espirion. >> as we noted to you, netflix is a big winner right now and tonight at 5:00 we are speaking to the biggest netflix there on the street. he'll defend his $270 price target. 5:00 p.m. eastern on "fast money." meantime, "closing bell" starts right now. hi and welcome to the "closing bell." >> simon hobbs in for bill griffith. a big rally on wall street sending the dow back into positive territory for 2015. and the nasdaq is within striking distance now of its all-time high. >> while stocks are surging today, there's actually been a bear market happening in 20% of the names in the s&p 500. we'll bring you the details on those whether the investors should be worried and see opportunity coming up. oil, meanwhile, a major catalyst behind today's big moves. crude prices pumping higher and fueling a big rally in energy stocks.

energy stocks are higher today, something we haven't seen lately. we will speak to the number one rated airline analyst on wall street. jpmorgan's jamie baker about why he still has overweight ratings at these levels. and then it's our trump card. ivanka, that is, rising rates are becoming a reality. what impact that could have across the real estate market. and maybe she'll give us insight into whether her father donald trump is going to run for president. let's begin right now with our "closing bell" exchange. joining us to talk more about this remarkable rally today, keith fitzgerald from running morning.com, and our very own rick santelli. we welcome you back rick and everybody here to the program. why are markets up so strongly today? >> well this is that spring that's been loading, kelly, that we've been talking about. this capital that's been coming out of fixed income. and not only out of fixed income. but as you think about it out of other global markets. out of asia or europe. and this is going straight into

u.s. equities. it was just a matter of time. what we're looking at is just a tsunami of capital. and the biggest problem i think that we're having is there are still a lot of nonbelievers out there. you know, we've been waiting for these markets to start going in different directions. this is the road to normalization. we finally got on it. it's going to be messy, but either way it's going to be good for equities. >> do you believe this is the start of something bigger? the idea that the reflation trade has become a growth trade? that increasingly stocks are going to rise and bonds simply fall as we normalize? >> well i wouldn't say that bonds are simply going to fall. i think those are a complicated market right now. i've been with jack for a long time. the most reluctant, bullish market in history. and i think there's a lot of pent up demand a lot of people on the sidelines, a lot of money rotating from around the world. that net, net is an upward influence. that's where i'm at. >> rick do you see a rotation underway in where people are putting money to work. are we at that juncture now

where we're going to see the flows into the u.s. stock market? >> you know, when i look at the size of the money funds, how much money has moved into the fixed income markets over the last several years, when i think of my conversations on this topic with charles, no just because treasury yields are moving up and liquidity will be a factor in how that process unfolds, i'm not so sure it's going to be big swap of flows, fixed income market's going to say gone fishing and all that money's going to go into stocks. i think those that have been fighting it are going to continue to fight it. they might not fight it fully loaded in what's a position they may have on the long end of the curve. it's more of the sail. we're just doing it from a lower level. the dow's still flirting with unchanged, but the dynamics are the same. until we see the whites of an interest rate's eyes that put a little fear in the marketplace at the grass roots level because every amount of vig in the economy is priced to some interest.

as long as the music keeps playing, everybody's going to keep stock dancing. >> we've seen the market. we've seen this market go up. i'm sorry, hi simon. we've seen this market actually price. and not only one, but two rate increases and stocks have not fallen out of bed. it was not the end of the world, rick. you know, guess what i think that this normalization -- >> what rate increases are you talking about? wait. >> two rate increases. >> i'm talking about the move that we have seen in the ten-year in the 30-year. if you think about it -- >> market moves, okay. >> already priced demand. >> the market -- >> there's a difference there. there's a difference. you guys are splitting hairs here. one is caused by traders, the other is caused by a fed reaching for straws that hasn't made up its mind doesn't know where it's going. doesn't have a road map. a few minutes ago, they don't know the way home. >> hang on because we had a very interesting contribution to this very debate from bill gross about 20 minutes ago on the network. and i want to play you a clip of what he said. and, jack, for you to respond to

it first. he suggested very importantly that the vice chairman of the federal reserve fisher and mario draghi in his words have been, like, people going into a crowded movie theater and shouting fire in that they have said that people should accept higher levels of volatility because they specifically want rates to rise at the long end to help the insurance companies. take a listen. >> while central bankers have been trying to dampen volatility for the past five years. to me that was a signal. that basically said they want longer term rates to go higher. now, why would they want that? because insurance companies in europe insurance companies in the united states, pension funds and so on are suffering with 2% to 3% long-term yields. they need higher yields. >> jack do you think those central bankers are moving for the big insurers? >> you know not only insurers think about the banks. it's good if the market starts to see a wider and steeper yield

curve. these banks right now are doing nothing but doing arbitrage with the federal reserve. if they can get back to banking. if insurance can get healthier balance sheets. if all of that can happen simon, then that's healthy and bullish for equities. now, you know bill gross isn't talking about is what really is out there, and that's something that rick has been talking about, and that's the lack of liquidity. and one of the reasons the moves have been so vicious and the velocity of the moves have been scaring people. that's what seems to concern everybody. >> and we'll have more on that. of course steve swardsman. we'll talk more about that. but same question to you, is this the appropriate way to think about where is that monetary policy? >> look bill gross has had a fabled career and a bull market that began in bonds in march of 1981. however, remarkably wrong calls recently. to his point about the fed, about fisher guys yelling fire in a movie theater, i think he's on to something. 75% of the holders of bonds never ever sell. you're talking about $1.5

quadrillion and that's how you've got to look at this thing. don't regard the fed for what it's doing, you regard for what it has done and hasn't done yet. >> i'm not quite following you. you make an important point one that doesn't often get brought up, but a lot of the credit instruments are simply held by for example, pension funds. >> right. >> are you arguing they'll continue to hold those so there's not as much of a risk? or if they move to dump those that would exacerbate conditions? >> there's not enough liquidity if someone went to dump global bonds. nobody can absorb it. where can you put it? europe? nope not going to happen. government paper, on the other hand. yeah, excuse me, corporate paper, that's going to move. the government paper's not going to move like everybody thinks it is. and that's the real bug boo here. there's going to be a one and done but all that is volatility. there's ways around that are if the individual investor. >> and final word to you. that is the danger of the spike here, the redemptions.

>> yeah. listen. i'm not going to spit and spat with bill gross. he's the bond king in our world down on the trading floor. good year or bad year, doesn't matter. but, if you asked me would my first reason for normalization be that reason? i would say no. i would say normalization and the hurry up to do it is pretty simple. if we start to see a reversal of fortune with regard to the global economy, more than we've seen over the last 16 months there is no encore performance to central bankers unless they lift rates a bit to give themselves a cushion. i think it's that easy. >> all right, thank you, everybody. guys, we'll leave it there. jack, keith and rick santelli this afternoon. ali baba shares getting a boost. part of the market rally better than 1% themselves. here in this country making a pitch to get american businesses to list on the site. >> david faber spoke, exclusive exclusively within the last hour here on cnbc.

