tv Closing Bell CNBC October 21, 2015 3:00pm-5:01pm EDT
i'm sure this will take up a lot of time. >> i'm sure it will. close close starts right now. we'll see you tomorrow. >> welcome to "closing bell," everybody. i'm kelly evan of the new york stock exchange. >> and i'm bill griffeth. you know the stock story that has everyone talking, valeant pharmaceuticals. noted short seller was out with a new note accusing the company of fraud, calling it the enron of pharmaceuticals. that stock got slammed. hit a low of around $88 a share. our own scott walker just reported a little while ago that the hugh jackman fund manager bought an additional two million shares of that stock. shares are now off their lows. we have all the details on a wild story about this company coming up in just a little bit
here. >> bucking the trend of ipos, look at ferrari. those shares are trading on their first day of trading at the new york stock exchange. luxury automaker also lining the outside of the exchange with all these different models. you can see whether the stock can hold on to these gains as we head into the close. >> looks like the most expensive used car lot in the world outside on broad street today. meanwhile, carl icahn is getting political. he's launched a $150 million super pac with his own money. we'll break down what's behind the billionaire's move. >> and china versus mexico. henry mcvey in a cnbc exclusive. >> he'll tell us what he found over there. very, very instructive. you want to stay tuned. let's start with this crazy story about valeant pharmaceuticals. meg has this story about the huge decline. and finally the company coming back with a response of some
kind. >> it has been a crazy day for valeant. let's start by what's been going on. today there have been some reports into relationships with so-called specialty pharmacies. specialty pharmacies essentially streamline, getting drugs to patients as a way for companies to essentially alleviate their co-pays and get around insurers to deper patients from using high price drugs. so that's not illegal. accounting fraud at valeant through use of these specialty farm sis, accusing them of booking revenue before the prescriptions are actually used. valeant calling this report erroneous in its statement today. and responding to a couple other things coming out. interestingly, our scott walker reported that one of the top holders of valeant, saying he's buying two million shares of the stock today, saying clearly a vote of confidence there in valeant. as of june, was the third
largest holder in valeant. this presumably could make it the second largest holder of valeant stock. i've been speaking with folks today about what is going on here. somebody pointed out to me that with the holders in the stock, including value act, and the entire battle that went on with allergen earlier this year, a lot of really senior, sophisticated people have combed through these numbers and didn't find any sorts of fraud or anything like that. so it's really a huge question of what's going on here. but the shares are recovering after that vote of confidence. >> and bill ackman being the guy that put out a 200-page report detailing the business structure as he sees it of herbalife. so you assume he's somebody taking a granular look at exactly how valeant is doing its business, because there's a lot at stake. >> that's definitely right. it's interesting to see the share's reaction today. valeant's been under fire all year. first it was high drug price increases after acquiring drugs. monday, folks seeming to not really like the changes in
valeant's business models. it is under investigation from the attorney general in massachusetts and new york, and a senator. valeant really under fire from a lot of sources here. it will be interesting to see how this continues to play out. >> one of the big questions it regarded there, their relationship with these distributors, these pharmaceutical distribution companies. there were some rather interesting developments in that regard about these distribution companies and how they operate, right? >> yeah, that's true. so there's this company, a specialty pharmacy company. an investigative report out of the southern foundation for investigative reporting -- i just got the name wrong. it's surf. essentially saying valeant hasn't disclosed a relationship with the specialty pharmacy. they say that they are actually the same company. and that valeant had actually
sued rno to get $69 million back. it's all very confusing. valeant in its statement not going so far as to actually comment specifically on that. but does explain that filador provides back end services to other pharmacies. so trying to explain the relationship that way. but all this is very confusing, guys. >> it is. the shares down about 17%. trying to demystify all of it. more straight forward is ferrari's ipo today. let's get over to bob pisani tracking the action at the trading post. >> it's a respectable opening for them. let's review what's going on. very busy earlier. priced at 52. opens at 56. basically throughout the day, it's pretty much flat lined around $56. that's a respectable showing. look at the volume here. north of 20 million. it's traded more than 100%. that's an indication of very active trading. you do more than 100% of the volume, you're doing pretty well. but i've been emphasizing, this
is a very strange ipo. what's different is the momentum and the stock story itself. it's got a luxury brand. so it's got higher multiples. higher margins. ferrari. all much more higher margins there. it's sexy in the extreme. that's what's driving this particular story. you know about the issues. there's concerns about a slowdown among luxury buyers in china and the middle east. he can deal with it and find new buyers. concerns that they might cut prices. he is not going to do that. said it several times on our air. and finally, they're going to spin off the remaining 80% of the company that the fiat chrysler company owns in january of next year to the fiat share shoulders.
this is also different because the ipo market has been very, very different than ferrari has acted. in the last four weeks, there's only 14 ipos and only two of them are priced in the expected range. averagely priced 22% below the midrange. ferrari is the only one that's come out in the middle there. nothing has priced above the midpoint of the range. the only good news. it's been better. they're up about 11%. those 14 that have actually traded. so good news for ferrari. good news for the owners of 8%. the bottom line is it is not representative of the overall ipo market. >> up 8%, that's respectable. but ferrari didn't even get out of first gear from that perspective. with that kind of a game today. bob, thanks. we'll see you later. let's get to our "closing bell" exchange today. with us, heather hughes. we have peter costa from empire
executions at post nine. rick santelli in chicago. peter, still a narrowly traded market. we're supposed to be focusing on earnings right now because the flood continues. and most of the high profile companies have continued to disappointment. why hasn't this market sold off more, do you think? >> well, there's been some stocks that haven't disappointed. general motors being one of them. the stock is acting real well today. you know, this is a market of two separate viewpoints. there's the bearish viewpoint, which i'm leaning in that direction. there's the bullish viewpoint. they're looking at different data streams that are positive. i think you have two different sides pulling at each other. that's why they're in this very narrow trading range. there's those people that are still positive.
they find there's still some upside momentum and they want to try to take advantage of the different stocks that are having that upside momentum. we're going to see this market the rest of the year. >> one area that seems stronger lately is real estate. i wonder if you guys are playing that as a theme, or where are you putting money to work? >> specifically right now, we would be looking towards the housing market for improvement there, as overall improvement on the broader economy. we would see telling signs of that. first coming from the real estate market. i can't comment if we're buying the housing sector or not, but i will tell you that financials, the banks are in focus, i do know that. technology has also been in focus as some big megatech names have been hit as of late. you just mentioned ferrari. the technologies represent only 14% of the total ipo market.
