tv Closing Bell CNBC March 15, 2017 3:00pm-5:01pm EDT
stimulative fiscal policies. many others are. home builder sentiment today was at the highest level since 2005. are you concerned about the effects on the economy if some of these policies such as tax cuts and infrastructure spending don't get enacted or are delayed? >> so we recognize -- our statement actually last time noted that there had been an improvement -- a marked improvement in business and household sentiment. it's uncertain just how much sentiment actually impacts spending decisions. and i wouldn't say at this point that i have seen hard evidence of any change in spending decisions based on expectations about the future. we exchange around the table what we learn from our many business contacts, and i think it's fair to say that many of my
colleagues and i note a much more optimistic frame of mind among many businesses in recent months. but i would say most of the business people that we have talked to also have a wait-and-see attitude and are very hopeful that they will be able to expand investment and are looking forward to doing that but are waiting to see what will happen. so we will watch that. and of course, if we were to see a major shift in spending refler reflecting those expectations that could very well affect the outlook. i am not seeing that at this point but the shift in sentiment is obvious and notable. >> thank you. kate davidson from dow jones. there is a perception out there that the fed could somehow stand in the way of some of the economic growth policies that the new administration is
pursuing. given that the fed is projecting 1.8% growth in the long run, is this a potential point of conflict for the fed and the new administration? >> i don't believe it is a point of conflict. we would certainly welcome stronger economic growth in the context of price stability. and if policies were put in place to speed growth that i have certainly urged congress and the administration to consider policies that would boost productivity growth and raise the economy's so-called speed limit or potential to grow. i think those would be very welcome changes that we would like to see. >> kathleen hayes from "bloomberg." i'm going to try to take the opposite side of this. the question about market expectations and how the market
has got things wrong and then how you say the fed suddenly clarified what it already said. for example, if the -- if you look at the atlanta fed's latest gdp track for the first quarter, it's down to 0.9%. we had a retail sales report that was mixed. granted, the upward revisions of previous months make it look better. if you look at measures of labor compensation, you note in the statement that they're not moving up. in fact they are -- if you look at -- there are so many things to look at. you yourself have said in the past that the fact that is happening is perhaps an indication there is still slack in the labor market. my question is this. in another sense, what happened between december and march? gdp is tracking low. measures of labor to compensation are not threatening to boost inflation anytime fast. consumer is not picking up. fiscal policy, we don't know
what's going to happen with donald trump. yet, you have to raise rates now. what is the motivation here? the economy is so far from your forecast in terms of gdp, why does the fed have to move now? what does it signal, then, about the rest of the year? >> gdp is a pretty noisy indicator. if one averages through several quarters, i would describe our economy as one that has been growing around 2% per year. and as you can see from our projections, we -- that's something we expect to continue over the next couple of years. now, that pace of growth has been consistent with a pace of job creation that is more rapid than what is sustainable if labor force participation begins to move down in line with what we see as its longer-run trend with an aging population.
now, unemployment has not moved that much, in part because people have been drawn into the labor force. labor force participation, as i mentioned in my remarks, has been about flat over the last three years. so in that sense the economy has shown over the last several years that it may have had more room to run than some people might have estimated, and that's been good. it's meant we have had a great deal of job creation over these years. and there could be room left for that to play out further. in fact, look, policy remains accommodative. we expect further improvement in the labor market. we expect the unemployment rate to move down further and to stay down for the next several years. so we do expect that the path of policy we think is appropriate is one that is going to lead to some further strengthening in
the labor market. >> just quickly, then. i just wanted to underscore. so following on that, you expect it to move. what if it doesn't? what if gdp doesn't pick up and you don't see wage measures rising? is it your view that there is a risk right now in the median forecast for dots that it's fewer hikes this year rather than the consensus or more? >> look, policy is not set in stone. it is data-dependent. we are not locked into any particular policy path. as you said, the data have not notably strengthened. there is noise always in the data, from quarter to quarter. but we haven't changed our view of the outlook. we think we are on the same path, not -- we haven't boosted the outlook, projected faster
growth. we think we are moving along the same course we have been on, but it is one that involves gradual tightening in the labor market. i would describe some measures of wage growth as having moved up some. some measures have not moved up, but there is some evidence that wage growth is gradually moving up, which is also suggestive of a strengthening labor market. and we expect policy to remain accommodative for some time. so we're talking about a gradual path of removing policy accommodation as the economy makes progress. moving toward neutral. but we are continuing to provide accommodation to the economy that's allow it go to grow at an above-trend pace that's consistent with further improvement in the labor market. >> american banker.
a regulatory question, if i may. the administration has recently reiterated its support for a reinstatement of glass-steagall, treasury secretary mnuchin called for a 21st century glass-steagall. keeping in mind that there is no specifics on this proposal, is the fundamental idea of separating commercial banking from investment banking a fruitful line of inquiry? is this the right path to be pursuing? >> so, i have not seen any concrete proposals along this line. i don't really know what a 21st century glass-steagall would look like. i think my reading on the financial crisis is that wasn't the major source of the financial crisis. in fact, many of the problems emanated from firms that were investment banking units.
to me, an important reform in the aftermath of the crisis was to make sure that investment banking activities where -- that were a core part of the shadow banking system where leverage had built, that those were appropriately capitalized, had appropriate liquidity and their management was strengthened and that's what we have tried to do. but obviously we would look at any proposals that are put forward. i am not aware of anything concrete to react to. i don't think it was the cause of the financial crisis, and i do feel that we have significantly strengthened supervision of bank holding companies that incorporate investment banking activities.
>> hi. i am jolene kent with nbc news. what message are you trying to send to consumers with this particular rate hike? >> i think that's a great question. i appreciate your asking it. the simple message is the economy is doing well. we have confidence in the robustness of the economy and its resilience to shocks. it's performed well over the last several years. we have created since the trough in employment after the financial crisis around 16 million jobs. the unemployment rate has moved way down. and many more people feel optimistic about their prospects in the labor market. there's job security. we are seeing more people who are feeling free to quit their jobs, getting outside offers,
looking for other opportunities. so i think the job market, which is an important focus for us, is certainly improving. that's not to say that it's good labor market conditions for every individual in the united states. we know there are problems that face particularly people with less skill and education. and in certain sectors of the economy. but many americans are enjoying a stronger labor market and feel better -- feel very much better about that. and inflation is moving up, i think, toward our 2% objective. and we -- we are operating in an environment where the u.s. economy is performing well and risks seem pretty balanced. so i think people can feel good about the economic outlook. >> hi.
