world, not in leslie's reporting, guys, but talking about big mergers, the market looks to the biggest player to see what they may or may not do. >> this sector already seen so much consolidation in recent years. >> absolutely. thank you for watching "power lunch." >> "closing bell" starts now. ♪ hi, everybody. welcome to the "closing bell" today, i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. we have more on the word from leslie picker from a bid on constellation brands, but another warning for the a automotive industry. shares hit hard on the back of weak earnings, huge decline for the stock, down more than 10% today. we have more details on that coming up here. >> also, go pro getting hit after speaking at a conference earlier. the shares down 3%.

we're going to speak to woodman ourselves in an exclusive interview to talk about the outlook for the company and that gopro drone crash over the weekend. >> at the padres diamondbacks game as a matter of fact. toll brothers losing early morning gains after a weak number for new home sales. we have a debate, bull and a bear, talk about whether these housing stocks are worth buying right now. but we begin with amazon shareholder's meeting taking place today in seattle, talk of a potential stock split. believe that when we see it. deidre is at the meeting there. what happened today? >> reporter: hey, guys, well, wrapped up just over an hour ago. a lot of happy investors. amazon stock run up 40% in 12 months. this was interesting. one shareholder noting that amazon's stock is approaching a thousand dollars a share. noted that it's less and less accessible to a younger and

middle class investor, so she asked jeff bezos why it seemed amazon was going the way of berkshire-hathaway, and whether he considered a stock split. not yet, but something reviewed on a regular basis. reverend jesse jackson was there, and brought up the all-white board, getting political at times, jesse jackson said they needed someone like bezos to lead in terms of diversity with amazon. there were a number of advocacy groups a loud presence. several urging amazon to stop placing ads with right wing media outlet breitbart. there was those piloting the air delivery program, pressuring amazon and employers to raise their pay. guys, keep in mind, amazon's 20th shareholder meeting, but focus on the next 20 years and areas of investments. there was a a lot of talk about

the prime membership program, about push into india, about alexa and echo as well as groceries. >> yeah, i mean, they are everywhere. making a point, bill, about maybe incentive for amazon to split the shares is if they want to be part of the dow someday. >> yeah. i mean, he's -- jeff bezos follows the warren buffett clearly, in this case, right? as you said, always monitoring the situation, but not likely to do it right now. >> reporter: yeah, and it was a very short response, guys, from bezos himself. it was interesting a shareholder brought that up after so many, you know, great returns, she noted, she's been able to engine, and wanted others to be able to enjoy that, but, certainly, animalysts don't thi it's in the cards any time soon for amso amazon. >> great thing is it built itself. they just grew internally. thank you. we'll see you later. okay. more on this brown-forman story.

the crowd dispersed over there. leslie picker, give us more shares on the bid. >> reopened after being halted for five minutes. in reopening, the stock gave up half of its gains, prior to the halt. reason for the halt cnbc reports that constellation brands made an approach to acquire jack daniels' owner, brown-forman, according to several people with knowledge. they were interested in purchasing, brown-forman said they were not interested in selling. it did pass the idea along to the board. the people said. now, consolation brands is still interested according to one of the people. fifth generation owner family own a majority of the voting power and historically said they want the company to remain independent. now, shares of brown-forman gained 12% over the last week as rumors about the company bled into the market. a representative for

brown-forman declined comment, and representative of constellation brands did not immediately respond to our request seeking comment. brown-forman with a market cap of $22 billion owns alcohol brands like jack daniels, while constellation brands owns corona and sedka vodka. >> we have talked to the constellation folks a lot in their -- whenever they report earnings. we know how hot the beer business has been. we know how hot the bourbonag. t they look to -- and constellation is successful with the acquisitions in the past. >> right. >> so i guess they are really looking to bite off. >> they know what they're doing. in terms of overlap, there's a wine business, but brown-forman doesn't appear to have a beer business to speak of. this is not a synergistic type of interest so much as trying to add, you know, the brown-forman liquor brands into constellation's portfolio. >> that's exactly correct,

kelly. especially in this environment where we have not seen much in the way of m&a, especially on this scale. these types of deals, more about building scale and improving their brand options for consumers, that's the type of thing where you couldn't need to necessarily wait for clarity on the taxes and things on regulations, just more about accumulating the brands, but they want to do just that. >> well, both companies are trading down now. i guess the market is taking to heart what the family said of brown-forman that they don't want to sell right now. >> exactly. >> we'll see. thank you, leslie. >> good stuff. >> see you later. more on amazon in the closing bell exchange. we have wealth managements, a shareholder, paul from fairfax global markets, steven from the street.com, and sarge, and rick santelli at the cme in chicago as well. robert, i mean, you must be a

happy shareholder, do you worry that it's over extended, over valued, you know, what -- how do you assess amazon right now? >> yeah, i mean, bill, you pu h punched me in the nose if i complain about a gain on a stock we held for the last year. a happy shareholder, but, you know, this is such a dominating company. i think kelly said they create their on conglomerates. they are playing a larger and larger role in people's daily lives, and there's an efficient company. look at the interpret of things, talking this morning about a potential deal with dish network to leverage that platform, and if you're somebody like procter & gamble, imagine the value of when your last gilette blades is down to one, amazon ships directly to your door. nobody has that ain't to monetize interpret of things or anything gathered in the cloud like amazon right now, and for a half trillion company growing at over 20%, hard not to own this

stock in the portfolio. >> having said that, though, you sold it last week, though. >> i sold a few stocks i like, amazon, walmart, caterpillar. these names hit the target prices. it's strictly discipline. i like all three names. i will buy all three back when they get to prices where i want to buy them again. i do think amson's going to a thousand dollar and apple to a trillion dollars. things are moving in the right direction. deal with the 2400 level in the s&p, a stone wall of resistance. are we as far as political uncertainty and macroeconomic uncertainty takes us? possibly. >> paul, you're the person on the side of the room folded looking at everybody in the big cap tech stocks and saying it's crazy, but is it? has it got to the sort of 99 era craziness for you? >> no. >> value guy -- >> as a value stock investor, i can't buy any stock that's selling for a pe of 183 times its annual earnings.

>> which is that? >> amazon. >> okay. >> it's trailing. it's got 86 going forward. i think investors have to think about is that for the last two years, these tech stocks have gone up enormously and have been a large part of the s&p's price performance. will we have a trend where we go away from the tech stocks, and my thought is once the corporate tax reform comes about and we see taxes go from 35% down to 15%, tech companies historically paid lower taxes because of overseas earns and things like that, and i think investors will start looking at other sectors because there's going to be a huge earnings bubble once that happens. >> having said that, though, paul, i mean, you're a value player. you like apple. apple had a huge runup. >> had a higher runup than

amazon, but it's trading at a 14.8 pe opposed to 183 pe. it has a much larger return on equity than amazon does. it pays a dividend, which amazon doesn't do. i mean, i would much rather own that. i'll tell you from the retail section, walmart is the only company i think can compete with amazon on the retail thing. it's bringing in its own prime. its prices are cheaper than amazon. it's the only company to compete. it's selling for 18 times pe opposed to 183. now, i realize the cloud stuff is very important for amson. >> right. >> but i'd rather have walmart and apple. >> all right. mr. santelli, stepping back from all of this, how do things look today for you, talking about treasury yields, the u.s. dollar, and it feels like people are just maybe starting to get back on the trump train here a

