Transcripts For CNBC Closing Bell 20180112

The market rally lets get to dom chu to give us a broader picture of what were seeing here. The whoopwhoops are happening all over the place, not just on the floor but across wall street and investing america because we are, again, at record highs for the overall stock market the best start to a year for the s p 500 since 2003 back then, it gained around 6 were at that 4. 5 , maybe close to 5 at this point. Check this out the s p 500 over the past week is up 1. 5 industrials, consumer discretionary, energy, financials, cyclical, economically sensitive the ones who do good in a rising economy. Those sectors are outperforming. Meanwhile, Interest Ratesensitive sectors like real estate, telecom, utilities, Consumer Staples are the market underperformers. As for the best performing stocks in the s p 500 and the worst ones, check this out because we have at least Seagate Technologies showing its going to be the best er performing stock so far on the Dow Jones Industrial average side, no surprise, aerospace giant, boeing, the best performing stock, also adding the most in terms of points to the yeartodate totals for the dow so far this year intel, down 3. 5 so far over the past week. And to finish it off, lets take a look at the year to date chart. Best start of the year for the s p 500 since 2003 check this out, year to date, 4 energy, consumer discretionary, industrials, leading the way higher again, cyclical sectors versus real estate, utilities and telecom, the underperformers so whether or not that Interest Rate trade plays out, well see if the Interest Rate trajectory is still up and to the right back over to you. Dom chu, thank you very much. Shall we get to our Closing Bell Exchange what a good idea. Talk about the moves weve seen here. Joining us now, sarg sitting next to us kevin from Riverfront Investment Group and Rick Santelli from the cme. So well begin with you. As a trader, what do you think about the momentum weve seen to start the year off as a trader im ecstatic i dont i really i mean, i dont have the records from every year of my career, but this has got to be the best 12 days ive ever had i mean, the transports, werent mentioned in doms segment, the tra transports were up 7 . Nasdaq up 6 the worst sector is the the worst index is the russell which is up sting liomething like 3. 8 if youre not up in this market, you made a gross error in your judgment on tax reform. You were telling me before the break, before we came on air, things youve been selling. Are you fading this rally or hanging on for dear life im not holding on for dear life i have actually given a lot of my positions leeway, gone beyond my targets on many of them because you almost had to in order to stay in it the game so this morning i took a profit in walmart its one of my favorites all along. I took a profit on walmart because i was a little angry at them i was angry that some people showed up for work and didnt have a job because ive been that guy they kind of ticked me off a little bit i took a profit in xerox i bought xerox on the whim, almost an impulse purpose. I got a gift all of a sudden when they started talking to fuji film. Thats one i didnt buy for a good reason, i took it off the table. My cash level is actually higher than it was two weeks ago. Im moving forward, im still heavy in tech like i almost always am. I still have the financial positions i like, i still love Energy Energy has been a baby of might be all year. Im still in those names kevin, whaut about you, how does the rally playing out make you feel and how are you changing your investments . The rally playing out is making me feel great because weve been riskon in our portfolios for some time what were seeing in the u. S. , you know, you have operating earnings in the s p expected for 2018 to be up about 16. 5 . And we continue to like financials one thing that were expecting, though, in the u. S. This year, is we expect more volatility because last year, you had the fed raising rates from 0 to 1 , 1. 5 this year youre going to cross over the 2 barrier. We think thats going to bring volatility to the market what weve done is rotated our money oust the u. S. Into europe and asia and, you know, those maurkt mae doing well as well rick, so i see oil now at 64. More than a threeyear high. See gold going to 13. 38 multimonth high why would that be happening . Could it be the threeyear low in the dollar index right now . Thats pretty amazing. Yeah, i mean, it really is amazing. The breadth of the move, you know, we talk about how weve had such big moves in equities without any major retracements you can sort of say the same thing about the relationship of the dollar index or the euro versus the dollar. Both of those now are sitting at levels unseen since about christmas 2014 so over three years. And its been swift. Just look at the last two days low to high. Youve gone from basically 119 1 2 to 129 1 2, two full year rows, low to high, in two sessions dollar index, 1. 50 cents this is amazing. It really does underscore that europe is where the concentration is this isnt as much a dollar weakness story as it is about a euro strength story. I dont see it diminishing as a matter of fact, when you actually start looking at things like bund yields going up but southern economies yields coming down, spain and italy, you know, what that tells me is the end game for mario draghi, leaves in 2019, is most likely to come up with some kind of a euro bond to make the negative Interest Rates go away. Think about how that affects credit in the southern countries versus the credit of germany all this starts to make sense. With bund yields going up on that spread to the southern economies, i think its kbigoino keep the euro firm rick, what about the high yield part of the debt market . You know, when we see Interest Rates move up, its an open question sometimes how thats going to react and its usually the part that acts most like stocks if were in that kind of rallypositive environment. What do you see there . Yeah, no, its always been an intermingling credit relationship with things like high yield, whats going on in the equity markets theres a real interesting relationship there given whats going on in stocks, though, if you were to look at the hyg, its not acting badly its holding in pretty well. The lqd. More Investment Grade holding well if you look at my favorite, the barclays credit spreads, what youll find is the highyield spread is about 344 basis points a couple months ago it was over 400 basis points everything is well behaved dont see any red flags, whether its in the hyg, the credit spreads, even with rates moving up we still cant break through the 260 to 263 level even though were snugging up to it. I still say rates are going to go higher. But not necessarily in a threatening way to all the other aspects of the economy and the markets that weve been discussing all right everybody stay right there we got more data now on big market inflows by retail investors. Cnbc. Com finance editor jeff cox is here with the details jeff yeah, bill, thanks. I got an article on cnbc. Com that goes into greater detail on this let me run a couple numbers by you. 24. 4 billion inflow last week into equitybased funds, thats mutual funds and etfs. A little perspective, thats the sixth highest singleweek total ever its the largest total in six weeks. Im sorry, in six months, and as far as etfs go, thats about a half a per seventh of the total assets for etfs. For one week, thats a really big move just a couple more things as far as across the country perspective, the u. S. Got the bulk of those assets but a lot of them spread around europe, emerging markets, japan. So moneys out there really trying to find a place to go its surging bigtime into the markets. Now, michael hartnet, chief investment strategist at bank of america, Merrill Lynch used the term bull capitulation we need to think about as we see a market up over 5 this year, alone, as dom chu said before, were at a 15time high in terms of the start of the year more and more concern being expressed over the froth in the markets now and investors really committing big money toward those equity funds sarg, i was going to ask you, this goes back to what we were saying earlier, part of the reason i ask how does it make you feel, we you hear some of these things or see the way the markets playing out, is there any instinct of wanting to fade it especially when we see this kind of retail participation actually it does scare sme a lot, not so much capitulation but wondering if the guy and gal on main street are throwing a hail mary pass saw a revolving credit for october and november gap up by gigantic percentages saw the cpi, people actually increase prices were increased for, looking here, fuel, oil, utilities and medical commodities. Okay, thinks people need those are necessities. They have to buy them. What went down this morning in the retail sales report for december, sports, hobbies, books, music, fun. People spent less on fun in the Holiday Season on a monthovermonth basis. What does that tell you . That tells you i think it tells you people are nervous from a macro perspective, i have worked as an economist, this does ring some alarls. I just told you im higher on cash then i was 12 days ago. One more number out there at you. Thats really interesting. The bull bear spread in the Investor Intelligence Weekly Sentiment survey is at 51 points, thats the highest since april of 1986. So that just tells you once again about where this sentiment is in the market and it does make does have to give you pause about the market behavior right now. Maybe the mets will win the series this year. Well, lets not get carried away. The vikings are going to win the super bowl. Equations to 1986 well move on. Kevin, does any of this give you sweaty palms i think, you know, obviously when sentiment gets this high,w. The thing we have to concentrate on, tax reform is going to put extra dollars into peoples pockets. And when you have, you know, minimum wage being raised out there, thats more money, more discreti Discretionary Income for people to spend and to propel the market so at this point, were not concerned about it, you know, obviously, were going to be a little bit more cautious Going Forward because sentiment has gotten so high, but we think that it can continue, and we think that 2018 will see earnings revisions go up as the year goes on because a lot of the estimates thus far havent really baked in the full effect of