Transcripts For CNBC Closing Bell 20171219

The s. E. C. Halting trading on a Small Cap Stock called Crypto Company. We got a breakdown on what to look for when considering stocks that are taking advantage of bitcoin mania. There are the four bitcoin prices there. All four of them. All in the red today, by the way. After the bell today, we have stitchfix reporting its first earnings since going public were going to have a debate on whether this recent ipo is worth buying or not. We found a bull and a bear we could get the first Earnings Report of they list is always perhaps the volatile one. They already said what they think the numbers are go iing to be. Right. Looking forward to hearing from them later. Breaking news out of washington right now, as the house votes to pass the tax bill ylan mui with the latest. Reporter we saw House Republicans celebrating their victory here as they passed the tax bill out of their chamber. Members of leadership were literally patti inting each othn the back, shaking hands, hugging even paul ryan framed this as a Campaign Promise they made and kept. This is a good day for america, this is a good day for workers. This is a great day for growth and were very excited about this moment. Reporter now, that final tally for the house vote was 227203 with 1 republ2 republic voting against it from hightax states, new york, new jersey, california this drama is not quite over yet. The senate is going to be up next Senate Majority leader Mitch Mcconnell telling reporters that a vote is planned for later this evening. He tweeted the tax bill is a once in a generation bill for americans. And it looks like republicans do have the votes to pass this through the senate as well however, Vice President mike pence will be presiding over the vote in that chamber just in case they need him to break any ties there make no doubt about it, this is a consequential day for the republican agenda. Perhaps the most important day that weve seen so far this year back over to you guys. Ylan, for now, thank you. Ylan mui more on tax reform, what sectors could still rally when the big gets signed into law, terry haynes from evercore isi and jimmy from the American Enterprise institute welcome, both of you terry, what do you think any sort of surprises at this point . You know, anything the markets should be particularly looking for . Well, i think the thing that the markets need to be looking for, kelly, frankly, is that youll see you will only now start to see tax reform baked into a lot of a lot of predictions, and a lot of calls. A lot of folks didnt want to call this before before it became obvious that it was going to be final. So you will see youll see an upside to that and what we had called before was an upside in financials, in consumers, in telecom. Some Health Care Stocks and a variety of others. And youre now gong to see that start to be baked in a little bit more and theres probably going to be some upside. We still think theres some room to run here. Yeah, listen jimmy i think thats a great point. What do you think is going to change tomorrow and whats going to be different . Well, listen, i think i think what weve seen the markets so far, i think primarily has not been about this tax cut i think there was too much skepticism given what happened with obamacare, as we just said, to fully bake this into the economy. Bake this into corporate earnings projections i think thats going to start to happen and, listen, ive never been a believer this is a gamechanging tax cut. I think incrementally it will give us modest growth, but, listen, you know, momentum wise, its probably going be a plus. At least, you know, for some time, and well see if we ever start to worry about the deficit. Maybe well never worry about the deficit. I also think this may be the last tax cut we see for a long, long time. Terry, you mentioned some of the sectors you thought might pop here, sc financials, consumer, health care, energy, industri industrials, telecom. Whats going down whos left out . I guess real estate isnt having a great day, but, yeah. You know, it depends on the individual company, of course, but its broadly positive across sectors and across industries. You dont think its already in the market, terry thats been the big debate on wall street lately, is the tax cut already in the estimates by the analysts or could we see another gear for this market after they finally pass this thing . I think i think our view is that we see another gear. We see plenty of room to run, bill listen, this is a big tax cut. This is 14 we forget about the immediate expensing provision which is put to the side because of the temporary provision. Thats also thats also a significant gain i just wonder, terry, procedurally, we also i think they have to fund the government past friday, right so what at this point is going to happen, does the whole thing get lumped together into one bill and what happens for this push that Susan Collins has made in order to get onboard with and support tax reform by saying we also want you to sort of shore up the obamacare markets even while theyre taking away the individual mandate how is that, you think, going to unfold by the end of the week . My view of this, kelly, for quite some time, has been that were going to get a were going to get a kick the can temporary shortterm government funding, at least until midjanuary, and probably longer but that it will ultimately be resolved around dreamers and a few other issues thats number one. Number two, to your question, i think what is obvious now is that mrs. Collins deal was to actually get the the aca temporary fix onto the senate bill theyre very hopeful that the gets done in the house, but tax will be up and out before the spending bill. So were still going to be wrangling around about the aca shortterm fix for some time to come listen, theres no interest among republicans when they finally have a major legislative accomplishment do anything to step on this thing. Youre not going to see a Government Shutdown any time soon and what about infrastructure, is there momentum for that now, jimmy thats what theyre talking about for the beginning of 2018. Well, listen, i mean, there you have a division, where you have, again, the Trump Administration talking about infrastructure, again, yet republicans will suddenly become debt hawks again and at least paul ryan, he may be the only one left in the party, treat paul ryan is going to push for entitlement reform, primarily medica medicare, probably also medic d medicaid you have two different agendas. You really think hes going to do that going into the midterms that theyre already going to lose . I think hes going to try to push that. The Trump Administration has derd zero interest in doing that. Right terry, last question before we go, this is a gop facing a potential wave Midterm Election where they could lose the house and maybe the senate, too. I dont know what that means for the ultimate fate of everything thats being passioned right now, what ities are goin to be after this i think their legislative priorities will include infrastructure ive gonefrom very bullish on this 12 months ago to very bearish today. I dont see a common approach. I dont see the urgency. And democrats certainly have a very different position. Would have been well interested in going into into debt and deficit over infrastructure. But i do think that republicans have a difficult time losing the 2018 midterms. The senate is very much against democrats and the gerrymandering in the house very much favors republicans. Listen, if you wanted infrastructure, it should have been part of a Corporate Tax deal back in february. That would have been it. That would have been the mother that would have been the giant compromise that democrats would have went, we didnt do that, so i think were going to see a big infrastructure deal. All right, guys, we have to go, terry, jimmy, great to see you. Appreciate your thought. Lets get to our Closing Bell Exchange joining us, michael han strks is he happens is here. Along with steve grasso, director of Institutional Sales at stuart frankel. Rick san tell will i joins us as well from the cme. All right, steve, tie this all together the narcotmarket holding if pla. The dow has been drifting lower. What do you make of it all the buzz language youve been hearing that youve been talking about. Its tax reform, its bitcoin, its rotation. Not necessarily in that order. Tell me markets arent selling off because bitcoin i dont think the markets selling off. Look at different aspects of the market you can see the fluctuations in volatility, bitcoin, people have the risk on our risk of and probably a direct reflection of the overall market whether its a risk on or risk off day. This is year in filing, putting in your buckets where you want to be. It is asbout tax reform, the leg into tax reform, where you think the biggest sectors are going to benefit the most from. I think any selloff you see in tech, large cap tech, i think should be bought those are the names that youre going to see the growth Going Forward. I heard the conversation before i came on about industrials and infrastructure i think you could see a tailwind going into that midterm. I think theres going to be a lot of stuff around the edges that might to the be a huge deal. But theres going to be a lot of but a lot of giveaways going into midterms. The long end of the yield curve just surging for the 10s and 30s here with the vote today. What do you make of that is that a Growth Strategy . Not just here, overseas, too, by the way. It had to be overseas if yields didnt pop eight basis points, id be shocked to see a 30year bond up eight basis points or tenyear note up seven basis points yeah, i think were all in the same ship together of course, theres going to be a large segment, remember, perception is reality in the marketplace. Many believe that the tax ref m reform, as it passes, is one of these issues where you buy rumor and sell fact. Theres going to be enough people to trade it that way. I think its somewhat evident today. I dont think i think in a big picture it gets lost i agree with steve i think theres a yearend cyclical behavior and i think that everything going on with regard to taxes and this administration is going to make it that much more fun. I do think were going to see more extreme prices going into year end both in treasuries and in the equity markets i think the dollar index continues to be the oddman out. I dont see that changes for the rest of the year were standing by for fun. Michael, how are you guys tweaking your positioning into next year . So just to echo those comments, its similar rotation that were seeing across the board that has more to do with year end than anything else. Right, the tax policy, to an extent, has begun to be priced in over the last really late november up until today. And from our perspective, we would utilize this differentiation in returns to start thinking about scores you have internationally because we do believe that thinking in what direction . Thinking more toward international diversification. Simply because that gap, that widened out in the first three quarters of the year narrowed so for the quart erkts ter, s p, d nasdaq, between 7 and 11 whereas the International Markets up 3 , 3. 