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tv   Closing Bell  CNBC  August 22, 2017 3:00pm-5:00pm EDT

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>> that is my check, please. >> i don't other than -- >> how are your teeth, by the way. >> seem just as wise as you used to be. >> haven't lost my wisdom, just the teeth. >> a real delicious "power lunch." >> find me some lunch in "power lunch. thanks for watching "power lunch," everybody. >> "closing bell" starts right now. enjoy your jerky ♪ >> hi, everybody welcome to the "closing bell." i'm welly evans at the new york stock exchange do you like jerky? >> i was about to say i don't really, but i'm hungry now that they have talked about it. >> made it look pretty appealing. >> i want it a little bit. i'm wilfred frost in for bill griffeth stocks popping on reports that progress is being made on tax reform how close the lawmakers and the president are to some sort of agreement. >> up 185 and "the wall street journal" says chevron ceo john watson is stepping down next
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month. the reporter who broke that story with the latest. >> and shares of home builders toll brothers after a mixed earnings report and we'll hear about the company's cautious outlook but we start with the latest on tax reform and a report from politico says the big six are making significant strides on a plan moving past the framework pushed out in july, and one of the big six, speaker paul ryan, is optimistic about getting things done. here's what he said in a town hall last night. >> i believe it's going to be far easier for us to do tax reform than it was say for health care reform >> all right how close are we to getting a plan, and what exactly would be in it? joining us are politico's nancy cook and our own ylan mui. glad to have you both here for this discussion. nancy, i was looking at your proposal today about the items that people are kind of rallying around here, but they include controversial ones like, you know, capping the mortgage interest rate deduction and
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getting rid of the deduction for state and local property taxes, so how do you think this is shaping up. >> well, i think that republicans ever since they looked at doing away with the border revenue tax they are looking ways to offset and some of the things they are rallying around is eliminating the deduction of state and local taxes, capping the mortgage interest deduction for mortgages above $500,000 there's also a sense of phasing out intradeductibility and the plan is to present a skelton plan to the congressional tax writers in september with the hope that they will be able to flush out more policy details. >> ylan, is speaker ryan right to say what he did last night, that this will be significantly easier than health care? >> reporter: i think that is a very optimistic assessment of the situation, wil i mean, if you look at tax
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reform, the hard fight there is not really between republicans and democrats even it's industry group versus industry group, and that was a lesson out of 1986 look what happened to the border adjustment tax, right? it wasn't democrats who killed it it was debate within the own republican party and a debate between retailers and manufacturers, so that's just one example of the big fight that's to come between business groups, and there's not necessarily a single coalition once you get down to that level of picking out which deductions and which tax breaks are going to go. >> nancy, i saw there that there's something about 401(k)s being able to contribute post-tax and not pre-tax dollars that i think would be a scandal and maybe i'm nye eve. what exactly are they talking about on that front? >> well, they are really just talking about collecting tax on money that you put into 401(k)s at the front end rather than the back end, so it would be similar to a roth i.r.a.
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this is one of the ideas that is quieter -- being discussed quietly. iwouldn't say it's an absolute forefront idea, and the other thing is that it will face a ton of opposition from the financial services groups that manage a lot of americans' retirement savings but also budget hawks who really think that this is a gimmick because it just basically front loads the revenue at the beginning of the bill, rather than the end. >> ylan, a lot of legislators were upset that they felt that they had been left out of the early part of the discussion when it came to various different forms of the healthcare bill. what do you think people will think if there's a war rom where six members are discussing a large part of the early part of the tax reform discussion? i'm hearing a lot of pushback to some of these ideas from cap bill and members of the tack-writing committees really want to feel like they have ownership over the process and they are the ones who are driving it and making some of the hard decisions they are the ones who will have
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to battle with lobbying groups over which deductions stay and go, so they really are going to want to be the ones who make those decisions, and i'm not even sure from my reporting that there will be an updated framework. a lot of questions still from the hill on how much progress will actually be made. >> nancy, real quickly, just to go back to this issue of 401 ks. i guess it's not so much that you would do it roth-style like you're saying. it's this idea that this could be subject to change every time there's a need to raise revenue, so, sure this might be the change for now, but who is to say down the road then they won't tax you on back end of that, too, or maybe do it with some sort of phase-in above some certain income level? >> well, the point is they are really just looking for revenue because they don't necessarily want to do just a straight tax cut package, and this was an idea that was in former representative dave kampf's plan and one of the ideas as republicans are looking for as a way to raise money
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i quickly also want to know that there are major outstanding philosophical questions that the republicans still need to contend with on this, like whether or not it should be revenue neutral and whether or not the tax cuts could be permanent or whether or not they will be temporary. and those are two really big overarching questions that republicans have to wrestle with >> if only we could talk to dave kampf himself. we'll do just that nancy book from politico and ylan mui next hour former congressman dave camp will join us to talk about his 2014 tax plan and whether those ideas could help now. >> closing bell exchange, peter anderson and steve grasso and jack, i want to start you. we've got a very nice rally in the equity markets also got a soft dollar is that a driving force behind the equity market rall re, do you think? >> wilfred it has been for the past seven months.
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talking to european portfolio managers, they will tell you they are under water the s&p might have been up 9% or 0% and the dollar is down that much before we go pat pentagon ourselves on the back and be all nice and happy about what's going on here, let keep in mind that a lot of it has been because of this deteriorating currencies weak currencies weaken nations so we have to be very, very careful and unless you think that the market will go down against the euro currency, it might be a bumpy road ahead of us for stocks over the next couple of months. >> steve grasso, sitting over there at post nine, i know you've got fresh eyes off your vacation do you see anything in this market, you know, from a different perspective now? >> well, when you look at what we sold off on, i think that was an overreaction and markets overreact and overshoot one way or another if you look at what we rallied back on. it's -- some has changed in one day, kelly does it seem realistic to you
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because it doesn't to me when you look at what jack talked about, president trump talked down the dollar himself this is something that he's been looking for, and he got it when you look at the chinese markets and you look at copper running higher, if you look at the fxi, they are core late, so you can trade off of that. when you look at the overall s&p market, the stock market is rallied back we're right around record highs. passive investing is there we've sold off to basically the 100-day moving average and rallied back to the 50-day moving average. >> all right. >> the one guess that every trader can make is that you stay in the position, in the stock market, stay long the stock market because every time you sell it off on d.c. troubles and worries, it's the wrong move to make. >> peter, what's your view at the moment on the talk that we might start to move slightly closer to tax reform, and is that something that you would find bullish >> well, of course, i think it's bullish. it's hard to speculate right now exactly whether or not we'll be
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successful with that, but here's our current view on what we think is happening we think that market makers and participants right now are saying perhaps none of this will happen, none of the trump enhancements will happen and we're okay with that, because at least that would be certainty, so let's just eliminate all those possibilities and look at market fundamentals, and you know markets hate uncertainties, as you've said many, many times on this show, so if you're saying with certainty that none of these things will happen, let look at market fundamentals. they look pretty good, right the consensus for forward earnings growth is about 18% from this point on through an annual basis looking out forward a year, so we think thinks are fairly good. i don't think that we're standing on a trop door in the sense that we're going to have a surprise i think that things are fairly stable, and so if you operate with the consensus that there may not be any tax changes things are still pretty optimistic >> jack, do you agree that nothing is priced in here and
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today's price reaction is not news on that front >> kelly, i couldn't disagree more i think that this is an indication of how important politics are right now to the market if you start talking about there's not any tax reform, no repatriation, and if that starts to really hit the market, this market is going to get hit hard. all of that have, even though, you know, it's being priced in the market for future earnings is very important to the -- if you think about it -- >> jack -- but, jack, the only thing that's really being priced in the market is that you're in a lower regulatory environment going forward. i don't think any tax policy or any tax reform are priced in other than lower regulations. >> that and a weaker dollar. when you talk about earnings growth over the course of the next year, people are factoring in a deteriorating dollar, so unless you think the dollar is going to go another 10% or 20% i don't see that growth happening. i don't see these multi-nationals printing that kind of money from overseas. >> steve, what do you think is the reason we're rallying today?
