united states. i thought one powerful thing the president said is afghanistan is not a perfect place. t a perfect. and welcome to "closing bell," everybody. how is that for an introduction? i'm kelly evans down here on this tuesday after a long weekend, bill, at the new york stock exchange. >> i'm bill griffith. we are looking at the dow up 62 points right now. you can see we're roughly 30, 40 points away from an all-time high. the s&p is in all-time high territory right now. we close at a new high on friday, first time above 1900 and today we've tagged on another 9 points on that index, so we are continuing last week's real, and we had some pretty

good economic data out this morning. >> often when you get a new high you tend more often than not to get a high the second trading day and it looks like we could be doing that for the s&p. 1910, 1900 was the new record closing high which is bringing up a different kind of conversation. inflation, suddenly. we're talking about that. we're talking about the dreaded "i"with the word and implications potentially far-reaching from the fed to your investments. if the people we're going to talk to are right, two top names, david rosenberg and ian shepherdson, both of them coming up on the program. >> yeah. i've got some anecdotal evidence of inflation and i'm sure everybody out there does as well. also, is this video holding up a $3 billion deal between apple and beats? remember dr. dre now infamously bragging on that video that he was becoming the first hip-hop billionaire, but now reports say that this video could be why

that deal has been dragging on, and we don't have anything. we'll speak to the reporter and another apple insider about what's really going on with that and see are they going to buy beats or not right now? >> i know. as that all plays out let's take stock of where we are heading into the final hour today. the dow up 63 points, not much movement after president obama's remarks about afghanistan just moments ago. the s&p 500 meanwhile adding nine and the nasdaq up 38, 4224 and if you want a change in sentiment, not giving money back to investors and that story up on cnbc.com. >> we have with us monica from seven call at all, john manly from wells fargo funds is here at the big board and so is kenny pull cary and our own rick santelli in chicago. kenny p., the markets continuing higher here. is it dragging you kicking and screaming along? >> it is a little bit. new highs beget new highs.

broke through 1900 and now there is nothing above, no resistance at the moment so the path of least resistance is higher. the news continues to kind of be improving. macro data is better. geopolitical data is better, right, elections out of europe, ukraine has not turned into the disaster with a russian invasion that people have been talking about and, therefore, if the buyers really want them, let them come and pay for it so the sellers are being very selective in terms of price and buyers are reaching. >> yeah, you know, you make a good point. come through the weekend with potentially some market-friendly outcomes for now, if you want to call it that and monica, we get brighter reports on consumer attitudes. what do you make of the consumer confidence numbers? >> it's interesting because consumers are confident but it makes me wonder if they should be because at this point wages are still flat. >> right. >> and overwhelmingly they are dipping into credit to fund their lifestyles so is that a good situation for the economy? is that a good situation for consumers? i really don't think so. >> i thought consumer credit was

still lagging to some extent. autos or student loans, but generally speaking, monica, correct me if i'm wrong, we're not looking at the kind of cred credit-funded spending we were during the last boom. >> lines of credit original nation was near $400 billion in 2006 but today it's 90 billion but you're seeing a 20% rise from last year so you're still seeing a consumer not saving very much, not seeing an appreciation in wages but is spending and they are, as you mentioned, spending on school and that student debt will be something that will continue to be a drag on the young generation for the future economy, so, again, this confidence, i'm not sure if they really should be as confident as these numbers suggest. >> mark, you think this -- we're at an infliction point right now in this tug-of-war that's existed between stocks and bonds. what do you mean? >> yeah, i think if you look at what equity markets are doing, it's looking at the data in realtime, as equities often do

looking at the glass half full knowing that first-quarter gdp will be revised negative. it feels better across with some of the data that came out today. equity markets are going up on that news and the bond market is more prove it to me. technical reasons on why the ten-year interest rate may be lower than anticipated but i think they are saying show me a second quarter gdp, a better job number, consistent jobs number above 200,000. >> which side are you on? >> we'll know in early july, to see who is right, equity or bond market. >> which side are you on? >> i'm on the equity side, but i think what this market has shown this year, it hasn't really mattered where you've been. you've earned probably 3% to 4%, 5%, equities across the globe. >> unless you were in the 30-year long bond. >> bonds are doing well. >> al real assets are doing well so a multi-asset diversified portfolio has done well this year, and despite the volatility and some of the political

unrest, 3% to 4%, not bad. >> richter, it's interesting. right now we're having this discussion about maybe some signs of inflation, down the road, better data, et cetera. the bond market isn't moving. does it matter, rick, does the ten-year still matter, or is it quite obvious that it matters because we just heard that the 30-year mortgage has dipped back below 4%? >> i think the 30-year mortgage could go to 2.5% and i still don't think it will create the kind of housing numbers that we really would like to see this many years after a crisis and a recession, and in terms of what interest rates are telling us, you know, we were talking about credit, and you're exactly right, kelly. the kind of credit we would like to see people get they can't really qualify, but any type of credit that you can put a sub in front of like auto loans or have the government put the heavy thumb on like student loans or mortgage-type loans, that's what's moving because there's a subsidy factor there. the whole economy, for the most

part, is subsidized. how many stories did you weread the balance sheets of the central banks is something used more often. to me that's code we can't figure out how to create growth but we kind of like playing around with this stuff because stocks are at record highs and i think we'll see this dynamic continue until one of the central banks can't hold it all together and i think we're actually still a ways away from that. >> john manly, second year in a row at least that we didn't see the old adage sell in may and go away. had a pretty good month, all-time highs on the s&p right now. what do you think that means going into the summer months now? >> i think the money is still coming in. the fed is still accommodative. can't stay that way forever but they won't have to. at some point in time the consumer starts to pick up a load. don't think of it as a 5-year-old recovery. think of three lost years, 2009, 2010 and 2011 were lost. start the cycle from 2012 and it's fairly normal. gradually getting better. consumer credit numbers were too

strong in 2006. >> how much higher does it go before you get sweaty palms? >> as long as the fed will stay accommodative. that includes tapering. they can actually raise rates a few times. as long as the fed remains accommodative and wants to help the economy and as long as earnings come through i'm still positive we're nowhere near a valuation problem yet. >> kenny, i know that we've talked in the past about the skepticism you still hold about the economy, but today does it look at least like the signs are pointing towards a more sustainable outcome here for the u.s. economy than we might have thought back in the deep winter freeze monies of january and feb? >> i think it does and we've seen that over the last couple of months with the macro data reception with the exception of a couple of outliers. most of it, in fact, has been improving, not as fast as we want to see but it has been improving which is kind of setting that tone so now that we're making new highs, there's nothing above us in terms of resistance.

the vix is at multi-year lows suggesting that even throw months out that investors are expecting only a 3% or 3.5% volatility factor. >> i was going to say now, kenny, you guys need people to trade this market. >> right, right. >> look at citi group, the cfo at a conference, more on the fixed income side of things we'll be down 20%, 25%. >> right. >> monica, you're in real estate. how are you in real estate and why? >> we're in realies estate and that's a very region specific play, have i active in texas which is seeing a ton of low unemployment and new population. >> what are you buying? >> so we're in aa lot of housing and new housing development down there, and that's because there's a one-month supply in texas when it needs to be a nine-month supply. >> are you literally buying homes? is that what you're doing? >> we've been buying land and doing the development and the building of homes, and, again, it's because there's a one-month supply and needs to be a nine-month supply to satisfy the number of people that are moving

in down there. >> what's the unemployment rate in texas? >> it's about a percent lower than national, and if you look at all of the fastest growing city charts you'll see a lot of those dots land right deep into the heart of texas. >> why do you ask, rick? >> well, because i think that it's a fertile landscape for business, so i see a much healthier housing market. i wish on the national level some of the politicians would take note of what's going on in texas instead of -- >> i think they take note. >> and people come in for a multi-year tax credit where they will eventually, you know, have to raise their taxes. those commercials from new york, i love watching them, but my question is if lowering taxes is such a great thing to get people to come in, why did you ever have to raise them? why shouldn't they be lower all the time? doesn't make any sense to me. >> yeah, especially, mark, when you have an economy at this point, the deficit generally, and we don't ever talk about this, but it's been shrinking

rapidly here. i mean, the need to say increase taxes actually is diminishing as the cycle progresses. >> yeah, but, i would agree with rick. we won't see tax rates going down any time soon. the deficit i think is shrinking which is -- i mean, kind of three steps to the problem. we need to get back to 3% growth, need to get deficit neutral and as far as tackling the big issue, long-term debt, another conversation for another day, a much harder conversation, but at least we're making progress on the first two steps towards dealing with some of the issues that are the heart of rick's question. >> do you have a reference for what the fix would be for that situation? i mean, again, just in a nutshell? >> i think it's a combination of everything. i mean, we have the biggest, broadest, most innovative economy xht world and apparently we have a whole bunch of energy we didn't have before and that's part of the answer and you have to look at some sort of benefit cuts, particularly social security, a system that was made for people to pass away a few

years after they work and now people are living 30 years which is fantastic but you need to revise that. >> i think the oldest woman in america just -- >> a long enough time horizon in order to implement it. the solutions are here but just need the decision-makers. >> 115th birthday, did you see that? >> lives outside of chicago to her. >> happy birthday. >> thank you all, folks. have a good day. hope we all live to be 115. >> maybe it's something in that chicago water. >> it's the food coloring they put in it st. paddy's day. up 67 points heading towards the close. the dow is about 40 point from an all-time high and the s&p, any positive close today is a new all-time high once again. we'll see what happens. >> so expect inflation to heat up. this is who noted economist david rosenberg is forecasting, but how much will prices rise and how fast? we'll talk about the inflation threat that he sees, along with jim bianco, coming up. bianco, c. (vo) rush hour around here

starts at 6:30 a.m. - on the nose. but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours.

