Transcripts For CNBC Closing Bell 20180102

The oil markets. First, stocks kicking off the first trading day of the new year on a high note. And if the january effect plays out, todays gains could be a positive sign for 2018 bob pisani here with the story bob . Reporter yes, just a lot like 2017, some of the big names are moving today semiconductors doing well. Lot of interest in that. We see Retail Stocks doing better we see energy doing better heres something curious, the banks are not participating in the rally. I find that interesting given that the ten years been moving up utilities have have been a loser for a long time. Thats no surprise here. Look at some of the big banks. Come over here citigroup here down 0. 4 on very light volume most of the big banks, regionals in particular are down fractionally not a great month, frankly, if you want to look at january. We asked our friends to take a look at the last five or six years in january it tends to be a down month. Nasdaq and the s p and the dow industrials all to the downside. Even the small caps, in fact, the small caps are the worst performing this is on average for the last five years only up about half of the time if you look at the sectors, utilities which are dramatically underperforming recently have been the big gainers recently along with energy and financials on the downside, again, so financials are starting out the year right around where they normally would be. Guys, back to you. Thank you, bob, see you later on bob pisani lets send it to dom chu meantime back at headquarters with a closer look at some of the dawns of the dow. End of one year into the beginning of the next where a lot of traders and investors look toward this dogs in the dow strategy in a nutshell, take a look at the ten highest yielding stocks in the dow, buy them, hold them for a year then rebalance the whole thing the next time around this particular strategy, this time around, focuses on the ten stocks we have in our current dogs of the bougdow. Th check this out ge, cisco, procter gamble, coke coca cola, chevron the dividend yields range from ges 2. 7 , cut its dividend by half not too long ago, up to verizons 4. 5 dividend yield, one of the higher yielding Telecom Stocks we talk about the reasons why people look at these, a lot could be some of these stocks have been beaten down pretty badly, like General Electric shares to a point where the dividend yield becomes very attractive, very hesthy evfty ee they cut it. Theres a case to be made for some folks buying beaten up stock have a reversion to the joupsi upside, maybe a bounce the dogs of the dow does not not outperform the market overall. As traders look toward the higher yielding stocks especially in the dow, theyll look toward these dogs to see if there are possible opportunities for a bounce this year or whether those down trends remain in tact, guys. Back over to you thank you, dom. What . I dont know. Skeptical . Were going to take both sides of this now. Yes, we are. When it comes to investing in 2018, should you go with those dogs of the dow . Or with 2017s big winners, the companies that already have been proving themselves in our debate today, mark leeman from jmp securities, he prefers the winners from last year while jake from longbow Asset Management favors the dogs of the dow stocks good to see you both jake, why the dogs of the dow . I think it companies that are down from the Previous Year offer, i think, great opportunity to get in at a low price, like before christmas if can you like an item at full price, why not go back the day after kbhchristmas and get it 4 off in the case of ge . Because you dont think its worth the money, jake. When the talking heads on all the shows Start Talking about ge as we are right now right. What might you be suggesting . Right im saying the mentality on wall street, unfortunately, why people hire Investment Advisers is people tend to buy high and sell low and we just look to see last years losers as a benchmark for example, amc theaters and kroger, kroger got obliterated last year because whole foods bought because amazon bought whole foods. So we think kroger is a comp compelling value. All right mark, what about that strategy which, by the way, has made the likes of Warren Buffett very wealthy over the years. It has. And buying some of the winners has been a great strategy. I sometimes call it the high enough to buy strategy all the people who have not paid attention to facebook and amazon and some of the great winners of 2017 and 16 are, i think, capitulating a little bit. I sat around for christmas wait a minute, mark, do those poem exist who hasnt been paying attention to facebook and amazon over the last couple years . I we at jp, i said on your show a year ago and told you to buy facebook and amazon and apple. A lot of people said they were too high then. Im not sitting here a year later th later saying theyre uncommon values as i sat around over christmas, we had amazon packages show up, my kids were staring at facebook all day long not a lot as changed stocks are still growing 30 , 40 , 50 i think you want to stick with the winners. Im sorry, does that include apple . It does i i think it does include apple. I think the names like facebook that weve all talked about, but given the extent, the growth rate, the Expense Growth that they have, i think youre still at a multiple you still want to Pay Attention to those stocks and i think 2018 is going it be a terrific year for those securities. And jake, what about the concept of paying a good price for a great company, which, you know, might have been the case a year ago for some of these tech giants and maybe is the case today . Instead of paying a great price for a crumbier one you know, momentum plays like amazon and facebook belong in every clients portfolio you should have value in your portfolio as well, whether dividend yield, percentage decline from 52week high. Its an opportunity to pick up 235 fantastic companies. Look at home depot, chevron, look at disney and i like verizon and even ge at this point. People feel like they overpaid for baker hughes, which they did, but were here in tulsa, oklahoma, a former oil capital of the world were very bullish about energy going forward. All right its one of my favorite debates. The bulls the dogs versus the winners for the year mark leeman, jake, thanks for joining us happy new year. Thank you thanks. And a major shakeup this hour out of washington utah senator orrin hatch announcing he will not run for reelection in november. Now, will mitt romney, one of the president s harshest republican critics, now take that seat . Lets bring in larry kudlow and john harwood john, first to you the news a little bit of a surprise because orrin hatch knows the ramifications, right i dont consider it very surprising orrin hatch is 83 years old. Hes been in the senate for four decades. Who would want to stay there forever . Especially after hes just completed the passage of the tax bill, which was a major accomplishment for him as the chairman of the finance committee. Not not you talk about going out on a high note now, mitt romney is the likely successor. Theres been a lot of talk about him running. Ive talked to several republicans today who expect him to run people in washington who are close to Senate Planning for 2018 he is overwhelmingly likely to win both the primary and a general election if he does. And that poses some risks for the president because mitt romney is somebody who unlike people like bob corker or jeff flame, he has president ial stature, himself he is not concerned about his political future and hes been a very staunch critic of President Trump from a moral place, as well as from a policy place and until he thats something that President Trump may not welcome. He was a staumpnch critic unl he wasnt when he was up for sec a secretary of state. Larry, what are you hearing ive been making calls. I got one finally back anonymous, im sorry but its somebody very close to romney down through the years. This person believes he will, in fact, run. He also confirmed what others have said to me a little bit outside romneys circle, that mitt romney wants to stay in the policy game, and that this would give him an opportunity to do so i agree with john harwood, if romney does run, he will win easily i will say this, and other people have said this to me, i dont think President Trump is going to be romneys biggest supporter in utah. There are younger really . Republicans out there. One name that comes up is mia love, a young conservative woman, congresswoman from utah, who trump might want to support. Another possibly is Jason Chaffetz who resigned as the house member to go work on tv. He might go back to utah and run for an open senate seat. In other words, the speculation is here romney is going to run and President Trump is going to back somebody else well, if he does back somebody else go ahead. He will lose because mitt romney will win that fight and the one other thing i was going to mention before is remember what mitt romney was known for among the things he was known for in 2012. He declared in a debate with president obama, russia is our foremost geopolitical adversary. He believes and many others believe he has been vindicated by whats happened since he said that in 2012 and i think that raises the prospect that he would be a very strong critic of President Trump with respect to policy on russia, and with respect to what happened in 2016 bill, you were right, he was a critic until he wasnt, but remember, it he was considering going into the administration and having some impact inhouse that is going to be a different situation. Right. And the posture he strikes on issues like nafta, on issues like of general Economic Policy and with respect to russia, those are significant potential thorns in the president s side you know, larry, maybe he should appoint him secretary of state right now. What about those reports that tillerson was out . Remember back a couple months ago the oh, tillersons out as secretary of state in january. Well, its january we havent heard much. Well, i dont know. Look, i dont i doubt if romney would be appointed secretary of state i think President Trump played his cards pretty well last winter inviting mitt, getting him involved, having dinner, letting it, you know, percolate, but it didnt happen i think i think mitt romney will run for the senate. By the way, i think that romney will agree by in large with President Trumps views, probusiness views, entrepreneurial views, taxcutting views. These are things that mitt romney absolutely supported. There will be differences of opinion with respect to foreign policy, but, again, this things going to have to play out. And i think President Trump yeah. Is not going to. Be passive in this. I think he may well