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tv   Closing Bell  CNBC  May 5, 2017 3:00pm-5:01pm EDT

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last week, caught an octopus of all things, and macron played soccer with poor imgrant kids in his suit, no less, trying to look like one chtd peoplof the guys, happens all over the world. >> see you monday. >> where's tyler? >> i'm not coming back to the desk, are you kidding? >> thank you for watching "power lunch." >> bye! hi, everybody, welcome to the "closing bell," i'm kelly evans. >> how do you say check please in french? something something. >> as far as we got. >> somebody knows, i know. i'm bill griffeth, ibm a drag on the dow today, and they said, he sold a third of the ibm shares,
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and while fizzling on ibm, there's one ceo in particular that mr. buffet really admires. we'll have details in a moment here. >> he doesn't own his shares, by the way. >> aparentally not. >> constellation brands, corona on fire this year, there's the shares, up huge, about 17%. the cfo joins us exclusively to talk about the beer giant's strategy moving forward. new report says amazon's jeff bezos and apple's tim cook could bury the hatchet. the hatfields and the mccoys getting together. we'll explain a little bit later. let's begin, though, with mr. buffet's market moving comments on ib mrgs today. this is what he told becky quick on why he sold a third of the shares. >> i don't value ibm the same way that i did six years ago when i started buying them. i mean, overall, i think the six years that i revalued it
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somewhat downward, and as a matter of fact, over the 180, we actually sold a reasonable amount of stock. >> you sold a reasonable amount of ibm? >> right. >> last i'd seen you, something like 13, 14 billion dollars worth of ibm. >> that was a different price. >> trying to think back the number of shares -- >> we owned about 81 million shares. >> okay. >> and we -- when it got over 180 -- >> a share? >> a share. and compared to the valuation, we started selling stock, and that was all in the first quarter. most was in the first quarter. some in the second quarter. >> how much did you sell. >> about 30%. >> 30% of the shares. you owned about 9% of the shares. >> we had 8 1 million shares. we thought we sold in the area of 24, 25 million shares. >> you were selling -- >> that was at higher prices.
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>> i was going to say you sold at 180 dollars, that stock came down significantly since the earnings. >> yeah. >> i think it's closer to $160 a share. >> yeah. >> would you still sell? >> i don't think we'll be selling. >> why are -- >> in fact, we could buy, but, i mean, i continuously look at what they do, look at the price of the stock, over $180, look what happened, and everything, and they run into tough competition. >> what's changed at ibm that ahead you change whether it was exceptive or cheap? >> well, it's not done what five, six years ago i expected would happen or what the management expected to happen. look how they projected, how the business would develop, and what they ran into was tough competitors, and what's fascinating is that, you know, amazon, which i've never seen a guy succeed in two businesses simultaneously that are really
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quite divergent in terms of customers and all the operations -- >> talking about amazon's shopping business and amazon's web services. >> jeff bezos, i do think, is the most remarkable business person of our age. i said that before, and to succeed in two -- big businesses in a huge way, is really -- i can't think about other example like it, and he talked on charlie rose several months ago, which was really good, talked about how in the cloud he -- these are tough competitors. you have smart people competing in the field. >> when you talk about the not doing exactly what you expected them to when you looked at it five, six years ago, is that in terms of the revenue continuing to decline for 20 quarters in a row, or is that in terms of the not necessarily bringing up the
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cloud business expected. >> based on earnings that are obviously disappointing, five, six years ago, they were earning 20-plus billion pretax, and 13 billion now, and i don't think the quality of earnings improved, so it's, you know, it's been a period when it -- i'm sure that it's been tougher than they thought, and it's been tougher than i thought. i was wrong. i don't blame them. you know, i get paid to make my own decisions like an apple or something of sorts, and sometimes i'm right, sometimes they're wrong. >> would you -- >> ibm is a big strong company, but they got big strong competitors too. >> very, very interesting, and becky is live now from omaha, ready for the big weekend there. becky, what struck me was, he's only owned those shares for, like, six years at ibm, and already now he's selling. for him to sell, even a portion
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after only six years, that's the equivalent for warren buffet in day trading. you had to be surprised as everybody else, right? >> reporter: it's like dog years, right? it moves at a different pace. warren buffet doesn't hold things forever, but he also doesn't sell things in the normal human terms of things, so, yes, to have him fall into a stock with so much money, big percentage of the shares outstanding, 9 m%, yes, i was surprised to see him sell out of it this quickly. >> by the way, they also -- >> yeah -- >> bill? >> they talked about admiration for jeff bezos and the valuation kept them away from it. i wonder when they look back and realize this just continues to go, maybe at some point, you decide you like the guy and the company enough, you can sort of swallow and bite. it's not the company that afraid to buy -- they said they'd rather buy great companies at a good price than a great company
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at a good price? >> you know, i keep wondering that, kelly. i asked that in february. he said a lot of very complim t complimentary things on jeff then too. he said he doesn't understand amazon. anything's subject to change. you see something changes in any point, but it's outside his circle of confidence. he thinks it's a great company. he thinks he's an incredible manager, but he thinks it's outside the circle of competence to figure out how to value the stock. he knows how to value ibm, and that's why he's selling, but he said if things got below a certain appointment, he buys more shares of ibm because he understands how to value it now. >> meanwhile, did i hear he said on apple, he's -- in it for the duration here? there's an example of one he's not afraid to buy green bananas, right? he's going to hang in there, through thick and thin. >> reporter: certainly sounds like it. it certainly sounds like it, bill. i thought the same thing when he talked about investing in ibm six years ago.
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>> right. >> he can change his mind about a company any point in time, but, yes, when we talked about apple, and asked him, was he disappointed by earnings, he said, absolutely not. makes sense to him the idea that sales were down for the iphone as people await to upgrade to iphone8, gets that entirely compared to bringing out a new car in a few months, you pay the old price for the new one. that means what he saw happening in his own research, talking to nebraska furniture mart, his grandchildren and other people about the iphone itself. >> you have show and tell for us, do you? >> reporter: ha-ha, i do! okay. a little bit of craziness going on here. the shareholders are here roaming the floor. we are standing in front of the k kra kraf-heinz. it's mr. peanut. >> i love him! >> wow, who knew.
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>> reporter: you're going to get this, bill, kelly, you won't. >> look who is here! the kool-aid man. if that's not enough, you can get the jell-o jmolds of bill. a product of what's happening here. >> you got to get a selfie for mr. peanut with kelly. she's standing here just -- >> man, i'm -- >> she's in admiration. kelly is in admiration. he won't talk to me, but would you talk to kelly, she loves you. >> oh, there you are. you got it back. you get the love back from the peanut guy. >> oh. >> all right, guys. >> okay. thanks, beth. see you later. >> i don't mean to short trip kool-a kool-aid, but -- >> i learned something about you every day. >> it's just -- old school, a
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dignified gentleman too. >> yes, he is. much more coming up with becky's interview. warren buffet, charlie munger, and bill gates monday morning. that's starting at 6:00. >> see in mr. peanut gjoins the to make it a foursome. the market is sitting there at a strong jobs number this morning. the dow up 27 points. let's talk about it. kim forest from pit capital group with us today, peter costa from empire executions at post nine, and rick santelli is at the cme in chicago. kim, starting with you. you own ibm. what do you think about warren buffet selling a third of the position, a sizable position. >> sure. it's always alarming when a large and very public investor is selling out of something that you own. it makes you, you know, take a good look at it, but i think
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warren and i are on the opposite sides of that trade because i came from the world of software, and i think i understand what ibm is about, and, you know, it would alarm me somebody gets out at this point. because -- you want to know why? >> yes. >> she's teasing us along here now. >> yes, i am. the software that they are selling, they do it by subscription for this cloud kind of stuff, and for watson, so you don't see the same sort of financial characteristics on the income statement and the balance sheet, so he's a very big financial, you know, big in the financials, but the model changes it. >> right. >> that's essentially why i'm not surprised. >> okay. i got it. we're playing 20 questions with kim today. >> and having audio issues.
