"gq." social media erupted with complaints from customers, many of them parents who have the -- and by the way, apparently the model on the cover was a topless lady in the "blurred lines" video. thanks for watching. "closing bell" is next. welcome to the "closing bell." >> hey there, kelly. thank vladimir putin for the green arrows today. what? the russian president was calming public statements about tensions in ukraine, but why do investors buy anything this guy says at this point? we'll have more on the man that's moving markets all over the globe. what's wrong with walmart? the company cutting the forecast says it hasn't performed, could that be because shopping isn't as good a experience anymore.

and. and we're going to get another good snapshot of the retail world in about at hon when j.c. penney and nordstrom both report. j.c. penney's continue toss bite out from the very deep hole it dug for itself. with an hour to go in markets, the dow jones industrial average up about 49 points this hour, the s&p adding about seven, the knead dab is up 14. we're keeping a close eye on the rate space. watching oil, scott, looking for what's driving, what is the catalyst in this market. >> joins us now, steve crawl, cnbc contributors heather hughes and great, and todd saldoni, and yes, of course our own rick

santelli. >> whether it's iraq. >> well, the good news about that is it's going to force interest rates to -- the fed can only do one and do at the most, and so you're going to force investors to put money into stocks, bonds and junk bonds. in light of what's happened, especially? germany, flirting with a 1% mark, you think that ten-year rate could go? >> and probably the key is it

will probably stay below 250. you see retail sales, you see china, japan, as scott mentioned, all the other bad spots, so there's really a lot of dollars out there, and very little demand for that. >> but you think that's a good thing for stocks. why? >> eventually. when you put your money in the bank and it sits there, last year the market was up 30%, and now we're about flat on the year. it forces people to look for good stories. not necessarily we're going to have a great bull market. as i said probably year end we'll be up 3, but people will chase yield and assets. if rates go below 2%, as steve says they might, that -- as you see it, is the u.s. economy getting better? or is it getting worse? >> well, i think it's getting better, which makes it that much

more of a puzzle to explain i think you have a decoupling. >> we've had good economic news and acceleration, top-line growth for u.s. corporates. at the same time, the bad news in europe, and let's not forget japan, they had a terrible second quarter -- excuse me, they had a terrible second quarter in the calendar 2014, and increasing the sort of flight to quality and downward pressure on global bond yields. i see a world where they're pulling down long-term rates, even as good domestic news provides fundamental supports for stocks. >> against the backdrop of the ten-year, the 30-year went up 3.2%, rick you heard what greg just said, decoupling, the fact these rates are so low doesn't have to be bad news for the stock market. do you believe it? >> no, i think it's the only reason. a baby a years old will be growing, but not going to be

dunking a basketball net anytime soon. certainly we're growing, but not growing very tall. flash points, you know, i understand the human element, but i think the flat points that the markets pay more attention to in treasuries are a debt, horrible tax policy, horrible immigration policy, horrible political factions that can't get anything done. those are really the flash points, but they're difficult, and nobody seems to be able to iron them out. so the geopolitics is an easy fit to put in the puzzle. i think what's going on with europe really exemplifies that. you look at italy's gdp, france's gdp, germany's they've been there done it, just like they've had 4% and we've had negative numbers. in the end the interest rate complex is spot on, but it isn't a positive story. we're positively better than everybody else, but nowhere near as tall as we should be standing. >> so, todd, given what rick

just said, how are you able to remain as bullish as you apparently are about u.s. stocks? it's the price action. yet the mark still is only a few percentage points off its high, yet in the context of this, we are seeing a ton of caution out there. bank of america, merrill lynch surveyed global fund manager, they just raised cash positions that were 5%, which historically has been bullish. you look in the options market, it's unbelievable, even though we just had a pullback like every over pullback we've seen, we saw a huge surge in bets against individual stocks, via put options, relative to the call options. the highest level in fact since june 2012. look at short interest on s&p 500 component names. against bets gentz answer individual stock, it's up 25% since the april 12 low,

yesterday the s&p is up 40%. >> a ton of portfolio -- -- >> but todd -- >> in response for the flash ploints. >> todd, here's what i'm wondering, though, this is one of the most hated -- but i'm seeing if we do have periods of corrections, they may be happening within each sector and not just from the broader market perspective. do you think that could be the new standard correction? on you do you think it would be a brought market correction? >> sure, as you mentioned, we have seen these corrections, most recently you call it small caps, or the russell 2000 by about 10%, or it can be individual sectors. we saw biotech and social networking stocks take a hit. so i think we do have vulnerable

within sectors, but broad are marketwise, i think we're in a good position. >> corporate profits up 9%, 1.7 trillion cash still sitting on the sidelines, but the question is we are on light volume, and the retail investor i'm hearing at the end of the day is still on the sidelines since 2009 even. i think the institutional investor may be in the driver's seat right now. >> they could be, because they just raised a ton of cash this past month. >> let's hear from steve. >> the retail investor that represents future buying power. >> steve? >> years ago, when people expected a market crash, you can put your money in money market -- nowadays you get nothing. time and price will price -- and

then we'll see -- but right now the market is acting much better than i would have expected and holding in there, as you get these group corrections. all negative things that you mentioned. and we are growing, a bit better than expected. that's going to stop abruptly and people will come into the jung bond market, and that's what the retirement people want. >> we'll leave it there for now. a quick last word, heather? >> i guess in order to have a second half recovery for real economic prosperity we need wage growth. that would be the key drivers going forward. >> if we don't get that it will be a long time before the fed takes the punch bowl away.

