tv Closing Bell CNBC December 5, 2016 3:00pm-5:01pm EST
that's great. i'm proud to be in that company. more importantly, marc is the hero. >> very nice to meet you. enjoy your day at cnbc. enjoy your day with marcus. thanks, everybody. >> closing bell starts now. >> hi, everybody and welcome to closing bell, i'm kelly evans at stock exchange. >> welcome back. i'm thought you weren't coming back. >> i'm here, reporting for duty. >> i'm bill griffeth. dow lost steam. another record closing. we have one market bear who is turning bullish. what's behind his change of heart? we'll find out in just a moment there. >> trump talking tough on china. president-elect shaking up chinese diplomacy with a series of tweets and phone call with president of taiwan.
break down which u.s. companies have most exposures to china. >> silicon valley stocks sat out trump rally, post election rally, whatever you want to call it. silicon investors haven't had much to say in trump's transition process. we'll dive deeper into the tech world coming up. deal with major league baseball. big uniform deals, 2%. >> dow on pace for record close, let's get to closing exchange. steve grasso is standing by and rick santelli checks in from chicago. ken, i want to start with you today. back in june you were calling for dow to hit 11,005. let's all remember that comment you made on june 22nd. here it is. >> i don't know exactly when the bear market comes but i think we're long overdue. the fundamentals i see don't
warrant these valuations. when the bear market does come, i do think the dow will go down 30% or so and that will put us with dow around 11,500. >> in the meantime, though, we've had another big rally, especially since election day. now you're calling for do you 19 two by the end of the year. we're there already. you've had a change of heart. what caused that? >> last year in 2015, i said we would have a correction that would come in the fourth quarter. that correction would lead into a bear market in 2016. we did get the correction. it did last from august to february and turned bullish in april. i did on the show say we were buying back in starting april of last year. that comment in june, i still believe what's going to cause the next bear mark is the fact we are running up debt all over the world. it's not going to end well. in the short run right now, i
have to give credit to the central banks. they have given us all kinds of confidence that everything is going to be fine. they can solve everything. here in the last month, we've had the confidence that if donald trump gets his way and lowers taxes, lowers regulations, profits are going to follow. if profits rise, the market will rise. so that's why i'm bullish in terms of that as well. but again, my stance in terms of where we end up with, with all the debt we're running around the world, is still not good unless we do something about it. >> steve grasso, we're in the month of december now. typically people start talking about how well the market performs. we've been on such a tear. how are you reading things here? >> if you look at what ken was talking about, don't look at val weighings, look at positions. for me about positions last run, catching everyone off-guard when president-elect trump took the reins, going to be the next president of the united states.
it's about positioning. people so underweight financials, industrials, materials, they had to rush in and sell large cap tech. so it's not about valuation when everyone sits there and says, well, i can't be paying these prices for financials or energy, it's not about valuation, how offsides were they and does that have a lot more runway to go. when you look at percentage weightings in the s&p, industrial, material still have a lot to go from here. >> position trade as you say. rick, friday we were all talking about the italian referendum. it was supposed to be a big event. waiting to see what happened monday. what do you think of the market response to the no vote over the weekend? >> if you were short euros, believe me, it was a big event, because euros are pretty high. listen, you know, i think what ken said gives me exactly all the information i need to answer
your question. listen, ken, nobody gets the markets right every time. but having said that, to think that the goodwill we're seeing in markets now has anything remotely to do with central banks, that's where i will definitely disagree with you. this is the year er ar of antti brussels, anti-establishment, that group deserves the tip of the hat for much of what's going on. it's rejection of everything that we've been doing that couldn't break us out and definitely held us in, mostly on helium. now there's a chance for more. to answer your question directly, bill, i think europe is going to have issues. i think it's like a firecracker going off in slow motion. this large economy, fourth largest in europe, third largest fixed income secondary market with regard to its sovereign securities, this is an important issue and it puts more onus on
mario draghi and makes next week's ecb meeting more important. >> what do you think it means for the euro, steve? >> couldn't hear the question, kelly, say it again? >> what do you think it means for the euro. >> you have to look at everything from my prism starts with the dollar. the dollar strength is where i start circling around, where i look for the mark and drill down from 50,000 foot up spot. that's why you see the russell will continue to outperform. that's why when you look at potential tax cuts, that's what ken and rick would point to as far as growth. that's the first thing that you can really establish quite quickly in the united states. that has a wealth of exponential growth possibilities for us. so i do think the market higher, dollar higher, i think gdp higher as well. >> ken, are you buying anything still here? what are you buying that's going to take us higher? we're already at your targets
for the dow for the year. are you buying anything? >> well, i want to comment on what rick said. i agree with rick that the transition between monetary and fiscal policy is occurring right now, and i think the market is rising because that hand-off is happening. as we said, infrastructure spending, tax cuts, those kinds of things i think are going to transfer that from the central banks. before that, i think central banks had a lot to do with the confidence in the market and why we didn't see a big sell up. >> are you buying financials, for example, as yields rise? >> i think financials are definitely going to be the beneficiary of lower regulation. there's no question about that. >> all right. we've got to go at this point, guys. thank you all. appreciate your thoughts on today's market action. meanwhile president-elect trump took to twitter to issue a new tariff warning to u.s. companies with plans to move jobs abroad. he tweeted this. here is the quote. any business that leaves our
country for another country, fires its employees, builds a new factory or plant in the other country and then thinks it will sell it's product back into the u.s. without retribution or consequence is wrong. he went on to say, there will be a tax on our soon to be strong border of 35% for these companies, end quote. steve liesman has more on this story for us. steve. >> made for interesting sunday of reporting. no official clarification on the weekend or today about the trump tariff tweets except one adviser who told me he had not actually heard of it. i reached several trade experts who had a lot of questions more than they had answers. many saw it more as a threat or negotiating position or bargaining chip with those companies trying to basically make them fearful of potential retribution. however, the consensus was that a president does not have the legal authority to slap a tariff on an individual company. a president can make a case
emergency-based tariffs on sectors or products. but eventually, perhaps as soon as 150 days after those tariffs are put in place, he will need congressional approval. so they could be put in place. a lot of discussion about how you would structure it. one expert suggested a lot of problems with companies going offshore could be reduced if the u.s. lowers its corporate taxes and loosens regulations as the president-elect plans. they all worry about a tariff framework that could ultimately increase cost for u.s. consumers and disadvantage some u.s. companies in favor of others who could be grandfathered and even foreign companies. so it's a sticky wicket, i guess, is the way to put it. >> what do you think the appetite in congress is for something like this, steve. >> i don't know. one of the experts i talked to suggested that you know what, as negotiating position with, for example, mexicans over nafta, could potentially be something useful in that regard. the problem i have as a
journalist, these tweets come out. are they policy? where is the fact sheet we used to get when we get these major -- >> come on, a fact sheet used to be a summary h tweet is the best summary you can get. >> so old cool. i've done this almost 30 years. when the administration puts forward major policy like this, we would get background. i guess i need to get with the new program. >> nicely polished up tweet, quote, doesn't look like that when it's flying fast and crazy. thank you, steve. how worried should american business about trump's tariff threats. alliance from american manufacturing. thank you for joining us. you said take trump's tweets seriously but not literally. what do you mean by that? >> i mean you should believe that president trump is serious -- president-elect trump is serious about wanting to make sure there's a new regime for american business. i think, you know, as steve
pointed out in his report that you shouldn't take a lot of those details seriously. those details are up to congress. congress will push for tax reform and other things that really aren't terror specific. i will note wilbur ross said on your air tariffs should be a last resort rather than first resort. clearly i think the direction of trump's senior advisers is not in that direction either. >> yes. but what we keep hearing is that he's the final say on a lot of this stuff. what do you think, scott? do we take any of this literally? are we over thinking it so soon into the transition process as we head toward inauguration day? what do you think? >> i think it's too early to tell. i would say that presidents employing the threat or deploying tariffs is not unprecedented. we have tariffs up to 500% right now on some types of chinese steel because of unfair trade practices. george bush in 2001 used an
authority to put, again, put tariffs on foreign steel. ronald reagan put them on motorcycles to help harley davidson back in the 1980s. there is some precedent. but economy wide that is a different story. >> are you saying those steel tariffs were unilateral actions? how did that work? >> well, the 201 case was initiated by the bush administration itself. so there is some leeway that an administration that to do these types of tariffs. now, they might be challenged at the wto by mexico, that could take years to settle as these cases often do. meanwhile the company's decision will have been made. i do think employing the threat of things like tariffs is actually a pretty useful counter-balance to try to keep some jobs here when so much of the focus has been on shareholder value.