5 , em up 4. 5 . The wide 6 , 7 gap this year where International Investors were finally seeing some benefit has narrowed we would use this as an opportunity to youre not fully positioned to start rotating there in our portfolios the biggest area of change isnt necessarily derisking outside the traditional its more focused within our credit allocations within fixed income. Little bit of chatter and spread widening two, three weeks ago, has died down. What were looking to do is utilize the stability in markets, twhere youre seeing th buoyant markets this is a good exit point. Good exit point to us to really good scaling out. Scaling out of high yields . Scaling out of high yields so our fixed incomport foe portfols become were making an active call that id take equity risk over credit risk. Last thought . Looks like the market echos that taking equity risk, but i do think michael brings up a great point with merging markets with a rising rate environment, thats usually a headwind for emerging markets thats why to a larger extent they underperform the s p. You see that dislocation take advantage of it. Buy emerging markets along with equities but overweighted emerging markets. Steve, good to see you, michael, thank you for joining us today rick, see you later. Appreciate it. We have 47 minutes left in the trading session today. Minus signs right now. The bill rally was yesterday. Yeah. They had a Preparty Party but right now, the dow a down 29 we were down 77 at the low of the session. When we come back, bitcoin mania, is it possible that its heating up as investors try to get in on the action the craze sending shares of financial tech company, longfin, through the roof, just days after going public why the companys ceo is calling its market valuation, quote, not justified. And what you need to know first about buying stocks off the bitcoin buzzwords. Meantime, Credit Suisse says karcarnival has one of the lowet effective tax rates. Were going to talk to the cruise line ceo about how it could affected by tax reform and what it will mean to investors. We also want to hear from aryo t, ch out to the show she urhoughts with us. Twitter, facebook, over email youre watching cnbc, first in business worldwide [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. Welcome back these buzzwords like bitcoin, crypto, blockchain, anything remotely like that are driving wild market swings for small caps take a look at financial tech company, longfin, up more than 1 1,000 since going public last week yes, thats all correct. Down less than 1 today. Longfin purchased a company focused on Blockchain Technology heres what the ceo told fast money last night when melissa asked him if this valuation is justified. I love this its not justified. Im not saying its not justified . Its not justified. Market cap is not justified because if you look at my revenues, if i look at i valued my ipo pricing, look at it i valued my pricing at 5. 5. 300 million. Somebody shorted nothing to do with it because we have nothing to do with euphoric mania. All right, dom chu joins us with more on this whole craze and the listing standards. I mean, that guys conversation just tells you how crazed it is, he cant even figure out himself first off, guys, its worth noting your use of the word, listing, in that whole thing, because in order to be actually listed on an exchange, there are certain base requirements that actually need to be met. And then there are Different Levels or tiers of listing for each of these exchanges. That applies to exchanges like the nyse, like the nasdaq, in order to be on each of them, there are certain minimum criteria that have to be met both exchanges are going to look at things like your profit levels, also maybe your total assets, total sales. The value of your equity from stockholde stockholders how many shareholders you y. Trading volume of your stock all of that stuff. Also Corporate Governance requirements like the makeup of your board is there an Audit Committee on your board there has to be for some of these listings the accessibility of regular financial reports. Who your auditors are. All that stuff is relevant where things get a little bit dicier is when it comes to publicly traded, but nonlisted stocks, like what happened with the Crypto Company earlier today, remember, the s. E. C. Temporarily suspended trading in the companys stock until after the new year due to what it calls concerns regarding the accuracy and adequacy of information in the marketplace, just about the total company also concerns about potentially manipulative stock transactions over the course of the last month. Now, a check on some of its recent Regulatory Filings shows a lack of disclosure on just simple things like an estimated revenue range. We did speak with a source familiar with nasdaqs Exchange Operations they el us at cnbc they have a battery of proprietary technology, also a team of analysts at constantly monitors its listed Companies Listed companies to make sure theyre complying with listing standards. They also use outside specialists, believe it or not, like private investigators to keep track of their companies on their exchange theres a lot of stuff being done the question is it enough from a regulatory or Exchange Perspective for the average investor out there, guys imagine that. Want to make sure you have enough revenues and profitability and shareholders and Company Holdings to go with the listing there. Its not just i mean, those are sort of the listed equities then theres the coin offerings. The icos. The coin companies which dont even delve into any of that. May i just point out the obvious, that it was 20 years ago that anything that had the word, dotcom at the end of the companys name, it was suddenly skyrocketing. We should do a retrospective. Are you saying it feels like 1 1997 im just reciting what has happened in the past im not saying its going to en the same way you never know just bear it in mind. Certainly, bill, kelly, cough y caveat, buyertrue ever words ha been spoken. The dow is down 20 points. We are waiting for the senate now, thats expected to vote in just a few hours on the tax reform bill. According to senator mark warner, he says this legislation in his view is the single worst that hes seen in his career the senator sat down with our john harwood well bring you that interview coming up. Later, the ceo of carnival nee tell us how the cruis lis bottom line will be impacted if bill becomes law it might surprise you. Yeah. Stay tuned. Click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Talk to one today and see why were bullish on the future. When you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. We call that, the golden hour. Evaluating patients remotely, is where i think we have a potential to make a difference. We would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network, with ultra lowlatency that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . Zblrk welcome back take a quick look at cars. Com, up 4 on reports that activist investor Starboard Value bought a stake in the Company Sources say starboard says potential for cars. Com to be sold to a private equity firm maybe. Heres the response, about a 4 jump in cars for you today all right. Time for a cnbc news update right now with sue herera. Hey, sue. Hello, guys good to see you. Heres whats happening at this hour, everyone investigators are looking into whether the amtrak engineer whose speeding train was distracted by the presence of employee in training who was in the locomotive engine compartment. Three people were killed and dozens more injured when part of that train toppled onto interstate 5 near dupont, washington. Secretary of state Rex Tillerson arriving in ottawa for meetings with Prime Minister Justin Trudeau and Foreign Affairs minister christia freeland. Attorney general Jeff Sessions visiting charlotte, north carolina, announcing two new initiatives to help that area and western pennsylvania combat Violent Crime he says two new task forces will focus on bank robberies, carjackings, kidnappings, and extortion. I fear that if we do not act now and act smartly, the surge of our resources moving the resources to the areas that need them most, this nation could see decades of crime progress reversed you are up to date. Thats the news update this hour bill, kelly, ill send it back downtown to you. All right, sue, thank you very much. Sue herera. The house just voting to pass the tax reform bill, and the senate is said to take up a vote tonight john harwood sat down with democratic senator mark warner for his less than flattering take on the bill and joins us now with more hi, john hi, kelly now, this is relevant not because of senator warners vote for the bill, like the debate over obamacare, this is a completely partyline process and theyre are not going to be any democratic votes for it. Mark warner said its possible, hes a former businessman, moderate democrat, said it would have been possible to lure some of those democrats with provisions like this one take a listen. One of the things that would have made this much more palatable to me is if these companies are going to bring back their profits they generated in Foreign Countries at extraordinarily low rates, and the rate, the range is between 7 and 14 , why not say, fine, company, bring it back, but part of the price of bringing it back at that low rate is youve got to put in place a meaningful training program, not for everybody, but everybody in your company that makes less than 80,000 a year now, even though they dont need mark warners vote, this is relevant because if the democrats in 2018 take back the congress, ultimately take back the presidency, youre going to see ideas like that debated as democrats take a run at repealing these tax cuts just like republicans tried, failed so far, to repeal obamacare, guys oh. Its never going to end, is it i mean, so were just going to reverse this now thats the thing, bill. I know. When we have a closely divided country and a very polarized country with both parties operating on narrow margins and determined to work and jam things through, themselves, it really does create a neverending debate obamacare was passed seven years ago and theres a provision in this bill, removing the individual mandate you can count on the fact that democrats who now have the political wind at their back, who are now favored to take over the house, they are going to go after these tax cuts and try to roll them back very good thank you, john. Good stuff thanks see you later. Meantime, shares of carnival have popped today about 2 after the Company Reported quarterly numbers that beat expectations higher ticket prices helped to offset a hit from the hurricanes they did take a hit from those hurricanes this summer related costs in that regard our seema mody joins us now with the ceo of carnival, aronod darnold in a cnbc interview. Good to have you on the program. Thank you, happy holidays, everyone. The cruise industry has been challenged by hurricanes, yet earnings for carnival continue to grow. Help us understand, whats driving profits . Whats