sam horowitz, everybody. absolutely delighted, doing fantastically. what can you say? thank you for watching "street signs," and "closing bell" is next. see you tomorrow. hi, everybody. we enter the final stretch. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. it looks like the bears are in control today. >> yeah, i'm bill griffeth. the steady drip you're hearing is the stock market losing steam bit by bit. this is the sixth out of the last eight days the market is lower. i have to say, you know, you and i don't believe the fed will start tapering in september. >> right. >> but more and more, the market is starting to act like it believes it will. >> that is the worry. as interest rates inch up, part of the story is the market is doing the job for the fed. >> exactly. >> they'll have to be real cautious come september. we'll be watching that. also on today's show, we're

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 icahn's 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 we're awaiting news on why it happened. we'll have the very latest on that. phil is monitoring that for us, coming up in a few minutes here. >> a tough story there. let's 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. two-thirds 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 two-week low now, the stand & poors and a decline there of about 7 points. let's talk about today's market action and, in fact, what's 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 they'll begin tapering in september? >> i do. i know that it's a controversial talking point here. listen, we've seen the data come in. we've 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 they've gone up and stabilized. that tells you we are ready for this time a successful end to qe. i think that's what's priced in. >> yeah, it's 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 we've seen year to date? >> well, i certainly think the market's worried about tapering. the fed is artificially supported asset prices, and when that support is removed, you could see a correction. it's 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 short-term trader's

mentality, you have cause for concern. but if you have a longer term, three to five-year, ten-year-plus time horizon, it's quite positive what the fed is about to do. >> you know, rick santelli, the fed's james bullard, pointed to the producer price index this morning. he says, you know, eventually we'll see inflation because of the easing money policy, but we're not seeing that now. what's your guys' view in chicago of the inflation picture right now? >> they call it the drain-o trade. there's a clog in the transmission pipes in terms of the velocity of money. and i'm 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, i'd be real hard-pressed not to think that the inflation doesn't hit. so down here, it's more a story that they can take all the flack they're getting from people that don't see it, but it's 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 can't 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, that's 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, we're waiting for burnny to show up here. >> all right. anybody want to take that question? you want to buy europe here or

no? >> i'll jump in -- >> no, i don't 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. you've still got a banking system over there that's 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, don't expect it to last. the credit isn't 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. that's where you want to put your money. >> okay. so you don't buy the european bounce. adam, what about you? >> we're 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 haven't participated in the rally to the extent that the rest of the market has. so there's some p/e expansion that could occur there, which could push prices dramatically higher. >> all right, gentlemen, thank you all. we're sorry that bernie williams couldn't make it with us today. i don't think it's true he's headed back to centerfield for the yankees, but we'll find out. thank you for joining us. >> thanks, we'll see you soon. meanwhile, the august drip turning into more of a leak today. bob pisani, what is in this market that's the driving forces here? >> reporter: yeah, maybe a little comment in the middle of the day, but that's besides the point. there's a depressing pattern. we've 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 it's just going elsewhere. rick referred to that. we've been talking about it for days. look at what's 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? that's 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. they're 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 can't do that when you're 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.

that's the definition of a momentum stock. and when you do that, you can't have inline results, guys. you can't lower the guidance, even one penny. that's what happens in momentum plays like that. unfortunate day for cree. back to you. >> all right, thank you very much. another story we're 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 so-called 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 lower-level trader in that office. the two men stand accused on four different criminal charges of essentially mismarking positions in j.p. morgan's 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 street's culture has run amok. let's 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 they're 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 what's next. will there be any charges against ina drew, or the gentlemen who worked just below her, but above the folks we're talking about? so far, i'm 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 -- there's an internal report done, senate report. so plenty of evidence to look at. >> all right, thanks, katement. >> reporter: thank you. >> it's interesting, throughout all of this, bill, the banks have been a leadership. today, they're 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 isn't happy with the film. he said woody allen got something very, very wrong about his company. he's here to talk about that. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade.

