Transcripts For CNBC Closing Bell 20180129

One of the big ripple effects is utilities. Take a look at this chart behind me were seeing the death cross thats what some technicians call it when the shorter term 50day moving average of a stock or etf falls below longer term trend, the 200day average were seeing it with the excel, the spdr sector utility, xlu this does not portend bad things but something to Pay Attention to its not the only that were keeping an eye on. Were seeing some action play out in some parts of the market. Namely in the real estate stocks the vanguard reit index is sinking down to multiyear lows. As we take a look at whats happening with this, its already in correction territory, off about 10 plus the highs we saw a couple years ago well take a look at another part thats perhaps a brighter spot while all these guys are making these multiyear lows, one thats not is the consumer staple sector. This is actually just a stones throw away from alltime highs would you believe it or not, more than half of the index members of this particular etf are actually up double digit percentage amounts over the past three months something to Pay Attention to. Well boil it all, scott and kelly, down to the tenyear note yield. Everyone watching whether or not well see the Interest Rates continue to rise or at least give a little relief for right now utilities appear to be taking the brunt of whats happening right now, guys. Back over to you. Thats where well continue with, dom. Thanks. A lot of the market is focusing on the tenyear ahead to the Federal Reserve meeting tomorrow lets get to steve liesman. Markets are struggling with a tug of war here when it comes to the outlook. Higher Interest Rates on one side but also higher Economic Growth the tenyear yield taking out highs not seen since 2014, passed through the 270 level, came down a little bit since then markets wondering if a threehandle is the next stop. Forecasters are nudging up their forecast to put a threehandle on gdp growth this quarter and maybe this year after fridays gdp of 2. 6 . Several economists upgraded their forecast for the First Quarter to 3 , noting that inventories and trade, they took away almost two full Percentage Points of growth jpmorgan writes, a shortfall in accumulation actually bodes well for the current quarter, we thus raise our forecast from 2. 5 to 3 more growth could mean more fed rate hikes this year take a look at the probabilities. A virtual lock on a march hike june is more than 50 . December, 53 . So, those three rate hikes now a new addition, this possibility of a fourth hike rate, four in one chance being put on it. Not the level but the speed of reaching higher rates. Interest rates have shot up pretty quickly at the same sometime they remain relatively low and corporate rates, which are key for the economy, are up only modestly so far thats an important point steve, stay right there. Chime in, if you will, when we get to our closing bell exchange. Joining us quency alongside kenny of oneill securities and Rick Santelli checks in from the cme in chicago welcome, everybody kenny, let me retrace to the death cross we were talking about in utilities as a way at looking whats happening in utilities, are question down because of Interest Rates or signals . I think its a division Interest Rates are at the top of the game not just u. S. Interest rates but whats happening around the globe as you mentioned earlier, as you mentioned coming into this segment the death cross is certainly a technical signal that is giving people reason to pause, reason for caution. With everything thats gone on this week with the state of the union, nonfarm payrolls, all the macro data on top of the earnings, its creating a reason for people to step back. Weve had a mads ive move in the market not only this month but from the last last quarter up till now. Were up 17 , 18 in a short three months i think people are now taking a step back and saying, lets just take a breath here rick, i woender if you think this level 270, lets call it, is a line in the sand of some sort if you get above that and then you start maybe even moving higher than that, the stock market starts to have an issue i dont know where the line in the sand is 270 in my opinion doesnt seem too high for rates i think its been more than orderly. Weve come 28, 29 basis points since we settled last year i think a lot has to do with the fed. Consider that on the 4th of year, 4th of january 2018 we made the flattest read on ten minus twos basically at 50 basis points were at 57 now. The short end is still in control. As a matter of fact, today 30s minus 10s, the flattest since 2008 when you look at whats going on, its part policy, part the economy and i think the fed is the biggest dynamic. I feel pretty confident we will test 3 . I think the issue is when and how aggressively i wouldnt say were done with the low 2. 60s. Thats a fallback and i think well test it before we see any zoom, zoom, zoom close to 3 . Youre saying we have to go well over 3 and also the speed matters before this is important for the stock market yeah. The velocity in any move, whether its commodities, whether its Interest Rates can give the market, the equity market jitters if you see the twoyear yield moving up as well, thats a signal that the short end of the yield curve cease growth it sees and in essence, it embarrasses the move up. The one thing about the tenyear moving up quickly, remember, yes, even though were seeing german yields move higher, french yields, even japanese there was actually a little movement, insurance companies, Pension Funds globally will start coming in and rebalancing and take off some of that move higher this is something they have been waiting for because its very healthy for them irn i think youre going to see that fairly soon. The market doesnt like speedy moves up it makes them nervous and jittery. The fed is extremely important in their statement coming this week whether or not the market thinks the fed is behind the curve is a big issue. Richard fisher with us on halftime last week who made a prediction of four rate hikes this year. Markets way offsides for that. You showed what people are predicting i forgot the number you had up there, but it was miniscule compared to the other predictions. Its not quite a Football Game in this case, the market is offsides but its getting onsides. Thats been a process. And the market has time to get onsides. And i think rick would agree with this in that you have to do three before you can do four thats a mathematical necessity here the first one comes in march the second one in june the market has time to adjust in a way that wont be too difficult here to incorporate the outlook here that 18 , that one in five chance of that fourth hike, thats a new number thats been coming by the way, the outlook for growth has changed pretty quickly. Its not all that surprising that the outlook for rates has changed quickly along with it. And there is actually shown by the mornings report not a lot of inflation out there no real hurry for the fed to get there. We might have more of a disconnect between these Interest Rates on the riskfree side as in the treasury side and the corporate side you have this Corporate Tax cut and one use of that money could be to pay down corporate debt. You might not see the Interest Rates paid by corporations go up all that much if they begin to pay down the debt and reduce the supply of corporate debt out in the economy. I was going to say between june and december is a good six months of macro data not only u. S. But global therefore, that fourth rate hike actually, would be the third, would happen in between june and december and the fourth one coming in december i think youre right, the market isnt necessarily prepared for four, at i think well get four this year because i think youll see an uptick in inflation sooner than what everyone is expecting. The question is if rates are rising for the right reason exactly. And the market may be able to digest it a little easier than if things start to get away from us. As she said, the speed the Federal Reserve owns a sports car they own a zo6 corvette that can do 195 miles an hour the problem is theyre not comfortable driving at full speed. My guess is theyll drive as fast as they feel safe this game, this parlor game 3, 4, you know how many theyre going to do by how much kick the economy has. Give them a chance, rick. Theyve been on a moped. They have to get in a sports car, they need to drive it around the block a few times. They certainly have thank you. Well see you soon. A developing story on the nafta talks. Lets get to Cnbcs Kayla Tausche from d. C. Reporter President Trump is planning to ask for an extension on the timeline for faf nafta talks according to his chief negotiator who said that to reporters in montreal. Trump must send a letter to congress by april 1st requesting the extension. The current Legal Authority to renegotiate nafta under a quicker timetable expires on july 1st the same day as elections in mexico its the clearest sign from the administration yet that talks could extend into 2019 as industry executives said was possible negotiations are likely to stall until mexicos new president is in office and that inauguration is not until december 1st. The extension by law is three years and comes as ambassador lighthizer expressed frustration with the glacial pace of talks so far. Im hopeful progress will accelerate soon. Well work very hard between now and the beginning of the next round and we hope for major breakthroughs for that period. The next round begins february 26th in mexico. All three countries today expressing cautious optimism on negotiations with lighthizer saying the u. S. Is committed to moving forward kelly . Kayla, im not surprised hes frustrated if the extension is a threeyear extension thats beyond the president s first term in office. Well, that was an extension that was put in place by statute back in 2015 when president obama was negotiating the Transpacific Partnership and republicans in congress wanted some checks and balances. They wanted a socalled fast track to renegotiate some of these deals if they didnt like where they ended up. Now that process is being put into place that republicans themselves negotiated. Thats a threeyear extension by law. Were trying to figure out if its possible the president could request something shorter but in the law passed by congress, it is three years. A twist of fate, thank you. Lets get to another developing story were watching out of washington. Fbi Deputy Director Andrew Mccabe stepping down eamon javers has the latest. Reporter the white house is offering a relatively lowkey of the news that the deputy of the fbi stepped down a little unexpectedly today he was expected to retire later in the year but today the announcement came that hes going to be leaving the fbi today. The press secretary here, Sarah Huckabee sanders said the president simply had nothing to do with the official Decision Making surrounding that. Heres what she said in the Briefing Room a little while ago. Look, weve seen the numerous reports as all of you have any specifics, i can tell you none of this decision was made by that of the white house any specifics i would refer you to the fbi reporter sanders referring reporters to the fbi saying the president didnt make the official decision but the president has been publicly very critical of mccabe, who he suggests is biased against him and biased possibly in favor of Hillary Clinton back during the investigation into Hillary Clintons emails. Heres one tweet that the president put out about Andrew Mccabe back in december saying, fbi Deputy Director Andrew Mccabe is racing the clock to retire with full benefits. 