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tv   Closing Bell  CNBC  September 13, 2016 3:00pm-5:01pm EDT

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>> 2,127 is where we closed on friday. that is pretty much where we are at this moment so yesterday never happened. >> yesterday never happened. that's fantastic. tell the rams. they would like a redo. thank you. >> see you tomorrow. >> this is cnbc breaking news, market sell off. >> hi everybody welcome to "closing bell." i'm kelly evans at the new york stock exchange. >> stocks are selling off today. apple is the only dow component in the green. energy is one of the biggest sectors it is losing. those stocks down across the board. >> that report that oil demand is seen to be much lower. that's a key development and something warned about in discussion at delivering alpha a
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few hours ago. >> plus bill miller at delivering alpha talking about his best investment ideas. he will join our show live for more ideas and will bring you highlights of interviews with others. live from delivering alpha in new york city. let's start with the price of oil reversing gains. jackie deangeles has details. >> good afternoon. 3% sell off today and closing at $44.90. three significant factors impacting oil prices. the first would be the monthly report taking demand forecasts down not just for this year but next year, as well. the wall street thesis for this rebound that is supposed to happen depends on demand staying at least flat or ticking up. so that's not really a good sign. the equity plunged today and also a little bit of strength in the dollar not good signs for crude oil. inventories tomorrow. remember last week we saw a draw
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down of $14 million barrels. some are looking for a pretty substantial build. those are the ones who think last week's action was a one off event. the build factor being priced into oil prices today. as you can see the effect that it ha. one reason that will hold the algeria meeting. it's the wildcard. back to you. >> thank you. keeping an eye on those crude prices below $45 a barrel. tracking his broader sell off again here. >> this is all about worries about the fed possibly raising rates. we have a risk off day. we have a double whammy hitting oil stocks. we have general risk off day. exxon getting hit. it has been a stalwart recently
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but breaking down. it is at the lowest level since april. $85 you see right there. you want to see a risk off day? you heard the ten year yield dropped off. normally this would be a big help to bank stocks. they would move up on that m. how much is this debate with the fed freaking out? it has gone 11 to 18. look at that at 18. here are the speeches for october and november. it's where the cash is right now. that's a huge increase in the vix. we have flattening in the vix. we haven't seen that in a very long time. back to you. >> bob, thank you. let's get to the key point in the last couple of sessions going back to friday stocks and bonds both selling off. i sat down with paul singer earlier today at delivering alpha and spoke about the
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possibility for sell off in tandem to continue. >> it's been so long in the making that the bond prices are so high, interest rates are so low that it's impossible to ascertain what change in thinking will generate a group think with a different vector, thinking that bonds are not the safe haven that both stocks and bonds can go down. i think go down together. >> let's talk about that and what he said in our "closing bell" exchange. michael far joins us from d.c. keith is here at post nine and jack beruzian.
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typically stocks go down and that means bonds go up because it is taking money out of one asset class and putting it in another. >> pretty significant on the short term move basis. on the longer term we have to get back to a version on relationships we have come to understand over the last five, ten years. they have definitely gotten out of whack. mr. singer is right on that. on a short term basis you are seeing both go down because markets are so temperamental. part of that is what mr. singer is saying is that any little match or fuse will set them off in the wrong direction. you take a look at oil prices going down, equities going down, bonds going down. that is a classic concern story and that is what we are seeing. the movements have been so dramatic. on friday we had markets. the vix overbought. today we had them getting back to neutral.
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today they are vastly oversold. i think short term this is a very good opportunity to start nibbling around the edges. >> what are you doing in this environment? >> holding my breath and seeing which way this is going to shake out. we started last week and the market declined on the fed news. i never believed it. i wrote that we are not going to have a rate hike before the end of the year. i continue to hold that position. i think that the uncertainty at the beginning of the week is probably more political. i think that the expectations for a clinton presidency might have been upset some over the weekend and i think that you are seeing some traders begin to vote with their feet. particularly with mr. trump's criticism of fed chairman yellen. wall street has a lot to digest coming into the beginning of this week. >> there was a bit of a debate on friday about the selloff that
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day whether it was about the fed or about north korea. now we think maybe the election. we're at 173 on the ten year. what is that all about? >> combination of all of the above. one of the sound bytes is when singer said nothing is working when he was talking about central banks. i think that was so insightful. right now that seems to be one of these opinions that is creeping into the mentality of the investing public. over the course of the last couple of months we have gone through the low volatile environment. we saw people chasing returns, chasing yield and started getting into stocks, treating them like bonds. now they are getting the volatility back and when michael far said is right. they start to smell the election and all of those uncertainties. before you know it we have a big move in the markets. i think friday was the beginning of something.
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friday might be the start of what in hind sight we will look at as the beginning of a move down. it started around this level last year. we made a high of 2135. we are right there again now. let's see if i'm right y. have a feeling. i have a feeling these next couple of months can be very dangerous. >> people have been telling us for some time if interest rates move higher it could help the stock market. if the ten year moves up to 2% do you expect stocks would find their footing or is this the kind of environment we have been laying out where unfortunately they would be selling off in that environment? >> only if move to 2% is based on economic fundamentals. one thought i didn't complete was one reason that you are seeing the market go down while the ten year yield is going up is that it is a global growth concern story but also a concern that central banks are tapped out and just can't do more. that is what jack was alluding
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to. that is where you are getting the storm happening today. i will go back and say for the longer term i think we will see weakness in this. september is always a volatile month. on the shorter term i think there are excellent opportunities to step in here. next week when they say they are not raising rates and going to give us dovish language then you see the market rally again. >> we have a lot to get to. thank you all. good to see you. >> from the macro to microsays he is shorting alibaba. take a listen. >> people have compared amazon to alibaba and it couldn't be further from the truth. amazon is a free cash flow machine beginning in 2002 and has been. this is the exact opposite of it. it is just burning cash in a dramatic rate. >> alibaba is lower today.
