from the boston consortium group and have 128 million people. >> your point is we often think of it as a slow growth zombie economic nation. >> coming back. >> a very rich place. >> a very rich place. a lot of of old wealth there as well, not just new. thanks for watching "street signs." >> "closing bell" is next. >> hi, everybody and welcome to "closing bell." i'm kelly evans down here at the new york stock exchange. >> good to see you again. i'm scott wapner. we're watching a market that continues to trade at or near all-time highs. the dow flirting with 17,000, plus these stories. people are just not buying homes. those words today from the chief executive officer of wells fargo. well, it's only the largest mortgage lender in the u.s., and this is the peak selling season. so what does that revelation mean to the recovering housing market and the economy? we're going to take a closer look. >> and in just a few minutes the founder and former ceo of

jetblue david neeleman joins us. lots to speak with him about and his newest project which has nothing to do with airlines. instead it centers on genetically driven health care. always interesting with david neeleman so stay tuned for that one. >> apple stock continues to climb after splitting 7 for 1 and there are reports now that could make the $3 billion beats deal make a lot more sense. is apple about to change the head phone port on its devices so that all older head phones are obsolete? story is getting a lot of buzz and making a lot of people angry. we'll have that story ahead on "closing bell." >> take a look at the markets. dow down 13 points for the last several hours. and as we continue to follow the major averages. there's the nasdaq up about 40 points. >> joining our "closing bell" exchange, we've got monica meta, doug sandler from river front

investment group and marty from premiere wealth management and kenny polcari here. welcome to everybody. kenny, concerned about markets here, encouraged by them? has everyone thrown in the towel and say maybe we do get a leg up? >> i think we've had that leg up. i think the action that we're seeing today and the action that we even saw yesterday where the market is churning, right, no reason at the moment for it to push higher. the news is out. the ecb news is out. waiting for retail numbers on thursday for some further direction but the market just feels tired at the moment. it's got to catch up. either going to churn here and wait for the data to catch up or by no noens meameans -- we're ng for a big selloff. >> i was going to ask rob morgan the question is the market tired or simply just taking a breath? well, rob morgan is not here. why don't you answer that, kenny. >> feels tired to me. can you feel the last couple of days, there's not a lot of volume. there's not a lot of excitement.

there's excitement in one sector, m & a for sure, but everything else kind of teams to be just trudging along, right, as the market churns. that's exactly what we're going to see for a while. >> monica, there were a couple of interesting development in the data this morning. the first was job openings looked pretty good recently. small business cementment, both improved and the prices index indicates a little bit of pricing pressure in the pipeline. how do you invest that? how do you -- if you like this story, how do you think it might be sustainable? what's an investor to do? >> i think it's telling you various aspect of the economy have a little bit more confidence, but as far as small business owners go, confidence doesn't help them grow their business. money helps them grow their business and liquidity continues to be a big problem for this sector of the economy. you had a story just a few minutes back about housing and how housing prices seemed to have stagnated and when you look at the small business community, 28 million small business owners in america, it's always been hard for them to get mortgages and since january it's become

even hard we are income verification standards so while you may be looking at all of this data thinking there are pockets of opportunity, i think the real crux where job creation comes into small business owners, still scratching their head and trying to find liquid tis and money and until we have a solid basis you won't see that engine turning. >> one of the issues is it's hard to find bargains. people don't know where to look. the market has gone up so much that maybe they are afraid to put their toe in the water at these levels. >> and sometimes you've got to pay reasonable price for a great company, and i think that's the environment we're in. buffet has that great quote where he says i'd rather buy a company at a fair price than a fair company at a wonderful price. >> we've got great profit margins and balance sheet. i don't think you'll get them cheaper so the economy is just starting to turn. i would note on the small business lending that we're actual hi starting to see alleged go up as well and banks

are always late to react. we're in the early cycle there so there's not a lot not to like. >> finish the thought, sorry, doug. >> the fact that you have to pay a fair price and can't get a bargain anymore that doesn't mean the market won't keep going up. i think you'll pay an expensive price one or two years from now and that's what we're trying to get ahead of. >> a point many people have made here market. kind of relates to what i was going to ask about, but today it looks like we've hit a new all-time low in terms of yield on the junk bond index. >> i knew would you work that in. >> look, i realize it's not front and center but it should be because this does tell you something, especially if this rally across stocks, across the credit market, mark, has further to go. do you think there's froth? are these companies -- are we basically propping up zombie companies in the u.s.? is the corporate sub prime, or is it healthy? what do you make of this development? >> i believe it's healthy, and, in fact, i like the high yield

muni bond market. the inflows there have reached about 22 consecutive weeks at about 4.7 billion. so i think rates, yes, are going up -- rates, coming down, prices going up, but i like fixed income across all categories. >> even at these levels, wow. >> i do, and i think it's important and advise my clients to be well diversified with fixed income because we all would agree on this panel and i think you would as well, kelly. there will be a pullback. we see a pullback coming and that pullback could occur sometime this somewhere, somewhere in the range between 5% and 6%, so how do you mitigate risk? you mitigate risk by being well diversified >> i don't mean to harp on this point, but this is what's so interesting. to some extent you're trying to mitigate a risk that's yet to pan out by going into something that may be riskier because the yields have never been lower and the quality may be deteriorating? >> quality is not a -- is not

that much of an issue when you're dealing with your advisors and professional institutional money managers, especially on the mixed income side. they are trained and their analysts know what credit quality looks like so i still think fixed income is a place to be, but i like where we're at currently with the equities market, and i see it grinding higher. >> kenny, does more money have to come out of bonds for stocks to go higher? >> i do, absolutely, but it will come out very cautiously. i don't think people will be going all in. i think people remain cautious. almost feels like that they think there's another shoe to drop and the way they wait the more it gets away were them and then you play catchup which is exactly when i think you shouldn't be running into the market, right? >> don't you think -- some are making headlines for saying that we're getting into an area finally of above friend growth. if that really is the case and it's sustainable, won't you have a lot of money coming out of

fixed income into stocks? >> i think you will, but what will happen is people will have to wait and be really convinced that that's what they see, right, have to be convinced that the job market is getting bet r better, their own personal situation is getting better and the housing market is stabilized. this whole housing story coming up, listen, talking about it for a while. even the town where i live in, the houses are sitting there, not moving at all and there's a lot of them on the market, so until people feel more comfortable you'll have this cautiousness. >> thanks, everybody. >> one last word, mark? >> as you well know that's not the same in the manhattan market. >> yeah. >> you try to locate inventory in the one to three bedroom range and it's scarce. >> that's not the case in texas either. in texas real estate, particularly residential, still zooming up. >> housing is very, very regional. i think that's also very important. >> what bill was saying here as well. miss you, bill. got about 52 minutes to go. thanks again, everybody, before the close here.

the dow gone slightly negative and same for the s&p and nasdaq. feels like yesterday to some extent. markets under a little bit of pressure. >> like almost every day. even on the days where we've set new highs, slow grind mostly higher. i think there's only been what, i don't know, three down -- s&p down for the third time in a weeks. >> yikes. >> john hatzus says the economy and housing markets have turned a corner, what we were talking about a second ago, citing the fastest growth in a pry prity indicator. he makes the case next. he's sitting or standing right there waiting to walk up on the set. >> also coming up, what's really behind mark zuckerberg's hiring paypal's president. did you hear this take earlier today on "squawk box." tic a listen. >> if facebook hires the guy just running it, what does that tell you about facebook's intentions?

he's coming here to do messaging. really? are they going to generate a lot of revenue off that, or are they going to be one of three companies that's trying to buy ebay and they just wanted to have the guy running it sitting in the house. >> that was bill speed, and he will return to make the case. could zuckerberg now be buying ebay. >> plus, doctor in the house. jetblue founder david neeleman and his physician discuss analyzing your genetic code to live longer. not just the stuff of new age pulp and science fiction. don't miss it and we'll ask him about jetblue's big move into first class. would he have done that?