>> i promise for the first ipo day and promised will always be a company focused on the future. but today, the business, we're taking care. it's too late to worry about today and next quarter. right? we started to worry about next quarter should be two years ago, three years ago. if we're still worried about, today worry about the next quarter. we are screwed. we're in trouble. >> david faber from another exclusive with the ceo of alibaba. it's always fascinating to watch this guy speak to you. what stood out for you? >> he's always reterrible fresh ing refreshing, as we know simon. in terms of whether it's his long-term view. you know many of the themes that he comes back to again, as was the case in that sound bite that we just shared of course, the long-term view at the company that he has, but i guess guess it is that he is sticking

to exactly what he always said he would, which is having that long-term view. having an empowering younger people within the company, and really trying to make this effort here in the states not about today or tomorrow, but about the next ten years in terms of really trying to get small businesses to actually use to access of course this huge and growing middle class in china. we'll see whether he can succeed. >> david, your first question to him got to the heart of this saying why not buy in ebay which has 25 million small businesses listed on its platform. and i loved his response where he said the internet's still young. he seems to think it has a chance to grow it organically. >> i think that's the fair take away, kelly. yeah, he you know he believes that they can continue to organically do these things. he gives himself a long time line in which to execute on these types of things so it doesn't have to happen tomorrow. and he does generally seem to be sending out the message. so many have said what's it

going by? ebay or paypal or yelp? he's sending that message, we're not going down that road. we are making investments here and there and smaller companies. but when it comes to the bigger efforts, they are committed to trying to do it with an at home kind of strategy. >> yeah. it's -- i think it's a clever message, david. i don't know what you think. peter talks about great technology companies uncovering secrets in the economy. air b & b, rooms not being used uber cars that aren't being used. and here's a pitch for the small and medium sized business person in this country. i think that's a huge secret to uncover, potentially if he can make the link. >> if they can make the link. and, of course, it's interesting on many of the examples he uses on the early days have to do with agricultural products. and of course, ma again here, differing from so many peers in the states willing to call out the level of pollution in china, climate change is an issue, wanting to make impacts on

society. but it figures into his thinking here because the food chain, as we know in china, can be suspect, and he's saying hey, let's bring over the cherries the fish things that grow on the ground and on the trees here in the u.s. we think there'll be demand from an ever growing middle class in china that wants to know where the food comes from and make sure it's healthy. >> yeah it's a remarkable shift from the '90s in a short period of time, david. fascinating stuff and thank you for joining us. that's our david faber with an interview with jack ma. we dug deeper into the push in the u.s. and what could be america's next gold rush in my latest piece on the spark. check it out at cnbc.com/thespark. and we have 45 minutes to go into the close. markets strong across the board really out of the gate. the dow at the moment at 250 points. gains of about 1.25% across the board. >> up next on the program, netflix is one of the biggest gainers on the s&p today. stock hitting an all-time high. it's doubled in value this year. is now the time to sell as it

moves to $40 billion? also ahead, ivanka trump on the impact rising rates could have on the trump empire. by the time police arrive on a crime scene they could have little to go on. a vague description. a single piece of evidence. a partial plate number. with an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. ibm analytics helps one hundred thousand officers work smarter every day.

welcome back. take a look at the markets. dow's up 250 points. enough to put it back above 18,000. we know we've been roughly flat on the year. but, again, a big move after we've been in a narrow range of late. adding 26 points and the nasdaq up 68. >> netflix leading that pack or at least one of the top gainers, the stock hitting new highs today. up more than 4% off shareholders approved to share increase in a move to pursue the much talked about stock split at some point. this stock has doubled in value from $20 billion to $40 billion. despite all that the next guest says he is bearish on netflix. david treanor joins us. david, why are you bearish here? >> the valuation is just, you know, it's extremely ridiculously high. to justify the current stock price. if they keep their prices the same, they need about 3.5 billion customers.

that's what the stock price implies. and so, i think, the conversation about valuation and risk with netflix is kind of been turned upside down and investors need to decide how much risk they're taking when investing in a stock this overpriced. >> add to that the move now to split the shares which might make it more attractive for a lot of people who think that $675 figure is out of reach. what will this add to the shares if they're overvalued? >> that's a great question. it reminds me of the tech bubble, just by changing the price of the stock and doubling the shares outstanding, which is effectively, you know, has no effect on value valuation, it's just half the price and double the shares. and that stays the same really means nothing. and it's just a trick to sucker more people into the stock. to get more people to buy because it's cheaper or

perceived to be cheaper. >> isn't there something unique about the potential of a tech company? that within a kind of social media framework where you have broadly fixed costs and the possibility that you could massively increase your user base that you get growth at some stage? isn't that what we saw with facebook, for example? >> yeah, simon, that's the idea. i think it's hollow. look at the competitors. you've got amazon vimio in the space. competitors coming from every angle. and at the end of the day, the whole tech story is overblown. they're a middle man, their deliverer of content. where's the competitive edge in that? what can they do that no one else can do? >> david, forgive me. there is a first mover advantage, which is what you see in facebook. >> i can flip to a different service provider, you know very easily. whereas with facebook, i've got

this information and history on there. that's a much higher switching cost, a certain type of product. whereas with netflix, doesn't cost me much to go to amazon and get my videos or vimio, whatever, it's not that big of a deal. i just, you know, i see an undifferentiated product costs rising faster than revenues. a broken business model and a valuation that should scare people. >> yeah i'm sorry, we have a little bit of a delay here. let mea read from the press release today. marriott hotels becomes first to offer netflix on guest room televisions. first of its kind launch gives direct access to the world leading internet television network. has marriott gotten this all wrong, too? >> it sounds nice but i mean, how many people, you know, it tend to watch my laptop or my mobile device, you know my -- the hotel tv. i don't think it's that big of a

deal. i don't think it cost marriott anything. it doesn't hurt. it's not that big of a deal. a lot of hotels have video systems or movies sure the netflix is going to be a little cheaper. but the problem with netflix, it's the price. if they raise the price -- >> if they don't raise the price. >> if there's another way that people want to play this space, then, a more accessible one that offers more value as far as you're concerned, what would that be? >> i don't really see a lot of value. being a middle man. when the internet is delivering something in a new way, there's not a lot of value add. look at amazon's margins on the retail side. you need to look for companies that are doing something that no one else can do. and when you've got a business like netflix where you've got a new competitor every day, that's a bad sign. >> we'll leave it there. thank you, david, so much for joining us this afternoon. in light of that netflix stocks that's david treanor from new constructs. >> 40 minutes to trade here.

and boy, what a day it's been currently up 251 points on the dow. who is the better stock picker? men or women? a special report next zplchlt. >> is that a question? >> you better watch out. >> i didn't mean that. >> ivanka trump will talk real estate and if interest rates could destroy property values ahead on "closing bell." leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. on us. get your first month's payment plus five years wear and tear coverage. make the most of summer... with volvo. ♪ ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants.

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the strong session, the dow's up more than 250 points the s&p index, they're adding about 27 to 2106. the nasdaq for its part, adding 69 points. all-time highs back within reach. and keeping an eye on energy. take a look -- there's some of the dow leaders we should mention there, as well. visa up 2.5%. microsoft, caterpillar, as well. here are the laggards meantime a different story for some of the consumer staples names. some of the telcos. a rate theme asserting itself. we've been talking about that all day as the ten-year near 2.5%. a quick check on energy. meantime, oil, again, rallying. we're talking about another almost 2% to over $61. despite that move, airlines are still higher today. slowly making their way back from what's been a rocky few months. for more on what's going on now, we're joined exclusively by top ranked analysts jpmorgan jamie baker. well, welcome to the program,

and thank you for being here. >> my pleasure. >> and let's begin with the fact that a sector gotten absolutely hammered of late, you have overweight recommendations on what's the bold case for the airlines at this juncture? >> well look the bull case is that the industry renaissance isn't over. and that managements were not tossing everything overboard, everything they've worked for. i think managements collectively have managed to quite frankly destroy a lot of investor confidence. i think managements have lost credibility over the last several weeks given some of the commentary. what we were trying to do today is put out a piece inject ourselves back into that conversation and show that things are really not as bad as the fear mongers might have you believe. and we think that upside potential from here is quite dazzling for lack of a better term. >> so what would you -- how would you deal jamie, with those that are concerned that demand is obviously down because of the strong dollar in

exporters, not so many people flying perhaps within the oil industry and at the same time, supply is ramping up. i don't know what figures you have but capacity growth, 5% from here? >> well look if anything we think carriers are going to start trimming back those capacity plans in response, you know, to some of the pressures that you identified. macro economic and, of course, foreign exchange pressures for airlines exposed to areas where currency is an issue. look at southwest airline's management team, earlier identified an 8% capacity growth rate. they, instead, took a vow of capacity chastity. i think we're going to see other managements follow in this regard. so whatever your capacity forecast based on recent commentary is today probably we emerge a little bit, you know maybe 200 basis points below that for next year. capacity is coming out, at least relative to initially planned levels. >> jamie we should also point

in time out, of course the huge move that many of these airlines have had. some of them doubling over the last year. what works best moving forward on the thesis that you lay out? >> i'm sorry, i missed that last part. >> what are the best picks within the space? >> oh the best picks. look, we would focus on the names that have actually come down the most that have fallen the most the most you know the fast and furious correction. so american delta, united. particularly if we emerge in an environment as we expect where international capacity is tighter next year whereas domestic capacity is possibly up you know at the margin a little bit too much. i think that actually shifts the the you know the investment pendulum sharply towards, you know, the big three, which, you know, have largely gotten hammered year-to-date. >> so you think this entire move in the airlines to the downside some big areas of correction has been irrational on the market of the market? >> well look i think there has been a lot of misplaced analysis out there.