gino smiley, "bloomberg news." you emphasized in the statement that the fed's inflation target is symmetric. would you be able to expand on why you did it, why it was included. how much of an overshoot would the fed tolerate and for how long? >> a couple years ago we included the word "symmetric" in our statement of longer-run goals. and this seemed like an appropriate time to introduce that word into the statement because we had previously indicated that there was a shortfall of inflation from our 2% objective. now, headline inflation has moved almost back up to 2%. as i indicated, a better forward-looking measure of inflation, core inflation, that's not our target but i think it's worth looking at because it's a better forward-looking predictor of headline inflation, i think
that's still running a little bit under 2%, but we expect it's going to move up to 2. this seemed like a good time to remind americans that -- what our objective is is 2% inflation. inflation is not always going to be at 2%. like all economic variables, it fluctuates. sometimes it will be below 2% and sometimes above 2%. we have had a long period in which inflation has run under 2%. as we move back to 2%, which is where we are heading, there will be some times when it's move 2% as well. and it's a reminder, 2% is not a ceiling on inflation. it's a target. it's where we always want inflation to be heading. and there will be some times when inflation is above 2% just like it's been below 2%. we're not shooting for inflation above 2%. but it's a reminder that there will be deviations above and
below when we are achieving our objective. >> how long would you tolerate the overshoot? >> we would -- if there were an overshoot and it appeared to be persistent we would put in place policies to try to bring inflation back to 2%. that's the corset of principles that we have adopted in our statement on longer-run goals and strategy. and exactly how long it will take to get back to 2% would depend in part on what was happening with respect to employment and our other objectives. so there is no hard-and-fast answer to that. >> cnn. some fiscal policy proposals such as the border adjustment tax would cause the dollar to strengthen significantly over a short period of time. if the dollar were to strengthen quickly over a short period of time, perhaps 20%, for whatever
reason, what would -- what do you think the impact would be on the u.s. economy, particularly in exports and manufacturing, and what do you think would be any implications for u.s. monetary policy? >> so that's a difficult question to answer. you asked that question not in an isolated way, what would the impact of a large appreciation of the dollar be. but as i understand it, you asked about it in the context of a border tax adjustment. is that right? because the argument that is made is that what a border tax would do without an exchange rate adjustment is to raise the price of imported goods into the united states. and that large movement in the dollar that analysts claim would occur would essentially, if it were complete, would fully offset the impact of the border
tax on u.s. import goods. so it wouldn't end up having an impact on u.s. inflation or gdp growth, but a question that's very different -- that's a very different matter than if suddenly, for some reason, the dollar were simply to begin appreciating by a large amount, say because there were flight to safety flows into the dollar. if the latter were to occur, there were just a big boost in the dollar, it would tend to put downward pressure on inflation and would have a negative effect on u.s. export growth and tend to boost imports. but that's a different exercise. i would just say it's very uncertain exactly what would happen to the dollar. it's been a lot of discussion of that. and i think it's complicated and
uncertain. >> "politico." my question is about republicans on the house financial services committee wrote to you asking that the fed not put forward any regulations until a vice chair of supervision is in place. so i have a couple of questions about that. one is, are you all pulling back at all on any regulations, maybe not all regulations, but you know, maybe only going forward with ones that you see as more time-sensitive? and during the hearing before that committee you mentioned specifically the stress test rule would have to come out sometime before the next cycle. are there any other time-sensitive regulations? >> so at this point we don't have a lot of time sensitive regulations. there's nothing right now that
we need to get out that's a isn't rule. so we have a relatively light regulatory agenda at this point. we recognize, of course, that we do have an obligation to write the rules that congress, you know, dictates and laws that they pass. and so that is an ongoing obligation -- obligation that we have. but our calendar is relatively light at this point. >> nancy marshall with marketplace. some fed critics have said it's too soon to raise interest rates because wages haven't risen enough to justify a rate increase. what would you say to that? >> well, i don't -- i would like to see wages increase and think there is some scope for them to increase somewhat further. but our objectives are maximum
employment in inflation. and we need to consider what path of rates is appropriate to foster those objectives. unfortunately, one of the things that's been holding down wage increases is very slow productivity growth. and i think we are seeing some upward pressure as the labor market tightens. i take that as a signal that we are coming closer to our maximum employment objectives, but productivity is, for those focusing on wage growth, productivity is an additional important factor. >> thank you. >> that is fed chair janet yellen wrapping up her latest news conference, this time after the federal reserve just decided to hike interest rates by another quarter percentage point. welcome to "the closing bell."
i'm kelly evans along with scott wapner in for bill griffith. >> our panel today. scott, to you first. how would you describe not only the fed's decision today but the market reaction thereafter? >> well, the fed decision was pretty much what we expected. so was the q & a around that. i think the market reaction, there was some segment of the market that expected dramatically revised forecasts and many people found themselves too short of u.s. bonds. we were not of that position and were not positioned that way. the market was expecting something much more hawkish than what they got. >> they do seem to like the
positive talk about the economy. chair yellen responded that the data have not notably strengthened. we think we're on the same path and then said quite explicitly, the simple message is the economy is doing well. i think people can feel good about the economic outlook. that coincided with us going up above 100 higher on the dow. >> i think everyone feels good about the economy for are waiting for chair yellen to sort of put a nail -- whenever i say nail, i nsay in the coffin but not the coffin. she took the coffin out and canceled the funeral. everything rallied. gold rallied. the dollar rallied together and then the dollar faded. the market has been a little bit offsides, too weighted towards bonds. they were short. they had to cover. that's why you see the yields and the interest rates on the ten-year react the way it did right now. all of this is positive for the
overall market. that's why the equity market has tilted to the bull's side. >> rick, did we get a goldilocks fed today? the market got the hike it wanted but nothing too aggressive and chair yellen made that clear. is rick? no rick. chris, you want to take that? >> sure. we raised rates today because things are getting better. that's great for businesses. it's great in confidence. we are seeing that in consumers. talking to managements of companies. we are in a bit of a seasonal downturn for technology companies where we spend a lot of time. but overall the long-term picture is looking better. you have a really positive government in place that's pro-business. we'll see what they get done. i just don't know when the policies come in. i think it will be further out. >> you want to take the notion of the goldilocks deal? the market was ready and almost demanded that the fed finally hike? >> certainly feels that way.
they maintain more credibility by the end of the year if they only do 3. i think you have your goldilocks environment. >> if the economy is fundamentally sound, why not get back to a place of hiking rates every meeting? she explained the natural rate of interest and things like that. this still seems to be a kind of plotting new normal story. the fed doesn't seem to buy into the idea that this is the old normal 3% growth economy where you hike every meeting. >> no. i completely agree. there is one word that janet yellen used today that i hate. don't like it. "qualitative." a question was asked about trying to get to the rules, the reasons why, now, why are we raising rates now, the one question by hayes was a great question. every dynamic you measure that leads to growth is falling short. so why now. qualitative is a squishy term. that's the problem.
it's squishy. i think that the fed should have used all of its might to try to normalize sooner. she can say that they're not behind the curve. she could say she wants to be gradual. i don't know. based on the performance of this particular rate hike, especially still not donning the cop ap to some of the dynamics have this changed is tant amount to being behind the curve. when you look at the response in markets, the markets were fine with it. as a matter of fact, rates moved lower. i am not saying they'll stay down unless the ten-year gets back below on a closing basis under 240. this is a little bit of a hiccup. but the markets are okay with this. the biggest question of all was asked by reporter that i didn't recognize that covers markets. it was something like what does the average person take away from this? she loved the question. her answer was that we're confident in the economy. gee, you think?
maybe that would have been a reason to do it a little sooner. >> if we're confident in the economy, then you look at, for example, the retail sales data this morning. it was a positive but yet we have 1500 stores closing across the country. you have fiscal policy here in washington at a stall. and inflation is upticking above -- trending above 2%, why doesn't that warrant more business investment spending? we should see an uptick in r&d. my answer is there still may be a lack of confidence out there. even though the markets today are digesting this just fine and telling a different story. >> bringing in steve liesman now. what were your takeaways? >> i feel like the guy in the movie who went to an underground bunker and arrived 30 years later to see how the world changed. i didn't see the market rally while i was in the press conference and taking notes. i was maybe a little bit more
frightened, i guess, by the idea of what happens when or if the president should pass these economic proposals. here is the answer to the question. when i said to her -- to the fed chair -- does any of this include any of the policies that you think are coming from the president? here is what she said. >> i do want to emphasize that, while some participants have penciled in some fiscal policy changes into their projections, that the basis for today's decision is simply our assessment of the progress of the economy against our long-established goals of maximum employment and price stability. >> so i don't know what the market's pricing in. maybe it's already decided that if the fed goes a little bit faster it's okay if we get more growth. or it's thinking the fed is not going any faster. if i think the president is going to get tax cuts and infrastructure spending, i have
to think, based on what the fed chair just said, that my estimate for where the fed is going to be is too low right now. >> rick, taking what steve just said, then, what do you make of the fact that yields fell after the decision? gundlach earlier with me suggested the fed could go in his words old-school again and get back to the sequential rate hikes. the movement in the bond market, or the longer end of the curve in yields says i don't believe you. >> i think it's the market having a little bit of bandwidth. there is a lot of speculation and algorithmic trade and technical significance to the 260 to 263 area. i am not surprised at all the way any of the markets behave. once again, heather, that was a wonderful compliment. you know what the problem is with all the issues you have said? them. the government, the regulations.
