Transcripts For CNBC Closing Bell 20121218

Boehners plan b thatty had came out with today. The major averages are all trading around twomonth highs today because it seems like progress is still being made on some kind of a deal. Heres where we stand right now. The dow up 98 points, was up 125 at the high, and then the white house rejected and some comments by Senate Majority leader harry reid on that socalled plan b proposal from john boehner, sort of took some of the wind out of the sails. Nasdaq still up 1. 25 , a 3348 and the s p 500 index is up 12plus points right now at 1443. While the dow on pace for the first backtoback tripledigit gains in nearly five months. Can we hold on for the final hour . Lets talk about that in our closing bell exchange. Carol roth, the author of entrepreneurial equation is with us. From chicago, Keith Springer from springer Financial Adviser and john carpina is on the floor with us, and rick santelli, of course, is in chicago as well. Carol, youve been skeptical about this market, but you, if i read you correctly, any rally thats going on right now, you might want to fade. Youre not too convinced at the longterm outlook right now, am i right . I think what were going to get. Were going to get a deal, but the deal isnt going to solve our problems, and so in the short term everyone is going to be very, very excited about this. We have a deal. Uncertainty is off the table. Were printing money. I think thats going to be very good in the short term. My problem in the longer term is the longterm drag from all of these companies not investing today. They are doing share buybacks, they are doing special divide s dividends. Right. They are not investing in their companies, so in the short term it will be fantastic. I just dont know whats going to happen in the long term i wonder what will happen in the short term actually, keith. We dont have any specifics on the table once again, and here weve got this hope an optimism in the market. Do you think were actually going to flesh this out and get a deal by next week . Maria, i think absolutely we are. I think its celebration time on wall street. Feels like it. A deal almost being done. You know, were pretty much in a position of buy the rumor right now. I am afraid a little bit when the deal comes through. Well get a sell the news, a little bit of a selloff. The fed printing a lot of money right now, i think it will be very positive over the next few months. I agree next year is going to be a difficult time. This will mean austerity, higher taxes, lower spending which will affect corporate earnings, and the one thing im more nervous about is complacency. People are getting very complacent and thats the thing that bothers me the most. The market never goes down when people expect did t. Thats what im saying. It feels like theres a lot of complacency and have all these expectations, but yet to see anything really materialize. What do you think, jonathan . Is that the case . I think everyone is kind of grasping at straws at this point right now. Whats happened in washington is theres been a game of chicken and nobody has decided to blink. People are blinking and showing their cards a little bit, and the market is reacting positively to that, but at some point when we get down to the nittygritty of whats going to be there, im not sure everyone is going to be so satisfied that the deal thats put in place is really going to help us moving forward, First Quarter, Second Quarter next year. Everyones investment horizons have been so shortened by what weve lived through over the last four years that we have to look further down the road. Rick santelli, very much a riskon market right now when you consider the yields in treasuries are going up. The dollar index is going down. The price of gold is going down sharply. I mean, its very much riskon right now, isnt it . It is, but theres nuances to everything you said. You know, if you look at yields on 10s and 30s were at twomonth highs. I think at top of the show you said equities are at a twomonth high. They continue to correlate. In terms of commodities, commodities are finding that ultimately demand really does make a difference and a weaker dollar isnt the only variable to higher commodities, not the least of which to mention profittaking on some of the mod tis like gold, and my final point, is you know, if anybody out there still thinks that because the dow and the s p and the nasdaq is going that the economy is firing on all 4 growth gdp cylinders wake up so to use that as a divining rod for the fiscal cliff in my impression is a bad idea. Let me tell you, today weve got the banks up once again. Well talk to Meredith Whitney about her upgrade of the sector yesterday, but, keith, is this an air yaw want to put money into, or do you think the stocks, i know they have had a very good year on the heels of a terrible year the year before. Whats your take on financials . Financials are by here. I think they are attractive because of the spread. The fed has made sure the financial are not going to lose money. They put a put in under them. They have made largely the ability for them to borrow at zero, and any profit on there is attractive for financials. I think down the road we have a problem when we start pulling money out of bond market. The fed has really spurred Economic Growth in housing, and in mortgages, but when they start raising Interest Rates and no longer add money to the market in housing, were going to see a pullback, and youre going to see more