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take a look at the major averages. in the red across the board. i was saying to kell before the break, the dow and s&p are down

for just the third time in the last three weeks. that's the kind of market it's been. we're waiting for dow 17,000 and waiting for s&p 2000, and it appears as though we'll have to wait for yet at least another day. >> our next guest had wall street chattering with his bullish outlook on the u.s. economy. joining us now. >> the chief economist at goldman sachs. this was a big call, welcome. above trend growth for the first time since the great recession five years ago. >> yeah. i think as a statement of where we've been over the last year, when we look at our sort of summery indicator of economic activity, up 2.7% over the last several months and that's the highest we've seen since the criesies. >> what happens now? >> i think we can probably see a little more acceleration from here. i think the main thing is house ing coming back.

activity has been pretty weak and i think that probably comes back as the impact of the big increase in mortgage rates last year comes to an end. >> you're not getting irrationally exuberant over what may be the snapback from the frozen win the their we all suffered through, are you? >> that's always a risk. when you are trying to predict the future that you either irrationally despondent or exuberant but i don't think so because when you focus on the year-to-year rates in these kind of indicators you're washing out both the weakness during the winter and the snapbacks so i don't think that's really an issue. >> how important that housing rebounds for all of this to pan out? i don't know if you caught wells fargo at an industry conference with the cfo saying nobody is buying houses right now. >> we do need some snapback or else i don't think we'll see much further acceleration from here. i mean, even staying in the sort

of high 2s would be better than what we've seen, you know, for most of this recovery, but for further acceleration we probably do need some further improvement from housing, but i would say i'm reasonably optimistic that housing will recover because i do think changes in mortgage rates make a pretty big difference and that impact should be turning a little more positive. >> what does this moan for the fed and when the fed may raise interest rates if the economy is in fact gaining steam a little more than most expected. >> at the margin it obviously does pull that forward potentially, but i would say it's still been fairly close to what we've been expecting, and i think even with this kind of growth i still think it's going to be late because there's still quite a lot of slack in the economy. i think the best measure of that is probably not so much the unemployment rate but the wage numbers, the fact that wages are still growing 2% in nominal terms if you cut through all the different indicateors. i think it's telling you that there's still quite a bit of

slack that can late. >> what does late exit mean, 2015 calendar year or beyond? >> early 2016 though late '15 is possible. the risks are a little on the outside but even that would be relative late relative to where we are now. >> it was suggested yesterday that the fed is behind the curve and the scenario is for an earlier exit than you think. >> i think there's a more hawkish view on the appropriate monetary policy. i think his current view or at least the one that he articulated most recently was early 2015 for the first rake hike. for various reasons i think partly it's an issue of how much a decline the labor force participation is structural rather than cyclical and i'm sure there's lots of other differences as well but clearly has a more hawkish view >> wonder what the risks are in this whole scenario. housing has had a nice snapback and maybe prices have risen too fast. sort of seeing that in various markets across the country.

>> i think on the price side you're right. i would say that the kind of price increases that we've seen which have been double digit on average, i wouldn't expect those to be sustained. they tend to lag a little bit more. activity has been a little bit weaker and i think we'll also see a slowdown in house price appreciation but the most important factor for economic growth is, you know, how many new homes are we building and what does that moan for residential investment and gdp ultimately? >> investors have been caught between two scenarios they see at odds with each oh, one is pimco saying new normal interest rates are going to be lower and ben bernanke is out there saying interest rates are going to be lower han we're used to and you guys seem to take the other view which is, no, you know, things aren't quite so different and the ten-year yield will rise back above 3% by the end of this year. is there a fundamental difference between your reading of the economy and those who believe in this new normal concept? >> not so much in the short term i think but -- but i think in

the longer term my view is that while i think the -- the average short-term interest rate five years out, ten years out i think is probably going to be somewhat lower than it has been historically, i don't think it's necessarily going to be dramatically lower. when you look historically at where the funds rate has been in real terms on average, been about 2%. if you look outside the u.s. or go back further in u.s. history, you also find similar numbers over very long averages, and i don't think we're necessarily going to be that far below 2% in -- in real terms which basically means 4% or thereabouts in follow nal charge. >> what happens if there's a big pullback in the stock market as we gauge where we are approaching the new highs if there's a correction of some magnitude is there a cause and effect on the economy and could that throw a stone in your growth projection? >> that's always a risk. if you get big changes in asset

markets, that means financial conditions tighten, downturn in the stock market, widening credit spreads or something like that, then you may have to shave something out of the growth forecast. can be a little frustrating for investors because they don't really appreciate it if economists say, you know, the market just went down a lot and now the growth outlook is worse, but that is the reality that these things are hard to forecast what happens to markets and when they do move in surprising ways you do need to take that into account. >> the wealth effect has an impact on economic spending. >> what do you think the odds are of the fed doing a surprise rate hike next week? zero? >> i've learned not to say zero about anything but it's very, very low. >> thanks very much for being here. >> 40 minutes to go before the bell rings. dow -- actually it's moving back towards the flat line. down only three points. any close positive would be a record close for the dow. >> it's practically been a

reframe of the last couple of weeks. wild swings in keurig/green mountain shares. we'll speak with keurigien mountain watchers coming up. >> and is apple thinking of disc the standard head phone jack, that's the buzz and already creating an uproar. we'll talk pros and cons and wait until you hear jetblue founder david neeleman's reaction to his former airline creating a first class cabin and if it strays too far from the original knitting a. we're back in a movement but, manufacturing in the united states means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources

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welcome back. no doubt many of you are working long hours and stressed out and perhaps a bit anxious about what that is doing to your health. our next guest will tell us about a new form, precision health care that uses your genetic code. >> joining us now in an exclusive evidence is founder and former ceo of jetblue and also with us is david neeleman's doctor. we'll talk to you about some airline news as well but we want to talk to you about this first, what you're calling genetically driven health care. can you explain. >> well, i was getting older, lots of kids and lots of grandkids and i wanted to be

able to live healthy. i think health is the most important thing and put a lot of years into jetblue, and i thought, you know, it's kind of time to get myself tuned up for the middle ages, and so i got ahold of my doctor a few years ago and started working together. i loved her research approach. it wasn't just throwing pills at you. it was, okay, here's your blood. take it once a quarter. we'll analyze it and look at your gone yoem. i have diabetes in my family so i was worried about that. what do i need to do? it was something i feel great b.never been healthier or stronger, and, you know, i can work out and keep my son-in-laws in shape by working out harder than they do. >> how many people do you work with? >> hundreds, more than ceos, any man or woman heading into their 40s is going to see changes and decloins in their health, and by getting an understanding of what's going on at a deeper level, genes, lifestyle, you know. david dropped down earlier today

and did the insanity workout so he's not just about genes, and when you look at all the factors you can predict what's going to happen in the future. >> what does it cost? >> well, actually $130 right now to get gene mick testing. there's a company i'm working with based on the west coast and base health is the brand company name. can you look at your saliva and it gives you a sense of it, but the trick is with genes you never really know if they will express themselves. there are actually switches on genes and by working out, eating right, taking supplements and medications you can actually turn off your health -- the bad stuff and really look forward to a great health destiny. >> david, americans are so susceptible to diet fads. how are you sure that this isn't just one of them, or are you sure? >> no, like i said, it was a scientific approach. the doctor is a yale-trained physician that has tons of

research behind her, and she never recommends anything unless she's doesn't research on it, and the numbers don't lie, and so, you know, as i have lowered my body fat and increased my endurance and changed -- the blood tests as i watch my blood sugar drop and cholesterol drop, all important factors for someone entering their golden years. i've never felt better. >> you made a whole lifestyle change, doing things you never did before? >> i work out every day, you know, i try not to eat any sugar, i try and stay away from processed foods. you know, i just -- >> that sounds sensible for anybody. >> it is, but, you know, i think when you look at the scientific approach where you actually look at your blood, four pages of stuff and then she has supplements that we adjust every quarter based on how my blood is at the time, and so it's -- it's very technical. very precise. >> it's really not for everybody. i'm an identical twin, and my twin sister and i are different and that's what's tricky about

genomes and also the lifestyle and medications or anything we look at so just because you're the same as the next person, which i happen to be, doesn't mean your body expresses the genes in the same way, and that's what makes general information not as good as specific information. >> how much would you estimate that you've spent on this? >> my health is priceless to me. >> that means a lot. >> a very small percentage of my net worth. probably should be more. seen a lot of people in their 70s and 80s that are not healthy. and they have billions, and what would they trade to be healthy. >> doctor, you're saying it only costs $130? >> to do the genomic testing, the rest is really information that most doctors know, getting blood tests and look the at your own health, family history, lifestyle, what you eat and if you sleep and it's taking it in balance. going to one extreme or the other never really makes sense.