if you let them clear the zone which is what investors is looking at, the dream of what may lie ahead. if we could only make them have a list of what we want them to do and follow it, everybody walks away a winner. >> janet yellen has been asking for government here in washington to do their part on the fiscal side for years now. we thought that maybe that would happen with republicans sweeping the u.s. elections and, of course, passing new legislation. but we haven't yet seen that. the road may be a little bit rockier than we expected. >> wait a minute, heather. what have we seen 50-something days in? the best chance to get this road built. is it going to be easy, no. mix concrete, gravel. break old road. >> okay. fine. then we had 119 -- 100 -- i'm sorry, $192 billion added to the deficit last month.
$20 trillion in debt we are nearing. the chickens have to come home to roost. democrats and republicans agree on the infrastructure spending, but at what point in time -- how are we going to pay for this? >> i don't think infrastructure spending is what is making the stock market go up. maybe that's an added bonus. don't call it stimulus. the roof is leaking. >> dow is up 116 points as we speak. one person not surprised at all by what the market is doing in the wake of the fed is jeffrey gundlach. here is what he told me before the fed's big decision. >> i think the stock market continues to grind higher. the problem for the stock market will be, i think, when we get the next leg up in interest rates. everybody is looking for 3% on the ten-year. i believe that's going to happen this year. but first a rally. so it's really the pressure will come when interest rates are perceived to be rising again and creating some competition for the stock market. >> grasso, this is the tepper thought as well, when he told
"squawk," wake me up when the ten-year gets to 4%. >> when you talk to most economists that's when they start to worry and raise the red flags, 3% to 4%. if you look at what's happened in oil, in copper, and the rest of the commodities, gold as of late going into this meeting, it's given chair yellen a little bit of breathing room. so to your original comment, this a goldilocks, it is. the market can rally. you can see bonds sort of tilt back and forth because people leaned into it and said let me get out of the eight years being overly stacked on bonds while the market is run. let me switch into equities. now you see day to day trading around this. >> scott, you said you weren't short bonds going into the meeting. zooming out, where do you expect interest rates to go now? >> we have been saying another
couple hikes this year. the market almost has that priced in. not quite. next year probably two to three hikes. don't expect a big selloff in the bond market anytime soon. if we do get a move up towards after the next couple hikes up close to 3% on the ten-year, don't expect that to be some apocalypse either for financial assets. >> scott, if president trump gets enacted this year a $3 trillion tax cut, say half of what he proposed, will you still say that? are you still banking on three rate hikes from the fed this year in the face of a $3 trillion tax rut? >> well, of course, that won't all be compressed. that is going to take -- it's going to be spread out over multiple years. >> of course. >> so we'll have to monitor that. let's look at the facts. first quarter gdp, everybody has been dropping estimates so far, in the face -- a post trump period. we are in a 2% world, unchanged
from the last few years. look at the legislative calendar, it's probably wrong to expect any significant moves on fiscal spending or tax reform effective for 2017. you're talking about something that maybe comes into play next year. >> the nasdaq is currently trading above its record closing low and the dow is only 50 points shy of its level. the nasdaq, up to 5908. closed at 5904 on march 1. at 5911 of the inter-day high. the dow is become within touching distance of some of the record closes it had on the streak when it ran above 21,000. chris, you mentioned the technology areas have not been performing that well. >> there has been a concentration to larger cap trek. there has been a little bit of a pause since 2016. we think it can come back and that the m&a market is still out
there. we saw activity last week. if we get a repatriation there will be a lot of cash of the big companies coming back. they'll need to deploy it and they'll probably start buying companies, which would be small cap. they're less exposed to a stronger dollar and interest rate movements. i think management are looking for a good second half but there is a bit of a pause. >> steve, sounded like the fed chair contradicted herself, one on the economy where she said the economy is doing well but earlier said, well, our view is not reflective of a new outlook on the economy. later on she said that business investment had firmed, but then said i haven't seen any evidence of any changes in spending decisions. can you square all of that? >> i think what she is talking about on the one hand are the results or the real economic fallout from this rise in
confidence. by the way, this rise in the stock market, which is really, essentially, on the come when it comes to policies from the trump administration. there is, as yet, nothing real in the economic data to support this rise other than the expectation of policies from the administration. >> exactly. >> i just want to make one important point here. there is only one forecast or tracking number on the street that's 0.9. the average forecast as chronicled by cnbc repeatedly is 1.5. i don't know why everybody takes the atlanta fed as the be all and end all of forecasts. it hasn't done very well of late. the cnbc wrap i think has done a little bit better. it's one forecast. it may be right. i am not saying it's wrong but it's not the current estimate or average on the street right now. >> let me bring in scott mather. there is one piece of hard data,
the consumer price index, that we just got this morning. up 2.3% on the year. 2.7 for the headline, 2.2 for the core. there are plenty of people who see it going over 3% later this year. is that going to be fleeting? is that not real? if that's the case either growth picks up and everything is fine in real terms or it doesn't and maybe it's a squeeze? >> we think what you're seeing is very have easy financial conditions. by most metrics the fed is intentionally trying to run the economy hot, they're behind the curve. it's a recipe for an overshoot of inflation expectations. i think it's something we should be counting on, investors should be expecting that. you may not see inflation get up to the 3% level, but it's certainly much more likely that we'll exceed 2% over the next few years than that we'll drop below that. there are some mispricings in the bond market.
inflation linked government bonds are one of the best ways to protect yourself in this environment. >> you asked the fed chair why they removed the word only. it was tweeted during the fed news conference that gradual has meant glacial in the past. now it means something else. the implication being that maybe the fed will move a little bit faster than people think and certainly faster than it has suggested it might in the past. >> i thought that was a kind of thing you might say to the frog boiling in the water right there. don't worry about it, the only thing. it's not a big deal but i think you're right. that's why i asked the question. i think it gives the federal reserve maybe some scope rhetorically to maybe go every meeting, maybe a 50 if they need it. i am interested in what the conversations have been around fiscal policy. one thing i know about the fed, they do a good job thinking ahead to things happening in the future. i think they have to be gaming out what fiscal policy means for
monetary policy. i am thinking about it already. i think it means more rather than less. >> steve, what about neel kashkari dissenting. >> we go doves and hawks on a left to right business -- basis. he would be the doviest member of the federal reserve right now. he has been pretty clear about what he thinks. i think there is a group who wont to let the economy run and risk more inflation. one of the things that's out there that's been discussed and there have been some liberal groups that have brought up this idea that don't get a lot of play on television here which is every time average folks get raises the fed tightens down on the economy. why not let it run. if you were okay with inflation below 2% or around 1% for a while, why not let it run at 3%. let especially minorities and their wages which forever run
below -- >> that group has done so well the last seven years. >> -- people, wages going up 3% but inflation starts going up 2, 3, 4%. how does it help them? >> it doesn't help them to slow growth in the economy. real wages. >> did any of the tightenings slow the economy? is the stock market not higher. >> rick, i was asked a question. i am providing what i believe to be the answer. don't yell at me! >> don't be so sensitive. >> yell at grasso, yell at yeley. >> you don't want to answer the question. >> no, no, no. i am saying there is an idea out there of let it run, don't clamp down before some people's unemployment rates end up peaking. >> maybe it's nothing more than cause of kashkari's role during the crisis. he was in the room. he saw a ghost. it's hard to get that image out of your head.