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is it because of some of these policy developments? >> sure. i think that knee-jerk reaction when you hear something is going to get done on the political front, you want to rally the market back, but i think it was an overreaction to north korea that didn't happen could it happen? sure anything can happen, but when you look at the passive investing, when you look at the money flows that are coming into the market, when you look at where the market goes and whether it's the chinese internet stocks or the f.a.n.g. stocks here, the market still is carried higher by mega-tech and mega cap and still looks like it wants to grind higher. >> thank you very much, peter, jack, also thank you very much. >> thank you all. big corporate news "the wall street journal" reporting that chevron ceo john watson will be stepping down next month joining us by phone is bradley olson who just broke that story. bradley, thanks for joining us this is not news the company is necessarily confirming here. what are you hearing >> well, i mean, i think it's news that they had anticipated
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putting out after next month i think there's a board vote next month that would have made it official. i think it's something that we've been able to confirm that this is the plan and, you know, they are kind of looking to a -- to a new leader that has kind of more cost focus as they, you know, look at -- although they are not necessarily disparaging the tenure of mr. watson at all. >> brad, talk to us a bit about his tenure and the share price performance in terms of company strategy what will he be most remembered for? >> well, i definitely think he'll be remembered for, you know, big spending chevron had two huge projects in australia that cost upwards of $90 billion, you know, for them and their partners, but also for returns. i mean, chevron's performance in terms -- you know, if you reinvest dividends was above 80% during his tenure. in terms of 80% return to shareholders, and that was more than double exxon's return in that time period as well and a good bit better than shell's and really any other tier of
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chevron. i think he'll be remembered positively in terms of his performance. >> which is interesting. it's a double-edged sword. bradley, if we assume that the market is rallying on this news because they like the idea of more cost discipline, does it also mean that they are giving up the potential of those continued gains? >> there's a lot of things at chevron that are priced n.a lot of cash flow from these projects in australia and a lot of long life projects and i think the market is aware of that, and i think they can sort of take in all the things that are necessarily from watson's tenure that they see as positive and also enjoy the idea of cost control in a low-price era >> some of those australian acquisitions, were they overpriced are those something that there will be a black mark on his tenure >> the investments they made, huge gas export projects and chevron was the operator hand they went way overbudget the budget was 25% higher than they originally estimated. that's something that people would look back on as slightly
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negative in his tenure he also sort of was, you know, he's been on cnbc many times i'm sure the viewers have seen he's very blunt and unabashed in his prow eds in the oil and gas world. and his importance in the world. people will reremember that about him as well. >> before you go, bradley. who will replace him >> it's not official yet and hasn't been final finalized but we understand that michael werth is kind of a leader in the running to replace mr. watson. michael werth was a downstream executive for a long time, sort of in the refining chemicals business, and these executives are known as cost-watchers and people that kind of manage returns a little bit more than growth you know, the high-price oil era was an era of high growth and somewhat lower than returns that people expected with the $100 a barrel oil prices and now a lot of these executives are coming in and saying, hey, returns matter a lot more than growth, and that is sort of what might
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be strategically why you would bring someone like that. >> a nice pop for snapchat details on the report that's helping to push those shares up higher. >> and toll brothers it is lower after its report this morning. ceo doug yearley joins us to talk about those numbers and how millenials are impacting the number we want to hear from you wham about snapchat? you're watching cnbc, first in business worldwide
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welcome back much more convincing rally than we've seen the last couple of days the dow up 195 points. the s&p up 1%.
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nasdaq up 83, 1.33, even the russell 2000 is up 1% today and the dollar index up half a point? half of the dow stocks are up over a percent toll brothers stocks is down 3% after mixed results and lowering sales projections this morning. >> joining us is toll brothers ceo doug yearley welcome, sir. >> thanks for having me. >> are you facing supply constraints with bringing inventory online because all the sentiments seem quite bullish? what's going on with toll? >> toll is doing great i'm disappointed that you describe our quarter as mixed results because we had a tremendous quarter we're surprised and disappointed the stock has traded off a little bit today our revenue is up 18 boston. our backlog was up 21% our new orders were up 24%, and it's the fourth quarter in a row that we've been north of 20% in order growth
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we lead the industry, so we're doing really well. we're very happy with all of our operations nationwide. the housing market is solid. the west has been great for us we made a big move into the west about five years ago, and it's really paid off, particularly california we don't see supply issues, and -- and all is good, and like i said, we're disappointed because we pretty much hit or beat every metric with significant growth, and we were expecting a good day on the market, so life is good at toll, and we're all happy here, just disappointed >> of course, 3% decline is not even a small decline it's quite a significant one is that perhaps in part down to the falling average price of sales and the way you're having to adapt your homes to sell to millenials >> if you're talking about the average price of our homes, that's strictly mix the. it's not because we've incentivized our homes anymore
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our incentives have been flat for years now. we're a diversified company. we build in many markets we went into boise, idaho, as an example last year at a lower price point. we're not selling as many very expensive condos in new york city as we had a few years ago we've replaced that with some million dollar units in hoboken and jersey city that are still expensive but not as high as they had been in new york, so the change in average price is simply mixed it's no reflection on a softer market or more incentivizing >> and doug, just circling back to the supply issue, i only raised it because of what have happened with the full year gross margin forecast. maybe you can explain to us due to a floor joist recall due to a major lumber manufacturer. >> so we -- we dropped our -- our gross margin guidance for the fourth quarter by 15 basis points that was offset by a 20 basis
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point improvement in sgna for a positive of plus 5%. there was a small issue with ijoyce in the industry managed by a large manufacturing company that have to be remediated, and that's delayed some of our closing 60 to 90 days. a few would have clothed in the third quarter which reduced our revenue in the third quarter by about $20 million. we have another bunch that will be delayed from the fourth quarter of 17 into early 2018. the manufacturer is standing behind the product they are covering all of the damages and the costs of repair. it's only affecting about 36r789 50 of the 22 up-plus homes that we'll deliver this year. >> wow. >> and it's simply a delay it's not in any way affecting margin it just had a very modest impact
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on q3 and q4 revenue, but i will point out for q3, you know, the revenue was up 18%, and there was had a headline this morning that we missed top line revenue. we missed $1.5 billion of revenue by $10 million and it was all attributable to the few homes we could not deliver because of the ijoyce issue. >> we spoke more about millenials wanting to rent rather than buy and what about baby boomers in terms of the level of transaction and volume in terms of that particular grouping >> yeah, it's a great question we've been selling to the baby boomers for decades. they are downsizing and moving in 55 and older active adult communities or they are moving into age-targeted communities or second homes 23% of our sales this quarter
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were to 55 and over active adult buyers we build now nationwide the empty nester move-down homes east coast, midwest, mid-atlantic, florida, colorado, nevada it's heading into texas. it's a big part of our business. the boomers are a huge generation, and they are moving down, and they certainly know toll from all their moveup years and now we hope they come to us from their move down years in addition to that we have the millenials that are coming into the market, and the leading edge of the millenials are now in their mid-30s. they are getting married later and are more affluent when they are buying in their mid-30s, and we will have product lines and homes for them when in the past they never would have thought that the fist home could be a toll brothers home. >> we've seen that homeownership rate tick up for the past year for millenials doug, we should put your stock decline today in perspective still up 20% on the year, 25% to
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30% in a one-year period and if d.c. takes away the mortgage interest deduction, i was shocked the recently to read only a quarter of people eligible for that even take it how much of an impact would it really have on market if that goes away? >> so right now you can deduct up to $1 million, and there's been talk for, boy, for maybe the last ten years at least about the mortgage interest deduction being modified i don't think anybody thinks it goes away, but there is discussion as to whether the million dollars should be reduced. we think it would be very bad policy and it would discourage homeownership h.i don't think it's going to gain traction but it's certainly something that is regularly debated in washington, d.c., and you're right. >> sound like -- >> many people don't take it anyway, but we're keeping a close eye on it, and as an industry we're certainly opposed to any change in it. >> i was just going to say it
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sounds like it is gaining some traction granted, a lot can happen in a month but these guys are under a lot of pressure to show a plan and they are going after all these boogiemen, mortgage interest deduction, state and local tax deductions which could also affect the housing markets. a lot of places outside cities have expensive property taxes which could make it less attractive to own, too, right? >> it could, but, again, it's -- you know, this country has prided itself on encouraging homeownership and mortgage interest deduction has been around for decades it's worked very well. the so has the deduction of the local real estate tax, and -- and while it's a headline right now, it's been a headline for many, many years, and we'll see how it all plays out, but i think it's very sound and strong reasons why it should not be touched. >> all right >> we'll see if they still try to go forward. thank you, mr. yearley, for joining us today. >> thanks very much for having me. >> that's doug yearley, ceo of
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toll brothers. a little more than half an hour to go to the close. you're a property owner. i found that out today. >> not here. it's not a toll brothers. >> currency is having more of an impact on your decision than it would for more. >> more just rent now, too. >> that, too. >> very, very -- >> as a percentage of yield and sort of central manhattan versus london, much higher, about 4%. >> is it really. 2.5 coming in. not a nice balance. >> no, it's not. here's a nice bounce, dow up 190 and the s&p up 23 and nasdaq up 83 and russell 2000 up 14. >> could amazon and facebook pose more of a threat to banks than technology startups in the author of a new report that says banks should be cautious of the tech giants mi ucongp into their space. back into a couple of minutes.