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david favor just finished a delivering alpha discussion with alibaba executive vice chairman who has words i can imagine. >> well, it's an interesting opportunity to hear sort of both sides. the executive vice chairman of alibaba right there at the founding of the company back in 1999 and disputes a lot of what he would say and points out that despite that drop today of 1% the stock has been a very strong performer over the course of this year, helped in part by the numbers a few weeks back where it delivered top line growth. specific to the questions and criticism this is what he had to say. >> the problem is he doesn't seem to try to understand the business and try to appreciate the power of the digital economy in china. and you can lay a lot of claims
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and accusations on our business. on the logistics business we made full disclosure on the profits, loss, revenues, assets, liabilities of the business. investors can do their own math. whether you consolidated or not. >> speaking specifically about the 48 or so percent of the delivery business that alibaba owns. it doesn't control. mr. tsai went on explaining they don't want to have control of a company that has around 2 million employees as does the delivery of what is 40 million packages a day in china by, of course, what is the largest online commerce platform in the world. >> it's not just about jim chanos. a lot of people are short alibaba for a number of reasons about accounting and structure and how you can trade shares and have ownership. i thought it was interesting the
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way tsai was saying fundamentally our top line just keeps growing. >> and it does. there is no real questioning that although they are actually eliminating any sort of real focus on merchandise value. to your point the top line last quarter accelerated and that is the overall theme that you get from alibaba executives like mr. tsai is we are playing to the growth of the chinese consumer as the economy changes that will only continue and we have the wind at our backs. there are no shortages of potential critics in terms of actual numbers and some free cash flow numbers. >> the biggest ipo in history. >> and just in the last year up 54%. much to the chagrin of jim
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chanos. >> we have 48 minutes. this is an interesting last hour of trade. the dow down almost 300 points. we are heading to the lows of the session. i will watch to see how we do as we hit lows that were set on friday and whether we bounce off them or continue below that. >> we will ask a couple of levels these guys are watching. also coverage from delivering alpha conference we have bill miller speaking with us exclusively from the sidelines. we will hear where he finds opportunities in these volatile markets. >> more fallout from wells fargo fake accounts scandal. wells fargo plans to get rid of sales incentives that they had offered employees all these years. the senate banking committee is going to be holding a hearing on the sales tactics next week. we will speak with the senator leading the charge on that investigation, robert men endez of new jersey will join us next on "closing bell."
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44 minutes left in the trading session. as you see only apple is trading higher. how happy must an apple shareholder be. >> that is after news over the weekend. they must have felt good reading that. >> the tech giant is not releasing sales figures for iphone 7 but some carriers are. t mobile says opening day presales set a single day record for any smart phone in the company's history. sprint reported that preorders for iphone 7 and 7 plus are up more than 375% in the first three days over the last year when the previous iphone was
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released. there was not a lot of buzz about this iphone as everybody is getting ready for the next one, the tenth anniversary next year. so far so good apparently. >> it is really interesting because it is pent up demand. apple shares doing nicely in the session that is otherwise a difficult one. wells fargo shares going the other way falling after the company dropped the sales goals tying to the account scandal. more than 35 million shares traded hands with shares down almost 4%. >> sources say shares down around 4% as the company eliminated product sales. speaking at the conference cfo tried to calm investors saying this would not impact earnings mptd. >> the sales goals were not leading strong performers to be the best performers. sales goals we believe were
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causing lower performers to be willing to take extra staff. that is my take is performance management. he added despite significant press coverage they had very low volumes of customer reaction and that full fine has already been accounted for in the numbers thus with respect to this matter this is all that there is to know. it is a completed matter. despite the best hopes share price suggests the 4% slide resulting in jp morgan surpassing wells fargo as biggest u.s. bank by market capitalization while there continues to be no admission of guilt included in the punishment
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of the cfpb. >> thank you very much. today the senate banking committee informed ceo it wants him to appear at hearing one week from today. >> on that note joining us now is senator robert menendez, member of senate banking committee. welcome. >> good to be with you. >> what are you most trying to find out from this hearing? this investigation? >> what we are trying to find out is how could the wells fargo wagon roll over 2 million customers have a widespread number of employees over 5,000 opening up accounts that were never asked for, banking and credit card accounts and have no sense that there is any responsibility of the upper levels of the company. and how did that go on in wells fargo? what lesson should we learn? how do we have safe guards to
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not let this happen again? and how perverse is this throughout the industry? >> we had robert cordray on yesterday. they fine them $100 million. it is the biggest fine that that office has ever imposed but yet $100 million to wells fargo is very little when you consider the scope of this. do you think they were fined enough? >> look, i respect what the consumer financial protection board has done here, largest fine ever. i am a big advocate for them because we need a cop on the beat. i was an advocate for them when we wrote dodd-frank. i have to believe in context here $100 million the cost of doing business. obviously, there was a culture here as is exhibited by the fact that the ceo today said they are going to end their incentives which obviously were perverse that drove these individuals to do what they did that allow or
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created the environment in which this could take place. so you have to say to yourself $100 million if that is the cost of doing business then it is not a deterrent. and the purpose of a fine is not simply to collect money. the purpose of a fine is to have an industry-wide message that this is not acceptable and have a meaningful consequence so they change their culture change and practice. i don't think the $185 million total cost is really going to change that. that's one of the things i want to ask the ceo of wells fargo. we don't need the story. we need the truth. >> it is also a question of whether the bank itself should be fined in a way that makes it more meaningful or whether you are looking for individuals to be held accountable. this goes back to the financial crisis. in this case there is an individual who has not been specifically named but in press
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reports is said to have responsibility and maybe taking home in excess of $100 million while this has been happening. is this about isolating the individuals who might have been more responsible for this than just trying to have the bank which is so enormous be the one that is bearing the brunt of the outrage? >> for me it is not just bearing the brunt of the outrage. it is ending such practices and sending an industry wide message that such practices are not acceptable. that can be done by significant fines. it seems to me and we don't know this, if there is any criminal action performed by anybody in the process of this if there was a coordinatedeft to do this and systemic effort to do this then that needs to be prosecuted because big banks should not be too big to be prosecuted and to be jailed in terms of individual
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responsibility. i don't know yet because we don't have all the facts but when you have the person who headed this division ultimately walk away with $124 million and you are not talking about clawback something is wrong. >> what more can be done to regulate the industry so something like this doesn't happen? already dodd-frank you haven't been able to enact all of dodd-frank. it is still unfolding as we speak. is there something else that you can do to try and keep that kind of behavior from happening again? >> well, look, we need to strengthen the consumer financial protection board. i know my republican colleagues want to slay it, kill its budget and authority. here is a perfect example of why you need a cop on the beat. you need to as you learn the lessons think about what regulatory and/or legislative kaf guards you can create. i would hope that the industry
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would come forward and say we learned from this and as a result of this we are not going to do perverse incentives so that they can come forward and be part of the solution and then it is the punishment side of this. if, in fact, you are caught here the punishment has to be significant enough that you don't think it is the cost of doing business otherwise we will see actions like these take place time and time again. that is something we have to consider. >> thank you, sir. >> you are watching that senate banking committee hearing next tuesday. big interview tonight wells fargo chairman john stumpf will be on mad money. i'll bet members of the senate banking committee will not want to miss. 35 minutes left in the trading session here. the dow is down 245 points. >> sounding a stark warning
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about the sell off. he will join us to elaborate on that next. highlights from the delivering alpha conference, best ideas panel. we're drowni. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. [baby talk] [child giggling] child: look, ma. no hands. children: "i", "j", "k"...
