tv Closing Bell CNBC December 20, 2016 3:00pm-5:01pm EST
important. technicians will say, it doesn't matter that much, but symbolically, it does. >> for really deep wonky wall street people, it means zero. nobody looks at the dow anyway. but for america, and i love america, it does matter. >> all right. >> thank you for watch iing "por lunch," america. >> "closing bell" starts right now. >> hello and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. we came within 13 points of dow 20,000 this morning. and of course, now, we're, what 52 points away. but anything can happen in this last hour of trading, of course. and we're going to follow every move, bring you the money managers to debate what's worth buying, maybe more importantly, what they may be selling at these levels right now. >> hedge fund giant ray dalio says the trump administration could be, quote, reigniting animal spirits and that could be
sparking a cycle in which people can make money. the details for what he had to say and what it means for this rally, coming up. >> plus, what one guest says is the single biggest factor for stocks going forward. and he'll tell you what that is and what it means for your investments. that's all coming up here on "closing bell." let's start with the dow's run at 20,000. bob pisani is tracking the action for us here at the new york stock exchange. >> we're going to make it. everybody, be calm. it's going to happen. the big momentum is on the side of the bulls right now. let's take a look at the dow leaders today. it's back again. the financial stock have said doing a little bit better. goldman's back. travelers. we also have the industrials, which had been laggards for the last week or so. boeing, ge, and apple. we could use a little help from the consumer. how about it, pfizer, proctor, coca-cola, merck. they're lagging right now. and we need them to sort of move forward and help us pass dow 20,000. thank you, my plea is in. how about since the election? we've moved 1,600 points in the dow since november 8th. and here's why.
goldman, jpmorgan, and travelers, three of the five big movers are all financial stocks. united health, which has been a big mover for a long time. disney was a surprise as helping things, as well. what's the most important stock since the election and what really powered us to the dow 20,000? this is an easy one, goldman sachs. remember, the dow is a price-weighted index. goldman is the biggest price-weighted stock in the dow right now. and 400 of the 1,600 points the dow has moved since november 8th, almost 25% of the entire move since the election is due to the move up in goldman sachs. there's my bet for the number one stock right now. we've got some students visiting here in philadelphia for dow 20,000. >> a very successful football team. >> i was just going to say, exactly. thank you, bob. get to our "closing bell" exchange now for this tuesday. with us is rob morgan from seti financial group. keith bliss from katonah and company is at post nine. and rick santelli checking in from the cme in chicago.
keith, you are of the opinion we will not hit dow 20,000 today for one single reason. and what is that? >> because you guys showed up with a hat that said "dow 20,000." put the hat away so we can actually get -- >> at least now it's not my fault for showing it last week. now it's on you. >> it's all gone. there you are. >> i think despite the fact that you guys poured cold war on today's session, we absolutely will get there. as bob is pointing out, the fundamental drivers underneath financials and some of the other growth sectors that reside in the dow will push us through there. but we're also dealing with a lot of seasonal pressures to the upside that we're dealing with right now. the week before christmas, i went back and looked 20 years past history, the week of christmas or the week before christmas, the dow has been up in 16 of those 20 instances. in the last three years, the average has been 2% in one week. so there's no reason to believe that this year will be any different. seasonal factors, fundamental factors, it's going to push us above 20,000. >> rob morgan, what are you buying and selling here?
>> i'm basically looking, kelly, at the rates and the dollar going up, as we head into next year. that from a macro standpoint should hurt big-cap multi-nationals and conversely help small-cap growth stocks. from a macro standpoint, that's what i would be focusing on. the sectors i like, i love financials. rising rates will hopefully help the yield curve, should help banks. and along with that, i like materials, telecom and health care -- or, excuse me, technology as well. >> rick, we've talked quite a bit about the strength of the dollars since the election. we're at 103.2 on the index today. but what do you think happens when and if the dow actually closes above 20,000. does some of the psychology change at that point? i know it's just another number. we all understand that. but we're all focusing out on it, nonetheless. >> no, i don't think anything changes.
as a matter of fact, right now as is we sit, the dollar index is at almost exactly to the day a 14-year high. i think it continues. and as much as i could agree with rob, i could make you a variety of fundamentally, economically, sound arguments about why a strong dollar will hurt a swath of businesses like multi-nationals. but you have to remember, we need to be inside the mind of the president-elect. and i think that donald trump is going to think about these things in a different fashion. that what you will give up, being an exporter into economies where your currency is stronger and they have an advantage, there might be spoonful of sugars in other areas to make it all more palatable. whether it's taxes, regulations, or centre incentives. it all seems so logical now. i personally think the only jinx we have on getting through 20,000 isn't cnbc, it's the fact that the president-elect's new address equals about how much we've rallied, 1600. and i think we will blow through there, as well.
>> there's some numeralology. rob, you mentioned health care, but said that actually isn't a place you'd focused now. why? >> well, kelly, from a standpoint of looking at where the sector is from valuation and visible earnings growth and a lot of this is a carryover from some of the suffering that the sector's had really during the obama administration, even though obamacare itself has probably net-net been a positive, i just don't see all of those factors coming together in a positive way. >> and keith, before we go, you'll appreciate this. you probably read the essay by ray dowelling, that the election of donald trump has brought back some of the animal instincts that have been missing in the economy and the markets here. do you agree with that? and what do you think that does to the markets here going forward? >> i do agree with that. a lot is going to have to happen. i don't think donald trump or
any of his cabinet subsidiaries will be able to wave a magic wand and roll back some of the regulatory environment we've had over the last eight years, but they are going to do some of it, and it's about tax reform, regulatory reform, maybe right-sizing some of the trade agreements we have. and what you're seeing and where it's reflected most is look at the russell 2000, the small caps. all we're talking about is going to be good for smaller businesses here in the u.s. if the trump administration can get through their agenda and get it through quickly. and it will really impact the community banks, which are in large measure a very large constituent inside of the russell 2000. ray's right. we hear from our clients, we hear from some of the issuer companiesy ies i work with now. and ray is on the mark. >> we're about 50 points shy from hitting or closing 20,000 on the dow. what are your clients asking you about it, if anything? >> kelly, i think for
institutional investors, it's not a big deal, at all. but i do think for retail investors who have had a lot of cash on the sidelines and they've been a big -- they've been fuelling this rally since the election, i think 20,000 is something of a big deal, especially based on what i'm hearing from them. there's something in the headlines and it will continue to draw more cash off the sidelines from the retail standpoint. >> so you think it's drawing people in, not chasing them out, rob? >> i think it's drawing them in. because so many retail investors have had huge amounts of cash on the sidelines, really for years now. and i think it is drawing them in. institutional investors know there's really no effect. >> all right. guys, thank you. appreciate your thoughts. i'm putting the hat away, keith. you're welcome. >> very good. >> we also have some earnings on tap next hour. fedex and nike are both reporting and could shift investor sentiment after the close. morgan brennan will be keeping an eye on those fedex results.
morgan, let's start with you on what the street is expecting here. >> that's right, kelly. when fedex reports q2 results after the bell, the street is looking for earnings of $2.95 per share on revenue of $14.9 billion in focus. improving profitability, signs of stabilization in the freight business. an update on the tnt express integration and fresh gdp forecast says fedex is considered a bellwether for broader economic growth. also, expect a peak shipping update on the 5:00 p.m. earnings call, as the final days of the holiday season unfold. if you take a look at shares of fedex, they're trading marginally higher right now, up about 0.2% as we await these numbers. >> i know we were talking about it earlier and you did yesterday, the worst time for fedex to have to report earnings at the same time, at the peak of the holiday shopping season. sarah, what do we watch for nike
coming up tonight. >> the expectations are low. the stock is down and has been totally left out of this year's march for 20k for the dow. watch north america, nike dominates here, but competition is heating up and that means sales growth has slowed down. and missed out on the higher fashion retrotrend that adidas has absolutely nailed. watch china. it's been a profit machine lately for nike, but the currency is weakening. trade tensions are heating up on both sides. watch the numbers and commentary on china. and finally, guidance. nike says it can still achieve sales growth of high single digits this fiscal year. well, it would need to bounce back pretty strongly to get there. so some analysts are expecting that forecast to be lowered. add it ul up, and nike has gone from 2015's best-performing dow stock all the way to 2016's worst. >> as "the journal" pointed out, it's subtracted about 80 points from the dow this year. nike, it's your fault we're not above 20,000 right now.
