Skip to main content

tv   Closing Bell  CNBC  December 14, 2016 3:00pm-5:01pm EST

3:00 pm
policy, of course, we'll have to factor those policies along as well as many other things, including the global environment, oil prices and other matters. we will have to factor that into our outlook and figure out what is an appropriate response. but we're operating under a cloud of uncertainty and we have time to see what changes may occur, and we have time to factor that into our decision making when we have greater clarity. you mentioned the market moves. i assume the market moves about what impact these policies are likely to have on the economy? the changes, the financial market changes that you described, particularly the increase in stock prices, the increase in longer term rates, and the strengthening of the dollar suggests that many market
3:01 pm
participants anticipate expansion anterior fiscal policies raise interest rates somewhere in the united states relative toal broad, but market participants are uncertain, too, and i would expect changes in our understanding of what is going to happen to also affect market prices in financial march kets as we move forward. >> hi, nancy marshall gunser with marketplace. i'm wondering about slack. when do you think the slack in the labor market will have worked its way through so we're no longer talking about it at press conferences and it's not such a big issue? >> so this is not something that it's possible to judge precisely. my colleagues write down their
3:02 pm
best estimates of a normal longer run unemployment rate. the median stands at 4.8%, so we're close. possibly the unemployment rate right now is ever so slightly below but in the neighborhood. if we look at larger border measures of slack, like the u6 measure that includes involuntary part-time employment and those who were marched only slightly hair than. we look at a broad array of. or difficulty of hiring workwor.
3:03 pm
i would say the labor market looks a lot like it did before the recession. we're comparable to 2007 levels when we thought there was a normal amount of slack in the labor market. the labor market was in the vicinity of maximum employment. >> michael mckee from bloomberg television and radio. given president-elect trump's criticism of your low rate policy during the campaign, like it or not, market participants are going to focus a lot in 2017. would you accept another term as fed chair, and would you stay on the committee if you're not fed chair? >> the way i think about it is i was confirmed by the senate to a four-year term.
3:04 pm
the term of the fed chair was not meant to coincide with that of the president, and there were good reasons. it's hard to interpret the independence of the fed, so i plan to sesh sbl. i recognize i might or might not be reappointed. it's a decision that i doernlt. he said, i recognize, too, that i could spay on as a board member and that's a decision for another day. >> peter barns sh, rms. many about the potential impact
3:05 pm
of a president like trump's policies on the economy and an improving kmel. i wonder if you share that appearty am i familiar, number one. and if not are we seeing perhaps a bout of rlt rhigher stock prices in the economy. >> i don't want to talk about stock prices. they may have been boosted by tax policy, cuts in tax rates that have been much discussed, or by expectations about growth, possible reductions in downside risk to the economy. b but, you know, these are things that market participants are trying to view along with the likely paths of interest rates, and i think all of that factors into movements in stock
3:06 pm
valuations. but i don't -- i won't offer review as to whether they're appropriate. >> you have mentioned -- on equity prices, you have talked about whether valuation prices are within historical ranges and norms. is dow 20,000 kind of in the historical norms? are you comfortable with that? >> i think rates of return in the stock market relative to remember the level of interest rates is low. i think it's fair to say they remain in normal ranges. >> john heltman of american
3:07 pm
banker. you said the rates were made more safe, higher equivalency rate, et cetera. does that stand true with the culture of the banks, the way they run, the way they operate and the way they run business? do you expect that if there has been improvement that that culture will continue to improve in the next administration, in the next congress? >> well, there have been many ways in which there have been compliance failures at large organizations, and you've seen a series of enforcement actions by the banking regulators over a range of practices that suggest culture whether there is an exchange or other matters. so this is something that we've
3:08 pm
discussed and emphasized the importance of a culture of compliance, and the board will be undertaking review. we've already begun this year of management of compliance risk in the largest corporations. so i think this is something that's important, and the failings that we have seen in a number of institutions suggest there is certainly room for improvement. >> greg robb from market watch. i have two questions, if i might. a follow-up on running the company hot that you mentioned in your speech in boston a couple months ago. you brought it up. are you now distancing yourself from the idea? >> i want to make clear what i said and what i didn't say.
3:09 pm
one of the things we learned from our financial crisis and a series of financial crisis in history and around the globe, when the economy takes a hit and falls into a recession, productivity doesn't pick up to pre-recession levels and that there looks like there is a permanent hit to the path of potential output for the economy, which is called historesis. and i raised the question as to whether or not this might operate in the opposite direction as well. we have seen quite a few people who have lost their job in the great recession drop out of the labor force, lose their ties and become discouraged and not reenter. i raised the question as to
3:10 pm
whether or not historesis could operate in the opposite direction. that was a research question for economists to see if there is any evidence, because it could be important in determining policy. but i didn't draw any policy conclusions from that, and as i indicated, i think the path that you see that the committee has laid out in a tentative way that involves a modest degree of undershooting of normal, longer run levels of unemployment, going down to around 4.5%. it would remain for a couple of years, might provide some insight. i was not recommending a substantially easy time to test
3:11 pm
that hypothesis. >> the last time you raised rates, the expectations has been over 50%. is that a prerequisite going forward? will that have to happen as you go forward? >> it's not a prerequisite, but we do try to explain our revolving views as clearly as we can. it's important for market participants to have a sense of how we think about the economy and the appropriate path of policy to look at incoming data and to form their own judgments as to whether or not changes in policy would be appropriate, and while it's not a prerequisite, if we're in good sync in terms of explaining what goes into our policy judgments, it's not surprising that it would often
3:12 pm
be true that moves are well anticipated by the market. as i said, in thinking about today's move, we've indicated that we thought we were making progress on our objectives, we wanted to see some more. i think anyone looking at incoming data can clearly see that we have enjoyed further progress both in the labor market and on inflation, and therefore there are good reasons why the market should have anticipated a move today. >> patrick gillespie with cnn. there's been a lot of talk about manufacturing and trade. what do you think are two or three concrete steps that could be taken to increase manufacturing employment in the united states? and separately, i've asked you about the importance of job training programs, something that you've emphasized. speck specifically, what do you think about worker assistance provided to people who have lost their
3:13 pm
jobs to trade? are they sufficient? >> i don't want to weigh in, i don't intend to weigh in. i haven't weighed in on either fiscal policy, specifics of evaluating policies. i'm not going to weigh in, either, on the details of particular trade policies. but more generally, i would s say -- you asked me about manufacturing. there have been a lot of manufacturing jobs lost over a period of time, and particularly after the great recession. we've had some recovery in manufacturing employment as the economy has recovered, so to some extent, manufacturing employment depends on the progress of the economy, and we have seen some recovery.
3:14 pm
over a long period of time, technological change is something that has been important in reducing manufacturing employment, absolutely, and it's a share of jobs in the economy. for decades, the pace of technological change in manufacturing has outstripped that in the economy as a whole, and so manufacturing firms have found it easier to continue producing by reducing their work forces, and that's a change that i would expect to continue. you mentioned worker assistance. so some of the forces that are acting on manufacturing in other sectors, including technological change and globalization, even though most economists would judge the overall consequences of these developments for the economy to be positive,
3:15 pm
certainly there are groups of workers who were harmed by developments pertaining to globalization and technology. and i think most economists and policymakers recognize that it's important to provide ways for workers who were harmed by these kinds of developments to be retrained for jobs so that they can succeed in the economy. so i would agree without getting into any particular program and whether it's efficient, i do think it's important to recognize that there are those who are harmed by these developmen developments, and their concerns, i think, need to be addressed by policymakers, certainly. >> justine? >> justine from finance.