driving profits is our ability to continue to exceed our guests expectations we have 120,000 super passionate employees. We have tens of thousands of travel agents that support us. Once people on those ships, they have a great time. Were also trying to create additional demand with all the things we do like we Just Announced yesterday, partnership with univision, the first primetime series by our ocean production efforts on univision, so spanish language, featuring all the spirit and family relationships and passion for life that you find in the Hispanic Community so booking volumes also looking to 2018 are on the rise and this on higher ticket prices when competition is also increasing so which market is driving this growth . Is it the caribbean or new markets like europe or china you know, every market in the world is underpenetrated theyre all large. All the cabins in the world, they add up to less than 2 of the hotel rooms in the world so every major market is underpenetrated and were some who constrainted, we can only add so much a year there are only so many ship yavrshipyard in the world being driven by almost every market in the world showing strength, creating demand, excess demand, to capture more of the value that exists between a cruise and equivalent landbased vacation. Arnold, this bill, i had another question for you, but wait a minute, you caught my attention here youre creating a reality version of love boat with univision, is that whats happening here no, no, its a beautiful, its a Beautiful Program where a Family Reunion oriented, surprise reunions. Its about a onehour program on univision that will air during primetime. We have also several other shows, you know, we have ocean treks voyager, Vacation Creation two of those are on abc. Ones on nbc we have our own digital network, ocean view, where we have additional content, digital streaming content. You can pick it up on roku, apple pay and others so, its just one more of the many things were doing to drive demand i got it. Should we think of you as kind of a retail stock . I mean, especially here in the united states, were seeing pretty strong retail climate for the holidays and i sense people are feeling good about their lives, theyre willing to spend the money for whatever reason. And i guess it extends to your business as well, yes . Well, yeah, you know, Consumer Attitude is important, but obviously were a Global Business every year, theres economic malaise somewhere, every year theres typhoons, hurricanes, et cetera that happens every year. And so for us, we think we are what we are, which is cruise, and cruise is the greatest vacation value and greatest vacation experience and thats why youre seeing the Great Results by ourselves and others in the industry. Arnold, is it true you have a 2. 2 effective tax rate . Thats not true its true from an income tax standpoint, but we pay lots of other taxes. Maritime has an alternate tax treatment. Its not tax avoidance its actual loss of taxes paid that other industries dont pay. And its existed for a long time because the ships are at sea and go between countries so we pay a lot of taxes, almost 1 billion additionally in taxes outside of income taxes related to things like harbor fees and other things. Im sure you know the reason im asking because when we were talking last week to analysts about who would be best and worst positioned from the tax cuts, they just said, look, a company like carnival doesnt have a vary high effective tax rate so it wont be helped out that much by this reform i have no idea if it touches on maritime tax law this tax reform plan so what is the effect of this going to be on you there might be some small benefit, if it passes, where we would get some small benefit because we do pay u. S. Income taxes and some of our subsidiaries the bigger benefit, if it passes, and if it works as intended, would be more disposable income. If u. S. Citizens end up having more disposable income, obviously thats good for Consumer Attitude. Good attitude for consumers means more vacation, more vacations mean more opportunities for us. What about wages, will they go up for your Employee Base which is truly global . Our Employee Base is global and so our wages go up every year, of course, but we have 120,000 employees from over 70 countries. We are positioned all over the world. Were not just based here in the u. S. We have ships and ports all over the world. We visit 700 port the a year at home port, a number of them. Thats a very complex thing. Of course our wages go up every year. All right, well leave it there, arnold, thank you for joining us today on carnival the stock is up on the earnings beat we look forward to having you on more on the show take care. Thank you, guys merry christmas. Merry christmas to you as well seema bucking for a raise for all the carnival vokes. I want to see show the companies are going to use the extra money they have due to this tax bill. Thats it. Probably share buybacks just dont buy the stock back thank you, seema see you later. Jack in the box trading higher after firming up plans to sell Qdoba Mexican Grill to a private equity firm. Well have details on that bill and what it means for the food space coming up. And fedex will report earnings after the bell today. Pretty timely. Well have instant reaction to those numbers and what it means for investors coming up. See if they shed any light on the christmas delivery season. Stay with us check on some of the movers in the markets today, theyre food related jack in the box announcing it agreed to sell qdoba mexican restaurants to Apollo Global managementment f for about 305 million in cash. The transaction is expected to close april of next year jack in the box is up almost 3 . And Darden Restaurants also trading higher, in fact, its been one of the best performers in the s p after reporting an earnings and revenue beat this morning. The olive garden parent also raised its outlook for 2018, citing an increase in same restaurant sales that stock up 6. 5 you know, wasnt too long ago we were talking about a restaurant recessi recession. Yes. Now were seeing the next phase of that with some consolidation and youre going to see a real division between winners and losers now, dont you think . I also wonder does retail and restaurants go hand in hand a little bit next year clearly this has been a watershed year for retail as weve been discussing august year like in basketball and football, after the last game of the season, the losing coaches are fired the next day. Yes. I think youre going to see that on retail this next year as well. Well see its been a little better of late i wonder, too, with darden, if theres any lift, people say, hey, the traffic in the stores isnt bad. Thats been helping the stocks maybe its helping a restaurant company, too well see what that shakeout is like after the holidays. Exactly. 21 minutes to go right now, the dow eebouncing around. Still down down across the board. The s p down six right now the russell is down 11 vix a little higher. The transports interestingly are hanging on to some gains right now. When we come back here, new Home Construction jumped last month. Despite concerns over how tax reform could affect homeowners were going to break down the data and the impact for investors. And stitch fix is lower today ahead f its first ever Earnings Report which comes after the bell its actually reversed its now higher by about 1, 1 1 3 well discuss whether you should buy this ahead of the results coming up. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. 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This time next year, were gonna be sitting on an egg. I think were getting close make a uturn. Uturn . Recalculating. Man, we are never gonna breed. Just give it a second. You will arrive in 92 days. Nah, nuhuh. Nope, nope, nope. You know who im gonna follow . My instincts. As long as gps can still get you lost, you can count on geico saving folks money. Im breeding, man. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back as we look at the markets with the dow at least trying to turn back into positive territory its down about five the s p is down just about the same amount. Russell is lower, too. The sectors of the s p 500 pretty evenly split. You can see Consumer Staples leading the way. Only with about a. 25 gain today. No big moves on the downside, were seeing a bigger downside move telecom a little less than 1 lower on the session utilities down 1. 7 . Real estate waxed today, down 1. 9 , almost 2 . Even though u. S. Home building is on the rise right now. Housing starts rose last month to their highest level in more than a year. Cnbcs diana olick has more on whats driving the boom and how tax reform could affect the louzing selouz i bla housing sector, diana . Boom is a little much construction moves higher steadily, did so in h november Housing Starts and building permits. Take a look at single families starts up 5. 3 for the month up 1 from a year ago. But you want to smooth it out to a sixmonth average because of all that Hurricane Impact we saw. So were at an annualized rate of 869,000, definitely an improvement from last year still well below the 25year average of just over a million new Single Family homes per year that said, builders sentiment off the charts literally jumped to an 18year high this month. And you can see it here, its really diverged from actual construction that is all about deregulation and the tax plan builders had actually fought against the tax plan, citing a loss of property and mortgage tax deductions, but now they say theyre supporting it. The chairman of the National Association of Home Builders specifically pointed to lower tax rates for small businesses, which most builders are, and keeping private activity bonds which support development of Affordable Housing now, Economic Growth will be key to housing next year, so will affordability, though, and without more steam in Home Construction, tight supply will keep home prices moving higher back to you guys wait a minute, so they like the bill because it will help the builders, themselves, but if they dont have customers, you know, what are they going to build . I mean, the customers will be affected they do have customers because the customers need to find a home. The shortage of homes for sale on the existing side is historic weve never seen it that low they have people coming in. I was going to say, do you expect a push in this industry before some of this kicks in with especially with the fed raising rates next year, as rates start to rise, youre going to see a little bit of a push here in the industry . Well, yeah, youre obviously going to see the builders trying to put more product out there. What they need to do is put it at the entry level they say they cant do that because of the high cost of land, labor and materials. But if they can get some of that entrylevel supply into the market, its going to go really fast its going to serve them really well also because that lower price inventory isnt really affected by the tax cut, the mortgage Interest Deduction so if they can get that lower cost supply in, great. If theyre still in the moveup in the higherend market which they are right now, and prits ps still very high, they may have problems Going Forward given these cuts. Interesting i know a millennial couple that already bought their house now theres somebody whos off the market. Whos that . I fade any decision i ever make is all i can say. Diana, thank you very much. Thanks, diana. There was some concern, like a car, down 20 off the lot but well see. Stay there. 