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>> all the awkwardness falls on me here. peter, maybe you can talk to us about putting comments in contest of the market. >> you know what, with ibm down four and a half, and, you know, it's probably taken 60-70 points off the upswing. there's 3:1 buy in. you have the vix, up a little bit, but you have a market that's relatively strong. i mean, we've seen it, you know, from the morning, we had positive numbers, and i thought that the jobs report, even though it was not stupendous, it was pretty good, you know, and i think that's something people can hold on to. you know, what we need to see is another month of, you know, positive growth, and i think the most important thing in that jobs report this morning was wage growth, and it is starting to pick up. that's a really -- that's a very good sign. >> rick, the market you cover, what's the big influence here? the jobs report? preparing for the french elections over the weekend. i mean, you know, all the fed
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speak we've had this week, what are you watching right now? >> all the issues you brought up are important issues, but, you know, let's look at the landscape. lack of volatility in equities, not far from the highs. interest rates, back in the bottom of the established 2017 range, and the dollar, weaker. i mean, this is kind of been the topic that we had for many months in 2017. it was just in the last, two, three weeks that, of course, everybody got nervous a bit. i think it was the fact you had a fed meeting and a big jobs report in the same week. i don't think that the aftermath of that was necessarily cause to the catalyst was either of the issues. i think the catalyst was that both the issues were out of the way, and didn't significantly change the landscape. i think central bankers, in particular, are going to be under discussion, just think about several comments i heard this week. many believe there's two tightenings for this year, three, four next year, and next
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year a balance sheet runoff. i'll tell you what. i'll take the other side of that trade. they are telling me, our fed, our trade fed, by the end of 2018 is going to have a 225-250 overnight rigate, at or higher than the ten-year is right now, and reduce the balance sheet? i'm not buying into that. i think that longer term thought process, when you think of those details, also helps explain a lot of the market behavior. >> yeah. that's for sure. all right, folks, thank you, all. appreciate the thoughts today as we get ready to finish off this week, this friday with the dow up 28 points. thanks for joining us. >> we have about 45 minutes to did. the dow's the laggard today. the nasdaq up 14 points, quarter percent, russell making up losses. >> happy cinco demayo. consolation rings the bell. the chief financial officer will discuss challenges facing his
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company including president trump's tougher trading stance with mexico. that's coming up. also ahead, congress not just focused on health care. a meeting to roll back specific pieces of the dodd-frank reform act. the timeline for that coming up. think again. this is the new new york. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov
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welcome back, fitting today, consolation brands tradele all time high, at $178. maker of corona, up 6% since the election. >> how the company may be affected by the trump administration, some of the new policies regarding immigration, and/taxes, concern about the relationship between the u.s. and mexico, we are joined by constellation brands, a member of the global cfo, david cline, ringing the closing bell today. david, welcome. >> thanks for having me. >> you know, as long as i can remember, your stock is a juggernaut. the growth and mexican beers you bought, that continues to grow. how much more can you grow off of that one acquisition, for
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example? >> well, i think there's a lot of room for the brands to grow. you know, when you think about a brand, it's the no. 2 import brand in the u.s., and people have not heard of it before. corona extra is the no. 1 import brand and has been for years, and -- >> at any time, there's talk about tariffs and fights with trade, nafta changed, that sort of thing. what is the exposure you do have to mexico? >> so, of course, all our beer comes out of mexico, and, look, that's not because we moved jobs to mexico because it's lower cost labor. we make it in mexico because it's mexican beer, has to be made there. we do have exposure for mexico, 60% of cost of goods in the beer business do originate in mexico. we did a lot of work right after the election, when our stock
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traded down, we did a lot of work on the tax on our business and concluded there were things we could do that wuould allow u to mitigate effects. >> such as? >> such as shift parts of the supply chain for containers and packaging and so forth to the u.s. that would allow us to get a deduction on that. now, that's not a simple process. so that's why we've talked to members of ways and means about the fact that there needs to be a very long transition into that sort of tax reform, if it happens. >> story in the "wall street journal" about attracting more of the hispanic market. seems counter intuitive for you, but are you one of those? a goal to attract that crowd even more? >> yeah, one in five legal drinking age adults over the next five years or so get to the point where one in five is hispanic. that's a very important market. we feel that we have a bit of a
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head start because our brands resinate as authentic mexican brands. >> is corona the cheap mexican brand? >> actually, the growth in beer now is coming from the $25 price point and up, which is what we call the high end. corona sits in the high end. >> for a six pack? >> for a case. >> 12 in a case? how many is in a case? >> when we talk about cases in the industry, we talk about 24 bottles. >> 24, wow. >> add in the lime, the price point is more. >> geez, the retail price point. >> that's where all the growth in beer comes is above $25 a case. corona is $30, craft is $36, and so it's the high end stuff. >> what about the distilleriedi that market as well? >> yeah. we, a couple years ago, bought a brand to build on the hispanic insights that we have using tequila.
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that's an authentic organic tequila from mexico. last year, we bought high west di stillers, one of the real up and coming whisky makers in the country located in park city, so we're going after that craft segment as well. >> finally, seems like you go for the growth parts because you read surveys and sounds like younger people are drinking less alcohol overall. there's mock tails, smoking pot that it's lisle egal in places. is that a competitor for people who formally would have been your customers? >> the category is blurring. before you talk about wine, beer, and spirits, now it seems like if there's alcohol in it and it's flavored, there's a market for it. i think, you know, cannabis will be a market overtime, and i think we'll have to learn how to address that. >> oh, boy, an acquisition coming down the road, i'm sure. very quickly, cinco de mayo, a super bowl day for you? >> it's a great day. i'm excited to be here because of an all-time high on our
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stock, but also this kicks off the summer selling season, and the great thing from a business perspective is it allows us to get the floor space at retail, sell well in the early months of may, and hold it for the entirety of the summer. >> you don't let it go at that point. david, ceo of constellation, getting you up to the balcony to ring the bell. thank you very much. stay right there, you go in a moment. you're not quite relieved. 37 minutes left in the trading session here with the dow up 24 points. >> up next, the rivalry between amazon and apple. it's showing signs of a thaw. >> also ahead, new detail on -- thinking about corona and lime, i don't know. details about an incident involving a california family kicked off the delta flight. more nuance than you think. more coming up.
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welcome back. here's a look at the 30 companies in the dow today. about evenly split. you see ibm in the bottom right there after warren buffet killed a third of the shares. down 2%. on the flip side, dupont, verizon, and apple lead the way. bill, look at the s&p 500. >> don't forget that. we are actually in record territory right now. if it closes right there, that would be an all-time high. >> first record close since
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march 1. >> something to watch there. now, you mentioned amazon -- or -- what did you mention? apple. the intense rivalry between amazon and apple could be thawing. they are working on a deal to bring an amazon video app directly to apple tv's set box. they said amazon's app could be on apple's hardware in the third quarter of the year. right now, amazon subscribers use apple's air play system through another apple device. you ready? are you following this? they are to use it like an iphone to watch their programs on apple tv. neither company, by the way, is commenting on this story. >> whose -- >> who called home, right? >> exactly. >> but a rivalry crops up when you're competitors in some category, but when there's a divergence that occurs when one
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side needs the other, and i think that there's a distribution issue there that amazon senses as they try to grow their original programming, and it's something that apple has grown to a great degree and find a way to do that. >> amazon's good about putting customers first. if it was a big problem for the experience as they make that increasingly important, they felt they had to. >> that's where people are. they use the apple device -- >> did you have an apple tv? >> no. i'm -- trust me, i'm not the demographic you want anyway. i'm stuck on tcm like your mom is. >> exactly. on the ipad, though -- >> i do watch the ipad, yes, i do. thank you. >> time for the cnbc news update, sue? >> guys, here's what's happening this hour, everyone. former first lady michelle obama is celebrating high school students per suing higher education. the former first lady participated in a 2017 college signing day event in new york city. more than 200 high school seniors from across the city
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atte attending. >> we want young people to know there's nothing more important than getting your education. we need to make going to college the event that we make so many other things. you know, it's got to be more important than going to the nba. it's got to be more exciting than getting a recording contract. >> firefighters in italy trying to put out a massive garbage dump fire sending plumes of dark gray smoke upwards blocking traffic on a local highway for hours. the area is owned by a company that handles recycling of plastics. nike trying to do the unthinkable tomorrow in italy after training three world class marathoners for months, they now want them to be the first to break two hours in the marathon. in addition to designing a signature shoe, nike's team focused on science including providing data that they can access through skin sensors. i don't know, a two-hour marathon -- >> it's not out of the question.
