correction. doing fine after the minutes. >> the single worst performing stock right now is garmin down 6%. it can't find a buyer. garmin. thanks for watching "street signs," everybody. >> "closing bell" and mr. doom, bloom, gloom is next. welcome to "closing bell." i'm kelly evans at the new york stock exchange where traders are trying help break a two-day losing streak. so far having some success. >> still below 17,000, though. we've got green arrows, though, today. maybe short reprieve if one of our guests is correct. we have the doom and gloom author marc faber mean says the s&p is about to crash to the tune of about 30%. his call has been burning up cnbc.com today. but he'll join us live in a few minutes to talk more about that call which he's been making for a while. let's face it. >> yes, he has. also, shares of tesla are

higher to the tune of 1.7%. one auto expert is saying stay away from the stock and the vehicles because of a string of bad crashes recently. that includes one instance where a tesla was split in half. are her concerns valid? we'll hear both sides of this debate. here's a reality check for all of us. are you financially smarter than a 15-year-old? 15-year-olds in 18 countries, including here in the u.s., were tested for their financial literacy. the results for the american kids were mixed. we'll tell you about that coming up. in the meantime, find out how you'd compare throughout today's program. we will be asking some of the very same questions that those 15-year-olds had to answer in that financial literacy test. see if you can get them right. >> here's where we stand in markets now. dow up about 78 points.

it hasn't reclaimed the 17,000 level it punched through last week. the s&p 500 is up about 8.5 points. 1972 is the level there. nasdaq up about 25, bill. >> kelly, we have a cast of thousands in today's closing bell exchange. kim forest from fort pitt capital, deeth fitzgerald, ron mullencamp, jerry webman from oppenheimer. jack berujian and our own rick santelli. let's see if everyone can get a word in edgewise here. we had the federal reserve minutes out today, kim. they are signaling they will continue to pull back on the bond purchases, probably finish up after their october meeting but still no word on when they intend to raise interest rates. >> market is up on that news. what do you make of the fed policy right now? >> i think they've been telegraphing what they are going to do and raising rates is not

on the menu right now. nor is it in the foreseeable future. they want to have a good measure of inflation going before they would ever think about raising rates. and we'll see if they can get that going or not. >> we want to mention at the same time, we think we're getting some comments from mario draghi in europe about the extent to which the ecb is prepared to ask if they are trying to fend off deflation. not much movement in markets since the top of the hour. just want to bring that to everyone's taepgs. keith fitzgerald, how much is europe, whether it's concerns about the economy there, concerns about policy there, a factor in either the sell-off we've had to start this week off or the rebound that we're seeing here? >> i think it's an interesting question. to some degree it's all interrelated. it's going to play into it. mostly europe will be a nonevent. they are saying, me, too. we're prepared to do whatever we have to do. that's what the markets want to hear. that's what central bankers have to say. i don't think there's anything else draghi could say without

risking the markets or risking a decline. >> i think you agree with kim forest. we need to see more inflation before the fed starts thinking about raising interest rates. is that a good thing or bad thing? >> the fed has told us they want to get to their inflation targets and employment targets before they raise rates. the story is that's still a year away. inflation is like credit and so many other things. we need a little more than we have. we're on that track. there's been a lot of toing and frommi in from'ing in the street. >> against this backdrop, last night after the ball, they may not be in the dow 30 anymore but they are attuned to a whole bunch of important industries. their shares are up 5% today. if they are up more than 6.2% it will be their best earnings day performance since 2003. >> think about it this way. they came out with a very

healthy forecast, too. >> we saw during the winter months, that is behind us. we have to accept that as a fact. the numbers we are going to see come out of these companies are probably going to surprise a lot of people to the up side. >> yes, going to be better than expected. >> and that's one of the things that's going to keep driving this market higher. quite frankly, the market goes up on earnings. the market we have now is one in which you cannot fight the central banks. as long as it stays that way we have to -- >> ron mellencamp, we were above 17,000. we're hovering there. are you finding value anywhere right now? >> this is getting tough. we're still finding companies but hard to find value. when janet yellen said a few weeks ago, we're going to keep doing what we're doing because it hasn't worked. >> basically, hasn't worked.

>> meantime the distortions from low interest rates are getting truly bizarre. we had a client come in a week ago who owns a utility fund that was floated, i believe, 14 years ago. and when it started it was paying an 8% yield. as interest rates come down, they've determined they're going to continue paying the same payout. the payout has become 15%. but 80% of it is return on capital. so people are -- we wrote an essay a year ago warning people about wall street's creative sources of yield and we're seeing people stretch for yield and doing things truly bizarre. >> i am so glad you are making this point. so what, especially when we're trying to figure out what's driving markets here, what creative things are people doing in this environment to generate that kind of yield against that backdrop? >> you know -- >> well, they are trying -- a year aing -- >> well, they are trying -- a year aing - >> i'm sorry. i thought you asked me. >> we warned them a year ago about mortgage-backed

securities. but they are doing all kinds of things. wall street is making promises that won't be kept. >> rick santelli, i said on twitter today, just once in the fed minutes i'd love to sighee transcription that shows a knock down, drag out fight with name calling and paper wad throwing because we know they disagree on fed policy yet the minutes often reflect a consensus on direction of where we're going right now. what did you think of those minutes today? >> there's something called the human behavior. there's something called thinking outside the box. i don't know. once again -- >> don't forget rose-colored glasses, rick. >> we're seeing a much more bureaucratic, aka, intelligent post office fed, in my opinion. when they talk about complacency, truly, truly do they have blinders on? if you look up complacency on the map down here you know what it will show you? the fomc committee. they are the reason for

complacency. complacency, by taking the long-term capital view to trading. lots of leverage. little worry. that is the strategy. that's what ben bernanke wanted to accomplish. now that they are getting close you look at the ten-year note yield. bad auction pushed it up. the anxiety the fed would be more honest about the ultimate notion the yield curve is so flat is because short rates understand that we don't have a crisis economy. we have a 2% economy. which means we should have a 1.5% overnight rate. the long end of the market looks at it and goes, wow, we can't see ourselves going higher yield because we only have 2% economy. it seems so obvious. there's a lot of ph.d.s on that committee. i don't know if they are looking at the prices coming out of the board of trade very often. >> wait a second. i want to say something to that. rick, okay. the bottom line is this. and you were talking a little bit about bad policy earlier. we have two types of policy. fiscal and monetary.

horrible fiscal policy. brilliant monetary policy that's balancing it out. >> what? >> i think what we are doing, we are not giving this fed enough credit. >> do you have any kids, jack? >> they are doing exactly -- >> you can't fix fiscal policy with monetary policy. >> any parent will know that if you continually put off responsibility, your child will not do what you want them to do. i understand. more than you do about fiscal policy. believe me. but you're never going to get congress to do anything if they have the crutch of monetary policy on some level trying to address the economy. >> rick, the alternative was flying off the edge of the cliff. >> the jacket used to say gop, free market. >> thfree markets are free markets -- >> what the fed is --

>> discount future earnings with a controlled interest rate. >> controlled market. we're now slaves to big man. big government. >> go ahead, ron. >> we're worried about financial literacy among 15-year-olds. give me a break. >> one equation you need to understand. big government equals small wallet. >> you know, we have -- >> you cannot fix -- >> go ahead, jerry. >> we've all got our ideological views. the fed has told us they are making the best of what had been a bad situation. they're not going to do anything in the near term that disrupts either the pace of economic growth or what financial markets have done. but they've warned us and that's what's in the minutes today. they've warned us you better be careful because we'll not bail you out if you get yourself into trouble. kelly, you and i were talking about this before. there were issues for the overall economy but i think they are expecting to do something on the regulatory side. maybe we'll wait and see. i don't have a lot of confidence in that. >> just like in '07.

