Watching apple. Again. The stock has not closed above 500 a share since january. It has a real shot today. Take a look. It is the why the stock that is surging that has our attention. Carl icahns tweet yesterday has so far netted him about 70 billion on his apple investment. So should we expect more of the highly publicized social media announcements . Is that good or fair for the free market . 70 billion, bill he bought a ton of apple, and is making a lot of money right now on that. Also, awaiting another briefing on the air tragedy involving the u. P. S. Cargo plane outside of birmingham, alabama, crashed first thing this morning. Sadly, both crew members died in that accident. And now were awaiting news on why it happened. Well have the very latest on that. Phil is monitoring that for us, coming up in a few minutes here. A tough story there. Lets look at the market as we approach the final hour. As the bell sounds in about an hour. The dow is down 105 point, just shy really of the low of the afternoon. Nonetheless, triple digits in the downside. Twothirds of 1 . 15,345. Last trade of the blue chip average. Nasdaq, similar chart. A steady decline for the last couple of hours, down about 9 points,. 25 at 3,675. Check the s p 500, at a twoweek low now, the stand poors and a decline there of about 7 points. Lets talk about todays Market Action and, in fact, whats going on this month now that the dow is negative for august. Joining us in the closing bell exchange, jeff from lpl financial, Adam Thurgood from high tower and our own rick santelli. Jeff, do you think theyll begin tapering in september . I do. I know that its a controversial talking point here. Listen, weve seen the data come in. Weve seen the retail sales numbers, the ism numbers, the jobless claims. All of this suggests the economy with withstand the tapering. Look at what the bond market is telling us. When qe 1 and qe 2 ended, bond yields fell. This time theyve gone up and stabilized. That tells you we are ready for this time a Successful End to qe. I think thats whats priced in. Yeah, its interesting, because you still have unemployment at, what, 7. 4 . And the fed has talked about 6. 5 . Adam, how much of this is the fed worrying, anticipation over the possibility of tapering beginning sooner rather than later . And how much of it is just a slow august, volume on the light side, take advantage of the gains weve seen year to date . Well, i certainly think the markets worried about tapering. The fed is artificially supported asset prices, and when that support is removed, you could see a correction. Its quite possible, if not probable. But i agree that if the fed is fulling back on qe, that is indicative of a strong economy, which is boding well for the future direction of stock prices. This is a time horizon issue, if you have a shortterm traders mentality, you have cause for concern. But if you have a longer term, three to fiveyear, tenyearplus time horizon, its quite positive what the fed is about to do. You know, rick santelli, the feds james bullard, pointed to the Producer Price index this morning. He says, you know, eventually well see inflation because of the easing money policy, but were not seeing that now. Whats your guys view in chicago of the inflation picture right now . They call it the draino trade. Theres a clog in the transmission pipes in terms of the velocity of money. And im sure that the fed has a dream every night that it unclogs. And all of the money on the sidelines actually turns into productive capital within the economy. But along with that good dream comes the nightmare, because once that happens, id be real hardpressed not to think that the inflation doesnt hit. So down here, its more a story that they can take all the flack theyre getting from people that dont see it, but its a matter of when, not if. And one other point. When it comes to what the stocks are doing and everything, all roads lead to taper, i say a couple of the avenues need to aim towards europe. I think that europe is going to siphon off what has been a unilateral equity game, as after six quarters of negative gdp, they turn positive. Whether it proves to have sustainability or not or affect the structural issues of unemployment, i cant answer. But investors just look at the cax and dax over the last four weeks, starting to siphon a little interest that used to go into our stock market. Right. Definitely. Europe is a buy, according to many of our guests recently, thats for sure. Ernie williams, how do you want to allocate capital . Go for bargains in europe, or new money into a market you know has consistent Earnings Growth for the s p 500, even though valuations perhaps are higher than you thought . Actually, were waiting for burnny to show up here. All right. Anybody want to take that question . You want to buy europe here or no . Ill jump in no, i dont want to buy europe. Europe has a lot of problems. The contraction may be behind us. But growth is a different story. Getting back to the flatline is one thing. Trying to put some growth in place, Southern Europe remains in recession. Youve still got a Banking System over there thats not creating credit. Banks are tightening lending standards in europe. We just heard about that a couple of weeks ago. Here, u. S. Banks are lowering lending standards. The opposite is true in europe. So the Consumer Spending bounce you saw contribute to positive gdp growth in q2, dont expect it to last. The credit isnt there. Exports will suffer here, now that the euro has lifted. That will be a drag on growth, as well. Keep the money close to home. Buy the companies doing the share buybacks here in the u. S. Thats where you want to put your money. Okay. So you dont buy the european bounce. Adam, what about you . Were big fans of the u. S. Market, specifically, because we have a strong dollar view. And we really like technology. They have the best Balance Sheets in the business, which protects you from some economic malaise that could come. The