find someone else to back now, perhaps thats utah i think john has a point there romney is still very popular in utah but there will be a certain high drama if those two are on different sides in a lousy utah senate state that might have 2020 ramifications as well all right right. Right. Yeah see john mccain and how that all works. Thanks, guys we will see you later. Thank you both. And we have a lot more ahead on the closing bell. Next, bitcoin gets a new and big backer see whos piling in now. Plus, a Hedge Fund Legend gets set for a comeback. Wait until you see what hes going to charge clients. And the latest after massive protests hit iran. The impact may be about to cut through heart of the Global Oil Market and we want to hear from you. Email us at closingbell cnbc. Com tweet us find us on facebook. The closing blel with kelly evans and Bill Griffeth is back in two minutes cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Welcome back we have a news alert on vice media. Julia boorstin stepping in with details on that. Julia . Bill, vice suspended its president as well as its chief digital officer to investigate harassment claims as following a New York Times expose last week detailing over a dozen incidents of Sexual Harassment and misconduct including a 135,000 settlement that its chief digital officer reached with a former employee in a memo obtained from a source, the companys chief operating officer and chief financial officer, sarah broderi broderick, wrote to vices staff this morning, saying that the allegations against the two execs will be reviewed by an external investigator. The memo outlines steps that the company is taking, hiring a new global head of hr. Launching mandatory Sexual Harassment training. As well as a commitment to achieving a 50 50 male female ratio across the organization by the year 2020. And pay parity by the end of 2018 also announcing a new part of content strategy to lead an effort to drive social consciousness and diversity across the companys content broderick also hinted at more potential changes in the works for vice, saying after the companys Board Meeting on january 11th, theyll have an update on new leadership, this also, of course, though, poses Reputational Risk for a company that had hoped to go public as early this year. There had also been talk of vice at certain points looking for a buyer. This could change that kelly . No word on renaming it virtue yet, though. At this point. Julia, thank you no. Nice. I mean, at some point. I got you. Julia boorstin in l. A. Lets get to the violent protests taking place throughout iran again today angry demonstrators attacking the government over a lackluster economy. Despite the windfall the country saw from the nuclear agreement, of course. Michelle carusocabrera following the protests for us. We start with jackie deangelis, she has the potential impact to oil. Crude prices not being affected yet but if the situation continues to deteriorate, get ready for a sbik from prices irans production has slowly been ramping up becoming more significant in terms of opecs overall output in 2015, iran was 9 of the cartels production in 26, up to 11 . In november 2017, almost 12 , just under 4 Million Barrels a day. Think about it in context. Opecs cut, just under 2 Million Barrels a day, including russia. Irans output is twice that. If iranian crude were to suddenly stop flowing, lets say 60 a barrel would seem cheap. Back to you guys. All right, jackie, thank you. Now to michelle with more on irans economic problems michelle hey there, bill yeah, the lack of Political Freedom in iran is well known. Less noted is the lack of Economic Freedom leads to an inefficient economy with very high levels of inflation and unemployment initial reports indicated these protests started at least because of inflation and a big price in the hike a big price hike in things like eggs doubledigit inflation, a longrunning problem in iran currently its running somewhere between 10 and 12 . Believe it or not, thats an improvement. 2 2015, 11 . 2014, nearly 15 in 2013, 32 unemployment also high 12. 4 . Thats according to irans Statistical Office for men, its lower, 10. 7 for women, unemployment almost 21 . Youth employment, worse, 29 for young men, it is 25 for young women, according to irans Statistical Office, 44 the economy did improve after some of the sanctions were remove ed by the Obama Administration as part of the nuclear deal it allowed iran to sell oil again. So according to the imf, gdp growth from 2016 to 2017 was strong, 7. 4 but consider this, growth in the nonoil sector, only 0. 9 . So a lot of the benefits not widespread, bill and kelly and thats with oil back on the rebound. Michelle, thank you. Michelle carusocabrera. Lets talk more about the unrest there, how it might impact markets back here. Joining us right now, ambassador nicholas burns. Former undersecretary of state for political affairs. And cliff whos chairman of the eurasia group. Good to see you both cliff, the scouting report on the protests right now is theyre not nearly as wellorganized as those in 2009. Therefore, we shouldnt take them that seriously. What do you think . More or less right so far theres no organization. Theres no articulated demand. Its mostly in the provinces, not the nerve center, tehran this is very unpredictable its a workingclass phenomenon. I dont think it will blow it could blow. The main reason is the main leader khomeini can and use ruthless force to put them down if he has to and that could be around the corner. Well, if the president , mr. Ambassad ambassador, wants to encourage these protests, if say see it as a way of destabilizing the regime, what more could the u. S. Do i think the Trump Administration is doing what it should do. I think the president s tweets have been pretty much on the mark the last couple of days he needs to keep it in balance, however, because theres a big contradiction here the president says we support the people in iran, but, again, theres this travel ban that doesnt allow any iranians to travel in the United States. So i think hes got to hes got to be careful not to overplay his hand here and you see now that Ambassador Nikki Haley is calling for u. N. Security Council Meeting theyre not going to be united russia and china are not going to agree to any kind of resolution to condemn the iranian government at this point. So i think the u. S. Should st stay should speak up, say what it can to support the protesters, but be careful not to inject itself into the center of this. Its not going to work to our advantage. So the president has has asked the iranian government not to block instagram, ambassador burns. Youre saying thats not a good idea is that not a good strategy . No, im not saying that at all. I think, as i said at the beginning, i think much of what the president has already said on twitter is on the mark, positive the United States should stand up for freedom of choice, freedom of speech, and we certainly dont want to see authoritarian regimes interfere with the internet and the ability of people to express themselves what im saying is, we want to act in our own interest here and we want to be effective. Right. And if the president makes himself a part of this, and we now have tweets running for three days now, increasingly aggressive, i think that probably hurts the United States it allows the regime to blame us, that wouldnt be right, it wouldnt be accurate, but theyll do it because theyre dishonest. And thats just not in our interest to see that happen. Cliff, theyre already blaming us but it seems like the iranian people arent interested in trusting what the leadership that theyre protesting against has to say about whose fault this is. My point is to your point about them cracking down further, if brutal repression, as you suggested, is next, if these protests continue, what would that look like, what are we talking about and would it happen in full view of the International Community . And if then, couldnt there be more of a strong response by the u. N. Or some other or by the u. S. Well, it would the main agents of repression in iran are the paramilitary besiege, sort of guys on motorcycles with chains the Iran Revolutionary guard corps and special organizations of the police. They there, you know, may be over half a million people. There is a brutal repressive machinery in iran. It would look ugly it would be in full view of everybody. And, yes, it would expose iran to more condemnation, but this regime, theyre a very tough out. And they will play that card if, indeed, they need to and, cliff, is as you know, the oil market had been rallying, anyway, and it had a pretty good rally this morning on first reports about some of these. Is there a legitimate fear that well see a cutoff in iranian oil at some point . Not at this point you know, the market starts talking to itself when anything in the middle east goes up, and this is hundreds of people now it just broke to thousands apparently in tehran its really small. Its not even a remote threat at this point to iranian production 2. 3 Million Barrels a day that iran exports, i think, are quite safe right now you know, id play against the spike. I doesnt think its a rational happens every time washi ines out its going to that again well, somebody already took profits on this mornings rally. Thats true well see if they flare up further. Guys, thank you both cliff kupchan, ambassador nicholas burns. Thank you. 35 minutes to go in the trading session. Dow up 75 points right now, half the session highs. Weve within flbeen fluctuating broad gains to the s p and russell as well. Big Companies May be about to pounce in the in u year scooping up other names. Were going to see it who may be about to be shopped and whos going shopping. Yeah, some rather eyeopening predictions already. Plus, disney, of course, has made a boatload of money from its frozie iningeefrozen fra. Frigid temperatures could cut into the companys bottom line the closing bell will have more in two minutes. Cnbc sector sort is sponsored by sector spdr etfs. Sector spdr etfs visitors on the web at sectorspdrs. Com. Nah. Not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Call for a free kohler nightlight toilet seat with consultation. Or visit kohlerwalkinbath. Com for more info. Welcome back abbott labs trading higher today on the heels of an upgrade to overweight from neutral at jp morgan the analysts say theyre encouraged by abbotts product line stock also being added to the cnbc i. Q. 100 index. Its trading up 2. 