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[bicycle bell rings] [indistinct chatter] [telephone rings] man: hello? [boing] [laughter] man: you may kiss the bride. [applause] woman: ahh. [indistinct conversation] announcer: a full life measured in seats starts with the right ones early on. car crashes are a leading killer of children 1 to 13. learn how to prevent deaths and injuries by using the right car seat for your child's age and size. now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted.
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you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. we are seeing another broad sell off today. another characteristic is
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interest rates are moving higher. nasdaq down 55. ten-year u.s. interest rate hit as high at 1.75% today. >> and one hot button issue at the delivering alpha conference in new york city is what the fed should be doing next. even smart money is talking about it. here is ray dalio weighing in. >> jamie dimon says to raise interest rates. you think that is wrong. >> i think that is wrong. at this stage the risks are so asymmetric. there is no doubt that you can slow the economy, the world economy, u.s. economy. risks are so much more on the down side. >> and when i spoke with paul singer from elliot management he says monetary extremism alone is not enough. >> you have a very delicate situation which cannot be solved by a sledgehammer.
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you need finesse. and one of the main elements of finesse is you can't just, in my view, whoever is the next president or central bank ophyllouses around the world, you can't just raise interest rates without doing something else. i think central bank independents is overrated. it actually in my view doesn't really exist. >> a lot to think about there. let's bring in our friend and chief economic adviser. the debate gets louder and louder as this market volatility picks up. where do you stand? i can't imagine you think we will get a rate raise next week but should we? >> interesting question. i think if you are just looking at the economy you could have a good debate. but if you look at border issues which is extent to which ultralow interest rates have distorted the system, have
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encouraged too much risk taking then i would be inclined to hike rates, but importantly add two things, reassure markets that the path is going to be very, very shallow going forward. and reassure markets that this cycle will end well below. >> what about comments that it's not monetary policy alone that has to be working in tandem with reform on the fiscal side to cushion the effect. the only way to do that is not with an independent central bank? >> i agree on the first one. absolutely right the central banks cannot be the only game in town. they cannot compensate for other policy makers. there are much better tools on the fiscal side and structural reform side that are much better suited. i strongly disagree with the comment on the autonomy of
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central banks. it is very important to have autonomous central banks. the last thing we need are central banks corrupted by the political system. >> his argument is that already happened. if you already have central banks buying these bonds what is the point -- >> so it hasn't happened. the central banks decide which instruments to use but have been pushed into a corner because others haven't stepped up to their responsibilities. central banks have had to do too much for too long. >> what about the argument that jamie dimon made yesterday. there are those who say just raise it a quarter point. what is a quarter point going to mean? it is nothing. it would be what it represents, don't you think? >> first i think it is absurd that we are ubseszing over a quarter of a point. it tells you the extent oo which markets have relied on these injections of liquidity.
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they deliver three things, the perfect trifecta, higher returns, lower volatilities and correlations where everything goes up. so the reality is we have become so sensitive to the tiny moves because we are over dependent on the fed. i agree with jamie. let's get it over and done with and let's resert. >> do you think it is possible this is the flip side of the period you describe where stock and bond prices rose together that now they may fold together? >> and that you are seeing interesting tug of war over the last sessions and today between those who say buy the dip and those who say wait, be more cautious because central banks are becoming less effective. and there's a tug of war going on and that's why you are seeing enormous volatility. >> if you were the fed chair and it occurs you would make a good
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fed chair. if you were the fed chair and you decided to raise rates next week what would that say? what would be the rationale for raising rates a quarter point next week? >> i would say the economy and labor market in particular is strong enough to need a rate hike. i would go on and say but remember we are in a very unusual interest rate cycle. the pace of further rates is going to be low and we end at a much lower rate. then i would end by urging other policy makers to step up to their responsibilities. >> perhaps a preview of what could be to come in some way shape or form. thank you. say hi to bosa for us. time for cnbc news update. >> here is your news update. former israeli prime minister
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suffered a stroke and was rushed to the hospital today. doctors have put the 93 year old into an induced coma. perez shared the 1994 nobel peace prize for reaching an interim peace agreement with palestinians. ohio university stripped the name of roger ales from school news room following sexual assault allegations against him. the school will return a donation from ales who stepped down from fox news in july. more than half a million black and decker electric blowers are being recalled. the company receiving four reports of fan covers coming up resulting in finger lacerations. at a bizarre scene on "dancing with the stars" as olympic swimmer ryan lochte two people rushed the stage. what the tv audience didn't see was a man rushed by security taken down on the dance floor.
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another man was whisked away by security. they are both under arrest. that's the news update this hour. back to you guys. >> do we know why? >> they were wearing anti-lochte and calling him a liar because of the incident at the olympics. >> do they have -- what interest group does that represent? >> i think it is random. the bigger issue is abc has very good security and i think it was incredibly surprising. >> i wonder how good the security is that these guys got in. i don't want to spend an hour on this but four people in the audience were yelling out. >> and they were wearing the t shirts in plain sight. >> usually people take this opportunity with a big stage to draw attention to some cause. i thought it was interesting that is the cause in this case. >> there is more to the story. i'll see you next hour. >> i suspect so.
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just coming off the lows of the session with dow down 223 points. a leading trader will tell us what he is watching into the close as both stocks and bonds do sell off. we have much more to come at delivering alpha conference. bill miller, and carl icahn are on the roster. where we explore. protecting biodiversity. everywhere we work. defeating malaria. improving energy efficiency. developing more clean burning natural gas. my job? my job at exxonmobil? turning algae into biofuels. reducing energy poverty in the developing world. making cars go further with less. fueling the global economy. and you thought we just made the gas. ♪ energy lives here. it's not just a car... it's your daily retreat.
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this is the new comfort food. and it starts with foster farms simply raised chicken. california grown with no antibiotics ever. let's get comfortable with our food again. 20 minutes left in the trading session with the dow continuing to come off of the lows of the session. the low we were down about 290 something. i will be interesting to hear thoughts on this. >> i am here with steve grasso. how would you describe what is happening in the market today? >> we have had a couple of things going on. you look at the iea. that put the nail in the coffin for the bulls today. >> saying demand would be weaker. >> if you talk about when they change their supply glut or when they extend or change their focus going out to 2017 saying there is going to be a supply glut, there is nothing bullish
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about that. growth engines what do we point to? china and india. >> you not going to take a picture so much about rising bond yields? >> they are all related. demand is so weak why are bond yields going up? >> bond yields are not relate today the energy move today per se but go back a couple of days that is related to the fed. we are still in the dynamic of the fed. fed is still the overarching reason for the market moves. today on a stock specific day on a market specific day i think it is all about crude. no growth, supply glut, nothing really excited to look at. >> real quick s&p 500 is about 2,128. what level is important? >> 2134 is the old high. from there it is round numbers. 2,100. look for flat on year. 2043 s&p 500 cash.