>> as if anybody believes they'll take it away anytime soon. >> i know. and we'll very velocity and inflation, and then janet yellen will be pulling her hair out. >> i'm happy you got the last word, guys, thanks. some of the big movers for us. >> biotech has been outperforming the broader markets. that's up about 1% today. adding for the gains, up more than 3% so far this week. amgen is up more than 3% today, after investors shall rugged off disappointing results for the blood cancer treatment.

also getting a fights. gillia, regen ron, vertex and bioagain, in fact the only big both tech that's not trading. taz about flag. analysts tell me biotechs are on the move because of an overall good earnings season. we have about 50 minutes to go before the bell rings. the dow holding on to a pretty decent gain. that's a third of a percent. now, going back to an issue we were just discussing, the u.s. versus europe. which is the better place for investors right now? dom chu and seema mody will go head to head in a classic "closing bell" debate. also walmart slashing guidance because of sliding

store in the united states. what they need to do to win shopper back. >> the state of the consumer, when, instant analysis and reaction to those numbers coming up. keep it right here. having the cloud allows us to rapid prototype a lot of ideas. being able to pay as we go was crucial for a start up. having to fork out a lot of money up front was risky. you can launch a feature really quick, and if the feature doesn't work, we haven't lost anything and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. ideas can be tried and tried again on the ibm cloud. the ibm cloud is the cloud for business. we're changing the way we do business, with startup ny. we've created tax free zones throughout the state. and startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure.

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sglooz home depot, some of the biotech names, and amgen, and even marriott, scott, at record highs at some point in the session. >> another quarter, another decline for walmart. cord any raining looking at how that's impacting the bottom line. >> you know what, could have been worse. second quarter earning of 1.21, revenue of 120.1 billion. beaten won sense. coming in flat for the quarter. ing the result traffic only

1.1%, increased by the same amount. from 510 to 545 to 490515. and it's because of higher health carry costs, that we saw that lower guidance. the company had originally estimated 330 millions, and it calls on e-commerce as it continued strong point lowering expecting comps for the current quarter. >> that's certainly challenging. what is wrong as walmart? are the u.s. stores up to snuff? is it no longer a good

experience? joining us is laura hefner, and pete lang. welcome to you both. laura, is it one thing? is it many things ailing walmart? >> it's many things. it's no secret that the store experience isn't what walmart executives watch it to be, and there's a growing chorus of shoppers that are pretty dissatisfied with that, but it doesn't mean it's not fixable. >> that's exactly the question, which is if i am running walmart, do i say we have to do a massive investment program in our stores and hope shareholders bear with us and this will bear fruit? is it even clear what that strategy should be? >> they are the ticket for growth. the shopper hayes changed the supercenters are not in demand as they used to be. they're not building anymore, or very few, but they have 3300-plus existing supercenters, they're not going to sit there

and let them fall fallow. >> a i'm walmart, costco, maybe my biggest problem is amazon, and there's not anything i can do about it, dirty store or otherwise. >> i agree. when you look at the good. dp numbers, they're just not growing. is it the case, an am sop prime is paying $79 or $99 a year, is that who walmart is losing share to? but in walmart's case, is it still the enter net phenomenon? >> absolutely not. when you look at walmart, you're looking at domestic sales of $500 billion. e-commerce are only about $10 billion, nevertheless up about 25%, so that's a great growth

area for walmart, but really not a competitor with amazon at this point in time. in the future we'll see them grow exponentially, especially with greg penner as vice chair on the board. >> laura, you were going to disagree with pete, right? >> actually i kind of agree. i don'tening that amazon is walmart's biggest competitor right now. it is the economy, it is a pressure chopper, and the dollar store segment is their toughest competitor at the moment. they're implementing services and programs to better serve that customer, but in the short term, it's not amazon. >> if you had don't have to go to the physical store, why bother? why bother dealing with a store that's more liquiditiered? why bother dealing with the customer service that may not be up to par? why bother with enough it? how can those stores possibly

fix that mind-set? >> that's a small percentage of the population. 97% of people are still shopping in stores. >> absolutely. i agree 100%. >> i'm just curious, if that's the case, not long ago we were talking about the dollar stores and whether their strong run had come to an end. are they and walmart suffering from the same thing? is the pie just shrinking so much there are no winners at all in that space? pete? >> i don't think so. i think we're going to see up kicks in demand. i'm not really worried about walmart's stock price because of phenomenal buyback, $16 billion buyback program. in the first quarter they had about $650 billion worth of stock that was repurchased -- i'm sorry, million. and as far as demand, we'll see it remain static until about

12022, and then you'll see some upkicks in domestic demand. having said that, the challenge for walmart is going to be growing internationally as well as from the e-commerce position. >> did you say 2022? >> i think we're really going to see some fundamental changes based on the baby boomers. a lot of what's happening with so many baby boomers. >> it's fascinating. i wanted to make sure i heard that right. >> that's a long time. >> you have to hold on. that's eight years. >> basically that's when we're going to see some demographic changes in the population base. what's happening in our population is the elderly or retires are deaccumulating, not accumulating. that's really bringing down our gdp and retail sales, but 2022, we'll see a huge shift in that momentum, but walmart os got some great opportunity again overseas, great opportunity with

these small store segments and also with e-commerce. he can really push the numbers there. >> that's fascinating. thank you. a broader look, perhaps at what'sation retail more broadly. bye, guys. 40 minutes to go. the dow is up 53 points, seven on the -- >> shares of red robin plunging on a big earnings miss as fewer people visited the restaurants. that's on the heels of walmart's in-store traffic declines. are they canaries in the coal mine when it comes to the health of the consumer and the economy? that is next. and the worst idea since new coke. that's what somebody here is saying about a new push to ease prison sentences for white collar criminals. we'll hear both sides of that debate. plus don't miss your chance to weigh in at cnbc.com/vote. wg faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better

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there it is, the dow is up 55 points, s&p 1953, kelly, seven points. and let's get a check on some of the big movers with dominic chu. >> hey, it seems like such a long time ago we had all that turmoil. let's stark with berkshire hathaway. class a shares are moufg up above 200 for the first time ever.

a nice sticker shock price, it is perigo, this is a maker of over-the-counter branded drugs, and you can see those shares up 7% at session highs right now. muling genetics is gaining ground after it's they're ready to testing a possible human obowla vaccine. and we'll cap things off with red robin after it plummeted the surprise drop. red robin shares off that session low. back over to you guys. >> and we're going to pick up right there, dom. are red robin's problems symptomatic of larger problems? >> joining us to discuss that is john herman, director of interest rates sales and trading at mitts beneficiaryu ufj securities. greg greenburg, to you first, what do you think?

