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tv   Closing Bell  CNBC  September 15, 2014 3:00pm-5:01pm EDT

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>> this is/1÷ once and for all decision. >> queen elizabethñr weighed in t$aáhweekend, as well.ñiwsñr she said that the scots should be careful about the decision and didn't officially take a side. celebrities continue to weigh groundskeeper willie of the simpson working atlp the school and a supporter of independence and he wants to lead an independent scotland and qualified living in the united >> i've lived in america most oá my life and seen firsthand her not to run a counpe+r @r(t&háhp% >> not clear whether it fárevea
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the ideas.c the polls are close. noes have a slight lead and the undecided vote is high enough to lead the outcome completely uncertain. the voting is thursday. we'll get the results on friday. >>t( you know, david cameron as you report said this is forever, but that's axd littlee1e1 disingenuous. they thought the uk was permanent, too, right? >> yeah, no. he's trying on the one hand and used a little bit of softness and same time, little bit of a car lot. giving you the things you want and sam time withe1 the stick tt says, look, if you go, you're done.lp that's it. maybe you lose all of the things that would have been benefits of youxd staying. >> michelle, stay there. talk about that among other t( not just the alibaba ipo or÷d t scottish independence vote. joining us ourt( exchange today anthonyok chang of chase. jason pride. kim forest.jf
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and welcome back rick santelli. let's start withxd cyou, rick. i mean, the markets -- do you scottish independence? anything about the fed move as you look back on what's going on in the market today? >> well, i really have enjoyed michelle's reporting today. outcomes predicated on the voter thursday. listen. i understand what it means that americans who want independence from the uk so i don't know. i think what's going on in scotland is fascinating. i do say that when you have the 7% undecided the burden of proof is"gí definitely in the partq o undecided and most likely+ stats quo and myq opinion. as for the fed meeting, you know, we can conduct surveysñi d whatever it is that people do and such fascinating fedñi theater. in the ñiend, between theñi bal sheet and how manyçó treasuries+ are in that balance)sheet, to me, the real story about the federal reserve continues to be the disparity of the what would
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interest ratesxd be if the fed hasn't done orñá accumulated wh they have and unwind it and the answer ise1e1 elusive and i thi some point result in at( very,x very quickxd pickup in rates ani don't see itxd happening any ti soon. >> all rigv4k >> rick, we keep hearing about the fact that qe is about to end but we haven't heard that much about exactly how the fed plans to begin selling off some of the balance sheet. jason pride, when you think about what the fed needs toc sa this week to allay some of the concerns of tku market that the exit is óeqsy and that the economy might not be strong enough to support thec language ìáhp &hc% at here? >> look. i think the fed isjf going to b continuing toe1e1 communicate an of takingc awayjf stimulus onxd aggregate and doing so inok an incrementalist, minimalist sort of approach andq tapering of th bond buying.
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probably doing theq same thing n interest rate increases. hing on actually shaving down the size of the ba4aát letting thinó& shaving down the size of the mature off and what@uétk want to do is they want to get back to normal and they don't know exactly when they want to get looks like. take -- they can peelxd away ea layer one at a time incremental slivers and see how thefá marke and the economies react to it. that's what they're doing so far and again. >> i think we haveq forgotten what normal was or used to be. anthonylp chang,ñi the question- >> many ofko usçó have. >> yeah. the question is whether the fed takes out a key phrase embedded in theira5xl communique for sev months now, that being keeping rates at a record low for a considerable period of time. do thuyr take that considerable period of time phrase out this ÷i$e do you think?
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phrase out and equivalent of getting a wound and you're hurt do they take it off carefully or yank it off. they can take the langñi wang o and suggest there's slack in th% u.s. labor markévy so that you overall monetary policy, that it is not going to be very dramatir or perhaps to putçó in there th normalization is about tot( sta but it is not imminent and not going to startjf anyxd time sood not necessarily a considerable period. remember, the considerable period language began in 2012. it's already been a considerable period since they said that. they can start thet( normalizatn process and doesn't have to be i imminent. >> considerable is probably just vague enough word they were looking for right there. kim, trex s&p a little bit, eve on lpwednesday, the dow up 49. it does seem like there's a little bit of complacency in the
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âutti andt( yet we have had alle 3,000 from morganñi stanley. the bares areq throwing in the towel in a way we haven't seen before. do you think we'll go high ore tn market despite the fed? >> depends on the time period you'rejflpe1 talking about.lpe1 of course we go higher. that being sard,e1 i think it i extremely costlyrqoçlp to be a the twoxd guests before me i completely concur with everything that they they said.q this is a very measuredt( fed. they understand the impact that they have by taking xdaction. they're going to do things very slowly and carefully.e1 permly i say rip the band-aid off and get back tonb normal.
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we dop being really careful, do we? we have to çóreact to things. they're making the universe and all of this happen. so, as long as they canñiçó do [ they're going to tryt(ko to sup thic![a5recovery. over time. >> michelle, let's go backñi to here. do you think, do you sense that the markets have alreadyñi anticipated the vote going one way or the çó3wother? if they do vote for independeqq in scotland on thursday, what do you think the market would do that?çóçó >> wait it out until the end. if you can't stomach the potential volatility. the you're a risk taker and want to get in there, that's a
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different story. a short-term play. the overwhelming view if you really have to put money on it, they think it's a no. so watch out if it's a yes. >> michelle, scotland wants to keep the pound and even if it does split off. what's the likelihood that the uk lets them do that? >> it is not up to the united kingdom what scotland does with the currency. >> but the definition of independence. >> right. what? >> that would be the definition of independence. >> not necessarily. you can be -- ecuador is independent country and nothing to say about ecuador. they use the dollar. a country can use whatever currency it wants. the question is, can they absorb the costs of absorbing their own currency? if you decide to use a currency that you can't print, that means your banking system has to be platinum plated. if you ever have an issue with the issues, you can't print to stem off a run. right? so that means you're probably going to have higher capital restraints and constrained in
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lenning. you don't have a choice and can't set monetary policy f. the united kingdom wants to burst a bubble in real estate and scotland wants to motivate the economy then they don't have a choice. right? those are the choices that they make and stick with the pound they can stick with the pound. >> yeah. well, it is -- potentially major historic move to see on thursday. i know you're heading out tonight. >> tonight. >> safe travels. lock forward to your reporting this week from scotland. >> to the rest of the panel, thank you for joining us. anthony, jason, kim and rick. we'll see you later on. with just about 45 minutes before the closing bell, we have the dow up steadily in green territory. nasdaq is down by about 47 points. taking a big breather. ahead of a really major ipo this week. >> we have more on the markets coming up here. john calamos will tell us how he's putting his clients to work and wait until you hear if he thinks the fed will raise interest rates sooner than
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everybody else thinks next year. that's coming up with john. also ahead, apple will reportedly rake in 15 cents every $100 transaction on the apple pay service. the pros explain why it could be a huge revenue stream and potentially a game changer for apple stock. and then later, general motors compensation fund making its first payments to families of victims injured or killed in those accidents related to faulty ignition systems. we have details on that when we come back on "closing bell." stay tuned. when change is in the air you see things in a whole new way.