the tax reforms yeah. All right. Guys, thank you, all well leave it there appreciate you joining us today. Jeff cox, sarg, our Rick Santelli, and kevin nicholson. We have a news alert now on the Supreme Court. Taking in some new cases hampton pearson, tell us about some of them hi, bill. Well, were getting word from the Supreme Court they have, in fact, decided to take up the issue of whether or not states should be able to collect taxes on Internet Sales. That would, of course, mean potentially billions in revenue for the states and presumably higher costs for consumers south dakota is leading a challenge of some 36 states to a 25yearold ruling that said in essence those businesses had to have a physical presence in order to collect the tax now the Supreme Court has put the issue on its calendar, potentially to be heard sometime this spring. Challenge to all of that, the estimates are that the states may be losing as much as 34 billion a year because of this physical presence rule the Internet Companies say it is a lot more challenging now to set up a system where that could go forward than it was back in 1992 when that original physical presence rule was issued but anyway, the question of states collecting Internet Sales taxes to be on the Supreme Court calendar probably later on this spring back to you. Thank you, hampton. Hampton pearson in washington. I was looking at amazon shares, obviously, especially the president earlier this week raids raised this issue. Not calling them out specifically, but theyre the elephant in the room shares were up 2 . Dont seem to show a lot of reaction to this not responding. Market, though, is coming back off highs here but that could just be the ebb and flow as we head toward the close here yes, amazon not blinking right now as this massive rally continues on wall street we have 47 minutes left in the trading session here on what has been a remarkable week for the stock market today the dow up 172 the s p, the nasdaq, and the russell and the transports, well not forget them, all in record territory still. And we have a lot more ahead today on the closing bell. What a week. Mr. President , are you a racist next up, were live at the white house on another big day for President Trump. Plus, the bonus question will workers whove been promised money really get it in the way they think they will e are Strings Attached . Thclosing bell with kelly evans and Bill Griffeth is back in two minutes take a deeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Liberate your spine. Aflac and reach, toes blossoming. Not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. So he had your back . Yup in just one day, we process, approve and pay. One day pay. Only from aflac like you do sometimes, grandpa . And puffed. Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. We got a broken record going here, folks. If youre just joining us, you wanted to see, gee, could it be possible that we have some gains again today . Boy, we sure do. The dow was up more than 200 points were up 181 right no u. The s p, the nasdaq, the russell l, the transports, yes, everybodys in record territory. As the rally that has begun 2018 continues. Best rally weve seen so far for the s p since 2003 meantime, kohls is one of the biggest winne erners today rbc capital raised its rating to sector perform both firms cited improving samestore sales for the improved outlook and that stock is up 4 third best performer in the s p right now. Goldman sachs ceo lloyd blank fi blankfein weighing in on President Trumps controversial comments on immigration. Tweeted a view from our building reminds me that despite all the American Values will shine through. Kayla tausche with the latest. Reporter the reaction from the csuite, and capitol hill, has been swift and incessant in response to the comments of the president referring to african countries with a fairly vulgar term there earlier today anevent recognizing Martin Luther king jr. , the president did not comment further on those remarks beyond a tweet that he issued this morning saying that was not the language he used lindsey graham, the senator from south carolina, reportedly stood up to President Trump in the meeting yesterday when he made those comments, and senator graham today just putting out a statement saying the president and all those taeattending the meeting know what i said and how i feel this reaction is coming in as the president is attending his physical exam out in yn ymarylad and amid big news on the policy front where the president is saying he will waive new sanctions and keep the u. S. In the iran deal at least until midmay but he wants some specific fixes in the meantime, otherwise the u. S. Will withdraw he says this is a last chance in the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran Nuclear Deal and if at any time i judge that such an agreement is not within reach, i will withdraw from the deal immediately. To fix the deal, trump wants stronger Enforcement Mechanisms both from congress and from european allies. I spoke to a Senior Administration official earlier this afternoon who said that european allies are receptive, but not committal to such a supplemental package that would have stronger guardrails for the deal this official did say that the white house expects congress to put its piece of legislation out in the next seven to ten days and boeing and airbus licenses are still under review that is something that the market is watching closely the president now has 120 days until the next sanctions waiver is due we will see whether the white house and europe and members of congress can reach those deals kelly . All right kayla, thank you kayla tausche. Weve got a news alert on lowes now to get to leslie picker has that story leslie reporter hey, kelly, thats right. Following reports that de shaw took an activist position in lowes, we have been able to confirm with several sources here at cnbc that is, indeed, true they are having dialogue so far, though, that dialogue has remained behind the scenes ive tried to get a bit more information, a bit more color about what theyre pushing for at lowes specifically doesnt look like theyre pushing for a sale or consolidation of any kind at this time. That the focus of those conversations are more about the stock being undervalued relative to peers and providing suggestions on what they can do to boost that stock. Also, were still trying to understand exactly how big of a stake they have at this point in time we dont know those numbers right now, but were going to continue reporting well let you know if we get that, kell back over to you all right thank you, leslie. Lowes, i believe, leading the s p with that 5 gain today. Meanwhile, shares of wells fargo are trading lower down about 1 of reporting mixed fourthquarter earnings before the bell this morning. Coming off a rough 2017 after that fake account scandal. How does wells plan to bounce back in the new year joining us now to discuss all this is john shrewsbury, cfo of wells fargo and member of the cnbc global cfo council. Hello, again. Welcome back. Hi, how are you thanks for having me nice to be here. Yeah, and john, the first thing i wanted to about you about is the impact on wells from tax reform. In the quarter it looks like you guys are a beneficiary, other banks have been taking charges can you explain that, what you expect this year sure. So the impact in 2017 is a positive and almost 4 billion positive from the impact of deferred taxes, alone. We have a net deferred Tax Liability at wells fargo mostly because we didnt have big losses during the downturn and we have earnings on which well pay taxes in the future. So with a lower go forward rate, that liability becomes smaller and creates a plus in the current quarter. We had a couple of negatives from tax reform offsetting that. The net impact in the quarter was about 3. 35 billion to the positive, so a great outcome and part of a quarter with 6. 2 billion worth of net income overall, about 11. 3 return on equity and a lot of great growth in the fundamental drivers of the business so it was a pretty good outcome from a performance point of view. John, you and your boss, tim sloan, have talked about cutting expenses you have a big costcutting program in line over the next few years. Your expenses in 2017 were up big. The Expense Ratio was much higher than anticipated. How much of that was the legal costs, but what else was going on there yeah, so the big expenses in 2017 that were out of pattern were call it 3 billion worth of litigationrelated settlements things that the we dont expect from year to year. Also theres big investment going on in transforming the company. We have Major Technology and cyberrelated expenses we is big innovation related expenses i hear some excitement in the background we also have we have costs related to enhancements and compliance and Risk Management when you add it up, there are overall rumpb for the year the expenses are elevated. We committed to investors to make structural changes to take them down. So, is that because, and it seems like every couple of weeks theres still a lingering issue with you guys, remember in the fall, occ had an enforcement action they were weighing against you and, again, a lot of this going back to the various scandals youve dealt with so when youre bringing down the expenses, are you habl able to o that once you resolved all those issues, is there another way you can do that separate from it how is that going to look . Sure. So theres the structural changes to expenses happen really by changing the way we do work weve got a big opportunity that weve already been capitalizing on to combine like work around the company, weve consolidated our staff functions. We have lines of business that should operate closer together from from an operations point of view were changing how we do business with customers. Theres more mobile, more digital, more selfservice so some of our physical infrastructure is going away we also have some things that like the the amortization of deposit intangible which is sort an arcane banking thing that will take about 600 million worth of expense out a lot of it is really modernizing the company. Separately, the cost associated with settling some of these these backward indicators of prior compliance problems, or regulatory problems, have appeared, will probably continue to appear for a while and they should run off as well so it would be the future efficiency story actually looks really good. Weve historically been among