Transcripts For CNBC Closing Bell 20171228

While some investors like it when activists come in to shake up public companies, weve got someone who says theyre ruining corporate america. Hell make his case coming up. And the new years going to bring new business in california that would be legalized Recreational Marijuana what took them so long im surprised its taken california this long. You moving back no, i go visit family once in a while, though. Were going to introduce you to the First Company to be licensed to sell in california coming up. Lets get straight, though, to the confusion thats for sure. The confusion surrounding the tax bill as americans continue to line up to prepay their property taxes before the new rules kick in in the new year. The irs did release that memo late yesterday in an attempt to clarify who exactly can take advantage of the prepayment. But there are still plenty of questions. So we sent our guy, eric chemi, out, to look into this he joins us now from a hightax town in new yorks Westchester County more lineups there, eric reporter its just been lines all day long you can see them behind me hundreds of people have been in line at any one point in the day. This has been going on since 8 00 in the morning. People are coming in with crutches, theyre on canes, theyve got folding chairs theyve been here early. Its been a long day a lot of questions, a lot of confusion. The line behind me, you see, is actually the one where people get their bill if you dont already have it then you go into another line on the other side, thats where you pay the bill actually andrew cuomo, Governor Cuomo from new york state, was on cnbc a few minutes ago talking about all the mess that was happening. You can listen to him here the way they financed it was by raiding the blue states why . Because the senate doesnt have any senators from the blue states so they came up with a very convenient rationale, well raise money from the blue states, and well give it to the red states so new york, a blue state, california, a blue state, jersey, a blue state they are paying a penalty. Reporter that was Governor Cuomo and we actually talked to a lot of the people here who have been in line today. There was some confusion, a lot of people did not talk to their tax planners, they just showed up and hoping to say, how much can i pay, can i pay it now . Whatever happens, they just wanted to see what the town would let them get away with here are some of the people that we talked with earlier if we can pay part of it this year to get the deduction, which were not going to be allowed to get next year, doesnt that make sense to save money . Everyones just trying to get it in so we can write it off on our taxes for next year, because once january 1st comes, that opportunitys lost reporter and the thing going on here, this is a town that has six villages theres different taxes. Village taxes. School district taxes. Fire department taxes. Town taxes theres county taxes we dont know the county taxes yet for 2018 those they cant pay all the local, the smaller ones like the School Districts, you already know the rest of the year the second semester of the School District taxes, people are paying that generally, but a lot of people still didnt understand that because there are a lot of questions today, the town supervisors been here bombarded by all these town residents trying to figure out what can i pay, what can i not pay . Back to you guys two things. I was reading where new rochelle in westchester, citizens there already prepaid 15 million. Wow. In their property taxes in my town, my wife went to pay yesterday, she said there was a sign on the door that said leave the envelope thats going to make people a little nervous. Through the door there, well make sure its posted by december 31st. Did she leave the envelope . No, there was one in there, if you go after hours, post it by putting it through the mail slot, theyll make sure they get it posted by january 1st. How is that town able to turn this out, other towns, Westchester County, itself, was saying oh, no, im sorry, we cant come up with this in time. Reporter the town has its own taxes, county has different taxes. The towns already send you, for example, the school year tax, came out in the summer, good through next summer. If you have the piece of paper and saved it, you can do envelopes if you want to fit your name on it and drop it off. Most people werent doing that if you didnt bring your piece of paper, you get it in this line and go pay. A lot of blank checks. People getting ready to write some big bills here. Thats for sure. Odd way to ring in the new year. Oh, brother, this is unbro f unbelievable never happened this more. Joining us, henry, thank you, sir, for your time this afternoon. Thank you very much we wanted to ask you what you think the impact will be on the Housing Market from all of these blue states, especially, where people are suddenly facing a potentially a lot higher taxes well, i think the conventional wisdom is there will be some impact on the Housing Market, in effect, housing prices effectively go up with this and therefore people will think, you know, twice, make a deeper consideration about buying homes i hope personally, that the impact is not severe because the whole intent of tax reform and tax reduction is to stimulate the economy, not create disruptions in the economy the piece you just showed, the experience thats occurring today in new york and other blue states is an example of what happens when you rush a tax bill through, havent thought through all of the consequences of a very complex system we have in our society. I believe we have these things calibrated very finely and you can see what it means to real people when misinformation or or changes are made without full information, without full explanation. So what were seeing now is people responding to the need to pay in advance, so they can get the deduction and a lot of confusion in communities im hopeful this can be resolved by communities, by counties, by cities, but its unfortunate because it is inherent in rushing a tax bill of this complexity through for, you know, on an artificial deadline to make a political point. You know, its not just about the state and local taxes, the ability to deduct those, but also on mortgages, you know, theyre capping that as you well know correct. It just highlights how reliant we are on tax breaks for such an important part of our economic lives that would be housing. Right and it also highlights just you have to imagine you have to imagine that it will have an impact if we dont have those breaks anymore, right . Its the breaks but its also kind of the fragility of the system, in other words, people are really watching these things very carefully as you can see from those tapes, older people, people who are disabled, really frightened by the prospect that they cant deduct their local taxes and then, of course, the mortgage impact as well, which is going to be harsher in some states than others. So, frankly, theres just the information has not been put out in a good way and i think now given that that bill passed, its incumbent on state and local governments and local authorities to clarify their procedures and get it to petrip. Thats not the way you do the governments business is to scare people. I do wonder if its going to lower the trajectory of tax increases over time. For example, Westchester County, we were just showing there, of course, rob made a point since he was elected in i believe 2010 trying to cap the increases and even push them slightly lower, and trying to say to people, look, thats far more important than this onetime issue which will come and go do you think that other municipalities will be able to follow his lead and cap or in some cases even reduce the amount of taxes people are paying from here on out . Well, unfortunately in the tax bill, as it passed, was some transference of responsibility from the federal government to state and local. An example was the ending of advanced refunding of municipal debt, which made it possible for municipalities to take advantage of lower Interest Rates and lower their debt responsibilities they will not be able to do that, therefore, theyll have to pay those higher prices for those higher debt rates for a longer period of time. All of that transfers burden to local governments. So, no, i dont see this as an area where local governments are going to be able to cut their own Revenue Streams because not only do we have situations like that in the tax bill, but we expect theres going to be cuts in key programs that communities defepend upon. Our system is very delicately built and do your point a moment ago, people rely on incentives, yes, but they also rely on a system that is finally finely tuned and finely balanced and some of the balance has been upset in a serious way by this tax bill. Well, we are certainliy rseeg that with all the lines out the door mr. Secretary, nice to see you again, happy new year. Happy new year to you thank you. Keep up the good work. Former hud secretary Henry Cisneros joining us today. Rets gplus signs among the r averages the dow the only one in record territory right now. Joining our exchange today, Quincy Crosby from pru den dentt post 9 sitting next to kenny from oneal securities and welcome back Rick Santelli as well kenny, weve been highlighting all week its been a very quiet week you know, in the past few years we havent had that. We had a market that just either was booming or heading south in a big way, but this year it feels like the markets either in a waitandsee mode or fell like they figured everything out. It is, you know, we had this conversation, weve been talking about it for a while, the market is gliding into the end o the year, right, with the s p up 25 , the dollar up almost 28 and with the nasdaq up almost over 30 you know, in the last couple the last week here, last couple days, no one is making any changes. Theyre going to let it ride which is exact lly what you see. I dont remember when volume was as low as it is today at 3 15 in the afternoon. Its really crazy which goes to show you large Asset Managers are just letting it ride quincy, where do you think were going to see strength in 2018, how are you positioning for that well, you know, i think the president is going to Start Talking more and more about his Infrastructure Program hes already started but i think given the success hes had with the tax reform going through, hes going to push for Infrastructure Spending and i think thats going to help the industrial commodities i think thats going to help the