Transcripts For CNBC Closing Bell 20180108

Impact that its products have on smartphone addiction in children cnbcs leslie picker has more on this story for us. Leslie hey, bill, thats right, its a twist on activist investing. Jana and california state teachers retirement system, sending a letter over the weekend to apples board pushing for changes there. In the letter, they say that apples ubiquity has created unintended negative consequences for children, particularly when it comes to their physical and mental health. They want apple to form a committee to study this issue and add more restrictions for younger users. Apple already provides tools that allow parents to restrict what their kids do on their phones, but jana and calsters believe there should be more thats done there. The letter was part of the firms announcement of their own social impact fund the plan is to raise money then use their activism knowhow to target Companies Like apple they they believe could do better when it comes to social issues now, investors and hedge funds have been increasingly focused on environmental social and governance issues. This one is in many ways a response to that but its also a way for henl fund activists to turn around their image which has been tarnished in recent years, guys. Yeah, leslie, thank you theres going to be a lot more on this. Lets talk more about it now, bring in ed lee from recode along with ross gerber from gerber kawasaki, an apple shareholder. Brian, director. The center for research on Media Technology and health at the university of pittsburgh welcome to everybody let me just start with you because you to have some research on this topic what have you found . Well, there have been in the past a lot of mixed findings a lot of people have been concerned about potential impact of social media, but a lot of people have said social medias also a good social thing to do so what we did was a National Survey of over 2,000 young adults, and we found that no matter how you sliced it, more social media use was associated with higher levels of depression, higher levels of anxiety, and even higher levels of social isolation. The perception that one is socially isolated. You buy that, ed . I mean, yes, social media certainly has had a huge effect. I have a 13yearold shes glued to her phone at home all the time thats the key, though, right . Its the apps on the phone that shes glued to, not necessarily the phone, itself. Of course, the phone is the proxy for all of this. Apple is the ecosystem which all these apps live. I think theres merit to the argument, certainly. At the same time, you shouldnt its not just about apple. I think, you know, you have to look at facebook, have to look at snapchat and twitter. A host of other social media apps that are out there that keep people tied in. I think thats a big part of it. If youre going go after apple, go after facebook as well. I wonder if thats coming next for the time being, since youre an apple shareholder, what do you think about what a these other shareholders are doing in terms of putting pressure on the company . You know, imagine the nightmare in my house being a major apple shareholder with products everywhere. And i own video game companies, i got video games, i got oculuses at my house its a nightmare for screens yet my kids are out playing outside every day. Theyre only allowed to use the screens for an hour. My wife is vigilant on screen time like i cant even tell you but when i was in listen, when i was in college, i was a com major at Annenberg School at penn let me tell you, we studied Television Television is horrible for children, too, and fast food is horrible for children. I mean, our problem is obesity in america its not eyeball problems. Its and, look, these kids are smarter and more sophisticated than any generation thats also because of technology so i think parents need to take responsibility for the behaviors theyre creating, and showing, because theyre mimicking their own parents. Right. So, please, like, america, please, take responsibility. Yeah, i mean, i would agree that let me add one more comment before you get to that. Yeah, sure. I think it isnt just about children, i think its about everybody. I happen to have been in a doctors waiting room this morning, people about my age, kelly would call old no. Were all in there and everybody, every Single Person had their nose in their phone. Thats right. I mean, everybodys doing this right now, not just kids. Whats the impact . Yeah, i mean, i agree i think its very important to engage parents and its very important to engage people in general because as youre saying, this is a universal type of issue but everybody cant have parents that went to Annenberg School of communication. And so i think that its common sense, come on, thats common sense thats not fair. No, im not so sure its common sense this is exactly what we heard with regard to the Tobacco Industry and food industry, you know, well, its parents should bear the brunt of the responsibility, but the fact is that developmentally, we learned later on that just doesnt make sense because developmentally, young people are programmed to go against a lot of what their parents tell them. And so Companies Use this as a way to, you know, show them how to rebel i do think that parents should bear some responsibility, but not the whole thing. I mean, i dothink we need to come together as a society youre missing something. Ross, hang on hang on. Ed, you also mentioned you have a 13yearold. Yes. What do you think about this is going to be one of those times im going to agree with ross, one of the rare times. No, this is a parent problem this is not necessarily a tech problem. At the same time, i wouldnt be surprised dont think or do something about this i wouldnt take the responsibility entirely away from the tech community. I think they should do what they can. I think they should offer better tools to make it easier for parents to police it but it really is a parent problem, not a tech problem. Jim cramer raise the this issue earlier today as well, hang on, aeeverybody. Take a quick listen to what jim had to say. Literally while you were talking went from settings to general to restrictions. Apples done Amazing Things to try to make it so parents are not alone. Thats right apple is probably the most sensitive to this stuff, versus, say, a facebook or google or snap which is the equivalent of captain morgan for kids. Like, wow, i really want to get involved with the captain. So do they already have th e thethes thethes these there are tools already in place, but, again, like to my earlier point, its not just an apple problem, right i think facebook in particular is so much control over the users attention, and thats what my daughters on, shes on instagram most of the time you know, its fair something they have to become literal in absolutely you dont want to take it away entirely how you use it, if those companies can offer better tools, all the better. By the way, brian, a sidebar question, im curious, i read where your research was funded by the National Cancer institute. Which i dont understand and the fein foundation which i dont know was there an ideological thought behind this going into the research to begin with no, the fein foundation is a local foundation that is just interested in maximizing social media and mental health. And so when we went into this research, we actually did not know which direction it was going to go. In fact, our hypothesis was there was going to be much more of a nuanced curve where maybe low levels of social media might actually be harmful to young people, medium levels of social media might be, you know, sort of okay, and then very, very high levels might be a problem but thats not what we found what we found was this basically this straight line, and so theyre much more interested in just maximizing how we use social media and we as an organization, you know, as a center for research, we do just as Much Research on how can we leverage media to do positive things, as, you know, what are the potential problems . In other words, we realize that media are here and here to stay, and it is not feasible to take them away or desirable so before we go, ed, one interesting sort of twist on all this that just came up today is there is another little survey out showing that the more people use Something Like an amazoni k ec echo, the less they use their phone. Is this a passing moment in time or do you think phone is here to stay and i think the phone is going to be here for a while. Theres a merit to the survey, though, shows its more about ultimately ambient commuting ease of use. Ease of access youre still distracted by it, still sort of engaging with it if its more efficient, probably the better again, i dont think the phone is going away in the noform tha we have it. All right i know youre all youre very interested in getting back to your emails yes. Well let you go. Important. Thank you, guys thank you. Ed lee, ross, brian, thanks for your research. Ross, i want you to tweet out a picture of your crazy living room i want to seed ill tweet some pictures of my entertainment palace. For more on apple, by the way thank you, everybody, guys, appreciate it. Were going to have tomorrow on Halftime Report tomorrow at noon barry rosenstein, an exclusive interview with the firm partner from Jana Partners, of course, theyre the ups behind this move with calsters investing in apple and pushing some of these concerns. Turning now to the markets, how about stocks coming off their best start to the year in more than a decade there could be more room for the bulls to run Senior Market commentator Michael Santoli is here with the story. Yeah, trying to can get the field position in place before we get into 2018, to put it in broader context here and essentially were approaching the ninth anniversary as you know of this bull market if were counting from march of 2009 the distance traveled in terms of the cumulative gains, where weve gotten to in terms of valuation levels, and even the public participation, the public exposure to the equity markets, are now higher than basically any bull market except for one, which is the greatest bull market of alltime the one that ended in the year 2000 so if youre extremely bullish on stocks right now coming into this year, if you think that last years 20 return can repeat this year or next, youre basically talking about thats the conversation youre having is can this one outdo that one so its well, what are your first and second questions after that is that a skacary thing what are the differences and similarities scary not so much. I dont think youre seeing similar behavioral kind of knockon effects of this market being so high. Youre not seeing a rash of halfbaked ipos people are scooping up. No, we got icos this time, mike. Its all happening outside of equities, right . Which actually gives me pause because people in 2007 said, eeroh thats a credit problem. Right. However, youre