Transcripts For CNBC Closing Bell 20171213

Low. And its projected as the population continues to age in the baby boomers retire that that ratio will continue to rise in an unsustainable fashion. So, the addition to the debt taking what is already a significant problem and making it worse is it is of concern to me, and i think it does suggest that in some future downturn, which could occur just for whatever reason, the amount of fiscal space that would exist for fiscal policy to play an active role it will be limited, it may well be limited. Sam fleming with the financial times. Couple of longer term questions, first of all, midway through the year, hot weather inflation targets might need to be raised. Obviously been a lot more debate and have had systems since then about this it may not be an imminent issue, it may be something the feds may be discussing over the coming years. Some sort of change to the inflation target second of all, the amount of stimulus tools that the fed may have at its expo sal are fairly limited. One of the incoming governors, Marvin Goodfriend talked about the merits of negative Interest Rates. I wondered whether you see that as potential at least in theory for the fed to consider, should it run out of other options thanks so, right now, the fomc is not discussing or considering its inflation target. We do see inflation as likely moving up to target over the next couple of years, and i would say you said our stimulus tools are limited. I would want to emphasize that if there were a negative shock to the economy, we do have some scope to cut the Feds Fund Rate and there are other tools available, ones that weve used previously Forward Guidance in asset purchases. So i think were not out i wouldnt say that were out of ammuniti ammunition, but certainly its been recognized and ive emphasized myself that in the longer run, we may be and well have to see how this works out, but we may be in low Interest Rate environments where it could prove useful to have additional scope to conduct Monetary Policy and in that context, i think additional research, the academic economists or others are thinking hard about what more could be done, and i think these are matters that are certainly worthy of further study. [ inaudible question ] so, i mean, on that, i would say we have thats not something that we have studied inside the fed to any considerable extent. And havent seriously thought about using ourselves during this last downturn and recovery. We have watched whats happened in other countries, i think thats worthwhile. And i would say, its an area that academics may have interest in in the future and is worthy of some study, but, it hasnt been part of the feds agenda. Hi, chair yellen. With politico. I wanted to ask you quickly on the regulatory side, in your testimony to congress recently, you spoke positively about the senate Bank Regulatory reform bill, and i was wondering if there are, beyond that bill, if there are tweaks to dodd frank that you think might still be beneficial and then, somewhat related, governor powell recently said that there are currently no u. S. Banks that are too big to fail and i was wondering, do you agree with that assessment well, i mean, you know, i think im not familiar with every detail of the bill, but i think the bill does address a wide range of issues that, you know, weve highlighted in the past as being ones where perhaps additional flexibility to tailor our supervisory requirements would be worthwhile. So i dont have additional things on the congressional list sorry, and what the other thing. Right. Too big to fail. So, you know, we continue to work seriously on resolution and the resolution plans, living wills, and the structure of systemic firms to ensure that it would be possible to resolve a firm under the Bankruptcy Code would be the top choice of methods or alternatively under the order of liquidation authority. And i think its fair to say that over time, we have learned more ourselves and more clearly detailed our expectations for the firms that file living wills. And the firms themselves have made considerable progress in, you know, changing what they do, whether its adopting financial contracts that would facilitate al resolution rather than disorderly unwinding of contracts, making sure that theyre appropriately dealing with shared services so key services will be able to continue governess arrangements, legal entity structures. The firms have all made progress in adapting to our expectations of what would enable a successful resolution. So, i think its an ongoing process and i believe weve made substantial progress to deliver a significant stimulus and it will be on the demand side. You expect growth to be faster you expect unemployment to be lower, and yet, somehow, inflation is going to remain at 2 for the foreseeable future. Could you describe what has changed about your Economic Assessment so that everything has changed except inflation well, you know, the projections that were showing you today, many factors went into that fiscal policy being one of the number of different factors. And, you know, youre looking at 16 participants who have made adjustments to their Economic Outlook for a whole variety of reasons, including in some cases rethinking the fundamentals that went into their original forecast so there have been modifications in Different Directions by different participants so its i would caution you about the dangers of looking at the median and acting like that is one individual who is made a change to their forecast thats a leap that isnt quite justified, but look, generally, you see modestly faster growth over the next couple of years. Which is consistent and i said, i think for most participants reflects partly an impact from taxes stimulating Consumer Investment spending. But its not a gigantic increase in growth that since relative to september. You do see a lower path for unemployment, but remember that inflation is also been running low on a persistent basis and the committee does have a concern about inflation and wants to see it moving up. And on balance, you see only modest changes, slight revisions to the path for the fed funds rate, you might think, well, shouldnt i see more well, okay, growths a little stronger the Unemployment Rate runs a little bit lower that would perhaps push in the direction of slightly tighter Monetary Policy, but, again, count the balancing that is that inflation has run lower than we expect and, you know, it could take a longer period of a very strong labor market in order to achieve the inflation objective. Yahoo finance William Dudley of the new york fed said that the fed is exploring the idea of potentially having its on Digital Currency what use to you see that it could have for the fed and do you see the potential of a currency that might be considered legal tender . So i want to distinguish carefully between Digital Currencies and crytocurrency there is a discussion going on among central bankers about the potential merits of adopting a central bank itself, adopting a Digital Currency and there might even be a central banker or two around the globe that might go in that direction. But, i really want to caution that this is not something the Federal Reserve is seriously considering. At this stage. It is something that Central Banks are looking at to see if there could be benefits from doing it chair yellen before i ask this question, thanks for the stewardship in the economy and some of the harder hit parts of my own family. Thank you your tenure, weve seen six Federal Reserve president s appointed one was a woman and five were men. I would like to know how that comports with your commitment to skbre gender diversity and second, i want to know if appointing president s needs to be more transparent and accountable. Recently the richmond fed board took 11 months and they came up with a candidate who was another fed board member so im wondering what you would say to critics that say that looks like cronyism and if you think this could be a more open process. These are votes on national monitory policy. So i would agree with you that these are important appointments under the Federal Reserve act, the nonbanking directors of the reserve banks have responsibility for conducting a search. And the board of governors has to sign off on the candidates with me very clear and we monitor ongoing searches very carefully to make sure that absolutely every effort is made to create a pool that is diverse and that there be a national, National Search and that every attempt should be made to create a diverse pool at the end of the day we cannot guarantee that the outcomes of these searches will result in an increase in diversity. I mean, ive been very pleased to see that theres been some success in that regard but we have signed off on the individuals who were appointed and have meld the view that these are individuals who work who were qualified to serve in these positions i would hope to see greater diversity. It has been a challenge to achieve that well, i think the process has become more open and number of the recent searches there has been outreach, public outreach, information on websites, acceptance of potential names and nominees and those have gotten careful consideration there has been there have been meetings in some cases with Community Groups to try to enlarge the pool and get suggestions, and i think thats appropriate and i think it has moved in the direction youre suggesting im wondering if you have any advice for incoming chair powell well, my colleague ive had the pleasure of working with him now for many years and hes somebody who understands the Federal Reserve very well and shares its values and as i mentioned in my Opening Statement he is committed to the mission of the fed to its independence and to its acting in a nonpartisan, nonpolitical way. He is somebody who has participated in the fomc now for many years to the best of my knowledge. I dont believe hes ever dissented. I think there is strong consensus in the committee for the gradual approach that weve been pursuing and governor powell has been part of that consensus. So, i feel hes very well positioned and very knowledgeable of all the ins and outs of everything that the fed does in supervision and the Payment System has played an active role there and in monitory policy and i have confidence that he is very capable of steering the Federal Reserve in the years ahead as long as everyone gets a turn this is american banker. Sort of related question to what nancy was asking, thereve been some reservations among some Democratic Senators recently during governor powells confirmation hearing and during