acting as a broker. Theyre arranging to put dealers and buyers together for negotiated price guaranteed thats brokering, theyre not complying with California Law and we want the court to confirm that thats true. Im just bringing kevin oleary in here. I say to myself this new crew car platform provides an eloquent way of price discovery in a market thats antiquated in terms of many buyers preferences. I have no problem with litigation. I get it. If youre changing someones Business Model, they have the right to pour boiling water on you and test it in the courts and they are going to do it. Particularly in california. I would like this market to clear itself. If you really have a service that works, youll grow youll survive litigation and people will use your service. And i say to brian out there, i appreciate what youre doing. I tell my kids when i teach now and undergrads if you have trouble with your competitor sue them. Slow them down. But the courts dont just give you merit for nothing. Youve got to prove your case. Thats whats happening here is it not . Its exactly whats happening. I made my living for 30 years as a trial lawyer so i believe in lawsuits, too. And the truth will come out. We are all about truth and transparency so well resolve these issues. This is a lawsuit not filed by consumers. Not filed by dealers. And most importantly, not filed by the very regulators who are charged to enforce the laws that are at issue in this lawsuit. Its filed by trade associations. It reps a lot of hard working, honest people that would prefer this new way of doing business not come about. But were not going anywhere. And as you say, the market will decide. What about other states and what happens if california does decide you have to be licensed as a brokered dealer . Well whatever the Court Decides well comply with. If we needed to tweak our Business Model for some reason we would do that. We dont believe it will happen. These issues have surfaced twice before. In 2012, we addressed them directly with dealers, with regulators, and with all the constituencies with which we do business. They were raised in 2014. Sitting down with the regulators in california, walking through our Business Model, walking through these issues. Do you think youre wasting money on continuing to press true car in this matter . No we dont. We took this extraordinary step because we believe that the law is clear. Its a very broadly drafted statute. Its a couple protection statute. Consumers righthand turn getting the transparency of knowing that dealers are paying truecar 299 or 399 per transaction. That needs to be disclosed and thats what the lawsuit is about. A lot of folks are watching this to one to see which way it goes. Johnny stevenson and brian mass. Thank you for having us. If youve been hit with Overdraft Fees recently youre not alone. Banks are collecting big bucks from customers. You could graduate with a business degree or a successful business. Drexel university in philly is one of the schools supporting entrepreneurial students with money and mentors. Well be joined by a soontobe drexel granddaughter whos already making money with an app he developed. Thats coming up on closing bell. 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. If youve been hit with an Overdraft Fee lately you are not alone. Jeff cox has the numbers. If getting overdraft protection on your bank account sounds like a great idea thats because it is. For your bank. In fact, banks are raking in money from Overdraft Fees. The first three months of this year alone, banks collected more than 2. 5 billion in Overdraft Fees from their customers. You want to put even a finer point on that the top three banks, jp morgan wells fargo, and bank of america collected more than 1. 1 billion in fees from their clients. This is the first time that banks have actually broken out these numbers as a source of revenue. But its very interesting to see how much theyre getting 34 at a time. This also reflects a trend that banks are looking for other forms of revenue. One of those forms, definitely bank Overdraft Fees. It will be interesting to see if this trend continues as a major fee generator for u. S. Banks. Thats our jeff cox. Whats interesting to me about this is weve known it for a number of years. Its persistent is what i find surprising. Everybody knows these things exist. The onus is on you as a couple to know that youre getting into an overdraft situation. Bank of america, for example i have a Checking Account there. If my balance drops below 25, it emails my mobile device and says hey we want you to know that youre running low on cash. Please top it up. I know that because its my daughters account. I was going to ask how much youre playing it close i say to her, listen. If you get dinged with an Overdraft Fee, youre paying for it yourself. That motivates her. I see nothing wrong with this. Im a shareholder of these banks. Please leave them alone. Let them make some money. This is getting ridiculous. I think the lesson is its a back door credit outlet. Its basically people able to skate and play a little bit where they otherwise wouldnt be able to. Typically what we see is the average person who goes paycheck to paycheck is going to basically take that escape path they dont think about the fee. This is something the new Consumer Financial Protection Bureau is actually supposed to be going after. People who arent even aware that theyre getting into these overdraft situations. I wonder as the whole idea of thin tech which youre hearing a lot about. These new alternatives that are appealing to millennials instead of banking. Instead of the traditional route. Can deal with these sort of problems. Because it is all done digitally. Or going back to the point that you were making, which is if theres a real need for somebody who will let you float close to the line what new ways might that entity look . Somebody get upset with your bank. You really cant go anywhere because theres a cost of capital. If youre lending somebody money, you have a risk thats not repaid it also has cost. I think our infrastructure in America Today is the best its ever been after being overregulated now for basically eight years. I bought a japanese knife yesterday because im going to make escargot and i wanted a very special blade. Love the stuff. I didnt have enough dollars in my paypal account. I had five options in which to pay. All of them were going to cost me money. How much was the knife . A lot. A lot. Weve got to go. But listen if the Banking Industry moved towards a were just going to charge everybody for a Checking Account. Would that be a better move . I think it would be less palatable to consumers. When you cant pay interest and earn interest its an unusual world. Resorting obviously to charging fees because you cant do it the traditional way. Exactly. Maybe that will start to change. Leave the banks alone, kelly. I know what youre thinking. Thousands of College Students are graduating this month with a degree in hand but at one school you can graduate with an operating business as well. Drexel students have an opportunity to build real business as part of their studies. Up next, well talk to one student who went from the classroom to the boardroom to shark tank. Well find out what grade kevin oleary gave this student entrepreneur. There is an ancient rhythm. [ ] that