Costs. John shrewsberry jiwill join ust discuss the Lasting Impact of fake accounts scandal. Weve been following the scathing critique of bridgewater and ray dalio written in the newsletter last week jim will join us in an exculusie interview. Some of it may strurprise you. We begin with iran today the president just announcing new sanctions will be put in place against the country and decertifying the iran deal after his speech, he took questions from the press, when asked why he didnt just end the deal now, he said this well see what happens over the next short period of time. And i can do that instantaneously. I like a twostep process much better what impact could the uncertainty over the iran deal have on energy joining us to talk about that now, andy liphow, and benjamin sal salesbury. Good to see you both benjamin, just talk at the outset whether this actually does change anything with regard to policy implications, about supply and demand for energy, iran exports, anything like thereat dothat down the road. The Immediate Impact on oil, oil exports is very limited. Theres not going to be any steps directly taken from this to go back to the old sanctions regime what we think is important is this tool theyre using is designed to escalate the president made it very clear he want to escalate the pressure on iran so sometime middle of next year you could see the deal start to deteriorate then have meaningful impact on oil supplies right when the market is tightening. Andy, we look at the oil price today, wti, benchmark is just over 51, brent is just over 57 what do you think the impact of these moves will be there . Well, i think your other guest is correct in the near term, theres not much of an impact to the oil market but it does introduce a degree of geopolitical risk and uncertainty Going Forward that could increase oil prices. Clearly, iran is still exporting about 2. 3 Million Barrels a day and the world simply cant afford to see that loss supply because we cant make it up from the other opec and nonopec producers. Benjamin, you know, there was so many years when we mostly felt there was some kind of a geopolitical premium in the crude price globally, perhaps doesnt seem that way right now. Im curious of your estimation if we see, you know, wti trading where it does, brent crude a few dollars higher, does that incorporate anything in the way of possible disruptions or is that just a pure, you know, clearing price based on supply and demand and expectations of opec discipline . So this is the fundamental issue that i think investors need to start taking seriously weve had essentially no risk premium because of the shale supply, and the scaleability of that supply, and more importantly, the bulging crude Oil Stockpiles that can basically meet any shortfall so theres been no geopolitical risk situation were facing is at some point next year, were going to have to start pricing in geopolitical risk adds ts th mashlt co market comes into balance, we work toward the fiveyear stockpiles and we start to stress the shale resources and cut billions and billions in global capx a situation now where you probably dont need to see a risk premium today i really worry Oil Investors are going to start to get complacent because the last several years and end up in a situation where you have a geopolitical situation that needs to be taken seriously and people have gotten used to letting them pass. I want to go back to what you said about the world not being able to put the barrels of oil in that iran may be taking out i mean, are you saying we no longer have the oil glut weve been dealing with for the last several years going back to the u. S. Fracking boom revolution . Yeah, i think the oil glut has been getting smaller and smaller as we moved ahead. We had both t, increasing their demand forecast. You see Oil Inventories that we talked several months ago about in floating storage. They all been liquidated were seeing oil come out of inventory in storage in places like south africa and the caribbean. Last place we have an excess supply of oil is actually in the u. S. And you saw a weak ago we exported record amounts of that oil and that trend is going to continue for the rest of this year is, andy, real quick before we go, is there any chance the demand side of it starts to drop were going to talk about this later. There are people saying the switch to electric vehicles say were not going to demand as much crude Going Forward. Well, i think thats a possibility but its several years away if you look at the number of automobiles that are still powered by gasoline that are being sold in china and india, i expect World Oil Demand for the next five years is going to continue to rise. All right. Benjamin, sorry, quickly . With had a report out this week emphasizing demand growth is probably underestimated and will grow faster, not slower, than con ssensus expectations. Thats part of the risk. All right benjamin, andy, thanks very much for your time today. Thank you. Lets move on to our closing bell exchange. President of Global Trends investors, and next to him, peter costa, president of empire executions and rim santelli is over at the cme. Peter, i want to start with you because another bear today, tom lee, kind of capitulated and raised his price target on the s p 500. And finally now thinks that maybe 2,556, where we are, is closer to a possibility for the end of the year. On he was at 2,275. What about you, you waved the white flag yet ive waved the white flag lets put it out there. Is youre going to scare the bulls. I absolutely waved the white flag i cannot see i dont believe the market should be here but thats just me but what youre seeing, youre continuing to see inflows into etfs, this is theyre not price denominated. Its just getting the etfs in there, in their portfolios and just continues you know, the only thing i worry about is some major geopolitical risk, not the iran deal. I do think if there is any major conflagration in north korea, south korea, i think thats the only thing that can derail the markets seriously. I think we might have a couple of pullbacks but the pullbacks never seem to be very deep so, you know, its i hate to say it, but the white flag is up peter, i mean, tom, excuse me, peter tried to kind of scapegoat your world there, the etfs for keeping this market at these levels what are you seeing in terms of demand flows from etfs what kinds of sectors are people going into, what does that tell you, i think, about the market position right now yeah, well, you got to agree with peter, large caps are pretty lofty at this point however, in in the last month, weve seen more money come into small caps for the first time in a couple years so thats encouraging. The other thing from the valuation standpoint, boy, you got to look overseas developed markets. Especially europe. And most importantly emerging markets. Its been so unloved for an extended period of time. And as we talk about opportunities, not just traditional indexes, but new smart beta indexes that can take advantage of certain factors like momentum. Power shares has a great emerging market. Momentum etf thats performing almost 50 better than the strategic traditional indices ain the emerging market space. We are seeing flows as peter said but some are starting to move over into other areas that are a lot more favorable from a valuation standpoint lets talk about the underlying fundamentals for a second rick, it was interesting this morning, the core cpi number, the inflation number was weak again. I think six months out of seven now. The interesting was the streets response to. Interesting was the streets response where you see we got this called a goldilocks on steroids because you have low inflation, strong growth, strong stock markets. You have whats his face, zurvos, saying thing e ing aggr surprise curve is shifting out says an unwind of secular stagnation is upon us. On this quote unquote global goldly lo lilock goldilocks what do you make of it all reporter i keep it simple. Group of multinationals who dont like a strong dollar the dollar hasnt been strong. Theyre going to like it contrary to many, emerging markets may have cut back on how many securities they issue in dollars to their own currency. Of course, thats less risky if the dollar gets very strong. But as judy shelton, dr. Judy sheltons wonderful opped in the journal pointed out yesterday, theres still a very large a. Mount of emerging markt that issued security in dollar term all of that eases back these are all little positives for the stock market which was doing quite positively well on its own without them then add in that Interest Rates are arent near 2 . That makes some nervous. But it also is still down on the year from 244. We failed a week ago so all those things, in my opinion, are going to make the channel even deeper and wider for stocks to continue to do what they do how the year finishes out, hey, theres a couple of really big Central Bank Meetings coming up and of course a couple employment reports where we could really see if earnings are going to pick up and could see cleaner Inflation Numbers that may not be distorted by some of the energy Price Movement that we saw after the hurricanes. Rick, im curious what you make of this idea, actually, this concept that the secular stagnation of the past decade is over and people are lciting the president , citing the regulatory pullback theyre saying the supply curve in the u. S. Economy is shifting out and thats why we have no inflation even as growth is picking up. Reporter listen, i think theres huge positives, a huge part of the reason in november that the markets did what they did is because of less regulation but in terms of the kind of issues that youre pointing to, i think the jurys still out, personally i think were going to have to wait and see i think a lot of the legislation, particularly tax policy, everybodys trying to handicap it. I had kevin oleary on all trying to decide do they want big cap, small cap, emerging market, dont want emerging market. At the end of the day, i think a lot of those secular stagnation issues arent yet decided and i certain certainly, certainly think were going to get a whole lot more inflation ahead if we get the kind of growth this administration seems to think they can pull out of the hat t tom, quickly before we go, this market has just kind of shrugged off his seasonal period, august, september, into october. Normally weak. All of a sudden were going to start hearing people say, starting in midoctober, year end tebnds to be positive should we listen to what theyre going to say about the positive implications of the yearend rally or are the rules different now . If you look at the fundamentals, mike, were good from an earnings standpoint. For the average investor out there that may be loading up on etfs, theres not a reason to panic. Are there going to be geopolitical aspects that may form some more volatility . Were at record lows as far as volatility is concerned. I got to imagine as we get into next year, were going to start seeing more normal aspects of volatility i mean, people are hoping so obviously, traders are hoping so but for the average investor out there, boy, it really is that goldilocks scenario. All right gentlemen, thank you, all, very much appreciate it tom, peter and rick, for joining us today. All right. With about 47 minutes to go before the bell, you have the dow up 48 points s p 500, 2,555 right about on that closing record high. Up next when we come back, shares of wells fargo getting hit today after the Bank Reported Third Quarter revenue that missed street expectations. 