the most efficient go right ahead. No, go ahead. Finish your thought. Please. Well, historically, weve operated our company with a cost ratio of between 55 and 59 which is a great place to be thats our stated goal and were vectoring back in that direction. Speaking of dealing with the scandals and all the work that you guys are doing to try and root out the bad behavior in things, tim sloan on the Conference Call was asked why management could not give assurances that problems, when they would be resolved he said id love to live in a world where i can give you an absolute guarantee in sercertai but not just the world we live in then he said, were never going to declare victory. Knowing tim as we know him, i understand hes trying to Say Something noble there. It makes it sound like you guys are going to live with this cloud hanging over you for the foreseeable future i mean, that doesnt sound like a very healthy environment to work in. Or to invest in, by the way. Well, its its an increasingly healthy environment to work in, and i dont think you want a ceo whos declaring victory in the face of constant change, the ongoing process that hes installed of instilled of turning over every rock and well always be improving. For him to step out and declare victory without control of how other people react to anything that changes in our business, problems that we find if they exist, something new that pops up because people make mistakes, et cetera, is just it would be i think hes smart for positioning it the way he did. Were trying really hard i get that. To continue to improve wells fargo in every way. At some point, youre in the banking industry, its an industry thats about confidence in the institution, and it doesnt strike me as being something to say if youre trying to strike confidence in the institution, if youre saying im never going to declare that this thing is over. Yeah, i think the message that hes conveying is that his work will never be done at improving wells fargo. I think the facts will speak for themselves as in terms of when when the sales practices issues of 2016 or anything else that hes uncovered since then have run their course. But i take your point. John, real quickly, have you guys announced anything on the bonus or wage front pertaining to tax reform . I know a number of banks we have. Come out and done something. Yeah sure. We have. So a few things. On the bonus and wage front, weve weve decided to up our minimum wage for our lowestpaid employees to 15 per hour and for people who have been making at or about 15 per hour, were moving them up commensurately. That impacts about 70,000 team members at wells fargo weve also decided to issue shares of restricted stock to 250,000 team members at wells fargo, fulltime team members will receive about 3,000 worth of stock and parttime team members about 1,800 worth of stock. That will happen in the first quarter. Both of those things we think are a good message for our team members. And investment the bankers get a 1,000 bonus this year, right . Thats the whole no im kidding. Pay for performance yeah. I dont want to give anyone a heart attack john, thanks for joining us. Thanks, john. John shrewsbury, cfo of wells fargo. Lets get to a market flash on affleck, one of the worst performers in the s p 500. Shares of aflac plunging, after a report now down 7 , after a report in the intercept alleging fraud at the company with the insurer reportedly exploiting workers, manipulating its accounting and deceiving shareholders and customers the article is citing interviews with nine former employees as well as three previously unreported lawsuits. It says allegations have already led to a series of investigations by state and federal regulators now in response to this article aflac putting out a release a short while ago saying, recent media stories regarding aflac contain false allegations made by a very small group of independent contractors. That aflac intends to aggressively fight these allegations beginning with filing for their dismissal and that the company has investigated these claims and found them to be without merit whatever the case, shares are down right now almost 8 on this news as you mentioned, one of the worst were foperformers in the. Back over to you all right well see if that brings the shares back. Lets get to a cnbc news update with sue herera hello, guys, heres whats happening at this hour, everyone President Trump did not comment on his reported slurs of haiti and africa during a ceremony to honor Martin Luther king he signed a proclamation honoring the mlk federal holiday which is on monday celebrate dr. King for standing up for the selfevident truth americans hold so dear that no matter what the color of our skin or the place of our birth, we are all created equal by god a recordbreaking deal for Toronto Blue Jays third baseman Josh Donaldson he received a 23 million, 1year contract from the jays. The highest salary ever paid to a player eligible for arbitration. A georgia couple was all smiles as the georgia lottery presented them with a 2 million check. Willie west and his wife, mae, receiving the check inside the one stop food store where that Winning Ticket was sold. West said hes just going to enjoy life right now thats the news update at this hour ill see you guys again in about an hour from now back to you. Thank you, sue. See you later. Companies been doling out these bonuses to employees because of the new tax law, but they may not be exactly the bonanza that workers had been expecting. Cnbcs ylan mui is in washington with her adding machine with the reason why ylan bill, 2 million, that is the number of workers that republicans say will be getting a bonus from their employers all thanks to the new tax law and that is real money in americans pockets but may not be quite as much as workers were hoping for, at least not at first. Under new guidance from the irs, employers should withhold 22 of your bonus for tax purposes even if your actual tax rate is much lower than that. Now, this should all work out at the end when you file your tax return next year, all of your income whether its bonuses or normal wages, its all taxed at one rate so if it withholding 22 of your bonus ends up being too much, you could be getting it back as a refund you got to wait until next year to see that money. Now the rules are a little bit different if your bonus is worth 1 million or more lucky you. Your employer has to then withhold 37 for taxes under this new guidance. 37 is the new top tax rate. So theyre assuming if youre getting that big of a bonus, youre probably already in the highest bracket. Now, if all of this sounds complicated, thats because it is the new tax law is generating a massive administrative migraine for the irs. So one more number for you guys, 500 million thats how much the irs says it needs over the next two years to make all of these new changes work back over to you yeah, i believe it. I think, ylan, their goal is to make sure that people dont end up having end up not getting their refund, right . Thats the goal with all these changes . The 22 withholding rate is for simplicity sake. Theyre saying everyone under 1 million is going to be at this rate to make it easy because otherwise it would be very complicated to try to figure out how much to withhold from a onetime bump in your paycheck theyre saying 22 is supposed to be simpler, but for people who might be expecting 1,000 bonus once they hit their paycheck in february, it might not be quite as much as they had been hoping for. Something to look out for. Thank you, ylan. If you can hear me. Yeah. In case you havent heard, its the friday before a threeday weekend. I cant even hear you right now. Okay there we go. There you go. Everybody happy now . We have 27 minutes to go until the close right now and dow is up 207. S p up 17. Nasdaq up 42 russell up 3 1 2 today oh, this is me. This is you. Facebook is falling, though, after Mark Zuckerberg made big changes. Is this your chance to get in on the stock . Then its me. Plus, big news on bitcoin. This could have a big impact on the entire cryptocurrency torket, this news were going tell you well tell you when closing bell comes back in two minutes. Whoopwhoo [ phone rings ] hey maya. Hey you still thinking about opening your own shop . Every day. I think there are some ways to help keep you on track, closer to home. We grew to a trillion dollars in assets under care by thinking about your goals as much as you do. Okay stock market continues higher and these are the s p sectors consumer discretionary, energy, and industrials, leading the way. Consumer staples, utilities and real estate have been the big laggards more on this recordbreaking week for the markets when the closing ell comes back in tw minutes. barry murrey when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. We call that the golden hour. Evaluating patients remotely is where i think we have a potential to make a difference. barry murrey we would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . Heres a birthday present, amazon founder jeff bezos saw his companys shares break above 1,300 on the nasdaq for the first time today in time for his 54th birthday. How nice for him. Happy birthday. Lets head to the floor with a look at other Market Movers with Bertha Coombs hi, bertha. Hi, happy birthday to my fellow capicorn. The real impetus today were the Strong Bank Earnings starting in the morning, jp morgan hitting an alltime high on the back of a record year, bullish outlook big focus overall is what companies are going to say this season about tax reform expectations traders say theres a bit of a fomo, as kids call it, fear of missing out, on the rally. A lot are going long ahead of earnings here, whats helping to drive this meltup. Short traders are covering ahead of a long weekend as well. Investors are also watching the ten year at a tenmonth high and wondering if the flip side of this tax bill is going to mean a more hawkish bet investors are betting on a bigger chance of rate hikes in both march and june now. Were seeing weakens in ratesensitive sectors like real estate a continued meltup in new alltime highs today for the transports led by defense and aerospace, region banks and health care, led by Health Insurers and biotech highs dow up nearly 2 for the week, more than 4 for the month with a dozen new highs today led by boeing, microsoft and jp morgan back to you. All right, bertha thank you. Just about 20 minutes to go and were a broken record on all the broken records around here write them down in pencil. The dow is up 208 today remember, we were up about 200 on the bell yesterday. So a big couple of backtoback sessions here. Yeah, we had that big kick to the finish yesterday well see if that happens again today as we are hitting highs for the session right now. Mark zuckerbergs announcement to make facebook better not so well received by wall street today. Its not participating in. Todays rally. Well debate whether nows your an tbuy in thats next on the closing bell. Welcome back rarely do we say facebook is one of the worst performers in the s p, but thats true today with the shares down 4. 