the worst company this month, a company that did do a deal, walgreen. best 21st century, worst walgreen. does that mean anything? probably not, but i found it interesting. >> it is interesting. and thank you very much for watching street signs. >> "closing bell" with dominos ceo and kelly evans, who we don't like anymore. back after this. i think we've got to send some pizza the way of the "street signs" team. welcome to the "closing bell." i am kelly evans down here at the new york stock exchange. >> pizza or an ice bucket, one or the other. i'm tyler mathsen in today for bill griffeth. welcome, everybody. it's a day where the market can't seem to make up its mind. it feels, kelly, like a real august day. we'll take you through the final hour, along with these stories. a convoy of russian trucks, are they carrying aid or arms? unmarked trucks. the world and the markets want to know t. the situation in ukraine continues to bounce stocks up and down, and we will have the

latest on what's moving your money. also, back-to-school in full swing across the country. it's the biggest shopping season of the year after christmas, and now analysts at citigroup are saying williams-sonoma will be the biggest winner in the back-to-school frenzy. really? williams-sonoma. you might be surprised to find out why. and would you take less pay if your company gave you a bigger 401(k) match? nearly half of the respondents in one survey say they would. we will give you the details and also give you a chance to vote if that would be the best financial move for you. and in the markets right now, as tyler mentioned, the dow's off about 31 points. at the lows, we were off 52. the nasdaq, meanwhile, down about 24, and the s&p 500 off 6 1/2 points. and we're keeping an eye, tyler, on a lot of individual movers. king digital will report after the close, but otherwise, it's been relatively quiet. >> indeed it has. joining our "closing bell" exchange this afternoon, rob morgue from v2v associates, dick burridge from rmb capital

management, sam stovall from s&p capital iq, diane, and mr. santelli is back. welcome one and all. sam stovall, let me start with you, as i know a student of market history. it's been a long time since the market has had a correction. it looked in the past couple of weeks like maybe we were going into one, but then the past few days not so much. if we go so long without having a 10% correction, does that necessarily mean that when the correction comes, it's stiffer, harder, worse? >> i figured you were going to add some more. no, actually, there's no guarantee that it's going to be a bear market, even though four times since world war ii that we did go longer than the existing 34 months, which by the way, is three times the median between such decline since world war ii. of those four times, three of them became new bear markets, but the longest one was from

1990 to 1997, just before the long-term capital management decline, and that ended up being a correction, not a new bear market. >> you know, dick burridge, i want to get your thoughts on the ipo market and just how healthy it is. there's talk about this ipo that existed for six days and then was pulled. there's been some focus on how poorly some of the smaller ipos have performed relative to the larger ones. do you get a sense that the jobs act is part of this? are you worried about this trend? or do you think overall it's consistent with a relatively healthy market here? >> i think the ipo market is like it always does at this point in the cycle, it goes through ups and downs. it doesn't surprise me that we're struggling here when you have some of the higher pe, higher growth companies really struggling to move forward, make new all-time highs. i do think acquisition activity is going to pick up, and that will help the ipo market. i really think what we need

here -- you were asking bob a minute ago about the likelihood of a correction turning into a bear market? i think the best thing that could happen for the market today and for the ipo market, frankly, longer term, is to have a meaningful correction to get some of the hot money out of the market and have an opportunity to put money back to work at reasonable valuations. >> diane, in my notes, it says you think we've actually had the correction we should expect. >> i do, and it doesn't mean that we won't have more over the next few months into the end of the year, as there's a little softness at the end of earnings season. but here we have seen, you know, really, earnings catch up with market valuations. >> so, is a 4% to 5% correction meaningful enough to borrow the prior guests' words or do you need something more? is 5% the new 10%? >> i think 5% is what we've typically had in most markets, 3% to 5% corrections and we're

right on schedule for that, in the midst of a good economic and equity year. >> and so, for now, then, it sounds like you're saying it's clear sailing? >> well, i don't know about that. there's a lot of geopolitical unrest, but valuations have come down a little bit, earnings have come up and dividend payout ratios are pretty low, so that can feed still into the system. >> rick santelli, are you surprised at the resilience here in markets, broadly speaking? >> you know, i am a bit. but once again, i think that the highest probability of what happens with equities is as they lose their benefactor in the form of the central bank, the federal reserve, i just think it takes away up side more than it guarantees a huge down side. so, i think it's about the angle of the glide path that's going to change moving forward. on interest rates, today's a fascinating day. it looks to be the eighth day we're going to close the tenure in a tight range between 2.41 and 2.49%, but since thursday's low-yield close going back to june of last year, which was

2.41%, this is the highest yield close since then, and 2.44%, where we sit now, was the previous -- or excuse me, low yield close of the year. why is that significant? because volume is so light everywhere that traders are going to have a real important decision to make. do they reverse the trade and get back out of some of these newly established longs or do they hold on? and that would be significant, because we have a lot of important data points and auctions. tomorrow will be a ten-year auction. and we get july retail sales. so, this is going to be the first month of the third quarter data, and it will be of extreme importance in front of gdp out of germany on thursday. >> rob morgan, meaningful or not, have we had the correction that we should anticipate for the next few months? and whether we have or we haven't, do you like stocks at these prices? and if so, what categories? >> yeah, i'll tell you, tyler, it wouldn't surprise me if we got some kind of pullback going forward into the fall, but what i'm focused on is the fact that,

you know, we continue to have a healing economy here. we've had six straight months of job growth over 200,000 per month. that's the first time we've had that since 1997, so i do like stocks here and i like the cyclical sectors. i like industrials, financials and technology. so, yes, could we have a pullback? sure. but i think in the long run, even with that, things look pretty positive for stocks. >> and rob, i have to imagine that you saw the same positive trends in this survey this morning of job openings and labor turnover. a little bit of a lagging gauge, but an important one that did show on top of what we've seen in the month or two prior to that a noticeable pickup in job openings in this country. >> yeah, kelly, absolutely, and obviously, that's a positive thing as well. it's going to, hopefully, lure people back into the job market that got discouraged. and then, hopefully, we'll start this virtuous cycle at some point where more jobs means more demand means more hiring, and it's a virtuous circle.

but we're certainly not quite there yet. >> diane, can stocks continue to rise if interest rates do? >> absolutely, because it means that if interest rates are rising, it's because the economy's definitely gaining traction. so, we do think the market can continue to rise. >> i'm going to pull a bill griffeth here and ask if we can show everybody for a second how many, with a show of hands, think the big decline in the german zew index this morning was a big deal and potentially a new hurdle for the u.s. market here? >> no hands? >> nobody. >> was that a hand? they're sitting on their hands, kelly. >> so, just to refresh people as far as what we're talking about, the german market has underperformed this year. and in fact, for a while it was correlated with the u.s. sell-off. so, diane, big drop in investor confidence today in germany. they're certainly feeling the impact from what's going on with regard to the sanctions against

russia. and yet, nobody appears to be that concerned about it. >> well, 8% to 10% of s&p sales are european-related. and while we are a little bit insolated from the troubles in europe right now, certainly, some of the companies do sell over there and a slowdown would be negative. >> sam stovall, if you had to choose between value and growth, which and why? >> tyler, i'd be going for value at this point. specifically, i'm looking at the s&p 500, 400 and 600 pure value indices, which also are mimicked by guggenheim etfs. the feeling basically is here you're looking at low valuation companies that are having a good technical uptrend, that if you are going to be sticking with stocks, even though a correction, i think is still looming -- >> where do you find those values, what categories, where? >> what categories? >> yeah. >> value -- >> no, no, where are the values greatest? i mean, is it financials, banking, what? energy? >> oh, i was speaking

specifically about certain etfs that are what's called pure value for large and small caps. usually you will find value in some of the financial categories, some of the more defensive areas, whereas the growth of more traditional discretionary. >> i understood you were talking about etfs. i was trying to get to another layer of exploration. >> let me going goe back to one people love to talk about right now, which is merger and acquisition activity. how do you play this space? do you buy some of what you think might be the likely candidates? does everybody win? does nobody win? give us your take on how investors can position for this wave. >> well, i think that the key here is going to be a pickup in demand. if you can start to see the top line grow in certain industries, i do think you're going to see confidence build up that merger and acquisition activity will increase. you're seeing it in the banking industry with small and midsized

banks. you saw the headline this morning in the "wall street journal" that bank profits are almost at a record high. that's a good sign for the economy. i think that industry's going to continue to see consolidation. and when you start to see profits accelerate in other industries, you're going to see m&a activity increase as well. >> justin lay hart has a nice piece about the quick ratio and how assets can be converted in the case of a takeover, so it could be happening, but we'll leave it there for now. good to see everybody. 50 minutes to go and the dow's only off about 13 points. we'll watch and see if it can turn positive at all this session. the s&p 500, the nasdaq also still negative. tyler, the dow was positive, albeit slightly early today at a session high of 19. >> but modest losses at this hour with about 50 minutes to go. coming up, blackstone's vice chairman byron wien weighs in on the markets. always interesting. find out if he sees a correction heading our way or if that pullback we had just a couple weeks ago was it.

blackstone oversees more than $200 billion in assets, so you may want to listen up. also on the docket, king digital posts results after the close. we'll tell you what numbers to watch out for and get them to you the second they hit the tape. find out if the candy crush maker can crush forecasts or be crushed. up next, the ceo of domino's pizzas will give us his take on the economy and where in the world he's seeing the hottest growth these days. boy, does that look good. we'll be back in a minute. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding.