1 billion in new litigation cos costs. A first on cnbc sbrir wiintervih the ce o, after the break. Coming up, were going to speak to jim grant, the man behind that critique who now says he got key details wrong. Hell tell us about that. Today were going to reach into our closing bell mailbag and hear who you have to say about about the show we always brace ourselves for this send us your thoughts. You got a little bit of time tweet us, facebook us, email us, closingbell nbcuni. Com. Well read them at the very end of the show. Youre watching cnbc first in business worldwide can i kick it . Yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone welcome back take a look at bitcoin today 5,600 doesnt begin to explain it it surged to a record high driven at least in part by the Cryptocurrency Exchange coin base saying some users will be able to access instant purchases of bitcoin and buy as much as 25,000 worth at one time. That would apply to atherium and others as well bitcoin having obviously a huge 48 hours year to date this thing is ridiculous. Rumors out there that china might loosen up its treatment of the exchange seems as if pretty much every news that comes into the bitcoin news is taken as a positive. More of jamie dimons comments later in the program. Yes strong a pinions on all kisidesf this one. Wells fargo lower today, down more than 3 , after posting weak on auto originations, commercial, and loans. Joining us, john shrewsberry, member of the cnbc cfo council john, good to see you, thanks for coming on us with today. Thanks for having me. Talk a little bit about the quarter. How it fits into really how the year looks like its going to be closing out. In your core businesses when were talking about housing demand, auto loans we mentioned, those originations down. That portfolio is down is that on a managed basis, is that expected . And how does that fit into the, you know, all the Customer Relationship stuff youre looking at sure. So i would say overall, this quarter looked a lot like the whole year will with loan demand relatively soft for the whole year its coming in different areas differently. You mentioned auto that is a managed outcome. We set a couple quarters ago that we were going to slow down in the ororigination of lower c quality auto loans were in the middle of restructuring of our auto business the auto portfolio is performin as expected. Mortgages on Balance Sheet for prime jumbo mortgages, r loath lot of growth in that area commercial real estate, biggest real estate lender in the u. S. Weve been relatively flat there. A very competitive market. Asset prices are at alltime highs. Weve been a little more cautious there cni loans which is the bulk of business loans, theres a variety of different undercurrents depending on what industry, what geography youre talking about and reflects really the 2 economy that were in plenty to do, but not a lot of growth overall so we love our loan quality right now, its never been better go ahead im sorry no, finish your thought, john. I was just mentioning that were, as the largest lender, we have a big spot in each of those markets. And were cautious to make sure were competing where we should be competing we step back a little bit if we think that we need to. But were really happy about the call it 950 billion worth of loans or our books yeah, i was just going to say we remember eric yesterday, his interview with steve talking about maybe concerns in commercial real estate, but what about the pure vanilla interest margin you guys make or dont make in this environment we saw a similar pattern yesterday, shares of citi dropped when they wouldnt kind of increase it as much as they wanted you know, what happens if it doesnt move much higher from here how you guys going to be able to make money sure. Just to be to level set, the amount of money that we make, which throughout much of the year has been call it 5. 5 billion per quarter, it was lower this quarter on the charge that was mentioned earlier produces about an 11 to 12 r. O. E. So in this environment, 2 growth, and short end of the curve coming up but still relatively low on the long end of the curve remaining low, its still been a pretty hospitable environment for us to make decent money the question people are asking is whats going to happen with growth from here and what does it take . That interest margin is part of the story. Were more interested in increasing the dollars of Net Interest Income that were producing from year to year. Were up about 5 from last year some of thats from loan spread, some from the investmentme portfolio. Deposits have been relatively inexpensive and we, like other big banks, have more longterm debt in our Capital Stack than we used to which is a little bit more expensive but very stable and actually this isnt a bad outcome. Whats the ongoing impact, john, of the litigation that youve had to do because of the account opening affair, also, what do you think its goidoingo market share essentially on a forwardlooking basis, how long is that potentially going to shadow the business sure. In deposits, we learned this week were the number one retail deposit share bank in the u. S. We have the same number of primary retail relationships a year ago the Value Proposition of doing business with wells fargo has hung in quite strong doing more to be better every day. The leadership in that part of the business is improving things every day. I think well be fine there. One of the places weve seen slow down is in referrals from our own team members to other parts of the bank. So home equity loans, student loans, some categories like that are taking a little bit longer to recover doesnt make a big difference in our overall performance this far. We need to get back to the level of competition and market share gains that we previously had john, when i speak to some industry insiders, they say that they hear anecdotal reports of other banks being able to pick up your best Loan Officers because their reputations have been tarred by what happened at wells. Is there an effort to try to keep those people, maybe having to pay them a little bit more . Whats the impact of being able to kind of keep that staff where it needs to be in order to keep making important loans Going Forward . You know, its a good question i dont hear that. We our turnover, our voluntary atri voluntary attrition of team members is as low as its been in six years including in parts of the business that have nothing to do with the sales practice issue and part of the business that does if, for example, we were to have to compete over labor, wed compete vigorously and the rare occasion where ive seen that happen, which hasnt really been in Loan Officers, were willing to do that weve been adding great people to our platform over the last year most people coming from other banks recognize what we went through from a reputatimembeputl point of view have liveed through Something Like that. Every major bank in the u. S. Or frankly other parts of the world and still like the assets that we have. John, we have to go we want to ask you about bitcoin real quickly all your yeah. All your competitors have commented on it. Whats wells think about the future, fate of that cryptocurrency well, first id say, you know, we like the Underlying Technology of blockchain and distributed ledger theres a place for that in markets but with respect to cyber, or ycryptoncurrency in burglar, doesnt look line a means of transaction because its volatility is too high. Our Regulatory Environment would not tolerate it. It makes it so easy to avoid about collecting taxing and preventing elicit transactions from happening designed to promote that activity around the world to allow capital to move anonymously and freely thats not insync with the u. S. Regulatory environment or expectations i dont see it happening here any time really soon. Yeah. Banks have to know your customer bitcoin is all about not really knowing your customer i guess, john on purpose. John shrewsberry, cfo of wells fargo, thanks very much. Thanks very much. The Harvey Weinstein fallout continues to rattle hollywood. Executive from Amazon Studios is hot water of Sexual Harassment allegations. Well bring you the details ahead. An exclusive interview with jim grant, penned a harsh critique oraf y dalio but grant says some of the criticism was wrong. Hell explain next on closing bell. For your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Welcome back last week, grants Interest Rate observer published a scathing criticism of drudgewater advisers, the Worlds Largest hedge fund run by ray dalio. Claims rather than focusing on investing, hes giving ted talk and spending time on twitter says the fund relies heavily on etfs and pulls out dealings with its auditor. Bridge bridgewater telling cnbc in a note, this statement is devoid of fact checking, lacks basic understanding of the rules, regulations and processes of the securities industry and is demonstrably false. Joining us now on the phone to respond to all that is the man behind the note, grants Interest Rate observer founder and editor, jim grant. Welcome, jim