the carrier plant was perfectly profitable in indianapolis. it was just going to be more profitable in monterey. the social costs of that are borne by those workers. if this is counter-balance to make sure some of those decisions made from perfectly profitable operations i'm not opposed to it. >> let's look at it from the point of view of ceo. so far we've been looking from donald trump's point of view. ceos are inclined to migrate overseas to maximize shareholder value. would they be able to use this threat of 35% tax or tariff to shrug their shoulders and say, well, i can't migrate overseas because i would be hit with that tariff there. >> well, what's more likely to happen, i think, is that you're going to have ceos say, look, i understand from congress, as well as from the president, his senior advisers, that what's coming is a serious tax reform
effort. that will benefit american businesses, intended to, and will benefit american business an benefit american jobs. perhaps i ought to take a look at that before i make any precipitous actions. i think that much more than threat of tariffing does the job. those ceos will also understand that scott points out appropriate areas where the president can deal with tariffs. but the vast majority of tariffs are laws that can only be changed by congress themselves. that's all part of the economic growth plan as well. >> like a chess board. so many moving pieces here to figure this thing out. terry, scott, thank you both for joining us. >> thank you. >> it's early in the game so we have a lot of pieces on the board, too. >> i've been thinking about chess with that magnus guy lately. >> yes. >> incredible stuff will back to the chess board of markets. s&p up 12 today. that's good for a half point percent gain.
nasdaq 49%, russell small caps outperforming by wide margin of 1.5%. >> nasdaq a rough week, worst in a month. tough relations with taiwan, greatly reduce the chance to achieve the goal of making america great again. that's from china. we'll have a special report on which u.s. companies have the most exposure to china. that's after this break. >> also ahead, those under armour shares gaining ground after inking a deal with a major sports league. we'll have the details for you. keep it right here. you're watching cnbc, first in business worldwide.
why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis. whmade plastics that tmake them lighter? the lubricants that improved fuel economy. even technology to make engines more efficient.
hong kong's hang seng indention down a quarter percent. composite 1.2 and shenzhen down three-quarters of a percent. all that in response to italian referendum overnight. >> i also wondered about the general view on china. >> phone call, too, i guess. >> done some things trying to drain liquidity out of the season. a lot of things going on there. president-elect donald trump taking a hard linebacker. his phone call with the president of taiwan pointed out in a tweet china did not ask for permission to devalue currency, tax products in china or build up military. ruffling feathers could increase risks. seema mody with us for who has the greatest exposure to china. >> tough talk has reached a new level, 35% tariff on goods made in china that seems to be the
major concern for wall street. companies like walmart which had $50 billion over the last 12 months, added tariff will hurt walmart's bottom line and drive up u.s. prices of chinese made goods, even other companies like mcdonald's and apple. the sector with highest exposure is tech with half of u.s. imports from china being electronics will by value it's three-quarters of mobile phones, 93% of tablets and laptops shipped into the united states. marvel, texas instruments, maxim integrated, sandisk reported significant revenue from china. automakers, german names like bmw, volkswagen which points out their sales from china. any unfavorable trade agreements or tariff proposed could mean or
make business with china potentially more challenging for those auto players, kelly. >> exactly. >> i think we're starting to realize, let's not forget the dealmaker that donald trump is. that has been the hall mark of the career. the way you begin a deal is begin with negotiations. i think we're going to have to get used to that. these tweets are only the beginning of a negotiation process as he perceives it, i guess. >> if you want the upper hand, the whole scuttlebutt was what's china's first move going to be in the trump administration, well, seema, he made the first move. >> we've always been trying to desypher between candidate trump and president-elect trump. one thing that has remained consistent is tough talk on china which many say perhaps tells us he will prioritize business with china in making those trade agreements a bit more favorable for u.s. companies. >> seema, thanks for joining us. >> certainly is interesting, isn't it? let's go to the break here,
about 40 minutes left in trading, dow in territory, other averages higher but not in record territory now. >> up next under armour climbing after sports apparel signed its first deal with sports league to supply uniforms for i think a ten-year period. we'll have those details ahead. >> shares tumbling. major hemoology conference, ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future.
welcome back. a little pop in shares of under armour up more than 1% after signing a deal to supply uniforms to a sports league. they will make uniforms for major league baseball starting no later than 2020. a ten-year partnership with closely held fanatics which will make license products, hats, t-shirts and sell them at retail stores like dick's sporting goods. details weren't disclosed but will take in part of the revenue from what's sold to fans. base layer apparel, will take over for both. could do so before 2020 if majestic were to bow out early. >> it's prestigious, good for their brand. we have a chart going back a year, let's not forget -- >> it's been a tough year. >> this is a two-year low that
the stock is at right now, even with this gain today. last year at this time, or not at this time but last year it was trading above $50 a share. >> here it is just around the nose at about $30. so for one of the fastest growing companies -- to imagine they could be rivals with nike when this thing started not so many years ago and yet here they are. >> all right. 34 minutes left in the trading session, dow up 40 points. a leading trader will tell us what he's watching into the close on the session coming up next. >> speaking with biotech agios on the heels of a hematology conference. they will discuss what lies ahead for the company. keep it right here.
♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficienes and delivering new value for their customers in return.
the dow is higher and if anythings posting some gaims gains among bank of america, citigroup, goldman which got an additional buy rating from hsbc on views stocks have room to run, the financials do. hsbc has $250 price target on goldman sachs which has $227 and change. jpmorgan chase also trading higher. one of the stellar trades since the election, kelly.