also yes, its highly valued right not in terms of a p e basis but a huge distance to where we were in 2000 it probably surprises people that if you look at the aggregate exposure to stocks by households in the u. S. , its not that far below where we were in 99 and 2000 just because the markets up so much. Wow. Maybe its a narrower holding of stocks but its still as significant. That is surprising. Stay with us as well, mike. Were going to bring in j. J. From Td Ameritrade welcome to you. Hey, guys, happy new year. What do you think 123. I think mike is right in some sense. We just released our imx, shows our clients interaction with the market its atan alltime high. But wait, what does that mean im sorry, thank you for saying that. What it means is clients who made at least one trade in a month that engaged with the market at least once and how long have you been tracking this . Weve been tracking this for five years. Okay. Alltime high. Not a 25year high. No, its a fiveyear high. Could be but you havent tracked it that long. Mikes right about one thing, when i look at this month, youre not seeing many of the what ill call speculative stocks in there, in fact, its come back to what you see ge, microsoft, bank america. Stocks that if we do turn around, i think people are like, okay, these are also good longerterm holdings now, you also do see alibaba, this is from december, see alibaba and tencent. Weve seen these i talked to you guys every month for the last couple years. These are stocks weve seen the last few months. Right. And amazon. Why . Because theyre in the retail online space which as we know has been a great, great space to be youre not seeing any of the traditional brick and Mortar Retail in fact, our millennials were sellers of some retailers, such as costco and nike so, again, i think its very interesting how people are looking at that way. I will say i think one thing the traditional markets missing about all the coin activity is this is the greatest opportunity people complain that we havent been able to get millennials to trade okay, maybe this isnt the product id like people to start with, but this is the greatest opportunity weve had in the market to get people who werent traditionally interested in the market. You think this could be a gateway drug in a good way. I do. I really do, kelly i hope it doesnt end poorly. Get into ge. Well, you know what, traditionally weve been like, well use 10 of your money to speculate, use 90 as what theyre saying is we dont want to do that, we want to do 90 speculative. Do i agree with that no, not necessarily, but for us to say, youre wrong is silly. Say, okay, what are you comfortable with investing in the stock market lets start there. What about this idea, though, that some of the stocks, the most popular, have been ones that actually were around its true. During the previous bull market you were highlighting there, the disneys, the ges. Sure. Even amazon. Even amazon, even microsoft i mean, you know what, its funny, there should be an m in faang. That stock has actually been right there with those other ones so, again, you can actually do an apples to apples in that case you dont have ge is not at 45 times earnings the way it was, even if its not cheap right now. I do think its sort of a contrast in tone that we have right now. I dont think i honestly dont think were going to get a rerun of that type of environment in terms of demographically none of it fits right to get another frenzy like the late 90s. It doesnt mean you cant have an overvalued market real quickly, if its possible we are seeing the greatest of alltime rally, what are we measuring it by, just the length of total the total gains. Okay. The total gains and to be honest, the valuation, itself. I mean, basically just how much the stock market capitalization compared to gdp and Everything Else the tom brady 16 a year weve done since the 2009 bottom. A lot of times at the end of a bull market the trailing tenyear return is over 20 . Thats not necessarily a ceiling but it does tell you weve come a long way baby. Michael jordan. He would tell me muhammad ali. Initially the greatest. Go thank you, guys. J. J. , good to see you. Mike, see you next hour here as well. We got much more coming up on the closing bell. Bitcoin volatility. The cryptocurrency craze is on the move again like a violent roller coaster. Plus, warnings on the horizon of a trade battle. Who will be the target whats the worstcase scenario and hows it going to play in the stock market one more closing bell, email us, find us on facebook and follow us on twitter the most important hour of the trading day is back in two minutes with bill griffethnd llevs. A nobodys putting their money into equities. Theyre not investing in commodities or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. By the way, shares of seagate surging 7 on a report it may have a sizable investment in ripple, the expensive cryp cryptocurrency, not the cheap wine seema mody has more on the cryptocurrency movers which are going down, right . Its important to make that distinction. Yes. As you point out, seagate is rising on speculation about its ties with ripple which has been seen as a rising star in the cryptocurrency world up 1,000 over the past month. But today ripple has been under pressure, down as much as 35 . Its a twofold story here. First, coinbase disappointed investors by saying it will not be adding new cryptocurrencies like ripple to its platform any time soon. But ripple tweeted out earlier today that its price fluctuation has to do with coin market cap thats a site that lists cryptocurrencies which has excluded korean exchanges from their pricing averages now the losses are not confined to just ripple litecoin, ethereum, bitcoin also under pressure on more signs of regulation overseas. South korea inspecting six local banks that allow clients to trade cryptocurrencies for antimoney laundering practices. Traders i speak to say not to focus on the daytoday price action when it comes to cryptocurrency, keep an eye on the longerterm picture if you can. Daytoday price volatility is hard to endure or stomach for many. One thing to explain daytoday moves in the stock market, when the world of crypto, i mean, honestly, why is it up 30 one day, why is it down 30 buyers and sellers. Yeah, exactly. There are different theories. I think regulation is a big part of the discussion. Any time you see a story around south korea, china, cracking down on cryptocurrency trading, you see the cryptocurrencies sell off but always come back if you take a look at a longerterm chart. What about venezuelas introduction of the petro, own cryptocurrency venezuela to even russia last week, Vladimir Putin says theyre looking at a cryptoruble. The use of Digital Currencies in some countries dealing with sanctions as a wa i to get around that is definitely something to watch. Whether that can watch. Because its a cryptocurrency doesnt mean it can do anything it wants. Thats true. It might be difficult to track. Youre right, this is a whole new front on this battle seema, thank you. Thanks, seema. 39 minutes left in the trading session. Weve had a pause today for the most part after a big week last week the dow right now down about ten points been hugging the unchanged level much of the day. The s p, the nasdaq and the russell are all positive so they would be in record territory if they closed right there. There you go. Still ahead with stocks hovering near record highs and corporate buybacks on the rise, the market faces a unique problem. There may not be enough stock to go around. Here we go again well explain coming up. And caterpillar was the second best dow stock of 2017. Cal up about 70 now it just got an important upgrade. E s up nearly 3 today. Sewhy when the closing bell comes back in two. We recently had a heart attack. But we are not victims. We are survivors. We are survivors. We are survivors. And now we take brilinta. For people whove been hospitalized for a heart attack. 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If you cant afford your medication, astrazeneca. May be able to help. Welcome back heres dave busters ticker play plunging today down 21 after the company cut its 2017 profit in sales outlook. The operator of restaurant Entertainment Venues said it had a slower than expected start to the Fourth Quarter and again thats sending the stock down bigtime today now, as the markets overall hover near alltime highs and corporate buybacks ramp up again, the market is facing a problem. There may not be enough stock to go around. Bob pisani is sheer to here to explain this one. Weve been talking about the effect buybacks have on the market overall a lot of people were saying they may be so successful its sergeantreally starting to i want pact the stock market the Global Economic recovery, the record earnings and, of course, low Interest Rates buybacks may be an important part let me just show you how little stock there is out here. We had the same amount of Stock Available as in 2006 307 billion shares all the s p 500 companies today, 2006, 307 billion. Remember the financial crisis, a lot of companies particularly the banks dramatically increased the amount of shares outstanding. So by 2010, it was up 10 . But by 2011, companies were aggressively buying back stock now, of course, they were giving out options on the other end but they were buying back stock on the back end so today, 2017, the end, there was the same amount of stock as 12 years ago whats the why is that important . Because the amount of stock impacts the prices the price of the average stock of the s p was 50 in 2006 today, its 107 in other words, its doubled in price. So you have increase in demand, with restricted supply and, well, demands going through the roof as well so thats very important overall. I think what we now have to acknowledge is that overall, buybacks have have been an important part of the overall stock market rally weve always talked about that economic expansion and the record earnings and the low rates. Buybacks has to be an important part of that i anticipate on friday when the Companies Start reporting, investors are going to want to hear more aggressive buybacks. I think theres a lot riding on this earnings season about guidance as well as the buybacks guys, back to you. All right, bob, thank you well see you on the close in about 30 minutes. Meantime, get to our closing bell exchange, joining us, robert frost from frost frost wealth management. Steve grasso from Stuart Frankel at post 9. Rick santelli checks in from the cme in chicago what do you think . There have been times in the past, steve, when theres been a feeling there wouldnt be enough stock to go around you know, supply issue. Right pushes the stock market higher i do think that obviously when anyone talks about supply issues that really gooses the market and people will actually act first and then analyze, do their analytics after the fact i nenk think theres a host of reasons why it should go higher. Tax policy at the forefront. The ability to not have enough stock going around, i think its a huge element to it, but i dont think people are trading the market off it just yet no. I think that will come later on, if we need another bullish case or another tailwind for the overall markets. Robert, its not necessarily, i mean, it almost to trade the stock market based on supply and demand is kind of like the bitcoin argument, right . I mean, would you consider those factors as a reason to own equities or would you stay focused on, you know, whats the value here longer term what is the cash generation, what is this literally worth per share . Yeah, i mean, we encourage our clients to stay focused on fundamentals theres no doubt to bobs report there that there is a shortage of stocks right now, but fundamentally, the stock market continues to do well were in a low volatile market this ill tell you what gets to me, kelly, weve got 15. 