genz is all the rage now. >> good story. >> thank you for watching "power lunch" whatever generation you might be. >> "closing bell" will start in just about four seconds? yep. >> hi, everybody, welcome to "the closing bell." i'm kelly evans down here locally at the new york stock exchange. >> you have plenty of company over there. i know i'm bill griffeth here and i'll be on nightly business report tonight on pbs, hope you can join us then, kind of a lackluster day overall. the dow up just 16 and s&p still watching that 2085 level on the s&p to see if they can get above that. but so far no dice. transports have been strong. you can see among the ten sectors in the s&p, the financials are the strongest. in the transports it was delta

airlines, had good looking earnings. and then today bank of america and wells fargo were among the standouts among the banks reported earnings. >> speaking of earnings, wells fargo exposure is a focus for investors we'll have a first interview with john shrewsbury. >> today a bit of a pull-back but essentially neutral. we'll bring you the ceo missage as they open up to developers for the gopro app. >> who had the best day yesterday? was it kobe, steph or jamie d e dimon? what one is calling the ceo trading bill of the decade. >> i think he was double that in his annual ized return. >> that's true. let's start with the airline stocks, getting the lift from

the better than expected earnings report. >> i would say first off, i don't know if jamie dimon took 50 shots the other night as well. let's talk about delta airlines, they reported first quarter operating profits that beat wall street estimates and airline company's revenues did however fall like you mentioned. they fell slightly short of estimates with some negative impact. shares gained about 7% over the past three months but still down around 4% this year. trying to rebound. airlines had been a hot trade before and trying to rebound from the january lows. the airline is forecasting a smaller decline in passenger unit revenue. that's one measure there for the current quarter and willing to customer capacity if necessary to spark growth. other major headlines reporting in the coming days, jetblue, alaska, reporting next thursday, american next friday. overall, remember, airlines having a pretty good start to the year. the airline index is up 9% and

2016, it rallied 30% from those january lows so kelly, bill, as we talk about this idea of airlines, they are flying high now but still trying to gain lost ground over the past year. >> those lines are growing at the airports too. american airlines saying tsa lines have become unacceptable, thank you, american. phil lebeau has more on this story, profiling one company that may have a possible solution. phil? >> we'll hear more complaints about long lines because we're just starting the summer travel season. we're already hearing airports and airlines and tsa saying be prepared for more. we've spent the last couple of days in denver at denver international airport, one of the busiest in the country. we saw a long lines there but again, you're going to see this continue through the summer. that brings up the question, is there a better option? clear, operations in denver, uses biometric screening, you put your fingerprints and image

of your iris into their system. more than 500,000 members and enrollment is up 200% in the last year. one reason why, the people love getting to the front of the tsa line quicker. >> the last time i went eight weeks ago there was probably 1500 people here and i walked right through. >> hopping through the line and being done is wonderful. >> i've seen it down and around the corner, standing there for an hour and a half. >> expanding operations to professional and other sports stadiums and targeting a greater use of biometric screening, in other words, any place you have to go through security, they are saying you go through a decem r designated entrance and you're in much quicker. when we had a chance to talk to experts about this, they believe there is a possibility for clear and biometric screening to be expanded into other areas.

>> there's going to be a huge and growing market in biometrics and ability to use that to reduce risk of identity theft and to increase opportunities whether it's access and otherwise is going to be quite large. >> by the way, we were here over the last couple of days checking out people going into coor's field through the entrance, all major league baseball parks have metal detectors you've got to go through those. this one they are not as many people members of clear, people are going right in. this is a taste of what we might see in the future with venues with security and large groups of people who need to get in. >> phil, karen over at clear has been working so hard to get this off the ground. interesting that the tsa has come around and you can be a tsa -- whatever it's called, to get priority access in the line and do global entry. pre-check, a lot of people, myself included paid up for those programs, how much is

clear and to what extent is the regulatory environment going to back what they are doing here? >> well, $179 a year. so if you're in a city like denver and you're flying a lot. it makes sense perhaps to say i want to go to the front of the line as quickly as possible. in my case, they don't have clear in chicago. you don't have it in new york. people might sit there and say why would i be a member if i have a tsa pre-check and it's not in my airport yet. they believe they can expand the business in the future and working with the tsa that people will say there's value here in certain instances where i want to go through the clear line and then also i can use it perhaps away from the airport at the place like coor's field. >> how about in seatac in s seatt seattle, they are hiring outside contractors because they don't feel there's enough tsa workers to meet the demand for flyers

here. >> >> that's a big problem in the industry. not only the lack of help being hired by the tsa our outside security firms but the infrastructure. we're asking more people to go through old airports not designed to handle big throngs of people going through chokepoints where you have to do security screening. that's the issue you have along with the personnel issues you mentioned. >> thanks very much. i think i heard the national anthem behind you here. you're going to miss first pitch if you don't hurry. >> okay. >> phil lebeau there. joining us, cnbc contributor heather hughes, probably sitting in my seat right now. jonathan corpina at post nine and rick santelli from chicago. what's missing right now? we're -- i know we're bumping up against those numbers you are

watching on the s&p around 2085, is that what's holding us back? >> i think that's part of it but i also think the nonactivity today is very good and healthy for our marktsz. the last two trading sessions we clearly saw buyers come into this market and saw nice volatility to the upside. this market needed this rest today and needed this break. it's missing buyers we had from yesterday and day before and waiting to see how this week will play out. unfortunately i might have bad news, i think the risk off trade will come into play tomorrow as we get towards the weekend. investors will like what that i have seen so far this week but heading into more earnings next week they might want to play it a little slower coming monday. >> rick, we haven't seen you since word yesterday that the cme will close the nymex trading floor in manhattan. what are your thoughts? >> i think it's sad but it certainly shouldn't be unxpeked. the chicago floor, ats least the

options markets still open, there is no plan to close them based on recent filing by the cme that we read that you're refr referencing. i personally think having people in the system is a great insurance policy. i hope the cme considers that but you know, these are days that helped create the markets as we know them, especially the energy markets and europe. personally i'm very sad to see them go but i understand the march of technology, the one thing we need to be very careful of is whether it's high frequency trade, i'm not saying whether it's good or bad, but with all of these high speeds and regulators an chapters and lightyears behind the people creating them, we need to be very careful. we're not tossing away something that might not have a future somewhere. >> heather, we've been talking about the tremendous skepticism about the rally in the market and what's your view of the

market? john is also saying, this can't last. as we approach record highs we can't believe that we are where we are right now. >> i wouldn't be surprised to see the markets take a breather here. it is reassuring that we're having a day that we're holding up even though the markets may be relatively flat. we had a huge risk on day yesterday. to see that the markets hanging in there is a reassuring sign. the short interest still weighs heavily on the markets. part of atrib bugs to the market, bit of the market rally or boost we've had over the past week came from short covering, actually. so about 8.5 billion shares, total market shares. they benefit when the market goes down but what you want to see is complete deterioration. we'll see if the shorts come into play in terms of ramping up exposure on betting markets to