industry names anything associated with local and regional and state Infrastructure Spending could help the local banks as well for lending. So i think those names, and i think the market is going to focus once he starts and whats interesting, i think the market had doubted that he could get anything through well now they know that he was able to get the tax reform bill, tax cuts through i dont think the market is going to doubt that he can get Infrastructure Spending through. Rick, weve talked a great deal this year about the decline of the dollar, the dollar index, and our Research Staff put a number on it today which is rather surprising, maybe not to you, but it barring some huge rally tomorrow, the dollar index will have experienced its worst year, its biggest down year, since 2003, going back 14 years. Wow. Pretty amazing, huh yeah. I think its pretty amazing. Especially after you see whats going on with regard to some of the data points we just had this morning. I mean, the trade deficit for november we received today was a whisker under 70 billion. It was the worst the most negative trade deficit since march of 2015. Usually when you see the trade deficit doing that, its because the purchasing power of the dollar is moved a lot. And what we see is that americans are still purchasing, still have good demand, and yet the trade balance is its a negative to the president. Its very kind of counterintuitive we see chicago at the best levels, chicago purchasing manager, since march of 2011 listen, i dont see why the dollar index is going to have any type of a banner beginning in 2018 even with the wall street journal notion of repatriate the money, what the feds doing. Its going into year end basically in a horrible level, close to the lows today. Its at the lowest levels since september. As you pointed out, worst year since 03. I think pretty much the Euro Currency strength is going to make europeans as unhappy as some of the people that are long the dollar index here. Kenny, real quickly, what do you think is going to be most important to watch here as we close out this year and start january . Listen, i think its all about whats happening in the future between today and tomorrow, theres nothing thats going to change anybodys mind like quincy said, its going to be all about this Infrastructure Program that he wants to announce and i have to believe, like quincy said, its going to go because hows any democrat going to vote against an Infrastructure Program when theyre talking about rebuilding roads and bridges and schools and in this country . How are they going to go home to their own constituents and say, oh, i voted against the Infrastructure Program not happening. Therefore, i think all those names right along those line as she pointed out is going to be where the focus is going to be i think youll already see that starting to happen all right thank you, folks always good to see you quincy, thank you. Kenny, rick, see you later thanks for joining us. Thank you. We have about 45 minutes to go into the close. Dow is up 48 as you said, we havent talked about this in a week or two. That would be a record close. Its been a very long dry spell for the dow. Ten days since we had a record. Thats a record this year the s p up two points. Nasdaq up three. Russell up two today as well. Still ahead a new filing from apple shows ceo tim cook had a little extra cash this year to spend on Holiday Gifts million extra to be exact. Even with that bump, he didnt have the highest compensation among apples executive team well explain why coming up. Also up next from nelson peltzs proxy vote recount, bill ackman with adp, its been a big year for Hedge Fund Battles. Just ahead, what the new year could hold in store for activist investing. And wed love to hear for you if youre not busy prepaying your taxes or something. Reach out to the show on anitter, facebook, or send us email youre watching cnbc, first in business worldwide another day at the office. Why do you put up with it . Believe it or not you actually like what you do. Even love it. And today, you can do things you never could before. Youre working in millions of places at once with iot sensors. Analyzing social data on the cloud to create new designs. And using blockchain to help prevent fraud. So get back to it and do the best work of your life. 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. Time for our bitcoin moment. Prices dropping today after the south korean government announced it will implement new rules to regulate trade of the Digital Currency according to reuters, the rules would include prohibiting anonymous trading accounts, and could give authorities the ability to shut down exchanges and theres the negative response across the bitcoin complex. If we call it that. There have been a number of notable Hedge Fund Battles this year for bill ackmans bid for adps board seat, nelson peltzs down to the wire proxy battle. What does 2018 hold in store leslie picker has the hedge fund playbook. Reporter new sources of activism, Retail Investors, and environmental social governance are three key reasons why the outlook for Hedge Fund Activism in 2018 may built upon some key trends from this year. First, new sources of activism sources in the activism world expect more nonactivist investors to use those strategies to push for changes at companies where they have large stakes that comes on the heels of newburgher bermans push at whole foods and d. E. Shaws campaign in eqt earlier this year second, Retail Investors arconic, to adp, investors are not afraid of companies with a large retail component they found ways to reach investors. Trian placed ads in a local cincinnati newspaper Pershing Square held video webcasts with live q a during its fight with adp not all these activists won bae every seat they sought their strategies are likely to catch on with other activists in the new year finally, environmental social and governance investors are deplanding activists bring more director nominees that can help diversify the board and make it a force for good and while some activists may seek to do some good for fellow shareholders, our next guest thinks theres been excessive activism lately and its bad for corporate america. Joining us is john levin wit Levin Capital Strategies john, thanks for joining us today. Hi, good afternoon. Make your case. What are the activists doing that you dont like . Let me give you a prelude every interaction ive had with nelson, with bill, high quality in a personal way. Heez a terrifically competent people with strong organizations. The question has to be caasked whether this is in the National Interest some activism is necessary i feel many of the major institutions have not been forceful enough when theyve been shareholders. But i think that the consequence of activism is employment reduction, the country needs employment thats where most activists are seeking is cost cuts it needs research, which management cuts back to try do get its earnings up. It needs capital investment. It does not occur in isolation if activism is more and more, fewer companies will go public, a la other countries, which is bad, and or youll find yourself in a voting nonvoting situation. I think there is a balance to be found, and National Policy should look upon it. I mean, i have some suggestions about what i would do. John, before we get yeah, before we get into some of those suggestions, you mentioned the balance. Theres many like carl icahn who could say the balance in favor of checked out ceos with no board oversight who spend all of their time on the golf course leading Zombie Companies into oblivion is a major problem. And a lot of countries one of the things the u. S. Has going for it, you have activists willing to come in, shake it up, some cases cause layoffs but make the companies dynamic, unlike other places where the culture is not as strong. I spent my life liking carl icahn. Its somewhat reciprocal carl at one point said 30 of employees of companies should be laid off he might be right from his standpoint but the question is what would that mean for america and the consequences sure, there are some executives not working as hard but for the most part i have high regard for the executives i met in america and most the boards are responsible for trying to do the best job they can. Im going to sound cynical with this question, but realistically, when you consider in a capitalist society, is the point of a corporation to turn a profit or simply to employ people that is an excellent question i would say, at least in my view, embedded in that question is, is the goal simply shortterm profits, or is a stream of profits over many years helping the united states, helping the employees, helping the whole public i have a long view i think that the country has to balance between shortterm opportunity and optimization and longerterm strategies john, let me ask you about specifically hess as an example, ill take your point there are tons of activist hedge funds launching, probably like the hedge fund industry, itself, you have a lot of imitators who arent as good as the real innovators on this front in the case of hrkts hess, what would your defense of the company as it stands today be okay. So the elliott activist there is one of the great professionals in the world, john pike. We agree, and ive written john hess many times, cut back Capital Spending, just work on your prime projects. John hess has done a friterrific job. He took a small, or moderatesized company, now is a partner with exxon, not only one of the largest discoveries in the world but exxon continues to want to work with him. I dont see what the grounds are to have john hess exited from a company where hes helped find one of the greatest discoveries in the world yeah maybe we should all write about what we think about Capital Spending and the board will be responsive, but thats where the difference is. I dont want to destabilize hess id like to optimize it and as far as i can tell, john has been totally responsive in every conversation ive had with him on this subject. So, what are your suggestions . I mean, how do you fight back against the activists when you feel like its being too disruptive and not productive . Okay. Here i think the first question is to decide whether corporate policy should be, what it should be what i would do is i would have activists limited to holding a stock for a year before they start a proxy fight. Not this driveby shooting i would only permit one, two, or three proxy contests a year. I would limit the number up to, say. 10 of anybody whos been in a proxy contest for five years