thank you for watching "street signs," everybody. >> "closing bell" is coming up next. we leave you with the markets ever so slightly on a positive note and a record are high for the s&p. >> and herb's pants. "closing bell" is coming up next. oddly enough, this is the "closing bell." welcome, everybody. i'm bill griffeth here at the new york stock exchange. >> the dow could still finish out record highs for the s&p. the s&p needs to close above 1,91 1.09. the dow has made a move to the up side. nasdaq still a little ways away. >> little ways away. we have a few hundred points away. we are taking a closer look

at costco. their earnings report is out today. very interesting. is it a canary in a coal mine for the question of whether we'll see more inflation down the road? costco said pricier merchandise. what they have to pay for the merchandise ate into their bottom line. is that the biggest sign that inflation is about to hit the average american more than it already has. we'll look at that later. it is all about how they pass those costs on. that's an important debate. but we're also going to talk about comments made by blackrock's larry fink. he's rattled the exchange traded funds world by warning that the enstir industry entire industry is at risk. we'll ask a chief invest. ment strategist at wisdom tree if he's just as worried as larry fink is. right now we had a little pop in the market about 20 minutes ago. took us to the highs of the session. the dow is up 51 points right

now. that is the high of the day. 16,684. again we're about 30 points away from an all-time high there. the nasdaq is up 20 points now. we're at 4,245. the s&p is in record territory with a gain of nine points, 1,918. we're seven points into record territory. let's talk about it in our closing bell exchange today. we have cnbc contributor heather hughes with us. jim lowell from advisor investments. rick santelli joins us as well. gang, let me show you a couple charts to get this thing started. we all talk about how volume here at the new york stock exchange has continued to move lower and lower, even when we're not in a holiday period. this is a chart of the new york

stock exchange volume, compared year or year for month by month. we're roughly down about 11% to 12% year over year this month. right? >> that's right. >> okay. now, i asked our research staff, if volume in the stock market is going lower, where is volume going up? guess where it is going up, rick santelli. this is the treasury yield for treasuries between 7 and 11-year maturity. look at the spike this month so far. >> this is volume? >> this is volume. >> it's 7 to 11 years but this is the chart that would capture any activity in the trading of the 10-year bond which of course we have seen a big rally in that exact note and of course, yields just going down. people are surprised that they keep going down. >> david kudlow, why is the yield going up and why is there so much interest in the 10-year? that volume speaks loudly, don't you think? >> you mean why is the yield going down on the 10-year or up? >> why is the yield going down

and why is there so much volume going into the treasuries right now? >> i think there is a lot at work. i don't know how much we can attribute to economic activity. we've had gdp -- >> a lot. >> -- revised down more 10% today. we know there are more forces at work. u.s. treasury is still the safest investment that exists. with uncertainty around the world, ukraine, it is a flight to safety bid but there's also, we look at what might be a short-term supply/demand imbalance. we've had deficits coming down. there's been less issuance. and at the same time, we have these stories about massive buying by china and maybe to a lesser degree we have pension funds and institutional money managers that had a run-up in their equity allocation because of the great stock market of 2013. >> so not one single issue that's pushing them lower at this point.

heather? >> i would say before inflation and taxes even -- i don't know who would want to own those. but i guess the point is relative to other global countries around the world, you look at sweden, canada, germany, france, they all yield less than 2.5% on their equivalent 10-year bond. so i guess from a relative standpoint, that's why you're seeing some thirst for yield in the u.s. bond markets right now. >> even spain and italy are less than 3% right now. >> but guys, it begs the question of why some of these safe havens are actually doing better than some of the other riskier investments. we have talked about the fact that we've sort of corrected from what was a risk off trade that started in march. but the fact that treasuries are still doing so much better than some of the other corporate bonds and some of the other riskier investments, meanwhile gold is down, too. it doesn't seem like a traditional safe haven market,

rick. >> well, first, i don't think it has anything to do with safety. if you walk down in your basement and it's got three feet of water and you see a broken pipe, would you go ask your neighbor, hey, did it rain yesterday? or did you water your garden? the reasons for why rates are down are so obvious. sorry, ukraine! flight to safety, not buying it. we're talking centuries' low yields in some countries in europe. it is low because the horsepower of the economy is low. heather hughes, why would anybody buy it here? maybe for 15%, 16% total return? year to date? and to think we could have negative interest rates one week from today in europe so don't let the zero line fool you in price appreciation. i continue to say that minus 1% two quarters ago wasn't in the cards. blame it on weather. blame it on the cubs. blame it on whatever you want. but for the most part, i'm sorry, but i bet you -- i bet anybody there -- that the total gdp for 2014 when we know it

will be less than 3%. a bag of white castle to anybody willing to make a bet. >> you have the bond vigilantes have won thus far this year but i would say it is the doom and gloom predictions, right, that have kept people db millions out of the market. >> not doom and gloom. i think it is realistic. i'm looking at this morning's data. what are you looking at? >> fine. fair enough. i'm just saying over a long-term perspective i think there are millions of dollars still in the bond market. $1.2 trillion since 2006 -- >> what makes people think you can't -- >> heather, rick! forget about the long-term perspective. look, today's gdp number was an absolute gift for mega cap stock investors inside that number, we saw weather impacted data hitting companies who derived the ply onlion's share of revenm their exports. i think today's gdp report was excellent news for those of us well diversified and focused on

battleship balance sheet names. you can find them in a fund like fidelity mega cap. obviously business spending remains weak but consumer spending remains strong and it ticked up 3.1%. that's better than not half bad. rick, i'll take the opposite side of your bet. i hope to be able to eat a hamburger and watch you get a little bit hungry across the table. >> hold on! white castle, here we come! >> the sliders come in sacks, not bags. just so we get our nomenclature correct here. let me add another voice to this discussion about where we are and why the treasuries are doing what they are doing. earlier today on cnbc on "street signs," pimco has rehired paul mccaulay. we all remember him from back in the day before the financial crisis. he's cut his hair, he's shared, he looks like a normal person again. here's what he said about the current climate we're in right now.

>> i don't think the world's upside down. i think the world is pricing in and coming to grips with the fact that post the minsky moment, which was 2008, and post-five years worth of healing in the economy and in the financial markets and in the banking system, that we're on the cusp of emerging from a liquidity trap, and that the fed and other central banks around the world are going to be exceedingly low on short-term interest rates. it is a brand-new regime. we are calling it here the new neutral. >> rick, the new neutral. we're going to be in this for a while. you must be thrilled. >> well, listen. i have great respect for everything pimco and mr. mcculley. i don't know i want to swap trading cards with them. so everyone is entitled to their opinion. >> jason, we haven't forgotten about you. >> maybe he doesn't want to add his voice. maybe he's just enjoying the

show. >> i think this discussion is exactly what's going on in the marketplace. what i also think is kind of the story that some investors are missing from a longer term play here. the reality is that they are going to hold interest rates low for quite some time. rick is exactly right on that. gdp growth is slower than it should normally be. he's exactly right on that. i don't know if it is necessarily doom's day scenario but it is probably in the range of 2%, which is not really all that good. but at the end of the day, it doesn't really matter if rates are going down or up a little bit on that mark. investors in those treasury securities or the government bonds -- the bunds in germany or internationally in many of the developed markets, they're not getting the bang for the buck there. there's a good -- >> so jason, jason -- >> they may get a return on a short-term basis, but longer term, that return is going to turn out to be big surprise --