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quick snapshot of the markets as we head toward the close with 45 minutes left in the trading day. the dow is outlier right now with a gain of 40 points. s&p, russell down a bit. a bit? down more than 1% today. there's been a concerted selling in the small caps today and the technology stocks. >> earlier in the day looking at the top five or six on the laggards on the nasdaq and all up between 25% and 80% this
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year. they're retreating seeing pretty immense gains. >> high fliers or not today. that's right. yes. main street was excited by the iphone announcements. reportedly apple will be getting 15 cents on every $100 transaction in apple pay which is quite a big amount. >> it adds up. how much of a game changer will this be and what are the implications? with us, max wolf, heinz morris. i was going to say nyca. that works for me. former president of visa. >> that's right. you got that one right. >> is this a game changer? mobile payments with the future anyway but now the model that apple is going to implement where you swipe your iphone to pay rather than using an actual card, is that the future for payments in this country?
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>> well, i think the way i would think about it is some of the ideas have been around for years. very successful companies tried to attack this problem. i think the issue is two. most people in the united states paying with the credit card is not a big deal. however, there are many, many interesting applications and why now has apple been able to pull it altogether and make it work and i think two things. one, the security environment has changed. people are a lot more sensitive about -- >> presumably more secure. >> definitely. the second thing is, has to do with the very complicated and arcane aspects of the payment system but that matter a lot in mobile payments. and i think what apple is able to do is cut through all of that. use the marketing power, their -- i think their reputation -- consumer reputation and their ability to put together fairly technologically compelling
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products, pulling that together and pulling the echo system together enabled them to get something done that no one else has been able to do. >> it's especially unique that apple is able to wedge itself into the revenue mix that typically the merchant and the issuers and the banks sort of all -- they all shared that per transaction but, max, i'm wondering if you're seeing apple being one of the only players that's actually able to negotiate successfully to get a piece of that revenue, what does it say about apple's clout and the fear of the banks potentially harboring against the new technologies? >> so thanks for having me. i think it's a great question. we have seen apple's future. i don't know if we've seen the future. the likes of swipe and square and others and many of whom disadvantaged by this probably much more square than swipe to be fair is that apple is now insinuated itself in the mix with a payment app native to its
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operating system. that is bad for the standalone payment apps and entered the fray getting economics and been a built-on addition that the merchant or the consumer bears the cost or share it. here the cost is very small. there's an incredible increase in convenience. the question is, whose economics does it come out of? just seeing the future for apple or the future for mobile payments? i think it is too early to tell. >> there is a regulatory issue and technology is ahead of the regulators here. in essence, you can think, apple's becoming a bank by doing this, aren't they? >> not really. i don't think they're doing any of the banking facti ining func >> actually probably careful not to do that stuff. >> let's talk about one thing, a big deal. the reduced risk, if you can eliminate fraud in the some of the transactions, that's --
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>> that's a big deal. >> 10 to 15 bases points. >> right. >> what apple did a and a very important point to get across. if you go to the restaurant and use a card, they have zero risk if the card is stolen. >> the card is present. >> present for the transaction. you buy something through a catalog or online where the card is not present then the liability shifts and it's called the liability shift. that's shifted to the merchant and big deal and explains the issues of why it's hard to get mobile payments doing because technically the card is not present. >> with apple's system it's still on the card issuer. >> so that they're going to the merchant saying there's no liability shift. this is sticking with the fraud risk with the issuer and telling the issuer to implement new technology which hasn't been
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used yet. technology makes it more secure. conceivably eliminates cost for the system and but even if it doesn't, it's merchants and banks to agree to doing this in a way no one else can. >> if it doesn't they still get a slice of the earnings and transactions. max, how big a business do you think this is for apple? 15 basis points doesn't sound like that much money. 2% of the retailers that accept traditional plastic. how long until it becomes a big revenue stream for the company? >> we think it will be a while. probably an indirect pref knew stream and pushing people into the ios walled garden and how they make money on the apps and devices and what apple is doing is inserting themselves in a general pivot in the business. we have had swipe and sign transactions.
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they have to change in 2015 to what's called chip and pen around the world and apple's front running that and taking advantage of the fact that they have to refresh the hardware anyway and leapfrogs the other guys in the space and 15 basis point shows up and also allow apple to take credit to the consumer base and media for a basic shift in the market toward chip and pen away from swipe and sign and literally piggybacking of a trend to greater security and a refresh cycle so they're really jumping in at just the right moment and we know it's the future for apple and remains to be seen. tbd still for the future for the space and nfc looks like they won with aapple's adoption. >> very interesting. can see both max, heinz, thank you for your insight today. >> thank you. >> what could be a game changer. toward the close. we have 25, 35 minutes left in the trading session. the dow's higher showing you here. but the other major averages are not, especially that nasdaq down
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1% today. >> we're all watching for the alibaba ipo. >> you especially. >> me especially. we'll get a little bit of news later on in the show and the ipo price is going to be hard but it may be harder to buy the shares than you think. our own jeff cox is going tb here to explain in just a moment. and when we come back, think neiman-marcus and saks fifth avenue and think luxury and how about costco? there's a high-end shopping experience at warehouse prices. the pros will toss that around in the stock crawl on costco after the break. there's a difference when you trade with fidelity. one you won't find anywhere else.
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so when you talk luxury brands in the retail arena, you think tiffany, nordstrom, michael cors. do you think costco? >> or you might now. i didn't until i read this report and citigroup initiated the coverage of a buy rating saying among other things the company offers a compelling luxury brand to the high-income consumer. with us now is citi analyst of that report, oliver chen and also with us is greg greenberg from the when's not
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so positive an the stock but oliver, since you published on this, we'll start with you. >> thank you. >> you say costco's customer has an average of $96,000 in income per year and they come in willing to spend and willing to spend on higher ticket items. >> we are excited about the affluent appetite. 96k versus walmart and target and costco's the biggest importer of european fine wines. famous for 112,000 worth of carats and diamonds and the mark-up is very low and low employee turnover. high service. at a low price. because the mark-up rate at costco, is about 15%. you get great prices there. >> greg, you're not buying this, are you? >> only thing luxury about costco is the stock valuation. trades at 24 times next year's earnings versus walmart at 13 times and i think target might be 14 times. if you remember for a while, everybody crazy about target or
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target. they don't last and people running out of manhattan to go to target. doesn't last. that stock i think bill ackman cried at one point. you can't trust fads like this. >> this segment of the economy, oliver, has been rebounding better than some of the other segments of the economy. do you see that continuing for costco and comp sales going forward? >> i do. they have 19 quarters of consecutive positive comps and 4% to 5%. compared against the mall and walmart and target, negative traffic and negative 2% to 3% traffic and affluent appetite behind the network customer, stabilizing unemployment and housing valuations with a big positive and not a high fashion retailer. it's a treasure minute. they have had 19 quarters of positive comps and i think the beauty here is the buying organization and the assortment versus fashion. >> people go to tj maxx for
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treasure hunts and that bag that they can't find anywhere. they don't go to costco which is a warehouse because over there you buy ten bags. it is a totally different shopping experience. you go to costco to fill up the car for -- on toilet paper or paper towels. these things which by the way you can order to your house. the e-commerce. which is putting lots of retailers out of business right now and costco rolling out new stores and retail space out there so they're not going to help it with family dollar closing spaces. when you have sears closing spaces. not a great game plan right now. great stock. trades expensive. probably not where you want you to be. >> 70% odd of the company's revenues from the membership. which you don't necessarily get from the e-commerce stocks. >> make sense to you? paying $110 to shop at costco going to walmart or target for free? it's counter intuitive. also when you have wage inflation finally in the economy, and you say to your wife, honey, i got a raise.
