historically speaking people moving to a city where a sports superstar is. >> lebron may be big, but a small part of the local economy. guys? >> thank you very much. scott cohn. we're going to leave it there, guys. thank you very much for watching "street signs." >> yep. "closing bell" is next. and welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange. >> and that would make me bill griffeth also here at the big board. what's the old saying now, you can't keep a good bull down? that appears to be what's happening on wall street right now. >> or never short a dull market. >> that's another good adage we have around here. last week we were talking about maybe the beginning of the long-awaited correction, but now we are roaring higher today. and don't look now, but we are right sitting on the cusp of a new closing all-time high. we're very close to it right now. we need to be essentially up about 125 points on the dow to close at that all-time high.

>> and we'll talk to someone who's skeptical on this market and has been calling for a correction, but we should also note, goldman sachs among those who say this could have, you know, room to run. >> upping their target on the s&p for the end of the year to 2,100 and higher for next year as well. >> so, the upgrades are starting. now, in a few minutes, mylan ceo heather bresch will be here following the acquisition of a generic drug business outside of the united states. the deal valued at $5 million. lots to talk about, including mylan's plan to redomicile outside of the u.s., commonly called a tax aversion. stay tuned. >> that's the thing, we have not been talking about the strategy involved, the drugs they're buying, what they plan to sell and so forth. it has been about the tax aversion issue. >> well, that's what we've been saying. the question is to what extent that was a factor in the company's decision. >> we'll find out, coming up. they're calling it app outrage out in california. it's a company that gobbles up

hard-to-get dinner reservations, and they use fake names doing this, and then they sell those reservations to people who want to get into that restaurant. it's called reservation hop, and it's making some people hopping mad, so much so that the creator actually calls himself the most hated man in san francisco right now. we'll tell you more about that coming up here on the "closing bell." my daughter lives in san fran, as you know. i texted her and asked if she had heard of this. no, but i'm going to check it out now. >> thanks a lot, bill, for all those people trying to get into restaurants tonight. in the markets right now, as you mentioned, it's a strong day. the dow's up 120 points to kick off the week. right here we're sitting close to the all-time closing high. take a look, meanwhile, at the nasdaq, adding 29 points for its part, up 0.66%. the s&p 500 a lagger on the day, up about 0.5%, still seven points off its all-time closing high. >> let's get to the closing bell exchange panel today. erin gibbs from s&p capital iq,

adam thurgood from hightower, joe tanney has made it from jpmorgan asset management. we worked on our technical issues there. we've got cnbc market analyst kenny biokari from o'neil securities and rick santelli. ken aeny pocari from o'neil securities, rally day, gold down hard, $30 today. what happened to the correction that started last week? >> we had all the geopolitical stuff which took a back seat right after last week. don't forget, yes there was some concern over earnings, but it was the much bigger geopolitical situation what was happening around the world, causing gold to rally as people were running to the safety trade. oil, right? the whole nine yards, people much more fearful. then this week we had this kind of relief, right? nothing over the weekend to really implode. yes, the israel situation continues, but almost to a sad extent, people are almost used to that, right? now, that's a sad statement about us in general, but the fact is, until something really implodes over there, i don't think it's going to hold the market down. >> you know, rick santelli, art

cashin had a great line earlier. he said markets are behaving as if peace has suddenly broken out across the middle east. peace certainly hasn't broken out between you and steve liesman, though. what did i miss earlier? >> oh, just a very calm discussion on the notion that, you know, interest rates in many ways are controlled along with other large swaths of the federal open market committee's jurisdiction, but all you stock traders out there, consider this example. if the federal reserve told you, you can trade microsoft, but only from the long side and only between $30 and $35, how would you feel? in terms of the markets? interest rates up a bit, but i'll tell you what, i listened to kenny, and he's a sharp guy, but when i look overseas, what i see is our second chart bunds, yields about five basis points away from new, all-time low yields. i look at the stock market in germany, the dax. it seems to have been stopped right before the fourth of july at 10,000. the cac, the french stock market looks like it's developed much more of a downside pattern.

so, i continue to think if you want to know what's going on go on with regard to interest rates and why they're not going up aggressively here, just keep looking at europe. >> yeah, europe's the story there, but we are watching earnings as well, erin gibbs. wells fargo pretty good numbers on friday and citigroup has been up 3% today. some of that i guess the result of the earnings, but there's also that $7 billion fine that they're going to pay as well. >> right, exactly. we're checking out our gap and non-gaap numbers, but it's really financials that right now are the only sector that has negative gross expectations for q-2. otherwise, we're looking very good at about 6.2% growth for q-2? it's come down a little in the past week but completely normal, and we're looking to end the quarter around 7%, 8% growth for q-2. >> look at the performance in citigroup today, those low expectations, and by the way, the settlement with the government lifting it.

>> the expectation was they would pay $12 mibillion. this is a big number, $7 billion, but still not what the government was after. but look at the stock today. go ahead. >> don't forget, last week was the article in the "journal." they were preparing everybody. they took the financials down last weekend, and so now, it's almost like sell the room and buy the news. today that's exactly what you're seeing happening, not only in citibank, but right across the board in all the financials. >> and i want to go back to something rick mentioned, and that's the degree to which germany is keeping bond yields low in the u.s. if that's the case, the federal reserve is basically getting a free pass here, because at the very moment they're supposed to be exiting their monetary policy, at least the easier policy, now here comes europe as a factor in keeping yields lower. so, in other words, they're getting a second wind, maybe, that they otherwise wouldn't have expected. and that could be one explanation for high stock prices here. are they justified, though, these high stock prices? >> you're looking at stock prices in particular, i certainly agree that interest rates are having an impact on

that, and in looking at europe, clearly what's going on over there is weighing on interest rates. but at the end of the day, i think if you're looking at the price in the equity markets, you also have to consider the profits. i mean, we just talked about the earnings season and expectation for the earnings season. i think we're going to see much better results than we saw last quarter, and that in itself is going to help fuel this market rally just a little higher. i think we need to temper expectations. you're probably not going to see a repeat of last year, for example. you're not going to see double-digit gains in the equity markets, but i do think that markets grind higher from here and i think profits help fuel that. >> adam thurgood, we've been watching the small-cap indices, the nasdaq and the russell, lead this market higher lately, but when we saw the selling the last couple of weeks, it was the secondaries, the small caps that got hit the hardest. today, the russell's not coming back and you are concerned about the small caps right now. why? >> well, i think the market in general is going higher, but small caps do concern me, because look, they're trading at about one standard deviation above their long-term average pe

ratio, and that's significant. and the reason they're doing that is because earnings expectations are sky high. so, there's plenty of room for disappointment. and what magnifies this problem is that we're trading just above the 90-day moving average and not far from the 200-day moving average. so, if you see some weakness on the earnings front, selling could accelerate to the downside pretty rapidly after we take out those key technical levels. >> you know, adam, one of my favorite indicators for the market is wisdomtree's commercial. last year it was all about the dxj, this year it was the india etf. i notice this year they've changed to what i think is a small cap etf. perhaps that is telling? do you hear retail interest in small-cap stocks here? >> i'm not seeing it on our end. we tend to have investors that want to take a more strategic view and stay allocated across the board. so, i can't really comment on how i'm seeing the small caps play out, but from a portfolio

manager's standpoint, if the market is going to pull back, i think it will be the small caps disappointing on earnings and breaking below those technical levels. >> but kenny, for those of us who have been watching the stock market for a while, the oldest indicator on wall street is positive right now, because the dow industrial average and the transportation average are at all-time highs right here. >> right. so, look right to his point, right? the concern is really in the growth and high-cap names. the dow represents the dow 30, the biggest americana blue chip, strongest companies in this country, supposedly. and so, that's actually quite positive, you know. it makes sense that the dow would be making new highs. if people want to be in the market and they're concerned, they want equity exposure, they're going to move out of the high-growth names, the ones they're really concerned about, and put money where they feel safe. the dow absolutely represents that, right? >> and joe, final question as well as we head in -- i know it's probably a bit early to start talking about it, but we're going to be coming up through the back half of earnings season and the retail names in the u.s.

we've already seen some pretty ugly results and talk about how dire the situation may be. is it risky for investors to be exposed to the market here as we go into perhaps some of those heavier parts of the earning season? >> you know, i think that as you get into sort of the bulk of the earnings season and we continue to see more and more companies releasing, what you're going to see is a lot of beats. >> okay, that was what we were fearing there. erin, why don't you pick that up? i mean, what are the expectations for this week? what are some of the high spots you're watching when we get some of these earnings? this is a very busy week for earnings. >> yeah. right now we're expecting about 8.5% for consumer discretionary. so far, the beats are at about 68%, so right on track with what we're seeing on average. look, there's always those concerns about those brick-and-mortar stores. we're still seeing the sort of change in leadership in the consumer discretionary, but on average, overall, it's looking good. >> all right. thank you all, even joe taneus, wherever he is right now.

