tv Closing Bell CNBC September 28, 2017 3:00pm-5:00pm EDT
>> we have a range in mind, yes. we're continuing to work on that range. again, we are working on delivering a large middle income tax cut to american workers, one that they rightfully deserve let me go back to the back of the room eamon? >> thanks. responsible budget said the plan will add $2.2 trillion to the deficits are they wrong >> we think they're wrong, but we think they're wrong because they -- the way they score but let's not argue if they're right or wrong, let's not argue that we firmly believe that this tax plan will have a dramatic impact on economic growth we know that 1% change in gdp will add $3 trillion back. so if they're right, we're only going to pay down $800 billion of the deficit i'll live with $800 billion paydown. >> thank you, gary, appreciate the opportunity. on the corporate side, your critics say on the repatriation of overseas assets that history
would show that companies don't always use the asset when they're repatriated to invest in manufacturing, jobs, things you gees are talking about they share buybacks and financial engineering. how do you guarantee that won't happen this time >> so, look, we heard that numerous times if that's our worst-case scenario that companies repatriate their money and use it for share pbuybacks and dividends, what happens? they buy back shares, issue dividends, pay the repatriation tax, we get another 20% tax on capital gains or dividends and the people who get that money back do what they reinvest it back in the economy in new investment and new capital. we're putting very enticing rules into the system that will entice people to invest capital for the next five years. we're giving people a five-year write-off that they can instantly expense. so, look, if that happens, that's fine, we know that money will get invested right back into the economy and drive jobs, drive economic growth, drive wages and drive prosperity right over here. >> gary, you asked a question
twice, you didn't answer i'd like you to answer this. i get your message on the middle class, you made that very clear. the tax plan as it stands now appears it will benefit the president and his family why not just be candid about that >> look, i fold ytold you it wil benefit the middle class i think that's what american -- american taxpayers care about what they take home. they care about they have to spend. that's what they care about. that's what i care about i care about what i pay in taxes. i bet you you care about -- >> the president's message, he's saying he won't benefit. it appears as though the way this is put together, he actually will. gets to the idea of wealthy americans around this country which people do care about. >> let me take you through the components you're all obsessed on -- senator's going to yell at me, i'm taking too long here you all talk about the death tax and that being a great benefit the two biggest drivers for repeal of the death tax are the nfib and the farm bureau
that's small businesses and farms. those are the two organizations that spend the most time lobbying around the repeal of the death tax. death tax has the biggest effect on them. small businesses and farms wealthy americans do a lot of estate planning. they can use trust, they can use all types of things that are legal within the tax code to make sure they don't pay death tax. on the amt, i'm not going to get into deep, deep, deep, deep calculations, but in a broad-brushed level, when you do the amt, once you get rid of the deductions of state and local taxes, that's the bilge ebigges add-back in amt. amt becomes if re s irrelevant all the things you're starting to pull at, you're not looking at the plan in its entirety. they don't make sense -- >> gary -- zblo
>> you're qwelcome. >> gary? >> yes, you. >> in a follow-up question, in your penultimate appearance to this group, said i cited to you the worry of groups such as jim martin and the 60-plus steen yours association that you were going to drag out repeal of the death tax, that it wouldn't be immediate land you said at the time that is immediate is that final? is it going to be an immediate repeal and go off the books as soon as the new tax reform package is passed? >> in our outline, it's immediate. >> the same with the alternative -- >> it's immediate. everything's immediate the only thing that phases out is the five-year expensive, a fooi-ye five-year expensing. >> thalast one, guys. >> speaking of all businesses, let's start negotiating. yesterday senator schumer said democrats may be willing to work some kind of small business tax relief into whatever comes out of all this. where do you start negotiating on that? what offer do you want to make,
perhaps, to the democrats? >> our offers -- our opening offer and final offer are on the table. we were happy to start at 25, and we're happy that o go lower happy to start at 20 on corporate and go lower there's our opening offer. if he wants to counter something lower, we're very negotiable thank you. >> gary -- >> gary, one more? one more >> thank you, gary >> all right the chairman of the national economic council, answering a number of questions involvin the tax reform package that was unveiled yesterday. >> a very complicated issue that wants to get boiled down politically into whether it was going to help the wealthy or help the middle class more. >> i mean, there's a framework there, but now we're starting to put a few pieces together and figure out any tax package look this can have moving parts and pieces. >> it's not -- >> if there's something here -- eamon's question about the repatriation of the money, and what corporations will do with that you can't force a company to do
something with that money, but i thought gary cohn wasser aerody, what they'd do with the money and how it would impact -- >> some ways like a budget document, it's a bit of a wish list until they can get the numbers to work or get democrats onboard. let's bring in ylan mui, shall we, to reaction of what we just heard. >> reporter: i think this is a sthast taste of the opposition building through the tax framework, particularly among democrats on capitol hill again, most of cohn's remarks were spent defending this plan against the criticism that it primarily helps the wealthy. you heard him talk about why they're getting rid of the state and local tax, saying only 75% of families do not itemize their deductions he said that they were going to protect the mortgage interest deduction, isn't say they were going to leave it totally untouched. perhaps room for change there. thought it was interesting he mentioned they do have some sort of draft language around how
they're going to write the rules to ensure the passthrough rate for businesses is not used as essentially a loophole for wealthy americans, you know, that has been something that has stymied lawmakers for years, so if they have some language around how they're going to solve this problem, i think we'd all like to see it >> all right ylan, thank you. we'll be checking back with you as the afternoon progresses i'm sure so is it the wealthy or the worker who win with this republican tax reform plan let's talk about it from both sides. jimmy, cnbc contributor from the american enterprise institute is with us. and maddie from the national tax union. now, jimmy, you're not convinced that this helps the middle class as much as gary cohn is saying here why? >> listen, i think this plan, i think it's almost charitable to call it a plan, it's not -- it's more than, you know, talking points, it's more than just, you know, some guidelines. it's an advancement. there's so much we absolutely don't know listen, it would have been very
easy to create a plan that un helped middle class, working class voters, could have a done a sort of means-tested payroll tax cut. right now it's not clear how much, on a static basis, that this helps one, what the final parameters of the child tax credit are, they tried pressing gary cohn on that, we don't know what that is that's going to be key now, you could argue on a dynamic basis with all the growth, it would help the middle class that way it could be very clear even on this basis that it would, and it isn't. >> well, maddie, you guys are saying the core tax reform principles outlined can deliver relief for middle class families highlighting the simpler filing process there. so what are your thoughts? >> i don't share jimmy p.'s pessimism. i'm hardened by the fact we saw a framework release yesterday. now this work goes to the committees this goes to the experts in congress who will negotiate these details out. but we do see a framework that i
think it's hard to argue, it doesn't benefit middle income earners and earners down the income scale you're collapsing tax brackets so much so you're expanding the people who have a 0% tax liability. that's significant, not to mention the expansion of the standard deduction, expansion of the child tax credit these are all efforts that are obviously aimed at people who have a tax liability they can't afford you heard gary cohn mention the fact getting rid of some of the other deductions and junk in the tax code is what's going to help make that math work but, you know, the deductions that are taken with these state and local, for instance, these are all deductions taken by high income earniners, without them, the impact is going to go straight to middle income earners. >> look, listen, this whole plan is very similar to the house better way plan. if you look at the distributional tables on that plan, this does not look like a windfall on a static basis for middle class workers listen, they better hope they keep the corporate tax rate 20%
and better be a i believe to pay for for it the way this is going to help middle class workers is ultimately by the growth if they don't get that, it's not going to help them very much as all. >> jimmy, you almost make it sound like that's a minor, if they get -- >> it's not a minor thing. >> that's the whole point. >> it's not minor. >> if this moves in the right direction to both, on, you know, day one, but also in terms of down the road, isn't that the whole point? >> right it's the whole point, as long as this thing ends up not losing $2 trillion or $3 trillion. >> listen, look what happened in 2003 >> all right, so, so far what we know is it's a money loser you know >> i'm getting a wrap here mattie, what's your final word there, what were you going to say? >> i could say we have an exercise in this before, 2001, 2003, 2003 paid for itself, and then some. we'll see explosive growth on the top end of this tax reform plan, and not only are we going