move lower or if short covering propels it even higher as we haven't gotten positive news from earnings season right now. >> jonathan, we have seen banks like wells fargo taking a hit because of exposure to oil and gas and energy here. the commodity prices have been a little healthier lately. does that tell us that we might be okay and that that risk is largely behind us here or how do you read things? >> i think so. commodities coming into play when you look at oil, oil has found its nice tight range at these levels here. i think investors have been waiting for the volatility to cut down and able to move in this range. as far as public companies are concerned that are exposed to oil, this volatility has not been good at all. they need to understand and figure out if oil will trade in a certain range how they can project moving forward. >> what's surprising to me, the retail sales data in march actually fell. it was weaker than expected despite the lower oil backdrop and stronger dollar. what gives? you would think that the consumer is very strong, at

least airlines are taking a place on the backs of lower oil prices finally today. >> that's a point. thank you, good to see you. heather, jonathan, rick santelli, watching markets, you mentioned how the sectors are doing and overall the averages hanging in there. the dow is up 15 and s&p barely higher up. same for the nasdaq. >> when we come back, wells fargo chief financial officer will speak with us on a first on cnbc interview. the bank's exposure to oil and gas and potential losses from bad energy loans among them. >> coming up, nick woodman announcing a key developer program. we'll bring you his comments coming up. why do we have aflac... aflac... and major medical? major medical boyyy, yeah! ♪ berr, der berrp... i help pay the doctor, ain't that enough for you?

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a mixed day, the dow up 6 points and nasdaq dipping into negative territory but some of the standouts we've been talking about the earnings from the likes of delta, bank ever america rising after reporting better than expected quarterly revenue, earnings per share came in at 21 xrents in line with the

street's lowered expectations and others reported as well, right, kelly? >> take a look at wells fargo. falling almost 6%, slump in oil does continue to take its toll. the country's third largest bank by assets charged off $204 million in energy loans. >> we wonder will they get bigger or have we seen the worst already? we're joins by cfo john sh ruz berry. good to see you, welcome back. >> nice to see you. >> the first time you added reserves in a while and you've been releasing them. jamie dimon said he thinks the worst as far as energy goes for the banking industry is behind us. do you agree? >> well, i don't know, we're in the middle of working through workouts with the variety of energy customers and e and p

space in particular. prices stayed low for a good long time and recovered a little bit, people have to work through what the current level of leverage is. this is both price issue as well as leverage issue for sector. at wells fargo, we managed to produce $5.5 billion worth of net income even while increasing reserves for energy loans and taking chargeoffs as well. we feel we've got a good balance. >> could you add color around where you've seeing losses or whatever term you want to choose, this is a big space, energy or gas, that could cover a lot of different things. where in particular is the relative weakness and relative strength? >> sure, so in particular with exploration and production companies, people upstream pilling resource out of the ground in oil and gas and obviously impacted by the spot in future price of the resource

and services companies. one of the first things that happened last year as energy prices plummeted is the company stopped incremental drilling and that had an impact on services company. those in particular in the energy space and energy exploration space are the ones that have been the most impacted. the second order impacts, we're a big lender in all sectors and look at our consumer businesses and commercial real estate business and elsewhere to see if we can measure the second order impact. some of those markets, the ones that are heavy on energy employment are beginning to look more average after performing at an above average pace for a while but that still seems to be contained. i would say the outcome is in the two areas i've mentioned. at wells fargo the services business and the mid stream business amounts to about 2% of you don't loan portfolio

overall. >> 1.9 i think i read, to be precise, 1.9%. you wrote mortgages but feweren than the fourth quarter and fewer than you did last year at this time. what's going on in mortgage business right now? >> pipeline is big. we had a rally of rates and pipeline activity and building into a big pipe line was very strong. we originated $44 billion worth of loans in the quarter and finished with a $39 million mortgage pipeline. that augers well for the second quarter. and second quarter is where spring buying happens and people are more likely to be buying -- to be moving up and trading up in homes in the second quarter. it was a pretty good quarter. some of it is seasonality but some is the rate pattern but $44 billion is a lot of mortgages. >> i still remember when jp was talking about trying to catch up to you there in any case they also showed a lot of strength in

that franchise this quarter and thinking again about the way in which sent. is interesting around the big banks. you were the star, john, for years. you still traded a premium relative to the other ones but this week a series of articles asking whether you're now the bad boy of the industry and regulators obviously raising this concern about material errors in your living will. what are these errors or mistakes they are referring to? in the past you came through with flying colors. >> we've got our living will feedback yesterday morning and some of it the night before last. we were obviously disappointed not to be a -- not to achieve a nonobjection, where we were a year ago. this is our second bite at the living will apple. the feedback we got is are things we can absolutely deal with. they are more than procedural but they are -- they are governance relate and the way we pull the process together, the

size of the living will office we maintained and things like that will absolutely address them between now and october. our expectation is that we will achieve a nonobjection as you said, we did a year ago -- >> i'm sorry, i don't mean to belabor this. i'm so curious about this process. how in the world we're this far along in this process of developing these regulations and these living wills and new material with dodd frank. how do you fail that? don't you work closely? i'm not picking on you specifically, there are three other banks that also failed. don't you work closely with the other regulators in the process of forming the living will. how does it come as a surprise to them they have to fail and as a surprise to you that you had your living will rejected? i'm curious about that? >> it's like the liquidity

stress testing process and some of the other big bodies of work that came out of dodd frank. i think there's a maturation process for the regulators as well as for those of us who are living with it. there's a maturing of expectations or increasing of expectations which is reasonable and expected. that's happened in see car and i don't think we're through the process. there's a couple of agencies working together on this one which is different than the other rules. that provides incremental opportunity for coordination to mature over time. so in a perfect world it would be a little bit more it ra tif back and forth and shorter periods of time, more expectations and managements and progress management and feedback can be built into the process but the way it stands, there are long gaps of time between us and middle and response. and as a result time passes. >> just real quick, before we let you go, there's so much speculation of the future of american express.

i know you mentioned you're not necessarily looking for an investment bank right now but what about the card business an area it seems it doing well for the banks these days. would you look to bolster the card business? i know you can't specifically comment but just generally speaking? >> we have a great relationship with american express and we have products that we issue on their behave and i'm sure we'll gro. there's a lot for us to do together. we're looking to grow our card business organically and co-granting opportunities with mer kmachants around the countr. my expectation is the growth will come more from that area. >> had to ask. didn't expect any announcements or anything, but -- >> you would be free to do that if you wanted, that's fine. >> thank you so much for joining us. >> for the latest council insight and analysis, head to

cfocouncil.cnbc.com. >> we have 37 minutes left in the trading session here. the dow up 17 points. the s&p up 1, the nasdaq up a fraction, kelly. >> up next, gopro founder and ceo nick woodman launching a major development program a few hours ago. we'll have details on this one. >> the treasury department's new rules on so-called tax inversion deals squelched pfizer's $150 billion takeover of allergan, we'll discuss deals in the pipeline again that could still meet the same fate coming up.