>> let's see what the numbers show us after the bell. >> just do it, nike. >> sarah, thank you, in hour ten of coverage today. we have about 15 minutes to go. the dow is up 63 points today. could be a record lows. >> 19911 is the number. >> probably goes for a lot of averages if s&p's up 5, the russell's up 7 today. and we'll have much more ahead on the dow's attempt to close above 20,000 for the first time. >> also, we'll go live to the nasdaq, a check of what's pushing that composite to a possible record close of its own. and also ahead, how a potential new tax provision could deeply affect retail stocks and the price of your clothes. you're watching cnbc, first in business worldwide. ♪ we're drowning in information. where, in all of this, is the stuff that matters?
right now. some of the consumer-related stocks, some of the pharmaceuticals are the laggards today, but the rest are move higher today. >> yeah, nike's leading the way and we'll hear more from it after the bell today. and some retail stocks generally have been lower since the election, including gap, ralph lauren, urban outfitters all among them. >> courtney reagan joins us now with a look at how the republican tax plan, if it's enacted, could affect retailers in the new year going forward. courtney? >> hi, bill. so trump's tariff rhetoric has gotten a lot of attention, but actually it's the house's ways and means committee a better way tax reform proposal that's actually scaring the pants off of clothing and shoe retailers. the plan was proposed over the summer but became more of a possibility under a gop-controlled congress and white house. there are three parts. first, a corporate tax rate of 20%. which certainly would be welcome. immediate depreciation expense. this would change how we do it now, which is over time. the third is the real zinger for retail. border adjustments for non-u.s.
manufactured goods and 95% of clothing and shoes are manufactured overseas. under current law, gap, let's say that's the retailer we're looking at, buys a sweater for $80 from its manufacturer overseas. then it has an additional of $15 of other expenses associated with that sweater like shipping costs. a shopper will then pay $100 for that sweater when they buy it. so tax is going to be calculated like this. $100 in revenue minus the $80 cost of the good, minus 15 additional expenses associated with the sale equals a $5 profit. so say that gap pays a typically 35% corporate tax on that $5, that's a tax bill of $1.75 for that sweater. so, under the proposal, assuming that 20% corporate tax rate, but also no allowance to deduct the cost paid to that overseas supplier, and gap now pays 20% of a corporate tax rate on the $5 profit, that's lower, but you
also have 20% of the $80 cost of goods sold, which is no longer deductible, which now means the tax goes from $1.75 to $1 plus 16 or $17 for that sweater. that is more than three times the profit on that sweater. there are lots of economic forces at play. some economists say the dollar preer appreciates and it evens it all out. but that's one basic example of why retailers would be so afraid of these border adjustments. bill? >> but accountants are going to love it! that's for sure. thanks, courtney. see you later. let's bring in simi siegel. what do you think? how will this play out? >> i think the accountants are going tlof it, the lawyers are going to love it. the retailers will have to figure out the interplay with consumers. the easiest answer, because every time we hear about noise changing the retailer proposition, the easiest answer is raise prices. >> and i don't want know if, courtney, you're still there, but that's exactly what i was going to ask in your explanation
there. how much does the price of that -- if the price of that sweater was going to be a hundred bucks before hand, does it go up by the amount of the tax change now? >> i don't know how a retailer would be able to increase prices, even just a little bit, kelly. because right now, consumers want 50% off that sweater. so they don't ever want to pay full price. good luck trying to charge them $125 for that same sweater, when you didn't really do anything to change the value of what that gives a consumer. so i think that's the part that's going to be really, really hard. unless you're a luxury player, maybe like a tiffany. those are the players that might have a little bit more insulation there. but if you're a specialty player like an abercrombie or a gap, i don't know how you pass on those costs. >> ultimately, this is a punitive tax. this is meant to encourage everybody to bring the jobs back to the united states. is that a realistic expectation for a lot of these guys? >> the reality is everyone is trying to figure out exactly how punitive it would be. there's no question it's going to be negative.
you have, obviously, a lot of lobbying that's going on. can i tell you from my conversations with investors, they have evolved or devolved, however we want to look at it, si since the election. and there's a new topic every day. and this is the one de jure. you know everyone's looking to fight this. to courtney's point, it's not going to happen. the notion you can pass on these prices in an environment where a month ago we were talking about black friday getting deeper and deeper, regardless of this noise, the consumer's in control. and the willingness to take that price isn't going to happen. >> if it's not going to happen, why have the stocks been down so much? >> the price hikes. the ability to then pass through the price. if that could happen, the stocks would be off. one thing i do -- so the reality, i think, fear takes us especially at this point of the year. we're counting down to 20,000, but recognizing it's december 31st and it's important time for investors. >> but who's least vulnerable? think about what you do have under control. if it's not price, it's expenses
and inventory. the rhetoric last quarter was all about bringing inventories down. the inventories were supposedly the cleanest they've been in over 3 1/2 years. but at the same time, the off-price retailers, t.j. ross, were out there telling you there's plenty of supply. they're going to benefit. domestically centered retailers that can capitalize on what's going on in this environment and then i would throw in the cosmetics. >> exactly to simian's point. if you have a ross or a tjx or a burlington, they don't import as much, and they also do almost all of their business here domestically, with the exception of tjx, which does have some european plays there. so they actually buy jpmorgan's analysis could be winners. they could see their earnings increase something like 19%, according to his math. it so may not hurt everyone equally, but it's still going to be a pig kanbig challenge to fi out. and we are only looking at what the proposal could look like now. we know this could take lots and twists of turns before we
actually get there. >> if i could throw in one thing, i think the reality is, it's a lot of noise, and important noise. but underlying, there have been structural concerns going around this space for some time. thinking through, t.j. and ross have been structural wishes. thinking through the players and companies that don't have to participate in this promotional warfare to the bottom is key. and it happens to be some of those are domestically focused as well. and as we look out into next year, i think it's important to keep that in mind. and the one i would throw in there, ulta, we spoke about last month, you have a cosmetics domestically growing company, worth taking a look. >> simeon siegel from nomura institute, thank you. dow still 50 points away from 20,000. the s&p is up 5, the nasdaq, 20. don peebles just met with president-elect trump at mar-a-lago yesterday. he'll tell us exclusively what they talked about and whether he thinks his fellow real estate tycoon has what it takes to lead our country.
that's coming up. and we're watching out for earnings from fedex and nike after the bell today. both shares are higher. nike's leading the dow today, it's been a laggard. we'll break down the results with our team of analysts before they hit the tape. stay with us. hey gary, what are you doing? oh hey john, i'm connecting our brains
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but the nasdaq is currently in record territory by about 4 points. and the russell 1388 was the prior record close there. >> since you mentioned it, let's check out what's moving the nasdaq into the close. bertha coombs is at the nasdaq market site in times square with the latest. bertha? >> thanks, bill. we've got some momentum moving. the nasdaq, the nasdaq composite set for an historic close today, if we continue at this rate. for its best year in a couple of years, a couple of years ago, the real momentum cape from biotech. this year, it is chips. the chip sector, in fact, today, notching up a fresh 16-year high thanks to the like of amd and video, which were both upgraded over at goldman sachs. both hitting an all-time high. also broadcom. that's one of the best performing songs in the chip sector since the dow was last at 10,000. it's up over 1,000% since 2009. but it's not just tech today.
today, you take a look and you're seeing a broad range of stocks that are also hitting all-time highs. and i want to note particularly the regional banks. texas bank shares in particular at an all-time high today. and this stock was a $29 stock earlier this year and a big concern that it had a lot of exexposure to shale producers. over the last ten years, since 2009, in fact, we've seen that explosion in shale and the texas bank shares are up about 400% since the dow around 10,000. >> all right, bertha, thank you. no doubt we'll be checking up with you at some point. about 38 minutes left in the trading session with the dow up 68 points. as we get closer to that managic number. a leading trader will tell us what he's watching coming up next. also ahead, real estate tycoon, don peebles, tells us what he and president-elect trump discussed at their meeting yesterday down in florida. stay with us.