thank you, kelly. What would you like to clarify to begin with about the note given what bridgewater had to say. It was a 5,000 word analysis of bridgewater and came essentially in two parts the first was a critique of bridgewaters organizational m. O. And description of some of its investment techniques. And the second, the much more titillating and much more familiar, notorious now, portion concerned an attack on the firms compliance and regulatory practices. And on that, on the second point, we were wrong in particular, we were wrong to question the relationship between the auditor, kpng, and bridgewater. We made it out to be kind of a nefarious thing because of disclosure having to do with a lending relationship which turns out to be rather vanilla like and wrong to suggest that bridgewaters former employees who were had gone to work at bank of new york melon, kind of an outsourcing thing, serving two masters and two other things having to do with prime brokage relationships and future merchant relationships we cast in the light of suggestispicion certainly should not have. Bridgewater is a secretive and eccentric firm i let my suspicions of that get in the way of our ordinarily comprehensive Due Diligence at grant. I regret that. I owe certainly the Compliance Department of bridgewater, been on the phone for the past week, i owe those people an apology which i unreservedly extend. You know, we i do not retract the story in total at bridgewater. I think we will continue to agree to disagree on such things as the approach to big macro investing, perhaps the turmoil in the c suite and size of president 160oddbillion behemoth, how such a thing can generate continuously excellent returns given the difficulty of bringing some outperformance out of these big markets jim, in writing about bridgewater, which is not a publicly traded company, so you were saying, look, in a way were not short the company, we cant be, but we are worried at they could be the face of the next crisis. You compared them to leeman, to ltc back in the 90s do you feel that way i know what youre saying about those issues you just mentioned about compliance, so forth, but you still think that this firm, itself, poses a threat to the Financial System i think it i think its systemically important bridgewater denies that, but i think its systemically important. And i think that its im going to say in a considered way, its obsessive secretiveness is not to its benefit and excites the suspicion of those who watch itt directly to answer your question, but direct answer, yes, i think it will play in some way in the peak of the next cycle, it will be seen as, you know, as a figurehead of this particular upswing in central bank levitated markets and in, you know, abnormally, in fact, uniquely low Interest Rates. So, yes, i do think that bridgewater will be the figurehead of the next crisis. Is that, jim, because the strategies that it principally employs to the extent we can infer what those strategies are, are so large and concentrated and have so many, perhaps, other followers, it would simply be taken too far or just because, you know, theyre kind of the biggest and basically the most venerated firm and those firms always end up getting tarnished in the next downturn how are we supposed to kind of along what strand of that are we supposed to worry much . I think both. As for the strategies, we cant know a great deal, certainly if bridgewater is right, being a free country to say as little as it chooses to say, very little, indeed, about how it actually does business. You know, it ray dalio is on record of saying i guess its in his book that he knows 1,000 uncorrelated trades. Nobody else on wall street knows it doesnt bridgewater is on record as saying that it extracts what they call in the trade alpha by separating the good performers from the average ones and it does this apparently in ways that have nothing to do with securities selection because it has owns very little equity and it owns most of that, it seems, in etfs so, so im speaking as an outsider im afraid with our gaffe not gaffe, our failure to get to the facts with respect to compliance, im not speaking exactly with authority on this, but it seem to me their approach to investing, megasized, this concentration in markets that are notoriously difficult to succeed in the big liquid currency in debt markets. Theyre not uncorrelated theyre correlated Interest Rates. So i think the size of loan would prevent the suspicion it would figure prominently in the next downturn. Of course, been meteorically growing since 2008 i think also the nature of its trading will present a difficulty in the next downturn, if that downturn, especially, is characterized by unscripted rise in Interest Rates. Jim, has the company threatened you with any lawsuits since this publication no. Is so theyve reached out to you simply to clarify how the Company Works . Well, they were furious and i must say they have a case. I think it pains me deeply. You know, weve been at this for 34 years and ive been at this for more than 40 thats to say, writing about markets. I ought to know better we at grant, we are critics of many things. When we mount analysis, we ought to do so with every single l fact that can be factually determined you know, on, you know, checked and scrubbed and awe didnt do it is bridgewater annoyed should it be yes. Im afraid were comprehensively im afraid theyre comprehensively annoyed rather than selectively but thats their prerogative, too. Comprehensively annoyed jim, we appreciate your candor and for calling in on this matter oh, youre entirely welcome thank you very much thats jim grant of grants Interest Rate observer time now for a cnbc news update with sue herera hi, sue. Hello, guys heres whats happening at this hour, everyone on capitol hill, former nfl players and medical researchers are participating in a forum to discuss chronic traumatic encephalopat encephalopathy, cte, whats known about brain injuries and thousand to treat them the former players shared their concerns about the disease. I think theres a good portion of guys who dont want to think about it, because honestly, its frightening, you know, to consider that, you know, five, ten years down the line when youre done playing that you could be a completely different person, you could slowly decline or, you know, rapidly decline. Open enrollment for Medicare Insurance begins this sunday participants can change their medicare drug plans or Medicare Advantage plans, but if youre happy with your current plan, and if its offered next year, it will automatically renew. This is a story for the ages how about this for a fish story . An amateur fisherman in britain tried to kiss a fish before releasing it yes, thats a tradition. When the fish jumped down his throat and almost killed him luckily he was fishing with two friends. You see them there who saved his life but not before some very anxious moments. Unbelievable it was a dover soul. I dont know about you, sue, every time i read a story like this immediately i feel like im choking. I know. Exactly. When they were trying to get the fish back out, paramedics arrived. They tried to get the fish back out but the barbs kept getting in the way so they couldnt get it i mean, really so the paramedics witnessed this its not just a fish story i was hoping to see video or Something Like that. You dont even buy it. I think because he went into cardiac arrest. There you go. Nobody was shooting video but apparently its a tradition to kiss the fish, and then you release that fish and the legend goes that you get a much bigger catch. He says hes going to kiss the fish again, but it wont be a dover soul it will be much bigger all right think about that next time im eating one for dinner. I know, right appreciate it well see you next hour. You got it. After the break, amazon suspending its studio chief amid allegations of Sexual Harassment e fosi ospeak with jescaf thinrmation which First Published these allegations back in august when we come back. Driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. 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Amazon suspended its amazon videos direct to roy price, following reports of Sexual Harassment. Joining us with more is jessica, founder and editor in chief of the information, whose publications for the first report of claim in late august thanks for joining us. Thanks, kelly. So how did this jump from late august to being an issue today with amazon, which is now putting him on leave and facing questions about this whole project that he had undertaken so after weve reported about the allegations in august, i think jefrl thiseveral things h changed. One is the climate around Sexual Harassment with Harvey Weinstein. Its a different narrative right now. And isa hackett, the producer who alleges the incident yesterday gave an sbrinterview o the hollywood reporter, some pretty salacious remarks i think thats probably one of the reasons that we see him on leave right now. Yeah, some pretty gross stuff, lets just say. So now hes been placed on leave. As we understand it, he was amazons point man in hollywood. This has big implications for amazons business intentions there, right absolutely. Amazon is a big spender in hollywood right now. Trying to get a wedge in against netflix, increasingly apple, as well as the traditional Entertainment Industry this really puts their studio in limbo. Additionally, we know that jeff bezos has been sort of agitating for some bigger hits out of the studio he wants to make a big splash. So that team is really under pressure and i think a lot of people in hollywood are wondering if theyre going to be in the game. And jessica, i wonder, i mean, not to really take a cynical cast on the fact that amazon seems to have moved relatively quickly to put him on leave but the fact Amazon Studios is getting criticized for really not having a string of hits, maybe was adrift a little bit, did that make it easier for amazon to make this move it would have absolutely you know, well never really know amazons not saying really saying much about why now. We know theres an employee town hall today maybe something more will come out of that. But i think the Business Environment and, you know, bezos wants a shakeup there. It will be fascinating to watch, particularly as this tech money continues to try to pour into