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go to costco for a diamond or rotisserie chicken, it won't buy it. >> it's $55, isn't it? >> i believe so. we don't have one. >> it's $110 for the executive membership and $55 -- >> that's even worse. essentially, people will stop paying those. they get the bill and say why pay $110 to go to costco when i can go to target or walmart? >> oliver your point is well taken. isn't there a perception issue here? costco has been perceived to be as, you know, another sam's club or target or these other companies. is somebody who typically shops in a luxury store going to trade down to a costco in this case? >> i think what's fashionable. i cover luxury goods and getting a bargain. good values in style and the numbers speak for themselves. if you go to the costco parking lot, you see premium cars.
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the household income is double and membership revenues consistently grown so you want to pay for the right to shop at costco and the mark-ups are low and also cnbc did a special on how robust with toilet paper and a lot of quality control. they have great buyers and sustainable on a global basis. >> greg, you have to admit, where else can you get a rotisserie chicken or a diamond ring? >> i can -- i wouldn't want to shop for both in the same spot. that's the point. to get a chicken, i might go to whole foods. a diamond ring, i'm not going to say let's go to costco when i can go to -- i can't go to tiffany's. i can go somewhere else. maybe zale's. >> what's the box at costco? >> maybe red. >> probably an opportunity for improvement. in terms of packaging but i like tiffany and the chicken an enthe diamonds. >> good. >> oliver, greg. >> thank you for joining us today. with a half hour before the
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closing bell, we have the dow that's steadily into green territory. off the highs of the day and not looking to lose that steam soon. s&p for most of the trading session unchanged but that's still -- take a look. down by a point at this hour. >> much more on the markets coming up. we have investing legend john calamos and why he sees room for the stocks to grow. >> it's interesting to get his take, also ahead, the sixth anniversary of lehman brothers bankruptcy. that event as you may remember triggering a 500-point drop in a single trading session and a wave of expensive government bailouts. we'll talk about the banking system then and now. stay tuned. otive innovation sta. right here. with a control pad that can read your handwriting, a wide-screen multimedia center,
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the dow with 25 minutes left in the trading session up 43 points but the nasdaq is a feature and the russell 2000. given the declines there today in what's arguably one of the busiest weeks of the year for the market. the big fed meeting on wednesday. the scottish independence vote on thursday.
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the alibaba ipo on friday. presumably. and markets hardly taking a wait and see attitude at this point. >> might not know how any one of the events turns out but it's a volatile environment in the week. dominic chu is back at headquarters for the movers for us today and a volatile week, dom. >> that's right. lots of jockeying for position ahead of the events so let's talk about movers today. tesla getting crushed after morgan stanley released a report echoing what the ceo said last week and maybe the stock price ahead of itself and shares down near session lows down by 9% and avanir pharmaceuticals. announced positive results from the phase 2 clinical trial for the treatment of agitation in patients with alzheimer's disease. you can see it eight-year high, up 91%, nearly doubled in value here. gilead science selling a cheaper
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version of the hepatitis c drug and used in developing countries. and then there's ab inbec and molson coors moving high after a brewing giant approached heineken and said it refers to be independent and both stocks up on the day and netflix here losing ground beginning the european push into france and received a cold reception. bill, kayla, back over to you. >> one wag was heard to say on twitter today, when netflix goes to france, can you get every movie of gerard? >> i don't know. i see a marketing opportunity. >> the market is up over 7% so far this year and according to our next guest, there's still room for stocks to advance even
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further. in a cnbc exclusive, we're joined by john calamos. welcome back. >> thank you. good to be back. >> after about, you know, five years of bull run that we have had, in this market, there might be people who say it's time to take profits or even invest defensively in those stocks that might weather a pullback or a slowdown in the economy. you still think growth stocks are the place to be. why? >> yeah. i think we're more in the mid-phase of the market cycle. you know, yes, we have had a good run in here. but we're at the mid phase of the market cycle and what we see going on is very similar to today. one day is an income market. next day it's a growth market. back and forth. when you look at the valuations, growth valuations relative to value is about 20% below value.
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so i think the next phase we'll see growth really outperform value going forward. >> john, does it worry you at all there's so few pessimists, so few bears in the market? because even though there are so many people like yourself who say we believe that there's still upside to the market from here. we're in the middle of the cycle, they get the eerie fact that no one's taking the other side of that trade. >> well, i think we have to look to valuations. valuations are fair in here. i don't think they're extremely high. i think as i said growth valuations could go higher but what is that based on? it's based on earnings, a continuing to improve here. based on an improving economy. going forward. cap x spending increasing. so those are all favorable factors. if i were concerned that a recession was around the corner,
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i would be more in the negative camp but i think the economy, although growing slow could accelerate in here so you know, that's why we kind of remain in that -- we're in the mid cycle rather than a top of a market in here. >> i spoke to a town hall of individual investors last week and we did a quick survey of those investors presumably pretty savvy people of which sector they liked the most right now. number one by far is technology. what about you? is that the growth area you go with or where do you see -- which sector do you see leading the charge here continuing this bull run? >> yeah. we agree with that. technology is a leading sector for us. we're overweighted there. health care, you know, is also another one. energy is another sector we favor. even some of the banking in here
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and the finance sector a bit overweighted, as well. seeing good opportunities there. >> john, we are now seeing the fed appointing a committee to watch for asset bubbles. any corners of the market you're staying away from? >> well, i think, you know, we worry about the fed, what they're going to do. the market worries about it. i think -- i don't think a lot's going to happen before the end of the year. but you always have to be prepared before the event instead of after the event. and remember, if the rates go up, that means that the fed has confidence that the economy is growing and inflation's coming back. that's positive for the equity markets. not a negative. >> that -- >> might be bad news that's good news. >> that's the -- that's the argument i hear a lot for people still positive in this market as the fed begins raising rates. it is proof that the economy's doing well but how can the market will respond when the fed
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starts raising rates? >> well, it could, you know, we could have obviously as we have had in previous short-term, you know, volatility in there, it reminds me of the mid-'90s in that area where you could get a slight market correction. but i'll tell you what,'s really difficult is to time that. so you got to kind of look through the near term volatility and look further out and say, what do valuations tell us? it's too difficult to time. >> all right. john, always good to see you. thank you for joining us. appreciate it. >> thank you. thank you very much. heading toward the close. about 17 minutes left in the trading session with the dow up 37. the nasdaq and the russell have been sharply lower today. down about 1%. >> coming back, general motors paying for deaths related to the faulty ignition. we have details and spoke with
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switches. >> phil lebeau spoke with ken feinberg. phil, what did you learn? >> so far, they haven't claimed that a lot of these are eligible for a payment but ken feinberg expects that to change. here's the numbers six weeks into the program in terms of number of claims that have been filed with them. that they have received, more than 440. there you see the total, 445. 125 involving death cases. 31 deemed el i didn't believe for a payment including 19 deceased cases. that 19 number we'll talk about in a little bit. we talked with ken feinberg earlier and said, look, you have 414 cases you have not approved yet. what will happen with those? he says they're still in process. >> we have received these claims. some of them woefully inadequate. no documents, cigsignatures. we are finding 31 are eligible
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and the remainder are currently being processed and we are working with the cli manhattan to firm up the claims. >> again, he expects that number to go up over the next several weeks and weeks. feinberg hopes to resolve more than 90% of the gm ignition cases. the fund payments start in the next 30 to 45 days. many for several million dollars. general motors today said ken feinberg and the team will determine the final number of eligible individuals and accept the determination for the program taking a look at shares of general motors, 19 death claims that have been deemed eligible for a payment, the significance, bill and kayla, is for months general motors said 13 fatalities. all linked with the ignition switch recalls. and already, ken feinberg said it's 19 and it will go higher. >> all right. phil, long and tenuous process for the company and the families involved here but we appreciate you bringing the latest from
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d.c. we have about ten minutes before the closing bell. the dow still in positive territory. the s&p roughly unchanged at this hour. mean whitime as we know, ala shares trade right behinds here and even -- on friday. but even if you cannot get shares, at the ipo, everybody must be thinking some exchange traded fund will be able to have those shares you can buy into, right? well, no. that's not the case. our jeff cox explains why coming up here on "the closing bell."