don't follow fads or trends. the testing itself for the genetic testing is $130. >> all out-of-pocket costs. >> right now. >> there are genetic tests, for example, looking at how well you metabolize drugs. because you two, for example, would take drugs of different amounts of your body may use it up differently so that's covered by insurance actually so there are companies already up and running. >> fascinating. >> gotcha. >> working with a lot of executives hoping that maybe they can -- >> just buy the book. >> the book is cheaper than the test. >> a little bit more. >> while we've got you want to get your take on something. jetblue is the airline that you founded, of course, and now offering first class, which is something in the past that it has never done. >> morgan brennan has been checking it out out at jfk airport. morgan? >> reporter: hi, guys. well this is jetblue's new premium service that is rolling out on flights between l.a. and new york this weekend.

now, this represents a big shift in strategy for jetblue which is now targeting the highly profitable business traveler and pricing is lower than competitors starting at 599 one way. i hear bookings so far are already sold out, but analysts say prices might need to rise to generate enough of a return given the significant investment. for its part jetblue says the new planes will be the biggest in its fleet, offer higher seating capacity and will operate at the same costs at other -- as jetblue's other larger planes. now the stock's been lagging bigger competitors like delta and united year to date but it's still up about 23%, and it's still trading near a multi-year high, something investors will want to keep an eye on. overall booking activity and whether jetblue can pull in more -- continue to pull in more core customers even if mint falls flat.

back to you. >> morgan, thank you. don't have too much fun out there. david, would you do this if you were still there? >> it's interesting, you know, because it was just announced we're flying to the u.s. and we have lay-flat seats. simple mavmt each one of the seats take up three coach seats, so if you can charge a fare more than three times what your average coach fare is, it makes sense, if you get less it doesn't make sense. there's a war going between american and delta and everyone has the beautiful lay-flat seats, virgin, american as well and jetblue felt like they were behind and needed to respond and deal -- deal with not only business travel but there's a lot of mowy stars and, you know, musicians that go back and forth that require that kind of service. >> but, i mean, come on, you're the guy that founded this airline. anybody sitting in the same seat. is this really kosher with you? >> i don't know. like i said, they have got the numbers. they are on that side.

i left as chairman to start jetblue years ago and in our long haul flights coming from brazil it makes a ton of sense but as far as trans-con, a crowded market and a lot of competition so i hope they do well. >> as you said in the past perhaps you couldn't have gotten away with charging throw times as much as you can. hasn't that said something about the way the country has changed. >> economy is doing better. fares are higher because fuel costs are so much higher. if the average fare is $600, they have to get $1,800 plus so it's a couple thousand a seat so the 599 is an indict are you, will certainly go higher than that, but just simple math, you know. hopefully it will work for them and they have the new 321s that have more space in the front so they connection peermt with it. >> what about the change in frequent flier rules? is that cool or not? >> united i guess. >> yeah. i think jetblue is now doing the

same, going to award miles on how much you spend, not how often you fly. >> we do that in brazil because if you have a business traveler buying a $1,000 ticket he should get more miles if he's flying a really short flight than someone would bought a ticket three weeks in advance and got it for a couple hundred dollars. >> how many people are going to the world cup? >> you know, i should be down there tomorrow for the opening on thursday, but my son is playing in the connecticut state semifinals for lacrosse tomorrow so i couldn't miss it so i'll have to catch the closing. i'll be down there for that. >> sure you wouldn't miss it. sure the flights will be full. thanks so much for both of you for being here. >> thank you so much. >> 30 minute to go before the close. market trying to turn positive. the nasdaq has managed a slight positive. s&p and dow still slightly negati negative. they are maybe going to have their third negative session in three weeks. >> the "squawk box" set came to a standstill when a guest said

mark zuckerberg's involvement in the hiring of paypal's president may be because he's making a play for ebay. stay tuned tore that. >> and wells fargo saying people are not buying homes but that's not what goldman sachs's chief executive officer is saying. more about this later on in the show. we're back in two. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything, and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. seeing the world in reverse,

and i loved every minute of it. but then you grow up and there's no going back. but it's okay, it's just a new kind of adventure. and really, who wants to look backwards when you can look forward? you stand behind what you say. there's a saying around here, around here you don't make excuses. you make commitments. and when you can't live up to them, you own up, and make it right. some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where it's needed most. but i know you'll still find it when you know where to look.

the nasdaq has gone positive with less than half an hour to go in the trade today, dow still trying to push towards 17,000, a lot of work to do, down 4 point currently. >> facebook making a big hire yesterday approaching paypal president david marcus. facebook saying marcus will head its messaging products. this morning on "squawk box" bill speed from speed capital management had a very different theo theory. >> if facebook hires the guy just running it, what does that tell you about facebook's intentions, that he's coming here to do messaging. really? are they going to generate a lot of revenue off that or be one of the three companies trying to buy ebay and they wanted to have the guy running it sitting in

the house? >> facebook to buy paypal. bill immediate is back to expand on his theory and also here is r.a. soelder from quantum networks who thinks bill is living on fantasy island. where's mr. roark. fill, to you first. >> about mobile payment, not about buying the whole company. >> ebay is one of the few of these companies that generates massive free cash flow and last time i checked if you're a public company the object is to create profits. i love the technology, well, like this guy is so great, he's so awesome and he'll jump into this thing and messenger will be fantastic. i use facebook all the time. have lots of friends, not professionally, and they don't make a nickel off me right now, but if they owned paypal and 100 million more people used paypal than do now they would make a massive amount of money. >> a tweet coming in right now. why buy the company when you just bought the brains? better move to poach the talent than buy the whole company.

>> he's 100% right. just because you poach talent doesn't mean you're looking to make an acquisition and quite frankly facebook has a lot on its plate. gobbled up and created a $19 bill crop acquisition. they are not going after ebay right now. they are interested strictly in the talent. >> aol wasn't going after time warner either. the illegitimate conceptionial high pe stock using its incredibly cheap capital to actually own a business that makes money what, a novel concept that would be. >> why don't investors or shareholders seem to believe you because facebook shares are up 4% today. >> ebay has been the rodney dangerfield of tech for five year, been a very good performer for five years. we really would not like to see them have that happen. we think john donahue does a good job of running the business. the problem is if the stock gets too low with all the other

asset, the huge cash they have, the $4 billion of free cash load, stubhub, 28% of craigslist, all the other assets they have got, they are a sitting duck so some private equity guys are out there earning it for the cash flow and then you know that google, apple, amazon. google wasted $300 million to $400 million trying to create a competitor to papal so if you can't do it yourself what do you do in. >> david, facebook is focused on building its social network right now. they are not looking and will not make an acquisition and get into the ebay space, i guarantee it. even if the economics are in place, if they move into the mobile payment space, it's going to be a complete distraction to its core business. >> you know apple is potentially get night mobile payment space and seeing stories about amazon. if you're facebook one of the most inquisitive and most willing to reinvent yourself of companies out there. why wouldn't they do this as a defensive measure? >> how do you monetize the