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19 minutes left with dow down 260 points. volatility continues. highlights from the delivering alpha best ideas panel. we have bill miller sharing their thoughts on wild market swings. bill miller will join us live from the conference in the next hour of our program. we will hear from black stone ceo steve schwarzman and carl icahn coming up.
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welcome back. one of the laggers is material sector where free port mcmorran. nucor shedding 3%. >> key investing ideas at delivering alpha conference going on in new york city. kate kelly with highlights and there have been many, haven't there? >> there have. it has been a really exciting day here. i wanted to review a couple of the most interesting ideas from our best ideas panel. bill miller who kelly interviewed had interesting ideas today. he said first of all i will warn
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you this is obvious and boring. i think it should go long s&p 500 and short ten year treasury. it may be time to go short or sell government bonds. he also said that he was long valiant, that it is a top position. this is the pharmaceutical stock that burned so many being down north of 20% after huge fall, management change and a number of issues, government inquiry. he says it is one of the top positions and thinks you can see 25% to 30% returns on this name over the course of five years or so. he also went on to talk a little bit about airlines. he said they are stupid cheap and sees opportunity there. and then let's listen to a quick summation on s&p and treasuries. >> talking 6% rate of return on stocks versus 1.5% on ten year
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treasury and strikes me that the treasuries are hardly a risk free asset and i think that the environment right now is the exact opposite of september of 1987. i will say that this is a long-term call on the treasury. >> the 1987 comparison interesting because we heard a lot of gloom and doom including comparison up through now to 1929 through '30s. moving on to the famous short seller. he had an interesting short on tesla. he is concerned about the solar city deal as we know a lot of people in the market and some members of the board of tesla have concerns about that deal. he mentioned a number of things including that the board was reluctant to provide solar city with a bridge loan. he says economics really don't make sense and there are a lot of risks involved. take a listen.
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>> the synergies i think are questionable at best. and to burden your own balance sheet and cash flow statement with this kind of business to bail out the shareholders strikes us as just a folly. >> so jim chanos never one to mince words taking on a stock that has been a darling for a lot of investors. >> exactly. we always look forward to hearing that. there is more still to come this afternoon. we will let you get back to it for now. very interesting to see what carl icahn having to say and bill miller joining us in the next hour. be sure to stay with us for that. last ten minutes of trade with dow down 248 points. art cashin just stopped by. balance of $200 million to the sell side. not a lot in the scheme of
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things for the sell off we are seeing. >> down about 250 points. jordan waxman will tell us why he thinks consumer staples and health care stocks could generate solid returns for your portfolio when we come back. mo so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade but the best place to start is in the forest. kubo: i spy something beginning with..."s" beetle: snow. kubo: no. beetle: snow covered trees. monkey: nothing to do with snow. narrator: head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. kubo: wow!
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dow down 233 points right now. joining us on the floor of the new york stock exchange is jordan waxman, good to see you. >> good to see you again. >> what do you make of this volatility? >> you have the summer i had when basically nothing was happening? the weather was great. >> are you welcoming this? >> i think it is natural after a period of complacency to have a jump from here to there. as el-arian was saying before there is a push pull between what we think is capable of doing. there is a bit of a lull here. >> you said you like consumer staples here which feels a little dangerous. we are talking about high valuations, very much loved space. how does that fit in with everything that is happening? >> we prefer companies in europe and asia where you are getting two to three cheaper than united
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states by virtue of the fact they are traded on european stock exchanges and most earnings are in u.s. dollars. there is less risk going in. >> do they have some of that? >> not quite as much here. no matter what happens in the world you have to wash your hair and put band aides on booboos. there is still a need. >> you have to do that here in the united states. >> you do, too. here those companies have rallied quite a bit. they are not exactly cheap anymore. you have to look for pockets of value where it is not a value trap like the banks or value trap like broken technology companies. >> are the dividend payers value traps? >> i don't think so. they are capable of paying 2% to 4% dividend rate buying back shares and the demographics are still in their favor. >> what is the highest payout ratio you feel comfortable with? >> we look at free cash flow, if
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it can fully cover the dividend. >> more than 100%? and look at the cost of their capital it has gone down and down. european pharmaceutical companies are borrowing negative interest rates. you are saying there is risk but cost of capital is down. >> paul singer said treasuries are not the safe haven that they have been. what do you think? >> agreed. >> treasuries are not the safe haven. if you are trying to figure out risk free rate that is pretty much the only thing you have. there aren't that many values left. treasury market is something we have under owned forever. municipal bonds for high taxpayers are still interesting. the only value left is high yield municipal bonds trading 3 to 3.5 percentage points over high grade bonds. there metrics are improving. jobs are up and so the metrics
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are improving. >> pension obligations are up. >> yes, they are. we stay away from general obligation bonds and being more tax revenue bonds. >> we'll take a quick break and come back with closing count down. >> after the bell we are bringing our delivering alpha all stars to you. a live interview with bill miller plus conference has more from ceo of black stone steven schwarzman and carl icahn. you watching cnbc, first in business world wide. across new york state, from long island to buffalo, from rochester to the hudson valley,
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two minutes left in the trading session with the dow down 250 points. bob pasani joins me. one day does not a trend make. let's look back five trading sessions. >> three days. >> let's go five then you can see where we came from before the sell off on friday. if we can show that chart of the dow jones industrial average. i'm trying to see if we are hitting back to the bottom we hit on on friday. >> we are exactly where we were on friday. >> dow 2.5, up 1.5, down 1.5. >> let's look at the ten year yield on that. as we pointed out this is a rare time when both stocks and bond prices are going lower here. >> in fact, not only stocks and
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bonds but eveb gold is going lower. this happened on friday. this is part of the trades where people have been long stocks and bonds are lightening up positions. >> 175 on the ten-year yield. and then the vix. that is something that has sky rocketed. that was more abundant for a while now. briefly touched 20 i think yesterday when we did that. >> the important thing here is there has been an entire business around selling volatility that has been very -- hedge funds that exist out there to sell volatility to the fools who want to buy it because we know volatility will stay low. this works well until it doesn't. then suddenly people selling volatility get caught to allow you to buy perfection. that is what creates all of this
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volatility. it is about the fed raising rates. it has people worried. >> thanks, bob. down 244 points. i wonder what tomorrow brings. still to come we have charles schaub ringing closing bell. stay tuned. steve schwarzman and carl icahn and bill miller live in the second hour of "closing bell." this is cnbc breaking news. market sell-off. >> welcome to "closing bell" i'm kelly evans with broad market sell off the dow dropping more than 250 points on the close echoes last friday. that is a drop of 1.4% to close just below 18,000 level. s&p 500 down 32 points to 2,127. nasdaq giving up 56. down about 1.1% to 5155.