any time you tell investors, hey, it's going to be different this time and management should be trusted, you're obviously going to be on the lookout for any evidence of a management team that might be falling off the wagon. you know, maybe going on an aircraft growth bender you know, for lack of a better term. i think the correction is largely unwarranted, yes. and what we're trying to do today is just kind of eject more rational analysis to combat the fear mongering we've seen. point out the fact that actually the kor ligs between capacity and revenue, revenue goes up. a lot of my clients were surprised to be confronted with that data. rarely two years of back to back revenue declines in the united states outside of 9/11 or an outright recession. i had investors tell me jamie, just let go it's not happening. the thesis is over.

and we whole heartedly disagree. >> and we have to wrap up in a second here jamie. people will throw the line around about the airlines forever being unprofitable and invoking warren buffet's name in the whole thing. what we're seeing today is not the aberration. >> i'm confident a year from now, you think about any share price chart, we're going to be able to point to turbulence, to midair turbulence if you will. this time last year, they took wind out of the industry's sail. and say, okay that was a capacity fear overreaction. >> we love it. thank you so much for joining us this afternoon. >> thanks for having me. >> jamie baker from jpmorgan. >> we're about to enter an important last 30 minutes of trade.

>> well here's what's happening at this hour. the president's nominee to head the transportation security administration says if confirmed, he is committed to fixing security gaps at america's airports. coast guard vice admiral telling the senate homeland security and government affairs committee he is disturbed by reports detailing major lapses in airport security. vladimir putin meeting with mateo renzi. poouten putin called italy a great partner of russia in europe. new york state police officers searching homes near the clinton collection facility. the search is not connected to any new leads. carnival cruises will ban beverages and bottles from being brought onboard. that's beginning july 9th. the move is an effort to stop them from bringing alcohol disguised as bottled water on to carnival ships.

that's a cnbc news update for this hour. back over to you guys. >> very good for profits, morgan. very good for profits. >> it's a trick that starts at college football games and apparently carries on cruise ships. >> you're the expert on this. 30 minutes to go into the close here. the dow's up 250 points. we'll see if we can hang on to the gains with the nasdaq up 69. a new study shows an unusual pattern of stocks selling in the final half hour of trades throughout the year. a top trade here at the new york stock exchange would tell us what he thinks was going on. and ivanka trump on real estate and whether her father may be running for president. cnbc is back in a moment.

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26 minutes to go in the session before we close up for the evening. and a recent study by fbn attracting some attention. it shows how important the last 30 minutes of trade are. since the beginning of the year the s&p 500, they say has lost cumulatively about 2% during those last half hours of the trading day. the firm says that it's a big red flag for the market. credit suisse putting out a

statement saying it could be 25% higher again in the last 30 minutes. steven joins us here from deep value. what do you make of that? are you aware of rising volumes? i guess that's what you do. >> obviously we're aware of rising volumes. the fact that we're seeing selling into that volume might be surprising to some people. upon reading this story, i did look into it. and seems it happens more on up days than down days. really kind of abated. only about 9 for 18. what i think is this is profit taking that kicks in when markets are up a certain percentage and traders -- >> on days when the market is doing the reverse, would you expect buying at the end? no? it doesn't work like that. >> i haven't seen it. >> it's a one-way phenomenon? >> seems like that. but again, most portfolios are long, not short. short sellers are a rarer bird than long buyers.

>> right. >> it's not something presumably. we're not seeing huge price action within that. this is not a danger zone for private investors. retail investors. >> well unless that retail investor is a frequent trader. someone who is not a professional day trader but trades on a daily basis. yeah, he could be losing hi gains in that final half an hour. the market's up. >> it's something we'll watch with increasing intensity. steven, thank you for your time. >> thank you. >> great stuff. simon, thanks. meantime what happens to a stock when more men than women buy into a company and vice versa. combing through the data and joining us now with a special report. >> hi, kelly. well, i hope simon's paying attention. all the research shows that women make better investors than men. the data that we have today is exclusive to cnbc and shows which stocks have actually seen the biggest growth in ownership by men and by women going back three years. so if you look at the men first at the top of the list is

mondalese. some of the names where you're seeing big growth in men as the owners. but on the flip side the names that you want to watch out for are the stocks that women have been buying more apache leads the field. doubled in the past three years. also, we had that netflix analyst on earlier. netflix has seen a 50% increase in ownership by women over the last three years. the data all comes -- you can see more at cnbc.com. i hope simon's paying attention because he might get useful advice there. >> that's right, simon, i have something to offer you. thank you so much. eric joining us on that. women also in focus at the forbes summit in new york. how women should be engaging across the business sector today. and who better to know business than ivanka trump. she joins us now from that conference. welcome to the show. great to have you. >> thank you. it's great to be on. >> let me begin with actually something that gets right to the heart of what you do at trump.

and it's valuing real estate. another op-ed today in the financial times talking about a real estate bubble. more people concerned about valuations. do you see commercial real estate, value still out there? or do you have some concerns? >> well we've been doing a tremendous amount, obviously, in this space and really global markets. so with the brand as we've grown our the company, particularly our hotel collection, we have projects in places like vancouver and rio. of course, a lot of real estate interests here in new york which has seen a major surge in terms of value. but we also have bought very prudently. so we purchased a lot during the downturn. we're in the process of renovating that and bringing it to fruition. so, you know we believe in real estate over the long-term. we have a long-term hold period, which makes us more resistant to cycle. plus, you know we believe we've bought well and strategically over the course of the last five and six years.

>> and what does it mean to you being at this forbes women summit? are there challenges you face or opportunities out there for the taking? what's the message here? how does it jive with your day-to-day business? >> it's incredible. i was on a panel this morning with one of my personal heroes who founded the company spanx and is an incredible success story with jen, and i was talking about my work both at the trump organization and also with my own brand of apparel and accessories, ivanka trump, which has been a wild and amazingly fun ride. i created a business and a company that creates product for this next generation of professional working women. and then i support that with a website that has, i think, really compelling and inspiring narrative to encourage these women to pursue their dreams. so it's been -- it's great and it's great to be in a room with so many energetic people who have such great ideas and are so optimistic about the future.

>> ivanka we came into this interview with a piece about whether or not men or women were better at investing and whether one set -- >> i heard that. >> i know. i'm just saying. i don't know what you think. i mean, obviously, you've done some work specifically for women. is it possible to generalize? do you see differences? values techniques coming from either sector? is it possible to generalize in the business decisions and negotiations that you've been involved with? >> well i think you can generalize generally, it's a negative idea you have to look to the person and not the gender. companies who are underrepresented in terms of the number of females on their board, the number of females and executive positions within their companies are doing themselves a disservice and that is proven time and time again. that is one generality i feel

comfortable making. >> the prospects of your father running for the presidency again next year something he's done in the past. something i'm sure affects you deeply in your day-to-day running of his company. should your father do you want to see your father run for president? >> i as an american would be very lucky if my father ran for president. i would support him and encourage him whole heartedly. i have the unique perspective of being by his side every day and understanding how incredibly capable and just what an amazing visionary he is. as a citizen, it would be amazing if he makes that decision. >> would you be involved, yourself, with any of that? >> well i think, let's wait to see what he decides. but, of course as a daughter i would be his strongest advocate. >> well ivanka thank you so much for your insights into the presidency, the real estate cycle and simon, whether men or

women or better at making investments. development and acquisitions for the trump organization. really appreciate it. >> thank you. thank you, both. we have a news alert, meantime, on jc penney to get to with our courtney reagan. what can you tell us? >> standing outside the piper jaffray conference and had the opportunity to sit down with marvin ellison who is the incoming jc penney ceo effective august 1st. he said first of all, they're working on setting aggressive using the word aggressive financial targets. he's doing it on an annual basis. he also says that when he takes over officially for mike he doesn't believe in change for the sake of change but we might see some strategic differences and changes that will happen in the year 2016. he also acknowledges that jc penney is behind on its omni channel strategy. it's probably the biggest challenge but also the biggest opportunity. and believes strongly in what it could do as a second mover with the second mover advantage

leveraging what he has done at the home depot with its supply chain initiatives. and i asked him if he had ever considered taking jc penney private of making a change would be easier to be done without being public. and he said it's not something that we have actually asked and talked about ourselves, but perhaps something a board would have to consider at a later time. kelly, back to you. >> thank you so much courtney. we've got 17 minutes left until the close. we're losing territory. it's a great rally. 238 points on the dow. but we are now back at the 18,000 level, which we thought we would comfortably close above. 2800 on the s&p. speaking with us before ringing today's "closing bell." why the payment processing company stock is up 20% this year. also ahead, despite the big rally, statistics show a surprisingly high percentage of stocks in this market in bear territory compared to where we were last year. the stock pros tell us if we're in the grips of a stealth bear

market.