little bit. >> well, you know, it's funny you mentioned that, kelly, because i always scrutinize markets to see any type of response that i could peg as much as possible to an event or political event or speech, and, today, budget director mulvaney was talking, it's hard not to notice yields rose a bit, dollar index fim index firmed up a built. it's unusual to pay attention to. it was confident to mr. muvaney's presentation, not necessarily the content, but nonetheless, i agree with you. now that the nasdaq's up 14%, the s&p up 7%, we're starting to get in territory where i think if it's possible in in late stage, you start to see more momentum. with respect to treasuries, yields up several basis points, knocking on the door for 230, the bottom of the range we had for most of 2017, but i think

the short end is notable here with the two-year back over 130. a great auction. last cycle, threes, tens, 30s, dd and d, and today it was an a-minus on the two-year, maybe because the selloff i mentioned was viewed as concession, so the last stainability of the market to keep yields close to 230 for tens, and more importantly, how the five-year note option goes may give us clues. >> mentioned 2400 on the s&p. how deep a line is that in the sand right now for you? >> well, you know, paul made a good point. the trump trade is not priced in here at all, other than the defense and aerospaecaerospace. if that changes, money comes from somewhere. it comes from technology. rotating into smaller caps, transports, and back in financials. we know where it goes and where it comes from. we need political certainty and better macro. >> i asked about 2400 on the

s&p. >> 2405, a bounce over the level, i give you 2 had 465 by the third quarter. >> oh. >> great. that's what i was after there. >> there you go. >> doesn't have to punch robert in the face. >> yes. >> what was that, again, robert? if you're not grateful for the gain in one year? >> yeah. >> all right. >> take it when you can. thank you, guys, appreciate your thoughts on today's markets action. >> thank you, all. >> thank you. 45 minutes to go here, dow's up 5 the 9 points here, a nice rally building on yesterday's gains especially. a quarter percent there. interestingly, nasdaq lagging, up tenth a percent, six points, and russell up half a percent. >> talking budget, jason furman weighing in on winners and losers from the budget proposal out today. gopro founderexclusively, a take on a recent court decision that could lift sales. you're watching cnbc, first in business worldwide. i sneeze...

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20 minutes episodes of "game of thrones," the ceo says a

20-minute running time for the popular hbo series provides better mobile experience for users than the current 60 minutes that these episodes run. he made that suggestion at jpmorgan's global technology media and telecom conference in boston this morning. at&t, of course, trying to win regulatory approval for the $85 billion acquisition of hbo's parent, time warner. shares of both companies are higher since that deal was announced back in october. i don't know what a "games of thrones" aficionado would think of that. >> i thought you were one of them? >> my children watch it. i watch by approximaproxy. >> i want to know what they think. >> i'll have to ask. go pro founder ceo is joining us in an exclusive interview, nick woodman, and josh lipton. >> thank you, kelly, nick, thank you for joining us.

>> thanks for having me. >> so, as kelly mentioned, nick, you know, stock's down 3% today, down since you guys last reported in late april. that q revenue guide at at the midpoint suggests a 20% jump. are you on track to achieve that, nick? >> we are on track. we feel good about second quarter, and we think that things are tracking just as we shared on our earnings call, and we're really happy with the turn around that we're seeing in our business, the restructuring that we took action on at the end of last year and beginning of this year they are bearing fruit. business is solid. demand is solid. customers are using our products more than ever here, and boding well for the second quarter. >> and, nick, you mentioned demand. you mentioned the hero 5. for that device specifically, you know, where are you seeing the demand?

is that exist in gopro users updating the device, or all new fans coming into the gopro ecosystem? >> it's across the board. we're seeing strong demand from existing customers, new custo r custome customers, north american markets or internationally. seeing stronger demands for our hero 5 line of products than we did for the previous generation hero line four of products, and on top of that, we're seeing increased engagement in usage of the hero 5 products, so improve. s we've made in the useability, the convenience, smart phone connectivity and cloud connectivity of the hero 5 camera all result in our customers using the cameras more than hero 4 cameras before. >> nick, if i could jump in here, i just wanted to ask you about this ruling where the faa no longer is going to be able to have its drone registry. you know, a lot of people are

excited about that. a lot of kids who want to use their drones and don't have to go through that extra step. is that a boom for you guys, or do you think there should be the ability to kind of track all of these aircrafts? >> well, it certainly helps any time you remove a step for the consumer. it's good for commercial sales of drones. the process wasn't very ownerous or burdensome to begin with, the registration process, so we don't think it was a deterrent to purchase, so i don't think it's going to increase the overall market opportunity for the drone industry, but it certainly doesn't hurt to have it be a less frictionless process for the customer to buy and use a drone. >> yeah. i'm also wondering if you would respond to the drone that crashed in the padre's game the other day. i think it was a gopro drone, and they -- it was what? >> karma.

>> that's right. they are not supposed to be flying in the games at all, nick. >> no. they are not. as with any product, common sense is important and consumers should know that you should not be flying any drone be it a gopro, karma, or any other drone over people, certainly not over a stadium as a baseball game is taking place. that was poor judgment on the part of that individual. we were sorry to see that happen, but on the positive note for gopro's karma business, sales are exceeding expectation. kar karma's doing extremely well in the market place. for its first two months of sales in north american market and mpd reports it's garnered a high teens market share close to 20%, and so we're very happy with its debut and consumers seem to be really excited about karma, and we're thrilled to see

it getting off to a strong start. >> nick, my turn. certainly, any ceo is second guessed. happens all the time. curious what you tell the critics that go 80 to 8 in a few years, leader in the category, still not profitable, hoping in the very least to do that this year, and there are those who say at the very least nickwoodman needs to hire an eric or sheryl sandburg to manage the company founded, or at the greatest, sell the company outright and let somebody else try and take this company to profitability and grow it. what do you say to them? >> i think those are fair points. i mean, i started gopro in 2002. took the company public in 2014, and 2017, 15 years after starting the company, for the last year and a half, we have suffered challenges, both self-induced, but also there are

head winds in the digital imaging industry overall that have just been unavoidable. i like to think of gopro in terms of the successful 15-years that we've had since founding, and not so much define our performance or my personal performance by the last year and a half. as i mentioned, it's been extremely challenging, but what i like to focus on is the job we're doing now moving forward, the restructurings we've had that frankly included very important changes in leadership at the company, we have a very strong coo in the form of c.j. problemer, and the rest of the executive team at gopro never stronger, better communication, collaboration, and better culture at the leadership level at gopro than had at any time there, and you're seeing the results in our performance. >> i have to be specific. >> you're stuck with me. >> while you do own 77% of the

voting power for the company, you're not going anywhere if you don't want to, but more specific on something that has has analysts scratching heads. you said in march you felt the company had enough liquidity you didn't have to draw on the equity line of credit, but at the same time, not long after that in early april, you sold $175 million of senior convertible debt, which as one analyst pointed out, is convertible at $10 above where you are right now. that's going to be diluting the stock price that's already beaten down as far as as it is. they wonder the wisdom of issuing debts when you don't have free cash flow to pay it off right now anyway. >> well, i think that the debt raise really helped fortify our business and allows us to continue and execute on our vision which we believe leads us to profitability later this year and puts us in a position over the coming years to pay down the debt. we've been able to preserve our road map, which is really -- our

product road map, future products, really important as it's the life blood of the company, and while 2017 is a restructuring year and to get us back to a place of strength and profitabili profitability, 2016 is a growth year for gopro, improve profitability making taking on debt now. >> as you return to profitability by the end of the year, excludeing certain costs, st skeptics on the street say that depends on a big q4, why should investors believe that camera in the pipeline, the one later this year, sparks that big demand? >> well, a q4 is not a profitable company, and truth be for, we need a strong q2, a strong q3, and a strong q4, and

each quarter from here on out, including the first quarter, which was strong, contributes to our full year profitability, which is our target, so all bets are not just on q4 alope. we have to execute all yearlong and showing signs of doing so, enthe entire company is not dependent upon the success of any one product either. karma is performing quite well. hero 5, as i mentioned, exceeds expectation. and across the board, we're seeing our business improve and be strong. hero 6, we believe, will be a strong performer. our software experience is improving. overall, you're seeing a stronger gopro than ever before. consumers are seeing the value proposition, and they are vetting with their wallets and buying gopro, and we're looking forward to a strong finish in the back half of the year. >> all right. gentlemen, thank you both. josh, as always, nick, thank you for the time, appreciate it. >> thanks. >> thank you very much. >> nick woodman, ceo of gopro.

