>> i remain confident in the u.s. economy. >> go usa. thanks a lot for watching, everybody. see you tomorrow. welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange where we have green arrows and some significant levels to watch here. >> sure do, i'm scott wapner in today for bill griffeth. the dow is above 17,000 once again. market seemingly will not stay down. but will it last? closely followed market technician tom mcclellan is calling for a major market sell-off heading into september. he will be here to tell us exactly why. so much of the stock market has been riding on interest rates. we'll try to get a better gauge on what's next in that department with philly fed president charles plosser.

our steve leisman sat down with him live in jackson hole, wyoming. stay tuned for this important interview. was it a well deserved $17 billion fine? or was it extortion? a former bank ceo says bank of america was extorted by the u.s. government to the tune of $17 billion. paying for the sins of merrill lynch and countrywide during the housing crisis. even though it bought those firms to help stave off the economic catastrophe for the u.s. we're going to debate that state with our own friend, larry kudlow, among many others. pretty impressive to watch the dow right now. because it is up 93 points. that's a session high. 17,074 puts it within shot after new closing high. something the s&p 500. looks like it is going to achieve, up seven points to 1,994 today. that is the new intraday high. the prior intraday high was july

24th. it could close above 17,000 today. anything could happen in the last hour. nasdaq a little bit quieter up, up six points to 4,533. joining us now, david scranton from advisors kakdmy, heather hughes from sun america funds and our very own rick santelli. david scranton, i begin with you. the festivities are about to take hold in jackson hole. the mark does not seem to want to go anywhere but up. is janet's speech in jackson hole going to ruin it? >> no, i don't think so. she made some comments recently that, although the unemployment numbers look good because wages have basically been frozen now for six or seven years, the average american isn't feeling the benefit that the numbers would indicate. as a result i think that's a slightly dovish to enwhich e ii

enable her to be accommodative which you know the markets actually like. >> if we hadn't just had the sharp rebound here, you could see it being much clearer sailing in light of what janet yellen says tomorrow. but do you think expectations now have gotten too high? >> i think they're getting there, but i don't really believe that this is a warning sign for investors. you have to realize the market is looking a good 12 months ahead. they are looking at the s&p 500 earnings which for 2015 at this point estimates aren't really all collected but they're going to be higher than they were this year, which is right now i think at -- the estimates is at 121. something like that. so there is upward movement there. but the bond market, it's signaling something different. so everybody has an opinion and we'll see who's right in a little while. >> let's get the opinion of the birthday boy today. hello, dennis gartman.

>> a little bird told us. ♪ happy birthday to you >> the beatles already wrote the song about when i'm 64. they have precedence. >> doing awfully well for whatever age you are, dennis. how do you feel about the market here, dennis? put the fed into perspective along with this rally that, as we said, a couple weeks ago we're feeling like something could be breaking like the correction is going to be starting and here we are, we've gotten it all back, and then some. >> the krek happened a couple of weeks ago. you had a very severe 3.5% or 4% correction, went right down to a tren li trend line. now you are taking all of this news which i think is relatively evil for the market, expectation of tightening monetary policies rather than being deferred, the market has accepted that very well and we're now up 95 points on the day.

i think you are having a melt-up instead of a melt-down and i think stock prices still want to go higher. the trend is up and all the smart guys i know keep trying to fade this thing. i've even tried to fade it at times. every time you do it's been wrong. it keeps wanting to go higher. >> i can just give you a couple of reasons. dennis, please respond to this. just today alone here's what we learned. that single family home sales jumped to a ten-month high. distressed sales were only 9% of the total. that's the lowest for the series. philly fed index, 3-year high. jobless claims below 300,000. leading indicators up .09% in july beating expectations. >> these are all good numbers. this is all -- >> that's what i'm saying. yeah. this is a virtuous cycle, is it not? >> i think are you now in that period of time when you're going to see interest rates beginning to rise and stock prices go higher. there are three sorts of circumstances in markets. markets rise when rates are going down because cash is being injected into the system by the monetary authorities. then you have that middle third

where prices -- stock prices rise even as interest rates go up. there will come a time in the not-too-distant future maybe a year or two away when all of a sudden everybody is so euphoric we increase capital expenditures and then that's when you may see stock prices decline. i tried once or twice to sell it short an that was silly. >> clients right now are very worried, they're nervous, despite all the positive macro economic data points that you mention, kelly. our investors are still worried, they're saying maybe this is due to financial engineering. buying back stock increasing dividends, splitting the stock price increases the price to earnings ratio and other valuation metrics. but i don't know that there's real growth. people are still sitting on the sidelines right to you. at sun america fund we have a nervous retail client with us right to you. >> a nervous retail buyer is totally different than not having good fundamentals.

what about, heather, just the rattling off of those data pieces today that came in better than expected? >> well, i think as dennis alluded to, we're still not seeing high capital expenditures, cap x spending. i would look at tech sector in terls of a sector, there may be an opportunity increasing plant, property and equipment. it's cash rich, all of the technology sectors. so if you do believe in a cyclical, tech collsecular grow going forward, you may want to look at the tech sector. not a bad play. >> rick santelli, you could take any of these comments and meld it about where you are feeling about the trend for rates say next week, for starters, post-jackson hole. >> well, there's very little doubt that financial engineering has a lot to do with what's going on. otherwise the fed would already be ending recession type monetary policy. it's obvious. listen to what kelly said.

existing home sales looking good. jobless claims looking good. everything's looking pretty good. >> why are we still buying? sflt last time jobless claims were at this level we had hundreds of basis points higher on a 10-year note yield. when it comes to houses, let's be frank. i heard about rates going up and affordability. if you are taking out a $200,000 mortgage on a house and are you debating between 4% and 4.5%, the monthly payment difference on a $200,000 house for 50 basis points, hold on to your seats -- is a whopping $59 a month. if $59 is going to change the landscape of housing, then we have more significant problems. the big issue, why normalize? i heard steve leisman ask peter bo bookvar why he would want to raise rates so people can't find jo jobs. no, it is the unintended

consequences. it takes away the wild card in their poker hand should a recession actually happen, what do they do for an encore? zp rick, do you think rates are low not just because of quantitative easing and the federal reserve but also because of a lack of wage growth? condition sumer spending power here. nobody spending. could that also be a reason that wages are so low and that bond are so low right now that they have to be low because wages are low? >> i would agree with that. just look at existing home sales. kelly is right, it is good news. but in 2005 with 7.25 million annualized rate. there's definite lay lot of room for improvement an the way the market handicaps that is through the flattening yield curve. by the way, after the minutes were released yesterday we stuck, we still held on to an extra five basis points in 5-year, an extra three basis points in a 2-year which is still hovering at 47 and it was at 42 1/2 after the minutes yesterday. >> kim, if you continue to believe that the market goes

higher, you are an investor in technology, is that still a good place to look, especially i might add on the back of the hewlett-packard surprise, especially in the pc space, i don't know if you had left it for dead like most people. >> we didn't believe it for dead. everybody had just thrown that out thinking the world was going to use tablets and pcs were going to the dumpster. that's just not true. but coming from technology, i love technology. i understand it. and i'm very selective about it. so i think in any weather, you should have technology in your portfolio but especially now. there's some areas that are very unloved for no particular good reason and that's where we're looking. >> could you just give us a couple quick examples, kim? >> sure. things like that cater to enterprise buyers as opposed to consumers. >> microsoft? you guys own microsoft, right? >> we own microsoft.

