fun tank. they have a special coating to deflect uva light. they are partially filled with water so they won't get blown away. this is 175 acres. wind could blow these balls around. >> thank you very much. thanks for watching. kayla, thanks for anchoring today. >> any time. "closing bell" starts right now. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. oil has been a big story today. wti crude in the u.s. breaking below $42 a barrel for a time. it his a 6 1/2 year low today. we'll take you live on the floor of the nymex. the debate about the impact the oil decline could have on the markets longer term. >> art cashin poichbting to crude. getting a footing with the dow

up 73. tesla targeting the manhattan elite. the electric car make are looking to make charging your car in new york city easier. >> along musk wants in on the company's $500 million share offering. >> ipads at work. apple looking to make the ipad more appealing to businesses. kevin o'leary is with us to tell us whether this could jolt ipad sales numbers. tablet sales stagnated. i don't get it. i i love ipads and tablets. i don't get et. we have a graphic here about our big guest today. >> michael carr. we've got global co-head of m&a to tell us which sector could see the most deals of this remainder breaking year. >> i think it's so interesting why it's happening now. >> the impact it has all across

these businesses. reshaping sectors. >> what is going on? >> good afternoon. it was a tough day for oil prices. slide of 2.5 pfrmts that intraday low $41.91 is what traders are focusing on. we took out a 6 1/2 year low and went under the $42 level. they think the same issues persist. supply and demand. it's the dollar. these things can move quickly. we came off the session lows today because you had traders probably short and wanted to cover before the session was over. that doesn't mean the negative momentum doesn't exist. this should drag prices down. i've got people in the midwest texting me, sending me twitter messages asking why gas prices are going up.

at the end of the day, if crude oil prices drop, you will see gas prices go lower. we are looking at a $2 national average as a target by the end of the year. >> i saw $2.23 this morning. >> it's getting there. >> i almost took a picture. i think it's going lower. we'll wait. >> could be a real down draft coming. thanks for explaining that one. appreciate it. >> jason pride from glen meade, jonathan corpina and cub fan rick santelli in chicago. typically the equity markets will correlate with the price of crude oil. today we are seeing a decoupling. right now the dow is up 74 points while crude is on that

6 1/2 year low. that is going on today? >> that is the correlation. if you go back nine, ten months, we did see that decoupling. we are in a range we haven't seen before. the volatility we've seen in both those markets have forced investors to move to the sidelines. i don't mean liquidate positions. how to step back and play these two different sectors here. investors are confused about what to do. add greece, germany, earnings season, china. earnings season change how investors will look coming into september. >> health care was leading the market in the first half of the year. now flat with the s&p. utilities were the worst-performing group.

utilities are doing well, financials doing well. bullwark health care not doing well. what are you recommending here? stocks got expensive. we are backing off a little bit from that now. i think that's healthy. there is a reason to own long term investors. there are good opportunities in the u.s. would you say go with the utilities, go with the financials. >> we are focusing on u.s. investments or things more stable and quality based.

that would tilt more toward the health care side of the evaluation. on the flip side, international is perhaps the best opportunity to take risk. in developed markets we are seeing underlying improvements along the way. we may get distracted by things like greece. >> rick, tremendous volatility the first three trading days of this week. is the china currency crisis over? >> china will try to massage the levers for many years. i think this is the beginning chapter of a long book. there was a lesson to be learned. commodities around the globe. they would have been better served letting the markets sort

out the allocation of those resources. they didn't. maybe they should look at the japanese playbook for tinkering with a currency. trillions of yen wasted in that endeavor and bank of japan surrendered. free market systems have hiccups because they are truly not free. if this activity is going to have an effect on markets, it's going to be affected for a long time. >> let me bring that back home as we continue to see energy under pressure here. what do you suggest people keep an eye on as we move through retail earnings season? >> looking at the retail sector, investors get a good idea where people are spending their money.

>> jason, i think i know the answer, but i'm going to ask, would you be nibbling at energy stocks here? people think there is enough value even though the price of oil hasn't bottomed yet. >> in any situation like this, you have to recognize quite often the baby gets thrown out with the bath water. i would probably argue that the supply issue remains in place. we are getting a lot more supply extracting out of existing wells than people thought was going to be the case. that should keep pressure on oil prices. that doesn't mean there aren't good companies to buy because everybody is throwing everything out in the energy sector at this point given the decline in oil prices. >> not all oil stocks are created equal. is this a sector you would favor? >> exactly. >> somebody yesterday made the case for the pipelines.

what you need is financial stability in the companies you buy and energy sector right now. i don't think ebay has a good idea how long this will last. you know your certainty of success goes up dramatically with financial stability and a time of difficulty for any industry. >> what about politics? >> we have to talk politics. if the 2016 elections looks like a republican candidate could get traction, the idea of exporting our energy will, at these price levels make this sector the bargain of the century. i think as we get more into the elections cycle, that will be a dynamic. it will start to have an effect on the marketplace. >> good stuff.

>> they are moving higher on news elon musk is looking to buy $20 million worth of shares in the $500 share offering. >> tesla plans to use the cash to fund production of its upcoming model s and that giga factory, as well. joining us for his take a long time bear on tesla. you have a sell rating still. now you see they'll be raising new funds for major projects and expansions down the road. >> nothing changed in our thesis based on the news today. cautious on the ability to hit some of their delivery targets. we downgraded the stock a month ago. i think our stock up up today because issuance was expected and people were expecting

something larger. the delusion near term is less. longer term, i think there is a lot of investment this company needs to do. long term delusion remains a risk. >> does it make tesla less attractive? >> i think long term it makes it less attractive because the economics are going to be harder to catch up to gas. that is more of a model 3, their mass model vehicle that will come in 2017. for the s that won't impact that buyer currently. >> what about this movement to increase the number of charging stations in a high traffic area. that would be manhattan. that has been a problem for tesla in the past.

traffic areas have not had enough charging stations. >> that is a positive thing for all the owners of the model s. that is one of our concerns long term. you need to ramp the number of charging stations around the world that will drive higher capex it's more of a factor in parts of europe and china that are concerns that have come up. >> do your concerns about this name boil down to how expensive it is relative to earnings or more reflective calling the argument for tesla longer term here? >> it's all about relative valuation. one of our key reasons for the downgrade is thislele stock opportunity. it had run 40% on storage news. that market will be smaller than most people are expecting.

