So, were not saying were going to see it this month, necessarily, but we are off to a down start for the month so far. Sure well get into that and market reaction. Plus, exclusive reaction to the selloff with pimcos bill gross. He has an eyeopening opinion of how investors should be playing this market. Hell tell us what keeps him up at night. The minimum wage is back in the news. We have a fast food worker walkout scheduled for tomorrow. The president was demanding an increase in the minimum wage. Today well talk to a major e c exective to a major food chain about what would happen if they were forced to pay all workers 15, which is essentially double what most fast food restaurants pay. What do you do . Cut jobs . Make burgers smaller . Sliders for everyone. With the dow off about 60 points, off the low of the session. It was down about twice as much at that point. The nasdaq only off about five points. The s p 500 off three. Interestingly enough, there have been some social media names, bill, bucking the trend today. Lets talk about todays Market Action with our closing bell exchange, lance roberts, jonathan brodsky, and jeff cox and rick santelli. Jonathan, youre feeling as, listen, weve had good gains, youre telling your client, take some profits, but money somewhere else. Yeah. Our perspective is the u. S. Markets have done well. Theres a lot of opportunity around the world. A lot of inefficiencies to be sought out. Were telling them to rebalance some gains theyve seen in the u. S. Markets. Which youre saying to people, maybe we have more to go here on the selloff. Buy the dip crowd not here necessarily, but you think theyre lurking . Yeah, i do. The first couple weeks of december, mutual funds distributed out capital gains, dividends and interest. Its not unusual to see selling early in the month but a lot of mutual funds are behind the curve, so i think we could see a rally into the close. Jeff, weve noticed that the market doesnt have the kind of oomph, theyre not buying the dip. Youve noticed a rather ominous statistic at the new york stock exchange. At the new york stock exchange, a lot of people are using borrowed money to buy stocks. Were actually at precrisis highs. About 412. 5 billion in margin debt now. So, that tells you if its another one of those indicators of frothy investor sentiment. You know, bill, the funny thing about margin debt is its only bad for you until it starts to go down. Its going up. Its always a very good sign. When you first start to see that margin debt go down, thats usually the smart money telling you that the markets getting overheat. This is a very good signal back in 2007. Just even incrementally when those margins start to come down, its the scientist say, hey, maybe its time to take a break. At the same time, theres for everyone who says, this is a sign that sentiments too high, some saying sentimentism is too low. Rick santelli, im wondering to you, what do you glean from the bond markets . Well, you know, alex was talking about margin debt. I think that many are marginalizing the influence of debt. I think the debt markets, even in a managed form, continue to exert pressure. Whether its the steepening curve. As you look at intraday, the stick yns of tenyear. Once that rate moved on the jobs, jobs, jobs, it stuck, hardly moved. Real tight range since. As you look at longer term charts, whether its year to date, remember, we closed over 100 batsz points lower at 1735. A bigger chart, we rarely look at, look at a 20year chart. Fy erase this was a tenyear and told everybody out there it was a tech stock, that pattern looked aggressive to the upside. You want to keep thinking about that. Last but not least, you want to talk quickly about whats going on with the dollar. It went up but came right back down. Its confused just like the equities on good data. Quick point i would like to make here. We just went over we had 1. 60 trillion in corporate debt. Thats a new record. We have about 4 trillion about to come come due over the next four years or so. So, if rates start to continue to move, even just, you know, modestly, thats going to present a very challenging environment for companies that want to roll that debt over. Jonathan brodsky, i know youre taking profits anyway, but isnt it possible that until the fed starts signaling or that its imminent, which theyre not doing here, couldnt it market move higher . Yeah, were not saying to remove yourself from the market. Were saying valuation is king, especially in the Market Conditions were seeing right now. The objective from our perspective as Value Investors is to take our profits from what we think are expensive securities, scour the globe for opportunities, and put our capital to work in securities that are trading at a much lower value we think have good prospects. Lance, theres actually a raging debate about the valuation of the market because there are two pieces of this, i should say. We keep hearing this. Theres price and then earnings. What you think the earnings projection is has a lot to do with how expensive stocks look here. Whats your take on it . Thats a great question. If you look at the Revenue Growth, top line of income statements for corporation, its only grown about 25 since 2009. The bottom line profits have surged by 230 during the same time. And thats because of all the costcutting, wage suppression, low Interest Rate environments have been very beneficial for corporations and profitability. And if ricks right about whats going on with treasuries, that could continue for a while longer. But ultimately, we have to pay the piper for costcutting environments because its impacting economic growth. I think this raises an important point about misallocation. I have breaking news you want to comment on, jeff. Go ahead. Misallocation of capital. What are companies doing with all their money . Are they using it to grow or are they using it to simply reward shareholders . I mean, that presents the growth question further down the road. Let me let me ask the guys to put up the chart of apple. Let me see what its doing. We just got word carl icahn has tweeted. Its not doing anything. Maybe theyll hear about it right now. Carl icahn tweeted gave apple notice it will be calling for a vote to increase the Buyback Program, but not at the 150 billion level. Hes been calling for that an increase buyback and maybe as much as 150 billion but now hes saying hes going to call for a vote but not at that level. Lets take a look at the shares, if we can. Part of whats happening here is this expectation or this combination is not new. Weve known for months, carl icahn wants to do something on the size of this Buyback Program and the market has already priced that information in. In other words, if they think its likely or not. Now were hearing the size of the program hes pushing for may be considerably less. If that means its more likely to happen, that could start to see the shares move, guys, potentially a little more. That stock was up 20 in the last two months. His last tweet on apple was met with a thud by the market, too. Its doing fine on its own. Lance roberts, would you buy apple here . Two things. We have to consider the fact that you have a guy tweeting about a stock that he owns and he knows that his tweets can push the price of the stock. Amen. Something is not quite right about that. Thats not a fair playing ground. I like apple. I think its great. Im really watching the competition from samsung to see how it erodes their profit margins. Thats the only real concern ive got with apple right now. Rick santelli, i think i heard you jumping in there with an amen. I just want to throw this out there. I mean, there are theres an element of transparency involved here, so, you know, talk us through a little why you think this is so pernicious. We know carl icahn is a big name played out there. We also know were less than an hour away from the close. We also know that theres a lot of issues with stocks and tech seems to be leading the way in terms of net change year over year. I just think its like throwing a match on a gasoline can. Kellys point is well taken. This stock is not moving. This was probably already in the market at this point. And the fact hes not calling for that maximum 150 million buyback hed been discussing, maybe thats the reason its not moving right now. I think its indicative of the excess cash on the balance sheets. Were seeing increased activism to put that cash to work. Its a signal management is just not quite ready yet given the profile of growth around the world. So, its indicative of a lot of what were seeing in a number of companies. We also know, jon fortt has pointed this out well, apple has stepped up the pace of acquisitions lately. They are putting the cash to use to that extent. This isnt about the cash. What carl icahn wanted them to do is take advantage of debt markets here and borrow to fund a lot of this. And a lot of companies have been following that strategy. They floated a huge bond earlier. It was back in february. Very, very successful to finance a buyback at that time. And that goes back to manipulating bottom line earningings. How do you increase earnings . You borrow cheap. It has to this low . You have to ask yourself, how long can this game go on . The point i made before about all the Debt Maturity thats coming up, you know, were seeing some pretty aggressive moves in the tenyear, as rick as charted for us very well, that, you know, this game is almost over in terms of just being able to take out unlimited amounts of debt and keep rolling it over and rolling it over. The day of reckoning is coming. You say that but japan has been doing it for 30 years. Exactly. God forbid we end up like japan. Thats not the template we want to follow here in the u. S. Thank you all. I dont know if carl icahn was expecting this stock to move with his tweet. Hasnt moved a bit. Well keep an eye on it. Meantime, we have breaking news on the banking industry. Kate kelly joining us with the story. Thank you so much. The securities industry and Financial Markets association, among others, is suing the Commodity Futures Trading Commission over the rules governing overseas swaps trading. Specifically, a crossborder rule guidance set of paperwork issued in july that the industry finds objectionable. Essentially, they think its an owner yous set of guidance, and this will be treated as law, was deeply flawed on the cftcs part. More details on that, kelly and bill, as we get them. We understand this suit has just been filed or will be imminently. Its certainly big challenge to see cftc chairman gary gensler in his final weeks of the job. All these countries, whether its u. S. Or europe, trying to move to indrese regulation but all these banks exist in so many jurisdictions. Who do they have to listen to . What happens when rules conflict . A big Financial Trade Association is pushing back to that ability to extend regulation beyond the u. S. We have a guest coming up well talk about that issue. Heading toward the close. 