>> the fed missed this entire crisis. >> before we do, kim, can you -- >> okay, guys. >> can you just -- before we do, give us your sense of where you see a couple of obvious opportunities in this market for investors. >> very quickly, kim. >> right. the economy is getting better. the rate at which we don't know. but it is getting better. so two things are -- pop out which are cyclicals. tech and industrials. that's where we're putting our money in the future to harvest in the future. but, you know, that's just the thing. how fast is this economy getting better. it's getting better very, very slowly and that's the takeaway i have. >> thank you, folks. that's the kind of food fight i'd love to see from the fed itself over policy. >> thanks, gang. great conversation. appreciate it. >> 15 minutes until the close. dow up 91 points. do a little bit of work. see if that has something to do with the headlines out of europe from mario draghi or not.

or just a rebound from the last couple of sessions. coming up. >> we're two points from 17,000 again. >> there we go. >> 17,000 watch is back. >> perfect time to took dr. doom, marc faber, the editor and publisher of the gloom, boom & doom report. warns the market is setting itself up for a crash, worse than the one in 1987. marc is blaming the fed. we'll join us ahead. also new york senator chuck schumer defending the u.s. import/export bank. it's scheduled to expire at the end of september. provides financing and credit insurance to u.s. and foreign firms in an effort to stimulate american exports. find out why schumer is teaming up with big business in battling republicans in this unlikely fight. and check out the new ferraris parked just outside the new york stock exchange today. which one do you want? >> that's how you got here. >> that's how i got here quickly today. and uncertainty over the economic recovery hangs over

wall street. ferrari's interim ceo will tell us how his business is doing. stay tuned. you'll watch kelly drive one of those babies down wall street coming up. about speeds and feeds.

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a bounce on -- bounce on wall street today. the dow up about -- i have to look over here, though. 85 points right now. we were precariously close back to 17,000 on the industrial average. the rally occurring most of it after the release of the fed's minutes from the most recent meeting in which they continued the process of pulling back on the bond purchases which they now expect to complete by the end of october, assuming that the economy cooperates. right now, rally mode, kelly. >> that's for sure. >> while markets are in the green, that may not be for long at least according to gloom, boom and doom editor marc faber who says the asset bubble may already be bursting. he's got a piece -- we've got a piece on cnbc.com about these views. it's on fire since it was posted yesterday, getting plenty of attention still. >> joining us exclusively on the phone is mr. marc faber himself.

marc, welcome back. >> thank you very much. >> continues to move fire. the feeling is that the fed is going to continue to pull back on quantitative easing. they are on course. the economy is picking up pace. the job numbers were strong and the economy is recovering. you still feel, though, that we are setting ourselves up for a big decline in the stock market. why? >> well, basically, i think that the global economy does not support the current valuations. corporate -- have profits largely because they're buying back their own shares and so the number of shares is diminishing where revenue growth is basically flat. and it's very interesting, as you just said, that the fed wants to pull back on its quantitative ease chicago they

have announced a long time ago, by the way. because the economy is strengthening. well, the bond market doesn't seem to suggest that this is the case. the ten-year treasury note yield is at 2.5%. treasury notes and treasury bonds rallied today. so it suggests to me that the bond market, that is the more sophisticated market than the stock market, is not believing in a very strong economic recovery. >> that's fine, but -- is it telling you, though, that we're about to have a 30% correction, though? that is your call? you are saying 2014 will be as bad or worse a year as 1987. >> i want to tell you something. last night, i was taking a nap and then i woke up. and it was five minutes before

halftime, brazil/germany. then i saw the result, 5-0. in halftime, i thought it's a misprint. the game ended 7-1. 7-1. this has hardly ever happened at the world cup. and i can tell you many things will happen in terms of volatility. the public, the institutional investors. everybody thinks the same way. the fed is there. there was greenspan put, yellen put, the fed prints money. everything will go up. that isn't the case. >> marc, do you worry you lack credibility at this point? with all due respect you've been saying the same thing for a few years now. you've been calling for a big correction in the market. you were calling for it in 2011 when the s&p was around 1,000, 1,072. we've gone up 900 points in that time and people ridicule you

saying, look, a stop watch will be right eventually. so what do you say there goes marc faber saying the same old same old right now. >> actually, i have to correct you. in 2011, after the correction has happened, that was the last correction of more than 20%, when the s&p dropped to 1074, i said there's a market rebound coming. i did tell anyone to short stocks at that time, but it is correct that in 2012, i said it would be healthy for the market to have a meaningful correction, but it woucould be that we are a year like '87 when we go straight up and then we don't have a correction. but the most significant crash. >> very quickly, do you have a sense what could trigger the sell-off that you're expecting?

>> well, it may come from the credit market. it could come from equities being perceived one day as expensive, which they aren't at the present time. but the fact is, earnings are grossly inflated by zero interest rates. or it could come from a political event, from a geopolitical event. the problem with crashes, you never know beforehand precisely what is the catalyst. and i can tell you the japanese market peaked out in december 1989. and there wasn't any particular event that knocked the market down. it just got too expensive. so we don't know ahead of time. >> all right. marc, always good to talk to you.

thank you. appreciate it. >> my pleasure. >> marc faber joining us from -- i guess he's in germany talking to us there. oh, he's in thailand. that's right. he does live in asia. pulling off the highs with 40 minutes left in the trading session. we were up 98 points. or 91 points. that close to dow 17,000. we've since pulled back. a gain of 77 right now. up next, another day and another retailer sounding alarm bells on earnings. are retail and the consumer in a funk or would now be a good time to buy a retail exchange traded fund like the xrt? two wall street pros will way the pros and cons. two separate accidents involving teslas fuelling the ire once again of auto industry analysts. one of the teslas split in half. find out why this analyst joining us thinks the tesla could go the way of fiskar. those are her words. remember them? we'll remind you of it. a closer look at tesla is coming

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welcome back. 35 minutes to go. a reverse of what we saw yesterday. all the vertices up. about 15 points off the session high. almost kissed that 17,000 level again. >> you are back in london. all the vortices. >> dominik chu eyeing the

numbers. >> i love it. so we're going to start with chipotle which is moving higher. there was no real negative impact from its higher menu prices. chipotle in focus. also american airlines flying high this after it raised its growth forecast for the second quarter. american doing well. a different story for gps maker garmin. the firm saying apple's new iphone and iwatch could drive head winds for the company. we'll end with the container store falling after the specialty retail store lowered its full sales outlook saying the retail consumer is in a funk. back over to you. >> thanks very much. the xrt, the s&p retail etf is down about 1% this year. it's underperforming in the market. >> if you don't believe consumers are in a retail funk, would now be a good time to buy

that basket rof retailer? what do you think? is this funk for real? is it just container store or is there a retail funk elsewhere as well? >> we heard the same thing from walmart yesterday. >> yes. >> and somebody from the cont n container store, you can say that's compartmentalized. when it's walmart, it's a shot across the bow. it's in a funk. >> walmart just had its own strategic problems. it's much more attuned to the low-income consumers. is not a good gauge of the consumer more broadly. >> so we're talking about the container and walmart. you're talking about very discretionary and very basic. what else is there? >> you're constructive on retail. >> when we look at it we're not expecting the consumer to give knus miracles. last year at this time this entire sector fell into the