>> they have been surging, the financials have. on the floor here, less than half an hour in today's trading session. virtue financial. like bill was saying, some parts of the market that's so hot. do we speak with the winners, rotations? >> definitely rotations. look at the russell, one of the strongest sectors and has been during the run up. keep trading financials, seem to be the bellwether of them all. technology has some bid, health care some bid, two laggards in this major rally at the end. haven't seen a selloff in any particular subset. >> many head winds named, opec meeting, prospect that interest rates would maybe go too high. are all of those just kind of fading at this point? >> we're anticipating the opposite news out of italy on the referendum. we didn't get it. markets still rallied. we shrugged it immediately. saw market trace off highs due
to oil. maybe oil becomes another leader. we saw oil have a huge week with opec news. such a surprise, short covering. now we've got to see if oil can break out new highs or below 50 on the downside. there's no -- >> any you would stay away from? >> not anywhere to stay away from but health care is going to be out the most going into 2017. that probably promises the most returns going forward because it's been so undervalued. >> people finally warming up to the idea, even no matter what happens with obama care, pharmas and drug pricing issue, it's the place to be. >> it's a place to put your money, real value and beaten up stocks down there that are quality stocks. >> let you get back to it. >> thanks. >> thank you. time for cnbc news update with sue herrera. hi, sue. >> hi. here is what's happening. a georgia man convicted of murder after his toddler son died in a hot car has been sentenced to prison with no
parole. jurors convicted justin ross harris of malice murder in the june 14 death of his 22-month-old son cooper. france prime minister announcing a 2017 presidential bid in hopes of rallying divided french left ahead of the may presidential election. after francois hollande decided not to run for re-election late last week. a new study said extreme downpours like those that flooded louisiana, houston will happen three times as often in the u.s. by the end of the century. this is due to climate change. the increase, scientists say, has already started. new england quarterback tom brady set a new milestone on sunday becoming nfl's all time winningest qb. patriots 2016 win over los angeles rams was brady's 201st -- yes, 201st career victory breaking a tie with
peyton manning. and the packers won, just saying. >> and raiders. >> that's right. >> did you see that comeback against the bills. >> what's that? >> did you see the raiders come back against the bills? >> i did not. >> they had like a 98% chance of winning this game, bills did, they are up by like a touchdown and then they turned it around and came back. i'm sorry that that couldn't hold true. >> it's okay, bill. it's okay. hang in there, buddy. i'll lend you my cheesehead. >> i got to see all of "60 minutes" last night. didn't wait around until after that game. it was sad. but congratulations tom brady. good for him. >> absolutely. thanks, guys. >> when did you become a raiders fan, by the way. >> "60 minutes," that thing on the rules about disability, that was insane. >> that was insane. >> she didn't answer my question, did you see that? >> artfully dodged. >> shares of age i don't sinking on the back of data presented at american society of hematology conference.
meg terrell is there. she joins us from there along with company ceo. meg. >> bill, thank you so much. joining us now, ceo of agios, thank you for joining us. >> meg, always a pleasure to be here. thank you so much. >> at agios you're focusing on diseases with no treatment option. one thing is pk deficiency. tell us what that is. >> it's been an exciting meeting for us, exciting for patients. this is a rare genetic anemia. these children have a serious and debilitating disease and have never had a therapy. we're about to bring to a pivotal study last stage of testing, we believe the first disease modifying therapy for patients. it's a pill. it's corrects their anemia. very exciting day, we presented it. we had doctors come to podium saying i've been taking care of children with this for decades and waiting for a therapy. it's an exciting time for these patients that have never had a
therapy. >> most analysts i'm hearing from are positive about the data but the stock is taking a hit. is that because of safety issues? what do you attribute that to? >> two molecules. first we showed data holding up, very exciting data. we had a second molecule that did have a safety event. safety is the most important thing to us. it was extremely high dose. a dose you would never use in patients. i think some people are missing the big picture, which is we have two really important medicines we think are going to change the lives of children and adults with this disease. >> agios also working on other drugs for acute mylo leukemia, huge as well getting close to market. as you approach market, how are you looking at pricing environment. >> it's a bit early for us to think about pricing yet. we're at the verge of submitting to fda our first application. remember, serve years agios was a blank piece of paper now we've got two medicines for leukemia, that repaired leukemia cell with a pill. we're bringing to fda hopefully
in december, this month, our first application and the second one in 2017. so we're really trying to provide that amazing value to patients and really change the way we treat acute leukemia. >> do you think the landscape for pricing has changed after trump was elected after some folks attributed the rally in biotech to. >> long-term and medicines that create huge value for patients. i think that's agnostic to the administration. it really is how do we find the right patients, focus on precision medicine and bring those to patients. >> you see patients twice a month. you're telling me still practicing medicine. there was a story in the "new york times" i think a lot of folks paid attention to about this new emerging class of immunotherapies and side effects we're starting to see with those. how do you balance that safety risk with trying to accelerate therapies for those who need them. >> that's been the balance. finding the right balance for patients. we have to focus on efficacy and safety. harnessing immune system is definitely exciting new type of therapy but carry some risk. with any therapy we have to
strike that right balance. but we need to focus on innovation. if you do that we'll make medicines that make that big change. i'm more optimistic now than i've ever been that a lot of new medicines, whether on the immune side, our focus, on metabolism are really going to change the game for cancer patients. >> david, thank you so much for joining us. >> a pleasure to be here. >> kelly and bill, back to you guys. >> all right, meg. thank you very much. meg at the hematology conference. >> we should mention blue man group ringing the bell. the original group not character actor from arrested development, just so we're clear about this. >> i was going to say unfortunately. blue man group is great. >> 25 years together. it's amazing. >> wow, 25 years. >> that's why they are doing this. >> about 25 minutes to go into the close. dow 41, s&p up 12, russell up 21. they are in descending order of strength there on your screen today. >> so far. up next. so writes the love they are
asking in silicon valley as executives have been noticeably absent from president-elect trump's leaders. more on that story coming up in the break. >> trump's pick for treasury secretary, wants to privatize mortgage giants fannie and freddie. we'll discuss whether that's possible and what it could do to home prices. stay with us.
♪ if you're on medicare, remember, the open enrollment period is here. the time to choose your medicare coverage begins october 15th and ends december 7th. so call unitedhealthcare to enroll... in a plan that could give you the benefits and stability you're looking for, an aarp medicarecomplete plan insured through unitedhealthcare. what makes it complete? it can combine medicare parts a and b, which is your hospital and doctor coverage with part d prescription drug coverage, and more, all in one simple plan for a low monthly premium or in some areas, no plan premium at all. an aarp medicarecomplete plan offers you benefits like an annual physical, preventive screenings and most immunizations all for a $0 copay. you'll also have access to a local network of doctors and much more.
you can get routine vision and hearing coverage, a fitness membership to help you stay active, and worldwide emergency care. for prescriptions, you'll pay the plan's lowest price, whether it's your co-pay or the pharmacy price. or pay zero dollars for a 90-day supply of your tier 1 and tier 2 drugs, delivered right to your door. in fact, our medicare advantage plan members saved an average of over $4,500 last year. now is the time to look at your options. start getting the benefits of an aarp medicarecomplete plan insured through unitedhealthcare. unitedhealthcare has been helping medicare beneficiaries for over 30 years. we'll connect you with the right people, help schedule your appointments, and with renew by unitedhealthcare, you can learn about healthy living and earn rewards, too. remember, medicare open enrollment ends december 7th. call unitedhealthcare today about an aarp medicarecomplete plan. you can even enroll right over the phone.
don't wait. call unitedhealthcare or go online now. ♪ last night the shocker about just how many of the italians voted no on the referendum thought it would send markets roiling. dow takes it in stride, s&p up 12, nasdaq up 51, russell 21, euro stronger. >> aetna and humana laggards with aetna defending the merits of its proposed $34 billion
acquisition of humana in federal court. the justice department says the deal violates antitrust laws for aetna's medicare and obama care exchange businesses and that it would lead to higher prices. both of these programs could face changes under president-elect trump's administration. both trading sharply lower. trip adviser is higher. travel website operator from hold to sell at stifel nicolaus. the price target remains at $47 a share. it's there now. >> right on that target. let's take a look at live picture of trump tower. silicon valley tech executives have been largely absent from the visits to see president-elect and from his positions in the administration so far. deirdre has more on what is shaping up to be trump's ties with silicon valley. deirdre. >> that's right, kelly, tech representation so far has been
scant. his economic adviser team announced on friday includes just one ceo from the tech world and that would be ibm's jenny ramettei. obama board much greater, facebook khloe sheryl sandberg, ceo and intel and one of aol's co-founders. spoke to the current uncertainty at the breakthrough awards last night. this is annual silicon valley event that honors the top minds in science. >> there is a really anxious period ahead of us. none of us know really what to expect. that makes it hard to be really gung-ho about investing right now. >> a key person to watch is billionaire tech investor one of the few people in silicon valley to support trump's presidential run. >> peter is an old friend of mine, supporter of my gubernatorial race so i'm a big fan of peter's. he's one of the best things we've got going in terms of
connective tissue with the trump administration. in many ways peter will be an outsized figure. for us we're going to need him to temper the more extreme elements of the trump administration. >> he's already played role. trey stevens founders fund tapped to join trump transition team and david saccs who worked with him could tell us that's not the case. >> he's saying it's not related, i understand, his leaving. i don't know. i mean, listen, what's interesting about the obama add manage, this was the whole cycle under which silicon valley really had a renaissance. this was not something that was left for dead after the tech buzz in 2001. we've had these tremendous, incredible innovative companies coming out of there and largely changing the way we live our lives. that's changing in the mobile era as the trump administration is coming in.