♪ ♪fame, makes a man take things over♪ ♪fame, lets him loose, hard to swallow♪ ♪fame, puts you there where things are hollow♪ the evolution of luxury continues. the next generation 2015 escalade. ♪fame

markets are actually moving higher as we head into the last half hour of trading here. the dow up 75 points. we were up 84 at the peak this

morning when europe was still oh. the s&p though, any positive close is a new all-time high again, and we're up ten points. at moment best performer, the nasdaq, up 1% or 42 points right now. >> dominic chu has more on what's moving the market. >> hey, dom. kelly, bill. hillshire brands responding to pilgrim's pride $6.4 billion or $45 a share bid by saying it's going to review the offer thoroughly but still believes in its own 4.3 billion offer to buy pinnacle foods so here's where all three are trading. hillshire is up about 22% above that $45 bid price. american express is moving higher on some bullish comments for morgan stanley. revenue growth is accelerating for amex and currently up towards special highs. aeropostale is up on news that it secured a $150 million credit facility. up 16% after a rough week last week, and we're going to end with ibm falling on reports that

china will no longer use its servers in the big country, at least for the big banks. big blue you can see they are trading down three-quarters of 1%. kelly, bill, back over to you guys. >> dornlgs thanks very much. meanwhile, tivo reporting net income of $8.1 million of the first quarter of 2014 reversing a 10.3 million loss in the first quarter of last year and that was helped in part by a rise in subscribers and paid tv providers. >> yet the company's stock has been underperforming the market down for the year while the s&p, as we know, has been in the black. what does it say about tivo's long-term prospect? in a first on cnbc interview joined by tivo's ceo tom rogers and we have to point out, as we always do, former head of nbc cable and the man responsible for a lot of us being here at sneefnl cnbc and one of the founders of the network. welcome back. you're constantly having to reinvent tivo. it's such a transformational

technology. you've been there how many years now? >> 15 since we shipped the first tivo. >> and you're still moving along here. the stock bumps along. why has this been such a slog for you? you're the deal master. what's going on with tivo? >> well, you know, we not only reinvented tivo along the way, but as we like to say we are reinventing television all over again as tivo did the first time. there's nobody who doesn't understand how tivoing something doesn't fit into the scheme of how they watch television today, but we knew that that alone was not going to drive the company, and so our notion now is how do you make television, believe it or not, somebody who has the common heritage and cable who will understand this, how do you make television as good as music because today people can get any piece of music out there down to a single device that follows them from the cloud, and they get their personalized play list just the way they want t.television hasn't had that yet, and that's what we do

today. we're about bringing all aspects of television, cable channels. >> not alone in that, tom. you guys brought it first with the -- with the receiver that you can pause live television. you can record live television, you know, all those things there, but now you've got tremendous competition from very big fish out there. you know, did -- >> we are alone in providing that in the retail world, and we are the leaders in providing that in terms of the number of cable companies that we now do that for. >> and yet you're still only a $1.4 billion stock. >> well, i'm not sure everyone has gotten it, because we were losing close to $100 million ebitda-wise a few years ago. today we're looking at making over $100 million ebitda-wise this year. massive transformation of the company, and in so doing one of the things that on this network people have said over and over again, over the top television netflix, streaming services,

we're going to kill cable. that was the enemy of cable and a couple weeks ago we said we're bringing netflix into the cable mode making it possible for it to be one of the options along with cnbc that people can get to with one box, one remote and one search, one user experience, and when i mean get it to be what music, is being able to have everything together in one place. you know, google tv, apple tv, roqueu, all these devices that bring a piece of television that you need multiple ways of getting things. we either only ones out there in the retail market of putting it all together like in the music world. >> whether it's a google device that's so cheap or some of the others that have better name brand recognition or whatever the reason have really made significant inroads, and now it sounds like you guys are almost reliant on cable to be that differentiating factor, that people care enough about having cable that they will pay out for tivo as opposed to going with

one. many alternatives out there. >> people already have cable, cable and satellite today are in 90 million homes. >> it's changing quickly, especially with the younger groups. yes and no. yes, people in dorms who don't have access to cable television are going to find ways to watch television on their laptop, plenty of evidence that once people get that first apartment or first home they get the big television set, and we aren't an alternative to cable. we're a way to make cable better, and we -- we made a bet a long time ago that it's the combination of traditional tv and broadband-delivered tv put together that's the future of television. we still believe that. the evidence becomes clearer and clearer. that's going to be the proposition that wins, and we now have 4.5 million subscribers and had our best quarter of driving mso subs in the company's history which is really an indication that have. >> always great to see you. >> great to be back. >> glad you stop here at the big

board. >> great to have a reunion with you. >> the ceo of tivo joining us here at the new york stock exchange. >> really appreciate it. >> we're heading into the close now. about 40 minutes to go and we're sitting with the dow up 37 points, again the s&p at 1911 is right there. the nasdaq having a strong day as well, the strongest of the three, in fact. >> on all-time high watch for the big board. when we come back bob pisani wraps up what's driving this market higher. look at the various sectors. >> home prices are up but new data suggests they are rising more slowly. how much of a concern is that? our housing guru diana olick is coming up later in the show with a look. a look. ♪

♪ ♪ ♪ [ male announcer ] great rates for great rides. geico motorcycle, see how much you could save.

but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's 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.

the s&p any positive close, record territory, where we are right now. >> even so, bob pisani joins us right now. we've had that's headlines now, but as the journal points out it's a sideways market, not a lot of volume and every time we bring that up everyone gets

hysterical and what's really going on? >> i said last week, this was the year of the chop. traders getting chopped up by ten points, and there was no clear trend established so what they have done is they have flattened their positions out. they are not as long as they used to be, not quite as sure as they used to be and what happens when everybody does that the market moves against them. for four days in a row the s&p has been up. not done that since april and now we're getting everybody dragged in so the volume isn't heavy right now and i think that's part of the problem. all year people cannot figure out how to make money. that was the only time we got a clear trend and only in those particular groups. >> i said it when i got back from my sabbatical three years ago. i think volume is a head fake. i think this is the new normal. the volume that we had back in the day was so much higher. that was the anomaly. this is the new normal. >> one major problem is

exchange-traded funds because many are out there now and with an exchange traded fund you can trade the fund without trading the underlying stocks that are in it, if you buy the spdr, you can trade that instrument but the underlying stocks don't trade at the same time. you trade a unit trust. as a result a lot of people trade these etfs back and forth and while you still get volume in the etf itself, you don't get volume in the underlying stocks so in the past if i wanted a lot of coverage in the s&p i might have had to buy the most representative s&p 100 stocks. now i buy an exchange-traded fund. why do you keep talking about etfs, it's killing our business. >> this is a fascinating point. want to make sure i follow. even if it pushes the price level around, for example. >> yes. >> because you can never have one deviate from the other for a long period of time unless there's a panic or crisis, it's

not reflected in the general daily trading volume the old way. >> when you buy an spy, you have an organization that creates these -- redeems and creates the stock itself and they have to pie and sell the underlying shares to create that share in the spy, but if i sell it or buy it there is no trading going on in the underlying shares. you're simply trading the stock itself and that creates less volume overall. i think etfs are wonderful vehicles, i'm not arguing against them, but i think they definitely had some influence on the volumes that are out there. >> as you know, the reason we spend so much time talking about this, everyone looks to the gauges as tells of what's going to happen with the market. >> i get it. >> and the question is reliability. >> i just think it's not the indicator it used to be. now the big question who is right, stocks or bonds? are we seeing growth or not at this point? >> i think we're definitely seeing growth. very heartened by the housing data. existing home sales, new home sales, and now the case shiller