that sort of shapes the way he thinks. >> you never want to underestimate what his past experiences have shaped what he is looking at right now. i don't know what he is looking at to quantify where he thinks this market should go. but to rick's point, i think he is right, it wasn't steve liesman's point that he was countering. the whole point is we have tried this for eight years. it didn't benefit a whole lot of people other than people who own the stock market. >> the big banks, the 1%. they loved it. >> isn't the market's response here saying the fed is not behind the curve. it's not like they didn't raise rates. if it was a quote-unquote dovish hike wouldn't the market be selling off worried about that? >> she stated -- chair yellen stated "gradual." she said 3 is gradual. >> she also mentioned 2004 where we increased rates 17 times from 2004 to 2007.
in that case we would be behind the curve. >> sure. she is walking a fine line. she is trying to make everyone happy. we'd all agree that the market reaction is based on making everyone happy. right now we see the reaction. this market is run on a couple of things. tax policy changing and deregulation. those are the two things driving the market. until we see backtracking of those the market stays on track and moves higher. >> thanks, everybody. >> one more thing. steve, have a good day. >> hey, rick, you have a good day. [ laughter ] >> steve, i was going to say i shouldn't have jumped down your throat so we're all clear on the air here. >> i'm good when it's you, kelly, don't worry about it for a second. the guy in chicago gets me going. >> thank you, everybody, for being here with us. appreciate it. about 20 minutes before the bell rings. stocks at the highs of the day. dow up 130. s&p and nasdaq on pace for their second highest closes ever.
based on what happened in washington today. up next, former wells fargo ceo dick cove chech ich tells us what will stimulate the economy. sheila bair on whether she buys the idea that capital markets are holding back lending. ( ♪ ) it just feels like anything is possible here in upstate new york. ( ♪ )
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5906. >> this after the federal reserve raised interest rates for the first time since december. president trump telling auto workers and executives that his administration is reopening a review of obama-era fuel economy standards. the standards finalized by the environmental protection agency, moved a fuel economy requirement of 54.5 miles per gallon forward to 2025. new gas mileage standards are expected to be set next year. shares of the automakers a little bit higher. the indictment of two russian intelligence officers and two hackers hired by the russians in connection with the heist of 500 million yahoo user accounts in 2014. yahoo says it is grateful to the doj. twitter lower after a third-party app twitter counter,
was hacked last night. the attackers accessed hundreds of accounts including those of celebrities and prominent organizations and posted swastikas and other nazi related messages. twitter shares down 1.75% today. >> one of the early investors sold all of his shares. i think that is probably having a little bit of something to do with the sale too. >> the latest forecast says twitter's ad revenues will fall 5% this year. jamie dimon says bringing corporate cash held outside the united states back home could spur economic growth. saying if all companies did pass pay dividends and buy back stock think of that as qe 4. >> joining us to react to this move and the move by the fed just now to raise rates is former wells fargo ceo dick kovacevich.
welcome. >> thank you. >> so can i just begin with you first on the fed -- on this rate hike? what do you think it means, the fact that they have done it now again? >> well, the fed didn't raise the fed funds rate. the market did. the fed decided to follow the market. if you go back to the 40-year history that i have been around and the fed policies relative to fed funds rate, it is usually the market that causes the -- or influences the fed in what they do, not just the fed leading the market. >> '94 was a little different. that was the surprise, right? allen greenspan raised rates and everybody else had to play catchup. will we ever get back to those days? >> i don't know. i think we have to have fiscal policy to get us back to those days, not monetary policy. >> that raises exactly the next topic. jamie dimon says this repatriation could be a qe-4 and a less expensive way of doing
so. the interesting thing here is a lot of people assumed, if the companies brought back the money because they got a tax holiday, it may not go to productive uses. you think it will? >> yes, i do. i think -- have to understand the money is fudgeable. you can say it's for dividends or stock buybacks, so forth. it's happening today. they're borrowing to do that. they know they have excess money and they expect it to come back someday one way or another and they can pay down their debt, use it is acquisitions or you dividends. anytime we can have more money working in our economy than having it overseas makes a lot of sense. remember, take dividends and buybacks. they're going into pension funds. so the ordinary 401(k) plans and pension plans of ordinary workers is getting more income.
and that's good. >> dick, scott wapner, taking wells fargo out of the equation, when you look at the rally in banks stocks as an investor with knowledge of the business as deeply as you have, would you buy these stocks today? >> yes. >> why so? >> well, because i think that i believe that our economy is going to improve over the levels that have been in the past. that's good for banks. because of that, interest rates will increase. that's good for banks. and we also have an administration who is explicitly said -- which i agree with -- that one of the major reasons that the economy hasn't been growing is the excessive regulation, not only on banks but small businesses and businesses of all kinds. that will accelerate the economy but also reduce costs in businesses and in banks. all those things are positive for financial institutions. their p.e. ratio is about 30% to
40% less than the market today. it's one of the best bargains out there with pretty high yields. i think it's a very good place to be investing. >> a lot of them selling off today, though. i wonder, scott mather of pimco said just now he doesn't think interest rates are moving that dramatically. could we have a rising stock market. reo covering economy and not much interest? where would that leave the banks. >> the reason i am saying i think interest rates will increase is because the economy will do better. they have to increase if the economy does better because the fed is manipulating interest rates at the -- especially with our lack of reinvestment policy, because they think the economy is only going to be around 1.5% and 2%. so if the economic growth is there, interest rates have to increase. and if they don't, economic growth is good for banks. no matter what happens, other than a slowing economy, it's
good for banks. >> what about the fact -- maybe rates are not going up because there is just too much central bank in the system. forget the fed. i mean, all around the world rates are so low, negative in places, even with the fed move today yields went down. >> the economies are not very strong around the world. and i don't think they -- the rest of the world doesn't have the optimism that exists today in the united states. now, i believe that optimism is a leading indicator of results. i think one of the reasons our economy has been so slow in the past is because of the pessimism that was created by the fed every six weeks saying the economy is so bad we'll have interest rates low forever. that's not the way to conduct policy when you want to try to stimulate growth. therefore, i think the united states is leading -- has to lead the way because it has the best economy at the moment. and when it does, it will
stimulate economic activity through the rest of the world and the world -- rest of the world will come along. it's the most important thing we should have been doing in the last eight years and the most important thing we should be doing now is faster economic growth. >> all right. listen to him, people. dick kovacevich talking about brighter growth prospects that we perhaps see ahead. thank you for being here. appreciate it. heading into the close. dow up 116 points. art cashin said we have 250 to buy on the bell and only eight minutes left before it happens. >> only eight minutes before the bell. dow up 115 points. s&p and nasdaq on pace for second highest closes ever. sheila bair gives us her take on bank profits. oracle and williams-sonoma report earnings after the bell. we'll break those down as soon as they hit the tape. stay with us. various: (shouting) heigh!
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close, at least on pace to close, at their second highest levels ever. yields moved lower despite the fed statement. following the movement of ten-year as well. i know bob pisani is and peter costa. guys, what do you make of the market reaction? >> nine to one advance in declining stock. you don't see that often. i think the key is less aggressive than people thought. you saw this in the overall move in the markets. the whole market moved up. interest rate sensitive group particularly. the key is right now, can the markets adopt the idea that the fed is moving away from the data-dependent approach and more towards the idea, we're going to start moving up rates on a regular basis. as long as they believe it's gradual. three this year, three next year, the market seems okay with that. >> goldilocks from the fed today?