>> good to see you again. thank you for joining us today. >> thanks for having me on. >> we've got 48 minutes left in the trading session. coming off the highs. dow up 57 points even though oil is at a 6 1/2 year low. >> apple making ipad sales boost by making it more business-friendly. >> perhaps you noticed egg prices cracking new highs. some analysts are predicting $6 a dozen could be in the near future. we go live to des moines for a special report. before earning enough cash back from bank of america to buy a new gym bag.

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welcome back. cisco systems rising on the back of that better than expected earnings report late yesterday kelly told you about. posted strong sales in the americas. this is the dow component's first earnings report under its new ceo. the stock up roughly 3.7%.

company teaming up with more than 40 app developers to try to make its ipad more friendly in the work environment. >> the company did announce it sold almost 11 million ipad units, but that was down 18% from a year earlier. a four-year low for ipad sales now. >> joining us to talk about it, josh lipton and "shark tank" investor and noted apple shareholder kevin o'leary. good to see you both. kevin, this is a question i don't understand. why are sales stagnant? in that whole category right now? i love my ipad. i can't get along without it. why isn't it doing better in this market environment? >> simple answer. what occurred here, and i've got lots of anecdotal data to prove this out. i've got investments in 27 small cap companies. generally all have apps for enterprise. they are trying to service their stomers, particularly sales

calls, o-shares, we go out and see accounts. we used to use ipads. now because we allow sales force to use any device they want, it's well split between the note, the larger samsung product and the apple 6 plus. the actual sales people don't want to carry an ipad or mini ipad. they want less stuff in their bag. the enterprise software works on both the ipad and any of the other platforms. there is more information. a period which is a private company that does enterprise development i own in boston, it started on the ipad. it now supports every hand-held device. the problem with the ipad is cannibalization of apple's terrific phones. it's not going to go up. every one of these developers is going to work for every platform. they've got to be ubiquitous to

companies like mine. >> josh, what do you think they would say in response here? >> let's take a step back. when i talk to tim cook, tim remains bullish on his product and confident. tim talks about the opportunity he sees for that product in the enterprise. that's because he knows where the growth is. there are structural head winds. we don't upgrade our tablets like we do smart phones routinely. business tablets are strong. companies continue to put money to work in tablets because those products are portable, easy to use. 20% of the tablets used globally in 2018 will be owned by businesses. that is up from 12% last year. that's where the growth is and tim cook thinks he can compete

with new productivity tools, new enhancements. of course, that's where the horse race is going to be between apple, microsoft and google. >> kevin, i'm a blackberry lover. is the tablet going to go the way of the blackberry? am i sitting here with another future dinosaur? >> i was a blackberry user for 12 years. i finally had to give it up because i couldn't figure out how to get uber on it. it's on display as a dinosaur device. i think tim cook will hit a brick wall on his theory he can get enterprise to buy tablets and iphones. i have 27 businesses. i poll these people in their 20s and 30s. they don't want to haul around two devices. they want one. the iphone 6, note plus and new devices coming this fall are just fine. you can hold up the sales data, sales charts, live data from all

of your crm systems on an iphone 6 plus just fine. ask any of,000 sales guys. this is going to be tough. while we are criticizing apple, fix the new music platform. my whole family, they said it sucked and they are back on spotify. >> no selection? what's the issue. >> i own a lot of apple. i don't like, even though it doesn't matter that the itunes thing isn't working, the fact it is so poorly implemented. if i were tim, i would squeeze that person's head like a teenage pimple and get it fixed. this is ridiculous. i can't make a play list on the new product. >> thank you, kevin. there is an image i'm not going to get out of my head all day. >> thanks a lot, joshua lipton

covering that story, as well. let's talk about tech giant samsung going after a piece of the mobile payment pie. >> john ford attempted samsung pay's launch event. it's here in new york. >> they announced samsung pay and new galaxy phones. you heard of apple pay. you can get a credit card on your phone. samsung's got something like that. you can use it not just at stores that have these terminals that have near field communication but anywhere you can swipe a credit card. this will work. they use magnetic fields communicating through. you also will be able to do a download for the previous two samsung phones. galaxy s 6 and s6 edge will be able to use samsung pay. lots of partners here. visa, mastercard, discover, american express. many banks.

they assure me it's secure. i had security experts say we'll see when the hackers get to it. this fall we'll end up with the old iphones and newer iphones, these new samsung phones supporting samsung pay and android pay phones and the new terminals that come with chip and pin there will be a surge in availability of people using their phones to pay by credit card debt. >> are people using their fingerprint the same way they are with the iphone? >> how easy it could be to steal fingerprints from public photos that are readily available. two years after the launch with the technology for apple, perhaps it's too soon. >> there is a token tied to the

device itself. once a single device is approved, whether it's a watch or phone, if somebody tries to make a purchase from a device not that device, visa or mastercard will not allow that. >> is the technology for these different pay services, is it the same or are retailers going to have to choose or will they have a tower of babble set-up here? >> this samsung pay works with all the places you can swipe a credit card now. if you want to use nfc, you will have to upgrade. there are some retailers slow to do that. in order to satisfy the new chip-and-pin rules that have to do with fraud, if the retailer doesn't want to be liable for fraud, that occurs at their location, they are going to have to upgrade their equipment anyway. that equipment is likely to have this nfc technology. >> i hope they all do it.

i'm dying to use my watch with the apple pay at more places. it's going to change the world. >> speaking of blackberry technology. >> and dinosaurs. >> thank you, john fortt. heading to the close. 36 minutes left. dow is up 33 points. it's been a very quiet day compared to what we had the first three trading days of this week. >> up next, we'll talk about why egg prices are flying through the roof. we'll go to the iowa state fair.

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it's our favorite chart. in last position is energy. it's happening with oil prices. that is no great surprise. check out who is in pole position today. consumer discretionary. >> retail sales numbers out this morning. they revised june and may upwards that. probably helps. >> up almost 1%. we'll start hearing more from retailers. this is the difference between spending on the macro level and some specific publically-traded names which are bricks and mortar. >> let's drill down more.