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shares of gopro slightly in the red after a huge rally yesterday and it's been a tough year overall forgopro stock. nick woodman hoping that a new developing program will help turn things around. josh lipton has the story from that program in san francisco. josh? >> well, bill, gopro introducing new tools today designed to make it easier for companies to integrate their technology with gopro cameras like what we're seeing behind me here. this is called sensor, they sell a piece of hardware for 249 bucks. it sinks with a gopro camera, from speed to the height you're jumping and potentially good news there for bikers and

skaters. i also did catch up with gopro president tony bates who walked me through what the developing program means for their company. >> gopro has been a versatile adaptable product. by having more developers be able to connect seamlessly and interact with us, it really expands as more consumers want to use gopro in new and different ways. >> now, other companies that were here included bmw. this designed this app that will let drivers kaptd tour data and video from gopro cameras and that app will be out this summer. bmw tells me, it wasn't just apps, fisher-price was here. they designed this kid friendly mouse for gopro cameras. stock has been under pressure, falling from the $98 high reached in october of 2014.

but their hope now for gopro, you introduce more versatility into the cameras and attract new users around bring back those -- >> it is a new market for them. it's not the gopro camera that brought them to fame and prominence. it's drones and dji owns that space. how do they compete? >> well, i think gopro, it's a big market. we are waiting for that gopro drone that's been promised in the first half. a lot of excitement. we've talk to gopro and they'll make the case, part of the reason the drill market is as big as it is all of these drone makers have been attach gs gopro cameras to their drones and make an impact there. it's not just a drone, you're hoping if your gopro, no new software and next generation camera you expect next fall. >> you are a brave man to stand in front of that skate board. i hope he stays right there.

>> i think it's a bike, a motor bike. >> i couldn't see that. >> even more brave. >> thank you, josh. time for a cnbc news update. let's go to sharon epperson. a magnitude 6.5 quake struck southern japan today, killing at least two people and injuring 100 more. the quake knocked down houses and buckled roads in the region. several fires also broke out. japan's meteorological agency says there is no risk of a tsunami. people supporting a wage hike for fast food workers are protesting across the country. many walked off the job to push for $15 an hour wages and say fast food chains such as mcdonald's and burger king and wendy's do not pay a living wage. americans spent more on prescription drugs last year to a record $425 billion. that's 12% increase over the year before, according to data

firm ims health. the rise in spending driven by ultraexpensive new drugs. president obama will deliver three commencement speeches on may 7th speak at howard university and may 15th heads to rutgers and on june 2nd, he will make the commencement address at the u.s. air force academy in colorado springs. these will be the last time obama does the honors as president. that's your cnbc news update, back to you. >> rutgers. how about that? just down the street here. >> exactly. >> thank you, sharon. >> 30 minutes left, we're going into the critical time of day but i don't know how critical it's going to be. we've had very little volatility. i think it's about an 80-point range top to bottom for the dow jones industrial average so far today and right now it's up just 18 points. we have a leading trader who will tell us what he's watching into the clois when we come back. what more can be done to make markets safer.

rick ketchum will join us right after this.

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don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back, less than 30 minutes to go. joining me on the floor is gordon charlat, japan may be driving the markets. talk about that. >> they had such a nice run it's given overall investor confidence and translates into people being willing to take on my risk here and other parts globally but certainly the fact that the fed over there as if you will is willing to take a chance and stimulate is a sign that these companies will continue to grow. >> we've talked about this when the markets were weak a little bit. is there a direct correlation? do i here in the u.s. need to

care about japan getting this right in order to remain intact? >> there's no question there's correlation. all of these companies and global economy, these things some of the stocks here and sony and other names you here, the fact of the matter is, if they are strong there and getting their economy together over there, that's going to help our markets here domesticically. you have to watch that and factor that in. but from the domestic standpoint, it's earnings season and we have to start it there. what you're seeing here because of that confidence, people are starting to take the vanilla investors and fund managers getting behind the names having what unremarkable earnings. >> the vanilla guys. joining those chocolate and strawberry ones here. neopolitan ice cream. >> please let gordon know i never get tired of seeing that

tie every single day. eight years after of the financial crisis we're still trying to improve trading regulations and regain confidence in the market. joining us right now is the man at the helm of the self-regulatory body of the agency, with us in a first on cnbc interview, rick ketchum, retiring this year, a bit of a valid did tri interview with us and bob pisani. >> a long 37 year career as regulator and with the sec and nasdaq since 2009, chairman, thanks for joining us. that is a long time. >> it is. >> everybody says the markets are too fragment and too complex. and some even saying it's been broken. you're the chief regulator here. what's your view how the markets are operating today? >> they are not broken. they are not rigged. in a variety of ways i'm a data

guy, when you look at the data, this for long time investors is a good market from the standpoint of the cost of doing business. they are fragile because of the changes in the fragmentation and the high frequency trading that exists here. and they are susceptible to different types of manipulation. when we started this thing, used to have a specialist down here few firms upstairs that might back the market. that's spread across and people around the world have the ability to trade and impact pricing, it's a different challenge for manipulation and errors and with respect to periods of short term volatility. but those are problems that can be addressed and we're very much involved in addressing them. >> let's turn to dodd frank. banks and others have bitterly complained that the excessive regulations around dodd frank are stifling their ability to operate and stifling competition. you're one of the people who has to implement those regulations

is dodd frank too excessive and honorous on the banks? >> the goals behind dodd frank are absolutely the right goals. you can't have as much activity going on outside a regulatory environment. the amount of leverage that existed in the system was too great. the particular pieces of dodd frank, some of them and how they've been implemented, i stand as somebody -- i'll watch and see. i think what really makes sense is to step back a couple years from now and take a really hard look and ask what's working and what's not. each of the individual pieces can easily be justified. i think the question of the overall impact of all of the regulation and i'll include finra regulation in that, is something we need to step back and look at. >> a lot of this is focused on the stock market, the last couple of years trying to figure out what to do there and meanwhile, thousand pound gorilla is the bond market of the investors are not only

involved in it but new generation products to get exposure. how concerned are you about the complexities and the on securities there? >> it's a great question. it's an area i'm very focused on. we worry about from a best execution point, with regard to markups in the bond market can be nickels and dimes and quarters and dollars, we're looking for more transparency there. there's the initiative of the various different agencies with respect to the total absence of post trade transparency with respect to treasuries that deserve a lot of attention and as you properly refer to, the range of structured products and the more exotic range of liquid etfs are key things from the sales practice standpoint. i really think the next few years are years of fixed income. a market is much more technology based and all of us have seen that story in the equity market.