6 right now theyre on track for their worst day since september. Investors not loving the social media platforms news feed overhaul will it have a negative impact Going Forward, or is this just a oneoff . Let lets ask dan, head of technology a lot seem to be shrugging this off. The markets not its a worry in terms of the overhaul ultimately, we believe its a longterm pain for longterm gain its all about engagement. If you look at what theyve done, strategically, i think this is valereally a good move could drive engagement and ultimately add dollars over the next 12 to 18 months i think near term, you could see a speed bump i believe given the monetization trend, given what were seeing on use rs, a one step back to move toward forward in terms oft they need to do. Especially with russian meddling and a lot of pressures they were getting, i think this was the right medicine at the right time. Let me get you to be specific on how this will improve things in the long run, because right now what hes doing is hes removing some of the big addollar generators from the newsfeed and he admits, himself, that by adding more of the personal feed to the newsfeed there, people will probably spend less time on facebook. Thats two strikes right there so how does this become good news down the road yeah, i mean, sure, i think ultimately its really about engagement i mean, if you look about if you look at whats happened right here, its about users starting to get more engaged on the model. Even though near term, this might be a strike against, ultimately as users see more of their friends, more of their family, more engaged in the platform, that would really drive up ad dollars, drive up engagement, and thats really the focus here if you think about it, what theyre really trying to do here is that even though its more noise from what users see from ad and publishers so something over the longer term youll see more engagement ultimately that would drive ad growth dan, does that mean that you think theyll be able to charge more for the ad inventory they are showing . Because it does sound like the quantity of it may be going down. Yeah, so this is really a supp supply demand. I think one of the you know, i think one of the areas investors are not really paying close attention to is the inventory is going to go down and its really a paytoplay model. Youre going to see a pricing is going to come up i mean, all of our surveys have showed ad roi looks extremely strong thats been very consistent. I think this is something that facebooks going to ultimately be able to charge more for ads even though there could be a transition period here which we think financially is going to be negligible for the next few quarters. Givesle them more Pricing Power over the long term i think we look back a year from now, and this was really the right strategic move for facebook to make well see dan, thanks for joining us. See you in a year writing down this date. That is dan ives watching facebook. Look at the broader markets. Dow is now up there it goes. It 231 what art cashin was saying, feels like a day like yesterday where we might get this latesession pop well see. Theres still 12 minutes to go all of a sudden we leapt up. S p up 19. Nasdaq up 47 the russell up 4 n1 2. Up next, pnc, jp morgan, wells fargo onalg with blackrock. Which of the financials is your best bet the closing bell is back in a flash. How about some of the lowest options fees . Are you raising your hand . Good then its time for power e trade the platform, price and service that gives you the edge you need. Alright one quick game of rock, paper, scissors. 1, 2, 3, go. E trade. The original place to invest online. Art cashin just stopped by i guess we shouldnt be too surprised by this. The market on close orders, he said, show an imbalance to the buy side of 1 billion i think we were already seeing that seep into the market. With the dow up 225 points. That would explain the pop. Yes, thats been a big pop today. We approach 26,000 already. We just did 25,000 last week anyway, its also been a big day for the banks. Jp morgan, blackrock, pnc financial, wells fargo, all reported earnings this morning jp, blackrock, pnc, are up today. Wells is down by just over half a percent. Ryan kelly from hennessy funds, and charles from ariel inve investments are with us for more thoughts on this guys, welcome to you both. Thank you thank you. Charlie, let me start with you. What are your takeaways so far from these earnings . Yeah, so its not so much about the earnings the earnings are going to be incredibly noisy, going to be big writeups and writedowns because of the change in taxes if you have a tax asset in the way of net operating loss carry forwards, this is going to be a negative and going to be a charge in the case of pnc, it was a big inflow because the deferred Tax Liability gets written down. So thee earnings are going to b very noisy the important point, what people said about the future. All of that news was good. All three of them gave us estimates of their tax rates going part that are a little better than we can expect. Brian, what about you i mean, clearly this was ex. Pekt e expected to be something of a kitchen sink kind of an Earnings Report and has been so far do you like what youre hearing, though, from an operating sta standpoint for these guys . Yeah. Certainly was a kitchen sink qua quarter. Lots of noise in there i think if you look at the fundamentals of the companies, what we look at every single quarter, is growth and tangible book value we saw that. We saw on an operating basis, at least, earnings per share was a little better than expected. We see margin on a core basis a little better than expected. And, you know, what was also expected, unfortunately, was weaker trading, weaker capital markets. Overall, ti think it was a positive quarter we think thats going to continue as we see other Large Companies come out with earnings over the next week or two. You know, charlie, it strikes me that you have a difference of opinion over one of the main planks people often cite for holding the banks here which is higher Interest Rates. You dont think this is all necessarily a good thing, do you . Im glad you brought that up. Absolutely if you look in the 70s and other periods in which we had Interest Rates going up, banks did not benefit. Thats because at any given time banks own a portfolio of loans and assets a lot of which are fixed rate the value of those fixedrate loans or bonds go down when Interest Rates go up the whole savings and loan industry went bankrupt when Interest Rates went up so it is not by any means a pure positive for Interest Rates to go up. It is very bankbybank specific all right, guys id love to continue this discussion we have some breaking news thank you, ryan, and charlie thanks for joining us. Have a good weekend. Thanks for having me. Thank you. Market flash on cvs and viacom this ought to be interesting seema, whats going on hi, bill. Theres a report circulating quoting multiple insiders that viacom and cbs are seeking to merge. The report says viacom and cbs vice chairwoman Sherry Redstone is pursuing a merger of the two Media Companies that split more than a decade ago. Decade ago you can see cbs shares up 1. 6 viacom up better than 12 on speculation that these two companies are looking to combine. Guys, back to you. Clear this is what viacom a long time ago. The issue has been raised to cbs multiple times well see if this movement on this front. Ill play the old johnny carson, and les moonves will end up running the company you watch that well see what happens. Again, the viacom shareholders running away with this one the shares up 13 . Cbs is also higher a little bit less than 2 . Well, were up 219, still good enough for a record for all the major averages well come back with the closing countdown in just a moment. After the bell, bitcoin bouncing back today after another volatile week. We are going to talk cryptocurrency strategy with grayscales michael sonehinsne youre watching cnbc, first in business worldwide if thats not, we offer innovative investing tools to prepare you for the future. Looks like you hooked it. And if thats not enough, well help your kid prepare for the future. Dont hook it kid. And if thats still not enough, well help your kids kid prepare for the future. Looks like he hooked it. Well do anything. Takes after his grandad. Seriously anything, to help you invest for the future. Ally. Do it right. Seriously anything, to help you invest for the future. slow jazz music fly me to the moon and let me play bell ring inside two minutes, wrapping up what has been another remarkable week to the beginning of a remarkable year, with a remarkable story now which i guess we probably could have seen coming here, Bertha Coombs. Pretty much you know, art cashin told me something thats very just keep melting up every time you think this tax bill must have been priced in, we get another leg up and another surprise get ready, perhaps, for 26k next week. Is it possible . Yes, its definitely another day like this, we would have 26,000 on the dow that, and a whole bunch more as we get ready for a busy week of earnings next week coming up on the second hour of the closing bell with kelly evans and company. Have a good weekend. See you tuesday. Thank you, bill. Welcome to the closing bell, everybody, im kelly evans were seeing the strongest rally yet this year on wall street what a year its been already. The dow going out with a 226point gain thats the third time this year weve been over the 200 mark by the way, it took until april of last year before we had that many 200point closes. Anyway, there you can see the dow up 9 10 of 1 it was the strongest performer of all four. By the way, all four higher, all four in record territory s p adding 14 points the dow, by the way, actually up 226. That put it over 25,800. 