>> let me jump in, everybody. we're getting a new statement from valeant. >> it categorically denies the allegations made in the sit ron report. saying sitron's false and misleading statements about valeant appear to be an attempt to manipulate the market in an attempt to drive down stock price. it believes it's compliant in regulations and laws. a stronger response there from valeant, kelly and bill. >> wow. where was that the first time? right? >> yeah. as we see with each passing hour, perhaps they get the sense, the way this is playing out, it is not favorable. what is interesting about this as well, if they're categorically denying it, you bet every single farm or business reporter more broadly has got to be looking deeply into these allegations right
now. also saying they are categorically false. that could be interesting for them going forward. >> absolutely. i'm sure everybody's going to be digging through this and getting to the bottom of what's really going on. so we just really want to understand it better. >> thank you for now. the latest statement from valeant. >> what's catching your attention in the area that you follow these days? anything? >> the fixed income market has very few new inputs to price off of. i think in many way, that's going to keep the stock market mostly buoyant. these are the issues that move markets. so whether it's china or something on the global economy, i know we're going through earnings season. i don't see a motivation. i think rates are going to stay very close to where they are in terms of tenure, very close to
2%. in terms of bonds. i think the biggest story to continue to stay on top of is there's a lot of things about the u.s. economy that may not add up to all the free marketers out there. but from investment standpoint, i really do think we are a lot more insulated. so the first jobs report, any news regarding the fed, the fed meeting, but outside of that, i think it's steady as she goes. >> yeah, steady as she goes, but you never know when you'll get one of those wild pitches. it can ruin your whole day. >> by the way, we have another interesting move. in oil today, moving to the downside. more reports about whether it's in the crude product or the refined product. gasoline prices have finally been plunging. are these two factors offsetting each other in the market, both the hit to the energy market but maybe a boom to consumers? >> you have to look at it -- what's the best scenario? the best scenario is if the oil companies get a tighter margin,
expanding margin. and that the price of gasoline stays at this level or comes back in. we're getting to a point where we're going to start seeing a base again. oil at some point around the 38 to $35 level, that's where it's going to bottom out. we've seen it two or three times. from there, i think there's a lot of room on the upside. >> how much oil do you need for the 50 ferraris you have outside? i'm in the wrong seat today. i'm coming up to the exchange next time, i promise. >> you got it. >> love to have you there. >> 45 minutes to go into the close. the dow is higher by 28 points. a couple of big companies to thank for that as well. we have boeing today. travelers also having a nice session. the s&p is down two points. nasdaq giving up 14. >> we'll talk about twitter when we come back. very volatile recently. morgan stanley downgraded this
morning. the bull and the bear cases on whether this is a stock worth buying on the dips or selling. >> the new ceo of angel's list speaks with us exclusively. find out how he plans to boost earnings amid rising competition from the likes of facebook. stay tuned. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most.
>> welcome back. shares are slipping as morgan stanley is downgrading its stock, calling for a $24 price target. >> but is it too late to fix twitter at this point? jack mar sees a tremendous amount of potential. i will say you're hardly a raging bull because you're not exactly in line with jack dorsey. >> not at all. jim cramer is i are on opposite sides of the page here. he loves dorsey. he sees him as a visionary. i see dorsey as a visionary, too, but man, if you were listening or watching that last conference call, it was pretty discouraging. it didn't seem like the -- like really anyone on the upper level
team were under urgency of their situation. i think at these levels it's very interesting. i think it's a very binary situation. i think it's either going to be a success if their initiatives are executed. but there is a lot of risk there. that's why it's really tricky to try to trade this thing, or value it. >> and it sounds like a lot of your concerns echo this morgan stanley report, one of which they say is ad growth. that twitter is already pretty saturated. doesn't have a whole lot more room to grow in that regard. >> yeah, they've made some optimizations to make it easier for advertisers. that's not the problem. user growth is the problem. twitter is not a social network, it's really a news platform. they don't know how best to monetize that. if you can't grow the user base, you're not beginning to be able to increase ad revenue
significantly. i really think that this -- the opportunity has passed. i mean, i hate to say it, we said it before, maybe last week with bill, you have recycled leadership that has a second full-time job. i don't know that that's the right formula to re-energize user growth. >> and we also talk about the possibility -- and this has been going around forever, the possibility of a takeover of some kind, lou. i mean, would that -- is that finally the thing that makes the most sense right now? >> i think it does. not at these levels, but the only reason i wouldn't short the stock is it's hard to know at what price point a suitor becomes interested. i don't think it's worth the risk very reward. i do think that twitter is going to struggle to really break out from being a niche product. it's not the next facebook like they had originally hoped. >> what do you think is most important here, and if it is product, do you think that jack dorsey will be able to pull it off as he continues to announce a lot of new issues just since
he's been back at the helm. >> i think adam bay could pull it off. i'm pretty confident about that. what i'd say, they haven't figured out how to monetize effectively. that's a problem, but at the same time, it's an opportunity. facebook was in the exact same position a few years back. and they really hadn't figured out how they were going to actually make money off of their product, even though the potential is there. so that's what i'm saying. it is a bet. i think you do have an incredible operator, that also has a vision. you have a collection of characters there, that if they could really come together and pull this off, i think it can be a powerful product. and i would also say that florida that the takeover kind of option gives you is pretty meaningful. and i think around like 26, $27 -- i can't see it going much lower. but i see a tremendous upside over the long-term. so i like the risk/reward. >> all right. we'll see what happens. good to see you. no doubt we'll have this conversation again at some point. lou, jack, good to see you both. thanks for joining us.
heading to the close. 40 minutes left in the trading session here. look at that. when was the last time you saw the dow virtually -- it was unchanged a moment ago. it was 0-0. >> coiled spring. angie's list plummeting. the new ceo tells us what's going on, next. also, coming up, the head of global macro and asset allocation at private equity giant kkr, he's just back from a trip to china and to mexico. we'll find out why he's bullish on our neighbor to the south. and get a very interesting take from henry mcvey on china as well. stay tuned.
they disappointed today. the stock was down more than 6% on the open. it was now up almost 7%. we will point out that it is a rather thinly traded traded stock. the market cap is about $300 million. the company did lower its full-year guidance. it's caused some volatility. it's moved into positive territory. >> joining us now, the ceo. welcome to the program. >> thank you for having me. >> most notably about angie's list, the speculation. are you committed to being an independent company? >> well, listen, we're focused on doing what's in the best interest of shareholders.
with 20% of our shares in the hands of management in the board, we're fully aligned with the interest of shareholders. we'll do what will create the best long-term value for our shareholders. >> i was reading the transcript from your conference call. you had your opportunities for improvement. you must do a better job of measuring what matters most. improve the effectiveness of your sales force. you just came onboard in september. you've done a top to bottom look at this company. this is a company in need of a bad turnaround. >> we've had our execution challenges. there's incredible assets to build on. the brand is incredibly powerful. the data that we have is granular. across 250 markets, 720 categories. most importantly, we catalyzed 10 to $15 billion of commerce around our whole ecosystem. so those relationships are really enduring. what we need to do is really,
you know, leverage those assets together with better execution and i think we'll have a chance to create some fantastic shareholder value. >> a lot of investors, scott, looking at the potential for you, and maybe a home away here, are excited by those assets that you mentioned. the potential to come into this space in an even bigger way. you mentioned your board earlier. do you feel like your board is standing in the way of unlocking more shareholder value through a combination? >> the board is fully aligned with the interest of shareholders. i think when you look at the different opportunities that we have to grow the company, i think there's a lot of value that's invented there, and i'm confident that we'll be able to unlock that volunteer. we're very focused on strengthening the core. we're very focused on improving execution. as i said, we can unlock that value if we do so. >> what are some examples of ways that you can do so on your own at this point.