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whole foods. >> joining us now to talk more about that in an exclusive interview is vantage ceo. >> well thank you for having me today. i'm very excited. >> it's a pleasure. congratulations on ringing the "closing bell." the payment system environment is obviously changing. it's actually deadline, i think, for a lot of merchants to switch over to new equipment because the cards are changing. how much of an opportunity is that for you? >> it's a great opportunity for our business. but we focus working with our clients. our clients are about enhancing security. and that's what it is enb. and we offer a full package, which is emv, what's called encryption and tokenization to protect the consumer information for our clients. >> let's take whole foods as an example for people wrapping their heads around this. what do you offer whole foods? and how does that affect me the consumer? >> looking at our clients in general and not specifically about whole foods is the hardware and integration that allows that when a card comes

the information of the card is encrypted so you can't break the code. so if anyone tries to get that information it's useless at the end of the day. >> what happens when i go and use apple pay now? >> apple pay is another device. a consumer could come in we grab that transaction. >> you'll still grab that? >> absolutely. and apple pay has a token. instead of that card number that you have there's a different number. >> we -- >> i wish we could talk more. >> i know security is an important piece of this charles. we have to let you go and get to the close. just on this specific issue of security of our payment systems, you know, how many -- how big is the concern out there? how safe is our data? >> i mean our clients take all the appropriate steps, but obviously, cyber crime continues to get more sophisticated. and we are investing a lot of money in security along with our clients. i could tell you all the clients are focused on making sure that our payments system is protected. >> okay. charles drucker, we'll let you

go. and we're still up 253 points on the dow. it's been a big day for the rally and arguably a turning point for many. >> and we have another great interview ahead. coming up the ceo of realogy. this may be it. we'll have much more after the break. financial noise financial noise financial noise

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welcome back. check out this rally we're seeing in stocks today. a nice one, but according to a piece in usa today, a bear market might be closer than it seems. for 20% of the s&p 500, in fact, it's already here. there are currently 100 stocks in that index in a bear market down 20% or more from the 52-week highs. to put that in perspective, at this time last year there were only 21 stocks or 4% of the index down that much. >> so is this a worrying sign for investors? joining us now to discuss david scranton from sound investment strategies. welcome to the program. so some big names down over 20%. delta, walmart, transocean. what should people make of that? >> well when first of all, when markets start to turn it's not as though all 500 stocks in the s&p 500 all turn downward at the same time. you get a few red arrows and more red arrows and there becomes a critical mass. right now, i think there's two things in particular that are

helping choose some of the stocks that are now in the red. you know, the first thing the negative gdp in the first quarter. >> i want you to finish the thought, but are you saying we're at the turn in the markets? these are the tell, the canary in the coal mine? >> i think we've had a lot of nervousness for a long time. whether the markets are ready to turn right now or whether we've got three or six more months before they do yes, some time before the end of the year, i see the markets turning and us having a decent correction. >> those factors you mentioned. i'm sorry, i want you to make sure for our viewers you can finish the thought. >> two things i think people need to be aware of especially investors and pay attention to. first is gdp. negative gdp growth in the first quarter. if we get that again the second quarter. now, of course we won't know about this until the middle of august or so. if that happens, we're considered to be in a recession. and once you put the recession label on the financial markets, that's going to cause a slide. >> i'm surprised that's your analysis.

i feel as if we've been through that. last friday that was real strong 280,000 jobs created. surely we can put those concerns to that extent behind us. >> no, and there's always the, you know two step forward, one step back syndrome. i think that's what we're seeing. the other issue that's reared its ugly head in the last month or so is interest rates. you know if interest rates continue to go upward especially on the ten-year as it has been that's another issue that can cause a stock market to take its turn. that's why i'm not surprised to see that it's -- that the stocks being affected are those that are more cyclical those that are more interest rate sensitive. >> if it's not growth it's the rate hike that will do it. i understand the point you're making and you do think that these are noteworthy for the direction of the rest of the market. >> certainly. >> okay. we'll let investors make up their own minds. thanks for being here. up next on the program, coming up to the closing

countdown. where are we? six minutes to trade. let's see if the rallies can hold at the levels. we're losing some steam. >> indicating about $200 million to buy on the close. after the bell we'll deliver earnings from box, krispy kreme and men's warehouse. and speaking us tomorrow on "closing bell," be sure to tune in, you're watching cnbc, first in business worldwide.

the dow industrials chart for the day. we've got apparently good news from greece, we spiked even higher. we're still above 18,000, 18,004 if with close within the next few minutes. a similarly high close. >> i think the important thing about today, we were moving up even pryer to those comments, she was willing to meet with sipress. the groups were already in correction territory down 10%. i think we were due for a bounce. i think the big thing about today, it was, the sustainability of the rally. 3-1 advancing to declining stocks all throughout the day. and some parts of the day, it was 5-1 advancing the decline. if i had something to complain

about, the volume still isn't here. an average volume day on a huge market upday. that indicates a lack of sellers rallying, causing the rally, not a lot of people interested in suddenly rushing in to buy. so it's really a lack of sellers. >> we thought with interest rates going higher today, this was the beginning of something bigger. felt like more than just reflation. it was about growth it was about, perhaps building for the second half of the year. >> i would agree with that. and that's a sign of how split the traders are. there's not a lot of strong convictions one way or another in where the market can go right now. and that lack of conviction is reflected in the volume. tomorrow, the big market mover's likely to be retail sales. remember how disappointing april was. flat retail sales. everyone said what happened to that? may, we're expected to be up 1.3%. expecting a nice bounce. that's a major component in gdp. that'll be a big argument about the fact that the first quarter was just an anomaly on gdp. if the number comes in line with expectations.

>> takes us beautifully toward the close of trade. "closing bell" continues now live from the floor of the new york stock exchange with kelly evans on cnbc. thank you, simon. hi, welcome to the "closing bell," everybody, i'm kelly evans, it's 4:00 and here's how we're finishing the day on wall street with gains across the board. adding about 240 point bs offen the close there. and closing just below 18,000. couldn't quite get back above that level today. still a gain of 1.3%. the nasdaq seeing a similar pop-up, 62 points to 5,076. adding 25 to 2,104. and to talk about all of this, we have cnbc contributor carol

roth. and with us more on today's market action, jon najarian and steve grasso in a moment. welcome to you both, as well. sarah, let me start with you, this popped today. what's behind it? >> there are so many reasons that i'm reading about. and they're really industry-specific. you can look at energy and materials and you really saw 1% moves higher and commodities like copper like gold and like oil on the back of dollar weakness. also that inventory's number shrink shrinking, helping the price of oil. all of those stocks tied to energy and materials gained. you had more buyback announcements. that's always, you know, you can always point to that as a reason for gain. barclay's put a note out saying 50% more buybacks this year than the same time last year. the latest to sort of join the fray upping their buyback by double. >> and how strange was that with the announcement that came and then wasn't and still there? dr. jay, what caught your attention today? >> well, all the chatter about

cypress, for example, talking with angela merkel and negotiating a tradeafter. but it's the same story, kelly. it's kicking the can down the road. i see carol shaking her head because we both know this is something that doesn't end well for greece. but it's something they've been putting off for years. and if you can put it off long enough, maybe you can get by. >> then there's no it. >> well exactly. there hasn't been an it. and that's part of the problem. >> right. >> it is the quintessential dysfunctional family. this is the bad kid who keeps messing up and keeps asking for money. they're not going to kick him out of the family. they're just going to keep finding ways and, you know go round and round. so everybody gets worried about it. is something going to happen? but, unfortunately, the parents aren't able to lay down the law here. >> what's interesting today. reminds me of the show. evan, what's it going to take for you to get involved? he'll say i want a revolution on greece one way or the other.

