Skip to main content

tv   Closing Bell  CNBC  September 20, 2016 3:00pm-5:01pm EDT

3:00 pm
to be. i brought it down a little bit. one quarter to go. do i get reappointed? yes. >> wow. >> the lesson from this game is the impact of rate hikes are long and variable. you have to act strong early when you see stuff. >> they will be playing that game tomorrow. i'll be there with you. thanks for watching. "closing bell" starts now. hi welcome to "closing bell." i'm kelly evans have the new york stock exchange. >> exxon is under investigation now. we told you friday about the new york attorney general's probe. now the sec is looking at the oil giant. we have details coming up. and the man once known as dr. boom will join us here at the stock exchange to give us his outlook for the economy and his fed predictions.
3:01 pm
>> do we call him dr. sunshine. >> he likes to say dr. realist. >> allergan could be buying a -- it had a market cap of $90 million and they're buying it for $1.7 billion. all because the bio tech company's progress in fighting a certain type of liver disease. we will look at what other companies could be takeover targets in that space because of this takeover here. >> we are keeping an eye on markets. the dow is up 50%. s&p is up five. nasdaq trying to participate. let's get to our top story. wells fargo ceo's testimony on capitol hill you saw live here on cnbc. testifying in the wake of the bank's fake account scandal. williford frost is in washington. he has been covering hearings all day today. >> and the hearing was far
3:02 pm
tougher for john stumpf summed up with this exchange. >> have you returned one nickel of the money you earned while the scam was going on? >> and the board will -- >> i will take that as a no, then. have you fired a single senior executive? i don't mean regional manager or branch manager. i'm asking about the people who actually led your community banking division or your compliance division? >> we have made a change in our regional to lead our regional bank. >> i'm not asking about regional managers or branch managers. i'm asking if you have fired senior management, the people who actually led community banking division, who oversaw this fraud or the compliance division that was in charge of making sure that the bank complied with the law? did you fire any of those people? >> no.
3:03 pm
>> okay. so you haven't resigned. you haven't returned a single nickel of your personal earnings. you haven't fired a single senior executive. instead, evidently, your definition of accountable is to push the blame to low level employees who don't have the money for a fancy p.r. firm to defend themselves. it's gutless leadership. >> it was very heated. that was really the tone of the q&a despite his attempts to apologize to shareholders and politicians at the open. senator warren concluded by saying that stumpf should be criminally investigated. the share price hit its low of the day during that exchange. it has since rallied, though. >> shares up a little less than 2%. stay with us. today's hearing has some wondering what may be ahead. >> join the conversation terry haines, managing director, head
3:04 pm
of political analysis. you were a staff member for some of these committee hearings in the past. you have seen this come and go these investigations on world com and so forth. what did you make of the hearing today and how do you think john stumpf did? >> i sure have. i was the lead investigator and worked on sarbanes oxley. mr. stumpf's bottom line, saying he is sorry helps but what you clearly have here is a situation where there is a lot more that still needs to go on both within the bank and a lot more that goes on with congressional hearings on both the senate and the house side. that was very clear from today. >> what is the purpose of the hearings? is it simply a public forum or is there a process that this begins and is part of for additional specific steps to be taken? >> it is a little bit of both,
3:05 pm
kelly. fundamentally senators and members think their jobs are to make sure the public is informed and that they have all the answers to things like this. clearly, there is a lot more left to go there. it is also not unprecedented for congressional committees and the justice department or sec to cooperate. that certainly happened while we were investigating world com. some of the things we did helped put executives in jail. so they're not just public forums, they are designed to get at the truth in their own way. >> senator warren was clearly the most outspoken questioner there today. but he didn't get many easy questions from many. >> i think senator warren was most focussed. i don't think she was the most outspoken. it really was the tone of all of the committee when it came to
3:06 pm
q&a. one senator or senator tester said this was an unprecedented moment because mr. stumpf united to unite the whole committee with one point of view because the focus of this scandal is the consumers and they continue to -- felt like mr. stumpf failed to acknowledge responsibility despite having said those words in the open particularly on aspects of callback. that is why there was such a united tone. >> already leveed about $185 million fine on wells fargo. what further fines or consequences do you expect from different parts of the government now? >> you have the potential for sec investigations. i know director cordray wouldn't answer the question directly about criminal referles and what might come from that. that is also a possibility.
3:07 pm
then, of course, you have what wells might be able to do itself. they've got more than an image problem here. there is the code of business ethics that wells has. and that makes for interesting reading today. >> does john stumpf need to resign? does something have to happen to show that there is a change? they have eliminated the sales incentives that created the culture, but does something else, another shoe have to drop and does it have to be john stumpf? >> i certainly have no inside information. let me say that watching the hearing today clearly the board is considering what to do here. and that was clear on both sides. it is certainly clear for mr. stumpf. >> we have to go. terry, thank you for joining us. and, of course, will, thank you. good job on those hearings today. >> we will have more next hour. david vitter on the banking
3:08 pm
committee gives us his report card on john stumpf's testimony in the next hour or so of the show. with the dow up 47 points let's get to our "closing bell" exchange. ellen zitner with us. keith list and rick santelli getting ready for fed announcement. keith, at least two primary dealers are predicting the fed will raise rates tomorrow. that is two more than had been predicting this on previous fed eves. i don't think you are expecting it to happen. what do you make of the atmosphere going into this second fed meeting? >> if you look at where the markets are we are trading back to where we were in the middle of july. if you think back to that period in july not that long ago it was one of the calmest periods that i can remember for several years.
3:09 pm
there is absolutely a wait and see attitude not only for what we will hear tomorrow but into november and december. this should be a volatile period in the markets. we should be trading a lot more. we have gotten into this really negative feedback loop where two or three days before the fed is coming out with an announcement the market goes silent and no one is willing to take a bet. >> i think what bill gross was saying he sees better than 50/50 chance of rate hike tomorrow. what is the point of view of morgan stanley? >> i would completely disagree. i think the probability of a rate hike tomorrow is very low. that is certainly not something that the fed communicated going into this meeting. it could have made its intent much more clear so you don't get adverse market reaction by surprising the markets. and the data just didn't cut the way in favor of a rate hike going into this meeting. there is really nothing for them to do but deliver a balanced
3:10 pm
statement. i think there are much more important things that our clients and investors are focussed on and that is what do they say about the future path for rates, not necessarily will they or won't they hike rates in september or december? >> rick, what do you guys talk about on the floor there? >> people on the floor aren't looking at probabilities in the hard sense of the term. they are looking at various shadow issues. for example, if you look at futures for 10s and 30s they have taken a lot of volatility out of the december contract for the futures. that is a good sign that nobody in the pit is looking for anything aggressive at this meeting or potentially any meeting this year. in terms of fed fund futures i look at the direction and there have been times where the contracts are much lower in price meaning higher probability of tightening that isn't showing up. i think after listening especially in some quotes by
3:11 pm
bill gross what i can say is traders in the pit believe that the markets are conditioned to throw a lot of volatility if the fed are hinting they will normalize. maybe they are just going to do it. that would be my call but i don't think they are going to. i would not take the element of surprise out of the equation considering where the dollar is, where rates are, considering about midnight eastern we will know. i personally think they have a nice window to do it. i don't think they are going to take advantage. >> i was going to bring up that decision. the bank of japan's tonight/tomorrow feels almost more critical because they seem to have internal divide on whether to be more or less aggressive. as they go the rest of the global markets are trying to follow suit here. is there coordination between bank of japan and fed to make sure they are not going to give from one hand and take from the
3:12 pm
other? >> i follow the line of reasoning that janet yellen follows and that is that it is about conversation among it global central banks, not coordination. coordination is something you get from global central banks in emergency situations. the conversation is certainly there. i would agree, though, the focus seems to be more this week on what the boj will deliver rather than the fed because expectations seem to be pretty locked in for the fed and the fed frankly i will never put a zero percent probability on anything. their appetite with the risks near zero their appetite for surprising markets is extremely low. so i think the markets are right to focus attention on the boj where there is more uncertainty about what kind of outcome they will deliver. >> i know this is a mug's game to do this, two quick things. the fed raises rates tomorrow. what do you think the market does?