>> seems like it. >> got the hike you wanted. not too fast going forward. >> the comments afterwards were what really sparked people. i think everyone was expecting this. with them giving calculator saying this is exactly what we're looking for, slow and steady wins the race. me, i like to get it all done. next year, should nothing change -- data can change very quickly. you can see, if they're going to get the growth they're looking for, the gdp growth, getting everything they are looking for, it's a good plan. >> so much for the market going down and giving you the chance to get back in, pete. peter costa on the sidelines. >> i tell you right now, when the market goes over 21,000 i would start shorting the market. i still think there will be a pull-back. i know it kills you. >> kills you because you're not in it. >> i am watching the ftechnical.
there is no sign of a pull-back. >> the fundamentals don't jive with where the market is. fundamentally a lot of stocks are very fully priced. there is going to be an opportunity. i think i'm going to wait for it. >> one other factor here. the big options expiration at the end of the week. there is a tendency for the market to rise going into that. you have what the fed said on top of that fact. not a good day to short the market, obviously. >> maybe i won't start this week. >> good idea. >> on the notion that bonds and stocks can go up together for a bit. it doesn't mean yields will start going up. >> i know gundlach. great interview. i'm not sure i agree in the long term. i think yields are moving up. i think this is a short-term phenomenon. now we'll turn to the trump tax thing. how long will the market give the benefit of the doubt to the trump tax ruts, the trump tryiu
verrate of tax ruts and infrastructure spending. as long as they believe they'll get it done they'll hold on. 2018, that will be a bigger problem. that's the next hurdle to overcome. >> is that what really is going to preoccupy the market? >> it already has. i think people are getting a little bit ahead of themselves on the tax cut. even if they get it done this year, which i mean -- or by the second half of this year, you know what, it still takes time to implement and time for the money to pass through. people are planning on it. i have a feeling it's not going to look anything like it looks right now. >> many people don't think it matters much but we should pay attention to the dutch election. europe has been moving on this and the rise in populism is a major issue. >> keep an eye on the dollar rates. see what tomorrow brings once people have a chance to digest what you said overseas and what the fed did at home. >> the important thing right now, i think, is that global markets have been moving up.
i think that's one of of the reasons. it's not just the trump rally. we're seeing economic activity pick up over the world. >> guys, thanks. your closing bells. the st. patrick's foundation here at the new york stock exchange. "the closing bell" starts right now. thank you, scott. welcome to "the closing bell," everybody. i am kelly evans. here is our finishing up on wall street today. federal reserve raised interest rates two hours ago. that might have been good enough for a record close here, almost for the nasdaq. didn't quite get there. 1500 on the dot. .75 of 1% gain. we're about four points shy of the new record on the bell. russell 2000 small caps the best performer up 1.5% to 1382. 30 points off their record high.
s&p 500 up to 2384. 11 points offer their record high. dow jones industrial average 20,947. that's about 60 points away from the dow's closing high. we'll have much more on the reaction across markets to the rate hike in a moment. former fdic chair sheila bair joins us to discuss the day's discussion and how bank regulations could further impact the sector. joining me now michael santolli. diane swonk. daniel hughes here with us and so is jeffrey cleveland. welcome. duri janet yellen weighed in on how trump's fiscal policy changes could affect the fed's monetary policy. take a listen. >> we recognize that there is great uncertainty about the
timing, the size, the character of policy changes that may be put in place and don't think that's a decision or a set of decisions that we need to make until we know more about what policy changes will go into effect. >> interesting responses here. we should point out the dow popped above 100 points when janet yellen in response to a simple question from nbc on what's the message the fed wants everybody to take away about the economy. she said the simple message is the economy is doing well, i think people can feel good about the economic outlook. >> the fed's actions are really just a recognition of good things and not a defense necessarily against imminent bad things. i think the rally was a little bit of a tension release. she also in answer to a question declined to flag excessive financial speculation or high stock values or other areas of looser financial conditions as a
concern. so essentially she said, play on. and the markets are playing on. at least right now, at least having clenched up a little bit in advance of the meeting in case she was going to try to get ahead and price in further rate increases than the market currently expects. >> at the same time the yields on interest rates went lower. the dollar went lower by more than a point, it's down at the 100 level. these go against the idea of hey, everything is coming up roses. >> she reiterated that there will be probably three hikes this year. they also said that -- >> you know it's fed day. >> unchanged, by the way. >> in addition, the gdp unch at 2.1% for the year. there is no policy to back up this euphoria. and frankly, you know, we have been taking a little bit of money off the table.
because we think that this is overblown. we think the market is wearing pants two sizes two big. no belts, no suspenders. we think it's time. financials, telecome utilities. industrials. getting a little bit more cash position. i think you always have to play, however, at this time i'm taking a little bit off. >> what are we to make of the -- the economics of all of this, jeff? on one hand she is saying things look good. on the other hand the first quarter gdp number is pretty awful. >> first quarter gdp is noise. everyone at home should ignore q1 gdp. >> it's only been true for the last many years now. >> better part of the last decade i think. we can throw it out. i prefer to look at payrolls. that looks really good. i think kelly, to your earlier question why did the market react the way it did, why is the dollar off, why did the ten-year
rally. they expected perhaps to see four. they wanted to see or thought they might see four rate hikes penciled in for 2017 which didn't happen. so just the relief of that not showing up on the page was enough to send the market reaction that we saw. >> we thought they might do something on the balance sheet. one dissenter to the dovish side, neel kashkari, add it up and say there was more going on here than just the rate hike. >> still need for caution from the fed until they see what happens on the fiscal side. i thought her answer to that question was carefully worded, even though she was adamant that the fed is not mike flynniovinge of any fiscal policy. she acknowledged that several officials penciled in what they thought the impact might be in their economic forecasts. even though they're not talking about necessarily around the table in the fed's board room,
individual participants are clearly thinking about plans for what happens if fiscal stimulus comes in a big way or if president trump's policies ignite a trade war that damages the economy. on both sides of this there are still unanswered questions which is a reason for the fed to remain caution. >> jeff, throwing out the cpi too? 2.7%. might be going above 3. >> i would throw out headline cpi, kelly. keep core cpi. when you do that -- it's hanging out at 2.3, 2.2%. >> that's the range you are looking for. >> it's not showing an acceleration. i think people are looking for in the market a sign that the fed is quote-unquote, behind the curve. my goodness. >> right. >> you are not seeing that in core cpi. >> this is one issue that i think the market is not looking at, one, we have had steady core 2.2% which is the lead indicator of inflation down the road.
we converge to core. that's something the fed counted on and it's occurred. that's important. the second issue is the fed putting symmetry that the inflation target is symmetrical into that statement. that's a little dovish. it means they're willing to overshoot on inflation and undershoot on unemployment. janet yellen is a veteran of the 1990s. she remembers when she ran low on employment rates. this is a fed that's willing to overshoot on the hot side a little bit to reengage some of those on the sidelines to get them on the dance floor. that's one thing that the markets are not fully pricing in at this point. >> we want everybody in the dance. it's more fun that way. let's bring in josh lipton. he has results from oracle. >> oracle reporting eps of 69 cents. that's first expectations of 62 cents. revenue $9.21 billion versus
expectations of $9.26 billion. total cloud revenue, $1.2 billion. up 63%. constant currency. new software licenses 1.4 billion, down 15%. oracle raising the dividend to 19 cents. in the release the ceo mark hurd saying that over the last year we sold more new software services and platform service than sales force and are growing more than three times faster. if the trends continue where we're growing dramatically faster it's a matter of time, he says, of when we catch and pass salesforce.com in total cloud revenue. oracle's conference call kicks off at 5:00 p.m. eastern. we'll be on it. back to you. >> thank you, josh. oracle shares up 2.5%. never shy about calling out salesforce. sass and pass.