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we will have more on all of this plus moves on oil and bonds. it is another busy hour from delivering alpha. we will speak to bill miller live from the conference and steve schwarzman and carl icahn both set to take the stage later this hour. joining me on the panel today we have senior market commentator mike san thole here. welcome, guys. for more on today's market action there is so much to get here. what do you think in a nut shell has happened? >> continuing from friday is this back up in bond yields we have had globally. it is giving a little bit of a shock to the premise of a lot of stock ownership. lower for longer with rates. it allows you to pay more. it allows you to justify higher valueuations. that is the immediate overlay of what has been happening here.
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once you have that buyer strike i don't think it is mostly about the fed. the fed is looking towards december. it is just about why our bond investors are getting cold feet. we have not made net progress since july 8. doesn't mean it is the whole story. that is what i think upset the stock side. >> another fascinating development that maybe plays into this, maybe it doesn't. we found out in 2015 that household median income dropped 5%. median is a little bit lower. point being you have actually very good news about wages. maybe it's enough to keep going. maybe it is just enough for people to think the bond markets are mispriced. >> it is a little bit backward looking. it tells you it is not just that wages are up. there are a lot of good things. it wiplay into the campaign. you have to assume maybe america isn't as bad as mr. trump says it is.
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it will help clinton. going back to today's market there is nothing, no single thing you can say that is what freaked us out. it's not like you can hang it on north korea blowing something up. if anything you can probably say it is because you had these amazing people at your panel today. i was watching so many of these billionaire investors kind of really worried more than they were optimistic about what is going on. i don't know -- i don't know that played into it. >> we can show a chart of the ten year, guy. curious to know what you think. it is one thing to know there are these bears out there. another thing to hear paul singer make a case for why the paradigm might be shifting here. >> i have been, as you know, i have been a steadfast bond bull
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for quite some time. you can't be dogmatic in views. if the market starts to tell you something has changed you sort of have to listen to it. last week we found out maybe the ecb doesn't have the markets back. i think people sort of push past that. somebody like jamie dimon saying the fed will lose -- understanding that he has a vested interest for his company he said he thought the fed would lose credibility if they didn't raise rates. now you have the voices today talking about missteps in the fed and all things they are concerned about. i think that is what leads you down this path. i think to mike's point i don't think it is necessarily a u.s. bond move. i think it is more predicated on what is going on overseas. it will drag u.s. rates higher, as well. in terms of broader market this is just sort of the -- this is what happens in the wake of what
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we are seeing. that bond movement from the lows we saw 135 to numbers we are seeing now percentage wise is a pretty staggering move. >> so the question is when it comes to bring us back to the stock market which is selling do you buy the dips which has been the right strategy to this point? people blink and miss the sell offs and then we continue to recover and move higher. do you do that again or sit out and think this time something is different. >> i'm not breaking any news here. the entire way up i have been skeptical and all along i have said my skeptmism. every pull off we have seen in the last seven or eight years has been a buying opportunity. is this going to be the different one? i wish i was smart enough to answer that question. i will say the longer the market
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stays below the 2,135 level in the s&p the more cautious i become. i think a huge level will find itself at 2050. if you are looking for critical support that is where it comes. if you continue to see these pretty amazing moves in bond markets globally again that uncertainty doesn't lend itself to a stable stock market in my opinion. >> it was interesting this happened on a day -- this is much-anticipated event of the weekend. she was dovish which is contrary to what was built up to be. she comes out and instead has a very dovish message. is that lost? do people not care? does it not have anything to do with why bonds are selling -- >> i think it was a factor yesterday to the rebound. i think today we woke up to the wall street saying you have a conflicted fed not likely to
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move in september. if i'm just trying to put the market on the couch a little bit it definitely feeds into the idea that has been building up that central banks are fatigued. they don't think the marginal advantage of doing anything more than they have done is really there. so that is to me where it fits in. not so much rates are going up on us but we just don't know. i think stocks need a new story if they are going to go higher. it is not just about lower for longer. >> good place to switch gears. thank you for joining us. >> later. >> there is much more coming up at fast. carl icahn will be talking everything from the economy to fed and markets. that will be happening within the next hour. bill miller spoke earlier today sharing his best idea for the market. he said he is long the s&p and short ten year. with us to explain why is bill miller, chairman and cio of lmn,
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llc. welcome. assuming you heard some conversation we were having explain the degree to which the fed and having confidence in the fed or anticipating their next moves fits in with your best idea here to go long stocks and short bonds. >> being short bonds has been a terrible trade for the last 35 years. i think that right now it's probably a good time to put that trade on. and the reason i say that is that you are in a period now where interest rates are about as low as they are going to go. we have seen a back up in global yields. maybe most importantly we had an interesting thing today happen which is for most of this year whenever stocks sold off bonds have rallied. we have seen stocks selling off and bonds selling off. >> and so paul singer's point was if both stock and bond prices rose together during recovery now they can both fold together. that might be what we are
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seeing. your point of view you are saying bond prices will fall but you keep buying stocks. >> i think overall valuations while high compared to historic norms those norms were periods where average bond yield is about 6%. average bond yield is 1.7% and have dividend growth rate and we can find really good value in the market short term corrections in the market really i think are not to be too concerned about. >> why is that? make the case for somebody who has been listening to the talk of delivering alpha or contemplating this move with the bond market and saying if yields are going higher than stock prices must have to fall lower and maybe be re-valued. why do you want to be long stocks in this environment? >> i think it is a valuation call. if you go back 30 years to 1987 so september 1987 the month
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before the market crashed you have the exact opposite situation where yields have been rising but stocks were continuing to rise and the fed had been toightening. the 30-year treasury you got to 10% in october of '87. and yet what you had was stock market goes around 18 times earnings and with 3% yield. when you look at stocks versus bonds it made no sense because you have 3% in stocks and dividend yield and 5% growth rate which meant you can only make 8% in stocks where treasury gave you 9% for 30 years. so the valuation case was compelling. right now it is the exact opposite which is it is hard to see. i think the bond market made a double top one in 2012 and the other july of this year. bonds around 135 level with bond yields the lowest in history and
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stock valuations are certainly not demanding compared to bonds. it is very easy to see how a decent -- long term it is hard to see how if you threw a dart and just continue to hold it you will get 4% or 5% growth rate in dividends. that will have to kill bonds. >> what is your anticipation here? is this predicated on they are going to keep raising rates? at this point does it matter what happens if they pull a 180 and say forget it? >> you know, i think at the end of the day the central banks around the world at least in a rethink about the ability of lower rates to make any difference in the overall economy. what we have now is there is a much diminished margin of utility. there aren't projects on hold because rates are too high. what is happening is it is