>> monster beverage climbing after an upgrade by morgan stanley. the firm raising monster's rating to overweight from equal weight seeing equal pressure on the stock created a good buying opportunity. >> egg prices soaring to their highest level on record. morgan brennan live at the iowa state fair to explain what is behind this. >> that's right. egg prices are at record levels. the reason is bird flu which has been absolutely devastating here in iowa. in iowa they lost 40% of egg production. that is a big drop for the country's top egg supplier. we haven't seen a new case in over two months, but 48 million chickens and turkeys, the majority egg-laying hens had to be destroyed across the u.s. this year. egg production, officials say, is probably still at least a year away from getting back to

normal levels. that is if bird flu doesn't make a comeback. not only that, this is having a huge economic impact throughout the upper midwest. >> besides the dollars that the federal government has spent which to date is over $600 million, we, in addition, it's the cost of the industry into the states themselves has been huge. >> some economists put the impact at nearly $1 billion while the university of minnesota says that the economic toll in that state is close to $650 million so far. all of this is having ripple

effects including here at the iowa state fair. they have a ban on live birds this year because of bird flu. that is a big change for a fair that normally has, get this 1,000 poultry exhibits each year. back to you. >> that is too bad. morgan brennan in the heartland in des moines. thank you. >> time for a cnbc news update with sue herera. >> here is what's happening at this hour. goldman sachs will pay $272 million to set al lawsuit that claimed it defrauded investors. the case concerns the safety of about $6 billion worth of residential mortgage-backed securities investors bought in 2007 and 2008. goldman denied liability in agreeing to settle. >> a federal judge ordered kentucky county clerk kim davis to issue marriage licenses to six same-sex couples. rejecting her objections on religious grounds. four couples were denied the

licensees earlier today. >> ben carson campaigning in new hampshire after a cnn poll showed him in second place in the state's primary race. he visited a restaurant in manchester where he signed books. he was posing for some pictures, as well. emirates airlines will add nonstop service from dubai to panama city. it will give the carrier its first destination in central america but earn the airline the distinction having the world's longest passenger airline route. that is the cnbc news update this hour. back to you. >> something like 17 hours. >> it's a long time. bring a good book. >> no thank you. bring a library. >> exactly. >> compression socks. maybe a basketball. thank you, sue. 30 minutes to go into the close. we had three indexes turn negative. s&p down a point. nasdaq down two.

a reversal of the reversal we saw yesterday. we'll see if the dow can stay in positive territory. >> mergers and acquisitions on pace for a record year. up next, co-head of global m&a at goldman explains how you may be able to profit. do you want to know how hard it can be to breathe with copd? it can feel like this. copd includes chronic bronchitis and emphysema.

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keith, oil going below $40 a barrel? >> it is. i think it will get there. it's certainly in that down trend. nothing can stop it from what we can see. the bears are piling on to it. you see the etfs related to energy and oil. they are coming in quite substantially. however, we don't see xl oversold. that gives me reason to believe it can come in further. >> can this market handle it and move higher? what sectors are going to do that? >> i think you can. oil is only about 7%, 8% of the s&p 500.

the big sectors we are looking at, health care, consumer discretionary. those sectors have been performing well. >> what a day for consumer discretionary and retail sales numbers. >> coal reported disappointing earnings based on last quarter. >> if we turn negative, what does that tell you? >> the dow, they got vastly oversold yesterday. we saw 1.5% yesterday. i think we should move up towards 2100. >> we'll let you get back to it. thank you. >> let's talk about deal making. it is on fire this year. so far in 2015, the u.s. has seen $1.4 trillion in mergers and acquisitions. this time last year was $934 billion. globally m&a is on track to

surpass records set back in 2007 when we saw $3.8 trillion in deals. so far this year, it's at $2.6 trillion. what's driving all these deals? in a cnbc exclusive, we are pleased to be joined by michael carr, global co-head of m&a at goldman sachs. i don't know how you have the time to run over here. >> luckily, it's close by. thank you for having me. >> why now? sixth year of a major bull market in equities, do they see value or is this a race to beat the fed? >> there are thee things we see going on causing this. number one, we have a relatively benign economic environment. there's grow. interest rates are very low. the math of that is when companies go buy other companies, earnings portrayal is positive. right now we have a good back drop. number two, what is going on, when we notice this about the end of 2013, it carried into

2014 and now '15. shareholders are accepting of m&a. this year alone, 2/3 of the buyers, stock of the buyers has gone up as a result of m&a. usually there's pressure on the buyers' stock. it's very different now. third thing and what is really different this time around, you have a whole series of sectors consolidating. you have the confidence that ceos and boards have to move. some sparked that m&a. everybody around them has to react. whether it's cable, managed care, semiconductors, everybody is going through their own consolidation. i think ceos and boards find it difficult to stand around when that is happening. >> can you after a reflection how big this deal boom is? >> i don't know about the size. this could change any minute. what is different is the complexion.

if you go back to 2000, it was very much a high pe-driven environment where tech companies were buying tech companies. you remember the big names that happened. it was a high pe environment. that was the 2000 boom. the '07 boom was excess liquidity which we found out afterwards. that was private equity driven. large leveraged buyouts. this cycle was very different. it was a coherent and cogent environment. it's companies consolidating within their industry groups, creating savings and generating value for shareholders. it's a much more sensible market than the last two peaks. >> are they overpaying? >> so far, so good. that's why i reference the fact shareholders seem to be embracing this. everything is relative in a low rate environment. >> decent valuations and shares responding positively by the buyer and one being purchased,

does it reflect a difficult environment for everybody else? p interest rates are low because the economy is still weak. a lot of combinations -- look at what 3 g is doing. a lot of guys are looking to slam down expenses. that will have an impact with folks hanging on to the jobs they have. if this is the norm, does this reenforce the weak economy? >> i thing you have to look at it sector by sector. some are growing, some are expanding, some are consolidating end market. the ones more in market consolidation are more difficult. those are cost-based mergers. those trying to grow are tending to grow their organizations by adding new product lines or new lines of business. >> how much longer does this last? and does it change when the fed begins to normalize? >> we look at this all the time. one of the things we look at is