2%. and 2%'s going to be easy to beat by pretty much everything else out there, including equities. >> stock markets barely have that number beat now. >> you seem to be siding with a couple voices we had on today from the fed saying yes, there are a lot of compounding factors in the first quarter gdp that led it to be negative. but the snap-back will be real. and if you believe that that's real. >> reporter: will you put your money, if not in the bond market? >> so our investments we are taking some credit risk here and there but are really placing our money more in equities, and even more in international equities where the discount still is. the u.s. market we think has gotten a little bit expensive. we have we're being very selective across the board because we don't think all risks are equal but we think this is an environment with rates as low as they are that it is justified to take some risk. but you be selective along the way because some of the things are overpriced and you won't get exactly what you want out of those that are overpriced. >> you get a lot of bang for

your buck in the u.s. mega caps. >> large caps. >> jim lowell pounding the table for the mega caps there. so noted. thank you, all. see you later. we have some developing news right now. kate kelly has that. >> thanks so much, bill. john mack, former chairman and ceo of morgan stanley whose resignation from the russian oil driller's board was announced earlier today, says his de departure today says it has nothing to do with the trouble wi with anything else, no bearing on morgan stanley, his former company's attempt to sell some physical oil sale assets to ros nflt eft. a deal that's still under way. the bank hopes to complete it by

september but it still needs a crucial approval from u.s. government regulators. more details on my talk with mack and the surrounding context on cnbc.com any minute now. back to you. an important story. a lot of u.s. oil companies are watching what happens here because they have a lot of interest in actually how that plays out. >> yes, they do. a lot going on politically and economically. let's head to the close here. 48 minutes left. we're up 48 points on the dow jones industrial average. it is the s&p that's back in record territory right now with its gain of 8 1/2 points. unemployment is something we've been watching. jobs numbers are out next friday. could it go below 5% a year from now? really? that's the surprising forecast of dun & bradstreet's ceo published in the harvard business review. he's here to defend that position next. >> we sure hope it happens but is it likely? that's the question. also ahead, is what's bad for costco also bad for the rest of us with higher costs affecting the warehouse club's

earnings, the pros will weigh in on if this is a red flag on inflation. and another day, another analyst move on twitter. this time upgraded again. that's helped the social microbloging spike this week. is now the time to get in on the okay? don't miss our twitter stock brawl when we come back. first you get hit by psoriasis. and now you get hit again. this time by joint pain. it's a double whammy. it could psoriatic arthritis a chronic inflammatory disease that attacks your joints on the inside and your skin on the outside. if you've been hit by...

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the unemployment rate could be on track to go much lower in our next guest is correct. >> our next guest says hiring could accelerate next year that unemployment could fall below 5% next year. he wrote about that in the harvard business review. he joins us along with our own jeff cox who wrote a scent cal piece on 5% unemployment on krpt nbc.com. what will spur this growth in jobs over the next year that you saw? >> thank you. this is going to be really driven by small business growth and we haven't seen that in the recession and that's one of the

main reasons why we've had this jobless recovery. small businesses now have access to capital and it is that capital expepd tur that's going to help them to bring in more jobs. we're seeing that with the surveys that we're now putting out. >> but jeff, i just wonder. we also haven't really seen a lot of cap x expansion on a large cap side either as they try to maximize their profit margins, we've gotten to where they aren't spending to hire all that much right now. do you think that large caps and small caps will play a role or do you think these mic microbusinesses will do so much hiring that that's how we get there? >> it is a great question but it is primarily driven by these microunder a small businesses. bigger businesses that already done that capital outlet over the last two, three years and now you are starting to see that slowdown. those cycles typically happen in economic recoveries. >> jeff cox, you're not buying it. >> no. i have three problems with this analysis. i hope he's right really. but number one thing, i don't

think can you have a serious conversation about the jobless rate in this country without talking about the labor force participation rate which we know is at about 35-year lows. if jeff's analysis holds true, it has to go even lower that. i don't think that's realistic given how we low with. i don't think he's giving enough credit to small business job creation so far. two times as many businesses with fewer than 50 employees are creating jobs than the larger firms. 2.5 million of those small business jobs out there. third, i wonder why jeff did not include any conversation about the fed in there. if his analysis holds true that janet yellen is probably going to have a nervous breakdown because she just won't know what to do policiwise. >> i'll take your third point first. the fed has a range. in the ranges, they go as low as

5%. trust me, they might be nervous about this but i think it is going to be nervous excitement. this is good news for everyone. with regards to -- >> i think their projections for next year, 5.6% to 5.9%. >> i think it is more -- >> the point that this counter trend going on, number of people who have just given up looking for a job, this group of people who, for whatever reason, have been out of work for so long that they just have dropped out and they're not counted -- >> teens or part-timers who don't want to look for full-time work. >> or are close to retirement. >> that's essentially learned helplessness. what happens is when supply matches demand, those people come back in to the labor force. i think that that is a very, very valid point. however, i think what you'll see is more and more people coming in to the labor pool as that labor pool expands. and that happens every time you

have a recession in a recovery. >> the biggest cause of long-term unemployment is skills mismatch. i don't think we're addressing that. i think that this optimism is misplaced to just think that these jobs are going to magically appear and we're going to be able to match workers with whatever these jobs -- whatever quality they are. i just don't know. >> jeff, i have one final question which is, even if we get to 5% unemployment, we still haven't made up all of the jobs that we lost in the recession. we're still getting there. so i'm wondering when you think we will be at break-even from the recession if we're not even there yet, even if we don't get to 5%? what is your data showing you there? >> look. 5% alone makes a huge dent in the unemployment numbers but you are exactly right. we were well below that point after the recession. the good news is if the trend continues, we will see an acceleration in job growth,

which means as we enter 2015 and '16, we're going to see those numbers continue to go down because small businesses employ a different type of labor pool. back to the earlier comment, again, big businesses have the discrepancy between quality of labor and skill set. but small businesses don't. if small businesses hire, they hire more than half of the job seekers in the united states, we will be able to match that skill set. >> we'll come back to you in july 2015 and face off again. >> we certainly hope you're right. thank you, jeff cox, as always, good to see you. heading toward the close. about 40 minutes left in the trading session here. nice little move up. 54-point gain for the dow. the s&p back in record territory. the nasdaq's had a pretty good move higher. >> pretty close on the dow. we'll keep an eye on that for the next hour. wisdom's chief investment strategist gives us his take on the markets and where you should be putting your money to work these days.

plus, black rock's larry fink warning that the entire etf risk is at risk of "blowing up." you won't want to miss this interview. also, twitter upgraded by yet another wall street firm. we'll find out if the social blogger is a must-have for your stock portfolio. in a world that's changing faster than ever, 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.