fixed income is different but it's a time where a lot of change and risk from standpoint of making sure that individual investors are served is really a key thing. >> i'm curious back to dodd frank, your thought of taking a step back as you said on the regulations there and re-evaluating and seeing if they are working or not. do you have specific regulations in mind? are there certain areas of dodd frank that i don't want to say concern you the most but you wonder how effective they are at this stage of the game. >> great question, as i said, each piece of dodd frank has been justified in response to a very real problem we saw. when we look at each piece from the standpoint of the additional capital, pieces that can impact liquidity and holding positions and the questions with respect to restrictions on financing to

make sure they are sufficient liquidity, all of those things make sense. it's a question of the overall impact. that's something that i love -- i think responsible regulators ought to step back and look closely at that impact. >> we have an application for a new stock exchange with the sec, the subject of a very famous book on the subject. the iex has a speed bump in it. the speed bump some people argued against the spirit that you're not supposed to have delays. what's your view on this? do you think the iex application will be approved or not? >> i've said a couple of times, i thought the most problematic part of the application was the broker routing part which they maemd an amendment that seemed to adjust it. the speed bump to me, the exchange act is sufficiently flexible, the rel question, is

it responding to investor need and that's got to be answered. my guess is with the changes and interpretation put out, the sec will prevail. >> 37 years as probably the greatest regulator of the last 50 years. congratulations and will you promise us you'll come back? do we know when your retirement is official? >> sometime this summer. i'll always come back, i love cnbc. >> we hope it's a regular appearance. >> thank you both. rick ketchum. we're watching these markets which are in positive territory but just barely. up next, treasury secretary jack lew talking to us about the administration's move to halt tax inversion inspired mergers, putting more deals in danger. that's next. >> kobe bryant scored 60 points last night in the game for the lakers and golden state warriors won their 73rd game setting a record of the season. but it may be possible that

jamie dimon had the better day of the three of those men. stay with us, we'll tell you why when we come back.

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america doing business in america, to be able to change your address to avoid u.s. taxes is wrong. we say we want to stop that and we are continuing to look at what tools do we have. >> treasury secretary jack lew talking to sara icen earlier today and inversions in play, several deals could be facing collapse right now. seema mody has a look. >> it could make it more difficult for companies to engage in inversion deals already resulting in pfizer, pulling away from its planned takeover from allergan, s&p capital iq says there are three specific deals that could be at risk. first up is johnson controls, maker of car batteries and if proposed acquisition of tyco and another one, data from ihs, planned takeover of mark it. a combined company is expected to be based in london and lastly, keep an eye on the plan

to buy progressive ways connection for $8 billion, which if approved could result in the company moving tax domestic sooil to canada. they have issued three rules on inversions when asked whether corporations should expect more. the secretary jack lew told cnbc that his department will quote continue to look at what tools we have and we've already seen a slowdown down about 40% from the same time last year and experts say further regulation could dampen future deal activity or result in bankers and lawyers being more strategic on how they structure transactions. >> seema, thank you very much. >> the dow still up 23 points and s&p up a point. so is the nasdaq. >> art misses you but did come by to say there's $100 million to buy on the bell. not a huge one and refleking these markets here today that we have seen.

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shares of burberry sinking today. the company announcing disappointing sales figures and predidded profits could be lower than expected. shares are down almost 4%. could luxury spending be sending a warning sign to the broader economy? good to see you. >> hi. >> i've just gotten an e-mail from you but you couldn't have sent it. >> the magic of technology. >> i was at the presentation yesterday where the warning was as goes luxury, as does the rest of the consumer. what do you see happening? >> i think it is fair to highlight that a good portion of the spending in the united states, almost always, at the upper end of the income. one thing we've been trying to drive home, wage gains as modest as they have been are more broad based and it's happening in sort of the highest end of the skills spectrum to the lowest end.

brought paul on u.s. consumer spending remains consistent with what we've seen over last year. roughly 2.5%, nothing changed even with retail sales, obviously on the soft side. one thing from today's inflation number, there was definitely a pricing element involved. and i think when we look at the real outcome for q1, you'll be about a 2% consumer. >> but it's not just about the u.s., burberry, as long as we're talking about burberry, hong kong has been slow for them and europe. i always had learned that the luxury brands were the last to feel the pinch. is this a sort of near the end of a cycle that we're seeing here with burberry? >> i wouldn't say that at all. i think you're right to sort of wonder about the general ma laiz

going on. make no mistake, it's been going on for quite a while. one of the things we're saying, it isn't an accident that breaks below even. if you want to hone in on the u.s. economic theme, or the narrative, in the narrative the u.s. remains consistent with this idea you have fundamentals this place that are enough to drive consumption at a 2.5 clip. people are sort of slightly off base on. this is an uneven economic recovery. nothing has changed in that regard. sure, you're going to have some sort of -- at the end of the day you're talking about a 2.5% consumer. >> nice to see you again. >> we're coming back with the close countdown. >> and future trading

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carefully, 205. midday and now we've fallen back below that with a slight minus sign. the transportation average with delta out with those earnings, even with the decline of revenue, delta did well in first quarter. transportation average today up a quarter percent. delta up 1.1% and bank of america up 1.6% and wells fargo down a fraction today. tomorrow we have citigroup reporting its earnings as they finish up a busy way of reporting, up 1.75% and charles sh wab will be reporting tomorrow as we wrap up what has been a decent day for the market. >> three big banks and bank of america and wells fargo, earnings were good enough, this is the same thing as jp morgan

and loan growth isn't that bad. the important thing is the general commentary has been slightly to the positive side. i'm very excited, the ipo market might finally be starting to thaw out. it's been four months since we've seen a notable ipo. that's global markets and it's an exchange operator, should be pricing tonight for trading tomorrow. they had a technology glitch in 2012 and weren't able to ipo. this is it so it's important for number one the fact they do that ipo several years after the ipo blew up and number two, they are the harbinger of how ipos go in the next few weeks. if they price towards the high end it will be a positive sign. all indications are demand is pretty strong. next week we'll have mgm and

american renal and secure works. the market is thawing out and it's been a long time. >> and the skepticism continues as well, closing out a rather quiet day. we'll see who's ringing the bell at the big board and nasdaq. stay tuned for the second hour of "closing bell." see you tomorrow, kel. >> welcome, everybody, i'm kelly evans, here's how we're finishing up the dow eking out a gain of 17 points and s&p, we'll watch that one and make sure it is actually closing positive. less than a point, 2082 is the level there. the dow hasn't closed above 18 k since last july. the nasdaq couldn't hold on to positive territory, it's down about a point and a half on the bell coming up, steph curry and

kobe bryant and jail jamie dimon, all on the panel for having the best day yesterday. welcome, guys, steve grasso will join us off the floor shortly, let's start with a look. does it seem there's a rotation, in the wonder child under way here? >> people were clearly leaning too hard against this group coming into the reports. what i found impressive bank of america could tack on more gain versus yesterday when it was up with the group like jp morgan. it does fit with that narrative of we thought things would be pretty bad. it was an underarmed group and