5 trillion thats still sitting in cash right now that hasnt gone into the market, so maybe to bobs point, if some of that money was eventually to move its way off to the sideline, i think we could potentially have some problems but right now, i think we have a lot of bullish investors they continue to stay bullish. I dont necessarily think that theyre looking at a shortage of stocks as a reason to buy. Some of that 15 trillion is going to go pay property taxes so, rick, you have been around the block a few times. Youve seen those periods of when we talk about supply and demand issues, and, in fact, there have been fears after the financial crisis that there might be a liquidity issue in the bond market as well. What do you make of the talk right now . Reporter i personally think bob is right im questioning the timeline in my opinion, the last handful of years thats been a major force in the runup of stocks since about 2013 in my opinion, the tax reform that was passed is going to put a capstone on that sure, theres going be repatriation, much of that re t repatriation may end up in purchases of stocks but i also think that debt is going to shift a bit to equity, which means that the ammo that many of these companies needed to repurchase their stock is going to change. I would think that the next big thing is actually going to be, hey, maybe putting more equity out by companies versus going to the market, going to the fixed income market, going to the credit markets, to try to move paper at a very low rate relative to treasuries and use that to purchase stocks back i think that is the epilogue for that line of thinking. That doesnt think that the stock market has to go down but i do think its a channel thats going to get more shallow as time goes on you know, it is interesting when you look at the overall market, when everyones been calling for a pullback, you see, you come out of the gates and every analyst on wall street is saying mid Single Digits, mid to high Single Digits and when you see the analytics come out across the street, if youre up 2 in the firstfive days the average returns are above, right around 20 for the year. Oh, gosh. That is going to throw a Monkey Wrench into a lot of the analytics that have been done on the street, catch a lot of people off guard, and you could have a redo of what we saw in 2017 that takes the most people by surprise i think thats what usually the market does. How are you guys positioning, robert well, first of all, trying to get our clients to stay diversified i think is the most important thing. Whats really interesting, ke y kelly, is over the last couple minu months weve seen people on both ends of the spectrum ive had clients who traditionally have been very conserve tative who wanted to be really aggressive and clients who were really agresive and said maybe its time to take pun out of market. I wish i could put my finger on it and see where the trend is. One thing that we know is that at least for our clients, were trying to get them to stay true to their longterm risk tolerances we think that long term, the market still has a long way to go its got nothing but headwind behind it. Weve got tax policy thats fantastic. Weve got low volatilvolatilityl have low Interest Rates. I mean, i think as i look back on previous bull markets i dont know as though ive sat back and just said, wow, this is amazing. And right now, i think it is a great time for all of us just to sit back and say, what were experiencing right now is an amazing opportunity and like i said before, once we can get some of these people to move their money off the sidelines, imagine what the market could do at that point. We will see well let you sit back as we move on. Thank you for joining us, robert frost, steve, see you later. Rick, thanks have a good day. Time now for a cnbc news update with sue herera hello, bill heres whats happening at this hour, everyone turkeys government has extended the state of emergency for the sixth time since coup attempt in 2016 since that coup, more than 50,000 people have been arrested and another 150,000 have been fired from both government and private sector jobs. Emory university receiving a 400 million gift, the largest in its history, to find new cures for disease and improve lives. The robert w. Woodruff foundation pledging that money. Cant make this up thailands Prime Minister evading questions at an event by bringing out a lifesized cardboard cutout of himself and telling reporters to, quote, ask this guy if they had any questions on politics or conflicts. And there as you see, he just turned around and walked away. Not to be outdone, an l. G. Executive tried to highlight that companys smarthome robot during its keynote address at the Consumer Electronics show but the robot didnt work properly on stage leaving the exec speechless and kind of fumbling to stick to script. He said even robots have bad days i think hes having the bad day, the. The robot doesnt seem to care maybe it was a cardboard cutout of the robot. Of the robot, right wishes it was a cardboard cutout of him. Exactly see you next hour, guys thank you, sue. Thank you. About 25 minutes, little less to go, right now. Dows down 27 right now. It is the underperformer in the markets today. A change from the recent trend the s p hanging on to a twopoint gain the nasdaq is actually up. 25 , 16 points. Russell up about two. Transports charging higher as well. Wow, theyre up 70. Not bad for the transports today. Well, is a trade war on our horizon . Thats the worstcase scenario, and what is the possible impact . Well talk about that. Plus, oh, boy, gopro tanks after the company gets set to lay off a fifth of its workforce. Ceo nick woodmans comments on whether he regrets going public and whether gopro is for sale or not. Next on the closing bell. Welcome back top of the hour, the president is going to speak from the farm bureaus annual convention out in nashville and trade will be top of mind. Kayla tausche is in washington with the latest on trumps trade agenda which sounds like it may be picking up. Kayla . Reporter well see what he says exactly about the trade agenda, kelly. It is the first address by a sitting president to this particular event in nearly a quarter century. The audience today ranges from fortune 500 Companies Like dow, dupont, monsanto, to family farms, and theyre all hoping that the president will state a commitment to nafta after his official position in recent months has just been well see one group, the farmers for free trade, in the audience today, was wearing buttons that said, i support nafta but its unclear what, if any, answers they will get. None of the excerpts provided by the white house about the president s speech today included any references to trade. They were all about tax reform, and deregulation and when i asked a white house official about the president s position on nafta, whether hed talk about it today, he said the president supports fairer deals, regardless of what strategy he employs to get there that would seem to leave the door open to a whole host of options that would not sit well with this particular group of exporters and heres why if the u. S. Chooses to withdraw from nafta, that means that mexico, for one, could immediately reinstate tariffs that it charges to other countries and charged the u. S. For nafta was in existence that means 75 tariffs for things like chicken and potatoes and 45 tariffs for things like turkey and dairy products. And so free trade supporters say those costs would cancel out any benefit they would even get from tax reform well see what nuance the president decides to offer today on that issue. And whether he decides to go off script and talk about this one other major sidebar developing as he prepares for this first policy speech since tax reform, the Washington Post and nbc news both reporting that the president is preparing, with his legal team, to potentially talk to the special counsel, robert mueller, in the coming weeks according to the Washington Post. This has been an issue thats been the thorn in the president s side well see whether that impacts his mood or the content of his speech today back to you. When they say talk to him, do they mean have a conversation or do they mean talk to him about some kind of personnel move or reporter its still unclear, kelly, in what format these talks would take place, whether it would be a formal interview, whether there would be a sort of affidavit that would clear the president or or state the president did not commit a crime before he would stalk to this special counsel. Where this would take place. How formal or informal it would be there are still a lot of questions. Nbc news was the first to report today there are some initial talks between the White House Legal Team thats running the effort to deal with this investigation, and the special counsel, so well see where that leads in the coming weeks. Yeah, if it comes up with the all later. Kayla, thank you. Thanks, kayla. Kayla tausche at the white house. Lets talk about the ramifications of a trade crackdown. Michael froman, former u. S. Trade representative under president obama. Hes now a distinguished fellow at the council on foreign relations. Mr. Ambassador, thanks for joining us. Thanks for having me. Trade sort of got lost in the sauce the latter part of 2017. We were all talking about tax reform have to dust off the old notes from last year when we were talking about the renegotiations of nafta, the high tariffs against china and other issues that the president was talking about. What do you expect to hear from him today . Well, i know this audience will care a lot about what the president says about nafta, in particular, because right. Nafta has been a great benefit to our Agricultural Sector and agri business and they have great concerns about the instability, a renegotiation or withdrawal from nafta, could create we now export over 150 billion of Agricultural Products oornd the wor around the world that contributes owe over 4 billion to