tv Closing Bell CNBC December 15, 2015 3:00pm-5:01pm EST
three judge panel. this is make or break for the company. >> one of those judge isn't even scott wapner. wow! so look for pandora tomorrow. we have the federal reserve decision, they can raise the rates for the first time in nearly a decade. 2:00 p.m. eastern. wow, ready, melissa? >> i am. meantime, "closing bell" starts right now. hello. welcome to "closing bell." i'm kelly evans. >> i'm bill griffeth. market's getting ready ahead of the fed decision tomorrow. oil popping. energy companies like exxon and chevron lifting the dow higher today. we'll talk about whether the bottom is in for crude and what that may mean for the broader stock market as well. a lot of green today. >> everybody seems to be expecting a dovish rate hike come tomorrow.
jan hatzius will tell us what that means and if it's even possible. and the "star wars" premiere last night in los angeles created buzz nationwide. can disney's stock deliver on increasing wall street expectations that bob iger keeps on trying to temper. and another potential black eye for apple today. one of the suppliers sounding an alarm. and we have a bull that says the naysayers are getting it wrong and the shares are down 1%. let's start with oil. that's kind of stirring the drink today with this rally. crude up 3% on the heels of yesterday's gains. that turn around that we saw there, up nearly 10% now from yesterday's lows. it's in a bull market all in one -- two days. >> did yesterday mark a true bottom for oil? joining us is lee mcgee.
what do you think? >> we were due for a relief rally and it traded down for seven straight deals. wtr -- but a lot really changed on the fundamentalal side. not really. but it became so negative. we reached historic highs in short positions. we were done for a short rally. we're worrying about q-1 so we'll looking for that to be a leg lower. >> the spark that pushed us to the low was the announcement from the saudis and opec that they were not going to cut production that hasn't changed either. why -- >> that hasn't changed. what was interesting about it, they came out and said no decision. i think the market interpreted it as basically, do whatever you want, because they have banned the 30 million barrel a day
ceiling. nothing really changed in terms of fundamental picture. >> so you don't think they increased production much by saying that? >> no, i think what they were saying, we can't agree on everything. i think opec's weakness was on display. >> and baker hughes and halliburton, they have reached an agreement on a deal, but perhaps either regulators aren't happy with it or they need more time. or could it be that oil prices falling as low as they have changed the calculus here? >> the question here, what is really changing? do we expect that oil is going to be at the -- below $30 on a sustained basis? or potentially on the news flow, we don't see it staying there. we think q1 could be in the 40s. again, we don't think it's sustainable at the really low levels. >> but are we at a pain point right here? that 35 to $37 a barrel? >> i mean, some producers we are another a pain point. we have five companies in opec
that could be circling the drain in the price environment. is it enough for the saudis, probably not? >> stay right there because let's get more on the baker hughes/halliburton situation. what do you have? >> so, we have baker hughes and halliburton both still halted still for the pending news. it's because they have issued a statement, a press release saying that they have now spoken with and addressed the concerns with the doj but the timing agreement with the antitrust division of the department of justice will expire without reaching a settlement. the doj, the justice department has informed both of the companies that it does not believe the remedies offered to date are sufficient to address the justice department's concerns. they acknowledge though that they would assess further proposals and look to continued cooperation. in essence what they're saying, they're going to extend the window to try to get this deal done. it will go until august of next year, i'm sorry, april 30th of next year. april 30th of 2016. at that point they're going to
try to find enough remedies so they can get the justice department to approve this particular deal. still, halliburton, baker hughes, shares are halted right now. they're saying they have not offered apparently -- the department justice said they haven't offered enough of the concessions to allow the deal to go through. but they have now until the next time line is april 30th. permitted under the merger agreement. again, they are delaying what's happening with this pending merger. pending justice department review. april 30th, the next benchmark date. they're going to work on trying to get more remedies in place to get regulators to try to approve this deal. we'll keep you posted when they open up again. what you're seeing right now, shares of baker hughes now still halted for the news. back over to you. >> thank you, dom. they're the second and third biggest in the oil services industry. they had agreed to join forces last year. so leaving the industry highly concentrated obviously.
you know, it would be named halliburton should this happen, but again as we're hearing here this is after the antitrust period was pushed to november 25th back in july and now more time for them to see if there's too much concentration in the space. >> this is an industry in distress. >> it is. you look at the high yield news, nothing great out there, whether for corporate producers of sovereign producers. again, we look at the 2016 and we say, there should be relief coming in terms of prices in the back half of the year, but certainly we're not that constructive for q1. >> exactly. >> with all due respect, weren't we all saying that we were probably going to see higher prices at the beginning of this year as well? >> are you kidding, no. >> what happened? they just produced more than we thought they were -- >> i think a couple of things happened. i think u.s. production proved more resilient. i mean, opec production is up a
million barrels year over year. and saudi production, nine months over 10 million barrels. everyone is maxing out on production. >> is it possible to keep doing that? there are so many countries in opec that need this money desperately whether it's venezuela, nigeria, russia. >> this is the question. demand should remain -- we had a banner year of 7 million in 2015. we expect demand to remain above a million barrels next year. but the question is who can add additional barrels next year? can saudi do that much more? probably not. russia, can they do much more? probably not. everyone is maxed out right now. >> thank you. again, we're watching the traders post there on the floor of the new york stock exchange. waiting to see where baker hughes, who you have now indications the buy and sell there, the spread is $3.
so the bid is $46, the ask is $49. we'll see in the middle there is where it will open there. >> we'll let you know as soon as it does. and now to the fed as policymakers do kick off their two day meeting on interest rates. let's get out to steve liesman to show where the top economists and the top money managers see it going. >> thanks, this is a difficult time for the federal reserve to be hiking interest rates. we have the outlook for the economy we asked as we have done for the last five years or so, what is the probability of recession in the next 12 months? you can see it's ticked up to a high that we haven't had since december 2012 of 22.9%. almost 23%. and it's been increased seven of the last eight surveys. going back here, that was a serious concern. 36%. sequester concerns. government default. it's come down, been pretty steady but it's been ticking up
now since january. now at a three-year high of 23%. look at the gdp forecast -- sorry, first the biggest threats to the economy as judged by our 42respondents. global response. and then a domestic concern, tax and regulatory concern 10%. geopolitical risk at 10%. the rate hikes are at 8%. judged by 8% of the respondents. terrorist attacks pretty low, domestic terrorist attacks pretty low here. now the gdp forecast for the rest of the year. that was the optimism we started with 3% was the outlook in january. for this year. that's come down. we have lost about 0.7% of a especially point on that. looking at '16, better, but not a whole lot. you see the optimism for '16 is wilted away. right there is 2017, 2.43%.
it's not 2%. a little bit better. take a look at what's expected from our panel here. 29% see two rate hikes, 29% see four. 21% see three. very few percentage see zero. very small percentage see five rate hikes next year. the median is three. whether or not the market is ready for that is a big question. we'll be listening very closely, reading the statement. listening to janet yellen tomorrow for some guidance on this question, how many rate hikes can the market begin to expect? what kind of cycle are we on here? >> oh, boy. can't wait. steve, thank you. see you later. don't miss the fed announcement tomorrow. 2:00 p.m. eastern time. hear it right here on cnbc. we'll have full team coverage of what is certain to be one of most exciting days of the year on wall street. joining us on the "closing bell" exchange, steve gra sew from stewart frankel and rick
santelli from chicago. there are all three joining us today. steve grasso, what is this rally about? we talk about the traditional rally leading up to a fed meeting is that what yesterday and today is all about? >> yeah, you usually get that bounce back. we were oversold. for me to rally 60 handles off that 1993 level basically, and then come right back, bill to basically flat on year and the 50-day moving average. you know, 200 day moving average around this level as well, it seems a lot to do with technicals. a lot to do with oversold and with that lead-up into yellen. i would assume that anything she does is a sell the news event. i'm still in the camp she should not raise rates. i get the argument. >> stephen wood, as we look at baker hughes and halliburton reopening for trade, the commodities boom was kind of like the gold rush.