when is the fed going to raise rates and other reasons you can own the stocks that have nothing to do with where short term rates are going. >> look the aat wells closing negative. >> they came out with an 11.5% return on equity. they are supposed to be the best of the big bunch. it's better than the other banks are getting and it's not stellar, they should be trading at 1.5 book or two book. it's not terrible news but i'm not sure it's all that reason to own the stock if you don't already own it. you can go to the tangible ones trading below book value. >> to his credit, saying for some time now, we start to hear from morgan stanley, goldman

sachs and morgan the worst performer from the start of the year to the low, is there a sense we've gotten through the worse for capital markets? >> citi reports tomorrow. the stock is up 12% this week for the past five days. clearly people are thinking that you can extrapolate a right to citi. if it's the trading line you buy and sell stocks on, you can't convert. it's not a zero sum game but some of the banks put the money on red and some on black. the flows don't all go to all of them equally. i do think the test will be how citi reacts to the news and morgan stanley and goldman sachs, everyone knows what a housy quarter it was for markets. >> citi is like this is the gang that can never shoot straight and yet, they are the only ones who kind of pass -- i wouldn't say with flying colors but -- >> look at the wall street journal today, who's the bad boy in banking is shifting.

>> mike corbett, the ceo has to win. nobody else has it on wall street. this will help him when it comes to the c car conversation and stress test and citi, this is his whole strategy. >> exactly. >> he's got good news. >> why did they pass this living will test? because they spent a year doing nothing but crashing for the test for the stress test. he said he quit if they didn't actually pass it. here you go. >> steve grasso joining us at post nine. what jumped out to you about trading activity today? >> one day wonder, concerning financials, talking about it, that was interesting because you can't use a blanket statement, buy all financials now. people have not -- forget about universally loved and hated, but they universally avoided financials for so many years looking for bigger bang for your buck in other places.

what i did notice is that utilities and energy, that flop, you rotate out of the u at this times and out of that trade years ago it feels like, it wasn't. you moved into yielders. then you got out of yielders and went back into energy. now they rotated into financials. i don't think the musical chairs is over quite yet. i think the financials need global growth and i don't think we have it yet. >> the prospects of them through dividends or buy backs boosting that return, how much more can we expect at a time when people are obsessed certainly with the yield they can get on stocks? >> you make a great point. there's not a lot of growth out there. we saw the imf came and cut for the fourth time in a year, projections for growth. it's hard to see where they are going to get it. it's just totally focused on trying to get it right and get all of the -- dot the eyes and

cross the tees and make regulators happy. which is what mike corpsbet's predecessor did and lost his job. they've got a lot of crash they can deliver through buybacks or dividend, that's all shareholders want. >> it is interesting how that net interest margins were so effective with that one december that one december raise. the problem is, does it continue and yellen has spoken out of both sides of her mouth quite effectively for the overall market. done a masterful job. when it comes to financials, you need to wait. >> again, it's sort of been a stealth rally. one of the worst starts to the year for markets and then get the february 11 lows and look where we are. it's not insignificant we could be back above 18,000 here on the dow in terms of a closing level. we were there last july. but we are kind of gradually creeping higher. >> the way we've done it is with more stocks doing the work.

more stocks were also beaten down than the indexes were at those lows. does the muscle memory of feeling smart for having sold at this level, does it kick in at some point? it didn't today, you would have thought we pulled back and sellers didn't come out yet, i don't know if the cpi number says don't worry about the fed for months on end. whatever it is, i still think you have to at some point expect it to rest and pull back. it hasn't really prompted -- >> i don't want to make it too easy about why hasn't it pulled back. but doi believe this market hinged directionally on crude. who's going to sell ahead of opec. >> the u.s. production figure, i mean it's come down quite a bit. we're talking about an upcoming meeting. >> you'll see crude sell off. you'll see that trade back offer come next week and i think saudis are the new janet yellen,

just enough to keep the market underneath. >> they love that comparison. >> meanwhile, today's shares gopro were slightly lower after surging after the news they hired a designer from apple. today they announced a new developer program and nick woodman is making his pitch. >> if you can think it, you can capture it with a gopro. and thanks to gopro's developer program, we're expecting to see many, many more developers thinking it and we're excited to see the world's most versatile capture module, our little gopro, become even more versatile but more importantly become even morrell vant in our shared customer's lives. >> is this what the company needs for a turnaround in stock?

steve grasso -- you're always bearish, steve. not always but andrew, welcome to the fray. you guys have etf called i fly, you're focused on the long-term case for drones here. how likely does go pro come into what's already a competitive space, one dominated by dpi. >> what they realize that go pro, we need to be more than cameras, looking for different ways to use those cameras and the drone industry is poised for a wild potential applications for different companies to get into it. because they have the cameras it gives an opportunity to lead in the new drone revolution. >> steve, why are you skeptical? >> let's first -- let me preface it with i was dead wrong when the stock first came out. i missed 300 some odd percent on the way up. i'm not exactly claiming victory but i think it's still a

hardware company. so even though they'll be involved with drones. what has that done to change the m.o. that it's a hardware company? >> great point but was that what today was about? to create platforms that people will you will maltly stick around for. >> we've seen other acquisitions to increase their software offerings and they are trying to expand their presence in the video footage eco system. drones being huge in film industry and different applications, their ability to get into this at a early stage could position them well into the future. >> there are a couple of areas where drones could use real improvements like battery life, sort of weight and issues like that. if they can figure out those things, great, i'm not sure that's where it's coming from. >> the stock has a 30% short interest on it. so very little has to go right. we've seen it make a pretty good move off the recent lows in the

stock. but having said that, i'll say to andrew, what makes him feel so confident, it's a big if and trust me, an if can move a stock. but what makes him feel as though they've got a niche market going forward in that software application space? >> right now there are a lot of nai sayers on gopro. for us we developed a fund that focuses on the drone industry. they are a important part to the drone economy. they are looking at karma and other areas within drones and bringing on a new design personnel and other areas for others to expand to. hopefully things move in right direction. it seems they are taking important steps to move there. >> they did have the big hire yesterday, it was amazing to see the stock move that much. >> and it gets to steve's point, it doesn't take much good news to move it. the stock went to sleep. it crashed from about 60 in august down to 9 or so then went side ways for two months between