90 days to go. Heres our understanding of right now of his retirement status it looks like hell be placed on leave officially, even though hes departing the fbi today, and that will edge title him to his full retirement, which kicks in in a month on or so time. He will get the Retirement Benefits the president was tweeting about we may get more news about this this afternoon Sarah Huckabee sanders said that the fbi may be making a statement later on today we might get a little more context here around exactly why this news came today interesting stuff eamon, thanks so much. Eamon javers from the white house for us Cnbc Alex Sherman breaking news that dell is considering a sale to vmware in what could be techs biggest deal already. Dell already owns 80 of vmware. It would give dell shareholders a way to profit without taking dell private alex sherman joining us with more details on the story he broke earlier. Yeah, so who are those dell shareholders theyre michael dell and silver lake, the private Equity Company that took dell private back in 2013 then dell got a lot bigger when it bought emc. Emc owned 80 of vmware but the rest has continued to trade as a Public Company so, the news today is that dell would reemerge as a Public Company by combining with vmware why would they do this two reasons come to mind initially. One, its a way to take care of their 50 billion of debt. You get liquidity by going public in essence, you become a Public Company, you can sell down, pay off some of that debt. Secondly stshgs gives silver lake a way to monetize their investment in dell by becoming a Public Company of course, they can sell those shares on the public market. Those two reasons right away come to mind but this is just one option of several that the dell board is looking at they will make a decision on which one exactly to move forward with in the coming weeks were told ail lex, thank you. Joining us to talk more about this is angelo zino who joins us by phone. When the first reports came out that dell might buy vmware, i know you had your price target up to 160. Why is vmware selling off more than 13 , below 130 on these reports it could go the other way. What do you make of it yeah, i mean, listen, if youre a if youre a vmware shareholder, this is the last thing you want to see, to be quite honest when you look at vmware, this is a company wall street absolutely loves and an easy company to love, quite frankly. Its a Company Growing at doubledigit pace here looking at a company with very little debt. Theyve got, you know, margins that are through the roof, especially relative to that of debt so, its a great name to love. And an easy name to love that being said, i mean, skok down 13 plus today. I think on the fear that, listen, if vmware were to taken over dell here, you know, its just not as nice of a company to be holding right because dell has high debt levels, obviously, theyre not as attractive on that profile you just mentioned for vmware. How likely do you think Something Like this is and why then i mean, is the idea to just own vmware on the prospect of a dell takeout then . If the Company Looks so good but it gets folded in anyway, all youve done is gotten the buyout price, right yeah. I mean, essentially. But when we look at this right now, alex made a great point, the reason dell is looking into this right now is for a number of reasons necessity have a debt level north of 45 million, amid rising Interest Rate environment and tax legislation that isnt favorable for a company like dell its an overheatstock market it makes sense for dell to kind of be looking at their options a reverse kind of option here with vmware makes sense that its a lot less costly all that being said, if youre a vmware shareholder, you have to watch out. I think its also a great opportunity to buy the shares if you know all right its a great point dell, one of the few Big Companies that will get hurt by the tax bill a thanks for your time. Thanks for having me. Again, 13 drop in vmware shares. A lot more ahead on the closing bell. Announcer straight ahead, iphone fears reports of a production cut. With the stock down today, is this the time to take advantage and buy in if you missed the apple raylly. A big pop for a soda stock after a big deal in the industry whats behind keurig Green Mountains buyout of dr dr. Pepper snapple closing bell live from the new york stock excngisacin o nus. Hae bk is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and 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. Each day our planet awakens but with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Now is welcome back. Check out shares of Lockheed Martin the u. S. Defense contractor helped by higher sales from the f35 Fighter Jet Program and forecast in rising earnings. The race continues for amazons hq2 with the field nir nair rowi narrowing to 22 cities a lot of people were a bit surprised newark made that top 20 list but the hope is they made amazon an offer it cant refuse joining us from trenton, the 56th governor of new jersey, phil murphy. His first appearance on cnbc good to have you with us, governor great to be here. Let me ask you about that 7 billion in incentives the state has offered, 7 billion. Are you on board with that package signed into law by governor christie . The answer is, yes. Weve been quite critical under the Christie Administration that tax incentives is the only weapon we have to attract companies, only Big Companies. I have to tell you, this is a once in a lifetime opportunity its not the only element of the opportunity in newark by a long shot its public transportation, communities that millenials want to live in, public education, Higher Education we think the tax element of the package is an important one. Let me ask you, as you know, as youre finding out as you get settled in there, a lot of needs in your state, a huge pension obligation you have a lot of homeowners that would love tax breaks of their own. 7 billion to a company with 140 billion or so in revenue. Is that the best use of the states money . Well, its not an either or reality. We need to deliver Property Tax Relief we need to deliver relief to the middle class the middle class has been ravaged over the past eight years. Well do that fully fund public education, among other things, invest in infrastructure but the prospect of a company that could create a real prospect, 50,000 jobs on their own and another 50,000 or more ancillary jobs in the economy, those are opportunities that dont come along every day by a longshot so, we think this is a good investment in our future its not an investment at the expense of other investments we need to make, but we think this is a smart one. Governor, its kelly in new york thank you for joining us just as you came into office the president did come out with his tax plan that highlighted the tax burden in new jersey, new york and connecticut i know you came in promising more than 1 billion of tax increases, but are you looking at are you looking at cutting taxes instead in new jersey Going Forward as a result of this again, kelly, the main challenge for us is to rebuild and reinvest again in our middle class and in those who aspire to get into the middle class. Theyve been left holding the bag for the past eight years were going to do whatever it takes to make sure we get that middle class in our state back up on its feet this tax bill from washington is a horrific law its political it takes it out on the middle class. I think its been wildly written at the end of the day, years from now, 80 of the benefits will go to the top 1 . Were going to do everything we can to push back on that, whether its legal or creative juices trying to find out ways we announced a couple weeks ago, by for example, we want to pursue a precedent the irs has set in many other states to convert property tax payments into charitable contribution payments and, therefore, get a deduction. Well do what it takes to push back on this and provide real relief to the middle class. Governor, its scott wapner do you really believe that amazon has yet to make up its decision i ask you that in the spirit of a comment made by the nyu professor Scott Galloway on this network last week in which he suggested its ridiculous to think for any of these cities to think that amazon hasnt already made up its mind hes going to pit these cities against each other, go to the one he really wants and say, match what this xyz city is willing to do to get the best deal for itself possible but the decisions already been made listen, i have no way of knowing that i take them on their word. I believe their process is real based on every interaction weve had, thats the evidence we have maybe more broadly beyond