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they ran a trial, sue. >> it's going to be hard. >> and the -- there was a horrible head wind, ran it in under an hour. i mean, it's -- it seems crazy, but it could happen. >> oh, it could. it could. i hope it happens. >> depending on the conditions. we'll see. >> maybe we'll have that next week. >> i know. best of luck to all of them. 5:45 local time tomorrow. >> excellent. >> we'll see. god speed. >> thank you, sue. >> sure. my turn. 30 minutes left in the trading session here with the dow up 25 points. i'm here with allen valdez on the floor of the new york stock exchange. a market that's flat lining even after strong jobs reports, earnings, are they waiting for the french election? >> it's been a crazy week. waiting for something every day. whether it's facebook or earnings and oil yesterday, and today, the jobs number. but, yeah, the market's been flat lining. >> i remember two weeks ago,
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nobodimey menwanted to go home before the french first election they were doing. now we get the runoff on sunday. do you think that's what we wait for? a big move monday? >> that's all that's left to wait for. monday, see what happens. no surprises. macron wins, great for the market in the u.s. and europe, could be a big day. right now, he's poised to win, but we know how that's played out so far this year in britain and here with trump, so you don't know where it's going to go. >> where do you see opportunity? yooip t i mean, decline in oil, buy the oil stock? >> i don't see a big move in oil because i don't know where buyers come from, so oil stays down. i still love technology, although ibm, 30 points in the downward draft, but mr. buffet for that -- >> right. >> teches are fine overall. >> good, thank you very much. >> thanks, bill. >> thank you, guys. headed into the close, a half hour to go, as mentioned, s&p 500 is just about in record
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closing territory here, see what happens. up next, boeing and air bus may be getting a rival to be reckoned with. the details after the break, and, also ahead, major hurdles facing health care bill moving to the senate. stay with us. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques. remote moisture sensors use a reliable network to tell them when and where to water. so that farmers like ray can compete in big ways. china. oh ... he got there. that's the power of and.
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all right. delta airlines has new issued an apology and refund to the family that was kicked off the flight from maui to l.a. a few days ago. the parents involved in this told nbc news that a delta flight attendant threatened them with jail and foster care for the two young children when the parents did not give up a seat originally purchased for their teenage son that was not on the flight with them. he went on another flight, the toddler was going to take his seat, but the flight attendant said they couldn't do that. this video viewed by 3 million people. >> by, by the way, i had not heard the story until now. you know what i mean? it's not like the guy who is dragged off -- did i miss it because it was last week? >> well, it's -- it's only been in the last news cycle here that it's come up. phil lebeau is with us here. it's a nuanced story here. i mean --
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>> very nuanced. >> not cut and dry as the david dao story with united, right? >> correct. correct. and, look, be clear from the beginning here. delta has admitted that it handled the situation poorly. you don't threaten people with jail time and foster care. put that aside. put the treatment of how this was handled by the crew aside from the key question which is, who has a right to the seat that parents purchased for the 18-year-old son not on the flight. once they relink wish him not on the flight, they really give up the seat. they claimed they asked for approval for the toddler to be in the seat instead of the 18-year-old, and delta said it was okay, but delta disagrees. that's the disagreement here. >> wait a sexcond. they got on the plane. that means somebody took the ticket and checked the ticket and put it on the machine and got on. >> correct. >> somebody -- >> but -- >> somebody had the 18-year-old's ticket and got on
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successfully. >> correct. the question is, were they watching carefully? wait a second, the machines do not say, bill griffeth, age so and so. it doesn't say that, just has a name. so the question then becomes, you know, who approved them to get on the flight, and was it clear that they did not have the right to the fourth seat? that's at the crux of this discussion. let's be clear with the federal law. your seat has your name. it's not like you buy a couple seats and say, well, i'll sit here, you sit there. that's not how it works. >> bill, i want to ask you about the china story while you're here. the c 919, you know, i know this just the first news floating from this, but china's been working on the plane, figured it out, and is this a problem for the likes of boeing, you know, going -- you fast forward many years from now. >> not immediately. they still -- cole mac, the chinese government agency that built the plane, they need
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approval. they need to be certified in a number of countries. most of the customers are in china. eventually, the concern is whether you are boeing or airbus, the biggest market for airplanes in the future is china, and do you think those chinese airlines are going to continue buying only boeing and airbus, or at some point, we'll say, well, wait a second, comac proved itself. they have to prove the planes are as efficient as a boeing 737 or airbus 8320. they are a long ways from that, but it is significant they had this first flight. >> that's exactly it. you know, it's happening. now it feels like, you know, you can see boeing shares are not respondsing to this. this is not a near term thing. >> no. >> hard to imagine china will use competitors when they can use their own going forward. all right. anymore pilot, flying outrage? >> not today, but it's early. we'll check in on monday. people will be flying over the weekend, i'm sure. thanks, phil.