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but even with the 75-point game, we're still about 40 points shy of that level. we are heading into the close, so we'll see how that affects all of this trade. carmax among the biggest gainers on the s&p 500 today. the nation's largest used vehicle retailer reporting better than expected quarterly earnings and same-store sales. carmax opened six new stores in the quarter, but revenue came in slightly below estimates. still, bill, investors bidding it up 6%. >> all right. we are almost exactly 30 minutes to the close here, with the dow creeping ever higher towards 20,000. mark newton from newton advisers joins me here to take a long-term perspective on the industrial average. what we've done over the last, what, decade or so, and where we stand right now in your view. >> certainly an historic milestone, 20,000. remember, it only took us 20 years to get from 15,000 to 20. almo almost. a lot of people remember back, and that took us 16 years before we could officially break it
again in 82, even though we got above it briefly. >> here's the dow of late. when you look at the peak back in 2007, we almost got to 15,000. we failed, finally got above it. the break out obviously back in july/august, took us up when we started to move up substantially. we are seasonally still in a quite bullish time. 1.5% on average over the last few weeks. momentum has slowed a little bit. it's likely that we hit it and get briefly above it. however, things like rsi, technical indicators of momentum have gotten stretched to the highest level in three years. so i think it is likely that we're going to pause once we hit january/february time frame. i don't think it's going to be off to the races. it's been largely financials and industrials led with a little bit of energy, but tech is just starting to get going here along with health care. it was still not as broad-based as i would like to see, based on back in the summer, back in 2014/15, there are new highs,
but the range of that based on it all being financials, if rates start to tumble based on the bearishness, people are shorting more treasuries than they have in two areas now on the speck side. there very easily could be a pullback in yields. financials could pull back into the beginning of the year and that could cause a little bit of packing in filling in this move. >> we're stretching the rubber band a little bit. >> i've got a few targets right above 21,000, and we go higher into year and my thinking is 19,000 is more likely than 21, at least in the near-term. >> very good. that puts it in perspective for us. thanks, mark. happy holidays. time nor for a cnbc news update with sue herrera. >> here's what's happening at this hour, everybody. the islamic state through its media arm claiming responsibility for the truck attack on the berlin christmas market place that killed 12 people and wounded 48 more. german police are still looking for the driver of that truck. volkswagen has reached a deal with u.s. regulators with and car owners for the remaining
80,000 diesel vehicles caught up in the company's emissions cheating scandal. it includeses the option of a buy back for at least 20,000 vehicles and will give all car owners substantial compensation. north carolina lawmakers will hold a special session tomorrow to consider the repeal of a law passed earlier this year that limits protections for lbgt people. the repeal could end legal challenges by both the justice department and transgender residents. and the trust for america's health finds that massachusetts leads the way for emergency preparedness, followed by north carolina. the least-prepared, alaska and idaho. that conclusion is based on key indicators like vaccine use, emergency supplies, and faculties that can be used during disasters. that is the cnbc news update this hour, guys. i'll send it back down to you. >> thank you, sue. president-elect trump has been meeting with and appointing ceos as he moves forward with various
cabinet appointments. >> yes, one of the latest executives to meet with the president-elect is don peebles. he's the chairman and founder of the people's coercion and joins us now. don, welcome. >> good to see you, don. >> gad to be here. hey, how are you? >> so we see how you are huddling with the president-elect. what was the meeting about? >> well, look, you know, the president-elect and i met, and i appreciated the opportunity to meet with him to discuss the future of our country. so the president-elect, he was very open and receptive and asked a bit about, you know, where i thought the economy was going, what i thought about, you know, the future opportunities, especially in terms of entrepreneurs and access to equal kpleconomic opportunitiesr minority and women entrepreneurs. >> what did you tell him? what are you hoping he will accomplish in those areas? >> one, look, i think we are
very optimistic in terms of my industry, the real estate industry, and overall, the ceos i have spoken to, whether they be heads of fortune 500 companies, mid-sized companies, or small ones, we're all optimistic. we feel that, look, donald trump is an outstanding bids person. he knows business. he understands our economy and so he's -- he's brought in some talented people who understand that. so we expect a very positive economic outlook. but what was very important was the president's commitment to expanding opportunities for minority and women-owned businesses. it is something that i'm deeply committed to as a business person and how i run my company. and he expressed a commitment to that and he plans to take definitive steps immediately to start creating an environment of economic opportunity for minority businesses. >> well, i guess you just defined it for us. i was going to ask you, what is a productive meeting? are we supposed to read into that something did happen, or
sometimes people used it as a hand waving, well, we totally disagreed and nothing was resolved, but it was productive. >> in our discussion, i don't want to get into the specific items that he and i discussed. we spent quite a bit of time together. his chief of staff, incoming chief of staff, joined that meeting. and we talked about a wide range of issues. but, again, one of the core issues, and one of the reasons that i was there to talk to him in terms of my agenda was that i thought that, you know, there's a tremendous opportunity to create a pathway for better access to the american dream, for all of our citizens, especially african-americans. and he articulated that during the campaign, through a new deal for african-americans. he challenged african-americans, in terms of what did they have to lose by looking at him and the republican party for a change. so you know, it was a very positive discussion. and fruitful about how we can work together going forward. >> is there a role for you in
the administration that would help accomplish that? were you offered any jobs? would you accept a job? >> look, one, i'm focused on running my business. and i've got some things, you know, in public service that ooi'm looking at doing myself. so it wasn't -- the focus of our discussion, and again, i'm not going to get into specifics, but the focus of our discussion, you know, was, you know, on business and on our shared experiences. how, you know, i see, you know, ways for, you know, him to, um, you know, reach out to the minority community and the entrepreneurial community and bring our country together. but look, you know, it wouldn't be that i wouldn't be, you know, wouldn't be willing under different circumstances to work for his administration. i find it -- i find he has the capacity to do some great things. and i think there's -- i know there's a desire, from what i heard. >> speaking of -- yeah, and people coming together, don.
do you see tim cook's letter to apple employees about his meeting with the president-elect? >> i heard a little bit about it, but i haven't seen the letter yet. but i did understand that he was challenging the president-elect, you know, even in their discussion. >> right, and i think his point to the staff is he's trying to -- because there are many in silicon valley who were vehemently against donald trump. and it seems to me like it's one of those ways to kind of explain to peep who might fill feel a little disgruntled about why he felt that meeting was important. maybe what he was trying to accomplish. i just wonder, did it need to be said? is it sort of beyond stating at this point that, you know, when the president-elect moves forward, that the country kind of rallies around him? >> well, look, i think, unfortunately, the circumstances we find ourselves in right now is that this was a very divisive election and that there is some anger and frustration, many on the democratic side, about the outcome. but we do need to of move beyond
that. and we are americans first. we've had, you know, a presidential campaign. we now have a president-elect. donald trump will be the 45th president of the united states. and his success is america's success. and so, all of us who are committed to the future of our nation need to work with him and to have a dialogue and be a part of the future. it's unfortunate that it had to be said. i think from what you're telling me about that letter from cook, it needs to be said. and hopefully, by leading by example. and that's what i'm trying to do. look, i am a democrat. i was a strong supporter of the president, the current president, president obama, but donald trump will be my president. and i tend to work with him in the areas that we have, you know, common goals and objectives. and we're going to disagree on issues. by the way, i disagreed on several issues with president obama. didn't make me less of a supporter of his.
so i think we need to look at things a bit differently. that's what the president's doing. he's being very receptive to new ideas. >> don, thank you for joining us today. >> thank you, bill. >> you bet. >> don peebles there in miami. we had a minor push higher a few minutes ago, kind of pulling back again here as we follow it tick by tick, but the dow right now is up 80 points. what could derail this rally, though? the answer may surprise you and it may be in your wallet. that discussion is coming up next. >> hope it's not photos of your kuds or something. nation's largest public pension is saying no to tobacco stocks. we're looking at stock plays coming up that could provide devilishly good returns.
