Month. The reporter who broke that story with the latest. And shares of Home BuildersToll Brothers after a mixed Earnings Report and well hear about the companys cautious outlook but we start with the latest on tax reform and a report from politico says the big six are making significant strides on a plan moving past the framework pushed out in july, and one of the big six, Speaker Paul Ryan, is optimistic about getting things done. Heres what he said in a town hall last night. I believe its going to be far easier for us to do tax reform than it was say for Health Care Reform all right how close are we to getting a plan, and what exactly would be in it . Joining us are politicos nancy cook and our own ylan mui. Glad to have you both here for this discussion. Nancy, i was looking at your proposal today about the items that people are kind of rallying around here, but they include controversial ones like, you know, capping the Mortgage Interest Rate deduction and getting rid of the deduction for state and local property taxes, so how do you think this is shaping up. Well, i think that republicans ever since they looked at doing away with the border revenue tax they are looking ways to offset and some of the things they are rallying around is eliminating the deduction of state and local taxes, capping the mortgage Interest Deduction for mortgages above 500,000 theres also a sense of phasing out intradeductibility and the plan is to present a skelton plan to the congressional tax writers in september with the hope that they will be able to flush out more policy details. Ylan, is speaker ryan right to say what he did last night, that this will be significantly easier than health care . Reporter i think that is a very optimistic assessment of the situation, wil i mean, if you look at tax reform, the hard fight there is not really between republicans and democrats even its Industry Group versus Industry Group, and that was a lesson out of 1986 look what happened to the border adjustment tax, right . It wasnt democrats who killed it it was debate within the own Republican Party and a debate between retailers and manufacturers, so thats just one example of the big fight thats to come between business groups, and theres not necessarily a Single Coalition once you get down to that level of picking out which deductions and which tax breaks are going to go. Nancy, i saw there that theres something about 401 k s being able to contribute posttax and not pretax dollars that i think would be a scandal and maybe im nye eve. What exactly are they talking about on that front . Well, they are really just talking about collecting tax on money that you put into 401 k s at the front end rather than the back end, so it would be similar to a roth i. R. A. This is one of the ideas that is quieter being discussed quietly. Iwouldnt say its an absolute forefront idea, and the other thing is that it will face a ton of opposition from the Financial Services groups that manage a lot of americans Retirement Savings but also budget hawks who really think that this is a gimmick because it just basically front loads the revenue at the beginning of the bill, rather than the end. Ylan, a lot of legislators were upset that they felt that they had been left out of the early part of the discussion when it came to various different forms of the healthcare bill. What do you think people will think if theres a war rom where six members are discussing a large part of the early part of the tax reform discussion . Im hearing a lot of pushback to some of these ideas from cap bill and members of the tackwriting committees really want to feel like they have ownership over the process and they are the ones who are driving it and making some of the hard decisions they are the ones who will have to battle with lobbying groups over which deductions stay and go, so they really are going to want to be the ones who make those decisions, and im not even sure from my reporting that there will be an updated framework. A lot of questions still from the hill on how much progress will actually be made. Nancy, real quickly, just to go back to this issue of 401 ks. I guess its not so much that you would do it rothstyle like youre saying. Its this idea that this could be subject to change every time theres a need to raise revenue, so, sure this might be the change for now, but who is to say down the road then they wont tax you on back end of that, too, or maybe do it with some sort of phasein above some certain income level . Well, the point is they are really just looking for revenue because they dont necessarily want to do just a straight tax cut package, and this was an idea that was in former representative dave kampfs plan and one of the ideas as republicans are looking for as a way to raise money i quickly also want to know that there are major outstanding philosophical questions that the republicans still need to contend with on this, like whether or not it should be revenue neutral and whether or not the tax cuts could be permanent or whether or not they will be temporary. And those are two really big overarching questions that republicans have to wrestle with if only we could talk to dave kampf himself. Well do just that nancy book from politico and ylan mui next hour former congressman dave camp will join us to talk about his 2014 tax plan and whether those ideas could help now. Closing bell exchange, Peter Anderson and steve grasso and jack, i want to start you. Weve got a very nice rally in the equity markets also got a soft dollar is that a driving force behind the equity market rall re, do you think . Wilfred it has been for the past seven months. Talking to european portfolio managers, they will tell you they are under water the s p might have been up 9 or 0 and the dollar is down that much before we go pat pentagon ourselves on the back and be all nice and happy