25,801 to be exact nasdaq composite adding 2 3 of 1 up to 7,261 today. Russell 2000 small caps adding, after a strong performer in yesterdays broadbased rally. Russell closing higher, about five points, 1,592 as records fall once again. Joining me now, cnbc senior markets commentator michael santoli. Mike b l din frchael zin from us and evan newmark on a friday welcome, everybody records across the board the dow 200 points higher. For is that right, the first time this year anyway, i guess on the close its probably the first time this year. There are some of the movers on the dow, leading the way today, boeing, again, up 2. 5 ge was the big laggard, down more than 1 over on the s p, viacom was the big gainer on some late news were going to talk about now, viacom up 9. 5 aflac a big lagger, aflac, of course, dogged by reports alleging fraud and so forth. But look at viacom with this nearly 10 move higher on the close, it was up almost 13 at one point. It and cbs surging on merger news or rumors or speculation, guys, reports, i should say, from the wrap that hit right before the closing bell. Mike, what are your thoughts the market hasnt had a chance to fully vet the story i dont think. It doesnt matter. Its sbu stintuitive, in the sp thats merging two companies that used to be together it resonates in the sense this is the kind of market were in, these types of competitors are going to probably get together i dont think this te market is saying its a match made in heaven whats i think key is cbs had been the better performer for a long, long time, has also falter faltered. True. The stock has faltered i mean therefore, theyre more in a position to say lets see what we can do together and spread your bets for the media future les moonves, chairman of cbs, has, of course, in the past talking about not necessarily thinking this is the right thing to do. According to the reports hes now open to the possibility of this Sherry Redstone of viacom, of course, seems to be leading some how les is going to manage to pay himself another 70 million to 100 million this year going to get some kind of weird merger bonus one thing you can say about cbs stock, up until recently, a good performer, les seems to have figured out how to get himself paid every year. Also cbs like you said was one of the stalwart performers in all of the media area for a while. They also figured out the over the top thing pretty early on. And i wubd onder do you think we look at a company like disney combining with fox on the entertainment size, is there a new push for scale across media . I think the industry is in, broadly speaking, secular decline. In terms of the old broadcasting model. Even the cable model and so theyre kind of theyre trying to get scale for the impending, i dont want to say doom, but, you know, the when it gets cold. The cold climate or thing. Reaching for metaphors here. Im slow on metaphors today. Well go back to seema mody who has a little l more on this. These are two stocks that clearly were in in focus toward the end of trade here, kelly. Unconfirmed report says viacom and cbs are seeking to merge we havent verified this report from the wrap. Ill point out, it says a timeframe for any potential merger is unclear, but three individuals with knowledge of the company said that redstone is actively moving into that direction. So clearly two companies to keep an eye on especially given what we saw in the media landscape in 2017 with disney and 21st century fox. Back to you, kelly thank you, seema. Michael, any thoughts here i would just say broadly this is maybe an m a starting gun a lot of people have talked about that people have said that the at t time warner deal review thats going on right now would put a freeze to any further combinations until people see what the outcome is. Right. Grachnted this is a report, could be at the early stages do you think thats putting a chill on things or no . Theres a bias that the market wants to believe m a is right. Across a lot of Different Industries this could happen you have relatively strong market prices and, you know, this consolidation, sort of beckoning. I markthink the market is goingo respond to this positively. These particular companies, there is not one that is a very broad distributor of Broadband Services and, therefore, of the cable bundle if thats where it differs from at t time warner, any other potential combinations, its basically a bunch of networks and Old Television stations you would put together again. Thats a great point. Brian is joining the conversation now, an analyst at Pivotal Research brian, what are your thoughts on this tieup . Yeah, if the deal does eventually happen, it shouldnt surprise anyone. The real question is, what does it take to persuade les moonves to make him want to do it . Because i think investors would generally respond positively if he was enthousaused about doing. Synergies to be realized between the two companies. There are certainly growth opportunities. That said, i mean, theyre not in the best position relative to where they would have been, say, five years ago theres clear struggles around, you know, viacoms Media Networks you know, the longerheld Cable Networks they have are not very desirable Going Forward but they do have International Growth opportunities ahead, if nothing else brian, just one more question on this. Why do you think cbs shares are rallying obviously, i understand that viacom would jump in anticipation of Something Like this, but what about cbs well, i think theres a lot of reasons to be enthused about the comments made with discovery regarding synergies they expect to realize the synergies that disney fox expect to realize. And you think from can be some extra efficiencies that cbs shareholders get the benefit from i think theres some reasons to look at it positively for them, too. Brian, thanks for joining us on short notice, from pivotal. Viacom closed up 9. 5 . Cbs up fenearly 2 today. Lets turn back to the broader markets. The dow up 228 points. 2018 has been is off to a better start certainly than 2017 was and were still trying to digest what a year that was. Best start in 15 years, actually, for the first couple of weeks obviously, the chase is on were redefining how good is too good in terms of the news and how hot is too hot in terms of the market behavior for this cycle. Its not unprecedented this is the way that kind of energetic bull markets operate we just havent seen it in so long now, that being said, weve really ripped a Long Distance in a short period of time all the sentiment stuff is looking very hot were heading into earnings season yes, perfectly logical time to pause, pull back, whatever it is it does show you the urgency of demand and a bit of a buying panic. We had the banks today. We werent the best performers didnt stand in the way, either. Next week, evan, were going to hear from a new more including citi, goldman, b of a and ibm. Its a weird thing. Given the tax bill and given that rates have been so low for so long, you would expect the banks to be in a very good position but i still you know, mike and i were talking about the yield curve, banks do better with a steeper yield curve you have a very flat yield curve right now. Youre at the point, which is interesting, you can basically have a money market account paying you 1. 5 now and could buy a tenyear bond thats 100 basis points away. Michael always tells me these things are irrelevant. At some point they become quite relevant. Are you at all excited about the little move higher in rates weve seen on the ten year this week or no its been relative to the short end, theyve been theyve been small moves yeah. You lost money if youre a bondholder since the beginning of this year bonds are down across the board. But you really lost money over the last six months if you were in the kind of two to the fiveyear range. Youve lost, i would say, significant, maybe a few percentage points, but when year to date the s p is up 4 , and youre showing in your bond fund youre down a half percent to 1 , for you, youre like, what am i doing here . Michael, what are your thoughts yeah, i think the helpful thing about the guidance today on the banks f f tha banks was not only did they specify tax reform in the rates aed about how the lower rates were going to help their Corporate Credit so if you get higher highs on the market and get declines in corporate spreads, thats very, very nice support. I think the other thicng you saw they didnt talk too much about the tax savings being competed away to oafi theyre not going to necessarily raise rates for fear of competition, theyll enjoy the spreads between real shortterm rates and what theyre paying to depositors. They want to lend long with a lot of margin in there and cant right now. What do you think they get on credit card balances right now well has it gone up or down since the fed started tightingenienin . I dont understand why people borrow on they have to. I dont believe in credit cards. You explained to me upstairs thats like 1 trillion on credit cards. Exactly. No, no, i totally get it but its a business that just seem to be, like, literally a license to print money it literally is. Sounds like if youre a regulator, youd put it out of business entirely. No, i wouldnt do that because i do believe in competition. As an individual, i dont understand why anybody should be borrowing money at 25 a year. I agree lets talk about how much of a blockbuster the first week of 2018 has been. According to bank of america, merri wi Merrill Lynch, the sixth biggest equity inflow total ever also the largest in over six months flows this large lets ask michael. So, mike, we got inflows, okay, we got momentum we can talk about. These are the indicators people want to know, are they supposed to lean against them, are they contrarian or what theyre very good, so i actually is my mike okay. Okay go back to these guys well talk about the by the way, im so delighted hes struggling up there at that new thing. It kind of mademy year already watching him up there without the mike on. Theres been so much equity inflows already. Does that is that a classic evan newmark sell . No, i dont think so, a lot may be 401 k money. People, once the new year kicks in, people put money into their 401 k automatically i dont think its necessarily a bearish sign, but, you know, i do believe that, you know, now were finally at a cycle where were part of the cycle where actually Energy Stocks are the strongest performers so that for me, you know, the one area that ive been overweight, suddenly outperformed so i dont want to say its a bad sign. All right, mike this is the public excitement phase of this bull market. Its been very belated, its taken a long time to happen. I do think you have to in the very short term on a tactical basis say were running very hot. So this is the relative strength index. A lot of people are looking at just exactly how violent this move has been to the upside. This right here showing above 3380 relative strength. Its a multiyear, maybe multidecade high in terms of that just means this should slow down, flatten out, maybe pull back after a little while. Its supported by those flows, though, so we havent seen this kind of public sponsorship of a move at new highs, people chasing it a lot of these things are in that category of shortterm negative but tend not to define the ultimate top of the bull market. While youre up there, since im enjoying this so much, what about the vix . We talk so much about this, it was down in the eights, it was in the nines now its kind of popping while all this plays out. Exactly its because the market is moving with a lot more energy. Its a springier market. We didnt have three 200 point down moves until april last year we had less than one move of. 8 we had three so far in two weeks. Wow. It shows you theres a little more juice in this market and i think you do have a lot of hedging instinct out there, too, people are saying, look, were at the highs, you might as well buy some protections its nudging up the vix is not at a scary level 10 and change is nothing until you get to 12. 