very happy to own that right now. we probably wouldn't add to the position but we're more than happy to hold it. intel. some of the really moldy oldies. i was pillaried before for holding them and buying them and now i'm feeling happy having bought them. zpl >> intel is up more than 30% year to date. you have reason to be happy. >> moldy eldis. i li . >> happy birthday. the market celebrated for you. 89 points higher on the dow. 17,068 is the level. the s&p holding at an intraday high. all-time intraday high of 1,994. we're eyeing 2,000. coming up, charles plosser, the philly fed president, speaks to us first on cnbc live from jackson hole. find out if he is still hawkish on inflation and if he'll give any hints on how soon and how fast the fed is going to move on

rates. also ahead, new data showing home sales climbing to a ten-month high. diana olick will tell you how much longer this real estate rally will last. an issue touched off by bank of america's record $17 billion settlement with the government. were banks subjected to extortie extortion during the financial crisis? that's the term a former bank ceo is using. larry kudlow weighs in this just a moment. e financial noise financial noise financial noise financial noise

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there is the picture on the street with 45 minutes to go on this thursday. there is the dow, back above 17,000 today. a gain of 91 points. nasdaq following suit, a little bit after laggard. banks per forming well today. kate kelly reported on this show yesterday, bank of america is officially agreeing to pay nearly $17 billion to the justice department and several states to settle allegations it sold risky mortgage backed securities ahead of the financial crisis. >> former wells fargo ceo was outspoken about that settlement

this morning on squawks box when my colleague addressed that issue. >> you've called this extortion? >> yes. >> elaborate on that though. you believe that the government is extorting the banks. >> yes. because they can. they are -- listen to the press conference. they won't talk about countrywide and merrill lynch. they'll talk about bank of america has to be held accountable. no employee of bank of america, no stock holder of bank of america, no executive of bank of america did these criminal things. >> so, is he right? joining us now to weigh in is our senior contributor, larry kudlow and andrew stole thematm. >> that's one of the dumbest things i've ever heard. nobody forced bank of america to buy countrywide.

and when they bought merrill lynch, they made billions of dollars off of that transaction. so yes, obviously there is some bad stuff that goes along with that deal when you are making billions of dollars like have you off of the merrill lynch deal and the thunder and herd. but guess what? you got to belly up to the bar and sell. nobody's fosing bank of america to do anything. they're one of the largest corporations out there, one of the biggest banks and they have the ability and resources to fight the government tooth and nail but they don't, they settle because they know the hand is in the cookie jar. >> nobody is suggesting that bank of america didn't get a good deal, so to speak, when it bought merrill. no one is suggesting that jpmorgan didn't get a good deal when they bought bear stearns. but that's not the point. >> i don't think bank of america got such a good deal. can i just weigh in? i would respectfully disagree with all this stuff. i just look at this as an election year atm. okay? the administration and the democrats in the congress are

going to run against big corporations and big banks. they don't pay enough taxes and they haven't been penalized enough in the banking crisis. you look at the actual evidence on this. the federal reserve, the federal reserve wanted bank of america to buy countrywide because countrywide was borrowing so much at the fed window. arthur and goolo told the fomc that countrywide should come to a close next week. >> merrill was push into bank of america's hands. >> that is correct. federal reserve and treasury hank paulson basically ordered bank of america to acquire merrilllynch. use this atm analogy. do you have any idea seriously how they come up -- take today's numbers. $17 billion. >> those are the past three years' profits for bank of america. >> that's correct. bank of america has already paid out $60 billion one way or

another. this puts it almost to $80 billion. if there was an individual fraud, go after the individuals. not just the corporation. then they go after angelo mozilo. they should. if he did wrong, he should go. you know why? because they won't. they won't do it. it takes too long. >> i know this is a little bit nuanced but if we could take the example of a bank that issued loans with devious standards or practices or whatever. that institution collapses and goes away, then how do you ever try and bring justice to the wrong that was done at the time? >> that's exactly the point. if you allow these firms to simply sell out and not have anybody charged -- i agree people should be charged. but if you don't have people being charged and the company is basically bought up, then nobody would be held liable and that's just unjust. this isn't an election year issue. these banks are almost melted

down the global worldwide economy and they have to pay. >> why should innocent shareholders be the one holding the bill? >> they don't want to indict the individuals. because they're going to have trouble in court and they know that. what's so bad about this? this money is going to federal departments where the congress didn't budget money. it is going to states for various things. many states are using it to cover their budget deficit. >> new york didn't have a huge amount of public pension losses as a result of this. >> and it is going to finance the new york state budget. it is going to so-called "community groups." okay? this is the housing version of acorn. where is -- >> just to go back to the point that i already said, i agree with everything everybody said but there's still a central concern.

amm what happens when one trucking firm has horrible safety standards and kind of flouts the law. they go bankrupt, bring the people, reorganize under a new name and kind of restart the whole thing over again. how do you go after that practice? how do you hold those people or that institution accountable whether it is the trucking industry or the banking industry? >> i'm a hardliner. citigroup should have gone down years ago. it is a terrible bank. it has been bailed out three, four, five times. okay? we have ways and means and bankruptcy court to do that. but on the other hand, i want to go to bat for bank of america. not every part of it. i'm just saying that with respect to countrywide and with respect to merrill, they did what the fed and the treasury wanted them to do. >> the only way today i guess is to hold the -- >> angelo mozilo is an old

friend. >> kelly, nobody can answer your question. >> indicting companies, this was a mistake the federal government made when it sunk arthur andersen many years ago during the enron scandal. >> post arthur andersen, once you indict an accounting firm, we're had zero accounting scandal at least with issue to shredding documents. if you indict one bank one time, that -- >> come on, buddy. that's not true. we have had so many s.e.c. civil cases here. this whole thing is caught in red tape. >> we need criminal charges. >> i'm okay with criminal charges. i'm just not okay with indicting the bank and money going to left wing community assets. kelly, you're the brightest of the bright. you're the smartest of the smart. where does this -- how do you make it --

>> i want to know, larry, answer this first. if, god forbid, there is another financial crisis of any magnitude such as '08, how in the world are you going to convince another financial institution or is the government going to convince any financial institution or any company, for that matter, to do a deal to "save the people." they're not going to do it. >> you are so right about that. that's such an essential part. thank you for are saying that. such an essential part of this discussion. no one is going to step up to the plate. read the narrative. when bank of america decided they didn't want merrill -- remember that? it was a stutter step. hank paulson comes if -- >> but this is about countrywide. >> this is also about mortgages from merrill, too. hank paulson said we are going to force you into doing this and we are going to give you bigger loans and you're going to have tough returns an we may have to put you out of business. they really came down hard. so you're right, this will never happen again. okay. so look, bankruptcy?

i'm all for bankruptcy. >> bank of america shares are up 4.5% today by the way. i mean granted -- >> kelly, it will happen again because we still have these entities that are too big to fail and nothing has changed post-08. if we're in the same situation, we have the same sort of bailouts, that's unfortunate. that drives people like me crazy. >> i totally agree with you. you got that point exactly right. i couldn't agree more. we've never really fixed the too big to fail. by the way, we are also making another round of mistakes. the housing agency under former congressman melvin watts, fannie, freddie, all loosening standards again. talking about unaffordable loans to people. this is how it all started years ago. of course, the federal reserve at 0% rate is encouraging this. we haven't learned a thing if you ask me. >> make this the last word. >> kudlow plan -- give me 20% down payment.

every property my wife and i have always bought, 20%. now that is credit standards. why can't we do that? >> okay. that's the last word. larry, good see you. >> thanks for having me. >> larry was going to make, i'll make it for him here. we have stocks rallying today. we have gold down. we have some good signs out there. you all right there? >> you did great, as always. >> 86 points higher on the dow. >> existing home sales hitting a ten-month high in july. diana olick explains what's driving the increase an if it signals true strength in housing or if there is trouble behind those numbers. also ahead, charles plosser will speak to us live from jackson hole. wait until you hear his take on inflation an when interest rates will likely rise from these rock-bottom levels. just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own.