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eight minutes left in the trading session. a mixed market today. the dow's up 38 points. look at the nasdaq and russell 2000 both down more than 1% today. joining me to talk about markets, heather hughes andy th diana sanchez. the feeling is to get ready for alibaba. do you buy that? >> there's probably some truth in that. honestly i think it has to do the plans for what's going to happen with the fed. so, you know -- >> why wouldn't they take it out
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of the stocks? flight to quality. >> seeing tech crushed. had a tremendous run. >> right. >> here to date so far. people saying let's go back to the defensive staple names. pull it out of the tech sector. where some of the risk-on trade is as of late and closing that gap between the s&p, nasdaq and the dow on a year to date basis. >> we had john calamos on saying we are halfway through the bull run and buying growth stocks right now. >> you have to really, really believe that growth is a lot better next year than it's turning out to be this year and i'm not sure i believe that we can go from 2 to 4, you know, in a year. you know? i sort of feel like it's a t-shirt. the fed spent all the money and all we got was a lousy 2% and hard to imagine that we're able to kind of get up to those expectations. >> i wish i thought of talking to john a little while ago. what do you think the fed will
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do? >> oh my gosh. like fantasy football, right? rg3. qep. the star quarterback on the bench. lockhart in. maybe put an all-pro in. fisher in. bench lock hart. i don't know. anybody's guess is as good as me. i'm just saying that may withdraw the considerable time language. we know that. >> does the market anticipate that? if they take out the key phrase that they're going to keep rates low for a considerable period of time, take it out, do we have a spike in rates on wednesday? >> i don't think you'll see a spike in rates any time soon. even taking the language out, actions speak louder than words, bill. rates have crept up from 2.45 to 2.6 and i think we're steady under 3% for the time being. >> yeah. i think rates are where they are for a lot of reasons. external reasons. europe and japan. i think gold gets hit. >> all right. let's talk about that when we come back. take a break. heather from washington so she
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knows the rg3s but even -- we wish him well. hopefully coming back soon and curt cousins did well for the redskins on sunday. coming back with a closing countdown and a moment after the bell. forget somalia. high rat attacks moved east. we'll show you where the new center of piracy is and how much it is costing shippers and ultimately you in the next hour of the closing bell. stay tuned. you're watching cnbc, first in business worldwide. er than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.
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heading to the last two minutes here and this is the trend this afternoon. with the dow still higher but nasdaq down 1.1%. same thing for the russell. the small cap stocks or technology related issues. no shortage of theories of why. our guests maybe getting ready for the fed and maybe taking profits to raise cash for the alibaba ipo. whatever it is, this is what's happening so far to begin this eventful week for the markets. 10-year yield, that continued to move higher although right now down 2 basis points at 258 and started the morning as you saw around 2.61%. what happens on wednesday? that will be key getting the announcement of the fed and you have the news conference of
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janet yellen and then finally gold, gina you were saying, you would buy gold here at this level? >> no. >> why not? >> we have been seeing a rally in gold and a little bit of a dead cat bounce. the trend on gold is down. there have been a lot of reasons the rally through now and we haven't seen gold rally. >> especially if the gold continues higher. >> yeah. if rates start to creep up. any kind of positive fed data from the macronews and all bad. >> not just gold but crude oil. >> yeah. >> have both been down and look at geopolitical tensions and you would think that gold shouldn't be up? >> would you buy energy at these levels then? >> i like the fact that energy is hopefully helping the consumer. energy at lows we haven't seen since 2010. supply at the highest levels since 1986 and could translate to the consumer also in the end.
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>> i think energy goes down. >> all right. you still going that strong dollar. >> yeah. >> thank you both for your thoughts on today's market action. as we go out, dow higher. s&p and nasdaq trading lower. stay tuned. we have big news on alibaba on the second hour of "the closing bell." and welcome to "the closing bell" on this monday afternoon. i'm kayla in for kelly evans. bill will rejoin us in a moment but as you heard here's how we're finishing the day on wall street. the dow only major average in the green. up by about 43 points ending near the highs of the session. the nasdaq down 1%. russell down 1.25% as we are seeing some air let out of the momentum stocks as invest to recalls reposition the portfolios for that major alibaba ipo. s&p roughly unchanged at the close. let's bring in today's panel.
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susan and our own morgan o brennan and with us is guy odami. this is like a choose your own adventure. what do you think is really moving the averages based on everything we have going on to work with? >> hi, kayla. people i think reposition themselves ahead of this. obviously, a lot of high fliers whacked today. but if you look deeper, i mean, to me the weakness in the russell is something that's been happening, something that's worth noting today. the fact that the bond market may have bottomed out in terms of rates being at their ze knni. the weakness in the russell to be looked at and maybe the alibaba ipo marks a short-term top in terms of the broader market. >> why do you think it marks a short-term top? >> you always look for an event, something that's sort of look to
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and say, everybody was looking towards this. i'm not in the camp that things have been getting better. as a matter of fact, i'm in the camp in a lot of things might be worse than a few years ago. what is better is the market's going higher and that, you know, higher market is consumer confidence so i think a lot of it is smoke and mirrors so maybe this event, this fall, the fall tends to be a weird time for markets in general. maybe this selloff in the bonds was the opportunity for people to get back in again. i'm in the camp that we're in sort of a deflationary environment. the environment in terms of boots on the ground is not nearly as solid as the market suggests. >> carter, what do you think? we have got this enormous -- biggest ipo ever coming friday. demand is unprecedented. they're going to raise the range we believe. we'll hear maybe this hour. kould it be that that does mark a top for the market right now? >> look at what's happening
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before then. alibaba and of course the scottish independence vote. >> oh by the way. >> yeah, oh by the way. before then, you have the fed. i think a lot of the market's essentially going to wait to see what happens with that. keep in mind there's a wide range of possible outcomeless for this meeting in particular. a lot of momentum building for the fed to change the forward guidance and same time there's a dichotomy of most indicators and two matter around jobs growth and inflation. they moderated in the summer. if janet yellen decides to postpone any meaningful change until later in the year. >> do you think enough changed, susan, between the last fed meeting and now to constitute a major shift in language? doesn't seem that way. >> no. i agree with carter, actually. janet yellen is very clear of what she is looking at and it's not where's the stock market going and looking at the labor market and just following up i think the scottish independence vote is potentially a bigger deal than we're talking about.