we are headed to the close with 34 minutes left in the trading session, dow is up. >> more trouble in retail. auto parts taking a hit today. what's rattling the industry now next. also ahead, pay attention to toll brothers' earnings bate or today's disappointing data on new home sales. mixed picture on housing today. stick around to talk housing in the debate coming up. about your brokerage fees. a qun fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. it's your glass of willpower that helps keep cravings...

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shares of autozone sinking, on pace for the worst day since 2008, down more than 10% today after reporting a miss on the top and bottom line this morning. same store sales saw a decline for the quarter. company cited delays in tax refunds for that miss. autozone trading now at 589.25. >> the question is, down 10%, lump in with footlocker, blaming delays in tax refunds. which, by the way, shifting the calendar is no problem. o'reilly is down, one of the worst performers in the nasdaq, under performing today. >> companies use that excuse this year. i don't buy it. it's like blaming the weather. i mean, come on. >> or the timing of easter, one of the things that -- >> it's always something. >> in this industry, already under pressure, interesting thing is, so if autozone sells parts to maintain the car and so

forth, what's that tell you about what's happening in the auto industry? the sales pace plateaued. people go long because it's a use cycle and maintenance cycle. maybe now they don't know what to think. >> exactly. >> oh, it's -- oh, by the way, there's competitors as well, as we mentioned, impacting across the sector. time for a news update. sue? >> guys, this is what's happening at this hour, everyone. president trump arrived in rome. the latest destination in his four nation, five stop tour of the middle east and europe. he's scheduled to meet with pope francis at the vatican tomorrow. manchester police conducting searches of a house in a suburb of the city following the attack of a concert venue killing 22 and injuring dozens more. they identified the suicide bomber as 22-year-old solomon, and isis claimed responsibility for that attack. the government is suing fiat-chrysler alleging 104,000 ram pickup trucks and jeep grand

cherokees have illegal software making them performance differently in normal driving than lab tests in the epa, essentially cheating emissions tests. bud wiser is featuring american bottles and cans featuring camouflage aluminum bottles with the goal to raise $1 million for educational scholarships to families of fallen and disabled soldiers. a very worthy cause. that is the news update this hour. back to you guys. >> all right. thank you, sue. see you later. >> see you later. up next, jason furman, top economic adviser to president obama takes on a heritage foundation fellow in what we anticipate to be a heated debate on president trump's proposed budget out today. also, ahead, up to speed on a house hearing about the controversial border adjustment tax proposal, it is being debated and we'll bring you the latest.

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welcome back. it's called a new foundation for american greatness, but the trump administration's may be called other names as well. ylan is in washington with the highlights and maybe the lowlights.

ylan. >> reporter: kelly, senator schumer called it a meat cleaver to the middle class. there you go. some of the new names used. the reason why he's using that language is $1.7 trillion is cut to social safety net programs over the next decade. some of the pro-growth affected are social security, disability insurance and others could face changes under the president's proposal. the omb director defended those cuts in a briefing this morning saying it's a budget that puts taxpayers first. >> compassion needs to be on both sides of the equation. yes, you have to have compassion for people receiving federal funds, but comparison for the folks paying it. >> reporter: democrats are not buying that argument, however. mulvaney testifies before the house budget committee tomorrow in already the ranking democrat on that committee is slamming the proposal and saying that it

should be, quote, resoundingly rejected. >> the president's budget is a betrayal, line by line broken promises he made to the american people. above all, it's a trail of broken dreams and homes and opportunities for millions of families. >> reporter: the white house is targeting investments in the budget. the defense budget will increase by 5%. there's also $200 billion for infrastructure investment. there's money for one of ivanka's trump, $19 billion for a paid family leave act. now, the president is not in washington to present his budget. he's, of course, traveling overseas intending to meet with the pope tomorrow. we'll let you know if he tweets about it, guys. >> ylan, thank you. reaction from both sides of the ail to the budget proposal, bringing in jason furman from the peterson institute, served as a top economic adviser to president obama, and romena as

well from the heritage foundation. i expect headlines tonight and tomorrow will be about the increases in defense spending and infrastructure opposed to the -- and the cuts in entitlement programs. is that a fair assessment of this budget? do you feel it is something that taxpayers should come before the beneficiaries of the programs? >> i think we have to have a proper balance between taxpayers and beneficiaries and also between state and local governments. what's missing in the headline is economic growth the budget could bring about. we cut the government down to tax reform and regular reform in the budget. we could bring the economy to grow, and that would benefit all americans. >> jason, you know, i mean,ing look, the budget's a tricky thing. it's effectively a political document like a party platform,

right? what is the chance that this budget that any budget resembled the ultimate reality? >> oh, look, the ultimate reality won't resemble this budget, but the budget is the starting point for the president. the president is app important player in any of the discussions we have. what's striking to me is just a couple years ago there was a pretty broad consensus around something like the approach in bowles-simpson. to deal with the deficit, put spending on the table and revenues on the table. you needed to use both of those. second of all, we should do spending cuts without cutting spending for low income and vulnerable population. this budget really up ends and reverses that whole idea behind bowles-simpson, the idea behind it by making dramatic cuts in low income programs, not reducing the deficit, but pay for tax cuts for the most fortunate households in the

country. it's a bad starting point for a discussion. >> what do you think? >> first of all, the budget operates from a revenue baseline, so there is in tax cut when it comes to that. in terms of cuts, look at the overall package of housing and food, it's only 7%, and taillight it's not cutting anyone off, just asking for something in run. not a one-way handout, but work requirements, community work, if there's no work to do, what we found that in maine when those policies were adopted, you found that roles struck because people went off to get a job instead, and this is a compassionate budget to help people get back to work. >> jason, it is notable that the participation in the food stamp program has not declined,

although even the broadest measure of the unemployment improved significantly over the last couple years. does that indicate a disconnect? >> you know, when it comes to the food stamp program in part, the takeup rate, a lot of families are eligible were not signing up for it. george w. bush made it actually easier for them to sign up. in our administration, we did that as well. that's part of what going on there. to say the budget is not about a tax cut, this president went in the joint address to congress wanting to do a big, big tax cut. that was his words. he's proposed slashing tax rates. this is a tax cut. it's disproportionally for the highest income household, and if we want to talk about work, absolutely. we have to do more to get more people to work. that's really important to our economic future, but the united states is, for example, among the lowest in the ocb budget for training and job search

assistance. we have to beef up areas more like that to help people work. this budget would cut those programs. >> and before go, quickly, it assumes a growth rate of 3% by 2021 with economists running back to their advocates figuring out how to achieve that. is that a realistic expectation for the economy, which is a cornerstone of the budget proposal so that you can balance the budget at some point? >> on its own, i don't think so, but when you look at the overall budget proposal, the regulatory to tax reform and the spending reform, if the president were able to implement this entire agenda, 3% is reasonable. you go back to the historic trends, but given demographic factors and gridlock in congress, i think it's less likely. >> all right. folks, thank. glad it was a calm debate. >> i'm tired of the rhetoric and

yelling. thank you for joining us today. >> reporter: as part of the budget plan, the trump administration proposes to sell half of the strategic petroleum reserve. what that does to the deficit and nation's energy plans as well.