15 minutes to go into until the close. Dow down 15. S p down six na nasdaq down 26 russell about ten. Stitch fix is going to release its first ever Earnings Report since going public before the bell before then, a debate on whether the subscriptionbased Clothing Company has a Sustainable Business model to fight off the good old amazon effect. Up 6 . Yh,ooathat. Wow. There he is. Your new brotherinlaw. You like him. Hes one of those guys who always smells good. His 5 oclock shadow is always at 5 oclock. You like him. Your mom says hes done really well for himself. He has stocks and bonds. Your dad wants to go fishing with him. Your dad doesnt even like fishing. You like your brotherinlaw. But youd like him better if you made more money than he does. Dont get mad at your brotherinlaw. Get e trade. Their leadership is instinctive. Theyre experts in things you havent heard of researchers of technologies that one day, you will. Some call them the best of the best. Some call them veterans. We call them our team. Welcome back take a look at shares of stitch fix. Now its off the high. Had been down much of the day. All of a sudden, up 1 and 6 . Now up a little less than 5 no clue as to why here this is just in the last couple minutes. Ten minutes to go until the close. Were waiting for the company to post its first Earnings Report after the bell stitch fix delivers clothing to your door through a subscription service. A model thats become popular for everything from dinner, to shaving, to cosmetics. Joining us now, a bull and a bear David Strasser is our bull grad he is right now jan niffen is with us, we cant figure out why the stock moved suddenly typically you would think maybe the word got out early, maybe earnings came out prematurely. We cant figure out if thats the case. Its possible, its the first time theyre reporting as a Public Company. Maybe something went wrong i just dont know. Maybe people got scared. Its a tough market. You dont want to be wrong on the be negative and wrong in this market. Why are you bullish on stitch fix . Im bullish on it because we do a lot looking at these ecommerce type retailers, subscription retailers and you look at what their lifetime value of their customer is, its really good and relative to what it costs to acquire that customer, you know, we do a lot of internet ecommerce and always looking at lifetime value versus cost of acquisition or Customer Acquisition and here they were, you know, theyre pretty good numbers, still in the mid to high single digit number and, you know, thats after spending 70 million of which well see how much of thats really starting to bear fruit and really start to drive reacceleration of customer growth. Theres a rot lot of reasonsu dont like stitch fix, right yes i dont disagree with everything david did said i generally agree with david on stuff, so im not surprised but i think the concern is theyre spending a lot of money to acquire customers and can they keep acquiring customers at the rate it takes to have that longterm benefit . Because im really concerned that if its a good idea for stitch fix to do this, its a really good idea for amazon to do this. And amazons the biggest player right now in womens apparel and theyve already got a model, right . Amazon wardrobe. And so they could put a lot of pressure on this space, and nobodys better at data than they are and nobodys better at curating than they are and nobodys got more customers to deal with than they do. So i just think this could be something that could take a hit really fast from a company like amazon david, what do you think its valuati valuation, the share price, is i mean, i think that people dont know i think theyre really struggling right now around valuation. Its a new model ill compare it to blue apron. Blue apron came out and very quickly the reason that stock didnt do well is because their lifetime value to Customer Acquisition was negative and it was i think. 8 versus a multiple here before they invested in all this marketing was in the mid to high teens now its mid single like i said, five or six times still. So i think its different and i i agree on amazon is being you always have to be wary here. Two things about stitch fix, number one, theyve done well in the midwest in parts of the country where these ecommerce businesses dont usually start out strong, and number two, amazons really theyre more about the consumable, more about commodity this is a fashion business if you believe its a fashion business, it will be a little bit tougher, i think, for amazon to compete i also believe its the retail business, not a tech business so we should value it like a retailer, not like a tech company. These guys are 300, 400 stylists and only got 75 data guys. Theyre really a retailer. And i was reading in the notes, you know, youre pointing out that womens apparel has been falling for the last five years. So are they in the wrong category to begin with well, it is a 400 billion catego category you dont have to get much of it to win, so thats not so much of a problem. You still have to win. Its highly competitive. Its going to get more competitive. What i do like about stitch fix, theyre very personal. Thats where the customer is going. Thats a positive. I still claim that amazon can do personalization about as well as anybody. David let me ask a question of a possible total expert. I guess would you buy into this . So it wasnt clear im not a fan of having a lot of stuff thats problem number one. But so i was actually asking people about the model a little bit because i think its 20 a month, but you dont have to get clothes every month. You can get it once a quarter, maybe less frequently. For something that was very infrequent, maybe i could see the attraction, especially if the sizing was good and the selection was good, but i feel like ive got many other subscriptions all the stars have to be in alignment there i guess. Its interesting, 80 of clothes in a womans closet get worn one or zero times so there is that could catch up to them at some point we looked at stuff in the rental business you know, that is an area where it makes it a much more efficient process because you are youre not acquiring, youre borrowing. And finally, what were you going to say about them being a technology versus a Fashion Company . When i was a retail analyst, i would have agreed. Now that im doing venture investing, investing a lot in technology, i its both its really about acquiring that customer and getting the most out of that customer and where retailers, they never really understand who their customer is thats one of the things all the brick and mortar guys are trying to figure out, who are their customer, what do they do . One thing about stitch fix, that customer is theirs and know a lot about them by the way, bill, they do mens boxes, too is really oh, yeah. Well, i could get into that. David, amazon knows who that customer is, too all right. Of course, they do. Of course, they do Glass Half Full glass half empty, all depends on whether youre pouring or drinking thats what its all about david, jan, thank you both well see what the numbers look like when stitch fix reports coming up in the next half hour or so. In the meantime with the dow down 13 points, we have the closing countdown coming your way after this. After the bell, an earnings parade not just stitch fix. Were going to hear from fedex, lbrg , red hat among others wel inyou the results as soon as they happened. Youre watching cnbc, first in business worldwide [lance] monica, it is absolute chaos out here gale force winds, accumulations up to 8 inches. Dont know if you can hear me, but [monica] whats he doing . [lance] can we get a shot of this cold front, right here. Winter has arrived. Whooo hahaha [vo] progress is an unstoppable force. Brace yourself for the season of audi sales event. Audi will cover your first months lease payment on select models during the season of audi sales event. Us. Its what this country is made of. But right now, our bond is fraying. How do we get back to us . The y fills the gaps. And bridges our divides. Donate to your local y today. Because where theres a y, theres an us. Your new brotherinlaw. You like him. Hes one of those guys who always smells good. His 5 oclock shadow is always at 5 oclock. You like him. Your mom says hes done really well for himself. He has stocks and bonds. Your dad wants to go fishing with him. Your dad doesnt even like fishing. You like your brotherinlaw. But youd like him better if you made more money than he does. Dont get mad at your brotherinlaw. Get e trade. Welcome back weve got about two minutes. Were inside the twominute mark with the dow down a little bit i want to show you going back five days, the dow, first of all, this is the runup to the tax bill we had the rally yesterday we had a pretty good week last week, too, didnt we but today, with them passing the bill, presumably, the house has already done that, the senate is going to do it tonight, we believe. The stock market kind of sitting there. Were not getting much of there, that happened beforehand. Theres the fiveday chart of the dow. Now, lets see the tenyear yield. Thats where were getting a move today weve been stuck at 235, 237, in the yield there, but today we got to 247, which is above where we began the year, bob pisani, and now were back 245 right now, but a lot of the longterm yields, germany, the bund went up to i think 39 or Something Like that. 39 basis points. And here we are at 247 at one point today. I wonder if you could jump ahead, show you the two tenyear yield. The yield curve is not the tenyear going up. Yield curve is steepening. Yes, yes. Better than 60 basis points we havent seen that in a long, long time. Thats kind of important because some people are arguing now that the tax plan will promote Economic Growth, and the bond market might be responding to that this is controversial, but you get the point. Its starting to motivate people darden was one of the best gainers today. They had that great Earnings Report up almost 6 . And wellstone and ventas, couple Real Estate Investment trusts led it lower for the real estate firms. Big rise in the tenyear yield, group like utilities and telecom, were notably weak today. You would have thought, bill, the banks would have moved up. Basically the banks have not moved. Some people are saying this is finally the start of a sell on the news idea weve been talking about for the last two weeks. Waiting for the senate vote and earnings from among others, stitch fix and fedex, on the second hour of the closing bell with kelly evans and company. See you tomorrow, kell thank you, bill. Welcome to the closing bell, everybody, im kelly evans no record closes on wall street toi today. Lets look at the declines dow dropping 35 points on the bell to 24,756 just over a tenth of a percent drop it gets worse as you go down the list the s p 500 down. 32 , 8 1 2 points on the bell 2,681 the close. The has dock down almost. 