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lots of interesting stuff going on within the indexes, but the headline numbers really rather flattish right now. the industrials off 15, nasdaq down 18 and the s&p off 4.25 points at 1,932. tyler, thank you. domino's pizza, with locations across the world on six continents has been an innovator on the food landscape for decades, continuing to post strong earnings quarter after quarter by utilizing groundbreaking technology and reaching new customers amid a landscape with more and more challengers, including names like chipotle looking to get into the fast casual pizza

concept. >> joining us for an exclusive interview to talk about all this and more and most especially the cinnamon sticks that i love is dominos ceo patrick doyle. mr. doyle, welcome. >> thanks. >> i have your app on my phone. i love it. it is really handy. how important has that app and digital been to your ability to post the kinds of numbers you're posting, numbers that most restaurant chains would love to have? >> it has clearly been a big driver for us, tyler. really, it's remarkable. we're now doing about 45% of our business on digital. so you know, we are almost officially an e-commerce company now. so you know, globally with retail sales of $8 billion or so, you know, we're doing $3 billion plus on digital. >> wow. >> happier customers, higher ticket, better repeat, higher frequency. it's been a big, big driver for us. >> and you want to get that number to 50. how soon is that going to happen? >> i think it's coming up pretty quickly.

>> this year? >> yeah, you know, we might. i mean, we'll see how it goes, but yeah, it's continuing to push. it's been growing every quarter for us, so we're really happy with the progress. >> is there much of a difference in terms of your earnings from tyler, who may call and order cinnamon sticks and go to the store and get them versus using the app? >> it's a little more profitable order for us, but their really big driver is the customers' error rates are lower because they're taking their own order, the ticket's a little bit higher. so, it's really about driving more occasions for customers is really the big benefit for us. >> one of the things that people in the restaurant business are always and maybe most especially this year worried about are rising commodity costs. where are you feeling it and how do you deal with it, or is it really a wash because you pass along a lot of those costs to your franchisees who buy a lot of stock and products from you? >> in the short-term, that's mostly within our franchisee's p&l, not in ours as much, but over the long term, it matters. our franchisees have to be

making money. that's what's going to drive store growth. if they see a good investment, they're going to build more stores. so, it's very important for us. we've had a little bit of a ticket increase this year, but overall, profits at the store level continue to be very strong, so our store growth has been quite good so far this year. >> i'm looking just for the number. you see between 4% and 6% commodity price inflation. is that still the case today? because look, we've had some big moves, and i think some of the corn-wheat space moving even lower recently. >> right. >> so, has that 4% to 6% range changed? >> no, we're still in that range. the one that's been stubbornly high is cheese, and that's usually 45% of our food costs. we're surprised, frankly, given that corn has moved down, and ultimately, corn is kind of the big input for the cows. we're surprised that cheese has stayed quite as high as it has. it's been down a little bit, but last week or so, it bumped up again. >> so, what kind of pricing -- >> sorry, tyler. >> what kind of pricing power do your franchisees have to pass on

those rising costs for cheese to the customer? >> yeah, i mean, very little right now. i mean, the answer is we've got a little bit of ticket increase. digital has been a part of that. our ticket is a little higher on digital. so, as people shift across there, we get a bit of a bump on ticket, but the consumer, you know, is still cautious. >> can we talk about franchisees for a second? >> sure. >> so, you guys are 95% franchisees. >> right. >> a worker suing i think mcdonald's was able to hold the parent liable, and not just the franchisee. huge deal, and it's got people talking about whether after a lot of companies doing what you've done, going almost fully to the franchisee model, if the pendulum may start to swing the other way. >> yeah, that's going to get appealed in circuit court. we'll see how that plays out. that's going to take a long time. but there are i think almost 20 million people working in the

franchise industry, small business owners. at the end of the day, franchising is incredibly important to the u.s. economy. i think at the end of the day, they're going to get this one right. >> but is it important to dominos? >> oh, absolutely. >> why is it so important to remain a franchise model, even if you see writing on the wall to the extent that you do in a ruling like this? >> local ownership, being part of the community, it's important. and that energy -- i mean, over 90% of our franchiseies started as hourly workers in our stores, worked their way up through. there's an energy and a passion there that's hard to replicate with people who work for you. so, we think it's very important. i'm hopeful that they're going to get this one right before we're all said and done. >> 90% of your franchisees began as hourly employees in your stores? >> that's exactly right. almost all of them is drivers and they stayed in the stores, they worked their way up, managed the store and then bought a store and grew from there. >> wow! >> that's a stunning number to me, and i think, you know, a very flattering one for you. let me ask you who you have your

eye on. i know you have your eye on all of your competitors, most especially what are described as the fast casual chains like a chipotle. there's no secret about how to make a pizza. i went to italy a couple months ago and they taught me how to make a pizza. anybody can do it. doing it well is another thing. >> a lot of people do it in their backyards these days, yeah. >> so, what about chipotle and the fast-casual and the other competitors? >> i think when you look at what's driven fast-casual over the past decade, it's really been about a few things -- better food, more attractive environment, getting people through quickly and the convenience of that, and still good value. maybe a little bit higher price, but good value. we're doing that in our stores. you know, we're opening our stores up, we're redesigning the stores, we're very fast and we bring technology. so, we think we're very, very well positioned. >> is it delivery? is that why you feel so confident that at the end of the day you are the guys putting that product right in front of the consumer? they still have to go to some of the other locations, each if

it's a chipotle. is that why you feel so confident? >> yeah, there is nothing more convenient than being able to sit at home, to order on your cell phone or over the internet or to call in, have it delivered to you, you know, still usually in under 30 minutes. i mean, it's very, very convenient. we think it's powerful and we're pretty confident about where we are. >> i feel like the rest of the retail industry is going to follow that model here as well. patrick doyle, thank you so much for being here this afternoon. >> thanks, kelly. >> ceo of domino's pizza. >> we've got about 38 minutes before the closing bell. modest declines for the dow, about 20 points. the nasdaq down 21 and the s&p off about 5. in the meantime, citigroup ranking williams-sonoma as its top pick for this year's back-to-school season. yeah, williams-sonoma not necessarily the first retailer you'd think of in the back-to-school category. we'll have the pros debate why this makes sense, next. and later, russian president vladimir putin versus fed chair janet yellen. find out who wall street pros are keeping a closer eye on these days. we'll be back in a minute.

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welcome back. red arrows but only a slight negative at this point for the major indexes. well, the nasdaq is off 0.4%, the nasdaq off 12, the s&p off four points, tyler. >> dominic chu is running through the market movers. >> a reversal of fortunate for kate spade.

this stock opened higher this morning and fell toward session lows when they warned gross margins for the full year would fall as it faced increased competition. the stock is down over 26%, losing a quarter of its value. michael kors also fell in sympathy. it had its own margin pressures when it reported earnings last week. you can see there down 3.5%, one of the worst performers in the s&p. twitter is moving higher after the company unveiled and promoted video ads. the stock you can see there up about 1.25%. twitter shares. gravity's hitting tech near pharmaceuticals. this is the maker of that experimental ebola developmental drug. it's falling as investors are taking profits here. remember, its recent run-up was huge over the course of the past couple weeks. you can see their shares down about 20%. and we'll end with schlumberger losing ground after it became the first u.s. company to announce sanctions against russia. it will hurt its actual bottom line, shave pennies off eps. that's down about 1.25%. tyler, kelly, on today's trade. back to you guys.