>> so far president-elect trump has been picking on those companies manufacturing their devices overseas and encouraging them, like apple, to bring that manufacturing back here. you wonder if that has something to do with all this. >> absolutely. you look at his pick of the ibm ceo to join his economic advisory council, and ibm is your classically global american company. he even criticized them during the campaign saying they were outsourcing jobs to india. but the fact that he's working with ramettei as well as gm ceo taken an eye to technology is an encouraging sign he's welcoming tech into the fold. though you saw the list, much less so than obama did during his administration. we're at the beginning. peter thiel will be a big figure.
>> dow up 43, s&p 12, nasdaq 51, russell 21. >> why he thinks the bice of the trump rally is over and done with. coming up. is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential.
points enough to put it in record territory. telling me on break market on close order shows a balance of $1 billion to the sell side but it doesn't seem to be impacting the markets. so a lot of these trades apparently pairing off. there's some buying to meet all that right now. joining us on the floor of the new york stock exchange david rosenberg. you're of the opinion this stellar rally we've had since election day, you think we've seen the lion's share of it. >> everyone says it's stellar and the market is up roughly 3%. when you strip out the two areas that benefit the most from the big d, deregulation, financial and energy, take those out, 20% of the mark, the other 80% is flat. >> up 3% in two or three weeks
that's pretty good annualized. >> it's a month now. >> the fact they are up on deregulation is the point. it's not the exception, it's the point. >> what i'm saying, we're talking about the market. we're not talking about the market. we're tausching about two sectors. >> heck has done well. >> health care hasn't done well in the past monday. >> there are certain sectors -- >> there are four or five sectors flat or down, two sectors up and that's carried the market. look, i understand the euphoria, it's called honeymoon rally. every president gets a honeymoon. ronald reagan took slogan make america great. he a six-montreally. in the next 18 months economic realities and fed took over. >> the recession they had to endure at that point. >> what we have right now, we don't have a recession but the mother of all overvalued markets. a 20 multiple trailing 8 1/2 on forward earnings you've got a
market priced 30% earnings growth. >> you also said you thought it was lopsided. are you referring to the fact two sectors seemed to be doing lion's share of the work. >> tack on industrials on top, that's the big infrastructure. we always have infrastructure. we're still feeding off obama's recovery and reinvestment act of 2009, highway spending bill two years ago. there's always an infrastructure. it's a wonderful motherhood, get people excited. strip out industrials and other two sectors. >> you're a skranlg today. >> talk about a market but they carry the whole load is what i'm saying. >> you change your valuation if we do get the kind of corporate tax relief we're talking about. >> let's say we get all the corporate tax relief, repatriation. let's assume no market compression whatsoever, assume corporate earnings will grow with nominal gdp growth you still don't get 30% earnings. that's what market defactoro --
normalize mull pelz, take a look at what we're valued at market pricing 30% innings, 10 to 15. if we're trading 15, 16 multiple an not 18, 19, have a different view right now. multiples, valuation is not a timing device but overall market going forward. >> do you believe in animal spirits? when you talk to me about the market, throwing numbers, look, i get that but something has changed. you know, we shouldn't just because it doesn't seem to add up right now, discount the excitement in the air, i guess. >> i like dream spirits. i don't know about the animal side. look, i'm getting people asking me, so rosenberg, how do you model animal spirits. i'm thinking, that's p to of the market stuff, how to model animal spirits. look, when you take a look historically back to truman you get a honeymoon period, on average a month into the presidency no matter who it is, median about .7-up.
we've done a little better than that. >> a sign of the bull market look at saks christmas display. >> nothing has happened yet. it's honeymoon. >> what are you doing here, selling those sectors that have had the kind of rally we've seen in the last month or so? >> no thankfully we've been in the financials trade, industrials, that's a little wonky, infrastructure, no reason to go out and buy. >> anything you're selling here? >> no, i think right now, during that period, two weeks after comey bombshell when the market was correcting we were putting money to work so we participated. >> you're skeptical but hanging on anyway. >> i wouldn't say we're adding. yeah, i think that's skeptical right now. i'm saying some of the areas of the market, i'm told pointing mostly to industrial side, the financials i think still have a story. if you believe we're going to be in the $50, $60 dollar rang, energy is still going to be a good place to be. my sense is that when you talk about the overall market there's another 80% out there that
actually hasn't rallied in the past moment. >> already. david rosenberg. >> thank you for joining us. >> thanks, david. let's get back to seema mody for market flash. >> continues to want to be on fire prospect of fiscal spending under pro business agenda. transport sector at 40% since hitting 52-week low january 20th, now within 2% of their all-time high, all-time intraday high. excuse me. the transports haven't set all-time high in more than two years. the leaders so far this year land star, rider systems, csx all up over 40%. kelly, to your point, is it animal spirits or the prospect of spending, helping the economy and therefore this index, which of course is a barometer for u.s. economy. >> we're all feeling a little blue down here. >> i'm waiting for the blue man group to show up. where are they? there they are. i'm a big fan. that's neither here nor there.
closing bell in a few minutes. closing countdown. >> we do. after the bell. there we go. >> a selfie. >> we'll discuss how president-elect trump corporate holiday could stump buybacks. you're watching cnbc first in business worldwide. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack.
with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.
this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars.
. coming up, about two and a half minutes left in the trading session. my friend dominic chu joins us. see the blue man group. >> yes. >> very exciting. >> yes. >> we've got dow trading higher, all are but dow in record territory. >> we've given up half the gains, up 100 points, about 49, 50 points now. >> transports, though. >> so art was speaking with me earlier today, saying some of the traders with dow transportation stocks to see if they can get to a record. a couple points away now but what we're looking for, those people who watch it, record high in dow industrials confirmed by a record high in transportation stocks and see if that bold trend continues. that's one thing they are watching right now. >> it's the oldest theory in technical analysis. dow theory. you need both going at the same time to confirm each other. oil getting pretty comfortable
above $50. but did you see late this afternoon -- >> pull back. >> tumble, wti experience, 5111. >> we are there and holding just about this right now. what we want to see energy stocks much more levered, oil can go down and it's volatile. stocks that track them even more so. see if that pull back in oil releases downside. the idea oil is perhaps drifting towards that $60 mark. if it stays that way perhaps we'll see energy stocks. marathon oil with a huge week. can't continue if oil is going to -- >> finally in the wake of the italian referendum, we were all executiving some fireworks in the market. only fireworks we got currency pits, down sharply and took off. as rick santelli pointed out if you were short euro you got your head handed to you. >> i told my wife, if it goes down -- i didn't get a chance to look it in.