50 to 6,963. The russell 2000 shedding. 79 , a 12point drop. 1,536 is the close for the small cap russell 2k going to be a busy hour for earnings Morgan Brennan standing by to cover fedex results. Courtney reagan will bring us stitch fixs first Earnings Report as a Public Company josh lipton results from micron. Deirdre bosa will bring us numbers from red hat thank you, everybody well see you in a couple minutes as they start to cross joining me on the panel today, cnbc senior markets commentator Michael Santoli along with mark spillman, coportfolio manager and alpine funds kevin oleary, chairman of oshares etfs. Bigger winner in the dow is intel, up nicely a couple sessions now, while the biggest loser today was Goldman Sachs. Over in the s p the biggest winner was darden after its earnings this morning. The biggest loser, ppl, along with Real Estate Companies real estate the worst sector today. In d. C. , tax reform passed through the house earlier this afternoon. And its set for a vote in the senate later tonight raising the question, michael, of is this a sell the news type of event i can hear you, can you hear me dramatic enough, to characterize as a sell on the news obviously you retain most of yesterdays upside markets up modestly in december which i think is basically when it seemed like this was mostly a sure thing for passage i do think the market is kind of like, okay, whats next . You know, if not to say that every penny of the benefit are priced in or any of the unintended consequences already accounted for but i think its about, you know, how does the picture evolve from here when you talk about growth next year, and all the other inputs yeah. Mark, meantime, we finally had a little bit of movement in the lod longer end in terms of bond yields tenyear yield, 30year yield especially youre a dividend guy. Yes. Does that have you nervous . Do you look at all these companies announcing and raising dividends especially maybe after the tax bill passes and go, come on on, everythings fine . Traditional engtquity income utilities and yield for yield sake, could be at risk as yeeied continue to go higher. The tax bill is going to increase cash flow dramatically. One of the first places that money is going to go to is Share Repurchase and higher dividend payouts. Thats where i think the best place to keep your real income protection next year is going to be. What do you make of, michael, the fact that real estate was down so much today, almost 2 . Telecom weak, utilities weak. I do think its the rate sensitivity. I mean, you had the tenyear yield just kind of nudge above the recent range above 245 it shows you how sensitive that the ratelinked sectors are. You know, i dont think it means that its up and away for yields but sometimes those sectors of the stock market are kind of load leading indicators of, okay, at least yields arent going to pull back. Rick santelli was talking about, the german tenyear yield was tick for tick in terms of how much our tenyear went up today. Great point kevin, real quickly, what do you think of the Impact Market wise is going to be, the house passed the bill now, looks like the senate is on track to do the same. I think were anticipating, Everybody Knows its going to go through now. Now its focused on rates. I think at the end of the day, rates never matter until they do and finally in the last two weeks, people are starting to get concerned about ratesensitive sectors te will, telco, housing taking the hit. To see the yield curve sharpen is a good piece of news because it pushes off a recession outside of anything visible, and i like it because i like inflation. I like Pricing Power for corporations in addition to enhanced cash flow from tax reform, Pricing Powers a great thing. I anticipate Wage Inflation coming in 2018 i think were going to have more volatility but an exciting up market i really do. This is all good news as far as i can see. All right by the way, goldman was down today. Just yep. And not that this is a kneejerk type of thing, again, if the financials are going to benefit from that move, as we said, perhaps in the shorter end of the whole thing. Right. Lets get over to josh lipton, looks like we have earnings from micron which crossed now. Joshua, how did they do . Reporting earnings per share of 2. 45 versus an expectation of 2. 21 revenue comes in at 6. 8 billion. The street was looking for 6. 4 million. Beats there on the bottom and the top. Micron saying it released, kelly, looks like overall consolidated gross margin, 55. 1 . In the First Quarter they say that was higher than the Fourth Quarter of 2017 and they say that reflects Margin Expansion for both dram rukt products talk about ongoing strength in the pricing environment and favorable mix. Heading into this report, the stock was down 10 from its intraday peak in november. That was on concerns about price declines and na n flash memory on this Conference Call, were going to want to hear a lot more about the supply demand dynam dynamics pricing environment. Gross margins. This companys capx plans the companys call will start at 4 30 eastern and well be on it. Kelly, back to you josh, thank you the ceo of micron is also going to be on squawk alley tomorrow in an exclusive interview to talk about these results thats also a dontmiss interview. Michael, pretty good especially when you consider their own guidance for the quarter was 6. 1 billion to 6. 8 billion. I was seeing analyst previews they thought the upside surprise could be 230 to 240 based on chip pricing and their history of beats this was obviously better than that and on the revenue side as well. I think theres sensitivity with the stocks in the group in the sense, look, fiscal 2018 might be the peak of the cycle. Theyre sense tiitive to the sis of that. This report didnt give you much mark, how would you situate micron i think its indicative of the fact that tech stocks are probably not the biggest beneficiaries of fax reform. So i think the rotation we saw a couple weeks ago, i wouldnt doubt that that comes back a little bit more. Theres nothing fundamentally wrong with the tech sector, but the logical trade, whose earnings are going to explode, whose Free Cash Flow is going to explode . Theyre not on the top of the list i could see taking a breather here although theres nothing fundamentally wrong with the businesses. Micron shares up 4 well keep on yeye on it. A new survey from bank of americ America Merrill lynch has bitcoin as the most crowded trade for the month of december. Respondents named bitcoin as the most crowded trader from 26 , in september, when it first made the top of the list. Meanti meantime, faang, facebook, amazon, apple, netflix, google, came in as a close second followed by being short volatility. Yes. Given the kind of year weve had, no major surprise, mike i dont know what it means, are institutions crowded into bitcoin . I have a feeling when first of all, it means merrill put it on the survey, so, therefore, a lot of times when you do get results of the most crowded trade, it literally is what people, themselves, own i would doubt thats the case. These are Global Fund Managers i think its a sense of this came out of nowhere. Its a tremendous monstrous percentage gain this year. Therefore, if i think its not worth much, the fact its going up at all mean it must be crowded. It must be crowded. Kevin, are you crowding into it . Im trying to find an Institutional Investor now that the options are available in the futures. I cant find anybody thats institutionally taking a position in any cryptocurrency so this must be very, very thin. A lot of people all around the world buying small incremental amounts. Its very entertaining im really enjoying it, but is anybody using it, for example, as a 5 weighting as they would in a portfolio for gold . Not that i can find. And probably because they dont feel liquidity on the exit is easy thats very hard try and sell 1 million with a bitcoin, you got to find a whole lot of people buying 5 of it to get rid of that. So its a cockroach motel. You can get in, very tough to get out. I dont actually disagree with any of what kevins saying but depends how you define institution. I saw something today, Blockchain Capital recently surveyed 91 Cryptocurrency Hedge Fund managers. There are 91, wow average age, 26 mark, and im guessing its never going to be in the rising dividend fund. Were not having a lot of bitcoin. You had patrick burn from overstock on just the other day, hes accepted bitcoin i think for four years. Yeah. It represents 0. 2 of his revenue right now. I mean, at some point you have to use this other than trading it with my friend over at another hedge fund. All right well stop beating up on bitcoin. Tenyear yield was moving higher today Robert Kaplan is watching the yield closely because too low of a level could limit how much and how fast the fed could hike rates. During my interview with Stan Druckenmiller of duquesne last week, he said the main cause behind the low bond yield is the fed, itself. Listen for me to say, oh, the feds making a mistake, the economy i going to slow down because of the yield curve, the only thing i know thats happening with the yield curve is somebodys picking up the phone and buying and buying bonds from investors then theyre picking up the phone and buying bonds. Fed and other Central Banks stop intervening, you think those longterm Interest Rates are going back up to something much more, quote unquote, normal i think thats a strong possibility. What do you guys think . Mike i mean, you cant deny that everybody whos a player in the bond market is, you know, as a buyer, is part of why yields wont go higher on the long end but i also will tell you in the last cycle, no Central Banks were buying treasuries and we had what was greenspans conundrum. Why isnt the long end going up . I also remember very distinctly people saying theyll never get the Fund Funds Rate up to where they expect, around 4 or more it will have to deflate from there because the long end is not moving they got it there, whether they should have or not, they did. Do you think, though, ill ask you, mark, do you think the fed should not be interpreting any signals from the rate curve right now given that theres so much central Bank Ownership and activity in those markets . I think thats a very fair point. Im not sure exactly what the right number is but im trying to figure out where could things go wrong and theres been one combination that has usually been a bad indicator. Its when credit spreads, which are incredibly thin right now, explode over 100 basis points. And the yield curve inverts. When you get both of those things, the last four times thats happened there has been a market i dont know what the right number on the ten year is, but those are the things im looking for. Doesnt look like were there yet. Not at all. We can stay at these levels for an extended period of time. Yeah, painfully extended. Lets get back to josh lipton, a little more on microns earnings. Kelly, micron moving higher in the after hours the company now delivering a strong q2 guide leer, kelly. Eps of 251 to 265. Analysts had been looking for 2. 