Transcripts For CNBC Closing Bell 20131209

This year last year hewlettpackard was the worst performer. This year a best buy . Until it left the dow it was the best performer. We see the springboard and some names is what people might be able to do with those in 2014. Were get a realtime check on the consumer during this Holiday Season. William lauder will join us chairman of estee lauder. That stock has done very well this year. Did you see this amazing moment in ukraine . Historic toppling of the statue of vladimir lenin. Its more than just a youtube moment. It could mean a lot more for anyone who owns emerging market funds, for example. Michele Caruso Cabrera will join us to describe the implications. Lets get a quick check of markets. Starting off pretty quiet. The dow is adding 16 points. A couple points higher on the nasdaq. On s p 500 perhaps more significantly, bill are simply the levels were looking at. 16,000 plus on the dow. 4,067 on s p. Lets talk about todays Market Action in our Closing Bell Exchange with jem ma godfrey, we have anthony chan from chase,on n onon john naplatano and gem you tweeted, the headline allocation. Were starting to see rally fatigue. We think that will support the rally. Good news is good news and bad news is good news. The fed is likely to remain supportive. This rally fatigue means people are reallocating away from growth into value. The biggest beneficiaries of this could be lets say, european equities over u. S. Equities where valuations are looking tight. And opportunities within the Financial Sector and also risks there so you have to be selective. Well get to that in a second. On this point about how expensive some value names are, how do you call it value if were paying these multiples . Do you expect that to continue . John . Yes, sir. Hi bill. How are you doing . Im doing okay, thank you. Good to see you. To kellys question. Yeah. We feel growth is a little cheap compared to value. We do think theres going to be there could be an issue with the valuations or value stocks, per se. The terms of allocation, what are you saying to clients . They should still is there a compelling reason to be long those names . Or are you saying you want to look at more cyclicals, cheaper growth names, if you want to use that terminology . Yeah we do want to look at some cheaper growth names right now. We are concerned about a little euphoric feel and maybe a little overbought situation out there. Were thinking correction time could be near. Anthony chan our resident economist here. The rally after friday is the market preparing itself for tapering or i mean whats the message . What do you think the feds thinking right now . What the fed is thinking is Financial Markets are getting better. The real reason why the Financial Markets were so scared of a tapering of several months ago and certainly midyear because they werent sure if this fragile economy had any legs. Now were seeing those legs. One thing i was really encouraged by was the slight increase in Labor Force Participation rate. You can see that across a lot of hcohorts. The only one that went down was initial one 16 to 25. Other than that the other cohorts they were rising. That sort of increase lakreescrease legitimizes increase. And people retiring who might have stayed in the labor force during the recession. Things look like better. Theyre retiring. The unemployment being where it is may stay down there despite the upward pressure may not be as high as some thought. Haum more months before we hit 6. 5 on the Unemployment Rate . I have believed for a long time well see 6. 5 Unemployment Rate by the fourth quarter. Keep in mind, even with todays Federal Reserve flow of funds data showing another record increase in Household Network worth. A lot of people that lost money in the financial crisis they got it back and are even ahead of the game and theyre feeling more comfortable. This they want to retire theyre retire. Youll have that cohort retiring because they can retire as opposed to working because they have no other choice. Rick santelli, is 3 on the tenyear yield inevitable this month . Especially as we get closer to the fed meeting. My answer is yes. Theres a possibility i could be wrong. Its all about timing. I think well not only cross it but slice through it a bit. Today there wasnt much going on. I found it interesting that 10s and 30s are unchanged. Some wiggle with the yield curve. Big story is the weakness you see on the dollar index. Thats year to date chart. As far as the taper and stocks and all our guests saying you know the economy is improving, hence, stocks deserve to be where theyre at, of course the economys improving. But the issue isnt that stocks should go up when theres an improving economy. We know that. The issue is have they overimimproved based on what the fed is doing . Illi i will continue to say the market is looking for more growth in buybacks. All this easy money created a dynamic where the supplies of stocks is more important than the fundamentals. The real yik issue will be once the taper is there for all to see, what are stocks going to do . I can tell you what Interest Rates are going to do. Stocks are the question. Its a great point on buybacks. I want to push back on something. It comes out of japan today. Its this notion that a lot of the japanese are looking at u. S. Debt here and saying i can get a great yield but i cant get it home where real yields are negative. Im going to pile into the long end because there isnt Inflationary Pressure in the u. S. For now. Why is it some of these forecasts from a minutes beneficiaricy, the u. S. Tenyear will be at 2. 