amazon, i think this is a great testament to newark and new jersey more broadly. This is a state that was Silicon Valley before there was a Silicon Valley we had Thomas Edison and Alexander Graham bell and bell labs and all that goes with it so, i think that this is a real signal that the innovation economy that used to drive this state is alive and well and nowhere better does it represent that than newark, which is a great signal whether we win, lose or draw. Thats a tall order governor, thank you for joining us governor phil murray with scott cohn more than half an hour to go here dow down 129 points. We tipped lower the s p is down 14 thats about a half percent decline. Apple shares down about 5 over the past week and another report out of japan could spell more trouble for the tech giant and its suppliers after this see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade welcome back to closing bell. Im seema modi with this market flash. The Bitcoin Investment trust is spiking as its stock split into effect today gbtc issued this stock split to bring down price after a massive surge in 2017 when it gained about 1300 . Scott, back to you seema, thank you very much. General electric is moving higher today after mario told us hes taking a position in that company. I dont care whether they split or not the answer is, youre the new ceo, you got a new deck, youre going to start doing what is right in a competitive and Global Economy youre going to innovate so, i have no problem with ge. How big of a position do you take in Something Like ge . We have a tiny position, maybe 40 million, 50 million were just starting. Eventually we would love to own the company. Mike santoli is here with some reaction. Every analyst we talk to now seems universally bearish. No one wants to go near this thing. Everyone is fed up and frustrated and is this the right time for a guy like Mario Gabelli to walk in its profoundly contrarian. Only 30 of the sell side is recommending ge. I guaranteeits an alltime lo going back to the dawn of the stock market basically with ge now, the stock has made a couple of attempts to made a stand at 20, as 18, now knocking around16 if youre someone like mario who tries to be longterm deep value approach and contrarian, how many mega cap stocks do you have in this kind of market you can make that kind of a play not that not if you believe the 1 share . Earnings is real, can you ballpark it and say, maybe thats the low and you go from there. The point i keep making about ge, all the businesses ge is in, look at the Comparable Companies in all those component businesses and they all have very generous valuations right now. 20, 24 times, 3m or honeywell or general well, its you could say he was complimentary about flannery, the ceo and how nice to call 40 or 50 million tiny. I thought about that, too its a tiny percentage of gdp and a small percentage of what mario wooe mario wields over there. Hes seen enough, whether its the bottom, the exact bottom thats the point, right hes not saying its the impact bottom just in the general area of, okay, i can see where the fundamental value might come through from here. And it makes you wonder because we wont know until midmay other investors who might be getting in, the 13d type investors thinking the same thing. Stock definitely moved on that. Lets get over to sue herera. Heres whats happening. Longtime congressman rodney fr frelinghuysen announcing he wont seek reelection he joins a growing roster of gop veterans who are not running. Former congresswoman Corrine Brown reporting to prison this morning. She was sentenced to five years for fraud and conspiracy the 71yearold brown is appealing her conviction. 13,000 u. N. Workers in the gaza strip went on strike to protest plans by the u. S. To cut aid to palestinians. More than half of the 2 Million People in gaza where unemployment runs at 46 are dependent on that aid. And variety reporting preliminary tv ratings for the Grammy Awards last night fell by more than 30 from last year to come in at 17. 6 million but cbs also said it did hit a record on its allaccess subscription video on demand and Live Streaming services. I wonder if thats because golf ran so long, if you wanted to see any red carpet, you had we were flicking around i was looking for the outfits. I think a lot of people were doing exactly the same thing exactly the same thing, kelly. Well see they didnt give us the hourbyhour count. They probably will break it down. I expect. See if people were tuning in dwardz the end, too. Thanks, sue. See you next hour. Thanks. Were in the home stretch on this monday on wall street dow is down 120 points a lot of focus on Interest Rates as you heard earlier in our program today and the other major averages are down as well. S p, nasdaq and russell. Still ahead, apple is reportedly slashing its Production Target for flagship iphone x after a slower xan n. Pected holiday see well tell you what it means for the companys stock and strategy Going Forward. Is helping build the new new york. Starting with advanced manufacturing that brings big ideas to life. And cuttingedge Transportation Development to connect those ideas to the world. Along with urban redevelopment projects worthy of the worlds top talent. All across new york state, were building the new new york. To grow your business with us in new york state visit esd. Ny. Gov. So thats the idea. What do you think . I dont like it. Oh. Nuh uh. Yeah. Ahhhhh. Mmmm. Oh. Yeah. Ah. Agh. Ddd. No. Hmmm. Uh. Huh. Yeah. Uh. Huh. In business, there are a lot of ways to say no. Thank you so much. Thank you. So were doing it. Yes. Start saying yes to your companys best ideas. We help all types of businesses with money, tools and knowhow to get business done. American express open. To get business done. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back dow is down 137 points we lost more altitude this hour. Nasdaq down 35 russell down 7 pretty consistent across the board. 0. 5 declines across the board to begin a string of gains in 2018. Apple reportedly cutting iphone x production for the first three months in half adding to growing concern over weak sales of the phone. Lets get over to josh lipton. Kelly, apple is now telling its suppliers it will slash its iphone x Production Target for the First Quarter by half to 20 million units. Thats according to a new report from the nikkei, which didnt cite a source in its story still the paper says weaker than Sales Results during the Holiday Season are to blame here this follows a similar downbeat note from jpmorgan analysts there recently talked about signs of what they called weakening iphone x orders. They said highend smartphones are clearly, in their words, hitting a plateau this year. Investors seem to be paying attention. So far this year apple stock is basically flat thats compared to a 7 jump for the market on the other hand, rbc tells us hes not worried he says no apple suppliers that he covers are suggesting production cuts that are out of the ordinary they are in line with historical seasonality. In other words, theres always a sequential slowdown between the december and march quarter, but he doesnt seem any cause for alarm. At least in what hes hearing from tim cooks supply chain in addition, he notes rbcs Consumer Survey in china indicates a strong iphone x mix with more than 60 preferring that flagship device scott, back to you josh lipton, thank you very much apple stock has dropped 4. 9 since january 22nd, wiping out 45 billion in shareholder value over that period shus investors be concerned apple and the iphone is losing luster here to debate that is ross gerber ross, how much do you think is in the stock and thats why its had this pull itback it is in the stock. They do this every quarter how many times can we do this with analyst and production slashing, this and that. Theyre never right. We dont know what the real sales are, nor does anybody. What we know is the iphone x is much more expensive than the other iphones and that does affect demand. Tim cook by splitting having two phones for sale, essentially, i think, also split his market what weve seen is that the higher end aspirational buyer is spending the extra money for the iphone x, but many other millenials are very conservative with their money and thaeyre opting to keep the phones they have and incrementally upgrade to 8 many are still using a 5 or below so still so much opportunity for iphone. Ross, we know youre a shareholder. Eric, what about you and what do you make about these reports 50 i predicted for a while that the x was not going to sell and these numbers correlate with that thats a big hit thats going to affect the stock in a big way i think youre going to see more revisions, certainly from suppliers. I think apple will revise their numbers in time. Look, i mean, the bottom line, when you look at the x phone, whats so special about it even apple thats not fair the phone is amazing come on. Let me address it you had your chance. Let me talk now. When you look at grammys, they advertise for the x, what was special . Unicorns and aliens. So, if apple is relying on unicorns and aliens to grow, thats why youre looking at 50 . Steve jobs would say, go back to the tool shed. Eric, you guys are not shareholders then . No, not a chance. Ross, what about his points that was the best apple ad ive seen for so long in the grammys. I look at animojis if you dont look at snapchat what kids do all day long, apple is addressing that thats smart for them. Second, apple is not an iphone company. It is a very Diverse Company and its all about getting user handsets out there to make services theyre selling more ipads than most people expect and more computers than people expect even though there might be an issue with the iphone, lets take into fact that margins are bigger and the phone is more expensive. More likely theyll surprise on the upside with earnings even though Sales Numbers might not reach where they expect. The biggest question is, if they guide lower, how substantially they may guide lower and what they be the impact is going to be in the stock, which has already been pulling back leading into the number i think they always guide lower. I think at 17 or 18 times earning with the potential to buy back 10s or 15 what do you mean always guide lower . They always guide their numbers lower. They always say im talking about cutting guidan guidance they dont always cut guidance. Apple, the same valuation as ge right now on a pe multiple and its growing so, dont you think in a marketplace where netflix is trading at 10,000 times earnings that apple is a fairly compelling investment . Thats where we stand as far as risk reward. I think its very compelling for apple. Eric, last word well, look, i mean, clearly hes invested heavily. Its obvious with these arguments. Yes, of course. I think they have a big way to fall. And i think it could be 15, 20 when youre seeing the x phone by the way, the iphone is the largest portion of revenues hes saying its not thats silly youre talking about a big hit coming investors are going to be hit and i think you have to be careful about investing. This is no longer a growth stock. This is a staple stock its still a good company but its not a high grower and the iphone is going to is facing big problems guys, thank you both. Thank you. 15 minutes left in the trading session here stocks are near the lows of the day. The dow is down 145 points 26,472. Theres no late day rally coming to the rescue here yet. 15 minutes to go paypal taking hit on word of a new competitor in the sector. Plus, is the Trump White House about to pull the em nint dou Eminent Domain card in the air waves . Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. 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Were back stocks are moving lower with 15 minutes to go on the first trading day of the new week. A lot has to do, people say, with whats happening in the Interest Rate complex. You have the tenyear right around 2. 70. Thats making people awfully nervous. Its hurting the utilities. Talking about the death cross earlier. A little skittishness about that. Bond proxieproxies, these bondsensitive areas lets get a check on some of todays lets do. Are you doing that . No. Looking at you perfectly framed thank you softbank is working on a new Digital Payment system toll rival paypal, also compete with a alibaba ten cent pay paypal is trading down on the news and starbucks is trading lower after they changed the share saying chooibs growth is not enough to offset slowing u. S. Sales. Take a look at starbucks and theyre down about 1. 23 . Still more pain since that Earnings Report last week. About 11 minutes to go dow down 165 were near the lows of the day well keep an eye on the s p vix is up 13 transports weaker, everybody else lower. Were watching the tenyear closely. Everybody is down here and the impact its having on, as kelley said, on interestrate sensitive stocks, utilitiesings telecoms and elsewre ldiusinwoinutes [ click, keyboard clacking ] [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ] 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. Talk to one today and see why were bullish on the future. Your friend just marea. You like her. Shes really good at social media. She buys stocks in companies that stand for something. You like her. Shes always up on the latest trends. She got in early on the whole goat yoga thing. And her sunsets are always nofilter. You like her. But youd like her better if you made more money than she does. Dont get mad at just marea. Get eatrade. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Breaking news on maxim integrated products. Alex sherman is back with new details. Another big tech deal potentially in the works here. The Japanese Semiconductor renesas in talks to buy maxim integrated this could be a 20 billion deal or so. Maxim tried to sell itself several years ago. That sales process didnt go anywhere renesas has been vocal about wanting to buy Semiconductor Business renesas over 20 billion in market cap and maxim approaching that another tech deal in the works here with these two large Semiconductor Companies potentially coming together. Nothing is imminent. No deal may happen here, but the companies are in talks alex, i assume the japanese buyer wouldnt have the kind of pushback a chinese buyer has had, correct for sure. Of course, there would be regulatory issues involved here, but we have seen other crossborder semi deals between Japanese Companies and u. S. Buyers, most recently the Toshiba Memory unit business which was bought by a consortium youre right, chinese steel would be a much different story. M achaxim popping. You have six minutes to break another story. Ill let you guys know. Alex sherman back at headquarters. Shares of dr. Pepper snapple snapping on news it will merge with Keurig Green Mountain leslie has more on these details. Thats right. A refreshing deal for share shoulders but analysts thirst not quite quenched it combines dr. Pepper snable with Keurig Green Mountain which is owned by jab. One analyst writing they are struggling to understand the rationale but they also add many Consumer Companies have benefitted from a longterm Controlling Shareholder that can execute a, quote, grand plan over time. In the meantime, the executives told squawk on the street that the deal is largely about distribution how beverage brands are born. Theyre born in small outlets, vending convenience where people buy them one bottle at a time. Thats hard to do. You need a very, very sophisticated Distribution System thats exactly what dps has. So, were able to match that with our strength, which is in traditional grocery. Now, one of keurigs partners, dunkin slipping on todays news after j. A. B. Sherman told a german newspaper this month that they are raising new capital. They speculated dunkin was a prime takeover candidate but with this keurig can reenter the market and expand even further. Thank you very much coming up next, the closing countdown wi t d jt f thheowusof the lows of the day. Lets get started. Show of hands. Who wants customizable options chains . Ones that make it fast and easy to analyze and take action . How about some of the lowest options fees . Are you raising your hand . Good then its time for power e trade the platform, price and service that gives you the edge you need. Alright one quick game of rock, paper, scissors. 1, 2, 3, go. E trade. The original place to invest online. Were back on the floorof the new york stock exchange. Time for the closing countdown stocks are a little off the lows of the day but a lot of the focus is on the tenyear yield which has been at its highest level in a couple of years pushing around 2. 70, sitting around 2. 69 making some investors nervous about the speed in which rates could rise from here and the impact on the overall market ill show you the three major averages everything is down across the board. Dow was down by 165, 170 earlier. Its peeled a little off that. Its down 136. In terms of the big stock stories of the day, apple reports its earnings on thursday after the closing bell that stock has underperformed the market this month for certain. Its down another 2 today on some reports out of japan that apple is telling its suppliers its going to halve apple iphone production in the current quarter. That has some investors selling that stock today im here, as always, with bob pisa pisani we talk about stocks but this is really about rates. Big week here a lot of movers. State of the union, jobs report, earnings huge, but everyone is focusing on the fed meeting for exactly what you talked about. Rates starting to move up rapidly. Its the velocity of change worrying people. You look at ratesensitive sectors, all down more than 1 you think on a great day like today, all the banks would be up, but were seeing some resistance, even to the idea that banks will be better. Theyve been regional banks on the weak side. I think the big market mover is lets see what the fed says about what theyre seeing about inflation. Wage growth is there, definitely youve had these Interest Rate sensitive selling off, that death cross, big talk about utilities. Thank you, bob closing bell state street Global Advisers second hour of the bell with kelly. Welcome to the closing bell. Im kelly evans. Dow dropped 180 on the bell. Could still be moving around well keep an eye on it. Exact same proportion as to the s p today. Dow down 26,435. Dropping 181 the s p down 19 to 2853. Nasdaq and russell down 0. 5 nasdaq down to 7466 and russell back to 1598 Interest Rates moving the other way. So it is volatility index, so is the dollar well talk more about this with cnbc senior commentator michael santoli, and paul hickey checking in and nancy tangler from Heartland Financial leading the dow, goldman sachs, caterpillar was the big laggers in the blue chips. Theres goldman up 1. 5 . Caterpillar down 2. 5 . In the s p, dr. Pepper snapple was up 21 and wynn resorts down 16 , that makes for a 20 two session. Well have more on that. Lets get back to the markets. We went from being down 100, going out on the lows here what do you think is behind this clearly, you could have guessed coming into the week there was going to be pentup selling, your basic backup after a tremendous run pretty much had to have a down day at some point. I know this is the weakest day in the last 100 trading sessions because before today we went 99 straight sessions without the s p 500 being down at least 0. 6 of 1 . 99 . Longest in history. We did go down about that much, a little more, it looks like, and got back to levels that were last reach, in fact, first reach on friday morning. So, we kind of gave up fridays little pop i dont necessarily think you have to make too much of the yield move well talk about that later. It was an obvious excuse to say, okay, lets back off a little ahead of the fed meeting. We talked about how stretched everythings gotten. What does today do to put things back in check for you . I dont think one day like today would really bring things back but i think we tend to see this late in the month in prior recent months, too, some rebalancing as, you know, people are overweight equities, rebalancing to fixed income. Treasury yields were up today, but people are just taking money off the table at the end of a month and a very strong month at that nancy, anything youd add on the correction we see here today . I called for a correction in july, so either i was super early im hoping were going to see some you know, just some evening out and a controlled brush fire would be the way id like to see it just so that we could clean out some of this excess in the market im glessing, nancy, im guessing when you called for a corrections, you didnt mean for a correction of 0. 