>> it's always great when ceos call out the competition. the question is to what degree the market buys into oracle's redefinition of its businesses moving toward the cloud. i think they hit a bit of an inflection there. what salesforce doesn't have is the legacy business. oracle is still trying to pivot away. >> mark hurd will joining "squawk alley" tomorrow at 11:00 to discuss the results. what do they say to you? >> the growth rate of the cloud is actually what investors wanted to see. the legacy has been the anchor that's held oracle down. they were the snake that ate the giant elephants one by one and digested them. it takes them a long time. but the groud infrastructure and the growth there, that's tremendous for the company. also the hike in the dividend. i think investors will like that a lot. i own oracle. our clients own oracle. we're happy to see that. >> gopro on their earnings.
going back to josh for those. >> kelly, gopro just now pre-announcing q1 results saying that they'll meet the top end of that q1 range. 190 to 210 million. gopro is also saying they still expect to return to profitability in 2017. also, more layoffs at gopro. they'll cut about 270 jobs, kelly. this news comes, remember, as just today the stock hit an all-time low. we have seen analysts come out with a lot of tough research in the past couple of weeks. you saw citi initiate it as a sell. goldman cut it to a sell. the worries there, saturation of the core camera market. execution issues during the holidays, disappointing initial rollout of the drone. how does gopro ceo answer the questions? we'll ask him tomorrow. woodman will be live and exclusive on squawk alley.
tune in for that interview. back to you. >> thank you, josh. we have talked at great length about gopro and their challenges. what do you make of this move saying we'll do layoffs and preannounce. >> it's really of minimal value because it's the slowest quarter for gopro. it's really a back-end loaded year. holiday season spending. really the announcement is basically cost-cutting. control what you can. >> in other words, you think even if the trends are a little bit better can can't be significant enough to move the needle? >> the news is the fact that we'll try to get costs back in line. that's probably why the stock from the low point is popping a bit on the after-hours. >> it's an acknowledgement by management which investors like to see. i feel like it's a one-trick pony again. they didn't branch out. >> gopro and oracle after hours here. the nasdaq today i think we mentioned earlier almost closed
at a new high after the fed rate hike was released. jeff, the point about how janet yellen didn't specifically call out the stock market as she has in the past. she has mentioned biotechs when she thought things looked frothy there a couple years ago. nothing like that in her message today. >> i think the interesting thing about stocks is, if you ask yourself what's so different in the economy this years versus a year ago? economy was doing well a year ago. fed chose to hike only once. the market is up. so it's like the market moved and gave the fed the opportunity to move. >> diane, do you think that's a fair point, that they're listening to the market and -- >> no. no. we entered 2016 and nearly collapsed in the first half of the year, accelerated in the second half of the year. this year we entered the year much stronger with a tailwind than we entered a year ago. we are on firmer footing and the fed is finally feeling credibility that its forecasts are being realized.
this is no tt the market that they're reacting to. one of the reasons you didn't see them address that is in fact they'll be raising rates and if the market is going to correct to higher rates then you'll see them do that. i think the market is a bit ahead of itself. certainly at a conference in washington last week with over 600 economists the view is that the market is ahead of the pro-profit policies they think they'll get by the end of the year which has already been addressed. she did mention wealth effects. those do affect the economy positively. she stressed the underlying fundamentals are there. this is not a market move by the fed. this is a reaction to the economy. >> we have jeff, to your point -- labor market has been strong. unemployment rate has come down across all different levels. >> population is up. >> accelerating again. >> we had a weak first quarter last year and over the last few
years -- >> there is residual seasonality. they're still not good at getting the first quarter. >> investors get overly concerned with that. it was a buying opportunity as far as we'ree concerned. the economy was fine during that. the other worry is, is the fed going to get tighter too quickly. i think it's foolish to worry about. even if they do 3 this year and next, we're still 2% and a huge bloated balance sheet. >> they're not going to lower it anytime soon. i agree. >> what's different between this year and last year is we have had another year of expansion. a year later. inflation is closer to target. we absorbed a few shocks. that says the combination of time and conditions means it's time. the burden of proof is on the people who insist they should have been doing this a long time ago. >> the confidence of the consumer and investor. those numbers are through the roof. >> home builders too.
>> let me point out that yellen did inject a note of caution arn relying too much into some of the optimism and animal spirits. she said she has not seen that necessarily translate into spending decisions by consumers and investment decisions by businesses. she said specifically that businesses are still in a wait-and-see mode. even though we are seeing the renewed optimism, where is the renewed. >> virtue financial is making a bid to acquire kcg holdings. knight capital. shares up 22% on the report from dow jones but halted. the offer is more than $18 a share which would value the firm at over $1.2 billion. knight capital a market maker. shares you can see down 2.3% in extended trade. back to you. >> thank you, seema.
anything to say about virtue and kcg. >> it's a scale business. high frequency traders. >> all the people are gone. all the machines are there. actually, this is kind of like a fairytale ending for knight. a couple years ago -- >> flash crash. >> exactly. all the systems overloaded. they had to be bailed out that day. they were out of business. this is actually a really nice kind of happy ending. >> we'll see -- >> if it ends that way. >> virtue may be going for them. thank you for joining us, everybody. president trump meeting with auto executives today in michigan and revisiting fuel economy standards is at the top of the agenda. up next, the highlights of that meeting and whether it could fuel growth of auto stocks. former fdic chair sheila
bair tells us how the rate hikes will impact the banks. you're watching cnbc, first in business worldwide. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity
attention to the netherlands. voters headed to the polls in what could be an election for the rise in populism. geert wilders, who some refer to as the dutch donald trump had been gaining in popularity. but polls just out say he's having a poorer showing. the euro up to 107.35. >> numbers on williams-sonoma. >> this company also owns pottery barn, west elm, earnings peat by 4 cents on adjusted basis. $1.55. analysts looking for $1.51. revenues at $1.5 billion. comps were down 0.9%. this was a miss. the street was actually looking for an increase.
however slight. 0.4% for those comparable store sales. look at the guidance, the first quarter guidance for both earnings and revenue is a little bit light as is the full year. they're looking for comps in the first quarter to be somewhere between down 1% and up 2%. williams-sonoma is also increasing its dividend by 5%. if you look at the brand breakdown, west elm posted positive comps and the williams-sonoma brand but all the pottery bond names had another quarter of negative comps. the ceo did not make mention of the broader retail environment. last quarter she said it was less than certain. didn't make any mention of it this time around. back to you. >> courtney, thank you. wow. a lot of different things happening here. just looking at pottery barn teen compared to west elm. a lot of disparity.
>> the stock was at about a four-year low. people were braced for something not too great. with retail especially. >> president trump making the case for rolling back fuel economy standards in a meeting with auto executives today. phil lebeau joins us from michigan with the details. hi, phil. >> kelly, when we are talking about fuel economy standards we are actually talking about the standards, the rules set for 2022 to 2025. take a look at this chart. what you want to focus is on the far right-hand side, the last four years where it dramatically increases up to a standard of 54.5 miles per gallon. that's an average for the fleet of all the vehicles sold by different automakers. donald trump saying we should review the standards in 2018. >> the assault on the american auto industry, believe me, is
over. it's over. not going to have it anymore. we're setting up a task force in every federal agency to identify and remove any regulation that undermines american auto production and any other kind of production. >> now, the argument from the auto industry has long been maybe the standards are a little too aggressive and costing the automakers and ultimately consumers by making them add on the type of equipment to force or push the vehicles to get these higher fuel economy standards. gm ceo mary barra says it's at a minimum time to look at what's being called for. >> we were in 2012 looking to make improvements through 2025. to take a paws use and say what does the customer want, what's
happened to fuel prices, from a technology perspective makes a lot of sense. >> since donald trump has been elected look at how the major auto makers' stocks have performed. >> fiat chrysler. a gain of more than 50% since november 9th. two messages from donald trump. one, to the auto workers, i'm going to work with your automakers to bring down costs. to a broader audience nationwide this is what the trump administration has said it would do for a long time. take on regulations that they believe are hurting american businesses. kelly, back to you. >> phil, real quickly because of fiat chrysler -- would they ever combine with vw? >> oh, boy, that's a loaded question. i think too much was made out of the comments from the vw ceo who said, look, if he calls me, i take the call. that was the comment in germany. it spread like wildfire.