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putting pressure on the banking system and raising present value of liabilities and i do think maybe most importantly the u.s. economy is chugging along at 1.5% to 2%. that is fast enough to bring down the unemployment rate. we are approaching full employment. you just -- all of that would tend to say you don't need extraordinary accommodation. removing accommodation some call it tightening. and i doengt hu it causes a lot of problems for the stock market except near term as money gets reallocated. underlying values don't really change. >> mike santoli. the fed calls it removal of accommodation. it seems to make sense. to your point that you mentioned in the short term when you have markets adjusting to general rise in bond yields as treasury market perhaps sells off further or to the fed doing what it is
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going to do. what are you looking for in that adjustment process? what kinds of stocks should perform well in that environment? is that what traditional growth is going to do better? what are you finding that is compelling? for example, those dependent on the credit market, are they going to be okay, as well? >> we tend not to think about it in the sense of growth doing better or value doing better. what we are looking for is where prices of individual companies change far more than warranted by change in interest rates or drop in the overall market. we are trying to look for dislocation and valueuation across the board. if the yield curve is shicfting up then that is good for banks and financials and credit sensitive names. but broadly speaking it would tend to be good for financials. 100 basis point move in fed funds rate is probably 4 to $5 billion of pretax earningsism we
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can look there. if you take a look at like a jp morgan with low payout ratio. we think those can grow far faster than the market. they are above market. >> just a quick question. do you have -- what about deep value? i mention financials deutsche bank at 30%. i look at these more distressed situations like volkswagen, is this a time to kind of put a little and bet on some of these more difficult situations? >> we are looking at that. we think something like credit swuisse is attractive name in here focussing on areas that we think make sense. those deep value names most
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energy names this year. many deep value names as expressed in a low price book have had a big move this year. even if it is not strengthening very much those should continue to do well. >> languishing this year despite all of the work they are doing on trying to help with zika. are you disappointed with performance there? what do you think of the stock? >> i think as i have said many times intrexon, people trade it back and forth based on news flow and what we are trying to look at is what r.j. kirk is doing in terms of execution and fundamentals and building intrinsic value. it remains i think on a long term basis a low risk portfolio of real options on probably the most dynamic and revolutionary and disruptive technology in the
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world which is synthetic biology . so we think they are making good progress. the stock is going to do what it is going to do. it doesn't have fundamental valuation support, for example, in the traditional sense of earnings or dividends or book value. >> all of those traditional measures that a company is standing on its feet. we'll get to those. i want to ask you about one more thing here and hat is actually in the auto space because i know you like to look at emerging technologies. we are about to come out with this chevy that will have a big electric range and a lot of controversy about tesla. is there anything in the field that you think is a good investment here? >> we own fiat chrysler and it has done well. we think it is one of the cheapest of major global companies with a management team
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that is very forward thinking and is looking and talks about them linking up on some of that stuff. i think we don't own gm or ford but if people are worried about an extensive market you can buy companies at 5% dividend yield and that is hardly extensive. and with great cash flow. those companies in general for people who are looking for a place to hide in the market that is a pretty good place. >> thanks for joining us. >> thank you. >> really appreciate it. that is bill miller from the delivering alpha conference. it has been a big day in terms of coverage. coming up, steve schwarzman will give us his take on global markets and the economy and where he is finding opportunities right now. later find out whether carl icahn has his eyes on stake in new companies. you are watching cnbc, first in business world wide. are. do i look smarter?
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welcome back. major averages lower by more than 1%. the nasdaq dropping 56. it was actually the outperformer. let's get to bertha coombs.
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>> the nasdaq 100 was the best performing sector of the day that we saw a broad decline with all down. apple was the reason why we saw relative outperformance. apple was up on the day on fairly strong volume reports from carriers like t mobile that demand for iphone 7 which lots of folks have been poopooing have been strong in the first few days available for order. that has had a halo faek on chip makers like sky works and others even on a day when most chips were down. intersol was best performer in chips space on news it is being acquired by a japanese chips maker. today was mostly down drafts. a lot of stocks down. biggest losers on down grades including netflix. anthem cut worried about their
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exchange. and intuit see margin pressures ahead at morgan stanley she meant to say. >> always a mouthful. especially on a day like this. the debate over whether to raise interest rates was a big topic. we are joined. >> i did sit down with former treasury secretary. we got their thoughts on the fed markets and why jamie dimon might be wrong in calling for a rate hike. >> when jamie dimon says to raise interest rates youz think that's wrong? >> that's right. at this stage the risks are so asymmetric. there is no doubt that you can slow the economy, the world economy, the u.s. economy. tightening will work. and when you look at the inflation pressures, it is a
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global thing. and you look at the demographics all of those things means that the risks are so much more on the down side. >> couldn't get a call on the election but we did get his take on central bank activism. >> the idea that you should raise rates to replenish the arsenal and slow the economy is a weird argument to make. it's true to say that central banks in developing markets are much closer to the frontier of what is possible than i think any of us have ever seen. but it's not true and i think ray would say it's not true that major governments are completely out of ammunition. >> and when it comes to politics while they weren't willing to go on the record on either side of it they did say and geithner
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lamented the idea that both sides moved so far from the middle. interesting day here at the delivering alpha. >> and probably one of the most interesting is what we were briefly mentioning this concept of central bank independence or lack thereof. >> you hear paul singer say something. he said central bank independence is overrated. i would argue it is probably overstated in the sense you can argue the markets kind of had control over the fed for quite some time. that is one criticism that instead of looking at data of employment and things like that there seem a bit trepdacious. one question for andrew. did you get sense of what they do have left to do? what is the ammunition? what does it look like? >> i think there are two issues,
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the ammunition of what the fed may or may not be able to do. then we started talking about what congress could or could not do. as long as the fed as low as it is, does that mean congress can do whatever it wants or rather not do anything about all of this. i don't think he gave a precise answer as to what it is that -- what quivers are still there. so we'll have to see. >> along those lines i found it interesting when you go to those guys about the notion of 4% growth rate that donald trump likes to push out there and of course that is very contrary to what ray dalio thinks is potential of the economy. he thinks we are so far from policy when it comes to economics and government that who knows what the upside is. i thought that was a surprising answer. >> surprising in that both of them think that we are in a 1%
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or 2% growth rate for the foreseeable future unless something changes. what is it that is going to change? and is it going to be who is in the white house and is it who is in congress? if everybody was firing on all cylinders could you get to 4%? maybe but by the way tim geithner did not seem to indicate at all that he thinks that something in washington miraculous will happen anytime soon. >> i know it has been a long day. coming up, two of the heaviest hitters are still to come. black stone ceo will tell us whether he thinks the fed should raise rates and how that could impact the market and the economy. later activist investor carl icahn tells us what he is buying and selling. "closing bell" is back in a moment.