8 right now kelly . Oh, boy. Time for a krns krcnbc newse lets get over to sue herera. Hello, guys, heres has happening at this hour, everyone u. S. Ambassador to the United Nations nikki haley saying the u. S. Will withhold 250 million in aid to pakistan and saying pakistan could be cut off completely if it harbors terrorism. Protests taking place there today after President Trump criticized the country in a tweet. North korea could be planning a Ballistic Missile launch in the next few days according to u. S. Military officials. U. S. Intelligence detecting the type of activity usually seen prior to a launch. Check this out that is not good news. Long look at the bottom of your screen okay that car in davenport, iowa, completely encased in ice. There was a water main break then there was some snow and now that car is literally frozen solid plus its a snow emergency, so call carshave to be removed from the road not that one, apparently, though. More than 100,000 donated to the charity of andy dalton, the Cincinnati Bengals quarterback. He threw a gamewinning touchdown pass to knock the Baltimore Ravens out of the playoffs and put the Buffalo Bills in it is the bills first playoff appearance in 17 years and that is why many of the donations are coming from bills fans in the amount of 17. Thats the cnbc news update thats awesome. This hour. I know, its a great story it really is. Wishing they hadnt been in in 25 years, though, but anyway. True, but hell take. He will take it thank you, sue. Got it. See you later. See you next hour. Lets get to the markets the dow is up 82 points right now, the s p is in record territory, i should point out. Nobody else is, but they are higher right now joining us on our closing bell exchange, peter costa from empire executions. Rob from u. S. Bank Wealth Management Rick Santelli is in chicagoland at the cme we had a pretty good rally on the open this morning. We. Lets remember we had a big selloff on the close on friday so we were essentially just gaining back what we had last on friday. Right. On the open this morning. Now were below those levels yet still a pretty good start to the year. E yyeah, i mean, i expect th to continue. Were not seeing any kind of major volume shift normally the beginning of the year is fairly light trading, anyway, but, you know, its i think youre going to continue to see this. It just the momentum in the market is such that its going to continue going up i think youll have minor, minor pullbacks. Until we have something that actually is a game changer, i dont think theres much in the way of this market going higher. I really dont. Rob, ubs made an interesting point today saying for the first time in decades the fed will enter the year with a smaller Balance Sheet than where it started. What impact is it going to have across the bond markets do you think as they continue this tightening yaerkeah, we think the fed wl keep raising rates and should lift rates a bit here as we get into the new year. Somewhat higher tenyear rates higher short rates maybe a flattening yield curve its going to mean a tough go for the bond market, i think, in 2018 is this finally the year that we see the end of the long bull market in bonds . Weve been forecasting that for at least a decade i think. Yeah. I think the industry has, and i think it theres a good chance of that, particularly if we get much better economic growth, right . I the fed will certainly help but better growth and better nominal gdp growth will also help raise Interest Rates in the u. S. Tough to do, though, rick, when the dollar continues lower as it did again today. 91 range now the dollar index. Reporter yes, the dollar cant get out of its own way, not a pretty start to the year, as you pointed out, bill it did lose its 92 handle. In terms of Interest Rates, it was a pretty powerful day. I mean, the long end for a while in the form of 30year bonds was up eight or nine basis points, even though it gave up just a smudge listen, i think that the bull market in treasuries, we can argue whether its over or not, but were almost double the Double Bottom in 2012 and 2016 around 1. 35 as we cover below 2. 50 in the ten in my opinion, the issue is how much higher can rate go on the long end i dont think theyre going down i dont think anybody over the next several years is going to be saying, wow, here we are back at 2 or lower i do think theres an issue we could maybe back away from the 2. 50 zone and go to the 2. 30s. If i had to pick a high yield for 2018 on the first trading day, it would be around 2. 63, slightly above 3 . Even though thats high considering the last history of four, five years, i dont think theyre anywhere near enough to on their own stymie any of the rallies in the stock market and i think in terms of stock s its kind of like bitcoin when it reaches 20 million they can only have 21 million of them, right . I think the stock market is going to continue to be a supply story. When we ultimately see more equity issuance than Debt Financing by big companies, maybe then we really need to Pay Attention to that equation of supply and demand driving stocks turnaround. Thats an interesting point i wonder, peter, if well see that shift at all under the new tax rules. I was going to ask you about the dow transports. Yes. Nice rally today, alltime highs. Fedex, jb hunt, norfolk southern, some of the names up there. I am old school i believe in the dow theory. I know there are not that many people that even follow it. The industrials and the transports hit new highs. They go in new highs, you know theres more new highs to come i do think we are in that phase. There was some separation earlier this year. The transports were lagging. That turned around quickly and tells you the economy is still growing and a lot more not sure about a lot more, theres definitely more room on the upside i think the transports are telling you that. Rob, before we go, its not just about the u. S you also like stocks in other parts of the world as well europe and asia, right yeah, we really like europe and japan here you saw it this morning with the purchasing management data last night with the purchasing manager index data, those economies are seeing really strong positive momentum and so we think theres a little more upside in europe and japan still to come. All right. We get our data tomorrow. There you go. Thank you, gentlemen peter, thank you, rob hayworth, Rick Santelli. Have a good day. 26 minutes left in the trading session here the dow was up 144 were up 7 5 right now and volume has picked up a little bit as we head toward the close. 2017, of course, was the year amazon firmly placed a foot in the brick and mortar space with its purchase of whole foods and this year the online giant may do an even bigger deal and bitcoin, speaking of which, is getting a little boost today after a Silicon Valley bigwig amassed a huge position d disclosed it to investors. Tell you about that when the closing bell comes right back. Your brain changes as you get older. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Well, the new year has barely begun and the m a predictions are already if play. Probably heard famed analyst munster says amazon is going to buy target this year and analysts at ci iti says theres 40 chance apple will buy netfl netflix. 60 chance they wont. 40 is always a good number joining us is russ, along with ed lee, cnbc contributor from recode welcome to you both. Ross, what do you make of all the speculation . Weve heard a million combinations about, you know, who these companies should buy who do you think is a wise target for apple well, first of all, you know, i was with some of the people who were working with apple and video and apple is not buying netflix. Apple is going all in on their own video platform, and theyre making a lot of progress there so, so what we really see apple, you know, doing is more of these addon acquisitions. Tim cook isnt the big bull, the acquirer he bought shazam this is very safe. We see this continuing with apple. We dont see anything huge there. We think theres going to be a lot more consolidation in entertainment, though, around netflix as more players come around and pick apart netflixs business but if anybody has something to worry about right now in hollywood is actually netflix. Yeah. And, ed, i always have to think that tim cook and jeff bezos are sitting back laughing with all these advice that theyre getting of with what they should buy. What about, though, i mean, gene munsters point on amazon buying target is they realize that theyve got to have this hybrid of brick and mortar and online brick and mortar and online, i mean, he didnt put a percentage on it, he seems pretty definite it will happen or at least should happen. I like that idea more for the pharmacy aspect. I think thats an area that clearly amazon is taking steps into same time, i dont know that they need all those locations. You can its cheaper to just buy Warehouse Space directly and use that as a hub for all your deliveries i think target has a nice Customer Base certainly. I think thats an appeal, but, again, i dont think i think amazon right now is in the business of going after logistics, going after owning the infrastructure of both delivery and whatever sort of backend for all kinds of businesses thats where theyre headed. Their Marketplaces Division is the faster growing part of their business. You think they would be looking at acquisitions. Right, and where it would be a smarter bet for them, right . Again, how theyre disrupting where deliveries go. Does that mean the mega guys or now, we, of course, know, the president was sort of piling on the pressure about their reliance on the u. S. Post office, so are we talking about kind of smaller plays or would they have do something larger to get that last mile taken care of i think the last miles are a really hard nut to crack one company that weve been reporting on at recode is xpo, logistics for big heavier items, luxury items its something that home depots actually been looking at because its a big part of their delivery infrastructure. And so its also defensive i think home depot is looking at it as a way to keep it out of the hands of amazon. Again, that tells us how amazon thinks about the delivery chain, where they need to own it. They cant rely on the third parties like the u. S. Postal service or u. P. S. Or fedex theyre going to use them the best they can, but the more they control it, the more they can sort of deliver on their promise of twoday for prime that kind of thing. Ross, what do you think jeff bezos has up his sleeve right now . I definitely dont think its target i cant imagine why, they already have the target customers and target, you know, is a retailer. I cant imagine. What i think jeff bezos needs to focus on, if hes going to go into retail, is the niche retailer like the whole foods, and a company like ulta salons which we own a little bit of stocks in is a perfect way if i want to get retail and get into a profitable niche like beauty and amazon looks at, like, pharmacies and i dont love that business as much as the beauty