i thought my irish golf vacation would come so much less because of the euro. >> we'll see. thank you so much. see you later. going now with record closing high on the dow today. there they are, the blue man group celebrating 25 years together and they don't look any different than they did 25 years ago. isn't that amazing. stay tuned for second hour of closing bell. thank you, bill. welcome to "closing bell" everybody, i'm kelly evans, finishing at record highs for dow jones industrial average. look at this 46 gain, good enough for 19272, that is the high by 20 points. s&p 500, nasdaq and russell all up actually more than the dow was with that quarter percent gain. s&p up half a percent to 2204. about 10 points high of its
record high. nasdaq -- s&p that is. nasdaq up 1% to 5308, about 90 points off its record, a tougher week last week. russell, small cups up nearly 2%, 1.8%, just 10 points from a record high. coming up dow transports soaring since donald trump clinched presidential election. when hawaiian airlines ceo mark dunkerley with his take on president-elect and what it will mean for airlines space. stay with me for that. joining me cnbc commentator and columnist michael santoli, welcome with paul hickey. good to have you with us, paul, as well. strategist here to kick things off with fast money trader. so it's a full house. glad to have everybody on board. what are your thoughts about this week. >> good to have you back. what we didn't see last week the market base taking a rest. it basically holding up near the highs, which i think is the main
takeaway. after you had that big sprint, held on near the highs, most of the things are pretty supportive in general. first december off a little soft before you get a run. i think the market is in the zone where a lot of trends in place are okay until they turn to some bad level. but we're not there yet, whether interest rates or dollar or fed policy. all seems like we're in this comfortable zone where it can all be okay. >> you were saying the market seems younger. >> yes. >> aging backwards? is it benjamin button? >> almost seems like that, refreshed youth. come march, that's very old if you think it's been one continuous bull market. if you look at auto stocks, hotels, banks, transports as you say, essentially leading this phase of the rally, that's early cycle stuff. it basically says we had a stealth bear market that reset the clock a little bit on this. also everyone willing to look at bright side about fiscal
stimulus. >> just like we're talking about, paul. what's your read on things? >> to what mike was saying, a year and a half the market doing nothing. finally seeing this rally. new sectors we're seeing. financials which have underperformed for years. seeing it in the industrials which underperformed. a stock like caterpillar has come too far too far, where it was at the end of 2014. you just have to look at things in perspective. >> oil prices crashed. >> oil prices have come back. last week we just saw a flat market and everyone quick to say this trump rally is over. now today we see market stocks higher again. even techs are rallying. >> italian referendum. you could always find excuse toss sell but they didn't find those. you're here to talk about what clients were buying last month. i love this, a window in to how people are trading while the rally going on. >> i think the biggest surprise
anybody would be, especially italian referendum, closed at 2021. >> down two points. >> down 13% actually on the day, which is amazing. what retail is doing, selling financials as we see so many of these stocks really perform very well over 11 1/2% in november. our clients outselling two major sectors, number one, financials taking some profits. as before, talked about how they bought those three and four months ago. the other thing is selling airlines on their rally, which they haven't seen times like this in quite a while either. what's really interesting, what we're seeing stocks retail buying three and four months ago, stocks they are selling now, wells fargo and netflix are two of the ones that come to mind most top of mind. >> what's flip side of that. this is the interesting question now people have been able to make decent profits in some of these areas. now that you're record highs, where do you go. >> what's interesting, they have
been buying dividend paying stock, which is kind of -- kind of counter-intuitive if you think about it. >> dangerous, explosive. >> but that said, they are not buying utilities, they are buying stocks like verizon, at&t, which you look the last month and a half have done pretty well. we'll see. the retail trader has been paid to do this in the last few interest rate raises because they haven't happened. fed funds 99% probability it will happen now. overall these stocks have still hung in there. it hasn't been slapping we've seen in utilities and they have had greater exposure to the market three months in a row. november is the first time they took off. that's interesting. >> thinking, too, about what we're seeing here. warning about the dividend pair has a lot to do with interest rates. that's the other big move. watching ten-year creep up towards 2 1/2 percent. now taking a pause there, too. stock market going to continue, does that mean yields, too. >> the question, really to the point of what both these guys
were saying specifically about caterpillar. seems like yields are up a lot but if you go back to a year ago they are not. it's happened suddenly, repricing but not so much up, up, and away. i do think there's a big question. for me i'm a little bit nervous how many people will say 35 year bull market in bonds is over and have everybody else nod in agreement as if we can declare these three decade trends over on the way. doesn't always feel like a bull market. i do think it makes sense to pause for a little while. i see there's room above where we are for yields before it matters that much for stocks. >> the whole interest rate argument, going up so stocks have to fall. in theory that makes perfect sense. in this bull market we're in about seven years now, 100% of the gains in the s&p 500 have come during periods when the ten-year yield was rising. >> what happened, deflating. every time the coast was clearing yields would go up and stocks would, too. >> they range from low 1% to 4%.
there's still a lot of room in upside yield for 10-year before bunker mentality yields. >> let me get you in here, guy, same question, where would you go in this market. >> hi, kell, welcome back, by the way. jj just talk about his client, retail client getting out of banks. i can totally understand why they would do so. look at the gain in a short period of time in a sector flat to lower for the last six, seven years. then lou at it the other way. look in terms of what could be happening. you might have a whole recalibration of what people are looking at in terms of evaluation. in a trump administration, what is the right price to book for a bank? 1 1/4 where goldman sachs and jpmorgan are trading or closer to two times in an environment where, again, regulation gets ratcheted back, wild west is back in some form. it's not two and not 1 1/4.
i think what the market is trying to tell you, somewhere in between. >> where were we back then. >> i can tell you it wasn't at the levels we're seeing now. i'm sure levels closer to two times. i'm not suggesting we're going to get back there. but what i am suggesting is people are looking at banks through a much different prism right now. you can say it's playing catchup or eight years of pentup demand. what i'm saying is i think the market is recalibrating what the right evaluation for banks should be. >> here are some of the all-time highs we saw in the market at various points today. jpmorgan, ntb, prudential, u.s. bank, also fedex hangs in there. berkshire and darden restaurants continues to kind of jump in there and enjoy this rally, too. >> one thing, i agree with what guy is saying, the banks definitely have that potential to the upside. the one thing we're going to find concerning after we go through more of the holiday retail sales season, because
that will become quick focus after the fed, will be the next kind of concern for the market will be because these rates are higher, because the dollar is going higher wit, how is that going to affect earnings. i do think as we head into 2017, first quarter, that's going to be the biggest concern of the market. >> meeting coming up, tuesday and wednesday. all of a sudden we're talking about the first rate hike we're seeing in almost a year. after it happened last december markets dove in early january. i don't know what the causation but are you concerned what's going to happen? >> when there's so little focus, or worry, that's the time you should at least be aware of it. i think the market has come so far. j.j. saying clients selling if anythings, taking profits. the financial sector as a whole long-term and weakness good time to buy. excess capacity for sector we saw since 2007 has been worked off a lot. much like tech in 2000 took five to seven years for excess to get worked off. we're seeing a similar scenario
with financial sector. then we have rising interest rates and less regulation. you have three tail winds for the sector. >> dial back to a year ago what was happening before december federate hike people saying look, flattening, kind of a close call. vix flirting with 20. you actually had a lot of welling up of stress in the capital markets. didn't seem like 99% sure thing. i do think you've got that out of the way, market didn't kill you and not a good analogy to expect. >> china was a big part of what happened in january. that now seems to -- it was interesting, there's little blurbs in the paper, by the way, they are tightening a little bit. meantime if you look at currency up seven to the dollar nearly. this is in the crosshairs of what the trump administration is talking about. i don't know what that means. >> the irony being the authorities are trying to slow the decline in the chinese currency. the charge from trump has been they are artificially depressing
it. it doesn't fit in that way. by the way, guy, goldman sachs traded two times book value in '05, '06, 30% return on equity. >> i told you, mike. at least i knew to ask. let me just interject one more thing. the reason people are not -- it's at if, this is not a political statement. if mr. clinton were elected president, if she was the current president-elect, i think the market would be far more focused on potential rate hike and could be potentially a lot more detrimental to the market. ic in this case people are now looking, look at the potential for fiscal stimulus. look how the fed can pass the baton from monetary policy to fiscal policy l the perfect time in their existence. i'm not saying the stars are lining up but i guess i'm saying stars are lining up. >> stars are lining up, good place to leave it. thanks for joining us. >> good to have you back. >> appreciate you joining us for
a look at what's doing there. stick around for guy and the crew on fast money. buying climax, tell you what your next move should be and that's top of next hour. president-elect trump wants u.s. companies to bring billions of dollars back overseas by offering repatriation tax holiday. if it happens, which stocks could have big buybacks. trump's pick for treasury secretary wants to privatize mortgage giants fannie mae and freddie mac. we'll look how realistic that is and what it would mean for housing market. still to come on closing bell. you're watching cnbc first in business worldwide. your path to retirement may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals.