defaults. Thats when the banks run into trouble a year, year and a half from now, and right now i think they are very attractive. Carol, its not just the financials. You look at other sectors, Consumer Discretionary is at a 52week high. The airline have set 52week highs five days running. Housing stocks have been on fire. I mean, all of these seem to point to a continued growth for the economy, but youre still skeptical. I am skeptical. What i do think well see is well see a shift, once the uncertainty comes off the table, so to speak, or at least perception of uncertainty. What will happen is people will come out of defensive stocks that are very highly valued right now, like consumer staples, like utilities and probably go into companies that have more foreign exposure, maybe technology to chase that growth, so i think that you will have a little bit of turnover in terms of the types of investments that the markets are going to be going after. In terms of broad Economic Issues in 2013, what kind of a year are you looking for, jonathan . I think once we get into the First Quarter, were going to see some growth thats going to continue from what weve seen already in the past. Everyone is going to continue to watch this unemployment number, and as its been trending in the right direction, everyones been adding their figures and their keys to why its moving one way or the other, but once we move forward there, i think thats going to help our markets move to a higher level there. The momentum that weve seen in this market is going to continue. All right. Well leave it there. Thanks, everybody, really appreciate it. See you soon. Heading towards the close, weve got about 50 minutes left in the trade, 55 minutes. Splitting hairs here. Up 108 points on the dow. The amount of selling that occurred after the harry reid comments were made public has pretty much been erased. Weve come back. Financial analyst Meredith Whitney is having a huge change of heart on citi. Remember this interview on citi. Citi hasnt been investable in four years. What would you take for you to invest in citi . A new brain. Shes got a new brain. Why is she now bullish on the bank and a couple of others . Shell join us with exclusively her call yesterday on the financials. Wizard of oz i guess will join us as well. House Speaker Boehner calling the president s bluff and agreeing to a tax hike on millionaires and billion airs. And when does senator rand paul think well get a deal . Hell join us coming up on the closing bell. Stay with us. More in a moment. Welcome back. Were now with banking analyst Meredith Whitney having a change of heart on some of the banks. Yesterday she announced shes turning bullish on financials and upgraded bank of america, discover financial and citi to a buy. Take a look at those stocks today, and they are moving on that call. Meredith joins me now to talk about the industry and the entire group. Thanks for joining us. So good to see you. What is getting you bullish on the banks today . We went bullish yesterday morning, and i think this is a really, really important time for the financial. You have three things going on. Most importantly clarity. More clarity today on the financials than you have in the five years since the financial crisis began, and then you have real fundamentals Building Momentum in terms of bank of america as an example has taken 65 billion of hits in the past five years, in the past four years, and so much of that is junk out of the trunk actually. Looking in the rear view meror, so you have momentum for these names and a lot of capital generation built, and number three you have cat lifts, so you can all eyes can point to march, end of march when the fed comes out with the results and gives banks the flexibility they fought for for five years. So this is a culmination of three, four years worth of work at bank of america. The same for citi, and discover is similar, but discovers got real growth underneath it. Whats interesting also about this call is its not dependant, at least for citi and bank of america, on a lot of revenue growth. Its dependant upon internal execution, so in bank of americas case they are going to generate over 18 billion in in capital. They are going to return to shareholders. I mean, i have not seen an opportunity like this in four or five years i like what you see about the catalyst, because number one, you say these banks are adequately capitalized and weve seen the capital being raised over the last couple of years. You wrote in the report yesterday that you think bank of america could quadruple its dividends . Thats conservative. That could be low by a factor they could do two times that. What was said is the maximum payout, dividend payout ratio for the banks is going to be 30 . We took 16 of that so basically half of that, and our assumptions, the math and incredibly intensive analysis we went through this, it incorporates extremely conservative assumptions so when we started yesterday, 45 upside for bank of america and 35 upside, and this is shortterm upside for bank of america over, you know, a 100 billion market cap stock. Hard to find upside like that in any sector. Its still using i mean, we could be conservative. I think we are being conservative because just out of cash under the mattress type of, you know, comfort levels we took, you know, base case scenarios. In terms of citi, you know, for a long time we were worried that the term failed the stress test, issues about the capital there. Youre comfortable upgrading