home price numbers show a little uptick. remember the argument has been housing is somehow sliding backwards a bit. those numbers that we've got in the last three days indicate it may not be robust, certainly not sliding back. we've got lower mortgage rates, prices have moved up a little bit, according to case shiller, i think that's very good news for housing overall and that gives me a lot of heart. i agree. the economic deity has been very, very choppy and hard to interpret. the bond market reflects that. the vix, we talk about this all the time, is another vehicle. i don't think quite reflects the fear or levels of concern out there because there are many different ways that you can buy protection now outside of what the vix represents which is going long or buying puts and calls on the s&p 500 so a lot of other ways to do that these days and the vix would not necessarily reflect that. >> what would the near fear gauge be? >> hard to look at. have to look at some etfs longs and shorts, for example, other kinds of options, weekly options

and monthly options in -- in the vix. you're looking at very specific kind of option. >> we need like a bob pisani board, you know, that you can show us these. >> there would be a way i think to create a broader fear index out there. actually that's a brilliant idea, and -- >> a bob pisani board. >> i think there would be a synthetic way to create a broader more accurate fear gauge. >> let's do it. >> you got it. >> i love it. >> seriously. i'm going to call some volatility desks. >> a new indicator is born. you watched it first here. >> thanks for the idea. >> see you later. >> heading towards the close. 30 minutes left here and we're just off the highs now with the dow up 70 points, the s&p in record territory right now. >> the hayt head of the european central bank wore egabout low inflation. should we be worried about too much inflation on this side of the pond? we'll pick the brains of two leading economists coming up next. >> dominic chu tells us what is

driving the surge and how long it can last for everybody's dividend play? cannot miss that, coming up. s t. we're moving our company to new york state. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies. become the next business to discover the new new york. in a we believe outshining the competition tomorrow requires challenging your business inside and out today.

at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

markets are higher today to start off the week after the long holiday weekend. dow up 65 point, europe and asia were also higher overnight. overnight and in the morning session which sort of set the stage for us. the dow is up 65. the s&p up in record territory with a gain of ten points. nasdaq up 1% and the dow transports, by the way, record territory which economically speaking is pretty good. >> and the russell is up almost 4% over the last four trading sessions. >> up again today. >> that's good news. >> amid all of this economists insist inflation hasn't been an issue despite higher food and energy prices lately but the producer and consumer price indexes are rising a little bit more than in the recent past. >> more analysis on where we may be headed where we're headed inflation wise. david, are we destined for much higher inflation, especially given the easy money policy we've seen from the fed for five

years now? >> well, i think one of the reasons why we're seeing inflation going up and why we will continue to see inflation going up is it because this is a deliberate policy by the federal reserve and other central banks as well to bring inflation moderately higher so i would have to say the data are actually telling me right now that their policies are actually starting to work in that record. this time last year the inflation rate is sitting at 1.1%. at the end of 2003 inflation signature at 1.5% and today it's sitting 259%, and my sense is over the next not just several months or quarters but next several years moderately higher inflation is going to be in your future. >> okay. jim, you don't have to try too hard these days to knit together a story about inflation just generally rebounding from the record lows. you would think the bond market would be super sensitive to it but it didn't seem to care. why? >> i think they did start with

the bond market and it will be the next big story, that at a minimum deflation is done with. it went from a 6% yield to 3% yield. everybody was positioning for it and already short it and that's why the bond market i think is having a hard time selling off or yields going higher at this point because everybody has been waiting for it to happen for a year, and it's just been so slow to evolve that you're starting to see them being forced back into the market which is why yields have been falling for most of the year. >> david, do you think that the fed is behind the inflation curve? that's often the charge against them, that they start to raise rates well after they should have given whatever is going on with inflation at that point. when we had a preemptive fed that was aiming towards the holy grail of price stability, you know, 10, 20, 30 years ago, yeah, would i say that they are probably behind the curve, but let's make no mistake.

this is a fed that wants inflation to go up. >> which is remarkable. >> not talking crazy inflation like the 1970s, but ben bernanke told us at the last press conference that his big concern is inflation was too low. in the old days it used to be inflation concern was too high. now it's too low so this is not being behind the curve. this is exactly what they want to see. >> well, the world changes the fed is responding to different incentives, and what's interesting about all of this, again, are we setting up for more of a problem, a reset, i don't know what you want to call it, in the bond market, six to nine months down the road. will people show up and not be buyers one day? >> the fed is the dominant player in the bond market. the fed has changed the game in the bond market. i saw steve liesman on with his toolbox and showing all the tools that the fed has and the takeaway is the fed doesn't know how they will do it yet.

they will figure it out when they have, to and the bond market is going to have some growing pays as they sort out how to use the new toolbox along the way but right now the big growing pain that the bond market has is there's no more sellers. everybody has sold, past tense, has sold the market already, and that's why it's been very hard for it to go down for most of the year. >> jim, we talk about bonds and how they don't seem to be worried about inflation. what about gold? a, is it still an inflation indicator and, b, if it is, why is it sitting in a three-month low right now? >> gold is a lot of things, one is that it's an inflation indicator, it vacillates on global tensions and also vacillat vacillates, i know if you don't understand the gold market, indian jewelry market, had an election and modi won and he's going to change the rules as far as importing gold and that's had something to do with it as well. a lot of facets go into the gold market. i wouldn't read this as being

one about the economy or about inflation with the big drop today. >> and david, just a question to go back to inflation and whether or not it can generally rise from here. if we're seeing increases in food and energy and even rents to some extent, aren't those more likely to act as a tax on consumers and undermining inflation growth down the road? >> well, that question becomes what will happen with the labor market. we just came off three consecutive months of 200,000 plus on non-farm payrolls, my sense looking at the claims data is we'll have four months in a row of 200,000 plus, and, kelly, we haven't seen something like that for all of the talk of the economy and no question that first-quarter gdp was moribund, four months of 200,000 plus on payrolls has not happened since the beginning of 2006, so my sense is that the labor market is tightening more than people think. wages are a lagging indicator.

they will accelerate to help cover for the rising inflati inflationary budget. not food and energy. take a look at core service sector inflation. 60% of the spending probably is services. >> yeah. >> core services are running at a 3% annual rate just over the past three months, and to me that's the real kicker, and, remember, these are very labor sensitive sectors at the same time. >> david, you're someone in the past who has been concerned about the economy, seeing it headed down and back up and it's fascinating as a result to follow it with you. really appreciate your insight as well. >> thanks, guys. >> 20 moments to go and the dow is up almost 71 points, right about 71. the nasdaq is adding 41 and ten for the s&p. >> and we mentioned utility stocks, have been pretty good this year. dominic chu takes a look at what's been driving the gains. that will be in our special sectornomics report. find out if it's too late to get

in on that action. >> and tom joys gives us his reaction to the michael lewis book saying the stock market is rigged. we'll be right back after this. ♪

[ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪

my mom works at ge. ♪ welcome back.

profitable, utility, one of the best performing sectors this year. >> dominic chu has a special report on what's behind the utility surge. dom? >> not sexy but they are important. these companies make up just a paltry 3% of the broader large-cap index. now, so far this year, they are the best performing sector, up 10.9% and investors like utilities because they are considered defensive. less subject to the ups and downs of the overall economy and cyclical tie. you get paid to wait. now, edge asset management manages over $26 billion in assets with income generation as a core part of their strategy. president joe kuhnive says there's a number of attractive qualities for these utility stocks. utilities have shown steady growth in earnings per share even with a low-growth environment for the overall

economy. second, many have steady growth in their dividend payments as well. they are picking stocks with meaningful dividends and grow that dividend overtime. more neutral on the secretary overover all at these levels but does find have in certain individual stocks like sempra energy for one. they have had substantial growth. sempra is up 20% and wisconsin energy is up 9% so far this year. both stocks are outpacing the sector and the broader s&p 500 so you can find outperform overs even with the sector with a more neutral outlook. so far today we've told you the bull case and bear case for utilities and told you where the biggest yields and and where the biggest growth is and now it's up to investors to see if there is there's a case for growing utilities. >> thank you, dom. see you later. by the way, looking forward to this tomorrow. a new survey shows many

americans are afraid of going broke in retirement but here's the rub. they are not willing to curtail their current spending in order to save more for that future retirement. we're going to talk to the man behind that survey coming up tomorrow right here on "closing bell." do not miss that. >> that's going to be -- >> every time we talk about this issue, how underfunded retirement plans are, there's a lot of attention. people know that this could be the next big crisis. >> don't talk to me about it right now. i'm busy living my life. >> 14 minutes left. moving higher. the dow is up 75 points. we're only 30, 35 points away from an all-time high on the industrial average on a closing basis that was set three weeks ago today. s&p is in record territory, up nine, ten points right now. >> median ceo pay topping $10 million for the first time last year. is it time to pull in the reins in the pros will weigh in on ceo pay in the next hour of the show. we want your thoughts, too. we'll be right back. l be right . she keeps you on your toes.