3:13 pm
the fed does nothing tomorrow, what do you think the market does? >> i think we see a sharp sell off on the open because it will be totally unexpected is what we are talking about. eveb though it won't be that damaging to the economy. fed leaves rates the same we go back to nice even trading striel and probably move side ways into the november meeting. >> sliding into november. >> thanks, guys. >> thank you, everybody. >> appreciate it. 45 minutes to go here and the markets are side winding. the dow is up 57 points. the s&p 500 is up six and nasdaq up 17. >> coming up -- dr. doom didn't look like dr. doom. hits the stock exchange predicted the stock market crash and tells us if he thinks the policy makers will or should raise interest rates. >> up next government making voice heard on driverless cars.
3:14 pm
the national traffic highway safety administration highlights key recommendations he expects to ensure public safety. keep it here. you are watching cnbc, first in business world wide. ♪ 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. announcer: when they test you, stand firm and move only when you hear the seatbelt click that says they're buckled in for the drive. never give up till they buckle up.
3:15 pm
enepeople want power.hallenge. and power plants account for more than a third of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture. our team is working to make this technology better, more affordable so it can reduce emissions around the world. that's what we're working on right now. ♪ energy lives here.
3:16 pm
3:17 pm
welcome back. shares of exxon mobil are lower after news it under investigation by securities and exchange commission. >> eamon javers has more. >> the wall street journal reporting that the sec is investigating exxon mobil on the heels of a similar investigation by the new york attorney general last year. the wall street journal reporting two key issues here at stake for exxon mobil. the first is looking into decision not to write down the value of oil and gas reserves that are on their books. so question of whether that is the appropriate decision or not. and then also they are examining how exxon calculates impacts of climate change. two separate areas for the probe according to the wall street journal. they are reporting that the sec sought information from exxon and auditor back in august so
3:18 pm
they have been asking both entities for details. we have talked to the sec today and asked for comments and sec has no comment. >> thank you. eamon javers with the latest in washington. a story out of washington. the federal government announced new guidelines for driverless cars. until now it has been up to the states to regulate drivers behind the wheel. with no driver the feds are stepping in to work with autonomous car makers to ensure safety on the road. >> joining us now is mark road kind, administrator of national traffic administration. i see you are an expert on human fatigue. thank you so much for joining us. >> my pleasure. >> these are meant to start to address many of the concerns people have that perhaps the technology has gotten out there before we're really ready for it. it is almost like it is in beta
3:19 pm
testing which is language tesla has used maybe not ready for primetime. where do you think we stand in terms of being ready for driverless vehicles? >> the whole reason we are focussed on this is that last year 35,092 people lost their lives on roadways. 94% of crashes are related to the human. so autonomous vehicles and new innovative technology is a chance for us to save tens of thousands of lives. to your point when people ask when is this going to be ready? it is already on the road. that is when we are producing the very first policy to address this in the most comprehensive package that exists in the whole world. >> i wonder if autonomous cars are ready for primetime. the president of lyft said he was describing the first wave of autonomous cars on the road. said they will avoid certain weather conditions. there will be specific
3:20 pm
intersections and roads they need to navigate around. who is going to buy a car that can only do those things at such a low speed? what's the point? >> that's why this policy is so important. we identify a 15-point safety assessment. what we want is on the front end to make sure that manufacturers and others are basically creating their cars, designing, testing deploying with safety in mind from the beginning. we are creating a safety framework but at the same time supporting innovation to get technology in the most life-saving way to deliver on the road. >> could you get as specific as possible about what exactly the new guidelines or restrictions or rules are? >> sure. in fact, in the first element of it we just have 15 safety points basically. it's a check list of 15 items to go through. this includes operational design domain. where should the car operate? what speed and what kind of
3:21 pm
weather? we have cyber security in there, driver education and training is in there. 15 specific safety-related issues that we expect manufacturers to address before they put vehicles on the road. >> so just to understand this, then, if i am tesla, for example, then starting today do i have to present evidence to you that i have met all of those before i put cars on the road? how does that effect things i might be liable for? >> so good question. first, as far as timing, we are asking for anybody to provide us their 15-point safety assessment at least four months before they put something on the road. how do we handle things that are already on the road? they now have four months to provide that 15-point safety assessment to us in a letter with data telling us how they are addressing that. right now the timing we are in a transition period moving towards basically making sure these safety issues are addressed before vehicles get on the road. >> how do you respond to
3:22 pm
consumer reports who has taken issue with regulations saying they are not specific enough? they say it has more bark than bite. what do you say? >> well, you know, the first part is that we spent several months putting these together. i thought it was fascinating for us to see how much everybody responded when they weren't out there for discussion. today is the first day they are out there for people to read them. what we are doing is trying to find a balance? not giving up anything. so we have full authority for defect, recall, anybody watching for the last couple of years knows we will use all authorities and tools at our disposal to make sure we keep people safe on the road. record recalls, record fines. we will do whatever we can to keep people safe. >> i know we have to go. thinking ahead as this technology does unfold i heard two potential issues. one is that each state has different rules of the road. auto makers would like maybe a
3:23 pm
more unified set of rules. maybe we need different classes of licensure for cars being assisted by a machine kind of like you might distinguish between pilot's license. are you thinking through options that would effect drivership going forward? >> that is included in the policy. so the second element we have is a model state policy that defines the federal roles, state roles and identifies specific areas if states choose to regulate we identify areas where policies could help. we are already on that one, as well. >> good to see you. thank you for joining us today. >> my pleasure. >> you bet. 37 minutes left in the trading session here on fed eve with the dow up 56 points, the s&p up 6. nasdaq up 16 maybe snapping a two-day losing streak. >> and boj eve, too. what the bio tech company has
3:24 pm
that others do not and which could be the next takeover targets. an earnings spree coming our way later today. we have fed ex, adobe front and center. we will deliver the numbers and break them down with the analysts coming up. this woman owns this house, with new cabinets from this shop, with handles designed here, made here, shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away.
3:25 pm
with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. 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! narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: come on, this way. narrator: visit discovertheforest.org to find the closest forest or park to you.
3:26 pm
you find out the
3:27 pm
information. your mom is elderly, you have this knowledge. there must have been a debate in your head. should i bring this up to mom or could this bow a mistake? >> the only way i was going to figure out what the deal was -- there is mom there 98 years young today. i have to tell you it was a difficult choice to ask her but i had to ask her in order to get answers. >> little did i know four years ago when i took that dna test and found out my father was not my father that i would be spending time on the "today" show talking about that. >> such a great discussion. >> i thank kathie lee and hoda. >> your fans are demanding that george clooney play you in the movie version. >> i believe george is otherwise occupied. we are looking into that. thank you. the second printing will be out soon. be patient. second printing out already. >> i better get those books
3:28 pm
signed quickly. shares surged after allergan agreed to buy the drug developer for up to $1.7 billion. it was a $90 million company before this deal. >> that's right. it is the premium that is raising eyebrows, about 500% premium. up 700%. allergan down about 2%. this has reignited speculation about takeovers known as nash. it may be one of the most common diseases. it is a progressive liver disease and growing in prevalence. maybe 2% to 5% of americans may have nash. it is a silent disease meaning you usually don't see symptoms.