sergio believes there should be consolidation within the industry but it's way too soon to say fiat chrysler and volkswagen combining makes sense. attractive ideas but too early to say it's a possibility. >> you can see why the market likes the speculation. phil lebeau, thank you. out in michigan. bringing in james albertine and dave wittman from morning star. what happens in 54.5 goes away? >> thanks for having me. good afternoon. i don't think it's going away. i think it will get extended. looking at fuel economy standards, you have to remember that this is one of many different standards. it's a fairly complicated set of regulations. in some cases california has a more strict standard than the federal standard. you go to europe, they have their own set and china is working on their own set of standards. to say that the oems could benefit is true from an extension of the 54.5 for a few
years beyond 2025. make no mistake. the cogs pressures are still there and will continue to be there. that's what investors look at. operating margin trajectory over time. >> what would it mean for the big automakers' strategy in terms of investing in alternative fuel vehicles. one of the arguments is they had to have it as part of their fleet to get toward the average fleet standards of mileage. does it change anything about the trajectory of those investments? >> probably not much. we have to wait for the final rules. gm will keep making vehicles like the bolt. tesla, of course, will keep doing what they're doing. nissan has been bullish on evs. the regulation is a push-back mechanism and what does the market want. though evs are not popular right now but by 2025 could be a different story. depends on where gas prices go. >> what happens if the trump administration is not as gung ho
on the incentives offered for buying these vehicles? >> well, i don't think that really matters a whole lot to the big automakers. it obviously helps buyers of, say, a nissan leaf or a tesla. tesla customers can afford the $7500 federal tax credit if it gets taken away. tesla is low volume at only 76,000 units last year. gm last year did 10 million. >> jamie, same question. is the consumer enough to change this -- to change what's happening with autos, right? there is a lot of demand for people who want this cleaner, more, you know -- it's hard to use the term cleaner when you wonder how the grid is powered. if wepeople wanting electric vehicles, is that enough to move the market forward? >> it's the chicken and egg question. if you asked this question in 2009 the answer would have been clear that we need incentives
because there was really no demand for the electric vehicles available at a time. i think fast forward seven or eight years and we have better technology, better range, more data to prove out that the vehicles are in fact cheaper to maintain over time and residual values have held up better than expected. so there are a lot of things making it a more financially rational decision than years ago. the lay is in thay is in the ba. if you're gm or ford, as much as you like to hear about the extension of standards, the tone could inflect in eight years, if not four. they have to plan for that. these are not cycles that are only two or three years out in planning. they take decade-long approaches to investment strategies. >> i don't mean to assume we should be talking about electric cars. what types of vehicles are the most fuel efficient these days? >> diesel has a bad rap, but
there is a cruise diesel coming out with over 50 mpg. it comes from a variety of sources but it doesn't have to be pure evs. there is hydrogen. plug-in and conventional hybrids. internal combustion is alive and well too. put turbo chargers in, pull weight out. a lot of things you can do. i want to carry on jamie's point. the germans are coming. they're not going to pull back in light of tesla's success and pull back on their electric vehicle plans. they're still coming. >> if you're going to comply there, you might as well comply everywhere. we'll see what happens, gentlemen. jamie albertine and dave wittman from morningstar. to seema mody. >> shares of gap falling sharply in extended trade on the back of disappointing earnings. 41 cents adjusted. wall street looking for 44 cents. revenue at $679000000 below wall
street consensus. in the press release the chief executive citing continued softness in the americas. he makes the point that they have seen strong double-digit growth in europe and asia in guess. that's not enough to get wall street excited. shares down 10.5% on heavy volume, i might add, kelly. >> tough afternoon for guess. seema, thank you. checking on other stories we are following today. shares of verizon climbing after announcing a multi-year deal with cbs. the agreement will allow verizon fios tv customers the ability to stream cbs live online and on mobile devices and continues verizon's distributions of cbs owned television stations including cbs sports and showtime. verizon shares up 1.5% today. rent is so high in boston that it may mean the end for the city's iconic citgo sign outside the fenway park. real estate firm related companies bought the building
housing the sign last year and is now involved in a rent dispute with the gas company. boston residents want the sign designated as a landmark. >> it's because of fenway shot. >> and the boston marathon. >> the boston marathon is, yes, it's one day a year. >> people spend every day of the year trying to qualify for boston. let alone trying to run it. have the glimmer of the venezuelan oil company sign in the -- >> i don't think they'll get rid of it any time soon. >> the boss tonian on the team says they can't get rid of it. president trump made repealing and replacing obamacare a top priority of the straugs. could republican infighting over the replacement bill put the rest of his agenda including tax reform into jeopardy. canada goose expected to price their ipo any moment now. we'll get instant analysis of this new offering coming up.
welcome back. with breaking news on tesla. seema mody has the details. >> tesla announcing a secondary offering of $250 million of common stock of which elon musk will buy 25 million. in addition to that, $750 million of convertible senior notes. the proceeds according to the press release will be used to strengthen its balance sheet and reduce the risks related to the rapid scaling up of the model 3 launch. we're looking at shares of tesla
higher by around 2% on the news, kelly. >> thank you, seema. ordinarily if you are a public company who issues more the price should go down. equity is one of the more expensive. we're not talking about any company. we're talking about tesla who has for some time has been speculated they needed to raise money. they're doing it now on a relatively small basis. >> it's always a matter of when they'll choose to raise more capital. less than a quarter of it common equity. the convertibles is more of a play on appetite for credit instruments. it does show you the pattern has been, once tesla gets out there marketing a deal with their bankers they tend to have a pretty good uptake and you see the stock rally. >> shares at $263 right now up 3%. >> $41 billion market cap on
tesla. >> they might have gotten past the buy the rumor, sell the factor. time for the cnbc news update with sue herrera. >> the "washington post" reporting the u.s. military has drawn up plans that would deploy up to 1,000 more troops into northern syria to help in the offensive against raqqa. the islamic state's de facto capital. that would double the number of forces in syria. james comey arriving on capitol hill for his briefing with chuck grassley and ranking member dianne feinstein to discuss the circumstances leading to michael flynn's resignation over his contacts with russian officials. the nation's doctors say climate change not only affects the environment but is making americans sick. members of 11 top medical societies have launched a campaign to raise awareness about the health impact of climate change. and a judge has dismissed all
charges against former new york jets cornerback darrelle revis stemming from a fight last month in pittsburgh. he had been charged with aggravated assault in which two men were punched and knocked out. you're up to date. that's the news update this hour. >> sue, thank you. up next, former fdic chair sheila bair tells us how president trump's deregulation and the fed's rate hike will impact banks stocks. we'll hear from one republican congressman who is a no vote on the health care bill. still to come on "the closing bell." what's going on here? you know how ge technology allows us to fix problems before they... they slow production, yeah. well, no more catchy business acronyms. wait, we don't need to smooch? i'm sure we can smooch a solution! we just need to "hover" over the candice, problem until... just let it go... hey, sorry i'm late for team building. smoooooooch!
welcome back. the federal reserve raising rates by a quarter point today just a few hours ago. the financial sector while enjoying a rally since the election saw a pull-back on the hike news. joining us now former fdic chair sheila bair. welcome. >> thank you. >> this is an interesting moment. good to have you with us for it. we've gone from the fed raising interest rates basically once a year and a couple times since the crisis to something now approaching normalcy. will we get back to the once per meeting of a decade-plus ago?