you don't have to play for gold but invest in the people selling shovels and picks to those who do it. they're oil services firms. how does the future look for the firms and for others related to the energy space for you guys? do you think they're sound investments here? >> i can't comment on the specific stock obviously but there's pressure in the commodity space right now. i think you did a good job of talking about the downward pressure. global pressure is okay. but look at the u.s. economy we would be in the 2.5% plus for 2016. improving year and improving japan. but the chinese is going to put pressure on the demand side. commodity prices are sticky. in the short term that's more pressure downward. that takes a lot of the pressure off the federal reserve with oil prices down. >> do you think they shouldn't raise interest rates tomorrow, stephen?
>> well, i think you get the fed what you have, not the fed that you want. i think they'll raise rates tomorrow. we would be in the camp of 3 or 4 perhaps in 2016 as well. >> rick, steve grasso thinks we'll get a sell on the news market after the fed, assuming they raise rates tomorrow. what do you think? yields are still going up right here. do you think there's an inverse reaction once the fed makes the announcement tomorrow? >> i think stocks will rally on the first tightening because the statement is going to be -- now, that may not be the knee jerk but as the press conference wears on and there's much dovishness and many promises to proceed slowly i think equities will like that. plus i think it's a faith based trade. the next presser meeting is three months. march 15 and 16. that gives a lot of room for the santa claus rally. i think the markets want to believe. i guess at the end of the day i'm glad we're normalizing but
listen to what steve liesman said. that's off 23%. if they can't calibrate gdp i have little hope they can make this giant machine run properly and what's even worse this is like all the interstate speed limits and all the stop signs every six to eight weeks there's a meet big your municipal board telling you how fast or slow you can drive, which intersections you can make a right-hand turn on. we need a rules based fed. all we discuss now is the controlled outcomes and the managed markets by the fed, the department of justice taking a year to come to no decision. these aren't the way things are supposed to be. >> they have one in a sense. we're trying to figure out exactly where the trends are going, we know they're looking at inflation at 2% and unemployment approaching 5%. >> the unemployment rate isn't 5% and everybody knows it. we have a whole litany of people -- it's about people
working. i don't care about benchmarks. it's about how many are really working not some test tube numbers they create or fourth derivative on inflation they create. >> aren't those their rules? >> they can make the outcome anything they want. >> their rules, they can change them. we need rules based. we don't need someone who can guide us but the nose and we can make adult like based decision on the market and do it right. >> all right. thank you. appreciate it. got crowded out by the baker hughes/halliburton story. >> it's been a strong session. echoing what we saw in europe, energy has been leading the way. crude oil up nearly a dollar on barrel on wti stocks. >> up next, of course the fed expected to raise rates tomorrow. couldn't the tone of the language affect the reaction? jan hatzius has reaction news.
>> and time for disney. they're already getting a pop from "the force awakens." we'll look at the potential of disney stock coming up next. big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
welcome back. tomorrow the federal reserve is expected to raise interest rates for first time in nine years. some are saying it's not go to be whether they raise rates but how they raise rates that matters. here's what wharton professor jeremy segal predicted yesterday. >> we're less than 48 hours away from the fed decision which i'm almost certain is going to be a rate hike, but i think it's doing to be a rate hike that's wrapped in a very dovish christmas package if you will. that i think could encourage the market. >> well, let's see what our next gebs guest thinks about that. jan hatzius chief economist of goldman sacks is back. >> good to be here. >> a rate hike wrapped in a dovish christmas package. do you agree with that? >> i think so. but the question is whether the market is expecting something so dovish it's going to be difficult to deliver something
more dovish than that. i think that may be quite hard. if you look at where the market's priced of course everybody is aware that, you know, the first rate hike in almost a decade is not going to be delivered as a -- you know, a bang. >> a spoonful of sugar makes the medicine go down, i guess. >> if we talk about a rate hike being so dovish why do it at all? and if we're talking about a rate hike where it might look like the last cycles where you continue to raise interest rates, we don't know, but it's possible that could be the outcome as well. >> yeah. i agree. it doesn't make any sense to hike, but then, you know, basically signal this is it. one and done makes no sense. they don't want to do one and done. if idea is that -- the idea is that the time has come to start normalizing. i think they want to normalize gradually. of course they can't make any real promises on that. because they don't know how the
economy is going to evolve. but the expectation is this is the first in a series of hikes. >> we're showing what your expectations are for your forecast. you were one of the first person who said we'll get three or four next year taking us to 1% by the end of next year. more people are jumping on the bandwagon but is that kind of the slow, gradual increase the fed has been talking about? >> it's still slow by historical standards. the average pace in the past has been twice that. at least if you take the last couple of decades and, you know, i do think what we're forecasting is very similar to what they're showing in the dot plot. it's somewhat steeper than what the market is pricing. >> let's get into what when we get the statement tomorrow, what it looks like. the fed has a huge balance sheet but they said we'll use the traditional fed funds tool.
but even targeting the feds funds rate it will be on from excess reserves. what are the interest rate hikes that are actually going to up what? >> i think the single most important thing to look at is probably the dot plot and in particular what they're showing for the interest rate at the end of 2016. our expectation is four hikes in 2016, possibly three. i think that's a fairly close call. but something that's a little north of what the market has. beyond that, there are a number of things. of course, in the statement. the statement is a bit of a mess. has to be updated. and there are a number of areas where -- >> it's so long too. >> you're some downgrades -- yes, it's quite long. >> a lot of legacy phrases are in there from previous periods. moderate growth, all these things. >> that's right. >> so they have to boil it down to the essence which is? >> which i think is an expectation that rates are going
to go up at a gradual pace. i don't know if they necessarily are going to use the words in the statement, but an expectation, not a commitment. and also, i think an assertion that the economy is doing better than it was. >> so briefly, when we're talking a teb single rate, are we seeing a range again and should we expect the rate to trade more broadly than what we have seen when it's just kind of one particular point? >> yeah, i think we can be reasonably confident to coin a phrase that the top end of the range is going to be 50 basis points for the interest rate on excess reserves. and the bottom end is going to be the rate on the overnight at 25, reverse repo facility and our expectation is to be below the actual midpoint. >> so many rates, so little time. thank you so much, jan. >> get ready for tomorrow, should be interesting. >> thanks. >> jan hatzius. more on the dovish hike and what
it means check out my column on "the spark" today. >> see, that didn't hurt so much. she doesn't like promoting herself but it's terrific reading. jan hatzius reads the spark, come on. and be sure to tune in tomorrow. we have richard fisher, james grant, blackrock's rick reeder and diane shwonk on tap for tomorrow. let's now get to some breaking news on the school bomb threat in los angeles. earlier today, julia boorstin has more information for us. >> reporter: that's right. the threat that led to the shut down of the entire los angeles school district was likely a hoax. now, this assessment by those federal officials that this was a hoax here in los angeles, very much echoes what we have heard today from new york's mayor as
well as new york's police commissioner about a threat that the new york school district received as well. now, of course new york did not choose to shut down its schools because new york based on its assessment decided that threat was a hoax, but here in los angeles, the los angeles mayor, school -- head of the school system here as well as the police chief here have said that they have -- that they stand by their decision out on an abundance of caution. we have to remember here in los angeles, we are so close to san bernardino where there was that terrible terrorist attack two weeks ago. so it seems very likely that the folks here are a little bit more on edge because of that proximity. back to you, kelly. >> all right, thank you very much. we have 35 minutes left in the trading session. coming off the highs of the day, the dow was up 259 i think it was at the peak. now up 169 points. and "star wars" fever is boosting disney stock.