13 efs, eve its not anything to Pay Attention to except rising vix with the rising stock market is not what weve become used to. Evan, im sorry to say, he rallied strongly. Whats that i thought that was a great performance. Tremendous. I love fact he can write on the screen maybe in the coming weeks hell give me one shot up there. No, im sire. I just want one chance on the screen. Lets talk about aflac. The shares did plunge today on fraud allegations. According to one report, the insurer exploited workers, manipulated its books and deceived shareholders and customers. Aflac down more than 7 and, in fact, i think the worst performer in the s p 500 today this reminds me a little bit, of course, what we were talking about in terms of viacom and cbs. Its a report thats come out. It hasnt had time to be fully vetted like youd say, mike, by the market, substantiated by other press outlets. It seems to be a major hit. The market did have a pronounced reaction. It was 10 or 11 times average volume. Wow. There really was a sense here, not that there were a couple lawsuits by former independent sales agents it definitely kind of had that feel of a wells fargo sales practices issue because theyre selling to working people. Okay so you talk about exactly who might be on the other end of this and these independent agents maybe were promised that it was a better opportunity, thats what the report says, than it was. That sounds like herbal life in a way. I think thats why the market said, okay, maybe theres a little bit more to this than weve been aware of. Yeah. And the company, i think do we have the statement from the company . Company did come out and, you know, have some remarks in response to all this theyre going into a long weekend. They might have a chance to prepare something more heres aflac on the fraud allegations. They said recent media stories regarding aflac contain false allegations made by a very small group of independent contractors. Aflac intends to aggressively fight these allegations. They say thats beginning with filing for their dismissal the Company Investigated these claims and found them to be without merit. Anything you guys would add on this ben, let me ask you before you go to give us your final thought on the markets a long position into the long weekend. So starting the year, im 50 cash, 50 equities overweight europe. Overweight energy. And a little bit overweight youre overweight europe . Yeah. Ive been for the last ive all the stocks you call it a museum economy all the time. It does, but over the last year, as ive been selling down my u. S. Stock position, i never touched europe, so its by nature of my selling in the u. S. All right michael . I would make high while the sun shines i think theres a onetime valuation adjustment going on that, you know, buffett talked about yesterday. I would get in on that i think its not just here, its global. But he mentioned thats because Interest Rates are so low. They are. I think you can have a debate about labor economics and, you know, what the ten year is going to be higher are you on the i have confidence that rates are not going tbe a significant issue. I agree thats a very important factor but youre seeing i think, a lot of confirmation that this market has durability, spreads are good, vix is good, correlati correlations low. I think thats durable. All right well let you float off into the weekend. Thank you for joining us michael zin from ubs zblfshlgs sha. Shares of cbs and viacom moving on a report theyre considering a merger. Plus one of the biggest names in bitcoin is making a big move that could impact everyone holding the cryptocurrency well tell you about it. Welcome back word breaking just moments ago about a possible merger between cbs and viacom on the phone now is the journalist who broke that story, Sharon Waxman, founder and editor of thewrap. Com. Sharon, thanks for joining us. The first question is whats precipitated this . I think this is something that sherari redstone wanted tod on and off and had to do with whether the chairman and ceo of cbs, les moonves, was ready to take viacom an as part of his brief. That seems to me, thats been changing i think whats also going on is its pretty clear that consolidation is the order of the day. Youve got disney acquiring the movie and television assets of fox. Youve got at t with this pending merger going on with time warner. And so theres a lot of movement and it feels like the time to get bigger and not stay not have two separate units. How confident are these sources that les moonves would be open to this move well, i would say this, i think the no comments by any of the companies, the no pushback, then an individual in my sourcing youll see in the story close to les moonves essentially confirms it. Saying that, you know, les is having this conversation with the board among many other conversations. Thats kind of code for yes. Sharon, you know, as we talk about viacom and its business dynamics, a lot of the focus obviously on the Cable Networks, which have struggled, but, of course, theres paramount there, too. Right now, i mean, is there considered to be scarcity value increasing for studios given the fox youre having fox hook up with disney right now . Does that somehow play into why it makes sense to get bigger in this way yeah, i think that, absolutely i think everybodys looking at whats going to happen as streaming becomes a bigger and bigger part of the landscape of how consumers are consuming content and cable becomes a less important piece of that than Something Like paramount which is a, you know, premium, legendary, historic, you know, studio that creates content. Putting that with all the other elements that they have for pushing out televisionstyle shows that can go on streaming services, that becomes a smarter strategy now, whether theyre thinking about the streaming services, whether theyre thinking about the you know, starting a really Competitive Service to whatever disney is going to be doing, and netflix, that would be the next step that i would think is in their strategy sharon, stay right there, if you would, for a moment. Our seema mody back at headquarters has a little bit more news on this. Little bit more detail seema . Kelly, bloomberg is reporting Shari Redstone is said to be interested in a merger between viacom and cbs but the companies are not in active talks. We just got another report from reuters which say h s discussio are not taking place in response, were looking at shares of viacom trading down. We want do get you up to date on the reports circulating around this potential merger between cbs and viacom viacom shares down 2. 2 . Yeah, up nearly 10 during the session. Sharon evan, go ahead. One question, sharon, whos actually the kingpin or the decision decisionmaker in this, Shari Redstone or les moonves, at the oe end of the day who actually is calling the shots here Shari Redstone is the person who runs National Amusements which is the controlling entity for viacom and cbs ostensibly, shes in the drivers seat. The question is who would really run those companies together and how many candidates are there out there to do this clearly, les moonves who has for decades been successfully run cbs, viacom is clearly the company thats had a lot more challenges and we know all about the board, you know, dramatics that we had in the past two years. Opposing Shari Redstone and all of that. So she would need a strong executive to do that so in some ways it has been a question of whether les moonves wants this to happen or not. My reporting is shes been approached by people who want that job who want the opportunity to run viacom and cbs together. And she, you know, would be, i would think, in her interests to check those out. Check out those other candidates what i was also told is that les moonves was looking for a his deal was very expensive and shari was having trouble making that deal, but that he was looking for an ownership stake in the combined company. But my sources close to les moon moonves are saying thats not true, hes not looking for an ownership stake. That says to me that hes something may have switched in his mind feels viacom is on a better track, feels better about taking on that responsibility it may be that hes seeing the shifting landscape, you know, essentially the end of the major studio system with disney, it was fox, eventually going away with at t essentially becoming the home for time warner and hes thinking, okay, well, this is really what needs to happen finally, sharon, where does this leave bob backes, now the ceo of viacom . Thats a good question. All of these are open questions. Youd have to ask Shari Redstone what his role would be hes only been there recently and announced a lot of strategic changes and how, where he wants to take viacom and all indications to me are that shes happy with his performance, so, you know, why wouldnt there be a role for him . All right sharon, thank you for joining us thank you Sharon Waxman from the wrap. Com on the report that sent viacom shares up about 10 during the session see them pulling back about 2 based on conflicting reports after the close today. Very big move for bitcoin could shake up the whole crypto industry and well get into that nextn e longel othcsi bl. Its time for sleep numbers lowest prices of the season on the only bed that adjusts on both sides to your ideal comfort, your sleep number setting. Does your bed do that . Right now our queen c4 mattress is only 1199. Plus 36 month financing. Ends monday. Visit sleepnumber. Com for a store near you. 