just tell us the plan. >> there'll never be a plan. there will never be a plan. >> yet, look at the action today. do you think, dr. jay, tie that together for me. i don't quite understand. if we didn't get more resolution and dragging this out, is that fine? >> all it does is take away a little of the short-term uncertainty. because, obviously, a greek exit will have some volatile impact on our markets. it'll have impact on currency on interest rates and, of course, on stock markets around the world. not so much around the world, i shouldn't say that. but between europe and america, it'll have an impact. now, they've just pushed it off a little bit. >> just to continue my theme about industries. i mean financials were one of the best performers. they've shown strength on the back of higher interest rates. we saw the highest rate today since october. and these sort of industry specific stories are propelling a lot of the stocks. >> and hold that thought for a minute. big news, we have now breaking news on amgen's cholesterol drug.

>> hey, that outside panel of advisers just voting on whether to recommend the cholesterol drug. that coming in positively. 11-4. that outside panel of advisers for the fda such that they should recommend it for approval for certain patient populations. now similarly to yesterday, they are discussing which patient populations it's appropriate for. and as we saw with regeneron's drug which was discussed yesterday, they were talking about narrow patient populations genetically to find high cholesterol and folks at high risk of heart attacks and strokes. so that going on now. but 11-4 positive vote for amgen. kelly, back to you. >> meg thank you so much. we also welcome steve grasso off the floor. what are you trading? >> interesting when you were talking about the outperformance with the finals. take a look at energy. energy has been so beaten down. now you start to see that whiplash back. a lot of guys thought it got ahead of itself.

started to factor in $85 barrel of oil. now it's coming back now. people that had to really sort of dig in and see what the valuations were as long as you're above $60 in oil, i think it's not all clear, but guys are really starting to dabble. >> and it's interesting, i just came back from a financial services conference last week. and pretty much every strategist picked that oil was going to end up the year, like $70 to $75 a barrel. so certainly, the sentiment is yes, it's moving on up. >> it's definitely the equilibrium is $60 a barrel. and it's all weighted toward the dollar. what's the dollar doing? if you can tell what the next move is in the dollar that solves a lot of big questions with the market. >> and back to greece which the headlines are moving the euro up when there's any kind of whiff of move on the dollar. >> look at the outperformance on small cap stocks. they don't have that exposure internationally the way the large caps do.

so 80% of their income their revenue is derived from here domestically. so you sort of get a bang for your buck when you're going small cap. >> yep. and the trade of the year has been to fade the consensus. consensus beginning of the year as oil was sliding was $15 or $20 oil over at citi or whomever. then it was 1-1, euro to dollar. now where are we? 113, 114. if the consensus is 70 75 fade that. >> it's either going to be 10 or 100. >> and that's not because carol said it. if that's the consensus, i want to be on the other side of the consensus. >> does that hold for the yield, though? does that hold for the yield? i mean the yield hitting levels we haven't seen in forever and is that -- is that a tell for you, dr. jay? >> well i mean i have been wrong on the yield. so me fading consensus has not been. i was right for several years.

i've been really wrong for 50 you know -- >> we're fading on you on that one. >> yeah, you should fade me on interest rates right now. >> this is important to dwell on this for one second. it is where we saw weakness in the market today. rate sensitive names. the ten-year up 2.5%. steve, the big trillion dollar question is are people going to leave fixed income or not? rick santelli says no. what do you think? >> i don't think they are. but the truth is when you talk to a lot of clients, where do they see this becoming a real head wind for the overall mark. and i think you have to go another quarter point higher from here. >> okay. >> there's still some room. >> hold that thought for a second. bob's quarterly results are hitting the tape now. now those details. hi, josh. >> kelly, box reportings let's get you those numbers. a loss of 66 cents. the street was looking for a loss of 31 cents. billings up about 58% to 69.8 million.

box also adding customers now 47,000 customers around the world. and looking ahead, q-2, guiding for revenue of $69 million to $70 million. this conference call starts at 5:00 p.m. eastern and we'll be on it and bring you headlines as they come. back to you. >> that's not a bad move. dr. jay, 10% pop in box. this company, last quarter, they had real issues with aaron levie, didn't understand and appreciate where the earnings were coming from. >> it's been a stock that people have loved to hate. we'd see a lot of those are the people unfortunately having to chase it up 10%, 11% in the afterhours. >> completely a short squeeze. i think from a momentum name, this is not one that people are particularly excited about. and if you think about the space they play in i don't know this is a need to own name nor a big enough momentum mover with enough upside that would be the one -- >> last word to you?

>> this actually is a type of stock that confuses a lot of investors. just as you were mentioning, when it pops like this and doesn't have great earnings everyone scratches their head. it confuses the retail. as you said, there's too many competitors in the space. >> steve thank you so much. >> thank you. >> don't miss a first on cnbc interview right here tomorrow at 4:00 p.m. on the "closing bell." also be sure to stick around and catch steve at 5:00. they're going to be talking to the ceo of the company that could be tesla's big competitor. don't miss that one. here are wall street's earnings. really all they're cracked up to be. an important new report saying the stock rallies we've been seeing have been based on phony profits. we'll explain next. and los angeles becoming the largest city to approve a $15 minimum wage. we'll hear from one entrepreneur who says this move will be great for his business. you're watching cnbc first in business worldwide.

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well those markets certainly rallied today. but new analysis from the "associated press" says this could be smoke and mirrors inflated with phony numbers. comparing bottom line profit figures to adjusted profit figures of major companies in the s&p 500 and found 72% of companies reviewed had adjusted

profits higher than actual net income. in an article, meantime, questioning practices with the headline reading tech start-ups woo investors with financial terms suggesting the numbers don't always add up. and that was a front page story, as well. let's bring in herb greenberg who joins our panel and dr. jay. great to have you on this topic. and listen, this wasn't the journal piece did focus a little bit on companies like uber for example, but the "associated press," meantime was talking about traditional names like alcoa. what do you make of this? >> this is more of the same we've seen for so many years. years ago, we used to call it ebitda. companies would say look at our ebitda. then they say, look at our non nongaap results then adjusted results. it's adjusted after the bad stuff. the stuff that won't make us look so good. sometimes there's a reason to look at the adjusted numbers. but many times, it's just the way to get people to look away

from the cost like stock-based compensation which people's eyes glaze over when you mention that. but it's actually very important. so, you know we've seen this especially in a bull market, costs don't matter. in a bear market you watch out. those costs are going to matter. >> so dr. jay, what is an investor to do knowing this i would hope and imagine that going back to the financials digging through them but still left with a choice to make. do i believe a company that tells me what's more important is its long-term focus and to ignore these one-off items or ignore this stock-based -- >> no ignore those. and when you look at the stocks that have underperformed. whether it's some of the ones that are cited in the article like "boston scientific" where they would swing from a $1.6 billion profit to almost a $5 billion loss depending on what you added back in. so to herb's point. when you're dismissing things like that stock-based compensation when you're dismissing some of the

write-downs that everyone else or an awful lot of other people think you should be taking for intellectual property for patents, for whatever it might be that is something that should be concerning to an investor rather than saying oh this is a one off. no it's not. >> carol? >> here's the issue. this has been going on forever. the change is, i feel like technology has made investors lazy. there are so many ways you can get information and adjusted numbers that nobody takes the time to go through the ks and qs and to look at the management discussion and analysis, look at these individual items and decide, which of these are things that are going to recur on an ongoing basis and are really part of the way that particular company operates because it is an art, not a science. you have to make that determination for yourself. and i think technology has been the catalyst for people to not do their homework. and that is not okay. >> it's a good point. what's interesting, as well, roadwaya reminder, there's new ways to