and more than that, i wouldnt let managements participate in lbo transactions involving activists because it seems like the managements in some cases are fighting activists but effect e effectively get together to take a lot of money away from the shareholders so i think there is a program to deal with this thats balanced john, good stuff. Lot of interesting points there. John levin for s. E. C. Chair thanks. Thanks for having me on. Thanks, john. You bet. See you later. Coming up, california is ringing in the new year with a new law. That would be legalized Recreational Marijuana cant wait to see this happen. And with predictions of billions of dollars of sales in the next few years, the pot industry could be a big part to that state. Well head out to the First Company to receive a recreational license when we come back. Later the nasdaq is on the cusp of doing something its never done before, posting gains for 11 out of 12 months in a single calendar year tech stocks, of course, have been a major part of that run. Were going to debate whether 18ray llonnuin ctie 20 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 when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. California has long been known for its laid back stance on marijuana, boy is that true in just a few days recreational pot will become legal across the golden state k cnbcs aditi roy joins us from a dispensary in san jose to report on the Economic Impact of legalization aditi . Reporter hi there, bill. I am standing in one of the 20 growing rooms here at buddys cannabis in Silicon Valley this is where this room, alone, is worth 50 million worth of marijuana the company has been selling Medicinal Marijuana since 2010 now they plan on switching over to the recreational market once it becomes legalized starting on monday some believe the Recreational Marijuana market will be worth between 6 billion to 7 billion. Theres skeptics out there who say the high taxes which some estimate to be as high as 45 could hurt the industry as well. Then, of course, theres the bureaucratic hurdles to talk about, the states only issued about three dozen licenses so far, and those Companies Still have to get municipal licenses you can see on the graphic where some those state licenses have already been handed out. Many cities like los angeles arent even handing out licenses until after the new year still the owner of buddys says the financial opportunities are luge there is a concern, obviously, if you tax the Legal Cannabis too much, youre going to give an incentive for folks to go to the black market. I feel, though, that the challenge is going to be on the retailers to keep the prices down reporter and he says hes trying to do that. Lucero believes with the extra taxes and regulations that his prices are going to go up about 10 . He believes he is absorbing many of the costs back to you guys im curious, youre in a disfence dis fen dispensary, there are all the plants behind you. Like cut your own like at Christmas Tree farms whats going on there . Reporter its interesting, they have 21,000 square foot of space in this industrial area. The upstairs where we are right now, they grow, they cultivate here in these rooms and they sell products downstairs they have a whole retail space this part is only where employees can be and its where theyre cultivating and plan on expanding this area to meet the market demand, they say, will be much more increased. Oh, boy thank you, aditi see you later. Aditi roy. Reporter thank you. If you cant get enough of this, be sure to tune in next week to catch marcus in a special documentary the profit in marijuana country premieres tuesday at 10 00 eastern. Me thinks you dont approve. This is like having to cover bitcoin, like bitcoin, legalized pot, like, oh, joy. Yeah. Where are we going time for now for a cnbc update with kate rogers. Kelly, heres whats happening at this hour what many thought was a Christmas Gift ended up being coal a South Carolina lottery glitch caused people who played a certain game to win nearly every time a line of people who thought they hit it big wrapped around the block at lottery headquarters Officials Say theyll make a decision on what to do about that by tomorrow. A heartbreaking story from connecticut where two dozen horses died in a barn fire overnight. In a post on its facebook page, foley farm said most of the animals had succumbed from smoke inhalation a months long diplomatic standoff between the u. S. And turkey has come to an end. The countries are lifting visa restrictions after agreeing staff overseas would to longer be targeted when performing official duties. And this may not be what you want to hear right before new years, but dietary guidelines suggest women should have no more than one drink per day and men no more than two there are reasons to limit your booze intake the American Cancer Society says limiting alcohol is key for cancer prevention. That is the cnbc news update at this our back over to you guys. Very important. Thank you, kate. Were 20some minutes left in the trading session for this thursday with the dow if record territory. Only one of the major averages doing that here is gordon from rosenblat securities. Thank you, bill first off i want to start out by saying what . The end of the workweek, almost the end of the workweek its friday, lunchtime in is a moe y is samoa. I feel the warmth i appreciate that. Do you see this continuing . Sometime we get a change in the tenor of the market from december 31st to january 1st weve had a stellar year, 70 record closing highs for the dow this year, thats never happened before, do you see that continuing into 2018 i think were going to carry right through, bill. Even though were up a tenth of a percent,. 2 , were seeing the up volume eclipsing down volume 21, the way its been the last couple times we had this move. Were seeing guys making the case in every sector, whether the beaten ones like energy or retail or the other high fliers th that theres no reason to sell not seeing the action you might see this time of year, hey, let me rotate, get into some of the hot areas. Youre seeing people say, im going to hold my position, im good with what i have, i think i have room to move over here. Were not seeing that kind of action. Even as the fed starts to raise rates. Well, i think the fed raising rates is kind of built in, bill, off of whats happened with the tax bill i think that, look, the tax bill is going to go two ways from a political standpoint either were going to see a repatriation of funds from some of the majors which is going to. Be a coup, not going to be loopholes galore and be a problem. Right now i think the tone is that its good that we are going to see continued growth in gdp and even if there is some sort of selloff, that theres a base under it theres a floor. I would say january effect looks good. Okay. Very good. Really has been a pleasure i just wish youd wear a new tie once in a while. Thank you very much, gordon. Kelly . Lunchtime in american samoa, thats why i love him. Thank you, both. Up next, apple ceo tim cook has 4 million reasons to smile this year after a 47 pay hike hes far from having the highest compensation among apple executives well explain why just ahead. Plus investors in apple and other Tech Companies have been rewarded in a big way this year with a tech sector gaining more than 30 but could a major pullback be looming in the new year . Eahtill debate it straig ahd. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade you myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Gold is at a onemonth high today, and the dollar index continues to weaken on pace for its worst year since 2003 which we mentioned i eed earlier seema mody joins us with more of todays movers in the commodity base. Reporter gold as you point out is higher by nearly half a percent driven by a weaker dollar from a technical point of view, traders say 1,320 is the next level to watch. Lets also talk oil, wti crude is trading right below the 60 mark which is broke on tuesday for 2018, analysts say watch opec to see if more production cuts will be announced meantime, chinas trade data and increased supply disruptions have lit a fire under copper the industrial metal has seen 16 Straight Days of gains, now trading at a nearly fouryear high analysts say increased supply disruptions specifically in china could push prices even higher in 2018 speaking of higher, nat gas prices surging as forecasts are now calling for even lower temperatures across the east coast. Which means more americans will likely be using their heater, nat gas up almost 7 today bill all right, seema, thank you see you later. Heading to the close, 20 minutes left in the trading session here the dow in record territory. Everybody else is positive theyre not quite there yet. Apple ceo tim cook getting a pay raise this year, but get this, tim cook, ceo, man in charge, is not even the highest paid executive at apple we have those details coming up. And with disney taking over 21st century fox studios, concerns are rising in hollywood that some of foxs less than familyfriendly fare will be on the run under disneys stewardship. Thats story coming up 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. 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. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. Welcome back apple jumped nearly 50 this year the tech giant is now worth around 880 billion in market value. The companys ceo tim cook took home a sizable pay increakreecri career as a result josh lipton joins us with those details. Reporter kelly, its been a good year as you point out for apple shareholders it hasnt been so bad for tim cook, either apples ceo saw his compensation for the fiscal year which ended in september surge nearly 50 to 12. 