3:29 pm
the regularatory pathway is a bit uncertain. people wondering about the premium. was it competitive? some speculating that gilliad could have been a bidder. if you look who else is working here in addition to gilead intercept pharmaceuticals trading up. that was a hot stock a few years ago on nash data. it has a phase three program going on. gen fit traded up 15%. people speculating these companies probably worth more if you take into consideration preme mm being paid. >> why is it so large? was there bidding war behind the scenes? >> there is speculation that there were multiple bidders. other analysts say maybe allergan has seen data that the rest of us haven't seen.
3:30 pm
one thing that is interesting is if you look over the last three months of trading they traded down at the end of july because they had mixed phase two trial results. they were depressed and expected to have data in november. some speculation maybe allergan seeing something positive there. >> shareholders went to bed with a $5 stock and today it is almost $40. >> doesn't happen often. >> thank you. time for cnbc new update. >> here is what is happening. president obama addressing the u.n. general assembly this morning warning world leaders that isolationism does not work and ignoring extremism endangers everyone. >> i believe that the acceleration of travel and technology and telecommunications together with a global economy that depends on a global supply chain makes it self defeating for those who
3:31 pm
seek to reverse this progress. today a nation would only imprison itself. >> north korea releasing photos of leader kim jong-un guiding the military's test on a new high power rocket engine to confirm features and launch a carrier rocket for a satellite. kellogg recalling about 10,000 cases of eggo waffles because they could be contaminated with listeria. and if you believe you couldn't date someone whose favorite music artist is taylor swift now is the chance to prove it. allowing you to sprinkle your musical taste into your dating profile. tinder says music is a big aspect of how people meet. back to you. >> favorite group?
3:32 pm
>> mine? i like mumford and sons a lot. i don't listen to music much these days. i got nothing. what about you? >> the carpenters. >> i think i heard of them. >> we wouldn't be all that compatible. >> i still remember the cassette tapes i got when i was dating. now i am dating myself. on those which my daughter found recently, lauren hill was all over it. >> thank you. >> take care. 28 minutes left going into the critical last half hour before the close with the dow up 47 points. >> economist nouriel roubini will be here to tell us how he feels about the fed. >> i was kidding about the carpenters. ♪
3:33 pm
well right now all our new plans come with no data overages. ...we'll finally be in control... and we're back... introducing new at&t plans with no data overage charges. announcer: don't let salmonella get funky with your chicken. on average, one in 6 americans will get a foodborne illness this year. so, learn the right temperature to cook each type of meat. keep your family safe at foodsafety.gov.
3:34 pm
3:35 pm
25 minutes left in the trading session with the dow up 27 points. just getting a history lesson from professor steve grasso here. you are reminding me of what the boj did the last time they met in july. >> they disappointed.
3:36 pm
everyone is worried that they will disappoint again. if you look at what happened to rates, rates went up. if you look at the ten year it went up. if you look at what happened to theirs, are they going to disappoint again? >> a lot of people have been pointing to the fact that rates have been going up anyway that maybe the bond market started to do the fed's work for them. >> everyone has put in that as injected politics. i believe there is a certain aspect of it. it is not the only aspect. i don't think they want to rock the boat. i think the market would be off sides if they raise in september. that is why traders don't -- >> you don't think it happens tomorrow? >> i have been on the record for months thinking that they are not going to do it. i can see why they want to get one off. we are rounding a year now. december was the last one. they have to do something but i think it is more like laback end of the year. >> thanks. >> thank you, guys. 25 minutes to go. i like podcasts.
3:37 pm
i listen to some stuff. anyway, the dow is up 48 points. s&p up 4.5. transports up 15 and so is the nasdaq. now economist nouriel has predictions. and we will break down numbers with the company's ceo shantanu narayen coming up. what's that? the number of units we'll make next month to maximize earnings. that's a projection. no, it's a fact. based on hundreds of proprietary and open data sets folded into a real-time, actionable analytics model. nine. eight. three. five. two. you're not gonna round that up? you don't round up facts. powerful analytics driving decisions for the world's most valuable brands. hewlett packard enterprise.
3:38 pm
♪ using 60,000 points from my chase ink card i bought all the framework... wire... and plants needed to give my shop... a face... no one will forget. see what the power of points can do for your business. learn more at chase.com/ink see what the power of points can do for your business. what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.
3:39 pm
man: ♪ you're beautiful [click] ♪ i'm coming back to you [click]
3:40 pm
of rate hike after tomorrow's meeting are as low as 15%. >> the man who called the 2008 financial crisis nouriel roubini isn't putting out odds but does have predictions and joins us now.
3:41 pm
>> woo ehave fed's latest meeting. bank of japan might try different things here. a lot of people are worried that there is much more risk within the system than what we can currently see. paul singer's view isn't that means rates are fundamentally probably going to rise and there needs to be mix of different policies here. what do you think about the current environment and the risks that we are seeing? >> for the fed i would argue that tomorrow they are going to not hike rates. there is no reason to do so. you don't want right before the elections. i expect the economy is strong enough that probably one hike this year after the election is highly likely to occur and will depend on the data. the boj is in a conundrum.
3:42 pm
they should do more. if they go more negative with the policy rate they hurt the banks and banks rally. and therefore increasing that is also subject to constraints. my view is probably boj will be on the down side. very hard for them to do something. >> just like in july. you are among those who believe that fiscal policy is needed now, not monetary policy. are we likely to get that anytime soon? >> reaching the limits of what monetary policy can do. the fed is going to gradually normalize. there is a strong economic case for moving fiscal policy. if you look at policies in noncoordinated way all are moving towards fiscal policy. first one was in canada.
3:43 pm
in the uk after brexit there will be fiscal stimulus. there is more flexibility from the european commission. in the case of the u.s. you will have fiscal stimulus. more infrastructure spending, more defense spending and if trump is elected you might get -- either way you have fiscal stimulus. don't expect anything more than half a percentage point of gdp per year. effectively the baton is moving from monetary policy to fiscal policy because central banks are rounding out. >> who do you think would be better for u.s. economy? >> you have been supporting hillary. >> i used to work with the council of economic advisers when janet yellen was the chairman. i would say if you look at the
3:44 pm
study of implication of trade immigration policy and their view was that if donald trump were to implement his trade policy meaning not do tpp and get out of nafta and start currency and trade war with china and start other trade wars and then build a wall is not going to allow migration the economic impact will be negative. it is possible that if he comes to power he may be moderating his views. even independent studies suggest economic impact could be significantly impacted. >> which parts do you agree with? she is talking about infrastructure spending. donald trump talked about that. >> he definitely does not want to do. the initial tax program of donald trump, the one we had last fall was $9.5 trillion of
3:45 pm
tax cuts. mostly for the wealthy and says a smaller package. at least in the case of you may agree on it but plan is revenue neutral. maybe some additional increase and that from a social impact and doing policy from a tax point of view more progressive is the right thing to do. i think we should do form of corporate tax system in order to make it more flexible and increase and reduce the rates and some of that wind fall coming from profits that are abroad is going to be used to finance our infrastructure spending so it will not be deficit. >> we got news that u.s.