invest in companies. during the dot com era, it was all about focusing in on eyeballs and lately focusing on bookings. and it's earnings and it's revenue, and these things should mean the same thing regardless of what cycle of innovation we're seeing. >> kelly, in the end, absolutely, let's not forget groupon. adjusted consolidated segment operating income. that's what they wanted everybody to look at. and i wanted to mention something. we recently did a report at pacific square on google. you say why google? my goodness, stock based compensation. people have taken their eye off the ball. stock based compensation has skyrocketed. anyone's eyes will pop out of their head if they look at those numbers. and you might say, why does it matter? this is a mature company. what's very important is if the stock market falls or the growth is not reignited, those costs, people are looking at google on add adjusted basis. if you look on a real gaap basis, and no one's doing that

right now. but mark my words, smart people are starting to chat about it. we think it's a significant issue they ought not ignore. >> i'm interested herb in this idea that private companies are getting higher in inflated valuations because of the metrics they're advertising. and whether that sort of helps explain the mismatch between valuations in private companies and public companies and is a signal that bubble is going to burst. and these valuations really don't match reality. and once the company ipos it's not going to do very well. >> well of course carol, that's the point. because what a venture capitalist, they can look at the other metrics. it still comes down to those. now you're trading on what everybody looks at and what matters. a private company can be valued very differently than a public company. and people forget that. but in this environment, man, as long as you get out the door that's what's important. >> and importantly, dr. jay, revenue should be revenue. so you know revenue with three asterisks and four footnotes is you know at some point

stretching the believability of using a term like revenue. and s.e.c. term like revenue. >> yep. >> and goes back to this question, i guess, though, of should investors avoid these companies they feel like aren't telling them. >> there's an awful lot of companies they'd be avoiding. >> that's right. >> i don't know you want to avoid all those companies. and the financial engineering you talk about all the time on this show you know when you're investing those billions of dollars as apple is buying back shares. and there's fewer shares out there so that the revenue per share obviously looks better. there's a lot of ways that companies play with numbers a little that doesn't seem to be as bad as some of the other -- >> you have to look at it on a company by company basis because there are some cases where those adjustments make sense and they are not reoccurring and shouldn't be included in the operations. and there are sometimes when they're just fudging it and you need to make the call. >> do the homework i like that message. thanks a lot, herb, really appreciate it. herb greenberg and dr. jay. thank you, both.

>> thank you. krispy kreme out with the quarterly results. >> that's right. it's a mixed quarter for chriskrispy kreme kreme, reporting 24 cents a share. the street was looking for 22 cents. revenues, though slightly missing, $132 million compared to $136 million in estimates for the quarter. same store sales up 5.2% for q-1. they are being slightly conservative guidance for the full year of eps between 80 and 85 cents. as you can see, the stock up by about 2% in the after hours trade. baaing over to you. >> thank you for now. elon musk making a bold prediction saying the car maker should be able to post an average growth rate of roughly 50% for the next several years. it wasn't his only bullish call. and we're going to talk about that straight ahead. also mortgage apps as rates hit the highest level since november. the ceo of realogy which owns century 21 and others is going to join us later on the "closing

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transports. speaking of which, elon musk making bold calls a the the shareholder meeting yesterday. and then today, bmw making a move to keep up with tesla. the details on those both now, hi phil. >> we'll talk about bmw in a bit. but first, let's talk a little bit more about what elon musk said last night at the annual meeting in mountain view california. some of the chatter today about hiss projection that this company will grow at 50% annually over the next several years. didn't say how far into the future. and he didn't say that it's going to be definitely 50%. but he thinks it'll average just about that. couple of other pieces of news the auto pilot test versions in the model "s," they are going to be tested out with customers at the end of this month. by the end of this month. it's coming along quickly. the model x is due to be delivered in three to four months and the battery packs, the first ones will be rolling

out mid 2016. now, many people are saying how can they achieve 50% growth over the next several years? well, take a look at where the growth in sales is in this auto market right now. if you're selling anything above $75,000 and that's what you get with the model s, the sales are booming. in fact, suv sales for anything over $75,000, right now it's running at 44% for this year. with this in mind we thought we'd show you the greatest super luxury car if you will. it was unveiled a few hours ago in munich, germany. this is the flag ship sedan from bmw packed with more technology it is lighter because of a carbon fiber composite base. not only a new v-8 engine but also you'll be able to experience gesture controls. that's right. gesture controls. if you want to adjust the radio station, get a phone call all

you have to do is wave your hand kelly. wave your hand and you'll get it. take a look at shares of bmw and tesla over the last year and something interesting here. look at the inversion relationship there. when one is up the other is down and when one is down the other is up. but year-to-date tesla outperforming bmw. >> i have so many questions, i don't know where to start. but it does to your point about being able to wave your hands and do things in the vehicle, how much of this competition is becoming about technology? and some of these more autonomous features in these cars? >> it's all about that. not only are people demanding this but the technology is coming along so quickly that the automakers have to include this. the question becomes how much can you put into the car without being too distracting? and at what point will regulators say that's too much. yesterday, he said these first besay versions of autopilot will require you to pay attention. but he believes in three to four

years, fully autonomous cars will be available technology wise. >> and sure how to respond in terms of liability and to the extent there's a human sitting in the seat or not, guys. there's a lot we're seeing. >> well or, it's unclear whether consumers even want them right? or are willing to pay a higher price for them which they will be significantly priced higher, right? >> i think it's a question of how much it's going to cost them. i think they're going to want it. i think people are so attached to this little thing right now. you you have people wanting to be texting on their smartphone and that time that's being wasted, in many ways by sitting behind a wheel. if somebody said to you, hey, you can take an hour and a half of your day instead of driving, you can be doing work something else, would you do it? absolutely. >> phil, i have to ask you, speaking of things that

customers -- i heard at the shareholder meeting, wanting a vegan car. what's the likelihood that happened? >> i don't think it's real strong. at the end of the day as passionate as those folks are about the use of leather and them not using leather, this is a company that's got to worry about the bottom line. and the number of people who are going to complain about whether or not they use leather or whether or not they make a vegan car is so small that i think they will be polite and they will say we will look at this but i don't think that tesla at the end of the day is going to make a vegan car. >> thank you, phil lebeau with the latest on the luxury cars and what they're offering. meantime kate rogers. what's going on? >> s&p has lowered their credit rating on greece from triple c plus. to now ccc. they're saying it appears to be prioritizing their other spending over debt servicing. and that without deep public sector reform greece's debt is unsustainable.

deeper into junk for greece. back to you. >> thank you very much. there are more practical applications than necessarily moving into it. >> correct. >> could harm them we're looking at interest rates, the ten-year at 11.5%. >> meaning they're not going to the market to borrow anyway. so the junk to further junk thing doesn't make sense, but piles on pressure. anyone who -- rating agencies. >> does it really pile on any pressure? i mean we all know the situation that they're in. we all know that the situation that the euro zone is in. and -- >> i'm not sure what to do with the rating situation. >> i can't think that any investor is going to go oh my goodness -- i don't think it changes anything. vis a vis their negotiations at all. >> well, a lot of the debt being bought in greece anyway by the banks there, as well. if anything again underscores the problems they're having. >> and that they're going to have a long way to catch up when they eventually if they

eventually turn the corner and have to go back to the markets tomorrow. >> thanks, guys. time now for cnbc news update. what's happening? >> here's what's happening at this hour. house speaker john boehner blasting president obama for his lack of strategy for fighting isis militants. he says adding 450 more u.s. advisers isn't an overall strategy stating it's clear the training mission alone hasn't slowed down the isis threat. joint chiefs of staff holding talks with rivlin in jerusalem. tensions between israel and the obama administration remain at a high level. and russian president vladimir putin arriving at the vatican today for his second meeting with pope francis. reportedly the u.s. ambassador to the vatican has urged the pope to bring up western concerns over russia's involvement in ukraine. and a team of experts from the world health organization visiting health facilities in south korea as part of the response to an outbreak of middle east respiratory

syndrome. 108 have been affected by the disease. that's the cnbc news update at this hour. back over to you. >> getting some criticism how it's handling it. thanks very much. mortgage rates are spiking and the fed hasn't raised rates yet. well, richard smith is here exclusively on that next. and blackstone chairman and ceo steve schwartzman warning the measure to protect us from another financial crisis, in fact, will spark the next one. we'll dig deeper into that coming up on the "closing bell."