t. rowe price. invest with confidence. fixodent plus adhesives. there's a denture adhesive that holds strong until evening. just one application gives you superior hold even at the end of the day fixodent. strong more like natural teeth. 17 minutes left in the trading session. the dow up 72 points. we're in record territory, but not at 20,000. the s&p is three points below its previous closing. we're not there yet, the nasdaq is in record territory. >> and the russell is shy of
that mark by about eight points. two out of the four look like they're on course for a record close. the dollar index hit a fresh 14-year high just earlier today. >> in fact, could the strong dollar be a risk to stocks going forward? let's bring in boris sclasberg from bk asset management along with joseph travisoni. boris, that's something we've talked about in the past. we're at a 14-year high right now, but it could have an impact on many companies trying to do business overseas. and not positively, right? >> not positively. if you look at the dow, dow is basically a sort of multi-national index. i mean, i think 70% of all the profits come from overseas. and if you think about that, most of the multi-nationals source dollars and are not getting revenues in euros and yen. and the thing about this particular dollar rally i think that is so interesting is that really a huge part of it happen within the last six weeks, which
tells me most of the corporates are really unhedged nobody was prepared for this burst in the dollar that we saw a post -trum election. therefore, i think come q1, you'll hear a lot of the blame game when earnings start to come out. because they're going to be un-hedged and see currency hits. >> why do you think the strong dollar is good for the market, then? >> i think what we're seeing right now, the dollar is really acting as a barometer of confidence, i think, in the u.s. economy right now. the fed has agreed, has gone ahead with its rate increases. again, sign of confidence in the u.s. economy. it's going to draw in investment. it's going to provide businesses with the means and also the incentive, i think, to both invest, create jobs, and build things here. i think at least in the medium and the short-term, it's going to be a benefit and is a sign of strength in the u.s. economy. longer term, of course, you have some effect on exports, but even there, the u.s. economy is not as dependent on exports as many other companies around the
world. so a stronger dollar has less effect on gdp than it might elsewhere. >> that's true -- >> let's be specific, though. let's put this in terms of specific companies that would either benefit or be hurt by this. for example, you think starbucks gets hard, but a company like zarah, you think, makes out like bandits. explain. >> let's take starbucks, for example. starbucks, you're seeing all of its growth overseas. specifically china. if you look at china, it's now the biggest market for cars, the biggest market for movies. in a lot of ways, the biggest market for a lot of other con suab assumables. starbucks wants to do 2,500 new stores in china going forward. that means with the yuan going lower, all their revenues will be greatly depressed against costs that are rising because they're still sourcing this dollars. add to that one other component, the tensions with china, they could retaliate. they've already said day may retaliate by not allowing starbucks to expand or not
allowing american corporates to expand. that means there's gouing to be quite a lot of pressure there. on the other hand, zarah, which has been execute like on all cylinders, is doing a great job on the retail side. it's the exact reverse. they're sourcing in euros and getting revenues and dollars, therefore it should be positive for them going forward. >> joe, before we go, would you be a buyer of sarbox for the very reason boris doesn't like it. >> i think it's probably a neutral effect at this point. i think the trade issues back and forth between china and the u.s., cl may, in fact, be exacerbated in the weeks and months ahead, i think are more of a negotiating position on both sides really than anything else. china needs the u.s. market, as much as the u.s. corporations benefit from china. there is a translation risk,
boris is right about that. by the way, hi, boris, haven't seen you in a while? >> how you doing, joe. >> there is a translation risk on this, but i think it's minimal as far as corporate profits go. so i would probably hold on starbucks and see how perhaps the trade issues work out. but other than that, i think it's a benefit. i think it's generally a benefit for the world economy if the u.s. accelerates into growth. >> i agree with that. i've got to go with this point. i wish we had more time. and we've got to get you guys together for lunch. but the question is, do you pay in dollars or euros. boris, joe, good to see you both. 12 minutes to go into the close. dow up 79. 38 points away from dow 20,000. s&p is up 6 1/2. nasdaq is in territory territory. the rest is a little bit shy. >> i guess we'll get the mark on you are o close orders when we come back. and as this rally inches closer to dow 20,000, one stock picker will tell us what he's buying and we'll find out what he's
keeping monetary policy steady overnight. that helped the nikkei move higher. the boj offered a good view of the economy, as well. financials also back in the green today. it's still the best-performing sector since the election. and retail and consumer stocks rallying. we mentioned this earlier, nike leading the way with the dow today, bill, although it's been a laggard, pretty much up until this point. it does have its earnings after the bell. >> art cashin telling us that the market on close orders are paired off. so there's neither a bias to the buy or sell side. so the market's on its own now if it wants to hit dow 20,000. joining us on the floor of the new york stock exchange, j.p. liebowitz from david nelson from bell point. i want to ask you. i know we're going to get some stock picks here as we sit as the these levels. you selling anything? are you at a point you've hit full value and out to exit an
position? >> something to avoid is the consumer staples sector. you saw another top line miss. they found out how to beat on the bottom line. a lot of these companies have been negative revenue growth for years now. and given the valuation, investors should really just walk away. >> so you'd walk away from the consumer staples space? >> sure. >> david, what about you? what are you a seller of, what are you a buyer of? >> not only are the earnings not looking great, but such high interest rate sensitivity, if we see yields continue on this upward accent, telecon and consumer staples are all going to come under pressure. i think financials will keep working as long as interest rates move higher. i think some of those higher beta names that are more leveraged to the cylicality should do pretty well. >> so tell us a story. who do you like here? >> nobody wants to buy bank of america up 35%. i get that. >> it sounds like david over here might. >> if you missed a complete rally, you'll have to find a way to scale into the financials at some point. buy a third here, a third after
the earnings, and a third where there's some opportunity next year. this is at least an equal weight sector. and most powerful managers have been underweight this sector for years, for good reason. you roll back a lot of the regulatory overreach we've had over the last eight years and this sector looks very attractive. >> you're not going to play the game of wait for -- >> i'm kind of fortunate. >> there are going to be who say, i missed it now, so i'll wait for a pullback and then get in. >> i think you can say that about some stocks. this sector is still reasonably priced. a lot of these stocks are trading well under market multiples. they're actually going to grow earnings next year. and for some of them, they're going to grow revenues. i like this sector a lot. >> david, what about technology? we talked about the nasdaq looking to close in record territory. again, some of those names initially lagged after the election. it was unclear as to whether they would do quite as well now as they have the recent past. >> so you saw tech being used as a source of funding for this more pro-cyclical, higher beta trade. i think when it comes to things
like technology, you need to think about the broader growth environment. in 2015, you saw people diving into these names because economic growth was this muddle through, it was unspectacular. they wanted the names that could grow their earnings, despite lackluster economic -- >> i agree. >> but going forward, if the risk to the economy is to the upside, tech probably keeps up, but i'm not sure it's the top performer the way it was a couple years ago. we're much better fabs of the higher beta. >> i think he has a good point. i think the growth to value, get out of growth and into value, i think that's largely done. i think portfolio managers, have had four to five weeks at this point to adjust their portfolios. tech is still a great place to be. >> i know the answer, but we ask it anyway. does dow 20,000 mean anything? mike santoli, our resident baseball expert, says, this is like a hitter achieving their 3,000th hit, okay? it's a milestone in the career. just another hit, but a milestone in a career, and then you have to take stock and wonder, what happens from here on out.