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>> you bet. >> see you later. 22 minutes left in the trading session with the dow up 29, but watching the zs&p becaue it's in record territory, up seven points. that is -- if it closes right there -- >> that's a huge jump. >> march 1st. a couple months there. >> the victory in the house yesterday, and what's that imply for tax reform? what challenges are still ahead for the health care bill next. also ahead, a house panel very quietly approved a bill yesterday to repeal and roll back parts was controversial dodd-frank. wall street reform ap, details there as well when we come back. ♪ ♪
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to help you keep rolling with confidence. go long™. ♪ after getting the thumb's up from the house yesterday, the health care bill now goes to the senate where it could face a significant number of roadblocks. we are in washington with more on that part of the story, ylan. >> republicans have no time to rest on laurels, bill. the senate majority leader mitch mcconnell convened a working group on health care, and a spokesman says they'll provide regular updates and hope to move expeditiously. now, some of the outstanding issues, worries that the
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medicaid expansion that so many states took advantage of, that it ends too abruptly. there's also kern that the age-based tax credits to help people buy insurance are not generous enough. a republican of tennessee is chairman of the senate health committee said point-blank that the senate will be passing a version of the bill that the upper chamber will take the time to get it right. now, the senate won't even consider a bill until there is a cbo score it has to pass with 51 votes and no democratic support, it cannot add to the deficit. one analysis says the price swing either way depending how many people enroll in the system. they are in session until memorial day. ide ideally, they want a vote before th then, but there are no guarantees. >> i have a question quickly. the cbo score, they wait for it, not just on the house bill, but their own bill, too, right? >> that's right. there's multiple parts of the cbo score to wait for, so we'll have to see how long that
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process takes. >> yeah. >> both from the cbo before the senate can begin consideration. >> all right. i was going to ask, when does it look like the dodd-frank replacement, you know, what -- choice -- repeeal and replace dodd-frank? >> it's up for discussion and decide when the bill comes to the floor. a house -- the house financial services committee passed the bill out of committee yesterday, and it does a couple things. it's a really big bill. the one everyone talked about is the changes to the cfpb. that bill would change the director of the cfpb allowing the person to be fireable and removable at will, removing power over what's called unfair, decementive, and abusive practices and changes the structure so it's funded through congress rrn the fed. it does other things for banks. removes the fed and federal regular laters authority, allowing them to unwind large
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firms, there's a cap on swipe fees and requires the fed to adopt monetary rules when it develops monetary policy. it's something that's wide ranging, comprehensive, and will engender a lot of debate on the house floor. >> yeah. it was interesting that it is, of course, they'll have to make changes to get it to the full vote, get it to pass the senate, only have to do stress tests every other year for the banks now. a lot of stuff in there. >> yeah. it's quite big. remember, though, for this to get through the senate, it needs a full 60 votes in order to pass the senate, not just 51 that they need to pass the healthcare bill. >> wow. even tougher bar. all right. thanks. >> thanks. almost like she knew you'd ask. graphics were ready. amazing. you are on the edge of the seats, hey, how do you say "check please, in french? we heard from a lot of you on twitter and from our staff members via e-mail. it is --
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[ speaking french ] something for the cocktail -- >> any time i talk to talk french, it comes out in spanish. >> i dabble in spanish myself. >> happy cinco de mayo. >> yes, exactly. feliz or something. the dow up 33 points, s&p, though, in record territory. other major averages higher right now. >> warren buffett said they should buy invest funds, take that advise or follow the stock picks? that's next. by the way, deep tease, we call it, next week, exclusive coverage of the sohn investor conference monday. kelly will be there live. we have a great lineup of guests and speakers, plus, a live broadcast of bill ackman's presentation. that's at 1:25 p.m. eastern time. that's on "power lunch," but don't miss what we do as well on "closing bell," don't miss a second of that at the sohn conference next week. kevin, meet your father.
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welcome back. the annual meeting this weekend in omaha, and becky quick caught up with warren buffett, and she asked if he thought his original purchase was a mistake. >> a mistake in the sense i could have done better if i bought the s&p. we made quite a bit more money than if we just sat in treasury bills, but there were a lot of things to make money in that we missed. >> so should you take mr. buffett's advice, buy funds, or follow his stock picks instead? bringing in thomas with gardener, along with mayor, a finance professor at santa clara university, author of "finance for normal people" -- >> oh, thank you. >> there you go. finally, somebody did that. tom, what do you think?
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do you follow buffett or do you -- just, i mean, the vogue these days is etfs, funds, or warren, the classic value investor? >> kelly and bill, i'm so comfortable, i wanted to dress comfortably because i want people to realize how comfortable i feel owning specific stocks. i love having berkshire working on our behalf, the heineken family, enthralled by the businesses and specific opportunities we harness by tapping into a portfolio of specific companies well led for future and long term gains. i think of warren and his answer to the question years ago -- >> tom, the point is -- >> yep if. >> tom, i was going to say, look, we all know what's meat buffett great, but he says 5% of people are going to be as
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successful as him in stock picking. are you saying you're in the 5%? >> oh, good lord no. so what i'm saying is i just find that, you know, warren, when i first started investment business was asked about indexing, and i seem to recall him saying at the time, you know, when he goes into a town, he can pick out the four best businesses, and he wouldn't -- he'd rather own the four best businesses in the town than all the businesses in the town of the that's a proposition of index funds, to own everything at the exclusive -- >> he clearly doesn't believe that anymore. his own advice is for everybody to do -- -- investing like buffet is not a good idea, why do you say that's the case? >> well, for one thing, that is what warren buffett says, unless you're a rofgsal invester and very few should do that, if you're a regular individual investor, you should buy low cost index funds. in fact, he placed a bet against hedge funds, almost ten years
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ago that the s&p 500 would be better than collection of hedge funds, and he's so well ahead that there's virtually no chance he's going to lose his bet. >> yeah. >> so -- >> yeah, yeah. >> this is the classic battle -- hang on, tom. this is classic conversation we've been having for a couple years now. active versus passive management. professor, you seem to be saying, you know, forget trying to pick individual stocks. go with index funds. is investing as you know it dead? >> no. there -- >> i was -- >> perfectly placed for professionals to pick individual stocks after they analyzed them and picked them carefully, but the rest of us are better off just to be free riders on them, and take index funds that are very widely diversified, and, of course, they are composed of
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individual stocks, i probably own berkshire stocks in my total u.s. index funds, but i don't try to analyze stocks, and i don't think that i'm able to pick the best. >> and, tom, the problem with a lot of -- >> the problem -- >> with the hedge funds they trade too much. i mean, if you're a company like berkshire, you only buy or make a big purchase of a company every now and then, and most other people get sucked into effectively trying to do, you know, indexing plus in market timing, and that's an extremely difficult thing to do. >> i would agree. ic the last three years are turnovers less than 4%, 2 partnership 5% to some degree. we buy and hold. the real concern i have with index funds is that the largest risk to the public invester is agency costs and lack of alignment of interests between owners and managering overseeing the assets entrusted to them. if the entire s&p but for a
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handful of companies suffer from agencies costs and alignment of interest, then over time, that'll be a deadweight loss on returns, and when you find businesses like berkshire, hooin ken, whatever the name with proper alignment. they are worth more money overtime. i hate to give up the competitive advantage of alignment. >> got it. we have to go, gentlemen. >> thank you. >> thank you, both with their comments today on warren buffett. >> thank you. we'll come back, closing countdown, and you have a band coming up? >> yes, we do. >> have fun with that. >> stick around, everybody. after the bell, there's a band, the vote in the french election, and how it could move wall street come monday. you're watching first in business, cnbc. nothing's wrong with the elevator. right. but you want to fix it. right. so who sent you? new guy. what new guy?
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watson. my analysis of sensor and maintenance data indicates elevator 3 will malfunction in 2 days. there you go. you still need a pass.
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and when you filter out the noise, it's easy to turn your vision into action. ♪ ♪ it's your trade. e*trade. start trading today at etrade.com just inside two minutes here, wrapping up another week of a lot of earnings. not as heavy as last week, but still a heavy week here, and when it was said and done, what happened, the s&p looks to close at an all-time high, barring any late selling here. two, three points above the previous all-time high set back on march 1st. the s&p hitting an all-time high. what's not at an all-time high, oil. crude with a tough week, fell through a few support levels in
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the week as it was clear opec does not extend production cut, and the -- the crude oil contract is up 1.8% today, but down 4 in the week. gold also, this is the worst week gold had in 2017. as it continued lower for much of the week today, minor bounceback. bob, watch the dollar-year row relationship. the euro's strong against the dollar this week ready for the important french election sunday. >> why do they invert that? it's the other way -- >> that's the dollar -- >> oh -- >> just know -- >> no. >> just know the first thing, if it's lower, the dollar is lower against the euro. you're right. >> new high on the s&p, and what did it was apple. we had a late day spurt in apple we were down, and apple is so big that it dragged the s&p up in the end of the last half hour or so. we have to note here the french election is a good time to go long in the week because the
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french election is happening, france closed at a multiyear high. germany closed at a historic high, and a lot of things for the stock market, bill. >> all-time high for the s&p. stay tuned for that. and the band as they celebrate ci today. second hour of "closing bell" with kelly evans. have a good weekend. >> welcome, and believe it or not, two records set on the close here today, and it happened quitely, the markets are not making moves, but then a momente mentous one for the s&p. getting to that, closing at -- there's a couple points, and above the closing high of 23.95, call it 96 from march 1 of this year, and here we are, we've
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done it. that's a gain of four tenths percent, but similar for the nasdaq that also hit a new closing high on the dot, but the nasdaq likely to do that, in fact, it's pryer closing high from three weeks ago. russell at the high, and dow a hundred points shy of the closing high of 21115, from march 1, but significantly, above the 21,000 level for the dow here with a gain of a quarter percent today, and that is despite the big drop at ibm after warren buffett sold a third of the shares of the company. more on the markets in just a moment. the freedom caucus is also reportedly working on a tax reform bill. it is separate from president trump's proposal. coming up, later kudlow talks about whether it disresults the agen agenda, but the markets could be excited again. joining us, we have cnbc's
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commentator, mike and welcome, guys. the data, you look at the score board, and it's an amazing one. >> it's really lullness here, kelly. you said, quietly, @ the only way they do anything is in the stealthy way, not emphatically. it was grinding into a position of strength all day. you didn't see a big reaction, but there was reassurance there, and bond yields did not go up, clearing the way for stocks to go higher, there was strength. a couple things, certainty in the french election builds, and berkshire meeting, monday dawns with warren bufffete talking about the market. >> that's true. bullish things about the market, talk of different acquisitions. >> happy things about the american economy. >> yeah. >> how strong it is, yeah. >> this is interesting.