to see growth for income earners -- >> was where the explosive growth in the 2000 there was no explosive growth -- >> everything was fully phased in, 2003, we saw it was $100 billion more. >> the economy exploded, i remember that. >> is right. when everything was -- >> it's hard to talk about the 2000s without the aftertaste. >> there's something in there, yeah thank you, both. we got to move along thank you, both, for joining us. it's only beginning. everybody's got their calculators out trying to work the magic right now. by the way, welcome to "closing bell. >> welcome back, by the way. >> thank you. >> that is kelly evans sitting next to me. >> four eyes. >> nice -- pretty cool to see that let's get to our "closing bell" exchange the dow up 44 points today the s&p for those at home keeping score that's in record territory. so is the russell. that's katie from goldman sachs asset management sitting next to new york stock exchange trader, jonathan from meridian equity partners both at post 9 with us. rick santelli checks in from the
cme. jonathan, i come back, gone three days this week, i come back, yields are much higher but so are stock prices. so what's going on here? >> i mean, we continue to see this market inflate higher right? the headlines that are out there that support the moves headline could put significant pressure on this market as we're trading at the highs, if we continue to consolidate at these levels here and don't get catalyst headlines, think tax reform would move the market all the headlines we've gotten over the last three to six months, nothing moved the market either way in a strong fashion if we consolidate up at these levels here, i think overall con st consens consensus, we're going to move higher earnings season might help the market as we've seen historically, tomorrow, end of the month, end of the quarter. i don't think we need window dressing we've clearly seen the returns in the markets. >> look at the russell, small caps, you're saying that might
be one of the beneficiaries. >> big debate about what individuals will benefit most, it's clear from a corporate perspective, an effective tax rate in the low 30s versus larger cap companies in 25 we look at equity valuations, obviously very elevated for large cap, we got to look beyond that the small cap part of the market to us represents great value. >> rick, what about the higher yields, are people simple sli bly selling bonds and buying stocks, what's going on here >> reporter: listen, i think the high yields paired with the solid stock market performance for 2017 isn't a bad thing it hasn't helped the dollar index as much as many of us thought. consider this, stock markets are up pretty strong on the year if you look at the yield curve, where everything settled, there's only two maturities that are higher in yield, lower in price than they were at the end of the year. those are short maturitmaturitis two year an three year, the fives, tens, 30s are lower in yield. we're at 231 i guess what i'm getting at here, all things being equal,
interest rates can continue to firm if you look at the two channels, i think one that was underrated was the fed policy, whether it was balance sheet or another rate increase, third for this year, that keeps some pressure on the curve and the other is global growth you know, there are many naysayers and maybe that's kept it down a lit, but all things considered, i wouldn't at all be surprised to continue to see the march of rates higher, a dollar, marching a bit higher in a slower fashion, and the equity markets seem quite comfortable here the one fly in the ointment, of course, can be if things go wrong with some of the legislation, but i have yet to see a great correlation with pro or con stories on any legislation that seem to have lasting impact in the marketplace. although tax policy does seem to have raised the kinetic normal energy of all markets. >> curiosity today, katie, the fact the dollar's weaker we usually see the stronger dollar, better small caps. the russell right now we should mention is at intraday all-time highs. >> yeah. >> what do you make of the fact
the dollar's weakened here a little bit >> obviously we have to digest a lot more of the macro news that's come out today and look at it relative to long-term history. i would say for us one thing we're always encouraging investors to do is diversify from an equity market perspective, it's relevant to the dollar, we're asking people to look outside the u.s. for opportunities both in developed as well as emerging markets so one of our, interestingly one of our best calls this year was to be overweight japan for many of our clients. and this is actually an environment where you've had a strong yen, obviously, because you had a weaker dollar, and actually the equity market has still done quite well. >> is that because the bank of japan buys everything that's not nailed down? >> i think that certainly helps but actually there's a lot of really interesting secular growth stars there one comment i would make, join look at really big secular themes in the market like % electr electronification, automation of vehicles, those stocks are available in the u.s., some are expensive. some of those companies aren't making money if you look in japan, you can buy those companying at a
discount to what's an offer in the u.s. they might not be the h headline companies but they're making inside parts great companies that attract -- >> thank you, both rick, thank you as always. see you all later. thanks for your thoughts on today's market action. full steam ahead streaming video company roku rocketing higher on its first day of trading we'll tell you what that pop means for other tech companies looking to go public. plus, no, this blackberry did not come from a museum they asked me if i would be embarrassed to hold up my blackber blackberry of course i would not be. >> no, proud. >> this came out of my pocket. apparently i'm not the only one excited about blackberry shares seeing a big bump on the ba oanarngsurise we'll hear what ceo john chen had to say about the future of the company when we come back.
future >> we have a consulting surfaces from cyber security, and that, you know, is starting to get into a very sizable range now. so we have to deliver that we have to have enough people and trained personnel around the world to deliver that. we're very big in cars in auto. we won a number of autonomous driving platform but those are going to g -- revenue is going to come later when the car is being shipped. so, you know, there's a -- there's still road bumps going along the way, but not so much that it will get ourselves off the track. >> and here's a thought here for you, john, how about getting back into the phone business >> i was going to say, i didn't hear him talking about the phone. >> yeah, i know. google's doing that now, they're getting back, right? >> maybe they could have called blackberry but they didn't. >> no, they didn't, for what whatever reason. anyway. streaming hardware maker roku, hardware play for you, jumping more than 50% of its first day of trading bob pisani is hear with a
breakdown of the ipo they talked about streaming and over the top deals plus other companies behind them could go public? >> folks, take a look at roku, this is a big day, they priced at the high end of the range, $14. pushback on ipo recently, they've been up big all day, $21 and change that's off of the highs from right after the open volume is huge, more than twice the normal volume. normally 100% is a good day. those looking for a play on cord cutting, this is it for roku 15.1 million act ifd uive user akouchbaccoun accounts it's still unprofitable. they have competitors, amazon, apple, even google high-profile names likely to go soon, actually been a pretty good last couple weeks rovio pricing at the top end of the range, somebody tweeted angry birds are happy, that's true going to trade in helsinki, by the way, and down at the nasdaq on october 3rd we'll also see switch, a big data center operator, competitor to amazon, see how they do
cargurus coming, too, new and used car dealer. finally, reuters is reporting lyft is close to hiring an ipo advisory firm, competitor, uber, of course, nowhere near an ipo ipo business has been getting a little better. i've been complaining all year about it 105 so far this year, up 41% from last year that's the same number of all last year. renaissance capital ipo etf, look at that, basket of last 60 ipos, up 27% this year everyone pushed back on the prices saying we don't want to pay high prices. pushing the initial offering prices down. >> good start today but remains to be seen what happens after thissin i this, right? that's the problem for some companies, they start fast out of the gate on ipo day then they fade. >> the company is unprofitable, itself. >> 15-year-old company, it still hasn't turned a profit >> i know, there's a little bit of a warning sign and have the huge competitors against them. it's big, well known, a lot of people want to buy it at a very
high -- i'm quite surprised it moved up on this kind of price. >> if you take the fact that apple should have owned this space and they have given -- they lost so much market share, that you got to hand it to roku, they at least are getting that right. >> i'm a big apple user, i have apple tv i have to say. >> so do we. >> i don't use it that much, i'm surprised how little i use it. my father is a human rohuge rok user he said i don't want to go any about cable, apple tv, my roku. >> keep it simple. >> it is simple. >> thank you, bob, see you at the close. twitter has a big presence in the oval office now it's heading to capitol hill the latest on twitter's visit to washington as lawmakers explore the role that social media played in last year's presidential election. plus, estee lauder executive chair william lauder sheer at the new york stock exchange. we're going to hear what his company is doing to fightbreas nc a wt caerndhahe thinks about the current retail landscape,
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result, abbvie up 15% today. spice maker, mccormick, also rising thanks to growth from recent acquisitions and the stock today also up just over 5% >> one of the best for formers in the s&p 500 the index positive by about a point. estee lauder will ring the closing bell today at the new york stock exchange in honor of the company's 25th anniversary of its breast cancer campaign. >> joining us, sort of become an annual event, william lauder, executive chairman of estee lauder who will be ringing the bell today, fellow blackberry user, by the way. >> right. >> proud of it 25 years since your mother started the campaign isn't that amazing >> yeah. who would have imagined 25 years it would take on the life that it has but it has really been a catalyst for gathering people in a conversation and awareness and discussion for breast cancer. >> right. >> that's really accomplished a lot. our breast cancer campaign, we've raised over $70 million in