about whats going on here, let keep in mind that a lot of it has been because of this deteriorating currencies weak currencies weaken nations so we have to be very, very careful and unless you think that the market will go down against the euro currency, it might be a bumpy road ahead of us for stocks over the next couple of months. Steve grasso, sitting over there at post nine, i know youve got fresh eyes off your vacation do you see anything in this market, you know, from a different perspective now . Well, when you look at what we sold off on, i think that was an overreaction and markets overreact and overshoot one way or another if you look at what we rallied back on. Its some has changed in one day, kelly does it seem realistic to you because it doesnt to me when you look at what jack talked about, President Trump talked down the dollar himself this is something that hes been looking for, and he got it when you look at the Chinese Markets and you look at copper running higher, if you look at the fxi, they are core late, so you can trade off of that. When you look at the overall s p market, the stock market is rallied back were right around record highs. Passive investing is there weve sold off to basically the 100day moving average and rallied back to the 50day moving average. All right. The one guess that every trader can make is that you stay in the position, in the stock market, stay long the stock market because every time you sell it off on d. C. Troubles and worries, its the wrong move to make. Peter, whats your view at the moment on the talk that we might start to move slightly closer to tax reform, and is that something that you would find bullish well, of course, i think its bullish. Its hard to speculate right now exactly whether or not well be successful with that, but heres our current view on what we think is happening we think that Market Makers and participants right now are saying perhaps none of this will happen, none of the trump enhancements will happen and were okay with that, because at least that would be certainty, so lets just eliminate all those possibilities and look at market fundamentals, and you know markets hate uncertainties, as youve said many, many times on this show, so if youre saying with certainty that none of these things will happen, let look at market fundamentals. They look pretty good, right the consensus for forward Earnings Growth is about 18 from this point on through an annual basis looking out forward a year, so we think thinks are fairly good. I dont think that were standing on a trop door in the sense that were going to have a surprise i think that things are fairly stable, and so if you operate with the consensus that there may not be any tax changes things are still pretty optimistic jack, do you agree that nothing is priced in here and todays price reaction is not news on that front kelly, i couldnt disagree more i think that this is an indication of how important politics are right now to the market if you Start Talking about theres not any tax reform, no repatriation, and if that starts to really hit the market, this market is going to get hit hard. All of that have, even though, you know, its being priced in the market for future earnings is very important to the if you think about it jack but, jack, the only thing thats really being priced in the market is that youre in a lower Regulatory EnvironmentGoing Forward. I dont think any tax policy or any tax reform are priced in other than lower regulations. That and a weaker dollar. When you talk about Earnings Growth over the course of the next year, people are factoring in a deteriorating dollar, so unless you think the dollar is going to go another 10 or 20 i dont see that growth happening. I dont see these multinationals printing that kind of money from overseas. Steve, what do you think is the reason were rallying today . Is it because of some of these policy developments . Sure. I think that kneejerk reaction when you hear something is going to get done on the political front, you want to rally the market back, but i think it was an overreaction to north korea that didnt happen could it happen . Sure anything can happen, but when you look at the passive investing, when you look at the money flows that are coming into the market, when you look at where the market goes and whether its the chinese internet stocks or the f. A. N. G. Stocks here, the market still is carried higher by megatech and mega cap and still looks like it wants to grind higher. Thank you very much, peter, jack, also thank you very much. Thank you all. Big Corporate News the wall street journal reporting that chevron ceo john watson will be stepping down next month joining us by phone is Bradley Olson who just broke that story. Bradley, thanks for joining us this is not news the company is necessarily confirming here. What are you hearing well, i mean, i think its news that they had anticipated putting out after next month i think theres a board vote next month that would have made it official. I think its something that weve been able to confirm that this is the plan and, you know, they are kind of looking to a to a new leader that has kind of more cost focus as they, you know, look at although they are not necessarily disparaging the tenure of mr. Watson at all. Brad, talk to us a bit about his tenure and the share Price Performance in terms of Company Strategy what will he be most remembered for . Well, i definitely think hell be remembered for, you know, big spending chevron had two huge projects in australia that cost upwards of 90 billion, you know, for them and their partners, but also for returns. I mean, chevrons performance in terms you know, if you reinvest dividends was above 80 during his tenure. In terms of 80 return to shareholders, and that was more than double exxons return in that time period as well and a good bit