i see you're marketing already. what are some ways you can either get new people onboard or continue to monetize the existing customers? >> we just announced this morning, angie's fair price guarantee, and angie's fair service quality guarantee. this was leveraging past investments that had been made in our call center, in our customer dispute resolution process. we were incurring a lot of these costs, but we weren't getting the lift or the kcredit to address these big concerns. so we've launched these. i'm excited about what we're seeing in the first few days. and this is one great way to take past investments and costs and turn them into future lift and growth. >> but how much time will your board give you? i'm not going to repeat kelly's question. but you do have an activist investor on your board in tcs capital. they called for the company to merge with a home adviser. something like that. have you spoken to them
specifically? are they going to give you time to let your initiatives work? or is it one strike and you're out? >> well, i mean, look. i think that what we are talking about really doing here is growing the company, and so i've been here six weeks in this role. we're defining a plan that we're going to announce at investor day early next quarter. and i think investors will reach their own judgment about what's going to create the best long-term value. we're looking at all options. >> there does seem to be a scramble these days. thank you for joining us. >> appreciate it. >> we have breaking news on at&t. seema modi stepping in with that story. what do you have? >> at&t shares are moving on a report from dow jones. reporting that at&t says the consensus estimates are inflated. they also see that at&t says
many q3 estimates include directv revenue for the full month of july. at&t says q3 results will only include directv revenue since july 25th. keep in mind, it was july 24th when at&t completed the directv acquisition of $48.5 billion. so that's the news. we did see shares down as much as 1%. just the last two minutes, still down three quarters of a percent on this dow jones report. back to you. >> it's one way for analysts to get the message. thank you, seema. we'll keep a close eye on those shares moving to the downside. let's get to a news update with tyler matheson. >> thank you very much. here's what's happening in this hour. the white house slamming russia for its red carpet treatment of syrian president bashar al assad. made a rare visit to check in with vladimir putin. it said their welcoming of assad was at odds with their stated goal for a political transition
in syria. house speaker john boehner announcing the gop leadership conference will meet next wednesday to vote on a candidate to replace him. the full house will then cast its vote the next day. he says he's confident that representative paul ryan, who said he's open to the position only if he has full republican backing, will get the support he needs. afghan government forces fighting to push the taliban back in helmand province after a fierce battle erupted the day before. the government said troops backed by air support had pushed the taliban some five miles away in fr the capital of that southern province. and espn will cut about 300 jobs, roughly 4% of its work force. the sports channel is under pressure from viewers who are migrating online by passing cable subscription rates. espn is owned by disney. and that, folks, is the cnbc news update at this hour. back to you guys. >> don't see that headline often with espn. >> nope. >> tyler, thank you.
30 minutes to go. the dow back into positive territory. it's been fluctuating all day. the s&p down by six. the vix a little bit elevated. so many interesting stock specific stories. look at chipotle. look at yahoo!. look at gm moving to the upside. very stock specific today. >> as you know, anything can happen in that final most important half-hour of the trading session. a top trader will tell us what he's focusing on when we come back. and then, henry mcvey explains why he is bullish on mexico. watch out, donald. stickers. ntly, they ale what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need.
welcome back. let's check in with alan valdez. hello to you. this market feels like it's a coiled spring, ready to move one way or the other. what are you watching? >> we are watching what's going on in the biotech world. energy for the biotech. we're going to keep a close eye on that. that's really been fueling the market the last year. >> is that a valeant specific issue ultimately? or is it something that is just getting to broader concerns about sector? >> it is getting broader concerns. starting to lock at other ones. we're not sure if it's just that
name in particular, or if it's going to spread. that's the problem. >> so we need leadership. where is it going to come from? >> energy is falling apart. that keeps getting worse every day. actually, even those earnings season is coming, only about 44% of the companies have beat revenue. earnings season has not been that good here. >> what about the consumer. gasoline prices looking better. some of the indicators are okay for the u.s. consumer. >> i think so, especially coming into the holiday season. more disposable money. go out there and spend. >> what's the gift of the season? do we know yet? >> i don't think too many people can afford that one. thank you so much. >> that's a great line. thank you. >> our next guest is just back from china, japan, and mexico. he returns with three different stories to tell. and plenty of advice for jittery global investors. joining us, we welcome back henry mcvey at kkr and company. good to see you again. >> thank you for having me. >> let me start with china. that's what everybody is
focusing on. the growth engine of the world, if you will. the gdp number was not horrible, but it's clear that things are slowing down there. what did you find when you went through? >> i think most people typically think about china in two ways, which is fixed investment, the second bucket would be the consumer. you've always been able to say consumption is doing quite well. i came back this time saying fixed investment is slow. where you're really seeing the changes in the consumer, i think the anti-corruption is really affecting demand. also i think that new things like the internet, where they're creating issues where people are changing how they're shopping, also a lot of that fixed investment is creating excess capacity. we have 16 companies in china. we're really focused on what we call a china 2.0. environmental is very big. health care. a lot of food safety. so i think you really have to pick your spots. i think investors looking for a
big bounce in china are misguided. structurally, a lot of things we think are going on globally. obviously we have a footprint all the way around the world. we see that fixed investment continuing to slow. even in the u.s., the jobs numbers in the good sectors is now negative. >> i was going to ask about brazil and other emerging markets. fortress wound up shattering their macro fund over. what do you do with brazil now? what do you do with other emerging markets? >> i think it depends on are you doing equity or debt? we've got a very big practice. we go kind of higher up in the capital structure where we try to get some security, some coupon payments. a lot of this slowing in china. dollar-based bonds issued in australia. commodity producers in brazil. indonesia. we see a lot of restructuring for companies that are coming to us and saying can you help us
refigure our balance sheet. so from a debt standpoint, that's the way i would play it. i think from the equity arena, we're most excited in terms of what we see in the u.s. that's kind of our long-standing practice. private equity, we continue to do things around the u.s. consumer. i'd say if you looked at one cyclical indicator, household formation has really exploded to the upside. i think there's good things associated with that. overall, we're later in the cycle. i think it's time to make sure you understand what's going on. profit margins are at pretty high levels. the china situation is pretty unsettled to some degree. there are a lot of things where i take a couple years ago, you wanted to be just in the equity. they have a more balanced approach. they're struggling. i think the person was mentioning this earlier. there's not a lot of revenue growth. the old model was doing cost cutting. i think trying to find new
markets. we've been very active in japan. i think one of the things we took away from japan is there are a lot of companies that want to grow outside of japan. with our global footprint, we're able to help them do that. it's public. if you look at panasonic, we bought their health care division and we worked with panasonic parent company and we took it abroad and we've done acquisition and helped them grow. it's definitely what we've been terming an adult swim. you have to know what you're doing out there. but there are some interesting opportunities. >> people saying we love japan right now. i don't think that story is over yet. mexico. you were impressed with what you saw. >> we've been spending a lot of time in mexico. i'd say you have to know what you're doing in mexico. there's very much of a local bias. what's different about mexico, if you were to contrast that with china, is that the consumer is really coming out. whereas in china, you may have had too much credit growth. or brazil, i think this is what you were mentioning, too much credit growth. in mexico, you haven't had enough. we're starting to see signs where the formal economy is