>> dom, thank you very much. citigroup names williams-sonoma as its top back-to-school pick. so, is the company really a stock poised to benefit from the back-to-school shopping season? >> here to discuss is anthony chakumba with bb&t capital markets and jamie katz, an xt analyst over at morningstar. so, anthony and jamie, welcome to you both. anthony, first to you. does it make sense to include the owner of williams-sonoma and pottery barn as a top back-to-school pick? why? >> i'm really scratching my head on this one. don't get me wrong, i really like williams-sonoma. i have a buy rating on the name. i think they have great brands. they're the premier omni channel retailer, top-notch management team, strong free cash flow. back-to-school play, not so much. i just don't quite understand this call, to be perfectly honest with you. >> jamie, i know that if you have children, you'll be running out for a waffle iron or espresso machine for your third grader from williams-sonoma, right? >> i think we agree on a lot of fronts with what was just said,

in that this is really a parent-driven business. and so, where they stand to benefit from the back-to-school season is that they aren't really targeting teens as much as they are targeting parents with the namesake williams-sonoma and pottery barn brands, you know, having the lion's share of the footprint. >> well, is that the story here, that it's going to be a foot traffic kind of thing? in other words, when people -- and i remember this was the case with the women's retailers in past years. it was kind of, you want to own ann taylor in back-to-school season simply because moms might be out in the mall. can you make a foot traffic argument for williams-sonoma, jaime? >> i think we're less positive on foot traffic for malls, but i think what's really interesting about the business is that it has carved out a really special place for direct sales. and with 50% of the business coming through direct channels, they really get to have a much leaner operating profile than some of their competitors.

>> anthony, let me -- you like williams-sonoma, you say, and you like the multichannel, you like the fact that they've got pottery barn kids, pottery barn teen, which i think is one of the thesis of the citigroup argument, but you don't favor it as a back-to-school play. so, the natural question would be what do you favor as a back-to-school play? >> one name we really like right now for back to school is five below, the teen and preteen retailer. the economic environment continues to be quite challenging, so i think the fact that the consumer, either the parent or the child can go to five below and spend $5 for a backpack, $3 for a calculator, $2 for a lunch box, that's pretty compelling, so i think that makes a lot more sense for back to school than williams-sonoma. >> jaime, what about you? >> i think tjx has been one of the top picks for the consumer team. i think that the price sensitivity is something that resonates across what we're seeing as well. so, looking through that

off-price channel, a company like tjx would really stand to benefit in the period ahead. >> ooh, all right. >> anthony, how do you handicap? you know, we've heard in the retail area some people saying, hey, the consumer is in a funk. a lot of the office product stores seem to be, which would be a natural place for back to school, seem to be struggling. how do you see the consumer right now? >> i think that the consumer is getting a little bit healthier. i mean, we're certainly seeing better employment numbers, we're seeing stronger consumer confidence numbers. consumer credit is rising. the housing market seems to be hanging in there, but they're still very, very cautious and they're still looking for a deal. we have a greater level of price transparency than we've ever seen. you mentioned the retailers. we did a back-to-school pricing study and found on average their prices were significantly above walmart, significantly above amazon for back to school, and we just don't think that's a very good thing. >> well, and a lot of those names in the red today. we'll leave it there for now. thank you both. anthony chucumba and jaime katz

of morningstore. the market is off about 32 points. the nasdaq is off 20 and the s&p 5. >> byron wien will speak with us on the markets, the economy, fed policy, geopolitical trouble spots and a heck of a lot more. don't go anywhere. what if there was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com

welcome back. you're taking a look here across markets, despite a big drop in german investor confidence this morning. some better economic news in the u.s. the uptick in job openings, that's what the market's digesting with the dow off 19 points or so this hour to 16,550. the equity markets are off their record highs with the talk on the street of a major correction seems to be tapering for now. the dow down just a little more than 2% over the past month, despite major geopolitical tensions after dropping nearly 5% at the lows. >> our next guest says not to be surprised, though, if the markets do head a little bit lower but that those dips provide buying opportunities. and joining us now in a cnbc exclusive is byron wien, vice chairman of blackstone advisory partners. byron, good, as always, to see you. we'll tackle, i'm sure, some of the geopolitical things in the time we have, but i want to begin with earnings, which have come in pretty nicely in the

second quarter, but are they as strong as they appear? >> they're really not. if you look at net income, that is probably up about 4%, but earnings are up twice that or even more. that's because of share buybacks and other accounting techniques. so, earnings per share look terrific, but corporate income is not as impressive. >> revenue doesn't look bad, though. >> revenue's okay, but you're not likely, kelly, to get much margin improvement. so, you really need even better revenue increases to keep this up. >> but isn't this what we want? aren't we at the point we'd want to be? in other words, first you'd have profit margins improve, earnings rise, and then finally, towards the middle to later stages of the recovery, revenue starts to increase, and then the hope is that the better macro keeps those revenue increases going, even if profit margins then are coming down because people, frankly, have more disposable income? >> let's hope that's the way it works out.

i do think the second half is going to be a whole lot better than the first half. i think the economy can grow at 3% during the second half, and if that's the case, i think earnings will keep up and revenues will improve. >> what price do you think investors are going to be willing to pay for each dollar of earnings? we're right now at what, 17 times trailing earnings? do you see that, the multiple expanding much? >> i do. bubbles occur at 25 to 30 times. i don't know or think we're going to get there. i don't think we should get there. that's bubble territory where the market is really vulnerable. i think what we should get to is 20 times. >> and that puts the s&p where by year end, or at that point of which it's 20 times? >> the consensus estimate is about 115, so that would be 2,300. >> and we're at 1,932 now, so that would be what, a 20% return

for 2014? >> that's right. it would be a 20% return. now, maybe it won't get there, but i do think the market's going to end higher than it is today. >> and byron, there are a range of factors here that are common talking points. there is the fed, there is woeful situations internationally to be aware of. there's plenty of other things that people could be worried about. what keeps you up at night and how does that factor into where you see equities going from here? >> well, the fed doesn't keep me up at night. i think the fed will remain somewhat accommodative. obviously, the tapering will end in october, but i think it will be the middle of next year before we see rates rise. so, i'm not worried about the fed. i am worried about all the geopolitical things, you know. right now, the market is saying that all of these things are going to work out favorably. that's ukraine, israel/gaza,

syria, iraq, iran, south china sea. well, maybe most of them will, but if one of them flares up, if the price of oil shoots up, that could create a calamity in the market. so, that's what keeps me up at night. >> but as you look at those things, in one of the papers i read that you wrote, you do tend to think that most of those issues are solvable, at least in the short term. particularly, you don't think that putin will do something in ukraine potentially until after the turn of the year. >> that's correct. i think israel/gaza -- i mean, i think all of these problems are going to be with us at least for a year, but i think they're going to be reduced in intensity over the next year, and therefore, i think the market can move forward. but the question was what keeps me up at night. >> right. >> right. >> i'm not right all the time, tyler. >> the unanticipated upset would be the thing that could take this rather more complacent market down rather more

drastically. >> right. i still think that sentiment is too positive and we have to correct some of that. so, i still think the correction could go further. >> byron, what about getting more long term, beyond 2014? do you have a sense of where equities could ultimately go? i mean, i'm just thinking about some of the calls we've had lately on, you know, this expansion going another several years and that, you know, usually when the fed raises rates, even that isn't the end of the cycle for equities. and you know, will the s&p be at 3,000 before it's back at 1,500? you know, those kinds of things. can you just give us a sense of how big picture you see the stock market from here? >> well, kelly, at my age, i take it one year at a time, but i can tell you that the economic outlook right now is pretty favorable for the united states. but there are some signs that europe is slowing, that china's too dependent on debt creation for growth. so, we really need a worldwide

expansion in order for the u.s. to continue to do well. the u.s. can't do well on its own. right now i think world growth looks okay, but if that changes, that could darken the outlook for the u.s. >> over the next year do you think the u.s. market is, of those ones you mentioned, europe, asia, china, the best? >> absolutely. >> are you concerned, byron, by the drop in german investor confidence? i know i've mentioned it a few times and it's going to be more important to see how confidence there is broadly and, of course, the impact russia has when we start to get the data, but are you concerned we're already seeing a bite, and that if europe does slow, that's a worry here for the u.s.? >> well, kelly, i have a sharper view than you on that. i think germany calls the shots in europe, and i want mario draghi to become more expansive in monetary policy. if angela merkel is more concerned about german growth, she'll put pressure on mario draghi to be more accommodative, and i think that would be good for germany and all of europe,

and that would step up the european growth rate. >> i know you've always got an idea, byron. what's a great idea to either help me make money or avoid losing it over the next year? >> i think there are going to be a lot of new drugs introduced in most of the major diseases. i think the biotech area is very favorable. in spite of its recent correction. >> i was going to say. all right, byron -- >> i knew, kelly, you were going to hit me with that. >> no, it's just, it's tough, because a lot of people at home, it's a space, you know, they'd love to play. frankly, it's an area that you want to put capital to use but worry that you're going to land on the mine instead of in a safer part of the field. >> well, not everyone is going to be a winner, but there are going to be some big winners out there. >> and we hope winners come out with treatments that can solve a lot of what's ailing us. byron, thank you. we'll leave it there for now. byron wien is blackstone advisory partners' vice chairman. and we have about 20 minutes to go into the close and the dow almost positive, tyler.