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oecd downgraded the estimate in the euro zone and a bright spot to be the uk. and, you know, there's going to be a lot of uncertainty if the scots decide to push for independence and a big distraction in the uk and could be clouds in europe. >> being named after the capital of wales, do you have any bias in the situation? >> i mean, i think this is also very sort of emotionally driven and in terms of the arguments, i think the no vote is still better way to go. that being said, the votes all conflict on this. not actually clear that the yes better -- excuse me, that the yes independence vote has been gaining as much steam as everybody thinks so there's still a lot of undecided but i agree with susan. i think this could be a bigger deal than people realize. keep in mind without scotland, they have a chance of leaving the eu, as well. >> yeah. >> big deal. >> opens up a whole can of worms there.
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morgan, the market in the meantime has to -- we got a couple of days here before the fed meeting announcement here. do you think we're going through a wait and see period right now? >> most definitely. investor, strategists i have spoken to today about this topic, that's what they're saying. waiting to see the market move to the side and see how the headlines shake out this weekend and an interesting note out of goldman sachs that touched on the fmoc and speculation of the lack wage. from considerable time dropping that phrase considerable time and whether we see that on wednesday and goldman sachs basically said there's a big difference of reneging on forward guidance and then not extending it and don't expect a change in the language and question marks of that, scotland, between alibaba, all of it's going to see how it plays out. >> do you take a wait and see attitude before the event this is week or positioning yourself
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based on how you think that things are going to play out this week? >> you have to take advantage of the opportunity that is are there. i think to me, the selloff in netflix is probably really interesting. i think that will catch another bit at some point. none of these are one day events. tesla move is not one-day event. obviously, the chip sector's been moving lower but i think some of the stocks have given you a shot. the yahoo! move, you know, pete and i both have thought that yahoo! headed to 45. he's more in the $50 camp. i'm in the camp if you've been in the move take some money off the table. again, same type of -- we look at the world the same way and different ways to trade it. specifically, yahoo!. i think that's on everybody's radar screen right now. i'm going to be in the take profits camp right here. >> what about softbank?
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especially as some investors are saying maybe i won't get my hands on those sharyls but these are two stocks that i can own meantime. do you think that trade ends before friday? >> i think the softbank is a little bit -- obviously, both proxy names for alibaba. yahoo! more so. we can have that conversation at a later date. i think softbank, though, can stand on its own two feet without alibaba. that said, yes, if you have been in both for the reasons of alibaba, now you have the catalyst. take profits ahead of that. trade the market. don't let the market trade you. bill, you can use that tomorrow if you like this. >> i'm writing that down right now. very, very good. you know, i'm of the mind, i'm always a contrarian. wanting to go against the crowd if i can even though i don't trade the market the way guy does. the hype on alibaba, you know, we were equating facebook to google. ten years before.
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we all know how facebook turned out. alibaba is like google on steroids in terms of hype we're getting going into the ipo this week. are you inclined to rush into the crowd here, susan? >> yeah. >> or take the other side? >> the big difference is there's a business model behind alibaba. >> it is a mature company. 15 years old. not new. >> facebook was a lot of hype, promise of how they might monetize the asset that is they have. alibaba has monetized assets. they own like 80% of e-commerce in china and barely taken off yet and i think people think of this as grabbing on to the end of a rocket ship. >> one thing we haven't mentioned before we leave the segment, m a& a. >> beer on tap and joined on the news in the beer consolidation speculation that we're seeing. we saw several reports that we're going to see more
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consolidation for beer companies and an interesting thing is many different ways of this to shake out and just getting started in this space. but what's interesting about this is really just a play by the beer companies to push order into emerging markets and beer sales slump in the u.s. and europe. >> here we thought consolidation was over. >> fewer names but they all have bigger market share and the man that taught me more about investing than guy adami is jim richards and came to a country and look to invest in brew earls. he said that's the basic industry to buy. no matter where you are. if they're doing well, that economy's doing well. brewers are finding out -- >> beer and cement. that's the other one. >> in that order. there you are. write that down, guy. >> i just did. >> there you go. thanks, guy. see you later. >> all right, bill. >> catch mr. adami at 5:00 p.m. eastern time talking to a top
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biotech analyst about the huge biotech selloff and the stocks going to make a big comeback in 2015 presumably. don't miss that doming up here. >> a big part of the russell 2000 which was considerably in the red today. >> yep. so as we know, alibaba's ipo could be the largest ever offering the stock to the public coming on friday. trading right over there. if you think you find the chinese e mers giant held by the country's largest exchange traded funds, think again. it's hard to believe but it's been six years to the day that lehman brothers employees cleaned out the desks after the firm declared bankruptcy. what lessons if any has wall street learned from lehman's collapse? dick kovacevich gives us his insight. you are watching cnbc. you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal.
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jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous. well she's a guy, so... [ male announcer ] another reason more people stay with state farm. get to a better state. ♪ i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to
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for over 60,000 site for tv viewers; extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math.
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going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. seems investors want a piece of alibaba's hotly contested ipo, shaping up to be the largest offering ever. >> listen to this. the stock is actually inedgible to be held in some of the largest exchange traded funds.
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why is that? >> while so many clamor for a piece of this ipo, one group is not as excited and the companies that put together major indexes. they're saying to the e-commerce giant not in the indexes. that's important because it means that etfs tracking indexes also won't be including alibaba and the shares only appear in some of the much more lightly traded funds like here and raising some questions from investors such as why have these indexes if they don't be -- the largest ipo ever. and we'll list the changes maybe in the rules for indexes. i have heard another interesting related question today. will inversion companies face similar barriers and also removed from the big indexes? investors will clamor when the shares hit the market and for investors, the question's about etf placement a longer term obstacle to overcome. >> a little conundrum there. thank you. let's talk more about this. >> bring in trends tom liden and
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the panel, as well. tom, when you think about the fact so many etfs so widely held, do you think the fact the stock will not included will have an impact on the buying activity? >> kayla, it is the clash of the old world legacy index companies and their slow change rules with the fast pace of ipos and etfs today. however, s&p just did announce that they are going to change the rules a little bit in their indexes to actually include alibaba. which is great news. i think this is one of those things as we move forward, we have to understand what etfs are all about. index construction taken a long period of time and a whole nimble and small etfs and ipos where that's appropriate. longer term etfs with bigger
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indexes may not be appropriate. will they move the needle if they go up or down in a big way? >> interestingly, if alibaba chosen the nasdaq to list, they would be in the nasdaq 100 like that. that's not the case. won't have that possibility, right? >> put them in the qs and the fifth largest traded etfs and given investors exposure and little bit of exposure there and not really in the index. >> the other thing we don't want to forget is look at what happened to facebook. if those etfs that grabbed facebook early punished because it declined. those taking the time were rewarded. >> over the long term. >> alibaba would rather we remember twitter not facebook in this case, though. >> exactly. >> this is what i guess i think is a little bit lamentable about this. it brings with it a lot of risk. i remember the risk factor section of the prospectus that
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people don't talk about anymore. in addition to the weird structure, it also does business in a country with a fickle regulatory government. it will have competitive pressures increasingly and 80% market share. so i guess my question is, is the fact it's not available in an etf form as much as it could be going to prevent investors of getting a diversified exposure the way and small investors versus buying the stock directly? i don't know how it affects the psychology but that's too bad. >> the tail wagging the dog with index construction? right? if you have the rules and doesn't reflect the market and the point of aen deposition in the first place then something is wrong. i'm not disagreeing with anything you're saying. the risks are true but ultimately we need indexes to work for the market and not the other way around.