>> look, i thought i was coming to a party. and this is the third time in the last couple of weeks i thought i had an opportunity. and i don't think i'm going to get my hat today. but i think it increases the animal spirits. and yeah, it's an important event. it kind of marks how far we've come. we've come a long way. but look at the crisis we've come through. i'm excited about it. and -- but i know there's a pretty big economic divide between rhetoric and policy and we'll have to get there. >> excuse me, i'm going over here for -- you go ahead. i'll see yo uh guys later. >> david and david, so you were just talking about growth prospects for 2016. the question now is, how much is priced in and how strong really are they going to be? especially if they don't deliver corporate tax overall, maybe until the back half of the year. >> so i think that's the key point. everyone's gotten really excited, you were talking about animal spirits, i couldn't agree more. we're still talking about washington. it's not exactly the fastest-moving machine in the united states. and any legislation, even if it happens on day one, it's not going to hit the economy until the second half. so we think second half 2017, we
see a pickup in growth. that possibly extends into 2008. but to your point about dow 20,000. to my mind, that's halfway to dow 40,000. and over the long run, stock prices rise. so you have to look through some of this noise and focus on the fundamentals for the long run. >> davided and david, thank you both. >> thanks for having me. >> over the bill. >> here we are on the trading floor. we're watching for dow 20,000. it is just another number, but it is something we're keeping an eye on. and we came precariously close this morning. we were within 13 points of the industrial average on the open this morning. and then it just kind of meandered the rest of the day. and you could feel it here on the floor. a lot of guys were saying, i just don't feel it today. it doesn't feel like we've got the momentum to carry us over that. but we are in record territory for the dow and for the nasdaq right now. the s&p we are two points away from. we could do that in the next
couple of minutes here, but you never know. and the russell is not quite there as yet. the dollar continues to move higher. we're not powering higher right now, but we are still at a 14-year high. and as rick santelli pointed out, we're almost to the day at that 14-year anniversary high for the dollar index. then we've got earnings after bell tonight. two important sectors to watch. nike in the consumer area, and then fedex in the shipping. imagine, bob pisani, you have to not only sort the packages, but figure out what your earnings were and report those and then testify conference call at 5:00 tonight. >> 200 billion packages delivered this year. something on that kind of magnitude. it's amazing. we're going to do this at the hope. >> you think it will be tomorrow morning. >> i think it's going to be tomorrow. because the momentum -- look at the most important thing. the last two weeks of the year, seasonally strong period. and the momentum from the election, you put these together and you've got these powerful forces. the problem is, the market does not -- volume doesn't change
around dow 20,000. it hasn't, because all the market participants are trying to figure out how to make money trading the sectors. because we've had this enormous rotation going on. the market keeps holding up. because as one groups fall back, financials fall back, they start buying industrials or technology stocks. remember that old johnny carson joke, there's only one fruitcake in the world and we just keep passing it around. there's only 11 s&p sectors, and instead of getting out of town, everyone keeps passing them around. the momentum is there, i'm quite confident we're going to do this whole thing. >> but goldman sachs has been carrying this market on its back for a quite a while. >> this is the number one stock. if you want to know, how do we get to dow 20,000, we had a 16-point move in the dow since the election, on a weighted basis, 400, almost 25% of that move, 400 points have been due exclusively to goldman sachs. that's what you get with a price-weighted index and a huge 30% move in the stock. >> nike, the best performer today among the dow components and we'll find out if that's
justified when they report their earnings, as well as fedex numbers coming up here. so, a record high for the dow and the nasdaq, but no dow 20,000 today. poppers holdings is the big ipo. stay tuned for those big earnings, coming up on the second hour of the "closing bell." i'll see you later, kel. thank you, bill, welcome to the "closing bell." i'm kelly evans. record highs today. we got so close! 19,972. nearly half a percent gain, but we're about 27, about 28 points shy, of course, of hitting and closing above 20,000. still, we made up a good bit of distance today with that 90-point gain on the bell. and it's gf good enough for a record high for the dow. it's about 60 points above its prior closing high. same for the nasdaq, a record
close today with that gain. 20 points above its last record high. the s&p 500, just a point shy, 2271.72 is what it need. just below its record cloe. the russell is also about five points shy, despite a nice gain of nearly 1% today. and two key earnings reports due out after the bell. morgan brennan is standing by to cover fedex results today, while sara eisen will bring us those numbers from nike as soon as they cross. thank you, see you in just a moment. joining today's panel, michael santoli here along with stephanie link from tiaa global asset management. for more on today's market action, "fast money" trader and cnbc market analyst, steve grasso will join us in just a moment. mike, what do you think? we almost got there. >> almost did. you know, in a vacuum, a 0.4% gain across the board, the average stock is up that much. it's the sixth week, mark, since
the election. we've been going straight up. there's really nothing to assail about the market action, except it didn't go over this kind of arbitrary number. but it's interesting. you saw the market kind of approach it, flirt with it, and not a lot of buying urgency, but for three days, the market went really sideways and paused. and this seems to be that mid-december pause that everyone says gives way to the number one bias in the back half of the month. >> is it the pause that refreshes or is it a sign that as we lose momentum and get closer to that level that we're concerned about, whether we do, in fact, cross it. >> maybe it's a pause that refreshes at least until the end of the year or until the beginning of next year. a lot will change in january. we'll have to reassess where we're overweight, cyclicals versus defensives. it was siblicyclicals and then
defensives. and today it was a mixture of both. a little discretionary, banks again. and i think people feel better when cyclicals rally and lead. >> because they're supposed to do well with a strong economy. >> better growth, feel better overall. but watch the dollar. the dollar is really something that is on top of mind for me. and as a result, i'm starting to shift a little bit more to u.s. or to europe pure plays because of the currency coming down so much. >> the dollar today hit a 14-year high. there's a look, i think, since the election at how these sectors have done, financials leading the way of 18% there. telecom actually is up 12%. it's kind of another story. energy up nearly 10%. the laggards include, as you would manage, consumer staples and utilities, hit a little bit by this rising rate environment. we talked a little bit about that last week. and i wanted to mention, here are some of the stocks today that hit all-time highs. we're talking about comcast, all-state, mtb, pnc, the banks there, prudential, travelers,
u.s. bank. adp, microsoft, nvidia, p paychecks, a good assortment. >> and the s&p 500 is just barely below an all-time high. you do have pretty broad participation. i think if i'm assessing the rally to this point, leading into the end of the year, comparing to it last year, it's broader, which is healthier. the credit market is completely supporting what the equity market's doing. that's also good. and it's been able to withstand this rally and the dollar. so all things considered, you know, it's positioned okay. the question is, does dow 20,000, if we get there, end up being some kind of a culmination type event, as opposed to really start of thing. because investor sentiment has already got, on board with this thing. >> steve grasso is here joining us off the floor. how's the trading? volume's a little bit lighter, this is the week of christmas. but you've been saying 20,000 is not where we stop? >> i do think we crossover and i
think it's the start of thing. but it's year end. are people going to make that statement now or wait until we blow past it. today as you saw the market action, they're actually shooting against that number. see, they're clapping for dow 20,000. >> clapping for you. >> that's right. at least that's what my mother says. now if you look at it and see where we topped out, i thought the interesting segment today was goldman. goldman topped, everyone's seen the reports that goldman's 21% of that rally off the election. so can the dow do it without goldman participating? >> goldman should participate, especially when you heard what jeffries thatted to say today. when jeffries is saying that investment banking was a bright spot in their quarter, that plays right into goldman's hands and right into the money center banks. and that's why these stocks are doing well. and that's why earnings are going higher. >> and it's one of the first names we could hear from about specifically the post-election
period, and an early read on what the rest may have to say. >> i would be more worried about these kind of, you know, below-the-surface match nations of what's driving the drou ow ie rest were not in tandem. if you didn't have the s&p up 0.4%, the russell up about 0.9%. it's not about someone trying to push and pull. >> i think it is interesting and healthy that one day you see reits take over, one day you see utes take over. if you can't get onboard buying the financials at this level, there's stuff for you to buy, as well. >> question for you, ultimately, can the reits and the financials and the utilities and the consumer discretionary stocks, can they all do well in the same environment? they arguably ballet on a different kind of macro outcome. >> i think really are ripricing in, it's a growth environment. people are really excited about corporate tax rates coming in, about personal tax rates being
out can from 7 to 3. you're talking almost 10%. >> the big if. >> i think now people will start to calculate, is it going to be 33% individual rate? i think they're more calculating the corporate side. is it going to be 15, 20, or 25. i think there's more room for argument there. >> and that's where i feel that we'll be fixated. it's so much about newest word calling out of washington or the order it all gets done. >> not only taxes, but this whole infrastructure bill. he's putting a whole team in place. that was the word today, which is why i think the industrials did so well today, right? i think, we're getting a lot of news. we're getting a lot of information. hopefully it backs up what we are pricing in today. but between now and the end o. year, i don't think the narrative changes. >> i don't think so either. my position has been, the more this is truly a trump rally, to the exclusion of everything else, the more vulnerable it is. not because of the specifics of the policies, but we've got great batch attacks from 2001.