welcome back. 30 minutes left this the trading session. let's check out the movers, twitter falling after evercore reduced it to $22 a share from $25. the firm says traffic data show that twitter continues to cede growth to faster growing rivals like instagram and snapchat. it's down 3.5%. howard stern has given sirius stocks a serious boost today. the shock jock signed for at least another five years. terns of the deal were not disclosed but some say stern will make $90 million a year.
>> 90. >> he used to make $120 million. >> all right. that's a shock. the force has awakened. the new "star wars" film is boosting disney up. >> when we bought lucas film, i knew that there was global interest in "star wars" movies. there hadn't been a film out in ten years. it hadn't been released in certain parts of the world. while we had strong instincts about level of interest and what it might do, we mhad no idea. interest in the film has exceeded the expectations by a lot. >> and expectations are not just high in hollywood. goldman sachs has raised the box office estimate for the film. >> it's pretty amazing, guys.
disney's working its second straight day of gains after a near term down trend. helping is the positive commentary out of goldman sachs. and it's titled, may the mouse be with you. yes, in honor of the "star wars: the force awakens" release, they think it has the possibility of being the third highest grossing movie of all time and the tote box office take is around $1.95 billion. now that's broken down between $750 million generated domestically, $1.2 billion that's the take on the international side of things. now, as a result of the upward revision, earnings per share estimates are 3% higher. and it's revised to $112 a share. it was 110. but the neutral rating does remain in place we're frayeding around there right now. we're talking about a stock up in disney.
and it's been a roller coaster with record highs, sharp drop, then it rose back up again. on the right-hand side of the screen, another drop-off near term. movies of course an important part of disney but remember that big drop we saw earlier this year subscriber growth concerns. specifically at espn that helped to push the stock down. still, disney investigators hope that force awakens to a big run. disney obviously a very big part of the dow jones industrial average as well. >> the expectations are so high. and to see the shares rally further today even on another analyst upgrade means that, you know, how much further can they go or how much more is disney going to have to deliver? >> what's interesting about it, of course when goldman estimates about a 1.9 -- nearly $2 billion total gross for this film, and
they only forecast a 3% upward revision to earnings per share it goes to show you how vast and large the disney empire is and even with a release of a film it moves the needle but not a whole heck of a lot. of course with media companies overall and julia boorstin talks about this all the time, it very much is these days about whether subscriber growth numbers can keep pace. it's not only the same with disney but like netflix and others. subscriber growth is a concern, but this makes all kind of -- make all kinds of fireworks. >> but don't forget, ceo 101 says underpromise and overdeliver. bob iger is trying to temper expectations so they can overdeliver -- >> that's key for a stock and for anybody who deals in business. >> indeed. thanks. time now for a cnbc news update. >> well, bill, here's what's happening at this hour. los angeles school and city officials are defending the decision to shut down the city's school system due to an e-mail threat.
mayor eric garcetti says he stands behind the superintendent's orders to close the schools. meantime, new york city police officials say they received the same threat and quickly determined it was a hoax. several federal officials also believe it was a hoax. white house spokesman josh earnest says the obama administration won't rule out additional tests if it would benefit national security. a chicago police officer used excessive force by dragging man from his jail cell after he was subdued with a stun gun. chicago police released the 2012 incident involving the inmate. and kohl's announcing it will keep its doors open 24 hours a day during the final stretch before christmas. it will stay open starting at 7:00 a.m. on december 17, all the way through until 6:00 p.m. christmas eve. that's 170 hours in a row. that's cnbc news update. back to you.
i'm not going in there. >> yeah. >> i mean, it could be -- i'd rather do 24/7 on kohl's.com. >> oh, look, 4:00 a.m., i think they're open right now. 25 minutes to go. dow up 152 in a session where it's been much more positive. so let's see if the rally holds in the most important half hour of the trading day. we have a couple charts to keep an eye on. and are apple's supply concerns overblown or not? come on in pop pop.
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or bleeding more easily or serious, sometimes fatal bleeding. don't take brilinta if you have bleeding, like stomach ulcers. a history of bleeding in the brain, or severe liver problems. tell your doctor about bleeding, new or unexpected shortness of breath, any planned surgery and all medicines you take. i will take brilinta today. tomorrow. and every day for as long as my doctor tells me. don't miss a day of brilinta. we are in the last half hour of trading. the last half hour before the -- the day before the fed announcement here. mark newton from gray wolf execution partners is looking at a a couple of charts. first the s&p and how it's doing here. >> yeah, very encouraging move today in the s&p ahead of one of the more widely anticipated fed decisions all year. >> this transactions us back to june by the way. >> we saw a rally up, a pull
back. interestingly enough we barely got down below november lows before holding. one thing to concentrate on though the s&p did get below that level, the dow, the nasdaq a lot of indices didn't. so there's not a lot of technical damage right now. we held, we're having a sharp rally. 2050 is important on the upside. obviously anything below this prior level that was hit is going to be bearish. for now it's fairly encouraging. we can probably go higher. a couple of different things to pinpoint, sentiment got pessimistic. it's real positive coming into this. and the fact we're coming into this fed meeting with a little bit of stabilization is going to be a high yield if we continue to sell off. that gives them a sign to hike in the face of stability. >> quickly on the ten year, do you see yields going much higher from here? >> i do. because we're starting to stabilize and it's a compelling short term picture. we have broken this trend line at least from 2014. we managed to gradually base a
little bit. 237 is going to be the key level to look at. and getting above that, my thinking is because sentiment has gotten less bearish on treasuries of late with the fed thinking it's one and done, stabilizing, we have seen the move now on the short end of the curve. the long end is going to start to gradually move up. the fed hikes, we might see yields pop over 237 and is a move up over 250, 3% is a big level in the sand. until we get over that, the long term is very much down. >> i can't wait to open up the packages to see what's in them. apple is spooking some investors this morning. the u.k. based company raised questions about the entire apple ecosystem. but our next guest says the skeptics are all wrong. we have ivan. and apple is 78% of the revenue
for dialogue so this doesn't concern you? >> well, they have sounded this alarm before and they're not apple's only supplier. they have many other suppliers. one of them, skyworks has not indicated an -- any kind of slowness. any time dialogue said there's an issue they want to run with this. if they lose any business from apple it can be detrimental to them. every time there's been a sell-off it's been a buying opportunity. >> in the meantime though, let's look at 3-m briefly today. one of blue chips, down more than 6%. having one of the worst sessions in quite some time. it's cited weakness in consumer electron electronics. the chief executive said global demand for iphones, television sets has weakened and sales of materials they use in making those will be lower for one or
two quarters. >> that may be ethe case, but specifically to apple there's a number of growth drivers. still the expansion into china is a tremendous opportunity for them. the expansion into india and plus they have barely scratched the surface of enterprise market. earlier this year they announced the partnership with ibm. there's a tremendous opportunity for apple to penetrate the enterprise market. >> so you're now willing to entertain the notion that maybe apple is facing some competition, just at the margins, at least? they're not getting the kind of topspin off the sales of the iphone that they used to get because of that competition out there and let's face it, people are using other devices as well. not just their smartphone anymore, right? >> well, the iphone 6 has been the best selling iphones of them all. the iphone 5 outsold the 4, the 4 outsold the 3. each one has sold better than the iphone before. and has not shown any indication
of slowing. >> but prior results don't guarantee the future though, do they? >> well, there is two things that happened in the phone market. one that phone users go through an upgrade cycle every two years. when you tend to be an apple user, you tend to stick with apple. i think one of biggest christmas items this year will be the apple watch which people who get apple watches will then also continue to buy apple phones because the watch only works with apple phones so once you're in the apple ecosystem, you tend to remain in the apple ecosystem. >> is there a sense then if we just take 3-m's comments for example that there's broader weakness beyond apple here, is it possible that apple gets exempted from something that's happening with consumer electronics more broadly? >> we have seen that auto sales that have been very strong so consumers are spending a lot of money not on apparel or electronics but on auto down
payments. it indicates a very positive economic picture. if consumers want to commit to the long term purchases they're feeling better about their jobs. >> auto crowding out -- not the iphone, but the rest of the consumer electronics. >> everything else. >> thank you. about 15 minutes to go. the dow is up 163. >> as you heard the fed is expected to raise interest rates tomorrow, for the first final in nine years. some in the market have never traded in a rising rate environment. dominic khouw will have the stocks to look at. those that benefit in the rising rate environment after this.