3:46 pm
household wealth hit $89 trillion after news that median incomes were up to one of their highest levels that we have had. are you worried about bubbles or distortions in the u.s. economy or is this all part of a healing process that will be able to continue? >> there is some healing process because you have more income generation. and you have also reduction as policy rates are close to zero. i would say it is increasing because the liquidity coming from q 1 to q 3 -- gone into asset inflation and it potential for asset and credit bubbles. i don't think we are in a bubble right now. if you look at the price of assets that look expensive. equities expensive, real estate including commercial real estate is expensive.
3:47 pm
government bond yields are so low. across the board i don't see a bubble but i see some -- the economy is growing 2%. earnings growth is slowing down. so the upside for the equities and other risky asset is more limited. >> emerging markets are growing faster than the u.s. the larger economies, is that where you would invest right now? >> emerging markets are a mixed bag. they were doing really well in 2013. fed tapering exit. commodity and price bust and then massive correction that has shown some resilience even those in trouble are showing improvement. i would say yield being negative and bonds in europe and japan
3:48 pm
are looking for stuff and looking at emerging markets. i would say foreign currency provides you something quite appealing. after equities with some recovery of growth may be some further upside. >> the former dr. doom. dr. realist now we call you. >> always dr. realist. nouriel good to see you. >> just 12 minutes to go. the dow is hanging on to a gain of 47. the s&p is up 4.5. the nasdaq is up about 14. >> big earnings after the bell tonight. we'll tell you what to expect from fed ex and adobe just to name two. what's the value of capital? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom?
3:49 pm
what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley announcer: when they test you, stand firm and move only when you hear the seatbelt click that says they're buckled in for the drive. never give up till they buckle up. from icy ocean waters... to your kitchen counter. on. pure. pristine. each one its own delicious artic prize.
3:50 pm
when you cook with incredible ingredients... you make incredible meals. fresh ingredients. step-by-step-reciepes. delivered to your door, for less than $9 a meal. get $30 off your first delivery blueapron.com/cook.
3:51 pm
fed ex and adobe report earnings after the bell today. morgan brennan and josh lipten standing by. >> when fed ex reports fiscal q 1 earnings analysts will be looking for $2.84 on $14.6 billion in revenue. more details about integration
3:52 pm
of tnt express. plans for peak holiday season. more on shipping rate increases that take effect. looking for commentary about the broader economy since fed ex is seen as a barometer of that. since both could boost air freight demand. if you take a look at shares of fed ex they are trading up. josh, what are we expecting from adobe tonight? >> here is what the street is looking for. eps of 72 cents on revenue of 1.45 billion. that would represent jumps of 34% and 19%. also, digital media annualized recurring revenue measure of how much the company makes from subscriptions. looking for 3.7 billion. the stock has not done much this year up some 6% year to date. about in line with the broad
3:53 pm
gauge. piper jaffery expects a solid quarter noting softness from large cap peers. here from adobe's ceo after results are released in the next hour of "closing bell." guys, back to you. >> we will do that. morgan, we'll see you tonight, as well. in the meantime we get ready for the bank of japan meeting tonight. the fed tomorrow with their announcement. joining us on the floor of the new york stock exchange is anthony chan. we are reminded that expectations are higher for the boj meeting than for the fed. they disappointed in july, as well. what do you think will happen? >> that is why expectations are higher because bank of japan did disappoint. i think there is pressure to at least change something leend it fringes maybe bond purchases. maybe tinkering with negative
3:54 pm
interest rate. i think there is enormous amount of pressure to do more. obviously with the fact that they will have fiscal policy and some pressure is off but not all of it. i think kuroda will make some sort of announcement. >> could debate the merits. in terms of the market fallout why is it important for global market physical he does or does not deliver? >> we want to make sure the global back drop is safe. we saw recent numbers making us feel comfortable with china. the weak link is japan. of course, the growth numbers moving forward and inflation numbers this morning we got some weak numbers in producer price index for germany. a lot of onus on japan to carry the global economy. the u.s. economy will do a lot better in the third and fourth quarter than in the first half. people are worried about japan. i think he has to do something. >> what have you made in the
3:55 pm
recent rise of rates here? are they anticipating something? >> i think the rise in rates is a change in global central bank sentiment. most central banks are of the view that they are going to do less than the markets may have wanted. you see global rates whether it is japan, the jgb or u.s. basically following what is happening all over the world. these rates are going up as everyone has come to believe that central banks would do. it is up to kuroda to change the view tonight. >> a lot depends on all of this. >> we will take a quick break, come back and close things out with closing count down. >> after the bell, louisiana's david vitter was one senator who put wells fargo ceo john stumpf in the hot seat today. the senator will weigh in today. you are watching cnbc, first in business world wide.
3:56 pm
this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. hthis bad boy is a mobile trading desk 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!
3:57 pm
the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade i'm one unlucky guy. the chance of being involved in a robbery is 1 in 757. the chances of being struck by lightning... [thunder] [coughs] 1 in 750,000. [ding] woman on p.a.: please fasten your seatbelts for unexpected turbulence. announcer: the chances of being a victim in an airline crash, 1 in 29 million. hey could i get some peanuts? the chances of being involved in a car crash are far greater than lightning strikes and plane crashes. and if you are texting while driving, your risk of crash increases 23 times. now, i may be an unlucky guy, but i don't have to be part of that statistic,
3:58 pm
and neither do you. drive responsibly. welcome back. we are inside two minutes before the close. bob pisani joining me for the count down as we look for any evidence in the market's anticipating something from the boj. let's try anyway. the dow and how did we do today? no. how about the ten year? >> pretty narrow range. see what the yield did there. this rise we have had recently
3:59 pm
today down and in the ten-year. we can go on. the dollar and everything. we don't have time. let's talk about earnings very quickly. three companies coming out tonight. we have adobe. we mentioned fed ex. kb home will be out. adobe ceo will be joining the gang. >> i have to do it because i'm a photo shop guy they force us into subscription model. the big thing for tomorrow is we continue this general gentle move up. we talk about fed drift. it's a real thing that happens here since 1994 gains 24 hours before the fomc meeting. the average gain is about a half a percent. we have seen this in the last couple of trading sessions. there is our board. you can see materials do better in the two days when the fed meetings are going to meet.