m&a volume is a percent of market cap, broad market cap. we are still below about 6% typically over time. we are still below that mark. numerically would tell you we should have more to run. from a practical reality, as long as people don't overpay dramatically or do stupid things, ie buy something two or three lanes over from their core business, they'll keep the support of shareholders. one of the reasons we think this is going to continue, shareholders seem to be very receptive. until that changes, this should move along. >> before we let you go, we've seen huge activity in the health care space, huge activity in the media space. what's next, potentially? >> that you can tell us about? >> very good, bill. >> we are starting to see the

industrial sector consolidating. that's later in the cycle. things like that, more traditional industries having a difficult time to get the kind of margin expansion they would like to see. >> thank you so much. >> pleasure. >> let us know when companies start changing lanes. >> happy to. >> michael carr, global co-head of m&a at goldman sachs. >> that was a lot of fun. 17 minutes left in the trading session. dow, all of them heading south. >> yesterday finished unchanged. today happening again. >> kohl's taking a hit after disappointing earnings. we'll see expectations for nordstrom which will release its own numbers after the bell. it took serena williams years to master the two handed backhand.

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where you'll find some of the best offers of the year on our most exhilarating models. lease the 2015 rc 350 for $449 a month for 36 months and we'll make your first month's payment. see your lexus dealer. welcome back. let's take a look at kohl's. disappointing sales and shares tumbling today. >> nordstrom set to release numbers after the bell. courtney reagan is joining us with all of that. >> good afternoon. u.s. consumers are spending. the pattern we've seen recently continues. according to the commerce department's latest retail sales numbers, consumers are spending

more on autos and home improvement and less at department stores, electronic stores, retailers and general merchandise type stores. for july, core retail sales increased 0.3% from june, about in line with expectations. june's data was revised upward to unchanged from a previous decline. kohl's results did reflect the weakness seen in the government's department store spending results. shares down almost 9%. this after reporting lower than expected profit, revenue and gross margin as well as disappointing comparable sales. the off-mall department store expected sales to come in at the low end, largely in a delay to the back-to-school spending. shift in timing for the tax-free holidays from july now into august and a generally later start for back-to-school buying. nordstrom shares are are down slightly ahead of its after-the-bell results. analysts looking for 90 cents

per share on revenue of $6.7 billion. some think nordstrom could be an outperformer because it's higher end. there could be a different level of demand. if it pans out, it will be the first good quarter posted for the department store sector. >> art cashin signalled $200 million to sell. a slight bias to the down side. not a lot of movement here. >> we see if the down can stay. up 12 points while the s&p is now negative. >> the calamity of china was missing from today's market concerns. a fund manager says there is social the market should be concerned about. he'll explain what that is. here at td ameritrade, they love innovating. and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers

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8 1/2 minutes left in the trading session with the dow up 14. joining us michael guy. i know you agree with rick santelli. your concern for the markets issed fed, but you think the

window is closing. the opportunity for them here. >> all truth passes through three stages, ridiculed, opposed, third accepted being self-evident. when the fed started lowering rates in '07, the fact you could be entering deflationary was ridiculed. then you have the violent opposition, qe-3. fed stimulus did not raise expectations. everybody thought s&p was the money market with no risk. now entering the self-evident phase which is the idea maybe we are entering this deflationary scenario. look how the yield curve is flattening. gold is outperforming lumber. something we approved in an award-winning paper as negative for the economy and markets. utilities, long duration doing well. everybody talking about the fed raising rates in september. these are not signs of the fed raising rates. we should stop this discussion

about the fed raising when, ask why they haven't yet. >> there is one fly in the ointment of your argument. high profile and everybody understands and goes back to as we talked about yesterday this move to say we raised interest rates. it's the labor market. unemployment is down 5.3%. we are steadily adding jobs. there are people who would like to take that on face value and say it's time. >> when you look at the labor participation rate, unemployment rate is not a good metric right now. you should see wage inflation. i'm looking at the standpoint of price movement. we are entering a phase where we should not talk about the fed raising rates but another round of stimulus if these continues continue to deteriorate. >> assuming they do raise rates, what do you think happens then?

it's only one move, one of many to come here. what do you think that does to the markets and the economy? >> you are starting to see some of that now. you should see more concern then about where the dollar is going to head as china continues its yuan devaluation. with oil breaking down on that potential rate hike, it will be tough for the fed to think about the path upward and have to go back down back to zero after all this talk about raising rates. >> good to see you. we have the closing countdown in a moment. >> after the bell i'll talk to sheila bair. she has a new job and part includes sending young men and women to wall street.

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today quiet. ten-year yield. today at 218 up five basis points. gold and oil, two very different stories. gold up 1.85% while crude oil continues lower, down below $42 for a brief time today. it didn't cause a big sell-off on stocks. >> oil stocks it did. this is the fourth time this year we've been trying to pick a bottom in oil stocks. we were on an up trend throughout the week. all the big names, all of them

are down, 2%, 3%, 4%. it's a heartbreaker. >> one bright spot. retail sales for june. they revised higher. >> most retailers were up. i'm worried about nordstrom reporting after the close we had a good one with dlard's. there is more downside risk for nordstrom. i thought the revisions in retail were impressive. september is not off the charts.