the last 25 years and we're helping to fund over 225 researchers who are searching to find a cure. and what we've accomplished in our 25 years, the whole breast cancer medical world, 25 years ago, if someone was diagnosed with stage 1 breast cancer, they had a 72% of survival. today that's over 92%. >> that's fantastic. >> what's amaze to me is the way we talk about -- any type of cancer therapies and treatments and you can talk about this being a diagnosis that is not necessarily such a life-ending one. where do we go from here with the funds you're raising and what's needed to for breast cancer >> our goal is to go out of business, find a cure for breast cancer and go away we won't stop until we accomplish that. therapies are far more effective and gentle, to longer is a death sentence, it's no longer even more than a bump in the road for people who are diagnosed with breast cancer. so-at thera many of the therapi thing the breast cancer world does is they're sharing -- when
we fund, they have to oblige themselves to share their findings with their peers who are doing the work we think collaboration is goingf momentum they're branching out beyond breast cancer because cancers behave similarly they're starting to spend time saying, okay, what other treatment attend what other cancers can help this, vice ver sau versa? the sophistication of the scientists is unbelievable, what toews been able to accomplish in such a really short period of time we as humans have eliminated a number of diseases from the earth. this is a disease we should aim to eliminate also. >> slight, with immunotherapy, genetics, they're using today, a bright future we can only hope there. while you're here, shift gears for a moment, i want to ask you a few business questions what is going on with the retail industry as it pertains especially to the big box
stores, department stores. where is that going, do you think? it's got to have an impact on your business. >> north america, it's had an impact traffic has gone down. we don't operate in the big box stores we operate in the macy's, bloomi bloomingdales. the numbers seem to be a little bit better one of the things we've done is reshifted our focus over the last few years to the specialty multi world, ulta cosmetics, sephora, for example, direct to the consumer through our own online businesses, for example those businesses are growing nicely in a healthy way. that's here in north america outside of north america, we see a resurgence of the chinese consumer which is both inside china as well as the traveling chinese consumer southeast -- all of asia in general seem to be doing okay. or better than okay. >> korea, i didn't realize what a hotspot that was for beauty products. >> very hotspot, korea has been a very hotspot and competitive place for a long time. the korean cosmetics industry is actually very substantial, very good, and has a credibility beyond its borders which is
great. >> quick question, talking about repatriation as part of the tax plan, you guys have a huge overseas business. in general as we're getting details about what the plan may look like, what are your thoughts about it and what impact it may have on the company. >> you know, on the surface of the few lines that we've -- actually been shared, it would seem it would be helpful repatriation certainly would be he helpful. lowering the corporate tax rate makes us more competitive. so there's a -- we'll get more competitive -- >> would you hire more people, would you buy more companies would you invest more to expand? what would you do with those extra funds? >> yes yes to a up ll of the above. buy more companies hire more people investing. it's all of that releasing the untrapped money. you realize that money is sitting there just earning the nominal rates. it would be helpful. i want to be careful there, we have to be careful of the law of
unintended consequences and the last time in the repatriation piece, didn't quite work the way it was intended so there have to spend some time engineering it properly to get the intended results. and that would be -- i would be concerned because if you do another repatriation, where all it does is go to share buyback, new york stock exchange says thank you very much, i'm not certain it does what you talked about. >> we're really late here, i have to stay gary cohn was asked that very question a at the white house a short time ago, what companies would do with the repatriated money. this argument was if you increase dividends or share buybacks, that helps the shareholders who are the middle class people that own shares in those companies. >> it's my understanding, you guys would know better, that something like 75% to 85% plus of all shareholdings is held by institutional managers for the benefit of. >> doesn't that represent pensioners and 401(k)s >> it certainly does, but it's all about individual confidence
and i have disposable income to spend on myself. so the real question is, how do they message it in such a way where somebody says, i've got a few hundred dollars more a month that i can spend and so the real key is how do they structure it so they really can show there's money there for me to spend? >> at estee lauder. >> certainly, estee lauder, only in our brands. should be engineered just for us. >> they're getting sweaty palms. they need you to go to the upstairs to ring the closing bell good to see you again. >> thank you very much. >> i'd say i hope to see you next year. let's hope we don't have to see each other it will be for other circumstances at that point. >> certainly hope so. >> william lauder from estee lauder, ringing the closing bell. >> thanks for having me. >> let's go the cnbc news update with sue herera. thank you very much. here's what's happening at this hour, everyone, president trump lauding congressman steve scalise's return to congress, hailing his bravery, telling reporters he's excited to see him back at work. >> he's a special man. brave. just a great guy a great friend of mine we're so excited
what happened to him, just horrible we are so happy. kelly and bill were talking about fight against breast cancer the star of "veep" and "seinfeld" julia louis-dreyfus has been diagnosed with health care she tweeted she's lucky to have fantastic health insurance through her union but not all women are lucky. 163 carat flawless white diamond, largest ever to come to auction, was previewed by chris christy's in hong kong today, expected to bring in more than $30 million. it was found in an angola mine in 2016. it goes on the auction block in geneva on november 14th. that is a big diamond. all right. you are up to date, guys back downtown to you >> that would look good on a ring, wouldn't it? thank you, sue i'll see you tonight on "nightly business report. >> i'll see you then.
>> looking forward to it. >> me, too welcome back, bill. >> thank you. coming up, americanairlines facing headwinds on the back of increased competition from budget carriers. we'll head to the company's investor conference in texas, seeing what ceo doug parker is doing to reinsure investors. plus kb home is reporting its results after the bell the stock on a tear, up 40% this year ahead, why one analyst says millennials could keep the home builders rising. stay with us i count on my dell small business advisor for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a
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executives from twitter meeting with the house and senate intelligence committees today to discuss the company's role in last year's election kayla tausche has the latest kayla? >> reporter: hey, kelly, members of twitter's public policy team met with staffers at both the house and senate intelligence committees to field questions about the extent to which its platform was used by russian propagandists and what twitter is doing about it going forward. lawmakers say accounts traced to russia built bots, bought ads and pushed out fake news to influence the election, and they say facebook after much rhe
reticenrhet reticence acknowledged its platform was used that way last month, happened in a closed-door meeting in september ranking member of the senate intelligence committee says facebook has yet to turn over the document it requested and said congress is going to be taking up this issue for all social media companies because self-policing has not worked >> i would like to see these social media companies, one, cooperate on this legislation, which will be bipartisan, and i'd like to see them spend more time, energy and resources kind of ferreting out some of these fake accounts and particularly when we see actual agents of foreign governments whose sole purpose is to sew chaos in our political system. >> twitter has publicly so far been silent about this issue, in particular, and it's unclear how much its public policy team divulged to the staffers of those committees much of this could, kelly, get discussed out in the open. the senate intelligence committee has invited executives
from google, facebook and twitter to testify in public on november 1st we'll see what they say and whether they'll accept that invitati invitation >> kayla, what looks like a related move here, they have now put out a long statement from twitter's public policy team saying it's an update on russian interference, basically they said they looked at the 450 accounts that facebook shared in their review, 22 had correspo corresponding accounts on twitter, they said they were -- already had been, were immediately suspended. in addition. 179 further twitter accounts were found related or linked and took action on those as well and said none of the original facebook accounts or ones they saw on twitter were registered as twitter advertisers >> reporter: yeah, but one of the issues, kelly, some these lawmakers on both sides of the aisle have been trying to distinguish is the fact that on facebook, where, you know, much of the coverage of this issue has centered, at least on facebook, they say, you have to use your real name or a
facsimile of a real name, whereas they're really harking on twitter's anonymity and believe it's much more than those several hundred accounts twitter has isolated and think it could be in the thousands or greater than that. so we'll see exactly where the dust settles there >> indeed. all right, kayla, thank you. kayla tausche on capitol hill. we're heading to the close with 19 minutes left in the trading session. most of the major averages are positive right now the s&p is close to an all-time high and the russell is still in all-time high territory. americanairlines could be ready to take off on an investment binge up next the ceo talks about ttg airlines' profits to work when we come right back think again.