citi. Where do you think the dividends are there . What do they do with the cash and no worries that theres another failure in the stress test. Well, i think thats, you know, what happened i remember being on your show right after the stress test, and i couldnt believe any bank failed the stress test. Right. Its sort of beyond comprehension. Take low expectations and exceed them or set low expectations and exceed them. I think they will have a very, very different tact this time around when they submit ccar application by the end of the month. The fed will be more comfortable for citi buying back shares than dividend because citi is pretty much an unproven story. What i like now about this management versus the old management, instead of going out and trying tonight biggest, greatest global story, they are really focusing on internal execution and rightsizing the company. They have needed to do that for a long time. I hope they go for as far as they need to. The ccard, this is an event that the fed will either approve or disapprove of the capital plan for these banks. Yes. And youre expecting the fed will approve all these dividends as well as capital as well as stock buybacks. To a certain degree. The fed will be more comfortable. If sympathy commits to buying shares back and something changes and theres more uncertainty around citi, they can halt their share. They wont have to cut their dividend again, but for bank of america i expect them to do both, increase their dividend and buy shares back. I guess i was reading an article recently that the Federal Reserve had become so involved in decisions about acquisitions, decisions about consolidation in the sector. You probably saw that as well. Just a couple of months ago there was a journal report, and im wondering, it got me thinking about dodd frank. Are the worries about the Regulatory Environment not there for you anymore . Does this not crimp into the bullish story for you in 2013, dodd frank . Its its kind of not a factor. Dodd frank puts well, dodd frank is yet to be entirely determined, but dodd frank puts a cap on the companies sort of old way of doing business and being profitable. These Companies Really need to ceo show they will make Structural Reforms and decide what they want to be when they grow up, and what i like about bank of america it committed to this in 2010, right . A lot of banks still are arguing that the reason why they are underperforming its cyclical, not structural, so dodd frank is not you know, dodd frank is sort of an outside influence on the company, part of the structure of your bank, but this is basically rightsizing the offense structure of the banks, so thats what this calls about. Revenues, were very conservative. Dont expect a lot of revenues. I think one of the most some of the most damaging things for the for the banks have been the card act which told them how they could price and reprice on credit cards. Prop trading, the volcker rule. Well see how that happens. Basl 3, nobody excited about the implementation and the mortgage industry. Im not going to say entirely digested but thats enough of a buzzkill on these stocks that its fairly well priced in. Now those who can execute the best and the actually can be leaders and show,000 how they can improve real profitable by rightsizing their businesses will outperform. Now, you upgraded these three, citi, b of a and discover. You said youd see meaningful upside protection for the whole group. Yes. What kind of returns are we talking about for 2013 . Should an investor be buying into this now even though bank of america, for example, is the best performer in 2012 after being the worst performer in 2011 in the dow . Yeah. I think bank of america has at least 35 upside from here. Wow. So what happened last year, you know, going into 2012, investors were worried that they would have to do some massively diluted Stock Transaction so the stock way oversold, and i think that investors really didnt give Brian Moynihan credit. The movement in the financial was really in the First Quarter of 2012, and since then they have been volatile so very much, you know, everyone can say, oh, well the stocks have run in 2012. Importantly lets look forward and say theres incredible Growth Opportunity within the financials, particularly bank of america, citi, discover, and there are others. I think the underlying support is housing has close to bottom so that is a great, you know, tail sorry, head wind relieved from the banks, and i think the banks have in bank of americas case they have almost doubled their Capital Position since the credit crisis so they have come a long way, and it marks a really you know, its five years later. Its taken i expected it to take Something Like five years. Thats extraordinary. I dont think the industry has healed, but a lot of these financials are on the road to recovery, for sure. Last time we spoke you were still expecting layoffs in the Financial Services sector. How are bonuses going to look in your view, and what about the layoff story . Okay. So for two years weve been talking about hundreds of thousands of layoffs, and thats where weve come over two years, not a story anyone likes to hear because i because this industry loves being bigger and more people and whether its profitable or not, so, you know, in the case of bank of america, they have laid people off. In the case of ubs they have laid a lot of people off. I dont think that a lot of people in the industry have even really started so were still encouraging