>> sorry, joe. >> thank you for your thoughts on the markets. heading to the close, 50 minutes left in the trading day. we're just about to the all-time high on the dow, not quite. the rally started first thing this morning and it's not lost much steam. forget merger monday, maybe we should call it tax aversion monday, because we have more deals allowing companies to escape sky-high u.s. corporate taxes. mylan's ceo is talking about their buyout of abbott labs, the generic drug business outside of the u.s., anyway, and her plan to execute a tax aversion as part of the deal. also ahead, citigroup surging after posting better-than-expected earnings, announcing that $7 billion settlement with the justice department over its handling of mortgage-backed securities. two pros discuss whether or not citi is a stock you can bank on for gains or whether you leave it for the dogs. and later, we mentioned this as well, raymond james's chief market strategist jeff saunt

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welcome back. rally day for this monday. lately, weferz we'd see selling in the morning, mostly by european investors, and we'd have to crawl out of the hole. today, rally from the get-go. the dow has been close to record territory. we're losing a little now, but up 116 points, about 8 points away from the all-time high. the s&p's up nine. and the nasdaq is the leader -- well, was the leader, now up 0.5% or 25 points. >> courtney reagan watching the big movers for us. what can you tell us? >> good afternoon, kelly. we begin with kodiak oil and gas bought by whiting petroleum. whiting higher on the deal as well, up 5% for kodiak and up nearly 8% for whiting. shire advancing after the drug company said it's ready to recommend the abbvie takeover bid. abbvie moved slightly lower. and a rough day for gopro, falling after bearish comments in "barron's" magazine.

the stock had doubled from its ipo price in the first week of trading. let's end with citigroup, moving higher after it agreed to pay $7 billion to resolve claims it misled investors about shoddy mortgage-backed securities in the run-up to the financial crisis. it's less than the $12 billion the government was seeking. as a result, citi said it would take a $3.8 billion charge in its second quarter. however, its adjusted earnings beat street forecasts. it's a complicated one but certainly a mover on the session. kelly, back to you. >> we leave that to the cfo, yes. >> courtney, thank you. so, is citi's better-than-expected earnings a signal to buy the shares today? >> let's do a stock brawl with michael farr of farr, miller and washington as our bull, and david nelson is taking the bearish side. good to see both of you, as always. michael, you're hardly a raging bull, though, on this, are you? >> well, this is kind of hold your nose if you're going to do it. i haven't been a fan of the banking sector. i have a clear underweight there. but look, this is -- the bad

news i think is out. this stock is selling at a 15% discount to tangible book value. so, it's not overvalued. you just got 7 billion problems out of the way here, everybody hates it. and for investors -- so, everybody hates a stock, that's really when you have to take a look. and this one has an added bonus. this has got a saudi prince who's worth $21 billion who's investing all along. if they're going out of business, this is probably not a bad valuation to get into citigroup. >> david, do you have other concerns with this? >> no, the valuation certainly isn't high, but it's cheap for a reason, kelly. first, look at this bank. i look at some line items in here, and there's some red flags here. trading down 15%. well, that beat the expectations of wall street, but that stinks. it's just terrible. and one line item in particular that for me poses a real red flag. we look at net interest income,

and we notice that, you know, some analysts would point out, maybe each michael would point out it's starting to stabilize and look better on a year-to-year basis, but when you drill down and see that one loss provisions are declining each and every quarter, that's a red flag, and it just points to me the discretion they have to make, these numbers and massage these numbers. the numbers would be a lot worse if those numbers were being held steady. >> what about michael's point -- >> david. >> go ahead, mike. >> david, are we seeing anything here that you're not seeing across the other banoard? >> michael's making a good point. investors in citi have two questions to ask themselves, first, do i want to be in the banking sector? and i think michael's right, i don't. i think washington's been waging a war for the last half decade on the banking industry and they won, clearly won. regulations like dodd/frank, they have pretty much stripped banks of their profit centers. so, i don't want to play in the sand box. >> that said, look at the

performance today, up 3%, michael farr. so, there must be something for investors to appreciate about the story financials can tell right now. what is that? >> i think you're getting a little bit of the monty python reaction here. remember the old monty python? i'm not dead yet. it's not dead yet, you know? they didn't actually kill it. the government was going for $12 billion. it's $7 billion. and $7 billion, oddly, strangely, amazingly, is affordable. they can get through that, they can work through that. so, if they can build on their balance sheet and actually get back to the business of banking, if they could see some higher rates where they could begin to earn a little bit better margin, i think that that would help, but their credit losses have been low and their legal issues are declining and their loan growth has been increasing. it's been horrible. >> what about michael's point of the sponsorship by prince ali? he was a pretty savvy investor and he's hanging tough with this. >> it's been a pretty lousy investment over the past few years. just remember where this thing is really trading.

it's not the price where it is right now. we had a pretty big reverse split in this name. and michael brings up an important point. we talked about the $7 billion, but again, shareholders get the shaft on this deal. of course, management is going to settle on something like this. where's the perp walk? management was well aware of some of the shenanigans that had been going on with all these banks the last seven years. they don't pay the bill. you and i do. >> do you think that citi shares could double from here? >> oh, i think they certainly could double, but you know, i'm not going to tell you the time frame, exactly. that's a little too cute. mike mayo, also, i listened to him the other day. he's one of the smartest analysts out there. i think when a stock is getting killed and everybody hates it, it really is time to look. so, i wouldn't put my grandmother in this particular stock, but -- >> there's an endorsement. >> like i said, he's not exactly a raging bull. >> did you like that? >> you're a good sport about it,

though. >> i'm getting citi in a party dress best as i can. >> there you go. good to see you both. thank you. very important stock out there. heading to the close, 40 minutes left on the trading session here. the dow's up 116, off the highs of the day. if you're just joining us, we need about a 125-point gain on the dow to be at a new all-time high. meantime, the aerospace industry showing off its latest jets at the air show in england. up next, our own phil lebeau is rounding up the newest gizmos and explaining how they could revolutionize flying and perhaps give your portfolio a lift. plus, more drug companies jumping on the bandwagon to buy european companies to save millions in tax payments to uncle sam in something called a tax inversion strategy. it's a way to escape the 35% u.s. corporate tax rate in this country. mylan's ceo speaks with us exclusively about her company's purchase of abbott labs' non u.s. generic drug business. that should be very interesting. stay tuned for that.

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welcome back. we're starting the week off on a fairly strong note. in fact, we could be at a record close for the dow if we can add seven more points from where we're currently trading. with the market up 117 at 17,061, it's out-performing the s&p and nasdaq. the s&p is ten points off its closing high. the world-famous farmboro air show is kicking off in edgelands. ever go there? >> i didn't, but phil lebeau's been there for years now.

>> this is where the world's biggest aerospace companies show off their newest wares. >> planes, trains, automobiles, he does all this, and phil lebeau's in the middle of the action again this year. phil? >> reporter: hey, guys. here at farmboro, sure, airbus and boeing, their commercial airplanes get a lot of the attention, but it's the military jets, well, that's what everybody's looking for, and we saw plenty of them today. usual cast of characters were here from all of the major defense contractors putting on a show for everybody. but one thing that we noticed is what you didn't see. amidst all of the planes that were flying around, including a few unmanned military aircraft, you did not see the lockheed martin f-35. it was supposed to make its public debut here in farnborough, but it didn't. it's been grounded since an engine fire in late june in florida. that's just one of the latest problems facing the f-35. there have been cost overruns, lengthy delays. today we talked with the ceo about all of the criticism. she says this plane will eventually pay off.

>> we have to have military superiority in order to protect our citizens. and so, it's absolutely imperative that we're constantly investing in the best technology that we can so that we can have an advantage over our adversaries. >> as you look at shares of lockheed martin over the last year, note the fact that over the last month, it's down just 1%, so despite it being grounded right now with the f-35, and all of these criticisms, guys, she hears that criticism, but she believes that despite these problems, eventually, the f-35 will pay off, not only for lockheed martin, but those who order it. guys, back to you. >> and those communities who depend on it as well, phil. good to see you again. thank you very much. phil lebeau in farnborough. all right, the rally has stalled here. the dow up 116 points. we had been up about 130 and change. we were in record territory for a while. not so now, but we have 35 minutes left in the trading session. and still ahead, another monday and another multibillion dollar tax aversion deal.

mylan buying abbott labs' nonu.s. generic drug business for $5.3 billion. is it what's good for investors bad for u.s. taxpayers in this case? mylan's ceo weighing in on this controversial practice that's becoming more widespread. at every ford dealership, you'll find the works!