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take a look at the markets right now. today the dow is within reach of

an all-time high. s&p is right there, just about seven points above where it would need to close if we were at that record high today. >> again, very light volume. a lot of traders believe that matters, that as you move higher on lower volume, that just does not bode well for the market going forward. >> there is the statistical data we've put together for this year so far. we are down -- >> maybe 13%. >> percent. year over year for this month. >> we have so much more volume when the market moves down than when the market moves up. that shows you how jittery it is. >> i just think it is the new normal myself. heavier volume days, that was the aberration. courtney reagan, what's moving the market today? >> a lot of movers despite volumes. foot for thought -- tyson foods offered to buy hillshire brands.

blackberry moving higher at the ceo spoke at a conference saying chances of turning the company around are now 80%. he had previously said the odds were 50%. 50%. abercrombie & fitch gained ground after posting a narrower than expected first loss. jpmorgan upgraded and downgraded celgene. biogen maintained its price target of $40 a share. a lot of questions about whether this is the right time for investors to bet on twitter's stock with so many bulls and bears on this name. >> we have a couple of -- one of each camp right now. robert sanders sees a lot of potential for twitter, while james romelli does not

especially with user growth slowing down. one thing that everybody's been watching. rob sanders, make the case for twitter. why do you like it here? >> two things i think are misunderstood about twitter. one is the potential for a much larger audience and a use case for more people than expected. the second is the potential as an app platform and indications from advertisers on the performance of twitter ads are i think underappreciated. >> jim, when you think about the potential for user growth, the potential for ads just this week, we got some news that twitter has a two-year deal that could be in the range of over $200 million. that's nothing to snuff a at but why do you think that will move the needle here? >> when we look at twitter stock, the main catalyst for the stock since the ipo has been user growth. we aren't expecting any substantial growth in earnings this year and it really has been all about that user growth. we are starting to see that slow down. while they may make the case

that they are making up with that in global growth outside the u.s. and europe, they haven't been able to effectively monetize those markets. they are still struggling to monetize the u.s. and europe. most major ad firms don't budget for ads out of twitter. until that turns around, i don't see twitter moving significantly higher. i think it is an uphill battle for them especially with user growth slowing. >> with this spectacular decline we've seen in twitter this year, does the market have it wrong? >> i think they do. on the user growth issues, what twitter is suffering from is a high rate of attrition of no new sign-ones. a lot of people try it, can't figure it out and stop using it. our research indicates the attrition rate in the first one or two uses is close to 50%. they need to tighten up user experience. i think from there you can turn the needle on user growth even in the u.s. market. that will certainly turn the

stock. >> there was a report out this week showing user growth is gangbusters in emerging markets but that's the place br twitter hasn't figured out how to make money. are you basically betting on the fact that users will be able to figure out the platform, they will be able to stay there, they'll be sticky users and acht d buyers will think that it is a productive platform. is that what you're saying? >> the bet is not that users will figure it out. the bet is that management will figure it out how to make it easy for users. i think it is much easy to work on user experience which the company never focused on. most of us have experience with twitter. it is a cumbersome platform to learn how to utilize its information seeking abilities. and i think it is management that has to tighten up the user experience and that will lead to user growth. >> jim, are you stuck on the past and not looking to the future? >> i'm not an investor. i'm a trader so i have a much shorter holding period than the average investor would. the stock has come off of the lows here, pretty aggressively

but i'm not seeing any large institutional options order flow coming in and getting long the stock with any kind of longer holding period than just a couple of months. that tells me that institutional money might be looking to play the momentum on their short-term bounce but they aren't convinced of the long-term story yet. i don't. really see what the silver lining is here. if i buy twitter at these levels, what is it exactly that i'm buying? >> jim, to buy it in the future, what would that catalyst be going down the line? company is expected to be profitable in 2015? would that be enough for you? >> that might be enough to make me consider getting long twitter. i think i really want to see revenue growth in the u.s. and europe because if they're adding users outside in emerging markets, they're not going to be able to monetize those until they can effectively monetize the markets that they're more embedded in. until that happens, i don't see any more positive story for twit

zblerp o . >> one of our favorite stories these days, where is twitter going. the dow hanging on to gains. up 56 points on light volume today. the s&p is in record territory. we need 25 points now for the dow to be at an all-time high. >> all that despite a weaker gdp print than expected. preem bullish on the story for the second quarter though. when we come back the war on cancer taking center stage at a big conference in chicago tomorrow. we'll give you an inside look at the latest developments in cancer drug research and development. a growing market there. and a fun story. we want your help on this one, what do you think about one of the freakonomics. listen. >> you find that the experts, the people that we most revere, people that we pay the most, are generally about as good as a monkey with a dart board. >> they're talking about stock

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but that would require wifi. switch to comcast business internet and get two wifi networks included. comcast business built for business. generally higher stock market today. the s&p, we're looking at the fourth record closing high in the last five trading sessions. as it moves higher. the previous record -- i have to point out. i hate to do this to our staff in the booth but that's a wrong number on the s&p. it should be 1,911 was the old high that was set on tuesday. but at any rate, the point is we're in record territory right now and the yield on the 10 honey year continues to move lower. at the low point today it was at 2.40% before bouncing back off of that. >> art cashin had said he's not brave enough to call for 2.25% but he does think it will go 2.35%. >> something around there.

>> that's where he's willing to go but that's still a little bit frightening there. most sectors are up. health care one of the leaders on the dow today. we want to talk about a conference that's getting ready to kick off in chicago with leading oncologists. today there was a meeting in chicago. our reporter is all over it as she prepares to go to this conference, looking at the most coveted areas of drug development, that's immuno oncology. >> analysts say all eyes will be on this class of drugs that harness the immune system to fight cancer. immuno therapies. here is how they work. immow therapies can work in different ways. some involve harvesting a patient's immune cells best equipped for attacking cancer, multiplying them, and then reintroducing them to the body to fight that cancer. another technique takes t-cells out of the patient's body and recodes them to be better cancer hunters, then returns them so

they can find and destroy cancer. other immuno therapies are medications patients take by intravenous infusion. immune cells can identify the target and attack. bristol-myers, one of the leaders in the space, is expected to draw $13 million in annual therapy. research presented this weekend is likely to move stocks early next week and it will certainly give us another glimpse at the promise of these medicines. >> we sure hope so. a lot of hope in today's show. we hope the unemployment goes to 5% and we hope they can do something with this new immomun oncology therapy. meg, you say it much better than we do. up 54 points on the dow.

the s&p up nine points in record territory. >> consumer staples leading the sectors. tyson foods involved in that merger. >> now it is a food fight. >> that's bringing that sector up. ron insana says the entire world is doing okay. that's why stocks are doing well as well. up next, we very found one of the world's biggest pessimists. he says ron is looking through rose colored glasses. that's a heated debate you won't want to miss -- next. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase like 60,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards even cash back. and my rewards points won't expire. so you can make owning business even more rewarding.

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ask your doctor about axiron. welcome back. our friend ron insana has written a new piece for cnbc.com called is the world right. in it, ron argues that it is and the stock market knows it and that's why we're at all-time highs in the market. >> we'll debate that right now, bass ron is here along with peter schiff from europa civic capital who, as we know, a has never thought the world is okay. ron, lay out your argument here. >> everybody is making a lot of arguments that the world is coming to an end, interest rates will skyrocket, stock markets will crash -- the dollar will fall out of bed. long-term entitlement and

deficit problems which are actually improving and that russia going to go to war with ukraine. quite frankly when you look at what the markets are doing, they say the exact opposite. gold has fallen $35 in three days. stocks hitting all-time highs. interest rates are quiescent. the dollar is mostly strengthening against key foreign currencies. i think the market is telling us, at least for now, the world is fine and nothing major is on the horizon. >> you got a tan over memorial. peter, if the world is pretty okay, why do we have low volume and why is everyone else buying u.s. treasuries? >> well, first of all, i never argue that the world is coming to an end. i don't even think america is coming to an end but i do think the party in america is coming to an end. i take exception to rod's comment that the dollar is strengthening. it is not. take a look at where the dollar index he is. it hasn't been strengthening and that says a lot about the validity of this so-called economic recovery. if we really had an economic recovery, then the dollar would

be strengthening. but we just printed a negative 1% for the first quarter and that's not because of the weather. and the only reason it wasn't a much bigger negative number is because americans were forced to spend a lot more on their diminishing paychecks on their electric bills, on their heating bills, and on health care. if it wasn't for that, it would have been a much bigger negative and of course, i don't believe for a second that inflation is only running at an annualized rate of 1.3%. i think we have a lot more inflation than that, so i think the u.s. economy is a lot sicker than ron and a lot of other people believe. >> it's an interesting point that weather had nothing do with the weakness in gdp. but people paid more for electricity because they were heating their homes. clearly you can't have both thoughts working at the same time. with respect to -- >> but that actually helped the gdp. part of the reason is electricity prices went up. a lot of americans were wearing sweaters because they couldn't afford to heat their homes.