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welcome back to "closing bell." let's get a check in on some of the day's markets movers the shares of dsw soaring. they saw comparable sales up 0.6% versus estimates of a 2% decline and they announced a $500 million stock buyback so shares of that jumping some 18% and cosmetic company cote falling today after reporting a miss on earnings
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the company whose brands include cover girl and clairol sort of break-even quarters citing high spend pentagon on marketing. that stock trading down some 12%. >> wow time for a cnbc news update with sue herera sue? >> hi, kelly, hi, wil. here's what's happening at this hour the u.s. top commander in the middle east says the first new deployment of u.s. forces in afghanistan will arrive pretty quickly also, estimation it could take days or weeks secretary of state tillerson says no decision about troops levels have been made. >> what will be different this to imis he has empowered our military commanders on the ground to make more timely decisions and conduct battlefield operations based upon the conditions on the ground with the battle plans that secretary of defense mattis will be approving. that is going to change the dynamic on the ground considerably >> in florida, venus williams did not attend the hearing in the wrongful death lawsuit
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against her. today her attorneys agreed to turn over her cell phone records. attorneys for the victim claimed distracted driving was to blame for the crash. and treasury secretary steve mnuchin's wife is defending instagram post louise linton tagged several photos in an outfit said to cost $14,000. she later removed the post but not before some backlash that's the up date and i'll send it back down to you. >> we'll see how much wilfred's outfit cost. >> 700 per suit. >> i don't know if you're going to go for it. >> i didn't want to lie. i don't know exactly. >> he's always wonderfullly dressed. >> not a super expensive suit. not super expensive. >> maybe not for your job but for a suit in general, you know, not that i know. i don't think these things thank you, sue. >> see you in an hour.
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>> cheaper than mrs. mnuchin. >> vastly. facebook expected to decline in usage for the first time ever a decline of 3% is predicted for the teen users, the group is shifting their focus to snapchat and instagram, but that is owned by facebook. those shares are still up 1% today. look at snap though. bigger reaction. it's up 6% wilfred. >> it's fascinating to see that snap is doing well on one metric and you factor instagram in as well, and clearly facebook has a massive offset to this snap gain interestingly i think with instagram is they have added more services to it to offset what snapchat is doing. >> stories. >> and does that make it more similar to facebook and offset them against their own property? >> yeah. >> that's a balance they have to have going forward. >> how do they make sure that people don't leave instagram the way they are facebook? as long has they are engaged
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it's fine. >> and the other thing we have to think about is as people get older do they change which platform they use, or are they still embaleded on that platform and use it >> they have got the wind in their sails at the moment but facebook is so well protected by having both. >> i remember when it first came to campus. >> sign up post your party picks. >> only a decade ago. >> dow is up 186 points today. broad gains here the s&p is up 23 and nasdaq up 83 and the russell up 15. >> coming up, big tech versus big banks. why a new report says amazon and facebook could be a threat to laesfincl y's rgt naia firms. we're back in a couple with at&t you can get your entertainment right here.
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and their relationships with companies. >> join us now is jesse mcwaters and author of the new report at the world economic forum very good afternoon to you thanks for joining us. >> thank you >> so your headline from this is as opposed to payment startups or fibtech companies like that, these massive tech firms that we know all too well are disrupting banks because of the data that they are able to gather, is that right? >> that's part of it it's interesting we've been talking for a few years about the potential for the fintechs to play the david in a david and goliath sort of play, but what we've really seen is that's not panning out, that the significant switching costs of getting people to move to new providers has -- has limited them and then at the same time banks are doing this quick shift to adopt the best of what they are seeing in fintech. >> where is fintech making inroads? is it in lending >> i think that fib -- tech is making inroad in defining what the user experience of the future is, that really in
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lending, lending club and on-deck have really defined what a lending experience should look like, and then you're seeing banks try and copy that as effectively as possible. >> where is it that big tech is making inroads i see that you're seeing that amazon is the one that everyone is talking about >> i think what's interesting is that amazon and all of these other large text are increasingly being an essential part of what banks want to become banks want to provide an experience that looks a lot more like the big tech experience they want the flexible infrastructure offered by the cloud. they want to be able to interact with their customers through virtual personal assistants like amazon's alexa or apple's siri, and what you increasingly see them doing is going to the large tech firms to get those capabilities. >> are you saying that the likes of amazon and google will run day offer us bank accounts or no >> i think that the real question is who is going to be
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responsible for the distribution of your financial services so the end bank account may not be resident with the technology firm, but increasingly you might go to a platform that gives you options to choose between many different financial products and services, and those distribution platforms could be run by a large tech. >> and when we think about some of the big u.s. banks, goldman sachs in the news for hiring a lot of technology experts. what type. people are they hiring and are they, therefore, ahead of the curve on this or is a company like jpmorgan of buying small tech firms, who is the leader? >> i think you make a division of what's hatching in the wholesale and capital market aspect of this and what happening in the retail side, show in terms of developing more sophistication, goldman has absolutely been a leader in automated aspect of their trading, in deploying really sophisticated analytic tech know, a but what we're really starting to see the edges of a
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new financial system on a retail basis, that's in europe. we're increasingly banks are being separated from the data that they hold by customers. new regulations like the payment services directive, too, really require pages to share that customer data with third parties which starts to move that customer experience away to others. >> so finally, if things banks don't want to become the back end office operations for the customer relationship, what can they do? should they start working with things like apple pay and make sure that amazon is not potentially making inroads into their birks or do they -- can they even make a choice like that given how big those firms have become? >> i think the conclusion that we came to is they need to walk a very fine line on one half the capabilities that you can access through the large text allow you to deploy the services that your customers want very rapidly. on the other hand, you need to be careful about not becoming
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overly dependant on them or inviting the technology firms who have now learned about the industry to enter and compete with you directly. >> that's tricky >> jesse, thank you very much for joining us, jesse mcwater. and the banks and tech firms all doing very well, along with most markets. >> that's a good point up 1949 points on the dow. near 200 the last couple of hours. we have 18 minute to go with the s&p up 25, nasdaq up 16 and the russell still up 15. >> also rallying, metals, copper in particular hitting a three-year high. what's behd atovcong upex nt?inth me mi finally. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity...