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welcome back. here's where we stand with half an hour left in the trading session and the dow up 115 points. looks like we won't quite close at a new high here, unless we get some extra wind in our sails, and soon here. >> we've got time, though, plenty of time. well, the big deal we're all talking about today is mylan paying $5.3 million for abbott labs' nonu.s. generic drug business. that deal opens the door for mylan to save millions in u.s. tax payments. shares of both companies have been rising today, rather unusual. >> well, it's a busy day for mergers and acquisitions in the pharma space. meg tirrell recaps for us some of the major action. what's going on, meg? >> hey, kelly, that's right. we'll start with mylan and abbott. as you mentioned earlier, paying $5.3 billion. that will be 100% in stock. analysts are calling this one a spin version. you've heard of an inversion. this one's a spinversion. that means they're not buying an entire company, just a unit. those have the branded generics

business overseas of abbott's. through this deal, they're going to reincorporate in the netherlands. they'll still have a u.s. headquarters in pittsburgh, but they'll have that lower tax rate. they say it will come down to 20% to 21% with this deal in the first year and the high teens thereafter. analysts say this is good news, putting them on similar footing to competitors that have done similar inversions. and also, we may see this accelerate deals for them. now another deal in news coming today is abbvie and shire. abbvie is the other half of what used to be abbott labs. and shire saying today it has asked for and agreed to and received a higher proposal from abbvie that would value it at $53.5 billion. now, of course, these companies are still just talking. there is no formal offer yet. and under uk takeover code, abbvie has until july 18th to put a formal offer on the table. that's friday. so, we could see this happen by then. this, of course, another

inversion. abbvie would be moving overseas to the uk to ireland through this deal. back to you guys. >> yes, we spy a pattern. thank you, meg. it's definitely a merger monday, but in this case, some are joking we should start calling it tax inversion monday instead. more and more companies are using mergers and acquisitions to relocate overseas. >> more on mylan's deal with abbott labs and what it means for the company's corporate tax bill. we bring in heather bresch in. i know you've been busy working on the deal we're hearing about here. are we making too much of the tax thing? that's all we're talking about. we haven't discussed the strategy of buying these drugs from abbott labs. >> right. so, i'd like to first start talking about that, because i think the reaction today and a lot of the reports coming out have highlighted the strategic rationale for this deal. we had said that we would not do a deal for a tax sake or a synergies sake, that it needed to make strategic rationale to our core business and compliment our platform, and this deal does that tremendously, both from

scale commercial platform' lowing us to avoid costs of building out that physician base channel in european and other important markets to us, as well as the financial flexibility it gives us. so, the strategic rationale of this deal is truly what we have been saying that we would do, and this certainly fulfilled those strategic lovers we talked about. >> and if the lower tax rate is sort of the cherry on top, if you will, how much money will you save over time and how much will be passed on to consumers? >> so, as i speak for the generic industry, as you guys know, we save the consumers -- in fact, we save the united states over the last decade $1 trillion, the generic industry alone. so, when you think about our health care system and the efficiency about it, generic drugs are doing that every day, and that's something that we will continue to do. so, you know, i think it comes down more to the competitiveness of the industry that we're in. and you know when you think about our country, 50% of the drugs that are taken in our country, consumed by our consumers, are made overseas.

>> you know what's interesting? why don't you want to talk about the tax inversion aspect of this? do you feel as though that -- do you feel as though that's a sensitive issue? >> no. i want to talk about it. it's just i don't want it -- i don't want the strategic rationale of the deal to get lost. >> but you understand why we're asking? the timing. there are so many other companies, so many other deals going on right now that all have the same effect on the tax base of those companies like yours right now. it can't be a coincidence, i wouldn't think. >> no, and i would like the conversation in my mind to switch to where it needs to switch to, which is this. i was just going to finish that 50% of the drugs consumed here are made overseas. so, our country had no problem opening the borders and saying, we want all the competitiveness we can get for our consumers, for everything else. what our country failed to do was keep pace and make our country globally competitive for corporations. so, if we want to sit here and have a discussion about how do we handcuff u.s. corporations to the united states, i think that's unpractical, and quite

frankly, ridiculous. we need to be talking about as a country, how do we make this country globally competitive again? we're in a global economy. and unless we want to shut our borders and say we don't want any imports on any industry, which, again, is not practical. so, i think there's a lot of politically charged banter. i think there's a lot of extreme views. and as we all know, washington could not have more bipartisan right now. so, if someone would approach tax reform in a holistic way and talk about what really needs to be tackled in this country to make it competitive is the conversation i think we need to be having. >> senator ron wyden has spoken aggressively about this, says he doesn't like what companies are doing, arbitraging the tax code, if you want to put it that way. he and senator joe manchin, your father, have an 86% similar voting record for the u.s. congress. in other words, it seems fair to draw from that that senator joe manchin would not enjoy this activity or see it as a problem for the u.s.

while i understand this may create interesting dinner conversations, i also think it kind of does get at this issue and whether there is legislation potentially retroactively that would not allow companies to do this. is there a clause in this deal that if this changes or changes retroactively, this deal would be -- you'd be able to walk away? >> well, look, let me start with this. we feel very confident that this deal is going to get done. we've said q-1 of 2015. and i won't speak for senator wyden or senator manchin. what i would say is that i would, you know, i wouldn't jump the gun so quickly that every senator feels that it's the corporation's fault. i do believe, maybe it's a minority, unfortunately, that believe that we have a flawed system that needs to be fixed. and i don't agree with senator wyden about let's handcuff u.s. companies and try to force them to stay here versus looking in the mirror and saying as a congress, what do we need to do to make our country competitive on many fronts, but certainly,

here on the corporation front, because i think that what made this country great was being competitive, and we're losing that competitive edge. >> forgive me, but i just -- i'm not trying to pin you down, but i'm curious. you talk about the strategy involved of the drugs and how it makes sense for your bottom line. >> right. >> would you have done this deal still if there was no tax inversion involved? >> absolutely. >> you still would have done it? >> could have been for a different price and a different structure, but we, absolutely, this deal made sense to us, top line, bottom line, cash flow, financial flexibility, letting us tee up for some transactions that we think make a lot of sense. it puts infrastructure in place to let us void that so that future deals can be very synergistic. so, absolutely. i don't know that it would have looked the same, but this deal absolutely made sense without the tax inversion. >> because there are some pieces of this company, i think some of the brands you guys are taking over, that maybe were perceived as the less fast-growing parts of abbott.

why do you think this makes sense bolted on to mylan with creating more potential for your company? >> so, we believe in our hands, the reason that we were the perfect partner for abbott is because in our hands, we can put more strategic focus, we can put our operational excellence to work and really get more, leverage this asset in a better way. i think that what that allows us to do -- you know, a lot of times, what's very meaningful for a company our size is not as meaningful for a company the size of abbott, so we're able to really hone in, focus, leverage this portfolio. we have tremendous strength in the retail, the pharmacy side of our business, so bringing in this infrastructure, we're then able to get synergy on a top-line perspective as well, which is not something that we've calculated into the deal yet, but we will certainly get top-line synergy, we'll get the tax synergy, and then really just an operational efficiency. our cost of doing business being a bit different than abbott's cost of doing business. >> so, this is accretive to earnings right away? >> immediately.

25 cents and growing. >> by the way, if you're headquartered in the netherlands or whatever, does that make you still an american company? >> yeah. well, i mean, look, we will continue to serve the united states market, we'll pay taxes in the united states. so you know, i think talking about where we're not organized to maximize the global tax structure is different. we're doing business in 150 countries. >> wow. >> it is a global economy. >> it is. >> as you said. appreciate your time. heather bresch, ceo of mylan labs, joining us today. and with 20 minutes to go in the session, let's take stock of where we are in markets. across the board, gains in the dow, a gain of about 117 points. 17,061, there you can see it 17,068. similar story for the nasdaq and the s&p this afternoon. the securities industry and financial markets association announcing initiatives to improve stock trading. bob pisani's been all over that and he'll tell you what you need to know about that coming up next. later, former new hampshire

manager john sununu and harold ford jr. explaining why the government should keep its mitts off the internet.