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evan, you know, all the sudden the zch 500 does this for the first time since march one, and the whole tenor of the market changed since that date, seemed to be the trump rally was over, and it was all the big cap tech stock, and, you know, there was a hint earlier today in the last couple sessions because the list of companies trading at all-time highs was growing and growing and growing, and there was priceline, and aetna, humana, csx, 3m, the video game companies, visa, just a -- i think it was one of the best performing tech companies this year. >> i think you first need disconnect between the bond market and equity market. they are saying 2% growth, saying 2% growth, and equity market thinks earnings grow at a rate that 2% gdp growth, so i don't know who is right or
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wrong, they have the equity market, and -- >> i don't want to show it's buybacks, but i don't know. feels like -- that helps -- it helps create the disconnect. >> yeah, it feels -- the market -- this is a nightmare market if you are short the market. this is just the total nightmare, on a day like today where the oil, energy's doing terribly, price oil going down, stocks up 1.5%. if you are short the market right now, everything is not going your way. >> you nod in sympathy, your not strategy? >> as i look at the market, i don't know if it's fueled by good news or markets fueled by cinco de mayo. >> early for the margarita. >> i'm not that excited. unemployment number at 4.4%. wage inflation is coming. look at margins on the large cap companies, they are incredibly high and relatively stable. get top line growth, that wae'r not getting. i think we see margin
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contractions in the united states, and with valuations as high as they are, i think that can be problematic for u.s. stocks, and that's why we are looking more internationally. >> coming back to this, but feels like it's slackier than just the headline suggests, but circle back to it. how much do you think has to do with the fact they passed the health care bill in the house yesterday -- you're already saying no. >> you're know -- basically, the great news about the trump administration and congress -- >> gridlock? >> nothing's substantive happened since trump took office. >> talking about the gridlock good for the market? >> talking about real action. you go down and ask somebody seasoned in the ways of washington, what the odds are that something is going to pass the senate and house that looks anything like the house's bill, it's close to 0. it's all, you know, entertainment. >> it's been 100 days. you don't give 100 days for tax reform health care -- >> i like that. >> it is lumped together.
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health care in order to get tax cuts through, but they'll get a tax plan through. that is the fundamental thing republicans want to do, cut taxes on the rich and rich investors are going to get tack cuts under the administration. it's going to happen. >> it includes a bunch of tax cut, let's say -- >> that's most likely one of the elements if the senate passes, something that's part of the final bill there, but, again, i think the policies have been sidelined. it was a -- there's a few months, and if you told me today, absolutely not, not getting tax cuts, and gary -- the stock market goes down, but the essence of that, okay, fine, a reason why the market grinds up. >> the gary cohen -- >> worth 2,000 points on the dow now. >> really? >> i say it jokingly, but i think that there's something to that. >> i'd put a thousand points on them, not just one of the other.
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>> a discount? >> out of the picture now, out of the stock market. >> steve leaisman, in san francisco, is there wage inflation on the way? >> you know, i'm not so worried about that, but you talked about everything behind this rally but me, kelly. i'm responsible for it. i brought you the jobs this morning, blame me if the number was blow, and it's a victory lap, 4.4% unemployment. the lowest in a decade. the market styles on that. took time to figure it out, but consumers -- more consumers with more money in the pocket, americans working, and that helps out, but the profits have been better than expected, profits coming in at good levels, and you have the economy, and we are afraid that first quarter weakness was the
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real thing, but this makes people comfortable with the economy right now. >> you want to respond? >> i don't know who -- i thought it -- might have been a seinfeld reference i was missing. >> exactly. >> but to steve, to what you were talking, is it possible the bond market does not react to wages until there's a market pickup at 3.5%? the bond market is not buying this wage growth stuff. >> that's right, yeah. i apologize, evan, of course. >> oh, that's okay. it's fine. >> here's the deal -- >> i've been called worse than newman. >> i don't use that word "wage inflation," wages go up, and they are only inflation when they go up on a -- level, but down from 27 to 25. that's in good shape there. it's -- really, the question is why are they not going up more? you know, the curve ideas suggest that you have a tight
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labor market now, could have stronger wage growth than right now, and i think it's pretty muted. i don't think it's a concern. it tells them stay on track. you saw what happened to the june probability. it's 80%. that feels right to me. you had something of a -- a 50% probability, maybe more now on the third hike in december where the question is whether or not they're going to reduce the balance sheet and stave off or hold back on possibly raising rates. >> i'll tell you, jim, look at the u6 number, 8.6%, come down a lot since the recession, and it's always going to be higher, but as long as that's where it is, will we see wage inflation? >> wii concerned about wage inflation. it's the coiled spring. more people retiring and entering the labor force. this opioad epidemic, brings up, that's taken 7 million people out of the work force. we need more people. so without those people, i'm not really sure how to stable wages,
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and -- >> worst point for a band to come in and celebrate. >> i think -- >> can i show you guys my chart, kelly? >> ask for 11 million people, we're not going have to people to build the roads quick that trumpments to build. >> steve quickly, then we have to go. >> one thing, people working part-time for economic reasons, it's come down by 1.1 million in the last year, meaning a lot of people, you know where the extra labor comes from, you have, now is over 6 million people that were working part-time because they count find work that's now down to 5.2 million people. that's a place where you have slack in the labor market. to me, that's a very good sign of health right now in the jobs market. there's the chart right there. >> in this case, pull up the band, celebrate. thank you for joining us from san francisco, jim, thank you for the time as well. >> my regards to newman. >> ha-ha! >> oh, i feel like that one e's going to stick with me. >> president trump got the health care reform bill through the house, now turning attention to taxes, but the freedom caucus
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that gave headaches on health care is crafting a tax reform plan. we'll talk about what the bill could be, whether it leads to a long fight over taxes, but, first, the future of france, and the e.u. when french citizens go to the polls. up next, live in paris for the latest. mr. diaz.a very simple procedu, we're just going to make one small incision here, then we're gonna go in and remove your '67 corvette. my vette!? it's just a gall bladder! you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent.