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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 they're willing to ready the taper the quantitative easing in september. he's 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. he's 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 it's going to hike rates. this is really calling into question an essential cannon of fed chairman ben bernanke who's really gone out there pounding this idea that the fed is on a two-track system with its two important tools -- raising rates and quantitative easing. he's 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 today's 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 i'm not sure when he'll be ready to taper, maria. >> all right, steve, thank you very much. this is very interesting. and it's what you and i have been saying, we don't 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 we're not totally surprised by the comments. >> no. >> it does add some weight to the notion that they may have to wait. >> he's also a voting member, which is also critical. so he votes, and we have a market that's actually traded better, as steve was talking here. >> the dow was down 134 points at the low. we're now down just about 80

points. it's 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 you'll get is the employment report, okay? >> unless they've already baked it in the cake and already said we're going to start the process there no matter where. >> hmm. >> i don't know that they'll 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. we'll see. look, we're also following the airline story. shares of u.s. airways and amr grounded for the second-straight day after the government's 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 doj's decision makes no sense, simply saying it's bad for consumers. he says that's 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, they're 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 government's 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 don't 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. we're 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 don't need the two airlines to come together in order for them to survive. >> right. >> the advisors are saying, that's true, you don't. but you can't 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, let's go, let's go to court. >> but, gordon, we've talked about this in the past. you've 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 they're doing is precluding american and u.s. air from creating a route network that's 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, it's 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. it's 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 we're going to see is we're 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, he's 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 they've ever made in their history. and even the ceo of american airlines said that during the

last quarter, they had the best quarter on record. what more do you want? >> gordon? >> yeah. >> well, that's not much of -- that's not much of a record to beat. i mean, america west and u.s. airway, together, bankrupt three times. so you're comparing apples and oranges. yes, it's better. yes, the pricing is better. it should be, oil's up 400%. the facts are that unless you have a network that's competitive with united and continental -- with united and delta, you are not going to be making all of the record profits. the big corporations book on networks not on individual city pairs. >> okay. one of the things i'm always concerned about is the fact that in the newspapers, the only thing they've been talking about, and on air, is what's happening to the airlines. we need bigger airlines so they can compete with each other. what we need is we need airlines to care about their consumers. they treat consumers and passengers with dignity, with -- to tell us what the prices are going to be.

let us know what the fees are going to be, and they don't stick their thumb right in the eye of the regulators and of legislators by raising change fees by 50 bucks during the discussion of a merger. >> -- that's got nothing to do -- >> it has everything to do with it. >> -- that's preposterous. >> it has everything to do with it. >> it has absolutely nothing to do with it. you have to earn the loyalty of your customers with good service. that's true. but there's some awfully good service airlines out there. >> how many airlines are there in the u.k.? how many are there in france or in germany? and so, that doesn't mean you can't have good customer service because you're big. that's just not true. >> well, unfortunately -- >> let me bring phil back in for a second, guys. i'm curious, we're all wondering, now what? did you get any sense from the attorneys for those airlines what the strategy is -- is there a plan b at this point? >> they said if there's a plan b, if this merger does not go through, i can tell you a few minutes ago the attorneys said they're talking with the doj and

they want to a trial soon rather than later, perhaps before the end of the year, because they want to make sure the merger, if it can go through, it goes through as quickly as possible. the issue that's been brought up on this conference call is whether or not they can go to the doj and make some carve-outs and say, listen, we'll give up flight routes, give up slots, d.c. reagan, one of the other larger airports where they have a presence. at this point, it's not clear whether or not that will work. they say they are open to discussions with the doj. you have to think that that has already taken place in the past, as far as some possibilities and that the department of justice has already said, you know what, we think it's a full shutdown here as opposed to giving up a certain number of slots. but the attorneys are open to further discussions. >> what's different, charlie, about this deal than the past deals that the government has approved, other than you saying that u.s. airways is doing so well? >> well, there are big differences in terms of how they looked at this particular merger. we put out a study, the consumer

travel alliance, back in april of this year, showing that there were 761 overlapping connecting routes. and then, the gao came out with their own study, and they added more than just one stop routes and came up with 1,665 overlapping competitive routes. and then, we ended up comparing it to the united/continental merger, and it turns out there are 30% more overlapping competitive routes in this merger than they had during the continental/united merger. it is a disaster in terms of consumers when it comes to competition. and that's what got the attention of the doj. >> i'm horribly out of time, but i have to say, gordon, the number that stood out to me in the doj complaint, was, they said, if this goes through, it results in four airlines controlling more than 80% of the u.s. travel market. how is that good for the consumer? >> well, you got some stability. people actually earning pension and get paid, creditors get

paid, people don't go broke. you don't need 20 airlines. you need four or five really good ones, and they can be more than competitive. when one of them gets greedy, the other one will move in and take market. that's always been true. southwest is still there. jet blue is still there. there's plenty of competition in this country. >> all right. we'll leave it there. thank you, everybody. appreciate your time. >> thanks a lot. >> we'll keep watching that. we have a market under pressure, although off of the worst levels, with about 30 minutes before the closing bell sounds. the dow down 89 points. more from amazon, reportedly getting ready to expand the fresh grocery delivery business to new york city. when we come back, we'll hear from somebody who says it will help the hot stock keep delivering profits for your portfolio. 100 supporters of egypt's deposed leader killed by a raid by police. we'll get you a live update. stay with us. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second.