50 minutes left in the trading session. The dow was down about 125 points at the low. Weve come back. Down 60 right now. It is our fourth consecutive down day here. And some new housing numbers out today. Sales surging but a new bag of trouble could be brewing in the mortgage business. That could change the sales story in a hurry. The winter chill can be a very good thing for retailers. Courtney reagan will be here to tell us why. Plus, why are investors so warm to Discount Chain tj maxx . The story behind that stocks just ahead. And after the bell, president obama entering the minimum wage debate a day ahead of a planned walkout by fast food workers. The president of white castle said such a move would hurt jobs. Hell join us after this. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Get the best offers of the season now. Lease this 2014 srx for around 369 a month with premium Care Maintenance included. If every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. New home sales surged in the month of october. Housing sales been pretty good . It was the biggest in three years. Some housing experts poking holes in the numbers. Diana olick joining us with the numbers. Poking holes is a nice way of putting it. Some are calling the numbers outright wrong. Deutsche bank put out a note saying were skeptical of the strong october reading because it runs counter to nearly all over an exdoelgts and macro data. We expect revisions to october or some reversal of octobers significant gains. Contracts jumped 25 in october, month to month, after falling 6. 6 in september from august. These numbers are highly volatile with a 20 margin of error. Plus, the numbers are so small that any slight moves make for a big percentage change. Now, we saw a slowdown in august and september. Augusts original reading was revised down by 15 . September was a drop from there. Then the crazy 25 jump in october. Whether you believe it or not, its not as great as it sounds. This number will likely be revised down as well. Even if you take it at its face value, youre still only going back to the april levels of new home sales, which is nothing stellar. It was a better market but it certainly isnt a market thats soaring. Now, the wild card now, of course, is rising mortgage rates. Some say they will knock buyers out of the market. Others say theyll pull buyers in, that is buyers who might afraid rates will go even higher. More at realtycheck. Cnbc. Com. Thank you. Bankers association is warning small lenders could go out of business because of a part of the dodd frank regulation that goes into effect in january that requires lenders to verify a borrows ability to pay back their loan. Necessity say that would be an additional cost that these small lenders just cannot afford. David liken of Mortgage Banking Solutions joins us saying this is a very real threat and will limit choices for borrows. Chris thornburg who thinks the whole principle is ridiculous. Thank you very much. Why do you think this will put the smaller shops out of business . First of all, it sounds like its something they should be doing all along. And they have been. Exactly, right . Were having credit risk all along. The reality is its not the fact theyre asking us to revere fi this information or go to great extent, its really new requirements of a poorly written law that are bringing up dodd frank the law im referring to and Consumer Financial protection has the Impossible Task of putting out there regulations on this industry. We have banks that are too big to fail. Now we have companies too small to comply. Because of the litigation thats coming at this industry. Its the litigation and cost surrounding these poorly written laws that are the problem. You dont buy that. Why not . Two things. I dough agree these laws are kind of unnecessary, but i disagree its going to have a differential impact on small and large lenders. When you think about these kind of costs, they are per loan. Its the marginal cost. That means more or less its an even playing field. Why i dont agree with the law, i dont think it will have a substantially negative impact on small lenders compared to large ones. Weve had barney frank on the program several sometimes. One of the last times he was on we talked about banks pushing back. I can hear him say now, let me get this straight, banks, lenders, small ones, are upset because were forced to do our job and the Due Diligence to make sure the money were loaning out is actually going to be paid back . He would say that is precisely the point of dodd frank, chris. I agree with that. And at some point these regulations had to go into place. We knew, of course, that there was a complete breakdown in credit standards in the middle part of last decade. We have to make sure we dont repeat that again. Some regulations need to be put into place. I think everybody would argue the pendulum has gone too far in the other direction and these numbers are a little onerous. Small lenders did better in the crisis than the big boys did. It was indeed, the big, big boys that suffered the largest level of defaults. And big, big guys dealing with higher Capital Requirements who are starting to get out of this business. David, the story in the journal today how smaller mortgage lenders are leaving the field here. Doesnt sound like theyre necessarily the ones suffering. Well, theyre selling out, as they look at litigation risk, the legal risk out there is the issue causing our firm is one of the largest m a firms in the nation. We have never seen the kind of activity where guys owning these Small Businesses are throwing in the towel saying, weve had a good run, its time to get out. We cannot sit and deal with compliance rules coming at us. Its getting too costly. The biggest impact, its going to be passed onto the borrower. I agree with chris statement, incremental, per loan. Guess where that per loan cost gets pushed . Right back to the consumer. David, a line from the piece. In the Third Quarter alone the smaller lenders, those outside the top five, gained 6 Percentage Points of market points. Thats an fbr number. That sounds like, if anything, they are gain making significant inroads into this business. They have made good inroads. Independent bankers association, im in miami, we have our Conference Starting tonight, this very group, thats been growing in numbers. Theyre looking at this litigation thats out there. Their legal risk, compliance legal risk. And theyre seeing this and going, its just too much for Smaller Company to reserve. The Class Action Lawsuit that are certain to follow poorly written laws. You know, chris, you made the point that maybe regulations go too far sometimes, even as the pendulum swing too far the other direction when they were taking advantage of the situation before the financial crisis. Dont you think that going too far is maybe the point that youre trying to restore confidence in an incredibly important industry in this u. S. Economy . Well, no, i wouldnt say so because if you look at the Housing Market today, we just saw that story, i agree. I dont believe those new housing sales numbers. Overall, the Single Family Construction Market is still completely in a slump. You can blame that completely on the fact that its very hard to get credit out there in the Housing Market today. And thats really suppressing what should be a big boost to the overall u. S. Economy. So, were really suffering as a result of this. It isnt helping. Guys, thank you. This is only going to make it worse. Appreciate your thoughts. Have a good convention. Thank you. Thanks, guys. We now have a little more than half an hour to go before the close. Were keeping a close eye on markets as we head into the close. Were coming bang here. About 34 points. More than 1030 points at the low. Well see if we can come back in the last half hour. Why did Merrill Lynch fail back in the crisis, you ask . Former president of Merrill Lynch international is out with a new book with never before revealed details on that story. Hes here first coming up on closing bell. And with just 21 days, can you believe it now, to go before christmas, were also just a few hours away from the lighting of the Rockefeller Center Christmas Tree. Take a look. This is a live shot of rockefeller sister. This years tree is 80 feet tall. Its fitting since this is the 80th Tree Lighting ceremony. Well show you more throughout closing bell. Stay tuned. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. More breaking news on this story we told you about earlier about investor carl icahn and apple. David faber has the latest developments for us. We can confirm, of course, carl icahn will submit a shareholder proposal to shareholders at apple at the annual meeting. Hell have to do it on his own by sending his own proxy. More importantly, we can tell you his new ask is significantly down from his previous ask. That being he is now submitting a shareholder proposal that would say, buy back 50 billion worth of stock in the current fiscal year. His suggestion previously had been for an immediate 150 billion buy back by apple. Hes now asking for 50 billion in the current fiscal year, ending with september 2014. Interestingly, icahn if he chooses to move ahead with this shareholder proposal, will be asking for 100 billion less in buybacks from the company. Perhaps more modest, more realistic sum. For its part apple has already committed to, if you recall, 10 billion capital return program. 40 billion of that through dividend. They have bought back 23 billion of stock. Have another 37 billion to go on that. And have said they will revisit their capital return plans early next year. News of course, icahn shareholder proposal down to 50 billion from 150 billion. Well see if he follows through. Maybe hell ask for buyback in tranches. 50 billion now and then we can go from there, right . Thanks, david. See you later. Nice weather were having lately. Going to be 60 degrees here tomorrow. Weather has been an excuse for retailers when they miss the numbers. Seems retailers should be warming up to cold temperatures as were seeing in many parts of the country. Courtney reagan joins us. This years black friday was the coldest in more than 20 years for many parts of the u. S. Temps were 3 to 15 degrees cooler for average per week, to jumpstart sales of winter apparel. In fact, the only apparel searches in googles top ten search trends over the black friday weekend were vf corp owned ugg and timberland. Jcpenneys boss things the weather is impacting what people is buying. Macys ceo has mentioned increased outer wear opportunity into the holiday season. In fact, Weather Channel survey shows consumer demand for heavy outer wear increased 125 over black friday compared to last year. Stronger demand suggests retailers can more easily sell winter apparel without deep discounts, especially important in one of the most highly promotional holiday seasons in 1078 time. Weather channels paul walsh forecasts colder than normal temps will continue for the next couple of weeks. The snowstorm will hurt foot traffic temporarily but then again it is christmas. Gifts have to be bought somehow. Bill . Somehow. Theyll have to be delivered by drone. Whatever it takes. What a concept. Thank you, courtney. You know, one retail stock thats been on an incredible run no matter the weather has been tjx, parent of stores like tj maxx and marshalls. Look at the chart so far this year with a gain of 47 as it enjoys this ride. Will it stay red hot, no matter how cold it gets. Youre ready . Were setting ourselves up with a stock brawl. Stephanie saying shes not buying at these levels, but chad morgan continues to add to his positions. Welcome to you both. Stephanie, you not interested in tjx, why . No. Just to be clear, we own it. We were buying this a couple years ago at 38 share. With 47 gain year to date, if you look at the valuation at 19 times forward estimate, thats well above five and tenyear historical average. Youre not buying it right now . Not right now. If it were to get to 60 or below, i would definitely pull the trigger because there are multiple ways to win with this story. Particularly the macro situation, as wage Growth Continues to be flat and pressure, the consumer is very choosey and theyre looking for bargains and quality merchandise. This company has both. Chad, you would be buying from here, yes . Right. Like stephanie, weve owned this position for three years and weve done very well with it. What we like about it, though, is that you have rising top line growth as well as you have rise in gross margin and operating margins. Our price target is roughly around 22 a share. We think youre getting paying well for a good margin of safety at this inflexion point. Now, would there be a pullback in the stock . Yes, obviously there could. For longterm holding, i think investors will do quite well with that position. Keep in mind, tjx has been buying back shares. Theyve roughly retired 25 of their outstanding shares over the last six years. Thats without taking on any debt. I want to go back to the point courtney was making about the weather and the effect that will have here. Let me ask this. If retailers dont have to get rid of a lot of excess merchandise, theyre able to turn it over because the weather is in their favor this time of year, doesnt that mean a tjx might have as good a selection this time around and potentially hurt shares . I dont believe that to be the case at all. Look, theyre going to go through some inventory issues from time and time again. Have you sfo keep in mind that the Management Team here over the last five years has been exceptional at being able to manage their merchandise as well as supply demand curve. He said 72 is stock price target. You . Upper 60s. You wouldnt see it go up . I could see it over the long absolutely, over the long term. It is a great long term story. Its hard to brawl on this one. I was going to say, we just brawled. Im sorry. I would love to be your bear. I would love to be, but i cant be. It was very nuanced stock brawl today. Exactly. Thank you very much, guys. Thank you. Market flash on social media stocks now. Lets get out to julia. Twitter is leading a mini rally in social stocks, up more than 5 . Why apples 200 million acquisition of topcy shows value of fire hose of data. Investors are speculating why apple would snap it up. Facebook shares are up more than 3. 5 after ubs speculated it could be soon moved into the s p 500. And reports that more than 2 million accounts from facebook, twitter and others have been compromised havent impacted the stock one bit. Meanwhile, pandora shares soaring today on streaming companys audience network. They say the number of active listeners grew 16 from a year earlier. This is huge. It shows that apples new iradio streaming service would cut into pandora. It is not doing that. Julia, thank you very much. Look at this market. We were down 125 at the low. Were going to be if we sit here in a moment, maybe it will turn positive. Dow down nine points. Some indexes back in the green. Its been a roller coaster day. Its not often Top Executive in the Financial Sector says his Industry Needs more financial regulation. Well, meet gary parr, vice chairman of lazard. You will meet him up next. I have low testosterone. There, i said it. See, i knew testosterone could affect sex drive, but not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. 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Today would be the third if we finish that way. Looks like we could be on track to end that eightweek win streak but a lot depends on what has happened from here on out. Were counting down finally to next tuesdays vote on the volcker rule, which would usher in a new era of stricter oversight on the banking industry. Our next guest is critical of that rule, but he does say he says regulations do fall short and that we actually need more regulation. Lazard Vice President gary parr joins us exclusively. Thank you for being here. Thank you. Its taken years, 950 pages. But youre not happy with the outcome here. The volcker part of dodd frank was 11 pages now and has turned into 950page, roughly, document. Thats too complex. It is addresses a lot of good issues. The concept was a very good concept. The whole idea was to end proprietary trading by banks so that it takes some of the risk off their balance sheet. Right. A very good idea. Completely supportive. But if it takes 950 pages to describe what all that is, it means it would be the full employment act for lawyers and regulators trying to decipher its meaning, i fear. Thats the issue. Unfortunately, we do live in an era where there are complex institutions that need specific rules written to deck tat behavior. So, maybe it takes 950 pages but if it finally lays out in detail which banks can and cant do, perhaps thats just what it takes these days. That would be my guess is, while thats a noble objective, my guess is thats not what would be imbedded in 950 pages. As you know, it was five different committees working, trying to come up with something, a consensus view. Thats unfortunate. Because, again, the concepts a very good idea. For that matter, a lot of dodd fra dodd frank, a lot of good ideas imbedded in dodd frank to add regulation to the industry. There was talk of maybe bringing back a modified glass steaga glass steagall, which was repealed just before the financial crisis. That put up a fire wall so that banks couldnt commingle risk assets with their savings deposits. You wouldnt want to see a glass steagall come back . I would say the following actually, its interesting, being at a firm like lazard, we would be a beneficiary of a glass steagall being implemented. As a taxpayer, i think its a false premise. The idea that glass steagall would have prevented this last financial crisis is, i think, wrong. Bear stearns was the security firm, Lehman Brothers is a security firm, and on the other hand, washington mau actual and wachovia were banks. The four institutions that became insolvent had nothing to do with glass steagall. By that time we had a systematic problem. Thats the point id make, that wasnt the issue. To put it in place, i could sort of say, fine, doesnt affect me negatively, but people believe theyre solving the problem. They made a mistake. There were other issues. Between regulation and market pressures generally, your industry is shrinking. Its consolidating. How do you continue to thrive to are you growing . In that case, how will the industry look in two, three years . The very big Financial Institutions are struggling. They are dealing with this avalanche of regulation. Dealing with in particular the Capital Requirements that bring down the returns. So, you know, the average return on equity for big institutions last year was like 8 . Thats not good. Lazard, pure financial advisory, there are others, alternative Asset Managers are doing very well. In fact, they are taking advantage of all the regulations of the other banks. They can then step in and provide as intermediary, do credit, lending. There are a number of places where theres growth. You have to segment and say whos you know, theres more change by dodd frank, more change to Financial Services industry since the 1930s. By the way a lot of people might say thats for the better. Oh, yeah. A lot is for the better. It is fine. The only issue i would wish regulators would focus on the big deals. If they want to make the Financial Institutions more like utilities by requiring more capital, fine. That would be fine from my point of view. I could be an advocate. But zglass steagall was 37 page long. Were now over surpassed 20,000 pages. Government by committee. Gary, thank you so much. Its a pleasure to be here. Were keeping a close eye on markets as we head into the final stretch of the trading day. Going from deeply negative, triple digit loss, to slightly positive. 