>> thank you, bob. we get ready for the sales numbers. and seala bear talking about her new job and what's going on on wall street these days. that's coming up. see you tomorrow. >> welcome to the closing bell. i'm kelly evans. session saw the market swing 150 points. the dow up eight points. s&p negative on the session by 2.5 points. similar in the sense we were up, we are down. finishing around the flat line. crude down 2.5%.

you heard keith bliss say it on the floor moments ago when i asked is oil going below $40? he said yes. investors getting set for a barrage of earnings. first though we have sara eisen, our stephanie link, welcome to both of you. guy adami out of san francisco and rich bernstein. welcome, everybody. guy, what are you doing in san francisco? >> we are having a great time out here. it's an unbelievable bureau. check out the shot behind me. mel is here with a conference. i'm here with dan nathan. big options action tomorrow night. i just saw josh lipton. handsome man. i'm having fun. >> are you coming away with any investment ideas here? health care has gone from a

leading position to lagging one. what is an investor to do? >> crude oil is the story. i still think crude oil is the story. i'm in the camp and maybe sara agrees, there is global deflation. that is a problem. everybody thinks this crude oil move is great for the consumer. maybe it's great when you go to the gas station. there are far more far-reaching ramifications that have negative implications. the only way to play energy has been through the refiners. look at the reversal today in tesoro and valero. i think they work but something to look at over the next couple of days. >> it's underpinning a lot of decisions people are making today.

how serious a problem is it? >> certainly something we are all keeping our eye on for. the actions in china, we don't know what's going on. we know the economy is slowing quickly. we don't know if this devaluation will be controlled and not going to be this 10% or 15% move. we are all watching the china news and oil. on the flip side, i'll give you a positive. that's in my nature, right? retail sales. retail sales was very good. they beat expectations. it confirmed to me the consumer remains choosey. within retail sales you had better auto. >> choosing restaurants. >> and choosing auto, furniture, housing. they are buying. revisions there the prior months are encouraging. we are all saying lower oil. what's happening? the consumer is not using that lower oil to their advantage. they starting to use that to their advantage. that is a silver lining. >> look at the trading action in

home depot and lowe's. it echos what we heard from macy's ceo terry lundgren yesterday. the consumer is shopping. >> you saw that in the numbers. department stores and apparel have been weak. the focus today shifted back to the u.s. and better economic data and odds of a september interest rate hike and dollar strong strengthening against the euro and yen. we talked to a chief economist, china's devaluation will go down 10% but not in the u.s. we are seeing core inflation move up. this positive story in the united states continues. that was the focus with consumer discretionary outperforming. >> let's put that question to rich bernstein.

which way does inflation go? >> fed will do what the fed is going to do. who knows when? the guess is they will probably raise rates. the question is september or december? the important thing to remember, we are on the down side of a global credit bubble. the global credit bubble is deflating. as credit deflates, it's really hard to get inflation. we've called this the walmart world. everybody is trying to undercut everybody else to gain market share. there is overcapacity all around the world. that's exactly what should happen after a credit bubble and that is exactly what is happening. it's i going to be hard to get inflation. today is an example. import prices year on year are down about 10%. that is what should be going on in this environment. >> we talked last hour to golden's co-head of m&a. he made the same point, that overcapacity is driving these deals. that's why the markets are

rewarding them. there are two ways to deal with overcapacity. consolidate capacity or grow faster and use it. what can we do to make the latter the outcome not the former? >> that is exactly right. everybody has been waiting for capital spending cycle to ignite. it's been very anemic. we were surprised how anemic it's been. the reason why is there is this overcapacity. what m&a is doing is removing that excess capacity through time. ultimately, you shrink the number of suppliers and shrink the capacity. you get inflation and pricing power. we are a long way away from that. m&a will still be around. corporations are too hesitant to try to expand capacity and build capacity in what we called this walmart world. >> i wonder if we should turn our attention to the industrials which was invoked by goldman after talking about the deal boom in health care, media,

consumer. he suggested industrials is next. does that mean somebody should buy or get expcomposures to the companies? >> i think there will be pockets. we've seen strength in nonresidential construction and residential construction. those are where the strong balance sheets and strong companies are at right now. do they then go and expand out of their core competency? or do they look for bargains like in the energy infrastructure area? i'm hearing there is a lot of activity in the energy world right now with private equity in there. as well as big companies, too. i don't know if there is a rush just yet begin what we don't know about the global growth situation at this point. >> the dollar is going up, going down. we are trying to make heads and tails out of china. what tells us it's working and lining up for the fed? rate hikes?

>> the data, obviously, is going to be key heading into the september meeting. the 10-year treasury note. besides consumer discretionary outperformance, we saw the financials close higher in terms of industry groups. following yields higher, that's where we had been going, towards this higher yield move, stronger u.s. dollar. we'll see if that trade continues through september and possibly december for the fed. numbers from nordstrom. looks like it's a beat on the bottom line. 93 cents versus estimates of 90. revenue at $3.7 versus $7.68. shares responding positively. up almost 4% after hours. courtney reagan has more. >> nordstrom's comparable sales are strong here, up 4.9%

nordstrom rack up 1.7%. this had been a strong segment for nordstrom and broader retail segment. inventory up about 11%. that does have something to do with the acquisition of trump club. that is a bit elevated. cosmetics, women's apparel some of the strongest categories. coats, dresses and apparel geared toward the younger customer were strong. >> guy, impressive results. >> yeah, they are. the stock sold off in light of what happened to macy's. in terms of valuation, i would rather own macy's at 12.5, 13 time forward earnings than nordstrom. not to say north strom can't push towards $80, but the value in the space is macy's. i think terry lundgren is one of

the better operators. the stock was punished unjustifiably. i would rather own m than jwm. >> i don't totally disagree. there is value there and that ceo is impressive. nordstrom has been spending like mad on a lot of different initiatives for growth. it's very encouraging to see results. one quarter does not make a trend. but that is a good comp number versus a disappointing comp number at macy's. macy's has been spending money, too. to not see results, there is a difference between the two. i do like there is operating leverage to this model at nordstrom. >> i like the disagreement. we have an earnings alert on el po polo loco. >> mixed quarter.

adjusted 19 cents a share. street was looking for 18 cents. revenues light at $90 million. street looking for $93 million. also their systemwide comp sales for the quarter coming in light at 1.3%, the street looking for 3.1%. continues to fall down near 12% now. back to you. >> loco what do you make of it? >> this company was doing well. strong growth. a lot of expectation. high-flying, not too long ago ipo stocks that are priced well. especially with the decline of gas. this group has been elevated. especially when you were seeing sales growth. when you get a disappointment like that, it's not surprising to see it sell off sharply. it's been the pattern. >> exactly. down 12%. rich bernstein, just a word here. going back to what we were saying earlier, the federal reserve sounds like you are

saying what they do especially if it's just one hike this year isn't going to matter a whole lot. is that fair? >> it depends on what happens with earnings. the reason the market has been squirrely all year has been the combination of relatively weak earnings growth combined with the threat of the fed raising rates. normally profits are booming and federate hikes don't have an impact on the markets. profit growth is flat or down a little bit. that is not a good combination. if earnings growth picks up, i think we have the normal early portion of the fed raising rates. >> great way to put it as we keep getting these results on earnings. rich, thank you. >> thanks. >> guy adami, enjoy the rest of your time out west.