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okay wow. here we go about to pierce 100 points higher on the dow, a level of 21,900, still below the 22,118 high had a selloff. about as sharp a comeback that we've seen spurred by some remarks that d.c. tax reform could be on its way. >> strong day for the dollar and strong day for europe and asian markets. also strong for copper hitting a three-year high. let's send it over to bob pins who has more on the reasons for the rally. we're seeing that in conquer and other metals bob. >> and the global economic expansion means more people using copper, metals, and we're
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seeing very good earnings reports from some of the big global mining companies. that's another thing that's happening today. metals have been rallying because the global economies have been getting better take a look. look at how strong some of these. nickel 22%. sync at a ten-year high and copper at a three-year high. aluminum up 9% near a three-year high and we've had great reports from the big mining companies. bhp, one of the big ones in the world based in london. they had a good report full-year profit rose fivefold happening this morning here. bhp has had a great year, up about 17% so far, but other mining companies are doing really well on top of that, so antofagasta had earnings in chile, and they are based in europe glencore up 20% and vale up 19%. all of these companies sell a lot of iron ore and copper and china in particular. one reason they have been doing so well.
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etfs you can buy for this. dbb, dog boy boy here you own copper futures and aluminum futures that's been rising the last three months because the global economy has been improving that's been helping that you can buy mining stocks but you have to be careful buying them the one you want to own is pick. that's the one that owns the global miners, the bhps and that's the white line. the orange loin is the metal and mining etf that basically owns steel stocks you want to own pick and finally the dollar has been down about 6% in the last three or four months, guys that's also a help to these met al companies back for you. >> bob, thanks very much for that, and i suppose all those factors considered, the question is why isn't it playing into the oil price as well? >> i find it highly strange. >> certainly playing into the metals >> coming up, salesforce trading at all-time highs. we've got a debate on whether today's earnings report which comes after the bell cou eldnd the stock's rally.
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welcome back there's your 200-point gain in the dow today. art cashin just came back and mentioned we're pretty much paired off on the bell no major factors are heading our
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way. 21,904 with ten minutes to go and gains are all for the better in the major averages. salesforce stock is up more than 35% this year so what will happen after the earnings? will it change that trajectory you're a bull on this stock, a lot of focus on the earnings report in the margin, all it be you're not that positive of a margin pickup despite being bullish on the stock. >> yeah, absolutely. i think there will be a lot of focus and we think management is changing its focus and paying attention to the margin as well and investors are also looking at top line. we think top line growth is going to be strong pretty solid momentum, and we're expecting a pretty solid top line activity from them, so, yes, margin is the focus, but people also care about top line, and if top line is strong and
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there's a little bit of an upside to margins which we think will be there, they should have the stock. >> meantime, you're talking about valuation concerns and maybe deal making ones, too, right? >> i think salesforce is an excellent company, really well run and not too much to be concerned about. you know, my general concern is more one of valuation. i think there's always risks to the downside and certainly at a market level, let alone for salesforce i think a lot of money just plowed into technology because it's growthy, but if you look at salesforce in particular, i love a lot of the acquisitions that they have been doing i think that they are strategically favorable. they have had let's call it mixed results with some of the acquisitions so there's certainly always uses of capital issues that we need to be mindful of when we're thinking about valuation, but at the end of the day it's a solid company, it's just, you know, robustly valued right now. >> brian, what about scale are they big enough to start to dominate the other players in
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what is a relatively fragmented market still >> well, this is another thing i think because i'm an advertising analyst, not a software analyst and i look at this the through the lens of the advertising marketplace and marketing marketplace which call it 2 trillion to 3 trillion of total activity in the year and the piece of software that's small, not even in the 100 billion. salesforce might be the biggest player if you look at that marketing technology subsector but it's incredibly fragmented with thousands of individual point solutions. you've got a couple of big guys in salesforce and oracle and adobe, but it's all the smaller players constantly going to be force competition. >> yeah, and -- and perhaps undercutting them on prices. gentlemen, apologies have to get it there we'll get those salesforce results in just a couple of minutes. appreciate your time. it's a news alert on blue apron. aditi roy, what's happening
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there? >> they have let go of 14 members of its recruiting time as it ramps are up a new full millment center. the company also confirming its hr chief has resigned earlier this month blue apron says it's in the final stages of a search for a new hr chief, latest of troubles for the company that's seen its shares plunge more than 47% since its ipo. right now though, kelly, shares are at the moment up >> all right as we mentioned, blue apron yesterday below $1 billion, using its unicorn status at least for the time being thank you, adeathy >> up next, we're coming back with the closing count keown. >> former congressman dave camp will join us he'll talk tax reform and we'll see if parts of his plan from 2014 could be useful now sissorwiatching cnbc, first in bune wldde you always pay
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♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany ♪ watch this don't get mad (bell mnemonic) get e*trade and get invested welcome back to "closing bell." just a couple of minutes ago, it's been a great trading session. just looking at just over 200 points just slipped under at 199 points for the dow. a nice gain for st. and we look at sector performance, only a couple in the red. in fact, just one app. real estate and metals, of course, talking about their rally. also some nice earnings from the likes of bhp want to finish very quickly on dollar board broadly the story of the last
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couple of months have been weak dollar, strong markets today the encouraging thing in this rally, a strong dollar and we're rallying despite that fact joined by mr. pisani any takeaways? >> the dollar has been weak, the last dollar index down about 6% in the last three months i think that turnaround, i don't know if this is a significant turnaround, but it's been quite notable in the dollar. so we've been talking for six months that there is some kind of premium in the market for tax cuts, for infrastructure, for less regulation, the whole trump agenda we don't know what the premium s.well, we found out today that just the talk, and that's all it is, that leaders are getting together and trying to coalesce around tax cut ideas, whether it's reducing the mortgage interest deduction or whatever, just the idea of doing that was worth 200 points on the dow. so i think we have proven to ourselves there's very clearly some kind of premium in the market for this had. we saw big momentum names, momentum sectors go back, so semiconductors haven't done anything all month
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they were big. we saw banks they haven't done anything they were big. biotech hasn't done anything they were big today and the defensive sectors, like reits, utilities, consumer staples, they kind of lagged today so people liked this idea and came back into the market. >> tech leading the charge as well, whether it's up or down day. >> f.a.n.g. stocks all did very well on top of that. the other thing i would point out, the talk of infrastructure. none of these infrastructure plays have gone anywhere throughout the entire year, but just the talk of the repatriation bill, perhaps linked to infrastructure -- into infrastructure spending, that kept some of these names going up roughly 2% on the day like acon, for example >> i with talked about the metals earlier why isn't oil taking place in the same rally because huge moves. >> it's a different demand sector >> it's a completely different demand sector. a worldwide glut and even with modest increases, a talk of a 2% demand on the year the supply glut is so strong it's not making a difference
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it's sort of a different sector by itself. >> we've slipped ten basis points on the dow. shy that have 200-point gain but decent day. >> very light volley would note today. >> light volume, late august, of course ring the bell for the new york stock exchange wageworks, five years since they listed on the naz being did a. that's it for the first hour of "closing bell. kelly's got the second >> thank you, wilfred. welcome to "closing bell," everybody. i'm kelly evans. a strong day on wall street today. the dow closing higher by 200 points, a gain of 195. on the bell there, just below 21,900 remember, the all-time closing high is 22,118 there still, just less than a 1% gain for the dow for the blue chips and a 1% gain for the s&p 500. 2452 nasdaq composite up 1.36%, to
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6297 and russell 2000 adding a percent to 1371. u.s. dollar strengthening. seeing some support across sectors like financials that had been struggling as of late news appeared to come on news that lawmakers were making progress on a tax plan coming up the author of a 2014 plan, former michigan representative dave camp who joins us with his take on the gop's progress joining me now, we have cnbc's senior markets commentator michael santoli, president and ceo of bell rock capital and david traynor. michael, strong rallies, is it justified and is it all because of of this news out of washington >> i don't think it's very directly pinned to these hopes for tax reform not that that hurt certainly would be a net positive if people thought that was right on the horizon i would call it a tidy little