4 next year, what have they got wrong . Japanese got everything late. The line from greenspan, irrational exuberance. That was in 9 6. He said its been ten years since anythings gone right for them. That was in 96. Look at the dollar yen the euro yen, the pound yen and the tenyear and what its starting to do move up a bit. I think theres a lot of danger with the outcome of abenomics. He says he thinks the economic recovery is sustainable in your region. Were here with a strong jobs report. Are we looking at stronger economy and is that the time to start selling stocks here . Are we going to sell on the news, do you think . Actually, the biggest divergence were seeing is this talk about winding down support in the u. S. Whereas they are starting to come out rumors that in europe theyre considering Additional Support, additional lending schemes for banks. That shows a sharp contrast. Its not necessarily growth is substantially picking up because its so weak in the european area but its more a case if you have Additional Support will that boost sentiment. From ricks point about sentiment overshadowing fundamentals sometimes this could provide another boost Going Forward to stocks in different equity names, especially as i said in the Financial Sector when actually the economy itself has significant potholes they need to overcome. An important reminder whatever the fed might not be doing, perhaps the European Central bank picks up stimulus from here. Well see. Thank you. Thank you for staying late gemma, as always. 50 minutes left in the trading session here. Really the bias is a wash at this point, according to art cashin. The dow is up 15 points, adding onto that monster rally whoa saw on friday. Last week the theme was selloff into the close. Today we seem to be sitting around the levels where weve been all day. Coming up next well take the pulse of the consumer this Holiday Shopping season. Well speak to estee lauder chairman, william lauder. Well introduce to you a conservative republican businessman who wants to raise californias minimum wage to 12 an hour and he says it would save taxpayers money in the process. Hell explain his reasoning coming up. And will this years dogs of the dow be the darlings of your portfolio in 2014 . It has been a winning trend over the last couple of years. So stick around to see if it will work out this time. What are the names to avoid for next year as well . Coming your way. I want to spread a little love this year [ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. Some of the best offers of the year. This is the pursuit of perfection. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. As markets try to build on fridays big gain dominic chu has stocks making big moves today. The deal news of the day. Cisco, the food company, announcing its merging with u. S. Foods in a deal worth 3. 5 billion, sent shares of cisco soaring and still up 7 on this news. Given imaging is spiking more than 26 after kavidian said its buying it. They make pills that take photo inside your body. Another stock popping, twitter, up more than 9 session highs. Some investors are expressing optimism about the new tools for advertising and advertisers. One other stock showing healthy momentum going into the Holiday Season is estee lauder. This is the sometime of year when consumers flock to cosmetic counters for holiday gifts. Will all of that holiday traffic translate into profits for the perfume producer . Back to you. We are just two weeks and two days away from christmas. Kelly and i have not begun shopping yet. After a somewhat disappointing black friday for retailers, were wondering what companies have done to try and drive sales in what is a very competitive shopping season. Lets check in on the consumer with william lauder. Thank you. People want to know how is it cosmetics are doing so well, whether its you, rivals. Do you look at it as a cycle or a sign that the consumer is in a better position than 2008 . I would like to say the consumer is in a better position than 2008 but thats a relatively low standard. Its a very approachable indulgent luxury for yourself. The consumer shopping, one for mom, one for me. One for dad, one for me. The price point is easy and we can afford that and we try to make it easy for her because of the price points we offer, the service we offer, the convenience we offer. All those make it very easy for her. And the benefit of a brand as well, obviously. Your grandmothers name just jumps out at people when they see that on a counter. Do you try to leverage that . I hear so often a company like yours will want to be a, quote, lifestyle brand beyond just cosmetics, to use that brand to further the consumer. Estee lauder a family of 30 brands. One of the most well known is estee but donna karan, mac, bobby brown, clinique. The consumer likes to buy multiple brands. Im