15918 is the level there. S p adding four points. They did buy that dip after all. Insider selling is picking up steam as the markets have risen. When he can we come back, well tell you who is selling what and if it means that maybe you should follow suit as well. After the bell ill talk with pimco founder bill gross. Hes talking about whats keeping him up at night and it might make you lose a little sleep as well. Sorry. 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[ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Before their gift helped preserve the point. Before a credit solution was used to expand their business. Before trusts were created for their grandkids educations. They chose a partner to help manage their wealth. One whose insights, solutions, and approach have been relied on for over 200 years. Thats the value of trusted connections. Thats u. S. Trust. If Company Insiders are selling shares as stock prices rise, question is, should individual investors do the same thing . Sheila tracking whos selling what and tracking a pattern. What are you finding . Lets start off with the numbers. Theres definitely big numbers in november. In fact, 7. 4 billion of insider stock was sold by companies. Now, yes, you can say this is a trend that happens whenever markets pick up steam or at the end of the year for tax planning purposes. Keep in mind, this is an 85 increase from the numbers we saw in october and the highest levels we have seen since may. Definitely, a lot of selling happening. Here is some big names we saw the most inside selling over the past three months. Best buy, 200 million worth of shares sold by insiders over the past three months. Amazon saw 400 million worth of shares, including jeff bezos selling a chunk, and google and microsoft, 830 million. Some top dogs, eric schmidt, larry page,er is sergey brin. Retail with coach, ceo lew frankfort, and biggest was Richard Kinder bought nearly 8 million worth of shares in september. The biggest buying we saw was in davida health care, the Dialysis Health care, Warren Buffetts Berkshire Hathaway added a huge chunk to their stake. Theyve been steadily adding over the last couple of months. Maybe not a big surprise. Traders said, some of this is seasonal, some is tax planning. When youve had stocks with such a big run, always interesting to note which stocks are seeing the biggest Insider Selling as well. Absolutely. Thank you, sheila d. Markets stumbling, down fife points. Well keep an eye on that as we head to the close with 12 minutes left. The last time we started any month with three consecutive downdays was september of 2011. The reason we point that out, that month the market was down 11 . If we finish lower today, thats three in a row. That was the last time we had a 10 correction. All those cars driving off show room lots arent necessarily driving into mall parking lots. Phil lebeau and our allstar panel has a lot to say on this story. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back. Eight minutes left in the trading session. We thought maybe we would turn positive here. We did momentarily but were coming back. Looks like the nasdaq would be the only positive of major averages at the moment. The dow is down 13 points after having been down 125 at one time today. Joining us as we start to close out this day, rick lake and bob pisani. Bob, really did come back. We thought they were buying the dip here but more faltering here. I think the problem is the jobs number today confused everybody. The adp, stronger than expected. Ism services. Employment component was weaker than expected. And i think the markets not quite sure which way the jobs report is going to go on friday. If you look at the vix, you can see the vix spiking up and collapsing late in the day. I think the overall the good news we got today is maybe a budget deal is near. Thats been a rumor. Mr. Bernanke did say before, one of the reasons they didnt taper in october was because uncertainty over what the government would do. Move that uncertainty, i think its good news. You know, maybe taper a little quicker. You like this market here, rick . Markets always prevent challenges. Markets have been punctuated by the uncertainty. We seem to have a little whiff in the air. But resilience brought us back to the close. Theres a rumor that maybe the committee of members of congress who have been commissioned to come up with some sort of a deal before the debt ceiling crisis may have come up with a budget framework of some kind here. That seemed to help bring the market back today. Assuming that gets out of the way, is this market cheap for you to want to buy things right now . Or you want to take profits here . Yes to both. There are risky parts of the market. Investors are more selective. S p stocks, some have earnings that are pretty weak and some are strong. It could be an interesting period for Equity Managers moving forward. Retail stock this is week, its been basically sell the news. All of those big retail names that have been up in the last few months, take a look here. This is this week. Urban outfitters, ross stores, walgreens, buckle. Its been basically sell the news on those thanksgiving reports. Theyre down again. We lost the upward momentum we had, but well see what we can do in the month of november. Thank you. Well let you get back to work. Well come back with the closing countdown. After the bell, the president enters the fray in the battle over upping the minimum wage one day ahead of a planned walkout by fast food workers over that very issue. In fact, a Top Executive with the White Castle Burger chain says such a move would cook his restaurant profits and eliminate jobs. Well talk with him coming up next hour. Youre watching cnbc, first in business worldwide. I dont just make things for a living i take pride in them. So when my moderate to severe chronic plaque psoriasis was also on display, id had it. I finally had a serious talk with my dermatologist. This time, he prescribed humiraadalimumab. Humira helps to clear the surface of my skin by actually working inside my body. 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Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Two minutes left in the trading session. This is going to look familiar. It looks a lot like yesterday. A positive opening in the morning. As we head toward the close, as europe is closing for the day, they were weak again. Then we keep going south. We were down 125 at the low of the session. We have come back. But were failing right now, at least, to finish positive. At least for the dow. The last time weve been pointing this out, last time we had three consecutive down days to begin a month was september of 2011 and the market was down 7 at that time. I know im quibbling over less than 1 at this point, but were looking for subtle changes in the tone of this market. Its clear the momentum to the upside is waning right now. What is going on . I think its the perfect reflection of a market that doesnt know what to make of the approach of tapering. The downside can be expected. I think the bias still has to be to the upside. If were going to be tapering because the economy is stronger, that has to give an upside bias to the market. Very strong Housing Market, which nobody believes today. A lot of skepticism on that. The jobs data, private number from adp, a stronger number. Fridays could be stronger. Still likely to be First Quarter but its coming and thats what the bond market is telling you today. What are you going to do with this market . We think any setback is an opportunity to buy. Youre going with the dip . Were going with economic strength. Even if they start to taper, the feeling is, once they start thinking about tapering, its all over. We think tapering will be coupled with Forward Guidance. We think thats a very good policy for the fed to pursue. Steepen the yield curve. Pushing money out into the friday. Thank you. That will do it for the first hour here. Looks like well finish negative except for the nasdaq, although thats very close right now. Well keep an eye on that. Second hour of the closing bell with kelly evans and an allstar panel of market experts. Ill see you tomorrow. Welcome to the closing bell. Im kelly evans. The dow down 120 points, came back but fell short of finishing in the green. Heres a quick look of how were finishing the day on wall street. 