interest rates rise hasn't happened in nearly a decade so we asked dominic khouw to look at the stocks that tend to do well when rates rise. he joins us from global headquarters with that. >> so it's interesting, guys, because we went back to 1990 with the help of our data partners to look at the times when we saw the fed raise interest rates after a period of lowering them or keeping them relatively flat. so here's what we came up with. there are a handful of stocks around four or five of them that have traded positively each of those four times among current members of the standard & poor's index. you can see the thermal imagining company. also the industrial side and mcdonald's up 5% on average. look at the s&p 500 it's down 2.5% and it's not traded positively one month out in a fed rate hike.
overall it's interesting i guess, guys, to see a handful of stocks that do tend to do well, but keep in mind that a month out the market -- the s&p 500 has not traded positive any of those times and among the worst sectors, health care, financials, materials. they tend to underperform during that time, although a market analyst says the market did post modest gains a year out. >> by the way, we'll bring you the interest rate decision, expected tomorrow at 2:00 eastern time. "closing bell" has a roster of all-stars to help break down the impact on the economy and the markets. it's like christmas day for fed heads. it's going to be great. james grant, richard fisher. rick reeder, diane schwan. don't miss a second. rest up and get ready for tomorrow. >> ten minutes left before that decision happens and stocks are
live stating, bolstered by upward moves in crude oil and european stocks. pretty mitch all the averages are up 1%. >> despite the attention on the likely rate hike, global growth is more important for the equity marks over the next few months. we'll find out why next. i'm here at the td ameritrade trader offices.
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about eight minutes left in the trading session. by the way, it's 300 million to sell going tone the close. we may have seen the effects of that. mark snellman joins us now. you're looking more broadly. >> yeah, i think what's going on, especially today, is much more related to the high yield markets and also related to global growth. i think those are the two real main drivers of what's going on. i think you're seeing a bit of a relief rally because the high yield markets are catching a bid today. i don't think we're out of the woods as far as that's concerned. >> a common theme, some of the napes you like include ford, cvs
and prudential? >> yeah, there's a theme. when you go into the rate rising cycle by which i think we're all in agreement there's going to be higher rates the last ten times they have raised the rates since 1960, dividend paying stocks do well. the ones that do well have a rising dividend. that's what we're concentrating on. when you look at a ford, a balance sheet doesn't make us worry about the high yield things, they have raised their dividend 20% last year, 20% this year. we think it's going up double digits next year. even china, people want to knock on china. sales were up 24% in november. in china. the chinese government is doing a good job of stirring up consumer demand. >> what do you do with a company like chevron who's had a solid dividend, the yield is incredibly high right now. but the ceo swears they'll keep the dividend. >> i take him for the word but the problem we have is a name like that it's more susceptible
to higher rates as far as the stock going down. they don't have the free cash profile you want see. the odds of the dividend going up i think are remote. probably it shouldn't go up. should be conserving capital to protect his balance sheet. that's not a yield that we look for in our fund. >> rather ironic that people want to shy away from it. >> there's a time when the capex budget starts to fit the free cash flow profile. >> good to see you, mark. mark spellman. we'll if back with the closing countdown. >> after the bell at one time they seemed like fast friends but now senator ted cruz and billionaire donald trump are at odds and just hours before tonight's gop presidential debate. look at how the new frienemies will impact that showing. you're watching cnbc. .at t. row. ...we've helped our investors stay confident for over 75 years. call us or your advisor. t. rowe price. invest with confidence.
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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. all right. inside the two minute mark as we head to the countdown. he's are two-day charts. the lead-up to the fed, if you will. first the dow the rally started late yesterday. and we are holding now with a gain of 160 points at this hour. wti crude, some feel may have bottomed short term yesterday. and then come back. it's had a 10% gain since then or a little less than now. but up 2% at $37.10. the ten year yield continues to rise going into the fed meeting.
we'll see if that continues tomorrow as well. bob pisani? >> we have seen some rallies and some beaten up names. chevron and of course the oil you mentioned. but put up the chart of receish ron. it was 85, $84, now up $8 in the last two days. you haven't seen that. exxon had a great two days. we had great day with the dow up 155 but the vix is barely down at all. normally it would be down on a day like today. that's a pretty modest drop here. should have been well below 20, that's because of the concerns about the fed. the vix elevated because of what might happen -- remember everyone is expecting a -- a very dovish tomorrow. if anything happens and the intonation, they're more aggressive i think that's the
concern that the market has right now. >> it's going tock a great day tomorrow. i can't wait. so we go out with 163 point gain on the dow right now. getting ready for the fed tomorrow. it's greek day here at the new york stock exchange. over at the nasdaq, the ceo. let's get you ready for the fed day. it's day two of "closing bell" with kelly evans. see you tomorrow. >> thank you, bill. welcome to "closing bell," everybody. i'm kelly evans. here's how we're finishing the day on wall street. the dow gained 158 points. we were down 27 at one point. the s&p actually outperformer by a hair as it adds 21 points and the dow interesting enough kept track with pretty much those other two indexes. even 3-m was a real underperformer, a lot of frommesting re-- a lot of interesting read throughs.