you wouldn't have it any other way. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure.

do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about experiencing cialis for daily use and a free 30-tablet trial.

welcome back. 35 points away for from an all-time high on the dow. it's actually the nasdaq leading this rally again. >> seema mody up with the

nasdaq. what's driving it higher today. >> kelly and bill, the same stocks that weighed on the nasdaq earlier this year helping to lift the index higher so the nasdaq definitely has some momentum behind it. you're seeing names like priceline and tesla move to the upside, but large-cap tech stocks also continue to shine. cisco up graded at deutsche bank from buy to hold and apple getting its mojo back, back above $620 a share, excitement over the iphone 6, feeling optimism and google shares up 2% on the day, but small-cap stocks, also a focal point for investors. you're seeing the russell 2000. the small-cap index up about 1% on the day and up 4% over the past one week. of course, this is an index that houses many domestically oriented names. the index was in correction territory earlier this year, but now staging a comeback. bill and kell? >> yeah, that's a big bounce for the russell. thank you, seema. we'll talk to you a little bit later. >> as we head to the close, joining us to talk about this,

mark rich peterson and robert frost. welcome back. is this a market expecting growth or are they still playing defense sniffle. >> it's a little bit of both. as we're talking now about s&p 2000 as opposed to s&p 1800. we have great earnings. the greatest story never told is that earnings excluding financials is the best since the fourth quarter of 2011. 6.14% in the first quarter of 2014. financials very strong, consistent earnings growth. cash on a balance sheet and a combination is still the name of the game and the fed -- the fed hike rates is going to be happening later than sooner. >> robert? >> yeah, i mean, capital utilization right now is at normal levels and when we look at cash on balance sheets, all-time highs, corporate profits are substantial. still not quite what they were but still substantial. >> those things are the very things that people who doubt this market will point out as

reasons that corporate profits aren't sustainable. companies have too much cash and will spend it in ways. >> not hiring anyone. they are paying dividends. >> poem have looked for a reason since 2010 to doubt this rally and the fact is the market has come back 170% from the bottom and yet, look at all the money sitting in cash right now. if we could get private investors to believe in this market rally and believe that the economy is strengthening, albeit not quite what we expect but it's still improvement. remember, the worse the correction the lower the rebound coming back, but we expect that eventually as investors buy into, it it should lead to a nice second leg up on this rally? >> this year, or you just mean for the next couple of years? >> what we've been expecting and telling our clients, over the next few months it will be slow, but we expect once we get through the very lackluster numbers from the first quarter, we think that by september and

october market is really going to take off. >> speaking of which, you guys at s&p, you still have a target of 2000 on s&p by the end of the year. >> target out at 1950. >> you'll have to revive that at some point? >> i'll leave that to the investment policy committee to make that call. as my colleague has said, you know, we'll have to see the recovery housing, see more job hiring and all factors have to come into play to have a more sustainable leg up on the rally. 4% for the year. we're going to see a strong single digit, you know, growth of 2014, maybe total return, approaching 2014. >> even though as the journal highlights, it's unusual we're that sideways this far into the year. that doesn't worry you at all? >> i think, again, growth and looking at the second quarter numbers, probably up to over 10% by the fourth quarter. >> we're going to take a break.

as we come to the closing countdown for this tuesday. >> after the bell, sam shepherdson and why he's sounding the alarm on inflation. what it's a bigger problem than what the fed is ready for and what it means for your investment. that's all coming up after the bell. bell. problem isn't likely to go away... ...on its own. so it's time we do something about it. and there's help. premarin vaginal cream. a prescription that does what no over-the-counter product was designed to do. it provides estrogens to help rebuild vaginal tissue and make intercourse more comfortable. premarin vaginal cream treats vaginal changes due to menopause and moderate-to-severe painful intercourse caused by these changes. don't use premarin vaginal cream if you've had unusual bleeding, breast or uterine cancer, blood clots, liver problems, stroke or heart attack, are allergic to any of its ingredients or think you're pregnant.

side effects may include headache, pelvic pain, breast pain, vaginal bleeding and vaginitis. estrogen may increase your chances of getting cancer of the uterus, strokes, blood clots or dementia, so use it for the shortest time based on goals and risks. estrogen should not be used to prevent heart disease, heart attack, stroke or dementia. ask your doctor about premarin vaginal cream. and go to premarinvaginalcream.com this is worth talking about. cozy or cool? "meow" or "woof"? exactly the way you want it ... until boom, it's bedtime! your mattress is a battleground of thwarted desire. enter the sleep number bed, designed to let couples sleep together in individualized comfort. he's the softy. his sleep number setting is 35.

you're the rock, at 60. and snoring? sleep number's even got an adjustment for that. you can only find sleep number at a sleep number store. and right now all beds are on sale starting at just $649.99. hurry in, sale ends sunday! know better sleep with sleep number. ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. coming up on the three-minute mark.

here's how the four major averages have done today. everybody is positive. the dow is the lag-yard. it's up less than half a percent right now. the s&p is up half a percent, but, again, that's all-time high territory, still above 1900. we closed above that for the first time last week. nasdaq is the better performer with a gain of 1.1%, but the bigger gainer once again, as seema mody was pointing out, the russell 2000 as it bounced off that level of a couple weeks ago when it was down 10% from its most recent highs in correction territory, as we say. up 1.3% today. how about the ten-year you ask. well, it's bumped up a little bit in terms of the yield. we're at 2.51% but today we learn that mortgage rates had the 30 years fixed mortgage now is below 4% for the first time since last october, so we're still watching the housing market and the home price data was pretty good today, so housing is showing some signs of recovery here, but we've still

got a lot of houses under water. >> we do. >> we go back a year. all everybody talked about was how house prices were accelerating at such a point that they would become unaffordable again and we'd be in a bubble and we've seen a little bit slower growth in that sector. maybe that's a good thing. when you take into account the fact that banks really are still not lend, the amount that you do have to put down and the credit score that you have to have it's substantial, the fact that anybody can buy a house in this market is pretty surprising and a lot of people are buying multi-tenant which doesn't show up in those numbers. >> you're the real estate expert. >> prices are not falling down as dramatically and better existing and new home sales we got last week. >> but are mortgage rates falling because demand has not been all that great? >> sales have been farrelly good. my wife has been an agent for 30 years in philadelphia. the problem is there's not

enough inventory. that's a major problem. the paradigm two weeks ago was housing is falling down, but i think the data in the last three days indicates it's not falling down. definitely may not be roaring, but it's not falling down. housing stocks are reflecting that today, and data today i thought was very encouraging. >> and the housing market, young demographics that need to get out of student debt problem. so many young people have so much debt when they get their first job and trying to pay off their debt rather than save for a down payment on a home. >> home builders don't have the inventory and not building new homes so demand is not there so they are sort of stuck now, too. >> as we've weeded through all the foreclosures we've had to look at new home builders, and they simply don't have the inventory to keep up with the demand, so like i said, it's a good thing, supply and demand, not a bad thing. >> we'll leave it here as the

glass is half full. thank you, guy. thanks for joining us today. we're going out with decent gains for a tuesday. the s&p up 11 points. will it close at a new all-time high and some of the other secondary averages doing good as well. kelly evans with a stellar panel today. see you tomorrow. kelly. thank you, bill. hi, everybody, and rubble to "closing bell." i'm kelly evans, and you guessed it. it's another record close today for the s&p 500. take a look at how we're finishing the day across wall street. a pretty good session for all the major averages. dow adding 70 points here at the end. just under half a percent. the nasdaq, the strongest performer again of 1.2 or more than 50 points there at the bell and the s&p 500, finally that's the one we just set a record close at 1900 on friday. today, 1911. up 6/10 of 1%. joining me now to help make sense of it all is today's panel. david seymour from cowan and

company and michael yosikami, our very own kate kelly and our contributor friend anthony scaramucci and it looks like history is bearing itself out because quite commonly when you get one record close it's followed by another. i guess the question is how much further can we go from here? >> it can grind. it can grind higher. low volume and grind high through the summer could occur. i think the chase will happen come september when you have the pickup in hedge funds. they will actually go out and try to find performance so they are underperforming right now but riffly 2, and i think that, you know, again, we could see the low volumes sort of grind higher through the entire summer. >> i'm starting to hear about the chase. i feel like more and more people are saying we just heard it in bill's markets and dave miller has been talking about the risk of a meltup out there. >> i saw the same report and had the same reaction. it's very interesting, lost ground needs to be regained here, but if you take a look at a b of a report, speculators,