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welcome back. 85 points higher on the dow. just off session highs but well above the 17,000 mark the dow last closed above on july 24th. interestingly enough, the nasdaq is lagging a bit today. that may be raising some eyebrows after this sharp snack-back rally we've had. existing home sales hitting a ten-month high. what's driving that increase, diana? >> reporter: it is really two things. one, there are simply more listings for sale right now. 6% more according to realtors in their report today. the second thing is, that the price gains are finally easing.

take a look. the median home price in july still up nearly 5% year over year but that's less than the double-digit jumps that we saw last year. that's a relief as we see more mortgage dependent buyers coming on to the market. the share of first time buyers increased in july. still very low but we did see a slight pop up. all of this pushed the numbers up. last july was the cyclical peak when investors ruled the market. but investors are coming out now and they only made up 16% of existing home sales in july. all cash though still very high, nearly one-third of the market. all this of course could change if mortgage rates go higher. rates hit their lowest level of the year last week at 4.12% on the 30-year fixed. that's down from 4.58% a year ago. but in the last couple of days we have seen rates start to edge up again so that's what we are tracking. back to you guys. >> diana, we should have kept

larry kudlow around. i want you to respond to something he just said. we talk about the last financial crisis an potentially whether we're repeating the mistakes of last time around. he was talking about fannie and freddie loosening credit standards. saying we need to get back to the days of 20% down in paltsym to buy homes. is that consistent with the kinds of bad practices that led up to the last crisis? >> no, not at all. i heard what he said. i was try fog raise my hand and jump in. fannie and freddie are easing ever so slightly, but really not at all. it is still very difficult to get a loan if you don't have that 20% down. the fha is at 39.5% for lower down payment buyers but they have to have very good credit scores. the most important thing in the market today is debt-to-income ratio. lenders are looking at how much other debt you have and whether or not are you going to be able to repay that loan over time. that has not changed at all. we are certainly not seeing the

kind of lending practices we saw during the housing boom where you really just needed a pulse to get a mortgage. >> i was with somebody last evening in a conversation who runs a big mortgage reit who is raising the issue and sort of the answer to a question that i posed to him as to where the supply and demand equation is right now. he said that supply is still incredibly tight. good luck trying to buy a home in certain markets because the inventory is just not there. and was justifying the fact that prices have gone up and likely will continue because of supply and demand. how do you see it? >> well, again, this market is becoming -- this recovery is becoming a lot more local. you are seeing markets where supply is still incredibly tight, and that does push prices up artificially. believe it or not, also these very low mortgage rates push prices up higher because it gives sellers the opportunity to raise their prices. we are seeing inventory starting to ease ever so slightly. that's good news but it is not

nationwide and there are definitely pockets where there's nothing on the market to buy. >> just a quick question -- do you know off hand what the proportion of people with a mortgage that's under water is still? >> you still have millions of borrowers who are under water. i think the percentage is up around 18%. it is lower than it has been but what's more important is not just who's underwater but the near negative equity which is a much larger share. that's people who don't have enough equity in their homes to sell and move up and do the cost of that next down payment as well as paying the moving fees, broker fees, all the fees involved. near negative equity is a bigger deal. >> that's probably keeping a choke hold on supply, those folks who can't maybe sell for less than the mortgage. thank you, diana. appreciate the insight. continuing that housing discussion there on the back of some positive home sales data this morning. helping markets rally past the 17,000 mark with the dow up 87, the s&p up 7 1/2 points, almost back towards 2,000. the nasdaq at 4,533. up next, with the s&p

hitting record highs and the nasdaq touching 14-year highs, find out why a top market technician is sounding the alarm on a major september storm heading our way. also coming up, moment of truth for gap. salesforce.com and intuit. their earnings are out after the close. what numbers to watch out for and we'll bring them to you the second they hit the tape. what would happen... if energy could come from anything? or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything.

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built for business. there you go. the dow is still up 76 points holding above 17,000. nasdaq is a laggard today despite the fact that so-called old technology stocks continue to do pretty well. hewlett-packard had a good earnings report, positive information on pc sales. s&p 500 pushing an all-time high, .3%. we have 20 minutes or so to go in this session. >> all that said, our next guest says a september storm is approaching. saying this will all likely be very messy for the markets here. >> for more on what investors should know now, let's bring in tom mcclellan, whose technical analysis of the market is widely followed. he is the editor of the mcclellan market report and the daily edition which is the number one long-term market timer for both 2011 and 2012.

according to timer digest. tom, welcome to the "closing bell." nice to have you on. >> thanks, scott. appreciate being on. >> why is this storm going to rain down on us in the fall? >> well, let me clarify a little bit. it no longer looks like as major of a storm but we are not yet out of the period of weak scenesality. seasonality? >> what changed? >> late august is almost always a bad time for the market. what we've seen in this bounce in august with 8 of the last 10 days closing higher for the s&p 500, we've seen really strong breadth numbers. the new york stock exchange advance-decline line today is at an all-time high. you don't get 1987 or 2008 within the weeks and months right after a new high in the a-d line. you still have normal seasonality weakness and normal correction weakness which i expect between to you and the bottom line in september. >> it's interesting this

resilience has caught so many bears off guard, so many technicians off guard. would you include yourself in that group and would you give us just some sense about how strong the market here has held up this year? >> it is strong and the question we really haven't answered is what is the taper going to bring. when we had $85 billion a month pumping in from the fed, we knew what sort of stimulative effect that was having. now down to $25 billion and going to zero really soon, can the addict survive without his daily fix of heroin. we are getting the answer now with a lot of liquidity. that doesn't excuse the late august and early september weakness. i expect some kind of news to drive it down and helpful fill the normal seasonality. then we'll enter the third year of the current presidential term in 2015. the seasonal strength of the third year after presidential term starts around october of the second year. third year is -- >> which would be this october. >> that's right.

in october. the third year is nearly always an up year. we had a notable exception in 1939 when hitler was marching through poland and 1931 when we had the dust bowl. other than conditions like that, the third year is an up year and with so much liquidity already in the system and not getting pulled out very fast, i can fully expect that we're going to have a really bullish time. >> tom, it is interesting. i respect the technicals. a lot of people who follow the markets do. but what's different now is the fed. right? >> that's right. >> technicals can say one thing, and it doesn't matter. right? the fed is still in the action and you can throw almost everything else out the window that you want as long as they are goosing the market or doing whatever you say. the punch bowl, this, that or the other nap is trumping everything else. is it not? >> i like to say when it comes to the overall stock market, there are only two fundamentals that matter. the first is how much money is there, and the second is how much does that money want to be

invested. the fed is trumping everything lately. we had an opportunity with the early august sell-off to really get going downward. the market caught itself and the money is going back to work and a new a-d line, all-time high, you can't really shake your head too much at that. but we still have to get through the end of august and into september before we get into the really good stuff. >> i want to raise the point that larry kudlow's made, art cashin brought this up as well. gold is not performing well. can you give us a sense about gold specifically and what that in juxtaposition with the strong equity outlook that you've discussed further indicates to you? >> gold has been due to make a major cycle low. it was ideally due in july of this year. it's a 13 1/2-month cycle. so it is not an annual cycle. it is 13 1/2 months. it can arrive a month early or late and that's normal. we are about a month late for the ideal point. not out of the normal window from when these cycle bottoms can come in. gold seems to be getting the last little bit of business done

for putting that cycle in. i look for a strong rally once that got bottom gets put in for the next year and for the next year and the rest of 2015. >> a rally for gold. and you think the stock market can perform well? >> absolutely. it is always a bullish time for gold and we are just now entering it. we got to finish the bottoming business, then we are going up. who expects that? >> that's the point. it is always the least when you expect it. tom, thank you. tom mcclellan, editor of "the mcclellan market report." 20 minutes to go on trading today. dow has a gain of nearly 80 points. 17,058. watching the s&p for nor afor ar all-time high. inflation hawk charles

plosser live from jackson hole with our steve leisman. plus, gap announces results at the top of the hour. we'll preview numbers to look out for next an deliver them to you right when they hit the tape. we're back in a moment. she's still the one for you. 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, or any allergic reactions like rash, hives,

