A, hell tell us why he made the call and mouch more pain he sees ahead. But first, we start off with President Trumps words late in the trading day that took oun Retail Stocks. Courtney reagan has all the details on that developing story. Reporter hi there, melissa. Late Session Movement in the Retail Stocks happened on headlines from a reuters interview with President Trump with comments about the border adjustment tax. So the president says, quote, he supports a form of tax on the border and that a border adjustment tax could lead to more jobs in the u. S. As Companies Come back and build their factories here. President trump previously told the wall street journal the republican proposed border adjustment tax was too complicated. Trump said the administration would tackle tax reform after obamacare. The xrt retailer etf took a tumble on the comments, closing down 2. 3 . You can see the leg down clearly in this chart. The American Apparel and Footwear Association says that 95 of u. S. Sold clothing and shoes are imported so a border adjustment tax if it were to be in place would be very harmful to apparel retailers like the gap so look at gap shares. They lost 3. 6 on the headlines in today. Remember ceo art peck was one of those ceos in washington last week speaking to President Trump. Representative kevin brady and others about the pain that it would cause a retailer like his. Gap earnings after hours did not move shares really in the post session though they are up now just a bit. Jcpenney ceo marvin elsen was in washington last week. Here you see the leg down that jcpenney shares took on the headlines ahead of its Early Release tomorrow morning and walmarts shares went from positive to negative in reaction to those reuters interview headlines that suggest President Trump is at least considering some form of the border adjustment tax. But melissa, were going to continue to debate this because he seems to sort of jump all around with this terminology, is it a border adjustment, is it a tariff, is it a border tax, theres a lot to be discussed but we may not know until after obamacare gets handled. Courtney, thanks a lot for that. Certainly moving the stocks here. So, could a border adjustment tax be be essentially the straw that could break the backs of some of these retailers . Well, certainly by the price action, yeah, absolutely. Whether, you know, how big of a tax it is, the degree of the tax, probably doesnt matter if you have a border adjustment tax, products are going to be more expensive and you look at walmart. You look at some of the dollar stores, dollar tree got crushed today. Those are the ones that are going to be in the crosses hairs if and when this happens. How do we unpack this, pete . Theres some retailers that are not as exposed to imports than others. It makes the entire sector really difficult, i think, to ascertain exactly how these guys are going to be able to manage this whole thing so i think it makes it extremely difficult but weve gotten earnings tonight after the close. Obviously its not affected by the taxes but its still an interesting thing. You know, it was today i think it was the u. S. Steel ceo who was actually on and he was talking about the idea that this is a level, fair Playing Field and that was what they kept calling it, rather than trying to use the same expression that everybody else is using, which is you know, some sort of a form of a border tax. Whatever the case may be, i think it does make it that much more difficult because we all know how much is coming across the borders. But you know, heres the thing. Its not just the dollar trees and some of these lower end retailers. Look at nike. This stock gained 13 bill clinton 13 . I think these guys really need better messaging because it is creating some real volatility it ha have. Look at foot locker too. Thats another one that got absolutely crushed today. We already know it. 98 of the apparel and shoes come from overseas so this whole thing, if they dont unpack it from the other tax returns tax reforms that theyre trying to do, it could be a real disaster for all these stocks if not the entire stock market. Ill see petes ascertain and raise him an impervious. Even better word. There are Certain Companies that seem to be impervious and i think one of those is home depot. Morgan stanley upgraded the stock today. I will say better late than never but they are clearly late on that one but you just saw them coming off another fantastic earnings release. Why does home depot not move on the threat of a border adjustment tax . You walk through the stores, righted, stuff comes from elsewhere, not all made in the United States. Not all made in the United States. A lot of it i cant speak intelligently what percentage of things are made in the United States but my sense is, more is made in the United States than not. But isnt the broader issue what it really means for the consumer. Theres been a lot of enthusiasm, a lot of consumer sentiment, Business Sentiment has shifted or really shifted in november, december, about a lot of these progrowth lower tax sort of situations and i think the issue with the border tax is that it has the potential to massively offset any gains about lower personal tax rates or income tax rates so to me, if you think about the stock market as a kind of discounting mechanism when the stock market is rallied 10 since the election, you have to say, if we cant put our finger on when some of this fax reform is going to happen and what its going to be tagged with and then we have the backdrop of better Economic Data that could be matched with Rising Interest Rates and the rising dollar then you say to yourself, theres a lot of potential head winds to offset future growth