eyeballs? how do you monetize 500 million eyeballs? that combined with the fact -- the answer is not acquiring more and more companies. there's so much a company can do and do it well and i think facebook -- >> are you saying the answer is for facebook to build it out themselves with the payments. >> i don't think short term but possibly down the line. i don't think gobbling up, and, again, what david and mark is, it's strictly about finding quality talent and i think that's his only objective. i don't think there's an acquisition anywhere on the horizon short or long term. >> mark zuckerberg formed facebook originally to try to get a date, what he formed facebook for originally and now it's a public company. don't take a company public unless you're trying to make money. we're not saying this is going to happen. all we're saying is three or four of the largest tech companies in the world covet the ownership of paypal and i haven't mentioned visa or masterca mastercard. >> if that's the case why have ebay shares dropped so

precipitously since this move -- since david marcus left as opposed to rallying on some sort of -- >> because they are not amazon, because the revenues don't grow 28% a year, because they are the black sheep of the family. we've known that all along. >> can't it just be about the talent? isn't it possible that the guy is a superstar and ran 14,000 employees in his division and he's just really good at what he does and there's no other motive there? >> read his outgoing letter. >> is that a possibility. >> have you read his outgoing letter. that was the most arrogant letter i think i've ever read in 34 years in the investment business. oh, you're all so wonderful and i'm so wonderful and i'm going to do this and i'm going to go be involved in a large-cap company that's -- that has a very high pe ratio. where's the economics in all this? it's only economic if that guy can cause a ton of revenue and free cash flow. >> you are not giving him enough

credit. watch him. watch him and follow him. >> do you think it's more or less likely or any bearing on whether ebay spins off paypal? >> no, i think it's separate and apart, absolutely nothing to do with it. i think they are focused in acquiring talent, whether you call it poaching or taking it away. they are going to continue looking at finding quality talent. david was on top of the list, david joined the board and they will be looking at other top talent. >> and knack nicholas builds golf courses and you report news and -- and they hired a guy that ran the largest payment system in the world and all of a sudden he's going to go wandering around looking for something else to do. >> we've got to go. >> awesome discussion. appreciate you both coming on. >> thank you. >> thank you. >> 15 minutes to go before the bell rings. dow right now is down just about 7 points, s&p off by a point or so as well. >> coming up, speaking of big moves in the tech world, is apple planning to kill the standard head phone jack and make you buy exclusive head

phones that only that company makes? that's what's buggs online and a lot of folks are not happy about this. >> and remember this. on friday shares of green mountain spiked on unusual activity. well, today the coffee company announced it's teaming up with a fast food giant named subway. did somebody know something ahead of him? hmm. that's next. ♪ ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ [ birds squawking ] my mom makes airplane engines that can talk. [ birds squawking ] ♪

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we are taking a look at shares of green mountain today. you may recall they had a big spike on friday into the close. there's a good look at one-week chart which really tells the story. the news today is green mountain and subway have signed a new partnership but we want to know exactly what was going on on friday that caused shares to make that kind of move, the one you're looking at right on your screen? dan nathan is from risk reversal, also a frequent contributor to "fast money." he's on the phone. dan, thanks for calling in. >> sure, scotty. the 10% move started shortly before 2:00 on a seemingly quiet day in the markets, you know, and so it go the a lot of options traders thinking and, you know, i'm just going back and looking at the time sales, the actual trades from friday afternoon and i see, you ready for this.

at 1:37 p.m. eastern time somebody started buying the june 13th, this week, this week expiration 120 calls, when the stock was about -- paid about 25 cents to those. the stock continued to real, a very high short end stock, 13% short interest in the thing and by the end of the day, by about 3:30 p.m. those same calls, the same strike, the june 13th 120 calls are being sold, ready for this, for $3.10. this was a quick trade. people got in and got out and people were asking around, what was the rumor, what was the rumor? we know that coke made investment, that sort of thing. this is really curious activity. see the announcement today. obviously the stock is up not nearly as much as it was friday afternoon. >> somebody -- somebody clearly, dan, was making a big play that this stock was going to go up in a very short period of time. so when it pays off or the news

comes out like it has and we're following it here can't help but have raised eyebrows. >> no doubt about it but it's also the sort of situation where the buying begets buying and they really had a snowball effect and people start reaching for the options that were going to expire that afternoon. two hours later, definitely rumors, a short squeeze was definitely in effect but no news that came out and hard pressed to think that -- >> dan, what's interesting, this is exactly, i mow we've got to go, the kind of trades being looked into with regard to clorox, in other words, putting large bet on something that will happen in a very short period of time, as scott just said. can you tell us how big were these positions? what kind of money are we talking about? retail or institutional-sized? >> listen, they traded in boxes, let's say 280 contracts but at 25 cents that's real premium. i don't think that institution dozen this sort of trading anymore, too much on the s.e.c.'s radar, doesn't make a whole heck of a lot of sense,

very few over, 500, 600 contracts but somebody came out of the june 13th 1.20 strike calls towards the end of the day at 3.10 so somebody had amassed a big position, could have been a trading firm. >>. >> thanks for calling in. thanks very much. >> sure, guys. >> great stuff there. important story. we'll head to break and see if markets can turn it aron. the nasdaq slightly positive. not the case from the other two. dow off seven points. back in a moment. y's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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all right. welcome back. there's the picture on wall street as we approach the close. dow trying to get back to the flat line and maybe each work its way positive. gentlemen, welcome. good to speak to you again. mike, you first. russell 2000 says a lot to you right now. why? >> speaking of what's happened in the russell 2000 past five or six months. we saw more or less a correction back in may, april time frame and we saw the divergence between that and more of the larger cap stocks. what we've seen over the past week, week and a half the russell has come back. >> it's been a great reversal

that sells me that the market has shaken out a lot of the valuation issues in the market and now we're focusing on m & a activity going forward and the fact that the economy is slowly by steadily continuing to improve. >> dan, you? >> we've seen a rolling correction between the soft and tech names and everybody is looking for this 10% sort of pullback in the market. it's really been very stealthy. really been an undercurrent of the marketplace and really just shifting around from sector to sector. when i get asked questions from very big clients and very small clients, they always are talking about when should i get out of equities? nobody is focused on bonds, and the risk in bonds >> you think people should get out of bonds now? >> with a 2.60 yield on the ten-year, the best you can hope for this year is your coupon. the worst thing is something with negative in front of it. >> mike, are people too complacent? vix at ridiculous lows. no one seems to be worried about anything.

i don't hear you guys worried at all. >> not a compelling reason to pound the table and jump in the market right now but that's not saying get out either so we've got a fairly valued market to dan's point and these types of scenarios, got to be opportunistic. wait for the opportunities to come your way. be patient and don't try to chase equities but -- i don't see any compelling reason right now to get out of market either. >> good to talk to you both. >> pleasure. >> mike and dan. we're back next with the closing countdown. you guys will stick around for that, and after the bell it's the outrage story of the day. florida condo owners being forced to sell their homes they don't want to sell and take huge financial losses as well. diana olick has the story you have to hear. you're watching cnbc, first in business worldwide. hammer that in. nice. wrench? what?