the markup of the relief bill about the approach towards regulation that the new leadership appears to be adopting do you have any similar reservations about the new leaderships ability to deregulate in a way that deep keeps an eye towards the stability of the financial situation and sort of the advances that have come federal postcrisis regulation so i would say that all of my colleagues on the board have expressed a strong commitment to keep in place the core reforms that have produced a stronger Financial System, and im considering their stronger capital particularly for the most systemic institutions Higher Quality kbal, stronger liquidity requirements, rigorous stress Testing Program and resolution planning that will make it more possible to resolve the firm that encounters significant distress so i have heard broadbased commitment to those things and i think they are the core of the reforms we have put in place i think all of us agree that it is appropriate to tailor regulatory requirements in all of those areas and others to the systemic footprint affirms weve done a lot to do that and i think there is more that could be done and in some areas, it would require legislation in order to do that, but i believe all of my colleagues and i are in agreement on that and were all focussed on Community Banks and want to find ways to relieve burdens. So in those important ways, i do think that all of my colleagues are in the same place with respect to their priorities. Are there any important differences between your policies and your vision on regulatory so i have not seen anything emerge at this point that i would describe as a significant difference hi, Howard Snyder with reuters. So, you mentioned in response to steves question that asset valuations you didnt think were on the high priority risk list right now. Im wondering what do you think is on that risk list and more broadly. What have you left undone . Youve gotten high marks for bringing the economy back twards its goals, but are there things that are going to nag you in february and say really, i wish id seen this to completion . Were not doing negative Interest Rates, were not doing inflation framework, whats at your top of whats at the top of the to do list that you are not getting to see to break the ground here . So you asked about the risk list there are always risks that affect the outlook, we tend to focus in our own evaluation on Economic Risks and weve characterized them as balanced and i think they are balanced. I can always give you a list of, you know, potential troubles, International Developments that could result in downside Economic Risks, but look, at the moment, the u. S. Economy is performing well. The growth that were seeing, its not based on, for example, an unsustainable buildup of debt as we had in the runup to the financial crisis the Global Economy is doing well, were in a synchronized expansion, this is the first time in many years that weve seen this. Inflation around the world is generally low. So, i think the risks are balanced and theres less to lose sleep about now than has been true for quite some time. So i feel good about the economic the Economic Outlook. I feel, you know, good that the labor market is in a very much stronger place than it was eight years ago. We created 17 million jobs weve got a good, strong labor market and very low Unemployment Rate and i think thats been tremendously important to the well being of american households and workers and i feel very pleased when i hear anecdotes from firms that tell me theyre having a hard time finding workers and they talk about given that theyre taking on people with skills that dont quite match what they want, but theyre training them and, you know, giving them the training that they need in order to be able to fill jobs. I think thats development that is a natural one that occurs in a strong labor market that tends to build Human Capital and worker skills and that thats a strong positive. As i mentioned, i think the Financial System is on much sounder footing and we have done a great deal to put in place greater capital liquidity and so forth that make it less crisisprone and that man an important objective. Whats on my undone list, you ask, we have a 2 semitic inflation objective and for a number of years now inflation has been running under 2 and i consider it an important priority to make sure that inflation doesnt chronically undershoot our 2 objective, and i want to see it move up to 2 so, most of my colleagues and i do believe that its being held down by transitory factors, but theres work undone there in the sense we need to see it move up in line with our objective thank you, chair yellen what do you think will be the drivers of inflation over the next couple of years and how long will the committee go with low unemployment, low inflation before you rethink Monetary Policy this gradual reacts, thanks. So young i think for a number of years, so weve had an undershoot of inflation for a number of years, absolutely recognize that i think until this year, undershoot was understandable. First we had a good deal of slack in the labor market. Then we had plummeting oil prices and beginning in mid2014 there was a marked appreciation in the dollar. And those three factors held down inflation for a number of years. Now, in 2016, core inflation came very close to 2 . We seem to be on a path of inflation moving up and this year beginning in march, there seemed to be a sequence of negative surprises some reflect onetime factors that were easily identifiable like a marked decline in quality adjusted cell phone plans. There may be other factors that are not some easy to name, but we would judge note inflation doesnt always follow exactly there are areas and many factors that effect it beyond the key influences of labor markets slack, Exchange Rates and import prices and oil prices. Those are three big ones, but there are other factors that affect inflation too and our judgment at this point is that transitory factors that are unrelated to the border mac coEconomic Outlook are holding inflation down but i have tried to be straightforward in saying that could end up being something that is more ingrained and turns out to be permanent. Its very important to watch it. And if necessary, rethink whats the determining inflation, a possibility is that the longer run sustainable rate of unemployment is its been coming down estimates in the committee have come down its conceivable that they need to come down even more its not my judgment that Inflation Expectations have slipped, but that also remains a possibility that needs to be monitored. So, there are, you know there could be a rethink of inflation, i think its important to watch inflation outcomes carefully and if we dont see inflation moving in the manner that the committee anticipates to alter policy so that we do achieve ur 2 objective, but, at the moment, most of my colleagues and i believe we are on track to achieve it hi chair yellen, los angeles times, im wondering, you mentioned this is your last News Conference what are your plan kbhs you step down from the fed . Are you going to remain in washington go back to berkeley. And also im curious if you have any disappointment that youre not going to be continuing in this job as some of your predecessors have done so, on my plans, i dont have anything definite for you. I guess i have o men berkeley and i would say my spouse is on the faculty. Hes a professor at georgetown, and would like to stay in his job and we expect to maintain washington as our base, but i dont have any definite plans. Lets see, and you asked me if im disappointed let me just say that i have served in senior positions in the Federal Reserve now for quite a long time. I became president in San Francisco in 2004, and i have participated in the fomc since that time as president , as vice chair, and as chair. And its been an immensely rewarding experience for me. I feel very positive about what weve been able to accomplish. And feel tremendous, you know, loyalty to the institution so, i did make the judgment that this is the right time for me to leave, but, i feel i have served in senior positions at the fed for a long time and its really been an honor and a privilege for me to have had a chance to do so. Adam shapiro. Glad to hear youre staying on the east coast curious i wanted to follow up to the bitcoin questions, because youve lived through what we all experienced in 2007, 2008, and should the fed take a more active role in trying to identify who some of the counterparty and what the exposure is with bitcoin as a potential threat to Financial Stability . It just the best minds of the fed can sometimes miss these kinds of threats your predecessor mr. Bern i can said in 07 that the contagion would not affect the Housing Market or the economy. So are we underestimating the potential threat from bitcoin as it runs up in value . Well, i certainly agree that its important for the fed to attempt to understand emerging risks to Financial Stability. And to be looking not just in the Banking System, but outside of it for developments that could pose Financial Risks and we are doing that, and i would say one of the changes during my tenure is we devoted, decided in the aftermath of the crisis that we needed to devote considerable resources to Financial Stability, to monitor for emerging threats and now, we have at the board a fullblown division of Financial Stability thats involved in doing that. Now, when you ask about bitcoin, i still see the Financial Stability risks from it as limited. Often risk threatening Financial Stability arise when theres exposure of the Banking System to flux chew waiting asset valuations, and i really dont see any significant exposure of our Core Financial institutions to threats from bitcoin, if its value would fluctuate, i dont see a threat to our Core Financial institutions indoubtedly there are individuals who could lose a lot of money if bitcoin were to fall in price, but i really dont see that as creating a full blown Financial Stability Risk Bloomberg television and radio, i suppose i should be asking you a value victory question since its the last question, i dont think you can top what youve already said couple of cleanup questions here, President Trump, while you were speaking just said that he thinks his tax plan will produce 4 growth. Do you think that is possible . Second, do you think that there is any fed blame or complicity in the flattening of the yield curve and are you worried that there might be some sort of policy mistake built into that that could slow the economy . And the last question, which is a bit of a value victory, everybody