business really Good Business to get in now, that being said, i dont think thats their direction moving forward i really think amazon cowell do a lot more with fintech and i think with bitcoin and if amazon takes cryptocurrencies as a payment, it will be the biggest game changer for amazon of any decision they ever make. So, i think thats for amazon or everybody in crypto for everybody, and crypto the future of money is global and digital. If you think about it like that, and amazon wants to dominate the globe, why not incorporate this before paypal does maybe they need to look at payments and systems and logistics more than im going to buy another retailer and lose money. I think payments is definitely crypto isnt a form of payment really its a store of value. Its the way its been doing not just for bitcoin it is a form of payment well, i it absolutely is a form of payment. Buy or sell things in bitcoin right now, just given the way its fluctuating relative to th dollar, anyway thats what people said about the internet 20 years ago. No, it well see, well see no one wants to buy or sell things with bitcoin. Just remember that Credit Card Companies Credit Card Companies made 3 off of every transaction in the world this is a monopoly that needs to change thats what cryptos about i think if you really about it, if amazon charged 1 and took crypto, theres a huge opportunity there for them im not sure equating this with the internet 20 years ago is your strongest argument right now, ross, knowing how it struck out 20 years ago crypto is very similar to the internet go ahead, ed. Well, one area i think at least for both amazon and apple, i think video content is definitely an area theyre both wanting to bulk up in. I think if terms of acquisitions, i think production houses, whether lionsgate or some kind of partnership with sony or paramount is a better route for that instead of owning, like, a netflix where youre buying into a smaller Distribution Channel apple already has a much bigger Distribution Channel through their apple i. D. I must say, ross, you must have made hearts at visa and mastercard flutter with the amazon kriccrypto they should be fluttering they should be worried. Thank you great stuff. Ross gerber, ed lee. A boldfaced name in Silicon Valley and friend of the president s is buying up you know what. Bitcoin. And elsa would be so proud its so cold even disney world in florida has to make some major adjustments. We have that story coming up on more closing bell in two minutes. Things starting to heat up here as we head toward the close. We mentioned the s p is flirting with record territory. Transports are already there look at the nasdaq up almost 100 points above 7,000 if we close there, it will be the first time weve ever closed above 7,000 on the nasdaq composite. Briefly trade ed above there. Well see if we notch an intraday or especially a close above 7,000. Would be a nice round number to start the year. Exactly. You know what getting a big boost today on reports one Silicon Valley tech fund is getting in on bitcoin. Josh lipton has the story. Josh kelly, maybe we shouldnt be too surprised here that peter thiels firm is placing a big bet on bitcoin after all, thiel, himself, is a libertarian and technologist with a deep background in Digital Payments as cofounder of paypal. The journal reporting that Founders Fund bought around 20 million in bitcoin in a bet that spread across several funds including one that began investing in mid 2017. The investment is now apparently worth hundreds of millions of dollars after the Digital Currency skyrocketed higher. Jumping more than 1,300 over the past 12 months though off about 25 from its high thiel isnt the only big name Silicon Valley vc investing in cryptocurrencies benchmarks bill gurley was on cnbc not long ago where we sounded like a bitcoin bull. We do have money in bitcoin and i dont think its irrational i think of it as an incredible store of value for the rest of the world. Now, not everyone is a believer, of course. Jp Morgans Jamie Dimon calls bitcoin a fraud that wont end well kelly, back to you meanwhile, what did i read about the new one today is stellar that everyone is talking about. It was ripple over the weekend. I love ripple thats my favorite bitcoin amid all this competition, though, is catching a bid today. Finally on this peter thiel news thats all im saying. Good for peter. Ten minutes to go. And were starting to tally up some records here the transports are in record territory. The s p, were close the nasdaq, though, were there, above 7,000. Could be the first time in history that we close at that number 7,000. Some of disneys most popular attractions are shutting down why the mouse house is closing the doors on some rides. Wh we meigenco rht back on the closing bell. Lets begin. Yes or no . 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. Wifiso if you cant live without it. T it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Nasdaq continues higher. Look at that now 7,006. Thats a few intraday alltime high. Yes, it is. 103 points. We could close above 7,000 for the first time s p 500, 2,095. Im looking to see if Peter Tuchman has hats for nasdaq 7,000. Got lost in the shuffle. Meantime the bitter cold is forcing disney to close part of its park in florida. Julia boorstin has the details julia, say it isnt so well, bill, disneys closing one of its orlando water parks due to that cold weather disneys typhoon lagoon is closed today through thursday, while its other water park is closed for refurbishment which the company says is typical for this time of year. Rival, universal, also closed its water theme park universals volcano bay on pond. It will remain closed throu throughjanuathroug throughjanuary 5th when i asked if the rest of the park is seeing an attendance dip, while it may be cool, its a lot warmer than where many of their guests are coming from saying theyre doing great seaworld aqua aquatica, the watr park, is closed and will with through thursday i think its in the 50s or so today. Brr. Are you getting Winter Weather in. In the 50s. Coming too . Its in the 50s heres the thing, kelly. Its not the main disney park. That park is open as is Universal Studios orlando. So the main theme parks are open because weather in the 50s, its fine its cold for florida. Its definitely too cold for water parks. Thats why were seeing the water parks close. Because not many people are going to be wanting to run around in a swimming suit in 50 degree weather im about to. Ill tell you what. I dont know. We would welcome that. Depending where youre coming from yes i said earlier during commercial, this is why disney world is not in buffalo, new york buffalo exactly remember troopers. Maybe there are a lot of visitors from buffalo who went down to florida for the warm weather. Certainly better than buffalo. Too cold for bathing suit weather. Thanks, julia see you later. So were closing if on what could be a recordbreaking day for e thnasdaq we have that coming up very briefly [hawaiian music playing] letsfist word that comes to mind when you think of lowcost futures trading. 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. The trading session and the first trading day of the year has turned out to be a pretty good one for some of the major averages the nasdaq right now in record territory. Although were just off the highs, but that would be a new alltime high. Anything above 7,000 would be, and anything above 7,003 would be the new intraday high as well bob pisani is with me here pretty good start to the year for the tech stocks, r which lagged the latter part of the year. Thats right. The semiconductors have been strong today the faang names have been strong today. You mentioned the nasdaq 100 moving up and the nasdaq hitting a 7,000. I think whats important is smaller names, im talking ross stores, or costco, or tractor supply, or western digital, some of these other names that are out there have been strong recently and they have helped move the market up so its not just semiconductors and the nasdaq theres Companies Like ross stores, you dont think of in the nasdaq, but theyre there, that are helping the markets. S ps also right now in record territory, but the transports, look at this, very strong they were strong the latter part of last year anyway, the shippers had a good Holiday Shipping season and theyre leading the way among others as well today. We had ryder at new highs we had many of the logistics companies, like robinson, at new highs today. In fact, there were a half a dozen transports at new highs. Whats not moving higher, again, the dollar. The dollar index now with a 91 handle and if we showed you a oneyear chart, i mean, it just, you know, cascading lower through the whole year, and showing no signs of trying to find a bottom yet. This is a problem in europe because the euro has been stronger against the dollar recently, and thats, i think, one of the reasons today on a normally strong day around the world, we saw much of europe slightly to the downside. Gold benefitting from this decline, again, as it moves higher were now comfortably above 1,315, 1,319 what happened to lets sell gold and buy bitcoin that story is not working well i dont think theres anything to the story. Bitcoin, thats been off the highs today. Records for a few of the major averages including the s p and the transports and the nasdaq. But not the dow. Stay tuned now for 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 and lets take a look at this close on wall street the first trading day of 2018. And the dow going out with 105point rally, a big portion of that just in the last hour. We opened higher, gave a lot of that back then climbed up to 24,824 for the blue chips. Not a record close the big news is in the other averages look at the nasdaq composite closing over 7,000 for the first time 7,006. 9. Thats after trading above 7,003 for the first time just in the last couple minutes of the session. The nasdaq up 1. 5 to kick things off here in 2018. The s p 500 doing all right for its part up 22 points. Closing at 2,695, thats a new record high. And the russell 2000 small caps up nearly 1 1,550. A record close for them as well. Again, first time over 7,000 for the nasdaq well talk about that in just a moment as we have a top tech analyst to give us his 2018 predictions for apple, amazon and ibm even thats coming up joining me now on the panel, to kick things off today, cnbc senior markets commentator michael santoli. Rob cox is here. Reuters breaking views global editor paul hickey, cofounder of Bespoke Investment group the biggest winner on the dow today was disney biggest loser was travelers. In the s p, the big winner, Advanced Micro Devices biggest loser, vers risign the nasdaq making the biggest moves with the 1. 