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the dow was up 130 points or thereabouts. we were in record territory, but we've pulled back, ten away from the previous high set july 3rd. there we are, up 114 points on the industrial average. speaking of trading stocks, the securities industry financial markets association proposing new rules to improve stock trading, and bob pisani has the highlights now. bob? >> hey, guys. sifma is the brokerage for the trade industry and it's ignited a debate on what, if anything, should be done about trading. sifma's got a few suggestions. number one, they want to eliminate the access fees the exchanges charge their customers. they imply the high fees drive traders to other venues, like dart pools and it treats too many complicated order types designed to avoid the fee. second, they imply there's too many exchanges. there's 11 right now. they say their members should have no obligation to connect to exchanges that have market shares below 1%. the implication here is requiring them to connect to all of these exchanges, particularly when they're not a relevant part

of the market share. it's expensive and it's too complex. they want things simpler. finally, they want the put more pressure on the nyse and nasdaq to improve the securities information processor that provides the public stock quotes. they say it should be as fast as the proprietary or direct fees that the traders pay to get information slightly faster. things are really changing around here in this dekbat. for years, the idea was let's have more exchanges, more competition, more dark pools, more order types. the pendulum seems to be swinging the other way now. they still want competition, but a lot of people believe we have too many exchanges, we ought to have fewer dart pools. some of this is because business is slower, some of it is because the market is just too darn complex. but guys, right now, there's definitely a sort of change in atmosphere in the air. we'll see if this translates into any real reform. >> bob, this dove tails as well into the investigation into what's happening with barclays' dark pool or lit dark pool, but

anyway, you saw the collapse in trading volume there that's been reported. to what extent are these factors, do you think, possibly are going to drive share or drive volume back to exchanges like the one we're sitting at? >> the hope, for example, is that you will be able to drive more business back to some of these exchanges. and i think even businesses that have dart pools, and some of these firms have dart pools. some of them are profitable, some are not. i think they would be willing to see lesser business if they could find cheaper ways to get their business done. most of the brokerage firms just want to get business done, fi t efficiently, quickly and at the best and cheapest prices, in terms of them charging access fees to exchanges. if they can do that, i think they'll take a little bit less business in the dart pools, even if they have to own one. >> you're right, markets are way too complex right now. >> yeah, changing the way this is being looked at. years ago, they wanted more complexity. >> right. >> now, everyone's saying maybe things could be simpler. >> overdone it.

exactly. thank you, bob. see you later. continuing to slowly lose altitude for the blue chip averages. the dow's up 109 as we head to the close with about 15 minutes left in the trading session. >> by the way, it's gold that's really taking it on the chin today. >> we haven't highlighted it that much, but it has. it's sitting right around that 1,300 level right now, so we'll see if it holds. after the bell, a dire warning from a fed watcher who says the central bank is way behind on inflation. really? economist ian shipertson will be here to make his case. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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about ten minutes left in the trading session. the dow's up 113, off the highs of the day. the nasdaq holding on to gains of 24 points. and the s&p is up nine right now. >> citigroup up 3% after earnings. let's talk more about the markets with anthony chan from chase and andrew aarons from aarons investment partners. thank you to you both. andrew, do you like the financials here? >> not as much as i did in the past. they've had a little bit too much run-up in my opinion, so i would proceed with caution with the financials. people are looking at the financials for dividends, and if you can find a low beta, maybe a community bank, i would be more apt to stick my hand in there than a big bank at this point. >> anthony, we've got this rally

today. the day before janet yellen speaks to congress. it's their semi-annual testimony tuesday and wednesday. markets expecting some good news from her, maybe? >> two things. every time janet yellen speaks, it's music to the ears of the equity market. the equity market tends to do well when she's speaking. the market's probably anticipating that. second of all, she's told us she wants to see wages in the 3% to 4% range before she panics. for those who think the federal reserve is behind the curve, all you have to do is look at the relationship between the unemployment rate and average hourly earnings. that relationship broke down at the end of 2011. unemployment rate continues to come down, and guess what, wages didn't go anywhere. so, she has some time. >> that's a great way to look at it, but at the same time, you probably saw the banker's bank, international settlements, high-profile institution, warning institutions, including the fed, that they are behind the curve. >> well, people are always going to say different things. in the bond market, we are seeing the spreads coming back in, getting nerves whether the

yield spreads are too tight here. so, there is some froth there. burt in terms of the overall economy, i think the labor market still has slack. otherwise, we would have seen wages picking upward. you're not sision them. i think that's the proof. the proof is in the pudding. they're so slack. >> so, you don't like financials. what do you like? what's going to take us higher, do you think? >> i'm still an energy guy. where i live is down on the coast, and there's oil and gas activity everywhere. and if you look, i think last month, we generated 80% of the use that we need in this country we generated here domestically, and i think that number's just going to get better and better, and the infrastructure's going to -- >> but tell us the best way to play that, because obviously, that doesn't mean necessarily crude oil's going to be the best performer, so how do you play it? >> if you look back to 2000, crude oil is up 314%. that's a 22% annual return in crude oil. so -- >> are you long crude oil here? >> i like it, because there is still a premium in it. there is ukraine, there is the middle east and there is the hurricane factor, which where i live you always have to keep an eye out for winds that will take

your back porch off. so, that's still built in, but i'm not as optimistic we'll get the gains like we did. the xle i think's up 14% for the year. but going forward, we may still get some, you know, good returns out of energy. it depends on overseas, too. >> if that's the case, inflation's got to come back at some point, right? >> well, at some point, inflation will come up with all this liquidity, but on the energy front, what we're telling our clients is to play it based on the infrastructure. over the next 20 years, we'll see anywhere probably from $7 trillion to $8 trillion being spent trying to rebuild that infrastructure as we start to build our capability in order to export. we're talking about exporting natural gas in japan, we're talking about exporting natural gas to europe at some point. no coincidence, russia and china have made a deal in anticipation of that. >> right. >> there's going to be a lot of money to be made for lots of companies as we build up our infrastructure. look at our numbers. since 2010, we have increased the production of oil by 2.8 million barrels per day, and this train has just started. it hasn't stopped yet. >> the increase alone makes it

one of the biggest players on the year. exactly, we have got to get down to texas, see what's going on. >> stick around. we'll talk more when we come back. we have the closiing countdown. after the bell, jeff saut is hitting the drum, warning on a correction sooner rather than later. is that still so with today's big gains? we'll ask him. stay tuned. ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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about four minutes left. let's review. remember last week? here's the dow. this is today's action in the dow jones industrial average. now, remember last week, intraday, we most often would see selling first thing in the morning, suggesting that the european traders were doing a lot of the selling. and then once the european markets closed, the market came back again, and we would finish positive or close to that. look at this today, rally on the open this morning and then it just held on to most of those gains. we were in record territory for a time on the dow, but that's not the case right now. doesn't look like that's going to happen, so they came back. what didn't come back was the russell 2000. that had been a leader to the upside lately, but today it's been a laggard, relatively speaking, for the major averages, up less than 0.5% or a five-point gain. see if that becomes a trend. gold, this was interesting, down $29 here, but down $30 more than that, hovering above that $1,300

range. we'll talk about that with our guests in just a moment and i'll give andrew aarons his due on this that the spider etf on energy, today this was, year to date, it was up 12%, and today it's up another 1% here as well. anthony chen, gold, do you like it here? >> i actually don't like gold. >> you don't like it. so, it does play -- >> the world is getting a little bit better, despite all the geopolitical risks out there. look it, energy prices actually have come down over the last 30 days. what you see is that a lot of the things we were worried about growth in the united states, now we're talking about overheating. the economy is getting better. we are seeing a european central bank that's really anxious to try to stimulate that economy. the worst things are probably behind us, and that's not a good situation for gold. >> you know, this is the second year in a row, we were talking during the commercial break here, where we didn't get the old adage sell in may and go away. they didn't sell in may and they haven't sold in june or july either, for the most part. >> there's a lot of

disappointing people ready to buy. last year, we had the treasury going from 1 1/2 to over 3. money was flying out of the treasuries going into stocks. the other half that was scared to get in stocks stayed on the sidelines. this year, yields are so low, nobody wants to go in the bond market. they've chosen the utility index as their safe haven. you noticed that the other day when the market took a bath, utilities rally. and people are still having to gravitate towards anything with a low beta, low pe that pays a dividend of 3% or 4%, and that's where i think we're stuck. >> that is one thing that has been a hallmark of the market the last few months. it has been the defensive issues that have been leading the way. that's hardly a vote for growth down the road, would you say? >> actually, that makes me feel very comfortable. climbing that wall of worry. remember, utilities worry you. >> you've got an answer for anything, don't you? >> absolutely. at some point, the cyclicals will take hold, and i think at some point, utilities won't be as strong, between now and the end of the year, on a relative basis, i don't expect utilities to continue to outperform. >> would you buy utilities here? >> no. they're played for a sellout.

this is summertime. people forget this is summertime. we are going to get a correction, hopefully more than 1% or 2%, so some real money can come in. >> you're thinking fundamentally, though, about the business of the utility. i'm thinking about, though, the person out there looking for yield in this market, or they're worried about the economy not growing as fast as anthony chan says it will, and i'm looking for a place to park my money because yields are so low right now. wouldn't utilities be a candidate for that? >> eventually. >> the utilities will be a candidate if the world is going to get worse and you need to be defensive. but in a world where interest rates are going to be going up eventually, the economy will continue to incrementally improve. it's not a place for defensive, it's a place for cyclicals, and over the next 6 to 12 months, that's where the money's going to be made, not in the defensive stocks. >> all right. good to see you both. thank you for your thoughts on today's market action. so, we're heading to the close right now with the dow up 113 points, starting the week off with a rally. don't forget, tomorrow we'll have live coverage of janet yellen's testimony to congress. it's two days of testimony, both

tomorrow and on wednesday as well. but stay tuned right now. much more coming your way. it's hour number two of the "closing bell" with kelly evans and company. i'll see you tomorrow. thank you, bill. welcome to the "closing bell," everybody. i'm kelly evans, and a pretty strong monday to kick things off this week. here's how we're finishing up the session, with the dow up about 113 points on the bell, 0.66%, putting the index at about 17,056. we needed something like 17,068 to close at a record high. the nasdaq adding 0.5% or 25 points, 4,440. and the s&p adding about ten to 1,977, 0.5% there and it's about seven or eight points off 1,985, its closing high earlier this month. today's "closing bell" panel joining me now is harold ford jr. from morgan stanley, ylan

moy from the "washington post," kayla tausche and dominic chu, fighting some traffic problems, importantly, dom. and with us from the nasdaq to wrap up today's market action is "fast money" trader tim seymour. tim, want to start with you before we get to the markets. generally, what happened in gold today? >> a lot of technicals are working against gold, too. you have some technicals on the chart which pushed things back from the intradays on friday. you also had gold funds taking effectively record amounts, 0.7% of assets came in. so, overbought conditions in gold. i think some of the geopolitical hotspots, the fact that global growth looks better, i would always say that bear markets in gold can be very, very dangerous and deceiving. this was a bear market -- excuse me, a bull market in a bear market gulp, to be clear. >> that's exactly what i was going to ask, because i remember jim grant several weeks ago making it at that point a contrarian call for gold in the miners. they both performed well.