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welcome back. we could be closing -- >> hey, what's the market doing? >> let's check in. the s&p is at 1,993 which i do believe is close to its all-time trading high. see if it goes out on a closing high here as well. the dow is up 76. what else? >> dow is having a pretty good day because ibm is having a good one, along with goldman. a lot of talk in the market today certainly with the bank of america settlement. that maybe, just maybe, that banks are going to start picking up some steam. the slf and other components. >> citigroup keep an eye on. it is back above $50 trading up 2.5% today. >> bertha coombs tells us what's moving the markets rirt now. previews a couple of big earnings due after the bell. >> we're going to start with hewlett-packard with leading gainer on the s&p 500. its third quarter revenues came

in above forecast boosted by a spike in pc sales. who says pc is dead? hp up better than 5.5% on the day. hormel foods hitting a record high after better than expected third quarter profits. trading up about 5% on the day. different story for sears. sears just can't get out of the doldrums, moving lower after posting another quarter where they had wider than expected losses. revenues coming in shy of expectations. sears off about 7.5%. children's place though a much better retail story there. gaining ground after the children's specialty retailer reported better than expected second quarter results. back to school seems to be doing pretty well, up. nearly 8% on the day. and it will be a busy session. gap, salesforce.com, game stop all reporting, along with

intuit. >> good thing have you satellite radio in the car. i can catch it on the way home. >> good thing. we have about 15 minutes to go here. dow is up 78 points just off its session highs. art cashin told us a little while ago there were some sell orders. gold under pressure. >> will there be more sell orders after charlie plosser speaks? he's coming up. inflation, interest rates, the economy, the whole shabang. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings

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75 points to the plus side for the dow, which is up above 17,000. financials having a really good day. people have been sort of reticent to place their bets on this sector because it just hasn't done anything of late. maybe bank of america, there it is today getting a nice boost of some 4%. these other names within it, too. citigroup, morgan stanley and goldman helping out dow today. jpmorgan is there as well with a gain of 1.5%.

it may and year that saw energy stocks do really well, that's by and large seen technology stocks do pretty well. second-best performing sector in the s&p. that financials can start to pick up steam. if you're going to look for another area for the market to take a leg up, it could be on the back of the financials. >> we're looking at the big guys but it is regional banks, too, that have been well bid. they don't have asle. legacy issues, so to speak. if that lending tick-up continues to happen, that will be a boon for them. we've got two guests joining us now with insight as we head in to the close. john buckingham and jim lowell. welcome to the both. john, first to you. do you like this action that we're seeing here in the markets? >> it is tough not to like it when you are a long equity manager. the interesting thing is we really see not a lot of enthusiasm from investors out there. i know we are right near all-time highs but we just don't see it in like the sentiment surveys. i certainly don't see it for my

clients. most people are still very nervous about this market which i believe is very healthy. >> jim, there's distress all over the place. could you naked any corner of the globe and there's something probably for investors to worry about. yet the market doesn't appear to be worried about much of anything lately. >> no. world obviously continues to be a very unsettled place. the markets in stark contrast, calm and collectioneed, focused fundamentals. especially here at home on the back of consumer spending. the market i think will be able to continue to offset any geopolitical risks and impingements in so long as they don't grow on scale and impact core areas of the consumer driven global economy. so far we simply haven't seen that done. >> i don't know. western europe? germany's not even doing well. i don't know how much longer -- >> if you look across the pond to europe, we fully expect them

to go into a mild soft recession, couple of negative quarters. their growth rate is at 0%. stocks there are being sold off as if there are no earnings growth opportunities in all of the eurozone. that clearly is not the case. but this is a stock picker's market par excellence, one where you want a manager with a proven track record to be able to go in, turn over the stones, find the rubies in the rubble. they're there. you just have to lace up your boots and wade into what can be some pretty woolly places. >> both of you have identified some names that look interesting here. >> we like to buy things that haven't performed all that well as we think about new ideas. deere is now trading at a single digit multiple. 2.8% dividend yield is down on the year. a cyclical company we think is poised to do well in the long run. even as we head toward trough earnings in the next couple of

years, trading at 13 times a trough earnings. in a market that's obviously trading at higher valuations. there are certainly some gems out there. we just put out 18 stocks in our "prudent speculator" newsletter of dividend payers yielding more than 2% that are actually down on the year. so great opportunities still out there in the marketplace. >> jim, just so our viewers know, you also like tide water and coach, ge. jim, real quick in a couple of words, what do you like here? >> a fund like harper and health care where you get both the global economy's net growth story in health care but also an emerging market health growth play. those two areas look very attractive to me. >> guys, thank you so much. up next, back with the closing countdown. >> then we've got a ton of earnings on tap. they include gap, salesforce, intuit. all posting earnings just after the bell. stay right here. we'll bring you those numbers and tell you how they could affect markets tomorrow.

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banks today. here with our own dominic chu. >> financials are huge. bank of america the single best performing financial stock in the entire s&p 500. on the heels of that, you got to figure investors are saying this removes that last major hurdle to really the outlook for these banks going forward. financials, remember, they make up 16% of the s&p 500. when they move higher, it drags a lot of that index up higher with it. that's why we're sitting at record highs. >> if you're looking at a place for that next leg for stocks, a place to start putting money to work where money hasn't worked all that well -- >> the financials. right. technology to a certain degree, though technology has been catching on a little bit more in the past six months -- >> second-best performer year to date. thank you very much. >> even semiconductor names like intels are doing well. when you have financials and technology on today's trade, the two best performing sectors, that represents 36% of the s&p and that's no too shabby if you

are a bull. i was just talking to traders over here. the same ones you talk to who say volumes are still ludicrously light right now. if you're a transaction guy like a lot of these guys who make money by the number of shares that transact, they are not doing all that great right now. >> s&p seemingly has no concern whatsoever for what's going to take place out in jackson hole. you'll get a new record high for the s&p 500. yet there is still some risk in the market for what janet yellen and the fed chair may say for tomorrow for the course of interest rates especially on the heels of yesterday and the concern that a rate hike could come sooner than expected. >> it is a great point. i spoke to art cashin, ub sfls' director on floor. he said people are going long this market into what could be a real catalyst for the markets one way or the other. that's an interesting position to be long going too something that could send at least a few shockwaves through the market.