03. The top line they say look for 6. 8 billion to 7. 2 billion that is versus expectations of 6. 2 billion and gross margin, the guidance here, kelly, is 54 to 58 analysts modeled more like 51. 9 . This Conference Call is going to start in just about 20 minutes kelly, back to you. Thats pretty impressive stuff. Josh, thank you. Still, guys, the shares arent moving much more additionally on that, still hanging onto a 4 gain maybe this quells larger concerns about micron, the macro. Thats what i would say not always known as being particularly aggressive about talking about pricing and things like that down the road, so, yeah, it does underscore the idea look, a lot of these chip stocks that had a great run, this stock doubled this year, had been selling on the result, even when theyre been good so its probably a pretty decent sign its up 4 although it was at 50 the beginning of november. Its a little over 45 right now. Kev kevin, any thoughts . There would have been a day when a beat like this in a semi, micron beat like this, would have moved the stock 15 , 20 . I dont really think were in a tech bubble again. In fact, this rotation out of tech is really muted this upside this is one heck of a beat nobody on the street had these numbers, and, boy, , 54 , 5 i nothing burger for the stock which tells me it could trade down tomorrow. Im not excited about getting in i see a lot of money leaving tech is moving to other places where theyre going to get a bigger bump because of tax reform definitely not exciting. Im really surprised that thats all its getting real quick, mark, before we go. I agree three out of the top four inflows in etfs were value related last were and gets back to my point, theres not necessarily anything wrong with tech but theyre all up 50 to 100 i think the thematic trade is tax reform Going Forward for the next few months. Good stuff. Gentlemen, thank you both. Here to talk with these markets as we kick things off this afternoon. Thank you very much. Up next, fedex is minutes away from reporting its earnings well have stitch fix results, too. Were going to have instant reaction to the deliveries numbers. Find out if the company was able to do that, deliver, for investors. Plus, the dow up 25 this year Jeremy Siegel whos one of the first market watchers to call this massive rally is raising some flags now coming up, hell explain why he is starting to worry. And we want to hear from you. Contact the show, twitter, facebook, send us an email. Share your thoughts with us. Youre watching cnbc, first in business worldwide welcome back bunch of earnings here lets start with stitch fix whose shares are down 6 were still digging into the results. Back with us for some reaction is David Strasser, managing director at swan and Legend Venture Partners and jan niffen. Guys, welcome. I know its early minutes here, but david, what do you think about the results . You know the thing i was looking at is memberships at 2. 4 million which is where sort of seems like consensus was everything we had seen i just think this thing is going to be volatile over the next couple days, next couple weeks its just the volatility here has been up and down i think people are trying to figure out how to manage this. What im most interested in hearing them talk about is sort of how the marketing and what the momentum is like from some of these marketing expenses that theyre spending and how thats going to drive in customers. So you dont see anything changes your bullish stance on the company here no, i dont i mean, i know theres going to be a lot of, you know, a lot of volatility here. I still like what theyre doing. The thing im going to watch is what this lifetime value is of customer versus acquisition costs. I think its going to drive the value of the business. Stitch fix, jan, is down nearly 8 . Of course, thats reversing part of thelittle pop it had before the close there. What do you see here, what jumps out at you i didnt see a thing wrong with the release like david didnt see anything done with the release. They were what, if better, than the street thought they were going to be. Everything looks normal. Have to parse through the numbers to see if theres something people didnt like down all morning, up at the close. Now its down again. Im with david, this is going to be a volatile stock until we all figure it out. So far we havent figured it out. Mike, now its down 10 . Look, i think as these guys are saying, they basically gave quasi guidance or real guidance five or six weeks ago. Its really not a lot of suspense in terms of what they were going to report for the quarter, how you going to read that, extrapolate it if they didnt beat on memberships, subscribersing maybe that means theres not as much momentum as some of the bulls would want i dont think this is noise in the context of how much its up in the ipo price. Stitch fix down 12 now well continue to follow it. Thank you. Joining us for some reaction there on the stock. Thank you. Meantime earnings from fedex just hit wow. Lets get to Morgan Brennan with those numbers. Morgan hey, kelly, thats right. Shares are up 2 right now in afterhours trade, beat on the top and bottom line. Earnings per share adjusted coming in at d 3. 18 per share, better than the 288 the street was looking for. Revenue better than expected 16. 31 billion versus expectations for 15. 68 billion. A few things to note here in the release, ceo and chairman fred smith saying that the companys on track for another record Holiday Shipping season, and Customer Service levels have been outstanding also, the company raising its fiscal 2018 earnings forecast. Says they now expect before year end markettomarket pension accounting expenses related to tnt express, that theyre expecting 12. 70 to 13. 30 per diluted share up from the previous outlook and also saying that if the tax reform that act goes through, that earnings per share could increase by an estimated 4. 40 to 5. 50 per dr saluted share for fiscal 2018. A beat on the top and bottom line also raised fullyear fiscal 2018 Earnings Guidance and shares are up right now on this report. Back over to you morgan, thank you strong, definitely strong reports, strong guidance i would argue muted response by the stock. Just because its up so much and i think that its at the upper end of where it trades in terms of valuation but, you know, still, given how well its done this year yeah, its up better than tacking on a little bit for shire 2. 25 right now his, of course key season for them. For more were joined on the phone by donald, the top and bottom line beat in the guidance looks pretty good. Its extraordinary. Without a doubt. Yeah, the stock is only up 2. 25 . But the results have been out, what, less than four minutes give everybody a time to digest this the real key here is not only are they beaten ting the tom an bottom line, how are they getting there . We know about ecommerce, that continues to grow. They continue to make service happen without any service interruptions. Unlike the brown team, unlike the competitor u. P. S whats really key here is look at the marmgin on express, thats 11 margins, record high margins. All the billions of dollars they invested in technologies, rotation, bran bradnew airplan starting to pay off in efficiency and capacity, so they can get the service and deliver really solid margins, bottom line remember, the highest margin business for them historically has been ground. Its been other part of the business which are smaller revenue. The big revenue is still express and when express starts to deliver 11 plus margins, guess what, you get what we just got. Yeah. Thasts the 30set beat on the bottom line. The revenue, again, was well involve what the street was looking for and it looks like theyre saying there could be an additional benefit if tax refor goes through is that priced into the stock, do you think no, i dont think so. Nobody was talking about i talked to hundreds of people in the last couple of weeks about the company, whats going on ecommerce and that was not the topic of conversation the topic of conversation was service, yield, revenue. What was the margin going to be, did they have to pay extra i would tell you, 2 pr. 87, 2. 88a the consensus. Could be 2. 90, 2. 95, maybe as much as 3 obviously they smokedtalking abe taxes. Once you pile that in there, i expect shares to trade very nicely tomorrow. Donald, thanks for your time. Appreciate you joining us. Always a pleasure. Fedex shares up a little measure more than 2 as investors react after hours. Stitch fix reported its earnings for the first time as a Public Company Courtney Reagan has more from those numbers. Hi there, kelly, thanks for being patient with us. First time stitch fix reported earnings as a Public Company for the First Quarter. So earnings coming in at 4 cents per share. That is on a gap basis and not comparable to wall streets estimates. Its kind of a low quality earnings print because a huge chunk of the profit is due to this onetime item, with the revaluation of preferred stock warrants so its a little unclear how analysts are going to treat that revenue coming in basically in line with what stitch fix told us, thats the same thing for the active Customer Base then owhen you look at the guidance, the secondquarter guidance is a little above wall streets estimates the full Year Revenue Guidance also a little above wall streets estimates however, there is no Earnings Guidance in this report. So you can see shares are down sharply for stitch fix, down about 11 . But a little confusing with the way they presented the financials for this quarter. Coupled with the fact that not a lot of it is new from what weve learned from the s1. Kelly, back over to you. All right courtney, thank you. Stay there just for a moment so, mike, a few things that might explain the drop here is as courtney mentioned a big part of that earnings, the 4 cent number they reported one time as a financial adjustment yeah. Stock warrants. Then also not in Earnings Guidance Going Forward yeah, i dont know if the company has sort of said, look, were not going to get bottom line guidance going out because if they typically were expected to, maybe thats a slight red flag still i think given how much the stock has run, mostly held its gains since the ipo, im not surprised that theres this backing off right here theres a couple other go ahead, kelly. Yeah, go ahead. I was going to ask about the clients and marketing cost, that sort of thing. Exactly okay so the active clients, the number that they gave, was about the same as what we saw in the s1 which was five or six weeks ago. Thats at about 2. 