growing. wage growth is growing up and there's credit extension. if you couple that with the reforms, it's pretty encouraging, two things we noted. one is natural gas prices are down 20%. and then second is if you think about the telephone, their costs are down 20% there, too. so people are -- >> that's what busting up a monopoly will do. it will give you an opportunity to spin. >> thank you for joining us. love to hear about it. henry mcvey from kkr. >> data download. >> 20 minutes to go to the close here. watching these markets trying to digest it all. the dow is down about five points. the nasdaq down by about 30. american express stock down more than 17% this year. e-bay finding its footing. trying to. spinning off paypal in july. and both will report earnings after the bell. we'll bring you those results and complete analysis. >> ferrari first made headlines at the new york stock exchange with the ipo. but if you haven't had enough cars on cnbc, tonight's latest
carl icahn announced he's forming a super pac. he's pledged $150 million of his own money to push for corporate tax reform. >> trying to get rid of tax aversions. scott walker talked to the billionaire investor earlier today on "the halftime report." >> guys like me, and i've said this before, should be doing much more to get involved in the political arena. because the political arena today is completely dysfunctional. just as companies were, and are to some extent. >> scott joins us now. what should we expect out of this super pac, scott? >> i think he's going to put some of that $150 million and any other third party money that he raises to try and change some of the dysfunction in washington. he's already had a number of conversations with leaders in d.c. he's sent the letter that we highlighted today to every member of the senate finance
committee. every member of the house ways and means committee. anybody who deals with tax-related issues on capitol hill, is getting the letter. and ideally and earful from icahn about trying to change the law. he's centered his attention mostly on inversions. whereas a company changes its domicile to pay a lower tax rate. we've seen it the last couple years, particularly in the pharmaceutical business, in the way that some of the transactions have been made. he wants companies to be allowed to repatriate their money without paying a double tax. and he's going full throttle and he's doing it the best way he knows how, and that is with $150 million of his own money. >> right. and now we know how successful he's been legendarily as an activist investor. can he have the same batting average as an activist politically? especially when you're dealing
with as dysfunctional a congress as we are now? >> quick to admit exactly what you said. that there's such dysfunction in washington, that it's really hard to overcome. in the conversations that he has had, and he laid this out in the letter as it related to chuck schumer and paul ryan, i talked to them. they completely agree that we should do something immediately. every lawmaker who has appeared on this network for the last couple of years, when we say do we need comprehensive tax reform, everybody says yeah. until they go back behind closed doors. and then they say no way. >> i don't know if it's dysfunction so much as fundamental disagreement in congress. on that note, it will be interesting to see if they can get people to work together. thanks, scott. we have two turning points for two companies releasing earnings tonight. am ex has a six-quarter win streak on the line. and we've got e-bay releasing its first number since spinning off paypal.
mary thompson is here to preview amex. josh lipton on e-bay. >> american express seen posting little change in third quarter revenue in a 6% decline in earnings for the last quarter. back in september, they were flat to down modestly in the first part of the quarter. we look for amex to keep a tight hold on costs in order to drive earnings. investors listening for any updates on the firm's progress in make up for the loss of its costco business, where its exclusive agreement with the retailer ends next year. kelly? >> thank you, mary. how does it look for e-bay, meantime? >> well, kelly, it has been a tough time for e-bay. that stock in the red. down some 15% since it started trading separately from paypal back in al. analysts expecting 40 cents on revenue of $2.09 billion. suntrust's bob peck will be close to watching that gmv number. the total value of all closed
items on e-bay's training platforms. peck says there's a chance gnb is flat year over year. that would be bad news, and another indication that rivals like amazon are taking share. kelly, back to you. >> we'll see both of you in a couple minutes here. 13 minutes to go into the close. the dow moving lower. it's off 28 points at the moment. the s&p down about ten. >> the worst of the selloff apparently is over according to our next guest. stay tuned.
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it's been that kind of day. here we are down, what, 36 points now. art casually just walked by and said flat, no bias up or down, heading into the close here. joining us, the scouting report says you think the worst of the selloff is over at this point. >> i do. i think it's in the rear-view mirror. >> why? >> provided that the congress pays its bills without any undue drama in the next couple of weeks. >> that has not been an issue for wall street to this point. we all know that that deadline keeps getting kicked down for a
couple weeks here. even on the eve of the last vote, wall street didn't pay attention here. >> yeah, but they paid attention in 2011 when they got downgraded and they almost didn't get it done. so it's really the outlier event that people are worried about. the last thing we need in the world today in terms of where we are is people calling into question the full faith and credit of the u.s. government. >> why do you like small capps and why do you like the ones in japan, europe, and international? >> you're seeing relative strength with the small caps in the developed world. japan and europe outperforming the large caps by a lot this year. by about ten percentage points. at a time when the s&p is up flat. they're up 12%, 14%. they're expecting a profit recovery in 2016. in europe, and in japan. the valuations are attractive. there's easying going on.
there's starting to be a pickup in the local economy. so i think this is going to be one of the big themes for 2016, the economic and the profit recovery that comes down the pike in europe and japan. and i think the small caps are an early indicator. >> what would you do with u.s. small caps? >> well, right now, i think the u.s. small caps are still -- you know, i look for the large cap companies that are getting more of the revenue inside the united states. consumer staples, consumer discretionary is the place to be going into the end of the year. you're likely to hopefully get a kick-in from housing. housing is starting to pick up. millennials are starting to move out. they're starting to form their own housing formations. rentals are very high right now. it's going to start pushing people into first homes. i think housing and strong consumer spending is the next move up. >> you're not the first person to tell us this. in fact, our previous guest just said basically the same thing. it's not a crowded trade yet.
and this whole notion that home formation, household formation is starting to take off here. >> i think it's a big, big theme. housing got us into the last crash. it's been a very slow recovery from the bottom. you're starting to see the things you look for to start kicking in. i really think the u.s. consumer is going to be a big theme in 2016. >> we're seeing it even this week. thank you for joining us. >> we're going to come back with the closing countdown with a couple of the stocks of this day. >> raymond james out with its results. you're watching cnbc, first in business worldwide.
at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. couple minutes left in the trading day. bob pisani back with me. quick recap of some of the other stocks today. the dow itself pretty narrow day. ferrari had a decent debut today. as it traded for the first time at the new york stock exchange. whatles had a very decent day was general motors. >> what's great is the home
improvement business. they had a great roofing and insulation business. >> what a wild day they had around here. they even halted it at one point on the report from citron about accounting irregularities. >> the story is not over yet. american express, e-bay, and -- i can't read my own handwriting. las vegas sands. that's the one, the third one that's reporting. >> we've already heard from wynn and they're having a lot of trouble. but that's already reflected in the stock. >> what did we learn? >> this was a very respectable ipo, so remember, priced at 52. opened at -- >> now trading at 55.