9, 10, 11, around there. by the way, $2 billion -- less than $2 billion market cap. half a billion in cash. clearly the market is viewing this as exactly how close is it to kind of an ultimate kind of support just for strategic value down the road or something. >> you know, what does apple have to do? everyone thinks in the back of their minds, maybe this is another beats thing, you see this shift, someone goes from apple to go pro and next couple of months, you see apple take them out. i don't know. i don't know if there's enough to entice apple to actually take them out at this point but that would be a reason why shorts should cover because if you can get gopro in the apple ecosphere, then you've got a real winner. >> andrew, last word? >> i think hopefully they are able to continue moving into the drone industry. but it's great to see they are realizing we can't just be cameras. zblt all right, thank you so

much, thanks for -- virtual reality and applications -- >> people already in that space and have competition and competition is pretty steep there. so when you start saying this is what we are, we are a camera company but wait, we're a software company and now we're in drones, it makes investors nervous. >> they are trying to be a lifestyle company. for the adventurous nacisrcissi generation it's a great product but going to the next level is really hard. bringing in the guy from apple and creating a software, you need an engineering agree. that's going to make lifestyle hard. >> i guess you're not getting one for christmas. >> i already have one, who doesn't? that's the problem. check grasso with the rest of the crew today at 5:00, head of derivati derivatives, back with an even bolder call for stocks.

jack lew defending new rules designed to crack down on tax inversions. >> if you get the benefits of being in america doing business in america, to be able to change your address to avoid u.s. taxes is wrong. >> will the new rules have the unintended sequence of hurting deals and investors? that's coming up. tough regulations partly to blame for the collapse of major coal companies. what happened to president obama's diversified energy strategy. former commissioner bart chilton joins us on that next. >> who had the best day ever? kobe, steph curry or jamie dimon? we'll discuss it later on "the closing bell." ook smarter? yeah, a little. you're making money now, are you investing? well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy? (dad laughs) wow, you're laughing. that's not the way the world works.

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coal, fracking, both have come under fire on the campaign trail. only seem to be promoting renewable energy and punishing fossil fuels and the question is at what cost. let's bring in bart chilton, good to have you with us. this news about the bankruptcy of peabody energy has highlighted how much that entire

industry has been decimated in the last couple of years. what's the broader impact to customers, to consumers and cost of doing business in this country from this real push away from fossil fuels? >> hi, kelly. there's another one today, another chapter 11 today that you all reported on. energy 21, one of the larger producers on the gulf of mexico shelf and so, we're seeing more and more -- there's been about five of these large companies as you reported just another one, wyoming, yesterday. so there is a lot of pressure. it reminds me of that old queen song, under pressure, it never rains but it pours, it's been pouring on the fossil fuel industry. with energy prices so low, it's very hard for them to keep in business and make ends meet

which is why you're seeing chapter 11s. and the other renewables et cetera, have lots of promotion. they've got tax credits that were extend for solar and wind last year. >> and guys, the supreme court even has weighed in on the extent to which regulators ignored the cost benefit and the regulations they've put forth. even if everybody has this agreement that we want to make this transition, the cost of it especially to lower income users is significant. >> it would be significant, especially without the glut in oil we happen to have right now. it seems like maybe you have a little cushion there because you don't have supply constraint at the moment and prices surging. otherwise without a doubt the favoring of one over the other and really the ones that can't really get by without subsidy or help that would necessarily bring prices up, all else being equal. >> maybe a question for bart or

the panel. is it possible that what we see with peabody, $20 billion company, is this kind of like a blue print for what's going to happen to big hydrocarbons and oil companies in the next 20 years. i mean, like 70% of american cars and transportations use oil, right? that's all changing. now you have 80% increase annually in electric cars around the world. do you think we're seeing the future here? >> i do, rob. i mean, this is the end. they cannot make it at these prices. if you look at our energy portfolio, about 25% of it's coal and 25% is petroleum and 31% is into nat gas. then go down 10% nuclear and then the remainder is renewables, including hydropower. so it's that last group that 10%, 11% of renewables that the

policies that this president has been promoting are trying to focus upon and bolster those. >> even if we push, for example, electric vehicles under the sense they don't pollute as much, they are coming from a grid that is coal and natural gas fire. what's going to be the answer? i don't think winds and solar will account for that and if they do it will make a tesla way more expensive, even the cheaper version. are we going to go back to nuclear? >> you're absolutely right, as always, but one thing this imbalance that mike talked about is really key. we produce 9d 4 million barrels a day, the world produces 94 million barrels yet we only use $93 million. that equilibrium needs to be balanced out. we keep waiting on opec to maybe meet and say they are going to reduce and we found saudis said

they are going to freeze production but opec has not done that. they meet on june 2nd and hopefully that will happen. we don't want to stop producing, the u.s. and iran which just had sanctions lifted. they wants to get back up to where they were presanctions and that's 4 million barrels a day. so you can see the imbalance is a problem. until you get that, you're probably not going to see prices go up any time. one quick thing, this is a big boone for consumers by the way. last year drivers in the u.s. saved a billion dollars in total. that's $550 per driver. so there are some benefits even though we see a downturn in the economy. >> using fossil fuels, that's what's so -- it's great for the time being if you get rid of them, probably going to cost a little more. >> absolutely. >> thanks for joining us. >> great.

>> bart chilton there. i think you mentioned under pressure, this song goes out to bart chilton. who had the best day yesterday, kobe scoring 60 points in the final game or steph curry winning a 73 games as he set the all time mark for three-pointers or perhaps jamie dimon, that company's strong earnings helped shares rally? he bought on february 11 lows. we'll discuss all of that next and guggenheim partners scott minerd talks about why he thinks the recent rally is under pressure. we'll be right back. ♪ ♪ for your retirement, you want to celebrate the little things, because they're big to you. and that is why you invest. the best returns aren't just measured in dollars.

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see car insurance in a whole new light. liberty mutual insurance. there was a ton of excitement across the sports and financial worlds yesterday, who had the best day? was it kobe bryant, with his final nba game with a storybook ending, 60 points in the win over the jazz or steph curry, giving 73 wins for the season breaking the record by the chicago bulls and back on wall street, jp morgan posting strong earnings that beat expectations, proo peling shares more than 4%. jamie dimon bought shares on february 11th, he's up a staggering 145% annualized and i suspect the space of gains will likely slow from here the trade is in the running for the ceo

trade of the decade in my opinion. what do you think? >> hard to argue with that. i don't know you can annualize a two-month gain but i think j px morgan will again report a quarter of more than $1.35 a share. i don't think decades from now we'll talk about wow, that first quarter and what it was, not really on par with the other two. >> he doesn't -- i don't think jamie is smart as he is and sharp elbowed as he is, thinks of his investments like a private equity fund. but it wasn't -- i'm a hockey fan and rangers fan. a different thing so -- there's a question that this raises about going out at your peak, at your best. so kobe bryant, 60 points on his last game in the nba. extrapolate that a bit to wall street or corporate -- >> what is that annualized? >> i'm saying what does a ceo go

out on a high note. you could ask that of a number of ceo zsh. >> how about jeff immelt's predecessor going out on a high note? >> it's kind of interesting to think about -- >> i'm reading between the lines there's maybe a subtle suggestion in there. i won't push you on it. >> i'm just saying, athletes go out an a high note. kobe bryant did that. derek jeter, wayne gretzky, pretty much. >> the lakers were the worst team -- >> i don't think that anybody thinks that kobe waited for the right moment. >> like jeter or gretzky. if you're going to make this illusion to the corporate world, i wonder -- >> you'll each have to pick in one word. it's funny when we talk about dimon's trade, he talked about

this yesterday talking about an idea centered in the '90s when george zoros tried to hire him and made it clear whatever investments he may have in the blue chip companies, he's not shorting any for obvious reasons. so in a word -- >> everyone is a potential client, that would be the obvious question. >> partly that too. >> i would pick curry because think that the 73 wins will last a long time. >> i think you're right. that's a team player and that's what that's all about. whether you're on a company or on a team. >> 89% of seeing them win and i was at the one of the losses. >> you got lucky there, scarcity value. >> john kerry condemning two russian war planes that flew near a u.s. naviship in the baltic sea saying it was a dangerous and provocative act. the fighter jets could have been shot down and adds that the u.s.