hedge funds and other spec la trif traders got out of their s&p long positions at the fastest pace in two years and they are net short and what i'm hearing from those i talked to a lot are expecting a big correction in july or august, may grind a lot for a while. >> had this conversation quite a bit, and the next connection doesn't materialize. >> we're tracking over 1,200 funds and kate is on to something. they are on a net short basis. if you look across the spectrum of funds which is why the grind higher could lead to a meltup, because what these guys do is reverse course in a hurry to try to catch up with the market, and they are definitely more on the cautious looking for a correction side right now. >> michael yosikami, where does that leave a lot of guys that are looking at the market with every record high saying i already missed the move. >> there's behavior starting to

occur with small investors, more individual investors, that when the market does drop down, even if it drops down 2%, 3%, 4%, you see people buying into this market because they don't want to move that next -- they want to move the next move up so what you're starting to see is some support on the buy side when the market goes down. that's why i'm not of the belief you're going to see a huge correction down because i think there are people waiting to buy who felt like they missed the move. >> no question. just add to that as well. i mean, look at the options market. the options market is not pricing in a big downside move. >> that's true. >> it's not pricing in a big upside move. look at skew and say skew blows out when people get fearful. it's moved higher and moved higher because upside calls are not in demand right now. nobody wants them because they are basically saying -- >> not putting their money where the mouth is. >> don't think the market has a lot more upside. >> and i don't mean to recycle another thing we talked about a lot. take a look at the vix, people think it's abnormally low and

looking for more volatility very, very soon. the vix seems to be potentially out of step with what investors are thinking so it's a very tenuous time and it's been seeing all year and another thing we've been seeing it's going to be a volatile year, especially for 2014. >> joining us is "fast money" trader tim seymour. what do you think? we've been batting this around, sort of the skeptical view from the fej hundreds. sounds like the retail audience is getting a little bit more interested here, but do you think that this volatility this summer is -- is finally going to re-emerge? >> hedge funds, long short guys are paid to be on both sides of the market, and it's been a -- it's been a bad place to be to be a long-short manager. you're not competing with the s&p. more or less gone up without any major pullbacks. pulled back no more than 5% but i do think that the rotation that we've seen is something that continues and if you play some of these moves say back into transports, into industrials and cyclicals i

think you get rewarded and looking at the commodity space, quietly you also have industrial metals. nickel is up near 20,000 and copper 10% off the lows so these are places that you can start to look and i think they are telling you something about the global economy. i've said all along that i don't think the world is that bad of a place. >> well, i think we're getting philosophical now. >> i don't know if you called the discussion last hour, great to chat last hour about inflation. do you have a view on this one way or the other? do you see what's happening in the stock and bond market as sending different signals? help us all make sense of it all. >> i think there's a false signal being sent by the bond market right now but it's just hard to see how inflation is not going to creep back in the system. i think that really if you look at what's happening with the equity markets in large part, obviously it's been driven by what's happened with the federal reserve. unless we have some significant indicators to suggest inflation is here and the fed is saying all we're concerned about is

weakness right now. that's all we hear coming out of europe right now, it's going to further fund equity rises. now, is that going to change one day? cycles change. when is it going to happen? i've been waiting for it to happen for a year and a half. still hasn't happened and one day it's going to change and i think it's going to change quickly, not gradually. going to be surprising news. >> speaking of inflation, i'm curious what you are thinking of the ecb and what's going to happen on june 5. i'm hearing a lot of chatter about that. david tepper at anthony's conference made a huge point about how the ecb needed to do further easing and it may even be too late. >> look at the reaction today in the markets. even over the weekend european central bank is having its version of jackson hole while elections are talking about the break-up risks across the eurozone and europe exit's bid because the central bank will come in. >> i think it's unlikely that the euro will break up. this is going to become a political crisis.

there's even on the table, kelly, possible quantitative easing in a different than -- in addition to easing interest rates. it will be interesting to see what happens here, but my guess is after elections are over the bank will get lax in terms of its monetary policy which augers for a higher market. >> just for one sector. an earnings alert. one of the big names in cloud computing has been part of that selloff of late and out with quarterly results, dominic chu has the numbers. what can you tell us? >> work day like you said, a cloud-based provider of employment solutions so think hr solutions, think financial management and time cards tracking. workday is moving higher in after hours. we'll call it 5% or 6% on about 170,000 shares of volume. first-quarter revenues came in above street forecasts. it was a $160 million versus 152 million in terms of the revenues. also the loss was smaller than expected, a lot of 13 cents a

share. also provided second quarter guidance on revenues that came in as better than expectations see revenue coming in at current quarter at 173 and 178 million. that beats the average analyst expectation of about 172 million so, again, work day shares. you can see they are on the rise about 5% in the after hours on a relatively thin trade so far but, still, 195,000 shares and the stock is up about 5%, kelly. back over to you guys. >> dom, thanks very much. again, they have been caught in the broader selloff. we're reminded right now they don't have earnings. all that said, how does workday fit into the cloud and into the kind of tech thesis that you guys have right now? >> well, i mean, look, first of all, the plug, a nice tech conference. we'll get a lot more information coming out of conference tomorrow and thursday, but, look, the reality within tech is right now what you're seeing is a real bifurcation. you're seeing a massive change in the way investors are looking

at technology. they are looking at user growth, and they are looking at revenue growth, right? revenue growth has picked up a little bit but user growth already outstripped it, especially the internet names and user growth is actually declining, people are looking at this space in a very different way right now. >> walking away from it, you mean? >> i don't think walking away from t.user growth needs to pick up for this space to actually move forward. >> because in the meantime it seems like everyone is just buying apple instead. >> they are buying apple. let me comment on workday. workday is ten minutes away from our corporate office and the sentiment around workday is very, very positive, as you probably know, as most of the viewers probably know. it's basically a people soft former employee company, and i think workday is really positioning itself well for the whole outsourced hr boon that's happening. in terms of apple, the stock that everybody loves to hate. one thing i would say about apple is apple is not really a

technology company. i mean, people think that it is. it's not. it's essentially a retailing company. when you hear stuff about home office or home automation through the cloud or you see other items that they are coming up with, perhaps inside the car, they are going to be game changers for apple. >> you don't think that makes them a tech company. >> we can call them a tech company, but, you know, i write a column on cnbc, commentary on cnbc, and whenever i say apple is a tech company i get hammered by 100 people that say it's dead. there's no innovation. i don't know what else there is to innovate. the reality is basically apple is looking for new markets to sell existing products and go into the upgrade cycle and seem to be doing a pretty good job doing it. >> in terms of trading tech stocks, an interesting story by our colleague this afternoon so they made news after having a rough april. down 9% after saying we'll return 2 billion to investors.

don't want to be asset gatherers and the subtext is you need to remain nimble in these markets and in this case they got hurt on the long and short side of technology. however, investors complained, and they are actually going to not give the money back, at least not right now. >> and they did okay in may. >> and the idea was let's not lock in our losses and i think it bespeaks the notion that maybe there are further gains and further upside. >> so true. tim, quick last word before we let you go. what are you watching tomorrow? >> the m & a activity today continues very interesting. the hillshire farms, pinnacle, pilgrims brings a lot of people into the fray. we'll talk about a lot of situations where there could be other targets out there on "fast money" and this is the theme that continues to drive markets higher. >> great point. seeing the financials give a bit on that as well. thanks, tim. >> thank you. >> catch tim seymour coming up with that discussion and the rest of the "fast money" crew at 5:00 p.m. they will be speaking with exclusive mark andriesen about what's coming out of silicon valley next. don't miss that. now, sounding the alarm on

inflation. price increases may be relatively tame right now, but coming up we'll hear from another person who says investors shouldn't be ignoring increasing signs of inflation indicators. also, is the market rigged against ordinary investors because of high-speed trading as michael lewis claims in his book "flash boys." knight capital chairman and ceo tom joys is here to weigh in and the median pay of ceo's large public companies has topped $10 million for the first type. some say that's obscene and others say it's proof that pay for performance is working. we'll debate that one when we come back. come back. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york.