still up 6%. you still have a nice pop. that's what you want from this. volume respectable. it was a little lighter than i thought. it's a little light going into the close. whenever you get 100% or more, it's a good indication. the important thing is this is not representative of the ipo market. this is an anomaly. the intense customer loyalty around the company, the luxury brand setting. high margin, high profits. very unusual kind of ipo. we had a number of big names that are out there. soul cycle still out there. mario draghi is speaking tomorrow. the european markets have been up 100% of the time.
so we're expecting europe to be up about 1%, 1.5% tomorrow. >> thank you, bob. they're celebrating natural health trends at the nasdaq. stay tuned. those big earnings coming up on the second hour of "the closing bell" with kelly evans and company. i'll see you tomorrow. welcome to "closing bell," everybody. i'm kelly evans. dow actually going out with a decline of nearly 50 points despite being in the green much of the earlier part of the session. the s&p giving up about 11 points. the nasdaq actually was down 0.8% on the day, or 40 points. obviously we have the discussion about valeant, pharma, what's happening with the rest of the biotech space. mary thompson covering american
express results. josh lipton awaiting e-bay's. thanks to all of you. we'll see you in just a moment. on the panel today, john ford and kate kelly. and lindsay bell from s&p capital iq. and "fast money" trader tim seymour. welcome one and all. i don't know where to begin in this market. that's exactly it. biotech. is that story now over because of what's happening with valeant? >> i think it's early to say that. i talked to a number of people about what's going on. one banker i spoke to said there's been so much excitement about biotech. did sort of reference the run-up come and gone. that's beginning to create more arbitrage information. i did think it was interesting, though. perhaps indicative of market sentiment that this valeant story dragged down the whole s&p
today. it wasn't an isolated thing. granted, a 30%-plus drop is not going to go unnoticed by the market ever, but this is a stock that was a real darling at the hedge fund community and many institutional investors. it does make you wonder about the sector broadly. >> we had ferrari go public and we'll have more on this in just a moment. take a look at his performance day one, bucking the trend that we've seen lately. up about 6% on the close there. but tim, i think it had a better day. >> i would argue it's a luxury good. it should be priced more in line with lvmh, the tiffanys of the world. i do think it's an interesting ipo. when you look at gm and some of the progress there, where they come in terms of all the recoils, where they are in terms of the global growth story, where they're taking market
share in china. gm from an earnings perspective had a lot more operational leverage, it was a lot cheaper. >> we are starting to -- hang on one second. some of these earnings results. looks like las vegas sands beating the bottom line by two pennies. shares look like they're responding positively to that. the revenue number looks a little bit light. morgan brennan has the details. >> you mentioned 66 cents per share adjusted. that was beat by two cents. net revenues, $2.89 billion. that came in a bit shy of the estimates of 2.97 billion that analysts were looking for. the company is increasing its dividend by 11%, and in their report, sheldon adelson saying in the high end gaming sell. s, it remains challenging.
the gee grographic diversificat adjusted property during the quarter. so we're getting the earnings call from that at 4:30 eastern. we should get some more information in the meantime. shares of las vegas sands are up a little over 1%. a beat on the bottom line. a slight miss on the top. >> also getting the numbers from american express on their screen there. missing the bottom line number by about seven cents. those shares are moving down about 2%. just talking about how disappointing revenue growth has been so far in this quarter. what do you think's going on? is that a strong dollar effect? >> absolutely. i think both of the names you just mentioned. the companies have been reporting. it's a 10%, 12%, 13% impact.
that's strong dollar comes, strong dollar goes. is that less worrying that if these companies were in the energy space geared towards crude prices that may or may not rebound? >> it's important to watch where the costs go. you're still seeing margins at very high levels. they're maintaining their operating profits. as soon as we start cycling that early next year, this will become a benefit. >> american express, by the way, did miss. those share prices moving in opposite directions. american express now down almost 3%. let's get more from mary thompson. >> american express missing on both the top and bottom line. the company said the earnings were impacted by three things. first of all, higher spending on
some new initiatives, what the company is doing to make up for the business it is losing because it's losing its exclusive agreement with costco. it also said it was impacted by some co-brand renewals as well as the stronger u.s. dollar. the company also giving some lower guidance for 2015 on the earnings front. the company had said earlier its earnings would be down flat. the company now looking for earnings in between $5 and 20 cents a share to $5.30 a share. the company says given its positioning, so it expects earnings to be uneven in the coming quarter. so in the coming quarters, as it moves, to try to find ways to make um for that business. so again, american express missing on the top and bottom line. stronger dollar as well as a renewal of some programmed relationships and the impact of
the higher spend. back to you, kelly. >> thank you, mary. you were saying american express is stuck at $75. what happens from here? >> i don't think a lot happens. as mary talked about the marketing and rewards spent is a big part of the story. the good news is that if you think consumer credit could deteriorate more, if you think there's pressure on wages, i think amex is going to be very defensive. i think they have the lowest ncos. the whole thing on the credit is very good for them. valuation-wise, it's cheap. it's not falling out of bed here. i think the resistance on the upside is the bigger deal. i think the stock probably trades sideways. i would not be selling it on these numbers. >> john, your thoughts? >> i can't help but notice throughout this earnings season, there seems to be this upheaval. particularly in tech where i think i see it reflected other places. companies are responding in various different ways.