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[ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. closing countdown time. back on the floor of the new york stock exchange. if you were hoping for dow 17,000 today, you'll have to wait another day. that's how the picture looks like it's going to unfold today. dow will go out probably with a loss near eight points or so. nasdaq barely ticking positive. green mountain, what a follow-up there because we were just reporting on the story today. that moved green mountain and this partnership with subway. the move in the stock up nearly 1%, but, really, that move on friday that had a lot of people raising their eyebrows trying to think of what was the catalyst here to get the stock moving. today's news may be what everybody was thick about but

that's the move there. back here in mike serrantino and mike veroux. >> this is the year when technical stock thinking will make a tremendous return in return profiles. underlying that, if you buy companies with good core franchises, first those will be the companies that will be coveted by bigger companies as i expect a wave of m & a occurring and second of all there's pockets of strength that will continue to see as the year goes on. >> already a lot of m & a and strongest in many, many years and certainly at this point. mike, what about you, same question? would you buy stocks here or would you wait for a pullback? >> we're long-term investors, and we're not market timers. i would say if you want to try to time the market go to vegas, you'll get a free drink at least. we're bullish for the long term for a number of reasons and continue to stay in equities. got to be opportunistic. can't go and buy the market. i can't really point to a

specific sector that i will say is stronger than another. >> guys, thank you very much. >> there's bell. the dow is going to go out. right now it's down 1.5 points. kelly evans in the second round of "closing bell" in four seconds. welcome to "closing bell," everybody. i'm kelly evans on a tuesday where markets were trying to close lower but only barely managed it. let's take a look at how we're finishing up the day on wall street with the dow jones industrial average and the nasdaq, look at that. we have to kind of wait for the numbers to settle out here, but it looks like at least those two will close ever so slightly positive. now that possibly puts us at or very close to the record trading high for the dow jones industrial average. about 1914 is the level we're going out. nasdaq up a couple of points and s&p slightly lower sitting right on the level of 1950 as ever more people talk about whether

2000 is the new benchmark that it will cross. author of "freakonomics," welcome and "think like a freak" which i've got right here. see if it -- we'll incorporate this material before the end of the show, our very own kate kelly with us as well, recently released her new book "the secret club that runs the world" and more on today's market action, who is that, tim joining us, tim seymour and "shark tank" investor kevin o'leary is here with us at well. welcome to everybody. >> first to you. some thoughts here today. this kind of languid market action, i don't know how else to describe it. what does it say to you? >> actually did pretty well. look at the financials and the entire sector. tells me there's need for big-cap value rotation. that's ultimately where i think you'll find t.financials are getting the best eps growth and

also from a cyclical perspective this to me is where this market is at. we're mid to late cycle at this point in terms of where i think the economy is moving and those are places where valuation -- citibank is still giving you 1.1 times book, a place we feel pretty comfortable. having said all that i think the market is looking for places to try to take a breath and breather, seeing emerging markets which is a place where people are undervested and places that continue to trade very well. >> and that's a point that michael darda will make later. where are you guys, where do you like to see value? >> we like the financials quite a bit. generally speaking if tim is right, financial are a good leading indicator for the market as a whole. >> right. >> unwest things we've been talking about is the idea that this has been one of the most, as bob farrell said, and it's hard to get a bull market top when you have so little participation, especially from the retail investor so we think

there's more room to go. certainly will get harder to get multiple expansion from here, but the untold story really is the fact that earnings keep chug along. >> and before asking how much further we can go, tim, what's going on where you are? >> kelly, i mean, you know about disruptive technology, about as disruptive as it gets. apparently my friends here want to talk a little bit about markets. where do you think the s&p is going these days? you're on cnbc right now. >> well, i think that we're on an upswing and feel optimistic about the direction of our economy and strength of our people. >> this sounds like what you hear on cnbc a lot and i'm sure our friend at "freakonomics" has something going on. >> are those robots? who are those in. >> beam technology, people who are -- where are we coming from, we're in san francisco? >> from palo alto. >> where else from palo alto. >> these people are being people here and moving around and getting closer to me and

dropping back. >> that cause me a little concern. what are we to make of all of this? >> learn to say i don't know. when you don't know the answer, i'll plead the third chapter here. >> yeah, yeah. >> actually want to get your reaction to something steve just said. last month when he was talking to colleagues over at cnbc europe, take a listen. >> talk about the ability of experts to predict the future, whether the future is geopolitical or financial, and so if you look athletes say stock picking advice specifically, you found that the experts, the people we most revere and the people we pay the most are generally about as good as a monkey with a dart board. >> first of all, what happened to the beard? >> you know, summer in new york. ever wear a beard in new york, don't want it. >> said no better than a monkey throwing a dart at the dart board. >> i'm sure nobody that watches this network or this program is

below average when it comes to stock picking. >> of course not. >> or at least thinks they are not below average but the fact is there's been a lot of empirical research within academia and the kind of quadrants relating to academia, and it turns out none of us are very good at predicting and when you have a market, especially a complex one like the one we take advantage of in so many ways, were tend to get overconfident and believe more in ourselves than we should and looking at data, done in many realms, like i said in some picking and politics and sports and weather, predicting the future is really hard, and on average the average stock picker -- we know that and like to think we can do better than average, but that can be a trap so you have to play it smart and lead to the index when you feel you need to and depending on really smart guys like this if they are much starter. >> this maxim that steven is talking about is true in the markets today, seeing strength

in the t-bills as well as strength in the s&p. i mean, obviously earnings season was generally good. people are happy about that and seeing these high valuations but feels all around like there's a lack of conviction in the markets and a desire to maintain someone's hold on safety and i think that's why we hear so much about fundamental stock picking as a way to distinguish yourself right now. obviously it is and it will be very important as some of the sectors diverge, but it's interesting that we're seeing a lack of volatility at a time when the vic recovery, despite the statistical underpinnings suggests that it's going on. doesn't feel that real to people. i don't know if it's because of income disparities or the jobs picture or what. >> we really want to amortize the market and want the market to have a characteristic because we can identify with that. the more you think about it and at more data you have, the more you see it's subject to so many forces. >> listen, i like this conversation. what it really tells you, if you

believe in the monkey with the dart board theory being evenings vent to an expert the only free lunch in investing is diversification because if it's true we don't know what is going to happen next, that forces you into a place where you also invest in fixed income and you have equities and you have tremendous diversification because monkey, no monkey, at the end of the day the only thing can you trust in life is cash so i say to myself give me things that produce cash every month. that way i know with certainty the one thing that matters with investing, cash, so bonds with yield and stocks with dividend and the story monkey no moaningy. >> jason, here's what i don't understand. the premise of investing in stocks, for example, as opposed to making a bet through the options market or on some kind of derivative is that you're making an investment in a company's future stream of cash flow. isn't this just an argument for investing in stocks generally even if you can't always identify which ones will come out on top? >> i think so. i mean, i'm a big -- i don't

know if i'm an acolyte. certainly a big fan of professor siegel. also a fan of john kenneth galbraith who says there's two types of economists, those that don't know and those that don't know they don't know. i think over the long term it's empirically true that stocks are offering you a better return over time. that's not surprising because they are in fact riskier, so it's -- if you believe in the c capitalized pricing model it would tend to suggest to you you would get a higher return on a riskier asset, but it really depends on what your time horizon is. if it's long enough you shouldn't worry that much about the short-term volatility but it's very difficult for professionals to do that. >> just hold that thought for a moment. breaking news on aig. bertha coombs joins us with the details. bertha? >> reporter: kelly, that's right, the board announcing today that they have named peter d. hancock as president and ceo effective september 1st.

of course, he'll succeed benmosche benmosche. mr. benmosche is expected to resign and assume an advisory role. mr. hancock has been at aig since 2010 and currently serves as chief executive officer of aig property casualty. back to you. >> bertha, thank you. >> interesting to read the statements from stuart miller who we saw last week on air and he's saying aig, kate, a far stronger company than five years ago focused on the core mission to help businesses around the world prepare for the future, recover from loss and retire with confidence. >> no criticism of peter hancock, sure he'll do a wonderful job. i'll miss bob benmosche after the taxpayer bailout of over $180 billion. very interesting colorful ceo, and he did preside over a

turnaround period for the company, so an interesting guy to cover. >> yeah. defying the nay sayers, jason, to some extent. tim, just curious if you would put insurance companies in the same group as financials here when you talk about places to look right now for investment opportunity. >> i think what people like about insurance companies and why the cash flow is where they model out. metlife is a place we've been investing. aig is a company that comparing it to the former is impossible. this would be a $1,200 stock if we were talking about the former company. they have rewritten their business and given a clean slate i think at the expense of the american people but the insurance companies overall are, the premium that people have to pay in here, but the ability of people to see the balance sheets of these companies is very important and, therefore, they are making allocations there. >> all right. thanks, everybody. stick around to catch tim seymour coming up on a very special "fast money" at 5:00 p.m. as you can probably tell from what you've already seen.

