Touting its first augmented reality superstar, the dancing hot dog. Is ar the future for snapchat . 14 million in market value. Meantime lets get to wall streets Research Prices well have the details on jpmorgans move to take market share ahead. Only going to charge 10,000. Could be a race to the bottom Retail Stocks get crushed, bill miller iv is making a big bet on shopping malls. Well join us to discuss whats behind that move we do start with north korea and the latest developments about the looming threat against the u. S. Reporter we could hear from the president momentarily on the latest regarding north korea theres an event set to begin at president s Bedminster Golf Club it could be on fork force workf initiatives. He upped the ante this morning he said the u. S. Military response is locked and loaded and to that end he retweeted photos posted by u. S. Pacific command of air force bombers at the ready in guam. The u. S. Territory about 2,000 miles due south of north korea that it has threatened to target, basically signalling should the u. S. Be threatened again the u. S. Military response is at bay. Guams department of Civil Defense issuing an emergency fact sheet for residents on how to prepare saying things like lay low to the ground, dont look at the fireball which could be blinding. Later this afternoon the president will be briefed by secretary of state Rex Tillerson and u. N. Ambassador nikki haley who was instrumentsal in implementing the onerous new economic sanctions that were approved for north korea just a week ago at that u. N. Security council meeting. If we do hear from the president in a few minutes time well bring that to you and any latest on the situation thank you very much well be listening for all that. For more on how north korea is able to fund production of sophisticated weapons and its Nuclear Program lets send it to michelle carusocabrera. Its expensive. North korea pays for it by exporting commodity, weapons, slave labor and extremely large statues. We know this because of this investigators who work for the u. N. Put out a large report every year on north koreas progress on Nuclear Weapons and whether countries are imposing the sanctions imposed by the u. N. Sale of coal and minerals to north korea are very wellknown. Arm sales. One of many examples, north korea sold automatic pistols and assault weapons and antipersonal mines to the congo. Take a look at this photo. Look closely 30,000 rocket propelled grenades were seized from a ship in the u. S. Canal under the crates how does north korea do it they have a Company Called global communications. It makes military equipment. Company advertising on the internet labor. One example. This letter shows north Korean Construction Company build agnew military headquarters using north korean labor also build enormous socialist style statues. This is in senegal you can see how tiny the flag is u. N. Sanctions were imposed on north korea statues back in 2016 so in theory shouldnt bring in that much money. Thats what im confused about. I thought the whole point of the sanctions is to keep this thing from happening another point is that a lot of the countries dont abide by them a lot of letters were cents to various leaders from the u. N. To say hey we saw this move through your port. How come you guys didnt do anything about it. On china in particular, comes up a lot in the report more than 300 times. A lost of Front Companies there. Theres lack of enforcements 312 chinese references in 326 page report, for example china has more recently gotten more serious so when it comes to the recent round of sanctions it could cut off a third of their income when it comes to seafood, iron ore and coal so we may see things change. It could if they are enforced the other part of this, obviously, this is the way the income is coming from, but clearly the regime over there is deploying most of it into its Weapons Program and its army its obviously not helping out necessarily the north korean citizen. No. Theres terrible poverty people are hungry. There are slave labor camp a Weapons Program is incredibly expense jennifer and this hard cash is diverted to that in order to fund it michele, thank you. Just want to mention as well, were expecting to hear from the president now at any moment hes speaking on workforce doefrmt and development. Lets get to phil lebeau a news alert on tesla. Reporter as expected and this is not a surprise we knew this was going to happen theres greater than expectsed demand for the debts offering from tesla. In fact the Company Originally hoping to raise 1. 5 billion. They will raise 1. 8 billion through the sale of these bonds. The yield coming in at 5. 25 so 5. 25 is where its at. Again greater than expected demand to nobodys surprise when it comes to the Debt Offering from tesla back to you. Yeah i mean thats the way high yield bond off erosierings go. Lets stick to these markets here well get our Closing Bell Exchange guys, thanks for being here. Kenny, interesting market kind of taking this in stride trying to sneak into the weekend in a calm way after a pretty big drop yesterday. Look what its done the market has backed off. We were higher now its almost flat you can feel a little bit of the nervousness although it feels to me that the market around the 50 Day Moving Average is where it found some buyers. Last time we broke now that being said i think everybody thinks in the end there will be a diplomatic solution versus the other. And so i think thats kind of what the market is telling you by the way, if its the other solution no matter what happens i think the markets around the world will rally on an event like that because the u. S. Will stand up and make a stand and everyone around the world is tired of hearing this whole story. Tony, in the meantime with all of that happening what about the inflation news this morning it was quite weak