4:00 pm
modest upturn. >> thank you. see you later. up 22. rollins ringing the closing bell. so much to get to, earnings and set you up for the boj and fed meeting coming up on the second hour of "closing bell" with kelly evans. see you tomorrow, kelly. thank you, bill. welcome to "closing bell." i'm kelly evans. rally day on wall street head of decisions. the dow is up just about nine points. we have seen closing about 18,129 a gain of only about nine for the dow. the s&p higher by half a point. make sure as they settles out. 2,139 its closing level and nasdaq up six to 5,241 snap ag two-day losing streak. we will talk to senator david
4:01 pm
vitter about wells fargo ceo john stumpf's testimony and whether he thinks stumpf should resign. morgan brennan has results from fed ex. josh lipton waiting for adobe and seema mody on kb home. on the panel we have michael santoli and cardiff garcia. for more on action brian kelly, a lot to talk about. glad you can join us today. we almost heard negative on the bell. there is always a sense that markets either tend to hold steady or lift. yesterday and today you have the morning rally that leaked away. stock bond currency markets all in a pretty neutral condition near the center of their ranges ahead of the central bank action. one thing i notice is volatility index is up a little bit towards
4:02 pm
16. elevated given how calm the markets have been which shows under current of uncertainty about the statements and exact nature. >> many people have been saying japanese decision matters more than the fed. >> not that we need it to slam the door shut but look what happened with the housing data. i think starts, permits, housing joins a growing list of economic trends that are favorable an outlook and indicators are more mixed. inflation and the consumer industrial production doesn't look like they are going to do anything. the bank of japan, nobody has a clue what they are going to do. so i think if we are going to get a big effect on markets it comes from boj. >> you have been talking about how extreme their intervention has been in terms of bond buying
4:03 pm
and purchases of equities. if there is a disappointment tomorrow and less than people hoped does that mean yields will rise globally? >> it could. the global yield, the long-term japanese government bonds, those yields have been rising because people thought the bank of japan will want a steep yield curve so they can help their banks. the other transmission mechanism which is global is the japanese yen used for a carry trade which means people borrow money in yen and then buy the s&p 500 because you get a 2% yield there. so that's the dynamic going on. that is why the bank of japan and their decision and how that impacts the yen could be bigger than what the fed does. >> tokyo could decide your next mortgage rate. >> that is kind of the world we live in right now. it is interesting that now we
4:04 pm
are getting a little bit of concern at least some people are getting concern that global yield curves are steepening a little bit, that we have longer rates going up a little more than short rates. it wasn't that long ago everyone was running in terror from flattening yield curves. i think there is just a general sense of unease out there almost no matter what the markets do. i do think that slight measured steepening is not a thing we have to worry about too much if that is the way it goes. >> investors are watching as we get closer to tomorrow's rate decision and news conference. steve liesman joins us with the look at the latest fed survey with the hawk and dove index. i imagine it has been moving around. >> here is what is interesting. you are having the debate about the committee. let's look at the people in the committee and where survey respondents think they stand on the dove, zero dovish and ten hawkish scale. five is in the middle. that would be neutral.
4:05 pm
kind of clustered with key members, chair yellen, vice chair of the fomc bill dudley. eric rosengran perceived to be more hawkish. bull rd because he wants to do one hike and keep it there for a couple of years perceived as dovish. nobody wants to hang out with brain rd. she is on her own. on the other side two women book ending. and fed vice chair stan fisher on the hawkish side of things. let's look at numbers here. and we have color coded this to show you contrast. most dovish 1.8 on the scale. most hawkish over here. the kansas city fed president. janet yellen at 3.2. the vice chair more hawkish at 5.8. governors perceived as more dovish 3.8 then presidents and here is the current average
4:06 pm
which is a touch more hawkish than it was before. what does all of this mean for fed policy? the implication or sense is that hike for the holiday. 90% see no hike coming tomorrow. that is up from 80%. 88% say the fed will hike in december. that's up from about 70% in december. those are the numbers. i believe that to be the market expectation. is there a play that maybe they surprise? yes. is it the better bet? not according to respondents. >> it is interesting because that would mean the fed is hiking once a year and fisher said we would have four hikes this year. >> he said it was possible. and he also suggested that september was possible in our interview in august. one of your panels was talking about the recent data turning a little bit sour. we had a good bump up. the isms came in kind of on the
4:07 pm
lame side. retail came in and not a whole lot of encouraging data except maybe home builders survey the other day. we are still maybe going to do 2.8%. the beginning of the quarter was strong. the end of the quarter is beginning weak and the fed may want to play no role at all or wait for the data to clarify. you tell me if your panelists think there is a better bet out there. i want to make money, too, you know. >> i'm tongue tied. what do you think in. >> interesting point to make. she is now the one getting yellen cover from the left or dovish side. in the big speech that surprised people she wrote about how cosmopolitan does the fed have to be in the outlook given that markets globally are increasingly integrated because everybody is chasing yield. she talked about the fact that the labor market debate we have
4:08 pm
been having not necessarily over yet. the fed keeps lowering estimate for long-term unemployment rate. she will be proved right. >> we have an earnings alert on adobe. how did they do? >> adobe reporting eps of 75 cents versus expectations of 72 cents top line 1 had the 46 billion versus expectations of 1.45 billion. a couple other metrics, digital media annualized recurring revenue. analysts are looking for on the call here. i was talking to richard davis he wants to see anymore color about new products, number of deals in the quarter as well as what executives have to tell us about the environment. back to you. >> thank you. the adobe shares up about 2%. we will have more from the ceo in just a moment. what do you think?
4:09 pm
>> i think it is right on. not much new information in that. we have to wait for the call and see what the guidance are going to be. it looks like maybe a slight beat on revenues. we'll have to see what the reason for that internally is because revenues look like they were about flat, up slightly. i would wait for the call, see what they have to say on guidance and as josh said see what they have to say on new products. >> anything you would add? >> i don't this can there has been a much more air tight story in terms of growth expectations in the way the stock has performed than adobe. it seems this is right in line with script so it is enough. >> i was going to say it is funny what steve just said he was talking about how the data has been mixed except for the housing stuff. i got such a strong sense of deja vu. is it 2005 all over again? >> i don't this can so. i think we would have to go and repeat a lot of awful steps.
4:10 pm
i think if you look at the financial sector it is stronger and more stability there. people are worried that will start picking up. if anything i think there is overabundance of caution. >> let's see how kb home is doing. seema mody has numbers. >> a mixed set of earnings up 42 cents a share. revenue missing expectations at $913 million but the chief executive quite optimistic on the housing market in the press release saying the housing market conditions remain healthy with positive employment, higher household income and economic trends supporting steady demands. shares are higher by around 3% in extended trade. >> thank you. those shares up about 3%. we had the builders today rallying about 2%. they missed on revenues but seems like investors like.
4:11 pm
>> kb has not been the best beneficiary. it has not been delivering on the order front. it has been a choppier story. i think you want to hear about what they think in terms of order trends and commentary about labor shortages in the entire home construction area. a lot of people think it plays into the advantage. i think it will be an issue for deliveries down the road. >> a lot of pressure here is on the supply side. the tight labor market. under writing standards are tighter and better than they used to be. people have better credit. i think that means things are safer to pick up without imbalances. >> we are seeing strong confidence from home builders. what do you think is going on with housing relative to the rest of the economy? >> you are seeing the last gasp here. you saw it in home builders sentiment yesterday which ticked up because rates ticked up. people said i better lock in
4:12 pm
that mortgage before rates go up. i would say you sell the home builders. despite the fact that the ceo said i'm bullish on housing. of course he is bullish on housing. that is the goal line of what he thinks the price of gold is going to do. >> josh lipton has more on adobe. >> adobe now issuing q 4 guidance. let's get you those numbers. eps guidance of 83 to 89 cents versus expectations of 78 cents. revenue guide 1.55 to 1.6 billion. that is basically in line. street was looking for 1.57 billion. back to you. >> and that's to your point about a tight operator and now delivering guidance. >> it's expected to grow in the area of upper 20s to 30% next year. very rare to find a company of this size with that. it has the valuation to match. it is not an undiscovered name.