it didn't stop a bear market. that's not really -- >> it shouldn't be the big -- >> it was already a bear market before 9/11. so i think what really we want to look at is, it should all be happening synchronously. you want the leading indicators -- >> who's going to sell the market? >> and i do understand your skepticism and -- >> i'm not skeptical. i'm trying say -- >> i you said that you're based in facts. but for the first time ever, they're talking about 4 to 5% gdp. you can't get in front of that train. >> that's not what history says. history says you want low gdp numbers, high liquidity, low rates -- >> this is a massive -- what inning are we in the get out of bonds and into equities? what inning are we there? what inning are we in people who are underweight financials and energy. and if you tell me that answer, i can better gauge where the market's hat. >> then it's greater investing. >> you were saying, can all these sectors participate at the same time? and i would say if steve is right and we're all kind of
watching the same numbers in terms of bond money going into stock money, it's not going from bond money to facebook. that's why you're seeing at&t do pretty well. and that's why you are seeing a broadening out of the market place. i think you're going to have this kind of spread out. some sectors are going to do better. >> and you want to see general mills go down 3%. >> and they did. >> yeah. >> by the way, it was not great. that i have got a bunch of yogurt problems. a little idiosyncratic, but at least the market's taking that into consideration. >> at 20 times forward estimates. >> we haven't talked about what's happening with ready whip. >> we didn't make it, but it's going to happen in the next day or so, i'm quite confident. the market broadened out, the dow leadership looked good. looks a little like november. the financial stocks came to the fore. we have goldman, jpmorgan, trarls, some of the techs did well. we even got a couple of industrial stocks moving forward
like caterpillar. the problem is, again, it looks a little like november, is we didn't get any help from the consumer names. your procter and gambles, johnson, coke never did anything. just a little move forward would help in that particular area. now, remember, the final leg of this march to 20,000, the last 1,600 points have been since the election. and if you look at what's mattering since the election, the stocks that have been moving forward have been all the financial names. three of the five big movers, all financials. goldman, jpmorgan and travelers. united health, which has been a big move for ten years and disney also surprise factors here. my vote, number one most important stock on the march to dow 20,000, goldman sachs. we've had a 1,600-point move since the election and roughly 400 points, almost 25% is due to the fact that goldman sachs has had an enormous move. 30% move in the stock, but more importantly, it's the highest priced stock in the dow and the dow is a price-weighted index. remember, guys, big momentum from the election and a
seasonally strong period of the year last two weeks, seasonally on the upside. we're going to open. kelly, here's what's going to happen. we're going to open tomorrow at 20,050, and close at 19,950. >> we'll get the intraday, bob. >> that's all i want! i think 17 closing highs since the election. thank you, bob. let's head up to the nasdaq now. bertha coombs, do you want to you ever a any forecasts after this record run? i'm thinking 2019, we'll just go over. you could either do a slam dunk or an easy layup. both give you two points. and today on the nasdaq, we had that nice easy layup, we kind of moved up. one of the real standout stocks the today was nvidia. goldman sachs says, it's time to out it on the conviction buy list. nvidia makes chips, graphic chips, used to be a big gaming chip, but now it's also in cars
like tesla, model s. so they really are the power behind al of technology these days and a lot of different sectors. and that's the stock that's given us momentum. the best performer in the nasdaq 100, also in the s&p this year. interestingly youb take a look at some of the others that had stork highs today along with nvidia, they include comcast. we're getting a little bit more broadening, although chip names are up on that list. broadcom, one of the big, strong performers. microsoft may have been part of the reason why the dow faded a bit. it hit an all-time high this morning and then just kind of faded and was sort of flat the rest of the day. but when you take a look at microsoft here, you know, this was one of the stocks, one of the four horsemen that powered the dow to 10,000 back in 1999. and it's really come back here over the last couple of years. but i want to show you one more stock. if you look at the dow's climbed the last 10,000 points, one of the stocks that has outperformed here in the nasdaq has been
priceline. it relisted into the nasdaq 100 back in 2009. and it is among the biggest gainers since then. so kelly, sometimes these old dogs can learn new tricks. >> it's funny to think of priceline as old, you know? for $1,500, too. >> the stock was really left for dead at one point. >> that's right. you forget. i forget so easily. bertha, thank you. bertha coombs up at the nasdaq there. we have some breaking news out of the white house. eamon javers, what's the latest? >> president obama today is taking action to make huge stretches of the u.s. arctic ocean off-limits to future oil and gas leases if president is using a 1953 law in order to draw them from accessibility for those leases. take a look at a map we have here of the arctic ocean. you can see can just exactly where this action is taking place. that's alaska there. it applies to the sea between the united states and russia there. and the vast majority of the u.s. beaufort sea to the north
of alaska. this is an effort that's being taken in conjunction with the canadian government, as well. the united states saying here that oil and gas drilling there is currently economically not viable and so therefore they think it's the right time to protect the ecology of that region. they're also taking action on the atlantic coast of the united states. the president is designating 31 atlantic canyons as off-limits to oil and gas exploration and development activity. take a look there. you can see the particular canyons in green. these are offshore underwater canyons. they call them majestic geological features that were caused by glacier runoff and submerged by rising seas after the last ice age. they say there's fishing in that area as well that they want to protect. all of that being done now. white house officials saying they believe that it would be difficult for donald trump to reverse this action that the president is taking today once he takes office next month. that's because they say there is no provision in this law for a
future president to undo the current president's action here, kelly. >> that's the idea. i think they did something with federal lands yesterday, too, eamon, trying to get all of this done. we'll see how much of it is undone in about a month's time. let's go to get to some nike earnings. on "fast money," a technician has the top dow stocks you can still buy. coming up, we've got earnings from nike and fedex. alts t also, the dow closing in record territory. some top stock pickers which will tell you what to buy and sell. find out if fedex and nike could fuel the next leg of this rally, when we come right back. you're watching is cnbc, first in business worldwide.
welcome back. here's a look at shares of fedex and nike. fedex shares down nearly 2%. the nike shares up 3.5%. nike is now reporting and emphasizing is not its futures growth number, which it always has in the past, but basically its pure sales growth. and as a i mentioned earlier, had nike shares not been down so
much this year, the dow would already be above 20,000. they subtracted about 80 points off of that index. a rough slog for nike after peaking in 2015. >> it's on this list of stocks that are great consumer brands that had an excellent 2015. also a tough category, nike. underheartmore has done no better as a stock, although they've probably done a little bit better on the market share side. the stock seems set up for a bit of a pleasant surprise the way it was trading. >> this really could be a classic dogs of the dow stock for 2017, right? because it's down 17% year over year. a great brand, fabulous management. competition offset by dtc and international operations that are actually accelerating. we'll see what the details are. i think the margins are a little bit softer than they get guided initially, but i think the expectations to mike's point were very low. i like the story and the setup. >> sara eisen joins us with more quarter details from the
quarter. >> 50 cents was the earnings per share. analysts were looking for around 43%. and better sales numbers, as well. $8.2 billion. the expectation was just over $8 billion. on the margins, stephanie was saying that this is important. people were looking at that. because we've seen mark downes across the athleisure space. 44.2% was the gross margin, which was pretty much in line with what analysts were expecting. you mentionmentioned, we're not to get the futures orders in this release. but nike is really trying to emphasize it's about sales growth, not so much futures orders, which is sort of an outdated model, you would say, looking out six months and talking to retailers. so much of the business is now direct to consumer. just in terms of the geographic breakdown, a lot of people were worried about north america and the u.s. business slowing downgoing into this quarter. what we got was $3.6 billion in sales and that's what analysts are looking for. it is a little bit of a slowdown, but not dramatic. western europe came in a little bit better and china, which has
been such a huge profit driver for nike, up to $1 billion. $1.05. that is exactly what analysts were expecting. japan coming in a little bit light. so overall, the sales number's on track with what analysts are looking for. we'll see if we'll get more color on futures orders. on the conference call, what they see ahead. talk of trade. clearly there's still a strong dollar problem impacting it, as well. but so far, better than expectations on nike. hence the share price reaction. it will take about a 7% move or a little over than that to push us over dow 20,000 in just nike shares alone. >> you add post-session performance from what we saw today, they're up nearly 27% since this morning. >> so taking a look at earnings per share for fedex's second fiscal quarter, coming in the earnings adjusted at $2.80 per share. that was a 10 cent miss versus the $2.90 that the street had been looking for. on the top line, revenues coming
largely in line at $14.93 billion. the outlook, the full-year earnings outlook for 2017, unchanged at 11.85 to $12.35 per share. that is the adjusted number that excludes certain integration costs for tnt. and the daily volume increasing 5% in the quarter. ecommerce and commercial packages driving that increase in volumes. also, in the release, ceo and chairman fred smith noting that we are in the home stretch of our peak shipping season and our service levels are high, thanks to the outstanding efforts of our hundreds of thousands of team members around the world. also adding that the integration of tnt express is proceeding smoothly and according to plan. but, of course, a miss on the bottom line of about 10 cents. revenues in line, full-year earnings unchanged. that miss is what's driving that stock down nearly 3% in after-hours.
kelly? >> morgan, thank you. some fougthoughts here? >> i think clearly, people had gotten behind the story. basically, as expected-type guidance number, i think, is not going to give you an excuse to buy more at this level. >> up 30% year-to-date. this is a total consensus long. i own u.p.s. and i've been trimming it because it's had such a nice theme. and we've been playing this amazon theme and all of that. what makes me a little nervous is not just this quarter, it's the january and february data points eget about the peak season and can these companies handle it? can they handle the volume and keep their costs low. we'll see about currency and everything else, but did their costs kind of accelerate because they were trying to be so efficient in getting the packages on time. >> longer term, are these the kind of issues as a shareholder you want them to have. geez, they have too much business, they've got to figure out how to handle it better.