is this market getting bailed out a little bit because now they are pushing off expectations of what the fed may do here . Without a doubt the signs of inflation are pretty muted right now. That doesnt mean its a risk longer term. Weve done a lot of work internally on the phillips curve. If you look on it based on employment why arent wages accelerating more quickly. As the job numbers continue to improve, we see inflation picking up over the longer term. I think its still a risk just not a near term risk rick, how would you gauge the response today in the treasury market to that inflation news, of course, as well as these other headlines. Its not as if its a huge rush into say instruments on the on the other hand that were already rallying how do you sort that out i like your comment youre looking at it correctly theres been a soft drift downward in yields for basically a month. Right before the employment report we were only a couple basis points higher than we are now. That turned around a bit thats an important number a lot of fed strategy embedded in those numbers as Inflation Numbers today. Now on the inflation front, you know, consider 212 and a half low close of the year but virtually unchanged at 219 we ticked down to 218. Dont let that get you off the scent. Theres still a big case if somebody asks me is there a chance to make a close for the year, absolutely but where is the next 30 basis point mover i would lean towards the upside of the yield. Inflation days is important. Fed fund futures whether the fed will raise or not. I dont know if that type of thinking will make you a lot of money for the back half of this year Balance Sheet reduction isnt dependent on anything. Its a must do that wont necessarily get changed by inflation data and how those markets behave to that is going to be key for the back half of the year meantime you look at whats happening the dow emblematic of that its a combination of both. You cant discounts kind of the political chatter but cant discount the macro data weve been seeing and what that means going forward. Tony, you guys have been saying the unusual thing about this year we havent had substantial fall backs here he weather less than 2 from the highs a lot of people would have invited a 5 dip is it actually a gift or something to worry about youre right. Volatility has been unusually low by historical standards. What were doing to protect ourselves is focusing on the quality of the businesses. Focusing on the Balance Sheets those two things really help you in a volatile or down markets. The other thing were holding more cash than we usually do were at 4. 5 . Thats higher than formal for us not that we expect the market to go down built were talking about quantitative tapering. There could be some hiccups along the way. We want toe opportunistic. Thats why everybody is buying bitcoin thats not my choice but to each his own guys thank you very much. Rick, as well as tony and kenny. Weve got a little less than 50 minutes left before the bell. The dow holding on to some slim gains. S p 500 up a little bit less the nasdaq has been the out performer all day. Russell pretty much sitting this one out. You can call at any time hot dog strategy thats the new model for success at snapchat. The stock is getting slammed today. Up next well discuss if that strategy cuts the mustard. Part of me feels bill would have nailed that line better. Theres a tugofwar between markets and fed on inflation that could iacmpt future rate hikes. Steve liesman has that story just ahead with at t you can get your entertainment right here. Right now, when you get the incredible iphone 7 from at t you can get unlimited data and live tv. The channels you love. Your favorite shows and movies. Making your iphone into more of a. Oh my tv is ringing. Hey. Im in the middle of a. A second iphone from at t . Okay right now when you buy a new iphone 7 from at t youll get a second iphone 7 on us. And power both with unlimited data and live tv. Looking for a hotel that fits. Whoooo. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. Inindividuvida i nvidia is sinking a drop in this key segment was the key to sending this stock. 3 billion got to be fine speaking of growth rates how about snapchat which is dropping on the back of its disappointing results. Down 13 right now snap missed on earnings, revenue and user one bright spot the company said its dancing hot dog has been viewed 1. 5 billion times all this leading some to wonder if snapchat could capitalize on its ar strategy in a big way. Joining us our own Julie Boorstin her face is not on it. She escaped that along with kurt wagner sort of as interesting and viral as these hot dog effects are and the company kind of trumpeting it as one way out there, is this a Way Investors should talk about what innovation is at snapchat, these buzzy little features that get people to spend more time on snapchat and engage more . I think what snapchat would like us to focus on is that engagements. They Just Announced users under the age of 25 is spending an average of 40 minutes a day using snapchat, 40 mains day thats ten minutes more than they were spending at the end of the Fourth Quarter of last year. So pretty Significant Growth engagements. By innovating and creating lenses for your face and innovating and creating lenses for the world around you like that dancing hot dog like you just saw in front of me those are the kinds of things making users coming back. The question i heard a lot on the call is whether they can here we are again whether they can make as much money from these things, these lenses as they are from ads on the discover platform. Kurt, you know, im just not that convinced weve seen effects like this before pokeman go is a good example i guess it was good for that game this is not so much good for snap sit . What are they going to have to do will they have to come