>> there is a fair a xlcomplacey about the events at jackson hole. dominic chu. there it is, dow goes out with a gain, s&p new record high. kelly evans picks up the second hour of "the bell." some big earnings on tap. don't go anywhere. thank you. welcome to the "closing bell," everybody. i'm kelly evans. if you just saw that animation, you know what that means. the s&p 500 for, i believe, the 28th time this year, is closing at a record high. looks like it is going out at a level of about 1,99 putting it not only above the closing high of july 24th but also the intraday high we saw at 1,991. pretty strong session adding almost six points. the dow paring some gains, it was up as much as 91.

looks like it is going out at 61. first time that index closed above 17,000 since july. after we bring you the latest quarterly results from gap. one of the big names we are waiting to report after hours. courtney reagan has numbers. >> gap beating by a penny on bottom line revenues. coming in just slightly higher than consensus at $3.98 billion. comps unchanged but remember we knew that because gap does report on a monthly basis. still those numbers. other news, gap will open its first franchise pratd stooperat in india in 2015. that news also coming out after the bell. gap shares are higher by 2%. the conference call starts in about an hour. >> courtfy, thacourtney, thank . let's get some reaction. president of hay capital management. let me quickly introduce the

panel. david zechltrbos, michael santo kate kelly. tim seymour. but mack, firrk, first gap shar spiked, now a little bit higher after hours. what do you make of the numbers here? >> i mean i haven't seen numbers but what you just told me but i mean -- they already told everybody what their numbers were going to be. pretty much came out the same way. so my attitude about gap is, this is a different kind of a company than a lot of other retailers. i can give you more of my overall view of it versus the sort of minutia on the earnings, if you want to hear that. >> we'll dig into gap and the other retailers in just a few moments as well. but let's get some thoughts on gap specifically while we can

here just to reiterate what they just reported. 75 cents diluted earnings per share. they've increased the full-year earnings per share guidance range to $2.95 to $3, including a gain on an asset sale, net sales were 3% in the second quarter. old navy just going down through some of the line items, comp sales of 4% in the second quarter on top of last year's positive 6%. athletic continues to open stores, et cetera, et cetera. tim seymour, is this a name that you like? >> i do. i like it on a combination of value and the fact that they're getting their operational store costs under control. the international growth opportunity is very interesting. old navy will open 20 new stores in japan, five in china, one in the philippines. you talked about the gap in india. it is a very positive free cash flow yield company, 7.5%. 13 1/2 times 2015. this company i think is getting things back on track and certainly from a valuation perspective is a very interesting play relative to some other guys that have a lot of troubles right now.

this looks like a relative safe haven to me. >> we've needed it in the retail space. the interesting thing is actually consumer discretionary. big picture might include some names like amazon, it is trading near all-time highs here. >> i was going to make the general point that you were touching on. i think in the retail space there has to be a little bit of a sigh of relief with these gap results. i know now the up side is pretty modest but to see the initial pop on these results, there hasn't been much to get excited about in this sector. to see a company that meets or even crests their number estimates to see that they're expanding into a market like india, that's got to be a little bit of a nice element for those that follow the sector. >> the cool thing about gap is that the really cool thing is that it doesn't have a lot of debt. all these other retailers. that's what i really like about it. >> that's your operating leverage, right, mark? >> no, that's not operating leverage. they basically have the same amount of cash as their debt. so any kind of down turn or any

kind of thing, they're going to be really well positioned. they're very defensive. on the other hand, you're paying for that in the valuation. it's like six times book value and 13 or 14 times cash flow. but, they use all that cash flow since they don't have any debt and they buy back shares. they buy back over $1 billion worth of shares a year. that's very, very shareholder friendly. macy's and these other groups, they buy back shares, too, but they have a ton of debt. that makes them much more riskier. so comparing apples to apples with macy he's and some of these other groups, kohl's and whatever, gap with 3,000 stores producing free cash flow and no net debt, i like that. >> it is an incredibly stable business especially in the down years. almost kind of looks a lot more like a staples company as

opposed to discretionary. what i fine interesting, the question about the story is going to be do people start giving it credit for 15% of its sales being online last year an growing very fast and now that athletica and things like piper line were also becoming material in the overall gap numbers, people start to think there is potentially a growth catalyst. i don't think we are there yet. i think it is a steady value play, but it is interesting, nonetheless. >> by the way, mark, do you shop at gap? your experience in jachcpenney one reason you like their name? >> no, i'm not going to go to gap. everybody is going to be going to jcpenney. >> i don't think i've been to jcpenney for 25 years. >> that's the biggest turnaround story there is in this sector. that's the only thing worth buying in this sector. >> i thought you were talking about -- >> everything else is totally boring. >> i thought mark was talking about plain-pocket jeans and ganimals.

>> i bought jcpenney a couple days ago. i think this is a name where you have not only the bottom of the boat that's been shoring up, but this company has catalyst in the fall, the kids' line is a very big deal for these guys. this is a company that i think a lot of people are underestimating. >> we'll just look through a couple of quick other earnings before we get to sales force. shares of aeropostale and game stop as well. looking again for some of the big movers after hours. you can see aeropostale, down 1.5% on trading after hours after its results hit. game stop was one we were looking for. looks like it is popping about 7%. sales force, the biggie, its earnings are now just hitting the tape. our jon fortt has numbers. >> these are good numbers from salesforce. you have to dig in to understand why because they tend to sandbag on their numbers. revenue came in at $1.32 billion versus $1.29 billion expected. non-gap eps at 13 cents versus

12-cent expectation. the gap loss was 10 cents, minus 10 cents. we were expecting minus 13 cents to minus 12 cents. now deferred revenue came in strong at $2.35 billion. guidance, importantly, came in at $1.365 billion. that's pretty much in line with the guidance expected. but again, they tend to guide a little light and they raise their full year guidance, this is important, $5.34 billion to $5.37 billion. the expectation had been $5.3 billion to $5.34 billion. investors are at least a little bit excited with these numbers after hours. >> jon, thank you. what does that tell you, jon fortt? we've focused lately on what i love, kim forest's line, the oldie moldies of tech. salesforce certainly not in that category, though it is more mature than some of the recent start-ups here.

turning in some good numbers. >> it is 38% year over year revenue growth. that is in line with the rates they were experiencing. i think they were at 37% last quarter. that growth story continues to be intact for them. part of the reason for that might be the developed markets continue to be pretty strong as we saw from hp last night, as we saw from cisco as well. developing markets are the ones having trouble an those are the ones that haven't latched on as much to the cloud and software as a service. sales force' bread and butter to begin with. the markets that are tending to be better right now are the ones where sales force is strong and numbers show that, kelly. >> thank you, jon, for now. speaking of developing markets, what's your thought on gap moving more agregressively into some of these regions? >> most of their expansion is overseas by franchise. that doesn't really come in the comp store sales and all that. so, yeah, it helps the bottom line but most of these analysts

tend to look at comp store sales. i'm a big picture value guy. i don't see gap as a value play. i say see jachlt c pcpenney as play. the sales side guys are probably only looking at comp store sales. that's all they seem to talk about. >> yeah. yeah. tim, what about you? to this point about developing versus developed markets. >> i'm a developing markets guy. i prefer to tell you what's going on in china and i think gap has a real brand. old navy has actually the most growth of the various franchises within gap in china and in terms of brand recognition, it is actually possibly a better price point for the chinese consumer. while the u.s. mature model, the u.s. business is the mature and it is the most important thing in their business model, that's really what's driving earnings. make no mistake. international growth story an e-commerce is where people get excited and want to put a higher multiple on gap and why i think you have a conservative relatively moving along company with a lot of up side and

optionality to it. >> david, the last word. anything you've heard this hour change your view on markets on the consumer, on retail? >> you know, you ended oun multiples. i think one of the things about this entire equity move that we've been involved with is we're talking about a world that's not as focused on earnings and a lot more focused on multiples. that's a macro fundamental that's affecting every company across all sectors and it is certainly affecting retail. >> we'll pick back up on that. thank you, guys, for now. appreciate it. a quick programming note, salesforce.com's chairman and ceo mac benioff will join jim tonight on "mad money" to talk about those earnings. starting at 6:00 p.m. eastern time so get your popcorn. catch tim seymour coming up with the rest of the "fast money" crew at 5:00. they'll have three chipmakers that are perfect takedown tashths in the s targets in the semiconductor space. straight ahead, he's been one of the fed's biggest monetary policy hawks. coming up, philly fed president