8 million. His compensation, remember, is tied to revenue and profit targets set by the board, which the company did exceed so revenue for fiscal 17 was 229 billion operating income clocked in at 61 billion. Its a turnaround for cook whose compensation actually dropped 15 in 2016 when apple did not achieve its financial targets. Apple stock as you point out, kelly, surged this year, up nearly 50 more than double that of the s p 500. Thats as investors bet that new phones, 8, 8 plus and x are going to spark a big upgrade cycle next year. Other members of apples top brass saw smaller increases in total compensation climbing about 6 to around 24 million they include cfo luca maestri, chief Angela Ahrendts and dan ricco and bruce sewerl his total payout for the year came in at 10 million kelly, back to you so lets just be clear, the base salary is what were talking about, his is lower than the rest of them, is that the idea reporter yeah, the annual comp at around 1 milli2 millio think probably threw some people, bill when you take in account the stain to stock grants hes getting, more than 100 million. I realize that. Just from a base salary standpoint, that to me says a ceo whos comfortable in his own skin. I love it. Let other shine some of the execs he may view as needing that to be compensated for thosal lenge at that they bring. Exactly. The thing i wonder, josh, i know as part of this they told tim cook he has to fly private, i imagine for security reasons. Yeah. Is tim cook, himself, seen as a key man at apple has he always been seen that way or what do you think reporter im sorry, kelly, as a key man, did you say . Yes, is he seen as irreplaceable . Reporter well, i mean, ill let traders and investors decide whether hes seen as irreplaceable. Certainly theyve applauded his role this year and since he started his tenure in 2011 before this role, he had a key role at apple, their supply chain guy. Look at the executives hes brought in, to your point, kind of like Angela Ahrendts, ricco investors cheered his investments so far 2017 was a key year for apple in terms of services. Traders and investors are making right now is 2018 will see even further gains. He had big shoes to fill. And i guess what im trying to say, feels like a lot of these, you know, moves by the board and others are indicating, yes, you filled them well. I think so. Absolutely. As a steward of this company. Thank you, josh. Thanks, josh. Still love the beard 13 minutes left in the trading session here the dow holding on to enough of a gain to put it into record territory. The s p and nasdaq and russell also higher but they are not in record terrterritory. If your portfolio is loaded with passive index funds, chances are you have a ton of exposure to the sector more than ever were going to debate how much higher tech can go in the new year or if its time to rotate out when we come back. 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. Yes or no . Gin. Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. The highflying tech sector is up more than 37 this year and its pushed the nasdaq to new records, in fact, many peoples portfolios, but not everyone thinks tech is a good bet for 2018. Were going to meet one of them in just a second here thats not paul meeks. Hes the bull. Chief Investment Officer and Portfolio Manager. Our bull in this case, is ian, director of equity trading at webbush securities we all believe that tech is the future, but is tech is it too easy to say that i mean, are we going to expect the kind of gains next year that we saw this year, for example . What i expect, bill, is the s p 500 to be up next year but much less than it was in 2017. I do expect the tech sector to outperform again but, again, on an absolute basis, its returned much lower than the huge returns that weve seen in 17. If folks are uncomfortable with active stock pickers and want to go passive, there are many ways you can replicate these indexes in an equal weighted manner instead of other indexes heavily overweighted in tech stocks because theyre your advice, paul, to people, would be, if you want a passive index portfolio, you can do that but do it equal weighted and not market cap weighted, right thats right. Not just u. S. Indices, but the International Developed world and also the emerging markets have those opportunities but the way i look at it, the largest names in tech, the faang stocks and a couple others in Key Industries within tech like cloud computing, the relative fundamentals, i. Ee. , their fundamentals compared to Everything Else havent been as good for probably a couple decades. Ive been doing this a long time i like them fundamentally but id like to buy them only on downdrafts in their stocks and we probably at some point particularly in the beginning of 2018 will have those drops in the stocks to bring some good buying opportunities all right ian, you raised your hand when we were looking for a bear on technology i guess its because you see growth slowing in the new year is that the idea yeah, i mean, if i look at the end markets for tech, and its corporate and consumer, in the consumer market, handsets arent going to grow much the next two years pcs arent going to grow at all. Automobiles are going to slow down in terms of growth. And the consumers running debt at alltime highs. If i look at the corporate side of the equation, capx to me seems right theres no reason its going to increase because of repatriation potentially. So fundamentally, yeah, theres pockets of tech that may do okay but overall, i actually think. You can underweight this sector because ultimately it comes down to are people buying the stuff i think the stuff youre hearing about apple and its iphone x may be the canary in the coal mine for consumers actually getting beyond their means at this point. Ian, i wonder if people would be more comfortable making a Valuation Case against tech in a fundamental one. When it comes to corporate, they made aftertax investment cheaper so we should probably expect more of it wh when it comes to consumer debt, i take your point, there still should be some growth until the economy turns and in auto, were in the midst of a revolution in terms of the amount of software and chips that are going into cars, so its hard to make the case that theres not going to be any growth in tech. Would you make the case that tech is simply too expensive no, i dont think its a question of valuation because if youre going to talk about index funds, which paul is talking about, they dont care if amstonamstoazon is trading at 100 times, 80 times earnings im not going to make a Valuation Case, it works the other way. Ill remind your viewers, that can happen theyre going to get sold the hardest. Im looking at the end Market Growth in most of the key areas that technology and semiconductors sell into, and after the monster move weve seen, its just not that exciting all right quickly, paul, what do you say i think that thinking is too broad, and he did allude to the comment that there are pockets i do think there are pockets, and i think some of these pockets apocke pockets of growth are in the early innings like cloud computing. Also Artificial Intelligence and some other areas if we have a slowdown in the economy, sure, enterprises and consumers will rein in their spending the areas i highlighted and stocks i focus on are going to do very well for a long period of time. Okay. Ian, before we go, would you then tell people, okay, if you want a passive index fund next year, do it and take tech out of it no, i would tell people to go back into active investing because i think at the end of the day oh what was that sound i dont know what that a Spooky Halloween oooh oh, well, ho, ho, ho, because i can tell you right now too many people are packed into these passive funds with the mentality of im going to buy stuff on dips when it comes in, as i heard before, that to me is like when it comes in on that dip, believe me, theyre not going to be there to buy it. All right very good, folks thanks paul meeks, ian. Happy new year. Thank you. Okay. Bitcoin, legalizing marijuana and active investing. I love activist theres a place for it, there are so many people who would say, are you kidding me ive just become a passive believer, im not going the other way right now. Pendulums got to swing back at some. Point. I dont know where that spooky sound came from. We will come back to the closing countdown without any spooky sounds. Why one d. C. Policy analyst says the market is underestimating the growth impact of the tax cut. Keep it here youre watching cnbc, first in business worldwide 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 nadia white the moment a fish is pulled out from the water, its a race against time. 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Was it happy . What about a dedicated service team with futures licensed specialists . And what about being able to react to the 24hour futures market with integrated trading across web and mobile . Still happy . Good. Then its time for power etrade. The platform, price and service that gives you the edge you need. Etrade. The original place to invest online. 90 seconds to the close. Weve got the dow set to close at a record high would be the 71st record close of the year. Something that has never happened before. So, write it down, but put it in pencil because we have one more day to go, tomorrow. The number one and two performing stocks in the s p today were chesapeake energy, and range resources. The common denominator, that would be natural gas, which has been on fire, literally, for the last week or so with the arctic temperatures that weve seen in the northern and eastern parts of the country, and thats going to continue for the foreseeable future new years eve, theyre talking about windchills of zero degrees in times square. Gold is at a onemonth high. Ill bring bob pisani in on this, gold up to 12. 96 and change today as the dollar index continues lower. Thats a onemonth chart of gold there. We have a oneyear chart of the dollar index its worst year since 2003. Snapping back a little bit. Let me note, we have finally a little more stability in the tech semiconductors. Doing a little bit better recently so we saw some modest gains in them theyve been weak for a while. And a very volatile day in bitcoin. Of course, the South Koreans are taking about more regulation headline risk is regulation in 2018 more out of washington on prepaying for taxes. Is that a good idea or not and its stump santoli thursday coming up 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. Quite a spike on the close here. The dow going out with a 60point gain. That is good for a record close for the blue chips 2 24,835 also the first time we closed above 24,800 theres a round level for you. Up. 25 today. The s p 500 adding four, nearly five points, 2,687 thats shy of its record close the nasdaq composite up to 6,950. Shy of its record high which was 6,994. The russell 2000 couldnt quite eke it out, 1,548 with. 32 gain the record close is 1,548. 