sure kelly has a whole drawer, and your wife, too, a whole drawer of products shes partially used and try again. We try to use the credibility of our brands to bring consumers to the counter. We show you what she thinks she wants but those things she didnt knew she wanted. We try to make sure were prepared for her desire to buy gifts, for others and perhaps for herself. As we get closer and closer to the Christmas Period the consumer gets a little more desperate, a little more anxious. What have you got . We make sure we have prepared gifts as well as wrapping things for them right then and there. The first point about price points because this reveals whats happening in this country more broadly. Pp when i think of cosmetics, its mac cosmetics. To me, if youre spending 30 on a lipstick or blush or single items, that adds up quickly to the hundreds of dollars. Sad but true. Its affordable to say, a pair of 500 shoes but it does still mean your Customer Base and this may explain why your sales are so strong is, frankly a higher income customer. Youre right. Weve seen a trend over the last few years, since 2008 of a movement from the consumer en masse to class. Shes moving from blister pack pegboard master brand shopping in other venues and moving into retail environments like macys like nordstrom, because one of the values we offer her is service. The Service Aspect is very important because the absolute value price differential between the top end of mass pricing and the opening end of prestige is not very much. Research weve be done shows, for example, we reduced consumers concern about a choice when i think about service, i think about people jumping in your face and waving perfume at the counter. You used mac, for example. Makeup artist show you the right techniques. In the store. At the store. Macys at estee will help you find the right shades for your skin and help match it for you. When you realize, that Service Aspect helps confirm for the consumer shes made the right choice the expert has helped her make the right choice for herself or someone else and that Value Proposition is worth something to her because shes confident and she doesnt have to do it again. And you have a great relationship with a lot of makeup artists at a time when the proliferation of content means demand for makeup is going to be pretty strong. Absolutely. We see great demand for our makeup, skin care makeup, and fragrance. This year is heavier for fragrance, traditionally but during the rest of the year makeup and skin care make up a bigger percentage of it. People want to look good, feel good and smell good. I may wear makeup but i know nothing about it so i leave that to her. But im focused on brand. How does it translate overseas . Is it american aspirational for a company like yours that people are drawn to or can you tailor a name like yours to focus on the asian mind set or european mind set at the same time . Im glad you asked that question. A lot of what we do is we think local, act global. So by giving the consumer especially in asia, a global brand, aspirational products relevant for her needs, relevant to her, especially in asia where the consumer is very particular about what she wants and we found that our one of the big engines for our growth over the last few years has been our focus on that asian consumer predominantly in skin care giving her what she wants. Surprising her for what she didnt know she wants 37 making sure its tailored to her needs. Then shes shopping for that same brand around the world. And the halo effect is she sees the brand at home but while shes traveling and theres ever more traveling asian consumers, as she travels, she buys. And then one other important factor. The average western consumer american and western european uses an average of five or six products in the morning and the evening for her beauty routine. The average asian consumer uses 12. Really . Wow. So i guess youre hoping that does converge. Very quickly, how is the consumer doing . Lets focus on the u. S. Because thats where we are. The evidence of what we see, she seems to be doing pretty well. The numbers seem to be holding up. You know, theres a lot of confusion because six fewer days shopping days between thanksgiving and christmas. All the numbers we hear from Retail Partners seem to be pretty good. And the transactions are pretty much falling in line with what we expect. A little bumpy ngs because of weather, whatnot. No one is saying this is the best or no one is saying gee, are we concerned. Twoplus weeks to go. Its early. We havent started shopping yet ourselves. I wait until christmas eve. Shop early and shop often. Thank you very much. Appreciate it. One more check of markets before we take a short break. Dow is adding 15 points. S p 500, the nasdaq are also up by a couple. Twitter is one to keep an eye on as that flirts with the 50 mark. Up 10 . Big move. Stocks generally building on fridays momentum from that huge rally. When we come back our buddy vanguard founder jack bogle will tell us how much more room he feels this market can rally. Did you know jacks own son prefers active investing compared to index investing, which his father pretty much invented . Great story. They also may be making investors howl this year but next year we have names of underperforming s p 500 and dow stocks that could be heading out of the dog house and into the Winners Circle next year. [ 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. 