and i'm just wondering if that was the trade, is the trade, or whether the setup looks better for this asset class? >> i don't see why gold continues to rally. if anything, we're waiting for the foed tell you that things are going to start to be in place and fed fund futures are starting to price in their exits from markets. this is not happening overnight, but look at what gold did not do over the weekend with hamas, with the escalation in ukraine. there's very little reason to feel gold can rally. inflation, i don't really think so, even though i do believe that the fed needs to move sooner rather than later. >> harold ford jr., welcome to the program. i want to pick up on a point art cashin made, markets are behaving as if peace has broken out across the mideast. we know how far that is from the case. what do you make of markets here? >> well, as it relates to the middle east, i think there's an understanding of politicians across the world, particularly here, we're constantly dealing with this issue, so you have to imagine it's built in. we have folks at morgan stanley who make predictions about this,

and i happen to think that we've found ourselves at a good moment p.m. people are ignoring what's happening around the globe and you can only hope politicians won't screw it up more than they have. >> and there's a wondering whether they will override theoe political concerns. will janet yellen deliver a dovish speech tomorrow? >> i'm curious how she'll characterize the labor market tomorrow, because i don't know how long they can overlook the fact the unemployment rate has fallen to the level they predicted it would be at the end of the year. so, i don't think you'll see a big game change tomorrow, but you are starting to hear some change their tune. john williams, san francisco fed president, janet yellen's research director, already said we may have to move earlier because of improvement in the labor market, so it's something to watch. any little signal, but i don't anticipate a big game change tomorrow. >> and it goes back to the question we were arguing last cycle, which is, when the fed

raises rates, is that lights out for the market, for the rally, for the moves we have seen? obviously, kayla, with the move in citigroup today, you could argue better growth simply could mean a better environment for a lot of different companies in the market here. >> and certainly, the financial sector as a whole is moving on the back of that expectation from the market. trading, where citigroup is concerned, it's gotten a lot of credit for the rally. basically, the ceo said trading revenues would fall 25%. they only fell 15%, so let's all cheer. that's certainly leading to the move in goldman and morgan stanley because trading is such a huge business, but that is basically forgetting the underlying fact that loans are growing, credit card balances are growing, deposits are growing and subprime citi holdings is profitable for the first time ever. so, if there's one bank that can actually show you that maybe the rising tide is lifting all boats, starting with citigroup, i think that's why the overlying sentiment regarding citigroup is so positive today. >> dom? >> here's the interesting part, we've been saying for the last

week and a half or so that financials are supposed to be the profit drag on the s&p 500. they're one of the only maybe two or three sectors in the s&p that's expected to post a profit drop this time around. if you do see banks start to beat, specifically this week, if that happens this week and the markets start to see a little bit more upside action, it just begs the question whether or not the path of least resistance is still to the upside for the stock market overall. >> that's a great point to bring up. stay right there. jeffrey saut of raymond james called for a 10% to 12% decline in equity markets this summer, though he thinks we march higher after enduring that pain. and he's here to discuss that call. jeff, good to see you. i understand it's one trading session, but on the back of today's action, are you still as cautious as you were in those latest remarks? >> yeah, well, i came out last week and said we were probably on the defensive end of the weekend, and then the markets should try and rally this week. and if we do rally and fail to make a new high, then i think

the odds go up that you're going to get some kind of pullback here. we're certainly overdue for some kind of pullback, if you look at the historic odds, kelly. >> hey, jeff, it's dominic. i want to hammer one point, though. you said you were looking for this kind of a correction here, and maybe it does happen. it's been a long time since we've seen one. but are there certain sectors that will stand out in your mind or be indicative of perhaps a lead to the down side or that the continued move to the up side? >> i think we're in a secular bull market that has years left to run. if we do get a 10% drawdown here, i would expect the defensive groups to hold up better, the utilities, the consumer staples. but again, i think any pullback has to be viewed within the construct of a secular bull market that probably has another ten years to go. >> ten years! >> ten years is quite a long time, but jeff, you know, in this recent bull market, for the last five years we have seen bond prices rally at the same time as equity prices, and i'm wondering, a lot of people had said you'll see the bubble pop in fixed income before you'll actually see any sort of retreat

in equities, and i'm wondering what you think the timing of that will be. >> you know, if the fed has made it pretty clear they're not going to raise rates until we get into 2015. my friend, rich bernstein, the ex-merrill lynch strategist, would tell you that interest rates can go up and the stock market can go up as long as earnings are growing faster than interest rates going up, and i think that's absolutely correct. >> from where you're sitting, what do you see about the broader environment, whether it's the health of the u.s. economy, the earnings power of banks here? do you sense that there's a turnout there, that conditions are getting better? >> there's no doubt things are getting better, but i think it depends on where you sit. i mean, you look at half of the country not invested in the market, you look at a number of americans who have not seen legitimate wage increases over the years. so, the question becomes, again, your education, what your opportunity for advancement. there's no doubt, this economy and this market is benefiting a big part of the country, but there's a significant part of the country that is not benefiting. and i think as we think about

the intersection between politics and business and politics and the market, i think that's what these elections are going to be about coming forward. and for that matter, thankfully, the fed, as you said at the very beginning, is sparing us the fact that our politicians aren't doing what we've asked them to do and what they've been elected to do. >> i'm curious, tim, to get your take as well on what sector, what part of the market will be most vulnerable, and as we've moved high. >>er, we've had corrections in biotech names. i don't know if we have tim at the moment. jeff, let me ask you this as well, talking about the bis warning, the fed about its monetary policy, what's your take on that? >> it reminds me very much of, who is it, alan greenspan talking about irrational exuberance many years before the top in the equity markets came. i talk extensively to accounts, institutional accounts in europe. there are a lot less headwinds in the european complex than there have been over the past

four or five years. i think things are getting better and i think that's all the equity markets care about, are things getting better or are things getting worse, and i think things are getting better around the world. >> so, jeff, if things are go getting better, we have something to focus on right now, and it's great that we have harold ford jr. here, because the midterm elections are what a lot of people are talking about, the thought that markets see volatility in those years. we haven't seen a bunch of it right now, but is this something we just need to shrug off, we shouldn't care what's going on in washington because in the end it's going to work itself out anyway? >> one of my themes -- i lived inside the beltway. i have a good network on the hill in the sam rayburn building south of the hill. and one of my themes is we'll elect smarter policymakers and get smarter policies going forward, and you're actually starting to see that with somebody coming out of nowhere and beating cantor down here in florida, alex sink is one of the most recognizable names in florida. she got beat by another nobody down here, david jolly.

the guy that you used to have on tv from goldman sachs, neel kashkari is running for governor in california. >> so, but jeff, what's your point about market risk that that entails? >> i think the market is looking at smarter policies and smarter policymakers, and that's one of the things that's driving this secular bull market that i think we're in. >> ah, so it likes what it sees. the winds of change are blowing. thank you, jeff. for now, we'll leave it there. tim seymour had to go, but you can stick around and catch him with the rest of the "fast money" crew at 5:00 p.m. they'll be asking aaron jackson of ironfire capital if yahoo! is dead money. that's ahead of the company's earnings report tomorrow as they continue their buying spree, by the way. so, don't miss that. now, we just asked about this a little bit, but is the fed way behind the curve on inflation? my next guest says yes and it could have a huge impact on the economy and markets. he will make his case. also, mylan labs becoming the latest drugmaker to do a tax inversion deal. should a company generating so much money from medicare in

particular be obligated to stay and pay u.s. taxes, or does it have a bigger obligation to do what's in the best interests of shareholders? that debate later on the "closing bell." you're watching cnbc.