one of the problems is not a level playing field. has impacts on different companies. it has the potential to pass on significant costs to consumer. it has the potential of moving the currencies. we want to make sure that we create a level playing field. >> that was secretary of the treasury steve mnuchin talking today, and while at the same time on capitol hill, they offered testimony on the border adjustment tax. courtney reagan is here. this is the idea that won't die, courtney. >> i know, right? interesting three and a half hours, actually. the house ways and means committee held the meeting to discuss tax reform with the focus on proposed border adjustment tax. opposing the economy, supportin

archer daniels, and the most interesting person here was former walmart ceo bill simon, here as a cents, not a a representative of walmart, and simon sees both the benefits and concerns, but ultimately supports the border adjustment tax with caveats. >> improperly implemented, it will be very, very hurtful for the industry and stuconsumer, b if we take the time to do the work, sit down in a group, and iron out, lay out what it looks like, i think it will be very, very successful for u.s. manufacturing. once the middle class jobs start to return to the country in the wage increases that would come with that, retail will start to see a new sort of resurgence in a period of growth. >> now, the community actually asked the most questions to the professor really to get her academic explanations.

while representative brady certainly is in favor, creator in part of the proposal, many others seemed to agree with representative that the border adjustment tax is on life support. >> hard when the trump administration, when you have the treasury secretary sounding like he does not support it, when it's said other members don't support it, but, still, would solve a lot of problems quite elegantly, but it's not popular. >> it's not. in the professor's explanation, she did a good job of breaking it down. if you don't have an economic background for both concerns and benefits. they went back to her looking for more. they went to her more than mr. lindsey, also an economist, very interesting. >> thanks. no doubt we'll hear more about this at some point. see you later, court. dow's up, what's that say, 38? >> yep. >> coming down a little bit. by the way, the nasdaq under performing today, some of the semiconductor stocks down, some individual stories weighing on the market there. toll brothers loses early gains today after a weak number

on new home sales came out. a debate on whether housing stocks are a safe beat or not coming up. you won't see these folks at the post office. they have businesses to run. they have passions to pursue. how do they avoid trips to the post office? stamps.com mail letters, ship packages, all the services of the post office right on your computer. get a 4 week trial, plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again.

shares of toll brothers giving up early gains as the

home building company reported strong quarterly results beating on the top and bottom lines today. >> the stock's down 1%. meanti meantime, maybe this has something to do with it, data showing sign of weaker demands, purchases fell 11% after hitting a nine-year high the month before. so which is telling the true story for the housing market and for home builders? bringing in chris who is bullish on toll, and ken from key bank cooper product stocks over the home builders. chris, you know, do you just look past weak data this morning? think it's an april blip? >> absolutely. i think it's a sell reaction. it's a volatile series, housing starts, new home sales, all very volatile. look at the trend line, and there's really three big factors going for the builders right now, and biggest of all is politics. nothing creates more jobs either on a multiplier basis, semiskilled workers than home building, and every

politicianments to go back to the community and say, look at all the jobs i created. that's huge. i guess the only way they could be on the down elevator would be if we go into recession. i feel we're in the early stages of a secular bull market, so that's a big thing, and lastly, they are cheap. they will 30% discount to the s&p. i think you got a lot of things going for it. >> ken, what about you? you like companies that supply products to the builders, but not the builders themselves, why? >> correct. well, we like companies that have exposure to the new construction road. high single digits, yet they need leverage. top builder, top picks there. so that home builder facing stagflation and costs eat up profitability. >> that's a great point, ken. construction costs, labor costs are a huge issue. can they resolve that for you? take more interest in the builders going forward? >> well, their costs are equally

divided in land, labor, and material, and land and labor, we don't think they have the h historical leverage on the pricing to overcome it whereas factories have better costs and higher margins. >> and, chris, you know, even in an incredibly low interest rate environment, home builders suffer. what happens when the fed inevitably raises rates, maybe as soon as this next month? what happens to the housing industry and the home builders themselves? >> well, no question, bill, normalization is going to happen. i think, though, if we look back in history, interest rates have been two to four times higher than now and there's been boom in home building in those period of times. it's immune, not completely, but a little bit. >> we have to go, guys, but thank you both. thanks for the thoughts on home builders and housing markets. dow up 43 points, closing countdown in a moment for you here.

after the bell, the tesla chief is used to overcoming odds, but there may be a roadblock for him and market in self-driving cars. we explain why. you're watching cnbc, first in business worldwide. if you have medicare parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time to shop for an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. medicare doesn't cover everything.

and like all standardized medicare supplement insurance plans, these help cover some of what medicare doesn't pay. so don't wait. call now to request your free decision guide. it could help you find the aarp medicare supplement plan that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and they're the only plans of their kind endorsed by aarp. remember - these plans let you apply all year round. so call today. because now's the perfect time to learn more. go long.

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really did take a toll on the market first thing this morning. we had to sell off, the dow today, then it did come back here, and it took a toll on the home build everies like toll brothers as we already established, although they had good numbers, talking about raising guidance for the rest of the year. toll brothers finishing negative for the day. nasdaq was a laggard among the major averages today as kelly was pointing out, semiconductor stocks among the laggards there, keeping index low, but have you noticed this? i'm going to bring courtney reagan in on this one. have you noticed what utilities have done this year? one of the best performers among major averages, very quietly -- >> yeah. >> even as we talk about higher interest rates down the road, the nasdaq -- the utilities average up 7% this year. >> interesting for this environment, isn't it? financials, still, strong, sort of on the flip side of this. >> exactly. >> financials leading today. >> just today, the ten-year yields rose, in fact, a lot of

the treasury yields rose here, and rick santelli pointed out it happened about the time the administration was unveiling the budget propose, and they were seeing maybe a market response there. the dollar went up as well as yields as well. >> exactly. we've seen a slow meltup and dropoff at the time too and eventually recovered, and now very, very close, at least for the dow, recovering what we lost last week and passed it on the s&p. you see the dip clearly in the short, but, oh, it's over. >> vix back at the ten handle there. how about those retailers? >> out the retailers. today, auto parts driving down consumer discretionary, of course, the advanced auto parts and autozone blame the tax refund delays, that you don't buy. >> i don't buy it. markets, i i don't think does either. autozone down 10%. >> a big drop, really big drop for them. i don't know what's going on there, but something maybe more than a tax refund. >> i think so. >> i think so too.

>> thank you. >> you got it. >> out with a 41 point gain on the dow industrial average. coming up second hour of "closing bell," see you tonight on the "nightly business report" on pbs. this is the second hour of closing bell with kelly evans and company. see you tomorrow, kell. ♪ thank you, dr. bill, welcome to closing bell, everyone. i'm kelly evans, another rally today here on wall street. dow headed 43 points on the bell, on top of yesterday's gain, about two tenths of 1% there, same for the s&p up 4.5% today, russell up decently, outpacing others a little bit to 1380, but nasdaq, interestingly, so strong this year, lagging this year. the reasons are all over the place. pharmaceuticals, the worst performers, and even tractor supply weighing on the index.

o'reilly, as we told you about. the decliners with dollar tree. getting more into what's happening there. also, the chip stocks a little bit weaker today, even as financials, broadly elsewhere, led the markets higher. and $70 billion, that's how much morgan stanley says google's self-driving car unit could be valued. how partnership with lyft could pose a threat to tesla. that's coming up. later, and i can't wait for this, going to try to stump this man, santoli, a new segment to humiliate him and put the news information to the test. send in questions. joining me today is the cnbc seep your market commentator himself, and mr. michael, he's the founder and ceo there, and the ceo there. mike, the economy -- i mean, i guess the big picture is building on gains here. >> yeah.