banks to get smaller, leaner, more efficient. Bigger the only thing bigger, where bigger is better is bigger profitability is better. Sure. Do you judge like, some of these some of these companies are judging themselves still by the number of employees they have. You know, they are taking money and paying managements and not paying shareholders, and shareholders are paying them back with lousy share prices. Right. At a certain point somethings got to give and Board Members have really got to press for much more much more aggressive rightsizing. If the banks go higher in 2013, broad market call here. If the banks could g higher in 2013, does that lift the whole market, do you think . I think its a big bonus for the market. Id rather not i think from a global standpoint the u. S. Looks so attractive. Equities are cheap in the u. S. , and its going to be just like the u. S. Treasuries have been for the last five, six years, a flight to quality. Youll see a continuation flight to quality. Im extremely, extremely constructive on the market. Real quickly on the bone u. S. We didnt get there. Sorry. Some firms are actually moving the bonus payments to the end of this year to avoid the higher Capital Gains tax. Whats your take on bonuses . Meant to answer that. Importantly whatever happens with bonuses will be no indication what happens with next year because in 2009 a lot of people were hired on contracts, so the firms are forced to actually still have higher payouts than they want to have. 2013 is going to be a much ruder awakening for salaries and total comp on wall street. Wow. Meredith, always nice you have to on the program. Thank you so much. Founder and ceo of Meredith Whitney advisory group. Want to update you on the tragedy in newtown tragedy. Danielle lee back with the very latest. Reporter good afternoon. Students returned to their classroom today aside from those attending sandy hook elementary, and when they did they were greeted by increased security and counselors on hand in case students needed to process. One parent said it was harder to send her son back to class and she believes this is a necessary part of the healing process for these students, but as all of that happens, as the students return to class just up the way behind me is a memorial still filled with lots of people, crowds of people struggling to move on. There were two more funerals today, and right now a wake is under way for that teacher that weve heard so much about, vicki soto works died trying to protect her children. The school, sandy hook, is still indefinitely closed while police investigating, even a nearby town says they can have another school red the for those students by tomorrow. The district has not decided when they will be ready to have those students return to class. Reporting live in newtown, connecticut, danielle lee. Bill, back to you. Thanks, danielle. Ill take it. 45 minutes, 40 minutes rather before the closing bell sounds for the day. A market thats holding on to the gains very close to the highs, up 98 points, shy of the high, 13,333 on the industrial. J. C. Penney and groupons ceo on herb greenbergs list of worst ceo. Hell be along to tell us why hes being so mean to these ceos. And coming up, home depot founder ken langone will join me coming up and will join me for the entire hour next hour on the closing bell. [ male announcer ] citi turns 200 this year. So why exactly should that be of any interest to you . Well, in that time thereve been some good days. And some difficult ones. But, through it all, weve persevered, supporting some of the biggest ideas in modern history. Like the transatlantic cable that connected continents. And the panama canal that made our world a smaller place. We supported the Marshall Plan that helped europe regain its strength. And pioneered the atm, so you can get cash when you want it. Its been our privilege to back ideas like these, and the leaders behind them. So why should our anniversary matter to you . Because for 200 years, weve been helping people and their ideas move from ambition to achievement. And the next great idea could be yours. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. What i care about is reducing the deficits. Well investigation pleasive growth in the country. How high will this market go in the face of the fiscal cliff . So bad they are actually good. J. C. Penney and groupon have been miserable stocks this year, and their ceos are both in the running for herb greenbergs worst ceo award of 2012 which hell bring you live. Could there be more upside for these troubled names . Lets talk numbers on the two today. On the technical side, its richard ross and on the fundamental side its steve cortes with veracruz. Rich, look at the charts. Which of these do you prefer, or do you prefer them right now. Well, bill, the case of the biggest loser here, but overwhelmingly i prefer groupon. Stock became public a year ago in facebook style. Lost 90 of its value in just 12 months. Had a nice bounce here. Weve taken out the downtrend from the february high and taken out 509day moving average. You see that key resistance, that key level at 550. I think were going to take that out. We have a vshaped reversal. A lot of momentum. We see projected upside to the 200 day, 8. 40, 8. 