nevertheless, it's still a real challenge. >> i think you want them to have that problem, provided that you're not getting the short end of the overall equation when it comes to who they're delivering for. if the economics are so tilted towards amazon or whoever else, but it shouldn't be that way. >> and they've been very, very good stocks. and i think it's just kind of known at this point. >> on the flip side, fedex, which has done well, down 2.5% after hours. nike, which had been a poor performer is up. it's up about 3% after-hours, that's a 5% swing. interesting little nugget in terms of the tax discussion we were just having, to the point about an increased mix of u.s. earnings. that increased their effective tax rate to $24.4% from $19.1%. this is what people are talking about, about houn high u.s. corporate tax rates are, relatively speaking. it's something that happens, even as their u.s. business is doing better in this quarter. >> it's going to be taxes and
currency. these are the real head winds for multinationals, which is why i've been sort of tilting my portfolio a little bit more towards u.s. or these european pure plays. so then you don't have to worry about that as much. >> we're starting to see a little chatter about inventory build at nike, as well, as well as in excess of sales. not necessarily the cleanest quarter of all, but gf. the other part of the tax discussion is, nike selling into the u.s., if they're making their goods overseas, no one knows how it's going to play out when it comes to, their going to be taxed at the border. >> and finally, their gross profit margin fell, and that reflects all those dynamics you're talking about. but investors appear to be in a mood to look past it. >> nike examinations were low enough. a lot of people i have talked to wanted to see one flushed back down and then we would all buy it in the mid-40s. i think even in the low 50s, this stock is still a buy.
longer term view, 2017 sets up much better for these guys versus some of the other names like we're talking about. >> on the valuation basis, probably a 3 1/2-year low, but not yet cheap. that's the kind of fix. >> $53 is about where nike's sitting at this hour. >> stocks have been soaring since the election, but the trump rally is only bested by the stocks associated with many of the president-elect's cabinet picks. up next, we'll look at whether the so-called cabinet index can keep up that outperformance. plus, calpers, the nation's largest public pension fund is going cold turkey on tobacco stocks. whether you should follow their lead or buy into some of these names when we continue. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony.
welcome back. the dow is now up nearly 9%, just since the election. it's been about a month, five weeks, maybe. maybe six weeks. that's peanuts compared to the so-called trump cabinet index. eric chimney is here for a look at how well this cabinet index is done. tell us about it. >> donald trump's incoming administration has a common theme, business experience, many of his future colleagues are on the board directors of major u.s. companies. exxonmobil, wells fargo, goldman sac sachs, news corp. being a few examples. so we put them into their own basket of stocks and we're calling it the trump cabinet index. and it's up 14% since the
election through even just today. far beating the s&p 500 gain of 6%, two-thirds of these stocks are beating the market led by financials like goldman sachs and wells fargo. so some of trump's incoming team include james mattis, gary cohn, wilbur ross, rex tillerson, and elaine chao. there have been plenty of discussions about whether people like tillerson are an appropriate fit. but the index is something to watch once they do take office, whether their experience in government have a side benefit to the companies they came from, or will they stocks sell off more than the rest? we're going to keep watching and report on it down the road, to see how this develops over time, as we start hearing more names. >> here's a different kind of index you can buy for the trump rally. >> it's been a winner! >> and then some. time now for a cnbc news update with sue herrera. >> here's what's happening at this hour, everybody. the plane carrying the body of andrei karlov, the russian
ambassador assassinated in ankara arriving in moscow today. the russian and turkish foreign ministers accompanied karlov's wife and mother as i that came down the steps of the plane. the flag-draped coffin was carried off the plane and into an awaiting hearse. police in kansas city have arrested a male suspect after he led authorities on an our hour. -long chase. it began after the man sideswiped a patrol car. the suspect was finally forced to stop after losing a tower and they got him. he was taken into custody. panera bread making a new animal welfare pledge. saying they will adopt practices set by the global animal partnerships chicken standards, becoming the first national chain to do so. no cages or crates or crowding will be used on farms they contract with. a memorial service was held for craig sager, who passed away last week after a long battle with leukemia. he was beloved by players and coaches and viewers and his
welcome back. it was a big day on wall street. not quite the banner day. we didn't close above 20,000 or touch it, but we got pretty close, with a 91-point gain on the dow. that put us about 25 points shy, away from that mark. the s&p 500, just a point shy of record territory. same for the russell, about five points shy. the nasdaq had a record close at 54.83 with about a half percent gain. we had a couple names report earnings after hours, as well, two dow components and they're moving in opposite directions. nike is now up less than 1%. it initially popped 3% on its earnings. fedex still down about 3% after its results. and with stocks at all-time highs, what specific names are still worth buying? joining us with some recommendations are chad morganlander, who's here at post nine with us. he's a portfolio manager at stifel, along with jeff davis. chad, what still looks attractive to you? >> so i have three companies that are all rising dividend companies, also, that don't have a lot of debt on their balance sheet. dr. pepper, a 12-month price
target of 99. danaher, price target of 90. and honeywell, price target of $130. well-capitalized companies. the thematic there is that operating margins over the nymex 12, 18, and 24 months will continue to gradually improve. giving us a big lift. >> a couple of industrial names there. interesting. jeff, want you? >> i can tell you what we don't like. and after a run like wae've jus had since the election, it's easier to find those. banks in particular have run too far, too fast. the regionals, in fact, have run, the s&p bank index is up over 40% at this point since the election. it's a little too far, too fast. and i also feel like it's being held up by, i think, well, let's just say, we'll see some tax recognition at the turn of the year. so we expect that to lag in the first quarter. you know, some of the pes in
these plummmultiples are up 50%. >> so you don't like the regional banks, but is coca-cola a name you do like? >> what you have now is a consensus against consumer staples. they've been the bond surrogates, they've been -- they're called the anti-garp. there's no growth at unreasonable prices. and they've really lagged badly here, as interest rates have gone up. so it's actually not a bad area to look at. coke is in our portfolio. it's been stable, it's been used for the dividend. i think people are too pessimistic about the rise in yields at this point. so that's probably not a bad stock at this point, technically. so we kind of like that. but again, be very wary of the banks. >> so just a question on coke, how do you justify paying 22 times foreign estimates and only get a 1% organic growth rate? >> that's the -- staples themselves are unreasonable multiples. however, you do have a chance for upside surprise for these and again, they've lagged badly
enough this year, really zero for the year, most of them, coke included. you do have some -- all sorts of operating problems. but i think that's where you find some good value s at this point. >> we've got to go, but chad, why do you like dr. pepper instead of coke? >> because you could have that 3% improvement within operating marginses. that gives you a lot of earnings leverage. this is a primary candidate for tuck-in acquisitions. we believe that management is exceptional and we just think it's going to go to higher highs. but you should have a viewpoint of 24, 36 months out to actually reap all of those gains. >> all right. chad morganlander skbr eer and s some picks nearing 20k, thank you both. and russia attacking the ad world in the largest and most profitable scam yet. those details, coming up. but first, big tobacco stocks surging. why is calpers selling its investment in the space after nearly 20 years? that's next.