4:13 pm
>> it reminds me of the value act play years ago with that. microsoft turning to subscription models instead of one-time sales thing. the question is how many different parts of it can transition to kind of the new tech model. >> and at what pace and do investors give you credit in advance of evidence that you have converted most clients. >> before we go we would love to hear how you are positioning for everything happening tonight and tomorrow. >> long vix i think is probably the call. long u.s. dollar. i think those are probably the two most obvious trades. >> long vix? i guess i did ask for your trade. >> exactly. >> futures is what you have to be. i think people are paying up for them. >> you can bow long vix futures. lots of ways to play it besides buying vxx. some clients can only hold that. i think volatility on the rise
4:14 pm
here. >> and to your point about rates is? >> rates? frankly, i'm unclear on rates. we may have seen the bottom in rates. i don't know. it depends on -- the biggest concern for rates is that the major buyers of u.s. treasuries are gone. i'm worried. >> a pile for the time being whether the call has been made. thank you for joining us. there is much more coming up. fast money sitting down with bank of america's head of high yield to discuss why he says this meeting will trump the fed here in the u.s. fed ex is just moments away from delivering its results. we will get instant analysis and bring those to you when we find out whether you should bow buying the stock. senate banking committee member david vitter just got done grilling john stumpf. he is the only republican member of the panel who hasn't taken money from the bank.
4:15 pm
we will find out whether he thinks the scandal could lead to more financial regulation. you are watching cnbc, first in business world wide. ♪ mapping the oceans. 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. ♪
4:16 pm
energy lives here.
4:17 pm
welcome back. morgan brennan has numbers.
4:18 pm
>> looks like a beat on top and bottom line. we have earnings per share, nongap of $2.90 per share versus $2.81 per share the street had been looking for. revenue of $14.7 billion versus 14.6 billion. the company is lowering adjusted fiscal 2017 full year earnings guidance to $10.85 per share to $11.35 per share. that stock is up almost 1% in the after hours presumably on the top and bottom line beat. >> thank you. let's get more from jim loe. you have liked fed ex. how would you intrpterate the result snz. >> interesting to hear what they have to say about things like pricing power, hiring for the fourth quarter as well as acquisition. a beat on both top and bottom
4:19 pm
line puts fed ex in a good position. it is a bell weather indicator of economic activity. and if they are able to exercise pricing power heading into the fourth quarter and first half of next year this is going to be a stock that i think we will find many good managers that we invested. >> jim, seems as if the stock is largely gone side ways like a lot of transport and cyclical names. seems like a relatively undemanding valuation. i guess the question here is is that one of those warning signs that says here is a cyclical company. >> no question about it. also clearly driven by consumer and business spending activity which may or may not pick up. that's the wildcard as we head into the end of the year. one reason why everyone is on the fence about tomorrow and whether or not the fed will raise rates or not. we think there is fundamental evidence that the fed could do so based on reasonable estimates for moderately faster growth.
4:20 pm
most recent reports begin to suggest we may be see ag slow patch. fed ex facing a slow growth head wind. >> one of the justifications for the tnt merger was gaining exposure to europe. a lot of fragility. i'm wondering how exposed fed ex is to trends abroad and disappointing global trade patterns. >> clearly exposure there reflected in current stock valuation. i want to hear them tell us how the acquisition is going. slow growth in europe despite the fact that they passed the trillion euro mark is absolutely a negative. i guess the silver lining is that they haven't receased. there is clearly enough global instability and softness in the global market that it would give not just fed ex a pause but our
4:21 pm
own fed take ag pause despite the fact that i think fed ex has reasonably good chance of improving the value of the stock price going forward throughout the end of the year. >> why fed ex and not ups? >> i like ups. it's not an either/or. if you look at fidelity select transport to actively managed sector funds you find fed ex below the weightings in ups in second and third position in both funds. i don't think you have to avoid one or the other. the real question is whether we think both consumer and business spending will pick up enough to drive economic activity that will help both of these companies top lines going through the fourth quarter. i think they will. >> if you knew the answer to that you could sit on the federal reserve. thanks for joining us, jim. >> thank you. >> adviser investments. meanwhile, adobe shares are moving higher after reporting earnings and strong guidance. the company's ceo tells us how
4:22 pm
much of an impact the shift to the cloud is having on the bottom line. wells fargo ceo john stumpf under fire on capitol hill over the fake account scandal. could it lead to more regulations on wall street? senator david vitter will weigh in still to come on "closing bell." [dance music playing] [music stops] woman: looks like it's done. [whistle] [dance music playing]
4:23 pm
[record scratch] announcer: don't let salmonella get funky with your chicken. on average, one in 6 americans will get a foodborne illness this year. you can't see these microbes, but they might be there. so, learn the right temperature to cook each type of meat. keep your family safe at foodsafety.gov.
4:24 pm
welcome back. adobe systems reporting third
4:25 pm
quarter earnings and stock trading higher. beat on the top and bottom line. let's bring in ceo. thank you for joining us, sir. >> thanks for having me. what do you think is driving the performance at a time when as oracle ceo larry elson put it the competition in the cloud is only heating up. >> i think we are executing against both of our growth initiatives on the digital media side. it's all about design and we are attracting new customers to the platform where delivering significant new innovation through the cloud. on the digital marketing side every single industry is being disrupted by technology where the consumer experience is now the most critical element of how companies compete. and where the defacto infrastructure for enabling businesses to move online. massive tail winds y. also point out that we are continuing to
4:26 pm
execute well against the opportunities. >> in response to that i see you have changed prices for the creative suite. raised and lowered price options and operating margin did increase. what can you expect on price going forward? >> i think we are really focussed on delivering more value to our creative cloud customers and i think customer satisfaction associated with these offerings has increased. and the expansion that you are referring to is a result of new services that we have been introducing, adobe stock revenue grew 40% year over year. i think as we continue to deliver new value in areas like video or virtual reality or 3 d i think customers are benefitting from having this one stop shop in creative cloud for all of their creative needs. >> you have also switched to telling the street to focus on recurring revenue. what does that reflect?
4:27 pm
in some ways aren't you trying to keep new people coming in and broaden the base or is it more important that those recurring revenue numbers show that they are still growing? >> i think with any subscription business it is all about attracting new customers as well as customer retention to ensure that existing customers are deriving value from our offering. the ultimate health of the business is best reflected in the revenue when you look at for digital media the fact that we have 3.7 billion in analyzed revenue. that is almost a billion more than what it was at its peak with the creative suite. so we have a more predictable business. we are delivering more value to the customers but we are showing investors that the true underlying health of the business is actually headed north as a result of attracting new customers to our platform. >> is that making it easier for you to upsell services like stock photography, for example?
4:28 pm
>> that's exactly right. when we look at how people adopt the creative cloud they might come in through what is called the single app. as they move from doing print to web to mobile applications to video they find that there is a nice expansion opportunity by sticking with the creative cloud. the same thing is also playing out in the marketing space. the marketing cloud revenue grew well. we have guided for approximately 30% revenue growth in marketing cloud for q 4 which will result in annual growth for 20% and there we started with a few solutions. it was all about content and data. increasingly customers are standardizing on our entire marketing cloud platform which is resulting in higher revenue per customer on the marketing side, as well. >> speaking of stock photography i saw you launch an interesting way to maybe capitalize on your library by putting images on t shirts aimed at hipsteres.