emblematic of something bigger? >> i think this is a red robin issue. when you look at some of the restaurant stocks, they're trading like team retailers, but in the industry you have to be the flavor of the month and people's tastes changes. everybody is looking at which i pot lace, so it's not easy being in the restaurant chase, and in an era where you have beef prices rising and every restaurant around is giving away free appetizers. >> the competition is unbelievable. i can't even think of the number of burger joints there are, including one called burger joint. >> yeah, there are some. greg, i love your line, they're the new teen retailers. ouch. >> you have to be on target all the time. sales did rise at red robin. it wasn't all together a massively horrible quarter. they missed wall street about 22 cents, but street numbers come

and go. but you know, it's tough when beef prices are rising. i think about 9% or 10% of the shares are sold short, so you can't read too much into any quarterly earnings report. >> john, that is the question we would like you to address more broadly, which is having a slew of misses on the food side, the retail sigh and also the weak retail sales report for july, what's going on here? how disappointing has this trend been? >> i think we shouldn't get too overly pessimistic. the key thing is here on the cyclical side, the economy is really still in a pretty debt recovery. the jolts index, job openings bakley at a seven-year high, jobless claims, payroll will be averaging 220,000 per month this year. very decent, best since 1999. i wouldn't really get too pessimistic on anything.

i think fourth quarter, what we're looking for, much stronger quarter for consumer spending. we think the seasonal hiring will be very, very good this year for the fourth quarter, very strong spending as well in that quarter. i think in general, the kind of points you are emphasizing, this inconsistency quarter to quarter, month to month, i think there's a few things at play there. i think several of them are structural in nature. i think we have the ability as a country to sort of solve a lot of these things. one simple solution would be basically to really amp up the h 1 b visa program, bring in a lot of really talented smart, energetic young people, very well-educated young people, get them working. there's tons of jobs openings for them. this thing would get going. >> john, correct me if i'm wrong. i thought one of the bright spots witness retail was restaurants, that people are still spending money at restaurants, but it's become much more competitive.

it's become much more selective and price sensitive, and there would be clear haves and have-nots, and red robin, perhaps, is an example of at least right now, even though sales as has been pointed out, is up, may is a have-not in the cycle. i would definitely agree with that. when you look at the consumer side, you see from all the different demographics, you're seeing people going to restaurants with greater frequency. that's the luxury they are availing themselves of. when we look past it, again we're looking for really solid quarter. in the fourth quarter for consumer spending, i think what we need to see, though, we'd like to see in this age bracket from, say, 25 to 39, in that age bracket, we're seeing it slowly recover. it kind of went through a bust between 2005, and 2012, 2013, it's recover now, will take about another 15 years or so to get back to the baby boomer peak, but we can step that up. we need that sweet spot for

spending, whether it's on -- >> here i thought 2022 was a long-term outlook. greg, we've got to leave it there, but can a company like red robin and to hang on? >> sure, they can come back. you look at some of the other burger players, sonic, those burger joints are doing final. just -- thanks, guys. >> i'll second the smash burger thing. 30 minutes to go, and we have half an hour to go. scott, i can't hear you. >> can you hear me now? >> now i can. yes. stocks turned around early this morning. after vladimir putin easing his tough talk over ukraine. why on earth should investors believe anything he says. >> could kinder morgan spark a

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the dow is up about 16 points. same goes for the s&p 500, which is now pretty much at that intraday high as well, on one of the best weeks we've had, as scott mentioned in quite some time. now, master limited partnerships, mlps as they're known, have been in the news this week on the heels of the kinder morgan consolidation deal. today at a time when some are questioning the future of this asset class. joining us now in a first on cnbc interview is managing director of tortoise -- welcome. >> thank you for having me. >> it's only a decade for this to be something of a household name. what can you think of the news on kinder this week? >> it was a surprising move, because the space has been going the other direction, putting more assets into the mlp class, rather than putting but it was something that was a unique fit

for the situation they were in, looking to reduce their cost to capital. >> is that something that would be an issue for the other guys in the future. >> we think it's fairly unique to kinder morgan. they've had a lot of success raising their dividend. so unique to them. never say never, but generally speaking, we think the trend will continue to be more assets moving into the mlp space rather than, you know, out. >> they may, matthew, be doing this, and i think richard kinder even mentioned this. >> i can't hear him. >> why don't you go ahead, kelly. >> we're work on that for a second. >> you handle it down there. you're good. >> we've been having technical issues. le met judd ask, as people are wonder, whether you can see season -- but also if there's pressure from washington, i understand that a lot of

republicans may maybe gains in the mid terms that could protect the existence of this kind of structure, but there has been pushback about anything that lowers the tax bills, whether it's inverting or outvertebraing. what is your response? >> the first question is on the sustainable. you have about a 5% payout, and those dividends are growing, call it 6% to 8% goods forward. we have good visibility into that growth continuing, so not just a question of sustainable, but growth, and there's a lot of visibility. there's a tres amount being built to mean the demands from the producing community. >> that's what raises the second issue, which is as more of this compare comes on and this asset class grows, is the u.s. treasury going to lose out, because it's being funneled to investors. >> great questions, we get that one a lot. the trend has been to make more things qualifying income rather

than less. recently senator kuhn has proposed the parity act which would make renewal assets, so between that and the i.r.s. issues a lot of private letter rulings, again to make more sources of income qualifying for mlps rather than less, we feel pretty confident that the mlp tax status will remain intact. >> last question, then, how big has this asset class become? how much retail participate? what can you just tell you about this asset class today? >> so tortoise brought the first mlp-dedicated fund, the space was about 50 billion of market cap. roll the tape forward to today, it's almost $600 billion, so a tremendous growth in the space, again because of the need for infrastructure, and the demand from investors to have a good current income in this low interest rate environment, and one that's protected when interest rates do move up. so you're protected from

interest rate risk as well. >> and the environmental and safety factors associated with pipe loons having 'me-- lines having amealated to some extent, but what about pipelines and the extent to which, as more fuel is moving -- and gas is moving this way, how do investors deal with those risks. >> as far as pipeline transportation it's the safest way to move energy around our country. we spend a lot of time talking to our management teams to understand what they're doing from a maintenance of their pipeline standpoint, to ensure they're spending proper capital. we track publicly available statistics, and rates of pipeline leakage have been actually declining over time. so, the space is growing a lot, but we feel very good about, you know, maintenance, and that it's sufficiently being done. >> adespite your name, you guys were certainly ahead of the

curve. i was going to try to make a rabbit pun there, but you jumpeded ahead of this asset class, now $600 billion. congratulations, our precious as well, as we keep an eye on this space as it growing quite significantly. thank you so much for being here. >> thank you so much for having us. we've got about 20 minutes to go before the closing bell which you'll see tortoise ringing here. scott? >> impressive. european stocking have dramatically underperformed the s&p 500, so there is a value there now, or still better off investing here in the united states? dom chu and seema mody, they're going to debate it, next. and what are big investors buying and selling these days? the disclosure filing deadline is moments away. we're starting to get the market moving news already. much more of that will be coming up. keep it right here. you're watching krmt nbc, first in business worldwide. i'm only in my 60's.