93 as things shake out, well see if that changes if the small caps got a record, too for now its just the blue chips in another one before we close out the year while stocks moved sideways since Congress Passed tax reform, one analyst says its corporate impact is underestimated the sectors he expects to soar next year coming right up. Joining me now on the panel today, we have cnbc senior markets commentator Michael Santoli and bill smid joining us, ceo and cio of smid Capital Management welcome, guys. The biggest winner in the dow today was united health. The biggest loser was coca cola. Over in the s p, the big winner, chesapeake and Discovery Communications was the biggest loser. Discovery, whole other story, mike i feel like its been so volatile lately. Yes. Zooming back out for a second, dow had another record close. Market is staying pretty much true to form final week at the end of a very strong year. Just kind of that upward drift is the main phenomenon here. Obviously theres sector tweaks, theres some kind of internal rebalancing going on, but mostly the market stays well supported based on, you know, whats been working all year we got good Economic Data this morning and have loose financial conditions and basically no sellers. Nobody seems to want to cash out just yet this year. Bill, you selling anything . No. You know, we practiced very low turnover, anyway, but i think mikes right, one thing you could see in the new year, certainly a lot of people hold on to big winners into the new year so that when they do sell in january, they dont have to pay the tax until a year from april. So, you know, we have this phenomena where the january effect where things that did poorly the year before bounce back in the new year because the tax selling abates simultaneously, the people have been sitting on big gains and didnt want to show them have a tendency to move in in january by the way, mike, what do you think about the dows outperformance in this quarter . Yeah. Up 11 . Only 6 for the s p and the nasdaq and 2,400, 2,400 of the 5,000point rally in the dow this year also came in q4. Its been a difference phase of this years performance with the dow accelerating away from the rest of the market it is also about the same time you had that rotation into value stocks and really had the market focusing in on the tax reform possibilities. So if you look at it from almost labor day on, that seems to be when that effect happened and tech had built up its outperformance before that. It was a passing of the baton toward big global industrials. Bill perked up when you said value. What are you going to say, bill . No, mikes right, really with the totality of investors out there especially in large cap, there has been a massive move into passive investments and that has a tendency to reward the largest Cap Companies in the s p 500 index. So for the last five or six weeks, for those largest cap tech stocks to, you know, underperform the dow, you know, maybe thats the canary in the coal mine for what begins to happen and you had a couple of people debating tech on before this, and what i would throw out that nobodys really talking about s is, you know, what happens if 2018 is the year that not just the millennials get bored with facebook but bill smid gets bored with facebook . And are you a heavy user of it, bill i was for a number of years for all kinds of great reasons, grandkids and Old High School friends and old college friends, et cetera, but, you know, this when somebody recognizes theyre addicted to something, they might back off in a big way and then secondly, having junk delivered to your door in cardboard boxes is probably so fun, you know, for somebody like, you know, thats our age to sit there and go, hey, id like something, then the next day its sitting in their at their doorstep thats probably pretty fun, but somewhere alod lodglong the line are going to add up and go, what am i going to do with my life . Am i going have a robot clean my house . Am i going to play golf in Virtual Reality . All of a sudden the reversion of the mean will start to hit these folks. I will admit the amazon boxes are a pain ann is here as well, equity team abe senior Portfolio Manager at Wells Fargo Asset Management ann, thank you for joining the fray here. We were just talking about tech, so let me read for a moment the performance that weve had this year its up 37 year to date as we were saying a moment ago, the gains have caused big tech like apple and facebook to now account for almost 24 of the s p 500, up from 20 last year, under 20 3 years ago. Ann, are you guys concerned about the size of the pie techs now taken up here 123. You know, im not surprised we got this high there hasnt been any other place to go for growth over the last few years and so, you know, as you look for growth, its all been in technology if you look at the change in the marketplace, whats going on, amazon what its done not only to traditional retailers, but what its done to the grocers over this past year, its been pretty incredible. So technology has been the place to go if youre looking for growth, fundamentals have been strong look at google and facebook, what theyve done to advertising. So i agree with bill, though, too, when youre going into passive investing, thats taking up a larger share of Technology Investing as well. And so as we move forward, i think theres going to be better places to invest were going to see growth broaden out due to tax reform. Were looking at other areas of the market that we think are more attractive than areas of technology. Such as such as industrials. Have yeah. Financials. Yeah. Banks smaller Tax Companies that are full taxpayers we think will be areas. You know, a little more of the value slant area of the market that has been, you know, left behind when you look at the valuation gap between Growth Stocks and value stocks this year, its pretty remarkable the difference so those are the areas of the market yeah. Let me hit the dollar here for a second because its kind of an interesting flip side of the coin dollar moving higher again today. It was down half a point down 9 this year. On pace for its worst year since 2003 that, to me, is an incredible stat, mike it was a totally confounding of the consensus trade this year i mean, a year ago we were saying can the markets handle this ongoing rally in the dollar everybody assumed policy was going to be pointing in the direction of having the dollar outperform i think its really more of a symptom of the fact its been a globally balanced growth story, other parts of the world outperformed relative to the u. S. If you told people wed have four rate hike totals, four rate hikes after having just one a year President Trump in the office. Stock market on a rally. Repatriation looming on the horizon. Typical yearend scrambles into the dollar he said all of that was going to happen and the dollar would be having its worst year since 2003, what do you make of it well, i can remember three years ago being in europe to promote the offshore version of our mutual fund and the euro was, like, at 1. 38. And so the thing that caused the poor performance in the dollar in our opinion in the last year was the huge move it made from 1. 38, what was it, mike, 1. 06, 1. 07 at the low point, now its bounced back to what is it, 1. 18 . I didnt look today. The point is its made a huge move to get to there, and mikes right about that everyone ended up on that side of the trade and, again, i hate to be beating a dead horse, but thats the problem that the amazons and the facebooks of the world have is which humans are going to be added, which analysts are going to be able to raise their price target another 200 or 300 points . You know, well have to bring back some of the analysts from 99 and 2000 to compete on that. What does that have to do with the dollar, bill . What it has to do with the dollar is thats where all the money has gone by the way, you mentioned up 37 in 2017. You didnt also mention that the tech group was far and away the best group and lastly, you also left out that netflix and amazon are not counted in tech, but theres not a single true, true. Employee that works there. So tech is actually around 26, so just a quick quiz, in 1990, which was an era that microsoft was emerging in a massive way, tech was about 7 of the s p just to give you some feel for how out of favor and in 1981, oil was 28 and now its 7 . So, people have to be really careful from a Historical Perspective both with the market in general, and secondly, with and, therefore, the dollar, to tie it back to the dollar, the Interest Rates going up were well telegraphed a year ago, right so everyone knew the fed was go i ing to tighten, therefore, you hit kind of a peak in the dollar. All right ann, a quick word on that. Yeah, i think the market needs to see the progrowth agenda really take hold. We need to see accelerating growth in the economy happen then we might see a rise in the dollar because as michael said, weve had weve seen global economies grow as well and so, you know, a weaker dollar is not bad, it makes it very competitive for u. S. Companies to compete globally. So not too bad where we are. Oh, sure. Yeah, no, thats why if it goes back up, wellsee if thats a headwind lets talk about citi for a second those shares closed slightly higher today, despite ordered to pay 11. 5 million in fines posting the wrong ratings on stocks 5. 5 million of the fine is from the Financial Industry Regulatory Authority the other 6 million is the amount citi is expected to pay customers for the error. Mike, the weird thing about this story is it went out on some sort of electronic notifications. Yeah. Its not clear to me how many people were seeing this and actually literally seeing you should sell some stocks apparently no attempt to actually deceive, it was a kind of an operations bureaucratic glitch that didnt get fixed in time and so basically, people who first of all clients are not supposed to be able to own sellrated stocks unless they explicitly say, yes, i want to some of them ended up owning ones that did not show sell ratings when they should have. Look, i think it was one of these things that was caught, the low level of the fine tells you that the regulators didnt really believe this was some kind of fraud perpetrated on customers but does show that, you know, these unwieldy institutions did not get on top of it very quickly. Ann, you disagree with any of that no, i mean, i really believe big corporations, especially big banks, where its really important for your customers to trust you, you know, they try to do the right things. When cust momers are harmed, thr should be some repercussions i really think the intention was to do the right thing. All right lets talk about bitcoin before we let everybody go. It did trade lower today, after south korea said it plans to ban new cryptocurrency trading accounts starting in january if an exchange allows new accounts, the commission has the ability to stop trading or shut down the exchange. Bitcoin, of