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americanairlines has been holding its media and investor conference today phil lebeau spoke with the company's ceo exclusively a little while ago, he joins us now with more of that conversation phil >> reporter: bill, this was a very bullish doug parker we talked with not only when we talked with him, also when he gave his guidance, essentially guidance, over the next three years for analysts as well as representatives from the media here in dallas what's american looking at over the next three years
he says there's no reason they shouldn't hit at least $5 billion in annual pretax profit, part of that is being driven by the fact that they see an immense opportunities when it comes to driving greater revenue, and this chart says it all, look at the revenue growth that american has seen over the last couple of years as it's introduce add new premium cabin product with new seats, live flat seating, all of that has been helping the company drive greater revenue and greater profits. >> the nice thing about profits is it allows us to invest again. we've been doing that faster than anyone. we're bringing in a new airplane every four days to replace an older aircraft, we invested $20 billion or so since the merger just in improving the product. that makes a difference and matters to premium travelers. >> reporter: but does it matter to investors take a look at shares of americanairlines basically, around $48 a share. doug parker was emphatic today saying, look, there's no reason we should not be at $70 a share. you do the math if you're an
investor and you realize that we will have sustained profitability, in fact, he essentially said there's no reason that american should ever lose money again given where the business is right now. having said that, bill, this is a stock that like a lot of the airline stocks has been under pressure somewhat in the last 12 months, in part because investors want to see can the airlines maintain this level of profitability if, in fact, we ever go -- we know we will go into a recession at some point, when that happens, can the airline maintain profitability >> i mean, i don't know about you, bill, but so when i see that the -- and doug, you know, he's fantastic, when he says i don't think we're ever going to lose money again. >> wow. >> i mean, phil, you just wonder, he was funny about it, actually, he said the old world was darkness, now it's light he knows he's been cheeky. that's quite a statement to make is it going to be the kind of statement we'll look back on and think how could someone ever think that >> reporter: look, there's always going to be certain factors that are going to pop up that no ceo can foresee, and
that's always a possibility here if you look at this airline and united and delta as well, in terms of how they are structured both with labor contracts as well as with route networks, they're far different now than they were before the recession and before all of these airlines went through bankruptcies where they retruckturstructured busin. it's a good point, kelly, not often we have a ceo say there's no reason we should ever lose money again. >> i like it, in some way they're right, but these reasons come about all the time. anyway >> all right and we have phil lebeau on record now as forecasting a recession. but he's got no timeframe. we'll see what happens here. thank you very much, phil. see you later. >> reporter: you bet 12 or so minutes to go dow is up 33 points. right now, the s&p is up a point and a half tra transports at an all-time high. >> talking about the airlines there, as a group, they're at an all-time high.
transports. >> doing quite well. plus kb home has made headlines recently, not happily so not for its home building. that could change after the bell when the earnings are released and when the analyst's call begins, will company ceo jeffrey mezger be asked about his headline grabbing feud with comedian and neighbor kathy griffin? you knew we were going to bring that up. plus we have a bear and a bull weighing in on the stock coming up us. it's what this country is made of.
we have a very -- mr. carbon cashin had to yell it across the floor, buy side of $350 million. the s&p, boy, it's flirting, it's right at the all-time highs. russell is still there, other major averages are not right now. >> the home builders have been one group higher today doing pretty well this year. all of this minutes before an earnings report from kb home, with hurricanes having destroyed many houses, tax reform possibly changing the landscape for home buyers, should you be investing in these home builders >> joining us right now, jack, home builder analyst at susquehanna financial group with us and ken, home builder analyst at key bank capital markets you're our bull. you're kind of neutral on these guys, right?
>> well, we're neutral on kb, the reports tonight. we're positive on lanar, horton, and toll brothers. >> what i keep hearing is the home builders in thing a r thiee don't have enough workers, enough land. is there a bottleneck? >> labor was an issue a year, year and a half ago. the builders have been growing the last several years and some qu somewhat of a moderator on growth and land investment as long as demand -- you see pricing power. that's what we continue to see now. the same time, a lot of builders are moving to a land light model where they're filling their bucket with land, but it's more on the options side. they're not going to get much capital. that's driving better returns. >> that's interesting. ken, i'm just looking at the estimates this afternoon, they're looking -- the street, 46 cents on the earnings about $1.1 billion on the
revenue. that revenue is up 22.5% from a year ago i mean, that's a pretty hefty number, isn't it >> it is kbh had good order growth. i think going forward in general, we do like the building product companies because they benefit from price depreciation, where the builders as you just spoke about face cost inflation, so land labor. pricing is not beneficial for them as it is for the building product companies. >> what would be an example, ken, real quickly, of some of the product companies you think are better positioned in this market >> well, we do like owens, top build, tied to insulation, which had three announced price increases this year, not all of them being realized. it's a case where you have tightening supply in the factories resulting in upward price as demand continues to rise i think the hurricanes obviously on the margin helped them. those type of benefits for the product companies are net negatives for the building -- for the home builders on their
cost side. >> is the jeffrey mezger controversy over now is he still a distraction to some degree do you think >> you know, the board handled it, the board addressed it i think when you think about somebody buying a home, are they buying the brand or are they buying the location? the school district. the price. the value proposition. i don't want to diminish what was said, but -- >> i think we know why they're -- they're saying this is a great looking house, a great -- the point is, if you have people all of a sudden tweeting, hey, look what this guy did, don't buy a house from kb, have they introduced that into the psyche of potential home buyers? >> it's possible i'm not sure that's going to be a meaningful impact to the business longer term. >> ken, do you anticipate any effect what happens if for some reason his tenure there is called in question again >> i think jack described it well i'll let his comments stand there. oftentimes, you know, changes in management can be seen as beneficial to companies and that the processes sometimes get reviewed
>> all right you aren't minimizing the role of the ceo, by the way, by saying that. >> i don't mean to >> that's all right. be interesting to see how the conference call goes when they get under way. jack, ken, thank you, both, for joining us here. we're coming back with the closing cotdn unowfor this thursday in just a moment. stay tuned pa in the trends, driving specific sectors of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.
all right. 2 1/2 minutes left as we head toward the close with the dow up 32 i'm going to highlight the russell today because that's gotten a lot of people's attention. i know the traders follow it a lot more than the after rverage investor does. it's noteworthy it's in record territory when some of the other averages are not this is the small cap index. this is one that's not affected as much by the vagaries of the dollar, for example. this is where a lot of the job creation is in the economy and right now, the russell is still goingto close in record territory. the s&p looks like it may as well, although, yes, now it is back in record territory the dow and the nasdaq are not you know what else is in record territo territory, the transports as a group and, you know, one of the great theories out there is the so-called doubt you're going to have the dow industrials and the transports setting records at about the same time they confirm each other and that's positive generally for the whole stock market so the transports are moving higher, even as the dow, itself, has been setting records
also yields are going up the ten year, although that's come back. i sort of thiss emove while i ws gone we're we today at 231. when i left we were comfortably in the low 220s. we had the big move up yesterday in the markets oil is just coming off a five-month high. we had a pretty good move down today. up more than 1%, bob pisani. i was in northern california the last few days. there's where gasoline's very expensive. but i even saw it when i got back here. the east it's moved up in the last few days here. >> yeah, that's why the refiners are hitting new highs, of course they need that oil that's one of the reasons the oil has been going up, holly, other ones like valero, at 52-week highs as well. 2,509, bill, new high on the s&p 500. there. we have the russell use mentioned and transports hitting new highs. >> we'll see how kb homes does, right? >> lanar, a new high just did a segment, very interesting. the hurricane effects seem to be somewhat minimal a lot of them are going to make
up for next year i think the car numbers are going to be very good as well, see people buying a lot of new cars i was encouraged by the fact that southwest came out with some comments but the damage here in terms of earnings from the hurricanes seems to be somewhat modest with the possible exception of a few of the airlines the economic damage, i'm talking about, of course. >> thanks, bob william lauder ringing the closing well as we mentioned at the new york stock exchange. stay tuned for kb earnings and much more on the second hour of "the closing bell" with kelly evans. see you tomorrow, kell >> thank you, bill welcome to "the closing bell," everybody, i'm kelly evans we have a bevy of records on wall street today. looks like at least the transports, small cap rustlsell going out at record high levels and s&p with a small .10% gain as i mentioned, also a record high for the russell up to 1,488 with a quarter percentage move higher today record high for the transforts
which had a 40-point jump. just have been moving this market higher as well. meanwhile for the dow, no the quite there but did gain 39 points today 2,23 22,33379 the nasdaq, 6,453. coming up, congressional conflicts of interest. the details of a new report who says it's not just congressmen and congresswomen who may have interestingly timed stock trades also the aides who are working on capitol hill. and we will get you those details coming up. joining me on the panel today, cnbc senior markets commentator michael santoli, next to him stephanie link, managing director, equity portfolio manager at tiia investorsmeinvest e investo investors. paul hicky joins us. earnings we're looking for, kb home at this hour. how about the transports in particular with withis move of late
>> transports hitting a new high, essentially going down, the bears' checklists of things they want to see, not giving an of them. have the small caps working and transports working sort of a risk-seeking profile to the markets very modest moves on an index-wide basis, holding near the record highs it shows you even with a lot of reshuffling through september, there's been a general acceptance of holding stocks at these levels so i think it's net positive, going to start hearing people say it's running hot, sentiment is starting to get little bubbly but that's historically this year has meant the market flattens out. >> stephanie, this comes as we're looking at the details on the tax plan, trying to learn more about it and understand, you know, just what basis it does have for moving forward and for something maybe on health, looks like the alexander murray might be on some sort of cusp of an agreement about the bhaum ca obamacare exchanges. how would you overlay this movement out of washington with what's happening in the record with the record high levels? >> i think investors are more excited about the potential for tax.