stocks storming back from last week's declines. all three major averages sharply higher today. courtney reagan looking at some of the names driving this market. >> that's right, kelly. we begin with apple, which moved higher after barclays upgraded the stock from overweight to equal weight, saying tim cook has solidified a strategy and regained the confidence of shareholders. riverbed technology fell after the network equipment maker cut its second-quarter revenue forecast. manchester united rose after agreeing to a ten-year, $1.3 billion partnership with adidas. and mylan gained ground on news it bought a portfolio of non u.s. drugs from abbott labs for $5.3 billion in stock. a very big deal. abbott's stock rising on the news as well. there you can see mylan up about 2%, abbott labs up 1.3%. kelly, back to you. >> all right, courtney, thank you. just a short time ago here on "closing bell," mylan's ceo, heather bresch, talked about buying abbott labs' generic drug

business. the deal will enable mylan to reincorporate in the netherlands and cut its u.s. tax bill. bresch defended the move in our interview. >> 50% of the drugs that are taken in our country, consumed by our consumers are made overseas. >> what's interesting, why don't you want to talk about the tax inversion aspect of this? do you feel as though -- do you feel that's a sensitive issue? >> no. i want to talk about it. it's just i don't want the strategic rationale of the deal to get lost. >> but you understand why we're asking. i mean, the timing. there are so many other companies, so many other deals going on right now that all have the same effect on the tax base of those companies like yours right now. it can't be a coincidence, i wouldn't think. >> no, and i would like the conversation in my mind to switch to where it needs to switch to, which is this. i was just going to finish that 50% of the drugs consumed here are made overseas. so, our country had no problem opening the borders and saying we want all the competitiveness we can get for our consumers, for everything else. what our country failed to do

was keep pace and make our country globally competitive for corporations. so, if we want to sit here and have a discussion about how do we handcuff u.s. corporations to the united states, i think that's unpractical, and quite frankly, ridiculous. >> joining us now is jared bernstein, senior fellow at the center on budget priorities and cnbc contributor. good to have you here. we just want your reaction to what you heard there from heather bresch on these tax inversions. >> well, kelly, thank you for inviting me. i yield to no one in my disdain for these inversions. i think it's really kind of almost sidles up to being nonpatriotic the way these companies kind of shed that part of their american personality in order to take advantage of a tax cut overseas. that said, she made some sense when she talked about how the incentives really do point in that direction. we have a corporate tax code that is in many ways

internationally uncompetitive. so, i certainly don't really like to hear those kinds of rationales, especially with a company that makes so much money off of federal programs like medicare. but she's right. she's right, we have policy to take care of in that realm. >> i did ask her, by the way, whether these savings she cited for doing this deal would be pass ode on to consumers. she didn't specifically say, but harold ford, i'm curious whether you think this now motivates congress to do something about tax inversions, and if so, what? >> i hope so. and i share a lot of jared's eyre and concern about this, but on the other side of this, you have companies who are competing on a global stage with companies who are not having to pay the same tax rate as u.s. companies are. so, there's another side of the story. however, that doesn't excuse the fact that a lot of these companies are enjoying every other u.s. protection from our military to rule of law, et cetera. what congress should do in fr this and what the president and white house should be willing to do right away is come together and reform the tax code. i think there is broad, broad

discussion, democrat and republicans alike in the senate and in the house, and i hope that discuss will manifest in a way that people want to find a result and find an answer to it. >> would you put the odds -- and i'd like both of you to weigh in on this -- at something happening at better than 10%? >> first of all, not in the near term, but it's not only that they're enjoying all those things that harold correctly pointed out that they enjoy, but they're also enjoying record profitability and also far lower tax rates than the 35% statutory rate because there are already so many loopholes. the way to fix this is to simply raise the bar. congress tried to raise the bar to 20% foreign ownership as a requirement for inverting -- >> they did. the bar is at 20%. they're trying to raise it to 50%, potentially. >> and i think that's exactly the right direction to go in. the 20% is a bar that these companies are handily hopping over right now. and by the way, you don't wait for tax reform to do that, because that's waiting for

guido. that's just not going to happen any time soon. >> but jared, the irony here, don't you see, is if not for these companies doing these deals, you probably wouldn't have a problem with the u.s. tax code, would you? >> no, no, that's really not the case. when it comes to the corporate tax code, i'm an old anger with larry kudlow on this point for years, and one thing i agree on is that the u.s. corporate tax code is filled with many too many loopholes and expenditures. certainly cutting the rate, broadening the base is something i've signed up for a long time ago. >> jared, i'd also point out, there are companies that are actually bringing money back. they are repatriating some revenues. you look at ebay saying it's going to bring $9 billion over, goog google's talked about it organizele as well. what's the market incentive for these companies to bring money back and what ku can be broadened to have more companies follow suit? >> it's a great question. i don't think there's much incentive to bring money back, especially given that you can keep it overseas and avoid u.s.

taxation. of course, inversion goes a step much further than that. that's where you reincorporate overseas. and i think that that's a much bigger deal in terms of what we're seeing now than the repatriation problem, which is a long-standing one. >> you know, harold, if we did away with the corporate tax altogether, we'd only lose about $250 billion in revenue per year for the u.s. government, i believe. you could make that up easily, couldn't you? in other words, aren't we creating more of a problem by trying to do this gymnastics in order to do something about the corporate tax rate? if we created a better set of incentives, wouldn't we have a solution? >> the rates should be dropped. i'm an advocate, like jared, i've argued perhaps for a lower rate. i think the rates should be 20%. we ought to have a repatriation holiday to bring back what's trapped overseas. sure, there would somebody money lost, but let's dedicate all that money, devote all that money to perhaps half reducing the debt and the other half for some public-private infrastructure bank that could begin the progression of replenishing the highway trust fund and perhaps doing other things. i think the fact that we're

having this conversation points to the silliness in our politics. it's clear, companies have every right to do this. they're not breaking rules, they're not breaking laws. as much as we may find it unpatriotic and wrong, which we have every right to, they have every right to do it. and i believe most companies are not doing it solely for the tax benefits. there are fundamental reasons companies are doing this. if the tax reasons is the only reason, maybe many of the companies will suffer a bit. we're on the same page, i just think we need to reform this aspect of the code or this trend may not stop. >> jared, briefly. >> quickly, how certain are we that these inversion moves actually boosiot shareholder value? shareholders pay a capital gains rate on the tax, even if they retain the earnings just by tax law here. i'd like to see some real evidence that this enhances shareholder values as much as these firms say it does. >> i would just say really briefly here that there is a benefit to just paying less money out the door in cash, right? i mean, you can talk about the subtle accounting issues all you

want, but the reality is for a lot of companies is that they will pay less, and therefore, keep more money to either reinvest in the business or dole out to shareholders. that's got to be -- >> but walgreens, who's talked about doing this, why can't it just spruce up its stores and improve its relations rather than having a one-time benefit by shareholders by, you know, saving on taxes. harold? >> i'm a believer that if shareholders benefit the country, it's a benefit. to answer jared's question, i don't have a specific answer. i'd be happy to try to find it. i happen to believe when american shareholders are benefiting and paying taxes to the government, we all win. and if we're going to continue to see this trend, which is likely we will, this inversion trend, then part of what policymakers have a responsibility to do is try to prevent it from happening going forward and try to create a benefit for everybody moving forward, including the government and we're not producing that benefit. i think we could all agree to that point. >> as we talk about whether tax inversion monday is a moniker

that will stick here, the deals keep coming, even as no moves out of washington yet. thank you, jared, for your time this afternoon. up next, we'll hear from somebody who says the fed isn't paying nearly enough attention to inflation, that it could come back and haunt the central bank. and it's not rick santelli. you don't want to miss that. also, harold ford and john sununu say new laws for regulation to treat the lab like a utility could cripple job growth. they'll explain later on the "closing bell."

welcome back. we started with a quick market flash. courtney reagan, what's going on? >> that's right, kelly, check out shares of apollo education group, the stock getting hammered in the after-hours trading session after the company announced it has been informed by the department of education that it intends to conduct a review of the university of phoenix's financial aid programs. right now, shares trading down 7%. kelly, back to you. >> big hit for them, courtney. thank you. well, we do know the fed will raise interest rates at some point. we just don't know when. but my next guest says the fed may already be too late to stave off inflation because of what he calls institutional inertia. ian shepherdson is chief economist at pantheon macroeconomi macroeconomics. ian, good to have you on the line here. listen, you're saying it's already behind the curve, so you see inflation already picking up in this economy, even where few other people do at this moment? >> yeah, i mean, it's not a massive problem yet, but of

course, the problem is that managed poliicy have a long lag. so even if things were changed tomorrow, it would still take a long time to filter into the economy. and during that period, i'm worried about a pickup in wages, and more to the point, we're already seeing companies behaving as though wages were starting to pick up and we're seeing margin pressure in the small business sector in particular. and this is new and it's filtered through already to the producer prices and a little bit into the cpi as well, so getting nervous they've left a little bit too late and the way they're talking, they'll leave it significantly late before they do anything. >> ian, is it your concern that if they're late here and monetary policy works with a 12 to 18, maybe 24-month lag, how much of a breakout do you see in terms of inflation? are we talking 4%, 5%, more? >> no. thankfully not. i'm not looking for a return to the '90s or what happened in the early '80s, but i'm looking for numbers significantly higher than the fed's own forecast, and actually coming through much more quickly than they expect.