>> well, listen. if you look at bond markets around the world they are pricing in deflation. the german bund is yielding 1.3%, u.s. treasuries at 2. 4%. you can't tell me the bond market is getting the inflation picture wrong. >> no, we're not going to be lucky enough to get deflation. we're stuck with inflation. reason bonds are artificially low is you have central banks buying them and -- >> no. you have pensioned buying them. >> just like you had people buying up subprime mortgages in 2006 and 2007. they got burned badly on those trades. i think people who think that the economy is recovering and that we're not going to have inflation and therefore they're buying bonds, they're going to lose a lot of money on that trade. >> you're losing a lot of mvnon on gold. if that's an inflation hedge, and you argue it is, it is going to $1,250 right now and falling $30 in three days is not the gold market telling you either

there is a geopolitical crisis on the horizon. i don't know -- >> because most of the traders have it wrong. they don't understand that the economy is relapsing back -- >> that sounds like you're claiming to be napoleon. everyone else has it wrong. >> they don't understand that the fed is going to stop the tapering -- >> no, they're not. >> -- and ramp back up qe. i understand that. that's why i'm buying gold and people who are selling it are going to regret it. i don't only own gold. i have investments all around the world. gold is a small part of what i'm doing but i believe gold prices are going up. >> gold is a small part of what you're doing, peter -- >> i think that decline is again another great buying opportunity because people who don't understand what's going on are the ones that are selling. >> peter, i want to ask you about one other thing are you doing which is accepting bitcoin. that took the street a little bit by surprise when you announced that a couple of weeks ago. how many bitcoins have you seen come into your shop and have you changed your mind yet?

>> you know, last i checked we only had one person who bought gold with bitcoin. but remember, we still accept dollars. as much as i dislike them, i have to pay my rent in dollars, i have to pay michael salary in dollars so i still sell my gold -- or i don't sell any of my gold. i'm a broker so i'm selling other people's gold to my cuss percent. i buy wholesale and sell retail. we're still accepting dollars. we partnered up with bitpay. if you have bitcoins and you want to turn them into reel money, you work through bitpay. you give bitpay your bitcoins and they give me dollars, then i ship your gold. then any dollars i have left over as profit i use to buy more gold for myself or more foreign stocks or other inflation hejs because the last thing i want to own personally are u.s. dollars. >> got to go, guys. that was fun, as always. peter, good to see you. ron, thank you. nice tan. see you later. just about ten minutes before the closing bell. the dow is holding its own in

the market right now. it is still not nearly at the place where the s&p is right now. we're still about 30 points away from what would be a record close for the dp but s&p meanwhile is still holding above that 1,912 level. right now, 1,918.67. we'll see where it closes. coming up, write it down -- $36 trillion. that's how much a new study says will be passed on to heirs offense the coming few decades. someone here says a cap needs to be placed on how much americans can leave their kids. wouldn't that be fun. it is a controversial take, for sure. but we'll discuss it in the next hour of "closing bell." do not touch that clicker. we're back after this. mayo? corn dogs? you are so outta here! aah! [ female announcer ] the complete balanced nutrition of great-tasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. nutrition in charge™. [ bottle ] ensure®. you need to see this. show 'em the curve.

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about the high for the session right now, up 58 points on the dow. nasdaq up 22. s&p in record territory, up almost ten points with about nine minutes left. joining us, maryann bartells and keith bliss. aren't those flowers lovely, maryann. >> they're for you! >> are they, really? >> the last time i was on, i said april showers would bring may flowers. the markets would blossom. here we are at record are highi.

>> we were talking last month that the party was going to be over. you said not so. >> so you get a bouquet of flowers. >> i'm probably going to steal those and take those home. you say there are still shorts on nasdaq but you think that's the wrong position for the tech sector to be in. >> the shorts and futures market, large speculative position and nasdaq are short. we think tech can do really well in this market particularly old tech. >> keith? >> i agree. despite the fact that i didn't bring a nice prop like you. i agree. i think the posture in this market is still one of a bullish tendency. you're seeing some sectors that are rallying along with the large caps now which you really need to propel this forward. small caps have caught. financials despite a modest pullback today is there.

and the tech sector. you need all those components to match up and carry on. i wouldn't be standing in front of this market right now. just doesn't seem like the right play to make. >> there's been confusion about the consumer. we get a lot of consumer data out tomorrow. some earnings results lead to you scratch your head saying how healthy is the consumer actually. do you believe that's an obstacle overall for the economy? >> i think any of the economic data we get over the next couple weeks swree to exwe have to exa closely. manufacturing and employment come out. we have to scrutinize it. the market are for us, even though i wouldn't get in front of this is a little bit getting exhausted here. i think anything that can break it from a negative stand to intercou -- standpoint could ses down. >> i think this goes through the summer. we also have clients sitting on 5% cash. with shorts in the market, people not participating, our

global strategist wrote it is going to be a melt-up in the markets. but we like tech, energy and the industrials. >> so those april showers bring may flowers, what do may flowers bring? can you finish that? >> allergies. >> just that the markets will continue to blossom through the summer. >> there you are. if you're just joining us, we're having a party. we're going to bring our guests back after the break. may i present these to you? >> thank you so much. after the bell, wisdom tree's chief investment strategist weighs in on the exchange-traded funds industry. a lot of experts say they are in danger of imploding. one person who said that, blackrock's larry fink. cnbc, first in busy worldwide. e. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

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that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ so the magic shell went back to being a...shell. get live squawks right in your trading platform with thinkorswim from td ameritrade. about three minutes left here. little stutter step on the dow, the open this morning, we had that first quarter gdp final revision where it showed negative growth. not an oxymoron. sideways, until about 2:30 eastern. then we had had a little pop. now going out with the highs of the session, a gain of about 60 points. we're about 25 points away from an all-time high on the dow jones industrial average. where we are at an all-time high is on the s&p 500 index.

this move higher put us into record territory. 1,919. the fourth record close for the s&p in the last five sessions. while that was happening, here we go again. the yield on the 10-year moved lower. now it's gone up a little bit here. we're at $2.45 b 2. 45%. but at low of the day, we were at 2.25%. >> you would have thought the market was down 200 points yesterday. flight to safety. right? all the check that we did, there was no real negative news other than maybe they were trading ahead of the gdp report that we got this morning which had a very large revision down. we have slower growth. no inflation. i think the market is expecting the fed to remain ultra accommodative. that's bullish for equities.