on this program, we had brian saying he expected to see more consolidation in the chip business because when growth slows down, they start making acquisitions. and boy, have we seen it. the biggest ever. the next shoe to potentially drop was what happens to valuations. your amazons, netflix had a little bit of a miss. if we start to see them come in with top line results that don't hit the growth numbers that people are hoping for, do overall valuations start to adjust what investors do? some other names coming down the pike. >> you've got e-bay today. that's the other thing. companies talk about needing to invest. amazon had been doing that. now some of the margin names are saying we've got to retrench. forget about the profits, we need to reinvest in the future. >> our reminder, united
technologies doing a $16 billion cumulative buyback, that's huge. >> they've been in a blackout period for buybacks. now the people are announcing major numbers. i still think there's a lot of support for companies. it's probably, as john said, the financial engineering or how companies are growing in this environment is the most important. the high growth names will continue to be rewarded and they'll be hurt the most. i think it's very stock specific. their growth is nowhere near where it was. it's actually stabilizing. i think this is an ultimate -- if i think about what's happening out there, it's going from less bad to stabilizing. for a lot of companies that have big growth, they've already priced in this environment. also a very big sell. >> i was going to say investors are waiting for this dividend spike increase. i think it's why the stock is up today. it's a 5.5% yield, even after
this. >> making some news on the dividend front. we'll leave it there for the time being. stay right there, everybody. earnings are dominating the after hours trading. yes, ferrari. phil lebeau has the latest on this debut. phil? >> kelly, i think most people would call this a successful ipo. at least when you look at the numbers involved here. remember, it opened at $60 a share. it was priced at $52 a share. bob pisani said earlier heavy demand for most of the day. you could clearly see people wearing a piece of ferrari after it opened up. and the valuation a little under $10 billion and oh, by the way, for those people who think, it's an ultraluxury automaker. he says no, it's far different. >> they're buying cars. i don't want to make auditory remarks about the competition. if you've got to wait over 12
months, they go somewhere else. >> that was sergio marchionne talking with us after ringing the opening bell. basically saying look, we retain the value for the owners who buy these vehicles, and if you look at what's happened with the value of ferraris, it has gone up. even if they're going to expand production, they can maintain the value that basically is part of why many of the ultra wealthy buy ferraris. not only the vehicles for how they perform and look, but also because it's been a great investment for them. finally, as you take a look at shares of fiat. remember, people who own fiat chrysler shares will be getting the remaining shares of ferrari starting next year. and many believe that's one reason that fiat chrysler shares have moved up. people wanted a way to get in, to getting ferrari shares. it was clearly selling off today while race was racing after an ipo. >> i'm wondering which one
you're going to drive off of, phil. outside the stock exchange there. with a nice-looking fleet of ferraris. >> thank you, phil. let's get to more on that visa news. >> it will be payable to shareholders on december 1st. of course, this announcement comes ahead of the company's earnings release, which will be on november 2nd. keep in mind, a number of people are waiting to see what visa decides. as for its shareholders, they are receiving a 17% increase. back to you. >> those shares not moving too much on the news. for now, thank you, mary. and thank you, tim. tim seymour has more coming up on "fast" at 5:00. a perfect storm could be brewing for the oil trade, which is under pressure again today. the earnings action continues next. we're going to bring you instant analysis as e-bay's results and valeant shares.
we've got the latest details coming up. you're watching cnbc, first in business worldwide. ven. ven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.
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this is its first quarter as a company traded standalone from paypal, which it did spend out their then concerns. that could explain some of the outsized reaction that we're seeing here. we're going to bring the panel in in just a moment, too. let's get more on the results with josh lipton. >> e-bay just reporting 2.1 billion. the street was looking for 40 cents on 2.09 billion. it looks like e-bay saying its active buyer base grew 5% year over year to 159 million. gmv, 19.6 billion. that's 2% decline. but with that currency impact of 6% increase, you're getting your first real look at e-bay as a stand alone company.
about 15% since separating from paypal in july. conference calls starting at 5:00 p.m. eastern and we'll be on it. back to you. >> as i mentioned, gale is here for more. frankly, they only barely beat the top and bottom line number. what do you make of it? >> expectations were very low for e-bay heading in. some of the industry was a continued deceleration. the numbers you guys just reported are basically flat. the revenue growth is still 5% constant currency. it means that e-bay isn't continuing to decelerate. that's the great fear on e-bay. as long as they can keep even this moderate level of revenue and volume growth, investors will pay more than the multiple for e-bay. >> you have a neutral rating on the $27 price target. you mentioned the biggest
concern is they will continue to decelerate in terms of volume, which these numbers suggest maybe isn't happening. at what point did you become more positive? >> actually, it's an acceleration on revenue is what it would take. the mid single digit level. the valuation is about right. if we actually see acceleration, can even grow high single digits. we can justify a higher multiple. >> john, what do you make of it? >> this is the sort of after hours pop that i as a reporter tend to be a little bit skeptical of. i think a lot of people were betting against e-bay. paypal got a lot of the hype and the spin-off. when you look at these numbers, revenues are just in line. eps is a little better. this isn't the sort of quarter where we're really concerned about eps in these companies. it's top line growth.
looking for 3.2 billion in q4. that's the high end of the guide. on the plus side, though, in their guidance, they maintain the revenue guide for the year and they up their eps guide. the question strategically for this company is are they going to get the growth engine going? one of the things that the ceo is trying to do is get sellers back onboard with e-bay. he's got this message about diversity. >> but talk about the competition. etsy in the handmade space. this is a crowded place to be, isn't it, john? >> e-bay played fast and loose with that seller relationship when they really owned it. now e-bay is trying to bring those folks back into the fold. the tricky thing is, though, when you look at what happens during the holiday season, it's 1% of those online items that represent the biggest bulk of things. people don't care if you have a million things, they want the five things that are out there again. >> before we let you go, things
on e-bay's quarter relative to expectations. >> i think to john's point, the reaction in the stock just points to how negative sentiment was. the guidance was certainly a positive. i think the key here is going to be how they reinvigorate for the long-term. >> it's the first quarter of many to follow to convince people of all of that. >> thank you very much. i wish we had more time. we have some more breaking news to get to in just a moment here. valeant shares falling off a cliff today. that stock down 40% just this week. what on earth is going on, and is there any hope for a reversal? we'll talk about that next. later, we'll take the pulse of the financial sector when we speak exclusively with paul riley just minutes after his company reports their results. stay with us.
cit also announcing some strategic initiatives, which is boosting its stock in the afterhours. the company is doing this as it basically advances its transition into a commercial bank. it plans to seek strategic alternatives for its $10 billion commercial air business as well as sell cit china and canada initiatives. ceo john thain is retiring as of march 31st of next year. back to you. >> he's so young, i've got to wonder if he's retiring for the company, but surely not from financial services altogether. but we'll see, obviously, what's in store between now and then. >> meg tirrell has the details. >> a lot into how patients access the drugs.
today, citron, a short seller coming out in a report alleging fraud, specifically in way that valeant deals with specialty pharmacies. what citron is saying is essentially that looking into the way they book revenue going through this distribution channel, saying that they're trying to deceive auditors and their booking revenue that actually hasn't been prescribed drugs yet. now, this driving down valeant stock quite a bit, it was halted and falling so quickly now. down about 19% as of the close. about 1:30 in the afternoon. coming out with two separate statements. categorically denying the allegations from citron, saying they're false and misleading statements. valeant saying it properly accounts for its sales at specialty farm sis and it's confident in its full compliance with all accounting rules, regulation and loss. we did see the shares recovered
today. said it's acquiring two million shares of valeant, really coming out in support of the stock today. you look there, a lot of the biggest holders, it will be interesting to see if they also come out in support. but providing a little bit of a bottom for the shares today. >> a tough day. what happens now? >>. >> it's interesting to see here. this is a totally different sector. it reminds me a little bit of the strong reaction we saw, based on one analyst's report suggesting that mining results were going to be a challenge going forward if commodities stay cheap, which is not a shock to anyone who's following the space. in this case, i've spoken to a couple of investors. there's some major long holders in the name, including bill ackman. and others. and the view is there may be an issue in the specialty pharma business here. the business of there have been lawsuits filed.