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bounce down 2.5%, 3% in a couple of weeks. things started to look a little bit stretched in terms of short-term sentiment and positioning and all that got 1% of of it back in one day so i think this was one of those deals where people are waiting for that fat pitch to say this little pullback has run its course not saying that it has, but it does show you that the character of the market hasn't changed that much. volatility index really collapsed again over the last two days and kind of shows you it's still a slow and steady uptrend but, still, you still have a percent and a half to the old highs. we might be in kind of of a no-man's-land trying to figure out what the next upside catalyst is if we're going to get one. >> talked about how strong the metals have been if that's happening now in conjunction with this rally it would all make sense but the chinese data has not been stronger the german data was a little disappointing this morning so what do you think is going on across markets here? >> i think for a long time we've seen markets go up and down for sort of a variety of reasons the old signals don't work
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anymore, and we've -- we've ground up and been in a bull market and that's long in the tooth and i think we're kind of, you know, near the top, where it's going to go up some and down some and i don't think we'll see really strong movement in either direction. >> where does that leave you got a couple of picks here like disney are you looking at it the as more, you know, a valuation play, that's a name that people have moved out of a lot lately i don't know if it's exactly cheap, but why is that attractive to you? >> we do think it's cheap compared to peers and the best original content creator in the history of the world how many firms have consistently created successful primetime >> that's what people say about netflix. >> how successful has the original contempt been >> pretty successful have they monetize it had? >> they have built a customer base that people thought was impossible to ever achieve based on the strength of those shows look at the awards they havewo and the market cap they have as a result. >> how much money have they made >> but you're going to tell me that netflix is not successful
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because of its series? >> successful for consumers but not for investors. >> that's a different story. >> we're here talking about investors, so monetization of content is what minutes. disney knows how to do that so in general we're cautious on the market overall but we think you've got to be smart about it. the days of the market going up and you can throw money at anything are over. got to be smart and got to be selective and pick things with real profits beware of non-gap profits and beware of accounting profits and look at cash flow and that's going to matter more and more. the good old days of rigamarole are coming back. >> i like that ibm is included as one of your pick and tenseient acent and al >> i disagree with your previous guest. i think there's a ton of free cash flow out there, and i think one little piece of information today i found very interesting,
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and i think it's going to be the start of a trend, and that was that norway was starting to increase their equity holdings in their sovereign fund, and i think -- >> how far -- they got pretty low? how low did they get, cass tra >> i don't know exactly how low they got, but they are increasing it i think to somewhere around 75% which is very significant. >> wow. >> and so with that happening, i think you're going to see more of sovereign wealth funds move into equities because they have nowhere else to go, and so i think you have another 1,000 points in the market it is going to be a slow grind, but for those who have sat on their hands a lot of the year and been scared about what direction the market is going, they have missed out a lot, so for us, names like tencent and alibaba are are the early facebook and amazons they are the equivalence in china. most people in this country
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don't even know what tencent is or alibaba for that matter, but they are -- they are -- they have subscriber bases of hundreds of millions of users. their revenue growth in bowes both cases is over 60 is p.the valuations are not stretched, and, you know, we've been buyers at lower levels for both of these names, and we're still buyers at these levels we think they have tremendous upside left in them. >> cassandra, let me just pick up on her point about big sovereign wealth funds interesting recent move by japan where they said we're starting to get so concerned about massive indexing that we're going to specifically put our money with active managers to make sure we're not contributing. >> well, japan is a huge owner of etfs in its own market. i feel as if that's just going to be tweaking around the edges. i don't think you can stand and make the caisse that in general the world is underinvested in equities and, therefore, it's going to be a massive rotation in. >> and you might also argue that sovereign wealth funds are not
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early, shall we say, when it comes to a market trend. so, yes, there's support there's high liquidity out there. there's a dearth of easy returns in other asset classes does that mean that money is going to flow disproportionately to u.s. equities i doubt it. >> david real quickly because you mentioned alibaba and tencent, names which have run up big and cassandra would still be a buyer. the big f.a.n.g. numbers in general, netflix being one of them >> facebook and google can do things no one else can do and make real money. amazon, you know, they have a great business model not making a lot of money. netflix we think is a paper tiger. we think that's a bomb waiting to explode haven't made money in a being lo time the expectation is baked into the stock price that they will grow profits at 30 compound annually for 20 years. >> i'll come back to alphabet but salesforce earnings are out. let's get to these with josh lipton who has those numbers joshua >> salesforce reporting an eps
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of 13 cents. analysts looking for 32 cents. revenue up 26% to 2.56 billion analysts had called for 2.51 billion. deferred revenue, kelly, 4.82 billion, and turning to q3 guide, salesforce is looking for 36 to 37 cents, basically in line on 2.64 to 2.65 billion and in a statement salesforce ceo mark benioff saying we had a phenomenal quarter of growth reaching a huge milestone for the company picking the first enterprise cloud software company to break the $10 billion revenue run rate of course, the stock has had a big run before this, kelly, you know, heading into this print. already up more than 35% so far this year. call starts at 5:00 p.m. eastern, and we'll be back to you. >> thanks. ceo mark benioff will join jim cramer on "mad money" to talk about the results at 6:00 p.m. eastern time cass drag, the stock down 3% now. you got a strong view on salesforce
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>> not surprised that it's down. i think that it was up, had a nice run up in anticipation of earnings i mope, i think the valuation of the company is stretched a little bit up here at all-time highs, and it's a great company. you can't argue that, and they have some wonderful a.i. technologies that they are building into some of their products, and -- but i'm not sure that i would be a buyer at these levels i think that i would wait for -- for a pullback i mean, you can't argue it's a wonderful company though. >> still dropping now, down about 4% michael? >> obviously the stock was even up more than a buck today. i will say you cannot really rationalized it on a pe basis. it's been expensive since day one. guess what it's compounded at 27% a year since its ipo, so i do think that also benioff is a good talker, and i think during the call it's one of those stocks that declines in the immediate reflex move. don't necessarily lasts. that being said, trade at 30
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times something free cash flow and that's their measure of free cash flow. it's one of those names where you have to believe in the top line momentum and say it's in the right place for the big trends it trades in the same space as adobe and facebook in terms of free cash for multiple. >> free cash flow they talk about is fake. they burn over $1 billion in cash flow in the last seven years. they adjust the numbers. one of the big things they take out is stock compensation. wouldn't we all like our performance based on a level that excludes our compensation can pay myself as much as i want but it doesn't count michael makes a great point. it has been expensive, stays expensive and what gives at some point you have to look at what are they going to cross the line and be profitable when they are going against companies like oracle and microsoft that are super profitable, will they ever get there? the stock price implies they will be as profitable as oracle while growing revenues compounded annually for about 20 years. >> seems doable. >> possible.
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>> so that's the risk. >> and there's that sort of backdrop if they don't become an acquirer at some point down the road worth $60 billion, there's always been that h.i don't think it's too big, you about i do think that's one of the things in the back of the investor minds. >> what were you going to say, cassandra? >> i would also say that they are not the only game in town. it is still a fragmented market for this kind of sales soft wear, and not everyone uses it they are still -- and they are not really that deeply entrenched in the international marketplaces yet, so they do potentially have the ability to grow their upside by 20% for a number of years, but, still, you know, if you're going to say the valuation on this one is stretched or that amazon is stretched, then you would think the valuation on this one is stretched as well. i don't think you can make one argument and not the other >> david, just before we go. i was going to let you circle back to alphabet here and just
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finish the thought earlier about all of those names that have been such high flyers and outperformers. >> alphabet is one of those that has really high returns on invested capital, really big free cash flow, real free cash flow generation, and the valuation is not nearly as stretched so for me some of these f.a.n.g. stock have real business models and some don't that's sort of a broader commentary on the overall market that's why we caution investors to be careful about where they put their money. it's not one that's just going straight up anymore. >> good stuff. thank you guys, both for joining us today >> take care. tax reform hopes maybe helped send stocks higher but more members of congress are pushing for straight tax cuts instead of overall tax reform. all the details next. and verizon announcing new unlimited plans. not everyone is interested the stocks still higher for the wireless companies today those details as well and contact the show via facebook, twitter on send us an e-mail you're watching cnbc, first in business worldwide hey you've gotta see this. c'mon.