hollywood, can amazon stay a big player and jessica, as they look to other people in hollywood who could lead this effort, they might be wondering what everyones wondering now, which is, who else is involved what other allegations might come forward in this feels like its much bigger than just a couple of people. Absolutely. We hear from our sources everyone is kind of an egg shells over there. You know, lot of things being whispered about. Remember, weinstein story was, you know, an open secret, if you will, that doesnt diminish the incredible reporting but reporters are out to learn more. I sure hope that companies are investigating more, themselves so i think were seeing a lot of reevaluating alliances. Amazon had a production deal with harveys company as well. Thats also come under criticism. Many people have as well so i dont think that that singles roy out. Thats another way that these stories are intersecting, you know, once again thats for sure jessica, i expect there will be much more. For now, thank you very much for joining us thanks, kelly thats Jessica Lessin from the information. Just over 15 minutes left in the trading day. Health care stocks falling today after President Trump announced plans to halt subsidies to insurers well talk about which stocks could be impacted the most, coming up next [vo] quickbooks introduces jeanette. And her new business i do, to go. Jeanette was excellent at marrying people. But had trouble getting paid. Not a good time, jeanette. Even worse. Now im uncomfortable. But heres the good news, jeanette got quickbooks. Send that invoice, jeanette. Looks like they viewed it. And, tada paid twice as fast. Oh, shes an efficient officiant. Way to grow, jeanette. New. Get paid twice as fast for free. Visit quickbooksdotcom. You know win control . Be this guy. 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Csr ayments, if you take a look at csr payments, that money is going to Insurance Companies to help to help lower income people. That money is going to Insurance Companies to lift up their stock price. Thats not what im about. Bertha coombs is here to see why the stock price is falling now given what hes chosen to do. Yeah, definitely, youre seeing insurance prices under pressure today that move by the president could mean that some could potentially face losses on those subsidies being cut in the fourth quarter. Insurers like centene with over a million enrollees on exchange and others will have to continue paying the lower out of pocket costs for lowinle cocome enrols most priced in the uncertainty of that being cut into rates for 2018 which is why youre seeing an extra 20 increase in many cases in and a lot of premiums for next year. But while insurers have effectively mitigated some of the obamacare uncertainty, hospitals face more of a longterm hit. With cumulative impact of the trump administrations moves to scale back obamacare the expectation now is that with the cuts weve seen for outreach and advertising, coupled with higher premiums, that youre going to see lower enrollment next year, fewer people coverage and thats going to be bad for hospitals. Open enrollment is just stlee weeks away, guys, and will be half as long than last year. One more point, take a look at this chart we have seen outperformance by the insurers, but analysts will point out that insurers have profited from obamacare when it comes to the growth in Medicaid Expansion and also when it comes to medicare growth not necessarily on the exchanges which is a real small part of their business just amazing to look at tenet which was over 60 back in 2014. Its trading at 13 today. Bertha, thank you very much. Bertha coombs. All right should we get to touyou t to do a little Julia Boorstin action i think we have a news alert hey, kelly, news alert on the weinstein company, bob weinstein, brother of Harvey Weinstein, and cochairman of the weinstein company, coming out with a statement disputing the wide spread reports that the company is in trouble after Harvey Weinsteins been fired. Bob weinstein saying our banks, partners and shareholders are fully supportive of our company and it is untrue that the company or board is exploring a sale or shutdown of the company. Polaroid is moving forward with a release date of nof nover 22 pdnd followed by paddington 2, going on to say war with grandpa scheduled for february 23rd businesses continuing as usual as the Company Moves ahead. This is in stark contrast to the widespread reports that the company is facing pressure from all sides. Also potentially tens of millions of dollars in terms of the costs, the investigations and settlements with the many many women who have come guard with allegations against Harvey Weinstein. Guys, back over to you. Julia, thank you very much. Could tax reform turn apple in a trillion lldoar company one analyst is going to make his case coming up next. Fly me to the moon and let me play amon ding bell mnemonic to err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. Welcome up, shares of apple up. 5 today Rbc Capital Markets saying it could be a further winner from the tax reform legislation and could push the companys market cap over the 1 trillion mark. Joining us to talk about that, amet from Rbc Capital Markets. Good to have you here. So, apples got, you know, 250 billion or so in cash overseas, they have 100 billion in debt issued somewhat against that is that really what would be the catalyst bringing that rest of that cash over here as a catalyst to get to a 1 trillion market cap yeah, you know, ill say the tax is going to work out on two phases, one of it, yoiwhich you said, bringing the cash overseas back to the u. S. At a 8 , 9 repatriation potentially do m a those are the tailwinds here the second part would be, which i think more important, if you structurally lower the tax rate from 35 to 20 , that will on a reoccurring basis bump up apples etf by about 1 or 10 on conglomerate. I would say that, along with the benefit you get to the iphone x cycle, you know, should get the stock in the 190, 195 range, how you get the trillion dollar market cap scenario. Mike, i thought it was interesting you were saying thats only a 20 move higher. Not even, right were not talking about this kind of massive lift, amit do they even need all that to happen for this stock to increase 20 in valuation over time you know, they probably dont, right if you can get to the bull case on iphone x as being 11, 12 e ee eps, if you get there on a better multiple than its trading at, you get to the 1 trillion price point without tax reform benefit the tax reform would be great, incremental on top of it i would agree with you, i dont think you need this to have secular sustained growth over the next couple years. Is this stock going to trade in the near term based on holiday sales, how the iphone is tracking what are we looking for sort of nearterm catalyst then . Yeah. This is the quiet part of apple, you know, if you may, but once the iphone x launches october 27th, i think the stocks going to react essentially to two factors. One is, how long are the lead times, how long are people waiting to get the u foiphone x to your point, the holiday season, how that works second, how aggressive are carrier promotions to incentivize people to buy these phones its all going to boil down to the iphone x, lead time, promotion, so on thats going to drive the narrative from now until year end. All right amit from rbc. Thanks for your time appreciate it. Thank you e when we come back, wre going to have the closing countdown for you. Stay tuned. The things you own . Or the people that fill it with meaning . For 150 years, generations of families have chosen pacific life for retirement and Life Insurance solutions. Protecting whats most important to you. Thats the power of pacific. Ask a Financial Advisor about pacific life. bell mnemonic tires screeching bell mnemonic about a minute and a half to the closing bell on this friday. The major indexes are still green. Theyre losing a little bit of altitude the dow up 30. The s p 500 just barely positive right below the alltime highs we saw about five week as ago a major rotation into small cap stocks, cyclical stocks, reflation trade. Banks out of big cap tech. Bertha coombs at the New York Stock Exchange for any little different story this week and today in terms of that rotation. E yeah, you know, i was talkn with one analyst he was saying what were seeing is not so much these days is a riskon go to tech, riskoff go to cyclicals and things that the are safe were seeing a rotation within sort of the riskon in a way its kind of a riskon within tack, in fact, if you look this week, wasnt so much the the chips were driving thick s things instead of netflix, the n in faang was nvidia lots of highs today among some people call it faang man with microsoft, adobe, nvidia. Exactly. All right well see what next week has to bring. We also brought moderate Inflation Numbers today. Well see how that filters into everything else. Folks are spending again, although ironically theyre not spending on electronics. Nvidia. Its all bitcoin well see where they go. Bertha, thanks very much ringing the bell at the New York Stock Exchange, acme united corporation. Up at the nasdaq, americas flagship pbs station the next hour of closing bell is all kelly not all mine hes coming back welcome to the closing bell, everybody, im kelly evans heres how were finishing up on wall street. Dow going out a gain of 38 points on the bell, just below 22,900 a small gain for the s p as well about 2 1 2 points higher to 2,053, closing high for the the broad market today the nasdaq composite the best performer. Nasdaq today, 6,605, record high close for the nasdaq today i believe its also a record high close for the dow as well at 22,876. S p, same story. A trio of record highs the russell 20000 did dip today, shed 2 1 2 points. The dow transports, a record yesterday, shedding 100 points today. Well have much more on all of this in just a moment. The state and local Tax Deduction for the middle class may be back on the table as part of the gops tax reform plans. With a catch we will have those details coming up. And those wildfires are still tearing through california we will talk to a local brewery founder about the impact shes seeing on her bottom line so far. Deadliest week of wildfires in california californias history joining