is economying its concerns with the russians so it does not happen again. on the heels of the federal regulators say another 75 million takata air bags may need to be recalled. the head of the national traffic highway safety administration says not just yet. telling a congressional committee, evidence shows rupturing air bags are mainly in older vehicles. fisher-price is recalling about 34,000 infant cradle swings due to a fall hazard. it received two reports of a seat peg coming out. no injuries have been reported. crews in des moines continue to work to fill a huge sinkhole that opened on the south side of the city. the sinkhole began because an abandoned mine shaft collapsed. that's the cnbc news update at this hour. back to you. >> that's a freaky one. >> thank you so much, sharon ep

per son. >> up next, guggenheim partners chief investment officer scott minerd will tell us if he thinks the rally is for real and where he's finding opportunities. >> and treasury's new tax inversion deals may have killed the merger but they won't slow down other deals. stay tuned. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle. and it keeps my investments fully mobile... even when i'm on the move... ahhh. or the freedom to choose what doctor you want to see.

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taking a look how we finished the session, the dow up 18 points and s&p up less than 1 point and oil prices did stage a big reversal closing lower after posting solid gains earlier. investors worried that the big oil producers could reach a deal to cap output. and private equity firm carlisle group reportedly in talks to buy a package of assets worth $7 billion from halliburton and baker hughes. trying to overcome an antitrust challenge to the $35 billion merger. we'll follow that for you, shares up 4.5%. according to the next guest the

fed is hostage to the market and the market is hostage to the fed. here at post nine to explain what that means, scott minerd, you just left a meeting at the new york fed. >> it was a very interesting meeting. >> let you out of the building. >> that's right. >> they are the hostage. i'm not the hostage. >> explain what you see going on in markets here? >> look, the fed's reaction function has been basically every time we get stress on risk assets they go on hold. and then they've broadened their outlook to include international effects. and so when you start to consider that every time there's any doubt that the fed might raise rates, we start so see pressure on market. the fed automatically responds by telling them we're not going to raise rates. now when you look ahead, an april increase is off the table. but you come into june and the week following the june meeting

is brexit vote. if we get brexit in europe and it looks like a coin toss right now, the markets will good turbulent over there. so we're -- we're going to see a backwash into the united states. i really doubt the fed will raise rates in the face of a potential crisis in europe. we're on hold. and if you continue down the road and think about the september meeting, historically the fed is never acted in front of a perfected sh presidential . >> are they one and done? >> i think we'll get one rate increase in september but does that count as a 2016 rate increase? i think we're in a holding pattern. >> what would you say to somebody who said maybe it's appropriate that the fed has raised the threshold for what it would take to move given where policy rates are all over the rest of the world after they did move last december the talk was about policy error and did they act too rashly given everybody else going the other direction?

>> i wouldn't be critical of the fed dragging their feet here but as a guy who invests money, it does point to some opportunities, right? and for instance, high yield bonds bank loans, still very che cheap, i think stocks have room to the upside but if we had a brexit vote, you could get a sharp pullback in equities. i quote baron van rothchild, he said i sold early. it might not be the best time to be buying stocks. >> let me ask you about negative interest rates. the impact that might have on markets. take a quick listen. >> i just wrote in my annual letter that negative interest rates are causing a slowdown in the world. i believe, first of all, i think central bankers have been the most bold leaders in the world. we have become too dependent on

central bankers and not seen government reacting to it. when you think about quantity take tif easing, it was supposed to be a temporary healing process. i don't call seven or eight years temporariry. the belief the first few years helped corporations refinance and homeowners refinance but into the seventh or eighth year, i don't see how that has a positive impact on the economy. >> how would you respond to that? >> i read larry's letter and tend to agree with almost everything he says. as far as negative interest rates are concerned, it's pretty clear that it is reducing the velocity of money, or the amount of turnover. people in japan are literally taking their money out of the bank in the form of 10,000 yen notes and stuffing it under their mattress. this is the stuff of the great depression. think we'll look at negative interest rates in a year or two and say this was a mistake --

>> i was in japan last week. that's not what it's meant to do, they are trying to tax corporate deposits so companies put it to work, not depositors and yet there is this anxiety about it. and i guess they -- you could argue they just sold it wrong. and i don't know how you sell a negative as a positive but do you think we're going -- there's actually an argument, just stepping into the united states, for raising interest rates? is there growth? when you look around trying to invest money, do you get excited about anything? >> look, i'm certainly not euphoric about anything right now. like i said there are pockets of opportunity. i think the emerging markets look really interesting but again any day you could have a 30% pullback. but when i look at the situation in relationship to the central bank theory of negative interest rates, at the end of the day i see the effects of the policy being the exact same effects we got in the 1930s. and so i think it's the wrong

policy prescription. but larry made a good point. the central bankers have been left to handle everything. we don't have any fiscal policy and so -- >> even in japan, they are looking maybe more fiscal prol policy. monetary policy has done a lot of the thanks for joining us fresh from the new york fed. >> jack lew calling on congress to help stop tax inversions, coming up, how the rules could impact future deals. first, move over millennials, we're tired of you, there's a new generation in town and major retailers are starting to pay attention. we'll get a peek at the latest consumer trend next. you're watching cnbc, first in business worldwide. you can fly across welcome town in minutes16, or across the globe in under an hour. whole communities are living on mars and solar satellites

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first came generation x, then generation y then the millennials. new kids on block have caught attention, generation v, as in viral. courtney reagan is live in tucson, arizona. tell us about these kids. >> reporter: it's a really interesting group and kelly, this conference is being put on in conjunction with the university of arizona. the audience is both retail professionals as well as college students. it's a group some experts are calling them generation v for

viral. jane bucking ham, the founder of trendera calls this group a rebellious one but one that's celebrated for their differences. accustomed to being rewarded from just participating in events and free add-ones with purchases. have you noticed a lot of them skipped that awkward face. think about the youtube makeup tutorials and fashion retails like forever 21 and then there's that constant social media feedback loop which by the way also keeps them shopping. >> you have those pictures on facebook, on snapchat and twitter and you can't wear the same thing you wore to in your profile to one social media site and another. it has to be different clothes.