on wall street wanted to ask you for four years since this is your last press conference, can you tell us which dot is yours well, i can answer the last question first, the answer is no, ive never been willing to reveal which dot is mine and im not, im not going to change that now so, you know, my assessment and i think most participants assessments as i said of the impact of the tax policy on growth has been informed by work by the joint taxation and other analysts and everyone recognizes that theres uncertainty about what the economic effects would be and i wouldnt want to rule anything out it is challenging to achieve growth at the levels that you mentioned. Look, if the package were to stimulate growth of that magnitude, let me just say again, the Federal Reserve would welcome that if its a favorable supply side developments that would be compatible with the attainment of our employment and inflation objectives thats something that would be very, very welcomed, but it would be challenging to achieve numbers like that. Lets see, i think you also then asked me about the yield curve and i mean there is much discussion about yield curve inversions and whether or not a flattening yield curve could signal a recession is that the brunt of your question so this is something we have discussed and looked at. The yield curve has flattened some, the flattening yield curve mainly reflects higher short term rates the yield curve is not currently inverted and i would say that the current slope is well within its historical range. Now there is a strong correlation historically between yield curve inversions and recessions let me emphasize its not correlation. I think there are good reasons to think that the relationship between the slope of the yield curve and the Business Cycle may have changed and one reason for that is that longterm Interest Rates generally embody two factors and the second piece is a socalled term premium that often reflects things like inflation, inflation risks typically its been positive so when the yield curve has inverted historically, it meant that short term rates were well above average expected short rates over the longer run. Thats what it means and typically that means that Monetary Policy is restrictive, sometimes quite restrictive. And some of those recessions were situations in which the fed was consciously tightening Monetary Policy because inflation was high and trying to slow the economy well, right now, the term premium is estimated to be quite low close to zero. And that means that structurally in this can be true Going Forward that the yield curve is likely to be flatter than its been in the past so it could more easily invert if the fed were to even move to a slightly restrictive policy stance you could see an inversion with a zero turn premium. The fact the premium is low and the yield curve is generally flatter is an important factor to consider. Now, i think its also important to realize that Market Participants are not expressing heightened concern about the decline of the term premium and when asked directly about the odds of recession, they see it as low and i would concur with that judgment. Thanks very much. And thats janet yellen, chair wochlt delivering her last press conference before her tenure ends at the beginning of february to make way for President Trumps appointee Jerome Powell to replace her a number of questions she took all of them touching on legacy and questions about, you know, students she might inspire to get in the field were focussed on the Market Reaction welcome to the closing bell by the way, everybody interesting to look at the dow up 127, thats little bit higher than where we were in fed statement came out around 2 00 p. M. Otherwise, not a ton of movement, check out the dollar, theres a little bit more of an outsized reaction moving lower, yields moving lower as well if they were looking to see whether they would maybe be looking for four rate hikes next year for example, it looks like theyre keeping it more to three and that explains the Market Reaction were seeing. The dollar interestingly as you pointed to highlighting the only real asset class that did move like that near the highs of the day with the dow. On the list of potential risks that shes assessing so thats sort of an encouraging thing for traders. Some slighter more clear passes on bitcoin not really moving the bitcoin price. And probably my favorite little question at the end nerdy one been but she was asked if she could reveal which dot in the fed projections was hers and it shows how nerdy we are. Got a loud laugh here. Lets discuss further. Joining our Closing Bell Exchange today ill start with you, we started the day 2. 42 on the ten year. Weve slipped significantly, why . Well, i think the inflation dated this morning was one of the reasons, the core, but year over year core, at 14. 7 was a bit surprising i think that was part of it that i think generally speaking we found resistance right below the unchanged level a year, 244, 245, weve stopped in the low 240s several times i think this downdraft weve seen in rates after janet yellen may be short lived do you realize we have let me think, one, two, three, four, five we have eight fed meetings tomorrow, Central Bank Meetings only five are important. The rest are small countries mexico are the ones that you probably should Pay Attention to, and i think that rates are going to be label the stubborn until we get through tomorrow, but it is crunch time. If youre looking for rates to close under price and overyield where they closed last year, i would think that tomorrow is your last day for hope, otherwise, were going to see things slip way dollar index is giving ewe tell here. Dropping twothirds of a percent. Little bit over a week, that is significant to Pay Attention to. Kenny, what about you what are you watching here either in terms what have you just heard or the Market Reaction two things. What we just heard, we didnt hear anything more than what we expected i think maybe the rate, the number of rate hikes might have been a little bit of a surprise to some people i think three or four was where we are, i think three now like you said, tends to be where its going to show. But, im interested in the way the market has reacted and hasnt reacted, and that tells you that investors are very comfortable with what they expected or to say and what she did say, she didnt surprise anybody, and i think, you know, that clearly the market continues to get some boost here from whats going on in d. C. In terms of the tax package theres still not clarity with that, and i think were in the by the room, sell the trade mentality on that tax package. And Steve Leishman is joining us too, he just got out of the conference you asked her about bitcoin. The yield curve, pressed by people saying if growth is so good and the job market looks the way it is. Who cares if your inflation target isnt at 2 there was also there was that comment, kelly, but the notion of a little bit of contraction in there rate, they raised their growth forecast by a not small amount, 0. 4 up to 2. 5 and changed their rate outlook and didnt change their inflation outlook much that was significant she was fairly upbeat on the potential of the tax cut bill in terms of the ability to at least modestly increase growth, modestly increase productivity so a little bit more favorable than i heard her in the past as it becomes lost, she feels more free to speak about or closer. But also as you said, talked about the market, i asked her about valuations, they were not flashing red or even orange at this point when i think of stock market valuations. Heres bitcoin is. It is a highly speculative asset. And the fed doesnt really play any role, any regulatory role with respect to bitcoin other than assuring that banking organizations that we do supervise are attentive that theyre appropriately managing any interactions they have with participates in that market and appropriately monitoring antimoney Laundering Bank Secrecy act, you know, responsibilities that they have. So, kelly, while i went out last night and heard a bunch of 20 something musician talking about bitcoin, and just made a sale and made 200, its a apparently not big enough right now to be on the feds radar when it comes to issues of payment or financial risk. Steve, i only made 200, he must be joins aggressively it was a quick thing he did hes a drummer and i was at a bar where i was playing music and i was talking to one of the muse sigss, these guys were outside all talking about bitcoin, that to me is the worst sign of all. When the 20 something guys are out there talking about it, its really a sign of a speculative fwoubl me. Michelle, i want to ask you about those comments that steve pointed to about the tax reform bill specific quote was it could lead to a modest lift to gdp growth in the coming years as steve said, that was a positive term, but said personally, she is concerned about debt to gdp levels she is. Shes trying to weigh both sides by knowing that it could create some short term boost to the economy, and she even mentioned as steve said, some of these longer term issues, the fact that you can create some supply side effects that are positive, boost the capital stock, maybe even lead to productivity growth, potential growth, although, its interesting that officials did not pencil that in you can see that they did revise up the trajectory of growth, but they did not change for longterm gdp growth, if they are incorporating stimulus, they do not anticipate its going to change long run estimates. Then as you suggest of course chair yellen talked about some of the concerns around the stainability of the debt which is obviously an issue for the longer term, but something that shes cautioning the policy makers should be taking into account today as well. Kristina, when you look at the probably the biggest mover again is just to go back to the u. S. Dollar here so while a lot of as we said, stocks kind shall have rugging this off, a lot of people still wondering how this exactly sets us up for 2018, the weak dollar, doesnt that, does that bode well for the market . I mean, how long do you think it can persist here how do you think that sets us up for next year . Well, i certainly think the weak dollar could persist far while, but we have to recognize that much of this is moot. Because the class of 2017 fomc is coming to an end and were going to have a new class, the class of 2018 and that fomc could be decidedly different, decidedly more hawkish so in monitory policy discussions, theres a potential that he could defer to others on the fomc, particularly the vice chair. So