15890 is the level there. S p shedding a couple, 1792. Nasdaq trying to stay positive. Social media stocks had a little better day. That certainly helped. Lets get straight to the panel. Joining me today, our very own phil lebeau here in the flesh, im so excited, carol ross, dominic chu as well as david sauerby, and fast money contributor, guy adami. Thank you for being here and being with us. Guy, first to you, we were moving around earlier today on some budget news out of washington. What do you think is really driving the market . How significant is it weve had the first losing stretch since 2011 . The threeday deal isnt significant. The budget deal is why we rallied back to where we did. People are trying to wrap their arms around, good news for the market good news . I think you had a lot of everything for people today. On the data, the margin is improving. If youre bullish and im ambivalent, but if youre bullish, you need the market. You need the s p 500 to trade down to sort of 1750 or so and see what happens if and when we get there. That would be the constructive thing, especially if you believe in the longterm rally. That echoes what weve heard. Let me correct myself as well. I think were talking about a threeday losing stretch at the start of the month, not a threeday losing stretch, period. Its four if you count the s p 500 overall. But what guy is saying is what a lot of market traders, a lot of strategists have been saying. They look at the numbers, the odds, play probabilities. Markets have been in this area. Youll hear overbought out there. The momentum doesnt get to where they can stay in that trajectory, that level, that long, without some kind of a pullback. Thats why this might be healthy for the overall market even if youre bullish with whats happening on the stock market. Interesting to see financials up today. Technology up. Some other consumer sectors. We saw the tenyear move up, 8 2. 80 . Housing but your baby, the auto market, appears to be shaking these rates off. What youre seeing with the automakers and the most recent ism data, and im hearing this from manufacturers, particularly in the midwest, theres a strength there that i think has not been given enough attention. As more data point out come, youll hear people say, this is much stronger than its getting credit for. Your point about the threeday stretch, i hear more people when im taking the train into chicago say, were due for a selloff. People are waiting for it. Not that they want it to happen but theyre waiting. Is that what happens with santelli . No, if i was with santelli on the train, everybody would know it. Were in december. A lot of funds have done very, very well year to date. When you look at the risk reward probability here, theres a temptation to lock in some fantastic returns to be able to do window dressing. Its a little early this year but from a risk reward standpoint i can understand where these managers are coming from wanting to lock in great returns saying, look how great i did for 2013. Weve been asking for people about this. In great 11 months, nasdaq up 35 , why not go to the beach and enjoy the rest of the year. Apparently mutual funds to some extent, hedge funds, lagging benchmarks, needing to make up a little extra into the end of the year. If youre a mutual fund first of all, the real money, asset manager is doing this, right . Your flows, your trades are driven off client flows. Youre not selling stocks unless theres redemptions for your funds and youre not putting money to work buying stocks unless people are putting money into your funds. As you watch whats happening with mutual funds, those equity fund flows are parnt because thats whats you whether or not these fund managers, are buying. Weve made this point before but well keep making it. When you want to get away from, are we the next big japan kind of thing, when they have minimal expect to equities, its in the range of 50 . U. S. Households, generally people know theres not that kind of exposure to the stock market. Theres still so much money on the sidelines, money left to work. Whether its 10 , 15 , 20 , we can argue about that. I dont see what the catalyst is for the market to im not sure how much the fund flows. David, i want to let you get in here. Your reaction as we sift through all of this. For the money flows institutionally, customers are warming up that longonly stocks is the best place to meet your liability needs. The early trade this year was from more traditional octane to opportunistic bond, bank loans. The trend is developing in the Fourth Quarter and continues into 2014 is Institutional Investors warming back up to the expected rate of stocks relative to traditional bonds. That, i think, is still second or third. What do you mean by that . I think that Institutional Investors, for so long, were being taught to embrace, quote, the yale model. More alternatives. Go passive in equities. Fixed income has some merits but i think perennial mistrust in the stock market boast 202, certainly in 2008. Given the last 4 1 2 years, so the rapid rise in stocks, i think were still a long ways to go in this where stocks can return between 8 and 8. 5 . Quite frankly, where else are you going to get that . Whats so siminteresting abo that, if there were certainty, lets call it 8 , imagine what a different world that is if youre a pension fund. You dont have to woesh about alternative assets and this and that kind of credit. Can you basically put your money in equities. I think a lot of people running these things say, were not sure we can count on that kind of return. I think if you look at the average return on equity for corporate usa, return on invested capital, Better Capital uses and return of cash. Growing dividends between 10 and 13 . Yes, even valuation is positive if you look at companies on a cash flow or a Free Cash Flow basis. All that adds up to me that we can still see a market after an incredible 4 1 2 year run that returns between 8 and 8. 5 . This week is a microcosm of it with what whoa saw on ism manufacturing numbers and as phil mentioned, auto numbers. Were stopping the filibuster there. Nathan joins us. Im curious what you make of the last couple of days, this losing stretch, what youre hearing from clients . I know from clingts is they cant do two things at once. They cant shop and they cant invest. You cant invest and spend money at the same time. Theyre trying to get over cyber monday. By and large, out in the rest of the world, the average investor is not back in this market yet. We saw 550 billion of outflows from 2009 to now. In 2013 we saw 125 billion go back into equities. Wheres waldo . Wheres the investor . Theyre sitting around in cash even when its not paying anything and theyre waiting for some great indication its okay to rotate out of bonds. I think well see great repricing when dividend stocks wont be highway are we going to know . Ill tell you, free asset. I mean, it would be nice if someone rang a bell. Unfortunately, they dont do that. Let me push back. Theres a lot of reasons to own stock. There is no other alternative to me is the last one. I dont think that holds a lot of water. I know its glib and sounds good on television but theyre probably more alternative than have ever been. There are a lot of things that could happen still. I dont want the people at home to feel the only Investment Option they have right now is u. S. We can itses. Thats dangerous. Thats true. I want to ask you about Something Else too today. Even as nasdaq was outperforming, twitter up back to the mid40s, facebook doing well. Why do you think this sector is staging a rebound in spite of the rebound or is it because of that . Facebook, Third Quarter was one of the best, and stock went down, for me facebook was due for this low. Twitter, im in the camp with most people, its going to the mid30s. It wont get there in the short term because i think everybody is looking for it to move lower, which probably will happen but not when people think it will. I will say this guy, 15yearold kids are saying snapchat. Thats true. Its interesting because on cnbc futures just yesterday we spoke with blackrock chief investment strategist, jeffrey rosenberg, he says he likes stocks more than bonds in this coming year and hes a fixed income guy, right . What does that tell you about the market . A certain element of that. Where is the enthusiasm right now for stocks . Where is it . Because i have to tell you not among the general public. Its not in the general public. Its large cap growth. Thats the only underpriced sector. I think the fact that this is not an overexuberant market, the fact that people still kind of hate this market and that the average person isnt excited is actually a very bullish sign. At some point youll wake up and say, ive still got my money sitting here. Oh, my goodness, the markets going down, what did i do . I sat around for the last four years. Or a lot of people, phil to your point, waking up and saying, im glad i weathered the last couple of years but theres still a mistrust for the stock market, for the average investor, given two 55 declines in the last ten years. That mistrust still permeates. And i think that can be n a contrarian way, an indirect catalyst to get equity prices higher. And whats interesting, david, is that if thats happening, you know, how do you get people involved, then, when theyre just so wary theyre going to come in right at the top again . Theyre going to look at the end of 2013 and see, my stock returns are up more than 25 . If i was in small cap, theyre up more than 30 . And my traditional bonds, not my high yield or opportunistic bonds, were down 1 . We havent seen that in more than 25 years to that degree of separation. Kelly hang on. Hold on. Investors will get back in this market when they see wage growth. Wages havent grown in 13 years. When someone starts to see a raise, they might have Discretionary Income and might have a good attitude about investing in equities. Until then youre seeing divided class of society and seeing divided investor class, too. Thats an interesting point. Nathan, thank you for joining us. Guy, i know you have to run. Another show coming up at 5 p. M. You dont want to miss it, guy will be on fast money with melissa lee. Bromance in the work, bill gross touting index funds. These are pioneered by vanguard pounder jeff vogel years ago. Bill gross will be with us. Jack bogle will be with us nex week. A dire warning not to hike the minimum wage to 15 from a white castle executive. He says restaurant shutdowns and employee layoffs will almost certainly ensue. Explorer