when we look at the earnings component and estimate revisions, they have one of the largest estimate revisions last month. you have the support of earnings behind the market. you don't have an expensive market. investors are short a lot of cash on the sidelines, markets going high per. >> the thing we've heard about the 010-year, rates have been suppressed. they had to rebound after being long in equities. maryann says the exact notion. there's no risk in the market. people -- some people are searching for yield of a safety nature so they go into a 10-year. treasuries have moved up along with equities. >> what's important is understand being the supply and demand of treasuries. our deficit is going down which means we are issuing less and less bonds. the fed is still buying. you have demand from the pension funds. >> got it.

maryann, keith, thank you for your thoughts today. appreciate it very much. going out on the highs of the session with the dow up 61 points. the s&p up nine. good enough for a new all-time high. here we go again. now coming up, second hour of the "closing bell" where one person says the etf market is in danger of imploding. stay tuned. welcome to the "closing bell." i'm kayla tausche in for kelly evans. we were looking to beat 1,91 r 1,912, the dow up 65 points. tyson foods has been in the markets today. netflix up on an interview with reed hastings here on cnbc where he made a lot of news and

brought a lot of bulls out in the markets today. we want to bring in today's panel, our own simon hobbs, cnbc contributor carol roth, our own sharon epperson joins us as well. also with us for more on today's market action, "fast money" market trader jon najarian. >> dr. j, what happened today? >> i think overall, bill, it is just continuing to climb higher after draghi's inevitable announcement next week. i say inevitable because i think we all believe he is going to cut those rates. that's one of the reason our bonds are going lower. the gdp re-adjustment was another reason. i think overall there is a number of positives out there. more people are looking at the glass half full than half empty today. >> i did see you shaking your head, simon, about the ecb cutting rates next week? >> i think the ecb will cut rates the next week but i'm not

sure we're going to get qe. i am absolutely mesmerized by what's happening to these great oceans of fixing not only our market but what's happening in europe. dutch yields at the lowest they've been for 500 years since records began, 275 years in paris. either this is a massive opportunity to short the fixed income market or it is transmitting a very strong signal about what the future will be for growth and inflation, for perhaps interest rates for the fed. but also the pool of growth from which you've got to draw future earnings and whether or not the stock market can rise from them. i'm not convinced about all the technical talk that comes in about repositioning. the market clears what the market clears. it is clearing below 2.5% when argue gli it should be closer to 3.5%. >> we talk about how volume ul has been light today.

that's because traders are waiting for draghi. there's no catalyst right now. some say it is worrisome the vix is eerily low and the small business index, the russell 2000, hasn't played a huge rule in our recent rally. >> whaile simen is focused on what's going on overseas, i'm focused on numbers at home and have serious concerns about growth if the united states. you look at the gdp number. we were expecting it to be down based on "weather." we'll certainly get a bounce next quarter but looking ahead to the third quarter i wonder about the catalyst. when i look at some of the big m and a deals that are coming out, many are these synergistic type of deals, to me instead of hearing growth, i see that as job groecuts.

>> joining us for the panel from the trading floor, what did you see happen today? >> bill, if you look at the markets as a whole, everyone was waiting for that 1,900 break to the up side. we got that. now what do you do? if you go back to -- talk '07 leve levels. so 1,576 was your high then. trade down to 666 in '09. you get an overshoot level of 1,923 in the s&p cash. we closed at 1,29920. most of the shorts are frustrated the market hasn't turned around and sold off. it's been 600-some days since a market sell-off of 10% or more. people are turning blue waiting for this collection. a little bit longer and i think you'll see the market turn back around. >> to the point with the longer term investors, looking at this slow rise higher, everyone still waiting to see the returns that

we saw last year overall. if you're a long term investor and you aren't repositioning or taking some of the profits off the table and trying to reallocate, you're going to be in trouble when eventually this correction does happen and everyone is waiting for that. >> so i don't sound like chicken little the sky is falling, in the last year or so we've had about seven of these where we've touched the 50-day or 100-day. with those, it's only lasted four to six days and the market rallies right back. the average investor can't really time itself perfectly. >> exactly. because of that, that's why they should not just count on it continuing this way but continuing a strategy of constantly readjusting and rebalancing. >> the sky is not falling by volatility is. >> i think one part of the trend is a lot of people fear about u.s. growth so they're not addings, they're staying on the

sidelines with the additional cash. then that one-two punch next week, draghi on thursday, followed by the jobs report on friday, bill. i think both of those potentially market moving events, since we're already saying draghi -- >> but which way? >> because draghi is probably going to be priced in on that cut, as simon said as well, then i think if we don't get it, if this has just been jaw boning out of him which he's done all along up to this point, you can see a big reversal on that. you couple that with that jobs report that could, of course, do the same and come in opposite of what people are thinking instead of big growth, not as good. you could have that be the real -- >> jon, that could be a head-on collision with the market that everyone feels as if apple had under their dividend, they under their buyback, they announced the split. it ran 100 points. now have you that on the same day as the ecb. >> i agree with you.

>> i love when that stuff comes together all at once. >> when you talk about draghi, jon mentioned it is priced in, to what degree co-surprise you -- >> i don't understand. if you think yields are being driven so super low in europe because you think draghi's about to be buying sovereign debt if that is not on the table. that's not going to happen on thursday. that's not what they'll announce. they might have a token cut to negative interest rates. but if you listen to what they're saying -- actually to what the commentators are saying, there, no big qe. my question is account bond market in europe continue to fly so extraordinarily high, higher arguably than the u.s. bond market -- >> i concur with simon. think draghi's actually painted himself into a corner here. i don't think a qe scenario is on the table. but if we don't end in this negative interest rate environment, that would be really bad. >> this is about the united

states -- this discuss i'm having. if you're arguing that treasuries have been driven down as low as they are because of what is happening in europe, if europe reverses or you don't get in europe what you think you're going to get, how does that effect the treasury market? that being the straw that enacts what could be a major move, be it on equities -- >> i don't think that's what's going on in the treasury market. i think it is more of concerns for growth. >> there are people who say that the -- our treasuries are so much more attractive relative to european or other treasuries out there that we are the place to come to right now. are you suggesting if they don't do what everybody is expect being the european central bank to do next week we could get a big sell-off in bonds. >> yes. i think that's the risk. if you listen to the commentary and believe people are genuine in what they're adding, they add up. >> i see najarian nodding your head. >> that's exactly wla said, that that pivot next week could be if we don't get what we are anticipating out of draghi

and/or if we get a combination of a very dismal jobs report. either of those two events and the combination of those two i don't think the apple split is quite as big. those two events are going to be what moves the market on thursday and friday. >> let's all mark our calendars a week from today. >> let me say, i did not think that the apple event would be as big as the ecb. i said just the coincidence was a head-scratcher. >> i also don't think you'll resolve anything on one payroll sticker. we didn't resolve it last time around. the debate will continue for a very long time. are we half-way through the quarter? you had can you determine if you'll get a bounce ba-back? >> because fed officials say we will. >> thank you, everybody. we'll be checking around. dr. j, see you a little bit later. you can catch him on the "fast money" crew after us here at

5:00 p.m. eastern time. >> dr. j, thank you for the $5. i lost my wallet. i couldn't get back down without it. >> you're very welcome, simon. >> at 5:00, melissa lee will speak with the president of emerging brands at gap. going ahead with >> lewis: lemon and nike with their women's athletic brand, alta athleta. the chief investment strategist for wisdom tree joins us exclusively. costco missed with its earnings out today but did not blame the weather, for once. instead, the big box retailer