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even technology to make engines more efficient. what company does all this? exxonmobil, that's who. we're working on all these things to make cars better and use less fuel. helping you save money and reduce emissions. and you thought we just made the gas. energy lives here. it is time for a cnbc news update. >> here is what is happening at this hour. president obama campaigning for hillary clinton in philadelphia making his first appearance -- most qualified person to have ever run for president. a tractor-trailer involved in a high speed chase.
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involves highway patrol. driver of potentially stolen rig did not stop for police. alaska airlines flew right past hawaiien airlines to post best on time rating. the d.o.t. says nearly 90% of flights arrive within 14 minutes of their scheduled arrival time. complaints against u.s. carriers fell by 20%. and listen up all you pasta lovers. olive garden will celebrate the 21st anniversary of never ending pasta bowl by selling passes for seven weeks beginning october 3. up to 21,000 pasta passes will be served but it is just for one hour on september 15. the sale begins at 2:00 p.m. eastern time. >> if the fed raises rates how does that effect the pasta pass? >> there is food deflation.
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>> questions for society. thank you. >> you're welcome. see you tomorrow. apple one of the few stocks rallying after strong reviews and presoerds of iphone 7. up next we will break down those numbers and get you the latest on the ios 10 upgrade. what does carl icahn make of recent volatility. find out live from delivering alpha coming right up. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average. it's about achieving goals. ♪ and invesco believes doing that today requires the art and expertise of high-conviction investing.
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welcome back. a rough session on wall street. the dow was down about 1.4%. 258 points. s&p 500 was down 1.5% and the nasdaq was down about 50. it closed around 5155. transports down 150 and russell was especially hard hit down nearly 2%. 1.9% today. apple was the only dow stock closing positive. lots of news for the tech giant. service carriers reported preorders for 7 and 7 plus. josh lipton joins us now with the latest. >> so iphone users at least
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those with an iphone 5 or later are downloading ios 10. among new features stickers and animations. new design for apple music and apple also opening up siri to developers. that means you can ask siri to make a payment or send a message to a friend. that new feature helps apple keep up with competition. amazon, alphabet and microsoft have introduced voice assistance. there was an issue with some users complaining that installing the new software was rendering devices useless. apple telling me that has now been resolved. beyond the software consumers waiting for the new hardware. today t mobile saying preorders for iphone 7 and 7 plus shattered records and meanwhile
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sprint saying preorders increased nearly four times. apple stock moving higher in today's trade. noting carriers are running aggressive promotions still calling that news from the carriers positive and encouraging. back to you. >> stay with us. a couple of things i'm wondering about. some are pointing out they weren't big iphone sellers in the past. are we expecting verizon and at&t to come out with figures, too? >> i would guess not at the same level of increase. the market on a bad down day took apple stock up 2.4 percent which showed you expectations were not very high. >> the general trend this iteration. we just don't know because it is this half year as opposed to full upgrade. anything is better than not
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having those. >> i wonder how much the galaxy note 7 disaster enters in here. over the past week we heard stories about the faa saying don't turn it on and you worry about this sort of thing and it is take ag real chunk out of samsung's market cap. that is not having some sort of effect here where people say i'm not going to buy that thing. >> is there anything to glean? i want everybody to keep an eye out here. carl icahn just arriving. there is carl icahn making the way with his wife there to the stage where he will shortly be delivering some remarks. and by the way it will be interesting to see how much he goes into this whole back and forth when you think it has been played out there is a new chapter. >> absolutely. the bill acman back and forth. he got a little benefit with bullish comments from valiant
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earlier today from bill miller. but i do think it will be fascinating that and what he might say about politics or whatever is on his mind. >> josh, by the way, if you are still there, i was going to tie up the subject when it comes to apple and to samsung, have you heard any updates on just what a setback it was the fires for galaxy note 7 for samsung? >> no doubt a setback and embarrassing one for samsung. if you talk to analysts they will say samsung is doing its best in a tough situation. as for the impact of apple i know there are some analysts that he does think samsung's pain could be apple's gains when it comes to smart phone. not a huge gain but could have some marginal impact. >> depending on who tells us what for the time being thank you so much joining us out of
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san francisco as apple shares the only dow component higher. coming up paul singer warning about investing in a particular asset class. weal will tell you what he is selling next. what's it like to be in good hands? like finding new ways to be taken care of. home, car, life insurance obviously, ohhh... but with added touches you can't get everywhere else, like claim free rewards... or safe driving bonus checks.
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even a claim satisfaction guaranteeeeeeeeeee! in means protection plus unique extras only from an expert allstate agent. it's good to be in, good hands. sometimes they just drop in. always obvious. 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. now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything.