that appointment carries more weight and we dont know what that is yet. And then we also have members who will presumably be on next year like Marvin Goodfriend. Again, someone whose been a critic of qe, someone who has been an advocate for more rules based Monetary Policy. So, we could see a very different fed in 2018. Yeah. Omar, this fed rate hike day should be a good day for banks as we look at the s p right now, financials the worst performing sector down about a percent. Why do you think that is and of course, janet yellen did also mention the shape of the yield curve towards the end of the conference saying too many hikes could lead it even to invert yeah, well, you know, what just happened with the fed was already priced into the market in a lot of what we have served in the performance after the conference its really just a confirmation that the market, the equity market is in a risk on environment, you know, the chair yellen clearly confirmed that her legacy will go as somebody that maintains stability and fuelled a lot of sentimenting to the market i would actually add also that a lot of the activity related to the yield curve is also related to what happened with other Central Banks and not necessarily that reflection of the economy in the u. S i think what we will have to tomorrow will probably give us a little more indications on what the ecb plans may be, and that may change very quickly in terms of, you know, how the yield curve actually shapes and it is obviously better for the banks hey kelly yeah, real quickly. Last word, steve theres something i didnt have a change to talk about, there is change in the language on the job market. Yellen talked about it during the press conference i wonder if the fed is getting close to drawing a line in the sand when it comes to the strengthening jobs market. They change from their supporting strong labor market initiatives to what was supporting further strengthening in the labor market. I think the fed has had just about enough of when it comes to the strength of this labor market and trat jekt ri of unemployment, and i feel like were on the verge, and kbron where this language came from, of maybe the fed goes a little bit stronger if the labor market were to strengthen from here i think theyre okay with the current level and the current trajectory of policy, i think if we go to another level and strengthening of the jobs market that may precipitate further action well see, interesting setup for next year. Thank you for joining us, did i get everybody . Thank you so much for joining us to react to what we just heard lets focus to other breaking news this hour President Trump speaking on tax reform and eamon has more for us. Reporter for those remarks came within the last hour here at the white house the president speaking in the grand foyer at the white house giving some remarks, but taking the opportunity to bring up a number of what he called regular American Families to talk about how the tax cut bill would impact their lives and what they think they would use the savings for. The president very much putting this Financial Sales pitch in the context of american prosperity, the american dream, and the ability of families to pass along a better income and better lifestyle to their children but take a listen to this one moment kind of interesting, the president seemed like he almost didnt to want jinx himself in terms of talking about how close they are to getting the bill passed heres the president as a candidate, i promise we would pass a massive tax cut for the every day working American Families who are the backbone and the heartbeat of our country. Now were just days away, i hope, i hope, you know what that means, right from keeping that promise reporter that comment the president made earlier today when talking to orin hatch he was giving out accolades to the senators and the representatives for their work on the tax bill, but then said wait, we dont have the bill passed weve got therein before gotten close before and it hasnt happened. The president very much on his mind today weariness that the bill might not come together republicans do have the votes up in the United States senate. Theres a bunch of notes counting going on. There are one or two wavering senators it does seem they do have the votes not wanting to jinx things here at the white house, back to you. Perhaps urgency after doug jones victory in alabama last night. Thank you. We have a market flash on the banks here leslie picker has more leslie hey kelly, i wanted to draw your attention to some announcements in the wake of feds decision to raise Interest Rates bay quarter of a percent they have each increased their prime lending rates to 4. 5 from 4. 25 , it is Effective Immediately while citi is effective tomorrow back over to you guys. Thank you very much for that, leslie its going to be interesting to watch these Going Forward for the bank so far, there hasnt been much passing on of the rate hikes which has been encouraging for the banks. It gets harder for them encouraging because they dont want to. For their shared prices. No, no, no, but it will be always harder as you get later in the rate cycle not to pass on the depositors it increases next year as it has this year. Anyway, switching back to the fed decision and press conference weve just been listening to, outgoing Federal Reserve wrap ugh her final News Conference moments ago following the feds decision to raise rates to 1. 5 from 1. 25 thats the range joining us with thoughts is Richard Fisher former dallas fed president. Thank you for joining us by the way, why do they still have the range cant they get rid of the range and pick a number . Well, its actually a corridor between what you pay on excess reserves and the way the repo works the point is, theyre moving rates gradual upward i dont view this as relative to whether weve reached it or not. To me, this is a Risk Management exercise and i think the chair powell made it clear they want to move to a neutral rate of 2. 5 thatd be three or four moves after the move today they want to pair back their Balance Sheet and as he mentioned in the 2. 5 to 3 trillion from 4. 5 trillion now i think the reason they want to do this is theyre late in the cycle. Chair yellen just pointed out, theres a reasonable expectation that tax reform, plus the kind of regulatory changes weve seen in terms of implementation will bush it out. At some point, they want to mitigate it a downturn theyre able to cut rates at that point, having stored some up, thatll be good. And if that isnt sufficient, they can rebuild the Balance Sheet because what we did when i was at the fed and over the last few years, is establish the principle of using the Balance Sheet which was not an operating principle of the fed so to me, this is very good Risk Management i think shes done a brilliant job in setting this up, starting the exit building up acorns in the tree to use later on if they need them and i dont expect jay powell to change things very much. Richard, steve i thought it was a great value addict ri by the way, performance by janet theres no drama to janet. She has a very even keel i give her a total a plus mrs. For what shes doing on her stewardship. And she wouldnt tell us which dot was hers, richard, and in terms of the point steve mentioned earlier, we have a big upgrade to gdp growth, but dont have the accompanying upgrade to inflation and to number of hikes. To what extent does that worry you that that gdp upgrade is a temporary one and not a particularly robust one . No, i think there are two things steve also, he was correct to naengs, but i had didnt mention their estimate of where unemployments going is improving. In other words, closer to the 3. 9 range one would think all things being equal that would lead to more inflationary pressure, but they do have this fixuation with the temporary forces that are holding back inflation, we do have the rampup of that as we had globalization come in in the middle part of the beginning of the century. So, i can understand their reluctance to mark up inflation, if we do have a surprise next year, i think its going to be that inflation will be above 2 and a little bit higher than people expect, not out of control, but i think that could be why, you know, we may be surprise the next year, but well have to see. But there is a contradiction their and steve was correct. Richard, thank you for your time today appreciate you joining us. Thanks so much. Bye bye. Richard fisher is the former president of the dallas fed. Up next, were coming right back with the closing countdown. After the bell, more reaction to the News Conference you just heard from janet yellen when we speak to jeff guocnlk, well get his live take. Stay with us what are the ingredients of a life well lived . Is it the places you go . The things you own . Or the people that fill it with meaning . For 150 years, generations of families have chosen pacific life for retirement and Life Insurance solutions. Protecting whats most important to you. Thats the power of pacific. Ask a Financial Advisor about pacific life. So thats the idea. What do you think . Hate to play devils advocate but. I kind of feel like its a game changer. I wouldnt go that far. Are you there . Hes probably on mute. Yeah. Gary wont like it. Why . Because hes gary. phone ringing what . 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Industrials are up there as well look at the bottoms, financials should be good for the banks, but they have outperformed and included today they were one of the best performing sectors just had another look as well at the dollar index near the lows on that, yes, we got a hike, but perhaps not a as many as people thought. Significantly down 0. 7 here it is, the lull we had this is trat addition runup into a fed meeting particularly when theres a press conference going on. We went up right after the fed and with good reason they did everything the market wanted them to do. Most importantly theyre expecting free rate hikes. Thats what the markets expecting next year. They affirm that then they said inflation would be below 2 market friendly and they upped the Economic Forecast little its no surprise it went up. Traditionally you get a selloff after the fed comes out. And thats exactly what were seeing here today. So i wouldnt put too much into this i want to know Bitcoin Futures had a dip below. We had trading fall dropped about 10 . There you see on wednesday, given the runup that weve seen, i dont think this is much of anything, but the spread between the cash and the futures is very narrow now and thats a good sign this is a Good Development overall. Important note to hear from him, we wouldnt expect it to be bullish. Clearly there were slightly negative comments. To what she said about the market levels. Its not a major risk factor shes focussed on. There goes the bell for the day ringing and the nasdaq darling ingredients. Dows up 88 points slipped a little bit in the last five minutes of the session thats it for the first half kellys got the second thank you, welcome to the closing bell everybody, interesting action on the bell here today dow much off the highs of the session, its up 86 points right now to 24590 now that is good for a record close here, but the dows outperforming the other averages with the exception of the russell. S p turned lower on the bell shed just about a point there. 