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>> jack ma said this is not a chinese internet company but a tech company that happens to be based in china. for the purposes of the indexes, it is a chinese company headquartered there and in the cayman islands for the tax purposes and very complex organizational structure but do you think some point, jeff cox, based on your research and reporting on this, the rules get relaxed enough and maybe in a year, two years if that structure changes at all that it could be reconsidered again? >> alibaba amendment. >> that's a great question. the short answer to the question is yes. i don't think it happens overnight because just as i mentioned the inversion factor here, as well. i think you might see that issue come up and as far as the foreign domicile countries in the way it's constructed and the china thing and any reports or data or anything coming out of china, i don't think that happens any time soon but it does raise important questions and you will see investors clamor more over this as we get into the future a little bit
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more and sort of see the dust clear of what does happen to alibaba hitting the market. >> tom, whose rules are these and how long to take to change them? >> well, the index companies make their own rules and so, for example, msci, even if they augment the rules so some degree, not between now and march of next year that they can actually include alibaba within the -- >> they don't need approval to range the rules? >> absolutely not. >> there will be some msc indexes that alibaba does appear in and won't be the big emerging market index that they have. same thing for ftse. a couple. might appear in a couple of indexes but not the big ones we see traded heavily. >> there's over $100 billion that's covering emerging markets in china. and the fact is ftse and the msci compete with the two big emerging markets, one may have
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al bah be at one point, one may not, big news for the etf business and see how it pans out. >> yes, we will. tom, thank you. jeff, as always. >> thank you. >> see you later. today marks an anniversary no one on wall street wants to celebrate. it was six years ago, the venerable wall street firm lehman brothers collapsed triggering the great recession. dick kosavasavich will joining. a new movie hopes to end your pain at the pump. >> now $20 a day at the pump. >> former shell oil president hoffmeister explains how to drive gallons of gas below $2. we'll talk about that coming up.
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welcome back. today marks six years, 2008, since the collapse of lehman brothers. happened on this date. markets rebounding from those
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crisis lows. we all remember the dow up 48%. since that market low in march of 2009. with us now, in an exclusive interview, former chair and ceo of wells fargo. does it seem like six years? could be like yesterday. i'm sure you have many, many memories of that time. >> i do, bill. none of them are positive but i do have memories. >> yeah. i'm sure. so we look back. we commemorate but we wonder how much has changed. we have dodd frank now. but are things better than they were back in -- before the crisis of 2008? >> well, they're better in two important ways, bill. the first one is there were really only 20 perpetrators of this crisis. people who originated mortgages they shouldn't have or people that securityized the mortgages and shouldn't have. they're bankrupt or out of business and absorbed by
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mainstream commercial banks. the bng that is are left were not tempted to do these bad things and we got the bad players out and very important. the second thing is that although there is excessive regulation, the banking industry is very, very strong, certainly from a financial standpoint, we have more capital than we have had in the last 50 years. credit losses are at an all-time low. profits are at an all-time high. financially, the industry is in good shape. >> all right. >> dick, i did -- this is susan ox and did research earlier this year on the mind-set of people in the financial services industry and stunning thing is mind-sets have not changed at all since before the crisis, specifically on measures like i'm good at seeing patterns among seemingly unrelated events, no surprise financial professionals see themselves at much better on the score than the rest of the population and
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also see themselves at the same place of 2006, 2007. and again, thinking about things like complexity, talking about risk management, there's a strong bias of complexity and the mind-sets have not changed at all since before the crisis. we have higher capital requirements. more regulation. i really wonder if some of the other peripheral problems that drove the crisis are better and are by better. >> i would take issue with that in the sense that the 7,000 main street banks did not have any serious problems. they didn't do the bad things. they were victims of the crisis that occurred because of the 20 perpetrators. they didn't have to change their business practices. dodd-frank says they should but dodd-frank is wrong. these people behaved appropriately. and they're being punished for the 20 bad guys. >> you don't think the higher
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levered trading, a lot of poor practices around consumer protection, you don't think that contributed to the crisis as well? >> it did but there's only about 20 of them. you're missing my point. >> i think maybe we disagree. i understand. i think maybe we disan i gree on that point. >> okay. that's fine. >> banks are highly capitalized now and seems to be a bottleneck. not seeing the lending. become more stringent because of dodd frank maybe or maybe a fear of a relapse back into a recession of some kind. what about that? what do we have to do to get the velocity of money picked up a little bit more in this economy? >> bill, you hit it on the head. it is really regulation i think that's the major cause of the lack of loans. take middle market loans. frothy out there. margins are falling.
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very few loan covenance is almost nonexistent. and it's due to the repurchase activities that are forcing banks to buy back mortgages from five years ago under minor technical deficiencies and also the litigation risk of dodd-frank that says you shouldn't make a loan to somebody who can't pay it back and you can have ten times the litigation risk versus the credit risk. these are policies inhibiting economic growth, make no sense and causing banks to be more cautious than they should be. >> i guess i don't agree with the fundamental problem of a 20 isolated banks. big banks were major counterparties in short-term lending markets to the bad guys, aigs, bears, lehmans. there's been so much commentary about the things of made the crisis and recession protracted
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and repo markets, that's where it started. wholesale funding i think finally left out of the dodd-frank and regulators are starting to crack down on it, too. probably safer now. is it safe enough? i don't know. >> i would agree with you. most of the repo was again within the 20 banks. >> all right. >> just an example. wells fargo, now the fourth largest bank in the country wasn't in the repo market. >> trying to say that jp morgan had no exposure to bear stearns and none of the other had exposier to aig or -- what were we talking about? >> jp morgan was not at risk of failing. >> not of risk of failing bah risk of being harmed like the rest of the banking system. i find this quite to be a lot of revisionist history. >> i need to change the topic drastically. we're getting more on the price range now from alibaba as we get ready for this ipo coming up on
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friday. what do you have? >> yes. we are getting word that it's $60 to $68. $60 to $66 was the range before and narrowed it and raise about $167 billion for the company. at the high end of the range. $68, an interesting number. eight is considered a very lucky number in china and talk about the fact they want an eight involved in that price range because it is considered good luck so we'll see if they can do it at the top of the range. middle of the range that would be $67. so certainly still above the first range. and by many measures a conservative valuation for a company that as we have discussed with a stronghold on the market share in china. we want to talk about with eric jackson. eric at $66 to $68 a share, do you think that's a fair valuation for alibaba? >> i think it's very fair.