4 million so about 20 , 30 , rather, higher year over year. Talked about near term how gross march will decline as they invest in new categories and marketing spend Goldman Sachs says is going to have to increase Going Forward to grab new clients. Day also call out that shrink was actually a bit of an issue this quarter so they want to make sure to sort of tackle different technologies to make sure that that improves and shrink, of course, includes stolen items which gets a lot of the headlines but things like damaged goods which if youre shipping clothing and trying them on without seeing them and then deciding whether youre going to keep them, that is an important cost factor here glad you elaborated for a second i go shrink . They dont make the clothes. What happens yeah. And shrink, retail shrink, got it good stuff, courtney, thank you for bringing us some of the details from that report shares are still down double digits stitch fix ceo katrina lake will be on squawk alley tomorrow and have much more elaboration on these results do not miss that. Red hat earnings are out now. Lets get over to deirdre bosa as we round this out deirdre . Hey, kelly, it is a beat on the earnings and revenue front for the Opensource Software company and developer of Linux Operating System eps coming in 2 cents above forecast at 73 cents revenue also higher than the street was expecting at 748 million versus 739348 whi milln which was expected despite the beat and higher view for q4, shares are slipping in the after hours currently down 3 remember the stock has been on an absolute tear this year its up about 85 . As of today, year to date. 2 since the last set of earnings this company has really been benefiting from jumping onto many of this years biggest tech trends like the sbempinternet o things subscription revenue continues and relating to emerging technologies was up 44 year over year in the quarter keml lkelly, back over to you. Thank you, deirdre. Red hat Ceo Jim Whitehurst will be on tomorrow dont miss it. Its going to. Be a busy hour for them, michael. Sure will lots of ceo stuff. Maybe trying to, you know, give a little color that helps their stock on the way i do think the game this year in red hat is mostly the story here probably not enough how big of a gain is it now they didnt come out and say. Its the up 80 its been on this tremendous run. A lot of these kind of Software Names did get caught up in that the. Yeah, why do you think 80 . Its in other words, theres the big tech platforms that have had a monster year. Sure. Theres names and kind of semiconductors, chips, parts where you can explain i think its just being in the correct little sliver of the market right there yeah all right theres red hat. As i keep talking about red hat, i think bitcoin brings me back to the old red hat days when everyone knew linux was going to take over the world, this was the only way to play. I appreciate that that explanation i very much enjoyed. Breaking news on the tax bill ylan mui, whats happening kelly, youre not going to believe it but it looks like the house will need to vote again on the republican tax bill after it hit a procedural snafu over in the senate a senate aide confirming to us that the parliamentarian has ruled that two provisions in the tax bill do not comply with something known as the burr rule those supervisions are one around 529s being used for home School Expenses as well as exemptions for certain colleges from this new excise tax based on them. Those two provisions not allowed by senate rules, which means that even if the senate does continue to vote on a revised version of the bill tonight, the house would likely have to take it up again, possibly tonight, but more likely tomorrow and this is just a technical problem, however, it does eat up valuable time for republicans as they try to speed this tax bill through, get it to the president s desk, and avoid, by the way, a Government Shutdown scheduled to occur on friday if they dont pass a spending bill. So, again, the house looks like it will need to vote again on the tax bill after it hit a snafu in the senate, guys. Back over to you. Ylan, i know you mentioned this is a snafu, but if those parts of the bill, the 529 issue, College Exemption one, dont comply with the rule, what do they have to do do they have to get them to c e comp comply reporter yes. Strike them out reporter were going to the procedural weeds, kelly. Ill do my best to explain them it looks like they can simply strike the provisions. The easiest thing might be to strike the provisions entirely, have the senate vote on a clean verks of the bill, still move forward tonight. Again, because the house just passed it, it would have to go back to the house for a new vote since there are changes to the bill so the senate could vote on the clean version tonight . Reporter the senate could still vote on the clean version tonight. Thats what weve been told. And remind me one more time, so the first one related to what part of the 529 plan issue reporter there was a provision in the tax bill that would allow people to contribute to 529s and allow those contributions to be used for expenses for home schooling. And for k12 education that was a provision that was requested by senator ted cruz. The other one exempted certain colleges and universities from a new excise tax on their endowments according to the senate aide, only one college would be impacted by that and its in kentucky hillsdale, right . Barea never heard of it. Yeah, college of the bible i think . Yeah. Anyway, yla in, thank you stay with us for just a second. Ylan, does it require if theyre going to revote in the house, theres time for debate and all this other stuff, do they have to essentially devote a day to it, say reporter yeah, that is still up in the air. It would have to go back to the rules committee before it can go to the full house floor. The rules committee debate, were told, could take about an hour, maybe longer, an hour at the fastest. And then, again, going back to the house floor. So unclear exactly what steps theyre going to take in what order at this point. But were hearing that they could go back to rules tonight, may go back to rules in the morning. But all of this seems to be setting up for another house vote tomorrow. Wow i dont think the do the futures open at 4 30 just they should if there was any immediate down Market Reaction to that if it sounds like this is something they can work out pretty quickly and not going to hold up all of a sudden their ability reporter it doesnt jeopardize support for the bill, it eats up time. That is in short supply right now. Yeah. Thats for sure. Ylan, thank you very much. Ylan mui on capitol hill there fascinating development. Lets get over to cnbc news update with sue herera at this hour hi, sue. Hello, kelly. Heres whats happening at this hour, everyone,a terrible accident in mexico at least 12 people have died including seven americans when a bus carrying Cruise Ship Passengers to mayan ruins in eastern mexico flipped over on the highway. Royal caribbean cruises says passengers from two of its ships were involved in the crash. Vermont senator Patrick Leahy says he regrets calling for senator al franken to resign instead of waiting for an ethics investigation. Franken announced his resignation earlier this month following allegations of sexual misconduct. New York Governor Andrew Cuomo announcing increased security for the Holiday Season in new york city including beefing up security at bridges, tunnels, airports and mass transit systems its a highvolume time its a hightraffic time and given the increase in the volume and the traffic, and given the recent events, we believe its prudent to increase security at the major crossings and the major transportation hubs. Youre up to date thats the news update this hour back downtown to you, kelly. All right, sue, thank you very much. Our sue herera Jeremy Siegel was one of the early believers in this massive market rally but hes turning cautious while David Rosenberg thinks there is more upside xteyre going to debate whats ne for stocks when closing bell comes right back ike . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley [ mouse clicks, keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Welcome back heres how we finished up on wall street. Red across the board after a big session yesterday. Dow dropped. Nasdaq down 30 the rulssell 2000 the worst performer. Earnings after hours, weve had a bunch of them. Fedex is up a little less than 2 still after its strong top and bottom line beat stitch fix down about 10 right now. Micron up 3 and red hat down 4. 5 . Although markets closed lower today, year to date they have had a huge run. The three major averages up 20 or more for the year will we hit dow 25k before the new year joining us is Jeremy Siegel, a finance professor at the Wharton School at the university of pennsylvania David Rosenberg, chief economist and strategist, author of the breakfast with dave newsletter. Welcome to you both. Mr. Siegel, first of all, professor siegel, where so weve talked about how you think theres still some room left for the market but not that much. What do you think . I think were 1 away from 25,000 on the dow and, you know, that certainly can happen. But im one of those people, and im, you know, very positive on the tax plan, but its sell, buy on the anticipation, sell on the news i think that all the good things about the Corporate Tax plan have been built into the rally that we have seen over the last two months and im not sure how much else there is really going to be. Take a look at the bond market today. Are we going to get more of those in the future . Thats going to be a real challenge next year. And, you know, as ive mentioned, you know, earlier, i think the prush can republicans to be politically challenged next year for the Midterm Elections. I dont think any other republican policies are going to be passed in 2018. Okay. Dave, how do you feel about the market well, i dont disagree at all with what the professor had to say. You know, there could be obviously with the positive seasonals in the momentum, the question was are we going to see 25,000 we probably will but when it happens, by the end of the year, i mean, thats still guesswork. My sense is that, you know, you do have a lot priced in. Lets take a look, you know, forget the trailing multiple, which is already at 23 times earnings were all looking forward. Even when you put the profit forecast in from the tax relief, youre talking about a 17 1 2 guard price earnings multiple. You know, that is stretching at least one standard from the historical norm. No, im got toing isnot going ty were in a bubble. This market is really expensive. Actually even when you count in the benefits of the tax reform package in the valuations, it is actually the most expensive stock market weve had since the dot bubble craze 17 years ago. So i dont see where theres going to be room for a whole lot of upside from here. Okay. So thats what i was going to ask. Taking valuation i dont know if i agree with first of all, the world of the difference is the Interest Rate. That kind of bubble, we had treasuries at 7 today theyre 2 pr. 5 . Even if they move up to 3 , 3. 