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strong day on wall street. aditi roy has that story. >> reporter: go daddy announcing its ceo blake irving is retiring at the end of the year the current president and c.o.o. scott wagner will take over the chief executive position irving will continue to serve on the board of directors through june of next year. shares of go daddy flat on the news after hours but finished the trading day higher by 1% kelly? >> wow yeah, we were just talking to him. aditi, thank you. reports of positive momentum on tax reform helping the broader market today ylan mui has the latest details. >> reporter: you said two really important words there, kelly, tax reform, but what if it's just tax cuts? republican leadership is coming under pressure to just take the easy way out and call it a day new york republican congressman pete king who is close to president trump tweeted this today. the gop must go first with tax cuts and not get bogged down in tax reform now, how speaker paul ryan has consistently said that he
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doesn't want to see this effort watered down he wants to go bold and rewrite the tax code, but in a town hall with cnn last night, even he sometimes got tax cuts and tax reform confused. >> the entire tax cut bill, tax reform bill can go in one bill through the house and senate we believe regulatory relief and tax cuts, tax reform is the secret to getting faster economic growth. >> reporter: the reason that tax reform is so hard is because it's not just about lowering rates. everybody loves to do that it also means getting rid of tax breaks which is not so fun, and that's why a politico story today about the popular deductions that could be on the chopping block is making so many waves. mortgage interest, the state and local deduction, these are some of the fights waiting for lawmakers once they get back here to washington back over to you, kelly. >> all right ylan, thanks very much our ylan mui joining us now with more on what this could mean for big business
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is the former ceo of frontier communications and current board member at costco and hewlett-packard enterprises, by the way, the sister of campbell soup denise morrison who served on president trump's manufacturing council. quite a long intro and we really appreciate you being here. welcome. >> thank you you can call me maggie, that's my mother-in-law. >> maggie, you got it. kind of want to get to some of the ways that they are going to pay for this earlier we talked about the 401(k) issue, if all of a sudden that's not pre-tax money, post-tax, for example, why would a company be interested in making a match for their employ eds and devoting a lot of resources to that if they are not longer going to get a tax break? >> well, you know, it is the right thing to do if you think about employees that work for you and work for you for a long period of time 401(k)s now become the real retirement program for most americans, and an incentive to
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help workers along is to do a match. i know as a ceo i never thought about matching or a contribution for 40 is k for employees to be anything other than good for business and good for our workforce. >> yeah. well let's talk about some of the others as well one of the ones about getting rid of business interest deductions seems like a corporate finance point of view it could make major waves. what do you think that would mean in practice >> well, i think it has toss do with the package of what you get from a rate reduction perspective vis-a-vis what you give up. you know, i think if there's a tax cut at even 5% to 2%, just a quick tax cut, that's good, too. but if you can really do reform and get the tax rate down in the 15% to 20% range, there are ways that you can give things up on the other side that aren't as painful, and i think business interest deduction is a god
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example of that or a lot of things that happen today for consumers and taxpayers thinking about their mortgages or charitable contributions or -- or what do they do for the child deduction? so you have to look at it as a package. i think congressman ryan is absolutely right from that perspective. if you're going to redo this, you have to look at all of the pieces to have it make sense >> maggie, one of the selling points of some kind of, you know, significant corporate tax reform package or corporate tax rate cut is ceos and board of directors will look at this and take this as great incentive to invest more, perhaps domestically, create more capital projects, things like that, that we at least perceive as being lacking out there you're on a number of boards obviously as a ceo are you that acutely tied to the tax implications of it in terms of making the long-term decisions for a company? >> yeah. i think what it does is it lets the united states be competitive internationally as well, and for a lot of big companies that do
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business not just in the united states but around the world, having a competitive environment is really important, and the tax positioning that we have as a country also would give flexibility i think for how we negotiate trade in this country, too. and i think businesses and board of directors look at those issues and say what's right for america, what's right for us, what incents us to invest and repatriate money sitting offshore and bring that back to work, and i think business is totally aligned with the concept of tax reform, and what i like about tax reform, too, is it does have both sides of the aisle. there is some consensus on this subject from both republicans and democrats. >> i just wonder if we're going to get a win-win kind of plan here that everyone can rally around, or something that is more like a lose-lose. here's what i mean, maggie you said when we were talking about the business interest deduction and other things that you can give those up if you get to 159% or 20% on the corporate
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tax rate well, what if you don't get there? what if it's not that low? what if you still then are putting on the table giving up those kinds of things, and is that why you hear paul ryan and others saying maybe, you know what, maybe tax reform broadly speaking isn't possible? we'll be talking something more about a tax cut and maybe even a temporary one. >> yeah. i think what will happen is they will go through the process of trying to do reform. i think a tax cut is kind of a fallback plan if they can't get there, if they can't get over some of the big hurdles that they are going to have to face in terms of these trade-offs but i don't think that businesses will give up a lot of deductions if it's a very small cut. i think it would have to be material, and it would have to put us in a very competitive position in order to make those trade-offs our businesses willing to make trade-offs i think absolutely because i think we all know that tax reform is really needed. >> one more question what is the business community's relationship with the president like when it comes to trying to
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get this done? has there been irreparable damage done from how he handles charlottesville? >> i don't believe that's the case if you look at the alignment that business has with the president's agenda, we're all for job creation we're for tax reform, decreation in regulations and better trade positioning with our key partners, infrastructure spending these are all pieces that really are a flywheel for businesses to invest more in america and for businesses that are based in the united states to be stronger and how we compete worldwide i think that's total alignment between the business community and also the president's agenda. in addition to that, there's a number of great business leaders in the cabinet today, and i think there's a lot of respect by businesses that there's a partnership between the president listening to businesses and taking points of view from business as part of that agenda. >> all right well, i still have some respect for 96% comps at costco but we
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don't have to talk about that right now. maggie, thanks for joining us. >> it's a great company. >> really appreciate it. >> okay. >> it's pretty amazing in this age of amazon, maggie wilderotter, former frontier communications ceo. >> lawmakers looking at dave comp's 2014 tax plan for ideas we'll discuss some of the suggestions come up and spotify executives are meeting with regulators to discuss their plan for a direct listing to bypass the ipo. how soont shares could hit the market is coming up. at fidelity, trades are now just $4.95.