expectations are much lower. if tax doesn't come out the way, best-case scenario, what we thought about yesterday, how the stocks reacted, sounds like the narrative is going to continue to be positive at least for the next coupled weeks/months and that should keep a bid under the trump trade and the reflation trade and value stocks and iwm the interesting point i'd like to make is, even though value has worked, so has growth. now, growth has had some, you know, ups and downs in volati volatili volatilities, particularly technology, particularly faang and the semis. >> banner faang names have not necessarily been leading the charge this time. >> right, it's interesting they actually, yesterday and today, they were quite strong in addition to value so to me, that suggests that we're broadening out a little bit. until we get earnings. when we get earnings it will all be about the underlying fundamentals. >> micron up again today applied materials one of the best performers in the nasdaq. by the way, on the dow mcdonald's was leading, with the
siracha burger is a big hit and the initiative are paying off. i don't know which aspect to you is most telling about the market. >> the siracha burger, i'll take it as far as the market is concerned, it's hard to tell people to fight such a strong tape here. mike was talking about sentiment getting a little bubbly here i think investors are far from complacence. we've seen short interest steadily increasing and investor sentiment polls are still showing, you know, a skittishness toward the market, just the individual investor poll today, only a third of investors are bull iish. i think as far as the sentiment is concerned, going, looking forward to the fourth quarter, you know, overall, the fourth quarter should be strong, and i think to what stephanie was saying about washington is, the markets rallied in spite of washington all year, and i think there's been zero chance of tax reform priced into the market, up until the last couple of days, and so if we do start to see some tax reform, make headway and move in that
direction toward something getting done, i think that could only be taken as a positive for the market, and make next year's earnings forecast of about $145 a share seem, you know, doable and, you know, that would put us at 17 1/2 times next year's earnings which isn't cheap, but it's not too expensive, either. >> mike, to his point, said their basket for the s&p, for the tax beneficiaries and also for this kind of trump trade in general is now turning positive and outperforming again. >> it's perked up, right, so it's had kind of a few months on the outs and now it's perked up a little bit i think that's kind of a matter of people sort of squaring up their bets, not going to fore close on the possibility we get progress on that front i agree with paul the main thing, and steph, the main feature of potential corporate tax cut for next year is not everyone's going to immediately raise their gdp growth forecast but the corporate profits can stay support if. $145 estimate on the books for 2018 now if the -- >> wages moving higher, high as
profits have been, that's not a small thing. >> it's not a small thing. >> surreally high. >> right see, here's what i was going to say, normally from this pibt on, that's going to get downgraded that's going to go down as people revise down the estimates. c can also get support from tax down the road, if you come in at 140 or something, you're less than 18 times earnings, it's tolerable. >> what's interesting, kelly, on that point, i looked at the financial services sector today. the multiple expansion that we've seen in that group since november 8th, since the elections. >> right. >> on average, financials' multiples have expanded 20% to 25%. >> wow. >> clearly we have some expectation of something happening, right but, but, if earnings are going to, therefore, now -- >> go up 20% or 25%, suddenly -- >> right back to where you were, so actually financials aren't as expensive or don't look like they're that ahead of themselves if you believe all that. >> here are financial-related names, all-time highs earlier today, jf morgan, t. rowe price,
nasd nasdaq, parent company of the new york stock exchange, blackrock. if you look at ben fish area be, apple and companies have largest cash piles, relative to their market cap, hewlett-packard enterprise, agiliad, these are companies that would benefit the most that haven't seen that much of an increase. >> that's why i think you're seeing this kind of broader -- some zoks that are doing well and some sectors and broadening out a little bit because repatriation impacts a lot of different sectors but a lot of company specifics as well. financials for sure will benefit. biotech will who knows what they're really going to do. you know, we don't really know if they're buying back stock and throw out a special divvy, something like that, that's fine we want to see m&a activity, capital investmentme. >> it's not like investors are saying show us the money, they're signaling to companies, we want you to put this to work in the real economy. >> the mismatch is the companies
with all the cash are not companies that need to do a ton of plowing it back into their own business. >> how much more can apple spend? >> that's the point. but at the margins especially with some of the smaller companies that you mentioned, that's where you really get the leverage effect. >> and paul, we also had an ipo today that went off pretty well. roku was up last check about 50% after pricing at $14 the interesting thing about that is media stocks have been lagging this year. over the top companies providing this hardware, roku, some of the software, are on a tear. ma what do you make of that >> roku soot w, another way to streaming. netflix being the main play. it's another opportunity there, makes it an attractive target. it's good for the investment banks going to be reporting in two weeks from now and stephanie, you were talking about the financials analysts have been cutting forecasts on the financial sector just about as much as, or more than any other sector heading into earnings season so the bar's getting set low there. and, you know, so that could set the stage for a positive, you
know, a positive start to earnings season. we typically see analysts lower forecasts but they've been doing it at a faster pace. >> yeah. >> sorry. >> i was going to they is the reason why they've been cutting their numbers on the financials because the way interest rates have fallen? i mean, they're so volatile lately, right? you blink and they're down to almost 2%. you blink again, they're back up 2.4% on the ten year is that feeding into this? what's going on there? >> yeah, we were seeing very low interest rates then you blink and then we're back to, you know, multi-week highs in the ten year so, and that's, you know, that's why they're starting to rally. i think as far as its overall concern is, the analysts have been, you know, overall lowering forecasts but there's a decent negative tone heading into earnings season and the, you know, with the backdrop of a potentially positive legislative environment out of washington. >> yeah, and i totally agree it is interest rate related, especially for the regional banks who are more dependent on
net income interest and the flatter yield curve. i think the stocks, bigger ones, started to rally after the barclays conference where the companies actually guided their business to no worse than expected down 15%, down 20%, but no worse. since then, september, the data points have actually been better so i think there's this hope that maybe things aren't as bad. >> let's get to kb home earnings which are now crossing the wire. diana olick has those numbers. >> reporter: kelly, a nice beat, coming in at 51 cents per share, earnings of 51 cents per share that's beat. we were expecting 46 revenue of $1.14 billion up 25% from a year ago so that's pretty nice. what i'm noticing here, though, is no mention of houston whatsoever in this press release. now, 14% of annual closings for kb home are in houston and there's nothing in here about that so maybe it's just not figuring into the numbers yet obviously, it may come in in the next quarter
ceo jeff mezger is quoted in the release, says "we continue to make considerable progress on three-year returns, significantly increased our housing gross profit margin on a year over year basis." no surprise, there is nothing in this report about his recent unsavory argument with comedian kathy griffin, his neighbor, so we didn't expect to see that, perhaps we'll hear something about it on the call one other thing i want to note is the home price, up 12% year over year. we're looking for the builders to lower prices. clearly that's not happening kelly? >> all right, diana, thank you guys, quick reaction, microl >> seems roughly on track. the way the market has been viewing the home builders -- on track. fits and start stock below their recent highs but still a decent up trend. it's not too much you didn't already expect. >> i would say gross margins, i didn't get the actual number sounds like they're making progress that's the big part of the story. capital allocation is the secon part of the -- lower debt,
invest more in land, we'll have see what the mix is like lot to come on the conference call. >> all right we'll leave it there, stephanie, paul, thanks for joining us today. >> thanks. >> stephanie link, paul hickey. white house making another push for the gop tax reform plan today. a big part of the plan is a tax holiday to encourage companies to bring more than $2 trillion of overseas cash back. up next, wooee'll explain why m of that cash isn't actually overseas at all. plus we'll dig deep into a new investigation that finds some congressional aides may be helping to write legislation that could impact the stocks they are trading and we always want to hear from you. contact the show via twitter, facebook or send us an e-mail, firstname.lastname@example.org you're watching cnbc, first in business worldwide want a snack?