course, had a roller coaster run the last few weeks hit more than 19,000 in early december fell to a low of about 10,400 on friday. Bill, im trying to think, what i mean, i just assume you hate bitcoin, but what are your thoughts on this whole phenomenon well, its so interesting, we think that each era has a thermometer. When the Health Care Stocks were on fire in 2015, valeant pharmaceutical was the thermometer of the hot health care sector, right so that was the thermometer. It reached 250 everyone thought Michael Pearson was a small g god and when it busted, it busted dramatically, right . Here we are, tech is hot fintechs hot. You know, cryptocurrency, blockchain, just change your name, and its a thermometer and people should be really nervous about that thermometer because what it says is people are way too excited about technology is that possible, mike, to be too excited about technology it is possible to be too excited about technology investments. The ones that are available and to overpay for them, yes. Like 1999, late 90s. You know, when 30 of the s p was in Technology Sector in 99. I dont know if i can diagnose the issue as being that in bitcoin. Honestly, i almost wonder if the very low volatility environment weve had in traditional assets is almost kind of creating, sending the gamblers somewhere else and had this tremendous kind of worldchanging cover story that says this is going to be the future. This is the ground floor of the next internet. Whats interesting is when you had the ground floor of the past internet being created in the early 90s, nobody was talking about it so its hard to know if this is going to be by the way when bitcoin first came around, it was a couple years before all of a sudden people are talking about it. Came around in 08, 09 here it is ten years later after its been developed and still kind of a wait until it becomes something kind of a story. Right i think thats fair. Ann, what would you say . I would say its probably one of the most speculative investments i, you know, of 2017 when you have people talking about it in coffee shops and, you know, raging about how much money theyve made or can make in it, and, yet, really cant explain it, thats cause for concern for me and so yeah. Its an area that im a little bit worried about essentially investors really should be able to explain things that theyre investing in. That makes me nervous. Its not something that im interested in. And its people more professional investors i would say are nervous about it versus the people in the coffee shops so makes me nervous. Bill, is it such a bad thing if all the gamblers are in bitcoin and not small caps its the uber drivers that are the bitcoin, you know, you get in an uber now, thats whos buying the bitcoin just to be a little contentious, as a contrarian, ill last word. All i can say is that you see this kind of stuff and if you look at expected tenyear returns from existing price earnings levels on the s p 500 index, the next ten years offer very low returns and, therefore, if people are buying passive to get at an 8 return, theyre statistically likely to be sorely disappointed the next ten years. Are you making the case for bitcoin there . No, im making the case that bitcoin thought you were explaining why is a sign of its financial euphoria thats all it is. All right, thank you very much for joining us today. Happy new year bill, ann. Happy new year as well. Stocks staged a huge rally this year, largely in anticipation of tax reform our next guest says dont ex pe expect a tax bill hangover in the next year. He thinks the market is underestimating corporate growth from the changes. Ubers valuation taking a huge hit after softbank took a huge stake in the ridehailing company. Our takeaway on the uber discount coming up. We want to hear from you, contact the show, twitter, facebook, or send us an email youre watching cnbc, first in business worldwide dad promised he would teach me how to surf on our trip. When you book a flight then add a hotel you can save. 3 waves later, i think it was the other way around. Everything you need to go. Expedia. There has been a good deal of debate if the tax bill is baked into the market or will soar because of it in 2018 my next guest says growth has been underestimated. Joining us is dan clifton. Welcome to you, dan. Thanks for having me on, kelly. So youre talking about Economic Growth, are you talking about, you know, corporate profits . Yeah, i would argue both of those. So, number one is, you know, how does this affect the economy, how does this affect stocks and how does this affect swr individuals . If we separate that out, i think the greatest underestimate is on Economic Growth. A lot of it, investors that ive been speaking to this week are pricing in maybe. 2 ,. 3 of boosted gdp. In 2018, the market is probably priced for around 2. 7 gdp growth i would argue is theres a good chance that were going to probably exceed that largely because this tax cut is about 1 of gdp in terms of its fiscal stimulus. Youre talking about 12 bill2 of tax relief to consumers when most consumers believe theyre going to get a tax increase. Youre talking about another 83 billion of net tax cuts to corporations that are then going to be able to be used to deployed for investment and Share Buyback and dividends. When you look at this plan overall, it looks a lot like 2003 and the market did not price that growth until the paychecks adjusted for higher aftertax income and that wont happen until february. So we think theres going to be an upside surprise to gdp in 2018 largely based on how this tax cut was drafted and the low expectations that weve seen since the tax bills been passed into law dan, im sure youre getting a couple of varieties of pushback on this idea. Yes. One is, first of all, does the market really wait to see the whites of growths eyes right up front before it starts to price things in for example, the bond market yep. Also are we at a different point in the economical cycle at this point, do you actually have that kind of juice as you did in 03 . Exactly right, mike let me say, theres a lot of concern that we may get too much growth and may lead to inflationary pressures but i have to tell you, again, go back to 2003, a lot of economists were arguing at that time a deficit finance tax cut that benefits the wealthy does not create any Economic Growth and we had 4 real gdp growth in the first 12 months and it did take the bond market some time to figure it out look at todays debate about whether you can prepay your state and local tax property taxes. Its just a lot of confusion, lot of people dont know how this bill is going to work its different than a separate rate cut thats why i believe that once this gets fully implemented and the paychecks adjust, youll start to see better expectations for Economic Growth. Just the first year, even if it does create inflation, inflation feels very good that first year because its nominal growth and we tend to believe in nominal. So from a growth perspective, we think theres upside then you look at it from an equity perspective, a lot of this is priced in over the last two weeks. What were seeing is still a lot more to be priced in in these hightax stocks. We tend to believe theres going to be a 5. 3 reduction in the effective tax rate of corporate on the s p 500. I think the markets pricing in maybe a 300 to 400 basis point effective tax rate as the companies begin to disclose how this is going to impact them, its going to dis p proportionately benefit companies that have a lot of domestic income. Some has been priced in but not fully priced in at this point. A couple sectors you think have chunk of the companies, industrials, financials, consumers, is that Consumer Discretionary even yeah, exactly right, kelly, when you think about it, right, consumers get two bites of the apple. Retail companies have high tax rates then were delivering 122 billion of tax cuts to consumers to go out and spend. Its that second part thats a lot harder for the analysts to estimate the earnings impact of that you look at industrials, this 100 expensing of capital equipment, theres no way to price out how many new planes, how many new machines are going to be bought, and so theres going to be upside surprise in the earnings estimates from the purchases of the from those Industrial Companies overall then the banks get an added benefit because if you get a stronger economy, youre going to get more loan growth from that its not just about the lower Corporate Tax rate, there are some an sillry benefits in the three sectors overall. Dan, why do you think it is youre among a small handful of people who seem willing to espouse this being the case . Everyone else we talked to seems to say either that, okay, now its priced in, or the impacts not going to be that big, its all going to go to Share Buybacks, its not going to help the economy, no one needs to do any investment, if they needed to, they would have done it already. All of these reasons why, you know, the kind of lift youre explaining can be explained away. Listen, i dont know how its going to play out but i can only go based on my experience in working on every major piece of tax legislation over the last 15 years. There have only, two tax cuts that have been fully frontloaded. 2003 and today so we dont have much of a sample size of what happens when you frontload tax cuts if you use the 19 im sorry, the 2001 tax cut as an example, it didnt really create much growth and thats because a lot of it was backloaded, years 06, 07, 08. A lot of analysts are using that as an example rather than looking at the frontloaded tax cut and the impact that could have this is what makes a market, kelly. In 2003, it was there is no plan, then there was a plan, it wont pass then it was it wont pass and wont create growth, in the final same, kelly, the markets final finally gave in. Saw bond yields rise it looks like were setting up the exact same playground here the more pessimism there is, the more opportunity there will be for investors in 2018. If we see the steepening of the tenyear yield goes up, that will be an unexpected move at this point. Thats right. At least how the market is pricing it in. Dan, thank you very much. Thank you for having me appreciate it. Dan clifton. Another bitcoin crackdown is putting pressure on the cryptocurrency were going to tell you what it is this time and whether bitcoin can bounce back. Restoration hardware soaring nearly 200 this year after spending about 1 billion to buy back nearly half its shares. R takeaway on whether that is the best way to spend that cash, when we come back. So how old do you want to be when you retire . Uhh, i was thinking around 70. Alright, and before that . You mean after that . No, im talking before that. Do you have things you want to do before you retire . Oh yeah sure. Ok, like what . But i thought we were supposed to be talking about investing for retirement . Were absolutely doing that. But theres no law you cant make the most of today. What do you want to do . Id really like to run with the bulls. Wow. Yea. Hope youre fast. I am. Get a portfolio that works for you now and as your needs change. Investment Management Services from Td Ameritrade. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. [music playing] 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. Its been a rough couple weeks for bitcoin investors. Today is no exception. Seema mody has a look at whats behind the latest selloff. Kelly, the south korean government is putting a stop to anonymous trading account and shutting down the countrys Bitcoin Exchange saying its vulnerable to investment fraud last week, ubid, a Crypto Exchange in seoul, filed fur bankruptcy after it was hacked a second time in eight months. The proposed legislation is anticipated to go into effect next month meantime bitcoin traders are expecting higher volatility as south korea is the largest bitcoin market, in fact, south korea reportedly makes up 20 of Global Bitcoin trade bitcoin took a large dip on the news as did blockchainrelated companies. Overstock and square, which accept bitcoin, are also down around 2 . And with todays losses, bitcoin is down 33 from its recent high now its not just bitcoin that could face more regulation initial coin offerings which are already banned in south korea and china are expected to face more scrutiny from regulators in washington i spoke to the former omb director David Stockman who said thats one area we could see further regulation in 2018 kelly . Im surprised we havent seen it yet thank you very much. Were slowry starting to see it, perhaps more in 2018. Koreas leading the way seema mody. Time for a cnbc news update, lets get over to kate rogers. Hi, kate. Hey there, kelly, heres blamast happening at this hour preparations under way at the cross roads of the world an estimate the 2 Million People will show up to watch the ball drop in times square new york city officials are increasing security by banning backpacks, large bags and umbrellas. Additional check points and street closures are expected. A government report says the fda is taking too long to remove tainted food from Grocery Store shelves. Investigators, 0 30 recalls between 2012 and 2015, the agency took an average of 57 days to recall potentially dangerous items. Users of fitness tracker fitbit had a very busy year. The Company Released stats on user activity for 2017 which showed they walked over 45 trillion steps, and got over 41 billion hours of sleep and the most active day was last new years eve and if youre taking a trip to paris any time soon, make sure to check out newly installed trampolines. Theyre set up for a limited time on the roof of the citys tallest, rather, skyscraper. That is the cnbc news update at this hour, kelly, back over to you. I dont think i have the stomach for that that looks pretty cool i think. Oh. Its cool, but, man, id be scared kate, thank you very much. Thanks. Our kate rogers. Quick look at how we finished on wall street. It was a record for the dow. A 63point gain for the first close over 24,800. 25 increase. The s p 500 up a similar amount, five points. Shy of a record. Same for the nasdaq, up ten. The russell looked like it might have done it on the close there. 1,548. 93 very close lets get to other big stories now in our rapid recap. Cold weather across the country sending nat gas prices surging. Nat gas higher by 7 today hitting a threeweek high. Apple giving its ceo tim cook and other executives a big pay boost after the Company Topped annual sales and profit goals for fiscal 2017. We are looking at a tectonic shift in the tax code thats happening in not a lot of time here. Im here in the town of greenberg, new york, one of the towns in westchester see these lines behind me. Hundreds of people have been here today some people waiting as long as two hours to prepay their property taxes before tomorrow if i passed the law in new york state that said republicans pay one tax rate, and democrats pass pay another tax rate, and the republican rate is higher than the democratic rate, it would be ludicrous. That is in essence what they have done here copper continues its march higher on track for 16 straight positive sessions on pace for its best year since 2010 up 30 here in 2017. And its time now for our takeaway. We begin today with uber whose shares would be down 30 today if it was publicly traded, sort of softbank succeeded in its offer to buy 15 of the company at after offering price well below ubers last 70 billion valuation in fact, the new valuation is about 48 billion it seems shareholders were lets to sell at that price. Michael, is this a victory or a blow for uber . Its a little bit of a blow in terms of people were anchored on that 70 billion valuation. Obviously this is a reality check. Its not necessarily truly reliable number for ultimate value, but its a little more reliable than Venture Capital estimates and auditors and things like that so i do think its a little bit of a blow, but, look, there was obviously soft bank is a big anchor investor and thats in a way, you know, a different kind of victory for uber. Theyre gik oing to get the capital, have a longterm partner. Is also with a near liquid situation, you have employees who said, okay, fine,vy a r vi a ready buyer, im going to put it into cash. Takes pressure off the ipo, according to the ceo, feels like its coming around the koecorner its falling to more terrestrial, you know its getting airbnb was that it for uber or is this a reality check before it goes public then maybe can grow its a really good question, very unclear how the Public Markets are going to treat it, either, because you dont now how the Business Model is going to perform on a quarterly basis if theres going to be an uptake. Im excited if rt t ed for te can finally cover the earnings. Next, Restoration Hardware bought back nearly half its shares this Year Spending 1 billion to do it and it borrowed about twothirds of that sum the ceo says the shares were undervalued and granted theyve gone from under 30 to over 90 this year. The wall street journal suggests this is also a battle against short sellers who may have lost 1 billion this year as a result. Is this a smart move its a huge bet by management is it a smart move long term to lever up the Balance Sheet to this degree in order to buy back a huge pile of stock at accelerating values . I dont know if thats the case. I think that the management protests a little too much when they say they werent out to get the shorts clearly aware it would engineer a short gesqueeze. A lot of criticism of the stewardship of the company and the strategy, one of the acquisitions it made so, anyway, whats interesting is its one of the biggest battlegrounds out there. Not just about retail is kind of not a hot area its this particular story they think is making strategic mistakes, the short sellers do right now theyre losing on paper. Well see if the company ends up being em blblematic of the e of buybacks. Mifinally, big tech is eyei a vast market in saudi arabia. According to reuters, apple and amazon already sell products in saudi but have yet to establish a direct presence which theyring doing now. Amazon is looking to introduce web services there apple may open a store as early as 2019. The crown prince made this a big push of his, this Technology Push at the same time, michael, hes holding the kingdoms big investor hostage in the ritzcarlton i wonder about what the reception would be ultimately if they had a big on the ground presence in saudi arabia before a lot of this gets sorted out. It probably does show you among other things there just arent that many markets in the world with a relatively affluent customer base. Young customers. Exactly they dont have a lot of exposure to. So its almost, they probably feel as if they have to try, you know, there probably would be some blowback. I wonder if anyone is going to turn to them and say why should you be investing there, expanding there . Can you help the liberalization of it . Are you going to be seen as a partner . An instrument you know, of course, theyre privatizing aramco saudi clearly wants to make gesture toward opening things up. Yeah. Based on an economic basis. Well see if the rest of the faangs follow suit. Star wars the last jedi saved the box office this year the merger of the studios will impact hollywood next year and beyond, after this star wars the last jedi brought in more than 400 million since its release, which some say is saving the box office this year even thats not enough to keep the u. S. Box overall from sinking to a threeyear low. Joining me is andrew, editor in chief of variety, andrew, thanks for joining us. Good to be here so is it seems the deep concerns from this summer passed a little bit about when it comes to the box office, but where do we go from here, first ofall well, where we go is close but no cigar the hopes were wed see enough yearend momentum where the studios could at least match the 11. 4 billion they bought in in Domestic Box Office last year. Looks like were going to end up at 11. 