[ male announcer ] see if your business qualifies. become the next business to discover the new new york. you need to see this. show 'em the curve. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in... it's beautiful. gotta admit one thing... ...can't beat the view. ♪ introducing the world's first curved ultra high definition television from samsung.

welcome back. we start here with a news alert on one of the wall street workers prosecuted on the financial crisis. mary thompson has the details. >> reporter: former goldman sachs vice president from a piece toure will not appeal the case against him. last summer he was found guilty on six of seven counts linked to securities fraud that was linked to mortgage securities deals that were done back during the financial or during the financial crisis. in a state he said, well, my lawyers have advised me there's strong grounds to appeal. i prefer to move forward with my education and close this

difficult chapter in my life. he's currently a phd chapter at the university of chicago in economics. he was ordered to pay $825,000 in fines and penalties and according to people close to this situation he has done so, so, again, faprice tourre not to appeal the s.e.c. case against him on which he was found guilty on six of seven counts. >> three words that have rocked the financial world, high frequency trading, a hot topic among wall streeter and retail investors alike and the topic of michael lewis's book in which he claims the stock market is rigged. former ceo tom joyce is joining us now. welcome. >> thanks a lot. >> our bob pisani is here as well following this whole story for us. tom, first of all, you left knight last year, in the meantime this book from michael lewis has come out where he says the u.s. stock market is rigged. is he right? >> no. he couldn't be further from the

truth. in point of fact, he's dead wrong. let me ask you a question. who is rigging the market? is the s.e.c. rigging it? i doubt it. it duncan -- >> he's accusing the high frequency trading if firms more like a knight capital of front-running and skimming from their clients so over a period of time sophisticated players are paying millions more than they otherwise would have to. is he wrong about that? >> wrong about a couple of things. knight capital group was never high frequency trading. we did merge with somebody which is why i left that. firm was the high frequency trading firm and i'd prefer not to have anything to do with them. having said that, the retail investor should have no concerns at all about high frequency traders. high frequency traders, assuming they are not doing anything nefarious like front-running or doing anything illegal, they have a different time horizon

than anybody else. >> let me bring bob pisani into this conversation. how does this ring with your experience? look, you talked to the git guys here every night and day. >> what i thought was interesting is your comment is you elected to leave and we all knew that about the deal that came down with knight, but you said you elected to have nothing to do with them. why did you decide not to have anything to do with them? >> that's a more complicated question. i didn't like their business model at all and one of the reasons they needed a partner like knight is they weren't doing very well so that's a much more complicated question but to the point of it, hfts, if they are doing things according to the rules of the trade, should not concern anybody. >> yeah. let me ask you a follow-up on the technology issue because nooigsing knight was almost brought down by a technology glitch, famous technology glitch that occurred. the s.e.c. is considering mandating uniform standards including the exchanges and firms like knight that would require uniform testing

standards. they are considering implementing this under the title regsei. do you support the s.e.c. to have uniform testing standards? do you think that would help reduce the possibility of the glitches like the one that happened to knight? >> i don't think there's anything wrong with it in the least. uniform testing standards apply across the industry will make sure everyone is on the same page. i think in general that is a worthy thing to pursue. >> let's take -- let's take the word rigged off the table. that's a very loaded word. >> indeed. >> it's obviously a word that in my view really is not accurate. >> it's flat out wrong. it's an irresponsible word. >> we'll call it that. so let's use another word. do you think regardless if the rules allow it. do you think it's fair that those with a computer edge, a high speed edge, have the opportunity to actually skim off the top. not that it's rigged, but do you think that's fair. i'm not saying whether it's allowed. we know it's allowed.

is it fair in your view? >> in addition to making markets, what they are saying they are doing. front running. >> wait, wait, way. maybe some people do front run liquidity, and i can tell you what, if anybody is front running anything they are breaking the law. and if you front run swiftly or if you front run slowly you are breaking the law, and those people should be prosecuted. >> all right. let's not use the word -- >> i can't get too twist ed abot some people who get their phds in applied mathematics or physics and instead of pursuing a job at boeing or google they decide to apply their skills to the stock market. how could you find any fault in that? >> because if it results in someone having an edge. >> a lack of fairness. >> right. >> that's what it results in, and just because it's allowed. just because they have the degree and someone else doesn't and it's not a rigged market let's say, shouldn't that be something that is the slapped down by the feds?

>> the broader question -- i think this is kind of a funny -- a funny argument. 1925 when some rich guy put a telegraph machine in his office instead of having a runner going down to the corner, was that illegal? you know, when they had -- >> this isn't 1925 though. >> time-out. >> hang on. >> finish your thought. >> when they had specialists on the floor of exchange in a much more vibrant market because my specialist did more -- my floor broker did more business, he was standing closer to the specialist, was there something wrong with that? people have always had an edge. >> there's a scale issue. if have you computers and technology you can -- >> you can't have fairness in an unfair world and it doesn't exist. >> how can it be unfair if they are playing by the rules? >> i have stock for sale at a quarter, right, and some buyer comes in and tries to take that stock at a quarter and a system detects that i'm coming in to take that stock and they take it ahead of me, that's fair?

i think that's ridiculous. >> that's front running. >> that's what it is. >> but what you're saying is there's a difference between legal and fair, right? tom, don't you think that's the case? >> i think it's pretty bold of us to decide who is fair and who isn't fair. why should your judgment on who is fair be any more valid than somebody else's judgment on who is fair? >> all right. >> it's all about whether people are playing by the rules. >> sure, if somebody gets faster access to quotes and faster fills that might be more attr t attractive, is that fair to people who aren't getting that? >> t.j. is making the point that life has been unfair since the beginning of the market and 50 years after we're all dead it's also going to be unfair. >> wait, that's not the point. >> trying to make the system fair we have to accept that there are going to be people in the system that have edges, no question about that. >> let me ask you that question. that's interesting. hfts is a broadly used term,

right? multiple participants within hft. who are the good, the bad and ugly, can you break that down for me because it would be good to know that. i would love to know who the bad are and let's eradicate them. >> i'm quite sure if i go out on a limb and start naming names i would have a whole bunch of attorneys calling me. >> which side of the equation is it? what participant group is the part that's bad? or that's acting in a way that we're saying the word unfair? >> i think all of them who are serious about being in the market should be registered as market makers. that's one of the things when we were at knight we had proposed for years, and it really never got any uptake in washington but start by registering them as market-makers. i think that would go a long way. >> what is it about the current system you would like to see changed? you just mentioned there putting more responsibility on high frequency traders as market-makers, maybe requiring them to leave quotes in place for longer periods.

what would you change about the current system if you were the king of the world? >> i would probably do two things pretty quickly. i would have a pilot program and change the tick size. i think a lot of people will admit if there's only a penny at risk then a lot of people will be involved but if the tick size is a nickel there's more p & l risk and you might shake people out and i'd also have a pilot and get rid of the make or take rules. ie, make or take prices and get paid for posting and you have to pay for liquidity. >> if you inherited a firm before your time there really standardized the whole flow idea, that was the something that was the underping of knight in its earlier years and your philosophy is at this point that that's not the right model, correct? >> i didn't say payment flows are bad. >> make or taker is a cousin of payment or payment flow. >> it's not a brother or sister. >> payment for order flow is terrific. you have to remember what's it's financed.

go ongy felt's website, free charting and free access to research and free this and free that and paying $10 a trade. it has its place in the marketplace. i they we should do some pilots and discern whether or not make or take makes sense anymore or whether these penny spreads are too tight. >> hang on. >> we pretty much have to go, out of time. really appreciate you giving us a sense of where you see fairness and unfairness in the markets and just wanted to end it by simply asking you the question, you know, for most investors out there, do they need to be worried about the current structure of the stock market or not? >> not in the least. retail investor has never been better served. prices are tighter for them. the surety of executions have never been better and been in dozens if not hundreds of academic studies that buttress that. the retail investor has it as good or better than they have ever had it. >> please come back. >> come back again. >> thanks. >> thank you so much, bob. really appreciate it. >> wow.

food prices on the rise, but inflation as a whole has been pretty tame. my next guest is saying that's not going to last much longer. he's painting a pretty drastic inflation picture. that straight ahead. also, home prices rising for the first time in five months. but it's not all good on the housing front. diana olick has the details a little bit later on "closing bell." bell." today is tuesday today, we greet you. treat you. care for you. today, you can come to cleveland clinic for anything, everything or just to get that "thing" checked out.

big, small, and yes, the best heart care in the nation. it's here everyday, for everyone. that's the power the power, that's the power of today. cleveland clinic. call today, for an appointment today. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you

is all in one place, so finding more insight is easier. it's 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. welcome back. fed chair janet yellen emphasizing that the u.s. is at

greater risks for low inflation rather than high inflation. my next guest says there's economic factors beginning to creep in that could push the inflation rate higher much sooner that be expected. joining me now is the she have economist at pantheon macro economics i believe from london. thanks so much for being with us. had a similar discussion with dave rosenberg last hour but you feel perhaps more stronger that inflation is coming. what do you mean by that and why? >> well, i don't want to sound too alarmist, but my problem is really the market is very complacent, and to some extent so is the fed. what we've got is a combination of things, an unwind of of very favorable technical factors like the big slowdown in prescription drug prices which is over. we've got some incipient pressure on wages which i think is going to intensify over the course of the pushing of the rent component of the cpi which is 40% of the index. we've got a bit of upward pressure coming on things like car prices and clothing prices

and maybe some upper momentum soon in health services as well which has been slowing and i don't think that's sustainable and we've also got for the first time in a long time what looks like a bit of upward pressure or attempted upward pressure in margins which is a very new and striking development. when i put all those things together i don't get a horrible inflation picture by any stretch of the imagination but i do get a picture not quite as good and boring as into the as the consensus. >> but let me -- let me be -- >> michael yoash cam? >> complacent is what you led with, and i'm hearing that many of the people, that many of the analysts, many of the strategists that are concerned about inflation cite as the first issue complacency. >> hang on a second. your mike actually fell off, so can i paraphrase for you. >> yes. >> ian, let me ask about this complacency. why don't people believe it if there are signs that this is happening?