president-elect donald trump wants u.s. companies to bring back billions of dollars from overseas when he takes office. in his tax proceedal from the campaign trail trump discussed a possible repatriation holiday, could bring profits offshore at one time low tax rate of 10%. most likely use that cash to award shareholders. let's turn to paul. you've got us a list. >> this whole tax holiday and repatriation, with a lot of trump market friendly policies
there's a lot of hope on what's going to happen but we don't know any details yet. that's a big caveat we have to think about. think about $2.1 trillion of cash overseas we think of companies like apple, microsoft, google. they have a lot of cash overseas. for those companies it is a big percentage of their market cap. for apple close to two-thirds of their market cap. for microsoft -- >> two-thirds. think about this for a second. if they brought back all the cash, two-thirds of market cap and did what with it. >> some debt they have i should, fund dividends. they do have a lot of cash. the whole idea there's 2.1 trillion overseas not all that would come back anyway. these companies have foreign operations they would have to run. microsoft is a quarter of its market cap. key way to think about it, not just actual cap level, which those guys have high levels, think about it as a percentage of market cap. so that way there's a lot of companies that have say a billion dollars in cash overseas but compared to their market cap. >> small number.
>> well over 10%. >> connect the dots for us from bringing over low tax rate to doing share buybacks, which those seem to have kind of petered out a little bit lately. >> they may have. one of three things can you do. you can do a dividend, buyback or m and a. that's one thing to focus on. but a stock like this, a cash cow, very little back into the business, 15% of their market cap in foreign cash. if they were to buy back their stock over the last 10 years i think they have cut it by half, their share count. any cash that could come back that they do bring back, would likely come in the form of stock buybacks whereas a company likes franklin resources, they have about a quarter of market cap over in overseas. and if they were to bring it back, there's one of two things they would likely do, a large
dividend or a symptom buyback. there's some ownership issues there where it's more likely to be a combination of the two. but you would see a buyback. the key way to think here is not just to focus on these large cap tech companies, there's also smaller cap companies. >> under the radar. >> johnson, the formulamaker. the other thing positive tax repatriation, the reason they have that cash overseas is because they have a lot of international revenues. if they have international revenues, the strong dollar is going to hurt them. so there's pros and cons to it. i think as we constantly hear repatriation, stocks go up, there's a lot of nuance to that. >> i think it has to be the kind of company, kind of stock where the investors bought into the idea, this is a capital return story. you go back to microsoft's huge special dividend 2004, shareholder friendly, moved the needle on gdp and spending that
quarter but it didn't necessarily catalyze much higher prices for the stock itself. what we're not talking about is direct reinvestment in the economy, any strings attached at all, even nominally speaking as a condition of bringing stuff over. >> kind of the idea behind the whole thing. >> generally the idea. >> 2004 completely didn't work, buybacks and dividends. wouldn't surprise me at all to see some sort of agreement made that some of it has to be invested. >> qualcomm, franklin, gilead, these are the names to watch among others. >> yes. >> took aim at carrier, now another company in his cross-hairs plans to move jobs to mexico. how many jobs at stake with this one and whether this business will be business as usual under the trump administration. also airline stocks have been flying high sense the election and hawaiian air leading the rally. ceo mark dunkerley whether he'll take on overseas rivals. stay tuned.
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. >> there was a cost keeping the indiana plant open. i'll tell you this, you and i know each other, i was born at night but not last night. i also know 10% of our revenue comes from the u.s. government. i know a better regulatory environment, lower tax rate can eventually help utc over the long run. >> that was mad money's jim
cramer greg hayes speaking about his company's decision to keep more than 1,000 carrier jobs in the u.s. after speaking with president-elect trump. catch the interview tonight at 6:00 eastern time. don't miss it. trump taking aim at another company planning to move jobs to mexico i think in the same neighborhood. fill lebeau has more for us. >> taxing about rexnord bearings. donald trump tweeted friday night. his tweet very pointed and direct, rexnord of independent moving to mexico and rather viciously firing all of its 300 workers. this is happening all over our country. no more! . rexnord bearings set to move to mexico. we have tried repeatedly to reach ceo, our calls haven't been returned. carrier as well as rexnord, they
say rexnord has not changed its plan. here is a comment from an employee about a month ago in indiana. >> i'm hopeful the government does what he says he's going to do and try to stop some of this. what are you going to do when they outsource your job to mexico. that's the question. that's what's happening here. >> again, those comments coming from employees protesting a month ago. optimistic or hopeful is a better word in terms of donald trump stopping the plant from moving as you take a look at shares of rexnord. going back to october 24th, that's when they announced to the employees they were moving the plant to mexico. it's down 1% but you can see in the last week it's down 7%. kelly, it will be interesting to see if we hear anything from rexnord or the trump administration or whether or not this was a tweet where he says, look, i understand the concerns and that's about it. this is going to be interesting to track over the weeks and months to come. >> i remember you flagging
rexnord for us a week or two. looking up market cap, $2 billion. this is a much smaller company than utx. >> right. >> especially hearing ceo tell jim, hey, he wasn't born last night, they do business with the government. would the same calculus hold with rexnord? >> you would think it wouldn't hold. but at the same time that's what makes this so interesting, kelly. will donald trump and his team really get down in the weeds and say we're going to stop a smaller company and one particular plant or make it really difficult for them to move. if that's the case, you've got any number of plants for any number of companies. some public, some private that are black or in the process of moving plants to mexico. how far down the line does the trump administration go. >> one other thing about this that's kind of peculiar, in some ways you mentioned a union working with both these firms. they know they have the ear of the administration. this is not typically what you would have thought. you would have thought democratic administration,
appealing to them to protect our jobs. again, another thing changing in this environment. >> very much so. i should also point out that some of those union workers at carrier, many on the record saying they were skeptical that donald trump's threat would actually result in them keeping their jobs. for a lot of those workers, they are reassessing how this played out. they did not expect it to work. so a lot of people are looking at this and saying, wait a second, far different than what we imagine ad a year ago. phil, thank you so much. >> treasury secretary designate steve mnuchin on the future of fannie mae and freddie mac. he wants to privatize government ownership of the mortgage giants. we'll discuss the odds of that happening and potential impacts on housing market. protesters in narcotic celebrating government's decision for an alternate route. we'll see whether they will see a boom under the trump
as a supervisor at pg&e, it's my job to protect public safety, keeping the power lines clear, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california. welcome back. here is a look how we closed on douse. gain of 45 points, 19216.