there will be more. "fast goes west" at 5:00 p.m. today live from cnbc san francisco headquarters. talking to sun power ceo tom warner and ceo of daily fantasy sports site draft kings. up next here, exclusive interview with sheila bair. why she just resigned from the board of santander and gone back to school. will a shake-up at coke lead to a pop in deal making? ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

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oil prices hitting the lowest intraday level since march 2009. how it's impacting energy stocks. >> it's another heartbreaker. they've been trying to buy energy stocks again. trying to pick a bottom. they've been doing all right throughout most of the week. this morning we hit a new low on oil. everything just dropped, all the big oil names. the guys in the service area the drillers. weatherford down 5%. halliburton. down 2%. that is a lot for halliburton. diamond offshore drillers down

4%. conocophillips after a good day yesterday down about 3%. what is making this really hard is that again this week they were trying to buy the oil service names and energy names. xle, all the big energy names. you see the up trend? we haven't been able to put together an up trend since april. everybody saw this. particularly at the end of the day yesterday. everybody piled in. big volume in this. there are a lot of capitulation notes out this week. oppenheimer talking about the new normal for oil. $65-$75, the recovery price. everybody's given up on the v recovery. not many people believe in a u recovery. he calls it a butt tub -- a batb

recovery. whether this means there is any hope for moving up the oil companies in the second half of 20 15shgs it's not clear. one thing everybody points out is the dividend is safe for the biggest companies. conoco was one of many that came out and said they are not going to reduce their dividend. they are terrific numbers, 4% to 6%. whether or not the other ones can maintain it, smaller companies, that is a big issue. another day of heartbreak for people trying to pick a bottom in oil stocks. >> still thinking about the bath tub analogy. >> breaking news on goldman sachs. >> goldman sachs and ge. goldman sachs buying the online depository of ge capital. it is selling $16 billion worth of deposits to goldman sachs. an effort to diversify its

funding, its means of funding, not just using wholesale but retail. the purchase price wasn't disclosed but a deal between those two dow components. >> a economic comment on this? >> ge is trying to shrink and become a more pure play. the more they do, the more they get through this transition. >> buying this business? >> it's interesting. interesting they want the deposits. that means they are more tied to the interest rate environment. what price they paid is clearly more important. this is more positive for ge as they transition to what they want to become. that should lead to a higher multiple. >> bank investors are becoming

increasingly concerned this turbulence could impact the timing of a federate hike. we are joined by former fdic chair and president of washington college. sheila bair. welcome to you, madame president? >> yes. >> because people are still so focused on this issue about federate hikes, what is your view on whether the fed will and should go in september and the impact it will have on the economy? >> i think they should. they signalled they are likely to. i hope they will. we need to get onto more normalized interest rate environment. i think they accomplished what they are going to accomplish. there are issues with financial stability when you have these extremely low interest rates. i hope they hold course. it's difficult to know how the economy is going to react.

my sense is they can do it without disruption if they do it gradually and slowly. signal it and stay the course. >> do you think this economy is healthy enough at this point? that's the debate today. >> to keep camouflaging the structural problems i don't think is healthy. i wish the fed would transition out of this. congress would get its act together and provide greater fiscal and tax policy reforms that would help our economy like corporate tax reform, infrastructure spending. those things could give us good economic growth. the distortions this zero interest rate environment created are significant. it does contribute to financial instability. it punishes savers. i hope they hold the course.

>> what about the lack of wage growth? we've seen different areas. what do you make of that? >> monetary policy hasn't trickled down. for a good percentage there has been no recovery. you can't accomplish this with monetary policy. education reform is another important area getting smarter. making sure we are positioning our kids to have better training and segue to better paying jobs and make us more competitive. the foreign workers who provide competition will be more competitive as a country if we

get leadership from elected officials. you can't accomplish it with monetary policy. >> wondering about your own career path. whether you are still involved advising any of the candidates in washington. you were such an outspoken critic of wall street and bank activity during the financial crisis. now you resigned from santander's board, going into education. what do you do next? are you going to still be working with washington? >> i'll continue to serve on the council. i will still be active on these issues. some of the skills i have i hope to translate to washington college. i'm very focused on student debt. i want to get debt levels down and make sure our students are well prepared to navigate this troubled and challenging labor market. there are new challenges at washington college where i hope my former career in financial

services will serve me well. >> sheila, there two competing proposals from the left and right here. hillary clinton's plan is debt relief and they say it will contribute to higher costs of college tuition. on the right candidates say they would like to see much more of an overhaul to how college works. will this work? >> i don't know. you have tax increases to pay for. we have a broken tax code already. i am concerned about that. we keep throwing money at this problem instead of getting smarter how we are spending it. there needs to be more accountability for all schools. they need to make sure kids are getting an education with loans they can afford to repay and get jobs to pay those loans.

putting more money at it will not solve that problem. i would like to see more accountability. she's got proposals along those lines. a simple risk retention, if students default on their debt, making sure schools have some responsibility could have a positive impact how schools think about educating students and positioning their graduates. i'd like to see simpler proposals. less about throwing more money and smarter about how we spend our education dollars. >> we look forward to hearing more from you going forward. sheila bair, thank you for joining us good. luck at washington college. king digital out with quarterly results. >> eps adjusted 49 cents. street looking for 43 cents. revenues of $500 million, beating estimates of $490 million. their average monthly active users down 9% to 501 million.

street looking for 519 million. average daily active users in line with 142 million. stock falling here because their monthly unique payers down 11% here for the quarter to 7.59 million. stock continues to fall down more than 7%. back to you. >> thank you. much more ahead on china's market impact as we turn back to the trading activity we've seen. barney frank and larry kudlow discussing a possible currency war with china and what that could mean for a fed hike. we'll get the latest details on yesterday's massive warehouse explosion in china.