they will be live from singularity university's exponential finance conference at lincoln center speaking exclusively to the ceo of 3-d systems. my head is already spinning. don't miss it. remember kevin o'leary's ultra bearish call on housing last week? >> i don't care whether you pay 200 million for your home or $200,000 for it, this is going to be a crappy investment for the next five to ten years. >> now the cfo of wells fargo, the nation's largest mortgage originator saying people are not, quote, buying homes. kevin is taking a victory lap and the panel will reaction next and the outrage story of the day. a developer in florida forcing condo owners to sell their property even if it means they will lose money. here's the kicker, all legal under a florida law. how on earth is that all possible? that's coming up. speaking of homes, what happens when a huge "star trek" fan becomes a multi-millionaire, you're looking a it. turns the inside into a

represent cla of the enterprise's bridge. robert frank goes boldly where at least one man has gone before. you're watching cnbc, first in business worldwide. we constantly evolve to meet your needs every day of the week. starts at 6:30 a.m. - on the (vo) rush hounose.und here 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. pcentury link provides reliable yit services like multi-layered security solution to keep your information safe & secure.

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welcome back. let's start here with bertha

coombs and a quick earnings alert. hi, ber it a. >> hi, kelly. >> got salon cosmetics and fragrances, a specialty retailer that sells a lot of makeup clear. higher after hours after posting better than expected results. comp sales for the quarter coming in, better than expected at 8.7%. the stock is trading higher right now, better than 6% after hours. back to you. >> nice pump. >> wells fargo cfo saying, quote, people are just not buying homes and while some, like kevin o'leary say they are not surprised, is it a cause for concern when the nation's lrnlgest mortgage originator says home sales are hitting a slump. let's bring in the national housing analyst for her thoughts on this one. were you surprised by these comments from wells? >> not surprised. the consumer financial protection unit changed the rules this year, starting the binge of this year and they have basically taken out a lot of incentives for banks to offer unique products so anything

above a 30-year mortgage, interest only, debt-to-income ratio, family formation has slowed or delayed because of jobs and careers, not surprised. also a lot of people are priced out of market. >> yeah. it's been a big move, jason. >> i would say it fits in neatly really with the president's talk about student loans. i think that there's a real problem in terms of household formation here. you've created a new generation which is having a difficult time finding new jobs and finding the money and time to settle down. it also speaks to the idea that monetary policy and regulatory policy are somewhat at odds which is to say that monetary policy is extremely accommodative. by the same token only about half of dodd/frank has been completed so the regulatory apparatus is still quite restrictive. >> do you think it's worse, and dani both, like to say just how bad you think things could be in the month ahead? >> i personally think things

have bottomed and i'm of the belief that things won't get a lot better any time soon, that this is a long process under which you'll have to restructure the u.s. economy. >> also goldman's chief economist who is for bullish on the u.s. economy and thinks that people moving back home with their parents will reverse even if it takes place. >> the last 18 months we've had an appreciation rate five so-to-six times gdp which is not sustainable. looking at 20% appreciation rates over the long term that won't happen but will we see leveling off and maybe more stable growth in the long-term, i think so and some of the foreclosure numbers point to that as well and the household information factor is certainly playing a role, jobs are playing a role and people have been priced out of the market. >> that doesn't argue, kevin, for people staying away from housing all together like were you saying last week and having

made those remarks which we played a million times, do you want to temper that at all. >> not at all. >> just pointing out that this asset class is no different than the other. view it in the context of the next five years. one thing we never talk about in housing and certainly people are considering forming a young family and buying one is the transactional cost of doing this. the cost of actually going through the process of getting a markets buying a home, paying the realtors, paying the land transfer taxes, if there are any, paying all of those, ends up being somewhere between 5% and 7%. kelly, you can't guarantee me in the section five years i'll get a 7% appreciation in this asset. that's why my argument is keep your money and don't invest it in a mortgage, invest in something else like the market or bonds which at least you know with certainty have some return versus buying this asset class. i hate this asset class right now. rising rate environment. >> isn't that what you're supposed to invest in when everybody hates it. before we go, steve, what would you say? >> i think it's interesting that

we've become continued to being collectively rooting for housing to increase which seems to make sense from an investment perspective, does make sense but if you're thinking in terms of a societal perspective what that means is everybody who wants to boy a home they are facing inflation except for the people who are cashing out and maybe downsizing so i think in terms of thinking about income mobility and actual life mobility and job opportunities and life opportunities, this is not terrible news. i hate to say that to an investment audience but that's the way i look at it. in terms of the transaction costs i could not agree more. we've written about how realtors' fees are bizarrely relatively high considering the way tradition and the internet and the -- >> that's a point. >> if you're buying stock, who is willing to pay 5% or 6% on a big -- on a big stock? >> pennies versus nickels. >> right. >> so i think we're due for a change there. long time in coming. >> dani, thank you. >> thank you. >> speaking of housing though,

also an outrageous real estate story. a florida investor wants to force condo owners to sell even if it means they take a loss on the sale. diana olick, can you explain this for us. >> reporter: i'll try. we're here in madison oakes in tampa, florida, and there are very few condo owners left here, but the ones who are here are current on their mortgages, current on their condo fees but they are still in danger of losing their homes. >> i never contemplate that had somebody could come in and take it from me. >> reporter: stephanie bought her condo at the wrong moment when florida home prices were about to come crashing down. she put 20% down on a $163,000 unit. now she claims investors are forcing her to sell for just $50,000 as they convert this condo complex into rental apartments. >> the termination process that's going on here is just for the financial gain of the buyer into that's why jackie and the remaining owners are suing. most of them bought at the

height of the boom, just before tampa homes last half their values. many of the owners are underwater on their mortgages. >> yeah, i made a terrible financial decision to buy in at the time that i did, but i did it, and i'm a big girl and i've dealt with that. i've continued to pay my bills. >> the facts alleged are sufficient to stake the claim. >> reporter: at issue is a new florida law that says 80% of owners agree to terminate the condo the others can be forced to sell. the law adds that 10% oppose they can block the sale, but the investors here, who now own 80% of the units, say the buy laws of the condo override that. the investors declined requests for an interview but issued a statement saying the steps we are taking at madison oakes will add value to the property, provide desirable rental homes for the market and improve the neighborhood while add together county's tax base. >> they don't care to. them it's business and to us it's -- it's like -- it's

everything. >> reporter: now the folks here are not alone. instances of this going on all over the state of florida as investors look to cash in on robust rental demand and excellent rental profits. we've got lots more details of this online of course realitycheck.cnbc.com. >> such a troubling story. thanks so much for bringing it to our attention. appreciate it. >> the easy gains in this stock market are gone. meanwhile that's when chief economist and strategist michael darda is saying. we'll lay out strategies coming up. apple is getting set to ditch the head phone jack and force users to buy a new pair of beat head phones, the company apple bought for $3 billion. up next we'll debate whether that's a smart idea for apple or if it risks a revolt by fans of its devices. here at optionsxpress our clients really seem to

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if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪ welcome back. so remember when apple updated the iphone 5 lightning connector which you can see in the middle, a little bit naoer than what was on the previous device and meant everybody who was updating might be getting a new charger. they might be at it again. but there's some reports that apple may want to abandon the head phone jack so instead of having two like this you'd have one here but in order to use this port you might have to buy a different pair of head phones, maybe even beats head phones which, of course, apple just bought. is this a god move for the company or will consumers get fed up and walk away.