5 gain is this a january effect, guys 2017 indicating good times for the rest of the year day one is not necessarily much of a bellwether but doesnt hurt i mean, first of all, the january effect has taken on multiple meanings. It used to be last years losers get picked up. Last years winners sell off and small caps outperform. That kind of was the old january effe effect now we talk about the various indicators i do think its a familiar feel, very familiar rhythm to the market today versus last year. This sort of gentle broad rally with a lot of the old suspects like the cyclical stocks as well as some of those laggards like you mentioned, kelly, walt disney and ge, which were underperformers last year that got picked up today. Rob, what do you think of it all . The best january effect story is Weight Watchers have you seen what their stock did today . Up 7 because this dude, d. J. , came out to be a social media ambassador so to be a this dude hes like the biggest dude on social media hes the perfect ambassador. Hes perfect. Although hes going to have to give up i was looking at some of this lyrics he seems to like philly cheese steaks and gray goose vodka. The vodka might be on Weight Watchers i doubt the cheese steaks are. Come back from three weeks of gluttony and get to get on Weight Watchers program and join your gym. I dont know, youre Weight Watchers might have been up 8 but Planet Fitness got a downgrade, rob i think it was down a couple Percentage Points on the close so, im sorry. It was the young and yang in the january effect let me bring in paul, what do you make of this january effect, if any i think as mike was saying, theres so many january effects its hard to keep track of which one people are talking about the bottom line is the market doesnt care whether the year ends in a 7, 8, or other number for that matter. Cares what the economys doing and what the fed is doing. The economy is continuing to do well were seeing leading indicators of the economy continue to show strength the fed isnt showing real signs of becoming overly aggressive. So until those two one of those two things change, i think investors will be better bet served to, you know, stick with their plans and stick with the market rather than reacting to headlines or becoming more cautious just because were due for a pullback you know, just that that that strategy hasnt worked well over the last 12 months so i think, you know, just continuing to stay the course here well, if theres one indicator more people agree on, its the transports. The dow transports hit a record enter d intraday high earlier today. Other transport stocks hit alltime highs and closed higher, fedex, u. Pmt p. S. , ry alaska air transports up 5 . The transports hit a lot of the strong points of the markets the kind of consumer boom, the shippers, the u. P. S. And fedex, as well as web when materials do better, rails do better. When basically investors are feeling good about how the economy is trending, they go to the transports so, look, have they gone too far, are some of those components very expensive relative to their histories . Absolutely but it seems just very much in tune with how this overall market is set up right now. Rob, whats it say to you . One of the things thats interesting is a reflection, perhaps, on peoples views about trade policy as well, certainly u. S. Growth, domestic growth is going to pow aer a lot of it if people are feeling Donald Trumps bark is worse than his bite, people seem a year down the road to believe, you shouldnt be worried about people like the fedex and u. P. S. Who, you know, have a huge who are even the Rail Companies who have a huge leverage effect to trade although we still have stuff like nafta, who knows where thats going to come out, even thee though a lot of people think now that we got a trade deal done, nothing is going to happen until after the midterms. To your point, kansas city, we often watch that, nafta proxy, up a couple Percentage Points today not showing a lot of concern there. Paul, what about you, watching the transports, watching them rally together with the dow industrials today . You know, i think, you know, one of the knocks on transport rally is that fedex is such a large weight in the index, but, you know, so, sure, thats true, its 14 of the index, but more importantly, though, like you said, the internals and the breadth in the transports is strong so that that eases the concern of fedex being a big driver of the rally. Similarly in the market, remember last year, everyone always complained that its the five largers stocks accounting for x percentage of the gains in the market but all along breadth was continuing to hit new highs indicating even though those largest stocks took up a large weight in the index, the other components were also rising. And i think woere seeing strong breadth. Last thursday we had breadth for the s p 500 hit a new high and we probably hit another new high today. I havent seen the closing numbers yet. But, you know, as long as breadth in the internals in the market continue to hold up, its hard to, you know, knock this market and have to give it the benefit of the doubt at this point. Yeah. One place we certainly saw record highs today was in the nasdaq closing over 7,000 for the first time mike, this after it was the best performer in 2017, it was up 28 . How about some predictions for the index that you think is, you know, best positioned now that weve turned the calendar . I think, i mean, its hard to bet against the first part of the year that nasdaq continuing to work. I think growth is actually something that even though nobodys telling you, yes, emphasize huge growth stocks, they still seem to have this momentum behind them so maybe through first month of the year, anyway, but i dont think its necessarily going to be one thoese markets any time soon where youre going to be penalized that much for emphasizing one part of the market or not. I do think i do think small caps as a group could be a little bit noisy, because i dont think its necessarily this across the board tax cut beneficiary that everyone has do you think the small caps last year was all about the tax reform not all about it. Traded like that. It was often it did, on a daytoday basis, even though many of the companies dont have profits that they pay taxes on so it was its a sentiment thing and i think at this stage of a bull market, its hard to start going small. So thats my general take. What about you . 2018 index winner i guess, i mean, for an index i guess id say the russell. Certainly a lot of it was baked in the tax cuts what were going to see is a lot more of those savings channeled toward buybacks than i think at some bigger companies. As a result joyoull see a squee only the stock prices. We may see this may be the year of great incineration of value through share buybacks i tend to think incineration of value incineration of longterm shareholder value. Lot of this money just going down to buybacks at overpriced highs. The other point is i would just say the i would hedge my bets given the dollar keeps weakening that some of these exporters so i would try to find the international, the exporter guys, among the rustlesells i guess. Im not sure is im sure. If thats coherent or not. Paul, what about you . So i think, you know, russell underperformed last year i think a big reason was the weak dollar. They dont have the International Sales to get boosted when the dollar is weak. 2017, you dont get years that are worse for the dollar, much worse than 2017. Was. So i think some of that you just dont think that 2018 will be worse for the dollar. So sthat should help some of the selling pressure and the small caps have an overweight relative to the large caps in the financials, and, you know, we think the financials will do well in 2018 on a continuation of the, you know, more benign regulatory environment. I think the russell things can change obviously over the course of months right now i think the russell looks pretty interesting enter lot of love for the small caps this afternoon when they did notch a record today, by the way, with a nearly 1 gain. How about shares of lennar, higher 2 after being upgraded to outperform from market perform at wells fargo cited changes in the tax law, possible improved lennar up 50 in the past year, mike, also one of the hottest parts of the market. Right an upgrade after a 50 move. Look, i mean, i think for very good youre saying theyre late to the game for very good reasons people are enthusiastic about the fundament fundamentals, housing sector of the economy. I think the trick for an investor is that the publicly traded sleeve of the Housing Market is actually not that big. And its not that varied and its very local and so i think that playing it to the Home Building stocks can be problematic. Theyve done great the whole group, the etf has done very well dont think its going to be a one for one thing because the fundamentals for housing are great, that these these stocks are way more expensive than they were in the midst of the housing bubble in the plmid 2000s. Is that so . You could say because the market back then knew it was fake bubbly earnings and looking through it theyre definitely more expensive now. Rob, does that worry you . No, i go back one of the points they made on the upgrade, theyre going get a bigger benefit as a result of the tax cuts this a perfect example of that kind of company, although they have, of course, performed very well over the past year, the tax cuts are going to go right to the bottom line, a 33 tax rate. Okay, its not 35 , but closer than an ibm or ge. Theyre going to get more of that money coming down plus they have this m a deal where i guess theres some hope that theyll have greater synergies than expected so im not sure its necessarily indicative of the Housing Market so much as it is the specifics of the company all right paul, well give you the last word you can settle the tie yeah, so, i mean, think for the Home Builders, i think long term its good but the sector, theyre correlated very well to singlefamily Housing Starts and, you know, toward the end of last year, the Home Builders who became really extended and stretched from the pace of Housing Starts, so i would expect to see, you know, again, like mike was just saying and rob was saying, its up 50 last year so i think theres better entry points for the Home Builders in general overall. All right guys, thank you for joining us talki ining markets today. Thank you, thanks, kelly. And as the markets start off the new year strong, where should investors look for opportunity . Joining me now to discuss three of the big investable events that could happen in 2018 is paul from sector and Sovereign Research hello. Thank you for coming over to post 9. Youre welcome. Thank you. This caught my eye because youre leaning