charles plosser with our even steve leisman. find out when he thinks interest rates should be raised. he was one of the biggest critics of high-speed trading when he was a regulator. m 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. we begin here with bertha coombs and a quick earnings alert. >> hi, kelly. let's check out intuit, moving lower after hours after the company reported a surprising penny loss for its fourth quarter due to higher expenses. also giving weak guidance. part of it is they are transitioning to the cloud. we've seen it with a number of companies. they say things will get better but right now numbers don't jibe for what people expected. game stop coming in at cents a share, better than expected. revenues were better than expected, also guiding higher than what the expect expected. stock currently trading higher. one thing to watch on that call is news on ceo paul raines who had unexpected surgery earlier

this week to remove a small brain tu who are. it won't interfere too much but he will have treatment for the next two weeks. >> our thoughts are with him, bertha. thank you. steve leisman is in jackson hole this week where most federal reserve officials are meeting. not just u.s. officials but central bankers were around the world. he joins us on a first on cnbc interview as a storm is bearing down with philadelphia fed president charles plosser dplp neither rain nor shine nor sleet nor nothing, kelly. we're going to do this interview with philadelphia fed president charles plosser. we'll try to keep you dry. charlie, the s&p closing at a record high today. is this a cause of concern for you? is this an example of excess in markets point of low interest rates? >> i'm not too concerned about that. our track record of knowing what that happens is not a great one but that's probably the least of my concerns at the moment. >> so whether it comes to the concerns that you do have, inflation, the economy overheating, what are your main concerns? >> my main concerns are that we

as as a montaetary policy is no reacting to the data as it changes. we've seen inflation start creeping back up to our goals and we have not really been adjusting the policy in a way that i think is appropriate. >> what is the appropriate policy in your view? >> i think the appropriate policy is -- you and i have talked about this before. i tend to look at a variety of rules and almost all of them now tell us that we should be moving off the zero ground. our lang in our statement says that not only we're not going to move off, we're not going to move off for a considerable period of time after we stop buying assets. of course buying assets is still trying to ease policy. so i just think we are running a very risky policy, if you will, given where the stance of the economy is and seeks to be going. >> if the fed gets this wrong here, i mean if it's off by six months or a year, is there real

danger to the economy? >> there could be. there are a couple of things that could happen. one, i would prefer us begin to racing raise sooner and raising them more gradually. longer we wait, we have to raise them more quickly in response to a stronger economy and perhaps inflation. >> there was an unbelievable fine paid by bank of mechanic, $17 billion. some of it from legacy issues from the purchase of countrywide. as a regulator, as a bank regulator, do you worry that the next time there is a financial crisis, do you have a hard time finding anybody to step up to make a purchase because they could be sued and pay these kind of fines later. >> i don't want to say anything about bank of america. as you can imagine. but i do think, i've talked in the past and i've talked with you about this, steve, is that moral hazard raises its head in lots of various instances. when government policies and government decisions make actions, you may think they're the right actions for today but they can very well have consequences for the future and

altering people's behavior and a firm's behavior. this is a case where i think it is perfectly reasonable to say or at least anticipate that, gee, this action will have consequences at some time in the future. how that will play out, i don't really know but i think those are things that regulators and policymakers more broadly need to think about and plan further ahead than just worrying about actions of today. >> i want to back up. maybe you can help our viewers and our investors here who are trying to understand -- >> well, that just really sounds fun funny. but that's okay, steve. >> how to think about when the fed is going to raise rates and the kind of effect it may have on markets and the economy. >> well, i think that, as i said before, my concern is that we're sending signals about how far in the future some calendar basis we're going to wait to raise rates. think that's probably inappropriate at this point in time. we need to be moving that forward -- >> but investors still have to make a judgment as to timing.

they buy time sensitive, term data -- >> what we really need to talk about, i've said before, what is the data telling us when we choose to raise rates. we need to be responsive to the data, mott to some calendar time or point in time. so if the data say certain things or data move in certain ways, we knee to be more predictable about how we're going to react to that and we really don't do that very well. >> kelly? >> thank you, steve. i just want to raise a question about wages. steve, thank you. a question about wages, which i think is at the heart of the debate right now. certainly that we hear on wall street. people want to know what kind of wage targets are you looking for to feel confident that the economy really can stand on its own. i'm also just curious what you think the impact of raising minimum wage is going to be in all of this as well? >> well, i think in terms of wages, wages are important in the economy but they are not the only thing that's important for the economy. i really don't think it's very wise, from my perspective, to

make wages the centerpiece of our economic policy or monetary policy in particular. the relationship between wages and inflation, for example, is not a very good one. indeed, to the extent there is a relationship, wages lag inflation, not the other way around. so wages are not a good predictor of inflation or many other things. so i think we need to sort of take a step back and be more clear about exactly what it is we're trying to accomplish and are we trying to accomplish goals that actually we can achieve. >> charlie, the statement says significant underutilization of resources. is that true? of labor resources. >> i suppose that depends on who you talk to. >> what do you think? >> i don't think it is. i think we are running a real risk, and my concern is that we're running a real risk of saying we haven't achieved or objectives yet, therefore we're going to keep interest rates at zero until we do. that's not good monetary policy from my perspective.

>> billionaire investors made a lot of money following and not following the fed, i guess. one says he doesn't understand how policy can be so below normal and the economy so much closer to normal. is that a way that you think about -- >> that's certainly one of my concerns. i worry that the consequences of that could be traumatic at some point in time if we're not careful. then we will have to turn around and race to catch up. >> but one of the things kelly was getting at, 2% wage growth. that's it. could be 3% or 4% and not be inflationary. millions of long-term unemployed americans, millions of americans working parts time for economic reasons. there is an argument. out there that will their is a lot of labor slack out there and the fed should keep rates low to try to help those americans get work. >> so i think the long-term unemployed and those that are unemployed or working part-time for economic reasons are a concern. question is, what does monetary policy have to say about that? we have very little empirical evidence that says that monetary policy can change the level of

long-term unenemployed or part-time unemployed independent of changes in the overall unemployment rate. we just don't have much evidence. in fact, we've had the unemployment rate falling part-time interest rates at zero for almost six years now. 5 1/2 years. and part-time unemployment has stayed the same. so do we think that keeping it at zero another six years is going to bring that -- i don't know the answer to that. >> you think this is a weak argument, charlie. but the other argument is going to be don't hold your breath waiting for the congress and the president to do anything about it because the physical side is not going to help. all that there is a monetary policy and since do you have a tool, you ought to use it. >> except what are the consequences of using that tool. if it leads to, in some people's view, leads to another financial crisis because we create financial instability of some kind or if it leads to a lot of inflation where we have to turn around and raise rates very fast and create other disturbances in our financial markets. what price are we willing to pay? >> not to be argumentive --

>> of course you do! >> but those things haven't happened and they've been warned about for a long time. >> monetary policy works with a lag. we know that. and so we don't know what's going to happen if the future. i scertainly don't know what's going to happen in the future. but i do know that the consequences can be dire if we get this wrong. >> charlie, we've escaped the rain. i think we ought to call it right there. charles plosser, philadelphia fed president. kelly, back to you. >> steve leisman and our thanks to philly fed president charles plosser. hope you guys can get right inside as that storm comes bearing down. up next, we'll get the panel's reaction to what charles plosser just said and the oil boom in north dakota is also unleashing a ton of natural gas. but the state's infrastructure can't handle it all and that's forcing drillers to burn off more than 30% of what they find. you'll be shocked to find out how much that lost gas is worth coming up. i make a lot of purchases for my business.