farmers income. Theres a lot there at stake over the course of 2017, there was a lot of rhetoric around trade but when it came to actually imposing tariffs, very little action by the administration very little action on the enforcement front. The president said hed gone soft on china. I think many of those actions are now being teed up and theres a debate going on in the administration about how high he should go, and whether he should go with tariffs or take other actions. So whats kind of the most severe action that he could take well, the most severe action one would be to impose tariffs on a range of imports, whether coming from china in the case of solar panels and washing machines, or on steel and aluminum coming into the country. Theres a big debate about that because at the Previous Report just said, you start when you impose tariffs, youre imposing a tax on imports youre raising the price of imported inputs in the Manufacturing Products or on consumer goods and it could take away a lot of whatever benefit the tax cuts might or might not have for the u. S. Economy and so that debate is going on is going on now. The other thing about imposing tariffs, depending on under what law you did it, and under what cause, it could very well violate our International Obligations. What that means, it gives other countries the right to retaliate against us to put tariffs on our exports to them and it gives other countries the license to imitate us. To decide selectively which International Obligations they want to follow and to begin to close their markets. Were very dependent on the Global Markets 95 of the worlds consumers live outside the United States 80 of the purchasing power is outside the United States. While were the biggest market in the world, if we want to have more highpaying jobs here in the United States, we need access to those markets. I dont know if this question is answerable in this forum, but im going to ask you, anyway you know, with steve bannon out of the picture at the white house we have learned he may have been the strongest advocate of protectionism in the white house during the first year of the trump administration, but hes gone now. Do you think that well hear a little softer rhetoric this year i think its really too early to tell. I mean, there are a lot of other voices in the white house who share that perspective i think even among even among some of the trade officials, theres a big focus on restricting imports as opposed to expanding exports and while there may be a range of views on that, i think thats a direction and thats an inclination that a number of people in the administration have well, we may get some answers this next hour well see. Mr. Ambassador, thanks for joining us. Thank for having me. Former trade rep Michael Froman joining us today. When we come back merck ceo ken frazier left his position on the president S Business Council after the violence in charlottesville last year today the ceo of the farm su pharmaceutical business is with us live. Thats when closing bell comes right back in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Shares of gopro taking a big hit today. Now down almost 13 after the Company Issued weak guidance, said its going to cut about a fi fifth of its workforce and get out of a key business. Cnbcs josh lipton spoke with gopros Ceo Nick Woodman earlier today. He joins us now. I dont know in theyre highlights, youre going to give us some of what he said, yes bill, gopro, listen, as you pointed out, having a very volatile day it hit an alltime low its expecting revenue for the allimportant Holiday Quarter of only about 340 million, bill. Remember, the company had previously guided for about 470 million. Its also killing off an entire product category as you mentioned. Its drone business laying off a lot of employees, too. Its going from more than 1,250 to fewer than 1,000. Does it make sense for gopro to remain an independent company at this point cnbcs alex sherman reporting that the company hired jp morgan some months back to help seek a potential sale, though gopro is not in any active talks with a buyer. Gopro declining comment. Ceo nick woodman on cnbc this morning stating that his company would consider a partnership with another company, though it plans to remain indenpendent, h said. If theres opportunities for us to unite with a bigger Parent Company to scale gopro bigger, thats something we would look at. Gopro suffering a whipsaw session but worth noting that jp morgan helped underwrite gopros ipo back in 2014 woodman making the case on cnbc there is demand for his products if priced correctly which is why he cut the prices of his devices. Investors, though, clearly still skeptical, that stock down more than 90 from its intraday high of 98 bucks back in the fall of 2014 guys, back to ou and let that be a cautionary tale i dont care whether its a marijuana stock right now, a bitcoin, whatever the case may be, look, even gopro, itself, would probably admit to you it would be far better if they never got swept up and an incredible stock price appreciation they experienced it and look how its come unwound now. Yep. Thats a lot of fog behind him. Fog in san francisco, imagine that thank you, josh. 11 minutes to go until the close here dows down 12. As we mentioned its the worst performer of the major averages today. S p hanging on to a fivepoint gain nasdaq up 22 the russell up about three. Next up, big calls in the industrials today. Some big movers there. Also some surprising good idceguan from some bigname retailers. Closing bell is back in two. A. 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. Especially when inside another amazing machine. Your an amazing machine. The lexus es. With Standard Technology like lexus Safety System plus. The lexus es, and es hybrid. Experience amazing at your lexus dealer. Art cashin stopped by a moment ago and told us the market on close orders show an imbalance of 900 million to the buy side so pretty strong number there. I dont know if its going to be enough to push the dow into positive territory on the close. The other three major average are all positive thats enough to keep them in record territory today. Two sectors on the move,otherwise the industrials and retail caterpillar and the industrials hitting alltime high levels today on the heels of an upgrade at jp morgan to overweight from neutral. The firm also raise the its price target to 200 a share from 144. Jp morgan says the company is restructuring its Resource Business to reduce fixed costs which should provide significant earnings upside. Caterpillar today up another 2. 5 and Goldman Sachs upgraded United Technologies today to a buy there a neutral saying manufacturing issues with a new type of engine are close to an end and that stock is up almost 1 today caterpillar, by the way, just the move today on top of the kind of year they already had, you know, we talk a lot about faang, talk a lot about the momentum parts of the market who would have thought caterpillar would be such a momentum kind of mover in this market and even the relatively weak jobs report that we got last week for the month of december, one of the top jobs growers in the month of december. The industrials. Yeah, there you go. So, theyre carrying on at this point retail also on the move today. Shares of kohls getting a pop trading at levels not seen since december of 2016 the retailer reported strong holiday sales due to Online Shopping also raised guidance for fiscal year 2017. That stock up 4. 5 crocs is higher today after raising fourthquarter guidance. Company expects its selling general and Administrative Expenses to be relatively flat compared to last year. That stock up almost 8 right now. Finally lululemon popped this morning after hiking its fourthquarter profit due to strong holiday sales that stock has since declined, though, now trading down. 5 . Crocs, man, you got to hand it to them, theyre managing to do something right. Theyre hang in there. Ultimate trend. I wonder how the kohls amazon experiment is working out and if thats working to their benefit what were seeing in that report cant hurt to have the foot i thought to myself sometimes when i have an amazon return, is there a kohls nearby where i can drop it off . So there you go. Perhaps something to it. Changing the way we think as consumers. Coming uwi tp thhe closing countdown. Dow lower but everybody else positive and in record troir to territory. 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Alright one quick game of rock, paper, scissors. 1, 2, 3, go. E trade. The original place to invest online. Welcome back to closing bell, im kate rogers we have a news alert on leucadia, moving higher on a dow jones headline its exploring a possible sale of all or part of its stake in National Beat thats a kansas city Meat Processing company leucadia owns 79 stake in national beef. Once again, this is a dow jones headline the stock is moving higher by more than 1 , bill back over to you. All right, kate, thanks very much were just inside the twominute warning here to the close. Ill let you in on a little something. I forgot my notes at the desk. Im going to do this whole thing by memory. A bit of a pause for the dow today. Even though as we show you a fiveday chart of the industrial average, which would include all the gains weve had so far this year, the best first week since 2006 a bit of a pullback. Youre not seeing that for the s p or the nasdaq or the russell. Theyre all in record territory. Utilities, very interesting, among the worst performing sectors last week, today its about the best performing sector its up 1 so it caught a bid but what has been a consistent performer the first part of this year, in fact, the latter part of last year, the transports continue into report territory up 85 points today a gain, bob pisani thats been a stellar performer whether its the airlines or shippers or whatever. The railroads. The rails as well all 52week highs. Let me point out seagate among the best performing stocks today. For why on reports they have a big investment in a cryptocurrency in this case, it would be ripple thats up 7 on a company like seagate. Gopro, of course, laying off 20 of their workforce, getting out of the one business and putting themselves up for sale which usually leads to a gain but not today. Not today just want to note this is the first day we didnt gap up at the open notice were closing higher. Heard art, 900 million. Those are Retail Investors putting in orders to buy in the Mutual Fund Companies buying at the close. We had that every day last week. Remember, 1 billion, 2 billion. 