>> well, because none of it is in the current inflation numbers. it's all lurking in the corner and right now the market is sort of marching towards that corner with its eyes closed and that's what makes me nervous. we'll turn that corner and maybe in three or six months time we'll say, wow, didn't see that coming, and the risk is kind of broad, and that's what's interesting, you know. this is a few different things all coming together at the same time, you know. margins, rages, rents, prescription drugs, clothing, a lot of things. >> just a quick question on global wages. i mean, do you see a lot of wage pressure, collective bargaining agreement being resized and things like that. tell us where you see the wages going up, if at all. >> a great point, anthony. >> yeah. it's not happening yet, but what we can see in particular i would urge you to look at survey of small business, small companies, micro companies, were asked whether they are able to fill the job positions they have open and increasingly they are saying no, we can't.

can't get the right people and that's become quite a big problem and it tends to be a leading indicator of where wages are going, not because of any great sort of union-based collective bargaining agreements like we used to see 30, 40 years ago, but just because hundreds of thousands of very small businesses are finding it very hard to get the people they need and they will have to pay more for them and that's why i think in the very same survey we're seeing attempt at pushing up profit margins which is something we haven't seen before the financial crash back in '08. >> a real infliction point given how the rally has played out over the last four years. >> is the fed looking at the right measures here? i mean, when i look at the unemployment rate, and there's something called the non-accelerated rate of inflation, right, they look at 5.5% as being sort of that equilibrium where the fed can actually, you know, can have stimulus and really won't be that crisis of massive inflation. i'm being told by some people that i have talked to that that 5.5% number is old school and it should be looking like more of a

7% number which is above that and now we're past it. i'm not saying we have massive inflation right now, but is -- is there a chance that inflation creeps up a lot quicker and it really ramps up and the fed isn't quick enough to react. that's the part that real scares me. >> yeah, yeah. >> the easy way for that to happen is if the labor market turns out to be as tight as more nervous people think and instead of wages growing at 2% as they have for last four years and suddenly they are growing at 3.5%, 4% and what will happen we'll see a quick acceleration in rents because the rental market is extremely tight and landlords are desperate to raise rents but the customers haven't got any money. if you put money into those people's pockets through wage raises landlords will take it out very quickly and that's part of the cpi inflation and we could see a really quick turnaround and that's what makes me nervous about it. >> i'm calling for the rent is too darn high party but that

might be a new york thing. >> sounds like that's nowhere in sight. >> really good to get your perspective this evening and i will say given the preponderance of people talking about this, the fact that the bond market hasn't moved itself is such a story. apple hasn't closed a deal for beats audio yet but buyers of the tech giant stock don't care. apple stock on the move on our hot list next, also ceo pay hitting a new milestone. median salary over 10 million. is that a signal that ceo pay is out of control, or is pay for performance really working? the panel tackling that question in a bit on "closing bell." n "c" a bike that honored those who serve our country. and geico gave me that opportunity. now naturally, we wanted it to be powerful, innovative and we built this bike as a tribute to those who are serving, those who have served and their families. and i think we nailed it. geico.

proudly serving the military for over 75 years.

welcome back. last hour we were talking about the fact that apple still hasn't closed the deal to purchase beats audio. the stock is on the move though, and it's moving up the cnbc.com hot list. joining us with the hot list is cnbc.com managing editor ale len wastler. >> diana olick took a look at housing prices as she does quite often and this one, the top 1% of housing is on fire. sales have gone up 21%. the other 99%, down 7.6%, so sort of a good news, bad news

thing from diana. that's got reader interest and also the apple story. we have a feature by our markets editor looking at apple stock and it's got its mojo back, she says. >> momo. >> since they announced their earnings, and people are thinking that the investment that's made in research is about to pay off, so people are diving into that story as well. my number three ties right back to the guests that you just had on, a feature by jeff cox looking at deflation as the great hoax going on amongst central bankers right now and that inflation is really about to take hold, so common theme going on for today >> exactly. heard it both hours of this program. allen, thank you. >> take care, kelly. >> good to see you. again, go back to the housing point or go back to apple. you were writing about apple, michael yosikami. does it have anything to do with the beats deal not going through or other factors? >> headline that rumor that had apple will be releasing something related to apple tv as

well as -- >> oh, the ft platform for life kind of thing. >> exactly. >> and i think apple, too, is a stock that's been so hated and zone so unloved for so long that any positive news at this point, i think the pendulum is just swinging the other way. >> i don't know. i don't know that it's so unloved. so many people hold it. i think in the last year or two -- >> just because i hold it -- just because i hold it doesn't mean they love it. you should talk to people who hold apple stock. man, it was at $700, now it's not. i hate it. it's looking horrible. >> what's it at, 625, something like that? >> exactly. >> so to talk about where it was down in the 3s i could understand theage risch but frankly a nice rebound. >> that's not how apple s.people expect it to go up 100 a year forever and when it got to 700, a guest i saw on cnbc and put a price target on immediately that it would hit 700 at 1100 so after a while it becomes a greater fool's game. >> when you think about apple, you think about steve jocks, the

innovation there. >> yeah. >> everything was so cutting edge. incredible to watch. >> not really, not really. >> what's the real technological advancement? >> in a word, if you could. >> in a word. >> yeah. >> maybe five. >> apple is an innovative retailer, an innovative in terms of putting together products that they can launch for a long period of time. that's what tim cook does. >> that was the whole concern when the book about tim cook came out. are they in a new and less lustrous generation where steve jobs' work will never be recreated and this is the new normal? >> tim cook hanging in there for now. ceo pay making headlines. for the first time ever the median pay of ceos topped $10 million, and some are saying pay for performance is working. companies are making more money, stock prices are higher, but not everyone agrees. we'll have that coming up. plus, home prices higher, but not a lot higher in march. is that a red flag for the housing market, or will these falling interest rates help to spark a resurgence?

diana olick will break it down for all of us. for all of us. (vo) watching. waiting. for that moment, where right place meets right time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

welcome back. ceo pay is on the rise again according to a new study and mary thompson has a look at who is getting what and there's eye-popping number. >> reporter: as the stock market goes, so, too, does ceo pay. stock market rose 30% in 2013 and with half of ceo paid tied to stock performance it should come as no surprise that the

median pay rose 8.8% to a record $10.5 million. that's up from 9.6 million in median pay that they earned in 2012. it also marks the fourth straight annual increase in ceo pay, and has put their pay at 257 times that of the average weekly worker's pay. the pay gap expanding significantly over the last five years. back in 2009 it stood at 181 times the average weekly worker's pay. now, the study looked at the pay of ceos on the job for more than two years at 337 s&p 500 companies that filed their proxies by april 30th. the ceo of the oil and gas firm nabors industry was the highest paid, pulling down $68 million followed by cbs' les moonves at over 65 million. freeport mcmoran was number three at 55.3 million and trip advisor steven coffer, a newcomer to the list, earned 39 million last year. most of it because of a large stock option grant. despite these high numbers, shareholders do continue to

support these pay levels. only 2.5% of the firms in the russell 3000 saw shareholders reject the executive pay plans on a vote. >> if company's bottom lines are lower and stock prices are higher, are the ceo salaries justified if you believe in the pay performance kind of a model. ed tor and cofounder of the corporate library joins us again and doesn't think so. good to see you. >> my company name changed. gmi ratings. >> gmi ratings. >> yeah. >> we stand corrected. >> okay. >> look, last time you were on we were talking about whether corporate boards were doing enough to rein in executive pay. why by these numbers, would this suggest there's still a problem out there? >> yeah. i think there's still a problem on it. i always say you've got to look at ceo pay like any other asset allocation made by the board of directors in terms of return on investment. the return on investment of these pay plans still continues to be very, very poor. can you do better on a t-bill.