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. Welcome back to another recordbreaking session on wall street the dow closed higher by 228 points today that put us over 25,800. The s p added 18 to 2,786. Nasdaq up almost 50 to 7,261 the russell up 5, 1,591. I dont know what superlative to pick. Relentless is the one for this rally in terms of exactly how persistent its been its kind of bypassed all these really easy opportunities to sort of say, okay, this is enough for now really since august, thats really when the ascent steepened, in midaugust we were up, like, 15 . You know im not a big vote you know im not. Im not buying equities right now. European equities. One of the promising aspects of the last few weeks has been strength in energy, strength in the financials not the areas that how about the transports . Yeah, but im saying its not been the big tech names, which right. Theyve been fine. Exactly theyre not the only thing in town. They carried the bull market for the first year since trump was put into office. Dont overlook now its oils the weakness in the dollar you guys were talking about earlier. Totally agree. Financial conditions are loose. Thats a big element the markets are saying were going to play until somebody still think the bond market has a bigger impact on equities than anything else. Fair enough we heard it that a lot this week, actually. One Bitcoin Investment stock announced a split. The high price of the boat koin Investment Trust was pricing people up. Its up 1,700 over the past one year 91 for 1 stock split will bring down the share price from 1,900 to 20 a share Bitcoin Investment trust has largely benefited from the rise in the underlying price of bitcoin which resulted in more mainstream interests in bitcoin, but not all investors are supportive Merrill Lynch banned Financial Advisers to pitching thisde kleins due to suitability and eligibili eligibility. The goal is to be on a larger plat form like the nyse. Grayscale pulled its etf application with the exchange late last year over fears of being rejected by the s. E. Krmt. Kelly . Seema, stay right there you have a special guest for us, mike b l sonnenshe initiation, from grayscale micha michael, welcome. Thank you for having me so can this deviate from Net Asset Value . Has it done so quite substantially . What would the stock split mean for that so we did announce the stock split. And historically, publicly quoted shares of the Bitcoin Investment trusts have traded at a premium to the Net Asset Value. But i think more importantly is for investors to know that the product is available for purchase at the daily Net Asset Value to really any accredited investor who wants to participate in the fund. What do you think about the merrill move, they said, look, we dont trust the fiduciary responsibility we have so we you know, we emphasize that so much, we dont want our brokers selling people your product. I think that bitcoin and the Digital Currency asset class as a whole, we all can clearly agree does not come without its risks. And so we are working collaboratively and really any other firm out there that needs Educational Resources to understand the asset class better i think ultimately what were seeing and certainly based on the trading volumes that were experiencing in the Bitcoin Investment the trust that theres clearly quite a bit of demand for this product. Theres certain days now when the notional volume of the Bitcoin Investment the trust actually eclipses that of the spdr gold etf which as you know is an instrument that not just individual investors use, but obviously many Financial Advisers. Michael bring in seema. For legal reasons, michael, you cant discuss the etf withdrawal, but how do you see the cryptocurrency market evolving if larger more sophisticated products can come to the market because the s. E. C. Wont allow them to . I think its really just a matter of time i mean, my time is squarely focused on product creation and trying to bring more Investment Products to the Investment Community for Digital Currencies that theyre looking to participate in as i think you know, seema, we also operate the Ethereum Classic trust and zcash trust were working ining transition the markets later this year will which will bring another availability for investors to express a view through the purchase of a security. Michael, lastly, do you see the appeal of investing in bitcoin going away as other crypto currencies come to market like ripple and litecoin is. I think what were trying to ascertain at all times is the types of Digital Currencies that investors want exposure to were continuing to build out the product suite because investors are asking for products around litecoin, ripple were actually very soon about to launch our first basket product which will give people the ability to make a singular investment and currencies at once. Guys, thank you seema mody michael sonnenshein. Thank you. Coming up, facebook making changes in its news feed didnt help the stock but supposed to help the Consumer Experience our friends fast money weigh in ahead where did the money go 27 billion has gone missing on wall street. Up ahead, well tell you whos responsible. Why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at td ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom thats lesson one. Education to take your trading to the next level. Only with td ameritrade. 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. Notheyre not investing iney commoditiesies. 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. All four in record territory and as you heard, facebook fell more than 4 today after the Company Announced changes to its news feed filter ceo Mark Zuckerberg saying the company will prioritize friends and family over publishers and brands some analysts on the street are calling the pullback a buying opportunity. Lets bring in a pair of fast money traders to talk more about this, steve grasso and brian kelly. Brian, you should have been here for that crypto bitcoin gbt. Yeah. Well talk facebook, though its safer. Michaels one of the best in the business, so you had a good person there. All right do you like facebook or no actually, i do. I think this drop today, i would agree with the analysts, when generally i dont. But i think this is the buying opportunity. What they did is a longterm, strategically good move. They did a fake news problem, and so this is the way to fix it theyll work it out. The brands will figure out ways to advertise again so, if youre a shortterm trader and youre trading for next quarters earnings, maybe not so good, but in the longer run, you buy this. Yeah, im not what do you think, grasso im not so sure this is the fix for the news issue that they had. To me, it sounds like theyre getting in front of something here, whether its the apple facetime issue with screen time with kids, or if its the russia probe i dont know it smells to me. Its suspect i would use this as a buying opportunity, but for twitter, not facebook ooh, interesting. Twitter right. Why twitter if you look at the timing today by the way, theyre all going to be hold up in front of Congress Next week to find out if theyre doing enough to battle terrorism is twitter really there to solve those issues its farks but i think its a cleaner way and you have their news feeds youre tapping into the existing news feeds for companies, so i think its a cleaner way to look at news, look at news feeds. Okay. I think it gets a little noisy when you look at the facebook angle and twitter, buzz about a takeout again, btig,price target moving higher twitter over facebook. All right well leave it there guys, thank you. Thank you. All right appreciate your time. Steve grasso, brian kelly. Theres much more coming up on fast money at 5 00 p. M. Eastern. Now, 27 billion has gone missing on wall street whats behind the lost cash is next and lets get a check on how the s p 500 sectors finished the day. Consumer discretionary the big winner real estate lagged again sissorcn, rsing bcfit bune wldwide welcome back it is time now for our takeaway. We begin with nordstrom, who will reportedly try to go private again. They tried last year but couldnt get buying in place, in the death of heat by amazon trade. Its a doubleedged sword because nordstrom could probably pull off the deal, but theyll have to pay a lot more given the share price rebound. Does this move make sense . I think to be private makes sense for nordstrom. To execute and lbo, have the math work and get the lenders on board is not as easy as saying that. Yeah. I mean, private equities history in this space with Neiman Marcus is not good. Well, neiman then was going to go public and then no, its not Public Markets its a very tough business. Do you think now is a time for a retailer to be private because its such a hard environment . Definitely. Yes, and because basically, financing is very skittish right now, and the Public Markets are skittish but its not a good sector for the long term. All right. You know. Well, lets talk about another retailer, gamestop it got whacked today, down about 10 after announcing some impairment charges gamestop owns a lot of at tbranded stores. Apparently, the charges are because people arent upgrading smartphones to new models as much as expected apple shares today didnt really react at all to this guys, i thought this would imply that sales of the new iphones were weak. Doesnt everybody already know that . Its interesting. It must have been that this way first of all, huge irony here, that it was their cell phone, the Wireless Stores that were the albatross right. As opposed to the video game business. The video game business is pretty good. Which normally everybody was concerned about forever. Saturated five times earnings, ultimate value trap, has been for a while, but theyve managed to keep the treadmill going, but the wireless business is tough for the retail. And