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welcome back time now for today's "fast take." we begin with the surge in today's class action lawsuits. these are filed by shareholders. been illegal for a couple of decade share shoulders are duke depo med over its marketing of opioids. should this be reined? >> cheap to have these reflex lawsuits blue apron has been public two month. half a dozen shareholder lawsuits y.? because the stock is down big, so when the stock is down big you have these plaintiffs' law firms automatically file a lawsuit and then they will try to find a reason. >> no one is suing when the stock is up 20%, 50% >> based on the fact that the stock is down a lot in a short
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time. >> if this is now being used by the quote, unquote emerging law firms to go find especially pension plans for big investors and say to them, you know, it sounds like had a little bit of a shakedown. >> used to be and probably still is you find actually anonymous investors usually willing to be the lead plaintiff and a shakedown that goes nowhere. >> glad the "wall street journal" is calling attention to that uber drivers have collected $50 million in tips in 50 days after that feature was introduced, michael could. this help them retain drivers given you have low morale and plenty of competitors and plenty of traditional job openings. >> it's a requisite for trying to stem driver turnover. sound like a big number. >> how many drivers do you think they have, too >> i think it's a tiny percentage of the gross fares that uber collects, so it's a start, and obviously you want it for drivers to have that ability. some -- some markets are going to mandate this anyway just to have parity. >> i've used it several times
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and especially when i'm on a corporate card. >> i have to say it's one of the things where one of the appeals of an uber was that it was just done did, you walked out of the car and you didn't have to worry about that part of it, but, on the other hand, i think once it's become so engrained the tip is not such a big deal. >> they are traveling and give you great stories. >> rate them highly. >> i don't mind throwing a couple extra bucks, too. next, verizon expanding its unlimited offerings adding a go plan that's 5% more expensive a month and the question is verizon going to keep ratcheting up prices on competitors how much more can the stocks take until i saw they are all up. >> stocks are all up and you have to focus on the aspect that unlimited plans are not unlimited. they are not limiting the amount of data. they are limiting how much you get in a particular period of time. >> and the way you see it. look, whatever the res lose that
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they are limiting it to you can barely watch anything on >> so they are effectively taking you out of unlimited video and it's a tradeoff. i think right now it's like equilibrium level. the stocks tend to trade along with the bond market and things like that, so, yeah, they can take -- i recently got -- went to one of these carriers to get an unlimited family plan i didn't even focus on the whole resolution thing and how much they would be constricting it. >> was this a mistake in retrospect >> at&t -- i don't know. i don't watch tv on my phone, but i will say that they automatically gave you the directv app and said you can watch tv. >> that's interesting. >> synergy. >> and finally, philadelphia's soda tax is fizzling out in terms of revenue raising less than 40 million versus the 46 million estimate in part because soda sales have cratered fallen by more than health and if you think that's good for health, some are substituting less expensive alcohol or beer. >> or buying it outside of the
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city limits. >> that's true. >> a badly designed tax, a huge percentage tax on soda sometimes 50%. >> exactly. >> soda is so cheam so if you have a cheap product that's easily bought somewhere else and brought in. >> but the thing is still in place. there's some sense oh, it's a good thing that soda sales are down, but as mentioned federal that substitute ability is going to items just as unhealthy. >> not really changing behavior. when new york was considering a tax like this, it was going to be on very large, you know, takeout sodas. that's different, right, because then you wouldn't necessarily have the 32-ounce one. >> the evidence on this seems pretty clear time now for a cnbc news update with sue herera. >> hi, kelly here's what's happening at this hour the governor of missouri has stayed the execution of a convicted killer amid new dna evidence marcellus williams was scheduled to be executed at 7:00 p.m. eastern time williams was convicted in 1997 in the death of a former newspaper reporter. police in denmark are
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running test to see if some body parts are those of a journalist who disappeared after board tag private submarine last week. officials believe the sub's owner and inventor killed her and deliberately sank the sub. peter madsen told investigators that she died accidentally. in harrisonville, missouri workers have plugged a leak in the dam there. officials warned residents that a lower third of the dam had a strong possibility of breaking and the area was evacuated, but the dam is no longer at risk and do not forget. you've got to be in it to win it tomorrow night's powerball jackpot is the now $700 million. the second largest in the u.s. history. the cash payout would be more than $433 million. that's the news update this number back downtown to you, kelly. >> thank you very much, sue. >> our sue herera. house speaker paul ryan saying yesterday that tax reform is easier than healthcare reform and lawmakers making big strides in overhauling taxes including
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borrowing ideas from former congressman dave camp. he'll join us shortly. spotify bypassing a traditional public offering and lists directly on the new york stock exchange instead when public investors may be able to get their hands on spotify shares after this. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at td ameritrade. 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.
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welcome back a strong day on wall street. let take a look at how we finished up. the dow is up nearly 200 points. up 196 on the bell there just under 21,900. the s&p was up 24. the nasdaq was up 84 that's 1.33% gain. even the russell positive by 1%, 14 points today. now, spotify executives have been meeting with the s.e.c. which always makes you get a little nervous, right, to discuss its direct listing i'm poe plan leslie picker is here now with the latest leslie >> hey, kelly, that's right. it's the latest indication that spotify is leaning towards a direct listing rather than an outright ipo how are the two different? as one banker explained it to me, a direct listing is where you basically wake up and say here's our ticker. no new shares are issued and the price is based on supply and demand compare that with a traditional public offering where the companylish unew shares at a price that's determined in a
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long process with perspective institutional investors. based on conversations with people close to the situation, both options are still on the table. either way the company is aiming to debut its shares at the end of this year or early next, but that timing is also in flux. as for those conversations with the s.e.c., i'm told that the purpose was for everybody to be on the same page as one source told me, it was not, quote, some grand inquisition. the s.e.c. just wants to be comfortable with whatever deal unfolds. the s.e.c. has made the ease of going public a key priority in the new administration both the s.e.c. chair jake clayton and the s.e.c.'s head of corporate finance are on the front page of alibaba's prospectus as you can see right there moaning they have both worked on the biggest ipo ever guys >> wow. >> what are we to infer from the fact that spotify is thinking about doing it this way? is it kind of a grudging move to be public? is it just strictly to give liquidity? is it to satisfy early
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i mean, what's the reason to do it this way? >> spotify is one of the few companies that can do it this way because they don't need the benefit of the marketing event that comes with a big ipo. everybody already knows what spotify is they also don't need the capital that would be required to raise an issue those primary shares because they -- they have plenty of capital in the bank now, of course, the direct listing comes with some significant risks as well, and that's -- that's kind of the mindset of the bankers who want to justify their position in underwriting traditional ipos. they say that you do risk a lot on the liquidity side here because the only people who can sell are the people who currently own shares, so you have to find a valuation that would compel them to sell and compel people to come in and buy, and that is a risky scenario when you don't have that kind of touch and feel of a banker who can help support the price and find a value as i and do all that stuff >> you if they pull it off and it goes well, do is that send a chill across wall street >> i think it could be a big disrupter to what the banks
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currently do i know a lot of companies are inquiring about this now but they see it as something risky, something unconventional so we sigh a lot of these happen -- a couple, handful, three or four each year of these direct listings but never on the size and scale of something like what spotify is trying to do, but it does make that process of going public a lot easier, so it's something that you could definitely see more companies being interested in. >> seems plenty risky even if you go through the process lately. >> leslie, thank you very much. >> leslie picker. >> let's send it over to seema mody for an earnings alert. >> kelly, we're looking at la-z-boy, the furniture manufacturer reporting earnings of 21 cents versus the estimates of 29 cents so missing street expectations on its bottom line. ref now at 357 million which came in a bit light as well and in response the stock is down more than 12%. in the press release executive management says that they are disappointed with the start to the fiscal year. lower volumes made it difficult
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to absorb higher costs and as a result a pull stream margin suffered when it comes to competition, kelly, you think of amazon target among others in the furniture space and take a look at wayfair, up about 92% year to date one. other low-cost furniture players, if you will, in this space. back for you. >> yeah, that's a tough one for la-z-boy seema, thank you very much, 12.5% drop. unclaimed property law in delaware has left two investors out $12 million. how it happened and the broader implications are coming up but, first, trump's team is reportedly making big strides on tax reform, and according to politico lawmakers are looking to former representative dave camp's 2014 plan for ideas he joins us in a cnbc exclusive next you're watching cnbc, first in business worldwide time's up, insufficient we're on prenatal care.es. and administrative paperwork... your days of drowning people are numbered.
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welcome back the white house and republican lawmakers are reportedly making strides on tax reform, and they are looking at a comprehensive tax plan proposed in 2014 by our next guest when he was a congressman. joining us now is dave camp, former house ways and means committee chair, now price waterhouse cooper senior policy adviser. you're still embroiled, sir. have people reached out to you directly on this >> well, i've certainly talked to some members of congress about it it, and they are really trying to do their best to get tax reform done this year, and i certainly hope they do >> well, do you think that what they have put on the table, which includes, you know, forget
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the mortgage interest rate deduction, state and local tax deduction, you know, forget deducting your interest if you're a corporation, and, you know, things like that, is that going to be palatable? can they get a plan like that passed >> well, i think what's going to be important is to try to get rate as low as possible but also to try to simplify the code, and a lot of those deductions and items are in the code. they are certainly valid and they are there for a very good reason but they help lower somebody's tax rate or some businesses tax rate, and so it's going to be important i think to look at all of those as you try to bring rates down and at least to this point they are working on a revenue neutral tax bill so it does mean they will have to look for some trade-offs in order to bring the rates down, and i think to try to simplify this complex code so that not -- not everyone has to spend hours and hours each year trying to comply >> it's been called a gimmick, an idea i guess that also comes
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from your 2014 plan that would takes 401(k) contributions now instead of later, and it's even possible that some companies who might have offered those plans in the past will say i don't say any reason to now, i can't deduct those contributions anyway which could undermine anyone's ability to save for retirement so what do you make of how much that would help people versus hurt their retirement versus raise revenue tore the kind of tax cuts for corporations that is being muted >> well, i think there's a good policy reason for going forward on that and that is so when you do retire, the income you receive will be tax-free, and as we look at people living longer and trying to make sure they can project their savings well into the future, i think this is an important development. when i looked at it we did it for about half of the pension plans or 401(k) plans. i think employers will still have an incentive to offer benefits to attract good talent and good employees, and i think it will still be part of the benefit package.