welcome back. some breaking news on nike this hour. kate rogers what's happening? >> that's right. well the nba and nike are announcing an 8-year partnership. going to become the first apparel partner to have the logo appear on all encore designs for the nba, wnba and the d league. this will begin in 2017. it'll last for eight years. and nike and ua had been competing for this deal. nike's stock is up over 1% in the afterhours trade. back over to you. >> your thoughts on this. >> well nike was doing well today and it's been on a strong run. this is what nike does best.

its partnership and relationship with the league and with the athletes. that's what helps it sell the clothing, sell the shoes. the big thing for nike is going to be whether lebron james wins this final or stef curry. and nike stock has gone up every time cleveland wins. the latest data on mortgage rates, meantime came out this morning. the numbers show last week a sudden surge in applications in 8.4% increase in the week before actually, ending a streak of declines. is this a sign that people are trying to lock in the rates with a fear of a rate hike on the horizon. for more joining us is richard smith, chairman and ceo of realogy. great to have you here. >> thank you. >> and showing some of your brands. century 21 coldwell banker sotheby's. from this perspective, are you seeing a surge in interest in home buying on the fear of higher rates? >> no it's a combination of

issues right now. it is that time of the year, so this is our christmas, if you will. so there's a natural surge in activity. there may be a little bit of focus on rising rates, but rates are only up about 20 basis points over the past several weeks. still at 4% or less. in fact, an adjustable rate mortgage is about 100 basis points less than that. if we do see an increase in rates, there could very well be a surge in activity as people try to beat the rate increase. >> that's what i was going to ask. fast forward to this fall maybe, do you think it's going to hurt the housing market because logic would tell us higher rates equal lower prices. >> the industry will tell you, excuse me takes about a year to handle 100 basis point increase in rates. and that's something that we saw earlier in the past several years. so i think that's probably a good measurement. >> we've seen the wealthier home buyers have been sustaining some of the growth. is that what you're continuing to see?

or do you see the middle class coming back at all? >> well i think the general issue is we have a lack of inventory across all segments. new york city's a classic example of that. we don't see it getting much better. it is slightly better. we're at about 5.3 months of inventory. should be at six or more. so the substantial amount of demand in virtually every market and not enough inventory to meet that demand. and that is clearly having an impact on the industry and is definitely have an impact on rates. so pricing is going up it's up about 36 months in a row, month over month and i don't see any end to that. >> and you're seeing at all segments, high middle low? >> we see it across the board. and we think that the first time inventory is particularly noticeably lower than it should be. the builders are not building fast enough. if we could encourage anything in the marketplace, it's our friends the builders need to build more inventory. >> i'm curious as to what you're seeing, richard, in terms of foreign demand for u.s. housing. specifically in the urban markets like new york city which has been such a fuel for the

strength in the housing market lately, but with a stronger dollar and some of the weakness overseas, is that really slowing down? >> well, one of our great brands that we are fortunate to own is corkran, it's a hot bed for foreign investments. there's a thought out there that the russian buyer has left the marketplace, it's simply not true. they're far more careful. they haven't left miami. still very prevalent in miami. i don't see that change in the near term. i see them being far more selective. >> what about from asia? >> asia is an issue in miami. a bit in new york. we love our asian buyers in new york. >> go ahead. >> the issue is there's a complete lack of inventory. in new york the difference is we have a lot of new construction coming online and the new construction's very appealing for a variety of different reasons. and i think it's particularly attractive to the foreign buyer. >> before you go, is there a

momentous shift here because home ownership rates are at a low? >> no it is where it is not by choice. people were forced into this position. they will quickly go back into homeownership as soon as circumstances permit. all the surveys strongly indicate that and we're confident that's the case. >> we'll have to leave it there, richard. thanks so much. >> thank you. >> a window to what's happening in the real estate market across this country. the los angeles city council, meantime, has voted to raise the minimum wage. a small business owner says why he doesn't think it would hurt his business. he'll explain that coming up. and spotify valuing the company more than $8 billion. are investors betting spotify has a better chance of taking on apple music than pandora. that story ahead on the "closing bell."

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usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. the los angeles city council voted to raise the minimum wage. jane wells following this story for us and joining us now for more. hi, jane. >> hi kelly, it was not quite unanimous, but close enough with a 12-1 vote. the last and final vote to raise the minimum wage in this city of nearly 4 million people to $15 an hour within five years. currently, there's no mandated city wage just a state minimum of $9 an hour. in l.a. it'll go up to $10.50 in a year. and then it'll jump every year $12 an hour $13.25 $14.25 and $15 by july 2020.

full-time employment would earn someone over $31,000. companies, though, with 25 or fewer employees will have an extra year to enact these step-ups. originally, organized labor pushed very hard for the higher wage, kelly. exempt to give the union more flexibility and perhaps negotiating lower wages in exchange for other benefits. that move was blasted as hypocritical and labor back down. all that's left senior if the mayor to sign the ordinance. we're told he'll do it this saturday. of course he will. this was his baby. back to you. >> thank you so much. jane from the west coast there. most but not all smaller businesses do view a higher minimum wage as a threat. joining us now is the founder and ceo of uncommon goods and e commerce and catalog company in brooklyn. he pays his workers a minimum of $13 an hour. david, we have you here because you have an uncommon philosophy about why you're paying people this higher wage. >> yeah i think it's common sense in business. you get what you pay for. and i think that we get more

dedicated and talented team members for we pay 40%, 50% above the minimum wage. >> you think higher minimum wage will be good for business? for everybody. we're talking about los angeles, seattle. i mean the minimum wage is going up. >> depends how high is high. i think minimum wages should be indexed to inflation and grow with the cost of living. having no minimum wage increase for eight years and then increasing it 50% in three years i think is a lot more challenging. >> let me ask you this do you think that small business owners should be guaranteed a minimum wage? because they're the ones that are risking their capital. they're the ones that are creating jobs so if they're going to put their capital to risk, should they be guaranteed a minimum wage as well? >> no, i don't think small business owners should be guaranteed a minimum wage but i also don't think that business owners like myself or taxpayers like myself should subsidize businesses that pay poverty wages. >> what would happen to your business if you had to raise the

wage from 13 to 15. where does the $15 figure come from? it's happening in l.a. but you're starting to hear a lot talked about it even on the campaign trail among some of the democratic candidates. >> so i think it would have a, you know so los angeles is $15 by 2020, we will probably be at or above 15 by 2020. so it would not have a material impact on our business. >> as long as it was staggered out over time. >> correct. >> do you think you're different from a lot of the other businesses like a fast food enterprise that would say, okay well, fine you want to attract better people pay them better that's all well and good. what we do isn't like that. our costs are different, our business is fundamentally different. why should we all be lumped together? >> so workers -- i have worked the most menial jobs in the world, and if i'm treated with dignity and respect, i'm going to work harder. and do a better job.

and so i think that's a universal truth. do i think that certain businesses have a higher labor cost as percent of total and they will have a bigger impact? most definitely. >> what about moms maybe people coming out of college. let's say my mom who starts a business, you know in my kitchen, i want to hire my neighbor down the street. we're starting out as sort of a side hustle and we agree we'll pay ourselves $9 an hour. oh, sorry, we can't do that. there's no flexibility if both parties agree to end around this. do you see that as a problem and hurting entrepreneurship? >> i think there could be situations where it's counterproductive. the one you described could be an example of that. but i think in the vast majority of cases paying a fair wage paying closer to a living wage so that taxpayers are not subsidizing the walmarts of the world who are paying employees

at a level where they have to be on government assistance. and who pays iffor the government assistance. >> walmart is not a small business and there are tens of thousands of big businesses there's 28 million small businesses in this country. >> right, but i think it's very hard to draw the line at what size business do you -- are you allowed to pay a lower wage. i think it's a very difficult issue. >> how many people do you employ? >> about 150 people year round people. and ever since we were a start-up with four of us we've paid above the minimum wage. >> and just before we go as we think through the implications of this if you pay $13 for people to begin with, what happens for the next level? >> there's a domino effect. there's no question. when you raise the minimum wage, it's no the just impacting the lowest paid workers, it's impacting across the board. >> does it mean that you find you have less room to grow your pay because you have to make sure that everybody else is taking care of first? >> yes, and that's my flox philosophy. i eat last i get paid last. >> how do i get a popcorn bowl

with a kernel -- >> i'm looking at the wooden wine glass. >> uncommongoods.com. >> thank you for being here. >> thank you. regulators enacting strict capital requirements iffer the banks. meantime triggering concerns could backfire in a big way. one wall street big wig is saying it certainly will and that story is later. first, though spotify striking back. apple announcing the streaming music service earlier this week but spotify not taking it lying down. that story when "closing bell" returns after this quick break.