you think, and this i was sort of suspecting this, too, that weakness is already in apples share price . No, the market already thinks that the iphone x and theres just weakness in that product line, relative youre sure its fully priced this is at t stores, by the way, so its one carrier. Relative to the expectations people had before. The stocks already been traded down a bit. Yeah, it sold off on a number of these reports all right, fine. Finally, a major overall of the s p 500 Telecom Sector has been unveiled. The expanded sector will be renamed communications services. It will now include all except amazon, plus twitter, snap, disney, our parent, comcast, and dish what are your thoughts on this it makes sense as a way to rescue the Telecom Sector. Its going to make the market look cosmetically more balanced than it is right now by the way, none of f. A. N. G. Will be in technology because amazons in consumer discretionary. Wow its kind of iron yak. Think about that, f. A. N. G. Is not in the technology sector. It shows you that technology pervades everything and its semantics in terms of categorizing it. Amazon wont be in the new sector, kevin. Is that weird . Like he said, its a matter of semantics you know, waiting, people but its not just semantics, because all of these etfs and sector choices depend on whats in each of these buckets. Thats true, but what i think is, is that the market will shape itself to the names as opposed to the product shaping the market. What its going to do is its going to muddle up all of those historical looks at, oh, when tech was 35 of the market in 99, you really had to work. I hate that. Its not going to be anything like that. It drives me crazy because its one of the things thats real value is being able to draw those historical comparisons up next, the case of the missing 27 billion on wall street, right after the break. Top of next hour, dont miss fast money. Defensive sectors the biggest laggards this year, but a technician says the futures looking bright olutions to help you reach your goals. Its having the confidence to create the future thats most meaningful to you. Its protection for generations of families, and 150 years of strength and stability. And when youre able to harness all of that, thats the power of pacific. Ask a Financial Advisor about pacific life. Signs of a slowdown among wall streets biggest banks, fixed income trading, which includes bonds trading, generated less than 76 billion in 2016 for the top 12 investment banks thats 27 billion less than what it generated just five years ago. Thats in a new article in the New York Times by kate kelly. And she rejoins us at post 9 its good to have you back great to be here. Thank you. This is important because it gets lost as were covering the daytoday of bank earnings, which is under way right now is it going to be a bigger problem over time that Topline Revenue cant get back to those numbers . I do think so, yes, yes by the way, our first indication of jpmorgan today was abysmal. I mean, a 34 decline in fixed income markets year over year. They blame low volatility, which everyones going to, and i think tighter credit spreads by the way, theyve had a better story to tell than, you know, relatively speaking, than goldman and morgan goldma and Morgan Stanley its tough to compare because you have universal banks with much bigger footprints, client balance sheet, im thinking jpmorgan, bank of america, compared to a goldman or a morgan i single out goldman for particular pain here, and in the story, because they were known for their fixed income machine it was a huge profit engine. Back in the day in 2009 when it peaked, they were making close to a billion dollars every two weeks in revenue now theyre doing a billion or a shade over that, a quarter its a huge change when people say, okay, volatility was at record lows, obviously it cant stay like this, we just have to ride out the storm, what do you say so this is a debate within goldman and other bangs too, will volatility return and will hedge funds become more active and we can process those trades . This is a big debate internally, and i would love to hear your thoughts, evan, whether a wholesale reformation is needed. I happen to believe those times are over, ive been saying for years. In many cases, if you look at the vanguards of the world, the black rocks of the world, they built their whole Business Model around low costs and not heavy trading. And its the exact opposite on what the people would say thats a retail focus but the black rocks products, vanguards products, have turned from being mainly retail theyre very institutionally oriented i guess the optimistic point of view, kate, on that, from goldmans perspective, is thats also cyclical. In other words, everybody indexing, everybody focusing on cost, is a luxury you can have in a very low volatility environment. Im not talking about equities there have been big disputes within goldman how to approach this weve seen senior level departures a debate with some of the current securities business management, with gary cohn, is part of the reason he left the firm the sort of more long term focused, relationshipdriven approach that someone like him would espouse versus a much more revenue upside per trade approach that theyre deariling with now the reality of that, the hedge funds, if you go back to the period before the world blew up, the hedge funds, private equity firms, they generated a lot of fees and goldman in particular got a lot of money from the Hedge Fund Business that business has not disappeared, but its so much smaller than it used to be you think thats permanent . I do. Goldman is trying to do some initiatives with consumer lending, the Online Platforms and so forth are those kind of whynots 0 or is there a more existential issue for them im sure they would say the latter i think its a little bit the former, though theyre using their bank status to growth lending business and develop new online products, which is smart theyve seen a huge growth in markets prosecutor for example their online lending platform. Theyre optimistic for that business but still, the scale of it is teeny tiny compared to the universal banks. Theres 80 trillion in Debt Securities in the world. I was looking at that this week. You cant say that Goldman Sachs over a cycle cant get a piece of that turnover a little more than they have right now if voluatility picks up thats all im suggesting. Its when do you go back to the gogo days the banks view is, we can incrementally grow exactly theyre looking to generate 5 billion in incremental revenue in three years its firmwide the fixed strategy is about developing more midsized corporate clients, more commodity hedging. Thats all well and good, but it takes a lot of people going out to a lot of cities, where jpmorgan is in like flynn. We have morgan coming down the pike on tuesday. On tuesday, but the issues around the ouster of Harold Ford Jr what have you learned there . I think the interesting thing there, kelly, thats a story that broke on december 7th we knew he was let go, we knew there were allegations of misconduct involving a female journalist we did a followup, published today, to try to figure out what did morgan do and what is it the right thing. The allegations were sort of a pretext for getting rid of him because the firm had already considered him a polarizing figure there were allegations of Expense Fraud i shouldnt say fraud but expense misconduct and other issues on the other hand, you know, its worth examining the allegations that occurred, which is that he had dinner with a female journalist, both camps agree that that happened, and was his behavior appropriate, did he try to grab this womans arm and bring her into an elevator to have an afterdinner drink. She alleges that, he denies it either way, the bank took her account pretty much at face value, i think, and fired him within about 48 to 72 hours. So its another sort of question about how companies should handle these sorts of situations was a more full investigation warranted, what was his back story . And interestingly, today, the reaction ive gotten has been all over the map some are sympathetic to him, feel he should have gotten a better shake youve been plenty busy, kate thank you for taking a couple of minutes to join us the market is having a monster week what to watch for with earnings season in full gear next week, after this well get you caught up on what could be a major media deal, two minutes away you always pay 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. Welcome back to closing bell. Walmart is planning to cut 1,000 corporate jobs, according to dow jones. The Worlds Largest retailer is expected to notify its Headquarters Staff by the end of the month. Kelly . Thank you, seema. That was a day after they announced 1,000 for the workers and a thousand job cuts. Over a million employees. Obviously not corporate. In another week, the idea that a legacy retailer is trimming back on head counts is not a big deal, but when they tried to get the splash for the bonus they shut down the sams club stores because its not exactly i understand the timeline, it had to happen the way it did theres your walmart news. Viacom lower after an initial pop on the news that its not in active talks with cbs. Vice chair Shari Redstone reportedly wants the two companies to combine the other big story of the day, the record breaking rally on wall street. So where do you guys want to start . All those stories will be live again on tuesday. I do think if its time for the market to take a rest or not, i think in the thick of earnings season, it might be that opportunity. Its funny, its going to be earnings the thing that will get all the headlines is trump at davos, which is a mindboggling idea. Thats going to get a lot of that will last for four hours, no matter how big it is, because there will be the next trump story, and the next one. Its so interesting, hes going into the heart of globalism. I agree we look forward to covering it with our squawk box crew that does it for us on closing bell. Fast money starts right now. Now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Tonight on fast, bitcoin got whacked. But ethereum is hot. The crypto baller himself, brian kelly, will break it all down. Plus the future is here. Gm launching its selfdriving car in one year. No steering wheel, no pedals will it send the stock into overdrive . And later, its the facebook fallout. The stock down 5 , having its worst day since november