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i'm going first. >> all right. go first. i know at first glance it doesn't look that appealing, slowing growth. we got those numbers overnight, but some market strategists say hey, europe has a supportive monetary policy that's aimed at stimulating the economy, and in a bold move, mario drawingi introduced negative interest rates to push banks to loan more money. that will continue until europe sees better days. second reason you might want to stay bullish is on earnings. and on average. 350 stock index are forecasted to show 8.5 jump in earnings this year. that, by the way, guys, higher than the average for companies in the u.s., companies on the s&p 500, so clearly disappointing data over the past couple weeks, but estimates for earnings still higher. >> here's what i got in responsible to that, yes, maybe negative interest rates are a big deal, but let's not kid

ourselves here. the u.s. federal reserve still has accommodative monetary policy here. >> they both do. >> so we'll call that maybe a watch. what i would say in response is where would you want to be in the proexis -- gross domestic product, the measure of economic output. things are looking shaky right now. maybe in the u.s. things don't look great, but we are still growing, and corporate earnings are gruing as well, as you look at what's happening around the world, you have italy slipping into recession german business confidences coming down because of the russia and ucrepe. i would just say this, you throw more geopolitical risk into the mix, and one play people go, when everybody else goes all haywire is in the u.s. markets. the u.s. treasury market, so even if global equities go down across the board, the u.s. will outperform, because it is in the world of many strait gists, the

cleanest dirty shirt in the hamper. >> is that growth already priced in? the germany dax down 8%, the cac is down about 8% as well. does that create a buying opportunity? >> i would just say, scott, kelly, that the s&p 500 trades at a discount valuation. >> pretty much in line. >> we should have had people vote on this one. >> i can see that coming up. i can see that coming up soon. >> we should have had that. >> why didn't you tell us? >> i think it's u.s. i'm just saying. >> i hear people say there's no value in europe, i mean, obviously, but the potential of many more problems, too, if you look at what the data has been lately, whether it's france, germany, italy or elsewhere, you have to be a bit worried or nervous if you're putting money into the european markets, or you think it's a great opportunity, because they have sold off. >> right, exactly. >> who knows.

>> isn't there a chinese proverb, something along those lines. >> prices, opportunities -- yeah, that's the one. >> exactly. >> it could change, of course. >> thanks, guys. we have about 15 minutes or so before the closing bell rings, the dow jones industrial average hanging on to a gain of more than 51 points. again, stocks are working on the best week in six. it's been a pretty good run, at least this week. it may have something to do with russian president vladimir putin cooling off rhetoric over ukraine. investors seem to like what they hear, sending stocks higher, but putin has a history of saying one thing and doing another. are investors making a being mistake by trusting him this time? that is coming up on "closing bell." at managing my symptoms, except that managing my symptoms was all i was doing. when i finally told my doctor, he said my crohn's was not under control.

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there's your market picture, the dow has been in a tight range for at least the last hour. despite the fact there are flashpoints of concern, but that's the picture as it assistants. jeremy hit from old black heap and rich peterson.

you know, you go down the laundry list of all these works, and the market doesn't seem to care about any of it. maybe the only thing out there that really is of great concern is the fed and what it ultimately does, how it does it and when it does it. >> yeah, that's definitely the largest risk. that's the 900-pound gorilla in the room. i mean, it's fed policy mismatch. certainly geo -- i think it's going to damp down a bit. i think we're going to be a range, because we haven't reacted very well to a pretty good earnings season so far.

in any case, how much -- >> let me previous by saying that the markets are shrugging off geopolitics. falling -- the propelling equity. on the s&p, now we're closer to 2000, than to 1900. gin, retail -- we're going to work that through. we haven't -- so rich, real quick, just to be clear, for the second quarter, where do we assistant? we're more than halfway through

the third quarter. >> when we come down from the sxekdations, but again, two qs, over 90% of the companies have reported. all that's going to be coming back with the back to school period. >> i think we're going to let you go. we have a developing story world trade center to get on the air right now and see if the market reacts to news that the iraqi minister al mall can i, apparently is stepping down. i don't have a whole lot of information in front of me here. there was clearly a new prime

minister was named there was some thought he would fight to the end and not leave, which would have a whole bunch of ramifications, potentially on the oil market, but certainly the situation within iraq, if there was going to be a civil war in iraq, as we're already dealing with a developing situation of ref giles and isis, and i'm told that john harwood is ready. john, this is a significant development? >> the second piece of good news, the obama administration, scott in the last 24 hours, the first was that they do not need to send troops to break the siege of those refugees in iraq, but this is something that the administration heart arguing is a precondition for a solution that, instead of a military solution, politically what you have you have to is a -- and

neuroty al ma'am i can i had not do that. the. nuri al malaki had not done that, and the hope is the new government will -- if that's the case, it would go a long way to resolving or eliminating the threat from isis, but all we know is iraqi state tv has flashed a banner saying that nuri al malaki has resigned. he has not spoken on tv yet. >> a more unified situation in iraq would take some of the onus off the president and thus our own involvement there as well. correct? that's pretty much what you're saying here, correct? >> yes, that's exactly what i'm saying. >> okay. john, thanks. up next, we're back with the closing countdown. being able to pay as we go was crucial for a start up.