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authorities this china investigating a massive explosion that killed dozens and left hundreds injured. ian williams joins us with the latest. >> reporter: that explosion was so powerful it was recorded by the u.s. geological survey as a seismic event. some people left their apartments believing they were in the middle of an earthquake. of course they then saw the bright lights in the sky, the flash of the explosions and knew it was something else, but something perhaps even more horrifying. the police have now cordoned off the area. you can see part of that behind me. the controlling access to it. beyond it about 1,000

firefighters are battling with a continuing blaze. the smoke and the flames going into the night sky. the problem they're facing, and it's a big problem, they don't know what they are up against. it's a chemical fire. they are not sure what that cocktail of chemicals is. officials haven't been able to say precisely what was in that warehouse. that's been worrying for local people. they're concerned about what they're breathing. officials tried to reassure them but people remain very concerned. >> incredible scale on that one. time for a cnbc news update with sue herera. >> thank you very much. here is what's happening. 14 years after a picasso painting was stolen, "the hairdresser" valued at $15 million and painted in 1911. it was discovered during the inspection of a targeted

shipment in newark, new jersey. >> 80,000 pounds of rainbow trout had to be rescued from a california hatchery and moved to cooler waters as a result of the ongoing heat and drought. the california department of fish and wildlife says water temperatures reached nearly 70 degrees, threatening their survival. >> nbc signed jimmy fallon to another six years to host the "tonight" show. the show has dominated its rivals in the ratings space. cnbc is part of nbc universal which is owned by comcast. >> a swarm of mayflies invaded a mississippi neighborhood. some woke up to find their homes almost completely covered. that is gross. mayflies mate, lay eggs and die all within a 48-hour period. news you can use, kel. that is so gross. i hate that. >> turns out i have no idea what a mayfly is. is it like a cicada?

>> probably. i'm sure it serves its purpose in nature. >> on to google. thank you, sue. are investigators worried too much what happens in china's market and economy? barney frank and larry kudlow will join us next on that and potential fallout to the market if the fed pushes back its rate hike. 3-d printing is giving a spark to the pharmaceutical industry. the fda approval for the first-ever 3-d printed prescription drug. coming up.

crude was the big story today. broke below $42 but below 2.5%. lots of people have eyebrows raised. keith bliss tells us it's down to the $40 level next. dow finished slightly higher by only five points. s&p and nasdaq did go out in the red. nordstrom shares 5% higher after beating wall street estimates.

different story for el pollo loco and king digital down 11% and 8% respectively. >> they just went public about a month ago there were no analyst estimates. they reported adjusted 13 cents per share on revenues of $254 million. adding that revenues were up 16% year over year, adjusted eps up 13% year over year. the company sees its 2015 revenues above $1.2 billion. and 58 cents a share. stock moving down by 6.5% or more in the after hours but on light volume. >> markets here much calmer after bouncing around earlier this week. china devalued its currency. if we are on the brink of

currency wars is barney frank and larry kudlow. currency wars, are we witnessing a first round? >> no. i think that term is one of the most overused, inaccurate terms. china is doing what it's doing because they are losing foreign exchange reserves. the marketplace is telling them they are overvalued. the imf supports this move and says to china, unhinge from the dollar. go and make a free market liberalization and we'll allow you into the sdr and you can be a reserve currency. finally for their own economy. they need easing with the economy. they are dealing with the imf and their own economic situation. there are other issues on trade and foreign policy we could get onto that.

i don't see a currency war. >> barney? >> i agree in substantial part with larry. this is driven by china's internal needs. to some extent i think what we are seeing is a more realistic down sizing of the world's estimate of china. there has been a tendency to overhype china's performance, chinese state-directed model. that includes, i think, in china's own part overstating the value of the economy. part was the conflict with their design to make the yuan a reserve currency. what we are now seeing is a reassessment of that. i am afraid of currency wars in this extent. i don't think we have to react. there is the fear other asian countries will react.

south korea, japan, others. there may be a currency going to battle or a series of battles set off by this even if china is doing it for its own reasons. that doesn't rule out reactions from its neighbors. >> people look back to china saying see, they are doing it all over again. >> donald trump saying they are sucking the blood out of the u.s. i am sorry he made those statements. i want to emphasize an important point he made at the risk of agreeing with him. we should not overestimate or panic about the chinese economic story. i think that's a key point. to the extent they are growing, they'll add to the world's prosperity if they are breaking trade laws, we'll hold them off to the wto to do something about it. china is not going to get the growth they had many years ago. you are going to settle in at a lower pace. something i do not like about

the china economy, they haven't exactly asked my opinion, they are propping up the state-owned enterprises again. they are spending money on that. that is a bad idea. that goes back to a management, a central planning approach rather than a free market approach. i think it's hurting their economy. i think that is a bigger issue than liberalizing the yuan. >> i don't mind agreeing with larry, on some points we are in agreement. this is a projection of foreign policy prestige concerns into the economy. i dislike the way china is governed. on the other hand, to the extent china succeeds in building up its consumption portion of its economy, that is good news for us. an interesting story in the "new york times" about a plant in indiana building a shady's to

send to china. if china has good economic relations in africa, it's almost like we are 10-year-olds and who gets more valentines. >> we've got to leave it there. >> one quick point. i don't want the republicans or democrats on the campaign trail to start bashing china and tempting a trade war. we do not need a repeat of smoot hawley in 1930. we do not need that. >> one last thing. >> republicans and democrats should be more careful. >> larry is assuming the position i've given him wishful thinker and chief of the republican side. as much as he doesn't want that

to happen, it's going to happen. >> gentlemen, thank you. media mowingle, the title many hear disney's bob iger, barry diller. nonexistent in cuba. that could be changing. details next. you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later.