bottom. inventories were huge issue. and, frankly, i'm not expecting revenues to be stronger, but i'm expecting the earnings to be materially stronger. investor expectations are very low for this sector. so to us, yes, there's going to be bounces here. we're not expecting q2 to be that exciting. the back half potentially very interesting. if there's any increase in consumer spending, could be kind of explosive. >> i'm thinking some of the names. i was going to start with amazon. this year that's not a great example. i was thinking about a sprouts. isn't it the case there are parts in this market doing quite well, granted it's because they are stealing share from rivals or because they are delivering big ticket goods. the auto sector, even some of the appliance sellers that are doing much better than as you put it, some of the more discretionary. >> within any index or etf, there are pockets and individual stocks doing well. our job is to find them. and i wouldn't necessarily

disagree with what eric said, but i also think that evaluations are way ahead of those expectations. and that's where the danger lies. >> you are hardly a raging bull here. you are tempering your enthusiasm quite a bit here. who do you like here? >> we like the names that have been beaten down. the team players such as an abercrombie or american eagle. they've been killed. we're starting to see them turn. a name like guess which we have a buy rating on. if you want to play higher discretionaries, oxford industries owns tommy bahama which are great brands which have seen no slowdown in this economy. >> for people throughout who might be considering one of these etfs, would you recommend something like the xrt? should they go broader to consumer discretionary or get more specific with some of the names in particular you think have an opportunity here? >> i am bearish on the group. i wouldn't be long any etf in

retail. and i am bearish mostly on u.s. retail. what i'm recommending is ralph lauren, partially because of their growth potential overseas. >> noconsumer discretionary has been the worst performer in the s&p this year. >> in '08 and '09 nobody bought everything. and now they bounceback. now we're five years into it. people have compounded comps for five years now. and it's getting much, much more difficult. and the internet is making it even more difficult. >> that's for sure. >> got go, guys. thank you. >> good stuff. see you later. 30 minutes left in the trading session. the dow is up 77 points. >> senator chuck schumer is up next. find out why he's digging in his heels to export the import-export bank. provides credit and insurance to stimulate american exports. he's on the side claiming u.s. jobs are on the line here if this goes away. schumer will make his case.

are you smarter than a 15-year-old financially speaking? the organization for economic cooperation and development tested 30,000 students from 18 countries on personal finance issues. the quiz is generating a lot of buzz on our website at cnbc.com. here's one of the questions. write this down. claire and her friends are renting a house. which task needs prompt attention? is it get cable? pay the rent? or buy outdoor furniture? the answer when kelly and i come back. dad: he's our broker. he helps looks after all our money. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy? does he have to pay you back? dad: nope. kid: why not? dad: it doesn't work that way. kid: why not? vo: are you asking enough questions about the way your wealth is managed?

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so are you smarter than a 15-year-old? it was administered to teens in 18 countries and has been trending on our website today. before the break we posed this question from the test. claire and her friends rent the house. which task needs prompt attention. get cable, pay the rent or buy outdoor furniture, kelly? >> the answer and by the way, it's not get cable tv, despite what our bosses might say here or even the two of us here. the answer, of course is pay the rent. >> i've said for years.

i think that financial literacy needs to be taught in schools much, much earlier, if at all, than it is now. kids need to learn the basics of financial literacy, rather than learning it once they become adults and have to learn how to pay the rent. >> i'm terrified that question was posed to 15-year-olds. don't you think somebody younger than that could -- >> let's hope they got it right. >> we've got more questions ahead. right now we've got the dow up 76 points. was up 91 points after the fed's minutes came out that showed they are still on pace to end their quantitative easing bond buying program after their meeting in october. the big question still remains, though, when will they begin raising interest rates? right now the fed is focusing on pulling back on quantitative easing and the market is higher by 76 points. >> for the past 80 years, the u.s. government's export/import bank has helped american companies sell american products overseas. now a main function of the bank

has been to insure u.s. companies against losses if they are stiffed by a foreign customer. it's time now for congress to reauthorize this bank. reauthorize this charter. and the battle has made for some strange alliances. on one side you have the obama administration. most democrats, the chamber of commerce and big business. they are in favor of keeping the bank. on the other side, you have many house republicans who say the banks' intentions may be noble but it ends up just being used as an expensive way to implement what they call crony capitalism. >> on that note, joining us now is one of the ex-im bank supporters, charles schumer, senior democrat from new york. >> good afternoon. >> this is making for strange bedfellows. have the democrats in the chamber of commerce ever been cozier? >> it's happening on a bunch of issues. the tea party has moved the republican party so far to the right that people in the

business community are scratching their heads. now it's ex-im bank. it was it is still funding the highway bill which has always had bipartisan support. at the top of the well, obviously, was immigration, which had the whole throated support of the business community because it would do so much for our economy but was brought down by the tea party wing of the republicans in the house who seem to run the show. the ex-im bank at a time we need good paying jobs, exports and manufacturing, the ex-im bank has done it extremely well. hasn't cost the taxpayers a nickel because everything has been paid back. the guarantee makes it almost a self-fulfilling prophecy that the money will be paid back. and the only people against it are ideologues. they say governments should not do this. and in an ideal world, they might be right, but when every europe country and japan and china and russia and everyone

else is doing it, why put our companies at a competitive disadvantage when we need exports and jobs so badly. inge >> it's a thumbs up, thumbs down vote. you maintain the charter or you don't. is there some middle ground that could please the opponents to rechartering the bank? to end their criticism about cronyism and undue government intervention in overseas business for u.s. corporations? you know what i mean? is there some way you can tweak the charter that would please the opposition at this point? >> no, the problem is they are ideologues. i don't like ideologues, far right or far left. they don't believe in compromise or meeting you part of the way. they say government is wrong to do this. no government should be involved. let's not forget. the majority of companies help their small business companies. we have a suspect called census in syracuse. if they didn't have the ex-im bank to help them get the

financing overseas and get the kinds of things a big company has its own people overseas doing, they wouldn't be able to export at all. >> senator, on the no to finances is president obama going to give his $3.7 billion that he's asking for for the immigration problem at the border? >> well, right now, we need to do something because the border is being overwhelmed. and we don't have either the administrative personnel to decide whether someone should be here legally or illegally. the majority of people coming are illegal. but there's got to be a determination. you need a little proceeding for that. we don't have the places to house them. we don't have the -- enough border security. and so -- >> but, senator, you are -- they've floated two western new york locations as possibilities to house these, what some would call refugees, and you've turned them down saying illegals can't stay. >> you don't have your facts. they were withdrawn from the

list before i even talked about it? >> you don't support putting them in new york state? >> no, it depends on the facility. it depends on the facility and the protection and what other people are asked. that's what i said about these two and they were withdrawn because they were inappropriate. they picked one site that had toxic waste in it. >> realistically, can any meaningful work get done in congress? not just immigration which became a hot-button issue after eric cantor's primary last last month. mao the ex-im bank nephouse will then have to take it up in september just ahead of the election. are these politics, are they going to get in the way of some of these important bills? >> in the senate, the hard right ideologues have less say. you have mainstream republicans working with mainstream democrats. i enjoy doing that with my colleagues on the other side of the aisle. and we get a lot done. in the house you still have a fight for the heart and soul of