3:16 pm
the fed has grown to $2 trillion. in what cases would you see the fed moving down its balance sheet and letting securities mature or perhaps outright selling from the portfolio. >> we've indicated in our normalization principles that we expect to diminish the size of our portfolio over time, largely by ceasing reinvestments of principal, selling securities. weave indicated once the process of normalization is well under way, we would probably begin to allow our portfolio to run off. . we have made no decisive sdigz about when that would occur.
3:17 pm
we want to be sure that if, that we would have initial rain cuts to be able to respond to that. . there is talk about with what federal funds rate we might deem appropriate to begin that process. it's not something that depends on the level of the fund rate, it also depends on our judgment. possible concerns about downside risks to the economy. so we've not yet made this decision, but it is something we have long planned to begin to allow our balance sheet to run off, and then it would take several years. if all goes well with a substantially smaller balance sheet than we have at present. >> this will be the last
3:18 pm
question. >> mike murray of dow jones netwires. i wonder if somebody who is really upset with how the market is performing, despite the distance is looking pretty good, would that cause you to think differently about how you value the economy? how do you get a sense of what's going on in the economy? basically, did how things turned out in the election, can you tell us how you think it's doing? >> i have long been aware, and i've spoken about strategic aims, and the fact that a significant share of our population hasn't been enjoying.
3:19 pm
so these are longstanding concerns. these are not new phenomenon, but the recession was very severe and perhaps exacerbated to fill up elements that had long been affecting many american workers and households, and i think they are quite disturbing. they are ones that the fed is not well positioned, i think, our policies can affect the general level of economic activity in the labor market. the rate of ip flation chgs we focus on. weave been quite attentive to
3:20 pm
specific demographic groups in the labor market. particularly minorities tend to be very badly affected by downturns. we've discussed that, we've been focused on it, it's not since the election. we are pleased to see they are. the american rate at this point is. but these are important trends, and i think it's important for policy to address them. >> chair janet yellen wrapping up her post fed meeting news conference on a day when, as anticipated, the federal reserve raised short-term interest rates, the overnight rate by 25 basis points. and i guess they sound a little more hawkish on their view of the economy right now.
3:21 pm
>> you might be wondering, tuning in now watching the market, continuing to move lower. the dow is down 150 points. was it part of what she said at the conference? it just appears it's the overall tone, the idea there could be three rate hikes next year. deregulation, all of that kind of thing. it also seems like they're poised to respond. you start to think, three? will it just every day. >> by the way, welcome to "closing bell." i'm bill griffeth here at the "closing bell." you know what that means. . we have dow 25,000 hats standing by. >> thank you, jeff koonts, for
3:22 pm
coming up with these and sending them inment. many we'll go live in trump tower with the latest in new york for his wirt feeding or frld -- you never know. beverage we have. jerry yellen's comments, our panel right now, heather recall. there, see that? they doubted necessary in the booth bought i knew he was next to me and was sell off right now
3:23 pm
f. there was the market nooufl umt. . i'm going to totally step debacle, and it will probably be a light liquidity day, but look first, shoot second. >> heather, you have a new name, a new do. a new lease on life here. >> but i need a new hat. i was hoping it would be that historic day. maybe i can come back when we do hit 20,000, but i think the markets are selling off right now because yellen is not giving them. i'm yelling in the background and i will have to let them know. but i think the markets are selling off because yellen did not give them the juice we want to hear in a longer market. >> we're holding rates lower for
3:24 pm
longer even saying i get it. and markets, there is no more fed-induced rally. probably fed is over. >> nancy kengla. is this the kind of dip you would want to get into today? >> it's a start, bill. thank you iltflt. >> we had three increases erm. the street and the consensus was it, too. i agree with heather and steve, i think it's just the rate hike was baked in, but her comments were not. >> our steve leaseman was in that meeting.
3:25 pm
he's stepped out to join us with some thoughts and reaction here, steve. >> yeah, i think the panelists have it right, that the market has a little catch-up to do. i think it's interesting, as rick santelli described it earlier, it's a bit of a flat inner that the high. the way the market must be taking this is as follows. . they repeated that we are not yet putting in the expected trump rate hikes. i think two years from perhaps today found itself a little bit more behind the curb. it shows you there is a single rate hike in 2017 additionally what had been previously forecast. to the point the long ks.
3:26 pm
. there is where the risk is in temples some of the many. >> we're trying to get the reaction every day. so far the trend that's been in place since, but it's the equity mark market. well, i wouldn't draw huge conclusions concerning the equity hickker book oorkt i think the fed is too rigid -- basically, this is what they've been wishing for, if he toes it is ment.
3:27 pm
steve had a wonderful question. other reporters kept drilling the point home about, hey, look what's happened since the kbrkt. >> i don't think they're oblivious that anything has concerned at all f. tmt. but i rubber stamp means in kent the other way. >> what is a rubber stamp? >> i could toll you d. i would issues that we fall whether it's corporate taxes, arguably certain regular ragsz, laynce if sgoomgly care act. she should have said these are good mingz.
3:28 pm
dove dt dale. >> nancy, you're nodding your head. >> i am just because i think he's absolutely right. it's as though nothing has happened. while the markets rallied, let's keep in mind it's up 6.4%. two weeks after reagan's election, it was up 8.3. we've only hit 17 new highs this year. in 1995 it was 77. while i am be jisht, this has he not been a roaring, we canless response. they have not factored in estimate rises in the. >> can i go back to rick's answer, which is interesting. had she said? what does that mean por positively he fopgs.
3:29 pm
it could end up being more and that would mean we have to hike more than we have in the past. >> i think it's a good thing. there is a very good chance they've been behind the eight ball, for getting what happened on january 8. >> it would only get them caught up to where they should be even if nothing. >> you're you are. gets to that 3% quicker, acknowledge all these positive issues like the many. that is catching up to a 2% target, but we're getting there. should we be normalizing more than a kwurter. . the following legislation and
3:30 pm
would you go that far that the market might be ahead? >> the market can get behind, and that's okay. >> the dollar index is spiking to almost a point of 102 here. the two-year yield is up one and a quarter, the 20-year not so much. these are big moves? >>? the last couple weeks, we had that great rotation going into finance, early, de -- it's not unlikely to have the market higher. now you have a chance to buy the market again. >> maybe not yet, though. >> of course. if i had that answer, then i can
3:31 pm
only work one day, but i do believe the market overshoots and undershoots. right now maybe it's overshot, but there is a lot of people who need to catch up in equity winnings tonight. >> we're probably not, but let me ask you, anyway. as yields continue to rise, are they going to shut out equity prices? >> possibly. but if you look at the. you're going to deal with what inning are we in? for market participants, it feels like we're in the eighth to ninth market. there is a huge hurry. >> you also have to factor in what that would do to paying the debt servicing, servicing our debt and the interest cost on all of our debt. >> 3% on the 10-year.
3:32 pm
he's being kind of a trip wire to your point that at what point does a stock rally run into all this? >> let me do this, steve, if i may. nancy, you have some stock picks. are these the stocks you would buy on pull chank. fm many. yeah, the i can't remember t tut -- if it familiar. here's a tax that pay an effective 30% rate. who would think a value manager would buy facebook? it came within our buy ranges. interestingly, the financials are close to our sell ranges, so it's a time to look at valuation, as it always is, but to really pay attention to the opportunities the market presents. and i would be happy if we got a
3:33 pm
little more of a pullback. >> hey, bill. >> hey, rick. >> i love this discussion, especially with steve grasso, because the notion of fed rates can buy stock. by giving this a little nod of the cap, i believe the fear relationship of what. i think that's one of the issues that the fed actually can change. and i think that's really what's happening now. and by the way, the ma turlt. they're up 10 basis points. >> what about that dog invest? you think it would be a big impact on multi-nationals. >> there's a huge pirm about, not even arguing the speed at what the fed does.