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whether the they ultimately have all of the 401(k)s moved to that framework or just a percentage of them, you know, that remains to be seen, but it was something i looked at. i thought it was good on the policy standpoint as well as it does help you get that rate lower, and if you can get a lower rate for your entire life, well that certainly helps your working life certainly helps your savings for the future as well >> in the year since your plan was put together, it seems as if you have people on both sides of the political spectrum kind of lauding it as a thorough very kind of noble piece of work. trying to sell this plan in congress and even to the public. >> well, some things have changed since when hi introduced that plan. one is it was the first tax bill to be scored what we called
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dynamically or to use real world analysis in terms of what tax policy might do, and -- and because it was the first bill, i also balanced it in what we call a static basis, assuming no matter what you did the economy wouldn't grow. there wouldn't be more jobs or wouldn't be more investment so i think the fact that they may be able to use dynamic scoring, they may not need to do all of the trade-offs that i did in hr-1 the other is even in this time frame, there has been some re-evaluation, and you might be able to get some benefits in terms of policy that weren't available to me. hr-1 is being used as a backboard and they will borrow from it clearly in the framework of the house blueprint and the trump administration proposal on tax reform, there's a number of similarities between hr-is and the ideas being debated now, but i -- i thought it was important to leave a -- i would have liked to have passed it when i was in congress but failing that i thought it was important to make sure that there was a detailed
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path forward i mean at the time people said tax reform is too complicated. it can't be done it can be done you may not want to make all the trade yofrs or do it exactly the same way this is more than one way to get tax reform across the finish line. >> i remember all the discussions about the bank tax you mentioned that you had spoken to some congressmen curious if that's paul ryan or kevin brady and if you've had any discussions with the white house as well. >> well, i have spoken in the past to people with the administration, and, look, they -- they know what they are trying to do, and i guess my main point to them would be just to encourage them to continue and try to -- try to move forward, but obviously they will have to see whether in 2017 there will be the political consensus to move this forward clearly there's great consensus that our tax code is broken. there is a bipartisan sense that we're out of step with the rest of the world and we need to make sure that we're competing with the rest of the world and that
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we need to find a way to simplify our code and make it fair so that we can get some growth for families and make their lives more prosperous. >> growth would be great thank you for joining us again dave camp, really appreciate it. >> yeah. >> appreciate your time. >> thank you very much. a law on delaware's books that could affect more than half of all publicly traded companies in the u.s. and could deprive shareholders of millions of dollars. we have that story right after this 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 trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.
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welcome back delaware's under fire, a pair of scientists suing the state for seizing and selling their stock without their knowledge. this is bringing to light a deeper issue about the state of delaware's ability to take custody of unclaimed shares.
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"the wall street journal" finding the seize urs reap resented more than 10% of the budget this year joining us is the reporter behind that story, lepaul monica by what basis can the state say these are unclaimed shares >> the law says if any shareholder doesn't have contact with their share for three years, they're abandoned you haven't cashed a dividend check. you haven't logged onto a online brokerage account unfortunately, this means a lot of foreign shareholders get affected by this. >> or a lot of buy and hold types. i assume they should be collecting their dividend checks but i guess in some cases they're not. >> well, you might be collecting and putting it in a drawer if you haven't cashed it, an that means you haven't paid attention to it the alarming th important it is to delaware's budget, eye opening.
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>> it's the third largest revenue source for the state but all states are getting more aggressive with these kinds of seizures south dakota, illinois, tennessee, just this year, made it easier to confiscate shares and sell them. a lot of it because they're cash strapped they need some sort of revenue. >> i mean, i can understand if they said look, after 25 years, if you haven't cashed a single check, haven't voted in a single meeting. but why three? has that changed has it always been the case? it seems odd. >> only a few years ago, it used to be five, then they moved it to three lo and behold, the revenue from those zoomed up. they're up to $248 million in 2017. >> don't you think -- you've shined a lot of light on this issue. is that going to be enough to swing back the other way >> that's hard to say. states will argue that it's -- what they're doing is a public good that the companies shouldn't be holding on to property they don't own. it's not just shares that are affected it's things like dormant bank accounts or uncashed gift cards. that the company shouldn't benefit from poor bookkeeping. what the state says is they're
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holding on to it until the rightful owners arrive when they do, they'll give them the property or equivalent value. the problem is, many rightful owners never appear. >> what happened in this particular case, if the states said, we're giving them rightful value? >> the state sold the shares in 2009 for $1.7 million. in 2014, merck bought identi for $3 billion these sign tastes would have gotten $13 million if they held open to their shares so they're out $12 million. it's a lot of money. >> so basically state says, oh, we are going to take possession of this and they can theoretically sell whatever it is. >> right. >> and then if nobody claims it, then they pocket the difference? >> right they'll pocket the difference and use it for things like infrastructure programs. the idea being if the rightful owners don't show up, it should go to the public good, not to the companies. again, the theory might be sound but it's used very aggressively. >> i just think three years is a very short period of time. so if the state of delaware, let's say now people go, you can't -- we got to extend that
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back out, they're potentially going to lose 10% of state revenue? >> right, unclaimed property has come under a lot of fire shareholders are starting to realize how it affects them. but they need it they need the money. >> i knew about it with the gift cards and royalty checks you hear these stories but, i mean, to go -- >> you also see a lot of ads for services that are saying hey, let us go look, make sure you don't have any unclaimed property. >> maybe that's a new market you have people digging through this, you better vote or cash a check or the state's going to sell your stock. >> police departments are confiscating property all over the place. it's becoming very aggressive by governments. >> civil forfeiture and all that very reassuring. paul, thank you. appreciate it. sales force trending lower on its earnings. and coming up on "fast money," a black rock strategist says the trump trade is on life support. he'll explain why. stay with us who's the new guy? they call him the whisperer. the whisperer?
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you can see the business is doing just fantastic sales force just exceeded the $10 billion revenue run rate faster than any other intenterpe
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software company in history. that is the predictor. that is revenue we have signed but not yet recognized incredible numbers >> and that was the ceo of sale force, speaking with "mad money's" jim cramer. again, a sound bite from the future we like to call it. we've seen the stock now make a little bit of a comeback it was down more than 3% now it's down less than 1% as you said, these shares always turn around when he speaks. >> he tends to sell it pretty well i don't think anybody in the rest of the real world was focused on this. but he can make it seem like it's inevitable growth deferred revenue whether you like the stock depends on whether you think that's an important metric, one you should pay up for as a shareholder. >> we spoke to a couple of guests earlier who mentioned this issue there's a lot of upstarts now who have cheaper more tailored products
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sales force has either got to acquire, match or just keep up with them. >> it's somewhere in between kind of the disrupter and the incumbent in a lot of these areas. i do think it's going to be -- you know, it's been a consolidator and it will continue to be i think basically they've got this head start in the area where the growth is. versus, you know, the real big old tech guys. >> yeah, it was still up better than 1% today, as you mentioned. that does it for "closing bell" today. "fast money" begins now. live from the nasdaq market site overlooking new york times square i'm scott wapner in tonight for melissa lee. our traders on the desk. tonight on "fast" check out shares of sales force, initially sinking after hours. now, though, trying to make a climb back the ceo just sat down with jim cramer you just heard his comments. there's something else he said that might have you giving that stock a second look. plus, it's the one stock that pete has held longer than any other in his

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