50, a very nice upside. Wed be a big buyer of groupon. J. C. Penney, stay away from j. C. Penney. The stock has been disappointing investors for over five years. Down 87 from the 2007 high around 90. Gotten a little bit of a bounce. You want to fade that bounce. Dont trade that bounce. Okay. You can sell your shares to steve because you want to buy them, right . Im on the exact other side of this. Bill, would i say trying to choose between these two is a little like asking me which one do you want to go on a date with, Estelle Getty or bea a. R. They are, my answer is neither but if i must chose between these two stocks i think jc penny is the far better alternative. On the groupon side, fundamentally this is still a coupon company. This is not truly new technology, and its a coupon conditions by the way, that has some incredibly scary competitors, mainly google and amazon. On the j. C. Penney side, i do think j. C. Penney has an interesting turnaround story here. The stores of ron johnson have been able to revamp and institute his new model of a collection of boutiques. Those stores have seen the revenues double. Only 10 of the stores have been revamped, but if they can continue to maintain cash flow long enough. I dont like what ron johnson is doing. Since this guys taken over this stock has done nothing but go down. It was about the product, not the concept. Anyone could have sold ipads and ipad minis and iphones over the year, the complete opposite and failure at jv penny the want to avoid those shares. Rich, of course, the stock has done poorly, but its done much better since the ipo of groupon of the youve been much better served actually being in j. C. Penney than being in groupon. I would also say this. I think there is a cushion you have in j. C. Penney than not groupon and thats the real estate. Arguably the real estate of jc penny is worth more than the market cap of the company. With the underlying protection i think you have a bit of a free call on bill actman, one of the greatest investors of our time, and on ron johnson who has an outstanding record, albeit not late lately, but over a portion of his career. You want to buy real estate, buy a home builder, a house on low Interest Rates in this environment. Dont buy j. C. Penney. There you go. Gave you guys a tough asign thement today, but you handled it both. Nice to see you both. Steve, let you get back to watching the golden girl reruns on tvland. Thank you. Maria. 30 minute before the closing bell sounds. A market is holding on to gains, Dow Jones Industrial average up 89 points here, shy of the highs of the day. Nasdaq composite holding on to a doubledigit move up on the nasdaq. 36 points. Deal or no progress, Real Progress or kicking the can down the road . Another edition of the way the fiscal cliff turns. Joining us former gop senator judd gregg. And later well hear from somebody about highspeed trading who says it benefits the few at expense of many. Back in a few. Tdd 18003452550 this morning, im going to trade in hong kong. Tdd 18003452550 after that, its on to germany. Tdd 18003452550 then tonight, im trading 9500 miles away in japan. Tdd 18003452550 with the new global account from schwab, tdd 18003452550 i hunt down opportunities around the world tdd 18003452550 as if im right there. 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Eamon javers here with the latest edition of as the fiscal cliff turns. Eamon . Been something of a soap opera today. The latest marketmoving development coming after 2 00 this afternoon when Senate Democratic leader harry reid told reporters that the republicans had in effect walked away from negotiations. Take a listen to senator reid. The republicans have walked away from serious negotiations weve held during the past three and a half years. As soon as president obama was elected, we started talking about the need to do something with the longterm Financial Security of this country. Compromising takes courage. Walking away, as they have done is so easy. Now what reid was referring to there was a plan b option laid out this morning by Speaker John Boehner here on the house of representatives side of the capitol saying if we cant get a big deal with the president negotiated in time, were prepared to move some legislation that would extend the bush tax cuts for everybody making less than 1 million a year. That he said was plan b for republicans, and he and his aides emphasized that they are not in fact walking away from a deal. They say they are still negotiating, but they just have to have something ready in case of emergency, in case they get up to that deadline and cant get to the deal. Now the next development were waiting for here in the Capitol Building is 5 40 this evening. All House Republicans will gather in another conference meeting, and they will talk about this plan b and will talk about scheduling details from now until the end of the week, and i think coming out of that meeting we might get a better sense of whether or not were on track for a deal here or whether or not they are leading more towards a plan b. I thought the president want that had anyway, he wanted to make sure that the tax cuts were extended for the low end of earners. Is the issue 1 million versus 250 . Yeah, exactly. Okay. What the president has proposed right now he would extend them for everybody below 400,000, so they are negotiating on the number there, and what the white house has said in the past is the that if you go too much higher than that, you dont get enough revenue to make a big dent here, so thats where this negotiation is shaping up, but ive talked to some republican aides in the house and the senate who are sort of gleefully mulling out proposals from democrats here on capitol hill who have proposed that 