2 billion on friday. Retail investors are putting more money in the market. Something theyll talk about among other things as we get ready for a busy week of earnings and the president talks trade on the second hour of the closing bell with kelly evans and company. Ill see you tomorrow, kell. Thank you, bill. You dont need your notes. Welcome to the closing bell, everybody, im kelly evans dow lower by 17 points as you can see there, everybody else closing higher. That puts them in record territory once again the s p 500 adding about four points to 2,747 the nasdaq up to 7,157 russell 2000 small caps adding for their part under two points closing at 1,561, all closing highs. The dow went the other way today, down 15 points on the bell you did have big price components like goldman weaker about 1. 5 on the close. Dow closing at 25,280 for a slight decline coming up, were talking the state of the pharmaceutical industry and whether President Trump is good for business when were joined in a first on cnbc interview with the ceo of merck, kenneth frazier. Looking forward to that in just a couple of minutes. Joining many ining me today markets commentator Michael Santoli on set rob cox from reuters breaking views. Jim lacamp from ubs. Welcome, everybody the biggest winner on the dow today was caterpillar. We talked about that a moment ago. Got an upgrade the biggest loser, United Health group. Actually theres General Electric which did it just at the bell down 1. 4 how about over in the s p, big winner Seagate Technology on rumors it invested in, yes, ripple, the cryptocurrency seagate up 7 . Biogen down nearly 4 . A lot of the worst performers in the s p today were biotechs with the big conference going on. Stocks in the u. S. Had a strong start to the year but hedge funds are increasingly turning overseas specifically to asia. To find more attractive opportunities, leslie picker is here with some of those details. Thats right. You heard the excuses in the u. S. For not being able to generate alpha blaming it on things like high valuations, low volatility and market efficiency here in the u. S. But in asia, its quite the opposite story over there. And thats because those specific characteristics are not as much of an issue. So were starting to see that as a standout region for 2017 on average, indiafocused funds returned 40 those investing in china gained 31 . And asia, ex japan, jumped 30 that compares with 8. 5 return that the industry posted last year overall. The trend is true at the micro level, too, with the top four performing hedge funds for most of 2017 all focused on china and india. And as you know, hedge funds like to go where the opportunity is currently less than 5 of industry assets are with asianbased managers that may increase in 2018 as a result of these trends that were seeing in 2017, kell. Interesting stuff, leslie thank you. Mike, what do you think . You know, the bet is they can go back in time, in a sense, where the u. S. Markets used to be maybe a little bit of a more fertile opportunity. You know, it was interesting because in the u. S. , leslie, as we know, they were waiting for a stock market, hedge funds were, when you had a lot of divergence between the sectors that were working and ones that werent and stocks that would outperform you actually had that last year. It was so hard, got whipsawed by the sector rotations and Everything Else. Overall gain was so good, anything that did exactly, the level of volatility was so also the overseas markets in asia, especially, they seemed like they responded more to macro factors. All those things i think were in the tool kit of hedge funds are maybe going to be more useful over there. Rob, what do you think. I think asia is a pretty big play you have to pick your markets. You look at a place like india, theres Something Like 4,000, 5,000 companies, alone, listed in india huge opportunity there but huge pitfalls. I mean, the governance issues in ich i india, alone, much less china, a whole other story, this is not for the faint hearted. It takes a strong stomach just like a traveler in india, i can promise, having been there for two weeks last month theres huge opportunities you know, theres been a you know, the market, up about 30 last year. But you also have and you have a little bit of people worried about some of the economic and structural changes that Prime Minister modi has put into effect. I actually think id be pretty id be pretty bullish about the place. Youre legitimateizing the economy, taking the black market out of the economy, or at least reducing it. I think theres huge opportunities there. China, you look at a place like that, im sure the hedge funds found a lot of opportunity in their minds, but, you know, you look over the past 20 years, chinas grown dramatically, but stock investors in china have not done so well its one of those yeah. I wouldnt want to say rigged, but it feels like a market where youre on the other side of the trade. Its a tough one to crack, thats for sure. Jim, you know, part of the appeal was also, hey, if you want to get 20 returns you got to go overseas that wasnt true last year and what do you think about this year, look, we just started it off with more record closes. Well, the u. S. Market looks good the Global Markets look good look, were growing nicely again here in the United States. We may have the best growth weve had in 11 years. But around the world, were growing even faster. And it doesnt matter where you look in asia, whether its malaysia, singapore. All of these countries, thailand, theyre all moving right now. And just since january 1st, youve had brazil, russia, india, spain, germany, all over 4 on the year. And moving past the asian markets and looking into the european markets youre seeing a lot of growth there. German the german ism numbers, the european ism numbers, are both over 60 now. Thats the strongest growth theyve had in years we think the european stocks are particularly cheap from a valuation standpoint so not only do you get the growth globally, you got better valuations if you look at how these Global Markets have performed against the u. S. Markets, going back to 2000, you got a lot of room to catch up here. So we think not only is the u. S. Look pretty good, but globally, the markets might look even better all right mike, just bringing this back home, too, the thing is if you said, okay, i want an option on Global Growth, you could get that by owning u. S. Stocks. You can i mean, definitely these perpetual kind of debate tha goes on about that the other thing is the money actually has been flowing overseas in terms of u. S. Investors, more likely to be raising Equity Holdings overseas not as if its a wholly undiscovered trade finally, yes, all those nonu. S. Markets do look cheaper on the surface. A lot is explained by the sector makeup of those foreign companies. Almost no tech in europe its a lot of banks, a lot of oil companies. Lets see, hong kong, would that is that still mostly banks . Go to china, for example, i mean, china the china market, obviously, is a lot of tech. Then you get the the emerging market indexes are a lot of tech because of it. I think individual to michaels point, if you look at materials and mining, theyre all moving, too. The materials and Mining Companies are all starting to move not only domestically, but globally and that suggests higher Commodity Prices, higher Global Growth so youre getting that rotation into these areas in the u. S. But youre also seeing that as verification of that Global Growth lets talk about this for a second, as you can see, the s p and nasdaq having their best start of the year since 2006, mike weve talked about this being the greatest rally of alltime i mean, certainly in length, it already is it already is one of them. Yes it already is certainly one of them look, theres a lot of ways to slice it but the persistence of it, especially in the last couple of years, has been pretty remarkable its come into 2018, i say its kind of accelerated into 2018. Obviously, you cant extrapolate that but while today was a very 2017type day, kind of resting it was. Generally around the flat line except faang was up more than the rest of the market. I think in general you have a lot of the pistons firing. Now, again, i dont want to say thats the way its going to be, but the markets not giving you in terms of its behavior a lot of reason to think that it wont make another upside challenge here, you know, in a pretty significant way in the next couple of months. Rob, take bing a step back, what do you think about the run that weve seen here in the stock market and is it matched by whats been happening in the economy i mean, its been an unusual one, the fact this rally, the expansion, it keeps going. A lot of times by this point, you know, youve had some kind of downturn in the cycle, had some kind of policy or something. Well, weve had policy thats relatively progrowth. The tax policy here, you look at around the world, there are even europe, labor policies are loosening. There are actually lots of reasons as an investor, a businessperson, to be quite optimistic about the world, even though, you know, its really easy certainly here in the United States, if you did, like, if you were like me this weekend, you read Michael Wolffs book and came away pulling your hair out thinking, oh, my god, its all you read the whole thing this weekend . I did, i read the whole weekend. It was cold. You were glutton for punishment. I sat by the fire and read it it might dismay you. Look at economic policy, you step back, you had Michael Froman on earlier also making the point, you know, trade policy hasnt changed. Despite all the noise. Tax policy, you might not like it if youre in a state, a blue state where youre now paying more, but generally speaking, its progrowth. There are reasons around the world to be hopeful and, you know, that should flow to the stock market jim, well give you a quick last word here on the u. S. Markets. Yeah, to that end, i mean, policy has been friendlier than its been in years, and market has been clamboring for tax reform old markets dont die of old age. Theyre like rock stars. They die of other things theres no reason to think this bull market is ending now. Were seeing new highs large cap, small cap, midcap, transports, it doesnt matter. This is the absolute definition of a bull market and unless we see money flows change or some significant policy error, you have to assume that the trend is your friend here we expect that the tax reform is going to increase corporate earnings, and with that increase in corporate earnings you could see the s p go up to 3,150 this year. Ubs said analysts moved their forecast this year 2 , the recent tax changes, in fact mike, real quickly, we were showing the Sector Performance today. Its a weird board utilities leading the way. When youre around the flat line, you know, the line between green and red is sometimes pretty thin. But, yeah, i mean, they bounced. They were so oversold and treasury yields did dip back a little bit today i think theyve mostly been selling off because the twoyear treasury yield is up toward 2 that all of a sudden, thats a cashlike thing, twoyear treasuries thats challenging the yields of utilities. So i do think today you want to point it to as more of a bounce. Still, a little bit of a riskseeking tone overall with industrials and tech outperforming. Fair point. Speaking of stocks who had a record run over the past year but Commodity Prices starting to feel love from investors, too. Lets get to jackie d. With those details. Good afternoon, kelly, thats exactly right. We looked at the commitment of traders report from the Fourth Quarter. Theres evidence managed money has slowly been adding to long positions in oil and gold. Gasoline and copper, also commodities to watch as well the explanation here, well, commodities as an inflation hedge, the longs in oil, theyre betting on opec, geopolitical instability, supply demand rebalance. Yes, the notion makes the trade more attractive. In the last three months oil is up roughedly 25 , gasoline up. 15 . Gold, out of favor last year, jumped almost 4 in three months the last move over 1,300 some say is likely to hold. Take a look at copper. 