the republican party between the mainstream conservatives who are conservative but they know they have to get something done and compromise and the tea party and the jury is out who will prevail. the general view is that speaker boehner is on the side of the mainstream conservatives, but highs got a raucous group over there. >> right. senator, just before you go, just so we're clear for our viewers out there. do you support housing the illegal immigrants who are here in some state if the site was appropriate, including possibly new york state? >> you have to look at what the site is before you can say yes or no. we have to find a place to house these people so they can be adjudicated and moved back. but you can't just give a carte blanc blancheand say yes here or no there. you had your facts wrong. >> understood. it was withdrawn before i made a conclusion. >> you have to see the

specifics. you have to see the specifics and then you can say yes or no. >> got. and that's a key condition of approving a $3.7 billion or no? >> no. that has nothing to do with the $3.7 billion. >> okay. >> they are moving to these sites even without the $3.7 billion. it's just that they are totally overburdened. >> right, right. >> in terms hou s of how many p have come across the border. the coyotes have learned if they come with adults there is the proper adjudication procedures and the proper procedures but if just children come, it's much harder to do. and so they, the poor people in these countries, pay $10,000, $20,000 and the coyotes say, we'll get them entrance into america. >> it's a problem. >> thanks for your time. >> we can't do nothing. we have to solve it. and this is one example of what you asked about. can democrats and republicans come together, because we can't leave the problem as is. >> we're always rooting for that

possibility in washington. senator, always good to see you. thank you for your time. >> appreciate it. >> chuck schumer of new york joining us. heading to the close with 18 minutes left in the trading session. picking up pace a little. the dow up 83 points. we are 11 points away from 17,000 again. >> coming up next, who is winning the race to fill stomachs with healthy food in this country? the answer is a lot different today than a decade ago. not just who is winning but how they are winning. sarahizen takes a look and maybe a taste or two. and another financial literacy question. you can buy loose tomatoes for 2.75 zeds per kilogram. or you can buy the box for 22 zeds for 10 kilograms. which is the better deal? the answer and the definition of zed when we come back on closing bell.

financial noise financial noise financial noise

welcome back. you can buy loose tomatoes for 2.75 zeds per kilogram or buy the box for 22 zeds for 10

kilograms. this was a question posed to 15-year-olds around the world. >> the answer is buying the box since 10 dealograms of loose tomatoes would cost 27.5 zeds. >> correct. >> so it would be more expensive. >> we've got more questions coming up. the chinese did the best around the world. >> really? >> 13 minutes to go. the market is up 76 points. the s&p is up 9. the nasdaq is up 27 as we rebound after a tough start to the week. >> all day long cnbc has been looking at the food industry and how shifting tastes are affecting some of the best known brands out there. >> sarah izen is looking at healthy foods popular a decade ago compared to what's popular now. >> back ten years ago the top selling foods introduced that

year, breyer's carb smart vanilla, pepsi vanilla, yoplait and toasted ritz. what's in today, protein, fresh, natural, gluten free, gmo free. it's in the numbers if you look at which companies are taking share in the grocery store right now. and analysts say this trend is here to stay. it's already creating a lot of winners and losers among the big food companies. who is doing it right? white wave which owns horizon dairy and silk soy milk. boulder brands behind other organic brands. the bunny crackers and mac and cheese. and annie's and hain celestial. those are doing well when it comes to keeping up with the consumer taste changes. conagra, campbell's soup,

kellogg, general mills. they call them the middle of the grocery brands. where increasingly shopping has become around the perimeter. people are going for meat and dairy. because of spending, because of low wages. these companies are facing big challenges when it comes to growth because of the shifting tastes and perceptions throughout about what is healthy. more innovation when it comes to new foods. general mills' ceo was on "squawk with the street" telling us about protein cheerios and checks gluten free oatmeal. obviously a nod to what is working with the consumer. you can expect more products, more marketing and perhaps some deals to find growth here. >> all good for customers. that's for sure. thank you, sarah. >> protein chex. up 71 points. 10 minutes left in the trading session. two ferraris are parked outside the new york stock exchange. we've got the company's interim

ceo to talk cars and the economy in the next hour of the show. don't go anywhere. greenline do for you? youy just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review.

welcome back. about eight minutes left in the

trading session. losing a little altitude. the dow up 91 points. very close to the 17,000 level. now up 68 at 16,974. joining me to talk about the markets, michael block and larry mcdonald from new edge usa. this has been a fed-driven market to some degree. earn,s from alcoa last night. the fed still on track to end quantitative easing by october. good or bad right now do you think? >> i'm calling this the -- they made the tapering call. we've argued about this before on this network. tapering is going to end. it happens. the fed is keeping things steady. those are very boring set of minutes. >> which is a good thing for the market? >> i'd say it's benign. there was a lot of fear people would jump on elements in there. i think they created a buying opportunity but would have caused -- now here we go and we're on to earnings season. >> will it dawn thun awn ton th

that the fed is not there anymore? >> sold off a little more after the minutes and then rallied right back. i think after lehman and everything we've been through since the last five, six years, i think ms. yellen's comments last week were pretty irresponsible. talking about seeing asset bubbles shouldn't have any impact on fed policy. and i think that's the wrong approach. it's a really dovish statement but just sets it up for another potential problem. >> she also said she felt stocks were fairly valued. she didn't see a bubble. >> look back the last -- housing crisis and internet bomb, they never see risk. they've never been able to see risk. >> are you buying here at these levels? >> i'm certainly not selling. i'm hanging on, looking for opportunities. there are outliers. a big down plouffe in tmove in . there's no tech bubble here. larry mentioned housing. people started worrying about housing in 2005.

now they were early and that means they were wrong. they had justification for being calibrating this as a big boy's game. that's my best advice to people. >> what are your traders buying? >> i really like brazil equities. the 100 day from below is crossing the 200. and ms. rusef is a radical socialist. the loss yesterday in the big game, the soccer game, leads -- i think it's going to hurt her potential re-election chances. if she doesn't get re-elected in the fall, 25% more upside. >> the impact of world cup on the economy of brazil. i like that. thank you both. good to see you. we'll come back with the closing countdown. and after the bell, a new study shows short selling is now at its lowest level since before the collapse of lehman brothers. what does that say about the markets? we have famed short seller bill fleckenstein.

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[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. 90 seconds left in the trading session here. the fun we have sometimes. up 73 points as we go out. the dow came very close to 17,000. we've since pulled back. nasdaq, lately, the weak link is

up stronger. so it's had a wider amplitude than the other averages or forces as kelly would call them. the s&p up 8.5 points. we've heard already from the container store which was down sharply today after the ceo said yesterday that he sees a retail funk going on right now. there it is, down 8.5%. down 15% earlier. >> becoming somewhat infamous line that we're seeing a funk in retailers. high end retailers, which is what the container store guys are after are not in a funk. we'll get same-store sales tomorrow. we're expecting 4.9%. that would be the biggest jump since january 2013. june looks pretty good overall. it's a clearance month. maybe we'll see some discounting going on. i expect that might hurt margins. we should get fairly good numbers from companies like gap, l brands. maybe only 15, 18 companies

still reporting. i'm hopeful we'll get decent m numbers to support the idea. >> going on with a 75-point gain. a bit of a bounce after yesterday's big loss. stay tuned for the second hour of "the closing bell" with kelly evans. i'll see you tomorrow. thank you, bill. welcome to "the closing bell." i'm kelly evans. wall street rebounding after a tough start to the week with the dow up about 80 points at the close. that is about 15 points shy of the 17,000 threshold we first pushed through last week in terms of the closing high. the nasdaq adding 27 points. the s&p to 1972. the russell was a little weaker into the close. let's get right to it with today's panel and talk about these minutes. nathan joins me. bill snead, stephanie ling,