2663 for the broad market after the fed Decision Just two hours ago in the press Conference Since then 6875, its about 40 points off the closing high from the end of november and the russell 2,000 is the strongest performer today of the major averages, small caps up more than half a percent, as it looked like we had moves on tax reform close to getting that deal done. Well have much more on all of these markets in just a one moment double line capitals will join scott wapner in an exclusive interview to weigh in and on Janet Yellens final News Conference as fed chair today. Joining me now, cnbcs senior markets commentator, michael here on set with me, jim bianca checking in from chicago, i think. Kevin oleary, chairman of oh shares etfs, where in the world is kevin today kevin is in toronto today. Hes in toronto i never know when with you, kevin, thanks for joining us stocks moving on Janet Yellens final News Conference. Raising rating and leading the dow by the way wx we saw from the blue chips was caterpillar having a strong day today, ibm was the laggard over on the s p century link was the top gainer while fox trailed behind michael, where do we stand a lot of as expected stuff today, we had the gentle rally for most of the day, gave up most after the fed the fed was an as expected, and then the question for the markets is obviously the last conference from janet yellen, what is the value in meaning of 2018 projections if youre going to have that turnover at the top . Because theres also turnover amongst the voting members the whole committee there are two today who wish they had kept rates steady yes, theres a camp that says look, theres not much to do when inflation is where it is. Obviously thats the source of much debate, and that i think chair yellen has managed to kind of, i guess, kind of give an airing to that debate as to whethertheres a structural reason inflation is where it is. They said they were going to raise it four times, they raised it once. We had abig lift with the fed to see which way 2018 breaks kevin quickly to you. From this rate hike decision today, market response is set up in 2018. Rates have continued low and the thing about the fed is it doesnt matter until one day it matters and i think today might be a time when people start to contemplate four fed hikes next year a full 1 rise, thats going to have some head twoinds equities. I think that came into the psyche of investors today for the first time in a long time. I think i had hair last time i was worried about the fed. All right lets talk about some of the other major news out of washington today, the gop house and Senate Leaders reaching a tentative tax deal which sources say would include a 21 Corporate Tax rate and no corporate amt. Jpmorgan jamie diamond weighing in on this earlier today on the corporate side, if the benefit is not going to be like immediate, okay, you do have the reduction taxes, companies will retain mar capital and start to use that over time youll compete away the advantage, some will raise wages, some will buy companies, some may do dividends and buyback. Dont act like thats a bad thing. Gets recirculated in the american system, probably a trillion dollars will comeback from overseas. Cumulatively over time, that will accelerate growth in the American Economy and more competitive economy. And so i think it simply needs to be done will this tax reform bill result in more jobs . Yeah. Ultimately youre going to have a lot more capital retained and reinvested here. Maybe for the russell today, does that explain the die verges to you a little bit, yeah. I think its another thing thats kind of coming in the zone what have we were expecting. I think that if the tax package kind of has these elements that are being handicapped. Its enough to move the chains on the bull market thats the way i think about it. As long as Everything Else remains okay its not in itself to say wow, 20181 going to be this huge, accelerating economy and a huge wind fall for investors, yeah, there is more money in location and mostly to the benefit of people, you know, who own businesses and company and stocks added to that yeah, 2004 we had a tax repatriation back then too, and it was almost no impact on the economy. I think we are going to overstate what this tax bills going to be. I refer this as a tax rearrangement, theres not a lot of tax cutting, theres some cutting of taxes some places and poor people that make, you know, some money in new jersey have to pay over 100 , minimal rate, they did as of money, im sure thats changed right now, but in the end, its probably better that we did this because were kind of were rearranging incentives, and this is hardly a major tax cut thats going to make the economy boom like people think with the fed raising rates for the third time this year which happened a couple hours ago. Lets get out to scott who is in los angeles joined by jeff for some reaction to all of these moves, scott kelly, thank you so much. Its a real treat for viewers today. Remember we spent time with jeffrey of double long capital into the fed station and the yellen News Conference, and now we get the bond kings reaction on the way out so jeffrey, good to see you again. Stocks went up, bond yields fell are you surprised at what happened after the statement and the newsroom well, i think the surprise was the strength in the bond market being substantially greater than the strength in the stock market really in the post fed thing, and i think the reason is that the market was thinking maybe in the back of the feds mind would be a change in the dots to four hikes next year and they didnt do that and even more powerful is that was done against a backdrop of upgrading gdp growth so what theyre basically the bond market seems to be taking sideways look, theyre not only not going to raise them four times, theyve upgraded gdp growth and still didnt go to four dots for next year and in the press conference you hear chair yellen say, well, you know, there might be a little bump to the economy. Which probably isnt even factored into their 2. 4 gdp. What the bond market is hearing even if the economy accelerates or hangs in there at the level that its found, a little bit higher level in the last few quarters, theyre not going to hike more aggressively and thats why the short end is happy and the the five year is happy because they were kind of putting a little bit of insurance on the yield level as of yesterday that that fourth dot might appear. When we spoke earlier, you said there was support for rates 359 , the ten year, you need to rethink that now by virtue of what you saw coming out . This is a daily kind of reaction what i meant about 3 , i believe that the Chinese Central Bank will is interested in keeping treasury rates low so the u. S. Economy remains at least not a head wind for the Global Economy. And i have a suspicion that if we get to 3 , you might see increased foreign buying not for investment purposes, but for Economic Management purposes two dissenters, are you surprised by that . What does it mean . Neil, hes the low dot. The thing about the dots that are really funny is they give us the median dot when you look at digs perngs of dots, its comical, neil that was down at about one and a quarter or is type of a dot for even 2019 year end, and theres other people up at 4 . I know that jay powells coming in and hes been somewhat critical of the dot scheme because its anonymous and he was made statements, he was going to try to reach a consensus dot which, good luck, chair powell, but a its going to be hard to get this disperngs of dots thats about 300 basis points high to low, somehow converging on the median dot but the no surprise there. The other ones a little bit of a surprise you upgrade your growth forecast its improved for the same reason that the bond yields retreated today. Its that the economy can get the fed is willing to let the economy grow label the faster and not talking about accelerating the dots, at least not for 2018 that has to be a positive for those that are looking for higher growth and yet may have been worried that the fed would take that on by accelerating the rate hikes that doesnt appear to be happening. The chair was asked about the flattening yield curve in which she said the current slope is well within the historical average. Youve said to Pay Attention to the flattening curve i know what the historical average is, twos to tens over a 40 year time period. Historical is 95 basis points, so, i guess ill cover a little slack. Were at 55 or something i guess thats in the context of the historical average, but typically when the curve starts flattening this aggressively, and this kind of linear fashion, it usually doesnt slow down, so i do think at 50 basis points through that, thats when were going start flashing yellow on the sign from the yield curve, right now, its in the 50s, so its not too far away, but its still flashing green to us for no recession for the next six to nine months. And finally on stocks, you said that valuations are high just because theyre higher doesnt mean theyre overvalued. I suppose that i suppose thats true. Well, i see what youre saying, contradictory, but shes saying, i think, is not danger zone. Stock evaluations are high, but they can stay high, i take a little bit of issue with that because one of the reasons pes got high with zero anymore were at 2 . Weve got three month at one and a half higher Interest Rates are going to start biting into the pe being too high because its the low, the zero Interest Rates for the justification for an elevated pe. All right thanks again for coming on with us thanks again for having us kelly, ill send it back to you. That was again our exclusive today here at double line in los angeles. Yeah, and our thanks to you both great stuff all day. Appreciate it. Jeff sitting down with scott wapner there mike, again, i mean its funny trying to put all the puzzle pieces together. Yeah. Of what all and it reminds me again of the discussion we had yesterday where, you know, you could argue that the stock market is overvalued or no its not. You could argue that bond yields are way out of whack historically or maybe i mean, it doesnt all totally square here no, we dont exactly know exactly whether the historical patterns are playing out as weve come to learn them or if theres something unusual about that cycle look, you know, jeff just talking about yes, 55 basis points is now the spread between twos and tens. Is 55 basis points today when the two years at 1. 