card. Eplus ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Thanks for giving me your smile. Thanks for inspiring me. Thanks for showing me my potential. For teaching me not to take life so seriously. Thanks for loving me and being my best friend. Dont forget to thank those who helped you take charge of your future and got you where you are today. The boss of your life. The chief life officer. The dow just posted first threeday losing streak since september fourday losing streak since september. First threeday losing streak to the start of the month since september 2011. Jackie deajoining us with big movers. We begin with airplus today because its lower in afterhours trading after reporting wider than expected Third Quarter loss on weeker than expected revenues. Cgi group, a big move today. The main contractor behind the glitchplagued healthcare. Gov website moving lower on news that shortseller james chanos it as han a big stake in this stock. Intuitive surgical after recall for their davinc irobot. Mcgraw hill with a buyback plan. Deer offering buyback by 8 billion. Las vegas sands, s p 500 raised from triple b minus to double b plus raising it from junk bond to asset status. Bill gross may be the last youd expect to praise Investment Fund index of fund pioneer jack bogle, founder of vanguard but his latest outlook does just that. Bill gross joins us now. Hi, kelly. Nice to see you. Nice to see you, too. If you read through the investment letter you just wrote, its interesting. You talk about how youre worried financial conditions are generally bubbly, not sustainable, not going to end well. Does this have something to to do with this move or admiration, almost, for passive index Fund Strategies . Whats going on here . Not really. You know, jack bogles logic speaks to the market not being able to outperform itself. We know common sensicly thats true. Index funds do better than the average mutual fund and the average fixed income investor. You know, what the exception is why im at liberty to talk about this is jack bogle himself a few weeks ago said there was the pi pimco exception. I thought he meant pimco has been able to beat vanguard. Were on the same team in terms of admiration, but certainly in terms of performance, pimco still wins out. Bill, the signal is important to a lot of people. Are you saying you dont think can you understand the market in the same way because of the feds involvement to be able to time it the way you have in the past . No, i dont think so. As a matter of fact, pimcos strategy is based explicitly on timing what the fed is going to do. We think, for instance, Janet Yellens fed is going to be focused on exiting qe, tapering and exiting and initiating Forward Guidance policy which encourages Bond Investors like pimco to take its place. Why would an investor do that . Only if janet yellen and the fed basically anchored policy rates at 25 basis points for a long, long time. So, that near certainty, in our opinion, leads to a strategy of outperformance Going Forward. Youre not losing confidence, bill . Youre not a ballplayer whos not sure if he can hit the next homer or Something Like that . Oh, gosh no. Total return fund is 1 better than the market this year. Although the market has a minus sign in front of it. No, you know, weve constantly been able to move ahead of the fed, move ahead of the market. I think Going Forward, as long as can you properly analyze, you know, the important anchor to this market and to other asset markets as well, you know, and that would be the fed, that you can actively manage and produce alpha, as we talk about it. Part of the reason i asked, too, is i recall this summer some of your writings about the captain going down with his ship in rough waters. Of course, the seven months now of outflows that you guys have seen. Obviously, youre not alone. Double line, a lot of other bond funds have seen the same kind of thing as a lot of Retail Investors think maybe they dont want to be in this space. Is that sense of nervousness reflecting a broader change in strategy for you guys . Well, i dont think so. I mean, we priced the fixed income Market Going Forward in terms of future returns at 2 , 3 , 4 , depending upon, you know, quality and the alpha generation that i spoke to in terms of pimcos historic results. So, you know, the 3 to 4 , it certainly pales relative to the 25 in terms of the equity market. I appreciate your prior debate. It was a lively one. But Going Forward, you know, our expectation for stocks is, you know, 5 to 6 . Its a low returning asset market. We understand why investors might not want 2 , 3 , 4 yield. Over a longer period of time demographically, you know, the countrys getting older and they prefer fixed income as opposed to the risk of the equity market. A quick fire question. Do you think the tenyear yield will go back below 2 . No. I think the tenyear belongs close to 2. 5 , 3. Thats where it is. Do you think the u. S. Employment rate is about to fall to 7 . I think it will. Its on to some extent artificial in terms of how its measured but i think it will fall to 7 and perhaps below. I do think the fed will not move until its at least 6. 5 and then, perhaps, even lower. So, we have a period of time Going Forward where policy rates of 25 basis points will be with us for another two, three, maybe even four years. Wow. Or beyond. Bill gross, thank you so much for fielding all of those questions. Great to have you with us. Well see what happens with rates. Of course, with the fed and with that jobs report coming up on friday. Bill gross this afternoon. Jackie with the market flash. I just want to draw your attention to shares of disney. The company just announcing its going to increase dividends by 15 to 86 cents a share. Thats moving the stock in the afterhours session. Up about 0. 25 at 70. 13. Back to you. Thank you very much. Coming up next, storming the castle. A minimum wage debate backed by president obama could have devastating consequences for one burger chain. A Top Executive will explain how a move to increase the minimum wage could shudder restaurants and hurt jobs for his chain and others. Dont touch that remote. Over the next 40 years the United States population is going to grow by over 90 million people, and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. Yep. 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Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. Welcome back. President obama talking up the merits of a minimum wage hike in washington. John harwood joining us about what the president s been saying. Why now . Why the timing . President obama is trying to get out of the defensive crouch hes been with the struggles over the healthcare. Gov website. Now that the administration believes it has turned around that website, its trying to go on offense and stalk about his economic agenda for narrowing income inequality. Part of that is health care itself. Part of that is investments and infrastructure and education. Part of it, as the president said in the speech today at center for american progress, is a raise in the minimum wage. Last month voters in new jersey decided to be the 20th state to raise theirs even hi high higher. Thats why the d. C. Council decided to do it, too. I agree with those voters. Im going to keep pushing until we get a higher minimum wage for hard working americans across the entire country. Note, president obama invoked new jersey, the state of governor chris christie, who may be a republican candidate for president in 2016. This is a difficult goal to accomplish because many republicans, even though the president disputes this argument, make the ar umeguments is going to cost jobs. I know our next guest will make that ar ument as well. Lawmakers nearing a deal on the budget. We know today being the 4th, the 13th being the deadline, does it look like were going to have an agreement . It does. Modest agreement, two years, 90 billion, raising the budget caps about 45 billion of ee quester relief for defense department, 45 for domestic programs. Does not decrease the deficit. Offset by additional revenue and budget cuts. They would not be tax increases and not cuts to medicare and Social Security or Agriculture Program but much more mundane things like fees and asset sales and cushing federal retirement, all ways in which the Congress Hopes it can avoid a shutdown in january and get us back into more stable budgeting environment. When is a fee a fee and a tax a tax. John harwood will explore that in the days ahead. Weve heard from fast woodworkers, economists on the debate. Today an industry executive to tell us what it will really mean for his business. Joining me, jamie richardson, Vice President of white castle. Thank you for being here. Good to be with you, kelly. You say if we raise the minimum wage, president says from 7. 25 an hour to, perhaps, 10 an hour. What the direct effect on white castle . Groups pleading to raise the minimum wage to 15 an hour. To more than double the mandated minimum wage, it would be catastrophic for white castle, our team members and neighborhoods. Weve been part of the cities were at for more than 90 years now. Can you give us the numbers, jamie . Sure. We have 406 restaurants. We know that would result in closing more than 200 of those restaurants. The ones remaining would be glowing embers, dying stars. What we also know is it would cost thousands of jobs to take a starting wage and double it, as some of these groups are advocating for, is absolutely beyond the fringe and doesnt take into account what this does for teen unemployment. We want to give them the first step on the ladder of economic prosperity. Were lucky enough to keep them. One in four of our team members have with us for more than ten years. Are the ones that have been with you for a longer period of time making significantly more than that . Yes. Its important to know when it comes to restaurants, less than 5 of restaurant workers are making minimum wage. At white castle our average team member, not management, folks working retail jobs, earning more than 32 minimum wage. Health insurance, Profit Sharing plan, a Holiday Bonus we invested over 100 million in over the past 20 years. So they have a great career. I want to bring the panel in on this topic. Carol, youve been champing at the bit here. I mean, can you the politics aside, because there are plenty of people who say, i just want free market, full stop. Why is this a bad idea to raise it to, say, 10. 