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i think there's going to continue to be a lot of interest of hedge funds and mutual funds in that kind of pricing. i expect that it's going to go up a little bit finally prices on thursday, though. >> dick, you have a thought on alibaba and where we stand? i mean, obviously, this is symptomatic of how we're doing these days in the financial services arena with a market that maybe can absorb what is expected to be the biggest ipo in history, especially considering that it's a chinese company. >> well, i've been very concerned about some of these ipos but i think alibaba is a real company. i think valuation in the mid-60s is reasonable and would be a buyer. >> are you concerned at all about chinese regulations, about chinese bookkeeping issues? that we were talking about earlier? >> i am. but again, there's a lot of positives in china and with an
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80% market share in e-commerce, you know, that's a fantastic position to be in. those are real concerns and should be taken to account. >> eric, what about that? the demand is unprecedented. they have had to raise what is already been an unprecedented ipo. when you still have people on the one hand saying they would buy it and they're concerned about regulatory issues in china right now. >> well, bill, i would say, you know, the regulatory issues related to chinese internet companies for 15 years and everybody brings up questions of i don't like the transparency. we could wake up any given morning and buy dues and deemed worthless by the chinese company. hasn't happened yet. i mean, you have to take that risk and compensated on the other side with the potential upside of the potential growth of the consumer and i do think it's a bad rap.
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we all seem okay with mark zuckerberg carte blanche and when you meet the management team at alibaba, they're just as impressive if not more so than the silicon valley gurus and a special company that i think only comes around a few times a decade in technology circles so, you know, i expect continuing high demand for the issue. >> bill, dick, what do you think this says about the fact that the biggest single ipo ever in the u.s. market is a chinese company? there seems to be some irony there, no? >> yes. but, you know, the developing countries are going to be the highest growth areas in the future. just -- they have slowed down somewhat but they're still twice as much gdp growth as the developed countries, so this is just something we will have to be used to. agree with the previous speaker comments of risk and there is a reward here, too.
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that's what you get paid to do as an investor. >> we're all stunned. what do you make of the rise? it was expected in the price range for alibaba. i mean, we are heading toward a hurricane in trading on friday, aren't we? >> yeah. >> it is going to be a big day. i don't entirely disagree with anything that was just said and paid to take risks and that kind of thing. i think people should be aware of them because in a week like this there's a lot of enthusiasm and people focusing on alibaba's financial strength. go back and read the prospectus. >> all 450 pages of it. >> some light bedside reading. morgan? >> eric? i'm sorry, eric, what were you going to say? hang on, morgan. >> certainly risks with alibaba and any time everybody's getting super excited, especially leading up to an ipo, i think it's right to keep your head but, you know, with the pricing that's discussed so far, you know, i still there will be a
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lot of people lining up for it. my biggest concern is their domestic competitor. i'm much more concerned. i think the management team is much more concerned about how they're going to keep pace with another big global internet powerhouse rather than, nlg, governance issues and this sort of thing. >> morgan? >> an interesting thing to bring up given unwith of the earlier discussions we were talking about whether alibaba will be able to make the cut in certain etfs and they make the cut according to the rules that stand for the largest exchange traded funds. but two things that strike me. the first is i'll be very interested to see how day one of trading goes for alibaba listing on the new york stock exchange and according to reports of the last couple of days it did not go to nasdaq and saw that facebook -- we saw facebook debut and go to trade and hit some snafus and interesting to see day one and kind of worries
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me about alibaba is fraudulent activity on the site and been received by luxury retailers. >> well, certainly seems to be priced at something of a discount. to some of the come pet to recalls given the concerns and the demand is very strong and seeing certainly on friday how it trades. thanks for eric jackson and dick, you wear so many hats. >> thank you for that wearing that hat, as well, dick. >> appreciate it. meantime, tesla stock not very popular today. down nearly 10%. tesla's story, of course, popular on today. find out if it was hot enough to make the hot list coming up. and believe it or not, the business model for piracy. it's changing. the story you didn't even know you were interested in. gosh, this is fascinating. so's the new epicenter for crimes on the high seas. these changes could actually have an impact on your money. details on that story coming up.
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how are you doing? the readers are eating up a story of millionaires to leave the country in the next five years or so. based on a survey of barclays bank and basically a better environment and looking for ways to get out. hong kong, canada and the u.s. are the top destinations. number two on the hot list, tesla stock kind of took a 9% pounding today based off of a note of morgan stanley saying it's too far too fast and the ceo said the same thing last week and let's keep pounding it. number three on the hot list today, a wonderful story, months in the making of ted camp here about piracy. and the new take it's taking in the modern times. tankers stealing from tankers. it's great and i believe you talk to ted about that story. i won't steal his thunder. there you go. >> great read. long read there on and looking forward to talking to ted about that. thanks, allen. see you latter.
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no more pain at the pump? new movie promises hitting theaters this week. and the folks of opec may want to get their popcorn for this one. how to get lower gas prices is coming up next. when change is in the air you see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement.
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our best-ever pricing on mobile share value plans for business. now with a $100 bill credit for every business line you add. wait, wait, wait, it's wait, wait, wait...whoa, does she have special powers when she has the shroud? no. guys? it's the woven one the woven one. oh, oh that gives her invincibility. guys? no, no, no... the scarlet king is lord victor's son!! no don't. i told you! you guys are gonna be so surprised when you watch the finale!!! you're so lucky your car has wi-fi. yeah...i am. equinox from chevrolet... the first and only car company to bring built-in 4g lte wi-fi to cars, trucks and crossovers. they're not favored at all. >> that is from "pump."