flows through all things. Through rocky spires. [ ] and oceans swell. [ ] the endless. Stillness of green. [ ] and in the restless depths of human hearts. [ ] the voice of the wild within. Drexel university is admitting the next generation of entrepreneurs with its entrepreneurship coop program. Students who qualify get 15 grand and extensive mentorship over the next six months to develop their company. Joining us is the programs dean with drexel student Christopher Gray who is in the program and the success of his app company even landed him on shark tank. A warm welcome to you both. Tell us how successful has this app been . Its been really great for shark tank. We had a lot of success and since shark tank weve had cities get the output of students and even dealt with obamas my brothers keeper initiative. Well bring in one of the sharks in just a moment and tell us what this app is and how it works. Yeah. So its a mobiling web app that instantly matches High School Students with current College Students and graduate students that they instantly qualify for. And students are matched with hundreds of different Financial Aid opportunities. Dean what did you think of this idea and how critical is this program for chris success . Chris had a great idea found a problem and worked his way to solve it, and so our program, we were just so pleased at the school of entrepreneurship at drexel to be able to support him and both financially and with incubation space and with mentors and hes been a Great Success and inspiration to other students, and were looking forward to many more. You know kevin oleary over here apparently didnt bite when this app came to shark tank. Why not . Not sure that i didnt bite. Ill Say Something about christopher that i think everyone can learn from, including Business Leaders outside of shark tank. He was extremely articulate in explaining the merits of his business plan. He was able to explain in 60 seconds what this did. Every shark got it right away. Think theres a lot of merit and understanding that no matter who you are, doing so caused a feeding frenzy in the shark tank because not only is this on trend as a socially conscious idea, i could see the probability of it making money one day if you actually turned it on to be a very profitable business. I looked at it that way and quickly the valuation i would have paid for it went way past what i would do and im very disciplined about it. I think he was masterful. People should watch his pitch before they go on shark tank this year. Chris, what do you think about that . Thank you im flattered. I deserve it. I wouldnt give it to you if you didnt. Thank you. How do you duplicate the success and tell us what kind of other apps have come out of this program so far and if its going to get any bigger for you guys at drexel. Oh, its absolutely going to get bigger. Theres such a surge of interest and entrepreneurship across the university, and thats why Drexel University created the school. We wanted to capture that passion in students, that energy, just like christopher has. We have many students applying for the entrepreneurship coop where they work six months for their own company, and i think christopher may agree that greatly helped his success in getting the app started. Chris are you talking to any other colleges and universities about doing it . Yes, yes. Its been its definitely been a good experience. I had six months through entrepreneurship coop where i got to work on my university full time. The university gave me 15,000 and office space and actually one i was able to connect to shark tank by drexel so it was actually a really really good experience and played a huge role in the apps success and its continuing to do so. Do you get a cut of the successful apps . Do you take a stake in the business . No, no drexel doesnt take any equity in these businesses. Our reward is the students who go out and spur employment and create new knowledge. Thats the best thing for Drexel University. We congratulate you chris on your success and dean decarolis on building the program. Thanks much. Thanks guy. If you didnt feel like paying 200 200 in the Mayweather Pacquiao fight a couple weeks ago youre in luck because people were Live Streaming the bout from their smartphones. Up next nbc sports president dick even sol giving his take on the app. When we come back. Here at td ameritrade, theyre always working. Yup, were constantly making thinkorswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Last night some of the biggest names in sports gathered for the business sports journal award in manhattan. Among the biggest issues in the sports industry, the ever changing media landscape. We asked some of the power place about the Live Streaming apps and heres what nbc sports dick even sol had to say. Its just wrong. To me its robbery, and i know to the young i probably sound like an old fossil but to me its theft. Wow. Its wrong. Its robbery. Its theft, guys. I can see somebody who has to pay a lot of money for sports rights believing that thats theft, right . They paid a lot of money to broadcast it. Doesnt he have a point . He does. Youre at that point deciding your a broadcaster, relaying in some form a signal that somebody else paid for. My whole thing with this its stupid because if you really want to watch the fight youre not going to turn youre not going to tune into periscope. You dont get a very clear picture, like youre there. Its a much better experience. But then the principle is as long as you have a lousy screen and its really small its okay . I think the genie is out of the bottle on this one. Heres what happened in vegas. Periscope feeds all day long. You could set up dozens them. And youre the biggest periscope user. And it whetted my appetite for the fight and it ended up being a really boring spectacle regardless of the screen you want on. I will not pay anything on a rematch, zero. Thats what those guys did to themselves. We know area was defeated in the supreme court. Should people be allowed to rebroadcast even with interior technology stuff that that everybody else is paying for . I dont know how youre going to regulate it. What are you going to do . Put everybody who holds up their iphone, not knowing whether its periscoping or you let them take pictures you let them do videos. Can see in a sports venue. I say lets throw all these kids in jail for life. Thats the answer. Well leave it right there on that sardonic note. Fast money is coming up in a few moments. Thank you, guys. Melissa lee is on tap. What do you hear when you hear a song and cant identify it . You hold up your phone and you shazam it. Thats right. Weve got the ceo of shazam on tap. Straight over to you guys. Thanks. Fast money starts right now. Live from the Nasdaq Market size overlooking new york citys times square tim seymour brian kelly, Karen Fishman and guy adaem s. Apple set to jump another 50 . Thats what Morgan Stanley said today. Well explain why they could be right and how you can profit. Plus shopify shares soaring in its debut and we have the ceo of what could be the next huge ipo and heres a hint. The company is on your iphone and you use it at least once a week. Hmm. Lets start with the biggest story this hour. Hewlettpackard moving higher in the afterhours session after reporting a mixed quarter. Beat on the bottom line and missed on the