and we have a stock market that may be discounting. What bk is talking about is how its packaged. Is this the first thing on the agenda right now. Its a topic today but doesnt it seem like obamacare, then theyre going to move towards then and then theyre moving down the line. Mnuchin today was talking about exactly the time line that he was already putting to august. But the problem you have, though, is the more these get delayed, the markets priced everything in. I dont agree with that. The rally that weve had. Weve got people looking for 12 growth and earnings from 2017 to 18. Why are retailers reacting like this to a border adjustment tax . This is a particular thing but if it starts to crack, if the narrative that everythings great and everythings wonderful again and were going to get all that stuff done t market was built on the fact that you have a republican in the white house and a Republican Congress and theyre going to be able to get everything done. If that narrative cracks, then youll start to see sector slack. People say President Trump is not the reason for the rally and other side want to say he is the reason for the rally so we have to decide exactly how much he has. You said the other day, we were on the show and you said to me, the whole thing is because of trump. It is. It most certainly is. Where was the market on november 7, pete . Where was it . And so to me, when you think about this, it has to do with all these things coming together, a lot of needles being thread and my point is we have had nothing happen, weve had some dates put out there, theres a whole heck of a lot of uncertainty. We have a stock market thats up. So the earnings season meant nothing to you. It was fine. The actual numbers that we have got. You want to go . I heard you today. Yeah, come at me. On the halftime show. You said it was phenomenal, the earnings. They were not phenomenal. Really . So the banking numbers werent pretty impressive to you . Weve had Interest Rates come up here. They were fine. How about the percentage of they were not phenomenal. We had very low expectations heading in so the Revenue Growth was litderly a smidge above what they were expecting to get. What i find interesting is whenever we have beats everybody likes to say well the expectations were low but when they miss its like, well, this was terrible. You cant have it both ways and i looked at this earnings season going into it and looking at these financial stocks specifically, because i was looking at that sector because they had flatlined. Well they continue to flatline, now theyve made that next leg up. When you look at the technology stocks, they have been rocketed to the upside and arent they the ones that are supposed to be having a hard time because of this whole thing with the taxes and everything, across the seas . Isnt that an issue . I dont know. I just dont think they were phenomenal. Okay. Were going to move on and get back to retail here, more on this developing story from a Retail Industry veteran who has forgotten more about retail than any of us will ever know. Ron johnson is the former ceo of jcpenney and the former head of retail at apple. Ron, welcome to the show. Pleasure to have you with us. Thank you, melissa. What do you think of this border adjustment tax and what this means to the Retail Industry at this particular juncture for the Retail Industry . Yeah, the timing is terrible for the are Retail Industry if this were to happen. The Retail Industry is essentially flat on its back trying to deal with this transition to digital. Almost every retailer is forecasting comp sales flat or down next year. And if you have a border tax and theyre forced to raise prices, thats going to further decrease their sales and keep people out of stores. So the impact on the Retail Industry would be very, very challenging. Will this mean make or break for some retailers, do you think . Will this accelerate the downturn that some retailers are already in . Were in a very difficult time. Many retailers are on the brink as they begin to close stores, as the malls theyre in start to close and change so its a very difficult environment and you add Something Like a major need to put a price increase on products and it could have a very serious impact on many. Some would say that consumers will adjust to this, that theyll get used to the idea that everything, if 98 of all clothing and shoes are brought in from outside the United States, everything will go up and consumers will get used to it. Do you buy that argument . No, i dont buy it because consumersov consumer over time have been buying less and less apparel as they spend more on experiences and technology so theyre going to transfer their spending habits and i think a lot of people are on pretty tight budgets. Thats why this election went the way it is and i think if you have a price increase, people will adjust their spending. Mr. Johnson, i think melissa did this interview the other day with Terry Lundgren and he basically said, when we get it together, the consumers will come back to us here at macys and mel said, what makes you so confident theyre going to come back. Do you think people are shopping differently . Jim kramer today said anything associated with the mall in terms of a stock is effectively dead money. Do you agree with that . You know, unfortunately, i tend to agree with jim kramer on this one. What people dont realize is for 22 years, amazon has built, in the u. S. , an 80 billion business, and thats had a lot of impacts on the industry. Over the next three years, they will add another 80 billion in revenue in the u. S. So, theyre going to have the same kind of market share impact the next three years that the retailers had to deal with