4:29 pm
is this a major new business line? >> well, you know, i think we are always looking for creative ways to not just deliver creative products but to tongue and cheek show different use cases of that. it's a phenomenon in europe that is looking for new innovative ways to showcase what the functionality is in our product. but if you would like a few of those we would be happy to ship them to cnbc in new york. >> i look forward to when you join us wearing one of them. that will be a real tell. thank you for joining us. >> thanks for having me. >> ceo of adobe. seema mody, news on dividend. >> more news in the tech space. microsoft increasing dividend by 8% to 39 cents per share. the dividend payable december 8,
4:30 pm
2016 to shareholders of record on november 17 the company also the board of directors also approved a share purchase program authorizing up to $40 billion. we are looking at shares higher by around 1%. extended trade here. >> thank you. here we go. interesting the journal was pointing out that dividend hikes -- talking to smallest since 2009. here is an 8% pop at microsoft. >> it has been core to the investment piece. just capital return and old tech being huge maybe under appreciated source of income if you look at qual com, cisco all pushing or exceeding 3%. it is not the standard household products company. >> and $40 billion stock buyback program. i guess if you look at where they have come from. >> less than 10% of the market value. it's an enormous number.
4:31 pm
pieced out it maybe will not move the needle all that much. >> i am surprised microsoft won those shares on that news. time for a cnbc news update. >> here is what is happening. donald trump speaking to students at high point university in north carolina. again touting his immigration and national security policies saying they are one and the same. >> over the weekend there were islamic terrorist attacks in minnesota, new york city and in new jersey. the attacks were made possible because of our extremely open immigration system which fails to properly vet and screen the individuals or families coming into our country. >> south africa university students demanding free education protested on several campuses today. they were reacting to a government announcement that universities can increase fees by up to 8% next year.
4:32 pm
they clash with police and shut down classes at some universities around the country. and no more brangelina. she is asking for physical custody of their six children but no spousal support. that is the cnbc news update. big news in hollywood. >> i don't know if it is worse that i am upset or that i care. it was just shocking. >> it is. it really is. >> i don't know if i needed them to stay together. >> you never know. >> certainly in hollywood. we'll see what happens. thank you. appreciate it. the senate banking committee grilling wells fargo ceo. up next we have the highlights and discuss the potential fallout for the financial industry when senator david vitter joins us. and tomorrow myelin ceo defends
4:33 pm
price hikes of epipen. we have a preview coming up. 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. you're at the top of your game.. you're unstoppable. nothing can throw you off track. wait, is that your car? uh oh! yeah, i saw that coming. that will throw you off track. you're looking at around ten grand in fines, legal fees, and increased insurance rates. let's try this again. smart move. because buzzed driving is drunk driving.
4:34 pm
4:35 pm
let's get back to morgan brennan with more on fed ex. >> i just want to clarify on fed
4:36 pm
ex's earnings which were reported. fed ex gave us two eps full year outlook numbers. i want to clarify the number i gave you before was actually not apples to apples comparison. the one we should go by is the one that compares the estimates of $11.85 to $12.35 per share for fiscal full year 2017. in other words, fed ex raised guidance by a dime. this excludes one-time items tied to tnt express. fed ex reporting a beat on the top and bottom line and also increasing its full yeareps outlook by ten cents. >> those shares up here. wells fargo ceo john stumpf testifying on capitol hill over the bank's fake account scandal.
4:37 pm
former president bill clinton weighed in. >> i think wells fargo better come clean on this because there is a lot of good will among people who watch that awful thing unfold in 2008 for what they did then. so it is shocking that they are the ones that are doing this now. so my advice is just get to the bottom of it, tell the truth, clean this up because we can't afford it. it really broke my heart. >> broke his heart. more of that conversation will air tomorrow. let's send it to washington where williford frost joins us with highlights from the hill. >> john stumpf arrived for his hearing on capitol hill fairly calm and collected in his opening remarks echoed thattentment. over the hearing the main headlines included the following, that wells cannot guarantee issues began in 2011
4:38 pm
and previously thought. the investigation internally being extended to 2009. second, fraudulent credit card accounts opened will be made whole and individuals will be compensated any damages via lower credit ratings. there are still no plans to claw back bonuses but the board has tools and authority to do so. overall, though, as we discussed earlier, the take away was of a rattled and poorly prepared ceo facing a united and ferocious hearing. >> when it all blew up, you kept your job. you kept your multimillion dollar bonuses and went on television to blame thousands of $12 an hour employees who were just trying to meet cross sell quotas that made you rich. this is about accountability. you should resign. you should give back the money that you took while this scam was going on and you should be
4:39 pm
criminally investigated. >> and, of course, stumpf still has the house hearing to follow though the stock ending up today. >> thank you for now in washington. joining us now is david vitter, the republican senior senator of louisiana and member of the banking, housing and urban affairs committee who it questions today for the ceo. >> good to be with you. >> so the comments from your colleague elizabeth warren, would you say it is true that the committee is pretty united in its concern about this issue and does it go further? >> absolutely. it's much further than concern. it is completely bipartisan because this was widespread fraud over many years that according to his testimony today he and the board didn't know about it for several years. something is wrong and maybe institutions seem like they are
4:40 pm
too big to manage or too big to properly regulate. >> and in the case of wells fargo often seen as one of the better actors in the banking industry certainly reflected in stock price and trades at much higher relative to book value than peers. is that undeserved? do you think it has gotten a free pass? >> some of that stock price is because of their average number of accounts per customer. of course, now we are finding out that some of that was produced through fraud. we need to reexam ln of that. that's why i think the issue of clawbacks of bonuses comes into play because some of those are based on that sort of performance, some of which was relate today fraud. >> where does that fit into the job of congress exactly aside from trying to get to the bottom of this? aside from examining whether regulators had a handle on this? where does the issue come into the senate's brief?
4:41 pm
>> as a conservative i don't think congress should micromanage any business. certainly, this raises my concern which was already very, very high about the ability for anyone to properly manage or regulate these mega institutions. as i said a few minutes ago, too big to fail apparently is too big to manage properly and too big to properly regulate because this was widespread fraud which went on for several years. he testified today that he understood the fraud in 2013. in 2011 that major division of his whole corporation fired 1,000 people over fraud. you fire 1,000 people, a whole 1% of that division and he doesn't know about it and that doesn't raise a red flag in 2011? >> senator, this primarily seems like it was a problem of awful institutional incentives where a very broad goal was formalized
4:42 pm
down the chain in a way that was specific and stupid. senator warren called for a criminal investigation. and it just kind of seems unlikely that stumpf was sitting in a back room somewhere twirling his mustache trying to come up with a way of doing this given wells didn't make that much money. in terms of crimnality how are you thinking about that? >> certainly a full investigation needs to be completed and we should go wherever it leads including there if it leads there. i agree with your hunch on that. >> finally, senator, in the wake of this you mention that it is indication you see a problem these banks are still too big to manage. does that mean that the same comments would apply to a jp morgan or other large financial institutions, bank of america and the like? >> it does in my opinion. i have grave concerns about too big to fail which is too big to
4:43 pm
properly manage. that is a trend line in our banking industry which i think is very dangerous as smaller community banks which are the main servicers of a lot of rural communities and smaller towns go down. i think it is a dangerous trend line. >> thanks for joining us. senator david vitter. we have a market alert on oil inventory. >> oil is spiking here as the latest data shows surprise draw down. crude inventories falling compared with the expectation for an increase of 3.4 million barrels. you are looking at oil stocks higher on this data report. back to you. >> we will see how it moves tomorrow. thank you. two for the price of one? we will break down data to explain why renting a two bedroom apartment may be cheaper than just renting a one bedroom. stay tuned.
4:44 pm
announcer: they'll test you. try to break your will. but however loud the loudness gets. however many cheese puffs may fly. you're the driver. the one in control. stand firm. just wait. [click] and move only when you hear the click that says they're buckled in for the drive. never give up till they buckle up.