7 of 1 . Youre probably talking of something more is this the start of something more, you think . Yeah, i do hope so, actually, because i think that having done this for 30plus years, this is what you need. I think everyone knows that and is just waiting for it the problem is after the rebalance, and i think youre right about that, paul, is that then we see the money come right back in. Weve only gotten a couple days of selloff and we never get the full correction. I think we really do need that i doubt well get it during earning season, though. Lets talk about the move in Interest Rates, which was a focus today. You woke up this morning, 2. 7 on the tenyear Interest Rate on the tenyear yield. We havent seen that since april of 2014. Mike, its a round number, 2. 7 . Is there a larger significance to it . I dont think this particular number is of significance but the idea were perhaps moving into a new higher range for yields, even though everyone seems to expect it or predict it, its something the markets have to adjust to. Not because it radically changes the cost of money, but just because weve been anchored at low levels for so long, i think you have to look and say, look, we know whats been working to have the stock market soar almost every day yields contained, dollar going down both those things changed today so maybe its an excuse to sort of have a minor reversal in some of these trends. What do you think, were just below the 2. 7 mark now. Does it keep climbing from here . The dollar index up 0. 3 of a point. The vix up 2. 5 . Vix over 13. What are these things telling you . I think 2. 7 on the tenyear is still extraordinarily low i mean, it was 70 basis points higher the day after lehmans bankruptcy at that point that was like our financial armageddon, everyone rushing into the safest assets were still at very low rates in Interest Rates and i think when these increases are still now a function of Economic Growth and thats what the market is anticipating interpreting it at throughout this bull market, rates are higher, the market goes higher. When rates pull in, the market goes lower i dont think until we get up to 3 , even a little over that, its a big problem for the market at all. One of the casualties was the utility sector the s p utility sector down more than 1 . Thats why were talking about a death cross. It means when index falls below the 200day. That happened in the utilities today. Do you think thats a factor contradicting to the weakness here i think i think so, kelly. Im surprised that anyones surprised that electric utilities are not going to be the place you want to be in this environment. First of all, valuation levels are pretty high. Second of all, its not the right fundamental market with rising rates for this group. I do think that well see some moderation in the tenyear as corporate cfos start repatriating cash back into the u. S. I would want to do it at these levels, particularly with the dollar i think it will put some upward pressure on the dollar and downward pressure on rates and also will be good for stocks i dont think anybodys thinking about that right now i think that is going to have a profound effect in the next couple of months. You mentioned you avoid utilities, nancy, as an investment right now what do you like, where do you think the best place is to put money . Yeah, so were bottomup investors. We think with the decline in the correlation amongst individual stocks and the s p 500, we think it matters a lot which stocks you own and which sector so, while we generally like we still like the pharmaceuticals. Thats been a stealth outperformer we are outweight to buy yoe and pharma we have modestly overweight to technology and industrials but its really the underlying stocks were most concerned about. These would be the beneficiaries of technology. Even if youre not a believer in tech as a sector, im talking about oldschool Companies Like home depot and boeing and mcdonalds and i cant even think of the others off the top who have benefitted federal express. I was going to say boeing might be oldfashioned but it has a growthy multiple tamped to it we bought it about 100 ago and we still think theres room in terms of what theyre doing with the supply change and Services Business same with fedex. We think these companies have used technology, walmart, to their advantage. And theyre leveraging it. Thats the story that were playing. Mike real quickly, because shes talking about amazonproof picks. Do you think thats behind the deal dr. Pepper keurig cold mountain, scale with retailers, is that i can see the conceptual distribution logic for it. I also think you have to consider that this is a different type of entity in terms of who owns Keurig Green Mountain right now i think the back doorway of getting liquidity for that business and maybe putting some assets together that didnt fit with the rest of the Family Business i dont want to generalize off this deal, but i do think what youre seeing by the way, dell vmware. Look, how can we kind of square this circle and get some liquidity and try to rationalize a couple that dont fit elsewhere, thats what seems to be going on. I dont think its about corporate impaeratives or business logic. If we get were doing an hour on it because i want to know why no one wants to go public i was going to ask you what it means for starting off the year with all of these deals . Weve had a ton of deals announced so far. Companies have a lot of cash. After the tax reform they only have more cash now, so you know, they have to find something to do with it its either return it tore shareholders, pay their employees or do m a. Were seeing a combination of all three. Getting back to the utility sector there, its typical, again, when rates rise, utilities go up. This death cross talk for indices, its a lot less ominous than the name suggests actually following prior periods where weve seen this type of occurrence, utilities have actually put up better than average returns over the following three to six months. So, theyre already down a lot, so, i mean, you could see a bounce in the group here especially with rates becoming stretched as well. Thats an excellent point i mean, some context we do talk a lot about these kinds of metrics its another way of saying its down a lot in a short period of time if you think thats oversold, that might be an opportunity if its not something obviously for an individual stock, it could be in freefall, but for a sector it probably means the ebb and flow of money. Lets talk about something thats been up a lot, even after todays pullback, what is a meltup is this defined as one theres nothing in terms of a formal definition of this, but everyones been talking about it i do think its basically when the market accelerates higher off an already high level, which weve seen right here. This is from the folks at fund stretch showing how we accelerated at this blistering pace coming into this month. Now, what happens after this period when you had virtually no pullbacks . Its a phase of the market that usually does not mean when this phase ends the bull market is over what it usually means is very strong underlying demand for stocks that somehow carries through. I think the risk here is that we have this oversaturation of good Economic News and very positive sentiment, and it creates a choppier environment coming after. And you have more fullbacks. But it usually is not the ultimate high. Basically above average returns or average returns Going Forward, but not as smooth a ride. Its a good looking chart its from fund strap. I saw that. Very interesting chart. It was a great chart would you echo that in terms of what is or isnt a meltup and what the risk of that is i think a big concern on the part of Money Managers is being left holding the bag when the market turns down. Theyre constantly looking over their shoulder like today, is this the beginning of something bigger . You look at the internals of the market we have high yield spreads at cycle lows, percentage of stocks hitting new highs routinely over 20 in the s p 500 theres really not any divergences underneath the surface. I mean, what could drive the market lower maybe an external shock but its hard to game those the point mike was saying is after these prior periods where weve seen these big returns, you have seen increased choppiness but, you know, average or better than average returns but just the fear is that people dont want to be left holding the bag. And that that causes them to be more cautious for people that dont want to worry about every twist and turn in the market are saying, okay, how do i just pick smart stuff and im able to drown out the noise . Can you still do that with a pretty concentrated portfolio . Yeah, i think you can quickly ill answer that but ill toot pauls horn. This is the first time in ten years that all ten sectors have revised earnings up. That gives you a lot of opportunity to look around and find Great Companies that you can own for a lifetime these are usually companies raising their dividend pretty quickly and dramatically like 3m, 16 increase or like Texas Instruments, 25 increase. So, you can drown out you can ride out the noise when a company like Texas Instruments doesnt guide high enough and sells off. Yeah, big move. Paul, you can tad credit for that no, no, shes exactly right its the first time in at least a decade analysts have been raising forecasts on every sector more than theyve been lowering forecasts its the first time weve seen that in ten years. It set the bar high coming into earnings season but so far companies have been reacting positively and earnings beat rate and revenue beat rates are nearest the high in ten years as well. Its a good nugget. Well call you paul nugget hickey thank you for joining us appreciate it. We have more headlines out of washington on outgoing fbi director Andrew Mccabe eamon javers, what now reporter new reporting from nbc