>> and they do follow brands and retailers, especially on snap chat. it's their favorite platform, they like the raw unfiltered unedited videos and like it because they get to choose when they play that messaging. it's a really interesting group and many are going to be working in the field of retail. there's a lot of insights here. >> i think mike's head is exploding, maybe rob's too. we heard about the snapchat vaulting to number one ahead of instagram and facebook. >> it's like somebody presenting an an tlo poll lol cal study. i heard it before, this instagram effect, there's a constant running record of what you looked like when and this impulse not to actually have it be too redundant all the time. >> i think i heard people make the case for ulta beauty salon

on that basis. >> a lot of students like shopping and like shopping in the store. they still like the human interaction. as much as they like digital aspects of their life from facebook to snapchat to instagram, they like that interaction, they explained to me saying we're very social people. we don't want to live in a world where robots are serving us in retail stores. >> that's refreshing i guess, courtney, thank you so much. out in sunny tucson. allergan and pfizer backed away from a $160 billion deal after the treasury announced new tax inversion rules. up next, we'll look at how they'll impact m and a bills on the horizon. the kitchen...that's home.

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>> our own sara eisen speaking with jack lew for first time since the rules were changed on tax inversions. >> the idea that a company could take advantage of being in the united states and wonderful rule of law that makes us the best environment and innovation publicly supported research and development and infrastructure reported by tax paid for roads and bridges and tunnels, and the education that's paid for out of our tax code -- >> i don't think it was a

question of that. >> no, but that is the question. the question is if you get all of the benefits of being in america doing business in america, to be able to change your address to avoid u.s. taxes is wrong. >> will the kill more deal making. we put it to frank, an attorney. frank, welcome back to post 9. it's been suggest by one group, at least three potential mergers in the works could be stopped because of this. what's your thought of the effects of this deal making? >> essentially a number of deals are in the works. and clearly, boards and managements are going to be very, very cautious. it is very clear that the treasury, having tried not once, but twice, now three times to stop inversions may very well act again. the fact, though, is that as long as the corporate tax code isn't changed, companies are going to seek to do inversions.

>> we want corporate tax overhaul, so everybody will kind of say this is what we want, yet come to it from such different points of view. it seems like no deal will ever be made so in the meantime they have to plug the leaks. >> i guess so. but i put it to you, frank, the deal is made to arbitrage ridiculous, albeit tax rules. if you look at the fidser allergen deal, there is no way to come to -- there's no way to justify the premium they're paying without this massive arbitrage. they weren't cutting costs. there was no net present value consideration that could explain it. i mean, it sort of feels like we've reached peak m & a cycle. >> i don't think so. you have to go back, first of all, the inversion has been going on for a long time. secondly, in the first four years of the obama administration, secretary geithner was very clear, hang on, because everybody wanted to

repatriate the overseas cash, because of the way the economy was. and it was in the second administration, we're going to deal with corporate tax reform. that's going to be our first priority. and the reality is, the administration didn't spend a day pushing for corporate tax reform. and these deals are predicated on the fact that in certain sectors, you're competing globally with companies that are non-u.s. they have a different tax regime. non-u.s. pharma company can come in, make an acquisition in the united states, of a u.s. pharma, and do it much more economically. >> it's interesting you bring that up. actually, we're seeing so much outbound activity from china which seems to be motivated by other reasons. you could argue they're trying to get capital out of the country, or bolster their international presence. as some people have observed, my colleague over here they seem to be coming out of the blue paying crazy prices and disrupting the

cycle. >> it's true. companies do acquisitions for different reasons. companies from different parts of the world do acquisitions for different reasons. and -- but when you're looking at big multi-national companies who are competing by and large against companies from other parts of the world, with different tax regimes, there needs to be some tax equalization for them to be able to compete. >> you mentioned at the getting at the overseas cash. motivation for something like a pfizer, can actually access its own cash overseas. do they have to match the lowest tax rate and have the generous treatment of foreign profits? how do we get to something rational? >> most companies do not tax overseas profits. you're taxed in france, you're taxed in germany, you bring those profits back. the united states has worldwide taxation. so you pay your tax in france

and then you bring it back and pay tax again. that's really what the issue is here. >> you pay the differential. and you do that as an individual, too. as someone who lived abroad and had to pay those taxes, i know that. >> i pay it as well. as a consequence, you know, that's really where the biggest problem is. as a consequence, the tax burden is so high, most u.s. companies keep their foreign profits offshore. >> right. >> they buy more assets offshore. and that cash keeps growing. that's to the benefit of the shareholders -- >> people say, we need to redesign the whole thing top to bottom. if that doesn't happen tomorrow, if it doesn't happen three, four, five years ago, you know, all this activity continues to pace. thank you. frank joining us there from sullivan and cromwell. refer to rob cox's piece on what's happening with the china

outbound deal. go to cnbc.com back slash pro for more on that. the red stone case. julia boorstin has more. >> well, a judge has denied a request for some residents to be deposed. filed by his ex girlfriend. the two sides were in talks for a supplement. they have requested sumner to be deposed. the case is moving forward. with depositions scheduled for sherri redstone coming this tuesday, and the ceo of viacom coming on the 29th. we'll continue to keep you posted on this case. >> no settlement it seems like. julia, thank you so much. it's another tale of a tech giant versus government. but the tables have turned, and those details are next. by debating our research to find the best investments. by looking at global and local insights to benefit from different points of view. and by consistently breaking apart risk

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call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. it's another case of big tech versus big government. but this time it's microsoft suing the department of justice. eamon has more. >> microsoft filed that case in washington state earlier today. here's what they had to say about it in a blog post this afternoon. they said we believe with rare exceptions, consumers and businesses have a right to know when the government accesses their e-mails or records.

we believe that with rare exception they have a right to know -- i'm sorry, let me recap that. it's becoming routine for the u.s. government to issue orders that requi e-mail providers to keep these type of legal demands secret. what's going on here, kelly, is the government is asking microsoft and other companies for information about consumers, but saying the companies can't tell their customers. in this case, microsoft wants to be able to tell its customers about those demands. we talked to law enforcement about this, though, and they say they need the secrecy here because they need to be able to avoid tipping off the bad guys. >> thank you, eamon. >> now it's actually in the courts as opposed to the pr war. >> them fighting it. >> yeah. and microsoft can't be completely overshadowed by apple over the encryption of the iphone. we're fighting for our consumers' privacy as well. >> it's also just fascinating given the history of microsoft's

entanglement with all sorts of european and american regulators, now taking them on. thank you guys so much. that does it for us. "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square. tonight on fast, the man who called the crash in august and recently called the rally in oil has an even bolder call for stocks. he'll be here to tell you what that is. a top technician said the market is on the top of a breakout if one thing happens. he'll tell you what that is and how you can profit. later, as earning season kicks into full swing, we've got the five stocks that could make or break the market. what could be a potential game changer for stocks. centered on the lack of breadth and a dash for materials and energy stocks could now be called into question. to