>> as rick mentioned earlier, there was aspect in the discussion about the budget of maybe the agenda is on track, talk about that. >> it could be. thinking about d.c. in a different respect than just the peril that the administration might be in. yeah. i can see that being part of the narrative now, but i look at the market, and it's up fractionally. we are capped by the 2400 level of the s&p 500. i can simultaneously impressed with the action because they support itself every single day. the tech stocks take a break, banks up a lot. you have media stocks down, semiconductors take a break, defensive stocks are good. >> financials simply because rates -- >> yields lifted a little bit. >> okay. >> yield curve is off the lows, and guess what, they have not participated in a while. that's the way it goes. >> their turn at the table. mike, where's that leave you? it's been such a big cap tech

story this year. do you bet on that continuing? >> well, we're owners of tech, for sure, and we still think that's probably going to be the drivers for the market, but i don't think investors should overlook some of the names as mike said. maybe they have not rotatrotate names like camp bell's soup, procter & gamble, boring names, but yields rise, it's clear to us that yields are not going to rise as fast as some really are fearing, so i think you can have both in your portfolio, sell out tech, but have staple names for dividend yield. >> yeah. by the way, a long list of companies trading at all-time highs today. not only some of the obvious suspects like amazon, but, you know, you had marriott in the mix, for example. you know, striker, united airlines, adobe in there, google. >> that's the rule. growth stocks like adobe, visa, that work in most environments

and have tremendous momentum in terms of stock prices, and then there's sub segments of consumer like hotels and airlines. select the groups work well. other stuff is not. it's a 50/50 split in terms of stuff that's good uptrend and others sit out. >> one of the themes here, talking to leslie in a sec, but cross border deal making going on between the u.s. and u.k. continues to ratchet up. anything to read into that, but, you know, how to things feel where you sit? >> well, you know, we have actually been betting on continued challenge of the administration to actually get a lot of promises done. there's a lot of promises made, setting the bar high. the market rallied up to the high bar. we've actually been long international markets, long epa instead of the fpy, and that has been a good trade, and we think if continues for a while, it's challenging, yeah, we had maybe potentially positive news, but we don't see details around this

tax plan, so we still think there's kind of, you know, a lot of promises and more room to stumble. we continue to be long the epa relative to the ewj. >> you're in the details, and i'm more details. >> details. >> you say details. all right, curious. getting details of the big deal we brought to you today, constellation brands pursuing a takeover the brown-forman. leslie picker broke the story hours back. leslie, do tell. >> kelly, yeah. sounds like constellation brands is certainly interested. brown-forman, of course, rebuffing that initial indication of interest to acquire the company, but did bring the idea to the board. now, it's clear to us based on sources familiar with the matter that constellation brands is still interested, and i spoke with analysts since reporting this about an hour ago who said they were surprised the constellation brands would be interested given the $9 billion in debt on their balance sheet,

that they could delever first, but it's clear this is something they are interested in. hunting for deals. looking to expand their po portfol portfolio, and brown-forman has ideal set of assets in the company. >> mike, what do you think of this? >> it's a continuation of what's going on in the industry for a while. i mean, great brand names in demand, tremendous scarcity value for jack daniels, and i do think it makes sense. also, m&a in general probably should be more active than it is among big companies, given all broad conditions. it makes sense in that respect too. the big outlier in this situation, though, talking about the control block at the brown family has, and it's not an easy run. >> is that explaining the price action, down 6%? >> you know -- >> it popped. >> like no means no when it comes to a company with majority

of the voting rights. >> leslie, does that mean this sort of story begins and ends today? or, you know, always, to me, feels like one set of interest made, maybe the family says no now, but at some point maybe it's the right price, the right time, plan to see something down the road? >> that's it, kelly. constellation brands has plenty of smart executivings, well- well-advised in the situation and well-known they have the control aspect with the family. it's not like they went into this not knowing the family would rebuff. they are outspoken wanting to be independent a while, but every family owns a business with a price. every seller has a price. it appears constellation brands thinks they can get there. whether or not that happens remains to be seen, but they would not make the approach if it was not at least possible. >> yeah. >> kelly and i used to work for a company that the family said no for a very long time. >> no, no, no, no, okay.

i was offered this internship. >> exactly. >> show up for work in june? i don't know. >> i think you did, though. >> exactly. leslie, thank you very much. great scoop there. michael, we want to bring you in. circling back to a story we talked about earlier today, amazon shareholders suggest the company do a stock split. do you like that idea? >> it doesn't matter to bezos. that's what matters. he continues to take action to reinvest in the capital for new businesses. this is not a company trying to make profit. if a company is not making profit, they are just growing revenue and market share. i just have a hard time believing they adopt a strategy to split the share to somehow get more adoption in the market. i think, basically, jeff is about world domination. that's what it comes down to. >> mike, any reason to pursue this other than to kind of broaden the retail base? >> there's notening the base,

there's no real impediment to one share. you wanted to buy less, cost less to buy like that, like apple, when they split 7-1, there was a sense they wanted to at least allow themselves to go into the industrial average. again, it's not something on jeff's list of priorities or the founders and leaders of google of alphabet because they are exactly the same boat. alphabet and amazon -- there you go. six months, shadowing one another, those stocks, and 970 a share. you tell me if it's about, you know, fundamentals, picking apart, or these are two great dominant tech companies. >> michael, are people buying shares of the company or the qqqs and the price of that or, you know, interest in how you express that kind of view is different these days? >> well, there's demand for qqq, but, frankly, people are buying these shares, i mean, they are buying the faang stocks,

specific technology oriented names they are very, very familiar with. i think they are very much focused on only those names. commenting quickly, kelly, you have to go -- >> no, it's find. >> a comment was made earlier about europe. europe is the international market place we think holds the most promise right now. latin america with the brazil problems has a lot of corruption, a lot of currency issues, and, certainly, in asia, you have the big sort of uncertainty around what happened in korea. the europe trade, which is really interesting, tied to the u.s. trade, both multinational sort of conglomerate companies. i don't think they should overlook that. >> there's been better growth lately too, right? >> that's right. >> yeah. >> i mean, yeah. >> i'm just saying we had markets there at all-time highs, growth prospects turned the corner, but, by the way, is that still making the case for people to get involved in this point now that we have, you know, whether it's the u.k., german

markets, they have been doing, you know, pretty well as of late. >> well, obviously, europe was really, really held under a lot of question as to what was going to happen with the french election, and so a lot of valuation, i think, tied up in that. now, we saw quite a bit of rally, particularly in the financial stocks, after macron won the election, but now we're headed into the next phase of europe. i still actually think there's still more to come, and i think that growth story is certainly there, and, also, what's interesting is kind of post-brexit, europe has been in the process to some degree of reconsolidating, and that's also very beneficial for that trade story. >> all right. good to see you both, gina san she has and michael, appreciate it. >> great. >> thank you, kelly. over to an earnings alert this afternoon. >> hi, kelly. drawing attention to shares of intuit, building on gains with better than expected gains in

revenue, and aided by momentum in the quickbooks franchise, the do it yourself software for tax season, raised q4 guidance and also raises expectations to end fiscal 2017, the 2.3 million quick books online subscribers. small business, a source of strength, growing revenue by 16% in the third quarter. shares up nearly 7% right now. kelly? >> maybe it's a good time for small businesses too. thank you. again, pop there after hours on that beat. president trump's budget proposes selling off half the petroleum reserve to reduce the federal deficit. good idea to sell now with prices down 5% or keep the reserves for emergencies. morgan stanley said alphabet should sell off the self-driving car unit to take on tesla. hear from a coauthor of the report on how much a threat it

could be to tesla. you're watching cnbc, first this business worldwide. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor... the genomic data came in. thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here.