6. 5 move in the same time period its uses as an industrial metal signal belief that demand will be strong out there, but its also an indicator of inflationary factors remember, inflation is expected to move up gradually, no ones been saying its time to trigger an alarm here, but they are positioning for it and they also feel commodities and stocks can move together, guys. Jackie, thank you by the way, the president is beginning to speak to the farm Bureaus Association well see if he has more to say about trade policy would that be the commodity rally, mikes is all predicated on Global Growth, things are looking is this a big risk, that he comes out and pushes the other way, puts on tariffs and pushes back for ag, potentially, agricultural commodities, i think it is. I dont know what the knock to effect with the dollar would be. Maybe cause the dollar to bounce and may be a negative for commodities. I dont know if that is what people are considering the linchpin to the trade as jackie said its kind of a latecycle thing. Commodities do tend to rebound along with other stocks. Its the everything rally. You cant find assets like like amazon. That are not going up at the moment if you want to be worried about something, thats one of the things. What do you think, rob . You can see it. Companies like bhp, caterpillar you mentioned is kind of highly leveraged to the commodity cycle. Remember they did the big deal a couple years back. Mining deal. They got trashed. Two years ago we were writing about how we were expecting an activist to come in and fire the ceo. They actually fired the ceo before the activist came in. Stock practically doubled or more than doubled. Bhp is up 23 in a month so i think youre seeing that reflation trade. You get the best of it, if you look at some of these companies that over as the cycle crashed, they got incredibly lean. Look at glencore. If you look back and go back a couple years ago, talk about skepticism about these companies able to remain a growing concern even. Right its been a dramatic change. They had to sell billions and billions of dollars of assets, but they more than doubled glencore ivan glazenberg, at one moment people thought the guy was going to be out and hes back as one of the great billionaires of the commodities business. Lets hang on for one second. Kelly, look at fertilizer stocks, theyre starting to move for the first time in years. We havent seen them move in a long time. The ism reports show 13 out of 14 Commodity Prices higher with new orders the highest since 2003 so its not only a growth story, but its a commodity growth story. Yeah. Thats a great point lets go back to headquarters. Couple of afterhours movers we want to flag kate rogers has more kate 123. Hey, kelly, were going to kick it off with urban outfitters, reporting Comp Store Sales for the holiday season, up 2 in the two months leading up to christmas that would be november and december they said this was driven by doubledigit growth in online sales but those gains offset by negative comp sales in retail store locations. That stock is down 11 now in the afterhours trade and going to move it over to seagate technologies, theyre giving guidance for the Second Quarter of 2018 revenue guidance slightly higher, 2. 9 billion. The estimates were originally for 2. 74 billion. Theyre also expecting record shipments for the quarter. Also guided on margins as well in line with previous guidance, rather, and seagate is up by 3 right now, kelly back over to you. Kate, thank you what a day for seagate up 7 on the session, who knows, something about ripple. That they might own some of this enormous pile of it would be nice to know one way or the other, by the way, an entire trading day almost 1 billion added to the market up 2 , 3 . At least thats who knows if that was to some degree out there in the market as well. People are thinking chuabsolutely. All makes sense yeah its interesting you have to chase the shadows a little bit when it comes to the crypton thing. Jim, what do you think about urban real quickly down 11 we had retailers actually come out with some pretty positive news today urban not one of them. Well, the Retail Stocks have been doing pretty well lately. What ive been concerned about, kelly, is consumer savings because weve seen retail spending go up, but consumer savings down to the lowest levels since 2007. So one wonders how long the retail rally could last or is the retail rally telling us that wages are eventually going to go up and wages are going to rise again . Im a little concerned about the Retail Sector for that reason, but the bottom line is, these stocks are moving just like Everything Else right now. And rob, final word you know, we just 3 00 p. M. , Consumer Credit numbers, biggest jump in a yearfor credit card debt, for, you know, for evolving debt and, of course, weve seen big increases in nonrevol nonrevolving, too. Yeah, i wonder is this kind of the, you know, the cautionary winds buildsing here you know, when you see that number, usually it means were in for some overindigestion, as it were with credit. One point, do you think gopro should change its name to bitcamera . What do you think that might do to the stock maybe ripple camera. Yeah, i mean, they served one trend, so to speak, they might want to try and surf the other one. You know, i honestly think that when it comes to Consumer Credit thing, its one of those good until its bad situations. Its confidence, probably some rebuilding of, you know, hurricanedamaged areas. True. Thats the kind of thing you throw on the card, you cant pay it back right away yeah, you still have to be mindful of exactly whats that saying you know, lower personal savings rate has been one of the bullish talking points personally. Thats bullish until its not. Thank you, rob cox, jim lecamp joining us appreciate it today. The second hour of the closing bell is just getting started. Next up, one major companys decision to drop plans to fight some of the most debilitating and feared diseases. Parkinsons and alzheimers. See why, next. Plus, a big change in the way colleges and universities in the United States make money whats it going to mean for your kid and College Savings account . Email us, follow us on twitter and foiind us on facebook the closing bell with kelly evans is back in two minutes we cant predict what tomorrow will bring. But our comprehensive approach to Financial Planning can help make sure youre prepared for whats expected and even whats not. And that kind of Financial Confidence can help you sleep better at night. With the right financial advisor, life can be brilliant. All day cnbc has been live out at the annual Jp Morgan Health care conference its the Biggest Health care investing event of the year. More than 450 companies are in attendance we saw big movers in the biotech index today. Meg tirrell is out there and joins us along with the ceo of merck, ken frazier, in a first on cnbc interview. Meg . Kelly, thank you so much. Ken, thanks for joining us. My pleasure. I want to start off with a big topic people are talking about which is the tax overhaul, something youve been advocating for for some time. Are you going to bring jobs, hire more, invest more, what will this enable you to do the most important thing about this, it will allow us to compete on an even basis with our competitors. As it relates to our capital allocation, i dont think its going to change a lot in the immediate future were going to continue to spend money on the science as weve always done and were going to build plants where we have an opportunity to do that and were going to hire people with our business expands so having access to that overseas cash isnt going to influence your decision to do m a . Well, actually, before this new tax plan, we had enough power in our Balance Sheet and enough Financial Flexibility in terms of our ability to Access Capital so that we could do the kinds of deals that merck wants to do like acquisitions. So i dont think that this changes that much. What it does is it gives us more Financial Flexibility to think about different ways to go about transactions well, in the political front, of course, one of the major stories of last year was when you made the decision to leave the president S Manufacturing council after the events in charlottesville citing a matter of personal conscience to stand up against intolerance and extremism. As a response to that, the president took to twitter as he often does, and accused merck of having ripoff drug prices in the months since then, how would you describe your relationship with the administration well, we continue to work with both the congress and the administration to try to do whats good for patients the real issues that are out there for patients, real issues for our economy, jobs, innovation we continue to work effectively, i think, with the administration as well as with congress on those issues were you surprised or insulted when the president got personal with these i cant say i was surprised and, you know, i made my statement, the president made his statement. Focused on american business, competiti competitivene competitiveness, jobs. One of the things merck has been focusing on is cancer your stock took a hit at the en of last year do you think investors were overreacting to that news . How do you describe where keytruda stands . In the last couple year keytruda had Phenomenal Growth were treating over 160,000 patients worldwide were the leader were the only drug thats approved in first line, both as model therapy and in combination with chemotherapy so i think were very well positioned i think the issue around that study for us was that we wanted to think about that study in the context of the long term what is it that physicians and patients really care about that is, does the drug show overall survival and we decided d it was very important to have a robust overall survival result so we extended it in order to do that. I think that was the right thing for the drug in the long run. You have confidence in that study . Absolutely. Because, you know, we thad another study, a smaller