8, the same message when it was 55 in the last cycle so all of these things are kind of, you know, unclear as to what they are going to mean expresses a percentage. Bull markets that have run this long, they get to 20 times earnings we got to 20 times earnings. So a lot of these things are tough to necessarily know why theyre happening. Jim, whats your reaction you know, as far as the yield curve goes, im reminded of the joke about window washer fell and as he passed the third floor said so fars see so good. And yellen is saying so far so good, look at the slope. Its interesting the last question she had another a presser was about the yield curve. It could very well be the first question powell will get in march if this slope of the curve flattening continues over the next 90 days that the curve could get very flat. Thats what i think could very well happen when it comes to the curve and that could pose a problem for the fed because it does signal a possibly policy error that theyre being too tight. Kevin, meantime, you were talking about the prospect that they might actually do for next year for example, and jeff gunlock said well maybe theyre pushing back against that and only doing three and threat run a little do you feel the same way or, thats one of the interesting divides this market has right now. Let me push back, let me push back a little bit on jeffs pe being eaten into by higher rates. Lets just stay focussed on once in a lifetime event thats about to occur you have a manufacturing company, california, its being taxed in the high 30s, and in a matter of days, its tax rate goes from 36 to 39 down to 21. Its not trading at a 20 pe anymore, its trading at a 14 pe so id argue the market is not overvalued if its true adding 15 to 20 more cash to an americanbased company with all of its revenues in the u. S. Which is why i personally think that these small cap midcap narcotic and russell moved again today in that this fashion is the place to be in 2018 because its not trading at 20 pe, its not a crazy multiple we have a once in a lifetime gift from our president which adds 20 more cash flow to Many American companies. Thats amazing okay. Thats why its not overvalued guys, thank you kevin, jim, joining us today and again the dow going out at a record high here while the s p was negative there was another one of those prump making a last pitch for tax reform what the final tax bill is in congress is looking like and especially now that it may or especially how it will impact your investments i should say. Plus, noted tech fund dan miles is here to discuss the investment a company he bought in october as a way to play the success of the iphone and contact the show and share your thoughts with us. You have twitter, facebook, email, youre watching cnbc first in business worlid dwe. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Their leadership is instinctive. With a clear advantage. Theyre experts in things you havent heard of researchers of technologies that one day, you will. Some call them the best of the best. Some call them veterans. We call them our team. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Kelly, the tax bills Conference Committee is meeting right now in the room behind me, but the reality here is that that deal was hashed out before this meeting even started. And the center piece is a 21 corporate rate and four people now telling me that rate would take effect in 2018, not delayed to 2019 as would have occurred under the Senate Version of the tax bill multiple sources tell me that the corporate alternative minimum tax, that is out of the final version of the bill. The house had originally also on the state and local tax deduction, one person telling me that cap would still be at 10,000, now you could use did for property taxes, income taxes, or sales taxes and that is consistent with some other news reports that are out ther and previously, that deduction had been applicable only to property taxes delay in vote until the winner of that election doug jones can take his seat and democrats are also furious that they have not seen final texts of this legislation. Republicans say it will not be made public until friday, that is when they plan to release the final text of this will legislation and senator orin hatch who is chairman of the finance committee and one of the key negotiators in all of this kelly, he did say they believe they have the votes to get this passed next week, back over to you. Real quickly, it sounds like the corporate amt is no more, but what about on the individual side we are still trying to pin that down though, but the wall street journal is saying that the individual amt does survive in some form all right thank you. Appreciate it very much. Tracking this all for us joining us to discuss it a little more is Caroline Harris who is an executive director at the chamber of commerce and ben salisbury at b. Riley, welcome to you both. Ben, let me begin with you so, it is interesting that theyre going to lower the top rate, but theyre still going to leave the individual amt in there, how does this shake out for as it shapes up . Well, so, i mean, the individual amt is designed to make sure that certain types of income or earners and especially with a lot of inherited end up paying some form of tax. So that should be sort of more or less as it always has been. I dont see a lot of big change there. Wait a minute, theres a ton of complaints about the individual amt because its never been inflation adjusted, sucks people who are professional lawyers, doctors, and that income sweet spot, about 300 to 600,000 who would be affected by this. It seems like something that should be addressed if theyre going to reform the code, right . I had an opinion of that one way or the other except as it relates to my personal amt, but from a market perspective so youre paying it, do you have a lot of inherited wealth my point is simply that, look, how this goes over with the public is a big deal because its not pulling that well Mitch Mcconnell said once you sigh whats in it, youll like it the republicans are probably already facing a wave election based upon what happened in alabama last night thats why im asked what you think the affect of this will be i think the amt is going to affect a relatively small number of swing voters, your bigger point is important, right, how this plays with the general public is going to be decisive, you have to remember, the republicans are absolutely convinced that especially with the fund dstz raising base, passing some bill they can call tax reform is essential to their reflections, precondition to reflection secondarily, the Overall Concept here, the vast majority of the republicans in congress buy into is the current u. S. Tax code disadvantages domestic employers, and to sort of reassert u. S. Competitiveness, they need to address that. How they do it, the details of that, you know, thats a specific question, but the idea, the article of faith is that improving the competitiveness of the tax code will please donors and improve rank and file incomes. Caroline, you must be pleased, sounds like theres no corporate amt. We are pleased to be sitting here potential lay week away from progrowth reform and lower rates, a globally consistent territorial system and no corporate amt. And carlin, i mean, no corporate amt, yes to a territorial system and really as we look at it, not a whole lot in the way of loophole closing of other ways. I think weve always lobbied for members and concerns and that was getting that rate down, getting to that internationally competitive in the 20s were talking about 21 on the corporate side reduced through on the pass through side obviously the territorial system again is huge and we worked in that space to make sure the antiabuse rules are minimally invasive on businesses and obviously the devils in the details, the details wes see so far, we like what do you think will be most powerful . Is that were going to have expensing immediately next year, would it have been more powerful if the corporate cut itself was delayed a year how do you think people react to Interest Deductibility theres levers here in terms of incentives for businesses. Its positive to see the rate reduction up front, that was very important to us were pleased to see that. I think were pleased to see the full expensing, were pleased to see that territorial system. I keep saying it, we are now moving to a system that looks more like our competitors and capital is going to go where its welcome and welcomes carpet jamie diamond hit on that before when you had him on. Thank you both for joining us thank you Caroline Harris, betty, looking at the effects of the tax bill as we know it this afternoon anyway shares are rallying. Dan niles is in both of those names. His reaction to the news and how empty pacts the way hes playing the space. Find out how higher rates could impact the lending market when we speak to lending tree still to come here on the closing bell [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Right in the heart of the was in his financial crisis,he future. And saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Down in the aftermarket on earnings they missed estimates reporting nine cents versus 11 cents that was estimated on the revenue side, they did beat reporting quarterly revenue of 469 million versus 467 million that was estimated and on the comp side, they were down only. 7 er have us being down. 1 which is what analysts were expecting now i think one of the main reasons why youre seeing such a huge drop off there in the stock price is because of very weak, q4 revenue and eps guidance, now, you should keep in mind that this is only a 400 million market cap stock, you can expect the volatility were seeing in the aftermarket trading, clearly not an Earnings Report that investors are impressed with, kelly. Wow, leslie, thank you, and mike again, this should be a name benefitting from look at home depot, lost, anybody in that space, but theyre down by almost half this year. Its not really home immaterial improvement, its a fall between the cracks type of franchise. The stocks got caught up in the huge retail rebound, it was up 40 in the last month. Its a low price stock of a small Market Cap Company gets swung around pretty violently. Up 7. 