3:34 pm
i'll buy you a violin. sometimes it's just not your. steef leesman, what were you going to say? >> i was going to suggest that the market has not, to this point, been spooked by higher rates. and i've been surprised by that, but day after day you come in and you have higher interest rates and higher stocks. i could wonder about coming in tomorrow morning and the markemarkets and i say, i wasn't worried about this yesterday. the market hasn't given me really anything different today. >> i hope so. >> it's sort of hawkeye man. the average of our hikes were 2% last year. half the market was on one side, half the market on the other.
3:35 pm
the long gain is up five. we've had basic moves like anything. >> i'm just talking about the last three hours. i'm just talking about the last three hours. >> how about the last 3 minutes? dow, i'm not sure what we have in mind. >> we're looking at the gdp possibly doubling by the minute. given the market the benefit of the doubt. maybe we're looking at double growth from what we've seen. is this the bat dead in terms of ryan. >> she knows what she knows, steve. her experience is quite different.
3:36 pm
she's been. no, no, she feels it's not the place of the kmerl federal reserve to comment on fiscal policy. >> there's nothing to put on their headstone? >> it has not worked out very well for the fed. when alan greenspan decided we could give the surplace, as you recall. . >> nancy tangler, what were you going to say? >> let's not forget the impact that lower taxes rv on earnings. it's almost a one percent birth. . s&p is what, 18, 19 times snl
3:37 pm
when will you sar knock moet, then we get stronger gdp growth or. temperatures up, guys. thank you very much for an engaging discussion. >> we're not just watching the fed this afternoon. ceos are meeting with president-elect trump as we speak. in fact, you can see on the left there a live shot of trump tower. that's where we find john harwood with the latest. john? >> kelly, the biggest names in tech are inside trump tower. meeting with the president-elect, cheryl sa sandberg, tim cook, eli musk, many others. they did not like donald trump's campaign very much, and vice versa. he went after jeff basils of amazon who is also there, and tim cook, but he opened the meeting by telling the fed executives, one, in the surge of
3:38 pm
the stock market since his election. and second that, his phone line would be. . we're going to have to try to have that bounce continue. and perhaps even more. there's nobody liblg you in the world. there's nothing like the people in this room. they think we can do to help this go along, we're going to be there for you, and you'll see we have good talks around here. >> they'll tell us what that conversation was like if they do that afterwards and stop and talk to us. one of them was the issue of trade because donald trump is talking about putting tariffs on some products and there is a lot of concern about trade conflict
3:39 pm
with china and other countries and getting rid of the tran transpacific partnership, for example. also the issue of immigration. donald trump has taken a big stance. he's talked about building a wall, and some of his appointees, jeff sessions, has also talked about eliminating, curbing the visa program on the grounds that sometimes it's been accused of other companies. there is very important to the tech industry. wait to be seen exactly how those discussions will come out. >> an intriguing sideline stoerm. at least two of the ceoa are going to be? any idea what that's about? >> i don't.
3:40 pm
trump criticized them for manufacturing products overseas, especially in china. i don't know about elon musk, a particular angle there, but hopefully they will spill the beans after they come out. >> yeah. in fact, some speculated about an announcement of some sort. that's what you love about this, the totally unpredictable nature of what it means and what could happen. john, thank you. >> reporter: >> reporter:. 1:56 is maybe what i saw there. >> the dow is down about. interesting enough, the nasdaq's is gog turn. let's get a look at the market. >> we've seen stocks fall off of those lows but some sectors will take it harder than others. the homebuilders are lower after the fed announced it's going to
3:41 pm
raise interest rates. the homebuilders etf, ticker shb, also down 1% this week, going for a second straight week of losses. now, the atf is down this part of the year. the dow is now down 36, the s&p down 8, the nasdaq is the best informing of the major avr averages today. transports are lagging. they're down to about 88. oil, there is a big inventory build overnight. we're watching the 38 president tru trump. we'll at the you moving these markets as well. carrie switch carrie swisher is coming up
3:42 pm
next, recode executive editor. you're watching cnbc, world stocks nationwide.
3:43 pm
3:44 pm
3:45 pm
welcome back. here's what we're all watching this afternoon. from left to right, tech leaders from trump tower. there is the lobby where we expect them to be departing from shortly. in the middle is what's happening with the dow. it did come up to a decline of only 40 points but now it's sinking lower again by nearly 80. on the right is the president-elect's twitter feed where we'll see at some point if he has something to say. >> i'm not surprised the tech summit is taking this long. there are a lot of people in that room so a lot of things to be discussed. i would imagine if you give everybody a chance to say something, that's going to happen, and mr. trump won't have time to tweet in the meantime.
3:46 pm
but the market has come back a little bit. we were down 160 points. it has come back. we're at 19,838 as 20,000 starts to fade into the sunset for the afternoon. >> if you want the green arrows, you can check it out by more than a point. also bond yields are moving higher. that's true for the five year, especially the 10-year up 2.55%. the nasdaq is now down by about 10 points. let's check on some individual movers for you. express scripts tells analysts he does not see the controversy of drug pricing going away under a trump white house. they also confirmed their guidance and those shares are still down more than 3%.
3:47 pm
meanwhile, general motors and ford both lower. the official china daily newspaper saying that the chinese government will soon impose a penalty on an unnamed u.s. automaker for alleged price fixing dating back, it says here, to 2016. that would be this year. general motors says it fully respects local laws and regulations and that it does not comment on speculation. ford, for its own part, is, quote, unaware of the issue. but both are lower here. >> yes, and goldman sachs meantime promoting david solomon and cfo howard schwartz tobac e be co-chief operating officers. chief information officer marty chavez, who oversees gold mman,
3:48 pm
will be higher this year. >> interest rates up bip a quy quarter of a point, and they were expecting three rate hikes for 2017. we've heard that story before, but the market is low, for the most part, in terms of equities, although interest rates are moving up and the dollar as well. let's get more reaction from black rock and dorothy weaver joining us as well. russ, what do you think? as we noted, the trend for fixed income and the currencies continues post election. they're both going higher here, the dollar is, but equities are pulling back here. what do you make of today's action? >> i think the trend will likely continue. we still haven't had the full impact of fiscal stimulus in 2017. and the most important thing to me is the effect higher rates are having on the equity market. we've seen a complete reversal of the trend that dominated earlier in the year, where
3:49 pm
financials struggled and proxies ran. now with yields backing up, it's very hard to justify some of the valuations we see in the defense of sectors. those continue to sell off and that trend will remain in place as long as rates keep backing up. >> dorothy, is that your expectation here? >> yeah, i think that today the fact that it's going down a little is just because the market wants its cake and eat it, too. it's been on the run with the fiscal and they thought, well, let the monetary just kick in and keep it going. sod i think it's just a reaction. but -- >> so you think the rally can keep going? >> i think the rally has already gone quite a ways, so it may be just settling down and saying, okay, now let's get down to the hard work of what's the fiscal policy really going to look like? and let's start now reacting to reality as opposed to, you know, what we all hope is going to
3:50 pm
happen. >> russ, do you think that the market believes raising rates, that monetary policy as they raise rates, would counter any fiscal stimulus that comes out of washington next year? is that what this is about? >> no, i think there's a couple other things going on here. one of the key points is the transmission mechanism of the dollar. there is a lot of options now about earnings in 2017. we see some acceleration in the economy. there is a lot of hope we'll see that corporate tax cut which will flatter the earnings among industries. the caveat, the danger, is if we continue to see rates rise, this divergence between rates in the u.s. and rates every where else may lead to more dollar strength than was anticipated. if the dollar goes up in the 5 to 10%, there is going to be a very big challenge for large kept stocks in 2017. >> how would read the dollar, dorothy? >> i think that's a real feel in
3:51 pm
terms of the dollar continuing to strengthen and the impact it's going to have on emerging markets when that happens. we look at it very domestically. but from a global point of view, it's a much, much bigger deal than, you know, a small adjustment here or there. >> okay, but let me give you back your analogy there. can washington have its cake and eat it, too, where it tries to jump start our economy with fiscal stimulus which then serves to push the dollar higher which, of course, becomes counterproductive for many of the companies to try and export overseas? >> i think it can. i think they'll try. so i think it's going to be a tradeoff and see what actually goes through and how it plays out. but i'm not sure that as we start out with the trump administration all the unintended consequences are going to get as much attention as maybe they should.