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>> because there's no other place to put money, the united states is the best investment vehicle if you want to be in the stock market right now. today we saw disappointing -- the trend has been down for more than a month, that's certainly very, very worrisome, we have seen the market move on ukraine. believe it or not, it moved preopen, with vladimir putin speaking in ukraine, speaking in yalta saying he would do whatever he could to stop bloodshed. so we are moving on economic numbers related to the united states, and moving on some numbers related to europe. just amazing when you see moves around the rates. even a prediction from a gentleman on the show this hour, that you could go below 2% on the ten-year.

>> we're at 2.4%, new lows on the ten-year, on the yield on the ten-year, german bund did go below 1%. we have not seen that in 200 years, scott. bob, thanks so much. that does it for ugh. the next hour begins now. thank you, scott, welcome to "closing bell", we're finishing up another day in the green for wall street. it looks like the dow jones industrial average going out with a gain of about 61 points. that means it's pretty much going out on a session high. the s&p 500 meanwhile, adding more than 18 points, so it is back up above 1950, the nasdaq meanwhile, adding about 18 points, similar percentage gains, and about on.4. joining us today, as we await earnings from nordstrom and j.c. penney's, jon najarian, and our

own kayla tausche, and guy adami. wake these markets up. >> i think last time we talked about being a pivot level for the s&p, within a couple points, that proved to be the days. and we've bounced. the bounce is more robust than i thought it would be, but we bounced nonetheless. i will say this to you and have said it now for a long time. i think yields are going down. i know you have heard it all day long, i've been saying it for a while, you look at what's going on in germany. at some point that disconnect between interest investigates here and globally have to come home to roost, i think, in the equity market. >> a big theme of the market was money going into some j.c. penney's after hours, we should know, those shares are moving

higher, wow, to the tune of 10% trading -- >> yes! bang! >> i think dr. jay has -- >> yeah, i got some of that today. yeah. they crushed. i mean, this looks like a real beat, because revenue up big, as well as the bottom line there, they're expecting to lose about a dollar, estimates were, and here they are coming occupy i believe at 78 cents. a phenomenal move by them. i was debating this one today at halftime. >> we wanted to get those full numbers before we totally dig into this. this comes in the back drop of a weaker report from macy's, some high-profile misses in the retail space, raising the question as to whether there's a problem with u.s. consumers or whether some are executing well in this environment and others are not. if you're j.c. penney, it might be easier to surpass expectations here. i think our corti reagan is ready with the report. >> that's right, kelly, as we

look at j.c. pen yes, sir areas earnings, a loss of 75 cents. tess better than we expected. this is on revenue of 2.8 billion. better than expected. same dr story sales up 6%, just a hair better than expectations. the company saying comparable same-store sales, for the third quarter, which was the same basic guidance they gave for this quarter, so it does look as mr. al man's plan has stemmed the bleeding. online sales of 16 points, 7%, that's a good number, but actually a bit of a slowdown. kelly, as we get more, we'll bring it to you, but for right now, it looks pretty good. >> courtney, thank you so much. kayla, erin, some thoughts here? >> i think it's interesting to see the fact that guidance is being upheld when, yes, j.c.

penney has gotten some flack for the fact it had -- so yes, when you get 6%, you can do that when you're same-store sales in the quarter a year ago, it wasn't that strong. so it's been relatively easy, a low bar for them to clear. unlike macy's, j.c. penney's ais saying this engine will continue for the rest of the year, which is an interesting sentiment. a question thought here, and then we have some guests to bring in as well. >> for me it was more about the guidance. >> it was a quarter for them to beat, all about going into the holiday season. >> reflecting -- >> let's get some thoughts,

welcome to you both. mark, you are a big fan of j.c. penney's, correct? >> yes, i am. you know, i looked back seven years ago, they were do 10% less stores, and so the am of leverage you have, like they seem to be doing, from macy's and these other places, you go into stores, you see it. this shows has huge potential. i think it's the best turnaround story i have seen in a long time. >> no, this was a little better than expected. it looks like the beat was largely on the -- sales just a

bit better. sales are going to get tougher. as i said here last time, they're going to have to grow a lot to grow into the valuation. >> if what you're saying, this is the best turn around you have seen in retail, they're training about ten and change, where can it go from here if you're right? >> an, massively increases both your margins and free cash flow. it's selling for -- so last time they guided for free break-even free cash flow, i don't know that they had anything about it, but if they hit that within a years, useal the stock, even a whiff of that, you'll see the stock start to move dramatically. i estimate they could hit 200 to 300 million in free cash flow

win a year or so. >> we should mention the free cash flow. not a ton, but that is 1.2 billion improvement from last year. dr. jay? >> i also like, when you see a big short interest like this one has, it's gone from 5:00 and change all the way up through 10, pushing towards 11. people that are caught really adopt have very many ways to get out. >> and does look like in the statements, the first year guidance includes free cash flow expected to be positive.

stand by, everybody. now we have the other end of the per peck tiff. eagerly awaiting this one. >> kelly, it looks like nordstrom's earnings coming in, a penny better than the street was looking for, which was 94 cents retch. do a range of 3.80 and 3.90 that upped guidance is upped at least about five cents on that lower. as you can see about 1% higher right now.

up about 10%. just made the point that if most names are -- we should note the company so my question is how does that not make this a $12 stock? >> it depends on how positive, kelly. it's going to take -- i still can't get a reasonable valuation with even these assumptions in the model until about 2018. wow. >> i agree, even one quarter of cash flow, you really need to see multiple years of cash flows, they also don't offer dividends, in fact they increased their sharing. it's a nice value trace, you

would agree? illustrates i agree. what i am is a trader. i manage money for some folks, but this is risk capital here. so, in other words, i trade it, i've traded out most of it. i'm happy about the pop, but i'm not saying it would be this in 2016 or that in 2018 as we're all siding tess desk. bravo. >> i heard what rick said, frankly positive free cash flow. >> this is just incredible. >> right now as of this quarter, what are they going to do next quarter? the point about free cash flow

is that's what pays down the debt. like i pointed out before, with 1,000-some stores, having done 20 billion in sales. in sales right now to, you know, 12, 13 billion, that's what you call operating leverage. in terms of the stock, if the market starts to calculate. with $300 million in free cash flow, at 12 times multiple 3.6 billion divided by the shares, you get a $12 stock, minimum.

j.c. penney's is at nine times book value. just the slightest whiff of reducing the debt gets you to a two-times -- >> let's get rick and guy in here before we let everybody go. respond to that, if you would. >> i'm liking at it on ebit to ebitda. i cannot get a reasonable valuation unit 2018. >> i do disagree it's all about sale, it's all about gross profit dollars. it looks like j.c. penney picked up a lot of that.