scott cohen and also joining sus"fast money" trader john najarian and steve liesman. welcome, everybody. steve, it's been two hours since those minutes hit. do you think they were the main reason why stocks pushed a little bit higher later in the session? >> you definitely saw a reaction to the minutes following the 2:00 release, kelly. and i think the reason is that everything in the minutes is gradual. the fed gave some certainty around the end of qe happening in october. pretty much along the line of market expectations. and then gave us detail around when it will begin to normalize policy, how it will do so. you didn't get the sense of a fed in a hurry. if the market liked anything about these minutes it was the sense that even after the 288,000 jobs on thursday, the decline in the unemployment rate, 6.1%, the fed is in no hurry to withdraw system us about but on track deliberating

right now on how to do so next year. >> maybe markets are overextended. maybe we'll not do anything. stephanie, do we have any confidence the fed or anybody can identify when we're in a bubble? yesterday the front page of "the new york times" called it an everything bubble. >> it's kind of a bubble-like valuation, right? back in 2000 you got as high as 30 times estimates. i'm very encouraged about the economic data. all the data last week was pretty much better than expected. i think that's what's happening. we have a lull before we get the real big boom on earnings. how strong is the economy? what is happening tow inflation and is the fed going to change their policy based on that? it doesn't seem like it. it was a very consistent message today. >> bill snead, people warning

with each successive month that passes we'll see another 2008-like meltdown. what is your response to the people out there who are short this market? to those people who are saying that this is fundamentally unsustainable and we're in danger of a market crash? >> in honor of the movie "casablanca," marc faber is one of the usual suspects. two-day decline and he gets trotted out. so here's what we think. we think the small cap arena is very oversmauld. and is going to be subject to the worst part of whatever correction we get. a normal year has a 10% to 15% correction. and so we don't think you should interrupt your ownership of wonderful companies and that's really what we focus on. >> dr. j, where do you see wonderful opportunities here? >> quite frankly, in chips today a lot as well as high tech. applied materials, take a look

at the outperformance there. nvidia. lam research, lrcx. these are all stocks up about 2% today with the market up 0.6% or -- not even. >> right. >> so i think that's outperformance. and then i'd also point to carmax, kmx and orly, which is o'reilly automotive. both of those saying the consumer isn't doing quite so bad either. it's doing this normal backing and filling like we've done basically senten lly since thate of this year. >> every market that's up, is it a bubble? we used to have something called overvalued. now if something is a little overvalued, it's a bubble. bubbles pop hard and they hurt

people. things that are overvalued become revalued. i like what stephanie said. maybe it's 15 times. that's the point of p/e to come down. it's substantial but not a huge bit of pain spread around. >> steve, to your point, though, if earnings -- if the economy is getting better, then earnings are going to get better and get top line growth which we haven't seen in several years. maybe the valuations are at 16, 17 times fair now. if numbers are going to go up, which we'll find out next week and the week thereafter, maybe things aren't that bad as a lot of people are saying. >> i think you are seeing earning goes from 5.5% on the s&p, grow by about 6.5%. nothing to write home to mother about. the only thing that messes up what the fed said today. a few consistent months of 280,000, 290,000 jobs, then yellen will have to say, am i going to get more inflation than i thought? that's the only thing right now that ruins the party. but the consumer is spending --

we used to spend $104 a day. now about $94 a day. if you want to look for strength in the economy, it's not from the average consumer. they are cutting back, watching where they are spending, cutting back on consumer credit. i don't think they are in a position to put a lot of oomph in this economy unless a lot of them get jobs. then they'll be spending, even if they are spending less. >> you want to look at the institutions. look at the institutions. >> what a difference a day makes. >> is this a healthy rebound from the sell-off yesterday? yesterday we were talking about things like geopolitical risk which is just like off the table now. that was one of the things that had people scared. it's a healthy rebond. the market needs to back and fill as everyone has been saying. there are other things out there. >> the situation in israel, certainly not better than today. we could, to some extent. do you worry about this as well? you look at gold and flight to safety in some parts of the

market we're seeing and you can start to see a story in which markets are positioning for some sort of geopolitical accident. >> yet you see oil going down. oil continues to go down. we've already discounted iraq as having any effect on oil. we'll go back to analyzing the agreement from 1990. all of a sudden, what happened to the $150 a barrel oil we were worrying about? >> gone. bill, what do you think? >> can i cut in? >> yeah, please. >> first of all, we think oil will be the last major commodity to die. what we think is about a ten-year bear market that peaked in july of '11. but the second thing, janice just hired an asset allocator risk manager by the name of myron scholls. that's a stock picking shop. stock picking shops don't hire risk managers at the top of bubbles. >> that's an interesting way to put it. an interesting way to frame the way the fed may be looking to push against this or not.

it seems pretty clear from the fed's own research they are willing to risk a repeat of what we saw during the last financial crisis as opposed to raising rates more aggressively now. mr. smead? i could have posed that as more of a question. let's get back to the geopolitical stuff. your point was oil would be the last major xhodity to die if we're coming out of a super cycle. these are the very areas we were looking for signs of inflation across the economy and seeing it. is this while part of the economy starting to roll over? >> there are pockets of commodities doing okay and pockets not. agricult are, a lot of that was weather impacted. i'd like to see a little more inflation because that's indicative of better demand. i look at something like gold. gold has rallied over the last couple of days. it's acted quite well, which is not a real commodity in itself. it's more of a safe haven if you will. just kind of worth paying attention to. but i like copper.

copper has done a little better in the last couple of weeks. and if you do get these massive global stimulus efforts from the global monetary policies, then that should put a floor on some of the commodities. so that's an area we've been buying. base materials is where we've gone from underweight to overweight in the last couple of weeks. >> gold will stay where it is and go up a little more but it's going to be fool's gold. once the federal reserve decides this is as much inflation as i'm willing to handle and no more, that's when gold starts going the other way. enjoy your gold rally while you've got it. >> i would just say you have this massive monetary policy accommodation globally. we may be getting a little tighter but nothing is going to change in japan, in europe, in brazil. so i think that globally you'll see an offset to what's happening. >> some on the fed are concerned about what's happening in japan and europe and even in china. and the potential for that to create more deflation or put

pressure on disinflation here in the united states. >> i want to put one thing on people's calendar. 4:30, stan fisher will be making his first public speech since getting the job. and what's significant about that. he's a -- a titan of monetary bhols trained most of the central bankers that are around here. and it's an interesting position for him to be in the number two spot to janet yellen. are there any daylight between the two when it comes to the outlook for policy? that can be significant. my guess is it won't be. it creates a certain risk. we all want to hear what stan fischer thinks about the economy and the outlook for u.s. monetary policy. >> steve, it's a great point. that all happens about 24 hours from now. thank you for joining us this afternoon. dr. j and steve. stay around and catch uch wip w the "fast money" crowd. don't miss that. we've got breaking news on

zynga. julia boorstin has the news. >> they are back in compliance with nasdaq listing rules. the vp of engineering and head of the advanced technology and projects group at google. also appointing perkins partner john doerr as lead independent director. zynga had fallen out of compliance with nasdaq listing rules a month ago when two employees stepped down last month. when more announcement ceo making a point that he's recruiting senior executives to upgrade zynga's team. the stock trading 1.5% higher on this news. kelly. >> julia, the shares as you said responding positively. we're going to send it over to dominik chu with another quick market flash. >> this is zumiez. the specialty retailer of action sports gear posted comp sales of 3% this past month.

as a result, it said it's raising its second quarter earnings guidance. the stock is trading up about 7%, sharply higher in the after hours trade. i will note also that zumiez shares overall have traded just around, we'll call it 18,000 shares. not heavy but still a nice size move for that stock. back over to you, kelly. >> certainly a different story than the other retailers we've heard from today. short selling by hedge funds has fallen to the lowest level since lehman brothers collapse in 2008. famed short seller big fleckenstein says it's become absurd making this market uninvestable. his ultra bearish case is straight ahead. also, how on earth did the government make $100 billion in improper payments last year? that's about 10% of the whole budget. remember, that's your money. this outrageous story is coming up. also, are you more financially literate than a 15-year-old? there's a quiz heating up cnbc.com today. and here's one sample question.

which statement is true about this stock chart. a, the best month to buy shares was september or, b, the share price increased by about 50% over the year. now there's the chart to the left there. so is it a or b that is true about this chart? right answer is coming right after this break. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler...