me today, cnbc commentator Michael Santoli is back cnbc contributor evan newmark next to him. Bill smid from smid Capital Management joins me as well. Going to be a rowdy group. I can feel it. Big winner in the dow, american express. Big loser, verizon the s p, the big winner was hp hewlettpackard inc. Big loser, pg e, related to the wi wildfires. Financials weighing on the market with banner earnings. Wells fargo down after weaker results. Goldman sachs and Morgan Stanley on tap to report next week Goldman Sachs managed to finish higher after its results. B of a bucked the trend reflex selloff, sell on the news b of as number, clean, expectations not quite as high i think in general, though, financials had this great four, fiveweek run. Kind of a logical place to back off. And thats whats happening in the overall market you know, right after labor day, you had this big reflation trade, everyone decided it was time to own the trump trade again. This week thats backed away a little bit market stays hovering near alltime highs but what get you there changes. We had some of the data as i mentioned, c cpi was weak i wonder if people are starting to embrace that as a good thing. If you like financial stocks, probably not a good thing. True. I mean, these super flat yield curves are not good i lost my hearing. We can hear you fine. Thats fine super flat yield curve, not good for the banks in general. I dont like the banks i think theres pressure on the Asset Management side. Theres not a lot of Capital Markets activity and a flat yield curve i can understand why everybodys attracted to them. But for me its not very compelling. Like a regional banks guy i just, you know, i dont know enough about the regional banks to say that theyre good or bad i just think the whole reflation trade if thats not on, probably not where you want to be in the financials bill, what do you think is going on here . Well, i think evan is giving the typical three to sixmonth view hes right about the three to sixmonth view youre talking about stocks and these banks have been until a year and a half ago the most hated sector of the stock market for 7 1 2 or 8 years running and a year and a half of joy do not even up a market so, so he could well be right that this is a shortterm top for those, but for someone like us thats owned them for years, at these valuations, with the o momentum of the next five years in front of them from an economic standpoint, these prices look way cheaper than the average stock on the market. Evan, ill have you respond you missed off the top, you said you were expressing a typical wall street three to sixmonth view. I hate being told that. Thats a thing to tell other people. That really gets under my skin no, i think its true theres been this rotation from different groups and the financials just had their turn but im not looking i think there are, as weve seen in the retail industry, weve seen it in recently in the content area with Media Companies. At ts earnings and some of the other companies weve seen the secular pressures take hold in industries and i think its really the financials turn now its more than three to six months. All right lets talk for a second about tech stocks, bill, they were leading the day with hp inc expecting 2018 to be a good year, company pledging to return cash to hair shoulders hps stock up 7, i call it 6. 5 . Big move look at the reaction in 3d systems and stratasys, lower by 7 , 8 on hp announcement. Faang stocks getting a boost netflix traded 1,000 bucks at close, a hair above there. Nearly 2 move and bring in michael for the other names, too. Netflix is interesting, i said forever netflix is the odd man out in faang, a different kind of business, direct to consumer, people decide to pay what they pay for. They kind of know when theyre consuming it its not about this huge platform where your eyeballs are kind of sold on an open market and i do think its also smaller in market cap than the other ones and the question to me is, i mean, everybody on wall street took up their numbers, raised their price targets ahead of mondays earnings for netflix. The question is are peoples expectations in the short term just way too high . Goldman raised their price target to 235, evan i think it was morgan at 225. Anyway, you were just talking about the Media Companies being a place to stay away from. But is that because netflix is the big disrupter . I mean, its you dont know, you know, when it comes to valuation, its very hard. I mean, is netflixa longterm v winner as a company . Absolutely does that justify its valuation . Maybe. If you look at the trends, step back and go, you know, are the trends good for the cable business, are they good for espn and disney Going Forward my gut feel is no, these are bad trends doesnt mean end of the world. Just means the valuation really, really matters and netflix is a weird one where the valuation really hasnt mattered for a long time. Bill, where do you fall this is a great juncture. You mentioned hp we took a lack ook at the 100 cheapest stocks in the other day. Dominated by financials and dominated by consumer discretionary, mostly retail and Media Companies. The cheap stocks are concentrated on a p e basis. Ten of presidethe 100 cheapest in the s p were all tech all economic studies show cheap stocks outperform average and expensive ones both historically on one, three, five and seven years. You get there to where these things are cheap, and then no one has the guts to own them when theyre cheap and i would argue reminds me a little of gm and David Einhorns ownership of that from a psychological standpoint, youve got groups of stocks that virtually everyone is scared to death of, but in many cases, theyre very underlying fundamentals and Companies Like you mentioned, nvidias, netflixes, amazons of the world, you know from a historical standpoint 15 times earnings always ends up coming 30 times earnings and goes up on an escalator and comes down on an elevator. The issue with bills argument, and its a good argument that, look, i dont want to i mean, his point that, you know its largely how its i dont trade its largely how how you invest. But the problem is that there have been very severe value traps over the last 10 to 15 years for anybody who is a believer that you can look at book values and things like that retail has been a giant value trap there are huge sectors where bill may be right, but the reality is, it doesnt help you if the businesses disappear. When it comes to hp, though, yes, the market loves Financial Engineering and sharing capital with shareholders and the rest of it. If the story turns to we have a good strategy for 3d printing, going to disrupt trade flows, manufacturing and everything else, that becomes a different thesis. A way we have to move on let me mention, mad moneys no, not mad money ceo, hp inc ceo dion weisler will be on mad money dont in an exclusive interview and maybe bitcoin. We got to hit this today. Oh, lord. Thats how i feel, too. A record high. Then it dropped back there it is at 5,500 almost at 5,900. Had a couple things going on Cryptocurrency Exchange coinbase said some users with ill be able to access instant uses of bitcoin. Jamie dimon was asked about bitcoin again today. Of course this a day today after dimon on the call after the earnings said he wouldnt talk about it again but here he was listen i dont personally understand the value of something that has no actual value. You can do whatever you want, dont care all right . That sounds definitive bitcoin hit a new high today. I could care less what bit ko bitcoin, how it trades, what it trades for the only value with bitcoin is what the other guy will pay for it honestly, i think its a good bitcoin, buyers are jazzing up every day so maybe youll buy it, too, and take them out i quite mean that, by the way. People are good at manipulating the press these days a case for bitcoin, if you live in venezuela, north korea, or if youre a criminal. But this is a last time im ever going to answer questions on bitcoin because i real will i dont care but hes so entertaining when he does. This is a very serious issue weve talked about this time and again. Separate blockchain which jamie dimon, did, too, not talking about blockchange. Were talking about bitcoin. What do you say . Weve had this discussion on this show several times. Im 100 with jamie dimon on this it does serve a function if you want to evade taxes, if you want to launder money, if you want to engage in activities that you do not want the authorities to know about, it is a good means of value. If you want to they will crack down. John shrewsberry told us the same thing last lour, hour he will crack down on it that was jamie dimons point, governments will crack down on this, will not allow this to go on. We view this as a thermometer of a mania three, four years ago we had a mania in the drug stocks, right, with all the rollups that were being done and the thermometer was valeant pharmaceutical bitcoin is the new Technology Era against thermometer. Jamie dimon is a very wise man and to be respected. And no one knows the insides of the guts of the Financial System better than he does. I cant think of anybody that would know better on the subject. All right what makes it so fun is that the people who are really enthusiasts for bitcoin who think that really it could take up a huge percentage of whether its currency reserves, or just, you know, fuel the blockchain buildout, they would be upset if the ceo of jp morgan liked it. I know. Outlaw maverick thing. I agree. It feeds on itself until it spins off all the energy. It was approaching 100 billion. The combined market cap of our largest financial i mean, its well, more individually than either goldman or my its not a company, right, if to you want to say you could make it look small next to 8 trillion of gold in the world. Thats true comparison bill miller has made. Quick last word, bill. Mike, the people that own the nifty 50 were happy when it got criticized in the six months before the nifty 50 died in 73, 74. When people were criticizing the dotcom bubble and getting annihilated from it, everybody goes im so glad theyre criticizing. And now the people that own the faang stocks are going, oh, im so glad theyre criticizing. When the 180 p e becomes the 20 p e, life is a lot more fun for value investors. All right lets bring in leslie