>> and guy adami -- >> yo! i'm going to wrap it. i'm going to put a ribbon on it for you. i can't spell ebitda. what i will say about j.c. penney is the quarters will be lumpy, but now shorts have gotten scalded a couple times. they'll be reticent to put on a short again, which leads -- that's 12, 12 1/2, 13, i don't know, but you're not going to see anybody playing this from the short side. well done, doc. all right. >> thank you, sir. well down with the ribbon on it. to the tune of about 8% after hours. we'll leave it there for right now. catch guy coming up with much more on "fast money" at 5:00 p.m., he and kevin o'leary are going head to head once again in a rematch over dividend stocks. who's going to win this time? you'll want to stay tuned for all of that. we'll dive deeper into

nordstrom rules after the break. and in light of macy's big miss. also markets making a move higher after vladimir putin claiming russia would do its best to stopped bloodshed in ukraine. should markets be trusting him now to keep his word? these names about ring a bell -- madoff, skilling, evers, currently serving long jail sentences. were judges too tough on them? defense lawyers and prisoner advocating are arguing for shorter sentences for business claims. we'll debate it. you're watching cnbc, first in business worldwide. ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month

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we begin with an earnings alert. >> how about something besides retail? we're checking out auto desk as the company beat on both the top and bottom lines. it also reported record revenues are $637 million. you can see their shares are trading at least, sharply to the up side, up by about 4%. then there's applied materials, also out with the third quarter results. the company earned 28 cents a share, a penny better than

estimates. those sharing, and with applied materials, kelly, it's one of the stocks investors look for, because it's a leading indicator for the sector since they make the stuff that makes computer chips. >> thank you, dom. rough numbers from walmart and macy's this week, representing the low and middle end, now the emer end with nordstrom out with better earnings. what does this suggest about the state of retail and the economy broadly? let's welcome or panel back. we've just had a spicy debate about j.c. penney, which performed quite wet after hours, but is this a name you like? >> yeah, i'm totally board to tears with that stock. but, you know, it's a great company. they make they're not going to make any money. >> what's your position on nordstrom? >> i think i have to agree, there's not a lot going on.

i have a hold rating. i will point out one thing. everyone will say this is a testament to the high end. full-line extort declined 1.2, the rack, the off price division of nordstrom's was the one that had the 4% gain that got them to the consolidated 2.7%. >> that's a great point. >> so is this because nordstrom rack is more fast fashion, if you will, or do you think this is purely an income story? >> i think it might be an income story, but i think it has more to do with opening rack stores, so they should comp better. >> rick, it's interesting to compare what we saw with walmart this morning, too, what we saw with nordstrom after hours. on the one hand we have walmart saying are they going to be hit, because we're building so many neighborhood stores. nod strom seems to be taking this expanding in stride, managing to not only digest some of these comp increases, but

also manage the costs better. how do you think they're doing this so well? >> that's a great point. the rack actually has a lower gross margin, so the gross margin at the pole line stores must be holding up. these days i tell people it's all about merchandise. the retailer have to have items, they have to have merchandise that can hold price. if you go into a nordstrom or macy's, there's a lot of items on which they can hold price, a lot of brands that people want. i think that's where they are differentiating themselves. >> aaron, how do you lump all of this together, from where you is it, is it about retail? about consumer discretionary? just walk us through where this leaves markets. >> this is really about the department stores going into the big stores, which is a smaller leases. for nordstrom, for us it's still not something we find attract e attractive. that's high for a department stores, so even though they're

doing better, i don't find it attractive at this point. >> board in a good way, mark? is that sort of the take? they're operating at a high price, hard to see them accelerating significantly from here? >> yeah, you know, it's like 12 or 13 times free cash flow. they are buying back stock. so that's cool. you know, that means -- i don't know who else in the retail sector is buying back stock, and their debt is really nice. but, you know, fine, you're not going to get a quantum increase in the stock price like you are with j.c. penney's that's basically what i see happening here. also i think they might be stealing a bit of market share from the macy's guys and all that stuff, but certainly j.c. penney is, all right? i think so. i went and bought two shirts there and a pair of pants for $47 at j.c. penney the other

day. just couldn't believe it. they had all my sizes, the ladies, i couldn't -- >> did it chart with a chap check and turn you into a customer, or did you go in intending to buy something? >> no, i already bought the stock. i've got a huge position in it, but the point is i wanted to actually go see the ground floor, and i loved it, man. i couldn't find my sizes, couldn't find of kind of stuff i wanted other than at j.c. penney. i'm a regular guy. i hate shopping. >> rick, last word to you. >> it's going to be interesting. i think j.c. penney is up against tougher comps. we'll see how they do next quarter. >> dr. jay, last time you were in a j.c. penney? probably ten years or more. i'm not been part of the ron johnson thing, not been part of any of the turnaround, farce

being in the store. i traded based on flow of cash. >> no, i'm just curious about the fashion. >> yeah, i don't shop there. >> we'll see maybe if this gets people more interested. mark -- >> not enough skull stuff. >> a lot of retail earnings. market here, made positive news today, on if the heels of russian president putin's comments. he said russia will do the utmost to stop the bloodheld, but at the same time said he would set up a military task force in crimea. we'll discuss that, next. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason

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and this one is a big one. warren buffett's shop. buffett has taken a new stake in charter communications, the cable tv operator. also, in terms of increased stakes, he boothed the shares of verizon by about 4 million shares. also a huge reduction in shares of oil exploration conoco

phillips, down about -- we'll call it. it yookd to be -- now about 1.3 million shares. so again very notable moves coming out of warren buffett's berkshire hathaway. complete elimination of the stars and booth in holdings for verizon as well as general motors, it looks like, and international business machines as well. we're going through the rest of the lith for right now. now, russian president vladimir putin, and market reacting positively. bob pisani, and wile investors started buying when he said it. >> you can be as skeptical as, but he did move the market. he spoke in yalta.