against faang a l little bit here, with a couple ones im highlighting. So to begin with apple, you dont think theyre about to have a super cycle, do you thats been the narrative for, gosh, all year long, drove the stock so high in 2017. Everyone thinks those iphone 6 buyers from three years ago will come running back to buy a new one. I just think that the first of all, the early indicators suggest that the demand for the new apple iphones hasnt been all that good. There was a downgrade from taiwan over the weekend, short orders of the iphone x going into 2018. Also back in 2015, still giving away subsidies people had a much different upgrade idea now when you got to pay that 1,000 right out of your pocket, that iphone 6, 6s, 7 in your pocket, seems pretty good. Mike, what do you think about i mean, weve talked about, apple today had a pretty good day. It did, yeah. This, every time theres news that some supplier may you know, we see the stock sell off. I think the market is a little bit on edge about exactly how this upgrade cycle is going to go. Maybe, you know, kind of building in a lot of the points that pauls making because the rules are different, the cadence is different, i dont know how much its going to matter. This is the big open question. To the stock because is the stock going to be okay with a more prolonged kind of perennial type upgrade cycle . Or is it used to it being like, hey, every two, three years, huge hit and rush for new sales . Do you see bigger problems at apple than just this global cell phone sales flattened out dramatically the Smartphone Market is up a few percent. All the growths in the low end where apple doesnt compete. Premium of smartphones is a dead flat market. No reason to think it accelerates. Theyre going to have to take share if theyre going to be more than a 1 , 2 grower in iphone lets talk about amazon then. Pivot to another one of the big tech platforms which you say, look, retail wise, dollars are going to be amazing. Overtaking walmart on the cloud, big competition. Bigger than you think the stock can handle elwewell, i think they will w nicely its just other companies are going to grow faster than they will in the cloud. The demand in the cloud began as webbased businesses, and amazon understood that. And was all over it. Dominated. The next phase, the next five years is going to be Traditional Companies moving bits and pieces of their i. T. Budget into the cloud. Yeah. Here, a microsoft, even an ibm, has a big advantage over amazon and really understanding those needs of a hybrid sort of demand. Do you see microsoft and google teaming up . I see i see google teaming up with salesforce, actually they signed a pretty Big Partnership in the fall. Like chocolate and peanut butter, they go together so well the strengths of one company with the strengths of the other. I think you going to see them strengthening that partnership and helping google to grow faster than amazon in the cloud space. What do you do with amazon as a stock then some critics will say this company doesnt even make money on retail, its all the cloud and its subsidizing, so if that is about to switch, is that bad news for the stock i dont think so. I think it could make money in retail if it wanted to and investors just let it not make money. I mean, its plowing all that money right back into growing the business and its doing so very nicely. The big key for amazon is, you know, their thirdparty sales are growing dramatically faster than their own sales and actually make better margins on the thirdparty sales and why i think people are undercounting how much amazon is dominating retail spend you know, theyre making 15 on a sale from a third party, and only recognizing that 15 and so their revenue doesnt show how much something we think theyre going to pass walmart as the largest western retailer by the end of 2018. Thats huge move. All right. Before we go, real quickly on ibm, you think theyre going to do what this year . I think theyre going to grow all year all four quarters, theyre going to show growth. Which, itself, is a bold prediction. It is, 22 quarters in a row they declined. Theres a whole generation of wall street that doesnt even remember an ibm that actually grew i think theyll get their surprise this year. Paul, its good stuff thanks for joining us. Thank you. Paul with some investable themes for 2018. We got a news alert on arexeon. Lets send it over to less lie picker. Thats right. 9 first major agreement on the activist front the Company Announcing today that it and elliot have agreed to work collaboratively to identify a new member to join their board. The Company Announced in november it had started a search to find that new member and elliott after having invested earlier this year, this is a move to avoid a potential proxy fight in the future. So elliott also said they were encouraged by the actions taken by the companys Management Team to improve Financial Performance and reset alexion strategy so far off to a good start in the new year, kelly. All right, leslie, thank you very much. Leslie picker with the news there. A lot more ahead still on the closing bell. Ever hear of myfid . Maybe not. It may be about to change how many things on wall street work including the fees you pay thats next. Plus, big news in casinos, retailers, and the auto sector. We want to hear from you email us at closingbell cnbc. Com reach us on facebook and follow us on twitter. The closing bell with kelly evans is back in two minutes at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Welcome back new financial regulations are set to kick in tomorrow in europe that could impact investors right here in the u. S. Brian sullivan is here to break down what the new rules are. Wilfred frost is also here with a look at the impact to wall street brian, kick us off. Kelly, thanks very much the mifid 2 goes into Effect Tomorrow formal name, market and Financial Instruments directive, yep, part two. Its the second part of a rule originally put into effect back. In twec2007, so ten years ago european rule, one that may need to be felt here as well. Why . Here you go. What does it do, who i do we care the rule is huge 500plus pages it does many things. Well simplify it down adds a host of reporting requirements to European Fund managers its designed to increase transparency in Financial Markets primarily by making the flow of money between banks and Fund Managers a little more clear. Apparently im blocking the graphic. I. E. , who is paying for what, and when you pay a fund manager, what is their money being used for . Okay most importantly, for you, it forces the unbundling of fees for research and trading in europe what does that mean . Okay you may not know this, but right now, an analyst will send out their Research Reports for free. If the Fund Managers or traders of the banks act on it, often theyll trade through the firms desk and thats the soft dollar payment. Thats how many analysts get paid you also got whats called broker votes lets move on. The concern, though, is this if research has to be priced in real dollars as this law states it will, i. E. Ill pay 1,000 bucks for your upgrade of intel, will that hurt the amount of research being done all over the globe because now you got a real price, guys, placed on research as well, which some fear, if that happens, could lead to yet another round of layoffs for analysts who, by the way, have already seen their ranks culled a lot over the last five to ten years. Andbrian, stay right there. Lets find out more about how the rules will impact wall street wilfred frost has those details. Giant investment houses like blackrock, jp morgan, vanguard, will pay for research out of their own pockets rather than passing costs on to investors many think this will become the industry norm, may hit smaller firms harder in a relative sense. Also the new rules bode well for Asset Managers who have own inhouse stock and Sector Research analysts already and therefore dont rely so much on external research. Furthermore, Equity Managers are like i more affected than bond managers because they use external Research Less the sell side, i. E. Brokers and investment banks, face implications the consensus is total revenues for research will fall as brian said thereby likely leading to consolidation there as well. However, some sellside Research Firms already operate without Execution Services and, therefore, are essentially paid in the equivalent of cash already. They could be set to benefit although this is an eu rule, its forcing banks with global footprints to adapt for their european operations. While its possible it could become the Global Industry norm in the long run, purely u. S. Focused brokers and Asset Managers will likely be able to continue business as usual for now. Does anyone disagree at the moment that this effects a smaller independent shops much more than the large players . No, we havent seen it come into effect. Thats probably the Consensus Forecast on both the sell side and the buy side my sort of summary would be on the sell side, so investment banks and brokers, you probably got a few individual employees more concerned than the firms are, themselves, whereas on the buy side, youve got some of those smaller, mediumsized investment houses who broadly are quite worried because the bigger guys are going to pay for it themselves and puts pressure on their i just wonder, youve seen this research go through, what, 25, 30 years now. Sure. The proliferation it really has shrunk dramatically already. Yet, youll still get people rolling their eyes when 30 people cover apple and say do we really need this sure. I do think theres going to be net losers, but also theres going be these opportunistic firms that start up and say, somehow i think i can price my research on an a la carte basis at a level it can make me money because im not bundi inling ith the rest of it its a vestige of an old way of doing business everyone kept bundling thats not been the says since the 70s its been a very longterm period i also wonder if its going to accelerate certain trends, like quantitative investing on the buy side where its really not about give me an upgrade, give me your best idea today. Yeah, and index funds as well go for it, brian. I was going to say, theres also a subsidiary effect, guys, some people i talked to worried about which is if youre a midsized company, lets say youre a 10 billion, you know, market cap company, got six Analysts Covering you, theres no profitability now in selling the research for 75 bucks so now youre a 10 billion company with zero analyst covering you your stocks are in a bunch of etfs ill ask this, will management matter anymore and whos minding the shop no ones watching these companies. Going to be frustrating to be a ceo of a company trying to get attention. One