all right, up next, make-or-break time for candy crush. the creator of it, king digital. our morgan brennan previews the numbers to watch ahead of king's earnings report out after the close. and later, would you take a cut in pay for an increase company match to your 401(k)? this is a hot issue. we'll be taking a poll in the next hour of the show. you might be surprised how many people already say they would. the address for you to make your voice heard, cnbc.com/vote. we will be right back. and cialis for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision,

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well, dow industrials have turned positive by about a point, almost two points right now. two-thirds of a point. just barely hanging on by the fingernails. the s&p and the nasdaq remain slightly lower, kelly. >> art cashin saying the buy orders on the close had gone from something like 600 million to 300 million, that, perhaps, helping here, as we've got about 15 minutes to go. we're awaiting results from king digital, hitting after the close. morgan brennan has a preview of what to watch for. morgan? >> thanks, kelly. well, this is the second time the video game maker's reporting quarterly results since going public in march. so, estimates are calling for 59 cents per share on $608 million

in revenue. bookings and active users will also be in focus. the street is looking for gross bookings of 640 million, mostly from mobile, and 155 million daily active users. analysts tell me they're expecting bookings for king's biggest title, candy crush saga, to continue falling but should be offset from farm heroes, pet rescue and bubble witch earnings. the biggest problem for king is overcoming its one hit wonder status, so we're watching the pipeline closely. also, keep an eye on customer rising acquisition costs and any comments on the stock lock-up expiration next month. analysts say that should be a major concern for investors. so, coming into the earnings later today, that stock's been trading largely flat, down about 0.3%. kelly, back to you. >> morgan, thank you very much. we've got about 16 minutes before the closing bell, and the dow is positive by just about a half point. s&p down two. nasdaq down 11. coming up in the next hour

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well, the dow flipped back

negative again by about four points. nasdaq off about 10 1/2. and the s&p down two. and joining us now to take a look at how the markets are doing, doug woefld from convergent wealth advisers and peter anderson from congress wealth management. welcome to you both. doug, i'd like to begin by asking you about one of the themes in your notes, or the note that was supplied to me, and that is that you think as a contrarian play commodities may be a place to go. why? >> absolutely, i do. one of the things we have to look at right now is the fed says that inflation is low. anybody who's put children through college knows that cpi has nothing to do with actual inflation. so, number one, i think commodities are a great inflation hedge, a great macro hedge. geopolitical concerns, problems in the ukraine are playing into our strategy of having a dollop of our portfolios in commodities and especially in energy. so, i think it's a great place to be and a safe place to be going forward. >> doug, do you still own

buffalo? >> you know, i still own shares in the north american bison co-operative, but the buffalo turned out to be more of an investment of passion than a true investment. >> peter, i don't know about your cattle raising habits or anything, but can you talk about the industries where you see potential and respond to what byron wien just said about investing in biotech, that an attractive area to him. >> yeah, i think that biotech is always attractive. it's a little bit challenging to actually analyze those companies. we tend to stay away from them because we're not specialists in that industry, but to doug's point, when you're looking at inflation, there's been a lot of nay sayers right now about -- here's another contrarian play -- high-yield bonds, because people are running away thinking that as interest rates rise, high-yield bonds might get smoked. however, if you have a little bit of inflation and interest rates rise just a little bit, then you'll still have some pricing power on these high-yield bonds and you actually can see some improved financials. >> but peter, isn't the real opportunity because we just saw

people piling out of them the same way they piled out of muni bonds, and that ended up being an excellent trade after that exodus? >> that's right, and munis are a different animal, though -- >> no, i'm just saying for the people looking at high yields today, it's almost less about fundamentals than the dislocation by everyone jumping out. >> that's right, and that's when i get excited, when you start to see these contrarian plays. when people are jumping out and you ask them, why are you selling a high-yield bond, if they don't have a clear answer about the specifics of the company, i would say you have to look a little bit more deeply as to what the rationale is, because as i said, a little inflation, pricing power, top line, and that gives you some better credit protection. and i would say if high-yield bonds start trading off more, start digging deep, look at some of these individual securities and possibly buy some. >> so, doug, commodities as a contrarian play. what else would you be suggesting i look at in today's marketplace? >> well, i really like health care. right now there are certain

parts of health kaer. i like hospital systems. i like concierge medicine. i like patient record-keeping and security, remote diagnostics. i think the affordable care act has picked some winners and picked some losers. i think traditional doctors, traditional insurers and, unfortunately, home health workers i think are the losers, but i like those other spaces quite a built. >> what about biotech? same question we asked byron wien. >> i think it's a little frothy, to be honest, and i think the 3.5% tax leveled on medical device manufacturers in the obamacare legislation is going to cool innovation there. >> peter, let's talk a little bit about the macro risks in the marketplace, starting with the fed and moving sort of around the globe a little bit. i don't mean for you to identify all of them, but as you look at those risks, how worried are you about them? >> well, as you know, i'm a pretty intense fed watcher, and i think that unlike most other

people out there, i am thinking that maybe she might raise rates in a shorter time period than most people think. so, i'm thinking the beginning of next year there could be some very strong signs of economic improvement. and then i think rates might actually be jacked up a bit. that could be a risk. some people might think that. but let me just turn that on its signed say that if rates are rising, that's still a good thing for the economy. i mean, i've said that in the past and i do think equities might trade off as a reaction to that, because we've had a dress rehearsal for this activity several times so far, and we've always seen as rates are hinted of raising, that the equity market might trade off. and i don't think that that's the right way to respond. i think that that's a positive thing if we were to raise rates. >> true, true. all right. we'll leave it there for now, guys. thank you. >> thank you. and when we come right back, we will have the closing

countdown. then after the bell, yes, candy crush maker king digital's expected to post results. we'll bring you the numbers and look at what they mean for the stock. is this just a one trick pony? we could be finding out in moments. ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style.

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closing bell with bob pisani, i guess the question, bob, is could we rally as we come in here and make it, what would it be, four in a row up? >> yeah, small chance of that happening. there's a couple of little things in the market i want to point out, tyler. first is brent crude is essentially at new lows for the year, and this is putting pressure on the energy sector. so, in the u.s., we've got enormous supplies, thank heavens, of crude oil as well as natural gas. that is very good news, but that supply pressure is problems for people who are investing in the business. that's why we're seeing these oil stocks that are under pressure hurting the dow today. also, demand is fairly low worldwide for a lot of this crude product that's out there. that's what putting out -- there you see brent. that's a new low for the year. the other thing i want to point out is what's going on in japan. we'll get to gdp figures for japan tonight, and they're probably not going to be very pretty. remember, japan has this new sales tax, and a lot of people

bought products ahead of the sales tax. now the sales tax is coming in and there's a lot of talk that the gdp is going to be notably on the negative side tonight. so, keep an eye on the nikkei. and that's been a notable underperformer, and i think the people there, and certainly the leadership, are going to have to deal with the implications of that sales tax. so, a couple of things are moving here. oil is really an interesting thing to watch right now. >> one of the things that the not moving. >> no, it's not. you had a good point earlier. i heard you say this sounded very much like a typical august day today. it very much was. i know you and sue were talking about that earlier. and the answer is yes, that's definitely happening, but there's also other little things that go on inside the market here, little things like the oil moves that i think are worth paying a lot of attention to. >> so, they're watching oil down there. what's the next other clue that the folks you talked to, and i know you talked to a lot, have their eye on? >> well, i think the big thing will be the retail numbers we're going to see. all of the department stores are going to start reporting in the

next several days. the general feeling is some of the big names like macy's, which has become a big, essentially discounter, are going to do well. others are going to have some really rather difficult things to say. >> and bob, thank you very much. >> okay. >> the bells are about to ring on wall street and at nasdaq. happy people clapping there to ring in, ring out the trading day. that's all for me. in for bill griffeth, i'm tyler mathisen. kelly evans will take you forward in the second hour of the "closing bell." >> thank you, tyler. welcome to our viewing audience and welcome to the "closing bell." i'm kelly evans and here's how we're finishing the day on wall street. the dow tried to turn positive there at the close but it just doesn't look like that happened. gave up about eight points. the nasdaq off about 12. the s&p off about three, 1,933 is the level there. let's talk about it with our closing bell panel. joining me is cnbc contributor carol roth, "shark tank" tv personality kevin o'leary, our own sharon epperson, and joining us to wrap up the day's action