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welcome back. shares of amazon.com up about 16% in 2013 as investors continue to bet on the online retail giant to innovate and expand. now, there are reports that amazon will grow its grocery delivery business to new york city, and the speculation is fuelled by a large facility amazon now has in central new jersey. that could be a move, and many

say it could be a further catalyst for the stock. we're talking numbers on amazon. on the technical side is jonathan with miller, and on the fundamentals is ennis with risk reversal. ennis, your view on the fundamentals of amazon. will a new york grocery business be a game changer or move the needle here? >> no, it certainly won't move the needle in the short run or really the long run. i guess it's another example of amazon delivering for customers, and that's the key. it's a great company for customers. but it's not a good stock. in fact, it's a very dangerous stock. in my opinion, given the fact that it hasn't generated profits for many, many years, but even if you look at the projections, go out to 2017, to 2018, it would generate less than $10 billion in profit if analysts' projections are correct, which i think are optimistic. so you're paying for a company that's never generated a substantial profit, and even going forward into the future, is not expected to do so. >> jonathan, how do the charts look? >> i think ennis will be right

in the short term. if we look at a longer-term chart, we want to be buyers of any weakness. we can see amazon has been in a well-defined uptrend channel since the 2008 lows. what happens is as it touches the upper end of the trend, you see a good wreck, somewhere in the magnitude of 10%, 20%. so that's what we're in the middle of now. we're down about 7% after the recent highs after the july earnings. if you look closer, you can see some better areas of support, where we look to be a buyer. >> i'll just point out that the price action this year actually is not that supportive for amazon from a tech perspective, because it's underperforming the broader market, which is up almost 20% and amazon is only up 16%. >> right, it is. if you look at the shorter-term chart, there's pretty good support down in the 280 level, which was prior resistance. it should be support. and really what tends to happen in amazon is when it comes down to the 200-day moving average, the pessimism really starts to build, and that's actually when you want to be a buyer. >> yeah. >> we'd be big buyers between here and the 200-day at 266. >> to me, it's a greater fool

stock. if you can find a greater fool, good luck. >> all right. with that, guys, that's what makes the market. thank you very much. we'll see you soon, guys. >> all right. we want to bring you up to date on the crisis in egypt, which took a deadly turn today. eamon is in cairo with the details. eamon? >> reporter: good afternoon, bill. curfew has gone into effect here, which means nobody is allowed to be out on the streets, otherwise they run the risk of being imprisoned, according to the egyptian government, which has also declared a state of emergency across the entire country. now, that comes after a day of very deadly attacks. right now, we understand, according to the ministry of interior, the death toll from today's operations to clear two squares that had been used as the sit-in protest sites for the supporters of the ousted president, has now reached 149 people killed. among them, 43 members of egyptian security forces. but members of the muslim brotherhood and supporters of the ousted president are describing today's event as a

massacre. they say up to 300, even as many as 2,000 people, may have been killed. it's impossible to verify these numbers right now. we'll certainly learn more about them in the coming hours. in addition to all of this, the country's interim government seems to be now facing a political crisis after the vice president announced he was resigning over the deadly confrontations. bill, maria? >> all right, thank you very much. we'll keep watching that. what a story that continues to develop. >> took a bad, bad turn today. bad turn. all right. we'll watch the markets. the bounce we got from the fed's james bullard's comments have ended, we're down about 100 points again on dow. and tim armstrong publicly apologizing for firing an employee, but the employee is still fired. up next, the star of "the profit," marcus lemonis.