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it's new film about fuel choice in america and how to break the monopoly that we all experience at the gas pump. >> you just heard the voice of former shell oil usa president john hofmeister and says it could change everything coming to our energy needs. he joins us now on the "closing bell." meantime, john, we want to ask the viewers if they think the u.s. will be energy independent. what's the premise of this movie and how did you decide that something needed to be made about this? >> this movie is about relief at the pump, not pain at the pump. we have known pain at the pump for most of this decade. this reverses it. if we do what the movie promises, we put $1,000 in the pocket of every man, woman and child in this country every year. because it reduces the price of transportation fuel and that reduces the price, could reduce the price of almost everything
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we consume in the country. this is about taking american domestic resources and turning it into gasoline, ethanol, methanol at the pump, giving competition a chance to overcome a single product at the pump. >> so we're talking about natural gas, some of the so-called alternative fuels we would be able to power our cars with away from oil. but isn't it ironic, john, we're also talking about a time with the fracking going on in the upper region of the united states that we may become energy independent simply because of that and may rely on oil more than ever at that point? >> well, i think the natural gas is really the opportunity because natural gas has such a price break from oil even if we're only -- if we are producing all of our own oil. the price break from natural gas, turning it into ethanol, methanol, compressed natural gas, liquefied natural gas, clean diesel, gtl, all the
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opportunities. we have for more natural gas than oil. this represents a huge breakthrough on the benefit of the consumer and it also benefits the oil and gas companies that produce both oil and gas. >> john, i guess my question is, where's the friction? what's stopping car companies from embracing the technology if it is so close and i can't imagine there's a shortage of consumers for a car to lower the gas bill. when's stopping them from embracing it? >> we have two federal regulations in the way. one prohibits people from converting their new modern car to a flex fuel vehicle adjusting the fueling software already in the car. d.o.t. regulations prohiblt an individual from having his car adjusted even by a certified dealer. it is illegal. the second is methanol is currently not a legal fuel. we could make a lot of inexpensive methanol, $1.10 a gallon and put what into the
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gasoline but epa has to declare methanol is a legal fuel. those are the only two constraints that stop us from happening. investors would buy into the infrastructure. they would build it out because they're going to make money. this is a mobile society. we love mobility. we're not going to change mobility. we make it less expensive. >> ladies? >> so, john, you said on your website, you've got a -- nice, shiny picture saying perhaps get gasz down to $2 a gallon but you also then say 70% of american energy consumption is oil and a stranglehold on the market. why aren't you just exclusively focused on the alternatives markets? break a mo knobbly, leave it expensive and get alternatives cheaper? >> people like the performance of oil-based gasoline in the vehicle. and so, the idea -- >> isn't that an argument against the alternatives? >> no. because you blend. you blend the gasoline with the
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ethanol. blend wit the methanol and still need oil products in order to put kind of pizazz in the engine you want and the btus from the oil products and same time using so much more natural gas and cleans the environment and putting out less co2 because you're using natural gas which has half the co2 of gasoline. and so, you're just doing all kinds of wonderful things and methanol mixed with the gasoline, methanol has a higher octane and benefit of the gasoline btus and higher ethanol. drivers will like the product. >> all right. we have been asking the viewers to vote on whether they believe we would achieve energy independence in this country -- >> 53% said yes. >> said yes. so we'll see if that's the case. the movie is called "pump." john, former shell oil usa president, thanks for joining us today. >> thank you. >> you bet. terror is expanding on the
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high seas. used to be somalia was the piracy hot spot. but now southeast asia is the danger zone and it is costing shipping companies millions. we have that fascinating story that's running on right now. when we come back. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ you can't get any thbetter than that. trains. siemens trains are not your grandparent's technology. they're something that's gonna change the cities we live in today. i find it so fascinating how many people ride this and go to work every single day.
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ever since robert louis stevenson wrote "treasure island" in 1883, pirates have captured our imaginations. >> but the new modern day versions of piracy are not content with capturing imaginations. they have much bigger targets. their raids are proliferating at a shocking rate. senior enterprise editor ted kemp has a fascinating report on our website right now. he joins was more on that. what did you find? >> bill, kayla, what we found is this is a much more sophisticated type of operation than what we were seeing the somalian pirates pull off in africa, and they're using an entirely different business model. the global center of maritime piracy has shifted from here, the somalian coast in the gulf of aden, to hear, the area of western indonesia. these waters, including the malacca straits, the singapore
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straits, and the southern end of the south china sea are the busiest commercial shipping lanes in the world. a full third of the world's commercial traffic passes through these waters. shippers and government authorities point out any one vessel's chances of being attacked are minuscule. but the threat and the costs are very real. almost half of the world's pirate attacks happened here in the singapore strait or indonesia in 2013. about nine times as many attacks as took place last year in the waters off somalia and the gulf of aden. and to give you a couple more numbers on that and give you an idea of how much somalia has dropped while indonesia has risen, there were 125 attacks last year in indonesia and the strait of singapore. that's just the ones that were recorded. we're tracking for more than that this year, and in somalia last year, we only had nine attacks that were documented. >> wow. >> ted, this is a much more high
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traffic area than the northeast coast of africa it would seem. any risk to travelers? >> not so much. this is an area that is really dominated by commercial traffic. there is roughly every four minutes a different merchant vessel enters this very really very narrow strait, which is in some points only 1.5 kilometers wide. we're looking at all of the commercial shipping that goes from europe to china and back, and all of the persian gulf oil that goes from that part of the world to the big economies of asia, china and japan. >> great stuff, ted. great read. good job. and it's been burning up our website, as we mentioned earlier. >> everyone should visit and read it. really fascinating article. >> thank you. so the trading day is over. you know what that means. we are one day closer to the big alibaba ipo coming up on friday. >> up next, we'll get thoughts from the panel on pricing, impact and more. "closing bell" will be right
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and see them through, we say: let's get to work. because the future belongs to those who challenge the present. so where do we stand on the alibaba ipo as we head towards friday? >> we did get the increased price range filing, 66 to $68 a
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share. >> could it go higher from here? >> it could, but they're trying to be very conservative, trying to price it at a discount and trying to have a value proposition for the key relationship investors, big hedge funds, big blue chip money managers, and they're trying to create some upside for the company here. we'll see if they succeed in doing that. >> i'll say the one thing i'm confident of is it's going to be a smooth trading day. >> it better be. >> in stock exchange, everybody learned a lot from facebook. they have been running drills. i think they are ready. >> it's going to be right there. it will be in 2 same spot where they traded twitter on the first day. and that's no coincidence. as we said, alibaba wants us to remember the twitter ipo and forget about the facebook ipo. >> they would want us to remember gm or visa or really any major ipo where that stock came to market and it went smoothly. facebook being the outlier. and they are taking a page out of facebook's playbook, or taking the opposite of that, which is they're not adding more shares, which is something facebook did. >> i'm not used to being like the cold shower on the panel.
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i realize i have been for the last hour. i'm just saying there are a lot of things that people used to talk about with respect to alibaba that they don't anymore. i'm sure things will be fine. i hope so. >> but monday, there is a tuesday. >> if you're a potential long-term shareholder, you really need to go into this with your eyes open. >> good reminder. morgan? >> don't forget we have a lot to get through before we even get to alibaba debuting on the stock exchange. we have the fed, the fomc, everything that does or doesn't come out of there. the scottish referendum. there is a lot to take a look at. we have the iphone 6 and 6 plus finally shipping out and hits the street on friday as well. it could be a big tech day. >> i don't know. maybe we could have a jobs number. luckily we don't have one this week. >> thank you all for joining us. we appreciate that. >> we do have "fast money" coming up, though, in just a few seconds here. you guys talking alibaba as well? i would imagine. >> just a little bit. in light of the range, we have
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the alibaba playbook. so we have the trades. not only on alibaba itself, but yahoo, softbank adds well as the chinese internet stocks. and we talked about the nasdaq crush all day long. biotech, one of the sectors really feeling the pain. so we have a top biotech analyst here. what you should buy on this pullback to be positioned in 2015. >> we'll sit here and watch. go ahead. >> i hope so. "fast money" starts right now. live from the nasdaq market site in new york city's times square, i'm melissa lee. your tjaders are tim seymour, danica patrick, karen finerman, and guy adami. just last week saying to short crude oil. >> you have to be short of crude oil. you have no choice. and you have to be short of brent. >> why he is now changing his tune when he joins us live a little later on in the show. first, the top story. the nasdaq suffering the biggest drop in more than six weeks, seeing the worst percentage decline since july 31st. clocked in with its worst percent drop in over a month and a half. guy am


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