in the markets is "fast money" trader brian kelly. welcome to everybody. brian, not a ton of movement on stocks today. perhaps the most noteworthy thing is the fact, as bob just mentioned, we saw crude moving lower. in fact, brent is at one of its lowest levels of the year? who would have thought against this back drop? >> right. i mean, the fundamental support lowered oil prices, and when you think of what's going on geopolitically, most likely the last thing that any country's going to do is cut off their oil supplies, whether it be iraq, whether it be russia, whether it be anything in the middle east. all those countries rely those oil revenues. so, that's the last thing they're going to do. brent is actually very interesting because it broke some significant levels today. we've been trading in a range for the last couple years, really. now we're starting to get that breakdown. that could be significant in the oil markets. >> we've got to think through the consumer impact already, but sharon -- all right, so, we closed just below $103 for brent. are we going below $100? >> it looks like we could perhaps go below $100, but

what's more interesting for the consumer is gasoline, diesel, jet fuel, they're at four-year lows for this time of year. when you look at the fact that gasoline prices right now are 15 cents lower than in july, you'd think consumers would be elated. but yet, there's a survey out today that the convenient store owners did that show more pessimism than in july. so, i think all of the geopolitical events people are watching and the fact that they still don't think they have enough to make ends meet in some cases, lower gas prices aren't helping. >> true. >> you know, it's funny, you focus on the consumer and gas. i focus on the consumer and fashion. and to me, the name that stood out today was kate spade talking about margin pressure. and i think margin pressure is the untold story we're going to be hearing in the back half of the year. all of these companies that were able to raise their margins in the face of not being able to raise revenues over the last couple years now have nowhere to turn in terms of margins, and i think that's something we're going to continue to see pressure, probably not just in the fashion industry and the retail industry, but across all

industries. >> do you agree, kevin? >> we're halfway through the game, and i think that's a very good comment regarding margins. i say halfway through the game, i mean earnings. we're halfway through the year. i believe it will get to $115 in earnings. so, now when i need to expand and get more value is i need to see the pes go up from 17 to let's say 21 times. i can't get more margin. i need more pe expansion. how do i get there? >> well, looking at shares of king digital, i don't think you'll find much of it there, down 13% after hours. looks like revenue was a miss. and we'll have more details for you shortly. this, again, one of the names this week as we look to wrap up what kevin was just mentioning, the second quarter earnings season, we're moving into that retail-focus retail-focused, end of it now. 95% of the s&p 500 companies have already reported. the names now are in some of the riskier parts of the spast. we know retail has been under tremendous pressure against that backdrop. let's get out to morgan brennan

now with results from candy crush maker king digital. morgan, what happened? >> well, we're looking at the numbers right now. earnings per share 59 cents. that's in line with expectations from the street, but here's where it gets a little not so good. adjusted revenue $594 million. that's versus street expectations of $608 million. gross bookings $611 million. that's light. that's less than the $640 million that was expected. also, daily active users, 138 million. the street had been expecting 155 million. we're also light on monthly active users. looking at these numbers, also reducing outlook for the full year, and it looks like gross bookings are set to decline coming into the current quarter, q-3. one bright spot, $150 million special dividend has been announced. looking at the stock, it's trading down about 18% in the after-hours, kelly. back to you. >> all right, morgan. thank you. we want to get thoughts from lance umenoff of national, who

joins us to respond. lance that active users generally, daily active users, i should say, looks well below estimates. >> yeah. i think this is what's tough for them. you know, they said that they're really hurting on the facebook side. and you know what's funny is every day i get requests from friends to join them and play candy crush saga and i'm not interested. and i think, you know, it's not the newest thing. and with these games, it's what is the newest thing. and people can move on. the games are all very similar, so it's pretty easy to supplant it with another one. as i thought about this, i know that the key is the active users. they have to continue to grow or replace it with brand new games. so, notable here, obviously, they've got the other games are moving in, they also have an acquisition that they announced, which i think may be part of a way of bringing in new people who haven't been introduced to their games. >> interesting point. i guess no one here is interested in "bubble witch 2"

saga? >> not me. >> no, we're getting candy crushed here. i love the idea of the content space, but i think when you look at a king digital and a lot of these mobile makers who make these one hit wonders, they don't have the deep content bench that we see in activision, in ea, even at disney. and so, if you're going to be playing within the gaming space, i don't know why you'd want to go with these mobile companies that have sort of everything hanging on one title and aren't building up that property and that content to be evergreen. you just haven't seen the companies make the leap and i don't think it's a good long-term investment. >> i think that's absolutely right, and you only have to ask a 12-year-old like my son, or i'm like you, i don't like the facebook. i give them all the time on facebook. i have no interest. and you look at what consumers' appetite is for these games, it's very short-lived. and so, you want to have a company that has a ton of content, a lot to choose from and a one hit wonder, why would you want to go that way? >> did your son share or play candy crush at one point?

>> i think he played it so briefly. his attention span is -- he might have tried it. >> he's our new best indicator here. >> i know. right now i try to hide the phone. >> kevin, is this special dividend a mistake, $150 million? >> absolutely it's a mistake, and i'll tell you why. this company should be using its currency, whether it be its stocks or whether it uses its cash to go and acquire content. i mean, everybody's focused on the blazing problem. it's all the revenue's coming from one game. there's so much risk in that. they got themselves public, try to use the paper to buy more developers. putting the cash out tells me it's end-of-life story. they don't have better use for it but to return it to shareholders? >> that's exactly why i asked you. >> look, what i see is they did try to do two things. they tried to give the dividend, they also tried to expand with an acquisition, but ultimately i think what we're seeing here is correct, that it is very difficult to tie people into the long-term just with these casual

games, because there is not a richer story. there's no idea of a true sequel. when you look at the big console gaming manufacturers, they make story-based games which lead to the next game. >> absolutely right. >> so, king digital, just to update everybody, is trading down about 20% after hours. under the $15 mark. i was just trying to refresh myself as to where it went public, at what price level. we're clearly under water, though, from that. and lance, again, this is going to speak to the demand -- well, we were talking a little bit about ipos earlier. there was one that was just pulled after being on the market for six days, unique story, but some of the smaller ones haven't performed that well anyway. do you think this feeds into that story? >> the idea that ipos are struggling in the tech space? i don't think so. i think this is unique to candy crush and king. if they had good products, products that would hold people in long term from multiple

products in their line, i think they would do better. and maybe if they start acquiring things or look to acquire somebody who makes a richer gaming experience that isn't only predicated on power-ups and better, more lives within a tiny game. >> i think lance hit on something important. this is a product company. this is not a robust company. it's not the type of company that should be a public company. this is a company that should be milked as a cash cow, perhaps sold into somebody else's content portfolio or just milk for that cash flow for as long as it is. it is a product line, and i think that investment banks should be really careful about taking these kinds of companies public to begin with. >> carol mentioned ea and disney and i wonder what lance would choose as where do you go? >> just looking at blue mobile, by the way, the kardashian game. >> where should people be right now? where should investors be looking? >> first of all, i'm not an investment guy, but all i can say is that you look for something that is going to have

long-term possibilities. that is, you know, why do companies invest so much in franchises like "harry potter" and "star wars"? because the lines go out in 100 different directions, there is so many different possibilities, so many brand expansions. and when i look at king's games, they all seem like the exact same game different characters. >> and brian kelly, though, isn't that one strategy that could have or maybe could still work for them? i'm just going to bring up "bubble witch saga 2" again. >> maybe. listen, i look at these companies, this and a couple of the other ones that are one hit wonders, they're like biotech or pharma stocks, you've got to continually load that pipeline. what king has done by declaring that special dividend is they sort of told us, we can't find a new game. we can't find new content. let's cash out. and you're seeing it in the stock price. look it, it keeps going lower even though they announced a huge dividend. i'd be very careful in this name. >> do you have any ideas if they follow on from that as well? >> from what?