check out the best of the best hand-picked fall shows on xfinity x1, online, and the xfinity stream app. thirsty? there is more than $2 trillion of corporate cash pa parked overseas and the president wants to reform the tax system to bring a lot of that back. steve liesman is here to pour cold water on it, saying overseas cash isn't really even all overseas steve? >> kelly, we're going to get to that in a second i want to talk about the winners and losers when it come to this corpora corporate tax cut and repatriation the market trades sometimes as if everyone's an equal winner from the administration's proposal to cut taxes on overseas earnings and cut
corporate taxes. closer look finds definite winners, losers or those who winless. first let's talk about the overseas cash winners. two type people have money overseas in part because they're running business operations over there some have it overseas in order to protect it from u.s. taxes. tech and pharma are the two biggest thought to be in that realm. and it will benefit firms that avoid taxes and most likely allowed money to come back and boost dividends and buyback. don't be looking for that to happen with companies that have money overseas in order to run those overseas operations. let's take a look now at the issue of -- this next issue here about deduction winners. some firms are going to lose deductions, others are going to keep it. deductions on the block include interest rates those likely to be kept, research and development, r&d credit, may stay one more, this big issue of capital versus labor the administration argues that capital, sorry, that labor, will profit from almost 70% of the corporate tax cut. could go to workers.
there's a big debate in the economic community most disagree. say that number's too high maybe 25% to 30% and on this issue of overseas -- on this issue of the money being overseas, it's not really overseas in fact, it's already mostly in dollar denominated assets like corporate bonds, in treasuries and in money market mutual funds. that's where they keep their corporate cash it's only overseas, kelly, mostly for tax purposes. >> well, but it's still -- i don't -- it's abroad michael -- >> it's from an accounting perspective, it's inaccessible domestically to be used directly for things like m&a, share buybacks, dividend i think steve's point -- >> and capital investment. >> -- going to create this tide of capital coming to our shores coming into dollar assets that weren't otherwise into dollar assets. >> you mean it might be kept in europe but still be invested in u.s. -- >> it's just categorized that way. it's at a global bank somewhere. it's not elsewhere. >> like in the caymans >> yeah, it's not actually piles
of money, right? it's just an entry that says the federal government doesn't get the taxes on this because we decided, partners agreed, this foreign profits we're keeping over there for some purposes. >> even though they may be in the u.s. bank? >> yeah. the big point is, does the tax change catalyze the use of the money? >> right. >> on some level, it absolutely does but many of the very large companies with tons of cash have been issuing debt that basically takes the place of that cash. >> like apple. >> using it for share buybacks exactly. apple $100 billion in cash out there. >> they bring the cash back, are they going to pay down that debt >> some will pay down the debt or not bring as much back. what's interesting, what we quite don't know, the white house framework suggests it will be called a deemed repatriation. what that means, qul you say you brought it back or not, we're going to charge you the taxes on it on everything you have overseas. so you might as well call it repatriated, bring it back and use it there's no advantage to keeping it in. >> steve, does that fit in with
how they're going to change the whole philosophy of the u.s. tax structure, you're only taxed on things here going forward and no longer everything overseas >> yeah, it does, but there is this question as to whether or not it creates lots of investment or jobs talk to a lot of economists about this, they say there's three reasons why you would locate overseas if you weren't necessarily going to serve that foreign market taxes are one of them. wage differentials are a second one. and the currency is the third one. this proposal here only gets at the tax issue. whether or not that's decisive enough is unclear. i think mike's right, you want to focus on these companies that will bring this money back, and perhaps pay a one-time cash dividend or buyback shares perhaps into the future. but watch out, because don't trade these other companies that are over there running operations overseas thinking you're going to get a big windfall here and whether or not that's enough to make the cha e chance, say, you know what, i'm going to come build a plant in the u.s. versus overseas because of the wage differential and
currency differential, it may not be enough but it still makes sense to equalize those tax rates. >> michael, what -- >> gary cohn, of course, in answer to a question at the press conference today did say, look, if that's what happens, and they basically buy back stock and issue dividends, that's cash that's kind of liberated into the economy. >> sure. >> into investors' hand and in herery going to find a place to go in the economy. >> but mike, wouldn't that be an interest rate problem in the sense that if that money comes out of u.s. treasuries and goes into share buyback and dividends, you could have a rise in interest rates as a result? >> yeah, i don't know in it's going to be -- if the tail is big enough to wag that dog. >> right. >> down the road if it became a big rush. >> in the corporate debt market perhaps. >> i learned a lot steve, thank you very much. >> pleasure. >> our steve liesman coming up, the ncaa rocked by a bribery scandal involving basketball coaches and a representative from adidas now nike is reportedly being investigated over its elite youth basketball program
find out how that impact could play out for the dow component. there's an advertising backlash for local nfl teams after last sunday's on-field protests what will happen tonight as amazon debuts its nfl game streaming package? that's ahead in today eat fast take throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host.
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( ♪ ) whoo! ( ♪ ) woman: class, let's turn to page 136, recessive traits skip generations. ( ♪ ) molly: i reprogrammed the robots to do the inspection. it's running much faster now. see? it's amazing, molly. thank you. ( ♪ ) welcome back we begin with seema mody and a market flash. >> reporter: let's take a look at tyson foods moving higher after the company raised its guidance for fiscal 2017, it's
also announcing some restructuring changes which does include a reduction in head count by 450 positions, most of the eliminated positions will come from corporate offices in springdale, chicago, and cincinnati they're looking at cumulative net savings of $200 million in fiscal year 2018 that will increase to $600 million by fiscal year '20 looking at shares up over 7% on this news, kelly back to you. >> that's quite a pop. seema, thank you very much. well, it's time for our fast take today we begin with the continuing nfl blow-back over players sitting for the national anthem. jp morgan now thinks cbs shares are going to sell off when ratings from the game this weekend come in it weak. the president is suggesting people boycott the games a tennessee businessman has pulled his check into cash and other ads for the rest of the season what do you make of this, michael? >> clearly the issue is going to persist through another football weekend. i think the call that cbs is vulnerable to the reflex move, if they say ratings were down
this weekend, it's a cutsie -- it's a derivative strategist saying we think there's risk there's a possibility. i tried to look at the cbs games to see if they were actually kind of, you know, not really appealing ones they have bears/packers tonight. >> i'm more focused on the rest of the season. >> yes. >> it's not just about the ra ratin ratings. whatever they do this weekend, it's too early to tell what happens if you fast forward and talking about the super bowl and the ratings -- >> yeah, harded f for me to see that's -- cbs is of the publicly traded stocks the one that's most directly vulnerable, they own stations that are going to rely on that i don't necessarily think you can state this is big on view viewership or advertising line >> small advertiser. >> existing trend of lower viewership of regular tv, right? hard to separate all this out. >> all right. next, tonight's nfl game is being simultaneously live streamed by amazon which remember beat out last year's streamer, twitter, to present 1 nfl games this season. with all the focus on the
anthem, pregame ratings have been up but amazon's pregame show tonight will feature former nfler barber and the australian chef curtis stone, michael, hawking football-related merchandise from amazon. they tried the qvc approach once it didn't play out so well is this the right time to -- >> this is amazon saying they're going to opportunity, say we're not going to try to compete with an actual pregame show. >> which is probably smart. >> probably makes sense. it does seem culturally amazon is incapable of playing it cool, doing anything but trying to sell you something. >> i'm actually -- >> we'll see -- >> i want to know what it looks like. finally, this story today, ikea bought task rabbit. people use taskrabbit to find handymen to do things like assemble ikea furniture. why not? >> maybe a problem into a virtue, right, for ikea >> makes a lot of sense. don't know how you can extrapolate this, say other retailers want to figure out -- >> amazon is trying to do this,
too, by sending people to help put things together. >> without a doubt. >> they feel if this is the model going forward, they have to participate in it. >> sure. ikea can be long-term thinking about this whole thing, don't have to make next quarter's numbers. i think it makes sense. >> if it helps make the stuff easier to put together, a little cheaper for that piece, too. >> that's part of the fun, isn't it >> okay. i'm calling you next time i need to oput one of these things together. president trump making it easier for ships to deliver supplies to puerto rico after the devastation of hurricane maria. up next, we'll head live to the island for the latest on the relief effort and faulk to one ulpert to find out how long it cod take to rebuild puerto rico's infrastructure. hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat?