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welcome back. a big box store with a big miss today. but the news may not be that costco missed its earnings this morning. >> that's correct. a little different story there. it wasn't weather related there. courtney reagan has the story. >> so running retailer is an expensive task. costco has even more factors to deal with once you add if foreign currency and gasoline price fluctuations as well as membership fees. they missed wall street earnings expectations now for four straight quarters. this time though because bogged down by higher expenses, administrative costs as well as merchandise costs up 8% and 7% respectively for the quarter. on the earnings conference call the ceo said the cost of its popular rotisserie chicken has dramatically increased by costco hasn't passed the price increase on to consume efforts. that's just an example he gave. one analyst says costco does

generally hand on the kos to consumers but to a lesser degree than competitors. they say it hurts them on some level but less than it has before. >> thanks so much, courtney. question is always, as goes costco, so goes the economy and the american consumer. if costco is suffering from inflation, will we all be suffering from it very soon? >> our next guest says this super store sticker shock is a big red flag for all of us. larry glazer is back with us. how so? >> clearly when you are as big as costco is with over 600 stores you are the economy. you are a reflekdz ction of wha going on. from the consumer standpoint they are seeing evidence of inflation especially in the grocery aisle. meat and flour are up. food and produce, eggs, milk, all soaring. consumers seize that inflation. the economic data supports it. ppi, cpi, the tips market, people are piled in worried

about future inflation. finally costco operating expenses, merchandising costs up 7% year over year. they got to pass it through. they can't eat it forever. there is no free lunch. that's going to be our cost. they're going up. it is a sign of things to come and it is a sign of big profit margins for corporate earnings in that happens. >> a lot of consumers are seeing this when they go to the aisles an they don't know how it all adds up until we see a company like costco come out and talk about how it is hurting them and how the costs are rising. when you look at it cumulatively, you can see the impact this is having a on the consumer. it is the little things. when you look at the price of meat or the price of flour, in breads. add to that what we are seeing in small rises but even in the gas prices, higher than we've seen a year ago but a few pennies. all of that adds together. >> that's not an inflation spiral. in order to get an inflation

spiral through an economy it has to go through wages. the labor mark is too weak. for those people who face higher prices to actually get higher wages. i don't think you'll have an inflation problem through the economy that gets out of hand. you just have people who are worse off. >> simon! what about rising health care of costs? what about other rising costs that you're seeing, education costs? those do get passes through? not just labor but other areas of expenses? >> there's only two things that can happen. if you have a company like costco that hasn't passed this along to the consumer yet, eventually they will or they'll continue to keep having margins that suffer which means that wall street is going to pile in on them and market will go down. one way or the other this will play out in a way that's meaningful for market. >> there is a certain irony we are talking about costco. the company that buys in such bulk. you have to go buy a tub of peanut butter. you can't just buy a dozen eggs, you have to buy a whole crate because they are able to pass on the savings that they have by

buying in bulk. if they're suffering from higher costs, certainly you know that other supermarket chains will feel the same -- >> the business model for costco is to sell memberships. you keep the costs down, not pass them on in order to have -- >> that's what they did this quarter though. memberships increases, comp store sales increased but at the expense of margins. >> 75% of operating income. >> the question here is one that's facing food companies first and foremost. we've heard howard schultz talk about rising coffee prices. chipotle talking about rising guacamole and avocado prices. now costco talking specifically about rotisserie chicken. it does seem somewhat isolated to the food companies and it does seem for at least the time being they aren't passing on the full extent of these increases to the customer and that's why it's hitting the bottom line for them. >> kayla, i would argue you are seeing other evidence in retail.

if you look at walmart, for example, staples, tj maxx, best buy, a lot of retail is contracting. retail is really suffering right now. those are not -- some of those are non-food companies. it is not specific to costco, the malaise that we're seeing in retail. i would also argue that it is very early. the bond market, gold market, don't see evidence of inflation. the tips market shows future inflation. this may and story that plays out over subsequent quarters but again begins to impact profit margins. it starts with food but ends with other areas of manufacturing. >> there were two big inflation bets in this country. one was gold, one was house prices. gold is falling. gold continues to fall. house price rises are slowing. we don't have an inflation problem in this country. >> yes, yes, yes. >> we may not have inflation problems overall in the economy, but looking at those individual items and looking at the consumer and what disposable income are they going to have

for other aspects of the economy to generate growth. it may not be the inflation spiral by the economist term but if you ask people if certain parts of the country, they are are feeling it. >> the consumer is two-thirds of the u.s. economy and if the consumer perceives inflation, it hurts the overall economy. nothing drives the u.s. economy like the u.s. consumer. >> larry, thanks for your contributions. i was about to say, as lon as co costco doesn't change the privates giant coconut cream better. there is nothing better. nothing better. >> thanks, guys. we'll keep talking about the consumer but we'll move over to the luxury space. it seems that luxury brands are not exactly living the high life either, these days. coming up, the a "wall street journal" columnist will join us to talk about the lows of the high-end shopper these days.

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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. let's send it over to courtney reagan at hq for a quick earnings alert. >> hey, kayla. three stocks moving lower in the afterhours. splunk, the software solutions provider posted a narrower than expected first quarter loss of 4 cents a share on better than expected revenue. investorsimpressed. express also losing ground. specialty apparel retailer posting weaker than expected

first quarter results. that stock also trading lower down by more than 10% after hours. lion's gate also to the downside. the entertainment company's revenue coming in significantly below street expectations. those shares are off more than 8%. kayla? back to you. >> thanks so much for that, court. larry fink fired kind after warning shot at the exchange trade fund industry. it was the shot heard around the world. black rock ceo said in his view, leveraged exchange traded fund have what he called a structural problem that could blow up the whole industry one day. >> quite a claim. our next guest says fink is wrong and that the etf structure has already been through stressful times and proven that it's sound. joining us now with more on that, luciano syracuseno, thanks for joining us. where do you think fink got it wrong? >> i think you need to appreciate the scale of the short leverage today. it is about 2% of the $2.7

trillion in global etf aspects. only a small speck of the total assets out there. this notion that it will have a disproportionate impact on the industry, you need more evidence to presented to make that assertion stick. >> he talked about the etfs that load up on debt to amplify the move one way or the other. he says -- we've seen this in other mechanisms in the past that took on too much debt. >> he compared them to mortgage-backed securities even. he said they're going to cause the same pain that those did because they're structured similarly. >> he also said they create a lot of excess voluatility in th market. now you have record-low volatility. sometimes these mashths don't bear out when you look at the underlying numbers. etfs have been tested during the stress and they've held up very

well. they're a useful tool for cautious traders. globally, if you're concerned about derivatives, the place to start the additional regulation is not with etfs, it is with the broader industry, particularly the systemically important financial institutions. >> anybody on panel have anything to say? >> this is sharon. -- >> this is carol. i am one that really believes that the reason why we had such a big financial crisis was really mainly because of aig and the fact that they sold the credit default swaps without any asset attached. i understand the roles of a derivative in terms of being able to hedge. but what i don't understand is derivative use when somebody doesn't try to hedge and underlying asset. i think there needs to be serious regulation here. every time we do get in trouble it has to do with debt and this crazy scale. don't understand why we want to turn the market into a las vegas casino. >> the whole idea that this is for short-term traders who are