>> that follow on from the way king's trading, or at least the way that its ideas, as you're suggesting, have run out here? >> yeah, well, the follow-on to other companies? i think this is king-specific, number one. and i'd be curious to see. i don't have my data with me right now, but who the largest shareholders of this are. it wouldn't surprise me if it's part of the management team and this is one way to get the last little bit of milk out of the cow. >> all right. we'll leave it there for now. guys, thank you for your thoughts. again, a tough move for king, which is down about 23%, almost 24% after hours. brian kelly is coming up with the rest of the "fast money" crew at 5:00 p.m. stick around to that. they'll be talking to a top analyst about a new report that doesn't bode well for samsung and apple's global market share when it comes to mobile. don't miss that either. so, who has the bigger impact on the market right now? is it russian president vladimir putin or fed chair janet yellen? the geopolitical threat today, a massive and mysterious convoy of trucks in ukraine. but yellen could royal the

market if she raises interest rates too fast. the putin versus yellen takedown is next. plus, jim cramer says there's a need for corporate takeovers right now. >> there's really only one choice when you're faced with terrible growth conditions. that's to take advantage of what's out there and make some acquisitions. >> we're going to talk about that. also, candy crush maker king digital hammered after hours. lots more coming up. we'll be right back after a short break. you are watching cnbc, first in business worldwide. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a busines even more rewarding. ink from chase. so you can. ♪

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welcome back. markets have been watching closely the tensions between russia and ukraine, especially today as a convoy of russian trucks headed toward the border, russia claiming humanitarian aid, but nobody has verified that. markets moved lower this morning as a result. jeff cox says even seeing that, markets still care more about the fed and janet yellen than anything vladimir putin is doing. he joins us along with larry mcdonald from new edge usa, who says no, it's all about russia. jeff, convince me this is a janet yellen market. >> they say the pen is mightier than the sword, but i also think that the printing press is mightier as well. if you put janet yellen and

boris yeltsin in a ring of combat together, obviously, yeltsin's a bigger guy, a meman, but moving the markets, it's still about janet yellen. look, the math is simple here. when there's a lot of fed liquidity like we had last year, we had a big market. when there's not much fed liquidity or less as we see this year, it's a slower market. you know, when you look forward -- or when you look at things as they are now, if russia matters so much, if the middle east matters so much, as far as markets go, you would see a much bigger market move than you do now. this market is weathering the storm of geopolitics because the printing press is still going, interest rates are still near zero and janet yellen's still in control. >> so, larry, make your case. >> well, i think yeltsin's in the grave, first of all. >> i'm sorry. i'm sorry. >> yeah, he'd be more fun if we had him in power right now. but i would say, equity investors that aren't watching the credit markets are making a

big, big mistake right now. russia's one-year cds is trading up near 200 basis points in july, early july. it was down at 90. to start the year, it was at 60 bips. so, something's wrong. their cds is up 2 basis points for one year production? something's wrong there. equity investors should watch that. secondly, john martin, who runs our equity derivatives business pointed this out to me two weeks ago. the front month's vix future has been bid up, and also the two-month. so, investors are paying up for short-term protection on the vix future curve. that also tells me they're worried about something happening right now from russia. >> yeah, and my apologies to mr. putin, but i would for sure say maybe i should be apologipolapio yeltsin, actually. if you want to find dislocations in this market, they're everywhere, but the big thing that's outweighing all this is

sentiment. there's a bubble of confidence in the market now. this market is totally convinced that the fed is in control. and until that reality sets back in, and i do think reality is coming, i still think janet yellen is your personal here. >> i'm just going to bring in the panel. kevin, which do you think matters more? >> i really think that russia's the big story. and i'll tell you why. i'm a pragmatic value investors. i ask myself, where do the earnings come from the s&p that i own? 47% coming from overseas. much of that is europe. if putin keeps causing chaos into those markets, business leaders in europe and here stateside are going to pull their horns in. so, i start to worry about q-1 earnings next year. he's fully capable of having a lot of mischief in the winter when he can mess around with gas and oil supplies. he has a more -- he has more impact, more potential impact from me as an investor than any fed policy right now, because the fed's pretty well spent their entire holster. they've shot all their bullets.

now mr. putin can really cause some problems. >> carol, sharon, do you disagree? >> i think there's a differential between what inv t investors should be concerned about and what they are concerned about. >> absolutely. >> i think that the geopolitical outlook should be a bigger concern in the long term. however, the market's very short-term focused and we've seen a lot of things that the market probably should have been focused on and it's been entirely focused on the fed, and i don't see that changing any time in the near term, although that could have serious implications in the longer term. >> totally agree. >> sharon? >> i think longer term investors are just as concerned about all of it, and that's why many are paralyzed at this point and not sure where they want to put their money, keeping it either on the sidelines or keeping it just kind of where it's been and not really ready to make one move one way or the other, because there is so much going on that they're concerned about what to really follow next and what the next shoe is going to be that's going to drop on them. >> yeah. that's evidenced across in a number of ways, some people just staying out altogether, that.

where do we leave -- should we have people vote and see who wins? jeff, larry, what do you think? >> i'd say, you know, i would concur with our other guests that mentioned, you know, this isn't the '80s. this isn't the '90s, not even the 2000s. the u.s. as a percentage of global gdp is a much smaller player, so when things happen outside of the u.s., as equity investors, you have to be aware of that. and in the '80s and '90s, you could ignore international tensions and make a lot of money in the stock market. it's a different market today. >> yeah, that's for sure. we'll leave it there. thank you, guys. thanks, jeff. sorry, got to jump. loary, appreciate it. we have a "market alert" with dominic chu. >> we've got cree moving lower after the company posted weaker-than-expected fourth-quarter sales. in addition, its first-quarter guidance came in below wall street's expectations. you can see cree shares down about 6%. also, jds uniphase moving lower

as well. this is a fiber-optics component company. it posted better-than-expected fourth-quarter results, but its earnings and sales guidance for the first quarter was shy of expectations. those shares off their session lows, still down by 2.5%. now, a different story here for fossil, and this is a fashion accessory company. it's vacillating. it's moving higher a little bit. we'll call it an up-and-down move after posting better-than-expected second-quarter results. you can see their shares down by about 0.5% after being higher, kelly, earlier in the after-hours. back to you. >> thank you, dom. well, bigger is no longer better in retail, at least according to walmart, target, best buy, just some of the names opening smaller format stores now. so, why is one retailer doing the exact opposite, more than doubling its square footage? the ceo of exploration xl will join us next. and a new survey showing 40% of american workers would take less pay in exchange for a larger 401(k) contribution from their employer. we're skeptical, so we want you

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people find out state farm does car loans as well as they do insurance, our bank is through. good point. grab an edge. look there's two guys on the state farm borrow better banking sign. nope for real there's two dudes on the state farm borrow better banking sign. [ reporter ] breaking news from the state farm borrow better banking sign... we're seeing two men that have climbed the borrow better banking sign gentlemen please get down from the state farm borrow better banking sign. phil get the hose. okay he's getting the hose. alright, let's go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. that's borrowing better. welcome back. take a look at shares of king digital, down 22% after-hours. in case you missed it, that company just posting results that significantly missed street expectations, also paying out a special dividend that has many people wondering if it sees no better future use for its cash shares. at a time when many

retailers are doing away with the brick-and-mortar model or shrinking stores, destiny xl is staying true to its name and going bigger. the speciality retailer of big and tall men's apparel is taking its 3,000-square-foot stores, expanding them to 6,000 square feet and adding a 12,000-square-foot location in manhattan. here to explain why the chain is going against the retail grain in an exclusive interview is destiny xl's ceo david levin. welcome, david. >> welcome. thank you. >> so, people have joked a little bit that maybe this is just because you need more room for your bigger apparel. why is it that you're going bigger here, that you think this format, this concept can work in today's market? >> well, we're trying to create a one-stop shop for this guy where we can fully wardrobe him, and we have to cover a full gamete of customers. our customers can be making $30,000 a year, $3 million a year, they could be 18, they could be 70. the only thing they have in common is they're big and tall. so, to give this guy a full selection, a broad selection of

brands, it really requires about 6,000 square feet to get everything we need in to fulfill this guy's wardrobe needs. >> and when you say full service, do you mean you're actually going to go more towards a service model and not just one of selling the clothing? >> well, we're definitely moving towards service. we have extensive training programs for our salespeople. it's a two-month program when they join the company, before they can even start working in their own store. service is very key to us. it really connects with this guy. he's got -- this is a guy who's been challenged to find clothes that fit him right. we have a lot of technology in our clothes that really offer great quality. so, it is definitely a model where we're moving more towards service. >> okay. want to bring in the panel for their thoughts. kevin, do you buy into this idea? >> well, the question i ask, again being a numbers guy, on a gross margin per square foot business, when you double the size of your store, if i'm your investor, are you able to give me an accretive outcome?