3:52 pm
>> russ, you mentioned the knockoff effects on other countries, and i think the journal pointed out that even if they peg the dollar, there is some volatility in forward pricing whether they'll be able to maintain those pegs. it raises issues porfor a lot o countries that will see theirs push even lower. is there anything you see in this environment? >> i think there are several merging markets that this will create additional pressure, but it also creates opportunities. you look at the performance of japan. this is a market we've liked for some time in the allocation fund. they have benefited significantly in the weaker yen. most corporations had priced in 110 on the yen. we're at 115 today. that's a big tail wind for japanese exporters. >> by the way, david today said he thought it was excellent that japan was one of the first to meet with donald trump saying japan buys a trillion of the
3:53 pm
u.s. debt and it's a win-win, right? >> that's a very big potential win. i don't know if we'll get 150 but 120 is a very big tail wind for japanese companies. >> all right. we're going to tread lightly over to trump tower here because we're just getting indications that maybe the tech summit is breaking up. someone says they just saw sergeant notello, the ceo of microsoft, walking to the elevator, but i don't see anyone now. the indication is they'll come to the reporters that are funneled over there, but you never know, right? >> i don't know. do you think they will? >> i would think so, but you never know, right? >> there are certainly a bunch of people who are waiting to see if there are further remarks from that meeting. >> dorothy, i'm going to put you on the spot here. do you expect donald trump to
3:54 pm
reappoint janet yellen? >> wow. i think he well could. that may be one area that he's got enough on his platter that he may not want to stir that pot. he's not going to do anything that will mess with his mind and mess with his agenda. she's just going to take it steady as you go. maybe they're two, maybe they're three, but it's not really going to mess with his agenda so he may well leave that one alone. >> appreciate both of your thoughts on the monetary policy. thank you for joining us. we're going to send it back to jackie deangelis for a market flash. jackie? >> i said it was all about sectors to watch before, so while the markets are mostly lower, i want you to take a look at the biotech stocks. it looks like they may be flipping right now. the ticker ibb up about a half a percent.
3:55 pm
among the stocks lifting higher, we want to focus on alexion, ver techs and biomarin, they're all about 1% higher. the ibb is off by about 20% year to date, however, so take that into account. on track for its worst year since 2002. kelly? >> while we have you, we've had some big moves in oil in the last 24 hours. there was that inventory build and then the u.s. production numbers, the rig count has been going up significantly. i mentioned this earlier and it is a big impact on the market here whether it stays on the $50 mark. >> you had a build that would be bearish, and then they turned around and said, no, there was a draw that would normally be bullish. as you mentioned, there are multiple factors here. the trade to me to focus on was that resistance level of about $54. we went up there very quickly
3:56 pm
but we couldn't hold. so right now we're going to see some choppiness in this trade. hopefully it will hold over 50, but if we see the data inconsistent with what people are expecting, some have said we could dip back into the 40s. i'm not saying high 40s, but the 40s certainly possible. >> we'll send it down to bill. we're going to wrap things up for this trading. i have ubs with the dow down 112 points. what's your version of why we're seeing this selloff today? >> threefold. number one they sold off while she was speaking. number two, oil has broken down below 51. it's considered to be very important that it stays above 50. if that breaks, it changes the chart pattern completely, so that's dangerous. and number 2, they did raise rates. that's not going to hurt the domestic markets, but there is great fear as it did last december when they did this,
3:57 pm
that the emerging market that had debt factored in dollar bills could be a big problem. we'll see how it starts to play out. the trouble here is it seems to be running out of steam. >> the dollar index is ripping. we're back at 102 or 121 right now. the dollar, for the most part, at a 14-year high. >> the dollar, trade issues could be a major problem for the whole market in 2017. but look what yellen has pulled off today. she's levitated the world into believing that somehow we can have three rate hikes in 2017 and try to convince the markets, guys, you shouldn't think too much of it. i think it's a remarkable trick. >> she called it very tiny. >> she's trying to tilell us, guys, we were two, but now we're three, and don't think much
3:58 pm
about it. this is a very modest move. if that had been done a year ago, the dow would be down 400 points right now. you could say the markets are down, but she's pulling off a neat trick here. >> it's not quite celebratory. i think you're right, it's a bit of a sigh of relief. it's not so great but it's not so bad, either. >> let's put this in context. we are still thinking about dow 20,000 and when that might happen. the rest of this week, on friday, let's not forget it's the third friday of the month, and it's a big one as well. it's the final quadruple witching for the year. what do you expect to happen between now and then? >> luckily, from what we can see, mr. trump did not tweet after the meeting. >> he's been kind of busy with tech today. >> a lot of people were worried about that, the tone of what might happen. secondarily, i think now that he's got an office, his economic advisers are telling him, you
3:59 pm
don't necessarily want the hawkish fed. that may calm down. going into expiration, i think -- you tell me what oil is going to do and i'll tell you what the market is going to do. >> she was asked repeatedly, did the trump rally and the talk of fiscal stimulus impact in any way people's expectations for rate hikes in 2017, and she said, basically, yes, it was discussed but the influence is very small because we don't know what the effects are going to be. she said, more importantly is the fact that employment is still strong, and inflation has moved up modestly but not aggressively. in other words, they're still not too worried about the whole inflation picture and the economy is expanding just fast enough for them to be comfortable. >> this is the first triple digit decline, if memory serves, since the election. are we seeing the end of the trump rallies that we know of? >> it's going to take more than one day to tell that. as i said to you before, the fact that the rustle has been
4:00 pm
running out of wind the past few days now gives me concern that things may change. >> the dollar goes up, but this time equities go down. the dow down 126 points on a big fed day. stay tuned now for the second hour of "closing bell" with kelly and company. see you, kell. thank you, bill, and welcome to the "closing bell," everybody. i'm kelly evans and 20,000 is not going to be today. the dow sinking more than 100 points at the close after the fed's decision to raise interest rates just about two hours ago. in fact, a drop of 117 points puts the dow down below 1800. the nasdaq down half a percent to 5436, and the small cap russell is down 1.3%, to 1355. so coming off record levels,
4:01 pm
that's for sure. and also breaking a 7-session win streak here after the fed's decision this afternoon. they also increased their rate hikes in 2017 from 3 to 2, and that helps bank stocks lower. you can see the sae/kbe down half a percent on the bell as well. we'll have a timeline of more of what this means for the financial sector coming up. and also meanwhile, donald trump meaning with tech heavyweights in new york city today. there are some shots of them entering and now beginning to exit. we'll bring you any comments from that meeting as soon as they occur. now joining me on the panel today is cnbc senior markets commentator and pro columnist michael santoli. we have jim bianco, the president of bianco research joining us, steve leaseman, and cnbc fast money trader, tim seymo seymour. mike, people have been saying, did they miss the rally? can they get in?