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he's been with home depot on 34 years. has long been thought of as the heir apparent. now it is official, craig menear will take offense as ceo of home depot on november 1st. >> courtney, thank you so much. we want to talk about this now with the panel. home depot is a dow component. a highly watched transition because frank blake has done such a great turnaround with his now six years with the company. >> yeah, almost seven years. pretty good victory lap in the last quarter for frank make. just because of how well the company's done already but i do think it is because of the process that has been in place at home depot. not just on the merchandising side where they consistently beat the competition but also on the financial manage many time. this has been a buyback machine. that's the story for a while. >> in a choppy retail environment this has been a name you could look at and see some momentum. we actually talked to craig menear just the beginning of this month in atlanta about some of the initiatives they are undertaking. they include with him at the

helm of the u.s. retail operations piece of this, turning a lot of these stores into almost more minidistribution centers themselves, focusing on being the amazon for larger items to some extent here. >> that's obviously been a successful model for a lot of folks but making that transition if you are the old-school retailer is the challenge. i was thinking about the gap discussion after we had it. the fact that i use it all the time particularly for my kids. their online service is very good. they are good at sales an promotions. those are all key elements. and they haven't had a cyber issue that i am aware of, at least not on a grand scale. if they can make that successful move at home depot, that should give some lift to the stock. >> which is already trading at 52-week highs, perhaps closer to all-time highs but again in a segment of housing that's generally been challenged and the different strategies that home depot and lowe's have understand. but also, they had a really difficult period going into that transition from nardelli to the current ceo, frank blake. it was a number of years before

they felt like there was a degree of confidence to really even talk about it. now we are seeing the fruits of that. >> no doubt about it. i called home depot about a year-and-a-half ago the most important stock in the market because it kind of had all those components to it, housing, discretionary, and also the financial engineering. i can't emphasize that enough. they buy back a tremendous amount of the company every single year and every quarter. i feel as if it is kind of discipline growth has been the story. i just don't know how much kind of head room there is to kind of keep that up with the stock. >> because valuations -- >> and the size of the company. >> do you have a take on this? >> not particularly. i'll reserve my time for the macro implications. >> i think what's interesting about home depot is it's gotten so much credit for the strength of its manage many. that's not just frank blake. this is craig menear, too. i think it is a move that probably shareholders should feel and do feel fairly certain about. he has a lot of experience with the company and he's taken them on a good transition. there were some bumpy years going back to the nardelli times

but things have been pretty good for home depot. as we walked through our future of retail series, a lot of folks pointed to home depot and said this is one of the names that's still going to be around in 20, 25 years. yes, they may be moving more online and that business will grow but there is definitely still a market to go to heem home depot and try to hang blinds or gloss those floors. home depot has got a good job with all of those in their stores. >> there's craig menear again. we visited that distribution center in atlanta at the beginning of the month. among some of the comments he had there, which was pretty interesting. he said i would say there is more change that's happening in retail in the last three years than in the last 50. he thinks there sis more of tha to come where the customer is now in control. you have to build up the capabilities, including e-commerce, including the

delivery systems to match that. craig menear going from being head of u.s. retail operations that had a lot to do with that e-commerce emphasis and the new distribution emphasis to now being at the helm of this company, court. >> that's exactly right, kelly. you have to make sure you can make the seamless transition homedepot.com. just as a consumer i've had some very different experiences as a consumer at the brick and mortar store. online is a little bit clunkier. the brand in some respects still operates two different businesses like a lot of retailers do. i think there is still some room to grow whether it comes in making home depot the brand. >> especially if they're getting into more of the smart home segment. they have a couple of other launches and are trying to become more of a place where you can almost get tech support. i did ask them if they'd need

more of a tech support service kind of staff. he said we're not there yet, but it will certainly be something to watch. home depot shares down just fractionally after hours. talk about an about-face. up next, former cftc commissioner bart chilton is lobbying the high speed rail industry even though he used to be one of the industry's biggest critics. we'll be right back. during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive. we rely on the cloud to provide that immersive digital capability. give fans more then just the game with the ibm cloud. the ibm cloud is the cloud for business. [b♪ll rings]

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i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. welcome back. bart chilton was highly critical of high-frequency trading when he was cftc commissioner. now had his latest role as senior policy advisor, chilton is joining the lobby effort. he joins you now to explain this about-face. also with us is our own eamon javers who's been following this story very closely writing today on cnbc dot abo.com about it. with us, too, kate kelly. bart chilton was featured prominently in her book, "the secret club that runs the world." welcome, one and all. eamon, give us a quick background on the story. >> bart can give you a better version of the story that i can because it is his life but i'll give you the background.

bart chilton was a cftc commissioner and left earlier this year. while there he became sort of famous for referring to high-frequency traders and cheetahs and saying they needed to be caged and reined in. he never said they need to be eliminated all together. always very consistent on that point. now he's left the cftc, gone to work for the law and lobbying firm dla piper and dla piper has been hired by an hft lobbying group to work on this issue. >> bart, do you not feel as though you are the very embodiment of this revolving door people are decrying between regulators and the industries they regulate? >> no, absolutely not. i agree with eamon, i've been consistent in what i've called for. i guess if anything, i'm just a glutton for public policy punishment. i love it, it is in my blood. i've been doing it 30 years. whether or not that's within government or outside of government in this new role. but i think all too often you have people that are in

government and they're insular and they don't understand what's going on in the real world and visa versa. so i appreciate the cross fertilization between government and the private sector. i've always valued that. again, i guess i'm a glutton for good public policy an with the modern markets initiative i think we're going to be working towards that. >> bart, it's kate. thanks for joining us. it is great to see you. one reason that i thought you were such a terrific character in my book is that you were unafraid to really go against the establishment. certainly -- and i was focused on commodities at the time, but the commodity trading business, but even your own colleagues to the extent that you thought they weren't moving fast enough to embrace tougher regulations to sort of rein in speculative trading. that was the issue i focused on. is it going to be hard to have that regulatory spirit, that zeal, in your current role? how are you going to toe the line to kind of keep your own principles at work? >> two things. first of all, everybody should go buy kate kelly's book. it is fantastic. i loved it and i appreciate your good reporting, too, kate. but look.

i've been consistent. people that know she, kate, and eamon, i mean i've been consistent in what i've said over the years. i'm not a shrinking violet. styles i'm driven to hyperbole but that doesn't mean that i don't have core values. i'm really pleased that what i consider at the white hats in the hft community, guys that are looking around the corner that aren't afraid to say, we want transparency in these markets, we're willing to have appropriate regulation. those are the forward thinking guys and that's exactly the type of thing i've been calling for for years. i'm just really pleased that there's significant symmetry in us going forward. >> bart, here's the thing that i think whether it is you or other people in similar positions. we have an incredibly complex financial system. it is hard for most regulators to understand. i get that. but if you can turn around and say all i'm doing it helping to explain this, this cuts two ways. really? >> well, there is a lot to that. but i voted on 63 dodd-frank

rules. i'm sorry if i have to burst anybody's bubbles, but i don't remember every one of them and every little dot and ftittle, lt alone what the financial firms are doing, even more exacerbated what's going on in the european union where firms have to apply all these rules. they do need consistent. i think it is important to have cross fertilization. i think it is good to have people from private sector come to government and i think it is good from government to go to the private sector. if you are just in government and you don't know what's going on in the private sector you are missing a whole lot. so i continue to enjoy what i'm doing. again, i think these white hat guys at modern markets initiatives will do a lot of good and i look forward to telling you more about it in the future. >> bart, you know the criticism as much as i do of the resolving door in washington. you call it cross fertilization. a lot of people call it a resolving door and saying there is a problem with it. i'm glad you are coming on as a former regulator and having a conversation about it.