am i going to make more money per square foot on a margin basis, because that sounds scary to me given the extra overhead. >> absolutely. because again, our stores at casual male, we're averaging about $650,000 per store, and now the dxl stores are coming in at $1.2 million, $1.8 million, $2.5 million, so we're really getting the bang for our buck. the sales per square foot has been down opposed to a casual male store, but we're getting double-digit comps on an annual basis and anticipate that going up. the biggest factor we're seeing in these stores is we're getting 50% higher transaction rates than we got from the casual male stores. that's a significant difference. we're gaining market share, we're getting a bigger share of his wallet because this guy's fully getting all the needs he wants on a shopping experience. >> david, this is carol roth. i commend you, first of all, on competing on service versus on price, because i think that there is a temptation by so many

retailers to go in the other direction, but i have a question in terms of the core customer. when you come to service and value, you have to really focus on what that core customer wants. when i think about a man, there's usually two types of men, there's the one that wants to get in and out really quickly, then there are the ones that are kind of fancy and they like a little bit more of the attention. but why would they shop with you, perhaps, versus a nordstrom or a neiman marcus? >> for us, it's strictly about the size selection. nordstroms and neiman marcus, they're not really catering to a guy of size, a guy who's over 6'3" or has a waist of a 42-inch or greater. and the beauty of the dxl stores is previously we were mostly driven by our house brands, which we're very proud of. we now have an extensive line of brands, over 40 brands, most of them exclusive. every store has a polo ralph lauren shop. we have michael kors, we have true religion, brooks brothers, tommy bahama. i could go on and on and on. these were brands that were never available to a guy of

size. and now, he is literally blown away when he comes in the stores and sees the selection. casual male had 600 choices. the xl stores have over 2,000 choices. >> wow. sharon? >> let me ask you this question. this is sharon epperson, married to one of those guys who's 6'5", and i've been in your stores for holiday shopping. but again, those brands at the time years ago were not available. how are you going to let this guy know that you're now offering these types of brands and let them know that's a completely different store? what you're describing is not the store i walked into. >> it's apples and oranges. and look, we've made a decision to invest quite a bit in marketing in the first years to raise the awareness, to get the traffic in the stores. once we get them in the first time, we own them. these customers are coming back 80% to 90% return rates for these customers. they love what they're seeing. but it costs money. we're starting with a new name, dxl, that has very little or no recognition when we started, and we're on tv, we're on radio. we've increased our marketing budget to 7% of sales versus 4%

of sales. we're going to do this for a few more years until we get that recognition level up. but the beauty of our brand is that it's a great experience. word of mouth goes around. these guys talk to their friends. >> fair point. david, we have got to go, but my last question would simply be the effect that retailer chains have been battling. you'll have people come in the store, be surprised, maybe buy a few things, but going forward do they instead start to use it as more of a showroom? >> i think we're in a good place right now. our internet business is extremely strong. we're driving a lot of traffic from the internet into the stores. these guys want to see what the experience is all about once they're in the store. and you know, internet for us is 20% of our revenue already, and that's with a large brick-and-mortar base. that's a very high percentage of sales. >> all right, we'll be watching to see if you can pull this one off. >> sending my guy there. >> a lot of square footage out there that can potentially be

absorbed as destination xl expands. thank you, david levin, ceo. and a story we continue to follow, the embattled head of the department of veterans affairs is continuing to remove and punish employees accused of manipulating veteran data at two va facilities featured in a cnbc exclusive investigation. dina has the details. >> kelly, the only thing the va is saying publicly is that they are proposing the removal and disciplinary actions against six employees who manipulated data in the cheyenne, wyoming, and ft. collins, colorado, vas. now, although this statement is the first of its kind, we dug a little deeper and found that no one besides the va and the va inspector general actually knows what that means. the va will not tell the media nor the house committee on veterans affairs exactly how they plan to actually punish these employees or whether anyone will be fired. now, here's what we do know. one of the individuals exposed in our report for personally changing thousands of veterans'

data was allowed to retire. she made over $95,000 last year and congressional sources tell us that she will be collecting a pension as well. now, the cheyenne va medical center hospital director who also knew about the issues based on the documentation that we obtained is still employed at that va facility. now, va will not comment on any of the specifics, citing privacy laws when it comes to federal employees. so once again, we're hiting a wall. we're trying to get answers. accountability is a huge issue here. it always has been for years with this department. and of course, you can see more about that in our documentary about the crisis at the department of veterans affairs. just go to investigationsinc.cnbc.com. kelly? >> dina, important work. thank you very much. what's it going to take for this market to pick up again? our jim cramer has an idea. >> takeovers need to happen because takeovers can spur the growth that's required to really ignite the stock market! can't do it alone with the economy. >> up next, we'll discuss

whether making deals is the only thing that can really send stocks to new highs. and would you trade a higher pay for a higher employer contribution to your 401(k)? more than half of americans said they would. you can weigh in at cnbc.com/vote and wait to see what the panel says about this. we needed 30 new hires for our call center.

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if you don't think the economy can drive the stock market higher, well, our own jim cramer has a solution. take a listen. >> takeovers need to happen. takeovers need to happen because takeovers can spur the growth that's required to really ignite this stock market! the simple fact is that growth is still slow all over. as stanley fischer, the fed's vice chairman and by far my favorite central banker said today when he talked about disappointing growth in the world's economies, there's really only one choice when you're faced with terrible growth conditions, and that's to take advantage of what's out there and make some acquisitions. >> and jim rattled off a list of companies and sectors where this could happen. so, are mergers and acquisitions the only way for companies to spur growth in today's economy? with us now is michael nemeroff along with the panel.

michael, good to see you. first of all, at the beginning of the year, a lot of people were skeptical that this long-foretold m&a boom was going to happen. now it seems it's really starting to happen, isn't it? >> yes, it really is. the strategic acquirers have upped the game. everybody's jumping into the pool. if you're not growing by acquisition, you have to slog through organic growth. it's not exciting to investors. so, virtually every household name that you see has jumped on the pile and is starting to participate in the acquisition game, as mr. cramer said. >> and i want to get into some of those names in a second, but to bring this back to the economy, this is not actually, or is it, a great reflection of the economy? >> well, i think it is a reflection of outlook of the economy. boards and ceos of large public companies don't typically get into the acquisition game unless they feel comfortable that good things are ahead in the u.s. economy and the global outlook. so, even if the economy seems like it's slow to grow, the trend line in corporate boardrooms and the advice being given by investment bankers is

growth is going forward in the world, in the united states, there's less political risk, there's less regulatory risk. and as a result, acquisitions happen at these levels. >> yeah, and we're starting to see some huge ones. carol? >> michael, as a former investment banker and my husband's a current m&a banker, when we're talking to boards, particularly with middle market companies, a lot of the geopolitical outlook doesn't come into play or is a factor. one of the things that we're looking at is synergies, bri bringing two companies together, seeing what kind of overhead we can cut out. to me, that's not necessarily a good sign for the economy. it says the economy is probably good enough, the capital availability is out there, capital's at a low cost and there are opportunities to consolidate and perhaps take some overhead out of the equation. >> and you mean people. >> i mean people and plants and the like. >> well, that's correct. in the middle market, which is largely driven by private equity and some strategic acquisition, the ton of cash available, the

incredibly historically low financing opportunities that are out there are really driving those deals. a lot of it's private equity. but you're exactly right, the ability to ring synergies and more profits out of the same thing is driving a lot of growth and a lot of boards and ceos believe if they don't participate, they're going to lose ground to their neighbors in these converging industries. >> right. i'm curious, kevin, what you think about this as a strategy for investing. a lot of people traditionally play in small caps because they thought they might get a good kind of takeout in one of those names, but that's a little bit risky. it amounts, more or less, to a gamble. is this good for the market generally? because in the past, and again, this time it's been so far a little bit different, but a lot of times, the acquirer would get hurt on some of these big plays. >> i've never been a big believer in selling synergy as a return to merge who companies and cutting costs, because really, you're making an excuse that you can't grow on your own, so that's problematic. and i will say, and i agree with what we just spoke about on

private equity, there's billions on the sidelines, but having invested with private equity, beside them and with them for decades now, i've learned a very important lesson. the funds that actually make most of the money are at a vintage when you're getting assets at a very low price. and i don't really find assets are particularly low priced anymore. when we were coming out of the chaos of 2008 and 2009 and you look seven years, eight years, nine years hence from now, those are the deals that have made the most money for shareholders. >> absolutely. >> buying with private equity and cheap leverage today is not going to give you the double-digit returns you expect. my only hope for all of this m&a activity is that it spurs the animal spirits that get me from a 17 price multiple to a 20-21 by the end of the year. then you're going to see a really happy kevin o'leary. >> a lot of other investors, too, sharon, perhaps. >> i just wonder how feasible that is and what our guest would say about that, because a lot of retail investors, average investors looking at this activity, and when these deals are announced, potentially, and