1 million figure in the past and saying, hey, wait a second, if it was fine six months ago from democrats how come they wont take that offer now and the answer is because they dont want to take that offer when they think theres a bigger deal that can be had right now. I thought because the republicans were against doing a deal where you just lower tax rates for one portion of the country and youre not getting spending cuts on the table. Thats right. So i dont understand why i mean, it seems like the reports are showing that the republicans are walking away, but i thought they didnt want to accept a deal where theres no spending cuts anyway. They dont, and thats why a lot of folks think that this is sort of a bluff by Speaker Boehner, that hes effectively telling the president , look, weve got another option here, if you dont come to where i need you to be on the negotiation im going with plan b. Its a threat but a lot of folks say its an empty threat because of the fact that youre laying out is a lot of republicans dont in fact want to do something. They want to do something about the sequester and dont like the idea of raising taxes on the rich. Eventually they will have to come to some sort of compromise on the issue. The plan b got a lukewarm response from the conservative wing of the republican party. Thats for sure. Eamon, well see you later. Closer to a deal or actually moving further away. Joining me now is judd gregg, cochair of the campaign to fix the debt and former republican senator from New Hampshire and Jeanne Shaheen democratic senator from the state of New Hampshire, and they both join us today. Good to see you both. Nice to be with you. Senator gregg, you released a statement saying youre encouraged by the negotiations but your fear is that theres going to be so much compromising that it will be a watered down bill. Is that still your feeling right now after what youre hearing today . Well, actually, we think theres been significant and important progress, but the problem is that the debt still goes up. The purpose here is to get the debt and the deficit simpson bowles, the commission i served on, said you need to reduce the debt and deficit over ten years and if you take the place where the president and speaker are, they both made a lot of movement here, in my opinion. They are around 2 trillion and throw in the 900 billion from a year and a half ago, youre up to about 3 trillion. Youre still 1 trillion short, so were concerned that the air may go out of balloon if the agreement is reached and we dont get to where we need to go, and the goal here is obviously one thing, to make to put our nation on a path to solvency and pass on to our nation a stronger country, and youre not going to do that unless you get 4 trillion over ten years because the debttodeficit ratio goes up too much. Thats the issue. Isnt it extraordinary that here we are, bill, eight days, eight trading days left in the year, eight trading days left in the year, until the deadline, and were still talking about plans that actually do not even attack the debt and the deficit. What are we forgetting the goal . Well, maria they do. I dont want to cut in on jeannes time here, but this is progress. Youre doing fine. If they get to 2 trillion, thats a you know, if you put jeanne and i in a room she would solve this tomorrow. We were both governors of the same state. We can figure this out. Hopefully they can figure this out. What about that, senator shaheen . Are we on a path to actual deficit reduction . That really is the goal of all of this. Do you think they are going to do that . Well, it is the goal, and i agree with senator gregg. What we really need is a longterm big deal that addresses the debt and the deficits. Does it sound like were going to get it this time . Well, what we could do is get a twopart deal, and i think theres still an opportunity to do that, so we could address the automatic cuts that go into effect in january. We could increase rates on top income earners that would help us pay for putting off those automatic cuts and give ourselves some time to further negotiate the final several trillion dollars that judd gregg has indicated that i support that we need to get, to and i think whats important here is that we need to do it in a way that is balanced, thats comprehensive, that looks at all aspects of the budget. The domestic, the defense, the mandatory programs and it looks at revenue, and the fact is months ago the Senate Passed a proposal that would have passed the extended tax cuts for everybody 250 and under, and, you know, if were going to take up a plan b why dont the house take up the senates plan b . Have you seen adequate spending cuts in all of this, senator gregg . I mean, it feels like once again this conversation is dominated by tax rates. Well, i think thats why Speaker Boehners position is so important and so accurate. He said he wants at least one for one. Were now at 1 trillion on the table, maybe 1. 2 trillion in revenues, and so he said, well, i want 1 trillion or 1. 