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say hello to internet speeds up to 250 mbps. and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. citizens go back to the polls, a impact on markets globely, and we are in paste with the latest. michelle, looks like this should be victory, right? >> reporter: absolutely, kelly, and to the point, tonight, marie le pen interviewed, and the
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toalty suggests she realizes she'll lose sunday. she said, listen, stop treating me like i already lost. there may be a surprise at the poll sundays, but she went on to say we've already achieved an ideological victory. we have restructured political light by throwing out political like by throwing out the two dominant parties, and, quote, we did a lot, even by standing alone against everyone else. that is in the past tense, so macron, 39 years old, never ran for office in his life, likely to be the next president of the france. governing is the hard part. economy is in a tough spot, 10% unemployment, 3% youth employment here. that's three times the level of germany. average gdp growth since 2010, a measly 1%. he's got reforms planned, but who knows if he can get them through. it's going to be a tall hurdle to get over. the euro tonight, trades as if
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they know the answer. it is near 110, and remember, that's why we are here because le pen represented -- i used the past tense -- an existential threat to the euro, wanting the french people to vote for frexit. looks like that it probably will not happen. back to you. >> michelle, what's the latest numbers? how far ahead does it look like macron's lead is? >> reporter: one from a few hours ago, 6 2% for him, 38% fo her. to overcome that, that means a lot of the undecided were for her, and you have to see real b abstentions for people who don't want to vote for either one of them. >> it's not exactly brexit or thump. michelle, thank you very much. michelle caruso-cabrera in paris this evening. let's bring in ben style from the counsel and foreign relations at post nine with us,
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and phillip from brookings. quoting an analyst from the u.k., he says macron wins sunday, france spends five yea s s rutterless, and le pen wins in 2020. >> there's truth to that. the biggest enemy now is apathy. look at french voting, 50% of the french supported a candidate who is broadly euro skeptic. even among those, the ones repulsed by le pen are out of sync with the agenda, and as michelle appointment out, he's he's going in the june election with a brand new party. he may well have to cohabitate over the next few years with a prime minister from a different party. this is going to be a tough period. >> and, evan, this fits into the museum economy. >> you know, i have a theory
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about the european countries. they are like japan. there's a tremendous amount of consensus in the country about not totally upending the order that's been established post war in the country, japan is totally unable to do it. i think france is also unable to do it, and i think the lack of any kind of new global beating company is coming out of france, the last few decades is good evidence of that. >> people said it's because france never had a thatcher or reagan to make pro-market reforms that bore fruit and never experienced what that kind of structural change looks like and would do for them. >> this is a new type of candidate. he's neither right or left, although he served in the current left wing government, but, you know, he's putting together a growing coalition, and this is new for french politics, divided between left and right since world war ii. we have to give him a chance before saying he's already fair that le pen would be the next
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president. i mean, give him five years and secondly, the turnout in the second round was good. 77%, that's much better than in the u.s. arguably, could have been better. we'll see how it goes on sunday. >> yeah. mike, it does feel like a vote for macron is a vote not for le pen. is it bullish? >> i don't know that it's analogous, but the scenarios laid out of apathy and drift, that's a dodged bullet from the market's perspective. that means if there's dissatisfaction with the euro project and we don't know exactly how it's going to shake out, but this was considered to be, i think, the election that would kind of define whether the trend continues. >> happening in the dutch elections, saying that it's over, you know, peaked. do you believe that?
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>> no. don't believe it at all. macron is not where he was because the french public rallied behind him. look at the last round of french presidential elections, the candidate, the mainstream candidate was mortally wounded by a personal finance scandal. had he not been, he might well be this this position right now, and we'd see a very different agenda being presented to the french public. >> he could be more of the thatcher figure rkts rig, right? he enjoyed broad support until the scandals. >> talked the talk but never walked the walk. i doubt he would have gone that far, but it would have been somewhat more euro-skeptic ajep -- agenda, more pro-business agenda. >> there's an been increasing distaste for the e.u. there. the world's third largest bond market as we know, and, you know, how many governments have they had over the last couple years? had to reform banks, bail them out and so forth. after this vote on sunday, do
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people start to become more concerned about what happens in italy, or, again, does this all kind of fade away for the time being? >> there's not a domino effect necessarily. each country has their own problem. first of all, i mean, france, obviously, being at the core geographic of the e.u. had le pen be elected, chance is tiny, obviously, that's the end of the euro as we've known it, but 67% of the french people have actually, you know, clearly said in various pools for the past year after brexit, after the brexit reference, they want to remain in the e.u. and in the euro zone. it's not going to happen. as far as italy's concern, the problem is debts to government, lack of govern nans in the country that's going on for many years. france is not in such a bad state. >> all right. guess relatively speaking, that's a good thing. ben, thank you both, and, of
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course, holding our final verdict until we see what happens sunday. ibm shares lower after warren buffett disclosed berkshire sold a third of the shares and why he no longer values ibm today as he did six years ago. the second guardian of the galaxy film, how much the film means to disney and other unusual promotions associated with the film. it involves chips. krp t need to know if the customer app will be live monday. can we at least analyze customer traffic? can we push the offer online? brian, i just had a quick question. brian? brian... legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday?! yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.
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welcome back, a record close in the markets today, a record, and, by the way, only hit that level about a coup dale days earlier, previous record, but s&p 500, a different story. you're looking at 2399, record since -- >> you love saying the word "record." >> no other synonym for it. the round numbers, so pretty. almost got there with the s&p too. got to admit, the russell -- >> by the way, the s&p -- the people at the s&p let you down. didn't give you the 71 points. >> it's your fault. you got to put more money in there. >> yeah, yeah. >> buffett dumps ibm. this is what the oracle told becky quick last night. >> based on a lot of businesses, but the earnings are disappointing.
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five, six years ago, earning twenty-plus bill pretax, and just 13 billion now, and i don't think the quality of earnings improved, so it's, you know, it's been a period when it -- i'm sure that it's. tougher than they thought and tougher than i thought. i was wrong. i don't blame them. >> certainly raised my eyebrows when i saw it. what do you think? >> first of all, i think it's kind of refreshing in a way, you know, somebody has to reassess the value of the very large position, public position, sold some, but not all. i think that's key too, and -- >> said he might buy more. >> might buy more. everything at a price, right? it's one of the things, obviously, he overestimated how durable the franchise was at ibm, wishes they had allocated capital, made acquisitions, bolder opposed to just buying back all the stock. >> this is the -- this is the buffett technology. everything has a price. when it comes to tech stocks, amazon, facebook, google, even apple in the early days, you --
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you couldn't look at the stocks and go -- how am i supposed to price this? you know, amazon trades at crazy valuation multiples, so for an investor like warren buffett, he wants to buy a dollar for 50 cents. that's the philosophy. you can't do that with the high growth tech stocks. >> his initial kind of insight was paying a higher multiple thinking a consumer products company was worth more. they said it's sugar water, why pay more? doesn't translate very well to technology yet. >> and 33 million last year. next up, check out the burger flip. shake shack shares now positive today. we covered this last night with the earnings. they were down 10%. closed up 9%. what is going on? >> well, contacts. it's down 50% in two years, the stock. there's a huge rush after the ipo. 40% of the shares are short. >> wow. >> tremendous work -- people think it's just not really
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remotely worth an aggregate what the business is scale for, and you had a pretty upbeat analyst comment. >> analyst upgrade today. >> comments basically saying, look, they lowered expectations for comps. it's reset the bar. they could probably do okay. >> these stocks, i'm not -- they don't matter. people who own it, don't listen to me, but what i'm saying is they don't matter in the context, it's got a 1.2 billion market cap. there's a $93 stock, a $36, lost two third the value from the peak. there's other companies, jack in the box, whatever, buffalo wild wings, people talk about all the time, a one and a half billion dollar company. i'm not saying, you know, if tim cook sneezes, that matters more than shake shack, not putting down the restaurant, delicious, wonderful, but it's the short squeeze driving it up. >> guardians of the galaxy the next block buster? furious 8, fate of the furious, whatever it's called, hit the milestone doing a billion
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dollars globely. seems like this is on track to do the same thing. >> exactly. if that's your tell, the thursday box office is suggestsing it's going to be plus sequel well received franchise, i think it is. i don't know if we celebrate the fact -- >> what's it mean for disney? >> reaffirms the ability to keep mining this character set from marvel in a way that, you know, look, at some point i think that's going to run out, but so far it has not. >> do you like disney as a film company better than a cable company? >> i hate the cable company. it's terrible. terrible business. one thing to point out, we talked about beauty and the beast, remember a month or two ago, and you were like, oh, it was not great, reviews were not great -- >> no, no -- you said it was great, i said -- >> oh, sorry. i said it won't matter what critics say.