the important thing, 6:00, putin will do his utmost to stop the bloodshift. look at that spike up ought 6:00 a.m. that's where the markets moved. that is the little move down just before 9:00 eastern time. the third important headline, just really crumby numbers in terms of gdp numbers. we're supposed to be expanding in europe. this is why, kellie, germany has been stalling out. ukraine is obviously not helping, but this is why our ten-year yields are at record lows, another low, they, and

finally the biggest question of the week, why are we up? no other place to put money. there is germany the last three months. the green line, your white line, investors have known about this underperformance long before the ukraine thing. i'm not saying eye crane isn't an issue, but germany has underperforming for about three months. >> those months. >> 6:03 arm eastern time. so trader obviously believed what he had to say this morning. although it hiked the price of analysis gab, so why do markets believe that putin when he speaks, let's ask jeffrey makoff. jeff, welcome. >> thank you.

>> you heard what this report just now, markets rallying behalf think de-escalate in rhetoric. is it the wrong move to take him at face value here. ? it's worth what he says. where the rhetoric and the reality just haven't meshed up. until proven otherwise, we have to assume that there's not going to be a major change right now, either. well, know, but it's still early. there's a convoys under the auspices of the red cross, which the red cross has disclaimed, and the ukrainance said they would not admit without

inspecting the trucks and oversight. the fighting in ukraine is still very much going on, so until proven otherwise, i think it's probably safe to assume that the crisis is not over yet. just warrant to bring in the panel. to what extent is it a factor? >> bigger factor that is gaza. that is because, of course, jeffrey, as you know far better than i, what's going to be happening in the fall and winter is going to be the focus of energy traders, and ag, all will be impacted so, yes, i watched that and listened to what happens, whether or not those are really aid trucks or not. jeff, i'm wondering, we did see

the german economy contract this morning, that wasn't even include the most recent wave the sanctions, so how short term do you see thinks is being honest in this situation, on you do you expect the fundamentals of the economy will feel the reverbs for several quarters to come, if not years? >> well, you know, i think in some way the u.s. and the europeans are in a different position here, because the europeans, especially the germans, are much more exposed to what happens in russia. the german business lobby is very concerned about the potential to negatively impact the economy there. in terms of wanting to ---ing there, you know -- about some of

her partners in elsewhere in europe. >> just finally, jeff, well, what would you say to the investing public for the next couple days, week even, as we continue to watch this back and forth between russia and the ukraine? >> i would just say be cautious and don't do anything abrupt before we know if this is a turning point or not. >> jeff, thank you so much this afternoon. >> thank you. dominic chu rejoins us. what's going on? >> a stock is not moving, but it's of we're watching chiquita brands, the company's board of directors had said that the unsolicited offer from both the katroli group and from safra announced a few -- is knead st. inadequate. the board says it unanimously

reaffirmed its recommendation to approve the previous merger with fyffes. chiquita is trying to buy fyffes perhaps to perform a tax inversion. so again, an unsolicited bid from cutrale, and safra has formally rejected by the board. they want they want to go through with the previous deal to buy fyffes. that's why we are following this one with such interest. dom, thank you. thar they blow. the biggest investors, the wall street whales submit their 13-f filings and we find out how big-money investors have traded. dom will be back with the latest sightings. but first advocates are pushing to lighten sentencing for swindlers and other white-collar criminals.

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welcome back. earlier this year, the federal panel that sets the sentencing policies for nonviolent drug

offenders. in the wake of that defend lawyers are trying to get similar treatment for white collar criminals. should be lightened, and with us, he says no way, and jim feldman, lawyer from kinds, markman and feldman who thinks the sentences are out of whack. >> make your case. >> thank you. it's a pleasure to be on the show. the issue here is the ability of the courts to consider the factors that we believed to be most relevant. and that has been set so high so that virtually any company's ceo convicted of almost any securities offense faces a guideline sentence of life without possibility of parole. so we're talking about taking

nonviolent, first-time offenders, and treating them as if they had killed someone. there may be some circumstances in which sentencing like there are appropriate. what you're group is advocating, and i'm working now on behalf of the american bar association, is for judges to consider more than just loss. they think it's a -- how long did it go on? how sophisticated was it? >> don't they -- they must take all those factors into account? >> they do not and cannot under the guidelines. the guidelines consider only the amount of loss. >> got it. you. >> before we bring in the panel, i understand you think there's no way these sentencing should be lightened? >> that's one of the dumbest things these guys are rational, and they don't want to spend the next 20 years in a prison cell. if you look at, bernie ebbers,

jeff skilling, the guys who spend decades in prisons, and we've had zero major accounting scandals since then. >> now, wait a minute. >> to say that we should take it into consideration is a joke. >> zero major accounting scandals? i feel like -- is that enough of a deterrent to see a couple guys sitting in prison for a few decad decades, so that everybody else, up and down the business industry, feels like they better not? >> i think a lot of people are frustrated when bank of america keeps paying bills onand bills onin fines that seem to never end when none of those executives went to jail. in fact, it may have been some of the companies that they acquired, of course, kelly, that with responsible, but nonetheless some of those folks needed those kind of folks away.