10 an hour . I think its not getting at the root of the problem. Im somebody who always prefers empowerment over entitlement. The big issue is we have a skills gap. Throwing more money at people for an entry level set of skills doesnt get people the critical skills, doesnt build innovation and doesnt grow the economy. Frankly if you give minimum wage workers a higher amount, all of a sudden everybody else wants a higher amount. Their earning power isnt any higher. You end up losing jobs. Are we in Wage Inflation right now . Yes. We need some Wage Inflation. With all due respect you need it from innovation. You need it because people are coming up through the institution its easier to start Small Businesses, theyre hiring more people for i dont dispute that. But you need some Wage Inflation. You need Wage Inflation because of productivity gains. Right. It sounds so great to increase minimum wage from a policy standpoint but it doesnt work. Back when it was introduced in 1938, and you ask yourself today, germany, sweden, switzerland, no minimum wage. Cuba has a minimum wage. And we do this and we price people out of labor markets. If you want to help out, look at what Small Businesses say is the biggest hindrance to business creation, job it makes it risky for a Small Business owner to start a business. We want to encourage we have 28 million Small Businesses in this country. We want to encourage them to add that next employee and to continue to grow and not focus on a couple of Big Companies that everybody seems to always be attack the regulatory issues first before you go after minimum wage. Jamie, one of the issues we hear from people who say, i dont like the idea of a minimum wage but what i also dont like as a taxpayer i have to fund a lot of government transfer payments used for various different programs to make up for the income that employers, like a white castle, are not giving to their workers. I mean, theres a legitimate argument there, isnt there . You know, i would question that argument. There have been studies we question that make that case. When you get behind the numbers and look at it, when you look at restaurants, only 5 of restaurant employees are at minimum wage. For us, we look at it as a chance, we want to offer flexibility. We have about 43 of our team members under the age of 25. Theyre just Getting Started in the workforce. Learning those skills and being able to apply that for later careers or often theyll stay with us. Our top 500 people in our restaurant regions to a person, 100 started behind the counter at white castle. Were proud of that. Were humbled by their loyalty. I want to say one thing. Im going to take the other side of this and maybe take the workers side of this argument. Not for anything else but to just to get that story out there. If you give us a chance to see a minimum wage hike, would it be n your opinion, a way to we know the Financial Impact on your company, but do you think society becomes better off because people do have a little more Discretionary Income and then can have that triple or Ripple Effect throughout the rest of the economy . Maybe thats a pro, an argument for raising the minimum wage . Heres what we worry about. When that happens, it sounds good if you only look at the primary effect. Look at secondary and tertiary. They have to find a way to cover the cost and prices go up. Next thing you know, we have more inflation and less earning power. For us, the real cost is, what happens to those kids who never get a chance to get that first job . Never get a chance to learn the skills they might learn in a restaurant or retailer. We have to go. Just to go back to one quick point on the numbers here. Whats your restaurant profit margin . Can you give us a ballpark in terms of what, again how much this eats into that profitability youre talking about . Let me share something i think is startling. The average restaurant earns 750 per team member where a typical business earns 10,000 per team member. That was before 2008. The whole industry has been under attack in terms of regulatory and tough economy, things were all dealing with. All right. Its a fascinating topic. Jamie, thank you so much for sharing some of your experience on this issue. By the way carry on, my friends. Workers striking tomorrow, jamie . You know, we have incredibly loyal people and we havent had any challenges. We know were communicating with our folks every day and listening to what they tell us. And taking that feedback. Thank you very much for joining us. Thanks to the panel as well. Theyll stay with us. Still more straight ahead. One is what is hot on cnbc. Com. The hot list coming up next. Plus, will black friday spike an auto sales lead to fewer gifts under the Christmas Tree this year . Big ticket purchases eat into smaller ones . As we go to break as well, heres another live shot of the biggest Christmas Tree in manhattan. Official Lighting Ceremony for tree at 30 rockefeller place is taking place just a few hours from now. Well be right back. Tdd 18003452550 searching for trade ideas that spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. 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Carl icahn making his 50 billion buyback offer. When we put this up, it was drawing in more than 100 readers a minute. Its cooling down a little bit now. Still a big draw for us. Still our number one. Our number two, very nerveracking story if youre a doomsday prepper like me, you know those red gas cans, nbc did an investigation of them and apparently they can explode unexpectedly. Apparently a combination of gas vapor and static electricity on certain kinds. People have been diving into that story. Its been a big puller all day. Pulling in readers at the rate of 60 to 40 a minute. Thats another top one right there. Our third best story, a solid performer for us, went up a few hours ago, an oped piece we got from sam graves. Hes the chairman of the republican of the house Small Business committee. He wrote an oped piece pointing out theres another Small Business problem with obama care. This one has to deal with the definition of employee. Thats on top of new paperwork rules, new definitions. Those are our top three right now. Our viewers have their homework assignment during the break to go look that one up. Thank you very much, sir. I hope my parents are watching because i know we have a couple of red gas cans in the garage. Coming up, Merrill Lynch was one of the largest financial snugs on wall street. Up next, former chairman of merrills international division, win smith on what led to their collapse during the financial crisis, of course it to be bought by bank of america. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year [ ding ] at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back. So, what really happened that led to Merrill Lynch collapsing during the financial crisis . It forced a shotgun marriage with bank of america remains pretty controversial. Joining me with a first on cnbc interview, win smith, former chairman of Merrill Lynch, current ceo of some adventures and author of catching lightning in a bottle. Thank you for being here. Thank you, kelly. 3 1 2 years, the first book youve written. Is this revisionist history . Some people will say, isnt this a big pr exercise about how great mother merrill was. No, i didnt want merrill to be known for what happened in 2007 and 08 and i didnt wanted to be known as characterized by the ceo. So, this is a story about the Merrill Lynch that brought wall street to main street. Its about the firm that was at the peak of its game in 2000. And its written for all the families of Merrill Lynch and the people who are still there as well. What was the moment that you said to yourself, i got to write this . I thought about it for a while. I delivered a speech to final Shareholder Meeting five years ago tomorrow, and i got a call from a fellow whoe had actually been commissioned to write the history of Merrill Lynch when stan oneill discontinued it. My wife said, have you to do it to bring closure and for the Merrill Lynch families. Whats gone wrong with the narrative about the collapse of merrill . I think what people dont understand is what made merrill great. What made merrill great over the many decades is they had a set of values, a culture, north star, they stayed true to over the years and over market cycles. Are you basically putting all the blame on stans shoulders . Im putting the blame on his leadership and lack of proper oversight by board of directors at the time. A different Leadership Team would have led to what outcome . I think a firm would have been wounded like all were but it wouldnt have been mortal. The people i worked with never would have allowed merrill to get to leverage and would have had growth to get them into overleveraged. The entire Financial Sector suffered from doing the same thing. They were in the game, dancing while the music was playing. You would have been in an extremely difficult spot to try not to get involved in any of that. I think thats what good leadership does and thats what good character does. Merrill went through many difficult cycles. The crash of 87. Suffered through longterm capital. Many market cycles. As people experienced as i said, we probably would have been wounded but it would not have been fatal. Do you think merrill should be spun back out from under bank of america . Thats looking back. Thats looking forward. The fact s its part of bank of america and i