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we want to show you apple, which is right now above $500 a share. it crossed above 500 earlier. it is up 10% over the last three days. this is the strongest three-day winning streak for the stock since may 10th to the 12th, 2010, when it was up 11.12% over a three-day period. clearly, icahn and others who have actually joined and agreed with him are pushing this stock higher. and it is on the move. >> as we said yesterday, it was about the ipod, the ipad, the iphone, the i-cahn. all coming together for apple. >> that's very funny. >> we'll keep an eye on that one. the latest episode of "the profit" aired last night on cnbc. hope you saw it. marcus lemonis works on turning

around a multimillion-dollar popcorn business that started as a humble stand at a fair in california. and despite being a cash generator, the company just cannot show a profit. so enter the profit himself, marcus lemonis. marcus, great to see you. great episode last night. before we talk with you, here's a taste of some of the drama last night. watch this. >> what insurance do i have that you won't screw me? >> how could i -- how could i screw you? >> you take money out of the company without telling me. or maybe turn what i think is a popcorn store into a drapery. >> i dress there's a risk factor on both ends, because you don't really know me and i don't really know you. all i can say to you, you'll have to trust me on this one. >> do i have to wonder if you're going to steal? >> no. >> do i have to wonder if you'll undermine me. >> no. >> do i have to wonder if you'll go behind my back and do something to hurt me? >> no. you have nothing to worry about me as far as integrity or undermining you -- >> and you can say that without any reservation? >> 100%. >> okay. >> yeah.

>> integrity is one of the pillars of business. and based on what i've seen at the storefront, i'm starting to lose trust. >> so? >> very good. >> you have something to worry about or not? >> well, i had something to worry about. luckily, i walked away from the deal. this particular episode was about controlling cash in your business, and this young lady didn't demonstrate that. >> so what happened with the business? were you able to turn things around? i saw what you were talking about as a big game changer, was changing the packaging. >> so, maria, we made a lot of changes to the business. at the end, i couldn't get my hands around the accounting. she showed $300,000 in profit, but had no cash in the bank and couldn't tell me where the cash went. and in the cash-sensitive business, i just can't take that chance, so i walked away from the deal. >> did you lose money on that deal? >> no, i did not lose money like last week. no. >> okay. you're learning. >> i'm learning. >> let's switch gears for a

second. let's talk about tim armstrong at aol, last friday, the infamous conference call which was taped, and then the tape was leaked, we got a piece of that. he fired that employee right in front of the conference call. let's listen to some of that very quickly. >> if you think what's going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave patch today. and the reason is, and i'm going to be very specific about this, is patch from an experience -- abell, put that camera down right now. abell, you're fired. out. >> just like that, he was fired. now, tim armstrong has since apologized, but abel lenz is still fired. what do you think of how he handled that? >> well, you know, people process and products is a big thing, but people is the only thing. i think he handled it terribly, to be very honest. >> so what should he have done? >> well, if you're going to scold somebody, reprimand somebody, you don't do it in a forum, where co-workers or other

employees will see it. if you're going to lead a business, you have to lead by example. >> you're hardly a teddy bear. >> well -- >> so, i mean, you wouldn't do the same thing to try and make an example, to get people to get in line? >> no, you know what, i don't make examples of people. if i want to correct somebody or counsel somebody or terminate somebody, i'm going to do it away from everybody else. and it doesn't take a genius to fire people. but it does take a genius to recognize that you're part of the problem. >> hmm. all right. >> good stuff, marcus. glad to have you on board, buddy. >> thanks. >> good luck. we'll see you later. marcus lemonis. catch it every tuesday for a new episode of "the profit," 10:00 p.m. eastern, cnbc prime, here on good ole cnbc. and later, we continue our series on reality television. you know him from "man versus food," coming up, adam richman on the crazy superfans across the country. >> will you wear an apron next hour? >> i better. i better. ooh. 20 minutes before the

closing bell sounds, down 109 points on the dow. cisco and walmart earnings could be big catalysts tomorrow. cisco is less than a half an hour. walmart reports first thing tomorrow morning. when we come back, we'll tell you what investors are expecting from the dow components coming up. also, carl icahn's tweet that he bought apple sends shares skyrocketing. but did he just open a pandora's box when it comes to moving box via social media? here we go again. >> unbelievable. >> we'll talk about that coming up on "closing bell." hey kevin...still eating chalk for heartburn?