so, for example, their forecast for the end of 2016, so 2 1/2 years from now, 4.9%, but i think we'll be through that by january or even by the end of this year. so, bursting through their forecast really quite quickly and probably not then immediately showing any signs of leveling off, and i think that's ultimately going to induce some nervousness in the markets, which eventually will transmit to the fed, but they will resist it. >> i want thoughts from ylan moy as well, watching from the "washington post," but one more quick thing. anthony chan said last hour, yes, the unemployment rate's dropped substantially, but wage inflation has not picked up, and that tells you that there, in fact, is slack in the economy and the fed shouldn't overreact here. what would you say to that? >> two things. first of all, wage inflation is going to pick up soon. all the business surveys that track it and track the tightness of the market are absolutely screaming that wage inflation's around the corner.

secondly, more importantly, companies aren't waiting for wage inflation to pick up before they act, and we've seen a clear surge in the prices received number from the small business survey from the national federation of independent business, which is a pretty good indicator of where ppi is going, and ultimately, where cpi is going, and it's the rational thing for companies to do. no, you don't wait for that truck of high wage to hit you and flatten you into the highway. you get out of the way by raising prices and testing your markets in advance and that's what they're doing and that's why we're seeing a pickup even before wages move. >> ylan, on the eve of the semi-annual monetary policy testimony, we'll hear from janet yellen tomorrow, you could perhaps, i'm sure people will argue that some of the rally we're seeing is ahead of that? in other words, kind of bidding up fact that she'll be dovish again. what if she takes ian's point and makes comments about the fed reacting sooner than expected? >> i think she stated clearly at her last press conference that she believes some of the inflation data you've been seeing is just noisy. i agree with ian that there is a level of institutional ientera

within the fed that makes it slow to move. remember, it's a committee of 19 people. but ian, my question is, you're essentially saying the fed will miss on its inflation target, but it's also missing on the unemployment target as well. so, my question is, how much more do you think the fed has room to push on unemployment before we start to hit the neutral level of unemployment or you start to see structural issues sort of take hold here? >> yeah, this is a really big problem for them. they have missed their targets for the last six or seven forecast rounds and they've had to revise it down, and that was easy when unemployment was at 7% or 8%, but now that it's at 6.1% and getting close to the range of 5.2% to 5.5% in the medium term, it's going to create a problem for them. they don't think they'll hit that range until fall of 2016, but if unemployment deepz falling at the range it's been, it will happen next spring, and that will create a significant problem for them because by that point, we'll have stronger economic growth, higher inflation and the pickup in wages. and so, all three or four of the things they think about are

going to be heading in an adverse direction for them as far as policy's concerned. yet, policy by that point probably won't have moved, which means that when it does start to move, it will have to move quickly and i think blow away the forecast of fed firms of 1.1% at the end of next year. it looks very unrealistic to me in that environment. >> i think you brought up a good point, ian, which is that we're all so focused on the first rate height, but it's the path of interest rates following the first rate hike that will be equally important and sounds like you're saying they need to move fast, possibly even move rates higher than they're anticipating now. >> are you, by the way, in the 2% or 4% terminal camp? >> i'm near 4% for the terminal rate, i'm afraid, and i don't buy the idea we're just going to go to 2% and that's going to create such a shock to the system that it's going to be enough. i don't think that will be the case at all. i think it will hurt the housing market, but i think that's just a necessary casualty for the rest of the economy doing better, and my guess is we'll end up seeing rates peaking near 4%.

maybe not all that way, but through 3%, for sure. >> we'll leave it there, ian. thank you very much for being here. tomorrow will be a big day, for sure. today's market rally, is it enough to crack the cnbc.com hot list? that's next. quit monkeying around! that's the sentiment in san francisco, meanwhile, dealing over outrage of apps that sell things that don't belong to anyone. the city just shut down monkey parking, which allows people to auction off public parking spac spaces. and you won't believe what's in its sights next, an app selling dinner reservations. ♪ during the cadillac summer's best event, lease this all new 2014 cts for around $459 a month or purchase with 0% apr and make this the summer of style. in today's market, a lot can happen in a second.

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hire an intern. and still have time to spare. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business. built for business. welcome back. a rally here in stocks to start off the week, but there was one part of the market that couldn't get any love. in fact, one might say it generated some hate. for that story and the rest of cnbc.com's "hot list," allen wastler is here. hey, allen, what's going on? >> hey, kelly. definitely real market flavor on the website today. that's what people have been interested in. right now we're leading with an analysis piece by patty dom, our markets editor, looking at the most hated part of the market, which seems to be the small caps, the russell 2000. now, i got a bloody nose last week, but analysts she interviewed saying it could continue to get hammered, suggesting people might look at shorting that or even going long on the s&p 500. now, compare that, though, with

the second entry on my hot list, and that's a piece by alex rosenberg over at our futures now unit. he took a look at the s&p 500 and actually short interest in that index is at the highest point since september 2012. now, that would seem to go counter to what patty's analysis says, except he points out some people think that's a contrarian indicator. so many people against aan index means it's time to go in. if you're confused, look at our third entry, dominic chu. he did a wonderful screen for us, the five stocks that do best and worst after an earnings announcement. and chipotle looks pretty good. whole foods maybe not so much, but -- >> not so much. allen, four straight quarters. four straight quarters for whole foods of earnings-day losses after those reports. so, it's been a tough losing streak for a lot of these companies out there. >> it is. and dominic, you're building up a big fan club on the website right now, okay?

>> wait, allen, tell us about that. who are these people? >> so, they just love dom. so, dom, more stock screens for the website, huh, buddy? >> i'll work on that for you. >> next time you're stuck in three hours of traffic, back and forth, you know exactly what to do. allen, thank you. >> take care, guys. >> fan club. i love it. when you think of public utilities, you probably think of gas and electric companies, but now there's a regulate the internet like those companies and harold ford and former senator john sununu think that would be a big mistake. they make their case next. also ahead, there's a new app that makes reservations at popular restaurants and then sells them to other users, and that's goth residents of at least one major city hopping mad. details are coming up. be on at&t's network for $175 dollars a month? yup. all five of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line anytime for 15 bucks a month.

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and we give music creation for the masses. ♪ ♪ unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business. welcome back. it's a fight about internet speed and who, if anyone, should be able to be faster than oth s others. it's called net neutrality, and apparently, the american people have an opinion about it. the fcc receiving over 500,000 comments regarding internet regulation as the first round of public comments comes to a close tomorrow. the current proposal would ban internet providers from slowing down web access for consumers. it would allow major content providers like netflix to pay for a better connection to consumers. joining me now are broadband for america honorary co-chairs, morgan stanley managing director harold ford jr., who's on our panel today, and former new hampshire senator john sununu, both worried the government will try to regulate the internet

like a public utility and that's a bad thing. senator, welcome and why? >> it is, simply because the internet isn't a public utility. it's a dynamic, innovative platform, a lot of competition, a lot of growth. if you just go back in the last year, internet speeds have increased 25%. so, the goal should be, of course, to have rules in place that prevent blocking of content, as they did in the p t past, that disclose how you manage traffic. those rules were struck down. nothing wrong with putting them back in place, but let's make sure we do it in a way that doesn't discourage investment and innovation, improvement in speed and the kind of things consumers want. >> what's the definition of a public utility in this country? a public utility is what? >> well, when that phrase is used, typically, you're talking about the way in which it's regulated, and that's title 2. so, title 2 was the regulatory regime for ma bell, at&t, circuit switch copper 80 years ago, and that is not what you

want to impose on the internet today. you want a light regulatory touch. that's what bill clinton and bill kennard came out with in the 1990s. it worked well through the '90s and the 2000s, and that's the approach we should take today. >> where you have an example of what john is referring, where you would reclassify the internet as a public monopoly, you've seen this happen in europe. and the main concerns people have around this issue is, number one, innovation will be affected, that price will be affected, that you'll limit the number of people and the kinds of people that have access. in fact, the last 20 years, to john's point, where we've had this light regulatory approach, we've seen all the barometers we want to go up go up -- innovation, competition, profitability. we've seen the numbers we want to go down, prices go down. so, the argument many are making around this, there just doesn't seem to be the evidence or the facts that support the notion that this should happen. i don't know what they're trying to achieve. the things we're trying to achieve, we have 90% of

households in america now with broadband access, wired or wireless. you've listened to john talk about the increase in speeds. are there things that could be done better? sure, we ought to find those things, but i don't believe what's being called for by some, who may have the best interests of consumers at heart, but what they're seeking to do and the way which they're seeking to protect consumers will have, we believe, a hugely negative impact on innovation going forward, will have a hugely negative impact on price and will have an equally negative impact on competition, which at the end of the day forecasters and fuels the great things that have happened over the last 18, 19 years. >> senator, what is the difference between the internet and telephones as they originally existed? >> well, you don't have to go back 80 years, you can go back just 30 or 40 years. was a monopoly. it was a fixed monopoly. one provider providing, you know, one color telephone over copper circuitry. today, 85% of homes have access to two or more fixed broadband providers. 95% of the country has access to