4:02 pm
now we have a pullback. >> you have half a percentage to get in if you really care to. i do think, though, just the contacts. the stock market as we've been talking about lab stretched. it's sprinting higher almost without a break for a while. this is a pretty big excuse, i think. a big rally in the dow on the incremental turn by janet yellen makes a lot of sense you would back away. incompete i think a lot of investors didn't think they owned enough but now it's enough for now. >> the flip side of the stronger dollar, people usually say, well, you want the companies that don't have exposure. they certainly don't have it like the big cap. it does seem like this was kind of -- where they were sort of lumping everything together, it's a risk off-broadway kind of move. mr. bianco. >> i'm sorry.
4:03 pm
i think you're right about the small cap stocks, but whenever you have a fed meeting like this, you have to be careful analyzing the moves in the next hour and a half because sometimes they'll reverse in the next day or so, but it was kind of not what you would have expected. >> so tim seymour, do you see opportunities here, or what do you make of these moves? >> the move of small cap stocks should really be taken in the context of the move they already had. if i think about where equities should be going here, financials, maybe it's struggling with a flatter yield curve and everybody expects this to be a bigger move for them. what's defensive in a higher environment, people will be more comfortable. kelly, if anybody did anything different today than what they expected yesterday really have not been paying attention. the fed has to acknowledge where
4:04 pm
at least sentiment has moved in the economy, and they have to acknowledge 2017. >> i want to tell people you're looking at images of larry schmidt and eric page of google leaving the the summit with the president-elect. >> i'm sure they're not looking for excuses to say anything at the moment. those two guys walking together seems kind of high risk. >> that's true. $3 trillion of market cap, i think, represented in that meeting this afternoon. tim, going back to your point, you're saying -- i was actually just going to raise the question, which is are the markets selling off today what the fed had to say or were they set up and kind of looking for an excuse to pull back here? z . >> i think you need an excuse whether the fed amassed a double statement. not much has changed here, folks. three hikes in 2017. suddenly we think about 2016 when we're told we're going to
4:05 pm
get four or have de ja vu all over again, so i think the market has reason to be a little concerned. >> steve leaseman, would you like to respond to that? >> i would, and i'm intrigued by something not that janet yellen said but by what rick santelli said. to essentially bless the coming policies from the president-elect. when i asked her whether or not the tax from businesses were the kind of fiscal policies she thought would increase the production of the economy, she was very lukewarm on it. she said, they can do that but we'll have to wait and see. guess what, there is a policy from the incoming administration. we kind of know at least what they're looking for. so the idea the fed chair believes we get this huge tax cut and all it does is increase the deficit, doesn't improve the economy, that might be something that's making the market a
4:06 pm
little more wary about interest rates next year, that we get all the inflationary aspects of it but not the growth aspects of it. >> jim bianci, what do you think about how this could all play out? >> i think what the markets will struggle with in 2017 is what do the rise of interest rates mean? are they being driven up by inflation expectations? if they are, that may not be taken well by the stock market and the economy. are they being driven up because of real growth? that would be taken well. and for right now, if you look at the last month, or basically since the election, most of the change in interest rates comes from a change in inflation expectations. if we're going to get more and more inflation, and yellen backed off her high-pressure economy comment, meaning that the fed might respond to inflation by hiking rates, you could run into a situation in 2017 where the feds are raising, and stocks don't like it at all, and the economy might not like t either. >> just to really say what tim
4:07 pm
and jim are suggesting, it might explain why yellen's response to the idea of fiscal policy now versus when we really needed it is taken. what it means is if you're planning on a more inflationary economy, it means inflation means more than a robust economy. it was just a small backing off from the recent highs. that to me isn't a big deal, but this is the theme that's probably going to continue into next year. >> tim, do you think it would have been better for her to just kind of outright acknowledge the extraordinary things that have happened in the stock market and the ism surveys and whatever, you name it, the confidence stuff since the election. did that kind of need to be said, and, mike, about to be knitted together? >> the feds are very selective on the markets when they want them to be a factor. they've talked about the markets in terms of volatility. i absolutely understand how the feds sought today to avoid any
4:08 pm
kind of confrontation with new administration policy. and ultimately, i do think it was also interesting when asked about fiscal policy and in the timing of where the fed has been overly accomodative. she kind of implied we wanted to do this before on 1 or 2%, i don't know if we want to do this now. she would never acknowledge it would get hot faster and she definitely tried not to. >> kelly, this is maybe a good day to remind people that the market has traded almost entirely on what a craps player would know about on the cuff, which is the idea there is going to be some form of stimulus, it's going to ratchet up growth. it's a good day for investors to think about whether or not they have an idea how much trump is going to get, what form it's going to take, and finally what effect it's going to have. are tax cuts really what this economy needs to boost growth or deregulation? what the fed chair is pointing to, for what it's worth, are
4:09 pm
policies that increase the productive capacity of the economy. maybe business tax ruts are that, maybe they're not, but it's worth thinking about, but we don't know the answer to that, necessarily. >> we have to see how it all plays out, but we have to say, yeah, this big thing has happened and a lot has changed the last couple weeks. stay right there. a lot of big ceos are departing trump tower. john harwood has more. john? >> we have gotten no comments so far from the executives who have come out, eric schmidt, larry page among them. i don't know what exactly that means, but we have certainly seen some of the people who have come applying for jobs with donald trump come out and praise him with foreign policy. don't know if -- they didn't
4:10 pm
comment, but we'll just have to wait and see. donald trump was critical of some tech companies, jeff basils and tim cook of apple, and they were critical of him. so the meeting has concluded, the press is being kicked out of trump tower for other reasons, a holiday party, and we're just going to have to see as reports come in what exactly was discussed and what the tone was. >> they're having a holiday party right now? >> in trump tower they're having a holiday party and kicking the press cool which is normally camped out in the lobby, watching people who come and go from trump tower. all of those people are being kicked out of the tower, the tower sk close tower is being closed. >> all right. thanks, john. john harwood at trump tower ther there. >> do you read anything into the meetings that were held? >> i think that during a
4:11 pm
transition period the president-elect is going to meet with a lot of people. today was the day that he met with tech, and i suppose between now and the 20th of january, we'll see several more meetings like this between varied industry leaders. as far as them leaving without making any comment, it's after 4:00 in new york. even they, with their trillions, are going to get stuck in traffic and probably want to get going. >> especially in that neighborhood. steve, i want to go back to something about the fed press conference this afternoon. janet yellen was asked about the stock market and it could have been an opportunity, if she wanted, to kind of lean against it. i didn't catch the phrasing exactly, but it sounded like she described it as about normal. >> you said earlier everything has changed. in fact, the only thing that's really changed, kelly, in my opinion, anyway, is the market valuations. there is no actual policy. >> steve, come on. you're the only thing that's
4:12 pm
changed since november 7. >> the only thing that has changed so far in reality is the market valuations on expectations of policies that don't exist. >> but there is an expectation -- if you look at his cabinet appointments, if you wanted the signs of a deregulation, any kind of signal that you want -- >> hold on, hold on. can you tell me -- first of all, you can take business confidence to the store and they won't give you even a soda with your business confidence data. >> what about consumer confidence data? there is correlation there. >> you can stay consumer confidence data to the store and they won't give you a cup of coffee. the only thing that matters is consumer spending. in fact, half the time they're not. >> when we look at business confidence, isn't this a concurrent indicator of what people talk about what they talk about indicators. >> timmy, you show me your regressions, i'll show you mine, but i've not seen a whole lot of correlation. >> this isn't because everybody
4:13 pm