>> you know, i don't know. i think they're going to be -- i take her at her word. i think they will be slow and steady. two more hikes probably in addition to this one this year. get it back up to 3% which is the historical norm. that will be good. i think this is the way to do it. i wish they did it earlier. they couldn't find a reason not to at this point. the economy -- it's reasonable. the growth is not robust but it's reasonable. unemployment looks good. inflation just shy of 2%. i'm glad they did. i hope they keep doing it. >> one beneficiary does appear. the recovering economy, the banking sector, people are quite positive on it. share moves have been extraordinary since the election and even going before that. >> right. >> i guess the question now becomes is now really a great time to be in the banking business? >> well, you know, that's a good question. i think -- look, we need a safe
and sound, resilient banking sector. i think a lot of the moves you have seen in bank shares have gone from the assumption that there will be deregulation and capital releases to be distributed back to shareholders and i think that's driving part of it. the perception that the fed will be raising rates which helps them. then they can reprice the loans faster than they have to reprice the deposits leading to greater interest margins. some were anticipating there would be more aggressive action or signals with interest rates increasing at this meeting which is probably why you are seeing bank stocks react the way they are. it's a mixed bag, i think. i hope mr. trump is smart. deregulation. i like to talk about smart regulation. there are things he could do in simplification that would be smart to help the banks get necessary administrative caps
out. >> not to weaken outright capital standards. you mentioned the market expects there to be a little bit more flexibility, perhaps, in things like the aspects of the dodd/frank act that might have tied up capital. is the sector in a position where it can afford to do those things right now? >> i think we can do some simplification. i don't think we have -- i don't think we have been as smart as we might be about financial regulation. for instance, the cap rules are a good question. we have two different types of capital standards. one is leverage ratio which is a simple tangible equity to total assets and then something called the risk-based standards which are hideously complex and mislead investors to think capital is higher at banks than they really are. i think you can overstate your capital. simplifying the rules and creating better transparency for the market investors, i think
that would be a smart regulatory reform. liquidity rules are also i think too complicated and create some bad incentives. i think there are good areas but we shouldn't forget the lessoninlessons of the crisis. the banks were borrowing short term. they have to make sure they have stable liquidity. >> smart regulation not deregulation. >> sheila bair, thank you for being here. canada goose, the ipo set to price any moment. we have key factors to watch and whether it could follow snap's footsteps with a surge and a drop. >> will the gop face the same things when it comes to tax reform as they're facing with their health care plan. that's next. you're watching cnbc, first in business worldwide.
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welcome back. some breaking news. sources telling cnbc canada goose ipo set to price at 17 canadian dollars per share. g.o.o.s., bob. >> that's good news. i have 20 million shares, $10.50 to $12 u.s. so this would be a little more than $12 in the u.s. that's a good sign. if this is accurate it's pricing above the expectations. >> leslie picker reporting. >> good news. rarity of rarities. a hot, in-demand retailer.
>> it's an apparel maker, right? >> yes. >> they're not stuck with brick and mortar. >> two things. they have growth 42%. revenues up in the nine months ending 2016. and they're profitable. that's magic to an investor's ears. >> a profitable ipo. we shouldn't look past that simple fact. snap. >> absolutely. mule soft, pricing tomorrow as well. big business enterprise software company. they upped the size of that deal. that could be considered a victory. but they're growing revenues but are not making money right now. >> you would hope canada goose, if you sell jackets at $1,000 a pop. >> it's a hot brand. it's obviously somewhat of a narrow brand and one that's been working well at a high price point. it seems as if people think there is momentum to the brand. it's not a big call on cold weather or people buying lots of
new clothes. it is interesting. i think probably the bold case is that, if you look at their sales in canada and translate that to anything remotely like similar penetration in the u.s., cold weather parts of the u.s., it can work okay. >> bane made a significant investment several years ago. they were a small family-owned operation and it looked like that investment helped them manage a well received rollout in the united states. bayne remains a significant investor in the company. >> he wore the jacket on the cover of sports illustrated. >> you know the jackets by the bright round red patch on the arm. has it jumped the shark already? is it too late? >> if you wanted to own the stock and hold it, you have to hope there is a second act. not that they become more popular for the kind of flagship jackets. but that there is another way to do it. maybe it's like deckers when it had, you know, uggs. you can find good and bad
examples. coach was a family-owned business for a long time. part of it diversified, sara lee and went everywhere. >> tech, showing signs of life. two companies filed for -- to go public companies file to go public. filed on monday. so we're going to get it now. over here, we had snap the recently so that's a good sign. i bet you, mike, sometime in april, we'll get a week, wee get six, seven, eight, ipos. i've been saying this since july. i'm going to be right someday, i know it. >> we'll have more details on canada goose. republicans are fighting over house speaker ryan's health care bill. up next, we'll hear from one congressman who is a no vote.
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on on. the gop health plan sometimes called ryan care, sometimes trump care, is moving through congress and about to face its biggest hurdle yet. an increasing number of republicans now oppose the built. and raising concerns for investors about tackling tax reform after that. one person who says he can't vote for the bill as written, we're just looking at your district. welcome. you kind of slice from northern virginia through charlottesville. even right down to the north carolina border.
your district is bigger than new jersey? >> bigger than new jersey, a little smaller than the nation of belgium. >> so tell us where you stand on this bill and why you're opposed. >> well, there is a lot of good in the bill to be clear. i like that overtime, we'll shave a trillion dollars off the deficit. what we do here is create a paradigm that rewards the states that chose to expand medicaid. reward states who did not exercise fiscal prudence and responsibility to the detriment of states that did. depending on the tax credit, it ends up being the largest entitlement program ever passed under republican president and congress. and these are directions we don't need to head in. so while there are some good things and we want to find a way to get to yes, those are two big hurdles. >> so you're in a more
conservative position. what we've heard from like minded colleagues, they would like to make it more palatable to them. if that happens, how does it get through the senate? well, peel on the senate side, the house side, want to get it done. if we wanted to play political games we would continue to let obamacare spiral out of control. the wheels come flying off. now a third of the localities in the nation have one choice. soon there will be no choices. we know sboek failing. if we wanted to play politics, we would let it fail. we criticized leader pelosi wanting to pass the bill to see what's in it. and we don't want to do the same thing. very seldom is the final offer the first offer. that's the message. and leadership should be congratulated. i think they need to be moving a little bit too.
how is it possible when it seems to come from two different directions? a little gun shy about the people who may not have insurance any longer, or folks like you who feel it doesn't go far enough? >> a few things. number one is regulatory reform and that will fix health care system as it goes. we've been going at a break neck pace. that's undeniable. the karen ferguson repeal which will open up lines across health care. the assistance act that passed through the educational work force committee that i'm on. so you have bills that are not tied to this pack an and a regulatory scheme moving forward. what we don't need to do is force it so we can say we did something. when your national debt is smaller than your annual gdp, then you're spending too much. we need to take account of that and get solutions that don't cost americans more money and it
can be done. >> congressman tom garrett whose high school included some of my biggest arch nemesis in sports. thank you for being here. >> a lot hangs on whether this passes. we'll address that tomorrow. "closing bell" is over. "fast money" begins now. the simple message is the economy is doing well. >> the markets ate up that simple message. for the third time in a decade, every rallied. gold soared. and even oil was higher. so if yellen is correct and everything is awesome, what do you buy? >> stay with it. we said it for a while. the vix continues to trade lower. the people have said, why bother with it's insure. they are all saying it correctly, people are foregoing that. but i think everything is intact