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welcome back we set some records today on wall street. we did so with the s&p 500, three-point gain to 2,510 on the bell, a new closing high, same for the russell. the small caps adding four points to 1,488. by the way, for good measure, the dow transports up 40 points today. that's a new record close as well. speaking of transports, we a news alert on hhs secretary tom price. kayla, what's happening there. >> reporter: kelly, a mea culpa from the hss secretary regarding his private air travel
$400,000 worth from may until now as reported by politico. he says h e regrets making these decisions although acknowledging all travel was approved by hhs officials. he said his staff and he are continuing to cooperate with the inspector general's review he says he will be taking no more private chartered flights while he's in his role perhaps most notably, kelly, he says he'll be personally reimbursing the u.s. treasury writing a check today to reimburse the government and the taxpayer for all of the travel that he took on the taxpayers' dime so a mea culpa from the hhs secretary after the president when he was asked yesterday about this issue, and secretary price specifically said, we'll see, which has been the enigmatic response of the president when he's displeased with his officials hopefully this will take the edge off the situation or at least the hhs secretary hopes it will back to you. >> all right that's quite a move. kayla, thank you very much kayla tausche. time for a news update
let's get back to sue herera at headquarters. >> here's what's happening at this hour, everyone, secretary of defense james mattis paying an unexpected visit to qatar after president trump said he was willing tomonths-long dispute between qatar and gulf neighbors. first lady melania trump holding a roundtable discussion on the problem of opioid abuse joined by health and human services secretary price and the white house counselor who you just saw, kellyanne conway. >> i plan to use my platform as first lady to help as many kids as i can with the many many issues they face as they are growing up drug addiction, especially opioid abuse, is one of those issue and i look forward to working alongside the presidential opioid commission. dramatic video emerging of wednesday's giant rack collapse on yosemite national park's el
captain. a 100 foot by 100 foot by 100 foot piece of granite peeled off, about the size of an apartment building it fell 2,000 feet to the ground the video was shot by a climber who was above the area that broke off. one person was killed and several others were injured. you're up to date at this hour ke kelly, back downtown to you. >> wow all right. sue, thank you very much. recovery efforts under way but slow moving in puerto rico after hurricane maria ravaged the island and destroyed much of its infrastructure let's talk more about the problems facing puerto rico right now with colleen newman, independent energy consultant, former energy adviser to former puerto rico governor fortinu kelly, welcome. >> thank you for having me, kelly. >> glad you're here. today we heard that the white house is giving puerto rico a waiver from the jones act for ten days the jones act requires you to, i think -- use u.s. equipment to move things in and out of islands. what will this mean for puerto rico's recover roy
>> well, i mean, think you'll be able to bring more ships in and also goods will be cheaper i mean, in my opinion, i think that it should be waived i think it should be waived until they -- you know, they get the humanitarian situation under control. >> yeah, that would certainly make sense >> yeah. >> anything that could lower the cost and make it easier for people to get supplies i read recently that they're only getting ten flights a day in and out that compares with 180 or so normally so, again, you know, what are people supposed to do, even in terms of getti inting supplies y need to rebuild right now? >> right now supplies are coming into the ports and the distribution is really just a big problem. in terms of getting off the island, the cruise lines are starting to bring ships in and taking people to florida, which
i think is really great. you know, i think moving some people off the island is a good thing. it's an island of 3.4 million people >> i also wonder, colleen, we spoke actually with the head of the power authority recently, prepa. >> yes. >> which had to declare bankruptcy before all this happened because it has such high debt level. >> right. >> should that now be privatized, how should that now be aid eed in order to get power bark on for this island and keep it sustainable going forward >> well, you know, i think a couple things. i think privatization is something the puerto rico oversight board was considering not publicly, but sort of privately prior to the hurricane, but, yeah, i think the hurricane certainly changed the dynamics, you know, prepa will get some aid from fema which is good to kind of bring the system back up and i think they need to bring it back up, but they also need to look at how to make it more of a
resilient system for the long term >> colleen, i've been asked, i just wanted to, tucurious for yr take, what difference it would make if puerto rico were a state right now, if that becomes something that's more important to residents going forward what would crow syou say, what difference would that make >> well, i think the main thing is puerto rico is at a deficit, it doesn't have senators, has ha nonvoting member of congress so when things are being considered for it in congress, they need to rely on folks like the florida delegation and the new york delegation, other places where there are puerto rico populations and these folks have their own people to deal with you know, their own states and their own priorities >> and they need someone squarely focused on this which marco rubio, schumer -- >> absolutely. >> -- new york officials have been as well
>> yeah. yeah, to their best. colleen, thanks for joining us. >> yeah, thank you. >> colleen newman joining us independent energy consultant from puerto rico more people could soon be facing charges in the ncaa bribery scandal. which major brand is now under fbi. we'll tell you coming up. first, the federal government keeps a close watch on pharma and energy companies some congressional aides are making top dollar as they trade ahead of investigations. the investigative journalist behind a bombshell report joins us next. u'atincn, rst in business worldwide every year we take a girl's trip. remember nashville? kimchi bbq. kimchi bbq. amazing honky tonk?? i can't believe you got us tickets. i did. i didn't pay for anything. you never do. send me what i owe. i've got it.
who watches the watchers, a question politico is asking about congressional staffers and stock trading. politico investigated congressional aides and risk of conflicts with stock trades and how some staffers make top dollar as they trade ahead of investigations or legislation. joining us is the author of this piece, maggie, thanks for joining us >> yeah, thanks so much for having me, mike and kelly. >> so, just wanted to kind of call autout a few examples hereo people are aware of what we're talking about. probably the most prominent example, you talk about a senate judiciary matter involving mylan pharmaceutic pharmaceutical, aid to a member, dick durbin, sold $4,000 to $60,000 worth from the portfolio and his own within the span before members sent a letter to justice about the matter and justice met a half billion dollar settle with with milan.