we have sarah izen and dan nathan as well. dennis, what do you make of this pretty sharp in a way relief rally maybe but before the fed meeting and decision tomorrow? >> i don't know what is so different from yesterday, kelly. when the market took a bit of a drubbing. i think we're all on the hold until that fed decision does come out. dow is down i think a few percent for the year. and if i'm a trader, i'm up for the year i'm holding on. i do not want to let go of any gains i can get. so i'm a little surprised by the markets -- >> so i think we said high yield a trillion times in the last five days. as we have heard from the guests they're not sure at all that the concerns have did min uppished. what -- diminished. what do you think is going on there? >> gri agree with you. i think some of the stocks have rallied. there's at least i think some support here at this level for
buying high yield bonds but this is not the end of it. the liquidity question still stands. i think it will take some time to play out. we're only going to see the answer to it at the beginning of january, not the end of december. >> that's true. so much is happening ahead of the fed decision tomorrow. what are you keeping your eye on? >> i have been trying to go through research notes today, trying to game out how to play the markets, what the reaction will be like. the key is in the statement, in the q&a and in the predictions of the various fed members for where the interest rates go. it's baked in, if it happens 80% the market is pricing it in. so people are looking for words like gradual when she talks, when janet yellen talks about what happens next. how many more rate hikes. they want to hear what she says about inflation. so far it's about the progress on employment. what about the lack of progress on inflation? their second mandate is that going to give a clue on to how
many more hikes we see beyond next month. then we'll watch the probability of interest rate hikes going into march which is the next one they'll game out. >> dan, you're looking at specific names, day in and day out. but against the back drop of what here, do you anticipate a pretty aggressive fed or they're going to end up being out of the picture? >> i do. i think the latter. i don't think that this fed -- you know that's chaired by a dove, you know, has any interest in igniting the spark that would cause the capital flight out of emerging markets. to me when you think of what's going on, if you look at the s&p it's down this year. it's unchanged. if you look at the yield on the ten year treasury it was where it was when it started this year. we have the s&p 500 the largest equity index in the world.
and if you look around the world, look at industrial commodities, oil, look at the volatility that we have seen in currencies that's stuff going haywire hire. i believe the fed does not want to be that spark that ignites the sort of contagion that we are seeing spread from the commodity complex into high yield and possibly into other places. >> it is dennis, we mentioned this before. but in an unusual back drop for the first rate hike. if it's the end of the cycle that's one thing. but high yield is a precursor for the cyclist. how do you read the weakness there against the back drop of hey we're about to raise the interest rates? >> you're a student of economics, kelly. so i would love to see your take but i don't think this economy is doing so great. it's not doing terribly but aside from the unemployment figures can we look at corporate earnings, look at 3-m today, not so great. look at oil, obviously it has a follow on effect in the job creation here in the united states. look at the high yield sector again, so much debt issuance
over the last two or three years. again, it feels like a blah no growth, very static year. i don't think we can call this a great year for american capitalism. >> listen, more than 2 million jobs. some signs that wages are gaining traction. >> that's what the fed can point to. it's been a lumpy recovery and it's in the industrial complex where you're hearing industrial recession being fotossed around. the association of manufacturers only 55% of those companies say the economy is strong enough that the federal reserve should be -- should not be raising rates. >> it's a great -- >> but i have to step in here, kelly, when -- >> go ahead. >> when you think of what's going on, we're going to lift rates off of seven years, look at what's going on here. there's an earnings recession going on in the u.s. you can talk about the
inflation. it doesn't really exist, but there was a quote this morning. 65% of the net income for the s&p 500 has come from corporate buy backs. it's happening because of zero interest rate policies. i know we'll talk about 3-m where things aren't fantastic here for corporate earnings. >> 3-m was down 6%. unusual for a company that size. it cut below the guidance estimates. let's get to deirdre bosa. >> you saw the sellout play off in a big way. the stocks were showing in some four years, shaving off some substantial amount of the dow's gain today. so the latest guidance cut was the second in as many months. it's now expecting full year growth of 1%. down from the previous guidance of 1.5 to 2%.
3-m isn't sound the alarm bells. it expects sluggish growth but not the deep slump. the strengthening dollar is another issue that may not go away. if the fed raises rates tomorrow, expect more strength and that could more pain for the manufacturing giant not to mention other companies that get their revenue abroad. an analyst was surprised by the sell-off because 3-m is seen as a safe stock and for it to do this is worrying. >> does this go back to the points you were making? >> no doubt about i. here's a company managing earnings aggressively. when you think of the eps cut, here's the thing. they cut it, it's still expected to grow 8%. that's probably too high. deirdre said it, only a third of the 3-m sales come from the u.s. so never the dollar exposure, a lot of exposure to the emerging markets. here is one where they cut earnings twice in two months. i suspect you will see another
cut in q1 where the balance of 2016. so the stock trades at about 18 times expected earnings in 2016. why should that trade above a market multiple? a lot will follow in the next few months. >> there's an interesting sub story, well, maybe not a sub story, but what's happening with consumer electronics. dennis, the company cut the demand because it doesn't see smartpho smartphones, tablets or televisions generating the growth it was expecting. another analyst, sara made the point, it looked at weak apple chain data points, they provide the related component, they don't think it will sale see sales growth next year. >> that's a problem. they're seeing it across pockets of their business. up they make -- they make 16,000 different products, everyone mentions tape and post its and bandages, but a lot of the problem is oversea, 65% of if
ref news coming from abroad. i did a quick economy search and economic growth is remaining positive. on the guidance, still slow economic environment. >> kelly, name one place in the globe where growth is solid. >> automotive sales. >> that's built into the growth. >> even house has been an area of reasonable strength. >> been reasonable growth. >> leasing -- apartment leasing has been going gang busters. commercial real estate. >> but the type of products that the 3-m or dupont would sell, it said at the big merger announcement that the earnings would be poor. not a lot of core demand across the globe. even in china it's debatable if that's seven, maybe 3% growth. >> do you think the federal reserve interest rate hike going to choke off what lit growth there is, forcing them to lower rates before they raise again?
>> that's the fear. >> sounding doom and gloomy. >> if so much of the growth rate -- has been equity turned into debt, it's not as available anymore, where does real growth come from? >> here's what makes dupont and dell, i love your thought, remember we were coming off extreme lows. has driven most of the investment community -- it makes sense to do buy backs. no we are seeing the companies get together and then split into three. pfizer, allergen, splitting into two. is this a new phase of what's happening in corporate america and is it a worrying one? this could start to position these companies for better or long term growth. >> i think it has to do with the last ditch like maneuvering in the cycle here. think about what's gone on here. most of the positives have been the benefit of zero interest rate policies. you talk about the combinations and the mega mergers, look what happened today with halliburton
and baker hughes. this could be a very difficult year in 2016 for mega mergers. the way i see it here, i look at the urge to merge is as a last ditch effort. this is what's left. >> and others have echoed that about the cycle. dan, what is your view on apple, which is related to 3-m, dialogue today and one of the rare growth areas in the last three years. >> i think dennis just said it, they're growing sales in china 100% year over year. that's massive. in the quarter they have just reported it was 20% of the sales, but here's the thing. look at the way that the yuan is moving, it has to happen. we had research analysts lower estimates on apple because of the fear of the slowing upgrade cycle for the success. so i think to me i think it's
dead money. down 1% on the year here. we know they have a ton of cash, 90% of it is overseas here. but the biggest problem is there's no innovation at the moment. i know my twitter is going to light unlike a christmas tree right now, but that's the fact. the music subscription service is a dud, the iphone is the best phone on the market but it's increme incremental. >> give me one name you like in the whole market, dan. >> you know what look at what qualcomm did today. they trade, they have a -- they have two here, they just said they're not going to split up, kelly. they have a ton of cash here. i think you're going to see some better things out of them after a very poor year of missed execution over the last 12 months. >> great point. thank you so much. great discussion. dan nathan, much more coming up with him at 5:00.