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>> critics loved it other than one. >> the one we talked about on air. taking my victory lap. >> yeah, you wanted to get that in. the doritos bag, plug head phones into it. we tried to get one. look at the headphones, what year is it? looks like they are discarded from the last flight you were on. >> by the way, that's off the movie, which, did you watch the first one? >> no. >> it's a gimmick. >> if i saw it -- >> that would make sense to you. >> cassette tape? >> yes. i'm on board with it. i'll say i found it first, like, very amusing, and then i thought when i was looking about -- today, like, if i see it the second time, it's going to irritate me. it was, like, one time is a cute novelty. when you start -- >> talking about the movie or the chips? >> the tape cassette in the movie, which you've not seen. >> oh, i see. >> i'm at a higher level than you are on this. >> they are going to hit a billion dollars whether doritos bag or not. time for the cnbc news update
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with sue. >> hi, guys. here's what's happening at this hour. the penalty for committing a criminal act against a law enforcement officer got stiffer in kansas. governor brownback signing the bill in topeka this morning. overwhelmingly passed earlier this week. one person killed when a coal train derailed in missouri. it happened after it collided with a truck in lincoln county. police say the driver of the truck was killed because he tried to beat the train. officials with bnsf railway say 30 cars derailed as a result. lakeside homeowners brace for more flooding as heavy rain batters lake on theriot's southern shore, the highest level in 24 years, roughly 20 inches above average. new york's governor cuomo declared a state of emergency for several coupes along the shore there. theoretic physicist steven hawking moved up humanity's deadline for escaping earth. it's now a mere 100 years.
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on a documentary that debuts this summer on bbc, hawking says the human species will have to populate a new planet within the century if it is to survive. now there's a happy thought for you. i'll leave it at that. >> or just go to the guardians of the galaxy. >> you can't make that comment on today. it's a day of celebration. you shouldn't be taking -- >> well, actually -- >> you can't talk about the doom of the humanity. >> that story makes me need a margarita, but there you go. >> that's true. it could be clever marketing promotions. enjoy that, sue. >> you got it. see you later, sue. >> is president trump gearing up for a bigger fight with house republicans over tax reform? larry kudlow's here to weigh in after this, and later, hottest area in the increasingly competitive single family home rental markets. renting single family houses is
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heating up. we'll be right back.
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historic day on wall street, how's that? >> a record, i think.
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>> that's not the story, the s&p up to a new high at 2399. the nasdaq up 25 to a new high of 6100, and the russell 2000 up eight points today. larry is here to talk taxes and how the process works, lei, but first incite on how this health care bill gets through the senate, how quickly? >> thank you. it's important. you can see senator mcconnell, the leader, he's going to truncate the process. if this bill passed, i thought it would be jammed through the senate, but i think the speed will be there. they are going to have a working group. that's how it's being described. >> so you think it's moving quickly although they are writing a new bill, get moderate republicans and democrats on board? >> hatch and alexander are in the group. the leadership will be in the group, and conservatives like cruz in the group, and i believe rob portman is in the group. so far the democrats don't seem to want to play, but this will make it a faster process, and
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they are not going to throw out the house bill. they are going to work through it. medicaid reimbursement is a huge, huge issue. tax credits and subsidies to what you might call the working poor, i don't know, 30, 40, 50, 60,000 is an issue. they are right about that. >> i want to ask about the bird rule in the senate. a guest yesterday say they can't move -- need 60 votes for the current bill to be passed through the senate because it affects the deficit, presumably, how -- what's the insight on this happening? i know you're not a fan of the bird rule. >> no. the bird rule has been used and not used through the years. no deficits after ten years. i don't know what that means after ten years. look, you have sort of that -- the rough and ready, you got about a trillion dollars of tax relief and trillion dollars of spending relief. that's in very rough terms, $900
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billion in taxes, a trillion dollars in spending. they're going to work that through. senator portman is going to work that through. no, that doesn't trouble me. i think the speed is important because i want to get my business tax cuts through because, as i i said to your experts, there's deflation signs in the global economy, gold, oil -- >> okay, iron ore. >> spreads, iron ore, broad commodities falling, china raised target rate quite a bit -- oh -- >> first thing said in the news conference after the house passed yesterday was i want to do tax, it's going to be huge, it's going to be bigger than reagan. the freedom caucus threw out its own plan. do you put chips on that plan? >> the freedom caucus works well in this. i think they will. i think one of the key points is going to be keep the small business tax cuts. there's a lot of people out there, oh, you can't do it. rich people take advantage of it. you can do it. tax accountants know how to do
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this. you know, you got -- i don't know, 20 million some odd small businesses, and people are at the margins. they deserve help. i think you'll see the freedom caucus go there to be honest, and i think they are going to be very much in line with what trump is asking. look, the -- the back tax is done. >> yeah. >> the freedom caucus says the back tax is done. they'll work through, and i think the freedom caucus buys into the kudlow-moore-evans growth story. i'm going to call it that. the evan growth story. >> the newman growth story. >> by the way, both of you think there's no real prospect of any of this? >> i'm not a political pundit, and i'm barely -- i do wonder, though, learry, why are politicians so focused both in the freedom kcaucus on deficits? when it appears that the bond markets don't care about deficits at all?