news about the phone call between the president of the United States and Andrew Mccabe that took place on the day that the president fired james comey. Nbc news reporting that the president wanted to fire james comey at a time when he was in california and he did not want comey to be able to use an fbi plane to fly back to washington. He thought all the trappings of the office should be removed from comey the instant the letter was delivered to headquarters, stranding comey effectively in california, leaving him to make his own way back to washington, d. C. Nbc news reporting the president called Andrew Mccabe demanding to know why that didnt happen mccabe reportedly replied that he didnt specifically authorize comey to use the government plane but that he would have if anybody had asked him. Nbc news saying the president was silent at that answer and then turned on mccabe suggesting he ask his wife how it feels to be a loser, an apparent reference to a failed campaign in West Virginia that mccabes wife made. How did mccabe respond to that nbc news says, he said, okay, sir, and the president hung up the telephone. A dramatic moment behind the scenes revealed by nbc news behind that phone call between the president and Mccabe Mccabe resigning effectively from the fbi he had been expected to leave the fbi later in the spring when he was eligible for his full retirement hell be on leave and able to collect his full retirement. The white house not commenting referring all ept questions to the fbi saying the president didnt have any official volment in the decisionmaking surrounding mccabes official departure from the fbi. Dramatic tale there eamon javers at the white house. We have a news alert from jpmorgan seema modi, whats going on here this involves leadership. Jpmorgan chase appointing daniel pinto and daniel smith as cochief operating officers of the company. Jpmorgan Ceo Jamie Dimon says hell stay on for five years the stock is unchanged after hours for now. Back to you. Thank you he just put five years out there, it sounds like. Absolutely right. I think its kind of unheard of, not just to say board of directors and i have agreed i will continue in my role for approximately five more years. I think this is probably an attempt to clear up any ongoing discussions about how much longer he may have at the helm gore man smith, as seema said, head of the retail bank, hes 61 and daniel pinto at 55 excuse me, gordon at 59. Pinto at 55. They run the two biggest parts of the bank below jamie dimon and were the two most h e eirapparent if anything were to happen to jamie dimon. Theyre promoting those two, making clear the power they have within the bank and at the same time jamie dimon saying he has five more years. Now were talking 18 years if he carries this out. Criticism of late has been succession and how many lieutenants jpm has lost to other places because they saw the writing on the wall. They were not getting that ceo job. If nothing else, jamie dimon making it clear rights now he intends to stick around. I dont think it will quiet that talk simply as he said, these guys are of an age that its not obvious one will be the successor if, in fact, jamie dimon stays the five years he says right now of course, i wonder if also putting five years out there is an attempt to quash the talk of running for president. Theres a lot of parallels between him and bagram they took over at the same time with igor he had an explicit departure date he keeps rolling forward. Thats not the case with dimond. What is the significance of that, especially for two guys who now know that jamie dimon plans to stick around in the top job for some time . I think its interesting. Gordon smith, 59, in my reporting recently just before earnings season when we did a big piece on potential longterm successors for blankfein, one of the parts of the reporting is he wasnt desperate to become ceo this promotion is probably exactly what he was looking for. Pinto head of the Investment Bank at 55 may still well have ambitions. Assuming its not the full five years for dimon at the helm, you could say its the other way, these promotions keep these two happy in the meantime. Then theres the other three members of the committee, marietta is head of the Asset Management arm, 50, doug, 52, and marianne lake, cfo, shes only 48. Those other lieutenants probably arent feeling a need to leave just simply because jamie dimon said five years. Some of those past lieutenants you mentioned in the past that we may have anointed h eirapparent in the media, they are older than the other bunch thats at jpmorgan i think the fact jamie is saying mr. Dimon is saying five more years and the two eldest of those lieutenants are being promoted, it probably shows their commitment in the short term. Thats agood point. Wilf, thanks for joining us. Jpmorgan shares are unchanged on the news. Theres a lot more ahead on the closing bell. Announcer next up, when the name on the front door gets in trouble, how much trouble is it for the people behind that door . More on wynns big drop in the wake of allegations against their founder and ceo next plus, the president just did something very unrepublicanlike that has an entire industry calling in anger making investors very nervous. Plus, the big call on amazon stock. Ma is treti te g ihe sllimtoetn . One in Customer Satisfaction r over cable for 17 years running. But some people still like cable. Just like some people like preshaken sodas. Having their seat kicked on an airplane. Being rammed by a shopping cart. Sitting in gum. And walking into a glass door. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv and get a 200 reward card. Call 1. 800. Directv but prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. We know life can be hectic. Thats why, at xfinity, weve been working hard to simplify your experiences with us. Now, with instant text and email updates, youll always be up to date. You can easily add premium channels, so you dont miss your favorite show. And with just a single word, find all the answers youre looking for because getting what you need should be simple, fast, and easy. Download the xfinity my account app or go online today. A rare big downday on wall street it was pretty close to session lows and decline of 0. 23 of 1 the transports were lower. The nasdaq composite lower the russell 2000s were down about ten points today to 1598 citigroup is the latest firm to raise its price target on amazon well get the fast money trade on how you should play that red hot stock ahead of its earnings. Plus, the white house considering a move to nationalize the next generation of wireless. Could it be a positive for telecom . The closing bell back in two hi, im bob harper, and i recently had a heart attack. It changed my life. But im a survivor. After my heart attack, my doctor prescribed brilinta. Its for people who have been hospitalized for a heart attack. Brilinta is taken with a lowdose aspirin. No more than 100 milligrams as it affects how well brilinta works. Brilinta helps keep platelets from sticking together and forming a clot. In a clinical study, brilinta worked better than plavix. Brilinta reduced the chance of having another heart attack. Or dying from one. Dont stop taking brilinta without talking to your doctor, since stopping it too soon increases your risk of clots in your stent, heart attack, stroke, and even death. Brilinta may cause bruising or bleeding more easily, or serious, sometimes fatal bleeding. Dont take brilinta if you have bleeding, like stomach ulcers, a history of bleeding in the brain, or severe liver problems. Slow heart rhythm has been reported. Tell your doctor about bleeding new or unexpected shortness of breath any planned surgery, and all medicines you take. If you recently had a heart attack, ask your doctor if brilinta is right for you. My heart is worth brilinta. If you cant afford your medication, astrazeneca may be able to help. Welcome back its time for a news update with sue herera. Heres whats happening at this hour. President trump lunching with members of the United Nations Security Council at the white house. He strongly condemned the talibans role in a recent string of deadly attacks in afghanistan. Well also discuss what more we can do to defeat the taliban. I dont see any talking taking place. I dont think were prepared to talk right now its a whole different fight over there theyre killing people left and right. Here at home, a small plane made an Emergency Landing on long islands State Park Beach this morning an instructor and two junior teen pilots were on board. One of the students was piloting that plane they were all taken to a hospital for evaluation but everybody survived. And chief wahoo is being removed from the Cleveland Indians uniform next year the polarizing mascot is coming off the team jersey sleeves and caps starting in the 2019 season the bigtooth smiling kashg ka tour has been used by the team since 1947 that is the news update this hour kelly, i will send it back downtown to you. Theres still a chief yahoo, right . Wasnt that what yang called himself . The company or yeah. I think right now all attention turns to the washington redskins. Oh, there you go. Theyre the next on the list. Well see what happens with that controversy. Thank you, sue. Axios saying President Trumps national security. All fcc commissioners put out a statement oat posing the idea. The Administration Significant named the goal would be to protect the u. S. From china and army of hackers. Marc grossman is with us to talk about this along with jonathan spalter, president and ceo of u. S. Telecom, an associated of telco businesses thank you for joining us jonathan, i assume you are vehemently opposed to this because the Technology Companies are doing the investment themselves what do you make of this announcement the quickest way we can put the brakes on the hard momentum that u. S. Broadband providers have in the global race to win in the 5g marathon is to federalize these networks. You know, trillion and a half dollars have been spent by Broadband Networks thats more than was spent on the interstate highway system and sending a man to the moon combined let American Companies innovate, invest and lead. Thats what we really need