7 now its down 20d after hours. Time farl news update, and lets get over to sue herrara, hi sue. Hello kelly, hello everyone Deputy Attorney general Rod Rosenstein discussing the Russian Investigation on Capitol Hill House Judiciary Committee member jared nadleer asking him whether special Counsel Robert Mueller should still lead that investigation. Have you seen good cause to fire special counsel mueller no. Thank you if you were ordered today fire mr. Mueller, what would you do as ive explained previously, i would follow the regulation, if there were good cause, i would act if there were no good cause, i would not. And youve seen no good cause so far correct donald trump jr. Back on capitol hill undergoing another round of closed door testimony in the investigation into Russian Campaign interference. He departed his hotel this morning for an appearance before the Intelligence Committee and the Los Angeles Angels confirming that recently signed japanese pitching and hitting star ohtani received an enjex in october. The team saying its still satisfied with the results of his physical and they are happy to have him on the team. Thats the news update this hour, kelly, back to you thank you, sue. Mike, is that a big deal it could be a big deal. I mean if it obviously what does that mean whats the problem with his in his elbow, what does that mean its a ugliment in his elbow, wear and tear. So to dull the pain, you think . Swelling. Pain wow mike healing. Yeah. Okay you know, the yankees japanese pitcher, but i dont know in his situation, but they throw an enormous number of innings at a young age its not like the u. S. Im watching this one closely and the rest of the world too. Lets turn our attention back to the markets, s p was negative on the bell by the way the dow was caterpillar today. And that was a record close for the dow. Russell, the best performer, it was up half a percent in percentage terms heres some of your other big stories in the rapid recap stunning result in alabama last night, democrats narrowed the republicans margin in the senate from 52 to 51 in one of the most conservative states in the country. One of my Corporate Bond traders pulled up something called cryto kitties its a picture of a cat and each picture is unique and apparently somebody bought one for 100,000 and flip it for 400,000 i mean, this is the kind of nutty stuff. Now hearing from two sources that the minimum tax will not will not be included in the final version of the bill. I think it makes a small bullish about the u. S. Does it three things, tax, regulation, infrastructure, spending, that takes a long time to get going the raising Interest Rates by one quarter point by the new range of one and a quarter to 1. 5 bitcoin plays a very small role in the Payment System it is a highly speculative asset and the fed doesnt really play any role, any regulatory role with respect to bitcoin. And shares soring 22 today after apple announced nearly 400 million investment. Josh lipton has the details from allen, texas, josh President Trump was actually speaking today about repatriation and jobs and yet, she specifically called out apple, but apple was actually involved in a jobs announcement today saying that its going to award them 390 million and you saw the stock move sharply higher on that news. This is part of apples 1 billion advance manufacturing fund, they make what are called chips which help to power a range of apple features and technologies including face id and emoji and ar kit, now as a result, they are going to build out a new plant in sherman, texas, and its going to hire 500 people including engineers and technicians, jeff williams, apples coo tells me that his company could invest in even more hightech american firms that this 1 billion is not a hard ceiling they are at the heart of some of the most advanced technology that apple produces, and they are used in a wide range of applications across industries, but when we were working on iphone 10, we realize we needed a much more advanced thing and we needed way more capacity. If you take the entire worldwide capacity and realized we needed ten times that amount. So we worked with them and a couple of other companies to put that in place and now we need even more and so, thats why were here now, they say this award really shows that apple is doubling down on ar specifically and that by locking in this market he says its going to make it even harder for apples rivals to compete, kelly, back to you all right, josh, thank you very much. Josh lipton. Our next guest owns shares and is very bullish on apples investment in that company also down 17 in the last two weeks and about 3 today on the back of that news. Dan niles recently called them the hot stock for 2018, hes on the phone to discuss todays moves, dan, welcome. Thanks, thanks for being on we immediately thought of you because we had just talked about your big call, it was down much more at the beginning of the day than at the end. Why do you think that is well, investors use that at home, i got it, they are going to take this market from momentum Going Forward and then i think this will investor started to see through this, they understood the reason apple had to invest in them is because, you know, theyre having all kinds of problems producing these vixel for apple. If you look at the fourth quarter, our estimation is momentum will do about 150 million or so in revenues going to apple for these waivers and finisar maybe 20 million at most and so, you know, i think the problem is if you have a knee jerk reaction, your first thing is oh my god, i have to sell momentum as you have investors thinking through this, thats what he said the stock continue to climb and i think the important thing is what you heard from that clip from apple this market is going to be ten times bigger in five years relative to today. So, the market for 3d sensing and Consumer Devices like smart phones maybe about a half a billion dollars in 2017, five years from now, thatll be over 5 billion and thats just in smart phones you throw in cars and industrial robotics, and that markets probably closer to 7 billion by 2017 and as you heard in that prior clip from apple itself, theres just not enough capacity in the world for this stuff right now. And so, you need more and thats why they did this investment so i feel better about momentum today than i did on monday when i put out the column for cnbc. Dan, what does is it say this sort of type capacity situation these bottlenecks about the general apple food chain as they look to next generations of products is it a genuine challenge across the board for them to kind of acquire at their scale what they need i mean, its a totally different area but they did make the acquisition of shazam, something folded into other products as well. Yeah, no, this isnt a problem across the food chain, you have to remember this 3d sensing that the vixels are involved in, thats the vertical cavity, thats a new technology in the iphone 10 so for other things like application processors or rf chips, you know, those suppliers have been in the market far long, lock time since apple introduced the iphone. Thats not the issue this is a brand new feature thats helping with augmented reality thats ramping up and, you know, when youre adding something that hasnt existed before and youve got a one and a half billion unit market for smart phones and apples the leading, you know, supplier in terms of, you know, best of breed, that creates the problems, and thats really what youre seeing. In that they are the new pixels how does this set apple itself up, do you think well, i think it sets apple up really well because what its doing is so now theyve sorted of locked in, we dont know what the terms of the agreement are, obviously apple didnt get 390 million out of the goodness of their heart. So im sure theyre locking in a lot of that capacity, so, other venders, other smart phone venders like the chinese will be introducing their own augmented reality features on their phones and thatll youre going to see that in 2018 you have the to remember, its over 80 of the market for smart phones its just weve spent all this time talking about apple and i think, you know so somebody like them, theyre going to benefit because they can supply to anybody, they dont have an exclusive relationship with apple. Anyone else there are some other venders that theyre trying to get ramped up, but right now nobody is ramping so i think over time, you will see a few others where involved in some. Im going to avoid commenting right now, but, if you look at overseas for example, Companies Like iqe that do the lasers are manufactured on, that stocks up 320 for the year. One semiconductor which is the founding for the lasers, that stocks up 244 this year. And so, when you look at the u. S. Companies like them which is up 30 or finisar down 22 even with this move, youre going see some catchup and the valuations trading 13 times earnings are even with this move, i think ive got at about 19 or so thats stale lot less than the 25 to 35 multipling you see on some of these Companies Overseas thank you so much really appreciate it dan niles giving us all the info on vixels which i am quickly becoming familiar with on the back of this cavity something zblb something or other thank you so much. Again, dan niles from alpha one Capital Partners tmobile is making a deal to enter the tv business. Our takeaway on this fastchanging industry right after this nobodys putting their money into equities. Theyre not investing in commodities or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. Upeace of mind. S we had a power outage for five days total. We lost a lot of food. We actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. When trying to save for the big things in life. We tend to start small. Less of this. Cut back on that. But if it feels like a lot of effort for a little gain. Change that. Start with something that makes a big difference. Your student loans. Refinancing with sofi saves over 22,000 on average. Its an easier way to reach your life goals sooner. Weve helped over 195,000 people. We want to help you too. Find out how much you can save in just two minutes at sofi. Com save welcome back it is time now for our takeaway. And we begin today with tmobile putting traditional paid tv on notice the company has bought denverbased layer three to launch a future product that tmobile says will be a quote, total