Transcripts For CNBC Closing Bell 20150521 : vimarsana.com

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. 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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 cr