study called 21g in that study if you look at that data over a long period of time, we have progressionfree survival and trend toward overall survival we look at the study of the smaller version of this study, it gives us confidence this sta study will bear out in a very positive way although we have to wait to see the data. Over the weekend we heard from a peer company, pfizer, its deciding to take invest thement out of certain areas of neuroscience including alzheimers and parkinsons disease, an area where merck has latestage programs where youre investing a lot of money, i assume, being big indications and big trials what is your commitment to the alzheimers case we think theres a lot of good information including Genetic Information that suggests this is a worthwhile way to pursue. We also brought in a new compound which is called a tau compound so those two programs were very committed to if you take a step back, i think all companies have to look at their portfolios and have to reallocate where they think they have the best opportunity. At merck, were not committed just to one area of medicine or another. Were committed to finding great drugs. Kelly, you have a question . Meg, thank you. Mr. Frazier, appreciate you joining us i was going to ask in light of everything thats happened with drug prices in the country the last couple years, we reported amazon has looked at getting into the pharmacy business do you think amazons entry could be good for consumers . And would you embrace that as a Drug Delivery model . Well, i dont know exactly what amazon has in mind. Thats in the drigs side of the business were focused on our business bringing new innovative differentiated medicines to market for conditions like alzheimers and important conditions like cancer so if thats a more efficient way of getting drugs to patients, we would be in favor of it. As we think about drug pricing, of course oh, sorry, go ahead, kelly. Sure, i was just going to quickly ask as a followup to that is there something broken with the Drug Distribution model l in this country as it currently stands what i would say about the Drug Distribution system in our country is that the rebates that are being paid by pharmaceutical companies, its about a third of what Branded Companies actually have as a list price a third of that goes into the Distribution System through Insurance Companies, pbms and others, through rebates. I think thats really broken, if you want to call it that, those rebates are not passed on to consumers. As is the case with hospitalizations and with physicians visits. So we think what we really have to do is get some of those rebates which are the product of intense negotiations with the supply chain onto the people who need it at the pharmacy counter. And as were talking about rebates go ahead, kelly. Final thing, meg, im sorry about that i was going to say to close off the discussion, if amazon could do that, if it could get those rebates in the hands of consumers, would that be a good thing for this country, mr. Frazier . I think getting those rebates in the hands of consumers, to make drugs more affordable, unquestionably a good thing, would be a good thing for this country. Ill come back in here. A question about drug prices ken, can you help us understand why drugs have to why do prices have to increase every year i know theyre list price. Why do they go up every year each company has a different philosophy with respect to drug pricing. At merck we always tried to be very responsible and tried to be very transparent so if you look at what weve done year on year, youre talking about increases, modest, so to speak, in the low to mid Single Digits so from our perspective, i dont want to comment on what other people do. What weve tried to do is slolok at that and make sure we have the right balance between the kind of return that we need on investment in order to continue to invest in research and make sure drugs are still affordable for patients. You know, this has been a huge political issue, of course, not just donald trump, but, you know, in congress, and approaching the midterm elections this year, do you expect there to be more pressure on drug pricing . Well, i think drug pricing is an issue lots of people have to respond to id expect the administration and congress will be trying to think about ways to do it. The good news is, from everything i sense, people want to do that in a way thats actually consistent with also supporting innovation. Our new fda commissioner Scott Gottlieb has been working on that issue by trying to get more generics to market faster. I think anything that actually supports marketbased approach to that is a good approach i think price controls and things of that nature which have been discredited and discarded in the past, i think those are not the kinds of things we want to go back to. In many ways, 2017 was a year where weve really seen a change to the way medicine gets delivered in terms of three approvals, onetime treatments immune no therapies for cancer, first gene therapy for a rare form of blindness. As you look at these models that were seeing for onetime drug pricing, do you think theyre the right models and the way were paying for medicines, its changing how would you evaluate that . I think you have to look at it by each therapeutic category. I think whats happening, were moving to Precision Medicine the right drug for the right patient at the right time. Sometimes thats a onetime administration sometimes its another a longer administration. Remember that the real costs to the health care system, this chronic disease, diabetes, things like alzheimers, not all those things with ill be susceptible to onetime treatments. Ken, well leave it there thank you so much for being with us. My pleasure good seeing you again. All right, kelly, back over to you. All right, meg, im sorry im stomping all over the place here so tough doing what you have to do with all these interviews really appreciate it great stuff all day as always. Our meg tirrell out there speaking with ken frazier. Thank you, both. Its time for now for a cnbc use up in date lets get over to sue herera. Heres whats happening at this hour. Criminal charges dismissed against a nevada rancher and sons accused of leading an armed uprising against federal authorities in 2014. The judge ruling federal prosecutors disregarded the constitutionaldue process rights of cliven bundy and his two sons. Mitt romney was treated for Prostate Cancer last year. A romney aide saying the cancer was removed surgically and nofon not to have spread the news comes as romney decides whether to run for the seat that will be open when orrin hatch retires. United airlines is eliminating, you heard it right, eliminating second checked bag charges on travel to and from china and hong kong. This is on all routes from north america. The airline will offer two free checked bags starting today. In the sports world the Chicago Bears named a new head coach. 39yearold Kansas City Chiefs offensive coordinator matt nagy. Spent the last ten Seasons Coaching under andy reid in philadelphia and kansas city he replaces john fox who was fired after three losing seasons. Youre up to date. Thats the news update this hour kelly, back downtown to you. Sue, thank you. Our sue herera back at headquarters. Ge was the ultimate dog of the dow last year. Its had a great start to 2018 coming up, a pair of our fast money traders talk about whether the dog is starting to turn into the darling of the dow. Plus american universities are getting hit as the one strong flow of foreign students fades. Up next the a ande shows us what he thinks is behind the change and how it is impacting his program. Stay with us 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 a report by the New York Times says the number of International Students enrolling in universities across the country is decreasing. And thats causing a lot of universities to face harsh financial side effects joining us now to discuss that is matthew myers, dean of the edwin l. Cox school of business which celebrated its 40th anniversary by ringing the closing bell at the nyse a couple minutes ago thanks for your time. A pleasure to be here. What are you guys seeing enrollment wise . Has the crest has it crested, are we starting to turn here a tide for International Students . Yeah. I think so. Theres a number of reasons for that range from everything from the strong dollar which makes our programs very expensive. We were down in mexico just a couple weeks ago, mexico city and monterey trying to recruit a number of really Good Students and their response is theres a lot of anxiety because of the rhetoric out of washington and whats happening with the immigration discussion here in the country. And also seeing that theres a lot of really good competition in western europe and asia and canada and in australia. Not just at the University Level but at the Business School level, too all those things are influencing the number of applicants to the programs here in the u. S for a number of years i know u. S. Universities, i mean, it was a Growth Business in part because of International Students and it became a little bit of a boom. Also became more selective at some schools for u. S. Born students im just wondering, that clearly built up capacity, if youre looking at it as an industry so can this now, i guess, be an opportunity for some kind of rationalization of the business if youre going to think about it that way, how would you think about it from a competitive perspective from smus point of view smus point of view, were in a great spot, were in texas where the economy is growing, in dallasft. Worth which is a destination place for many folks, not just to come to school but also to stay and work unfortunately, theres not parity across the country, so many states are suffering from, of courses an economic downturn but the demographics arent in their favor. Many of the midwestern states have declining High School Graduation rates so they need to fill those campuses and generally are trying to fill the campuses with International Students particularly. Its not working out for them. I grew up in a college town, while it was booming, while it seemed like it was constant expansion, i remember writing articles for the quauwall stre journal, anywhere who had a college or university, it was an economic boom and safe place during a recession now its not true anymore. For Business Schools as well, are you experiencing this what are the numbers from look like were seeing a basically a flat enrollment trend inside the mba programs, traditional mba programs even declining. A number of mba 3r5programs hav been shed over the last few years. Why is it demand for business degrees is down do you think i think largely because so many of the really Good Business schools closed the gap between quality of undergraduates and mba programs so theyre seeing a lot of our market, of course, is hiring firms, a we talked about earlier. Many of these firms want to invest in in future leadership inside of the organization theyre finding that their turnover rate for hiring of undergraduates is less than for mbas. Wow. Obviously its less expensive. Theres a sense of being able to identify that talent at a younger age and not take as big of a risk. Theyre really taking a look at really strong undergraduate institutions on the business side and those that are investing their time and curriculum and technology and innovation especially. Is that a challenge for you are you guys similarly shifting your focus there were making sure our curriculum is modernized in the way of being multidisciplinary in nature. Do a lot of stuff with the engineering school, for example, smus Excellent School also even art, inside the s. T. E. M. Disciplines thats where the industrial sector growth. Thats where we want to focus. Wow have to do a lot to keep us. Yes, you do. Thank you for joining us. Congratulations on 40 years and ringing the closing bell my pleasure. Matthew myers ge rallying 4 this year remember, the year is, like, now days long. It plunged 40 last year up next, qfast money traders guy adami and Pete Najarian tell us whether now is time to get back on board of ge. Survey finds people with digital Voice Assistants like amazon echo are using their phones less. Find out if that could dial up trouble for phone makers like apple, still to come on the closing bell. 