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The rebound driven by signs of a recovery in the Housing Market as well as better than expected earnings. On the other hand, best buy, hewlettpackard, pitny bowes were among the worst but hp and pb were darlings. Now among the dogs this year cliffs natural, Peabody Energy and mining. There is some doubt on the street where this dog to darling trend will continue. Seema, thanks very much. Stay right there. We want to talk about the dogs of the dow and bring in john from 24 7 wall streeting, here with his top contenders to be on that list in 20 14. Welcome. Thank you. Thank you for having me. Lets start just straight off the bat. What are your picks for 240 20 14 that are the dogs of the dow today . Its just a dividend methodology. Thats at t verizon, intel and mcdonalds are in the top four. Youve also got merck in there, actually, ahead of mcdonalds, but these are theyre just traditional high dividend stocks. I took a lot right before i came up, and believe it or not, the dogs of the dow did actually keep up with the s p this year in performance at least very close to it, which im very surprised about, considering how strong the bull markets been. And you think ge could be in there. I mean, theyre expected to raise their dividend as theyve been doing lately. That could make the list at some point, too, right . They i mean theyre going to raise their dividend. It will be any day. For all i know they did it in between the time they were miking me up for the show. They wont talk about that at ge. Thats probably going to make it if they raise their dividends to what i think they will, which is just about 8 then theyll probably be in there. You know whats interesting about that is that a lot of these winners that jon is pointing out are actually up double digits this year. That goes from what im hearing from market strategists that i spoke to. Many see winning sectors will continue to outperform in 2014. Health care is an example i was told. The best performing sector over the past three years. You would think at some point Money Managers would lock in their gains. I think whats happening is the fundamental story is still so attractive for that story. Thats why you still see money being put into that into those names. Jon i want to make sure i didnt confuse things here. The premise that were talking about for 2014 is to take the underperformers from 2013 and they might do better. I think what youre saying is the opposite of what i had asked. Which is that what youre predicting the dogs for next year, right . These dividend names are you ones you think will do poorly . The dogs of the dow are the highest dividend yields. I tried to do something last year called the pigs of the dow, which were the worst performers. Thats those are entirely different. That year if you looked at worst performers for 2013, ibm is in there. I have a hard time getting excited about ibm. Hewlettpackard was the worst performer in the dow last year of components. If it remained in the dow this year its been taken out in the meantime, but up to that point it was the best performer. I remember two years ago mcdonalds was the worst performer inside the dow. And last year it was the best performer. I think thats what weve been getting at at this point. Correct. Youre absolutely right, bill sometimes the worst performers end up being the best gainers. Id probably be more inclined to throw a hail mary on caterpillar than ibm. Its an internal operating metric. Ibms biggest story they have is their buyback. Outside of, that theyve got nothing. How true is that for so Many Companies here. Jon, seema, response here . Yeah. This will be the big question going into 2014. I think as well as the fact we are seeing so many sectors all ten s p sectors are up . Where can you put money to work . You would think they go into high growth sectors like technologies. Jon, good to see you. Thank you for joining us. Thank you. Byebye. Heading toward the close. 30 minutes to the close. Slight bias to the downside but not much. If we sit here long enough maybe well turn neckgative on the dow. What is wall streets most famous investors think about this market . Well ask him. John bogle is here next. George clooney lending his support to ukraines prounion protesters. Let me say that this to all of you in the square in kiev all around ukraine. When you look to the west know we are looking back at you with great admiration. Those same protesters hes talking about just tore down a statue of the first leader of the soviet union. Of course vladimir lenin. For some reason was Still Standing more than 20 years after that communist nation dissolved. 