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thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. welcome back. we have a market alert on oil inventory. seema mody, what is happening. >> api data shows smaller than
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expected build. crude rising to 8.4 million while gasoline inventories decrease. up roughly 25 cents on this api data. >> thank you. earlier today an institutional investor delivering alpha conference i did sit down with paul singer. he gave us his best investable idea. >> i think owning medium to long term g 7 fixed income is a really bad idea. and by removing from your portfolio things that are really bad ideas that is a helpful thing. it's not just go buy this or that. it is sell your 30-year bonds. the japanese swap about three weeks ago was just a tiny bit north of zero. it was like five basis points. today it's 60, 55 or 60 basis
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points which is a heck of a small yield for a 30-year instrument in a goodness knows what world. so sell long term bonds is my outright recommendation of an asset class. the reason i called it the biggest bubble in the world is because the bond market is $60 trillion roughly and it's at prices and yields never before seen and containing a tremendous never before seen asymmetry between potential further reward and risk. >> paul singer there. that is when we saw ten year yeld move up, highest level only since june. from the lows relatively speaking it has been a sizable upward jump. >> 55 basis points from whatever
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five basis points was 30 years. actually, if you can take that 50 basis points on the other side of the trade, there is a lot to be made here if you have any idea why these things are moving the way they are moving. that's the problem with this. if you don't have any idea then jump out of just a small matter of $60 trillion. >> i think the main point is that with rates so low even if they don't go up a lot, they are kind of spring load today create losses when they go up at all. that move was a double digit percentage loss. i have never really bought that fully into the idea of a comprehensive bond bubble. to me a bubble really has to have some kind of broad public participation of an agreed story attached. here is where it will get me rich quick. >> the one moment when i wonder if we might have entered that
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territory is when you sense whatever you buy. >> negative yield really kind of only operate well if that is the premise. >> in a bubble basically implies delusion. >> i guess it's that somebody else will take it off your hands for more and it is an uneconomic buyer. i don't know if that means it is a total bubble. >> certainly why so much rests on rhetoric coming out of central banks. >> steve schwarzman taking the delivering alpha stage. we will hear from him and jim chanos. he does say there is one thing that. find out if any new kaecompanie are on his radar when he takes the stage coming up. they may want the latest products and services,
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welcome back. jim chanos gave his best idea earlier on halftime report shorting tesla. here is what he had to say. >> tesla put itself into the walking insolvents by doing this deal. i would assume the market would cheer if they walked away from it. he seems pretty committed to try to get it done. they will have to raise capital by the end of this year early next year a lot. >> he was saying it would be about a billion dollars a quarter. >> tesla a company already dependent on raising new capital from time to time to fuel its business would therefore have to
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go to the well that much more often. he points out that in preceding this deal for tesla to buy solar city comes out that solar city just wanted a bridge loan from tesla, tesla's board says no thanks. this spread has widened out in terms of how tesla's trading in relation to solar city stock. it is about a 20% spread. >> if for some reason it falls apart that would be clear trouble for solar city tesla investors might feel somewhat relieved. >> you have two companies with very different risk profiles, different costs of capital. you decide to merge them to put the weaker underneath the stronger you will have to raise capital and go back to the shareholders. you going to raise the cost of capital. the whole thing made no sense from an industrial perspective either and the same time you
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will have angry shareholders. >> and it stinks from a governance perspective. >> solar city shares down 4% reflecting all of that discussion. steve schwarzman just took . we'll listen in when we come right back. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.
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blackstone chairman and ceo, steve schwartzman taking the stage with becky quick. let's listen in. >> things are down, you're always buying and selling at the same time. now we've got an economic recovery that's still going on. it was a sub par recovery, which is maybe why it's lasted so long. and u.s. consumer looks like they're in pretty good shape. we have got inhibiters on the growth of the economy that's kind of a huge regulatory repression. that's going on. sort of like one foot on the brake, one foot on the gas. with a very slow rate of growth. 2%. and that's in a world where we probably have close to 1% immigration between legal and illegal. so we're growing netted
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immigration probably the same as europe, which is not heroic. so keeping that going for a while strikes me as okay. there's a little bit of wage inflation, which is going to probably impact the growth rate of profits. so that puts a bit of a ceiling on the equity markets. >> but does the equity market look expensive to you right now or not? >> well, if you have interest rates where they are and you will pop up all asset classes. and so it's a little expensive for my taste. >> if it the fed were to raise rates, even if it were just a quarter basis point, would that make it look even more expensive, in your perspective? >> people are been talking about this on television for so many years, the fed might actually do something. just out of the boredom of it all. and, you know --
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>> daring them. >> right. daring them repeatedly and eventually they'll give up and do something. and 25 basis points will move markets only because you all have become a proxy for the markets. you wanted to move something, or else there is no news. and -- but it won't make a difference to the u.s. economy. it will temporarily impact markets around the world, just simply because it will. and it's been years in effect, really, except for the one increase. so it's something that at some point will have to be normalized. they'll probably start later this year. but i think the fed is very cautious group of people in large part because it at least for the last few years, we haven't had fiscal policy. >> right. >> so when you get a new president, you know, sort of
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like jump ball. let's see what happens. >> speaking of a new president, when we sat down with you on "squawk box" in january from davos, you said you would take donald trump as the republican nominee over ted cruz. you got your wish. but you still haven't endorsed him officially. >> well, i think you took away my choices. i mean -- i was just sitting there, minding my own business. and that was that sort of gotcha question at the end of the interview. i thought it was cold out there and it just got colder when you asked the question. and so i think this presidential election is like a mystery. i've never experienced something like this. with such low positives for each of the candidates and frustration and so little conversation about policies of almost any type. it's turned into some kind of
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food fight where people are just talking at each other. so i think for the public, it's been -- it's been amusing on one level, but it hasn't been substantive. and i am hopeful that in the last two months of this that people will start turning to more substantive things. because if they don't, one of the options is that, you know, not many people -- not as many people come out. >> sure. >> to vote as they should. >> one of the things that both candidates have been fairly clear about is they are taking a more protectionist stance. neither one of the two major candidates is in favor of tpp. we've had things mentioned like tariffs being slapped on the chinese or others. all kinds of trade barriers, and i just wonder for you who is
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traveling so often and speaking to leaders of both business and politics around the globe, what impression you get from them, and how worried you are about that type? >> i was just out at the g20 honjo last week and what they were talking about is how trade is sort of some modern low growth rate. and how this populism and anger and sort of concerns about globalization are affecting all kinds of countries in terms of the political will of people to keep the system open. and that -- that was the number one issue. in effect. because, you know, i think we're facing a lot of issues, all at the same time. i mean, you have -- if you have
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globalization, which has made some groups, you know -- poverty-reduced by i think it's 700 million people in the world. but you've also got this tech revolution, and the tech revolution, disruption -- >> that is blackstone ceo steve schwartzman at delivering alpha. just want some thoughts to wrap-up the day or to look ahead. >>in he expresses the view of everyone in that position. people in business who don't feel as if they have a place in the current election cycle. and that they're kind of mystified by not that many opportunities in a low-growth economy and what do you do? and it all seems dependent on interest rates, even if we don't want it to be. >> i think -- these are disenfranchised billionaire republicans. and that's -- across the board. even the chamber of commerce. they feel they're not being represented by donald trump. they can't quite get themselves to endorse hillary clinton.
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they just feel like they have no choice. >> yeah, dave saying it puts yellen in an interesting spot. either you do or you don't, and you seem darned as the saying goes. either way. guys, thanks for joining me on "closing bell." rob sox, michael santoli and "fast money" begins now. >> live from the nasdaq overlooking new york city's time square. pete najarian, guy adami. there's more pain to come. he'll tell us what he's looking at and check out these two photos. can you tell which is shot on the iphone 7? if you can, it might explain why apple's stock is surging. and later, heading out to the conference of captivating wall street, the man, the myth, the legend, carl icahn. warning about a market

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