and a letter from the general council of valeant asking for unpaid money of what seems to be a shell company. but by no means did they think it justify the 30% drop. so a lot of them are buying. >> exactly. as we heard from them again today. thank you very much. valeant down about 20% on the close today. the story is not over yet. >> we're just a week away from the big gop debate on cnbc. which candidates made the cut and which will have to duke it out on the undercard, we will get you those details when we come back. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. welcome back, with some breaking news on next week's cnbc republican debate. john harwood has the details. >> now the stage is set, literally. with all the polls calculated, so is the lineup for our cnbc republican presidential debate a week from today in boulder, colorado. in the opening session at 6:00 p.m. eastern time, four candidates. here they are. former senator rick santorum of pennsylvania, current senator lindsey graham of south carolina, former governor george pitaki, and bobby jindal. shortly after 8:00 p.m., there
will be ten. you will see them arranged this way on the stage. with a poll position in the center of the stage, our two republicans, donald trump and ben carson. flanking those two, marco rubio of florida. carly fiorina. moving out from there, former governor jeb bush of florida. senator ted cruz of texas. then former governor mike huckabee of arkansas, current governor chris christie of the state of new jersey, and finally on the wings, governor john kasich of ohio and senator rand paul of kentucky. cannot tell you what's going to happen in that debate, kelly, but we have got an awful lot to talk about with those candidates. once again, october 28th. boulder, colorado. be there. >> i will, john. i was wondering if you were already there based on the backdrop at first. thank you for breaking that news with us. john harwood on the debate is coming up next week.
for more reaction to this lineup, we've got cnbc contributor larry kudlow. so much to talk about. welcome to you. first of all, what do you think about the undercard in the lineup for the main event at this point? >> i think it's very much an undercard. i don't see much -- i mean, they're good men. i know them. and so forth and so on. but look, the primetime, as john described it. and i'm going to be out there, you're going to be out there. but i think it's very interesting. i just start with this. that leaders, the frontrunners are donald trump and ben carson. and i don't know anybody, including myself, who would have predicted this 90 days ago. >> and even if this had happened, the fact that trump just moved higher, at what point historically speaking do they fizzle in order to stay with the kind of flash in the pan trend, as opposed to the wait a minute, these guys might be the main ticket? >> you make a great point. it's really important. everybody's been writing off trump, for example.
guess what, he's still leading. he's picking up a couple of points. you're very close. you're very close historically to polling evidence that suggests he could win. the same is true for ben carson, by the way. and interesting the second tier of rubio and fiorina. they're in the game also. butch cruz is in the game. i think this debate will be very revealing about the durability and staying power, and let me coin the phrase presidentialness of mr. trump and dr. carson. and one last thing. governor john kasich is the outsider of the primetime group. john kasich has a lot of potential. he needs a good debate. maybe more than anybody else there. he needs a good debate. >> he's performed well. he's really impressed a lot of people as a sleeper hit. but perhaps not enough. >> i'm a big fan of john's and so forth. he did okay. he's got a new economic message.
i think it's going to be really important to get these candidates the message. economic growth. issue number one. economic growth. that is so important. and it's important to go through the candidates, they have tax plans, regulatory plans, they have health care plans. they don't have entitlement plans yet. but growth, growth, growth. that's beginning to be really -- what are they proposing? what specifics are they proposing? how are they going to deal with the broad-based problems? all that's got to be in the mix. >> you mention how important these debates are. we saw that with even the democratic debate last week. the narrative, quite quickly after hillary clinton's performance shifted, there is no room for biden to get in. we get word today. let's take a listen. >> unfortunately, i believe we're out of time, the time necessary to mount a winning campaign for the nomination. but while i will not be a candidate, i will not be silent.
i intend to speak out clearly and forcefully, to influence as much as i can where we stand as a party and where we need to go as a nation. >> what do you make of it? >> i don't make much of mr. webb running as independent. joe biden, he is a wonderful person. i've known him for years. he's been great to me. wonderful person. on the other hand, i never understood what he would run on if he should run in this race that mrs. clinton's not running on. they're both going to defend obama policies, which have obviously not worked on the economy. very unpopular on health care, for example, obamacare. and everybody's unhappy with national security. and the whole iranian-russian debacle. so i don't understand what joe would have done. i love the guy, but i think he's right to pull out. i think mrs. clinton at this point has that nomination wrapped up, unless, unless there
are serious wrongdoing charges regarding her e-mails. >> larry, talk for a minute about paul ryan. because now there's this word that if he can get everybody to agree to give him the terms that he needs, he will be speaker. he's a guy who you could name any of the top offices in the land and say you expect them to be running. but he seems reluctant. is he playing chess here? what do you think is going to happen? how does this turn out? >> i think he's going to be a terrific speaker. i think he's going to win. it's kind of like the 12-step program. paul ryan is saying to his caucus i want unconditional love from everybody. i think he's going to really push a growth agenda. i hate to be redundant. i think it's the key issue. if ryan gets this, you're going to see in pretty rapid fire a reconciliation budget and tax bill requiring only 51 votes that will repeal substantial chunks of obamacare, including
the tax hikes and the mandates. secondly, he will push very hard for a corporate tax cut as part of that reconciliation bill. i think he's going to be an excellent speaker. i hope he's aggressive in his agenda. saying gop's got to get something done here. >> it's going to be an interesting couple of weeks. thank you so much for joining us. >> always a pleasure. >> half the 14 gop candidates for president either are or were governors. and each is pointing to his record in experience to be the next president. next week's cnbc republican debate. we asked him to look into the various records of all the governors using data for the top space. leading up to the debate, he'll be focusing on the govs and joins us with more. >> polls is change. 17 governors have gone on to be president from thomas jefferson of virginia to george w. bush of texas. seven gop candidates are vying to continue that tradition.
some with better shots than others. jim gilmore will not be in the cnbc debate next week, but he's said hooe he's e's said he's ine for the long haul. he claims his administration laid the foundation for the state's leadership as a national technology center. there's no question virginia is a technology hub, and did appoint the nation's first cabinet secretary when he took office. virginia was already well on its way. fortune magazine already dubbing virginia the first silicon valley back in 1994. george pitaki says he wants to do for america what he did as governor of new york from 1995 to 2006. >> we did transfer people from the welfare roles to the employment roles. we had almost 700,000 more private sector jobs. >> you will see governor pataki in the opening session of next week's debate. it is true that welfare roles
did drop dramatically while pataki was in office, although federal welfare reform passed in 1996 the following year had a lot to do with that. and new york private sector employment did grow in the 1990s. nationally during the same period, the figure was nearly 19%. in our inaugural rankings, using data primarily, new york tied with washington for 21st place. we've got a lot more on all of the governors who want to be president, democrats and republicans at topstates.cnbc.com. our series continues tomorrow with two southern governors. bobby jindal of louisiana and mike huckabee of arkansas. >> thank you so much. raymond james out with its earnings moments ago. 44 s&p 500 companies will bring you instant analysis like
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cloud networking company announcing management changes. its ceo mark templeton has announced plans to retire, and citrix systems appointed board member robert calderoni as interim president effective immediately. texas instruments, earnings of 76 cents a share versus 67 cents estimate. revenue also beat expectations versus the estimate of 3.28 billion. despite a beat, it's important to know that revenue did decline 2% from a year ago. two important businesses, analog processing did see growth. looking at texas instrument shares up better than 7%. lastly, united rentals, the beat on its bottom line. $2.57 adjusted. revenues in line with expectations. stock up marginally after hours. kelly? >> seema, thank you for now. raymond james also just reported results a few moments ago.