one question i always wanted to ask a regulator is this -- do you think in the backs of the minds of regulators in washington there is this idea there are high-paying jobs out there waiting for them in and around the industries they regulate and does that call regulators to pull their punches a little bit when they deal with industry? >> eamon, i think you are spot-on. all too often i think that's what's done. for me, i had nearly 30 years in government. i had a full career. quite frankly, i probably -- i'm such a glutton for public policy punishment. i probably would have done it until i dropped dead. but the president didn't seem to think that was such a good idea. so i think the most important thing -- by the way, this is the advice i've given to new cftc colleagues and my friends over at the s.e.c. once you get nominated and confirmed by the senate for these jobs, never think about being renominated. you will do the best job -- >> but are they thinking about their job in the private sector in forget about the renomination. but this idea that while you are making policy that affects these

industries, you're potentially also drafting your resume to go out to those same industries. >> yeah. well, it was the same answer actually. because thinking about being renominated also means you're thinking about those that you might work for in the future. that you want to -- you don't want anybody coming in as an 800-pound gorilla and say don't renominate eamon javers, he's not a good guy. so you want to be careful. i think if anything, i don't think i've been too careful in calling them like i see they will. sometimes that's hurt me but i think i've been consistent and i'm pleased about that. >> bart, one final question. were you were leaving the cftc you gave a sort of dispiriting, but i thought extremely candid, interview about what depressed you about washington. you talk about what happens to financial regulation all too often as a four-step process. one, kill the bill. two, defund it. three, regulate it. and four, if all else fails -- this is if you are a member of industry -- litigate it. which part of that equation might you be in at this point? >> it's called the d.c. quadra

kill. a four-pronged effort to try and kill something and it is used far and wide in every sector, not just the financial sector. and my role is going to be consistent with what i've done throughout my career, supporting good public policy and in this regard, with these guys at the modern markets initiative on high-frequency trading which is really a part of what's going on in the future. i am really pleased to be working with them. >> well, bart chilton, thank you for being here this afternoon along with our kate kelly and eamon javers. you can read more about all of this in kate's book. today on wall street the valley rallying above 17,000. billions of dollars of natural gas being burned off and wasted. why that's happening and what's being done now to stop it. tdd#: 1-800-345-2550 searching for trade ideas that spark your curiosity

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improved. the same survey showed 40% of retirees retired involuntarily. the question for the fed is, if they retired but they want to come back, should they be counted as retired or discouraged worker that now comes back? anyway, people are just gobbling up that story. >> that's fascinating especially ahead of jackson hole. >> number two, speaking of gobble, we had a look at russia where the government is saying to its consumers, no food, no problem. the different things the government is doing to try to mitigate the hardships imposed by the ban that they put on western imports of food. there are media reports there that they're introducing reindeer meat to make up for some things and quietly taking some things off the banned import list. number three, there is great considering what the market did today, we have a stock screen from "usa today."

14 stocks that tend to hold their value at a market top. they did a screen of what holds value between the bull top and the bear bottom. >> can you give us just one quick champ? >> kellogg's. southwestern. i'll even throw exxon-mobil in there for you. but there's 11 others people can check out. >> they should do so over at cnbc.com. allen wastler, thank you this afternoon. the energy boom in north dakota helping to fuel the economic recovery. but the lack of the infrastructure in the state is forcing drillers to burn off $100 million worth of natural gas every month. new rules meant to curb that but could have a huge impact on production. details when we come back. 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.

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right now. so many, fact, that astronauts can see them from space. drillers are flaring because so much oil is coming online and with it natural gas that the infrastructure just can't keep up. the focus has been on crude, which is more valuable and which can be transported a variety of way, but nat gas moves by pipelines and that network is at full capacity. so drillers have had to burn what they can't well into that system. it's burning 30% of the bakken being proud each day. that's a loss of over $100 million a month. the state is implementing new rules aimed at decreasing flaring to 10% by 2020 the oil and gas is scrambling to meet these new guidelines. even at a 10% rayes rate. that's ten times laernl than other states like texas and

alaska, so this flaring situation has a very long way to go and probably spark a lot of innovation among the oil and gas producers moving forward. back to you. >> wow, light and heat were incredible there. morgan, thank you. up federal government, the final thoughts. the president and steve liesman and this record day on wall street. we are back in two. d see more of what you wanted to know? .

welcome back. time for some reaction now to what philadelphia fed had to say to our steve liesman, the center from last meeting, did it change your mind, did it reveal anything to you about the protection policy? >> not particularly. i think we seen almost since q2 a message from the hard core hawks, you know, these are sort of die hard monetary economistss that don't view an activist rule affecting the real commitment find kind of a money neutrality guide. >> i thought that was the most interesting. you could tell he knew this was going to be a big part of the

debate. he said i don't think it's wise to make kaij wages a centerpiece of fed policy. >> i, oddly enough agree somewhat. i think two things, one is gas is down 16% in the last month. oil is down over 12340r9s last month. there is no way we will have an inflation scare into the end of the year. so anybody getting excited about the fed because of the inflation like charlie was talking about, that's next year, if at all. so that's one. two, i this i the committee is not focused as much on wages as they are on slack. your cnbc.com story about retirees wanting to come back. if janet yellin saw that, i hope she does, that's a telling fact that i think would convince, hoep help convince a number of people there is a lot more slack in the economy than slackers. >> that shows the numbers as well. that was a good lean, actually. what about your lean? wasler's response or does the market again close at an all time high?

>> wasler acts as if the burden of proof is on the people saying, let's wait a while? why should that be, let's wait, six, eight months to see if the data warranted a lower policy. we had lower rates for 30 years. it's not as if we know what the normal is. >> there is a bond building, everything is in a bubble. it's all the fed's fault. they better hurry up and exit. >> we had a whisper of tightening and outflow. junk bonds sold in a heart beat three weeks ago. it's not as if this is a one-way street. it did shake out a lot of guess. >> i thought his comments about wage inflation and lack of evidence that monetary policy can do anything for good or ill was good. to take a conversation in a slightly different correction, i thought he addressed it while he wasn't going to, he said, i'm not going to punt and

telegraphed the idea that i felt he was saying this could have a chilling effect on prices if you will, such as the bba buying merrill lynch. the other thing from the market discussion at the beginning of the hour. we continue to see new highs. i have been talking to traders about the notion of liquidity. we are in the dog days of august or the chilly days in new york. in general, every time we see a rise in volatility or a big move in the markets, you would see we'd see that to continue there would be so momentum. there is so much liquidity on u.s. stocks on a continuing basis. maybe because 2004 best house in a neighborhood. i don't know, that seems to be giving owe glow that should be interesting coming out of jackson hole. if we hear something from japan that, could reverse a little bit. dennis gartman did tell us he's tried to short this market. he can't do it. i think that message of

capitulation will catch on. thank you, guys. i appreciate it this hour. fast money is coming up in just a few second with melissa lee. melissa, what's on tap? >> you saw yesterday's big yield in the sector, we're going to name names in terms of his targets, acquisition tarts. also the ceo of clean energy. they're installing a bunch of fueling stations across the country. specifically in texas. >> all right. over to you guys. >> "fast money" starts right now. at the nasdaq market site at new york city in "time's square. financials breaking out, bank of america leading way on news that a $17 billion fine from the justice department t.xls seeing a major move higher today. this is of course ahead of tomorrow morning, janet yellin at jackson