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michelle caruso-cabrera is live in cuba now. >> i want to show you what's going on over my shoulder. this is the u.s. embassy in havana here since 1953. it's been incredibly busy today setting up the chairs, getting the flagpole ready. we've been watching like ants in the building all day. to the topic of media. cuba appears to be changing. it's hard to tell. let me introduce you to the founder of a magazine called "on cuba" and an internet site and newsroom in cuba. born in cuba, left for the united states. now he lives in both places. he's been allowed to start this magazine, have a newsroom here. there have been bureaus set up here. he is trying to make a profitable go covering just cuba. the fact he is set up shop here means he has to have good

relationships with the government. i asked him how is it possible you have this beautiful new newsroom here in havana? here is what he said. >> i've never been told what to write and what not to write. >> how is that possible? this is still an autocratic that controls everything. >> we are a foreign american media market. we are not bound by regulations a cuba-owned media has. >> we had a much longer conversation. he insists cuba is changing. it's hard to tell. there are so many things different here. so different than when i was here just 15 years ago. at the same time we see things you feel are not moving fast enough. it's an enigmatic moment. >> how is the media covering this transformation of relations between the u.s. and cuba, ahead of kerry's big ceremony

tomorrow? >> not very much, actually. remember there isn't that much because there are two newspapers that aren't widely distributed. they are controlled by the government. it's cuban-run television. we'll see tomorrow. we are told we don't think there is going to be that many cubans outside the embassy when the event happens. i plan to see what get mentioned in the paper tomorrow about this, for sure. >> are there high barriers to entry in terms of setting up something like this other than the government being involved and being a big sticking point? >> okay. that is the barrier to entry and the answer is yes. you have to get permission from the cuban government. cnn was first. ted turner was friends with fidel castro. nbc has been in here a long time. yes. that is it. it's a high one. >> michelle, thank you so much. taking the curtain back for us

on what's happening in cuba. the latest from havana with michelle caruso-cabrera. >> high-tech pills coming from a 3-d printer. a company printing drugs for seizures. the ceo joins us next. hello. i am a fully automated investment advisory service. i can help you choose investments. monitor them. and rebalance your portfolio. i can do a lot of what humans can. except have a real conversation. if you'd like that, you can always speak to someone at schwab. they aren't algorithms.

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welcome back and take a look at these. may look like regular prescription pills but the first paid by a 3 d printer. it's for the treatment of epilepsy. joining us in today's edition of "the spark." don, what a moment this is. thank you for joining us. what is the significance of this 3 d printing that you're doing? >> my pleasure, well, it's a pharmaceutical company and we have a three dimensional printing technology plant form -- platform as the core and it changes the way people experiences their medication. >> well, the interesting thing here is as all of these old rules of thumb we have, you know, take two aspirin, call me in the morning. you know, as 3 d printing moves from ultimately a controlled environment to maybe everyone's

household, are we going to witness people printing their own prescription drugs, don? >> well, our first platform or formulation is called ziptos technology and that is high-dose loads yet disburses quickly with a sip of a liquid. we believe 3 d printing will be used to bring advantage to products that wouldn't be available through existing technologies, and so the idea of bringing something to the house of a patient or to a pharmacy i think that's a noble pursuit and one day possible but i believe there are business models to be considered and think about regulatory pathways. >> sure. >> security quality, safety for the patient. all those things come into play when you talk about the personalized medicine. >> for the time being, this particular drug will be printed only under only by the -- well,

actually, let me ask you, who is printing these drugs and what advantage does this offer for epilepsy patients. >> the key to unlocking the potential three-tim mentidimens printing was developing equipment that would allow you to produce at commercial scale, in other words, produce tens of thousands of units per hour with a high degree of precision within process controls according to good man manufacturing practices. so these will be produced in an fda approved and inspected facility. the equipment is such that it will continue to evolve and produce more capacity as we progress as a company, but we're very much taking advantage traditional ways that pharmaceutical products are developed and manufactured and distributed. >> and we applaud you for the invasion. let me ask down the road if you had a kid 3 d printing substances you prefer he wasn't

taking. would you look back and wish you weren't part of pursuing it? >> again, our system is not internet enabled. it is very secure. it's a highly regulated industry so everything that we're doing is very much under control. again, we're trying to bring advantage to patients that doesn't currently exist. in this case, three dimensional printing is really a welcoming thing for many patients, especially those having difficulty swallowing tablets and certain diseases, especially epilepsy. we're very proud of what we're doing to bring good medicine to folks. >> and again, you know, love that you're doing that for millions of sufferers. thank you for joining us and telling us all about it. >> my pleasure, thank you. >> check out more on "the spark"

on cnb nrks brncnbc.com. we're back in two.

well, a management shakeup at coca-cola. prompting speculation about future plans at the company and on a day we've been talking about deals, prompt speculation. >> the company introduced him to us today as the president and ceo, number two position and did not say he was a successor and if they did with reporters said it would be inappropriate but obvious considering this company has not had a coo and not had a succession plan to investors and another person who was in contention on bozer announced he's going to be leaving the company. an obvious take away. in terms of deals, they also mention and highlighted this in the press release, this person james quincy was instrumental in the deal to combine the bottlers, combining the european

bottling system with german and spanish. the upshot is bonnie of wells fargo said maybe coke was looking for acquisitions and played a role in the juice acquisition in 2009 though it's jet to be scene. coke sees itself in a transition year and instead of full acre wi acquisitio acquisitions, they are taking stakes and monster beverage growing. >> is it a reason to buy coke here? >> i don't think so. i think that this is, to sarah's point, this year is still a transition year. i don't think you want to be short the stock but i do think there is going to take some time. i actually think that maybe there might be mna but i think this new person quincy, he actually brings a fresh set of eyes to kent who needs it and strategically can help focus him on volumes because volume in europe where this person was have been declining and just started to stabilize.

perhaps maybe he has insight how they can get that. >> they stabilized diet in europe. >> quick, stephanie, put you on t spot, would you have them buy another food or beverage? >> beverage. >> leave it there. thank you for being here. that does it for us on "closing bell." a special "fast money" live from san francisco starts right now. ♪ ♪ this is "fast goes west," "fast money" from the hottest city in the world. we're here to bring you some of the best investment opportunities for tech, real estate and beyond. dan nathan and guy. we made it out west. the hedge fund manager, another internet name he says is about to go on a net flex runik