better than shells and really any other tier of chevron. I think hell be remembered positively in terms of his performance. Which is interesting. Its a doubleedged sword. Bradley, if we assume that the market is rallying on this news because they like the idea of more cost discipline, does it also mean that they are giving up the potential of those continued gains . Theres a lot of things at chevron that are priced n. A lot of cash flow from these projects in australia and a lot of long life projects and i think the market is aware of that, and i think they can sort of take in all the things that are necessarily from watsons tenure that they see as positive and also enjoy the idea of cost control in a lowprice era some of those australian acquisitions, were they overpriced are those something that there will be a black mark on his tenure the investments they made, huge gas export projects and chevron was the operator hand they went way overbudget the budget was 25 higher than they originally estimated. Thats something that people would look back on as slightly negative in his tenure he also sort of was, you know, hes been on cnbc many times im sure the viewers have seen hes very blunt and unabashed in his prow eds in the oil and gas world. And his importance in the world. People will reremember that about him as well. Before you go, bradley. Who will replace him its not official yet and hasnt been final finalized but we understand that Michael Werth is kind of a leader in the running to replace mr. Watson. Michael werth was a downstream executive for a long time, sort of in the refining chemicals business, and these executives are known as costwatchers and people that kind of manage returns a little bit more than growth you know, the highprice oil era was an era of high growth and somewhat lower than returns that people expected with the 100 a Barrel Oil Prices and now a lot of these executives are coming in and saying, hey, returns matter a lot more than growth, and that is sort of what might be strategically why you would bring someone like that. A nice pop for snapchat details on the report thats helping to push those shares up higher. And Toll Brothers it is lower after its report this morning. Ceo doug yearley joins us to talk about those numbers and how millenials are impacting the number we want to hear from you wham about snapchat . Youre watching cnbc, first in business worldwide welcome back much more convincing rally than weve seen the last couple of days the dow up 195 points. The s p up 1 . Nasdaq up 83, 1. 33, even the russell 2000 is up 1 today and the dollar index up half a point . Half of the dow stocks are up over a percent Toll Brothers stocks is down 3 after mixed results and lowering sales projections this morning. Joining us is Toll Brothers ceo doug yearley welcome, sir. Thanks for having me. Are you facing supply constraints with bringing inventory online because all the sentiments seem quite bullish . Whats going on with toll . Toll is doing great im disappointed that you describe our quarter as mixed results because we had a tremendous quarter were surprised and disappointed the stock has traded off a little bit today our revenue is up 18 boston. Our backlog was up 21 our new orders were up 24 , and its the Fourth Quarter in a row that weve been north of 20 in order growth we lead the industry, so were doing really well. Were very happy with all of our operations nationwide. The Housing Market is solid. The west has been great for us we made a big move into the west about five years ago, and its really paid off, particularly california we dont see supply issues, and and all is good, and like i said, were disappointed because we pretty much hit or beat every metric with significant growth, and we were expecting a good day on the market, so life is good at toll, and were all happy here, just disappointed of course, 3 decline is not even a small decline its quite a significant one is that perhaps in part down to the falling average price of sales and the way youre having to adapt your homes to sell to millenials if youre talking about the average price of our homes, thats strictly mix the. Its not because weve incentivized our homes anymore our incentives have been flat for years now. Were a diversified company. We build in many markets we went into boise, idaho, as an example last year at a lower price point. Were not selling as many very expensive condos in new york city as we had a few years ago weve replaced that with some Million Dollar units in hoboken and jersey city that are still expensive but not as high as they had been in new york, so the change in average price is simply mixed its no reflection on a softer market or more incentivizing and doug, just circling back to the supply issue, i only raised it because of what have happened with the full year gross margin forecast. Maybe you can explain to us due to a floor joist recall due to a major lumber manufacturer. So we we dropped our our gross margin guidance for the Fourth Quarter by 15 basis points that was offset by a 20 basis point improvement in sgna for a positive of plus 5 . There was a small issue with ijoyce in the industry managed by a Large Manufacturing company that have to be remediated, and thats delayed some of our closing 60 to 90 days. A few would have clothed in the Third Quarter which reduced our revenue in the Third Quarter by about 20 million. We have another bunch that will be delayed from the Fourth Quarter of 17 into early 2018. The manufacturer is standing behind the product they are covering all of the damages and the costs of repair. Its only affecting about 36r789 50 of the 22 upplus homes that well deliver this year. Wow. And its simply a delay its not in any way affecting margin it just had a very modest impact on q3 and q4 revenue, but i will point out for q3, you know, the revenue was up 18 , and