wireless internet provider. we've got much higher rates of 4g enhanced wireless broadband capacity than they have in europe. we have higher fixed broadband speeds than they have in europe. so, it's a competitive dynamic environment. we just want to make sure from an economic perspective that you continue to encourage innovation and continue to encourage investment. >> and also to get a sense of what this is going to look like, so harold, here's the question. if in the next couple of years, what you guys are in favor of, which is in some ways maintaining the status quo, so it's not regulating the internet like a public utility, that means that, for example, a netflix, another content provider, could and probably ultimately will have to pay faster speeds to give the best speeds to customers. so is that a problem? is that a good thing? is that a bad thing? i mean, how would you describe this process to consumers who in

some cases to then get that fast lane to the fastest content will be paying more? >> look, netflix, this is not an attack or to indict them, but i think their number, as customers face wait times and filtering times, i think there's a number of things you have to look to the netflix from that point. are they choosing the right channels? are they choosing the fastest lanes for their customers? and i'll let them come on and discuss and answer those questions. i think the broader point for john and i, and certainly for internet providers, is do we want to do two or three things -- one, travel down a path that's been traveled down in other parts of the world and we've seen speeds slow down, we've seen innovation slow, we've seen product advancement slow? we have that example in europe, and nothing against europe, but this is what they're doing and it's not working. second, for the last 18, 19 years, we've had this light regulatory approach that is working. again, there is no one in this community or in this world who would say that -- >> but you know the next 18, 19 years will look very different from the last. >> there is no paid prioritization today.

there are no fast or slow lanes today, even in the wake of the supreme court striking down those decisions. there is no business model today for paid prioritization. >> will there be? >> i don't know. you certainly can't predict the future. but the one thing i can tell you is regulators shouldn't write regulations based on what they think the future will look like five or ten or fifteen years from now. they don't know, i don't know, the markets don't know. so, let's be clear, there is no case, no business case for paid prioritization. this should be driven by consumers. and what do consumers want today? they want speed and they want reliability, and that's by and large what broadband providers have been competing with one another to provide. you've got verizon with 100 megabit -- >> even some of the newest players in the space, like verizon and like google fiber, they are important competitors that ultimately put these companies on watch, but they're still small and available only in a few cities. what about your point to the status quo? what do you do for a lot of

those americans right now who really, truly only have one choice? >> i'm laughing at the fact, though, that you're calling verizon or at&t uverse or google fiber small players. >> you know that verizon's offerings are not available in very many households, some of the fastest fiber connections we're talking about. >> i think they've got over 10 million subscribers. >> that's not very many of the u.s. population. >> they're growing. google is building out a network. to your point, it's driving higher speeds. the fios platform is over 100 megabits per second. comcast-based platform is 100 megabits per second -- >> meantime, to your point about addressing the situation today. until those offerings are available for every american household. >> 85% of household have access to 25 megabit-per-second or faster broadband today. it should go even -- we want even more, but the increase in speeds over the last year alone was 25%. and the last point on this, the fcc just put out their study that said broadband providers

are delivering 90% of the time the speeds that they're advertising. so, there's truth in advertising, which is important as well. >> kelly, your question -- >> that's the fcc. that's not the industry. >> we've got to go, but harold, last word. >> your question should be answered. we're debating whether or not regulating the internet as a public utility is the best for consumers, and we don't believe that's the case. we believe we turn back the clock and find ourselves in a situation where speeds are slower, innovation would be slower and everything consumers and us on the set want would have a harder time achieving that if we reclassify internet -- we allow internet to be regulated. >> thank you both for being here to explain it. >> thank you. >> really appreciate it. you've heard of road outrage. now there is app outrage, a spate of applications that have sold things people don't actually own. they're popping up from parking places to restaurant reservations. while they're generating plenty of revenue, they're also generating plenty of anger. we'll tell you why next. tomorrow, csx is out with earnings and ceo michael ward will join us.

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wall street segment. app outrage on the rise. and residents are angry that they're selling things that don't belong to them or anyone. shut downen a app, for example, that sold vacant parking spaces. now as josh lipton reports, they're aiming their wrath at another kind of start-up. >> yeah, kelly, the only thing in greater demand in san francisco than a parking space is a dinner reservation. but a new start-up is offering a solution to this problem. reservation hop makes reservations under fake names and then sells them for about $10. the response from many, it has been swift and it has been angry. wired calls reservation hop irresponsible and sleazy. the "new york times" chimes in ses the start-up breaks the social contract. so why all the outrage? well, because a start-up makes money off something that's free, dinner reservations, and if people don't show up for their reservations, restaurants can take a hit.

>> reporter: the biggest challenge in the restaurant industry are no shows because you hold a table and expect them to turn every 90 minutes and when you hold a table off for a reservation that doesn't show up, it's a huge economic impact. >> this isn't the first time an app or website elicited outrage. monkey parking, which auctioned off public parking spaces stopped operating after getting a cease and desist order from the city of san francisco. as for reservation hop, he's now talking to restaurant owners about how they can work together, kelly. >> josh, thank you. yeah, contentious issue. good luck, by the way. stay with us, let's bring in our panelists for their reactions here. you spent some time in san francisco. >> oh, yeah. >> i have. you know, it is hard to get a reservation there. but i don't see wipe anyone would pay $10 for this. here in new york, we have a twitter feed called last-minute eating and it scans open table and post links to tables for two at some of the city's biggest restaurants that evening. no one has to pay for it, you

get a streamline news feed of what's available. i don't understand why people would pay for that. i think the argument that this is for the city's 1% is probably a good one. >> herald, are dinner reservations a public utility? >> i definitely think this should not be regulated under title ii. look, if the market sustains this, reservations must be hard to get in san francisco. if they are -- sounds like they're trying to work with these restaurants to try to make it work. i can see both sides. >> this has been going on forever. i'm from new orleans and there's a restaurant, a real old-school restaurant that people would pay money, other people money to stand in line and wait for a table for them. so this doesn't really seem that different to me. >> early on my career, i interviewed a disciple of keller who is now a michelin three star chef out in chicago. does the next restaurant. when he opened up next restaurant, he and his partner actually started to sell tickets. so they have seatings and they sell tickets, just like a

sporting event, and then those tickets could be secondarily market traded. >> the message seems to be -- >> presell your stuff. and you can forecast a lot better that way. >> and you get the earnings on the back end of that, not the app the middle man, too. >> you sell the seats, not the meal. >> all right. thanks, guys. look at the day that was, you've got a preview tomorrow and on tomorrow's edition of the "closing bell," all over the intel earnings. that company reports. and we'll have analysis of the cfo stacy smith. don't miss it.

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call our specialists today to get up and running. welcome back, it's going to be a busy week. we've had a strong open today. dominic chu, let's do a preview if we can. >> how about this? it's monday of a big week of bank and technology company earnings. those two sectors make up a huge, more than a third of the s&p 500. you're going to hear from goldman sachs and the morgan stanleys and the bank of americas this week. also the intels, googles and ebays. they're going to tell you something about the bulk of the american economy and that's going to be the real focus. i'd like to take it more from the macro big picture. i still think it's a market of

stocks and on a stock market -- >> well, fortunately, harold is here to tell us if morgan stanley's going to report. right? no? >> wink twice. >> exactly. we know that -- >> i agree with your analysis, though, what this week is going to tell us. >> what are you focused on here? >> look, i worry a lot about the everyday hard working consumer and homeowner who is watching all of this great news and may most likely is not benefitting from this. and how do we -- you hear this conversation about inflation and wages going up. wages aren't going up for a big, big slice of the country. i'm more concerned about that. >> unless you work for the mta. >> i think that's a big issue she's going to hit in her testimony. part-time employment is something she's been focused on, underemployment's something she's been focused on. obviously her testimony not only tuesday but also wednesday before the house will be important. and jackson hole coming up in a month, and i booked my tickets and i'm ready to go. >> kayla. >> banker names, tomorrow, jpmorgan, wednesday, bank of

america. not only get consumer broad stories about how the consumer is doing, you'll also get how companies are doing whether they're borrowing, what sort of activity -- >> big week on that front. >> bank of america, we'll see what they say on their potential settlement. >> i'm going to book my ticket to jackson hole. thank you for now. "fast money" begins right now. live at the nasdaq market site in new york city's time square, this is "fast money." i'm melissa lee. tonight's top story, apple's influx point. the new larger screen iphone will be delayed until next year. barclay's upgrading from overweight to equal weight rating the price at $110 a share. it's at an inflexion point right now. that of google back in 2013. this is interesting, remember in 2013, beginning of the year, google was mired in concerns about