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 the stocks are coming off the best start to a year since 06. The three major indices closing the week at record highs the force is weak in china. Star wars the last jedi opening to a soft 28. 7 million in that country over the weekend. Shares of gopro sinking this morning on a new round of announced job cuts, restructuring plans, weak q4 guidance. As a public company, its our job to translate that consumer success into profitability and thats what were focused on 2018 the markets are fair, and im still glad that we took gopro public. Jp morgan is, in fact, bo working with gopro on a potential sale of the company. Bitcoin down today. Approximately 10 on the various exchanges we follow. News this morning, regulators inspecting local banks this time its south korea that offer bitcoin. Apple under fire from two investors, Jana Partners and calstrs urging the tech giant to take action against growing smartphone addiction in children. The culture of silicon valleys been about disruption for so long that people have forgotten that there are consequences to disruption and at the scale that the tech guys are at now, they have to take some responsibility. Dow lower by 17 points, but as you can see there, everybody else closing higher. That puts them in record territory once again General Electric was the dows worst performer last year, but its up almost 5 so far in just a couple of trading days in 2018 what is the bullish case to be made for this stock . Joining us now, fast money traders guy adami and Pete Najarian hey, guys. Hi, kell. Hi. Guy, all right, whats the case . Not the case for, ike, a one o twoday bounce here, whats the, like, sort of the case for owning ge in 2018 . Its very hard for me to make that case. Ill play the game with you. Theyre going to tread water now for the next six to nine months on valuation, people will say its attractive and can hold on to this thinking the floors been put in, hoping theyll turn the stock around in nine months. Im not in that camp i happen to think its expensive on valuation im not in the make a bull case for ge camp. Pete unfortunately, kelly, i got to admit i totally agree with guy. I think this is six, nine months out. The problem right now is, what about that upgrade today of United Technologies . Goldman sachs, what did they point out . Talked about this engine, right . Thats competition to ge 20 of what ges revenues comes from aviation. So i think if theres true competiti competition, thats one more hit. The positive you can look at is the energy space energy looks like it wants to make this turn if that continues, thats going to be obviously better for ge. They literally bought the absolute to p in energy. Lets all admit that in terms of that space, kelly, there are so many other names id rather be in than ge i think theres more upside. Mike, heres what i wonder, if nobody can make the case for it, weve seen this time and again, sometimes the stocks, they fit all the news in and can kind of just grind and find their footing. Right definitely on a shortterm basis, this stock was washed out coming into this year. Thats why you saw that bounce there was a ton of tax loss selling. You at least had this churn of the Shareholder Base in terms of whose hands its in. I do think the basic premise, too, is this stock is going to turn before you know that the fundamentals are turning thats typically the way it is when you have really smart guys with who trade for a living saying you got six or eight months before this thing is going to move an inch, maybe its going to move in three months we just dont know how thats going to play. You know what, kell, i tell you, people have been heres the word for you flummoxed. Why are they flummoxed thats a good one. Look at honeywell, a monster for the last five years. Why cant ge catch up . The reason is, they have no eps growth why are you paying a prime yul valuation for ge when you can pay the same valuation for honeywell and get twice the youre throwing us off i hear you. Im flummoxed thank you, guys. Guy adami, Pete Najarian much more coming up top of the hour catch all the fast money act action at 5 00 p. M. Eastern. Is alexa going to kill your smartphone the closing bell is back in two with that answer barry rosenstein, managing partner of Jana Partners, and anne sheehan will be live tomorrow on the Halftime Report. Make sure you dont mi tsshat tomorrow 12 00 noon eastern more closing bell is coming right up things go wrong and an employee takes action against you, legal fees to defend yourself can be huge, even if youre not at fault. Employment practice Liability Insurance helps cover these costs. Trusted choice independent Insurance Agents represent multiple Insurance Companies and customize coverage to help protect you and your business. Announcer to find an agent, visit trustedchoice. Com Flexshares Etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Its time now for our take away. We begin where the new survey saying people who use voice devices like the amazon echo, use their phones less. This was a global survey, finding 66 of people who use a Voice Assistant use their smartphone for fewer activities like entertainment and Search Online initially i guess its not great for apple, because they dont have a welldeveloped he competing product, but i think the entire industry had been focused on this. I think this is what google glass was about, everyone recognized this unsustainable by staring at a small thing in your hasnt you want to make it mower organic. For that if theyre not the Echo Technology and alexo and not google can they catch up . And search and shopping seems to be the first way in i just dont know if the headstart will be i hope its the end of this i hate that. I cant stand it. Next visa given workers a retirement lift. The company saying it is increasing the annual 401 k match up to 10 of workers salaries they didnt necessarily need visa said they wanted to do something longer term for workers with the savings from tax reform what do you think . It seems like winners all around you dont want to be cynical, but employer match i believe is already tax deductible, so it wasnt like they were taking literal tax savings, and visa has 40 person profit margin, but in a competitive job market, you have jobs doing and certainly want to make it clear they are sharing. Venezuela wants to be in on the cryptocraze. Heres Michelle Carusocabrera motor vehicle. Nicholas maduro made the announcement they will create cryptodigital units. The key reason experts are skeptical, lack of rule of laul. Ultimately to have trust in this uchbt, you have to move you can redeem it. But how do you know theyre going to deliver whats your legal resource if they dont theres an enormous amount of counterparty risk venezuela hasnt announced what protocol theyre going to use or if theyre going to create their own . Will it be a based on etheyrium or something else. There are also a number of countries evaluating backed cryptocurrency sits like sweden, estone i dont, canada and singapore. Mike, the whole thing is to get around the venezuela collapsing currency. Theyre having to scramble. You wont believe the big money behind tonights game. Thats up next 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. Athey always refer to meade was master sergeant. Ge. They really appreciate the military family, and it really shows. Weve got auto insurance, homeowners insurance. Had an accident with a vehicle, i actually called usaa before we called the police. Usaa was there handson very quick very prompt. I feel like were being handled as people that actually have a genuine need. Were the webber family and we are usaa members for life. Usaa, get your insurance quote today. In case you hadnt heard, alabama and georgia kick off the National Championship game tonight just after 8 00 p. M. Aar eric is standing be with more. Two steams from the same conference, it looks like great business with ticket prices skyrocketing more than ticket sales, lets face it, this is a madefortv event. Espn pays more than 6 million a year to air the playoffs its as small a playoff as you could possibly have, but 5ds are going for 1. 2 million. Thats why many believe the playoffs should expand some of the other stakeholders dont want to add , from the traditional bowl games every confidence benefits from the playoffs, sharing revenue, even if none of their teams make it to the playoffs the top five make 60 to 90 each with the bottom splitting 80 million. Only three had a playoff team. I find is all confusing what is the rose bowl . I dont even understand. Is it a playoff game not . Some years its a playoff. Why that makes no its on a rotation. If they go to an eightgame play jon, does that mean we dont have to pla deal with this thats the tricky part, eight teams, so now three rounds will they use the real bowl games . Or just keep a playoff system . The less relevance the other games have as we talked about a couple weeks ago. All these bowl games, they make hundreds of millions in aggregates its all about the money. The Current System was years from haggling and know we want to reopen the process . Thank you, eric, chemi. Are you going to watch i probably will. That does it for us. Fast money starts right now. Live from the nasdaq marketplace overliking times square, traders are pete, tim seem op, dan nathan and guy adami. Bitcoin goes bust, tanking today. The rival etherium takes off and one of the its creator says this rally is just getting started. Thats later but first we start off wit