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take a look at the dow closing at 18,000 on the nose today. 18,000.4. 236-point rally. and tech was leading the way. it was a pretty good performance across the s&p and the nasdaq today, the nasdaq adding 62 points. apple, by the way, up 1 1/2 bucks on the session. just over 1%. and the company jumping back into the music streaming wars but spotify, the current leader in paid music streaming, is looking poised to strike back. julia boorstin has that story for us now. hi julia. >> hi kelly. that's right. spotify just yesterday closed a new funding round, raising $526 million at a valuation of over

$8.5 billion. that's more than double pandora's market cap. this cash will fund spotify's competition with apple music, which has the advantage of already having 800 million customers' credit cards and the fact that it's embedded on apple devices. it will also fund spotify's diversification into video. last month the company announced podcasts and videos from partners including espn comedy central, and nbc. and spotify does need the funding. its losses nearly tripled to $200 million last year. that despite the fact that it grew revenue 45% from 2013 to 2014 to $1.3 billion. now, spotify is growing users fast. just this morning announcing that it has 20 million paying subscribers, double what it had a year ago, and that it has over 75 million active users, up 40% from a year ago. that puts spotify far ahead of rival deezer with 6 million subscribers, but behind pandora,

which has 79 million listeners. they're not paying though. the big question is whether having newly deep pockets to pay artists and new video providers will help spotify stay ahead of apple, which happens to be the richest company in the world. kelly? >> that's a point. going to the artists, julia. that's a really interesting point. we'll have to watch it. julia boorstin with the latest on the streaming wars. thank you so much. meantime blackrock's steve schwartzman warning about the next financial crisis, saying this time the government will be to blame. we'll bring you the details and get the panel's take when we come right back. hier doesn't happen all by itself. it needs to be earned... every day... using wellness to keep away illness... and believing that a single life can be made better by millions of others. healthier takes somebody who can power modern health care... by connecting every single part of it. for as the world keeps on searching for healthier... we're here to make healthier happen. optum. healthier is here.

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blackrock chief executive steve schwartzman today warning about the next financial disaster. in a "wall street journal" op-ed he writes "it will be overregulation of the banks and particularly dodd frank and growing liquidity concerns that will cause the next crisis." it's a phrase, guys that we've heard before, a warning we've certainly heard before. especially coming from steve schwartzman now, do you think it will force people to pay more attention? >> more and more financial heavyweights are warning about this. even on the regulatory side. you've heard them talking about this. the question is what do they do about it now that the dodd frank law is implemented and now that all of these changes have already been made? i thought it was also interesting, which i haven't heard as much about in this schwartzman piece, and carol, especially to your point he warned about small business and

the impact of fewer community banks. and just how much that sector has shrunk from 2007 to 2013. it has declined by 41%. >> maybe the same person sarah. it is true the dodd frank has weighed heavily on small businesses. the rules and regulations, it's such an overreaching document that it has rules and regulations that don't even relate directly to big banks and financial services. and that has hurt access to capital, it has all sorts of regulatory compliance issues for small business. and i think certainly at some point and with 2016 coming up this will be something that will be back on the table, probably pretty heavily debated in the upcoming presidential election. >> there's been a lot of moving pieces since the crisis. in a way hedge funds have now moved from major providers of liquidity to the system. that's something to watch the next go-round. but more broadly i wonder to the extent that people focus, sarah, on this issue of well who's

going it buy if everybody's selling at once. that itself is what happens during a financial crisis. so yes -- >> the importance of the role of market makers. >> well in a way it's like market makers maybe last time around there were more of them the broker-dealers were larger and relative to the volume of corporate bonds everybody was still selling. i mean there might have been some fire sale point finally that bid. but i think people forget to some extent just how bad it gets during a crisis. that's what makes it a crisis-s there are no buyers. >> and then you have the potential for price dislocations and all sorts of shocks that you could see in interest rates. a lot of people look at october 15th last year as sort of a preview of what happens when there's this massive exodus and you don't have others stepping in to buy it where you normally would now that these banks don't have the kind of treasury inventories that they used to. >> and the biggest challenge is that the government are not the smartest guys in the room. really on anything. but particularly when it comes to financial services. so their ability to anticipate

what the next crisis is, i give it very low probability too. they can work backwards and try to regulate around what happened before, but that's not what things are going to look like going forward, and that's the part that concerns me. >> meanwhile, there's been a lot of criticism aimed at mary jo white, the chair of the s.e.c. for the issues in which she's had the agency spending its time, areas like and this has been -- the point has been made before. conflict minerals ceo pay disclosure, et cetera. relative to some of the things that are happening in financial markets. and when it comes to the s.e.c.'s resources on the bond markets, they're frankly not there. this is another place that if you talk to even some of the s.e.c. commissioners like dan gallagher, outgoing now, who's drawn attention to this issue. there's not -- you've got to get that up and running if you're going to try to tackle in the first place this very issue that everybody's drawing attention to. >> i think you're absolutely right, kelly. and i think they're always behind the 8 ball. and that's the issue. whatever comes along next they're going to try to regulate that. but the entire market's going to be moved on to the next. >> i think it will be interesting to hear bringing it back to hillary and sort of the campaign. her thoughts on dodd frank and on financial regulation given the porch later of elizabeth

warren. i thought it was interesting to look at jamie dimon's comments today in chicago saying she doesn't really understand the global banking system financial system. finally someone hitting back at her. and whether that will really enter the popular debate. >> but the problem is that none of them do and they're the ones that are crafting this language and that's why something like dodd frank is so onerous and so overreaching and could really create a big issue, because they really are out of their leagues. >> elizabeth warren being one of those people directing criticism at mary jo white. be sure to tune in to "closing bell" tomorrow. we'll hear from the man behind dodd frank, former financial services chair barney frank will join us with his take on schwarzman's op-ed and much more. that does it for us on "the closing bell." thank you so much, guys, this afternoon. really appreciate it. "fast money" is coming up now in just a few seconds with melissa lee and the gang. melissa, what's on tap? >> we've been tracking the move in tesla today down 2% off the news of the shareholder meeting, sell the news sort of event. today we've got a tesla competitor privately held and the car, get this costs more than half a million dollars.

>> melissa, if i'm right i remember we teased this earlier. is it renovo. is there any coincidence that rhymes with le noefo? >> i'll have to ask the guy. i don't think he wanted to name his car after a chinese appliance maker slash -- >> what -- is it a chinese company? >> no, no. it's a u.s. company. it's got enfunding. it's based in california. >> just wondering. >> super high end. if you think tesla's expensive, this one's in another league. >> can't wait to find out more. straight over to you guys. >> thanks a lot, kelly. "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square. i'm melissa lee. our traders on the desk are tim seymour, steve grasso, brian kelly, and guy adami. tonight on "fast money" netflix shares nearing $700. we've got a top analyst who says they're worth just a fraction of that price and he'll tell you why later on. plus houston, we have a problem. could big oil be the real cause behind the spike in the lone star state? earthquakes evidence that claims to link