i love it when a guy like this is getting a ton of play, that will be a great tv interview. stay tuned. valiant pharmaceuticals trying to team up with walgreens. the company's ceo has some thoughts on the deal and so does the panel next. and how law enforcement determines how threats like the school bomb scare in l.a. today are credible north. back in a moment. but a few might shape the future. like turning algae into biofuel... ...new technology for capturing co2 emissions... ...and cars twice as efficient as the average car today. ideas exxonmobil scientists are working on to make energy go further... ...no matter how many tries it takes. energy lives here.
welcome back. valeant shares soaring today after the embattled pharmaceutical deal inked a deal. we have more details. >> hey, guys. everyone was wondering what valeant would do to replace the revenue when it cut ties with the controversial specialty pharmacy philidor six weeks ago. this is coming sooner than people expected. and announcing a deal with walgreens that lasts for 20 years where it will distribute its ophthalmology and other deals throughout the pharmacies and offer a 10% discount through walgreens. and part of the deal it will offer branded products, more than 30 branded products at generic's prices. discounts at 5 to 90% for the
drugs. this could lead to $600 million in annual health care savings. now, analysts say this deal gives valeant some much needed credibility after the fallout following philidor. we talked with the ceo mike pearson on "squawk box." here's what he had to say. >> i was talking about the allegations, which again i'll say it again, that's no proof that the allegations are true. i was unaware of the allegations going on. >> we asked him how much he knew about philidor and he said they're troubling himself, but he didn't know about them. even when the stock is reacting positively today. all is not over for valeant here. still the subject of multiple federal investigations into the drug pricing practices. they have an investor day tomorrow in new york. they're expected to give a new forecast so it will be interesting to see how investors receive that.
>> not to put it too strongly, but this is a company maybe in search of a new future. if it was roll-ups and now it's having holes poked into the cost of the drugs. >> they packaged it all so nicely. the core questions remain -- is the function of philidor which was frankly to push valeant products as hard as they could be going to be fulfilled by walgreens in the same way? i suspect not. >> megan, with some of -- the toenail fungus with mario lopez -- what is it -- >> jubilee ya. >> right. are these price cuts enough to spur demand? >> you know, it's interesting, the doctors just want it to be easy for their patients. that's what's so magical from the valeant's perspective about the specialty pharmacy model. it takes care of co-pays for the patients so their not having trouble when their pharmacy benefits manager is trying to give them a high co-pay to
persuade from taking the drug. valeant is helping them pay the co-pay. you're not feeling the high cost of the drug on the patient level. >> immediately. eventually you do. but immediately in a lot of cases, yes. >> immediately you're not feeling it. then later it goes into the health care system. >> what about that political noise? valeant was such a poster child for all of the pressure from politicians and the hillary tweet of all the high drug prices that's it will going to be continue to be investigated as a sector overall though? it has seemed to calm down a lot. >> it has seemed to calm down and what's happened, in the hearings and the investigations they're focusing on companies like valeant and touring and pearson took exception being lumped in with touring. they focused on valeant and touring. >> let us know if he buys any wu-tang albums.
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julia boorstin has the very latest. >> reporter: hi, kelly. that's right. earlier today, the police department chief charlie beck explained the decision to shut down the 900-plus public schools here in los angeles including this one behind me. saying that after reviewing the threat against the schools, they became very concerned and contacted the fbi. >> we want to keep our kids safe. these are tough times. these communities, our communities, southern california has been through a lot in the recent weeks. should we risk putting our children through the same? >> los angeles officials defended the decision in the face of criticism for overreacting. new york's city -- new york city's school system did not shut down, and nbc's jonathan deans is reporting that the nypd deemed the threat noncredit
after conferring with the fbi. the writer claimed to be a high school senior who was bullied saying he was going to attack the schools with an army of 138 other students. new york city mayor de blasio explained the decision to keep the new york city schools open. >> this was a very generic piece of writing sent to a number of different places simultaneously and also written in a fashion that suggests that it's not plausible. >> reporter: among the reasons the threat was not taken seriously in new york was that the written claimed to be a jihadist but misunderstood islam. of course, kelly we have congressman adam shift say that it seems like a hoax in both new york and los angeles so we have to see how the investigations continue and if here in los angeles if it's considered a hoax. back over to you.
>> as it's affected the second biggest school district in the country. our julia boosten. larry barton joins us, he's an fbi director and thank you for joining us. the question going forward is how do you know, larry? >> i think the bottom line is that the threat landscape is changing and certainly after paris and san bernardino and what we saw in aurora, colorado, look anywhere in society. the threat landscape has changed. i don't begrudge in any way our second guess the superintendent. he made a decision that in his belief was the best thing and remember, 50 miles away an enormous tragedy occurred. maybe the best thing that happened today is that hundreds of thousands of people had to pause and think, what would i do? and what do i have to do in terms of getting my kids in and out of school, the logistics of city were changed. i'm not sure that was a bad outcome and to second guess a superintendent i honestly think
is imprudent. he did the best thing he could at that time. >> there's a heightened state of fear across this country, and not to make it too political, but what are our are leaders doing to talk about the increased threat? what about protecting our nation from terrorism threats an what's happening with our malls and movie theaters an restaurants and what kind of advise are we taking from israel? >> what a great question. first, don't be paranoid. that's the worst thing that can happen. however, be aware. what's funny is you and i and most people we lock our cars, we have alarms on our homes, we take a prescription with us for antibiotics if we travel to the foreign land. i have an emergency watch so if i get lost while hiking i can notify authorities. and what we're asking of our government, democrat or
republican, to also be aware and be more protective. in the absence of any decision that come there, local authorities will make a decision that they think are in the best interest of their people and that's what they did today. >> that said, larry, now that people are aware of what kind of impact this has, you know, and not to mention the people just are a little bit more scared because of recent event, how do you keep this from becoming a regular occurrence that it's a headache for the parents who has to goet their kids and it has a impact? >> this was a viral issue, and not a single year went by that i didn't have a bomb threat, and they were surprisingly during examination threat. that did not come days or weeks after a huge catastrophe. so to your point, what i would say is in society, again, we have to be aware and alert. but let's be thinking about this.