to do not have the federal government take over our networks marc, can the federal government actually do Something Like this . Amazingly, they could the power of Eminent Domain is really broad goes back to kings, giveth taketh you layer on that the inherent power when it comes to power of national security. Yes, they could. Theres no doubt the power exists. So maybe they could justify a move in that way, but if theres huge pushback by the telecom industries, what would happen . You ask me could it happen, the power is there, yes. Politically, will this happen . This is a stril balloon thats the bubble is going to burst and fall to the ground nothing more, nothing less trumps controlled fcc came out almost instantly reminds me of the immigration ban. Hss was like, theres an immigration ban . Whi when did that happen lets say this does not go any further. Do you think theres going to be an imperative by the government to say, we need to have some kind of secure part of the spectrum or network or Something Like that, have to have some assurances from the industry that, in fact, this is going to be safe in some respect . And is the industry prepared to assure that . Oh, absolutely. We absolutely require security resiliency of our networks not just our Current Networks but next generation of networks. Our innovators are working hard every day to make that happen. Its a great thing the federal government wants to play a role, an assertive role in helping the u. S. To lead in the role of 5g but its not to run the networks themselves its to lower the barrier for investment to create incentive for our companies to win this race thats what well be striving for in the days ahead. Guys, thank you breaking news. Jonathan and Marc Grossman on the eyebrowraising story of the day. How about this one breaking news on met life. Shares are lower whats happening thats right. Metlife preannouncing preliminary Fourth Quarter 2017 earnings and rescheduling the Earnings Release and Conference Call, which had been scheduled to happen after the bell on wednesday. Then that call this upcoming thursday morning now, the company says this seems to be tied to a reserve charge in the Group Annuity business. Management of the company has determined the prior release of Group Annuity reserves resulted from internal weakness what that means, metlife expects to increase reserves in total between 525 and 575 million pretax to adjust for reserves previously released as well as accrued interest in other related liabilities. What that means, that is an impact to the Fourth Quarter 2017 net income of 135 to 165 million pretax adjusted, what it means, the company is expected to report earnings of 61 to 66 cents that is far below the 1. 08 estimates that are expected from the street thats why youre seeing shares down 7 right now. They were down as much as 10 in the afterhours trade. Volume seems to be picking up here last thing i would note, they have rescheduled their Conference Call and web cast for february 14th. Theyre pushing it back about two weeks from 8 00 to 9 00 a. M. Eastern. Back over to you morgan, thank you the shares are down nearly 8 . Mike, you could point to a number of reasons why, but any time you see weakness and internal controls, financial reporting, annuity accounting issues, not to mention pushing back the earnings. Absolutely. I dont know if this is about a heightened level of scrutiny among auditors or regulators that this kind of reserve accounting is echoes a little what ge had to deal with in terms of longterm impact of accrual accounting and the rest of it. So, you know, i dont know if its just about this particular episode. The reason you sell first, because its certainly unexpected and often it impacts what previous years earnings were and were not. Im trying to think of others in the space we talked about some challenges there and actually the lack of participation because the forget even whatever may be happening with the accounting. The business itself has been no good prudential shares down about 1 after hours, for example looking at some other insurance names. Met down 8 . I believe theyre still trying to fight the regulator to make sure theyre not a that already happens. Basically the regulators backed off that seems even prudential will escape that. Metlife down 8. 5 and theyll not be reporting q4 earnings as expected. Amazon shares are up 22 this year. Up next, fast money traders tell us whether that rally is just getting started, which is hard to believe. Plus, the record market rally has led to a boom in borrowing from 401 k accounts to pay for everything from homes to vacations. Were going to look at how widespread this is and if its a red flag for your retirement two, one, fadeaway. That was awful. Why are you so good at this . So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at Td Ameritrade, we offer free access to coaches and a full education curriculum s just to help you improve your skills. Boom thats lesson one. Education to take your trading to the next level. Only with Td Ameritrade. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Theyre not investg in commodities or fixed income. What people areally 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. We have one to two fires a day and when you respond together and you put your lives on the line, you do have to surround yourself with experts. And for us the expert in gas and electric is pg e. We run about 2,500 2,800 fire calls a year and on almost every one of those calls pg e is responding to that call as well. And so when we show up to a fire and pg e shows up with us it makes a tremendous team during a moment of crisis. I rely on them, the firefighters in this department rely on them, and so we have to practice safety everyday. Utilizing pg es talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. The things we do every single day that puts ourselves in harms way, and to have a partner that is so skilled at what they do is indispensable, and i couldnt ask for a better partner. S. Welcome back to closing bell. Take a look at rambus reporting in line with estimate but revenue guidances almost half of what estimates were calling for. This might be due to a new accounting rules that were adopted. Right now were looking at shares off session lows. Still down about 4 here in afterhours. Kelly . Thank you, seema. Seema modi. Now lets get to other big stories of the day in our rapid recap. As the month heads into the home stretch, s p the best. A dr. Pepper snapple and Keurig Green Mountain are merging. This transaction worth about 11 billion in what theyre calling combined pro forma revenues. Its for our consumers, our partners we talk about being a total beverage solution. This was the perfect avenue to take us to where were not only in cold beverages but also in hot beverages. The board of directors of wynn resorts is launching its own investigation into the allegations against steve wynn. Republican National Committee now has accepted steve wynns resignation as finance chair. Apple shares cutting iphone production in half, according to japans nikkei news service. Sources are telling me its possible dell will consider a reverse merger with vmware. The action is really in the bond market today where yields are soaring. The twoyear at its highest level since the beginning of the financial crisis. Dow dropped 180 on the bell could still be moving around well keep an eye on it. Thats more than 0. 23 of 1 . Exact same proportion to the s p today. Citi named amazon as top stock pick, raised the price target from 1600 to 1400 the boost they say could come from amazons ad business. Ad revenue 10 billion in 2017 i assume according to citis analysis, could be as much as 50 billion in a decade. Joining me with more, cnbcs fast money trader steve grasso and brian kelly. Hey, guys. Hey, how are you . Peachy. Listen, lets talk about this price target also, brian, what do you think about the fact that, you know, it hits 14 so raises it to 16. Is there a strong basis for this its not like this snuck up on anybody they had 10 billion ad revenue last year. This isnt anything new. To me it felt more like an excuse for an upgrade. I get it you want to get your price target up there. Perhaps this was undiscovered at the very least maybe this was underappreciated but it didnt feel like any new news coming out. Heres the thing, it worked. Stock was up amazon gets that pass. It worked. Steve at the same sometime we had people in there talking about they have to break the ad duopoly of amazon and google maybe will take the regulatory heat off it. When you amazon, this stock ive been in and out of. It goes thrown off to the side when we talk about valuation were no longer talking about valuation. Were talking about growth they own basically the retail community. Now with groceries theyll be there as well. Theyre in cloud they own streaming, their own little nook. This is something people buy, keep buying. To your point about the price target, these are going to be ratcheted up people dont want to play catchup its still a buy. Its had a good year. Its up 22 in how many what have we had, 20 trading days its a fascinating setup in sentiment. Everybody on the street has a buy on it, but half of all the price targets are below where its trading right now. Wow. I think its just a natural response the analyst has a 1400 target it got there the obvious question is, what do you do now, buy it or sell it . If you say buy it or hold it you have some justification. Look, you could always plug in various assumptions and leverage because the stock does not trade as we know penny for penny on earnings per share. Its not about a value play every time you get fooled into thinking its a value play, youre wrong its a momentum play they can turn the spigot on and off when they want. If its momentum, why are we even reading the Analyst Research anyway . Thank you for joining us steve grasso, brian kelly, much more coming up on fast money at 5 00 p. M. Eastern. We have a news alert on revlon a busy hour. Seema, whats happening there . Revlon ceo is stepping down Fabian Garcia stepping down to pursue other opportunities we saw shares of revlon underperform, down about 4 in the regular session. Its been a tough year shares are down about 33 over the past 12 months kelly . Seema, thank you. This comes today as avon is trying to figure itself out. Music streaming services will have to pay up to songwriters and publishers thats next. Ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov welcome back time now for our takeaway today. We begin with the u. S. Slapping a big increase on the amount of royalties that streaming Companies Must pay out to Music Publishers and songwriters the copyright royalty will force them to pay outer 15. 1 up from 10. 5 , and thats to owners like sony who pay it out to artists you think they have to look too pay more, look to the shares pandora were up 4 spotify is not public so we cant check. I thought there would be a bigger hit. Pandora, the stock is already at a deep low before this actually happened. Two, the majority of pandoras business is a Digital Radio type business its ad supported. These higher royalties dont apply to that business they dont apply to that kind of only ondemand streaming . Ondemand. You couldnt look to apple shares today we couldnt look its going to disappear inside those. If thats the case, theres nowhere to look to the pains, they might as well increase it to 40 i think apple would feel it and not love it. Spotify certainly would. They lobbied against it. Theres all this about how much you track im sure the artists are happy today postgrammys. As people keep scratching their heads about the dollars weakness, its weak because people keep buying foreign stocks they say investors have taken 20 billion out of u. S. Equities since last january and putting 100 billion into europe and japan. What do you make of this argument it definitely reflects the broader trend. Its a contributing factor, without a doubt. I dont think of it as u. S. Investors sending money out of the country. Its happening globally. I think of lets say one investor owned all Financial Assets in the world. When they feel like the world is growing well, they want to invest in the faster moving more from the u. S. If youre from a global basis, the u. S. Is the defensive kind of quality play. Thats true. Thats not where you get the money when everything is going great. I look at the i dont know if anything explains the weakness its headscratching, thats all it is. Well see if it continues. Finally, what is elon musk up to . Why is he selling flame throwers i dont mean he elsaid he sold flamethrowers next. What is elon musk really up to with this stunt . Beyond it being a stunt, i dont know i think its one of those things he seems to want to kind of stay in front of people. Court the attention. For all his variety metrics it started as a gag and people took him up on it, called his bluff. Hes running a oneman qvc operation but the biggest thing hes trying to sell is shares of tesla. I think it keeps him buzzy, cool. Hes always doing the next thing. Hes the flamethrower guy now. I dont even know if theyre legal. Legal up to ten feet. Seriously, you know that . Thats what it said. Okay. Please dont get one. Tax season is upon us. With the new tax reforms in place, some are turning to experts to handle these returns. How to find the right accountant is next. Coming up on fast money, a strategist says forget bitcoin theres been a great rotation in teceouantoaypa y wt p atntion to instead o [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ] 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. Talk to one today and see why were bullish on the future. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. Welcome back. Sorry to say tax season gets its official started to. The irs is beginning to accept individual returns and the agency is expecting 155 million this year. If you want to get jump start but need help and who doesnt especially this children, sharon is here with some tips. Kelly, move of the recent changes to the tax code wont go into effect until this year and so they wont impact your 2017 tax return. But its always important to get organized and if you dont want to do your own taxes you need to make sure to hire a professional who has the proper cre chen chalz and expertise. What is your ptin, thats the preparer tax Identification Number and without one, they cant sign off on your return. Make sure to ask for credentials, a Certified Public Accountant or cpa must know about taxes and auditing. They must know about all will these to get the designation. Theres the enrolled agent or ea and that person is tested on their knowledge of tax laws and earns their designation from the irs. A lot of the you also want to find out if your tax preparer will be available yearround because you may want to be able to go back in the fall or winter and do some yearend tax planning especially this year. Now unfortunately tax season can become scam season. The irs lists about several red flags that you need to watch out for and couple of them include staying away from tax preparers who claim they can get you a bigger refund than anyone else. Also avoid anyone who wants to tie their fees to a percentage of your refund and never agree to let a tax preparer deposit all or part of your refund into their financial account in order to pay the fee. That is a big no. Im still trying to separate who does what here and in the meantime, sharon, i wonder how people are going to react feeling so good about their 401 k plans the Washington Post has the story about theres more and more people borrowing from their 401 k not because they need too but because it will elbe replenished. This is not an apples and apples exodus. Youre taking this money out of your 401 k unless youre over 59 and a half and your paying taxes on this money on your traditional 401 k and youre also paying an early withdraw penalty. If youre taking out 20,000, youre not really getting 20,000 to usefor your own so really think generally taking money out of your 401 k , borrowing from your 401 k before youre eligible to it is really a bad idea. The good news a lot of people are saving a lot more. Theyre balances are going up because the markets been so good but theyre also contributing more to the 401 k than they have in about ten years thats according to fidelity. Were also seeing the number of 401 k millionaires at the highest weve seen. 133,000 at the end of the Third Quarter in 2017. So were seeing significant gains for people in their own balances and in their contributing to their retirement accounts. Thats great. Just make sure to have another account where you can dip into more easily, a taxable account or savings account thats more liquid. Thats a great point. Again, hopefully some help for people trying to figureout these tax returns in the meantime. Thank you very much. Sure. We got some big tech names reporting earnings this week. Will preview the results from apple, amazon and all the rest right after this. Here . Doing were voya. We stay with you to and through retirement. So youll still be here to help me make smart choices . Well, with your finances that is. We had nothing to do with that tie. Voya. Helping you to and through retirement. Hey maya. Whats up . Hey so listen, i was taking another look at your overall financial strategy. You still thinking about opening your own shop . Every day. I think there are some ways to help keep you on track. And closer to home. Im all ears. How did edward jones grow to a trillion dollars in assets under care . Thanks. By thinking about your goals as much as you do. nadia white 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. dane chauvel 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. tom villa 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. dennis woloshuck 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 . Dow down is 77 points on the bell. We went out on the low. The s p down about 19 there. The nasdaq as you see down half a percent. Russell down a similar amount. Twothirds decline or all the averages. This ahead of the president s state of the union tomorrow night and speaking of which, looks Like Congress made a little mistake on the tickets. Lets just say this union could have been more perfect were it spelled correctly. The tickets for tomorrow nights primetime address the first in Donald Trumps Presidency Union with an m at the end. The sergeant at arms office the tickets have been corrected and reprinted and redistributed before tomorrow night but not before some lawmakers got a laugh at the error. Hes looking forward to the state of the uniom. Democrats predicted the many misspellings from the word nor may, theresa may misspelled or of course covfefe from trumps own twitter feed but this error happened on the other end of pennsylvania avenue and will be corrected before tomorrow. Kelly . Ive never made a spelling error in my life so i dont know what thats like. Were all human. Thank you. Its going to be a busy week for earnings. Me and mike are here to look at the calendar and some of the big names coming up. I think wednesday is your funday because you have your industrial momentum name at boeing which nothing makes we just talked about boeings multiple was higher than facebooks recently. Exactly. Boeings forward multiple is higher than facebook and facebook will have a lot to change about changes in the news feed and all the rest of it. Its more of a controversial than it used to be. Microsoft too they have stayed out of the lime light with this one. Thats right. Linkedin was one of those im going to turn cash into something and maybe theyll be an update here with take a on time warner. Alphabet its a clock work type company. The earns just come. Be interesting to see what they have to say about the ad market. A lot of this controversy about measurement and all the rest of it in digital ad. Alibaba, the one worth looking through, they offered in english. Fast money starts now. It does. Thank you very much. Melissa has a well deserved day off. Im brian sullivan. Your traders on the desk tonight, steve see more, brian kelly and dan nathan nows diversity. The scandal rocking las vegas. Also hammering investors, wynn resorts dropping nearly 20 since that bombshell came out. Plus, one top strategist calling it the great crypto rotation and that could have bitcoin back in the saddle again. Tom lee will be here to explain. All that