2 trillion in spending reduction. Hes absolutely right insisting on that. No reason doing a deal if you dont get that, and it has to come entitlement reform. Now, there is progress here which is that the president , as i read, i havent talked to him, has implied or said that they are willing to do the koala change which is absolutely essential. Got to call it a miscalculates and we need to go into health care and take a hard look at making Health Care Deliver Services Based on quality versus repetition, things like that, and the speaker is right to insist on spending reductions that at least equal the revenues. Let me just ask a procedural question, senator shaheen. Are you guys hearing . Going to be around for the weekend, going to be here for Christmas Eve . Sounds like well be here through friday anyway, that well be back on the 27th after the Christmas Holiday to continue to take up whatever agreement has been reached. If we dont have it by friday, well have to wait until new years eve the only thing behind this rally. Up next, rich bernstein will be along explaining why he thinks this market has nowhere to go but up. And then later, fiscal hawk rand paul is here with us as well. Hes not too happy about where the fiscal cliff negotiations are going, and it has a lot to do with the t word again, taxes that you were talking about. Hell join us later on the closing bell. [ male announcer ] you are a business pro. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. Military families face, we understand. At usaa, we know military life is different. Weve been there. Thats why every bit of Financial Advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad dad [ applause ] [ male announcer ] life brings obstacles. Usaa brings advice. Call or visit us online. Were ready to help. All the talk about progress on avoiding the fiscal cliff is keeping markets in the green today as we head to the close. Can investors take their eye off those headlines and focus on economic fundamentals . Joining us right now to weigh in on cnbc contribute Richard Bernstein and jeff tanose of jpmorgan and our own bob pisani. Gentlemen, thanks for joining us. Rich, what do you think about fundamentals going into 2013, corporate sector, economics . Im actually quite bullish about 2013. I think were going to start getting, as the year goes on, easier comparisons for corporate profits. The corporate sector as we know is loaded for cash. I think when we get beyond this uncertainty and corporations have more certainty, i think were going to see an m a wave because they have underinvestmented for the future by hoarding all the cash so i think they will have to buy growth so i think 2013 could be a very good career. What do you think, joe . I agree. Everything weve been dealing with the past year has been the uncertainty. Is it europe, the election . Is it the fiscal cliff, but as you go through those one by one, the election is now behind us. I do believe well have a resolution on the fiscal cliff and if you look at europe, the ecb put a gigantic bandaid on this so next year will be a big year. Did you see the s p upgraded greece today by six notches . I had to hit the machine to make sure that was the correct number there. Well, you know, a lot of volatility in rate. Bob pisani, what do you think today . A pretty good real under way . All about the fiscal cliff . Well, the markets, is bullish because the markets are acting like 2013 will resolve a lot of problems so weve multimonth highs in the stock market. We have the safe haven, gold and bonds just getting hit badly again. I mean, bond yields are moving up. Gold is moving down on a day when the dollar is is weak today, so the markets are sort of acting like things are actually going to resolve themself. Even now, maria, you might notice, the headlines out this afternoon arent bullish. Markets believe a deal is coming quickly. So do you guys. You dont have any necessarily different guidance or expectation or reports than we do, and you both are very much in step that a deal gets done what. If it doesnt . I kind of think whats going on right now is a little dance. Everybody has to appeal to their constituency so what they can do is come out with plan a, b, c, d, e, f and g and if a little bit of every plan goes a little bit into the final plan, they can say we fought for what we wanted and we won. Thats what were seeing and the fact that were getting this means that were getting closer to an agreement. Weve highlighted in the past, joe, financials are very strong right now. Consumer discretionary hitting 52week highs. Airlines have been hitting all 52week highs. Home builders. Do you by strength in this market right now, or do you look to the laggards and hope they play catchup . I think before until we receive some type of an agreement im still positioned a little bit defensively. Thinking about defensive sectors and lower beta strategies, but after we do receive an agreement, were all on the same page here, its going to happen but just a matter. When when you look at cyclical sectors theres opportunity. Why dont you guys can i ask why dont you guys take the flip side of this art because a lot of people have been arguing this is the start of american austerity, youll have head winds in 2013 with lower government spending, lower defense spending and just a generally more austere environment. Any deal will mean spending cuts. How is that a positive for the market . Bob, you remember like two weeks ago everybody was saying if the government would step aside the private sector would do very well so what were going to do is see the government step aside to some extent. Its a question how much of an extent and see what the private sector can do, but, again, the important thick to remember here is this corporate fundamentals in the United States are exceptionally strong . They are the strongest in the world, and i think thats kind of getting overshadowed here with washington a little bit. Certainly is, certainly is. Thank you very much. Great conversation. Just ten minutes away from the closing bell for the day, Market Holding on to gains. Markets trying to close with backtoback tripledigit gains since july, and one sector is hitting historic highs that well talk about. Oracle nearly doubled the return of the tech sector. Will the softwares companys latest rally newly the analysis . More coming up on the next hour of closing bell. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 ml350 for 599 a month at your local mercedesbenz dealer. We believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Its another reason more investors are saying. Sfx sounds of african drum and flute look whos back. Again . Its embarrassing its embarrassing we can see you carl. We can totally see you. Come on youre better than this. All that prowling around. Yeah, youre the king of the jungle. Have you thought about going vegan carl . Hahaha you know folks who save hundreds of dollars by switching to geico sure are happy. How happy are they jimmy . Happier than antelope with nightvision goggles. Nice get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Sharon epperson put out a note today saying gold went over its own fiscal cliff today, at its lowest level since august and is at the nymex with the latest details. Reporter when you look at the intraday chart of gold prices, can you see how the price started to drop and drop significantly as house Speaker Boehner was talking and then as White House Press secretary jay carney offered his response to the plan b budget deal. We saw the prices fall to the 1,670 level and continued to fall breaking the 1,667 level and falling to an intraday low of 1,662, the lowest price since the end of august. Keep in mind that gold prices have had a pretty good year so far. Were looking at a 7 gain in the gold price and in the 12th on sective annual gain that weve seen in the price of gold if we stay on track and traders are looking for near term weakness thouwea weakness. As you mentioned, eight trading days left. Amazing. After today, left this year. Yesterday we told you about the Financial Sector hitting alltime highs. Today were looking at another of the years strong sectors. This one is hitting an historic high, the Consumer Discretionary stock, up more than 25 . Thats the s p index of consumer discretionaries this year. And more broadly today, if the dow holds its tripledigit gain at close, up 113 today, it will have the first backtoback tripledigit gains in nearly five month. Market is up 113 points right here, and once again financials are certainly among the big Leadership Groups today. Technology also doing well today. Bill, you said this years big winners, last years big losers, and it looks like weve got real momentum going into 2013. This is a market that want to go higher. Dont want to sound like polyanna, but a market that just is itching to rally again. Its been held back by all the uncertainty about the fiscal cliff, and once you get that resolved, i think it want to go higher here. Though the guest had a good point. I think it was john corpina, maybe you have a sell on the news at some point, but right now this market is anticipating something they want to go higher here. Particularly given the fact theres 3. 6 trillion in cash on Balance Sheets going into 2013. A lot of expectation that if we dont go over the cliff the economy is well positioned so long as we dont do something thats wellpositioned. The other variable is what corporations do with that cash. If they put it to work. Right. They start hiring, and weve heard plenty of ceos, they just want a resolution to the fiscal cliff and then they can get on with their business and make the plans. So much on the shelf right now, on shelf, m a deals on the shelf, buybacks, dividend increases. That comes off the shelf in 2013, if we have a smooth transition into the new year. I agree. Or not. Well come back here with the closing countdown in a minute. And after the bell home depot cofounder ken langone will join me to talk about the fiscal cliff and what it really takes if walmart is really unique in allegedly bribing its way into mexico. More with ken langone, my special cohost next hour. You wont get a word in edgewise next hour, trust me. Its going to be great. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. She also likes to ride her bike. She knows the potential for making or losing money can pop up anytime. Thats why she trades with the leader in mobile trading. So shes always ready to take action, no matter how wily. Or weird. Or wonderfully the markets behaving. Which isnt rocket science. Its just common sense. From td ameritrade. 90 seconds left. Show you one chart. This really shows the story today. The market, still a lot of hope about the fiscal cliff negotiation, and were going out on the highs of the day with a gain of 127 points on the dow. Warren myers, First Time Since july weve had backtoback tripledigit gains for the dow. Thats amazing. Hard to believe that its been that long since weve had it. The market has been acting well. I must be getting a cue from the tenyear yield and watching this thing continuing to skyrocket. All the safe havens have gone higher. Treasury, gold, the dollar you. Get a sense that its a real rotation out of safety net and the riskier assets. Are we being too complacent. Were being bullish. Are we overdoing this . In the short term we may be. One bad word from washington and the market will go down, but from a fundamental point of view, as i said before, 2013 i