in this particular example, is there any ramification for somebody who's an aide and is trading on what we might call inside information >> yeah, well, so when we did this story, you know, it's -- there's the difference between having inside information and having conflicts of interest, you know, if there is evidence here of inside information, that's something that the s.e.c. could investigate but the s.e.c. doesn't have a lot of options when it's going to look into members of congress. what's interesting is that there's a very few rules keeping aides and lawmakers from holding and buying and selling stocks and companies that have business before the committees they work for could be lobbying them heavily or otherwise have address in congress. we found a number of opportunities of these for these real conflicts of interest that are surprising to the public i think a lot of people find offputting. >> yeah, you guys already reported in the past, this is back from may, that 28 house members and 6 senators each traded more than 100 stocks in the past 2 years placing them in the potential cross hairs of a
conflict of interest on a regular basis. now as you mentioned, there are 12,500 staffers, all of these people if it was in the executive branch would be in violation of federal conflict of interest law paesotentially, ri? >> yeah. that's another thing i think most people don't realize is in the executive branch, people are expected to sell all their stock before they take on a job that could pose a conflict of interest with their work or if you happened to, you know, stumble onto an issue, you didn't know you were going to be working on, you're expected to recuse yourself. congress has placed no such limits on itself for lawmakers or aides there are a couple kind of loose guidelines but for the most part people are allowed to hold whatever stocks they want, and we found examples of aides in the dozens, senior aides who seem to be holding and buying and selling stocks that have to do with their work and, you know, the policing on capitol hill around this is mostly expected for people in offices to do themselves so there's not much oversight, either >> yeah, you give -- by the way,
these disclosures are only made if the aide only makes s ks s -- example, paul ryan's chief of staff whose wife bought shares of occidental petroleum, before congress announced plans to lift the ban. nancy pelosi's spouse bought shares s -- both cases they sa their brokers acted without their involvement. >> yeah, and, you know, a lot of people have a stockbroker and people who make trades and troez brokers can make a lot of trades without someone's involvement, it becomes this gray area because there's also nothing to keep someone from picking up the phone and saying, hey, maybe you want to invest more in energy, maybe you want to invest more in one particular company so there are just very few safeguards in place there that i think watchdogs for years have said is inadequate on capitol hill >> maggie, i guess it might be
hard to kind of isolate any of these individual situations and figure out exactly how the circumstances came about, but i wonder, there's one thing if there's going to be a provision going into a law, and a staffer knows about it and then decides to trade upon it, it's another thing if they initiate something being put into a law in other words, if they can kind of rig it themselves and then trade upon it in advance or during is there any way of knowing if that's the way the conflict might run at times to influence them to actually change the composition of legislation h. >> you know, that becomes kind of the perview of the s.e.c., in the house there's the -- the house has a watchdog committee that con look into that, you know, and gather material and gather e-mails and information, for the purposes of what i can know as a reporter, i can hear rumors, i can hear things from people but figuring out what's going on inside someone's head, someone's motiveis very difficult which is why people say there should be actual rules
structuring what someone can and can't trade at a certain time. you know, there's also the possibility that maybe, you know, if i'm an aide and work on energy issues and have a portfolio that has k has tons and tons of energy stocks, it could influence my decision making consciously and unconsciously. there's a lot of room for unethical behavior. >> maggie, we have extremely tight rules as i'm sure you might at politico as well making sure we're not involved in any trades and certainly nothing that's not disclosed when it comes to -- you mentioned this -- if it were the executive branch, behavior like this could potentially be violating federal conflict of interest law who's going to make a law that says lawmakers and aides must stop doing this? >> you know, that's the problem, and the number of times, you know, when i've been talking to people about this investigation, they put out, everyone points out to me, you know, the president is also exempt from these laws it's just the people who write the bills don't always want to put themselves under a stringent ir requirements as they're willing
to put other people in the executive or judiciary it's one of those paradoxes. congress has regulated itselves with a number of ethics issue but happen after a big scandal the abramoff scandal is when we got ethics reform in washington and doesn't seem like the hubbub earlier this year about tom price or reporting at politico has been enough to push congress over the edge to regulate itself more with stock trades they have done this, addressed this issue once before in 2012 they passed a law called the stock act. they actually went back a year after the stock act was passed and very quietly revised the law and kind of made it easier for lawmakers to do this kind of stuff and not come under scrutiny there's less disclosure than there was supposed to be. >> i got to say, it's outrageous maggie, thank you for all your reporting on this and joining us to talk about it. >> thank you so much for having me. >> maggie severns from politico. another news alert from washington, kayla tausche, what's happening >> we told you earlier about
twitter public policy executives visiting capitol hill today to talk to staffers at the senate and the house intelligence committees and just earlier this hour, the ranking member on the senate intelligence committee, virginia senator mark warner, talked to reporters and didn't exactly give twitter a ringing endorsement for its performance. >> presentation that the twitter team made to the senate intel staff today was deeply disappointing. their response was, frankly, inadequate on almost every level. >> so certainly some harsh words from the virginia democrat about twitter executives' testimony today in front of the staff level of those committees. we'll see if we get any comments from the republican side or whether we get any further comment from twitter which released a lengthy statement talking about the efforts that it has gone to to remove several
dozen, in some cases, accounts linked with those on facebook that have been proven to be linked to russian entities but it seems that this controversy is not going away any time soon, and senator warner said it wasn't just the 2016 election, that that activity from russia is going on on twitter to this day kelly? h. >> all right, kayla, thank you if i were them, i'd want to stay on congress' good side. >> absolutely. i don't know if it's a matter of showing the depth of their own inquiry, who came to present it. maybe they don't know enough about exactly the source of a lot of accounts and that is, in fact, something that frustrates the committee. >> good point. another major athletic wear company is now under the fbi's microscope as the ncaa bribery scandal widens we'll have those details next. coming up on "fast money" energy is the best performing sector this month. a technician has three names you can still buy, stop of the hour. , you interfering imbecile! give us one good reason we shouldn't vanquish you to another dimension!
welcome back we have a news alert on equifax. aditi roy, what's happening there? >> reporter: hi there, kelly it appears on thursday, october 5th, former equifax ceo richard smith is scheduled to testify in front of the third congressional hearing he will be appearing for. the first one is scheduled for next tuesday in front of the house energy and commerce city second one is the senate banking committee on wednesday and now we have a three-fer with the house financial services committee. smith of course just stepped down this week as the ceo of equifax in the wake of that massive breach he was replaced at least on an interim basis by a new ceo who
issued an apology in an op ed piece. he says the company will be offering free locks for customers to lock access to their credit lines >> aditi, thank you very much. meantime the fbi is looking into nike's youth basketball program and the widening of a bribery scandal rocking the ncaa eric chemi has the latest. >> reporter: kelly, two adidas employees were arrested on tuesday. with the case now out in the open, they've been able to go after more targets according to many reports, the government served nike a subpoena to look into its elite youth basketball program nike says they firmly believe in compliance with laws and fair play in all sports there are no allegations against nike in the complaints and we are committed to cooperating with any government
investigation into this matter one of the adidas employees arrested the other day had previously been director of nike's elite youth basketball program. three of the assistant coaches arrested work for nike sponsored schools. the original government complaint described the wigged for one particular player, describing how adidas might have to raise their payment because there was possibly more money available to attend a school from a rival shoe company. most people believe the shoe company is nike. at the rate this case is going now, it likely will become bigger than just two employees at one company and that brings us back to the debate about the entire purpose and approach of the ncaa experts have long said the system is broken because so many colleges and companies make billions every year off the players, who by rule get almost nothing in return. this has brought up renewed debate about whether players should get paid directly, creating an open market for their services espn's jay billis likened the system to prohibition where a
black market economy was created. he says that's exactly what the ncaa is doing now with its players. back to you, kelly >> i know, i was an ncaa player, this was division 3 women's lacrosse i'm sympathetic to the point people are making, acknowledge it for what it is and don't get the feds involved. eric, thanks very much for updating us. >> reporter: you got it, kelly it's the perfect plane for a pampered pup some alliteration, too at tlyonle's $8 million jet th'sru ge to the dogs, after this
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secret lives of the super rich has gone to the dogs. robert frank is here with a look at a jet that is tailored to a couple's pampered pooches. >> reporter: just when i think you've seen it all a california couple were tired of traveling without their dogs or putting them in commercial. they bought a gulfstream 4 and made it the ultimate puppy plane. the $8 million aircraft was recently purchased by retired financier scott simon and his wife hillary and today, they're meeting to pick out materials with a modern
look >> i want to stay away from the pattern and do more of this. >> reporter: their ultimate goal, to make their flights as comfortable as possible for their beloved travel companions, their two young sons and their three giant fur babies >> they're called moscow watch dogs, a very rare breed. >> reporter: that's right, the duo wants to bring status, mishka and milla on a family vacation for the next three months, skilled craftspeople work full-time renovating every inch of the plane's inside. >> you could buy a stable of ferraris for what this costs >> reporter: these pets would never fit in the back of a ferrari. now they won't have to they'll be transported in comfort, whenever their owners want to go one of my favorite lines is when the jet designer says, we're used to designing for people,
not dogs and when the private jet designer is designing for dogs, we've reached a whole new level of excess. >> i was told there would be puppies in that video. >> 300 pounds worth of dog i'm not surprised they don't want to go into coach. >> exactly >> the whole point of this was they're redesigning the interior over a period of many weeks and months to make it, what, water resistant? >> they spent millions of dollars to make sure that all the materials and the setup of the plane was amenable to each of their three 150-pound dogs. >> each weighs 150 pounds? >> 150 pounds. each of the seats in that plane is $10,000 each, because it's made with a fabric that's bite-proof, slobber-proof, and scratch-proof. >> is there a place they can walk them, so to speak >> they can walk up and down >> out on the wing in case you haven't guessed, "the secret lives of the super
rich" debuts its new season tonight at 10:00 p.m i'll watch it. thank you for joining us "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square i'm melissa lee. tonight on "fast," the gop tax plan is sending the market to record highs and could create a boom for an unlikely set of stocks plus mcdonald's is the number one pick for, get this, hot smokers. will the late night munchy runs send shares even higher? pete has been on fire this year, knocking pitch after pitch out of the park. now he's one stock with a major rebound. we'll give you the name. one energy stock going from worst to burst this is a group that's