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welcome back. before the break we asked you one of the questions 15-year-olds were asked around the country to test their financial literacy. take a look at the chart on the left. and then which statement is true? the best nouth buy shares was september or the share price increased by about 50% over the year. the answer is "a." the best nouth have purchased that stock was in september. the dow hovering near 17k may not be a surprise. hedge funds are significantly reducing their bearish bets on stocks. short selling has dropped to its lowest level since before the collapse of lehman brothers. more reaction on the newsline is bill fleckenstein, president of fleckenstein capital. great to have you here. we wanted to ask you about this. as short sell appears to be at an historic low, you are ramping

up. is that right? >> right. but i have -- i'm not short now, and i'm not sure exactly when i'm going to get short. there is going to be an incredible opportunity on this short side as the market has been driven higher by money printing on the part of the fed even though they're tapering that and people have -- and there are no shortage of things that are risks that are not being accounted for. but it is still not quite time to be short in my opinion. at least not the way i like to do it. i have a certain methodology that i like to use. and the things that i want to have happen are still not in place. but that does not mean that the stock market doesn't have plenty of risk. it does. it's just not possible to make money on the shrt side right now. >> why isn't it possible and when is it going to be possible? >> it's not possible for one reason, and this is the reason i shut my short fund down in 2009 because i knew the central banks would print lots of money to

fight off the problems that were going to be a consequence of the last time they made their mistakes. thus, last year when the fed printed a trillion dollars, it drove the stock market up. you cannot make money when the fed and the other central banks are printing so much money and people believe that what they do works. those two things make it very difficult to make money on the short side. problems get ignored and no one cares. if you try the short stocks you oftentimes get run over. even though i have a strong feeling i know how this movie ends, i don't think it's quite time to prepare for that just yet. >> and i want to bring the panel in in just a second. before i do, your comments echo comments we heard from marc faber last hour. he's more specifically warning about something like a 30% correction this year. >> what marc said is that the risks are high and we could have a crash and the longer we go with more risk being taken and

people acting recklessly, the higher the probableitiilities a that. i would agree. the stock market is way more crash prone than people would think because of the structure that it has now. and given all the hot money and things. i suspect at some point we will have a crash again. but, you know -- >> the fed is starting to exit, though. if that hasn't made it time to start going short now, then what will the catalyst be? >> well, i can't say for sure. i have my own pet ideas. one of these days, the bond market is going to wake up and realize that the coupon it's getting relative to inflation that's out there and going to continue to grow makes no sense. so one day the bond market may revolt against the policies of the fed. that -- when that happens if that happens first, that's going to be a tremendous catalyst because if the fed can't print money and we have to actually solve our problems and deal with

them, valuations are going to go much lower for a time. >> and i want to bring in the panel here before you go for a couple of thoughts here. >> let me ask you. this is nathan. when you take a look at where the market is now and the fact the average american, or the average investor only has about 37% of their assets invested in stocks, wouldn't they make the case they'll have a lot of patience and look at like to any other asset class and say it could go down a little, take a 10% correction? that's only 3%, 5% of my portfolio holdings? i'm just not that exposed to stocks? i'm not going to be as reactionary as i might have otherwise been at 60% of my equities? >> yeah, but that doesn't have anything to do with the fact that the stock prices are pushed up to where they are because the fed printed all this money. and just because the public is not as involved as they might have been in the past, doesn't make the market any less risky given the policies we're pursuing and the likely outcome

from these policies. >> when did a 15 p/e become frothy? most markets -- a rally started at 13 p/e and go to a 19 before they die. somewhere in between? >> when was the last time the fed printed a trillion dollars? >> it's not circulating. >> 1946 to 1952. >> what's that? >> bill, this is bill smead out in seattle. funny speaking to you from your hometown. from 1946 to 1952, the fed capped rates. we had a high profit margins in relation to gdp. 2% treasury. rates slow lear worked higher for the next 30 years. and in the first 14 of those, the dow quadrupled. so here's my question for you. your going to short indexes? are you going to take advantage of how expensive small caps are in relation to large caps? your doing individual stock research? because we're long duration common stock owners. let's say there's going to be a

bear market come up in the next two years. that's not a good idea for long duration people to deal with. what are you getting at? what are you going to do that's going to really add value? i'd like to hear. >> let me ask you this. how well did those arguments work out in 2008? what we're going to have again is a period not exactly like 2008 but there's going to be a big liquidation in stocks when the fed can no longer print this giant amounts of money. i don't even -- >> just going to slam on the brakes. is that the deal? they're just going to slam on the brakes and stop? they don't seem inclined to do that. they seem to be wanting to ease off the accelerator a little bit. >> well, listen, by the end of this year if the fed stays an the path they've been on, they won't be print anything money. >> bill it -- >> at some point, i don't -- >> can i answer the question or not? >> please do and then we have to hop.

>> i don't think the fed will be able to finish tapering because at some point i don't think the market will be able to take the -- the fed is buying. we've never seen a period where the fed has printed a trillion dollars on top of the other 2 trillion printed before. to compare this to the early '50s a bad analogy. this money printing is coming on top two of prior bubbles that helped break the financial system, the economy and the public's participation. this will end very badly. i just don't see the signs of the catalyst just yet. >> please give us a heads-up when you can. really appreciate your perspective. here again as more and more people have been loathed to short a market that even so they don't like. tesla's stock red hot this year. up next, we'll hear from someone who says tesla's safety concerns could eventually take them down the road to bankruptcy just like their rival fisker. ferraris parked just outside the studios today. we'll speak to the automaker's