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Your money needs an ally. Oil and gasoline prices have been on the rise. Sharron epperson at the nymex. One spread has been between brent crude. A lot has to do with the fact the brent market is well supplied and hasnt been as much demand from european marketers. It also has to do with what weve seen in the u. S. Market. Weve seen a big jump from 4 last week. That has a lot to do with pipeline developments on Gulf Coast Pipeline owned by transcanada. Today they said they started filling that pipeline 700,000 barrels will be filled from cushing, oklahoma to the coasts. Thats something supporting the u. S. Oil price. As weve seen gains there over the last week or so weve seen gains in gasoline prices. Wholesale gasoline or the futures at nymex are up 5 in the past month. That is translated to higher prices at the pump. Were up about six cents or so for the National Average in the last month, 3. 26 a gallon. Back to you. Thank you, sharon. Its been a big year for index fund managers. Probably the most famous index people can invest in or want to. The s p 500 is up 26 this year. We still have a couple weeks to go. On top of that even bond king bill gross has been paying homage to index investing singing praises to jack bogle just here on closing bell. The market not being able to outperform itself. We know common sensicly, we know thats true. So should you stick with those index funds for 20 14 . Vanguards jack bogle joins us now to weigh in. Jack, i imagine youre taking a victory lap here for the passive investing view. Ive been around too long to take victory laps. Times change. Bill knows that. You taught me well. Victory laps a little arrogant for me. Im content with what were doing here in 20 13. Obviously content with the way the index funds have performed. But theyre not doing were not creating any miracles here. All were doing is giving you your fair share of the market return. And thats what all investors as a group are doing. Active Money Managers except they take such a huge hunk out of it. As a group, they cannot win. Mr. B. What do you say to those im lobbing you a softball but an important point to make. When they say the world is too complicated with all the different trading mechanisms that are out there, the high speed trading, the computerized trading and so forth, the buy and hold strategy doesnt work anymore and certainly you dont want to go with index investing. You need to be paying more attention to your portfolio with an active manager of some kind. What do you say to those folks . No no and no is what i say to them. Think about this for a minute. All the active managers are a giant index fund. They all only index as a group. 100 of the Market Participants own 100 of the market. Theyve got this little piece of that pie, about 30 of it in fact. Indexes by owning all of those stocks and the other 70 as a group own all those stocks but they trade them back and forth with one another. So, they have to lose. They take too much money out. Yes, there are some good managers periodically. Certainly, there are. They come and go. Its very hard to pick them in advance. The conventional way we do it in the Hedge Fund Business is in the past. Thats a terrible guide for the future. Absolutely. Jack, i mean to add insult to injury, a lot of the funds invested in some of these active managers are Pension Funds. You know in other words, its a double whammy. I wonder what you would say and how you get that message out. Its almost less Retail Investor youre trying to reach out to here and more big institutional funds that keep channelling money the way of the active managers. The Retail Investors are actually pretty close. Mutual fund market is 30 . But there are a lot of Pension Funds. I think particularly the state and local Pension Funds who are swayed by these promises of great returns from hedge sxrurnz theyre not getting them. Montgomery county where i live in pennsylvania just switched. Theyve had enough experience with trying to pick active managers. They switched almost half a billion dollars, entire pension port foal dwroe, into largely Vanguard Index funds. Thats the correct mathematical thing to do. It wasnt a tough sale. We talked about this before but it bears repeating because the story advances. Whats important right now, how much does quantitative easing play into an Investment Strategy right now . We hear from so many Investment Advisers who come through here who are still enamored of the stock market to a great degree because the fed is still pumping 85 billion into the economy every single month. Its not as much about the fundamentals, per se its more about the easy money policy and for how much longer its going to last. Is that a strategy you would espouse . I realize youre a classic Value Investor here to keep indexing but this is a stellar year as the fed pumps money into the system. No question about all that. One thing i would tell those who are saying were scared because of whats going to happen next when it happens, its basically in the market today. The market expects, Market Participants stock Market Participants and bond Market Participants, both expect this market to begin. A consensus, it would certainly and maybe into the end first quarter. If things work out all right. Inflation rate is too low to suit the fed. As they return to their a little more longterm reality, the tapering will begin. The fed has gone from 1 trillion to 5 trillion in this buying program. That cant go on forever. Great economist to richard nexten, herb stein said it wont go on forever. It