careful and caution is a very important caveat here. you have individual investors who look at the returns on one direction or another of some of these leveraged etfs and they want to get involved and don't understand the risks here. and there are many of them. i think it is important for investors to understand that the risk of holding these overnight, the risk of knowing that they're going to reset at a certain time, all of these things are very important to know but they're not necessarily presented in a way that the individual investor will understand. >> that doesn't mean you should ban them in a free country, does it? >> i'm not saying they should be banned. but regulation is one way to get investors to be educated about how it will work. >> i think it is buyer beware. sharon, you hit on the key point right there. on these leveraged etfs, when they recalibrate, as long as they go with you in the right direction you're okay. but when they go against you the recalibration and the setting, it is only meant to be a safeguard for one or two days because it goes against you dramatically when the stock

market is down. >> luciano? what do you think? >> there is a lot to it. first, they already are regulated. question is should you ban them. i think it is a question of suitability for the client. certainly advisors are much more restricted today in how they can use them. but for certain investors who have that level of sophisticati sophistication, i think they can be useful tools. again, what we're talking about is $60 billion of etf assets in a world that has trillions floating around it. >> luciano, they're not meant to be long-term holdings. >> no. they are going to decay over time especially if they're double and triple leverage, they will decay over time. so there are specific risks to them and they have to be monitor zblpdky just say, if you are going, an example, in general electric and say are you systemically important to this economy, you probably should go into leveraged etfs and do the same, should you not? they could cause a serious problem further down the line. they are a crucible of potential imbalance. >> as are many other things in

the marketplace. we live with a lot of risk. again, this is a structure that's been tested during very stressful times in the market. arguments that were made five years ago about these funds have turned out not to be true. they're not impact being the overall volatility of the market. >> let's talk about what is working in the etf space. this is a tiny slice of the overall market. what in etfs and what in the underlying market? >> certainly in the u.s., return to dividend theme. in 34mid and small cap space. also internationally in the developed world. certainly this has been a very good year to have broad-based difficult den themes. >> do those trends tend to lead the market? in other words, do you see that run to defensive plays before the rest of the market happens or is that a catch-up phase? we've been hearing lately people

have become more defensive in this market right now. >> it also gets tied to the direction of interest rates. 10-year came from 3% down to 3.50%. it's been a little of rotation going on. >> before we leave leverage etfs entirely, i just want to hear what the merit is for people who are interested in them, what are the two reasons that you want to have them as part of the portfolio even if they are only the 1%, the .5%? what is the merit of having it? >> if you're a trader and you're trading on a daily basis or a two-day basis and you feel the indian equity market might go up 3% in the next week, some people will try to capture 6% or 9% by leveraging themselves up. it uses less capital and you can maximize a move in the market. that's the purpose of the leverage. the short ones that often are in leverage give you a way to get inverse movement. if the s&p 500 goes down and were you short the s&p in one of of these funds, you'd have something to offset the downward movement.

you'd actually have a hedge on your equity movement to the downside. they do have a role, but again, very specific and individual investors in particular had should be very cautious about how they use them. >> one term that keeps coming up is short term to describe these as i listen to you talk about them. >> some work over longer periods of time if there is no leverage involved. once you introduce leverage an reset daily, the path of the direction of the returns impacts the long-term return. it is not unusual for a lot of these etfs to lose value cumulatively over time. >> thanks for stopping by today. the authors of "freakonomics" are stirring things up again, saying professional stock pickers are akin to monkeys throwing darts at dart boards. maybe they should see the dawn of the planet apes movie. pretty strong charge. >> a very strong one. the heat is on at cnbc.com.

managing editor allen wastler joins us with stories burning up the internet. after this

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that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization. i'm looking at you phone company dsl. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business. welcome back. back to a busy courtney reagan for a quick "market flash." >> i just thought i would get

busy here. sal salesforce.com is merging to microsoft to create apps. no terms disclosed but traders like it so far, shares moving higher in the after hours. >> thanks so much for that, courtney. a lot of investors waiting for microsoft to do more with business. earlier on "the closing bell" a few moments ago you heard a chief investment strategist at wisdom tree say this market still has a long way to go. >> but a story contradicting that point of view has been burning up today a's cnbc.com hot list. let's hear why and get the day's other big stories from the site's managing director -- allen wastler. >> we took sort of a macro economic angle today. take a look at gdp numbers this

morning and the trade factor in that gdp number and how exports took a little dip in there. a lot of experts say those booming days of global trade that we used to see that used to fuel a lot of gains might be over. why? offshoring isn't as big. the cost of outsourcing things, putting factories overseas has been actually growing more. it is cheaper to do it domestically. that's story's captured our reader's attention today. also today, pimco, paul mcculley has returned to pimco as chief economist. he has the best hair-do of. anyway, he appeared on-air today. he says the world is not going upside down and people shouldn't panic, though they should be conscious. we have a story summing up at renewed calls for ending the u.s. ban on exporting oil. that has captured our reader's attention. lot of comments and traffic on that. >> you need update the picture of of mucculley because he

doesn't look like jerry garcia. >> all our file photos weren't right. >> allan, you're on television right now. a lot of people just heard that. >> we wonder who's naval mcculley was contemplating in those days. >> mcculley oil markets. a busy day for you guys. when we come bab it is not all glitz and glam foruxury retailers as the demand for luxury goods appears to be declining. why the shine nigmight be weari off some of the luxury names like kors and nordstrom. we'll soon have a huge -- and i mean huge inheritance transfer. cnbc's wealth reporter robert frank will join us with who gets what coming. up.

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welcome back. courtney reagan has another quick earnings alert. >> annie's getting had hit hard in the afterhours. organic food producer posting weaker than expected earnings. shares taking a hit after hours down more than 12%. >> is that the one that makes the cinnamon rolls? >> no. they make the cheddar bunnies.

>> i got it. all right. trying to keep that straight now. our next guest says contrary to what might be popular opinion on main street, retailers catering to higher income shoppers are also struggling these days because the high-end shopper is also struggling. >> justin layhart is a reporter at the "wall street journal." our own jim cramer had something to say this morning about this, justin. i'm interested just to start off with cramer said basically echoing the same idea but really saying that the onus on the economy is on this luxury sector. >> look, there are -- there is tremendous pressure on the consumer. undeniably. what's the strongest part of the consumer? the richest people. president's probably like wow, what did we accomplish here? you know what? it's okay.

it's not bad. the secular trend against them all is very, very real. >> how do you respond to that? >> i think that's absolutely right. i across the retail spice we are seeing we have a constrained consumer. we also have the movement online. just an over-stored country. that's the sort of overall look. what i looked at specifically is just how upper income people are doing well. while they are doing relatively better than poor and middle class people, they really aren't doing all that well. >> any of our well-healed panel here? >> we're focusing really though on what the costs are or how the main street consumer is doing in the usa. when you talk about luxury brands though, aren't we seeing most of the growth in asia anyway and with japan really leading the charge there? while we may be seeing this here in the u.s., luxury brands may not be suffering that much if the bulk of their growth is coming from primarily overseas,

asia and japan. >> especially if you look at upper luxury brands, tiffanies and so on. i am thinking about the affordable luxury brand, the type of thing that people are trading up to. >> many retailers aren't even trying to reach that consumer now for many of the reasons that you mentioned. you try to go to some of the luxury stores and get things like what i can afford, a keychain at burrberry's. i don't want the priciest items, they aren't even there to buy anymore. >> as long as it comes in that little blue box. >> exactly. ? isn't it more of a product of since we saw the financial class, the wealthy and middle class are all looking for bargains. a company like coach is subject to discounting. or kors. or a company like tiffany's that isn't subject to discounting, that stocks to be beating and exce exceeding. >> tiffany's, very differentiated as a brand. it has its pocket there and it is very aimed at sort of the affluent.