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future of tesla. lauren is the car coach. you have already said tesla needs to be careful it doesn't go the way of fisker. really? >> bankruptcy, i don't know. but if they have problems like this with fires, they need to show whether it's fair or not if they may have taken a real big beat with the consumer. this was publicly announced everywhere. it was all over the news and print that tesla had two fires, that the cars, people were injured, people died. this is a total nightmare for tesla. they don't ever have to have a problem like this. now they do. and now they are in this position they need to take a unique attitude and make sure they don't become the next fisker. >> i don't think they've suffered at all, craig. people understand that there are fires in cars all the time. but her point specifically is, is there a problem inher tonight t inherent to the way teslas are

made? >> crashes are bad. no question about that. you never want to see fatalities. but the fire rate in tesla's vehicles is close to an order of magnitude loy elower than in conventional vehicles. on a relative basis, it's a fraction of that. the conventional vehicles the other guest wants to defend. realistically, i think tesla knows how to make their cars. they've proven with their crash safety test they can deliver best in clasper formance and they've got a hot car. a lot of people want to take hot shots. >> what is your primary concern? i understand the general argument. but, still, you have to be careful in this case not to take a couple of incidents and suggest that tesla is going the way of the do-do bird. >> tesla has made a lot of promises. battery swaps. nobody has taken into it. there was some sarcastic

comments from some of his competitors of mainstream manufacturers that wouldn't even use tesla technology. also some problems going on in china. you've got patents that are going into lawsuits. sales that are not where they want to be. there's a lot of other factors involved. what tesla needs to do is show their unique attitude go out there and say we're going to do what we can so this doesn't happen again, whatever that may be. last time they had a fire they put in a titanium plate. this vehicle was taken off the show floor and sadly people were injured and people died. this needs to be really carefully investigated. they need to be open and let the public know what's going on. >> bill smead, do you like tesla as an investment? >> we don't. we have to have a long history of profits and dividends. we admire elon musk. we owned ebay and he got paypal started. so we like the idea of move away from gasoline as a way to power

cars. and we are kind of hopeful, naturally a lot of people are rooting for this to be a part of a changeover to that. but other than that, that's our only interest. >> stephanie, do you guys like the name? >> 77 times forward estimates? that's hard. especially when you have something like gm at 7. i know they are apples and oranges. our style is more on the value side. tesla, great car, i think. good product. but a lot of room for error. >> i guess the question is, does the crash where the car was going 100 miles an hour down the city street and burst into flames, does that change your investment thesis? the stock may be overvalued but the crash, we're making an awful lot of it. i'm sure there were a number of fords and chevys that crashed over the weekend and we're going to take a look and see what happened to this vehicle. we want to get to the bottom of it. are we overblowing it or is it just because it's tesla? >> root for tesla.

you don't invest in tesla. i think that's -- you have to be in their corner. he's wild and crazy and everything capitalism is. shooting things up into space. go for it, elon. invest in it? i don't think so. >> warren buffett -- >> the growth investors out there that own tesla and are buying tesla are looking at a company that has drive train cross parity with traditional vehicles today and over the next three to five years you'll see them cut that cost in half. what will that mean for detroit? big things. that's why people are involved in tesla. a lot of growth ahead. >> we would agree with that. >> all right. thanks, guys. turnover dominik chu for a quick market flash. >> we have united continental holdings. this is interesting. it's spiking after it raised its second quarter passenger revenue growth forecast. that stock is now up about 5% in the after hours trade. it's interesting only because we had american airlines with positive news. in the weeks before we had both

lufthansa and air france with more negative news. both united and american, a little more bullish in terms of story for the airlines. phil lebeau will have much more on this next hour in "fast money." of course, pay attention to that. back over to you, kelly. >> and looks like a better than 5% move after hours. thank you, dom. those shares have been hit hard as airlines are selling off. president obama is addressing the immigration crisis today in texas, but he's not visiting the border despite pleas from members of even his own party. kay bailey hutchison is here with her analysis of this crisis. also, here's another financial literacy quiz question posed to 15-year-olds around the globe. play along at home. here's how it goes. lisa lives in zedland and receives a new bank cord. she receives a personal identification number for the card. what should she do with the p.i.n.? write it on a piece of paper and keep it in her wallet, tell it to friends, write it on the back

of the card or d, memorize the pin. we'll get you the answer when we come right back. oment, where right place meets right time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours. humans. even when we cross our "ts" and dot our "i's", we still run into problems. that's why liberty mutual insurance offers accident forgiveness with our auto policies. if you qualify, your rates won't go up due to your first accident. because making mistakes is only human, and so are we. we also offer new car replacement,

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posed to teenagers around the world. lisa receives a new bank card and the personal identification number for the card. what should see do with the pin in the answer is "d," memorize the pin. does anyone here memorize their pin number? everybody. murder, drugs and google. sound like a crime novel. it's a real life story or web users are reading all about. for that and the cnbc hot list, allen wastler joins us. >> that test, we have more people taking that sample test that we have on the website than are reading the actual story it's tied to about financial literacy. so there you go. right now we're leading the site with a wonderful write-up from robert frank about, guess who is supporting a four-day workweek? larry page of google fame and a bunch of millionaires. 60% of millionaires support moving toward a four-day workweek. you think these would be hard working types. i'll take a four-day workweek.

number two, you mentioned it in the intro. when you have the words prostitution, google, yacht, murder, heroine, it makes for one heck of a headline. finally, a wonderful write-up from seema mody about india. it's gained 22%. the mark threat. b market there. the investing world is just poised to see whether or not that 22% will hold up or retreat in the face of how he actually manages that country's economy. so we've got a great lineup on the website today. >> is mody nomics the new abenomics. breaking news at american apparel. >> so here's the next chapter of this saga. all kinds of news. here's what we have that's new today. the company american apparel saying they are going to

reconstitute, reform the board of directors at american apparel. the reconstitution is going to be -- what's going to happen is five of the current seven members, including founder dove charney will voluntarily step don from the board of directors. the departing directors will be replaced by two new directors chosen jointly by standard general, the hedge fund that's backing this particular company right now. and the current board. and three new directors that are going to be designated solely by standard general. all but one of the new directors are expected to be independent with either standard general or mr. charney not affiliated whatsoever with them. mr. charney will not serve as a board member or be represented by them. it will be overseen by a newly appointed board member. he'll continue to serve as a

consultant. based on those findings, the company will then determine whether or not mr. charney can serve as an executive or an officer of the company or even an employee of american apparel. again, the board is being reshuffled because of standard general which is one of the primary backers of the company. the next chapter in this saga. back over to you. >> it's clearly not over yet. despite the deficit, the federal government still isn't minding your money. the government may have made $100 billion in mapayments to people who do not deserve them. how does this happen? our panel will tackle that next. and the immigration debate is moving to the front lines. texas governor rick perry n president obama have never agreed an the subject. they couldn't agree on where and how to meet while the sprt in the lone star state. and former texas senator kay bailey hutchison joins us with a view from texas just ahead. e of.

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f provokes lust. ♪ it elicits pride... ...incites envy... ♪ ...and unleashes wrath. ♪ temptation comes in many heart-pounding forms. but only one letter. "f". the performance marque from lexus. welcome back. a new report by the white house office of management and budget showing the $100 billion and taxpayer dollars may have been wasted through improper payments in 2013. this is like tax credits, people who didn't qualify, unemployment checks, people who had jobs, medical payments or bogus treatments. how does something like this happen? scott cohen, i'm sure you can tell us. >> it happens through fraud. you know, the big chunk of this is medicare and medicaid. health care entitlements. we did a documentary on this a

couple years ago about the enormous amount of effort that's done to recover some of these payments. all of the scams. because it's a huge pile of money and people are finding ways to get tat. >> huge. $100 billion. my favorite is that one of the lines in the piece is, well, but the good news this is down from like 120 or $112 billion wasted a couple of years ago. >> particularly with medicare and medicaid. they recover about $4 billion or so in change a year, which is a lot. there are tools under obamacare that let them go after this even harder. but it is still -- that's justice a drop just a drop in t bucket. >> bill smead? >> senator dirksen had this covered. a billion there a billion there. pretty soon it starts adding up to real money. >> i hate to bring it up. but we also give $180 billion a year corporate tax breaks. so when we get rid of waste,

fraud and abuse -- >> those are incentives. this is just pure manipulation, greed, waste in the system. >> when a system is as big as ours is, this will be a natural outcome. >> $100 billion? $100 billion? >> i'm going with smead. >> it's a couple percentage points. it's still a lot of money. one of the other issues is you talk about -- when you talk about trying to cut back spending, a lot of spending cuts back in areas where they can recover some of this. so, again, back to health care. for every $1 they spend they get $7 back. if you look at the irs which is under a lot of pressure for a lot of reasons, if they are cutting back that budget, those are improper payments that the government is not going to recover. >> it's the irs which will be recovering those payments? >> the irs that would be recovering improper tax payments which is one of the chunks. >> the sad part is these are for programs very much for part of the social safety net. so it's always sad to see that's where the leakage is. >> it's another impetus to say do away with it altogether.