got together and decided, hey, we're just going to make up a story about this. donald trump was elected president against all the odds, and everything he's done since is a signal about what kind of policies he's going to run. >> then you tell me what kind of tax cut donald trump will get through? will he get 15%, 20%, 25%? how much of a tax cut will he get through? >> we're raising the question, and that's good for something. >> but we're talking about, i think, what the reality is. and the reality is there's a bunch of proposals and ideas out there for which i would remind the average viewer, unlike most other president-elects, there are very few white papers behind it. there is a speech donald trump gave. there is a thread of an import tariff through three tweets. you give me the information that we can plug into a model that comes out of what we think -- where is the tea party going to be, kelly? do you know where the tea party is? >> the tea party for now is actually kind of fallen into line, so we'll see how that
4:14 pm
plays out. my point is, if you had been walking by here a second ago, the tax cuts as we've been talking about, maybe it's not the big package in next year, we've seen a million proposals not play out. we can say the only thing that's happened is the fact that the stock market has moved. a lot has changed. >> i would say the one thing that's certainly happened is interest rates have gone up. the log jam was broken to at least get rates back to a semblance of mediocre and it's because interest rates went up. we're talking about swinging in a tight labor market already. all that stuff makes sense. i don't think you need to suggest that the market has capitalized trump's policies at a very high multiple right now to explain where the stock market is. i think the economic surprise index is getting you there, and what happened, interest rates get the bank stocks there. all that stuff. it's not as if we're at 30,000,
4:15 pm
we're at near 20,000. >> once that all starts to go the other way, it could all come right back down, i totally get that. tim, jim, steve, guys, thank you all for joining us. >> thank you. >> you can be sure to stick around also to catch tim seymour with the fast money crew. talking about bank america's high yield who will say what you should do now that the fed has raised rates again. that will be in the next hour. let's send it back to kathy deangelis. kathy? >> the stock is certainly spiking here a little more than 10%, and we're getting reports out of a german magazine that there's speculation that mondelez is a takeover market by heinz. i'm not sure if that's true or not, but you can certainly see looking at the chart here that this stock is moving on the news and worth bringing to your attention. back to you. >> nearly a 10% gain, jackie. thank you. stocks getting hit today but the dow has rallied still about
4:16 pm
8% since the election. it's about 200 points from 20,000, and we'll hear from somebody who says history indicates it will hit 40,000 under trump's presidency. also the financials have been a big catalyst behind the record rally. coming up, two top financial analysts tell us whether you should still be buying the banks. you're watching cnbc, first in business worldwide. 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 decreas or loss hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.
4:17 pm
4:18 pm
tadirectv now. stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen.
4:19 pm
welcome back. financial stocks took hold today, but they're up 18%. is it a buying opportunity in paul joins us now as manager of financial institutions at capital markets. along with ceo at bell capital. thanks so much for joining us. paul, is your enthusiasm temp tempered by this run to the banks here? >> no, we're not. we're also excited that the fed is talking about higher short-term rates. what these banks need is higher rates. they need higher and lower rates, they need a curve, and we're trying to get a program in place if the government can get it passed or trump can get it passed. you have a fiscal stimulus wahih would be good with rates.
4:20 pm
we think these banks have farther to run. >> ka scassandra, would you ech that? who do you think looks like a good opportunity? >> i would totally agree with paul. the reality is that we haven't seen in the sector the wind at our back in such a long time, and we now have that in a big way going forward for quite a long time, it seems like. and so for us, we like jp morgan, biavet, c and p, and a lot of small cap names. we think this will be a tremendous 2017 and '18 for the entire sector. margins will going to do very well, and from a regulatory perspective, it seems as though the burdens and the expenses related to those are going to diminish under the trump administration, and that's going to have a huge impact on the bottom line for all of them.
4:21 pm
>> i guess it sounds like both of you would recommend buying on these dips today, paul. what about the point they were making? all of this has yet to happen other than the boost they might get from trading the last couple weeks. is too much in terms of the expectations placed in here? >> regulation we know is going to go away, or the increase in regulation. the pendulum is swinging back the other way and that's going to help out a lot. we're right in the fact that if we don't get a tax cut or a stimulus, how big is that going to be? it goes a long way in how these are run. the up side is much further to go if these policies get done. if we wake up six months from now and the tax cut is dead on arrival and the stimulus is not that important, yeah, these stocks will give up some of these gains. i know trump has a mandate and we believe he's going to be able to get those tax cuts through and get a stimulus through. >> cassandra, we have to go, but
4:22 pm
is flat curve a risk here? >> that may be a slight risk, but i think the market is doing a good job in the fed in terms of guiding the rates higher. i'm not too concerned about that. i think they'll get the yield curve steepened enough where they'll make some big money. >> thank you for joining us. >> thank youment. the federal reserve raising rates for the first time in more than a year. will it spell trouble for housing stocks? that's coming up. first tech leaders flying to trump tower to meet with the president-elect. these leaders of silicon valley should be ashamed of themselves after how trump has attacked their industry. she'll join us, next.
4:23 pm
4:24 pm
4:25 pm
we have a news alert. our eamon javers has the news. eamon? >> this is from the public national committee. theriy are officially naming roa mcdaniel and gordon paduchik to lead the republican national
4:26 pm
committee. also ohio state director bob paduchik of ohio, some rewards being doled out to those people who were crucial to the trump victory. >> did you say they were sharing the role? >> yeah, we have a deputy chair and deputy co-chair being named here. that's an interesting hybrid there in the leadership of the republican national committee. obviously, once you win the presidency, you take over the political party that you're from, and this is a sign donald trump is doing just that. >> meantime, that big tech summit at trump tower is just wrapping up. they discuss jobs and the economy with the president-elect. take a listen. >> you're doing well right now, and i'm very honored about the bounce. right now everybody has to like me at least a little bit, but we're going to try to have that bounce continue. perhaps even more importantly, we want you to keep going with the incredible innovation.
4:27 pm
>> i think he's talking about the stock market bounce there. john ford joins us from outside trump tower. john, what can you tell us about the meeting? >> reporter: well, i can tell you i got a readout on the meeting for someone who is familiar with what was discussed inside. three major topics: jobs, immigration and china were discussed. i was told that the discussions were friendly, that they covered a lot of ground, and that they would be described as productive. a few sub-areas were discussed. security was one of them. i tried to get a sense of whether encryption in particular was one of the topics, because, you know, from apple as well as other companies, facebook in particular, there have been some pressures around whether the federal government was going to have access to communications within imessage or within facebook messenger which has encryption. i couldn't get a sense of
4:28 pm
whether encryption specifically came up, but security did in the case of china. also education, which presumably would have something to do with the areas of middle america. not in the big cities, not in the areas like silicon valley, seattle, new york that are seen aztec hubs. how might technology companies might be able to help there? also, repatriation did come up as a topic, bringing those topics back to the u.s. at a lower tax. tax holiday, perhaps, is usually the case and has kept some of those profits offshore. regulation was also a topic of discussion. so got a bit of that read into the meeting. however, the ceos, as they were coming out, none of them stopped in the lobby itself. they hurried out the doors. i did manage to follow larry page and eric schmidt of google out the door. said, good meeting? and eric schmidt just sort of half looked at me, and he sai s
4:29 pm
you don't want to say anything? and he said, no thanks. but was able to get some sense of what happened in there, kelly. >> john, i appreciate you running them down for us. was it about keeping jobs in america? anything further on what about jobs? >> no, i didn't get much drill-down there, but i think it is interesting that vocational education was also a subtopic of discussion within there. so we know engiginny rometti sa ibm is looking to add 25,000 jobs in the next few years with maybe a quarter or a fifth of those coming in this next year. so jobs both at the top and the lower end are important. immigration came up. you would expect that to be skilled immigration, which is an area that a number of silicon valleys have pushed on, wanting perhaps a lift on the h 1v caps.