nasdaq up 1%, 53. russell small caps up 1.8. all a little shy of record highs. let's go over to seema mody for market flash. >> therapeutics around 20% on extended trade after phase 3 trial reports in postmenopausal women with moderate to severe symptoms commonly known as hot flashes. again, shares of therapeuticsmd up 21 1/2% after hours. kelly. >> thank you, seema. this is an area of market that could use good news. a lot of high-profile drug failures recently. >> something like this, huge adjustable marketa lot of people that could theoretically be targeted. >> do you think we were saying last hour health care sectors jump in participating new highs going forward. >> i think parts of it. >> i think the whole pricing
issue, the horse is out of the barn on that, whether clinton won or trump, there's doing to be pricing pressure on these companies. especially high multiples. high multiple tech, health care, they may see rallies but longer term rotation away from these higher growth companies, higher multiple companies and into lower multiple cheaper value stocks. >> then not knowing what obama care revamp is going to look like. >> a lot of questions hanging over it. time for cnbc news update let's get to sue herrera. sue. >> here is what's happening this here everybody. a judge declared a mistrial in the trial of south carolina police officer charged with murder in the shooting of an unarmed black motorist. injury unable to agree on unanimous for shooting slager. shooting walter scott to death after stopping him for broken taillight. libyan forces say they have
driven isis out of sirte, one-time stronghold. fighters surrendered after forces backed by usair strikes advanced into the area. army taken control of isis in two neighborhoods in eastern mosul. footage taken by freelance camera man shows houses damaged in the fighting and civilians leaving the area. so far nearly 70,000 civilians have fled mosul. a temple dating back to prehispanic mexico has been discovered at a mexico city shopping center construction site. the site was the capital of the aztec empire which the spanish raised in 1521 to found what is now present day mexico city. that is the cnbc news update this hour. kelly, i'll send it back to you. >> that is amazing stuff. >> it is. really is. >> treasury secretary des nat
mnuchin says fannie mae and freddie mac should be taken out and privatized. how would this work? >> this that sent stocks soaring. what he said publicly, he would make sure when they are restructured they are absolutely safe and don't get taken over again. these stocks have no real value because the two are in conservatorsh conservatorship. but investors are fighting that in court. fannie mae and freddie mac put in conservatorship during financial crisis when treasury deemed them insolvent. during the crisis the two drew $187 billion. when they became profitable again in 2012, the treasury ordered all profits from the two be, quote, swept back to the treasury. so far they have made $255 billion. that's $68 billion more than they drew. they are literally a cash cow. that's part of why they have gone untouched for so long. that and private investors still have no interest in buying mortgage bonds that are not backed by the government.
the republican proposals today have been to wibd down or phase out or make them into some kind of public utility which would include some risk sharing. it was not expected they would be recapitalized and turned back into public companies again. the reason for that, there's always been this implicit government guarantee putting taxpayers on the spot yet again if there's another crisis. most in government don't want that. so this was a new one, kelly rainfall and a b. >> and a biggie, too. more on the prospect, joining us co-founder and partner of financial analytics along with mark hanson housing and mortgage strategist at hanson advisers. guys, thank you for joining us. karen, what do you think about the prospects for privatization here. >> i think it's going to be restructured, gses restructured and probably liquidated but not privatized in a way that will
make investors happy. >> how about you mark? >> more we can end distorted rates, socialized mortgage lending, easing underwriting all put there to goose house prices that ultimately forms bubbles, the better. i'm all for privatizing or getting them out of control, putting them back in the hands. but then again you've got to be careful what you wish for because it could be destabilizing the housing market. >> mark, just to drill into what you're actually saying there, you would like there not to be as much availability of 30-year mortgages and maybe they would cost more. is that something that should be a policy goal? >> back in the good old days, 10 and 20-year mortgages allowed you to build real wealth over short period of time, pay less interest rates. if you want stable and less volatile housing market, 30 year rates artificially pushed down by power of the government and fed don't do that. we need to get back into a simpler mortgage rate environment plus you have fha to
do that. if you really need government loans, fha is there with a huge balance sheet ready to do great loans. they are doing loans for borrowers 700 credit score all day long at rates better than fannie and freddie. >> mark, you're saying you're all for this process of privatization. karen you say more likely fannie and freddie get restructured and liquidated in a way shareholders wouldn't be happy about. why do you say that? >> i think it's because the only way you can have profitable gses is with no capital. the only way you can have gses that meet steve mnuchin being safe for taxpayers or gses we want is with lots of capital. that's putting government and taxpayers on the hook even then. we get rid of fannie and freddie as they are. let's call this what it is. as long as the country wants 30-year fixed mortgages, we need a government agency. i don't think this congress, epa as republican as it is, is going
to be willing to say to american middle class, you know that mortgage you want, you can't have it anymore. >> what about mark's point you can get it from the fha, karen. >> fha only does high loan to value mortgages. if you want a whole housing market with mortgages with almost no money down then you can have the fha. what i do think we're going to see is what jeb hensarling chairman of the house committee wants is a government corporation, one that wraps fha, fannie and freddie into a single entity -- at least this is what i hope it does -- sharply shrinks their role. >> mark, what were you going to say? >> on that note, you have to be careful what you wish for with privatization. because when you control the fannie, freddie, and fha which does 95% of all loans, you control the economy. last time around they used them for mortgage modifications. the next time the housing market slips and needs reliquefy
indication, freddie and fannie the link into the household checking account for things like 50 and 100 year mortgages. things like qe for home owner with fixed rate pricing in the event of bailout. real important to keep a leash on. then again, you don't necessarily need fannie and freddie as government agencies if you have fha behind them. that's my opinion. >> this is such a tricky one. explain the role fannie and freddie play in the sense what is the federal -- what is the government guarantee that they are offering and does that need to be in place for a functioning mortgage market? >> right now, fha doesn't have the balance sheet to do the national, all the loans in the nation. and rates on the 30-year side, banks don't want to take that risk for 30 years at rates that are competitive. so you need those securities,
need them backed by the government in order to go, which public-private partnership might be the only option in the long run. again, if you move these things totally privatized without some sort of government backing, you're going to end up with shorter term loans that financial systems want to do, 10 and 20-year loans. things resemble car loans and things like that, which then takes time to get an adjustment period for the housing market and house prices. house prices right now largely reflect fannie and freddie, presence in the housing market. if you took them out of the housing market, there would be a time of readjustment. then again, you could do some fantastic things that enabled a safe and stable, less volatile housing market for the next generation. >> steve mnuchin has opened a can of worms here. we'll see what the administration's plans are. mark hanson, karen, thank you both for joining us. >> thank you. >> thank you.