out with Something Like this hourly, daily, a lot more contents for this to turn into a strategy where advertisers can get involved with . Well, you bring up a great point which is how often can they come out with a brand new product and hit that everyone lovers and also one that is going to be unique enough that facebook or instagram or someone else cannot immediately copy that because thats what weve seen so far is when snapchat comes out with something cool or exciting facebook is right there six months behind to roll it out to 2 billion users this is a very tough strategy. And i think what people want is not only this but they want them to show that they can create a viable advertising business behind that so that when it takes a couple of months or even a year for them to come out with the next cool thing they have an important reliable business underneath to carry them through that time. Of course, we should obviously mention that theres a lot else going on in terms ever contents strategy at snap where in terms of professionally produced content shows, other things like that is there any way to gauge just yet how excited advertisers are for those things well, the Company Reported that advertising revenue increased about 150 yearoveryear, 25 quarter over quarter. They say that over 75 of the top 100 ad age advertisers are now advertising on the platform. I think it will be interesting to see more granularly the type of results advertisers are getting. Right now were hearing from advertisers that they would like to have another third big player, an alternative to facebook and google. Right now brands feel they have to invest in facebook and google and the question is whether snapchat becomes that must have destination. Thats a good points. How Much Technology is behind the deployment of a dancing hot dog albeit with your face in it. Forget facebook why couldnt any other company who want to do something nifty come out with similar kind of tools. Youre going to see more Companies Come out with similar stuff because both facebook and apple are coming out with ar platforms. They are basically opening up in apples case iphone and facebook camera app if you have a cool idea like a dancing hot dog or fun dog face filter build it on our platform and get it to our users. This concepts of snap being the first to pioneer these fun ar features is not going to last forever because the bigger players are trying to get into that space as well as they have such bigger reach than snapchat does there will be a lot more of this moving forward we had an analyst on yesterday who was talking about the launch of the iphone 8 might be a big moment for snap just because you need a high end phone with all these different capabilities to take full advantage of it. Do you think thats something the company and Investment Company are fixated on at this point . I think snap has shown its ar can work with the phones we all have now snap will continue to evolve to make sure they stay ahead of this one thing thats interesting you mentioned apple and google moving into this ar space. The biggest competition right now is facebook and instagram and i was surprised that yesterday in the call there werent any specific comments about facebook and instagram but there was an allusion to them against these big giants. He understands hell always be facing this competition and r y reliant on the phone makers. This is a way tore them to have a touch point with the consumer. Their refer news are down between first and second quarter. I thought that was a clever one. Hard to do at the scale that will move the needle experimentation will continue thanks very much got about 38 minutes left in the trading day. Kind of losing a little bit of ground here. The dow just barely above the flat line. S p 500 up 1. 4 i noticed the vix back above 16. 5 close to yesterdays high. Little bit of anxiety still remains in the markets going into the weekend upcoming changes in european regulations are causing what some are calling a crisis for wall Street Research details next tesla model 3s are hitting the road the electric carmaker is hitting the bond market. Well have details coming up bell ringing finding the best hotel price is whoooo. Now a safe bet. Because tripadvisor searches. Over 200 booking sites so you save up to 30 on the. Hotelock it in. Tripadvisor. music stops bell rings welcome back we keep an eye on these markets into the close how about a ticker is golf equipment maker falling about 8 after reporting earnings this morning. Same Quarter Sales dropped due to a retail slow down. And they say unfavorable weather conditions that kept golfers off the course acushnet down. Upcoming changes to european regulations are now driving wall street firms to start charging for research explicitly. Putting a dollar price on their investment research. In just a few months the eu will impose a ban on the decades practice of sending Free Research for clients at no charge in exchange for trading business jpmorgan going to charge 10,000 a year barclays going to charge 40,000. Its interesting nobody at these firms has ever really thought about charging for, as a product, as required toby these transparency rules. Bundle their soft commission charges. Now they want to put up a chinese wall and say this is what you can charge for trading and what you can charge for research if jpmorgan can come out and say fine well charge 10,000 how does a startup who have to charge 100, 150 grand expected to compete jpmorgan is subsidizing that Research Business by other things they do Small Research firms survive by having another middle man help out with the distribution of their research in exchange for trading business its fascinating also fascinating on the buy side, on the Investment Funds have to decide if they are going to at the time cost or pass the cost on to their own Fund Shareholders in which case