4:30 pm
it doesn't seem like something trump would be looking to do. but things are different now. he's the president-elect. you never know. >> real quick on that repatriation issue. anything big there? >> i don't have any more detail on that but we're talking hundreds of billions of dollars that these companies have overseas. we'll see what comes of that. >> john, thank you so much. john ford getting the gist of the meeting that was just held between those tech execs and the president-elect. we're joined on the phone now from cara fisher from recode cara. you're not thinking a lot about this meeting. do you think it was more substantive? >> no, as i said, i think it was just a meeting and it was a photo op. the kids were there, and that was nice. i'm not sure why the kids were there for this meeting, but they were. how serious could it be on real policy? i think it's one of these things where he wanted to show he had businesspeople on his side, and of course they brought up repatriation, which is why the tech people were there, one of
4:31 pm
the reasons, obviously. they'll probably get it for showing up. >> wasn't trump criticized for not having much dialogue with this meeting? not much more had to be accomplished, right? >> i guess. they're all available by phone and they can have meetings themselves. i don't know why they had to get together. it's a hard thing to do. all these issues are complicated. encryption, dealing with china, dealing with privacy, dealing with all kinds of issues. it's fine if you want to have a meeting like this, but the photo op to me is what the point was, and meeting him, i think most probably haven't met him in person, and if you noticed, they stayed to the end and it was a constructive meeting. they might have said something at the end but they wanted to get out there and move along. >> saw some some of these
4:32 pm
gestures whether it be ibm on the slate, following what softbank did as well. even bill gates kind of likening him in some respects to jfk. all of this is kind of like a make nice tone, at least for now. >> if you get what you want, you might as well make nice. there is nothing done with the situation. now this is the power that be that they have to deal with and therefore they'll say whatever they want. they were talking about the space prom because of jfk and the space program. elon musk is very interested in climate change and not having the agreement being overturned that's threatened by the incoming administration. each of them have their own issues and they did the facetime thing. again, real policy is made in a very different way and this was what trump has been doing with lots of people, and i think it was a victory for donald trump for sure to get them all there. and again, i think they probably just ran out and said, you know, i did what i had to do, and
4:33 pm
there you have it. >> kara, thank you for calling us. appreciate it. >> thanks a lot. bye. >> kara swisher from recode. let's get over to sue herrera. hi, sue. >> here's what's happening at this hour. the federal reserve has raised a key interest rate by 25% in 2017. a u.s. study of zika-infected pregnancies. the findings echo with what's reported in brazil with zika outbreaks. they will pay a fine for violating a rule that permits long tarmac delays. american airlines allowed a number of domestic flights to remain on the tarmac for more than three hours without
4:34 pm
allowing passengers the ability to deplane. and the postal service's holiday website is offering a media reality website app which is supposed to build excitement about gift giving. it let's receivers take a photo or video with the experience so they can save it and send it. that's the news update this hour. clil, -- kelly, back to you. >> i think it's kind of hip. >> the postal service is trying to innovate. we'll see. the dow below 20,000. our next guest says the dow could hit 40,000 during a trump presidency. that bold call is next.
4:35 pm
4:36 pm
4:37 pm
welcome back as the dow is on watch at 20,000. we have someone who says we could reach 40,000 under trump. also with us is gabe ava. he tweeted about the dow at
4:38 pm
40,000 the other day, prompting the journal to remark that that would be conservative because -- that would be a doubling and markets tripled under clinton and under obama. >> i think if we look -- >> we're giving him a second term automatically, then. >> the rule is 72. we would have to get 4.8 years so we do have to get him to a second term. >> why do you think republican control means 15 returns? >> the returns are really between 13 and 15% historically. so we're taking the high end, obviously. but i think even if you look back at the bull mark. if we take 1989, the s&p was 1500. we went to a generational low, then we popped up above 1500 and in 2015 we went above 1500. we're only 15% higher than 1500 now, so really over the last 17
4:39 pm
years, the annual return on the s&p is every year. >> chuck gabriel, what do you think about the policy angle this is all predicated on which is republican control of congress and i would assume kind of the deregulatory program of policies that could emerge. how likely are they to emerge? >> sommer of deregulation and some infrastructure investment, kelly, and certainly some tax reform. maybe some savings incentives when they get into it. republicans for years used to think new savings accounts were a cure for dandruff and the common cold. maybe they'll get back to that. but there will be issues to be careful not to create dissavings and federal deficits. and peace and trade are important issues, too. i agree with dan. it's not impossible, a double is not impossible, but we don't start with cheap levels and depress evaluations like both clinton and obama did. >> here's the performance of the s&p under each presidency there.
4:40 pm
you can see with obama, 182% return, clinton 209% return, reagan 117% return. mike, how similar are the parallels between those big moves and what we're talking about today? >> in terms of the entry point, not that similar. we're a lot closer to george w. bush's entry point in terms of valuation and all the rest. we have not had the bull market leading into it that we did then. i think it's a matter of not thinking that just because it seems to be a big break in the policy tone at the election that it all of a sudden means we reset the clock and we're early in the cycle somehow. i don't think you can say we're early in the credit cycle or anything else, and i agree with john that, look, if this is going to be a secular bull market, it will have a lot more to go s but reeg agan had a 25% bull market. >> what is different between those kinds of projections in the past, john, and what you see as not that crazy of a limb to
4:41 pm
even go out on right now? >> i think really if you go back to 1896, you go all the way back and you look at times of the market consolidating for a long period of time, after that happens, we can't go on regular valuable ratitions valuations. we don't know if the overshoot will be 20, 30, 40% overshoot. some of those moves are 500%. we're only at 50% from that four-year accommodation. >> thank you for joining us. thank you both. yields climbing after the fed announce aid rate hike today. predicting they'll hit 3% next year. what that means for the housing market is coming up right after this. you're watching cnbc, first in business worldwide.
4:42 pm
4:43 pm
i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor!