dont think you can try to undo something. Thats the given reality. I think it can prosper, especially the private wealth side. Do you believe Brian Moynihan is the person to be de facto leading that organization now . I dont know Brian Moynihan but i know john kiel leading the Division Side and he is key. The key difference . He appreciates the history, heritage, culture. Hes bringing it back. Celebrating 100 years. Reaching out to some old guard and asking us to talk about it. Hes trying to tie the past to the present and go forward in the future. Theres also a lot of concern or skepticism, i dont know how you wanted to describe it, about what the future is for a merrill kind of business. The world has changed and the model of the brokerage, Wealth Management indicates theres been a change since 5, 10, 15 years ago. I think thats what people understand. Thats what Merrill Lynch was doing. Theyre very successful advisers are theyre charging a fee rather than a commission. Theyre looking out for their clients needs. They really are managing their money. And so if you when youre on the slopes in vermont and, you know, people are going to get this book and read it, what is the main takeaway you want them to leave with . I want them to understand what made a great company. How important values are, how important a culture is. And also that in leadership, you not only need technical skills, you need character. All right. Well leave it at that, win, for joining us. Again, can you find the book and perhaps change your own mind about just what happened five years ago. Coming up, black friday may have been called black top friday because car sales were off the hook. 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Black friday sales revved up auto sales figures for november, but will that put a dent in Holiday Shopping for Everything Else during the season . As we go to our panel, we have to start with our autos expert, phil lebeau. Obviously, im having difficulty reading this. Of the numbers tht were coming out of these auto sales figures for november, the run rate for the month was impressive, but black friday in particular, whats going on . A lot of things come together, and the biggest factor is that the mass brands, if you will, the toyotas, the chevys, the fords, they all stole a page out of luxury ballpark because the luxury automakers used to be lets run the end of the year promotions, holiday promotions this year. The big red bow on the lexus. Thats what everybody wants, the big red bow on the car. This year everybody realized people are generally off on friday, why dont we see if we get them into the showroom. Its a good time to buy a new car. And by the way and they came together. 16. 4 million, an annualized run rate. Thats not the actual sales, the pace of sales. The expectation was 15. 8. Now, that may not sound like a big deal, but it indicates all of a sudden there os a pop. Heres what i want to know. What is it mart marketing . Consumer pentup demand for bigticket items or is it easy to understand how easy it is to get an auto loan . Smart marketing and pentup demand and that will be here for three or four more years. Finally the auto Interest Rate right now for a new car auto loan 4. 27 . That is the lowest that is the lowest expirion has measured since 2008. They cant go back before that. Getting everyones hopes up. All looking in the driveway. The perfect storm. Lowest rates and people are driving around on average a 12yearold car. A 12yearold car drives great. My car is 9 years old right now, fair enough. They are holding up and lasting longer, no doubt about that, but at the same point at some point when youre driving a 2005 civic youre going i dont have the connectivity. I dont have all the things that i want. David, do you have a 2005 civic . No. I think its a function of a longterm recovery, secular recovery in Motor Vehicle sales, scrappage rates are going up because the average age of the car on the road is quite old, and thats a favorable factor. It showed up in november, but its been showing up for the last couple of years. Over 15 years ago i developed an auto affordability index. The number of weeks it takes to be able to afford a car based on income, and thats one of the best ive seen in more than 20 years. I dont know if youve had it off the top of your head. Its been a while but its still one of the best that weve seen in more than to years because of low finance costs, affordability on the price and respectability. Lower finance costs, right. Carol, when is the last time you bought a car . Thats all good for sales. You have to understand that im in a family of excel spreadsheet junkies so my husband is doing excel spreadsheets on horsepower to dollar value so it takes us quite a long time to pie a car. My question for phil is how elastic is the demand, and as these Interest Rates rise into the future, if and when they rise, what do you think that does . Is that sort of a perfect storm right now, or is that going to change as we hit the first and second quarters of last year . Ill tell you how off the radar Interest Rate concerns are in detroit. Ive not had an executive mention that as a concern. Rising rates . Probably five years. Wow. This fits into the theme of autos being the new housing. Theres some subprime going on thats reminiscent of that as well. Sure. Phil back to get into it in the weeks, month and years to come. Thank you, guys, all and ill be looking into the driveway when i get home. A live shot of Rockefeller Center. The annual christmas Tree Lighting center. Get on a plane if youre not here. Dont want to miss it. Whats lighting up the twittersphere next. Well tell you what you have been tweeting about. Thats next. [ tires screech ] [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Before Global Opportunities were part of their investment strategy. Before they funded scholarships to the schools that gave them scholarships. Before they planned for their parents future needs and their sons future. They chose a partner to help manage their wealth, one whose insights, solutions and approach have been relied on for over 200 years. Thats the value of trusted connections. Thats u. S. Trust. With my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Welcome back. As always, keeping an eye on twitter and some of the conversation points make the rounds. Heres a few of the favorites that hit on some of the themes weve been talking about today as well. Our own robert frank tweeting earlier inequality irony. Under Obama America has added 2. 3 million millionaires. An increase from 6. 7 to 9 million plus, and hes been following a lot of that coverage for us. Jeff hull tweeting the word strong appears 69 times in todays beige book, down from 99 in the october 16 release. Havent really had a chance to talk much about the beige book but did have an undercurrent of weakness, confusing given some of the other pockets of strength that weve seen. Also this story. After uber saying its going to deliver Christmas Trees in some cities conor saying im wonder if well look back at uber as just a car service as we did look the at amazon as being just for books back in 1988. Phil and i were talking how far weve come as a country, as a nation, as citizens, Technology Just in the last 0 years. Just staggering. I think about warren buffett. Remember when he was skeptical about a microsoft or about an apple as investments because they werent didnt fall into his understandability. I dont know it. And today, and then he was saying to people as well, kids these days, if you get what uber is doing, if you use Something Like that all the time, why is that not a fantastic investment . In fact, david, i wont, when we start to talk about some of the names, bubble in social media, et cetera, some of this sounds like it kind of makes sense in a changing world, with the changing consumer habits. If you look at tech overall and the valuations on Technology Today as an investor, the Free Cash Flow yield, the price to earnings, the price to sales, i think this is the secretary that you want to be overweighted. Yeah. Not on a valuation basis as well as on were all waiting for the next killer application. Im not sure what it is. Or the next killer drone. The modifications or a drone that drives the truck, not flies the package. They will be leaving that to uber for the time being. Valuations are there, and Revenue Growth is there, and i think thats a sector you want to be overweighted. There is kind of an explosive combination of people with mobile devices in cities which drives a lot of it because of the density, phil. Right. Why not have these kinds of things delivered or have the ability to rent all kinds of Different Services you previously had to own . If youre going into a factory and its coming into the Consumer World in the world of automation and robotics and it will blow you away. It has to be a right timing. Used to be a service back in the day, cosmo. Com that used to deliver ice cream to you, first Success Story and then it went bust. True. Its a timing thing. There will be a lot of turnover in technology. Guys, thanks so much for joining us. Phil, thanks for flying n. Plenty more coverage of all these ecom coming up, minimum wage stuff, too. Fast money is coming up in just a few seconds. And melissa lee, speaking of going long social media, youre batting around facebook potentially joining the s p 500. Had to separate fact from fiction. Well give you the real take. Were expecting the news potentially within the next hour. So should be a big one. A telling one. Exactly. Fast money starts right now. Live from the Nasdaq Market site in new york city times square im melissa lee. The trade of 2014. Japan is shaping up to be the trade of this year, but one of our guys is making a call for next years big trade tonight. And tenyear treasury yield on fire, rising to levels its not seen since september. Dennis gartman is here to tell us what moves hes making because of it. And watch out, apple