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welcome back. cisco will likely be a market mover after it reports earnings at the top of the hour, next hour. jon fortt has the preview now of the one number investors need to watch for. jon? >> reporter: maria, gross margins. once we've gotten past revenue and eps, we'll get guidance on the call, the x factor will be gross margins. mark, who i know will be with us in a little bit, pointed out in a recent note that at cisco, the p/e multiple has tended to track margins. so if the highly profitable services business outperforms or if cisco has relative strength in mia, the americas, which tends to be higher-margin geographies, that will be a good thing. we won't get q1 until the fall. he guided to a 61%, 62%,

nine-gap gross margin range, and a year ago, cisco guided to the same range for the fiscal first quarter. so if revenue and eps come in as expected, that gross margin line may be above 62% if it's good, as the next place to look. bill? >> all right. we'll keep an eye on that. jon, thanks. we'll have that for you at the top of the hour. another dow stock that could move the market tomorrow is walmart, which reports earnings first thing tomorrow morning. courtney reagan with a preview of that. court? >> reporter: bill, it doesn't get any bigger than walmart. the world's largest retailer will report quarterly results for tomorrow. analysts have been lowering forecasts for walmart's results over recent weeks, and there's some extended concerns stemming from comments out of macy's today that the consumer is holding back on discretionary purchases. analysts are looking for $1.25 for earnings on $118.25 billion in revenue. key u.s. same-store sales forecasts to improve 0.7% over last year, the weakest point. last quarter, u.s. comps fell for the first time since summer

of 2011. wall street wants to see if slowing comps were just a blip on the radar or the beginning of a downward trend, and if sales are weak, is it going to be a walmart-specific issue or a broader consumer one, as macy's suggests today? any commentary about the back-to-school momentum could e be -- could somewhat temper any disappointment from q2. analysts believe many shoppers are waiting to buy closer to need, but with many students in the midwest and south already back in class, the need is now. maria? >> all right, court, thank you so much. we have about 12 minutes before the closing bell sounds. we have a market lower, and down triple digits, 109 on the dow. >> heading lower again. when we come back, michael explains why he feels investors should worry about a 1987-style sell-off. really? that bad? we'll ask him about that. also, americans love and often spoil their pets. just ask my very own ella bela. there she is getting a blowout. we'll check up on the health of the pet industry when we're joined by the ceo of the world's largest maker of animal

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welcome back. we're approaching the closing bell. the market is headed lower as we approach the close.

we're down 106, off of the worst levels. but pretty steady the last couple of hours. >> no clear bias. one of the next guests says investors should be worried about a 1987-style crash. >> yeah. >> which some of us remember. joining us is that analyst, michael, from atac inflation rotation fund, and also aaron gibbs from s&p capital iq. be careful now. i know you talked about this before, but you're going to scare the kids at home. what are you expecting to happen here? >> my father wrote a book on market analysis, and in that book, he wrote something that i'm going to quote. interest rates are the heart, soul, and life of the free enterprise system. now, there are similarities to '87 here. '87 was preceded by a period where yields spiked and the dow jones industrials average ran away on the upside. the crash of '87 resolved that massive outperformance of stocks relative to bonds. guess what? that's happening right now, as we're nearing the taper. as homebuilders are warning everybody to be very careful -- i don't know if bernanke is watching them or not, but he should. and i think it's one of those

things where that's one way to resolve what i call the fat pitch of this differential between the u.s. market and emerging markets. if you notice, the emerging markets are outperforming very strongly up, almost an inverse of sptf. you can collapse the spread with an '87-style decline. >> i guess we have to look at interest rates, then. we have to look at where rates were in 1987 and compare them to here. i think it's a very different scenario. >> the level is obviously quite different. i think they rose 300 basis points, about 10%. >> right. >> about the speed of the spike is similar, and also very similar, by the way, in terms of the stock/bond relationship, right before the 2000 bubble and right before the '07 level. >> yeah. >> at this very important inflection point. the trend in yields isn't a trend in apple. it has an impact on the economy. >> all right. how worried are you about rates, erin in. >> for us, i think it would be healthy to see a spike in rates considering we are coming off of the artificially low rates. anything you need -- >> -- healthy? how would a spike in rates be

healthy in. >> well, one, because we need the interests for the margins, for the revenues to come in. also, the rates -- if the rates go up, it's purely a function of the federal reserve. when we have a much stronger federal reserve these days. they are controlling the rates. so if the rates go up, that's really a sign that the federal reserve sees the american economy as stronger. for me, it's much more a reflection of what's the underlying economy. and, also, i think, you know, the question of saying that the dow's run away, right now, we're trading at about multiples of 15 times earnings. i'd hardly call that runaway. >> -- other asset classes, this has been ex-japan, the u.s. you have any asset allocation mix, the s&p has so dramatically outperformed -- >> because the earnings are there. >> where does the money go if it comes out of equities in a 1987-style sell-off? >> how do you describe a risk-off trade? it's a trade where risk has been taken off. where is that? it's the emerging markets. if you look at the allocations based on the bank of america