quick thing, kelly, what this means for the u. S the s. E. C. Implemented a rule, by a year, could have affected the banks straightaway that rule says if you receive hard dollars cash for research, you have to be designated as an Investment Adviser and comes with stringent compliance reasons. They said theyre not going to enforce that for the next year that kicks the can for that, particular impact for the big u. S. Banks who will now be receiving hard dollars in europe for research down the road for at least 12 months. Before we go, mike, what do you think . Is it going to hurt the coverage of Smaller Companies and ult patpa ultimately hurt the Capital Market will exacerbate the effect which has been there a long time a lot of people point out trading in decembimals and penn brought the demise people blame that for the lack of ipos relative to what we expect i think a lot of people are anchored on the old way of doing thi things, saying it was better, knew how to do it then and its an ongoing change. I think youre going to have fewer people covering Smaller Companies. We need to go back to fractional eights and quarters thats the aim of the eu of this was to increase trakreecrease transpar. Its definitely going to increase transparency. That aim, at least, has likely been achieved, but there might be side effects. Point well taken. Guys, thank you both wilfred frost, Brian Sullivan talking us through the impacts. More on themarkets and nasdaqs first close over 7,000, stay tuned were going to have more on that next. Plus organic milk helped arel dairy prices in recent yes. Sales are souring as consumers turn to alternatives at your overall financial strategy. You still thinking about opening your own shop . Every day. I think there are some ways to help keep you on track. And closer to home. Im all ears. How did edward jones grow to a trillion dollars in assets under care . Thanks. By thinking about your goals as much as you do. Break out the hats the nasdaq just closed above 7,000 today for the First Time Ever weve only traded above that level one other time today we traded above it intraday, close at 7,006. 9, 103point gain a point less than the dow up at 24,000 anyway, its a per september and percent and a half increase. A lot of contributors to the rally. Saw a lot of the faang names strong today attend names like micron with a 6 gain. Netflix up 5 today. Apple, amazon, gains of nearly 2 2 . Time for a cnbc news update. Lets get over to sue herera. Hello, kelly, hello, everyone heres whats happening at this hour senator orrin hatch is retiring at the end of this year. He began serving in the senate in 1977. Hatch is 83 years old. The announcement earlier this afternoon already creating a lot of buzz about potential candidates with mitt romneys name coming up frequently. Kids in erie, pennsylvania, getting another day of winter vacation the city needing one more day to clear the roads of snow. They got hit with 7 feet since christmas. And the cold spell even affecting florida. Disney universal and seaworld all say that they will close their water parks in Orlando Universal and seaworld saying until at least thursday. Disney officials are still evaluating universal orlando is owned by comcast, which is also the part company of this network. And are you feeling lucky . Well, huge money is on the line this week, if you are feeling lucky. The megamillions jackpot is now estimated at 361 million. And powerball at 440 million. That is the news update this hour if youre playing, good ruck, guys back to you, kelly thank you, sue. Sue herera. Time now for the takeaway. We begin today with amount dazo potential move into advertising with alexa talks with clorox and p g to promote products with voice orders advertising is a tiny business for amazon with total sale of 2. 4 billion expected this year from emarketer and its a 40 billion business for google. So should google be worried . I think its probably one of the reasons google is making a priority of this same area obviously, some of its going to migrate off of keyboards into voice. I do think that the google advertising model is one that makes the most sense in terms of how to think about this because i think people who are speaking to these devices are kind of seeking that very thing, a tr s transaction or product or a business that can provide it. If amazon just expands the pie, does that steal from especially consumer packaged goods, traditional i mean, the big source of all this growth has mostly been tv i mean, print has been pretty well tapped out to this point. But, yeah, i think its its textbased digital, if you want to call it that, and tv. Now its voice. Speaking of tv advertising, sears doesnt think its worth it anymore they ran zero National Tv Ads during the Holiday Season. According to the with twall stt journal. Ceo Eddie Lampert said in the past Digital Advertising is more Cost Effective and trackable is he right . The same time the nfl is seeing an increase in tv ad revenue despite falling ratings this season michael, whats your take . Can probably separate these things a little bit. Obviously sears has been in retreat as a retailer, as an advertiser, as a National Brand or two brands with sears and kmart for a very long time so they have to prioritize theyve tried to pivot toward this membership model and all the rest of it i think its most about sears distress, inability to drive traffic. Does that mean tv advertising has been a luxury good Something Like that about mass awareness and those National Brand campaigns to some degree i think its an interesting paradox when the ad dollars are growing on the nfl even though the number of eyeballs is going down. I wonder if thats sustainable. Its sustainable in a sense theres simply no other place you can even get 15 million eyeballs a week. None not in one area. Maybe an episode of game of thrones. Its declining in line with all of tv. Nascar is down 20 . Im aware next, Big Four Accounting Firm found negligent in a bank failure during the financial crisis its not quite what you think. Its not about lehman or bear stearns. This is about the Colonial Bank which collapsed after its major customer, taylor bean, itself, collapsed in fraud fdic filed suit to recover the funds used in colonials collapse experts think even this ruling of negligence, michael, may not stand. Where does that leave us yeah, it seems to leave us with clearly the fdic trying to define a certain level of responsibility on the auditors in this situation. In terms of being aware of a fraud, trying to root it out and expose it. Its not clear to me its going to happen. Its also not clear to me exactly how much we can apply this example to other stuff that has gone on or might go on. There was, you know, small fines levied on ey, on the auditors of the bear stearns and lehman it was never a big story. True. Surprises me a little bit but this is not about to set a precedent for aggress if ways theyre dealing with the auditors during these episodes as well. Finally, theres too much organic milk now and not enough demand the same clientele that pushed dairy in this direction has already moved on to things like almond, cashew, and soy milk, leaving companies no choice but to turn their organic milk into cheese, yogurt and creamer instead. Such a fickle group, mike, these consumers. What should the dairy it really is. Effectively wha ll lly what hap glut of organic mouth, milk is it worth it for a farmer to keep your cows organic its the customer thats always going to go to the next thing that they say is going to be better for you either it has to circle all the way back around or organic milk has to hit the mainstream that means the profits arent going to be there. Also theyre fighting a trend, a very longterm trend of people drinking less milk in general. It isnt as if the i did have honey nut cheerios with milk this morning. With what kind . Probably organic. Did it have the fancy stuff. Moneygram is falling after hours. Kell, just about 9 off in the afterhours trade. This after the Money Transfer company, moneygram, announced today that theyre terminating their merger agreement with amp financial. It was formerly known as alipay. That is the moment payments platform of alibaba, one of the Biggest Fintech Companies in the world. Alipay amp financial no longer going to pursue moneygram, they state specifically in this they were not able to obtain the required Regulatory Approval for the transaction from the committee on Foreign Investment in the United States thats the regulatory body known as sifius that bets all pending mer men mergers of American Companies bay foreign takeover aqcquireac. The ceo going on to talk more about why they arent doing this that stock off sharply in the afterhours trade, kell. Back over to you guys. Dom, thank you. This is a big story. While this had been flagged from the beginning it might be blocked, the fact they would still block something you cant say it on National Security grounds. I understand the implications. The movement of cash in and out of the country is the business right. So obviously they were not sure about the clearance also a very tough sector moneygram is in right now. Western union has been a very tough stock. Of all the applications of blockchain, all the rest of it, its transferring cash and also remittences to mexico and such have been on under some pressure its a great point ruling that they will not let Chinas Alipay buy moneygram in the u. S. Those shares are down 9 . Tech stocks leading the market rally last year will it take a back seat in 2018 to a different sector . Two of fast moneys top traders are going to give us their predictions coming up. 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. Heres a look at how we finished on wall street today be with big headlines records for everybody kpexcept e dow. The s p up 22. Look at the nasdaq up 103. It closed above 7,000 for the first time 7,006. 