then they don't come through, that's when a lot of panic happens. and some of the tried and true names that they may be in, they're wondering should they still be there. so, that creates a lot of concern, i think, among many average and long-term investors about how do you actually play in this game. if you're not in the private equity space. >> speaking of which, michael, some of the blue chip names that are ones jim was talking about, a lot of big, well-known consumer companies, perhaps some of the tech names, too. if you own -- let's just call it the dow, for example -- is this going for you to be a source of another leg up or is it something you should be concerned about if some of these acquisitions aren't strategically sound? >> well, i think investors are finding the acquisition to driving price as well. i think for the first time in a long time, the investor community has been reacting favorably on a couple days' notices after deals of the acquirers, which hasn't happened in a long time, since like 2007. so, if you look at companies

that have been relying on stock buybacks, their dividends as their way to grow and use cash, using cash for acquisitions might make a lot of sense for their investor base and their investors are demanding it in a lot of cases. >> yeah. great point. thank you, michael nemeroff from vetter price. appreciate it. they're back. despite less than sizzling sales, burger king is bringing back chicken fries to its menu. people were ordering the stock up on cnbc.com today. that tells you what kind of day it was. we'll see if it cracks the "hot list," next. and would you make a deal for a smaller paycheck if your employer had a larger match for your retirement account? nearly half in one survey said yes. your chance to vote is just ahead. i'm only in my 60's.

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and learn more about the kinds of plans that will be here for you now -- and down the road. i have a lifetime of experience. so i know how important that is. welcome back. more bad news for millennials today. a special report on the state of college grads and jobs today was driving traffic to cnbc.com. for more, allen wastler, the site's managing editor, has the "hot list." >> this is a piece we picked up from our partners at "global post," and they have done an impressive bit of journalism here. they used a profile of a young man trying to make ends meet in youngstown, ohio, a community that's traditionally relied on manufacturing and that kind of industry to move forward. and they've used his profile to back into the whole problem of the 11 million underemployed folks out there, a large part of which are millennials trying to get out of school and get out, and you know, start making their

way in life. and wonderful thing. we've got lots of readers diving into it. but here's the melt ritric that caught my attention and made it on the hot list. people who are clicking on the story are basically reading the whole thing. a lot of times we get people who blast in, click, they're in and out. this one, they're reading the whole thing. >> how can you tell? is it length of time or how much scrolling down? >> length of time. and when i last checked, this was getting over two minutes, which doesn't seem like a lot, but in an internet age, that's forever, okay? i know a lot of my writers on my staff would die for it. anyway, number two on the list was our wrap-up of robin williams, the tragic situation. we had lots of guests on air today. we've wrapped up all their comments about his contributions artistically and economically. and finally, you pegged it, chicken fries. our readers are all about food. burger king's bringing back the chicken fries, taking back the mcdonald's mcrib and wendy's pretzel bacon cheeseburger tactic where they bring back old products and make them new again. there you go, kelly. >> i must be living in a cave

because i didn't even know about the chicken fries. >> oh, no. chicken fries, if you've ever had one, it's like ambrosia. you'll love it. with a good barbecue sauce? oh, god, that's great! >> allen, good to see you. >> take care, kelly. >> oh, man. it's always sort of today's sign of the apocalypse, two minutes. anyway, when it comes to your 401(k), less could be more. more than 40% of americans in a new survey say they would take less pay if it means their employers would pour more into building a bigger nest egg for them. we want to know, would you trade your pay for a higher contribution? head to cnbc.com/vote. that's coming up next. and congress did not reauthorize the export-import bank before it left for recess. tomorrow we'll talk to the chair of that bank, fred hochberg, and we'll ask him what happens next.

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ken tweets, no, he wouldn't take it. the match is small and doesn't help for a cost of living hike. trade tweets, unless you are maced out on contribution, why would you take pay for a few percentage point better? tom trooets tweets, i made enough money so i would. people that live paycheck to paycheck couldn't. panel, what say you? >> i don't think most people don't understand how the whole things thing works. when i talk to people how much they can contribute overall to their 401k, a lot don't know if they are 50 or older an extra 50 on top of that, they don't know what the contribution limits are. they may not realize their company offers a matching contribution. if they do, they may not be contributeing enough to get to the max. i'm curious how many people are contributing to their 401k or say this sounds like a good

idea. >> part one sounds leak you are doing what you can. part two, a lot of people after the financial crisis saw their employers cut that match when times got tough. they haven't necessarily reinstated that. >> but they have. fidelity is saying 80% of the company that it runs plans for, that's some 20,000 companies, so we're talking 16,000 companies, they do have a matching contribution they offer their employees, so a lot of folks may not realize, yes, it was cut after the financial crisis. now it's back. this survey may have been more of a marketing too many for that as well. >> a lot of entrepreneurs, including myself, make a trade similar to this. because you can have a profit sharing plan that allows you instead of taking money out as part of your salary or bonus to put more than that away. i think the maximum this year is up to something like $52,000 depending on the amount of earning. so there are a lot of entrepreneurs, if you are a small business owner out there, you can be looking into these

profit sharing plans, you can basically do these matching for yourself. >> that's a great point. let's say i take home $1 no,000 month and have the choice of $50 in salary or putting $100 away or $50 away into my 401k. is there a question which within i should take. >> i like this deal. i don't want you spending that on a new pair of shoes, i want to force you to save it. i spend a fair amount of my time talking to people in mid-20s trying to find their way in business and their careers and the one thing we haven't taught them at a younger age is you have to start taking care of yourself for the future. if you start at an early age and i don't care what the metric is that forces you not to spend it and let it start to become basically to collect interest. >> a lot say it's that payment, between that and my car payment and my rent.

>> and their iphones and deluxe iphone and iphone accessories. >> look, first of all, every, you are getting into a very slippery slope. most people are spending too much and they can't afford, including getting degrees that don't have any value in terms of generating income. that's whole different discussion. >> no, but you are right. >> most people, go to a trade school. you should be learning how to weld rather than getting a leb ral arts degree. i'm sorry to tell you, but that's true. >> it's discipline and it taxi that money away from you. if you have a smaller amount, you find a way to make it work. >> the results of the survey here i think is now closed. 15% would not trade their higher pay for a 401k. >> people don't understand what this means from the employer perfect e specttive, that might help to build some loyalty in

the employee as well. maybe they want me to be. you start off at a high salary. it may not go very far, maybe you will not. >> and it will be better to have that money contributing as opposed to stock options. >> it's free money. you definitely don't want to give it up. then will you have more money in the long run. people have to be sophisticated. definitely for entrepreneurs, doing this is a no brainer. >> thanks, guys. up next, a flurry of earnings, cisco among the big names posting results. a panel will tell us what's on their radar when we come right back. just take a closer look. it works how you want to work. .

welcome back. time to get some final thoughts. we can't stop talking about 401ks, kevin, what are you thinking about? >> i'm looking for any signals capex is slowing anywhere in the economy, whether it be tech or spending or any sector of the defense. because that will tell me what the rest of the year has happened. has anything scared a ceo from making an expenditure? i want to know i got my buck 15 on the s&p earnings and i'll be okay. >> it will be a steeper climb

after this candy crush. the maker of the game after the bell missed expectation shares after hours ouch. guys. >> i'm going up the income statement, kevin is looking at eps. i'm looking at margins. i want to hear from people like wal-mart and nordstrom what they're saying about mar jen pressure, something i will be keeping a very close eye on in the coming dis and weeks and watching destiny xl. >> i'm also watching these gas prices, i'm fascinated at the fact they keep falling. the consumer is rather pessimistic. what is this going to mean ultimately down the road in terms of companies as well, it will be interesting to see diesel, jet fuel at the prices for four years for the summer months. >> amazing, time for back-to-school season for parts of the country as well. thank you, everybody, stick around, tune into cnbc tonight.

kevin o'leary is on for "shark tank tuesday." "fast money" is coming up in a few moments. sarah eisen, what's on tap? >> we're going to talk about apple and samsung, potentially losing market share big time, some of the local players in chosen without the right price points. the traders have opposing views on apple. we are going to have a debate, kelly. >> good stuff. over to you, guys. >> all right, fast money starts right now live from the nasdaq market site in new york's time's square, i'm sarah eisen in today for melissa lee. our traders sim tee more, dan nathan, container feinerman, ryan kelly. tonight, germany the once shining star of europe showing weakness after a new report indicated investment morale is at the lowest level since december, 2012. that sent the dax and germany and much of europe into the red. so is the u.s. still the best pla is to invest right now?