oh. twitter is hilarious sometimes. over to meg here for a quick

market flash. meg? >> hey, kelly, looking at bioscience, stock sells off in the after hours after a mid-stage study of the drug in tourette syndrome in children did not meet its primary goal. the company said, though, they underestimated the dose of the medicine in the trial and see a path forward here to further test. however, obviously, disapointing those who hoped for positive data here. off 9%. back to you. >> too bad to people with turret syndrome. thank you. president trump talked about selling off the oil reserves, part of the first budget proposal to raise $500 million in the fiscal year 2018, up to $16.5 billion over the next decade. is it a good idea? let's bring in kyle cooper thinking it's a reasonable thing to do, and johnthinks it's short sided. kyle, you think it's an overdue move here? do we need the spr? >> not nearly as much as we did.

clearly, created to compensate for the loss of imports, they are relatively stable, and with rising u.s. oil production, our imports from unstable parts of the world have really plummeted, and, thus, we don't need as much as we did before. >> yeah. john, seems to me, in an era when the u.s. was reliant on forp oil, smart to have reserves, but we're not reliant, anymore, are we? >> i don't know, kelly. the keyword here is strategic, after all. embarking on defense spend in buildup here, the saudis committed to buy $10 billion worth of defense stuff from us. telling me they are not secure about the situation in their nabt neighborhood where the bulk of the world's oil is. when the time comes and you need the oil, you can't snap your fingers and pump from anywhere else.

it's app essential safeguard for us to not only have where it is now, but it was supposed to go to a billion barrels under george w. bush's plans so i think it's misguided. >> not saying there shouldn't be some supply in the event you need it, but actually what happened is we have just in time oil production and can say, we need more, and, you know, in this case of national emergency, then go ahead and do it. >> yeah, i mean, look, we are still importers of crude for our refiners, so it's not as if we are fully self-sufficient and integrated in that way. my one thought on this would be maybe it's time to reevaluate the strategy, but what this clearly is is a way to sell the family silver and find a way to make revenue in the budget making process. >> okay. but did we need the little fork once used for a piece of cake. >> maybe not. this is just plugging a hole in the budget revenue side. no one talks about privatizing values. things you throw out, look at

the revenue side as well. >> it's a great point. kyle, if we didn't have the pressure to do this, would it happen or would it just sit there? >> well, clearly, if you have hurricane disasters or other things, that would, indeed, a be very quick resource to utilize in short term destruction. however, with some estimates that texas production is going to soar, the revenue you'll be generating from those royalties, because, remember, u.s. oil production pays taxes. those taxes are going to help increase revenue to the u.s. government, and if we implement policies that actually encourage u.s. oil production, then the revenue gains from rising u.s. oil production will not be short sided as all, but that's actually a long term growth prospect generating revenue here in the u.s. john, another aspect of this is if we have oil available to sell off at some point, do you want to wait until oil prices go higher or too difficult to know?

>> i mean, obviously, we want to buy low, sell high, what the chinese do with their spr. look, nothing knocks our economy off its block like a surge in a spike higher in oil prices. in a commodity market like this, if you want to try to short circuit that surge, rally, that crisis, you need to respond by the equivalent of overwhelming forcings and that means a lot of oil, not a little bit. that's why we need a ton of this stuff in the ground ready to go on a moment's notice, not less of it. >> yeah. have to go, but i also wonder having successful trip to saude, what they think of the supply out there. john, kyle, thank you. quite the crude today, up 1%. apple settling a patent decemis, but there's other legal battles that could impact the stock's huge rally this year. first, major changes on the horizon for how you watch tv. the fast take future of television when we come back. hey gary, what'd you got here?

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parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time to shop for an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. medicare doesn't cover everything. and like all standardized medicare supplement insurance plans, these help cover some of what medicare doesn't pay. so don't wait. call now to request your free

decision guide. it could help you find the aarp medicare supplement plan that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and they're the only plans of their kind endorsed by aarp. remember - these plans let you apply all year round. so call today. because now's the perfect time to learn more. go long. welcome back, time for fast take, first up today, if you can't join them, beat them. left out the skinny bundles like those owned by viacomm my join together to launch their own super skinny bundle. savvy or desperate? >> necessity. you might be able to interpret as desperation. the market is not necessarily at ease with it.

i mean, look at the stocks today, viacom down 2%, discovery down as well. it basically is necessary because industry has to test lower price points. now skinny bundles are not that skinny or inexpensive, 40 and up. question is, are they destination networks? >> right. >> now, yes, nicklodian is there, that's attractive, but it's not necessarily viewership friendly. >> they'll find out. amazon went live in the u.k. it does include discovery, by the way, nbac and others, and t get the channels, be a prime or prime video subscriber. a matter of time before we get this? >> if they swing the deals. the content companies are more willing to say, give it away overseas, but it's a little, again, same story, a night mare scenario where you become a feature of, by the way, what's prime? bundle. a different bundle, subscribing

to something, assortment of services versus a tv bundle, but, you know, i think you have to experiment with all the platforms. >> exactly. >> it's not a bounty you're rushing for. >> channels, that's another thing to have. next, the clicker, the remote, may be no more. dish network customers can change the channel with a voice thanks to a partnership with alexa. i say, bring it on. >> well, you never lose your voice, at least not often, right? that's one benefit. i do think that it makes sense who gets to be the one to tell her what channel to put on? i can see the conflicts arising. >> yeah. >> but, again, it's obvious next step, but this is a level of innovation. we no longer have to do this. speak to the machine. >> and what i hope they include is futures, not just total mute -- >> mute only commercials. >> exactly. i would love that. >> all that stuff is a

nightmare. >> also going to be a fight, why not one of the other voice providers. finally, today, chinese phone makers elbowing apple out of the market. apple's market share fell to 13.7% from 15% a year ago. can the iphone8 stop the trend? >> probably can. i mean, it can move the needle on some level. obviously, the fans of apple tell you, look, at the premium end of the market, it's not overall market share because they are displaced, only because the pie's getting bigger, growing faster at the low ear end. remains to be seen. >> you know, rolled out cheaper phones to be more broad. it's do they want to be the high end, goes back to the -- >> they always want to be. >> high and a phone for everybody, but reminds me of we chat, what happened there, they had this issue over the tipping feature, and so, you know, applements revenue to flow through, but the problem is you can use that in any phone in china. doesn't have to be iphones at all. >> clearly apple is not having

the same rules of engagement in china as in other places. >> a lot at stake. >> we don't know how much future growth it means. >> feels like a movie franchise. the trump administration is setting sights on tax reform. john harwood sat down with the treasury secretary to find out the latest tax reform timeline. remember it was august? find out next. plus, morgan stanley said alphabet could be worth more than $70 billion if it spunoff. discussing whether the self-driving car unit could be a threat to tesla still to come on "closing bell." there's nothing traditional about my small business so when