let's ask our apple experts. jon, first of all, let's for the sake of argument assume that this is happening. does this mean in order to listen to something that's coming out of your next iphone you're going to have to have a special new pair of head phones? >> no, not necessarily. all that apple has done is written in some specifications that allow the lightning connector to be used for head phones. doesn't mean that they are necessarily getting rid of the head phone jack. this is an adapter be included in the fund that would allow you to do both. let's not get them ahead and assume you can throw out your head phones and get new ones. >> but they also did beats and what better way to monetize it than make everybody have to buy new head phones? >> they could and that would have to be a transitional period, done it in the past with

the 30-pin connector. it takes a couple of years usually. apple makes a plan so they can transition people. most people upgrade the accessories every couple of years so if they can have that transitional period where people are able to upgrade their accessories and if they can see if consumers are going to embrace the lightning head phones, then maybe down the road they might make the decision to remove the old head phone jack. >> i have to say as a consumer this kind of thing drives me nuts. it's like i have an iphone 4 and 5. my husband has a 5. we've got multiple chargers in the car and house. it just becomes -- and then you have the regular wear and tear that goes with one device with one set of chargers and find yourself in the store replacing a screen or getting a new device or whateverch just a lot of maintenancech the only upside i can say is the iphone is so ubiquitous you can get the parts almost anywhere. >> a downside but, yes, progress. used to have disc drives and cd drives and everything and serial

ports and fire wire and we had to get rid of those in order to get better devices. >> uthe eternal on theist. >> isn't this the conversation the reason that it's a problem. don't know if it's a consumers electronics deal to promote hardware like head phones or was it really a response to their losing in the streaming music business. which one is it, the fact that you don't know, i don't know bothers me that $3 billion of my valuable equity was spent on this as an apple share holder. >> they had a whole different issue. you and i agree. i've got some issues with the beats deal. on the lightning connector, not a clue what apple is doing here. might not be what everybody is rushing to, that they are trying to wean everybody off of the head phone jack. >> jason, still on the blackb y blackbury. >> what year is this? >> i need the chiclets, the keyboard, but i will say as a consumer i'll agree. you don't know how many of the chargers i have for this.

by the same token, in terms of the beats deal to be fair it's a $500 billion market cap company with 150 billion in cash. i don't think it's a particularly bad bet and it's trading at 13 and a half times earnings. personally i like the stock >> you like apple regardless of whether you need new head phones. >> whether it's a good deal or not remains to be seen but i don't think it's a bad bet given the size of the company. >> don't they have to stay true to the central purpose of putting out devices that the consumer wants to have and if all of this upgrade technology means people are getting frustrated, is that a problem? >> look, apple has been masterful at creating an ecosystem that it controls lots and lots and lots of, and there are a ton of benefits and there are a ton of costs. look, we made this podcast that we need to distribute at 6 million downloads a month on itunes for nothing.

a lot of us that free ride on what apple has built. they may try to attract something from people that listen to head phones. i think the company is way too smart to require a head phone that will only work -- it feels a little bit like lithuania. >> they will know when too far is too far usually. >> meantime we'll pray for this adapter. >> thank you for that. >> thank you, jordan. >> thanks for having me. >> fracing is red hot in the u.s. right now. the method of energy production uses a lot of water and severe droughts in many states, could they spell trouble for the fracking industry? that discussion is next, and this may look like an ordinary mansion on the upside. step inside though and you're transported right on to the bridge of the star trek "enterprise." robert frank with a look at this

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diana olick telling us

florida condo owners could be forced to sell their properties. that's heating up on the hot list what. has made the list today? >> diana's story is our number one story, been on fire since we put it up. over 32,000 people have already read it. she ran through the facts with you about, you know, an investor group coming, buying up the condo and forcing out the remaining owners. but what's really interesting in her story is the comments. the comments are just going nuts, i mean everything from blame the government, why did you buy a condo in the first place, all that and also some interesting very thoughtful ways for many the condo owners to handle it so it's really turning into a fun piece here on the website. my number two, it's based off of an interview that came from "squawk alley," interviewed senator rand paul, the republican from kentucky, put out a proposal for repatriating overseas profits of american corporations. >> huge issue. >> and says it will raise about $60 billion for the tax coffers right now. people are reading up that,

anything with the word tax in the headline is doing pretty, pretty well and finally our last one is piece written by our ag writer. he took a look at the states where the drought is the worst, and how fracking is facing agricultural water use and how farmers and frackers are essentially facing off. texas and colorado, two of the biggest fracking states. two of the biggest drought states, too. >> such a great point and that story on cnbc.com along with the others. alan, good to see you this afternoon. >> breaking news from morgan stanley's financial conference. mary thompson, a lot of headlines from this all day but what's happening now? >> james gorman, the ceo of morgan stanley, just concluded his presentation at the end of the first day here at the morgan stanley financial services conference and spent some time talking about one problem area for morgan stanley. fixed income and commodities and currencies. he says this area continues to go through a sec already and

cyclical change and he spoke with the recent sale that the company made of its commodities business and talked about reductions that the firm has made in its macro business, where they cut both jobs as well as risk-weighted as e. he said this will have a slight impact on revenue but it should help to improve the company's r.o.e., return on equity, as well as their supplemental ratio, and the company focused on efficiencies and to that end he presented lower targets on compensation for all three of the company's businesses. he says he's targeting a comp ratio of 30% or less in the investment bank and that's down from 42% in last year in large part because they are expecting higher revenues. kelly, back to you. >> i find it interesting, i mean, morgan stanley, as mary knows well, has been sort of downscaling their fixed income business for a number of years.

this has been a trend on wall street rethinking fixed income and getting rid of some of the less well performing areas and saw news on that this week from credit suisse? >> driven by new regulations, as we all know. you want to get rid of some of the capital intensive businesses to improve your profitability. again, morgan stanley is targeting an r.o.e. of 10% and has a ways to go there and this is one of the ways it will get there. >> and also driven by a lack of volatility. >> the lack of -- is that kevin jumping in there. >> no volatility, can't make any money. >> right, and those are the cyclical changes that he was referring, to but there's secular changes as well, again, mostly driven by the new regulation that these banks are facing. >> mary, thank you for now. we know it's been a busy day. appreciate t.mary thompson from the morgan stanley conference of earlier on klebl we spoke to the founder of jetblue about the founder of the airline business. market strategy mike darda weighing in on that. airline stocks and also how high

the industry as well as the broader market can fly. if you've never been to a star trek convention, well, you might see some bands dressed as characters from the sci-fi series. for out-of-this world collectibles to be up for sale. coming up we'll meet someone who beamed a star trek set in his house. you'll want to see this.

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let's send it over bertha coombs. >> reporter: we're watching the chip-maker soaring in after hours on news it's buying a japanese display chip-maker for $475 million. this is obviously going to expand its product offerings. synaptics also raising its fourth quarter revenue forecast. the stock right now up better than 17%. big move there. >> certainly is. thank you, bertha, for now. the markets, meanwhile, posting record highs on the regular sparking some on the street to get cautious but hoy-profile investors like david tepper, bill miller, they are sticking by their bullish guns so who has got it right. joining me now with his take on the markets and the economy is michael darda, chief economist and chief market strategist at mkm partners. michael, it's great to see you, and, look, a lot of people for the last couple of months have been trying to figure out, you know, whether we're about to see a 25% correction in the stock market. we've even had a guest on saying the u.s. was headed for recession. you've said no. why do you think that that's the