picker for a moment, another market flash for us. Hey, kelly, amazon talking with suppliers about private label sportswear according to a report by bloomberg citing people familiar with the matter. That sent shares of other Sports Apparel makers, under armour, lulu, dicks and nike down when the news broke shares of amazon did not move. Everyone used to them being at it again we reached out to them for comment and have not heard back yet. Well let you know once we do, kell. All right, leslie, thank you. Bill, anything youd say on this development . T. O. P. , that would be exactly the kind of company that would get into something after ten years of it being absolutely fantastic because they have to show Revenue Growth youre saying wait a minute, amazon is behind the game here no, no of course, they are. I mean, havent they tried to be in groceries for 20 years . And failed then bought whole foods. Is that not behind the game . What am i missing . Theyre a chaser. Theyre a chaser what do you think about amazon overall. Are they chasing movies chasing television theyre a chaser everything. Because their stock is dependent on the idea they got to grow their revenue 20 a year so that the people who are willing to pay a very high price for their market share and their t. A. M. Will be happy bill, would you buy the lulus, Dicks Sporting Goods which of those things would you own here, then well go . I already told my wife that since she and her peers are wearing the stuff that the 30yearolds and 20yearolds are going to get bored with it bill, is that a lululemon reference . No, its just the whole athlete era. Just the whole athleisure everyone agrees with it preside santoli coined it lethargy. I want to know how bills wife took that how well did that go over at home honey, you like it so im going to sell it bill, thank you for joining us. Youre welcome. Thank you. He was very quiet on that, too. Bill hes running to the phone right now. President trump announcing today he will not certify the Iran Nuclear Deal and thats worrying many u. S. Companies that are now doing business with that country up next, well debate whether that move is overall bad for business. Plus, congress reportedly may let the middle class keep the state and local Tax Deduction. But what income level will be considered middle class . And will that increase the odds of a deal . Larry kudlow will be here to weigh in. And we want to hear from you, contact the show on twitter, facebook or over email tell us what you think well read some thoughts at the ury end of the show yore watching cnbc, first in business worldwide is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Were very unhappy with iran they have not treated us with the kind of respect that they should be treating they should have thanked barack obama for making that deal they were gone they were economically gone. He infused 100 billion to 150 billion into their economy he gave them 1. 7 billion in cash and they should be thank you, president obama. They didnt say that that, of course, was President Trump speaking this afternoon and taking questions from the press after announcing he would decertify the Iran Nuclear Deal now, is it a bad move for business remember, a lot of firms started doing business in iran after this deal. Joining us to debate that, former ambassador to morocco, mark ginsburg. Mark jacobson from georgetown universitys edmond a. Walsh school of service. Welcome to you both. Hi, kelly. Mark ginsburg, let me ask you, there are a couple interesting thoughts about different ways this could play out. I know the question overall were asking is it bad for u. S. Business let me begin with that how do you think companies from boeing to anybody else who started to do work over there should react to this well, its clearly going to be programmatic. The president laid out a 40year indictment of iran and threatened to impose additional sanctions that are already going to make it extremely difficult for american business, particularly if he imposes additional sanctions on the international on the Iranian Revolutionary guard corps. At the same time, there are american businesses that already stuck their foot into tehran and have a 17 billion boeing deal that is pending. So the president at the same time wants to help the iranian people i think that the iranian government, particularly president rouhani, will want to see everything he can to ensure that america doesnt walk away from this deal largely because without the United States lifting banking sanctions against iran, its going to be extraordinarily difficult for commercial deals to go through, whether theyre the United States or europe. Mr. Jacobson, you have an interesting kind of facesaving maneuver for everyone here im not sure the president is interested in that, honestly, as much as he is punishing iran he thinks thats what his job to do, feels like to me, anyway. What do you think is a possible way out for everybody here sure. Look, im concerned about the uncertainty that president s move does in terms of the middle east entirely. Im concerned about the uncertainty this will do for u. S. Markets im concerned about the fact that the president s move may make it more likely that we end up in h a war with iran. So whats a way out . The president does not like the optics of having to certify these agreement. Objectively, the iranians are complying, yes, here and there there are problems but this happens in arms control regimes, this happens in agreements and you fix that theres a rather robust mechanism for making sure the iranians stay on track, and for making sure that the iranians comply over the long term. So what would i recommend . Lets take this away from donald trump. As we already heard from the european counterparts, this is not a u. S. Only agreement. This is about the eu this is about the u. N. Security council. This is and the rairanians o course. Right so we could have congress refine the Corker Cardin bill. That is, what made it possible for the requirement for the president to certify that the iranians are complcomplying. Lets push it down to the secretary of state and secretary of defense they have the information, let them certify take the politics of the white house out of this. Let them work with their counterparts in europe and tehran take this deal and move it forward. Because without this deal, you can almost guarantee that the iranians will acquire a nuclear weapon, which is what trump says he doesnt want to happen. Mark ginsburg, how do you think this plays in congress, in terms of how the various Factions Within Congress who want to pull different levers when it comes to potential new sanctions, or not, how is that all going to develop, do you think . Well, its going to have to happen within a 630day window that is now opened up. Based on a head count i undertook as part of an article i wrote for the huffington post, the republicans dont have the votes to reimpose or snap back sanctions and, frankly, even the hawks, the iranian hawks led by senator tom cotton, they may try to push a resolution through to impose additional sanctions not directly related to the nuclear deal so it really depends on whether or not either house of congress is prepared to snap back sanctions and, frankly, if you watch the president s speech, he did not recommend that sanctions be reimposed so i think thats a signal to the republicans. All right we will watch Corker Cardin, see if their legislation can maneuver here. Gentlemen, thank you both. The two marks. Mark ginsburg, and Mark Jacobson this afternoon. Qualcomm is ramping up its legal battle against apple well have the latest in their patent wash cor coming up. Pumpkin spice flavoring has become huge in recent years. Look around the grocery store, any starbucks. You know what im talking about. Now that Strong Demand is coming at a premium that will hit you pretty hard tinhe wallet. Our fast take when we come back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. They always refer to me as master sergeant. They really appreciate the military family, and it really shows. Weve got auto insurance, homeowners insurance. Had an accident with a vehicle, i actually called usaa before we called the police. Usaa was there handson very quick very prompt. I feel like were being handled as people that actually have a genuine need. Were the webber family and we are usaa members for life. Usaa, get your insurance quote today. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. 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Keeping the world of business connected and protected. Thats the power of and. Welcome back, it is time for todays fast take. We begin on this friday with the bombshell or not that saudi aramco may delay its ipo, which the Financial Times reported this afternoon but cnbcs report says its whether to list saudi first and new york and london later on and which of the two venues to change chris of long view economics told us earlier today that aramco better hustle because he sees oil falling to 10 a barrel in the next six to eight years, guys, because of the switch to electric cars. Should aramco hurry to get on with it . I think for a lot of reasons they probably want to. Its a national priority, of course the biggest one perhaps of saudi arabia in the last year or so. Yes, they want to get this done. Its been a very difficult situation, though, because each of the venues they might list in new york and london, theyd be competing and also deciding how much theyre going to exempt it transparency. From their general listing rules. Yeah, you have to believe they have to get out there. They think theres a risk its not going to be a very longterm picture here. Youve been holding these energy i know i sp i can say, oh, 5. Going to 5. It has no meaning. I dont think the dollar number is as important as the point that 70 of oil goes to vehicle consumption. By the way, thats already in the market Everybody Knows that hes not bringing any particular insight to that. I think the saudis are as aware of thereat at as anybody. The ipo never made sense to me dont understand it. Im not saying it makes sense to the world. I dont you wouldnt be a buyer of it no. Think about it, its basically commodity. Theres a price. A world market price for it. Theres no difference between owning saudi oil and owning, you know its the lowest cost of production on the planet. I get that, but all im saying is its all right. Look, the Russian State Oil company privatized, you can own a piece of that and it trades like a commodity company. Up today about 1. 