>> salley mae used to do the student loans and the federally funded program and they had 1.5% to 2% losses. now the federal government has the entirely federally funded program and about 11.5% defaults now. so -- >> but defaults are not the same as improper payment. >> you can't walk away from a student loan. so that money is going to come back unless the law changes. >> maybe people are fraudulently taking them out but that's another story. just your government at work. let's send it over to dominik chu with important news. >> we're going to start with lumber liquidators. its second quarter comparable store sales fell by 7%. it's also guiding earnings below forecast. you can see the stock is down about 16% in the after hours trade. the company's ceo also making an interesting comment saying that customer traffic to our stores was significantly weaker than

expected, particularly in geographic areas impacted by unusually harsh weather. then there's potbelly, another one just reopening for trading after being halted. the news turned out to be a second quarter sales warning as comp store sales fell short of anticipated levels. as a result, it sees its full year earnings coming in way below wall street forecasts. and you can see that stock is down about 18% in the after hours trade as well. we should note it's only about 15,000, 20,000 shares in the after market but still very large moves. back over to you. >> and we're seeing by the way it move lower in lowe's and home depot as well. there's been a texas showdown in the lone star state today. president obama and texas governor rick perry meeting in texas next hour. what should they do to address the ongoing crisis at the border? former texas senator kay bailey hutchison weighing in. and david pyott's first

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[ female announcer ] f provokes lust. ♪ it elicits pride... incites envy... ♪ ...and unleashes wrath. ♪ temptation comes in many heart-pounding forms. but only one letter. "f". the performance marque from lexus. there, and president obama in texas today feeling heat for what he's not doing.

he's not visiting the border area where tens of thousands of illegal immigrants have entered the country creating an urgent humanitarian problem. jon harwood joins us with what the president is doing in texas in texas. >> the president remains under pressure in texas for that border crisis and at a hearing this morning, senators in both parties complained that the influx of unaccompanied children from central american countries has put the united states in an impossible position. >> they're getting an impression in their countries that once they get here, they can stay. as humane as we all want to be, it's inhumane to send them on this journey. >> the president is going to have a meeting with stake holders, including texas governor perry. before he went, he hit republicans in congress for not dealing with immigration comprehensively. >> congress said no to fixing

our broken immigration system if a way that strengthens our borders and our businesses, despite the fact that everything from law enforcement to corporations to evangelical, there is an immigration reform that's unprecedented. these guys still can't get their act together. >> that pivot is not likely to bear fruit any time soon t. fear question, is congress going to give him the $3.37 billion he's asked for to deal with the urgent problem. it's not clear. they have been non-committal so far. i think the odds are in the end he will get at least some of that money. >> john harwood, thank you very much. i want to get reaction from former senator and cnbc contributor cayley hutchison, she joins me now from dallas. what is your precipitation? what should be done here about these children at the border? >> kelly. we should be talking about the policy t. policy should be that

we take these children in a very humane way back to their country of origin. the policy has to be that if you come to our country like this, you can't stay and you won't be able to stay. you must go back to your home country and i think all of the supplemental appropriations that we're talking about should be ear marked for help for those countries to have the children repatriated or to keep them from coming in the first place. i also think we need to ask mexico to be more helpful about not allowing them through their southern border to get through our southern border is. >> this is going to be an expensive undertaking in the shortened and the long term. >> it is. it is. but we feed a policy in place that stops the flow that so we can deal with them here now in an expeditious and huh pain way.

>> the issue, of course, the beginning of the situation on the ground in guatemala and these other countries, you can hardly blame these kids for trying to escape it, to come to a place where they think they have more of a future feempb it's as illegal immigrants. >> i think it is important that we try to help those countries either have places that are safe for these children, maybe camps that are safe, some way to assure that they are safe and that they have an opportunity for a life that the fact is the absorption problem is overwhelming our infrastructure. we want to welcome people. we always have in our history and we all favor illegal immigration. but we must have a way to absorb and do right by those coming to be a part of our country and you can't do it when there is such a

huge amount that we don't have the infrastructure to handle it. >> thank you for your views this afternoon in that situation down there sales were up 39% last year t. legendary interim ceo telling us how sales are doing this year and what that says about the state of high end consumers. financial noise financial noise financial noise

welcome back. ferrari loaned the iconic distributor of luxury automobiles, this year celebrating the 60th anniversary of north american distribution. here to tell us more about the brand and these two vehicles is ferrari's interim ceo. welcome. >> nice to meet you. >> reporter: this redwood is not even available for sale, start? >> this is available for sale. it is not yet a believer. this has recently been launched in the united states. we started in the same four weeks here. >> we are talking a price point about 23 much,000 for this one and for the silver one over there. >> slightly below. >> reporter: are these financed or are your customers buy figure cash? >> most of the customer are willing to by cash. most of them are willing to buy

finance for the car. so we have our captive finance house that is providing service. >> reporter: i will say, we heard a slew of customers in the last 24 hours the container store, wal-mart, lumber liquidators. potbelly. they continue to get hit by this weak environment that their customer space seeing. is it that tough out there or is it just good to be in the auto sector right now? >> listen, our situation is pretty different because we are in the outer section, we are in the last segment. so we are keling less than 7,000 cars a year. i think it's easy to find 7,000 willing customers about to spend this amount of money. >> reporter: will you keep it at 240u6r789 will you sell -- >> it's not for us to grow sales in terms of volumes. it's the turnover, of course, which is our target. we plan, we always think it's

nice to deliver one less car. so we keep a little bit of wait if there. people have to wait to have the dream. >> sorry, scott. >> thank you for pulling by car around by the way. i really appreciate it. is it as easy as it sometimes is to find those 7,000 people? give us a sense of what those people are spending and how much they are willing to spend? >> if you think of how many high end individuals are in the world, the answer is it's easy. the point is that we are not only trying to find customer, we are trying to find compler to fit with our positioning. we don't want to have just customer that jump in the car and go screaming on the road. we buy customer that enjoy and they become a part of the family. they participate in our events they become a part of our daily activities. it's not just find someone with the.to buy the car. it's someone that we really feel the difference of owning a car

versus any other. >> i think we got to go. >> i can't afford the paint job. >> we can work on. thank you so much for being here. as ferrari has no trouble finding people lining up these days. that u.s. the it for us here on "closing bell." now ritz time for "fast money" with melissa lee. >> thanks, kelly. "fast money" starts right now. live from new york city's time's square. i'm melissa lee. the oil spike has come to a screeching halt, fin straight days for wti sending it the low 50-day moving average. oil, in fact, seeing its worst nine-day losing streak. tonight we're is asking the question, have we seen the peak in oil for 2014? what do you say? >> to call the top is difficult. i think we are at a place, there is some demand. pe with in a staggering economy.