>> protesters at standing rock claiming a victory over the weekend after the obama administration effectively delayed construction of dakota access pipeline. with a new incoming president taking over the white house in just 45 days, we'll look at what a trump presidency means for that pipeline and other energy projects next. also transport soaring since presidential election. coming up hawaiian airlines mark dunkerley joins us at the stock exchange to discuss trump presidency and spending plan could mean for his industry. you're watching cnbc, first in business worldwide. go after it the same way?cause y chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of t world's leading investors. partner with pgim. the global investment management
in case you missed it, we just had a record close for the dow jones industrial average. 45 points. it was the weakest performer out of the major averages. most of the others in 10 points or a percent or so from all-time highs. >> it seems as if even this rally is kind of rotating around. it's not just about haves and have nots anymore. >> look at nasdaq, that had a tough week last week. >> tough week last week. it doesn't have a reason to rally at the moment at the year end but it definitely is one of these things where it's not just about the very strict trump trades anymore. that was the story for the next few days and it's kind of broadened out electric there. >> small caps, 1.8% higher today. >> the sector has been on fire. it just shows when you go from shifting funds from large cap to small cap, it's like shooting a
fire hose in a water balloon. the entire market cap increase of russell 2,000 in six-day winning streak was less than johnson & johnson market cap. there is a rotation there. a little money out of a big sector. >> it underperformed s&p by 5 percentage points in the few weeks before the election. it's obviously a little more. >> it's been -- army corps of engineer turning down permit for pipeline after thousands of protesters camped out for months in north dakota to fight it. it's not the only pipeline project in the works though. morgan brennan joins us with the ways the incoming president-elect trump could affect the industry especially after this. morgan. >> so true, kelly. the decision to grant easement for the pipeline unsettled industry. energy transfer and partners like sunoco and phillips 66 had fulfilled environmental and
legal obligation toss move forward with construction, the reason you see shares of energy partner down today. this may be short-lived because the trump transition team has already signaled for the pipeline. overall there are three big ways the trump presidency could be a boone for midstream energy. one, if he stream lines federal regulatory process, more projects could move forward according to raymond james, horowitz, there are billions of dollars waiting to be unleashed including on line three replacement and northern leg of keystone which trans canada says it is potentially looking to revive. second, policies that promote oil and gas drilling would drive up transportation demand. third, got the cabinet appointments most notably for energy, interior, doj, many of whom do have energy backgrounds. factor in recent opec, energy infrastructure could thrive. keep in mind, kelly, there's still risks. if energy prices fall, pipeline
volumes, key metric. a more streamlined approach would usher in new projects, they are still going to be subject to state and local rules, the issue with line three right now in the u.s. of course there are these protests and lawsuits much like we have seen with dakota access. >> yeah, but even rex tillerson, this administration would be keen to promote the sector not necessarily to prevent its progress. thank you, morgan. appreciate it. amazon announcing amazon go score grabbing items without checking out. having no registers may ease experience for customers, what impact on the job market. coming up. american airlines stock soaring 47% this year. up next the company's ceo joins us here at the stock exchange to see what's behind the run and a look at 2017. we'll be right back. >> announcer: when the biggest names in business have critical news, cnbc gets them first.
welcome the parent company of hawaii skbrn airlines, surging almost 5-0% year-to-date benefitting from the so-called trump rally. its peers also getting a nice boost, united higher by 16%, delta up 8%. there are many unknowns once president-elect trump takes office in january. how is the airline preparing? here is ceo of hawaiian airlines. welcome. >> great to be back. >> you have had a busy day already. >> we sure have. >> i imagine they're pleased with how the year is going. >> yeah, 2016 has been a stronger year than 2015. and that puts us in some pretty unusual company at the moment. >> why wasn't warren buffett in the room? berkshire hathaway? what did you think when you saw
these -- american, buying into love, and what about us? >> well, indeed. i mean, i think we're fine looking at our existing shareholders and hopefully can continue to attract shareholders into the future. but it's been good couple years for our company. and we're in the right part of the business. >> but i would imagine that itself -- whether or not he's directly investing in hawaiian shares, a sign the industry is, you know -- has -- one person, i think put it the good housekeeping stamp of approving professional now. >> that very much the case and those in the industry have kind of seen this coming for a while now. and it's nice to see, as you say, that good housekeeping seal of approval. >> okay, so donald trump taking office coming in talking about a lot of infrastructure needs. a lot of times that seems to mean airports. we hope in the new york city area that's the case. but what do you think the impact is going to be of the trump administrati administration, early days. >> obviously, a lot of unknowns about a trump administration. we don't have a sort of fully fleshed out policy agenda, as
far as transportation is concerned. but i think the early signs are pretty encouraging. we are hearing a lot about infrastructure. there's a lot to be done in the infrastructure of air traffic control system that needs reform. we -- >> would you say privatize it or are you for or against that? >> i don't think we're for privatization but freeing it from the shackles it currently lives in, the u.s. budget and so on. what we want to see is a reform that allows a separate organization, looking after the public interests, not for private shareholders, to be able to move more nimbly than atc has done so far. i think that's a positive part of the agenda and also the nomination of elaine chao, to be transportation secretary. we like that. i think that's a very positive sign. >> mark, what are the factors that mostly drive end demand for
your flight? is it consumer demand from here, asia, what is the currency? how does that build into your bottom line and how do those look at the moment? >> we have three sort of natural segments. we've got the flying between the islands of the state of hawaii, a quarter of our business. we're the local bus service. we carry all kinds of everyday life, people going to the doctors' appointments and all those kinds of everyday needs. that demand doesn't fluctuate a great deal, candidly. and we provide an important public service. we fly between the u.s. main land, particularly the west coast and also to new york. and that has a lot to do with consumer confidence in the united states. and then when we look abroad, what we see is a big growth in the number of people who are getting to that level of income that allows them to consider taking an exotic vacation to hawaii. >> the consumer confidence you
mentioned, are you seeing a lift there since the election? >> yeah, perhaps a little bit of one. we certainly guided today our unit revenues, guided hire for the fourth quarter. >> is that because of the election? >> it's hard to tie back to the election. we have seen some encouraging trends in that regard. it's been a good year and certainly if these trends continue, we're looking forward to 2017, as well. >> so between asia and the u.s., the stock chart which suggests they're both doing strong. hawaii is a unique indicator, because it can gauge asian tourism and u.s. tourism. where are you seeing the most strength right now or one area of strength or are they both strong? >> they're both strong. when we talk about asia, of course, a big place and lots of different economies. so japan's particularly strong. notwithstanding the fact that the yen has become relatively weaker against the dollar than it was just a couple years ago. australia places like that, they -- they're more kind of resource-based economy. we're seeing a little bit of weakness there. but nothing, frankly, as severe
as we might have anticipated. and so it really depends on the market in asia. >> a little bit of a window into what's happening all over the world. >> yeah. >> that is certainly what you guys have. thanks for joining us, mark. >> you're very welcome. >> mark dunkerly, ceo of hawaiian airlines. amazon changing the way you shop. plans to change the way you shop in stores. details, next. and the goldman sachs financial services conference with the biggest names in banking, key trends affecting the industry. he'll have exclusive interviews with suntrust ceo rogers, brian moynihan and kelly king. don't miss it, right here on cnbc tomorrow.
or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com. welcome back. we have a news alert on amazon here. seema mody. >> according to a report from dow jones, amazon working on several grocery store formats, and it could open more than 2,000 grocery stores, locations, in an effort to expand its retail footprint, kelly. again, this from dow jones. amazon go, according to this report, one of the least -- at least three formats of brick and mortar food stores, the online retail giant is exploring. back to you. >> thank you, seema.
so we're getting a fuller picture of what is happening. first we heard about the amazon go stores where you check out and they know and scan your phone or something. and now more grocery stores. 2,000 locations. >> that's a tremendous number. who knows what the timetable would be. it made me think of reed hastings in netflix has said their job is for them to become hbo before hbo becomes netflix. as if amazon is working from the flicks direction and saying we can become what we are, plus a walmart or something else like that. >> what do you think about it from the amazon five? >> the grocery business such a lucrative business, why would they not? >> merging fixed costs. >> if anybody can do it, it's amazon. what's really important, you couldn't do any of this without your phone. and these things now -- it's less than ten years ago, changing the way we do everything. you have to have the app to go in there and, you know, that's the key catalyst and the key connector to connect everything. >> i do wonder if shareholders are screaming, don't dilute our margins any further. >> interesting to see the
response. >> very scanty details. but again, dow jones saying amazon may have 2,000 locations, including grocery and these amazon go ones. paul and mike, thank you both for joining us 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. traders on the desk, tim seymour, karen finerman, dan nathan and guy adami. a record run in stocks has hit a, get this, buy-in climb maximum. that doesn't mainly you stop buying? lots of to dissect. and jim cramer spoke with united technologies, which owns carrier after a major deal with trump. we've got the comments that has all of wall street and corporate america talking. and oil soaring above 50 bucks a barrel, hitting its highest level since july of 2015 before retreating. the commodities king says, think again. he'll be here on set to reveal what has him so