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welcome back. the california public employees retirement system, known as calpers, is getting entirely out of tobacco stocks, despite their strong performance in recent years. the investment committee rejected a recommendation to end its 16-year-old ban on in-house tobacco investing and also decided it will unload nearly $550 million worth of tobacco
stocks that outside managers were still allowed to hold. let's bring in thomas russo of gardner, russo, and gardner who owns some of these tobacco names, along with brian milligan from the avai maria growth fund, which calls itself a morally responsible fund. gentleman, thank both for joining us. brian, i'll begin with you, because your ethos sounds what calpers is trying to get at here. you know, from an investment point of view, can you just kind of say, you know, listen, we don't want to support these any longer, so we're willing to give up the returns that would aid our beneficiaries in terms of collecting pension income down the road. >> we at the asurvey maria fund practice morally explicit, so our mandate is to invest in companies that don't violate core teachings of the catholic church. so we're not investing in corporations that contribute to planned parenthood, but at the same time, we have avoided tobacco stocks in the past just as an idea that what we're looking at is for companies and
industries that offer a good value proposition to their customer and any use of tobacco is good for the tobacco. we look at alcohol stocks on the other hand, it's the abuse of alcohol that's bad, not necessarily the use of alcohol. we have our explicit mandate, but we've also avoided tobacco stocks. >> so let me ask you, going to the whole purpose of the plan, which is to provide income for the beneficiaries, and calpers has in some ways failed to meet its investment targets and tobacco stock have said a great performer. is it in the interest of the beneficia beneficiaries? >> i always allow investors to have the personally held moral belief against investing in tobacco. i also say to them that they may end up doing good or doing well by doing good. it's a moral belief that you do well by not investing in tobacco, but the actual performance of the tobacco
investments has nonetheless been quite considerable. they retain pricing power, even in the loss of cigarette volumes around the world, and they've been able to distribute that in generous dividend yields, but most importantly, more recently, in primary research, into products that will replace combusted cigarettes. and that's the most exciting element phillip morris, a portfolio company, and altria, which is they're investing their cash flow from the kpexisting products to come up with disruptive technology that will allow people to quit smoking and enjoy at the same time the benefit of flavor and nicotine. >> yeah, brian, let me just ask you, would that argument go down at ava maria in terms of looking long-term where these companies are heading and saying, maybe they are trying or working towards solutions that will end smoking instead of be about smoking. >> no, what we have found is that there is between 150 and 250 companies that pass our
screen that are not -- that are also not tobacco companies, that have exceptional sustainable competitive advantages, and when we're building a powerful 30 to 40 companies, we don't need tobacco stocks. the ava maria growth fund are four-star rated funds and we've had great performance without looking to the tobacco sector. >> the ash with calpers is also its size. it's one of the largest funds in the world. so if they don't make it through investments, they're going to have to make it by increased contributions from, you know, overstrapped governments that don't have -- what are they going to raise taxes more in california? >> some of those public funds have sto many constituencies and so many priorities that don't necessarily line up with maximizing investment performance. although, what's interesting is, at least conceptually, with owning tobacco stocks and profiting from the use of tobacco could be kind of a hedge. it's a big health plan, too. >> go ahead. >> one thing that's missed is that society in all parts of the
world, legislates, litigates, taxes and holds tobacco to a high standard. in new york, for example, if cigarettes cost $12 a pack, the industry may get at least $1 per pack. the rest is social burden placed upon the industry by governments to try to dissuade people from smoking and so they've come to terms -- society has come to terms with this industry -- >> or you could argue that the government finds a way to monetize something at the same time it tries to dendenigrate. and it's non-solution to a problem. a new source says ad scammers are diverting millions of dollars away from companies. we'll tell you how, next.
welcome back. a cybersecurity firm uncovering a massive online scam that's, stealing millions of dollars from u.s. media companies and advertisers. eamon javers has the details and joins us now. eamon? >> hi, kelly. the fimrm that found this is called white ops. it's being called very credible. what white ops says they found is a massive botnet that's inserts itself right in the middle of the digital video advertising ecosystem. the way that video works, all the videos are matched online instantly between buyers and sellers. they say that this entity called methbot is making between $3 million and $5 million a day and they're using bots to send in reports to this online ecosystem, claiming that they
have watched these video ads, and therefore, they say that ultimately, it's about 300 million non-human views a day are being generated by this massive botnet. they say also involved in this are 571,904 real i.p. addresses, all involved in gaming the system. ultimately, the advertisers and ad buyers who are on the hook here. they are paying for views of digital video they think are real, but ultimately, white ops says, are nothing but bot views. i've talked to some folks in the industry today who say the industry simply has to get its arms around the fraud problem. they are taking a number of steps today on it. it's a problem they know exists out there in the ecosystem, kelly. >> wow, a big one, eamon. thank you. how will it impact the advertising industry? joining us, cnbc contributor, mike jackson from events solutions international. mike, were you -- i mean, so you're probably finding out about this along with the rest of us. does it mean we can't trust the
metrics out there that everybody -- facebook, all the biggies they're releasing about how many people are watching the ads on their platforms? >> well, you know, it's interesting. again, we're finding out just like everyone, it's long been suspended that there has been fraud in the digital advertising space, whether it's display or social. we all suspect that some level of fraud. but when you read this report, the intricacy of how they're executing the fraudulent activities, it's massive. it's a big problem. >> so is there a way of telling the scope of the companies involved? are we now to assume anybody online is suffering from this? >> well, when you look at the publishers involved, and all the big names were there, starting with, you know, espn, and so when you look at the advertisers that support that platform, it's a wide-ranging problem. and what i think needs to happen is, the publishers, the clients, the media agencies, they need an industry solution, not a platform solution. >> mike, clearly the
advertisers, they have a calculation on their own of their report on investment. in terms of advertising dollars spent. do you think that that basically more or less accounts for this level of fraud? or basically, they kind of know a lot of the money is wasted or a lot of the views are not legitimate, and therefore pressures pricing? how do you think that fits into this whole thing? >> as an advertiser, you want -- you want value. you want to know what you're buying, right? so there's been all of this conversation earlier about fake news sites, et cetera. so you want to know what you're buying. and you want to know what you're paying for. and so that level of transparency and authenticity is important for advertisers. you don't want to pay for waste, if you will. and if you go -- even look at traditional advertising the way nielsen would measure television views, there is some understanding it's not a finite. but when you get into the digital space and you start talking about massive amounts of views, massive amounts of
fraudulent views, it's a real concern. so while you expect there would be some level of waste, you never anticipate the level that we're talking about in this report. >> mike, why do you think this is not a platform fix? versus an industry solution fix? >> well, because, you know, facebook will attack it in their way, google will attack it in their way. a lot of the publishers, especially the broadcast media publishers kind of touting this view everywhere kind of strategy, i think the industry needs to take a step back. and really put the resources against an industry right solution that would literally monitor the execution of digital media buys, whether it's a direct buy or whether it's coming through a media agency. >> a lot of this is going to ripple through and cause bigger responses. so everybody can trust the numbers. most important thing. thank you for joining us. >> thank you. >> mike jackson from events
welcome back. we have a news alert on twitter. julia boorstin has the details. julia? >> hey, kelly. that's right. twitter cto adam messenger, says he is leaving the company. he tweeted that he has decided to leave twitter to take some time off. he thinks jack dorsey, ceo of twitter. jack dorsey thanked him for everything he has done. this comes just about a month after twitter's chief operating officer, adam bain, announced he is leaving the company. so certainly a lot of upheaval at the management level. jack dorsey, of course, has faced questions about the fact he's running two publicly traded companies, twitter as well as square. and, of course, twitter has been making many changes to the platform with the new focus on live to try to accelerate its user growth. kelly, back over to you. >> thank you, julia. has been in a position for a couple years. again, the narrative simply about executive departures. >> right. and the stock not moving, because it's not too far from a low.
i think this is the story for a while now, right? dysfunction. product hasn't evolved very much. i don't think that necessarily changes the overall value, but right now the market -- >> i wonder if this makes them more of an m & a candidate. if you lose a lot of your bench and he gets spread too thin, i wonder if they're more willing to sell. >> and i'm looking back to a report after recent executives left saying that jack dorsey, ceo, described how he and messenger would be working together day and night, quote, unquote, to the development. taking on some of the responsibilities. twitter shares could be a mover further tomorrow. amazon's echo speaker sold outonline. the smart home device can only be found, and i love this, on amaz amazon's brick and mortar stores. out of stock until mid january, the white won't ship until december 30th. who would have thought? go into the store if you want a
product? that's the one place nobody is going. >> although, how many stores are there and what kind of scale? >> like a few. five? >> i don't know why amazon doesn't jack up the price. come on, make some money. >> pipeline building -- would anyone claim it's something different this holiday season? amazon owns christmas? >> it's got to be that this year. and, of course, i think their argument -- the bulls' argument would be it really is just a mechanism to get you to buy other stuff from amazon. yeah, they'll make money on it. >> they price it low, they sell it out, get the positive press. sounds like a win-win-win. >> i like it has a shareholder. >> do you have one of these, by the way, stephanie? >> i do. i do. and i actually ask -- >> are you willing to sell it? >> for $500. >> on a black market. what were you saying? >> you were telling us a couple weeks ago about the wedding proposals, so i look like a rock star telling my family. ask alexa. >> and did it work? >> it worked.
>> what was the punch line, $100,000, i think it was. >> something like that. in their earnings report. we did this and the other, and by the way, we achieved a record number of wedding proposals for our alexa platform. anyway, that's the latest on amazon there. michael, stephanie, thank you for joining us today. that does it for "closing bell." "fast money" begins right now. ♪ money money money money >> it was close, but no cigar. the dow inching toward the key 20,000 milestone, getting within 13 points of the big number before retreating slightly. still a record day. the dow closing at a record high for its 17th time since president-elect donald trump was elected november. the nasdaq also closing at a record high. and check out where we stand right now. the financials leading the rally up 19% since the election. telecom and energy up double digits. on the flip side, utilities and staples down 1%. at this point, is it more dangerous to put money to work or to wait on the sidelines? tim. >> it depends what you're bu