5 related to the iran news. Next google is building an antiamazon alliance according to recode. Began a month and a half ago when walmart made a deal with google home to offer thousands of its products through the voice service. Home depot also got on board today target said its expanding its google home partnership, too. Is that going so far to say theres an antiamazon alliance that google is building, michael . I wouldnt think that google would mind thinking they were partnering up with everybody theyre a little bit more of a platform others can bolt into. Is it exculusivitexclusivity . To me, it implies theres going to be one or the other walmart is different. Home depot, target its unclear theyd want to go on one track versus another i dont think so maybe that selling point, look, youre not buying into the allinclusive amazon world the way you might be with the echo. All right i dont know. Im just going to i know, youre the alphabet guy. Finally the pumpkin premium, starbucks puts a 25 markup on its Pumpkin Spice latte relative to the regular latte trader joes marks up its pumpkin waffle mix more than double its regular pancake mix dunkin donuts, guys, doesnt mark up its pumpkin products at pull what cosmic lessons can we i have to let him get a huge crack at this. Im a huge pumpkin guy. Love pumpkin pie id never put any of the Pumpkin Spice but i love pumpkin pie. How can you say you love pumpkin bpie and youre a pumpkn guy but dont like the products this is part of my thing, its a millennial product, this pumpkin thing. Im on board with you. Millennials are willing to pay for more the cool factor. Or its sort of like a seasonal little hook you know its time to do it, im going to buy it i mean, 25 sounds like a lot. Hefty markup i bet a lot of them dont mike pumpkin pie. You say the cool factor i think the Pumpkin Spice thing has become a joke. Do you like pumpkin pie sure. I was thinking about this the other day, im surprised pumpkin buy doesnt taste better than it does after hundreds of years weve been eating this dish and its kind of gelatinous and cool and i like it with whipped cream it would be drachticalstically improved if you make a great one, id whoi objectively would a pie made out of squash pecan pie, thats the way to go thats the way to go anyway, we want your take on todays fast take. We always do skpaes especially today share your thoughts and we could read them during the closing bell mailbag. Time for a cnbc news update, lets get over to sue herera. Speaking alongside the first lady outside the white house, President Trump discussed a variety of topics including the latest developments with north korea. We are going to see what happens with north korea i will say, look, if something can happen where we negotiate, im always open to that. But if its going to be something other than negotiation, believe me, we are ready. More so than we have ever been. Iranian president rouhani says iran will remain committed to the Multinational Nuclear Deal as long as it serves the countrys National Interests and its Ballistic Missile program will expand despite pressure from the u. S. He said President Trumps speech decertifiedsults and fake accusati accusations. Aston martin unveiling its db convertible, 216,000 starting price if you want it, preorder it now for delivery starting in the spring of 2018 right at the start of convertible driving weather. The car has been the driving force behind increased profits at the luxury automaker. That is the news update this hour, kelly. Backdo downtown to you have a great weekend. Sue, you, too thank you very much. Our sue herera. Eliminating the state and local Tax Deductions was supposed to go a long way in helping to pay for President Trumps tax cuts now lawmakers are reportedly discussing a way to keep those deductions for the middle class. Up next, the man over there, larry kudlow, is going to explain how congress may define the middle class and how tax ttg atedan be paid for without cuinth duction stay with us braden so, i was at mom and dads and found this. G cds, baseball cards. Your old magic set . sigh and this wrestling ticket. Which you still owe me for. Seriously . 25 . I didnt even want to go. Ahh, your diary mom says it is totally natural. 25 is nothing. alert beep abracadabra, bro. Pay back a friend day is october 17th. Get the bank of america mobile banking app today. Welcome back gop lawmakers are considering keeping one of the most hotly contested deductions as they hammer out tax reform. There could be a catch here. Robert frank joins us now with those details. Robert kelly, House Republicans are considering a new plan to allow the middle class to continue deducting their state and local taxes. The question is what is the dollar definition of middle class and does it depend on where you live now in the face of opposition from high tax states like california, new york, new jersey, House Republicans are proposing to eliminate state and local Tax Deductions for the top earners, but allow the middle class to keep them now the next battle is where to draw the income line the Median Income in america right now is around 59,000 a year but 59k goes a lot further in illinois and minnesota than new york or massachusetts now. Representative peter king of new york, he says the cutoff should be 400,000 a year hes saying that counts as middle class in his highcost district of long island. But if you, according to the census data, the median imcome in new york is 61,000 massachusetts, 74,000 illinois, 57,000. 52,000 in iowa. Analysis by Pew Research Finds the upper bound of the middle class, thats about where the federal government would draw this line, that varies even more widely by state. Being in middle class in new york state stops at about 112,000 california, 120,000 mississippi, its 75,000. Alabama, its 85,000. This matters because the higher they raise the income threshold, the less revenue they get from eliminating the tax. I defer to my esteemed colleague, larry kudlow, real tax expert i suspect theyll work it out. It shows yet again when you fix one tax problem, you often create yet another guys, back to you. Thats for sure robert, thank you very much. Lets talk more about this with cnbc senior contributor larry kudlow what so theyre talking ab t aboabou keeping it, big pay for, but phasing it out above 350,000, 400,000 i think everything robert said is right. The politics of this dictate a very high income threshold. Like how high thats a good question. What do you mean by the politics of it the politics of it like in new york state, i believe we still have nine republican congressmen. If you just phased out s. A. L. T. As they called it, wed have zero republican congressmen, thats what theyre saying peter king has his finger on the pulse of that. What im hearing, they want to have it but will be a real high threshold. The group theyre most worried about, i know bob is correct on the Median Income stuff, but, you know, the middle class is a little different definition. And theyre worried about the 150,000 to 300,000 group where preliminary models have shown theyll take a hit from s. A. L. T. So that has to be fixed. Lot of people talking about giving back the property tax so that youll get to deduct the property tax. One or the other. And but then youre going to have to kick in the s. A. L. T. But at a high income threshold. When theyre not going to lose it all together. Rand paul was saying if you cut taxes overall by enough, losing the deductions doesnt matter you know, but this is thorny and sounds like the president is not very happy with the impactdeduc. If you got rid of it entirely, wow wou how would you pay for the whole thing . Growth. I knew you were going to say that. Can i be deductions right now im a tax reformer not now. When you say you dont care, you say you would leave everything as is. For the moment. Not worry art the pay for. Just get through the business tax relief which trump now is arguing will help the middle class wage earners. You heard me say this a million times. Hes now picking that up thats the key with the repatriation and expensing and steve moore and i put in a doubling of the standard dedu s deducti deduction, turning out to be a very popular provision the rest of this stuff, if its agony and heartburn and warfare warfare, i dont care growth. Will they pass that if they get rid of the, quote unquote, pay fors if they dont mess with anything there are a few they wont mess with. Combination of the net Interest Deduction versus unlimited expensing. For this round, i want so much to get investment restarted and get that productivity and wage increases. My view is, lets get the basics done lets get to 3 to 4 growth rate which of course improves the scoring of this enormously the Republican Party is starting to come around on that growth issue. What about the fed . Lets raise this one last thing. I want to get to the fed thats yeah. Theres going to be, i think, a Senate Budget vote scheduled for thursday okay because you know the senators dont really work so you have to get it on the right day. And right now, the republicans do not have 50 votes and you cant have tax cuts and reconciliation instructions n s unless you have a budget resolution complicating this, by the way, you mentioned rand paul, dis appoi appointing i love rand paul, hes so disappointing on this. Thre threatening to vote against it thad cochran, literally deathly sick tragic thing he may not be able to vote thats a loss theyll have a hard time with mccain is probably going to vote against it, Lisa Murkowski will vote for it. My friend, susan collins, may be a vote for it. Not going to run for governor. Named some people who maybe three who arent for it so they dont have the boats. Have to hustle around real hustling. I dont think the democrats will vote for this budget resolution. Democrats going to say lets get the d. R. E. A. M. Ers in there, its not a clean thing. I think democrats will vote for the tax cuts i dont think theyre going to vote for the budget. There are stringent budget cuts in there thats a difficult thing now, can we we got to go. Do the fed. Real quickly. You wanted to flag what john kelly said earlier this week that has gotten