survey that came out yesterday, fund managers have the lowest allocation in emerging markets since 2001 at around 10%. that means there's nobody left to sell. the great rotation talk may not be from bonds to stocks. it may be developed to emerging. again, it's the most contrarian scenar scenario, u.s. stocks falling, yields falling and europe stocks acting like an inverse u.s. >> so you're going to play the emerging markets. you guys are still staying the course here, but are you seeing wear and tear in the market? we've had six out of the last eight trading days to the downside, and we're negative for august now. >> look, i've been saying, you know, the market's slightly overvalued. actually, i'm very happy to see somewhat of a pullback. there's actually -- now i can find something that i want to buy. everything's been so highly priced. >> like what? >> like what? >> i asked you first. >> oh, safeway is one of my darlings, my few values i can actually find these days. so i think despite, you know, people really didn't like them selling off the canadian operations, you know, it's

gotten exceptionally strong free cash flow. >> so you're looking at specific stocks. >> yes. >> in this environment. you're saying maybe it's time, what we're seeing is a rotation, we'll see increased money out of u.s. stocks and into the emerging markets? how about europe? you mentioned the emerging markets. the fact is that the emerging markets outflows haven't stopped. maybe we saw a little bit of a bottom last week, but money is still flowing out of the emerging markets -- >> and bouncing here. >> -- because growth is not there, while europe is bouncing, as bill said. >> nobody can tell me that the developed markets are going to grow and not pull the suppliers of the developed markets higher, which are the emerging markets. the big concern all along for emerging markets has been inflation. guess what, if you have a rotation that develops into emerging, that will push their currencies up. they need higher currencies. that can happen with fund flows into the bricks. russia and china. one final point very quickly. i would agree with you that yields rising are bullish, but again, speed matters. financials have been underperforming, homebuilders have been underperforming.

anything sensitive to growth is underperforming. and there's a deterioration here, and i'll be ready for this, do not discount the possibility that we could see a doozy of a correction. >> what's the catalyst? >> i think the catalyst will be the realization that spiking yields are not a good thing for the economy. >> all right. we'll leave it there. michael, erin, thank you. >> we'll come back with the closing countdown. >> and cisco's earnings out any moment. we'll have full team coverage. you're watching "closing bell" on cnbc, first in business worldwide. golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. what are you guys doing? having some fiber! with new phillips' fiber good gummies. they're fruity delicious! just two gummies have 4 grams of fiber! to help support regularity! i want some... [ woman ] hop on over! [ marge ] fiber the fun way, from phillips'.

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okay. very quickly, as we head toward the close, we're not getting the return that we've been getting lately. got the dip, but it didn't return. we're finishing near the lows, down 11 points on the dow. apple, the other thing we're watching, hadn't closed above $500 since january 23rd. still looks like it won't either. it's up to $498 right now. up 1.8%. still in that icahn bounce. last thing, cisco reports earnings after the bell. we're expecting a profit of 51 cents on $12.4 billion. matt, are you getting the beginnings of the correction you have been expecting here? >> it's funny, we're not seeing the volume to incorporate any type of sell-off i'd look for. we're starting to see the negativity coming out, which is a good sign. maybe we do get a push lower and get the chance to buy stocks. that's what everyone is waiting for. >> you're waiting to buy on some

kind of a dip. >> i'm not. but i think a lot of people are. there's a lot of money ready to catch up in the market. >> all right. thank you, matt, very much. [ bell sounds ] that will do it for the first half of the "closing bell." apple doesn't look like it will close above $500. cisco earnings will set the tone for tomorrow. stay tuned for the second hour of the "closing bell" with maria bartiromo. i'll see you tomorrow. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. red arrows on wall street. the dow closing lower for the ninth time in the last 13 trading sessions. look at how we're settling out on the street. the dow down 113 points, .75%. at 15,337. volume on the light side once again today. nasdaq down about 15 points, almost about .50%, to 3,669. and the s&p 500 gives up 9. we have a big hour ahead. bob pisani, nathan and peter are ready to break down the day on