malls, theaters, shopping centers, when it comes to sports and concert arenas are safe. we have our guards who have never been on a higher state of alert and corporate executives. the audience of cnbc corporate executives have been asking more questions, in terms of the emergency response plans. that's a good thing. >> we'll leave it there. thanks for joining us,er larry. >> thanks for having me. >> larry barton, fbi instructor. here's what's happening, the police officer charged in the death of freddie gray is deadlocked. william porter is first of six officers to be tried. the judge sent the jury back for more deliberations. the u.s. says it's close to an agreement with cuba on restoring regularly scheduled commercial flights between the countries. american and cuban officials are discussing the matter in washington this week. adults who get shingles over the age of 50 are at an
increased risk for stroke. according to researchers at the mayo clinic. experts say the increased risk of stroke could be prevented by vaccinating against the shingle virus. pete rose says he's a changed person. even if he still likes to be bet on baseball games. he says what's disappointed in not being allowed back in baseball but held out hope he could still one day be inducted into the hall of fame. and that's the cnbc news update. back to you, kelly. >> thank you. we have a merger on two payment processes. >> so payment processing, systems all part of the equation here. global payments will acquire heartland payment systems again for $4.3 billion. it will be a cash and stock transaction that's going to total around $100 a share at current levels. it will consist of two-thirds of a share of global payments and around $53.28 per share in cash
for each share of heartland stock out there. payments processing companies, payment transaction type of companies going through again with a $4.3 billion merger and cash and stock deal. heartland is up about 10% in the after hours trade. back to you guys. >> interesting. dom, thanks. are fears about junk bonds overblown or not? that's straight ahead. and plenty of fire works between donald trump and ted cruz when they square off during the latest republican debate. we have a preview coming. don't miss our coverage of the fed's big decision tomorrow. featuring heavyweights like richard fisher, jim grant, rick reeder and diane shwonk right here on cnbc. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you. (phone vibrates) look at it! (friends giggle) i can do dogs, hamsters, guinea pigs... you name it. i'm going to transform the way the world works. (proudly) i programmed that hat. and i can do casaba melons. i'll be helping turbines power cities.
welcome back. here's a look at how we finished the day on wall street. the dow added 156 points, remember this was on top of yesterday's late session rally. the s&p up 21 points and the nasdaq 43. predicated on oil, possibly those are certainly the outperformers on the dow today and crude managed tory bound and that bolstered stocks worldwide. but high yield bonds getting a bit of a retrieve after selling off in the wake of third avenue closing the focus credit fund. dominic chu has been looking at those hit hardest bring the concerns. >> so rightfully or not rightfully so, some of the names
that have been floated around over the past few days given what's happening in the world of high yield get include names like franklin resources. this is a big mutual fund adviser here and again, you can see the down trend that we have seen specifically over the course of the last week and a half or so. we have seen a sharper return to the downside for the shares. how, they got a pop. and blackrock, they do the ishares, they manage the ishares etfs, they rebounded by about 3% today. they've lost 6% of the value. rebounding as well today here. you can see over the past year to date period we are seeing a bit of a down turn over the near term at least. that's affiliated global managers. this is important here because this is the firm that actually is an investor in third avenue management. that's the mutual fund complex, the asset manager that's closing that focus credit fund, putting
up the gates and barring investor withdrawals until they can liquidate in the orderly fashion. you can see they're getting back to flat now. what's interesting about this goldman sachs put it a note to the clients about the opportunity, risks and rewards that are happening with the asset managers. they do believe that franklin templeton is more exposed to redemption risk in high yield and market debt. blackrock and affiliated management group is not as -- and we're seeing a bounce and etfs are starting to stabilize and we'll see if they stabilize. >> thank you, dom. the third avenue focus credit fund had 800 million in assets. one class, the institutional had a 28% of the assets in bonds rated triple c or lower. that's nearly three times the
peers. for more let's bring in todd rosenbloouth right now. the unprecedented thing, the s&p gave the approval but it's not clear they would have. >> yeah, they were taking on significant risk. it was triple c a lot of nonrated bonds. they're less liquid than the other bonds that are in other mutual funds and etfs. when you have to sell and that's no buyers of it, you have to come one a lot of problems. >> sure. but this flies in the face of what a mutual fund is supposed to be. and so how significant is this that they're actually not allowing investors to get their money back? >> if you put money in the fund, that's trust that you'll get the money back, but it will be worth more in the future. this is a tough year, and now investors are not getting the
money back. mutual funds typically will return that, to investors but etfs offer more liquidity. you can sell intraday and it's easier for the investors. >> dennis? >> todd, do you think that the crisis -- probably a bit of a strong word, but the episode is over? >> i think we'll continue to see fears from investors. the fed is likely raising interest rates, that's going to cause investors to rethink their fixed income portfolios. if you're taking on more risk than you're comfortable than you're wanting to sell. if you see this as a buying opportunity and there's a lot of mutual funds that are sitting on cash, perhaps they can be able to get in and be able to stabilize their fund by getting on things that are cheaper. >> do you think it was an exam race for carl icahn to say this was a meltdown? >> yes. mutual funds and etfs are a small part and from the etf
perspective particularly like hyg it's very liquid, it traded 13 times in past week than from the redemptions. if you wanted to get out, you were able to get out. unfortunately if you were in part of the third avenue fund you were not able to do so. >> right. we also saw plenty of people interested in buying what they perceived as a good opportunity in the funds if it gets to the point where the sell-off worsens or the bid isn't there, then what? >> well, we think that obviously over time it's going to stabilize. you know, there's still a market that's out there. this still offers a compelling yield versus a still lower exposure from the ten year treasury. you want to make it's a good part of your portfolio and you want to understand if it's in bb or c, make sure you're comfortable with your portfolio. >> thank you for joining us. it's the last republican presidential debate of the year and tensions between donald trump and ted cruz are heating up.
details next. but first, are drones about to be downed? new faa rules are sparking concern. more on that after the break. you're watching cnbc, first in business worldwide. the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. at&t has the tools and the network you need, to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most.
a jump of more than 60%. that's according to the consumer and technology association. but did uncle sam just ground the drone market? now, the faa announced new rules this week that will require recreational drone users to register their flying machines in a national database. those who purchase a drone before december 21 must now register it by february 19th of next year. drones bought after december 21 have to be registered by the first fly. the registration is free for first 30 days and after that, it's $5. investors have been fans of drones, they committed $430 million to drone start-ups since last year. but some of those we spoke to in silicon valley question if the industry is really a smart investment. >> i think you're going to see regulatory framework that's much tighter with drones than with other consumer electronics and
this is absolutely going to have an impact on venture capital financing in this area. >> now, on the other hand, we should mention we spoke to lawyers who represent the drone industry. they're not happy clearly with that $5 fee, but they say that technology here, too innovative, too powerful to be held back by the new regulations. who is right? holiday sales of drones could provide a big clue. >> what do you think is most significant? people are going into stores or online to buy these, maybe for their kids or for somebody this holiday season. >> well, so a few comments about who has to register, right? you have to be a u.s. citizen, you have to be at least 13 years old. if you're not 13 years old, at least someone who is has to register for you. but i'll tell you this, kelly. the faa they're not messing around with these regulations. if you don't comply you could be hit with several penalties of up to $27,000, even do three years
in prison. they'll work with the local law enforcement. not to be messed around with for drone users. >> dennis? >> you know, it's only a matter of time god forbid one takes down an airplane, so i kind of get it. the analogy i bring up, go back to 1920s, radio broadcasters were free and wild and anyone could set up a radio station and it took acts of congress to establish the framework we have today. the industry drived, still here in 2015. so i think this is a surmountable challenge for the whole industry. >> it makes sense in a way, if you want to track who's doing what where because of the air space concerns. still, you know, again, this is almost exploiting a loophole that you can't do commercially except for the other loopholes that exist there as well, josh. it feels like the whole thing is a bit piecemeal. i wonder how effective it is to, you know, are people sort of self- -- you know, relying on each person to register this?