case, that we're fundamentally still in an expansionary cycle here. >> thanks for having me on, kelly. well, first of all, most bear markets, not all of them, but most of them are associated with recession, so if we're talking about going down 25% or 30% i think that's very, very unlikely unless we're headed for a recession sometime in the next year. that would also be very unusual absent any fed tightening. gag back over the last century over which we've had the federal reserve, we only count one recession, 1945, that wasn't associated with at least some magnitude of fed tightening so recession risk very, very low, at least looking out over the next year. sure we could have a bull parke or correction but i don't see the markets going down 20%, 30% from here. >> do you see them going much higher from these record levels in. >> i think we're at full valuation levels now so the expectation from these levels is going to have to be a bit more subdued, probably single digit gains unless we do have a

material pullback. and that's okay. i mean, it's been a great equity market. might not be acfor those who have missed are and are sort of jumping in now at cycle highs here, but the bull market should continue as long as the business cycle conditions. how long will this cycle one once it does start to tighten cole policy. how far will they get when recession risk really starts to mount? >> what inning do you think we're in, and if you're an investor who is linked to the cycle where do you still see better opportunity than just single digit returns? >> well, my guess would be that, you know, this will be an eight to ten-year business cycle but i reserve the right to change that view. these things are hard to predict but my operating assumption is that the yellen fed probably won't tighten enough to risk recession with these labor markets lax indicators above normal level. we could be at close to a normal

level in the unemployment rate in a year's time but some of the broader labor market, like the u6 rate, will take longer, two years or maybe even more so we should have at least a few more years of the business cycle left in front of us, if not more. >> what happened with bond yields from here, michael i? mean, there are people who on the one hand say they are never going up and that's okay and then others who say they are never going up and we should worry about that and then still others who for years now have been saying they are about to go up significantly. where do you fall in all of that? >> well, i'd be more worried if they go down from here rather than moving up. typically bond yields will move procyclically and usually peak on a level basis towards the end of a fed tightening cycle so it would be unusual if we've already seen the highs in bond yields so i do think we'll end the year probably closer to three than two on the ten-year and then it will really depend on what the so-called equilibrium interest rate, is and if the fed starts to tighten

policy and the long yields don't really move much and ignore the long end of the yield curve then we could have a problem in a year or to a year and a half time. >> that's certainly one signal to bear watch. what sectors of the market right now do you think have the most opportunity? >> well, over all the market i don't think has a tremendous amount of upside from these levels. individual sectors, there's still individual opportunities, talking about the airline sector. it's moved a lot but the price-to-sales raichos are still fairly depressed, .5 times sales and during the late 1990s the sector was up at, you know, 1, 1.5 times sales and the industry is much, much, much stronger non-now than it was then. essentially an ole gone police, and even with high oil prize, if they are stable, this industry can earn a lot of money so we still think there's upside there. the high yild municipal bond sector we've liked a lot since

last summer. it started to turn around, but that's the one area fixed income we think will deliver better returns to the overall equity market going forward so we still like that area. >> that's the second time we've heard that specific sector mentioned on the program today so something to look into as well. michael, thank you so much for being here. >> thanks a lot. >> good to see you for giving us broader perspective. moving on up, may have heard about the "star trek" fan who built an apartment to resemble the shuttle craft seen on the show and up next someone who left him totally in the space dust when it comes to "star trek" housing. if you're a gamer or investor tune into "closing bell" when we get the latest on the best-selling grand theft auto franchise when we hear from the mak maker. ♪ or their new product tanked? ♪

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if space is the final frontier having plenty of space in your house to do what you want is the last great thrill or it might have been for one billionaire "star trek" fan. >> is that cool or what? >> wow. >> if that wasn't cool, as spock might say this house is highly illogical. tonight on "secret lives of the

super rich" we take you inside a mansion in boca raton, florida, 26,000 square feet, basketball court, wine cellar, manmade sole lang solange a lasolang solang picked original movie pieces and leonard nemoy's spok ears still have them stuck to them. that is cool. just like the show. when they open up, it's that sound. >> we tried to make it as authentic as possible. >> the mansion can be yours for $35 million. kelly, i would be remiss without saying live long and prosper until you're super rich. >> robert, thank you. what do you make of this? >> i just have to say robert frank, i have long loved your

work. it's great to share the air with you. >> likewise. >> one thing we have been looking at is the relationship between wealth and happiness. this has been an eternal question among economists and philosophers. does money make you happy? the research shows that once you get to a certain level that we expect a lot more happiness than we get, i think this guy may have found a loophole in he found one thing so bizarre it must make him happy. >> that new pool says one key to success is thinking like a kid. this guy thinks like a kid and spends like a kid. kids ask obvious questions and not afraid of wild ideas. that really is true for a lot of the entrepreneurs i have met. >> let me bring it back to the real estate conversation.

kids don't think about resale value of homes. >> i also suspect he probably won't have a hard time with this property. thank you, robert. >> there are tons of them out there. >> there are. truly. thank you for now. coming back down to earth, after that story, we will take a look at what happened today and what's ahead for tomorrow in our final thoughts with the panel when we come right back. and if i tap my geico app here i can pay my bill.

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welcome back. we have got breaking news. one of the followed investment fun funds. it's been a very hour. >> the chief of the harvard endeavor fund is stepping down. she has no immediate plans as to where she is going to go. but she did tell the boston globe, harvard management is in a really good spot now. the company and portfolio are firing on all cylinders. mandillo joined in 2008 and she did help turn things around there. she's been a regular fixture at delivering alpha, kelly. this is a big move. a lot of folks moving on it

seems. >> another high profile woman in the industry as well. i think she took over from one mohamed elarea. >> i think but we want to double-check. as a commodity trading writer, i always paid close attention to her because harvard is active in the natural resources phase and that was one of her best idea a couple years ago that was natural resources like water and forestry here and abroad. it's one thing that makes it an interesting case study. >> the cost of education, the more people say why don't we look for endowments to be the source of that. harvard has allowed that to off set the cost of tuition. >> returns on education are still massive. if you're in an institution like harvard that decides how to use your endowment.

but i think that's part of what gets lost. returns to education, don't discount how huge they are history. >> we're reminding every month with the unemployment figures. >> harvard's endowment is $25 billion to $30 billion. >> $32.7 billion. >> one wondering what they need that money for. people can go to school there for free pretty much forever. there also have been trail blazers. yale model was trail blazed by the yale endowment and harvard has been a big part of that. this is something else that's going to become a bigger question over the next several years. >> what is the next big alternative. or are you saying people are going to walk away? >> i think it might be public equities. it's the anti alternative asset. >> i was going to say private

equity or real estate. >> they're already there. >> that's like $800 billion. >> i think it's $800 billion or $900 billion. they're looking to mix it up and create more yield and talked about things like real estate. they added real estate recently. they are seeded by commodities and thinking of getting out of some of their fossil fuel investments. always discussion about private equity and they haven't gone there that. >> you're like the cat here, stev steven. >> this is a fantastic opportunity for an experiment. let's get some money key with darts and put the data to a test. i have no doubt she was an excellent manager. but in terms of seeking return even with a huge endowment like that, it would be interesting to

peal off a piece of it. >> we used to do the dart board. we had investors throwing darts and see if that outperformed the market and many cases it did. >> jason? >> if you look at one more thing, look at cam bridge's endowment in the uk. i think they have an investment staff of three, four people and they have kicked everyone's behinds in the endowment world in the past four, five years. i'm all for active management but i think steven has an interesting point. >> we have to hop. kevin, your last thought? >> i liked the conversation we were having about can money buy you happiness? maybe not. but it sure let's being miserable a lot easier. >> i feel like i have heard that quote somewhere before. thank you. we have got a couple of programming notes. tonight is shark tank tuesday.

it starts at 8:00 p.m. eastern time here on cnbc. immediately following that be sure to catch secret lives of the super rich. this will feature the star trek house that we just saw robert frank showing us. that does it for us here. a very special "fast money" from lincoln center begins now. >> announcer: "fast money" is going fast to the future with technology that will change the way you live. and off to the world of business. >> companies, organizations, that are not aware of expediential technologies will be completely disrupted. they will no longer be relative. >> announcer: we have got the road map to future-proof your portfolio. live f