replacement for satellite tv shares of at t dropped on this news this afternoon. Michael, what do you think tmobile has up its sleeve and is that share price reaction just fine . I dont know about the reaction theres a lot of other stuff going on in terms of the cable and satellite space. I do think, look, they want to obviously have an offering here thats a little more comprehensive, sort of a directv now which at t has it definitely sort of on the upper end of this sort of skinny bundle market, right, people who still want to pay, you know, at least right now. The layer three service is not cheap. Its at the higher end, internet based and they rent space. Its a little bit of a different twist. And maybe people think its seeming like hey, were going to challenge if you dont buy us. Thats another kind of tactical thing. Theyre certainly putting traditional tv on notice next big news out of alabama, not that news target bought shipped for 550 million. Target says this will allow them to offer sameday delivery on items starting next year youll need a 99 ship subscription and can continue to do business deals with others . Its a good sign that target is willing to, you know, do a deal of this size, half a billion dollars, just to sort of maybe flush out its capabilities in this area. I do think theres a question longer term as to whether youre going to have all of these people running around target stores in a sense competing with shoppers who are there to get their own stuff. I dont think its a problem right now, but people have made that, made that concern known that, you know, look, these arent warehouses, and if youre going to be using your Retail Stores mostly as Fulfillment Centers season that going to be suboptimal as you know, very much love the amazon prime seamless experience and for target to think, okay, i want something from target, but im going to ship to create my account and theyre going to hand that will relationship, you know, id to want see them in practice to see if they can rival this i agree with that, at the same time, the costcos adding stuff to its bundle right, for its membership giving you video streams video im thinking about christmas presents finally deals details on the disney fox deal courtesy of our david favor today. Sounds like a 60 billion dpeel thats the value theyre giving movie and tv assets and fox shareholders will hold 25 of the new disney now why then was 21 st century fox one of the worst today give back since david reported there were talks in this direction foxs stock is up 24, 25 before today. Clearly there was a little bit of chewing up of what the value was going to be. It was an enterprise value number, theres a little play, we dont know exact how much debt will be place on the those assets as they go over to ginz if the deal happens. Its more of a matter of people trying to do the math and maybe not be unpleasantly surprised if somehow tomorrow theres no deal well see if we get an announcement, now it if we dont, its a surprise shares were higher after releasing guidance for next year the stock soaring more than 200 in the past year were going to talk to the ceo about how a rising rate environment will Impact Business coming up. Ahead on fast money, the cme gearing up to launch Bitcoin Futures this sunday. Terry duffy will give husband caughts on the surge and what it means for his exchange the moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. Sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. We took our world Class Network and we developed devices to track environmental conditions. This device allows people to understand whats happening with the location, but also if its too hot, if its too cold, if its been dropped. Its completely unique. If you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Who knew a tiny sensor could help keep the food chain safe . I mwell, what are youe to take care odoing tomorrow 10am . Staff meeting. Noon . Eating. 3 45 . Uh, compliance training. 6 30 . Sams baseball practice. 8 30 . Tai chi. Yeah, so sounds relaxing. Alright, 9 53 . I usually make their lunches then, and i have a little vegan so wow, you are busy. Wouldnt it be great if you had investments that worked as hard as you do . Yeah. Introducing essential portfolios. The automated investing solution that lets you focus on your life. The Federal Reserve raised Interest Rates bay quarter percentage today the ceo joins us in an exclusive interview to talk about how those rises rates will impact his bottom line after this e tre, 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 ecommerce. 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. Welcome back the fed did it, they hiked rates by another quarter percentage point today. How will that impact the loan business joining us is lending trees ceo, doug lebda. Welcome, sir thanks for having me. Stocks are on a tear. Yes whats the correlation between that and rising Interest Rates, if any . Youre having a major secular shift from offline to online were only facilitating 2 of the loans in the u. S. And weve seen that go up to 6 or 8 over the next two years the mere fact that the fed is raising rates, is that going to make people go online to check rates . We call it the flywheel effect basically what we say is that lenders, first off, as they get better and more efficient, our monetization goes up that enables us to go market demonstrate the consumer savings which enables lenders to buy more leads from us do you have a window on the lender activity or aggressiveness of lenders . We do we can see all the lenders pricing side by side and save the consumer thousands of dollars. Were seeing lenders put lower prices on lending tree than on their own sites. Wow, so its like the expedia effect exactly right providers are getting upset with expedia and now we see them move the other way is that a risk for you guys . Not really, when we advertise we bring in everybody in the u. S. Population, then we let lenders slice and dice the market any way they want do they get to share that data yes we have full data transparency between us then we help them improve their Conversion Rates and improve their performance, so we let them save a lot of money as well the increase in consumer default rates on credit lately, its kind of surprising, with the economy as strong as it is, before theres any signs of a job slowdown, for some of the major card companies, its approaching 5 it is are we tapped out your stocks performance suggests weve just too far in the Consumer Credit space. I dont think we have at all. Our credit card business is our Fastest Growing business and also one of our smallest ones but its growing very rapidly. We focus on higher end credits we have very good performance with our lernnders and we love u leads. What does that look like in terms of the origin point of that search . Somebody goes out there and says so we advertise and say, come to lending tree, search for credit cards, and you enter in your criteria, we match you up with multiple credit card providers and let you make the best choice for you. What concerns do you have for 2018 biggest concern for us is just internal execution and complacency. We just need to just keep the hammer down and keep performing exceptionally well all right well let you go try to do that. Thanks for joining us. Thank you very much, thanks for having me. Doug lebda is the ceo of lending tree delta is about to put in a big order for airbus, those details next music plays throughout your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Delta airlines is holding its investor day tomorrow. The Second Largest Airline is poised to make an announcement, maybe a surprising one phil lebeau is here. Its for 100 airbus a321 neos. Think of this as the competitor to the 737 this is a huge order the value, book value over 12 billion. We should also state that airlines never pay the book value, the list price. They always have a substantial discount and theres probably going to be some options that are going to go along with this the announcement will come tomorrow before the investor day meeting. And it will be an interesting meeting, because, you know, theres also going to be some questions about whats happening with the c series build by bombardier, which is now partnered with airbus on the c series we know whats going on with boeing saying to the u. S. Government, hey, slap a tariff on these things. Right, and delta was very unhappy about that because it was getting a great deal i know its not like u. S. Airlines only buy from u. S. Manufacturers, but how big a deal is this announcement with airbus, and is it in retaliation . I dont know if its in retaliation. The a321 neo is a great aircraft for airbus, this is further inroads into north america for them and theyve got to feel good about how theyve been able to position the Company Relative to this, relative to the c series im interested to see what happens at the investor day tomorrow for delta, phil, is this kind of a routine freshening up of the fleet or does it represent a bigger capacity edition over time look, well see capacity seats added, routes added over time but not a huge increase in capacity, nothing out of the ordinary its not like theyre going to jump 5, 6, 7 . Youre going to see that in the years to come simply because theres so much demand, worldwide demand is up 7 this next year in terms of people who want to fly. So all of the airlines are adding capacity. Quickly, boeing had a monster day yesterday, the buyback, the dividend yes does this represent a significant blow to them, a turning point . I wouldnt call it a significa significant blow that people would say, oh, my god, im going to take money off the table on boeing thats not the case at all there arent a lot of huge orders that come around every year there is a significant number, but you want to get as many of those as possible. 100 aircraft is a huge order and its one of the big ones of the year were glad to have the news now. Phil lebeau, thank you so much tune in to closing bell tomorrow, jim chanos will join me, well be at the yale ceo summit here in new york city, dont miss it. Michael, thank you as always have a great long weekend too. Fast money begins right now. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Tonight on fast, it is a crypto crash, well, kind of. Bitcoin sinking 10 today, tripping the breakers on the futures and trying to come back from those lows. If youre worried about your crypto investment, well be tracking the price throughout the hour terry duffy, chairman and ceo of the cme will join us as his exchange gets ready to launch Bitcoin Futures trading this weekend. Hell tell us how big this