stuck in the shuffle. It has. Its really important. He may be scrambling, this whole fed story. What we said is a decision is not imminent that goes against what everybody in the white house has told me, but you got to believe it because hes the chief of staff. Sure. Second point, said this sort of odd im not sure exactly what this means, but hes saying all our choices are firstround draft choices. Meaning we have smart people but then he said, and we have more to come so the implication is, if youre thinking the final four look like warsh, taylor, yellen, et cetera we just showed those faces. Powell im not so sure. General kelly is saying theyre going to have more interviews. That is the first time ive heard that ive been very close to this process. I consulted on this process. Im just saying to investors and so forth, what you think is going to happen may not happen where you think the final four is may not be the final four and they all have different points of view i think some of us are pushing a warsh taylor ticket. Now woere going into a ticket. Oh, no. A ticket. Im saying that about the idea of a ticket. A ticket. Complicated enough. If youre going to take this one, you have to take that one. If it was simple, they wouldnt ask my advice i want to make this interesting and idiosyncratic. Really, folks, go and read the news conference, what general kelly said it was very it was a brilliant news conference. But this fed thing kind of got lost all right. Were going to have to revisit this. I appreciate you. Larry, always a pleasure thank you so much. Thank you. Larry kudlow. Well ski what happens next week especially come thursday. The deadliest wildfires in californias history are still raging coming up, well speak with a brewery founder in santa rosa, a mile outside the evacuation zone, about the impact on her business so far. First, theres no love lost between call co between quco a alealmmndpp on the patents. The two Tech Companies are at it again. Well have the latest on their legal battle next. That make everything from cell phones to rail cars more efficient. Which helps improve every aspect of advanced rail technology. All with support from a highlyeducated workforce and vocational job training. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, im an outdoorsman. So ive asked chase sapphire reserve cardmembers to find my next vacation. Chile, whats going on . Im at the el tatio geysers. Geezer. Geyser. Geezer. Geyser. Enough. Geezer. Whoaa, wooooo. Dude, be careful. I think you should come camping. Why would i camp in the atacama desert . Oh. 3x points on travel and restaurants on every continent. Sapphire reserve, from chase. Make more of whats yours. Tensions between call come a qualcomm and up a l are bubbling up once again. Josh lipton has the latest on the bad blood. Josh reporter kelly, analysts say this is unlikely to go qualcomms way it was another real escalation in this fight. The chip maker filed lawsuits in china to try and ban the sale and manufacture of iphones there. Qualcomm saying in a statement, apple employs technologies invented by qualcomm without paying for them. The chip maker says the suit is based on patents that covers Touchscreen Technology that apple uses in current models apple hitting right back telling cnbc regulators around the world have found qualcomm guilty of abusing their position for years. This claim is meritless and like their other courtroom maneuvers, we believe this latest legal effort will fail. Remember, this fight is really over how much apple should have to pay qualcomm for its patented technology in the Iphone Qualcomm wants a percentage of the iphone selling price apple wants to pay something closer to a flat fee this suit comes at an important time for apple and its business in china the new iphone 8 line has really just gone on sale and the new iphone x starts shipping in november its last reported quarter, Greater China generated 8 billion in sales bernstein says qualcomm could have real challenges, though apple indirectly employs a lot of people in china who assemble all those iphones calling into question whether china would really want to shut down production kelly, back to you we may find out josh, thank you very much. Josh lipton. Russian River Brewing is based in santa rosa, california. Located just a mile outside the evacuation zone for those wildfires. Coming up its cofounder will join us with how the fires raging across the state have affected business, right after this massive wildfires continue to sweep through Northern California at least 31 people have died and more than 190,000 acres scorched across the state, an area almost the size of new york city. Natalie cilurzos brewery is within a mile of the Fire Evacuation zone. She joins us now on the news line, natalie, thank you for being here hi, thank you for having me are your doors open for business now yes, you mean received a picture of a group of firefighters having lunch at a pub right now. That must come as some encouragement. What does the scene look like where the fires hit you . The fires came in right into downtown early monday morning, and just wreaked havoc, just tearing down entire neighborhoods, burning down hotels, restaurants, kmart, other businesses, jumped the freeway. Just wreaked havoc, and super high winds it was terrifying, is what it was. And then, you know, kind of started to leave downtown over the course of the next couple of days, and we have several fires burning around us. The closest ones are to the southeast, mostly east of our breweries, as well as just kind of up to the north theyre kind of burden of proof a little bit more to the east of us right now so we dont feel that were in too much danger right downtown and our business has been open since tuesday. We were able to open with a skeleton crew, although we have several employees who are still evacuated. The ones who are here were able to rally and come and help us open ill tell you what, the community has appreciated so much to have a place to go and have a warm meal and have wifi and be able to, you know, just talk to each other and share their stories. Oh, sure. How much of a business hit are you anticipating at this point Going Forward . Well, although were open, many of our customers right now are first responders, evacuees, and people who have lost everything and literally have nowhere to go. And so were giving away a lot of stuff right now were buying meals for people, were giving away a lot of free clothes. You know, im not worried about making money right now financially its definitely a big impact our sales are probably about 60 of what they would normally be at this time but honestly, it doesnt really matter, well make it up later were just happy to be able to help our community natalie, its evan. I had a question if we were to visit sonoma right now, would we see widespread devastation everywhere, or is it more patchy by neighborhood . Because we see the photos and the photos look absolutely devastating. But i cant tell whether its widespread or its kind of highway by highway, neighborhood by noboeighborhood. Sure. So if you were to drive north from San Francisco and come into santa rosa, south of santa rosa, in the downtown area, you wouldnt see any danimage the minute you get to north of downtown, literally the next exit, youll see some very shocking sights. Youll see major hotels, the kmart right off the freeway, the Luther Burbank center for the arts is right off the freeway, wall see devastation right off the freeway. And then if you were to venture off, which youre not allowed to go anywhere right now, they wont even let you off the freeway now, several exits are closed, headed north all the way up to windsor, because the fires are still raging in the hills just to the east of us so eventually well be able to go up, you know, i dont really want to right now, but you can go up and see the neighborhoods, particularly coffey park, which everybody has seen the footage of one of our suppliers came in this morning for the first time in a tshirt and sweatpants, and hes a salesman. I said, what happened . He was telling me this story of evacuating coffey park in the middle of the night, and the story was terrifying, absolutely terrifying but he was just grateful to get all of his family out and survive. To answer your question, there are pockets, but theyre very, very large pockets and so the average visitor to santa rosa will absolutely see the devastation. But not to its complete magnitude unless you venture off the freeway, which you cant even do right now. Its also happening in the town of sonoma. Im sure youve heard about calistoga in napa valley, which the whole town has been evacuated. Natalie, wehope you can bounce back even more quickly. Im glad youre able to operate a little now thank you for painting the picture for us, its a tough one. Thanks for calling in. I appreciate you listening to me have a great day you as well thats Natalie Cilurzo from the russian River Brewing company, which you can support, thats one way to help everybody out there. Your messages are coming up in todays closing bell mailbag, after this zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Aggressive styling, so you can break away from everyone else. The bold lexus is. Experience amazing. Welcome back we have a news alert on nestle to start here. Leslie picker has more reporter this is from cnbcs loren hirsch, reporting that nestles confectionary business is accepting bids. They said in june they were exploring options and could be valued as much as 2. 5 million thank you, leslie reacting to our top stories today, g. Hawkins says grant seems to think it doesnt end well for bridgewater because success has been due to the fed qe go people think if you work from 9 to 5, youre a hero. I think youre a hero thats all we had time for we had some poking fun at you too. For the pumpkin i cant wait to eat pumpkin pie with you thats for thanksgiving a got a couple of weeks to think about that that does it for closing bell. Fast money starts right now. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys time squares. Im melissa lee. Tonight on fast money, stocks surging to record highs. Traders thing theres one best chance to catch the rally. Well explain. Bitcoin has all of wall street talking the f. A. N. G. Stocks surging back
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