will stop. Its hard enough to win the retail guy over but you struggle sometimes, even your son moved to the passive world. I dont know if win over. He said in the wall street journal article, he invests in index for his children. He started with a fairly conservative hedge fund or actually Small Cap Mutual Fund is what im talking about, bogle Small Cap Growth Fund i put a little starter money in there. I dont think its time to be doctoring air. Someone said i wasnt be consistent by doing that. I said life is not consistent. Do what you think is right and enjoy it. And family first. Oh, by the way. Yeah it doesnt hurt. Thanks, jack. Good to see you. Merry christmas. Good to be with you, bill and kelly. Really appreciate it. While we were talking we turned negative briefly. Art cashin pointing out the bias is to the down side. Were virtually unchanged with 18 minutes left. A couple points high other the s p 500. The nas dashgs too, perhaps held by the fact twitter is up double digits at some points of the day, flirting with 50 mark the same as the intraday high. Despite a barrage of naysayers it would soon fall into the 30s no it turned around today. Barclays head of research joining us with his outlook for 2014. After the bell, the rubber hitting the road for polaris entries. The stock is riding high. The ceo joins us to share how hes revved up the company and we have a financed look. 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. In clinical trials, most adults with moderate to Severe Plaque Psoriasis saw 75 skin clearance. And the majority of people were clear or almost clear in just 4 months. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma or other types of cancer have happened. 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Larry cantor of barkley says investors should be wary of a greater than expected pick up in the u. S. Economy. You dont want things to overheat. Is that likely, though to happen next year . I think theres a good case for it. Really . In fact i think if you dont see a pick up in the u. S. Economy going into 2014, youre not going to see it in this cycle. The two big things are a lot less fiscal headwind is number one. We had nearly two Percentage Points of tightening. Two Percentage Points of gdp and, you know, tax hikes and spending cuts last year. Previous two years was local. This year less than half a percent. We make it smaller spending cuts. Last is Household Wealth. Increased again in the Third Quarter by almost 2 trillion. At the depths of the recession, it was neutral. Now theyre both going up double digit. Thats going to add well over a percentage point to Consumer Spending. This is the time when growth should pick up. As you said this is also an important time for a couple of reasons because the hope is that cycle starts the broader, more sustainable, more widespread move that helps people get off jobless benefits as they run out. All of these extreme mers prosecute expiring so this has to be the year we see that pick up. Food stamps and all of it. Right. Other things have been expiring before like the big fiscal stimulus package. A lot of that has come off already. It may not be great for investors. If you think about this past year, what happened . We didnt have a great recovery. We had lower than expected inflation inflation, and more monetary support than people expected. The fed did it the entire year of qe3, they didnt taper at all. That would be a Good Environment for bonds, right . Low inflation. And bonds collapse and yields soared. You still see tapering the threat of tapering triggered it but there was a bubble in fixed income. Come on how is it a bubble . In fixed income. We had no business being at 10 1 2 yields at 1. 5 . The economy didnt look like it was growing more than it should run nominal gdp. It was too low. One thing we look at this sounds complicated, but fiveyear rates five years out. Real rates on that this is long term. Were about 2 for a decade. They fell below zero before the tapering took. Now theyre back up there. So the long end has adjusted to tapering, so its the short end in the middle of the curve thats vulnerable. I think fixed income probably sells off more. Im running out of time. What will be your best sector next year to invest in . We still like tech and industries in the u. S. We think the windows still open even though its narrowing because the stock market has come a long way. We are favoring. We have a manufacturing renaissance. Trades doing better. Emerging markets should do better. Europe its still very weak broet but they were in recession. Now theyre out. And earnings expectations really havent adjusted. We think theyll do better. Maybe cat biller will do well. Like the theme cropping up. Still makes me nervous. But you promise stock investors arent rooting against real people here . Im not saying look. All im saying is this environment has been a bonanza for investors. Huge fed support. Thats not going to last forever. Thanks larry. Appreciate it. Heading toward the close, about ten minutes left in the trading session. Dow coming back a little bit. Lets not make too much of it. Up 12 points. Thats right. I think you just summed it up. The battle over the minimum wage increase taking a strange