rather than just focusing on a few of the people, the jeff skillings and so forth of the world. >> kelly, remember the timing is absolutely crucial. investor confidence is at an all-time low. we no that no senior executives have been indicted. so if you take the people who got caught with their hand in the cookie jar and say, gee, we're going to slap them on the wrist, that eadvice rates any investor confidence. >> i don't think they see are the type of crimes that jail time solves. if someone has a propensity to mismanagement money or inside trade, the doj and s.e.c. have the power to strip those people of any rights to manage money. >> i'm sorry. hold that thought. breaking news on coca-cola. what's going on? coca-cola is taking another step to try to rule the beverage rule on the heels of the keurig

investment here, they have now maid a $2.15 billion investment in energy drink maker monster beverage. in return monster will give coca-cola a 16.7% stake in the company. so the details of the transaction are as follows. coca-cola takes a 16.7% ownership stake in monster beverage. in return, coca-cola will transfer ownership of the worldwide energy business, including brands like f. several names, to monster beverage. in returns monster beverage will transfer the non--energy drink business includes hansen's, peace tea. they're in essence swapping brands in return. coca-cola gives them 2.some billion, and they get in return a 16.7% stake. so a very large deal on the consumer staples side of things. coca-cola making a large 2

billion-plus. >> dom, thank you. a couple things, first, thanks to andrew and jim. there's more on cnbc.com/vote. let's put monster back up. on the news of this deal, it looks like those shares are popping. now let's get to our panel with some thoughts on this. kayla, you first. it was probably just a year ago that they were going to buy monster -- that monster -- and coke -- i'll never forgot watches the weekend update saying but actually coca-cola in reality, this is a much different deal, trying to get into the health space. as the market for cashinated

beverages is detirating. this is great news for us. we've liked monster for a long time. actually it's a story -- >> it's very challenging. >> this is exactly what coke should be doing. what about pursue -- the. >> most people do identify with the energy side of it, but then the hansen side is pretty exciting for a lot of folks as well. quite frankly i'm sure some of the folks at pepsi are not too happy, because this is a deal they probably could have and perhaps should have done. >> why do you think they should have? certainly pepsi would be looking at possible acquisition, why do you think they would look at coke's acquisition and feel as

though they missed a beat? >> i think the sugar side of the business, more and more of the soft drink drinkers are looking for, rather than corn syrup, looking for real cane sugar, so forth, in the drinks. that's one of the things i think could be attractive to people who want an alternative. >> so coca-cola taking a big stake, amounting to an asset swap, as mentioned. monster shares are up to the tune of 24% after hours. we'll have much more when we come back. 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

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welcome back. you're looking at shares of monster beverage, surging after coca-cola is taking nearly a 17% stake in the company. our dominic chu has more details for us, as we follow this big one, dom. >> that's right. only interesting because of the coca-cola's high profile investment in keurig/green mountain, that they're investing in for single-serve at-home brewing systems. i want to add comments made by the executives of coca-cola. muchar kent said the equity investment in monster is a capital official way to, and category, we believe this partnership will create

compelling and sustainable value for our system and shareholders. meanwhile, rodney sax, the chairman and ceo of monster beverage says the transaction announced today represents a unique opportunity. we game access total distribution system, the most powerful and extensive system in the world. so again both executives, both teams coming out and talking about the virtues of this deal, one of the reasons why you can see both coca-cola shares and monster beverage shares are up on this, perhaps signaling that both sides like the potential of this deal. let's talk to one of the analysts in the space. bill schapelle, bill, thanks very much, your first thoughts here? >> wow is probably the first thought. it's something we had thought might happen in terms of coke about two years ago, but anyone the negative headlines and stock price surge kind of quashed

that, so we hadn't heard much on potential partnerships for a couple years, but we also cover green mountain, so this is similar to the set upof taking a minority interest in a company company to kind of fail down the partnership, but this goes even a couple steps further in terms of changing the disagreements world wide and transferring licenses and businesses. >> so do you think this is a better deal, bill, for coke or monster? >> i think it's really better. i think they're both winners in this one. coke certainly needs growth and its own energy brand, which are burn and knauf has been non-starters. monster, not only in the u.s. where it has a leading share, elsewhere has been gaining share and hitting the ground running. so it's a nice shot in the arm to coke and their distributors to have the monster kind of partnership going forward.

for coke, understand, monster right now in the u.s., half of the distribution is through cokele half is actually through ebi, anheuser-busch inbev. they have enbev in brazil and elsewhere around the world. this gives coke control as they go around the world. so i think it's a winner for coke as well. >>s that's reflected in the shares at this hour. as we watch shares of monster and coke moving to the upside this hour. we'll have a complete round-up of the major names in after hours along with these two when we come right back. you do a lot of things great.

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turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. welcome back. what an hour, dom chu has certainly is been busy. along with disclose years, we got the coke news. >> i mean, so much breaking news, right, kelly? we want to get you up to speed on the money manager holdings. pershing square capital getting rid of beam and apartment inventory and management company. there some good stakes getting

rid of there. then there is david temper at appetizing appaloose sa, eliminates his position in hess. paulsen added new staits stakes in allergan and direct tv and got rid of stakes in american airlines and general motors. we have warren buffet. let's reiterate a new stake in charter communications. remember, this is holdings data from the june 30th snapshot. again, there this is 45 days old. it gives you some indication, perhaps, of what these money managers have doing. over to you. >> we will get final thoughts along with a round-up of what's happened this hour when we come right back. also our collectible cars, our own robert frank is at the pebble beach car auction where people are fliping cars for huge

profits. you can catch that story tomorrow on the "closing bell." we'll be right back and the free of the open road? .

. welcome back. let's get to a final thought here with our panel. erin, you first. >> i'd say even though the apps

are 40 days late, there is still persistence in which stocks will outperform when you look at different types of investors. when you look at stocks owned by hedge funds, versus endowments or hedge funds. >> it's better to look at overall who the big shareholders are, the better for performance? >> so a stock let's say is owned heavily by a hedge fund would outperform versus something heavily owned by a pension. >> do your homework tonight, dr. j. >> i think coke threw down the gauntlet. they have done it with monster. so watch this space. >> watch it to see if this is instead of an outright deal. because that deal may be off the table if they got everything they wanted that they could have otherwise bought. people speculating this could be a takeover target. we'll see. the markets are sleep walking. we'll see season volatility.

>> my thanks to everybody. now it's time for "fast money" coming up with michelle cabrera caruso in for melissa lee. >> so much news after the bell. >> such a busy session. there is a lot to get to. we will hand it right over to you guys. >> thanks, so much. "fast money" starts right now. we are live in new york's time's square. our traders tonight are tim seymour, brian kelly, karen feinerman and guy adami. coca-cola is moving higher on the news along with monster beverage which is soaring after hours. if coke is moving higher, clearly, those shareholders leak this idea. >> this is the story of the market. we talked about why the market keeps going up. you might have mediocre news, these large companies have to go out and buy that