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[ rat squeaking ] they're dangerous long after. cigarette butts are toxic. they release chemicals that poison our water... and harm wildlife. and millions... are polluting our environment. [ sniffing ] [ seagulls squawking ] welcome back, see how he finished on wall street, a gain of less than a quarter percent, same for the russell, and s&p less than that up 4.5 points, and the nasdaq lagging, only up five points, and bevy of things weighing on the market from the drop in o'reilly automotive after the miss this morning and weakness in the chip stocks. time nor a news update with sue. hi, sue. >> hi, kelly. here's what's happening this hour, everyone. the u.s. ambassador to the united nations, speaking to the

staff praising turkey for sheltering refugees fleeing conflict. hundreds gathered outside city hall in manchester to hold a vigil for the victims of monday night as attack in which 22 people were killed, dozens more injured. manchester police have named the attacker. a black state university student stabbed by a white university of maryland student was honored at the commencement ceremony that he would have been a part of today. an empty seat was draped in the memory of richard collins iii. on a liter note, nfl commissioner said that he wants players to have more room to have fun after making big plays, so players will now be allowed to use the football as a prop after a touchdown. relaxed rules will not allow for

celebrations that delay the game or that are directed at opponents. that's the news update this hour. kelly, back indicate to you. >> thank you, sue. steve mnucchin in washington, d.c., and john harwood interviewed the treasury secretary on stage and joins us now with the highlights. >> we are trying to figure out if tax reform is possible and when. the original plan was for a health care reform package to get to the president by easter. tax reform package to the president by august, it's clear that's not going to happen. mitch mcconnell talked about having it done in this congress, meaning incoming next year, steve mnuchin said he hopes it doesn't take that long. >> i would hope we get this done this year. it is -- it is critical to our plan for economic growth and can assure you, you know, we are working very closely with the house and senate to get that

done, and i think i had said on your show earlier in the year that we were going to try to do that by august. it's clear now we're not getting that done by august. >> a couple obstacles to that plan which people need to keep in mind. first of all, the expedited rules that the congressmen menwo use for tax cuts with republican vote, not a bipartisan plan, depends on health care reform getting through. that has to be done. then the budget, which the trump administration released today has got to be negotiated with the house and senate. they get to pass a new budget and create a new special, what they call reconciliation vehicle for tax reform. if that doesn't hatch, they will not move on tax reform. neither is easy, kelly. >> yeah, john, so what happened with the tuesday group today as well? does that play into all this? >> it sure does. the tuesday group has seen tom

mcarthur resign from that group now. tom mcarthur is the member who negotiated with the freedom caucus, changes to the health care act, that stalled earlier. changes narrowly passed the house including things that many moderates do not want to become law. they put a lot of pressure on mcarthur for having, in their view, sold them out, by making this deal, putting them in a bad spot. that's an indication how divided the party is and how difficult it will be to get the health care plan through the senate, and them reconcile it with the house. remember, the congressional budget office revised score for the house bill comes out tomorrow. >> oh, right, oh, geez, it's going to be a big story. how in the tuesday group goes back decades, right? >> yes. you know, the republican party, like the democratic party, used to be a lot more ideologically

varied than it is now. there used to be liberals within the republican party, conservatives within the democratic party. now they driven out to the tuesday group. they tend to be more moderate members from north eastern states, and charlie from pennsylvania is another example, but they are getting marginalized. we'll see whether they decide that the trump moment in the pressure they get from the more conservative colleagues is going to change that equation in the end. >> what do you think mapters to the market at this point? the time line for tax reform that slipped? >> well, obviously, it's the time line, but also just evidence these are, in fact, a set of issues we'll deal with. congress has the attention span to grapple with these things opposed to being sidetracked on nonlegislative, nonbudget things. >> yeah, no. >> that's a low threshold. >> no, but it's overall where we're at. >> for sure. >> john, thank you very much. our john harwood there in

washington. apple, meantime, setting dispute with patents with nokia. that's coming up. first, watch out tesla? alphabet's self-driving car program could be stiff competition for the car maker, and one analyst behind the report joins us next. the power of 100 of the world's top companies. the power of a proven 15-year track record. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc.

new research today lays out the case for alphabet self-driving unit as an emerging threat in the auto industry

saying it's a candidate worth $70 billion competing for talent and capital versus tesla. let's bring in one of the analysts behind the call, brine, of morgan stanley, brian, thank you for joining us. >> thanks, good afternoon. >> so this is interesting. so in some ways stated what we already know, waymo is successful within google, got its own name, that's one indication. in another way, it's a road map to the company potentially being a stand alone entity and taking on tesla. why tesla? >> well, we are bullish because what we lay out is that if you can paint a scenario where they grow to be even only 1% of the global miles driven by 2030, generate.50 over a mile over ten to 15 year period, there's a case where waymo as a stand

alone entity is worth $70 billion from an enterprise value perspective to alphabet. they are part of the other bets in alphabet's overall pnl, it's material because we often say which of the other bets move the needle. punch line is it's waymo because alphabet right now is about a $600 billion company, if you say how big can it be? add 12% to that. >> right. so, my question, brianings though, why is it not a threat to uber? why a threat to tesla? >> well, so, knowing today is a joint note with the tez la and analysts, and i would say on the tesla side, when adam downgraded tesla, we got cautious because there are large players like alphabet who are building their own autonomous entries and interest in the industry. waymo is one of those, so i would let adam jonas talk more about tesla side, but the fact that waymo is coming into the

autonomous space is not just a threat to tesla, but to any other player, including uber trying to come into autonomous driving. >> brian, from the alphabet side, you mentioned these numbers pan out, it could look something like 10-12% of the current market cap. clearly, the market is not really putting a dollar value out on that in any of wait right now. at what stage -- >> i have to jump in, guys, one second. interrupting here. i believe we're going to listen to theresa may make comments about the bombing in manchester. i said police and security services needed to investigate whether or not he was acting alone. those investigations continue. the work undertaken throughout the day revealed it is a possibility we cannot ignore that there is a wider group of individuals linked to this

attack. this morning, i said that the joint terrorism analysis center, the independent organization responsible for setting the threat level on the basis of the intelligence available was keeping the threat level under constant review. it is now concluded on the basis of today's investigations that the threat level should be increased for the time being from severe to critical. this means that their assessment is not only that an attack remains highly likely, but that a further attack may be imminent. the change in the threat level means that there will be additional resources and support made available to the police as they work to keep us all safe. as a result of the decision, the police have asked for authorization from the secretary of state of defense to deploy a number of armed military

personnel in support of their armed officers. this request is part of a well-established plan known as operation temporer in which armed forces and police officers involved are well-trained and well-prepared to work in this kind of environment. the secretary of state for defense has approved this request and operation tempora is now in force. this means that armed police officers responsible for duties such as guarding key sites will be replaced by members of the armed forces allowing the police to significantly increase the number of arm officers on patrol in kiey locations. you may see military personnel deployed at certain events like concerts and sports matches helping the police to keep the public safe. in all circumstances, members of the armed forces who are deployed in this way will be

under the command of police officers. precisely how the military and armed police officers will be deployed is an operational decision for police commanders, and assistant commissioner at the metro pal tan police has a statement to give further details at scotland yard later this evening. in the coming days and weeks, there will, of course, be many events hosted up and down the country. the police will work with the organizers and posts of these events to come to a judgment about how they could go ahead while making sure the people who attend them are safe and secure. i do not want the public to feel undually alarmed. we have faced a serious terrorist threat in our country for many years. the operational response i have just outlined is a proportionate and sensible response, the