4:45 pm
4:46 pm
don't start leveeing up your portfolio and taking risk thinking you can get the same returns. you can't in this environment. the time will come in the future where thithrough will be more return opportunities. today you should not take the same risk. >> some words of caution there. that was from our delivering alpha conference last week. you can catch the rest of his thoughts along with our entire global opportunities panel right now on deliveringalpha.com.
4:47 pm
apartment rental prices remain sky high. believe it or not more is actually less sometimes when it comes to pricing. >> that is right. here is something you might not realize. the average cost to rent a one bedroom apartment in the country is actually more expensive than the cost to rent a two bedroom. and that is not a mistake. it is true according to data from zillow. see how the blue is a little bit higher than the yellow. the price of one bedrooms actually passed two bedrooms at the beginning of the year and the gap has been growing ever since. it is true for average price of apartments across the country and in many major cities like new york and chicago. this is about young people living alone, getting married later, having kids later. all that is pushing the price of one bedrooms up faster and faster. it is moving at twice the rate as price increases on two bedrooms. think of buying a place you can rent out the trend suggests
4:48 pm
buying a one bedroom. >> you are telling me the price of a one bedroom is more? >> i am moistucurious about if reflects where. >> people say you mean the price per square foot. i mean the total price of the apartment. it is all because of location. you think about in new york city you can live ten blocks away and effectively get a free bedroom for the ten blocks. people are saying i live by myself so i would rather pay to lose the ten blocks and lose a bedroom. that is what we are seeing here. it is all about the location because people aren't getting married and having kids and sacrifice that to be a little closer to the center. >> i wonder if it is a supply issue. i remember there not being a lot of studios on the market or one beds relative to some bigger units. >> it seems like both. there is almost certainly a supply issue with zoning codes and rules. on the demand side the two
4:49 pm
biggest age cohorts in the u.s. right now are 20 to 24 and 25 to 29. it's not like boomer category. last week when we got the median income numbers we learned the share of young people living with parents is also very high which suggests this is a sustainable trend. there are a lot of young people moving into one bedrooms. >> 6% growth rates where the two bedrooms moving up 3%. it is doubling as we continue. >> if you get the two bedroom then people think they can stay with you. >> much more anti-social. >> pay for the privacy. we have a news alert on new skin. >> new skin enterprises reached resolution with the sec relating to charitable contribution made in china in 2013. the company will pay roughly $766,000 and nu skin has raised the sales guidance on this
4:50 pm
resolution with the sec. you are looking at shares higher by around 3%. back to you. >> nu skin up 3%. if you thought there were fireworks on capitol hill with wells fargo go before congress to justify those huge epipen price hikes. we have a preview when we come right whack. opportunities aren't always obvious. sometimes they just drop in. 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. announcer: are your children in the right car seat for their age and size? it may be too late to check when you're on the road. [blaring car horn and skidding] fortunately, you're on the couch.
4:51 pm
4:52 pm
welcome back. west virginia stepping up its probe into mylan enme pen price hikes. >> just this afternoon, three pieces of news around mylan price increases came out. first the west virginia attorney
4:53 pm
general filed an enforcement action saying they agreed to cooperate with an investigative subpoena late last month but failed to respond. he asked the west virginia circuit court to enforce the subpoena calling the practices a potential antitrust violation. say they continue to cooperate. west virginia an important state. heather bresch's father is a west virginia senator and former governor. another story focuses on gail manchin. a story saying manchin used her time leading the national association of state board's of education to help boost a program to put epipen into schools. the company says there is no truth to the suggestion that its efforts were anything but straight forward. and finally, the republicans in the senate finance committee say they sent a letter to the inspector general of the department of health and human services asking about oversight of the rebate program after several charges that mylan
4:54 pm
misclassified the epipen as a generic drug to pay lower rebates. this before heather bresch is set to testify. we'll bring any news. back to you. >> meg is going to be pretty busy, because there is a lot of this to unpackage. what is the bottom line for mylan? >> it's still retreat. still not about trying to assert why this made sense. but it exposes the whole pricing gamesmanship that goes on within the entire supply chain. they thought it would be absorbed by the distribution channel. >> we asked could they just drop the price instead of doing generics and the rebates and the coupons and he said, yeah. but you can imagine there is some gamesmanship. >> moral failure of the company and epic failure of competence by the rig laters. it should have never gotten to this point. >> and by the way, i don't know if you guys saw this.
4:55 pm
cpi, consumer price index. a lot was a prescription. could the fade surpri fed surpre market? we'll give predictions when we come back. ople everywhere do what they do... better. i work with startups like alpha modus to predict markets five times more accurately. i am helping tv networks use social data to predict what people want to watch. and i worked with marchesa to turn fan feeds into a dress that thinks. hello, my name is watson. working together, we can outthink anything. hello, my name is watson. 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. thank you. welcome. so, fedex helped simplify our e-commerce business
4:56 pm
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. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com. mapping the oceans. 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. bacteria can hide in food and make you ill.
4:57 pm
wow! announcer: but you can keep bacteria from ruining your day with 4 simple steps: clean, separate, cook, and chill. the roadchip to food safety starts at foodsafety.gov.
4:58 pm
welcome back. here's a check of our earnings movers after hours. actually, a lot of movers to the up side. fedex up 1.5%. adobe 4% and kb home, even though it had a mess. but people buoyed by what they were talking about, the housing market conditions, generally speaking. and then, of course, we have the biggies come tomorrow. the bank of japan decision technically tonight and the fed decision tomorrow. what do you expect? >> you know, i think it's hard to actually bet that the fed acts tomorrow. but it's interesting to me there is this kind of sub story out there that maybe they just decide to do it, to kind of reassert control over the storyline. maybe do it and be done with it. or don't do it and have some very firm indication we're looking to do it in had in december. i think we had some fed speak friday. if they have a chance to come out. >> when they have done that in the past, right? i still don't expect them to do anything tomorrow. i think if anything, everything will be around the language. might try to send a signal for
4:59 pm
sure it's coming in november or december. but they're going to pair that with a change in their projections for future rate hikes. i kind of think it would be awkward not to do, given the gdp growth is going to come in below their prior estimates. >> which it has for 25 times in a row now. >> that's right. >> are you going to be setting up for the bank of japan? >> i will listen for the alert on the phone. and maybe take a look if i wake up. no, it's interesting. because there is such a wide, you know, range of things that we might hear. and also the market reaction not obvious on whatever they do. >> and, again, almost more of a predictor where central banks are thinking in terms of their next moves. >> if they do try to steepen the yield curves, and long rates go up by too much, might be a stealth tightening. i would not want to be in the bond market tomorrow. >> and we'll have more of delivering interview from last week. central bank independence is overrated. if they need to be moving
5:00 pm
accommodation while making sure the fiscal piece is going forward, those are fighting words. >> you really want to have confidence in who is running that thing if it was not independent. >> oh, boy. guys, thank you for joining us here on "closing bell." that does it for us. "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. pete najarian, tim seymour and dan nathan. bank of america's head of high yield is back and he says forget the fed. bank of japan could be one of the biggest rifbs to the market right now. fedex rallying and adobe surging on a top and bottom line beat. we will bring you the headlines. and later, angelina filing for divorce from brad pitt! but that's not the only breakup that's got the commodities team on ed

66 Views

info Stream Only

Uploaded by TV Archive on