for 22. And im not sure people are prepared for that. The only retailer thats truly taking a. Taking amazon seriously is walmart. And theyre making a lot of moves and its starting to pay off but even walmart will have trouble because if walmart doubles its 10 billion in sales, it will add 10 billion while amazon adds 80 billion. People have to take amazon much more seriously. What would you do right now if you were the head of a Retail Organization once again, ron . Im curious in terms of either fighting amazon or the message that you would send the Trump Administration about this border adjustment tax. Yeah, my read, if i was a retailer, Companies Need a target. They need an enemy. You need someone to go after. For years, everyones been saying weve got to figure out omnichannel, get people to buy online. Thats not the issue. The issue is amazon. So, i would say how are we going to beat amazon. What do you do in store to beat amazon . What do we do with our merchandise to make sure its differentiated and preferred . I would put amazon on the wall. I would paint it on the billboards and i would say, we are going to find a way to beat amazon because that is whats going to change the game here. You want all the retailers to band together and gang up on amazon, effectively. Theyve got to all recognize thats the enemy here. If you look at it, collectively, they can have impact. Look at a Super Regional Shopping Center like stanford. When the industry goes together and simon puts together a better center, people come. The super regional mall is doing well against amazon. Its very hard for an individual store within its four walls to create an experience that can matter enough. So, the industrys got to figure out collectively how do we compete better with a company theres never been a company in its 22nd year that does 80 billion in revenue thats comping at 29 . That never happened in the physical world. And so the growth, the impact has been really profound over the next few years. Give me an idea of the impact that the are Retail Industry will see from the Amazon Effect in a year and also lets assume that a border adjustment tax is in effect. Will there be bankruptcies in this industry . Will we see the same retailers today as we will in a year . Yeah, i think i think you will. Whats going to happen is the retailers that are on the edge of bankruptcy will probably be pushed over the edge. The others we will see bankruptcies . You will see some, but i think the other thing to remember is the Retail Industry has done a very good job of managing inventory, reducing expenses, most of the companies are reporting pretty good earnings. And retailers still generate significant cash flow. You know, i think macys will generate 1,800,000,000 in cash flow next year. Walmart generates five times the net income that amazon does. Walmart has the resources to take them on. So the industry has to take that cash as they are reduce their store current and figure out how to compete better for the next decades. Ron, thank you. Its a pleasure having you on the show. We hope youll come back again. Ron johnson, former ceo of joek jcpenney with some very interesting analysis of the border adjustment tax. With this looming over the industry, is it too hot to touch. You know, its funny, he spent a lot of time talking about walmart there and walmart just report and had in that quarter, it was the First Quarter since they paid for jet. Com to accelerate their online sales growth online sales in the quarter actually decelerated on a sequential basis. When you think about that, and you think about that the only name that he said is actually really competing well with amazon, and you say to university, the rest of the retail space has a really tough time and 22 years before, back to when amazons inception, we could have probably been having you probably were on this channel having the same conversation that walmart was destroying on the radio or whatever. However you guys used to talk to each other back then but amazon was the walmart destroying mom and pops. Smoke signals. We had our blankets. If you were to send a signal with a ticker. Ill give you three, sister. Go ahead. M. A. , v, hd. End. Not end the symbol. End, im done. Coming up, teslas electric slide, the stock reversing much lower after last nights Earnings Report but is the dip a buying opportunity or a warning sign . Plus, President Trumps treasury secretary making some very interesting comments about the stock market and it could have big implications for your portfolio. Well tell you what he said. And check out nvidia having their worst day in six years. Why . Because that man right there, the analyst at nmura downgraded the stock. Hell be here to tell you what has him suddenly so bearish. All ahead on a very busy fast. Join directv today starting at 35 a month. No extra monthly fees. Its your tv, take it with you. With directv and at t, stream live tv anywhere datafree. Join directv today starting at 35 a month. No extra monthly fees. Welcome back to fast money. Shares of tesla sinking more than 6 today, reversing its postearnings game from last night. The reversal marks a twoweek row for the electric car maker as investors digest the mixed quarterly results. Is this reversal a warning sign after the stocks big run or just a chance to buy the dip . More specifically, guy on the conference call, elon musk talked about the Financial Model not suggesting that they need a Capital Raise but they will go to the edge and maybe its more prudent if they do. The Free Cash Flow burn, 756 million when you lump in their other company its probably closer to 1 billion of burn which is a significant number. And to your point, it would be prudent to raise additional