threat security experts judge we face. i ask everybody to be vigilant and cooperate with and support the police as they go about their unfortunate work. i want to end by repeating the important message i gave in my statement earlier today. we will take every measure available to us and provide every additional resource we can to the police and the security services as they work to protect the public. while we mourn victims of last night's appalling attack, we stand defiant. the spirit of manchester and the spirit of britain is far might yeah than the sick plots that plague terrorists. that is why the terrorists will never win, and we will prevail. >> british prime minister may addressing the nation there,

raiding the threat level for the u.k. to critical. it was severe by upgrading to critical, that does mean that the police there expect an attack imminently, and one of the reasons she said they did so was because the investigation, since the bombing last night, revealed there could be a wider group of individuals linked to that attack. >> yeah. >> it's -- you know, it's difficult not only for people trying to carry on their lives, deal with the aftermath of what was witnessed, worth terrorist attack. islamic state claimed responsibility, not verified by the u.s. yet, but the worst in about a decade. now to have that sense already with the question in the back of the mind about whether to attend events of the summer, which are about to kickoff, but with this threat level raised to critical, that's a very difficult one. >> yeah, i mean, essentially

raises possibility there's going to be more consumer caution or other things that we throw out there as possibilities when you get one attack. if it's considered to be under the shadow of an ongoing heightened threat alert. history says, you know, we, i guess, as a society, markets have pretty thick callouss against this stuff unfortunately now. i don't know that we'll necessarily see reactions right there, but we're on alert to see if, at least in the u.k., if there's any kind of, you know, kind of cooling session. >> as for what it means, may indicated we'll provide additional support to the police. there will be military personnel deployed in a lot of events to keep people safe. she told the public to not be alarm, but it's, again, going to be hard not to be when there's a sense there's other individuals who helped carry responsibility for the bombing last night who might have further plans yet. that's latest from the u.k. at this hour. >> when we come back, we're going to go back to the previous

discussion, a little bit more about the challenge that waymo presented is tesla down the line after this. it's all yours. wow! record time. ♪ at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. ♪ get ready, because we're helping leading companies lead with digital. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant.

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welcome back. brendan noak is still with us from morgue gab stanley. brian, we were talking about waymo. whatever happens there draws it in. i don't want to connect too many dots. ford's ceo was just ousted this week. does it feel as the closer you're getting the more the traditional car industry will have to make the same kind of outline to its investors? >> i don't cover ford directly. if you think kind of bigger

picture about consumer behavior changing and multiple players in the industry including waymo, tesla, uber pushing towards autonomous driving, it is going to change the way in which the automotive industry is likely needed to run. so i would say yes. the thing to watch with waymo, waymo is already open to partnerships. they've already partnered to a few oems and other potential oems to come. the question is going to be how do you partner and how do you kind of navigate this evolving ecosystem as you move towards autonomous over the next couple of decades? >> brian, at what point in waymo's development do you think alphabet might spin off waymo to spotlight some of the value there? >> what we wrote about today is the spinoff is one potential outcome and one potential way to highlight the value in waymo. what we look for the most is

what type of new partnerships do they strike in how do they look to drive this model from the top and bottom line perspective to really drive the autonomous transition. we'll have to watch the partnerships, business models and revenue bubble over the next couple of years. as that does happen we do think there is value down the road that could be achieved through multiple different scenarios, one of which is a potential spinout. >> brian, thanks very much for joining us. >> thanks. >> always good to try to get a sense of where these things are headed. brian nowak. nokia is off the list of people doing a battle with apple over patents. will apple's other disputes end as quickly? that's after this. the whisperer? why do they call him the whisperer? he talks to planes. he talks to planes. watch this. hey watson, what's avionics telling you? maintenance records and performance data

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except that the next morning it all makes sense. to power global e-commerce fedex networks are massive, far-reaching and, yes... a little magical. fedex.com slash dream welcome back. apple and nokia reached a settlement over a pat tint licensing lawsuit. nokia was up are 5%. apple will buy nokia's products and services while nokia will provide infrastructure products to apple. the latest supreme court ruling will prevent such lawsuits from going through in the first place. this new ruling limits where lawsuits can be filed.

essentially rulimoving them awa. eastern texas, anybody? how will this play out with future patent lawsuits. joining us is mark lindley, a professor at stanford law school. welcome, sir. >> thanks. happy to be here. >> let's begin with how do you think the supreme court ruling will move forward? >> well, i think it's going to be a significant shift in the way patent law is practiced. in the last couple of years almost half of all lawsuits in the country have been filed in the eastern district of texas. a number of those lawsuits are going to have to move. whether apple's is one of them is an interesting question. apple may still have enough presence in the eastern district of texas that it's going to be sued there, but a lot of defendants in apple's position won't be. >> is that because it has retail stores, mark? this ruling essentially narrows it to where your residence is. that's where you can find -- be sued, is that right? but does a store count as a residence?

>> right. so what the -- what the old law said was basically the plaintiff can sue anywhere in the country and that led to this problem of forum shopping, of picking plaintiff friendly forums. what the supreme court said now is that the statute allows you to be sued only where you reside, which is where your corporation is incorporated, or where you have a regular and established place of business and commit infringement. so if apple has stores in the eastern district of texas, right now it does have one, it might be subject to suit there if it's selling infripging products in the store, but a company like google that doesn't have any presence wouldn't be. >> gotcha. even outside the kind of jurisdictional questions with the venues and all the rest of it, it seems like we're hearing a little bit more about higher profile patent disputes with apple in particular being a target. is that just the way the game has always been played or is the industry now set up in such a

way that we have kind of more of a drum beat of these efforts? >> well, i do think it has changed and accelerated in the last couple of decades in particular, and so innovative companies like apple who are patent plaintiffs as well end up targets in hundreds of patent lawsuits. there have been a number of lawsuits in recent years both in the courts and in congress to try to address some of the abuses of those lawsuits, and i think this case may be the latest effort trying to limit forum shopping. i don't think that means apple isn't going to be sued. they make enough money that a lot of people are going to take a shot at them, but it may mean that they can get out of those suits more quickly and easily. >> yeah. and it's not just them. samsung built an ice skating rink in this district to try to win favor with some of the residents for these rulings. in any case, mark, going back to the apple/nokia one that we're talking about today. it was interesting. it sounded like apple effectively said to nokia, we're

done paying these royalties. this is too much of a shakedown. i don't know much more about the specifics of whether that was legitimate. you can see in the market nokia shares are up big. did this work out well for nokia? >> you know, it's hard to tell. this settlement like most settlements is confidential. we don't know how much money is changing hands. companies like nokia have been transitioning from product producing companies to companies whose primary business is licensing their patent rights and so i think any deal in which apple actually pays them money is probably something that vindicates that model for nokia and it's going to help them in the marketplace. >> thank you for joining us. explaining this case and what the patent disputes might look like going forward. what are you going to look at? >> fed minutes. we can focus on the fed and its cadence and trajectory of how it's going to go from here. just this market, the way it finds a way to sit almost still and stay supported at these

highs because something's working, something's not. like a team with a lot of injured players and still manages to win or tie. >> i'm trying to think of which team in the playoffs would be the best analogy. the warriors and -- >> there's only two teams in the series ongoing. >> thank you so much. >> see you tomorrow. >> that does it for "closing bell" and "fast money" begins right now. "fast money" starts right now. live from the nasdaq market overlooking new york city's times square. i'm melissa lee. tonight on "fast" famed investor asher edelman who predicted stocks would rally under trump now says there's something fishy happening. you will not want to miss this. plus, another day, another call for an iphone super cycle. has the apple cycle gone too far too fast. deal talk is brewing as constellation brands makes a bid for