25 , i mean, were still in an amazingly low Interest Rate world so, you know, i i dont think that 17 is high. I think 17 is low. I think some of the earnings estimates for next year are too high but i i think if you want to know the truth, in the world that we live in, 20 is the new normal p e ratio. No, no. 15, forget it. I dont think so. Not in this Interest Rate world. I think, professor, youre using the wrong Interest Rate. You cant use the Interest Rate on a treasury note in a riskless asset and compare it to a risky asset. Take a look at where, say, the multiple is, benchmarked, against, say, where the high yield Interest Rate is lets compare a risky asset on the capital structure to a risky asset. Taking a look at where the average high yield coupon is right now, its not clear at all that the stock market is trading cheaply next to Interest Rates i hear that all the time its the fable fed model which never made anybody money when you bench mark the multiple, the earnings yield against the appropriate yield and the highyield market, the stock market is absolutely no bargain right now. Is jeremy, last word. We got to go well, you know, i think Interest Rates are i mean, thats the Worlds Largest asset class is fixed income. If they dont give competition, i think thats good for the stock market all right we had a lot of breaking news, but i love hearing this debate guys, thank you very much. Thank you. Jeremy siegel, dave rosenberg, planting some ideas about rates for stock valuation. Quite interesting. Coming up, well look at whether Higher Oil Prices and president trumps policies including the tax reform bill could lead to more jobs in Oil Infrastructure were going to head live to a pipeline plant toige atut furth o feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. The moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. Sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. We took our world Class Network and we developed devices to track environmental conditions. This device allows people to understand whats happening with the location, but also if its too hot, if its too cold, if its been dropped. Its completely unique. If you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Who knew a tiny sensor could help keep the food chain safe . Welcome back breaking news on the banks this hour dom chu, whats happening . Banking regulators including the Federal Reserve and fdic have come out with their status report on u. S. Bank living wills. That i have given at least a passing grade to eight of those banks. They have no problem with plans submitted by bank of new york m mellon, citigroup, Jpmorgan Chase or state street. However, theyre referring bank of america, Goldman Sachs, Morgan Stanley and wells fargo back to do some fixing they have found some they have some shortcomings day are not material deficiencies which would have required a refiling and replanning of their living will. However, they are going to go back and ask those four banks to fix at least some of the problems that theyve found. Again, satisfactory or passing grades for all eight of those banks but the four, specifically, bank of america, Goldman Sachs, Morgan Stanley, wells fargo, the regulators want to see some of those weaknesses they found in mare plans readdressed. We have more details the stocks are not moving hugely on this. Of course, in context, kelly, the reason we talk about living wills, this is part of dodd frank and this orderly Resolution Plan in case these banks ever go out of business. Back over to you. Dom, thank you. Mike, what would you say on this right now, were lucky enough that its like editing the will of the very healthy person, theres no urgency to it, trying to do the bureaucratic fixes its not something thats really critical i think theres a lot of people who actually wonder even the living wills that pass muster, like functionally, are they going to operate the way theyre intended is. Elizabeth warren has been a big critic of that even though its been an important part of dodd frank, is there sign that regulators now under this white house, i mean, not that day report i dont know if they touch the process at all. If theyre more deregulatory, if theyre going to be less obsessed over the living wills the fed is stress testing issues, so you have to see under the new chair if thats going to change. Right comes in in early february, of course, but in conjunction with the fdic, i dont know if its a major issue or feels like once theyve been put out there, i dont know. I imagine if you explain had them explain exactly why they didnt measure up, itd be hard to really see one from another. These documents are thousands of pages long a piece. Glad i dont have to read them. Stitch fix thank you, dom. Stitch fix shares sinking after reporting its first earnings as a Public Company what to listen for on the Conference Call. We have that coming up. Also shale is booming and creating jobs in the process production has not gone up in a straight line. We have a deep dive into the industry and an indepth look at a new pipeline facility. Still to come. Youre watching cnbc, first in business worldwide at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. The markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. What we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. The price of oil climbed to more than 27 since donald trump was elected president. Our Jackie Deangelis is in bay city, texas, at a new pipeline plant with how the policies from trump are impacting the Energy Industry and closer look at the pipes that support it. Jackie reporter good afternoon, to you, kelly thats exactly right you can see this facility behind me here. Its one and a quarter million square feet. Its the size of seven golden gate bridges what theyre doing here is making seamless pipes for the oil and gas industry now, this is a project that started back in 2013 the idea was anchor here in bay city, texatexas, supply pipes f the expanding shale infrastructure thats going to come out of this region. This is a project that employed over 20,000 people during construction its going to give about 600 people fulltime jobs. It required a total investment of 600 people fulltime jobs with a total investment of 2 billion why is the company doubling down on shale despite the reductions weve seen in oil prices, they believe the demand will be there and they want to capitalize on it. They told me that president trumps proenergy, proinfrastructure stance is an added incentive. We saw Oil Prices Get near 25 a barrel because we had a supply glut most producers are confident that even though its been difficult, conditions are starting to improve slowly the key with projects like these is longevity, that theyll pay out over a period of time, and that these short term Price Fluctuations probably wont have a long tell me impact. I will say this, a lot of the people i spoke to here as we are waiting for the tax bill to be voted on, they say corporations will be the beneficiaries, maybe theyll invest more in projects like these putting 25,000 more people to work, that would be something, Jackie Deangelis, thank you very much a procedural snag was hit in the senate, we have the latest from capitol hill after this lets get back to capitol hill for the latest on the tax bill which has just hit a snag ylan mui has the latest. Reporter the house will need to vote again on the republican tax bill there were some problems with the bill in the senate the Senate Parliamentarian ruled that several provisions in the bill did not comply with what are known as the byrd rules. I just spoke to house ways and Means Committee chairman kevin brady, he said its no big deal, its just a procedural process, they expected some challenges to be raised. Again, this does eat up the time that republicans had been hoping to use to clear this off their plate and move over to a government funding bill. Also receiving a statement from Bernie Sanders and ron wyden, ranking democrats on the budget and finance committees they said, in the mad dash to provide tax breaks to their Billionaire Campaign contributor, our republican friends forgot to comply with the senate rules. The house will have to vote again on the republican tax plan, kelly. Ylan, stay with us, i just wanted to check the futures real quickly and see if there was negative reaction, given that theyre susceptible to any hiccup in all this it looks like, lets see, the implied has the s p down ten points, dow down 35, nasdaq down 31 its very light volume right now, of course, but some negative reaction there. I was just going to say, if i heard you right earlier, ylan, these provisions are not exactly the type that sanders and his colleagues were referring to one would allow contributions to your plan to home school your kids, the other exempts a college in kentucky from the excise tax they were impose on documents. Reporter thats right, kelly, this goes to the process the republicans have been use to go push it through without democratic votes it constrains how large the bill can be and puts them up against some tough, arcane rules in the senate that clearly now the parliamentarian has ruled the bill does not comply with. We dont envy you having to figure out how this all works. I dont want to overstate the reaction perhaps it could be another day of voting for this, does it raise the possibility of a Government Shutdown slightly because theres not that much time i dont know if thats really well, theres not that much time reporter i asked kevin brady what that means for the vote on the stopgap spending measure he said unclear at this time thank you, ylan mui on capitol hill stitch fix and red hen have earnings calls, well have numbers to listen for after this ok, so with the awardwinning geico mobile app, our customers have 24 7 access, digital id cards, they can even pay their bill beep bill has joined the call. Hey bill, were just phone hi guys, bill here. Do we have julia on the line too . k, well well just phone hey sorry. I had you muted. Well yea lets just phone so what i was thinking ok well well phone yeah lets just go ahead phone oh alright the awardwinning geico app. Download it today. Their leadership is instinctive. Theyre experts in things you havent heard of researchers of technologies that one day, you will. Some call them the best of the best. Some call them veterans. We call them our team. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back checking on some of the earnings movers after hours, fedex up 1 , a little off the 2 initial gain red hat still down 4 . Stitchfix down 10. 5 their calls begin in just a couple of minutes. Real quickly, what will you be listening for . Obviously, for fedex, anything about this quarter, whether they can meet demand stitchfix has to basically convince people they have it figured out for their business model. Futures are down after hours but thats capturing the last 24 hours, capturing the move we saw in the session today, it might actually be up basically little changed since the official 4 00 market closed no apparent reaction to this revote in the house. That does it for closing bell, thanks for joining us fast money starts right now. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Tonight on fast, were all over the after hours action. Fedex, micron, and stitchfix, all reporting earnings moments ago. Well bring you tell latest details and tell you which names the traders might be buying. Plus why blockchain is soaring today. We warned you right here on the show, buyer beware famed short seller andrew left is targeting the company. Hell join us to tell us wha