yeah, the companies are doing better and the pay -- and the ceos are doing better and are those things connected? >> now the panel is coming at you. >> i have a question for you. >> okay. >> is there a maximum pay this a ceo in your view should have? and i know it's going to be it's got to be commensurate with the performan performance, et cetera, et cetera, is there a cap? this is a ben & jerry's thing where the ceo pay can't be more than seven times the lowest paid employee? if a stock capitalization goes up $50 billion, is there a cap on that pay? >> have you ever heard anybody complain about bill gates' pay, of course not. you can make all the money in the world if you make all the money in the world. i'm just not sure that these people that we're talking about earning that kind of money. >> so my question is there a cap. >> no. >> there's not a cap, so, in other words, if you're paid based on stock incentive and the company's stock goes up 50%, should your pay go up 50%? >> no, your stock -- your -- the

pay should be based on your outperforming the peer group and not on the total market. a lot of options grant, 77% are attributable to the market as a whole. is that what we want to pay the market for. >> the shareholders approving the pay packages as they tend to do, how are we to understand that? warren buffett who said on our air not so long ago he thought it was really rude or like really poor form to vote against a compensation committee's decision. >> yeah, warren buffett. >> even he was shy to oppose a pay acage. do you think that's a prevailing attitude, and how does that change? >> yeah. well, of course, he was talking about board of directors. once he got off the board of coca-cola he was willing to abstain from that pay plan at coca-cola, and as a result they made some changes in it. we have seen a lot of companies make changes before it goes to a vote because they knew that iss was going to recommend against, it so i think there have been some improvements.

>> and chipotle is one example where we've seen people take a stand and say that pay is too high. there has been more empowerment, at least awareness for some of these hair shoulder groups in the last couple of years, and the main way it seems like this issue has receded from the headlines is because of stock price performance. >> yeah. >> do we know how much buybacks might be contributing or is that a fair way for these executives to be getting a raise? >> you want to provide incentives for them to grow the company in terms of their products, in terms of their market share and all of that, and you want some kind of sustainable growth and not tricks that can be -- that can support total shareholder return type incentives or earnings per share type incentives. >> and that's measurable by peer performance? >> i think that that's a good way to go. i'm very open minded about it. companies should be allowed to determine what their own goals are, but they shouldn't be allowed to change them and one of the most important discoveries in a current study

is that, surprise, the more companies change their performance goals, the worse their performance is. in other words, what they like to do is shoot the arrow at the wall and draw the target around it. >> do you think that is good fodder for shareholder activism, anthony to my left has written about the importance of shareholder activism and how it's the new trend in hedge fund investing and catching a lot of attention in the general public, too, because activists tend to improve stock performance. do you see this becoming a problem for some of the people? >> i certainly do. there was a press conference recently in new york where one comptroller said he'd focus on the pay gap particularly in the fast food sector which hats sharpest disparity between the ceo and, of course, the average worker. i think that there are a lot of political points and more investment points to be made. >> we saw already what happened to the mcdonald's share herald meeting just this year on the back of this. >> quickly, you are making a distinction between the innovators and owners like the bill gateses and the caretakers of 100-year-old companies like

coca-cola, is that fair? >> it is fair and the best bang for the buckaroo teenly that we see on pay plans do come from founders. >> nell, thank you. >> thank you. >> good to see you. >> say that again, nell. want to hear that see you. >> can you say that again? we want to hear that one more time. >> what does it mean when home prices are up everywhere except, are you ready for this one, new york city. and tomorrow on closing bell, like mark twayne reports of blackberries may be exaggerated. the mobile company's ceo john chen joins us. tdd#: 1-800-345-2550 there are trading opportunities

tdd#: 1-800-345-2550 just waiting to be found. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 bring what inspires you tdd#: 1-800-345-2550 out there... in here. tdd#: 1-800-345-2550 out there, tdd#: 1-800-345-2550 there are stocks on the move. tdd#: 1-800-345-2550 in here, streetsmart edge has tdd#: 1-800-345-2550 chart pattern recognition tdd#: 1-800-345-2550 which shows you which ones are bullish or bearish. tdd#: 1-800-345-2550 now, earn 300 commission-free online trades. tdd#: 1-800-345-2550 call 1-888-648-6021 tdd#: 1-800-345-2550 or go to schwab.com/trading to learn how. tdd#: 1-800-345-2550 our trading specialists can tdd#: 1-800-345-2550 help you set up your platform. tdd#: 1-800-345-2550 because when your tools look the way you want tdd#: 1-800-345-2550 and work the way you think, you can trade at your best. tdd#: 1-800-345-2550 get it all with no trade minimum. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account and earn 300 commission-free online trades. tdd#: 1-800-345-2550 call 1-888-648-6021 to learn more. tdd#: 1-800-345-2550 so you can take charge

tdd#: 1-800-345-2550 of your trading.

welcome back. the latest home price index out today. there are some positive numbers but not all the news is good. and diana joins us with the breakdown. >> home prices are higher than they were a year ago but still slowing in the gains according to monthly report. but we should note these numbers are based on a three-month running average for closing sale prices ending in march. that means some of the deals factored into these prices were made as long ago as last

november. that said, prices in the top 20 markets up 12.4%. but you can see here that those annual gains are beginning to come down. go local, and even some of the hot markets are losing steam. take san francisco. prices up nearly 21% year over year and it's the biggest monthly gainer as well. you still see that line that's beginning to platen out. same for phoenix which saw huge price jumps, bidding up the bottom prices there. still up but flat lining. the issue is simple. investors are moving out and mortgage dependent home buyers are moving in. the prices are higher because of a lack of supply, not because people can afford these gains. this is why the 1% in housing is soaring and the 99% is falling. if you want more on that, you have to see my story online and interview with the ceo on realty

check. kelly. >> that's a tease, diana. up next, we look at the day that was. we'll preview the day ahead as well. share your thoughts as well on twitter. closing bell is the way to reach us. we'll be right back. with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's 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. humans. even when we cross our "ts" and dot our "i's", we still run into problems. that's why liberty mutual insurance offers accident forgiveness with our auto policies. if you qualify, your rates won't go up

due to your first accident. because making mistakes is only human, and so are we. we also offer new car replacement, so if you total your new car, we'll give you the money for a new one. call liberty mutual insurance at... and ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. so call... to talk with an insurance expert about everything that comes standard with our base auto policy. and if you switch, you could save up to $423. liberty mutual insurance -- responsibility. what's your policy? cozy or cool? "meow" or "woof"? exactly the way you want it ... until boom, it's bedtime! your mattress is a battleground of thwarted desire. enter the sleep number bed, designed to let couples sleep together in individualized comfort. he's the softy. his sleep number setting is 35. you're the rock, at 60. and snoring?

sleep number's even got an adjustment for that. you can only find sleep number at a sleep number store. and right now all beds are on sale starting at just $649.99. hurry in, sale ends sunday! know better sleep with sleep number. today is tuesday today, we greet you. treat you. care for you. today, you can come to cleveland clinic for anything, everything or just to get that "thing" checked out. big, small, and yes, the best heart care in the nation. it's here everyday, for everyone. that's the power the power, that's the power of today. cleveland clinic. call today, for an appointment today.

welcome back. we just closed at new record high at s&p 500. 1911. the question is what to do in these markets. david. >> i think if -- i wouldn't be a buy right now. i would wait until september. that's when i start putting money to work. >> do you agree, michael? >> don't agree. i would be a selective buyer. it's going to be a trading range. if we get any kind of meaningful move down, start buying. >> kate? >> these guys both make sense. the folks are looking to a big down side risk in july or august. i think if you're in, maybe stay in. everybody i know is predicting volatility and saying watch the picks and watch the russell. >> it's just been up 4% in the

last four sexssions. >> i'm not going to -- >> he's going to disagree with me. >> i think all of these guys short is going to cause the market to creep up and have to chase the market. i think she's got some of the best insight. >> what you're saying is you're taking the other side. >> those hedge funds are going to get caught of getting let up on twitter. i'm actually very bullish right now and i think the ecb and fed and bank of japan are in tilt, easing mode. >> you're bullish? >> i am. because remember what temperatu tepper said. if they don't we'll have another conversation here. i'll say it's going to get rocky. >> for now, guys, thank you. great show.

appreciate it. "fast money" is coming up. mandy is in for melissa today. b wh what's on top? >> melissa is out in silicon valley. she's going to be talking with mark and the ceos of fireeye and it's going to be a huge show and of course, we have got the trade as well. it's going to be starting right now. >> jam packed. i'll let you get to it. >> "fast money" starts right now. we live in the nasdaq market inside new york's time squares. live in silicon valley. and has an exclusive interview with marc andreekken. let me introduce our traders tonight. we have ti