do you think the word will get out there? is it effective? >> well, listen, certainly you've got a lot of fans of drones but there's equally a lot of people out there who have legitimate concerns. we know drones did make a lot of headlines for the wrong reasons. there are concerns about safety, concerns about security. like i said, the penalties will be stiff. it is interesting just because an industry is regulated that doesn't necessarily mean it takes a big hit. listen, talk about gun laws in this country. i was reading reports that in california we'll see a record number of gun sales in this state this year. you saw a huge spike on black friday. so just because there is regulation doesn't necessarily -- it means a halt to growth in the market. >> i think the -- most of responsibility will probably -- settle on those who sell the drones. >> it goes back to what josh was saying, as to whether it freezes any capital going into the space. thanks, josh. >> i'm scared of them flying into crowds. >> all the more reason to have
them registered. you'll know who the culprit is. >> a lot of worries. >> is your money manager ready for rate hike? it's been so long since the last rate increase some have never dealt with it. and nine presidential candidates will take the main stage in tonight's debate. ted cruz has overtaken donald trump in the iowa polls. what he needs to continue doing to gain traction. ur car insurane premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn
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the fifth republican presidential debate takes place tonight in las vegas. ted cruz is catching up to donald trump in the polls. what will it mean for the gop? john harwood has more. >> we have three candidates really to take a close look on in this debate tonight. first of all, donald trump because we have been watching donald trump all year. he always says things to make us crazy. in particular, his call to ban muslims from entering the united states has polarized the race, others disagreeing with him. secondly, you have ted cruz who's moved up in the polls to become the principal challenger
to donald trump nationally. in our poll it's fairly close. then you have marco rubio competing with ted cruz to be the not trump. many assume that this race is going to come down to alternati. those three guys are at the center of the action. you could also see a big push by somebody like chris christie, who is doing well in new hampshire, trying to make himself more relevant nation nationally. but this race has become unpredictable all year. we've seen since the paris attacks that people like ben carson, less experienced and less certain in foreign affairs, have fallen. and there's an opportunity for some others to rise up and even jeb bush may try to use the relevance of national security to make himself more relevant in this race. >> john, you had not mentioned those two words, jeb bush, but you did at the end. is he really a contender here at all or is this kind of the last stand for him? >> i don't know if you can say anything is the last stand.
there have been a lot of candidates in this race for a long time who have not seemed to have a great chance of winning. in that race to be the not trump, you look at the state of new hampshire, you have trump ahead by a significant margin, and then you have a half dozen candidates bunched between six and 12. jeb bush is one of those candidates. could you over the next six or seven weeks before the new hampshire primary move up six or seven points? of course you could. he also has a lot of money to advertise. hasn't done him much good so far, but you can't count him out yet. >> obviously the paris attacks, the san bernardino attacks are going to weigh heavily in this debate. everyone is going to talk a tough game when it comes the keeping america safe. who actually has national security chops on that stage? >> nobody really has a lot of national security chops. lindsey graham has some chops as longtime senator specializing in those issues. he's in the undercard debate. but what donald trump uses as a proxy is the idea that his
supporters think he's strong. so strength, toughness is what he has going for him. ted cruz as a united states senator can lay a claim to have some involvement in foreign affairs. senators can do that. interesting contrast, though, between rubio and cruz. rubio says cruz is softer because cruz has voted to limit the surveillance programs like rand paul has, who think those are intrusive. ted cruz has said people like marco rubio have not learned the lessons of iraq, that they're more inclined to intervene, perhaps to the detriment of american interests. real cross currents on that stage tonight. >> well, we expect donald trump perhaps to go after ted cruz as he has with past other frontrunners. whether cruz goes after him or others also are attacking the texas senator, we'll just have to see. for now, john, thank you. >> john harwood. just a couple hours left before all that begins. in 2006, barack obama was
still in the senate, george w. was in the white house, and that's when we had the last fed rate hike. we could be facing one tomorrow. our money managers really ready for it. that is next. be sure to watch cnbc's special coverage tomorrow of the fed decision at 2:00 p.m. eastern. we will have expert analysis after the fed chair's news conference. we'll hear from richard fisher, jim graham, rick reiter, and diane swank. don't miss a minute. why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach,
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is your money manager ready for a rate hike? many fund managers have never worked during a single fed rate increase and that could shake up the markets. eric chemi is here on the eve of what could be the first hike in nine years. >> 2006, there was no twitter, there were no iphones. barack obama was just a freshly elected senator. the world has changed a lot since then, and almost ten years later, we're close to seeing another rate hike from the fed. if it's not tomorrow, it will be sometime in the next few meetings. there are so many financial pros who have no experience. that number is one in seven. talking 14% of financial pros have never even worked during a single rate hike. financial researcher jeremy hill
says there are more junior varsity fed watchers commenting on this potential policy change than ever before. he thinks this inexperience will cause a toxic cocktail of increased volatility in the markets. but not everybody thinks experience will matter much. jason trenner author of "my side on the street", he says no one's ever witnessed a central bank behave this way at all, so experience doesn't even matter. cass's dire experience, he says there are aulgs casualties. some of our journalists weren't necessarily around. >> yourself included. >> i was there. >> sarah says she remembers it well. >> i remember where i was. no, but i actually am with the trenner camp, which is circumstances have been so extraordinary with zero interest rates. quantitative easing, that was never a thing before this cycle. and this position we are in the
economy, maybe it doesn't matter. >> there have been stories about people who work at the bank. like the actual bankers. how am i supposed to sell a mortgage? i think the journal got into that. >> you know, maybe the bible had it right, speaking of history books. the jews had to wander the desert for 40 years so they could all die off so they wouldn't know there was slavery. maybe it's for the best, that younger people have not seen it before. they have a fresher eye. >> that was good. >> but that's the inexperience that leads to volatility, where they just don't know what they're doing. >> i would say take a look at the third avenue. they were pretty old. i don't think necessarily it means that experience necessarily means success. >> what do you think is most relevant when it comes to sort of then versus now? i mean -- but seriously. if there's one -- what do we know? we know dodd frank has happened. we know dealer inventories are much lower. liquidity has been a concern.
some things really have changed and i wonder which one of those is going to come back? >> i vote with sarah on this one. we're in such a strange period right now of central bank activity from japan to europe to the u.s. and beyond. there really is -- this truly is unchartered water. so i think perhaps really knowing a little bit less. it might keep you open to ideas and outcomes that were not expected. >> the last time the fed started the hiking cycle in 2004, the two-year treasury note yield, 268. >> oh, my goodness. >> now 0.96. the ten-year yield was 3.59%. the euro was 1.2185. financial markets look completely different. >> that's true. the other really fascinating thing about this one is even if experience may not count, everyone seems to be on one side of the boat. expecting the same kind of thing tomorrow, the rate hike to come, that it will be a dovish one. we know consensus is often proven wrong. >> being on one side of the boat often gets you in trouble when the boat starts to change
direction a little bit. >> exactly. thank you for joining us. thank you both so much. that does it for us here on "closing bell" today. closing things out before that big fed rate hike that is still expected tomorrow. "fast money" is coming up in just a few seconds. melissa lee, we'll hand it right over to you guys. >> thanks so much, kelly. "fast money" starts right now. traders on the desk are tim seymour, dan nathan, karen, and guy adami. we will hear from the man who has predicted some of the biggest market moves of our time, from the flash crash this summer to the massive october rally. jp morgan has had a quantitative strategy. joins "fast money" for his first tv interview in years. plus, finding danger in the herd mentality, and if yellen is about to send investors heading for the hills. it could be one of the biggest beneficiaries from the force. will "star wars" send imax rocketing higher? how is the company g