products are becoming more necessity goods as our society evolves, and they havent participated in the rally to the extent that the rest of the market has. So theres some p e expansion that could occur there, which could push prices dramatically higher. All right, gentlemen, thank you all. Were sorry that Bernie Williams couldnt make it with us today. I dont think its true hes headed back to centerfield for the yankees, but well find out. Thank you for joining us. Thanks, well see you soon. Meanwhile, the august drip turning into more of a leak today. Bob pisani, what is in this market thats the driving forces here . Reporter yeah, maybe a little comment in the middle of the day, but thats besides the point. Theres a depressing pattern. Weve been moving straight down since the open since august 1st. There may be concerns, obviously, about the higher interest rates. It may not be that as its just going elsewhere. Rick referred to that. Weve been talking about it for days. Look at whats going on since august 1st with the overall markets, global markets. Brazil is back up. Mexico is back up. China is back up. Germany is back up. Money is going into europe and some emerging markets. And, look, when was the last time you saw the u. S. Lag like this, up 0. 1 for the month . Thats what i think is going on. In addition to the concerns about the higher interest rates. And china is sucking in some of the commodity names into them, as well, so steel stocks, coal stocks, copper, terrible performers in the first half of the year. Theyre all outperforming so far this month. One thing i do want to point out is one of the great momentum stocks really broke down today. This has been beloved by investors, korea does l. E. D. Chips, the bottom line is, earnings were fair, not great. And the guidance was just a little below expectations. You cant do that when youre a momentum stock. This is one of the big momentum plays out there. This is a momentum stock. Four great quarters and then an eh quarter, the stock doubles, no volume on down days, or side days. And the p e is twice the s p 500. Thats the definition of a momentum stock. And when you do that, you cant have inline results, guys. You cant lower the guidance, even one penny. Thats what happens in momentum plays like that. Unfortunate day for cree. Back to you. All right, thank you very much. Another story were following, especially late this afternoon, you saw it live on cnbc, the government formally filing criminal charges against two former j. P. Morgan employees at the socalled london whale trading losses. Kate has the update. Reporter u. S. Attorney preet announced charges against javier martin, a fairly senior manager in the European Branch of the chief investment office, and also julian grout, a lowerlevel trader in that office. The two men stand accused on four different criminal charges of essentially mismarking positions in j. P. Morgans trading books to minimize losses that led to an earnings restatement to the tune of 660 million. And down the road, losses to the Company Overall of about 6 billion or more. In a press conference that ended just a little while ago, u. S. Attorney tried to cast the evidence that wall streets culture has run amok. Lets listen to what he said. We happen to live in a time where not Just One Bank but one trader within one bank can do catastrophic economic harm, in practically the blink of an eye. Regulators need to be more vigilant. And as i have been saying for some years now, companies themselves need to pay closer attention to the cultures that they create. It sounds like a little bit of a rallying cry, maria and bill, to his fellow prosecutors to potentially get tougher on m miscreants on wall street and the cultures theyre looking at. Certainly because the government has become harder and more aggressive in terms of some of the prosecutions. You wonder if, you know, this is the end of this issue with just these two individuals. Reporter well. Probably not, right . Reporter probably not. He made the point that the investigation is still over. During one of the q a, the focal point after, have the guys been arrested, and the answer is not yet. Everybody is wondering whats next. Will there be any charges against ina drew, or the gentlemen who worked just below her, but above the folks were talking about . So far, im hearing nothing to that effect, that those are two individuals under criminal investigation. But you have to assume that prosecutors are looking far and wide, and there are a lot of recordings here they can work with. A lot theres an internal report done, senate report. So plenty of evidence to look at. All right, thanks, katement. Reporter thank you. Its interesting, throughout all of this, bill, the banks have been a leadership. Today, theyre mixed to lower. Yes, they are. And the market heading lower, down 100 points on the dow as we head toward the close. About 50 minutes left in the trading. When we come back, the heart of the u. S. Air american controversy is this question has the massive consolidation of the Airline Industry been a good thing or bad thing for travelers . We know investors want the merger if you look at stocks. Two industry insiders debate that story when we come back. Then, woody allen winning over audiences and critics, but one ceo isnt happy with the film. He said woody allen got something very, very wrong about his company. Hes here to talk about that. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. Welcome back. We have breaking news on the fed now. Steve liesman on the telephone for us. Steve, what do you know . Reporter st. Louis Federal Reserve president jim board saying the fmoc needs to see more data in the second half of 2013 before tapering. He becomes the second fed president to make those kinds of remarks, that cast doubt on whether or not theyre willing to ready the taper the quantitative easing in september. Hes also saying that the fed should hold press conferences after every meeting. This way, decisions can be made at any one of the meetings, rather than only those four a year that have press conferences. Just a little background here. Bullard has said this before. Hes making the point of saying it again now on the heels of Dennis Lockhart from atlanta making the comments yesterday. Another comment he makes is that the fed is wrong here to think that the market can make a can make a difference between when it starts to taper and when its going to hike rates. This is really calling into question an essential cannon of fed chairman ben bernanke whos really gone out there pounding this idea that the fed is on a twotrack system with its two important tools raising rates and quantitative easing. Hes saying the market is not going to make that difference. And the implication of that is you better be ready for the market to tighten policy when you tart to taper. Another important thing, saying fmoc and private sector forecasts have been too high. Finally, this is worth noting, especially after todays flat Producer Price index, it could decrease the inflation, another thing that suggests bullard, who, by the way, is a voter, and dissented earlier, he is not ready to taper. And im not sure when hell be ready to taper, maria. All right, steve, thank you very much. This is very interesting. And its what you and i have been saying, we dont believe the economy is in the place that would warrant at least on the benchmarks that the fed has already set for themselves. Employment unemployment of 6. 5 and inflation target of 2 . Nowhere near any of that. Now, bullard is a known dove. So were not totally surprised by the comments. No. It does add some weight to the notion that they may have to wait. Hes also a voting member, which is also critical. So he votes, and we have a market thats actually traded better, as steve was talking here. The dow was down 134 points at the low. Were now down just about 80 points. Its come back a little bit. From my standpoint, it seems extraordinary. What, three weeks away, four weeks away from the next fed meeting, september 17th. Four weeks away. The only major number youll get is the employment report, okay . Unless theyve already baked it in the cake and already said were going to start the process there no matter where. Hmm. I dont know that theyll do that. Yeah. And the bullard comments underline that sentiment. The other thing, remember, we talk about this, whether or not ben bernanke will wait and leave it for his successor and not start a process that his successor may not want. You know . My bet is december. My bet is december is the beginning of tapering. Well see. Look, were also following the airline story. Shares of u. S. Airways and amr grounded for the secondstraight day after the governments move to block this merger. At the end of the day, are mergers in this industry good or bad . We have charlie of the Consumer Travel alliance. He says consolidation in the industry has already hurt consumers. Former continental ceo and cnbc contributor Gordon Bethune says the dojs decision makes no sense, simply saying its bad for consumers. He says thats not enough. But our own phil lebeau has right now he got off a Conference Call with the airlines, and what are they saying right now, phil, before we get reporter bill, the Conference Call is going on right now. It is with the legal advisors for u. S. Air and American Airlines, and essentially, theyre blasting the doj saying that they plan to go to court to prove that the doj, in their words, are wrong, and they got this one dead wrong. According to the legal advisors, they will show in court that the governments contention that this merger will make things less competitive in the Airline Industry is wrong, in their opinion. You know, yesterday, when the government came out and said, we dont think this is competitive, they said that there is more than 1,000 routes that would be hurt if this merger were to go through. The advisors for u. S. Air and amr have come out on the call and said, listen, there are 12 routes and we will show there are only 12 routes where this would hurt competition. Were willing to make adjustments on those 12 routes. And then they go on to take one other issue with the government. The government saying, you dont need the two airlines to come together in order for them to survive. Right. The advisors are saying, thats true, you dont. But you cant have them be as competitive as they would be if they were to combine. Yeah, but essentially, this is u. S. Air and amr coming out and saying, lets go, lets go to court. But, gordon, weve talked about this in the past. Youve made the point that capacity needs to be taken out of the sky. In order to really see growth in the business and a better experience for folks. But you still think that the doj made the wrong call here. Well, what theyre doing is precluding american and u. S. Air from creating a Route Network thats competitive with the new united and delta. Size matters in the business, and offering consumers more connections and more destinations makes you competitive. I mean, its almost like dealing with a bipolar personality when the Justice Department approves delta northwest, continental united and turns right around without any basis and disapproves this deal. Its almost preposterous. Charlie, why are you against the merger . I mean, why do you say that a merger would be bad for consumers . Well, basically, what were going to see is were going to see competition cut for consumers across the united states. And when gordon goes on and he says that just because we merged delta and northwest, and we merged continental and united, we should do the same thing for american, hes forgetting one small issue. In those days, the airlines were hemorrhaging cash. They were losing hundreds of millions of dollars a year. Today, the airlines are healthy. American is in bankruptcy. Making u. S. Airways is making more money than theyve ever made in their history. And even the ceo of American Airlines said that during