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so why don't the politicians get together and say, you know what? let's just -- let's run these tax cuts through. >> feels like they are. >> let's do -- let's do what we think makes sense, a stimulus -- >> you are coming around. >> i'm not coming around. >> you're coming around. this could be your first nobel prize win here on a friday afternoon, you are coming around. >> no, i'm not coming around. >> tax cuts promote tremendous economic growth. >> no, no, i don't -- i don't think you -- >> the bond market's not worried. inflation markets are not worried. this is good! welcome to good! >> i don't think you get 5% gdp growth. >> okay. maybe not. >> on the other hand, i e don't think politicians are going out and saying oil and copper are cheap. we need tax. what you need is -- economic rationale, and with something looking like full employment already, i think the economists say, look, the case is not there unless you're talking about corporate tax reform -- >> yeah. >> a longer term solution. >> the heard of the issue, it
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has been from my stand point. i mean, look, the jobs numbers are okay on the snas, still okay on the surface, but participation rates lower, but okay. what's lacking is standard -- living standards and real wage increases. you have to get your business investment. you have to promote capital to get into labor productivity. you have to have people incentivizing and taking risks. for example, the apple announcement a couple days ago, that's exactly the kind of thing you want. the money flows. the great story in the wall street journal saying china's worried about our manufacturing. i just love that. that's exactly right. >> hang on -- >> lessen the tax burden and regulatory burden, we'll be good. >> reporting earnings aeearly, larry, thank you, we'll let you go. >> thank you. >> getting to the earnings from berkshire this afternoon. >> that's right. berkshire first quarter earnings, a miss at 2163, and
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revenue beat expectations at $65.19 billion. another important number is book value. book value up 3.5% to 1783.73. those are the details, kelly. keep in mind, only two estimates on revenue and four on earnings. back to you. >> all right. of course, this is just the very beginning of the berkshire meeting. >> i love the fact these are meaningless numbers. nobody cares. >> good for berkshire. >> by design. >> exactly. >> i know. by the way, the companies i tend to admire more are the ones who are not working quarter to quarter. >> look at amazon. >> amazon. my wife's employer, alphabet/google, no, no, there are companies -- and by the way, you know, the market -- the big difference is, not so much -- well, big difference is that none of the companies have to
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raise capital. it's not that -- it's not a big deal for them. >> a big difference is for berkshire, it's arranged to be a tremendous tally on the economy, never used to be. 3.5% growth is okay. >> in a 2% economy. >> yeah. outperforming the economy. >> more after this. warren weighing in on apple's earnings, prospects for the new iphone, and whether he owns one. plus, snap shares up more than 30% since the recent ipo, and investors get the first earnings report as a public company. next week, a little preview still to come. onvenience. i finally switched to geico. oh yeah? ended up saving a ton of money on car insurance. i hear they have a really great mobile app. the interface is remarkably intuitive. that's so important. ♪
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safe to say you don't own an iphone? >> it's safe to say i don't. i have a flip phone, although, it's not on me. >> what do you think of apple's earnings? >> about what i expect, but i don't really -- i don't own it because of what i think the earnings will be in the three months or six months. it's really hard to figure out how much people delay their buying of iphones because of the launch of a new one in six months, i talked to the guys, and they say there's a lot that. >> of people waiting? >> yeah, i mean, if you knew a new car was coming out tomorrow, a new model or something or another, and you paid the same -- roughly the same, i don't know what they sell the new one at, but close to the
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same as last year's model, you'd wait. so i -- i think -- i think it's an incredible consumer product. >> that, of course, is our own becky quick catching up with warren about his apple investment. becky is yojoining us, and we appreciate you seeing mr. peanut last hour, becky, but interesting he bought into this idea that people are waiting to buy the iphone. the -- this has been a case for apping, and i don't know, warren believes it. >> yeah, i think he looks at this, and, again, this is a guy who doesn't own an iphone, so he's not speaking to us from personal experience. he looks at it and said, he's been talking to the guys out the nebraska furniture mart and said, yes, they had a lot of people coming in saying they were waiting for 8, and, look, i know people saying this too. he talks to a lot of people. he believed it, if there's a new car coming out, you don't pay
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for the old price to get the new one coming out. he think it's a sticky environment and people are sucked in, i suppose you have the music on it and other things too. >> it's true. by the way, you guys, my point is apple has had an upgrade. you know there's always a better one coming. tesla tried to say people were not buying the model s because 3 is a better one. >> you know what's coming in two more years. not as if there's no sense of urgency. it's a decent cycle, though. >> the bigger issue for me, which i do own an iphone, is that i have not been happy with the upgrades. meaning i -- as an individual user, i get less and less use out of any of the upgrades, in fact, some of the things they did with e-mail, things like that, they are confusing and difficult, and so i don't think i'm -- i think i'm pretty average in terms of my iphone use. i'm not at the head or at the way behind, and so i think maybe a lot of people like me out there who don't necessarily love the upgrade. >> 300 million worldwide, more than two generations old. there's a basis potential for
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upgrades. >> i imagine. becky, interesting thing now, is there so much, in a way, just the peanut gallery pressure to e see if the apple investment works out in a way that ibm has not for berkshire? >> was that for me? >> yes, sorry, go ahead, becky. >> yep, yep. yeah, that's a question that i've seen people e-mailing in and asking me about too is, like, maybe it's not in the circle of competence looking at technology stocks. i think he thinks this is not a technology stock, but a consumer stock. we'll see. i mean, it could be an issue that time tells. >> do you think, becky, before you go, the vibe you get -- oh! it's the geico! i hope my dad's not watching. >> you were excited about mr. peanut, but now look. >> i know. becky, there's family drama here. you know, dad's business, they compete with geico. he hates the gecko, you know, i just -- >> oh, no!
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>> yes. i like the gecko personally. >> she says she loves you. >> he doesn't have an ip. >> kelly, go ahead. before -- before we let you go, i go, i have been in the mark looking around for a wedding gift and i'm on my way guess what, it's coming home to you. >> no now, wait. >> if you are serious, i absolutely love it, by the way the big one has lots of sharp -- we're trying to sharpen it. it didn't work. >> you have to put that in checked luggage. >> good luck putting that through the airport. >> exactly. i'll check it. anyway. >> becky, thank you so much. we love it. this is my favorite day every year is becky quick joining us from the floor there with the geico gecko this afternoon. this is just the beginning of the fun they will be having all
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week into monday. up next, the top ten markets for single family rental returns. it's an extremely competitive space, in fact the founder of axios to president trump's agenda. we have the biggest people on wall street discussing the latest investment ideas, plus a live broadcast, to bill ackman's presentation on power lunch, don't miss a second. week we'll be right back. know ag or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)
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your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $509 on auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance. >> welcome back. we got an exclusive look at the
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hottest markets in this space. diana olick is here with all the details. >> reporter: kelly, you'd think the housing market as hot as it is investors would pull back. that's not the case at all. with such demand for single family homes, investors are pouring n. if you are one, you want to see the best returns. it's not where rents are highest. no it's in the mid-west, cleveland, oklahoma city, st. louis, to name a few t. price to get in is low. not only can you command solid rent, you will also see the value of that home appreciate. this is all according to home union, a company that matches investors with rental homes. these areas are seeing ememployment growth and new tech jobs in pittsburgh. right. who knew? as for the worst markets, sure, can you command huge rents in the west, but your cost to get into that home is very high. surprised? tightest out west. so will you see the most competition, dating wars. and the entry point where move
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investors are. one interesting sight from home unit, investors are looking at new construction, the cost is higher, newly built homes come with a premium. but they come with builder warranties and you are less likely to have repair issues, also, can you ask higher rent for a newer home t. entire list is on cnbc.com. go to it. few want to pick out any one of these homes for your wedding gift, let me know. >> thank you, that's very generous. i'm thinking the new homes, diana, is the way to go. >> reporter: sure. >> no repairs the housing stock in this country is so old, who has the wherewithal all, the handymen are so expensive, it's impossible to get somebody who know what is they're doing. anyway. >> reporter: you want the environmentally friendly homes as well, what the builders are doing. >> you can tell you hit a sore spot. thank you, diana, appreciate it. diana olick here in washington. >> it's true, though. i wouldn't -- you could buy a
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new home, i would do it. it's been two month since snap ipo, we will tell you what to expect when we come right back. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.
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we are looking at shares of ibm here. s&p revised its rating from aa minus to single a plus. >> that is a downgrade for ibm. i believe moodies did something similar earlier this week. all this after warren has sold out a third of its shares. another beg week of earnings is headed our week next week. i love this calendar, it looks so exciting. snap is the first time the company will report quarterly earnings since going public. i know it doesn't meet your big money to the mark threshold, however. it's a lot bigger than many. >> the crazy thing about snap, they must be in the $20 billion. >> 27 billion. >> by the way, snap, snap is 20 times bigger than shake shack that you talked about. >> real quick. >> it's interesting to see how they characterize their own results, what metrics they want to put forward, because they were trying to de-emphasize user
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growth in the ipo. >> by the way, mark hauthen an analyst said he wouldn't be surprised the user growth turns negative because of the strong growth and what facebook, instagram is doing. thank you, guy, for being here. appreciate it. have a lovely weekend next weekend, that's it for "closing bell." "fast money" starts now. >> fast money starts right now, live at the nasdaq market over rainy time's skwar, the traders are tim see mohr, karen finerman, guy adome, tonight on "fast" commodity crush, oil, copper, silver, all sinking this week t. chart master says one is a screaming buy. he will be here to explain this contrarian call. plus the second and final round of the french election. can marine le pen pull off a shocker? and later the or cam of

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