1 billion despite the fact that this latest star wars movie, last jedi, is performing quite well. So disney is going to win the box office for the second Straight Year with a 21 share next is Warner Brothers with 19 . Then comcast, then fox by the way, disney only released 12 movies this year. Fox released 38. Andrew, what happens when disney and fox tie up, were talking about more than a third of the box office they own, and what kind of movies and how many of them will be coming out then yeah, theres a lot of questions. I would start with is there going to be some antitrust concerns here . Could this be the kind of thing, this combination of two studios, the number one and the number four, that could actually trip things up for this acquisition with regulators . And then i do think, to your question, the volume of titles coming out from these combined studios really no indication yet. Disney has certainly learned that less can be more. So in the past, disney has had small studios like searchlight, maybe touchstone. There have been a couple over the years that have not lasted with fox now putting out so many more movies, is that going to be a threat for movie production under disneys ownership quite possibly, although ill point out that searchlight is a fox property disney has really always been in recent years squarely in the blockbuster business their appetite for midbudget films, the kind of movies that netflix, for instance, seems to be making a lot of going into 2018, these are just a few of the bigs strategic questions as disney should they make this acquisition happen maybe if their trying kelly, apple just now putting out a letter to its customers regarding this issue about its batteries. Remember, apple did acknowledge it introduced a new feature to ios last year that iphones with older batteries are throttled at specific times to try to make sure they dont get overwhelmed and shut down to really improve Power Management we know some complained at the time that apple could have been more transparent about that change apple now saying in a letter here to its customers we know some of you feel apple has let you down we apologize theres been a lot of misunderstanding about this issue so we would like to clarify and let you know about some changes were making. First and foremost, we have never and would never do anything to intentionally shorten the life of any apple product or degrade the User Experience to drive customer upgrades our goal has always been to make products that our customers love and making iphones last as long as possible is an important part of that. Also some specific changes apple goes on to say its going to be making here, kelly, some concrete steps to address the issue, one, apple is going to be reducing the price of out of warranty iphone Battery Replacement the by about 50 bucks so that brings it up from 79 to 29 they also say thats going to be for anyone, by the way, with an iphone 6 or later whose battery needs to be replaced that starts next month also next year apple is saying its going to issue this ios update with new features the whole point of that will be to give users more visibility into health of their battery, kelly, so, listen, when this issue first hit, you know, we had tech analysts who said that what apple did was technically defensible, that theyre dealing with this very real issue, lithium ion batteries do decline over time. Your older i foiphones do suffe. Tech analysts right here on cnbc thought apple could have been more transparent, better communicating about that apple trying to take that step switching gears, kelly, we also had reports earlier today that softbank had, indeed, succeeded in its bid to buy that big stake in uber. Uber now just out with an official statement about that. We look forward to working with the purchasers to close the overall transaction we expect to support our technology investments, fuel our growth and strengthen our Corporate Governance. I know, kelly, you and mike were talking about this not just the money here thats so important but also a range of critical Corporate Governance changes that are going to make place now for uber that really transform the company and they were tied to this tender offer as well. So big news from uber and softbank there kelly, back to you all right, josh, thank you very much. Mike, on apple, its easy in retrospect to say they should have been more transparticipaent the battery issue. Theyre going to roll out features to do so. I think perhaps the one that could win people over, 29 Battery Replacement if you have a relatively new phone exactly. Is not bad the issue is do people trust that apple has good intentions here at this point, its a recognition by apple it was not going to blow over and the fact they were so kind of secretive about this, it all happens behind the veil of kind of software being manipulated and removed was something they had to address i also think long term its also a good reminder that we put such tremendous loads on these devices that over time, you know, you actually do have to modulate what they do and maybe over time, it means pentup demand for upgrades all the time yes, that battery issue, i think, is definitely a gesture that says were on your side, you can actually extend the life of your device this way, and that was the one thing people said, look, even if you if you had a warranty, they didnt real will i tell you. Exactly. That it could be covered. If there needed to be a learning moment for the consumer out of this, again, this is something they should have made much for clear along the way, its not the phone, not software that were deliberately slowing down, its a battery problem so theyre going to do two things, now let you replace your batteries for 29 bucks if its a 6 or later, theyre going to introduce an ios next year with more visibility on Battery Health so if this works, and people become more attuned to their Battery Health, you know, is that going to i want prove tmpre experience with their older phones i dont know if its going to that across the board, obviously when people want to hang onto their phone, it makes it easier to do so i think the big thing, though, is the fact that apple was not up front about this whole issue beforehand, it it forced people or got people to go to the most cynical interpretation of whats going on yes yeah. So what this should do is maybe undermine that kind of suspicion story that apples intentionally trying to disable your phone. And well see if it does that apple, again, out with a statement and a couple of fixes aimed at placating people who are concerned about these slowdo slowdowns. Meanwhile the s p Retail Sector climbed nearly 30 this year were going to break down both the year and the Holiday Seasons winners and losers just ahead. Later on fast money legendary tech investor roger mcmenae will reveal while he thinks the bitcoin boom is coming to an end 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. Right in the heart of the was in his financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. The whole Christmas Shopping rush is now pretty much over up next well take a look at the retailers who fared the stbe and worst this Holiday Season. Some names might surprise you. And seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. The great emperor trekking a hundred miles inland to their breeding grounds. Except for these two fellows. 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. The Christmas Shopping blitz is over. And with just one trading day left in 2017, kate rogers has a look at which retailers fared well reporter lets look at the etf xrt, it hit a new 52week high the day after christmas who are the retail winners and losers this year year to date, these five stocks are the best performerers. Khans inc. , wayfair, pet med express, and alis bargain outlet and five below. Now, the bottom five in the index were rite aid, gnc, then Traditional Department stores jcpenney and sears, and rounding out the bottom five, genersco inc. , down 50 for the year. The retail season, the naughty and nice list from november 1st, the names kind of change around. These are the top five from that point on foot locker, express, abercrombie and fitch, finish line, and ingles, all up 50 and 60 . Foot locker was one of the worst performers for the year but its turned around this shopping Holiday Season to the downside, gnc, sears, significant net jewellers, liberty trip adviser and carmax. In terms of execution, amazon and walmart are the real winners, theyre up nearly 65 and 40 for the year im shocked at some of those names, its quite volatile, i guess. Kate, thank you very much. Kate rogers in headquarters. Were closing t ou2017 with a year in review edition of stump santoli. Harness the energy from the sun to develop popcorn. We thought we had the right equipment, we quickly realized we needed more. We were able to send a Wire Transfer to a local vendor and get more Solar Cookers delivered, right here in death valley. Manage business expenses from virtually anywhere. The chase mobile app available with business checking. Chase for business. Make more of whats yours. Well, thomas, youve got prediabetes. But with more exercise and a change in diet, it can be reversed. But ive tried exercising, and it just makes me hungry for bacon. I love bacon, too. And who really likes to exercise . Not me. Me neither. Nobody [both laughing] mmm so were good . What . Oh, you still have prediabetes. Big time. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. 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 it is now time for stump santoli its our final stump santoli edition of the year. For this year i do better for 1997, but okay hes been trying to take a peek at these all day. The dow has hit more than 70 highs today. Whats the second best performing dow omponent . Caterpillar yes its up more than 70 year to date really they were all in the top five exactly, we tried to make it tough. One of the most buzzed about deals was amazon buying whole foods. That made them the fifth largest grocery retailer in the u. S. Who is number one . Thats a trick question ill say walmart it is walmart correct. Two for two. It wasnt really a trick question kroger is a real grocery company. But you still went with walmart. Number three, the disbanding of the president S Manufacturing council. Who was the First Executive to leave . Frazier three for three you cant leave on such a were done . No, theres two more. The box office for 2017 looked grim until star wars came along. Which movie was the top domestic movie of the year so far wow i can read this again no, no. This is probably a pure guess. Guardians of the galaxy. No, it was not. This surprised me as well. Do you want to guess again not really. Its beauty and the beast. That would have been my second it had 50 of my money 504 million of everybodys money, so that was the biggie. Was it four questions . Was there a fifth . Is that everybody . Thats it. I thought maybe there was another one. Did you want to i have a quiz for you so the momentum etf, mtum, how many dow stocks are in the Top Five Holdings . You just told me. Was it three out of the top five its four. Four, okay. This still shocks me let me see if i can remember microsoft. Microsoft but not caterpillar thats not fair. It was jpmorgan. Right apple was in there what was the last one . I dont know were stumped together michael, thanks for being a good sport as always. Happy new year, everybody. 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, bitcoin burning investors again today, falling nearly 10 , back below 14 grand legendary tech investor Roger Mcnamee says dramatic price swings are far from over next, apple apologizing for its battery issues just moments ago and lowering the