4:44 pm
i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars. thanks to both of you for being here. jack, what is the risk to the
4:45 pm
housing market now? >> the risk to the housing market is, i think, less pronounced than people are making it out to be. we're still at a 4% mortgage rate. that's up 15% from the 3 and a half we were, but that's still pretty low. if you look back historically, we did thousands of homes in 1997. rates were north of 10%. that was when the first wave of boomers came into their home buying years. to me it's more about demographics than it's about the absolute level of mortgage rates. >> the millennials being the force. whether they're buying at the same rates is another question. don, what do you think about the risks to the housing market here? >> i agree with him. i think that you have to look at market fundamentals themselves, and look, as interest rates go up, that means the economy is getting better. that means more people can afford to buy homes, and real mortgage rates are not going to move that much. look, in the past, we have
4:46 pm
prospered as an industry when interest rates were 7 and 8%. i'm not very concerned about a movement, even up to 3%. i don't think that would be a big issue. i think commercial real estate, maybe that's a little bit of a different story. >> one issue that mike was raising is access. if it makes those debt to income ratios switch around a little bit, it's harder for people, anyway, to get credit to buy a house, this makes it a little easier. >> it increases the amount a little bit if you're trying to buy the home you can with your income, but on a regulatory basis, if there's going to be other things that go on, maybe try to loosen that up a little. >> fannie and freddie has been thrown back into the mix by steve mnu shrshin who was picke be the financial secretary. do you think that the millennials are going to have enough interest in buying houses, or is it something else
4:47 pm
going on? >> i think you have a wave of 75 million people about to enter their home buying years. they're doing everything later than prior generations but they still seem to be trending along the way. the mortgage piece, that's a little bit of a different discussion. i was having lunch today with a pretty large bank investor and we were debating the availability of mortgage question. mortgages have gotten easier to come by, but they're not back to where they were and i think the big issue today is down payment, frankly. we have mortgage structures in place, rules in place that are going to limit those debt to income ratios. there's a little bit of pressure on the margin but i think we've got a lot of room to run. don't forget, rents have gone up a lot. that's the calculus in a first time homebuyer's mind. what am i paying in rent? what is my house going to cost me? what is my mortgage going to cost me? that's still pretty attractive in most markets. i'm not talking about new york,
4:48 pm
but the rest of the country it's still cheaper. >> you've got a lot of existing inventory out there, does the rate actually spur in the market? people start to think i better buy now before they go any higher, or maybe they realize there is some life to the market and maybe they should move now, whether it's to buy or put their house on the market. >> i think it's a good point. i think that it will compel others to get to the market and buy. inventory values are still relatively low in the major markets, especially the markets we do business in in san francisco, washington, d.c. i think that an increase in rates hopefully will bring more capital to the market. i wouldn't underestimate a regulatory change. look, regulations have limited the availability of mortgages to creditworthy buyers who want to buy homes.
4:49 pm
and i believe these regulations will be reformed by the new administrati administration. as they're reformed, they will put a better leverage into the marketplace as well because as he pointed out, the down payments are prohibitive for many buyers. >> john peebles, john seco for now. just finished a meeting with silicon valley heavyweights including tim cook, elon musk, john sandberg. compact's ceo joins us on that next.
4:50 pm
hey steve check out this guys leg. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg. no, this is a full blown move in to the basement, you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool. health can change but the life you love doesn't have to, keep your lifestyle healthy with... aflac!
4:51 pm
welcome back. some of the most high-profile tech ceos from silicon valley
4:52 pm
just finishing up their meeting with president-elect donald trump here in new york today. trump spoke to them about his plans for them working together. >> fair trade deals. we're going to make it easier for you to trade. across borders. because a lot of restrictions, a lot of problems. and if you have any ideas on that, that would be great. because there are a lot of border restrictions, a lot of border problems. >> for more on the meeting and trump's relationship with silicon valley, let's bring in rod kenyon, former ceo of compaq. rod, thanks for joining us again. >> thanks for having me. >> what was your working relationship like with the white house back in the day? >> you know, there's an interesting parallel. in the mid '80s, the vice president, george h.w. bush, came through texas and talked to a number of small company tech company ceos, and i think went back and had an effect on the agenda that ronald reagan used during the '80s.
4:53 pm
>> kara swisher was the guest who said she thought this was basically just a photo op and there wasn't much more to it other than the ceos showing up for that. but you're suggesting that even something that appears superficial can, in fact, have a lasting impact. >> well, i think it's a start. i mean, you can't do much in a meeting of that size, you know, with as many very important issues as there are today. but i think beginning a dialogue and what appears to be a president with a desire to use the knowledge of the ceos of the tech industry, to work with the tech industry, to try to create jobs, maybe in some areas bring back some manufacturing. there is a lot of potential good things that can come from the relationships. >> rod, putting yourself back in the place of one of the ceos in this meeting, what does he or she then go back to the company and do and set as a priority? is this a way of maybe a good
4:54 pm
faith gesture to say, look, we're going to try to actually have a decent relationship? are you going to look for an opportunity to announce some domestic jobs or essentially try to help in some other fashion with government efficiency, one of the things talked about for a while? >> you know, absolutely. i think i would go back and -- there's a couple areas that would be effective. one is, because the -- the positive feeling about things getting better is so important, making some announcements, looking for ways you can tell people what's going on. what to expect. the other is deeper and more real. i think looking for people in the company to begin to establish more solid relationships with people and the government. and there's a lot of different parts of the government that come into play here. so it could take a pretty significant amount of time from some of the key people of each of the companies. >> real quickly, rod, the tech stocks, big cap tech stocks lagging since the election, has this cleared the air now, broadly speaking, about the relationship between silicon
4:55 pm
valley and washington? >> i don't think so. you know, it's hard to say. but i think there's more reasons why the other types of stocks have gotten stronger, rather than they don't like tech right now. i think it's just sort of a swing, if you look at the way the different sectors have swung this year. >> we'll see if the pendulum reverses and what else comes out of the meeting. rod thank you for joining us. >> thank you very much. markets were broadly lower after the fed's decision to raise rates. that was also this afternoon. and saying it's on track for three rate hikes next year. what to watch for, coming right up. alpha seems more elusive today. is it because so many go after it the same way? 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 the world's leading investors. partner with pgim.
4:56 pm
the global investment management businesses of prudential ♪ ♪ ♪ how else do you think he gets around so fast? take the reins this holiday and get the mercedes-benz you've always wanted during the wier event. now lease the 2017 gle350 for $579 a month at your local mercedes-benz dealer. 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. call us or your advisor t. rowe price. invest with confidence.
4:57 pm
what's ctical thinking like?? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.
4:58 pm
morgan stanley welcome back with some breaking news on yahoo!. jackie deangelis has more. >> hi, kelly. look at shares of yahoo! down 2% in the after hours session because the company is coming out with more clarity on the security issues we've been following closely. remember, there was an incident that disclosed in 2013 that impacted about 1 billion users. the company is now saying the incident disclosed earlier this year in september is likely distink from that one and probably impacting another 500 million users. so, of course, when it comes to issues like this, people's security, the stock will take a
4:59 pm
hit. but, of course, yahoo! is saying it's taken steps to secure these accounts and that it's working closely with law enforcement on these issues. again, shares of yahoo! taking a hit. back to you. >> jackie, how many users? >> we're talking about 1 billion in the previous incident and another 500 million. so we're talking about a significant number, kel. >> shares down about 2%, mike. that's a lot of users. >> well, is that 1.3%? yeah, it's a lot of users and i think the only reason the stock would be down if the market starts to think that maybe verizon is looking for a way out of the acquisition of the core business. >> by the way, that had been floated denied and floated again and denied again. it hasn't closed yet. >> hasn't closed yet. they're saying it's going to. and alibaba and yahooa japan, it would be a negative. >> that's the latest on the yahoo! stock. what do you watch tomorrow? >> the dollar. and see if this assent continues
5:00 pm
overnight. you know, also, day after fed meeting is the market action that might actually have more clarity to it than the hours after. >> then people better book the european vacations. euro under 1.05. thank you so much. that does it for us on "closing bell" today. "fast money" begins right now. "fast money" starts with breaking news on what has been a crazy and historic day for wall street. the fed hiking rates for the second time in a decade. the dow getting within 35 points of 20,000 before reversing and falling more than 100 points. and all of that happening while the biggest names in tech met at trump tower. we'll have a live report. and we start with the big story of the day. the fed raising rates, investors, though, not like what janet yellen had to say. the dow having its worst day since the election. let's get straight to steve liesman for the latest on this. steve. >> yeah, so melissa, a burge of what the fed did was expected, it hiked rates but a

62 Views

info Stream Only

Uploaded by TV Archive on