if you look at the more affordable affluence, there is a lot more competition then. granted, it's much better at the upper end of the income than it is at the lower end. right? where is the competition going to go? >> aren't they buying on the gold coast? >> i think there is a conflags of terms between what is it high end and what is the sort of aspirational consumer. we have been talking about the b barbell economy, the high and low end and the middle getting squeezed. also as rotation i think coach is getting hurt at the benefitm put their brand everywhere. i think the consumer has traded out of coach into a mike kors who has been doing very well. >> i think that's right. maybe one way to think about it, at the lower end we definitely

have people that are hurlting a lot. then at the higher end it is sort of static. we haven't seen house old incomes really move up very much. not moving up aall in terms of inflation adjusted terms. you have a zero sum game where you'll have a lot of competition. winners and losers. for traders it is a very exciting sector. go and kick the tires, figure out who's winning, who's losing, short, go long, et cetera. >> but until that household income goes up, perhaps that pie won't get any bigger. >> thanks, justin. good to see you. enjoyed the column. when we come back, should you bother listening to the advice of the stock pickers? according to the authors of "freakonomic," they're no better than monkeys throwing darts at a dart board. we're in the middle of the greatest welt transfer ever. a new study forecasts that $36

trillion will be passed to heirs in the coming decades. we'll hear from somebody who says the kids don't deserve that much money. there should and cap on what we should be allowed to give to our kids. i see the pnl already getting ready to react to that. we'll find out what es going on in just a moment. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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wealth in history is under way right now, according to a new study. it is all about what people stand to inherit. >> cnbc's wealth reporter robert frank joins us with a breakdown of the eye-opening numbers. >> thanks, guys. this is a forecast from the boston college center on wealth and philanthropy. they say over the next half century $59 trillion will be passed down to children, charity, taxes. $36 trillion go to heirs and heiresses. $5.6 trillion go to government for estate taxes. more than $6 trillion go to clarity. if you include charitable gifts people give while they are alive, total giving over that period could be $27 trillion. so huge amount to charity. but let's go to what some skeptics think. the same group in 1999 proposed $41 trillion was going to go to

this same group of people. too early to say whether that is going to ban out or not but some said, look, people are getting older, they're living longer, they're spending more, they're not able to rely as much on not to mention, weaker economical growth. all of which could shrink that number. there's little evidence right now of an inheritance boom. a study at nyu recently found that the percentage of americans actually getting an inheritance has fallen over the past 20 years. and it's fallen fastest among the rich. so that's the caveat. but, look, if even part of this number is true, it is a huge amount going to kids and charities. . . >> and a controversial one, too, as we'll find out. but for now, thanks, robert. >> thanks, robert. >> author of "capitalism with morality." i know that you have some thoughts on what could potentially be this biggest, greatest wealth transfer in history. >> i mean, you want to cap the amount people would be able to

pass on to their children, is that the idea? >> yes, it's the idea. one of the problems, of course, we have today in the united states is that we really do have a great amount of inequality of wealth, probably more so than any time during -- from the -- since the great depression. and that harms the equality of opportunity, which is extraordinarily important for upward mobility. and, of course, if we want to maintain our reputation as being a land of opportunity, we do have to -- and one of the ways is by limiting inheritance. >> we become too soft if we start inheriting that kind of money. >> who comes up with that limit? is there a panel, you, three of your buddies? who comes up with that limit? >> well, it would have to be congress. >> it would have to be congress. >> you trust congress with

something like that? >> well, these days it's hard to trust congress to do just about anything. >> but david, how many layers of taxes a limit on their salary as

well. >> no, of course not, no. >> people are so generous in spending other people's money, and i think this is one area where we actually have really good leadership. we have people like bill gates and warren buffett who are -- >> people not like that, believe me. >> but we have -- we have some very good leadership. at the end of the day. >> it's roughly the same as the amount of money you have to pay in income tax. you can actually change. you could dial that back while you have, say, theoretically, 100% death tax and pay no income tax. >> where does that money -- where did that money go?

that the government is not going to use it effectively. just because you give it to a charity doesn't mean they're going to use it effectively. why do we have people telling other people how they should spend their money or what they should do with this? >> david? >> well, the idea would be, first of all, not to, there wouldn't be any limitation on inheritance between spouses and for charitable organizations or what's necessary for dependents. but the idea is that if we do have a tap of let's say $100,000 or $200,000 lifetime cap, that might go a long way toward creating more in the way of equality and opportunity for people to succeed. >> always gets into the right people's hands. >> david, thank you for your -- >> well, presumably, it would --

what was left over after real property was sold would go to the government and if the government were able to get enough. >> their lobbyists and their friends. >> you know what's odd, though, bill, i know we're short on time. >> david, thank you for joining us. appreciate it very much. >> it's odd that we look at warren buffet fete, bill gates. they don't want to give their money to the government. they want to decide where that money goes, but now we're going to make sure that 99% of inheritance goes to the government so they could -- >> do such a great job of spending the money. >> warren buffett says put it in index funds. everyone has different ideas. >> if you made the money, it's your decision. stop it.

oh, my. we're talking about caps on estates. who knew? >> they're going to grab a beer after this and continue that conversation. but this morning on "squawk box," something else we can't stop talking about. steven dubner and steven leavitt. they said stock pickers have basically the same odds as monkeys. here's what they said. >> we talk about the ability of experts to predict the future, whether the future is geopolitical or financial. and so if you look at, let's say, stock picking advice, specifically you find that the experts, the people that we most revere, the people that we pay the most are generally about as good as a monkey with a dart board. >> all right. now, first, everybody's raring to go on this one. we ask your thoughts. one of your best tweets that come our way. mel said he thinks it's rather insulting to the monkeys. charlie said, at least a monkey

won't try to sell you his book. don't go there. frank says, the average monkey could beat the average stock picker. however, there are above average stock pickers, not above average monkeys. >> there'll be an above average monkey -- >> i have a statement from the monkeys of america foundation. they are entirely offended and they'll be releasing an official statement later today. >> well, quite incendiary comments. so nonetheless, getting a lot of buzz today. >> but the short-term. even warren buffett says he's a lousy stock trader. he would not know what to buy for tomorrow. >> it's extremely difficult. >> and focusing on that market momentum, which a lot of folks do to their detriment. i did a story on this a couple of weeks ago about the impact on your retirement. you're focusing on what they're saying because they're talking about a movement that might be happening that day, that week and you're planning your lifetime savings. >> where we said that the market is due for a pullback, but it's

very difficult to pick that bottom. >> turn the television off, i guess. >> rising tide continues to lift all boats, even monkeys, even stock pickers. >> it's been a lot of fun. appreciate it very much. >> let's hand it over to melissa lee and team "fast money" coming up in a few seconds. what's on tap? >> thanks, guys. an exclusive interview with the gap. and, of course, we are trading some of the momentum we've seen in a lot of the internet names. thanks, guys. "fast money" starts right now. i'm melissa lee. your traders tonight are tim seymour, john najarian, karen finerman and guy adami. a rare and exclusive interview with the man behind the gap's growing brand. but first, to our top story. the comeback kids as stocks like netflix and twitter come back from their lows. we are looking at whether or not you can still get in on this rebound. we start off with netflix here after dropping 35% from the 52-week high. the stock has come roaring back. at the conference today, reid hastings addressed the