9. The russell 2000 also strong also in a record, 14 1 2 point gain up to 1,150. The nasdaq above 7,000 for the First Time Ever. How about the chips . Big part of that story today look at micron, nvidia, with gains today. This was a little bit of a tough space lately, mike. Yes. Interesting, today, were back on trend for 2017 this is the 2017 trend reasserting itself yes the dominant trend up until the very end, you had dowtype stocks outperforming saw the reversal what worked last year didnt work today you had 75 of all volume on the upside shows you there was plenty of the strength to go around for today. How about some retail movers . There were stock upgrades a shares of nordstrom by 4 . Upgrade from neutral to underweight by Jp Morgan Company had its best Holiday Season if three years. L brands upgraded to outperform from neutral at baird saying it thinks victorias secret is turning a corner under new leadership the stock higher most of the day. Down about half a percent. Still this is kind of the opposite story of some chif names. Retail was strong into the end of the year but had a poorer 2017. I think the analysts are assimilating the moves in the stocks from the low whether it was in august or november. For a lot of these names and saying, okay, i think fundamentals are going to match up with where the stocks are trading right now. Doesnt mean theres tremendous upside to it but means the pessimism of the middle of last year into the Third Quarter was probably overdone. What that means for the First Quarter now is unclear. Right, they have to prove to the market the amazon death watch countdown should not be restarted. Casino stocks, Las Vegas Sands and wynn resorts closed lower today after slightly missed estimates for december and 2017 fullyear growth. Monthly gambling revenue was up. 15 in december. That was a little below expectations of 17 to 20 growth and 2017 fullyear growth, 19 that was right below the 20 expectation. Now, despite missing estimates slightly, it still is the first annual revenue gain for the casinos in macaw in three years. Las vegas sands down half a percent. Wynn sold off 2. 5 . Yeah, its a good example of how in some sectors investors eyes have become pretty big and become used to companies and the data beating the numbers so to me, it was just a logical place to back off right here i mean, you havent seen a lot of Global Economic indicators that havent exceeded expectations for a while gaming was one of the few today. Thats true Everything Else has been on a big upswing. Two fast money traders sharing special insight on 2018 for closing bell viewers that is next the final 2017 numbers for auto sales are also out tomorrow. Well have a preview about what to expect and a look at small numbers from today the nasdaq starting the year with a record and a round number at that. It closed above 7,000 for the first time joining us from that nasdaq, fast money traders steve grasso and guy adami guys like the wedding crashers here what do you whats going on steve grasso, what do you thinks going on with this rally today . A lot of it was at the very end of the session. You know, mike hit it on the head in the one of the last segments where he said what worked last year worked today. And what didnt work last year worked today where youre going to get growth from, kelly, where are you going to get this outsize growth everywhere. I thought we were getting growth everywhere, the year it was supposed to be. The fiveyear performance, the xlk dwarfed all the other sectors. People realize when they come back to growth, xlk. Thats what youre seeing with tech you can go away, you can rotate a couple of times a year, but in the long term, you want to stay with the xlk, stay with tech, you want to stay with innovation. Xlk is the Technology Select spdr etf all this jargon. Guy, what about you . What do you think of the rally today . Im with steve 100 , but you want to get granular, start to look at some name. Micron had the huge move from basically the high teens up to 50, retraced back to 38, had a decent day today if you look at micron on valuati valuation, the stock probably makes sense here despite the huge move it had to the upside on the other side of that coin is a name like texas instruments, great story, but then you ask yourself, at close to 24 times forward earnings, has the stock run too far too fast and is valuation starting to get in the way . I think tech makes sense be careful when youre picking them some stocks have gotten expensive, in my opinion. I guess i would wonder, guy, what worries you here . Everything. The market, itself, the way its acting. Mike, everything worries me. Bad question, mike. Lets do a hierarchy of anxieties here, guy, because the market, itself, is not giving you that many reasons to think its character has changed, that its really very vulnerable to something dramatic on the downside what could develop that does come as that kind of ai shock what worries me is what worried me for the last few years. Are we going to see missteps from central banks, specifically now our Federal Reserve has taken a different course and i think theyve taken a different course for all the right reasons. But to think that they could sort of stick the landing, carrie strug a warning, to lend a phrase, and not have the market affected at all, is Wishful Thinking theyve done everything right. The market is at an alltime high good for them. To think were going to get into 2018 as the fed continues the heightening cycle, not to have a hiccup to me is a fools errands. Mikes point, look at the financials today you had the tenyear rally should have seen the financials take part in it. You didnt its the flattening of that yield curve. Theyre scared of that yield curve. Thats a good point, steve. What do you like for 2018 . Lets just put up some general, you know, you can get real short term if you want, where do you think is the place to be is it just the tech etf or where else im in apple, im in alibaba. Those are the two plays that i have as far as technology. Im still in the Home Builders as the shortage of homes, spult homes there. Im in vrx, valeant. For me, theres a lost me therei the rearview mirror. I still with the growthy place guy, what about you i think financials can work in 2018. Its somewhat counterintuitive to what i just said. But names like honeywell, throw boeing in there, names they dont talk about a lot, still have tremendous tail winds behind them. I think industrials worked in 2017 and theres no reason to believe they wont work in 2018. One last thing, kelly, energy is the outlier weve seen crude rally, the gas rally, the northeast freezeover. Thats the one to keep an eye on, xle has done virtually nothing for the last five years. Im just thinking you guys dont seem to agree on anything for 2018 i agree that steve grasso gets better looking at every year we agreed on a whole lot. Maybe tech. Financials have outperformed. You like valeant, energy. Guy, you like financials, industrials. Youre warning us on tech. Its something i dont agree with steve, i just like these sectors better thats why people for the last almost 11 years have tuned into a show at 5 00 to hear different opinions, kelly. You know what that show is thats what makes a market, as i understand it im not going to ask you about crypto ill save that for the show. Guys, thanks for joining us. See you guys. Steve grasso and guy adami. Catch them tonight on fast money with a top lawyer who tells us why he thinks regulators are about to crack down on the crypto craze lirnsll take a look at cafoia impact from the profit in marijuana, premiering at 10 00 p. M. Eastern. Howd that go . He kept spelling my name with an i but its bryan with a y. yeah, since birth. That drives me crazy. Yes. Its on all your email. Yes. They should know this . Yeah. The guy was my brotherinlaw. Thats ridiculous. Well, i happen to know some people. Do they listen . What . Theyre amazing listeners. Nice. Guidance from professionals who take their time to get to know you. Thank you so much. Thank you so were a go . Yes we got a yes what does that mean for purchasing . Purchase. Lets do this. Got it. Book the flights hai si si ya ya ya what does that mean for us . We can get stuff. Whats it mean for shipping . Ship the goods. Youre a go you got the green light. That means go oh, yeah. Start saying yes to your companys best ideas. Were gonna hit our launch date scream thank you goodbye let us help with money and knowhow, so you can get business done. American express open. Welcome back with some news out of Pershing Square leslie picker, whats happening . Reporter announcing a tender offer for as much as 300 million. The reason for the tender offer is to increase its investment in Pershing Square which it believes is undervalued. Pershing square is suspending its repurchase program the firm announced the need to pare back its stake in Howard Hughes in order to comply with certain Real Estate Tax rules that would be triggered by a tender offer ackman will remain on the board of Howard Hughes and shares of Howard Hughes trading lower. A lot of moving pieces there, thank you, leslie picker the first round of final car sales for 2017 are in, and well break them down and preview the numbers due out tomorrow alerts wouldnt you like one from the market when it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Fidelity. Trust 1 doctor recommended dulcolax. Use dulcolax tablets for gentle dependable relief. Suppositories for relief in minutes. And dulcoease for comfortable relief of hard stools. Dulcolax. Designed for dependable relief. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. 2017 was a strong year for u. S. Auto sales, driven largely by trucks and suvs it was a very different story for small cars made in america phil lebeau joins us with more phil reporter four or five years that weve seen ugly numbers when it comes to smaller cars and sedans these are the folks who probably have the most exposure, so to speak, when it comes to the sar segment. Look at their sales this year or last year they were just bad across the board. Its not their fault as much as the fact that the market continues to rotate into these vehicles trucks, suvs, crossovers weve talked about it for some time they remain extremely popular. Sales up 6. 5 through november of last year this in a market overall that will be down anywhere from, oh, i dont know, 2. 5 to 4 for the full year. Take a look at Fiat Chryslers shares Fiat Chrysler made the decision last year, were not going to build cars in the United States anymore. Instead their expanding the production of trucks and suvs. Dont be surprised if we see more of this in 2018 and the rest of the year as well a silly question, phil, does it matter where the cars are made in the share between Companies Large and small . Reporter look, at the end of the day, if youre an investor, you care mainly about profitability. And the rotation into trucks and suvs is fantastic. The big concern is, what if we have a spike in gas prices maybe not in the next couple of months but in a year and a half from now the trucks and suvs are more fuel efficient than they were in the past, but that is the one worry that is out there. Fair enough, phil, thank you, well see how those auto Sales Numbers do tomorrow morning. Maybe by then well all be driving electric vehicles. That does it for closing bell. Fast money starts right now. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Tonight on fast, its a crypto come back with ethereum the big winner one top lawyer says the crypto crackdown is come. Hell explain. Disney and netflix soaring on upgrades. Which stock will be the big streaming winner later, apples apology continues after iphone fans were