earnings per share coming in below estimates. revenues actually up. joining us now is paul riley, ceo of raymond james financial. hi to you, paul. >> hey, kelly. good to be here. >> what was it for you guys that bit those bottom line numbers in particular? >> it's actually a great quarter. the bottom line was impacted by growth. had an all-time quarter on the revenue side. more than i think we all expected. and the bottom line was impacted by the growth. especially the growth in the bank where you take loan reserves when you book loans. and the bank credit quality improved. it was a great quarter and it's really reflected in the year. we had a record year up 7%. a record pre-tax income, up 7%. every segment had record revenue. every segment had record pre-tax profits. >> it's kate kelly here.
can you elaborate a little on the issue of growth? was there something on the cost side that was particularly impacting your profits and how? >> there's really two items, kate. first, the bank loan growth was a lot higher than we expected, and the analysts. you book a reserve. that reserve alone was a couple cents a share above analysts' estimates. it was due to more loans booked than they had anticipated. and the other is there is higher i.t. costs of about a penny. the really, we think it's a very, very solid quarter. it was due mainly to better growth than we thought. >> i'm just curious. he sees pocket of concern in the credit market. auto loans were one thing he
pointed out. i also know the occ is doing a review of oil and gas loans. how concerned are you about some of his remarks. do you think banks are under too much scrutiny given that in the aftermath of the financial crisis it was the opposite critique? it was that there wasn't enough lending going on. how do you react to those remarks and toe the line in your business? >> first, our credits are very, very targeted. we have very few oil and gas credits. in fact, only one ent name. it's an investment grade name. we're not really lenders in that space. and we don't do auto loans and car loans. we really do kind of investment grade corporate loans. mortgages for our clients. and security based loans, which are very secured. so in the general economy, i think any time you get a lot of fast loan growth and you're near the top of an economic cycle, as some think we are, you worry about the downside.
is there too much leverage and credits? i think it's good to question, good to look. if you get too much pressure and stop lending, you start creating the thing you're worried about. >> on a different topic, i know you guys have spoken in the past about reasons you don't like the fiduciary standard, that is likely to become a final rule early. it looks like that's progressing. how is that going to impact your business? both in terms of cost and the rule going forward. >> we're concerned about the rule because we think it's bad for clients that would leave a lot of small clients without advice. we really don't make money on those small clients. but we do it as a service to help our advisers really help extended families and friends. so that's why we've been against the rule. i know it's well-intended. we believe that the best interests are fiduciary standard. we operate that way and have. the question is how do you legislate?
secretary perez has said he has heard the comments and we will make major changes to the rule. but to us, it isn't the number of the changes. there's one or two things that need to change. until we see it in january or february, we can't tell if it will be a slight impact or bigger impact, which will really be more i.t. disclosure and cost, that would impact this from a cost standpoint. >> okay. >> when it comes to financial names, a lot of people are waiting to see when the fed is going to move on rates. how much of that will benefit your business? >> for us, it's a big number. almost 150 million of pretax profits. we have a lot of cash. especially customer cash. we assume we're going to share that a lot more than people share clients. it's a substantial number. it's also tough on clients who are searching for a yield. it's a constant fight for
advisers. >> as they tried to get the yield, especially retirement people. we're concerned. i think a modest rate hike is going to be good for the economy. certainly good for raymond james. maybe i'm a little biased. >> we love it. thank you for being here. that's paul riley, ceo of raymond james on the earnings report this afternoon. let's get to a news alert. seema modi rejoins us. >> green light capital overseen by david einhorn posting losses of 14.3% in the third quarter, bringing its year-to-date loss to 17.1%. that's according to a letter reporting here by reuters. green light says losses are due to poor performance in consul, energy, sunedison and micron. david einhorn telling investors it is taking new positions in uil holdings. a that's the latest, kelly.
back to you. >> and michael coors popping up 2% on that news. seema, thank you. kate? >> those numbers are astonishingly bad for one of the most respected long short managers. their continuation of what we've been but they are a continuation of what we've been seeing. micron, sun edison and these are the things that have dominated him all year. he is a short investor as well and he's made a number of seminole presentations about authority these he's. he saw the bubble. >> -- bubble markets but that is one thing that surprised me about his performance here. you can see what happened on the long side if you look at the stocks he hold but on the short side i thought he would have a more balanced result because of his strong views and the fundamental work he does.
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subscription service. julia boorstin sat down with the chief business officer to talk about it. and ashe has the details. how much are we paying here. >> well, kelly, it is $10 a month and it is called you rub red and it is released a week from today. can you get exclusive content for motley fee. subscribers get free access to google play music which cost $10 a month. the you tube chief business operator kinsel said they are responding to feedback they've heard from users over the past decade. >> we decided last year that we should probably address some of these requests and evaluated it and we also wanted to make sure that we build a new revenue stream for our creators who could then supplement that advertise revenue. the ad business will continue to dominate our revenue stream it. will by far by the biggest
revenue stream for our creators. but you nub, now, and every single month and year will provide an increased supplemental revenue stream from high value users. this is the first time that user is basically saying, my time is worth this much, versus an advertiser saying your time is worth this much. >> hulu recently launched an ad-free subscription service and netflix and hbo have apps in the same price range. but he was careful to say they are look knotting to compete with that movie and television content. they are focusing on the bread and butter which is the original digital video. kelly. >> it is a crowded space. are they too late to the game? >> they are not. because as julia alluded to, they have digital creators that have an enormous following, not just among millennials but the
generation below them and facebook was coming up with ear normous -- enormous volume of video and so you tube coming out with this with the combination of google music and the ability to download and view stuff offline for those kids who don't have cell phones with large data plans, like the ipod touch, this could be huge for them. >> i like the excitement. thank you very much. julie a boorstin with the latest. >> another busy hour for the earnings. next hour will have more. we'll get you set up for those when we come back.
let's check in the names moving after hours on the earnings. american express down 3.5%. for everybody else it is green air rows. sands up 4% and e-bay up 8. and texas instruments up better than 9%. with ti is that a read for tech tomorrow? >> i think it could be. because you've seen other companies missing on the top line. and ti runs against that and that is a pipeline indication. >> we'll watch it for you.
for now, thank you everybody for closing me on "closing bell" today. "fast money" begins next. what is on tap. >> we're all over the big stories but just two words for you as a real tease -- guy -- delorian. >> i was going to say you had me at guy. [ laughter ] >> straight over to you guys. >> "fast money" starts right now. live from the nasdaq market site overlooking time square, i'm melissa lee. tim, david, karen and guy adami. tonight on "fast," it raced to the center stage of the new york stock exchange. we're take you under the hood of ferrari's first day of trade and we'll tell you if they could rev up your portfolio. and worries over rise in stockpiles weigh, we'll have from a top analyst to tell you how he is playing the big story in crude. and then to valeant. shares,