turn now as conservative Silicon Valley advocating minimum wage to 12. Hes here to explain why this move will save taxpayers money. Impact wool exports from new zealand, textile production in spain, and the use of medical technology 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. In a world thats changing faster than ever we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through we say lets get to work. Because the future belongs to those who challenge the present. Seven minutes left. Fourpoint gain on the dow. Bob, if we dont have minister s p 500, were at new highs. Were ready to close near a new high. You didnt take much to do that. Its a 50point range in the dow, very narrow. A very points every day. Eventually you start closing at new highs every day and technicians will get more enthusiasm. I know its not exciting but nasdaq at 13year high again today. You say, it doesnt take long to get there. Were still advancing. If you look at the market leaders, cyclical groups are all Strong Technology stocks industrial stocks are all the ones moving. Look 1808 gets us near a new high on the s p 500. Weve had trouble get over 1800. We kept saying there was a barrier. Now were over it and everyone says, who cares . I think a few points every day is a significant move. Technicians will squawk about it. Oil stocks cant we had a major snowstorm over the weekend. Natural gas is up 2 . The e p stocks keep dropping. Theyre down about 10 in the last month and a half because were oversupplied with oil here in the u. S. These companies now are very concerned about whats going to happen in 2014. Are they going to continue to drill. That looks so often. Look at mining stocks. So its happening on the Energy Stocks now. Nobody is talking about the fed meeting possibility of tapering. We had a lot of fed speak this week. Look today. Fisher is out again. We know what he thinks. The rest of them you know could have some say in this whole thing are saying well talk about it. But i dont no not in december. But i think january is now becoming increasingly likely. Its a real issue about, some people are arguing we could withstand a taper. The bulls are getting a little more aggressive on that front. Im not sure. Ill take a few points a day. Now were flat on the day. The s p up there. We still have 4 30. Plenty of time. Well come back with closing countdown for monday. If you wish you were riding a big twowheeler, stay with us because the ceo of Polaris Industries will join us to talk about how his stock is zooming and indian cycle brand. 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To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision or if you have any allergic reactions such as rash, hives, swelling of the lips tongue or throat or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Honestly . No way did i think a tablet was gonna be a good deal. Youre talking to the guy who hasnt approved a new stapler purchase in three years. But then i saw the new windows tablet, with a real keyboard, usb port and full office. Its a tablet that works for work. Plus, its got apps and games for after hours, of course. Compared to an ipad way more value. These tablets are such a steal; i couldnt find a reason not to buy them. Honestly i wanna see you be brave [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Last 90 seconds its been a side ways day. Zigs and zags. No followthrough for the bulls, 200point rally of friday but no selloff for bears either. One standout, twitter approaching 50. There we are, up 9. 25 . At 49 a share, trying to make way higher. Those on satellite radio, this is peter costa im talking to even though he doesnt sound like it. We had the big rally friday. No followthrough today. We didnt get a follow through which tends you to believe it wasnt that realistic. Were going to be very very sideways motion for the next two months. Because its december or december you know small caps are doing well but big caps are going to be waffling. I dont see any major moves coming until you get earnings. Fed meets december 18th. A pop and selloff. Once thats done its going right back into this same narrow trading band. Thats what its going to do. Weve had a great year. Why ruin it . Exactly. Hot tea and lemon, try that. That will work. Peter costa. Thanks for joining us this first hour. Going out virtually unchanged here. The s p going up about three points. Nasdaq with 13year high. Stay tuned for the second hour of closing bell with an allstar panel. Ill see you tomorrow. Welcome to the closing bell. Stocks managed just to hang on into the close. Lets start with a recap. Numbers continue to trickle in. Looks like the dow will add eight points so 16,028 is the level there. Nasdaq up about six. And the s p 500 both adding 0. 2 . 4,068 and 1808 are the numbers respectively respectively. Lets get straight to it with todays closing bell panel. Joining me now, our own robert frank, cnbc contributor, and howard dean down here on the floor of the stock exchange. We love you for it. Lets start off, i guess, robert with talking about one of the biggest heaes tn the i dont know if people have focused enough on this. Every quarter the Federal Reserve comes out with basically a calculation of how much households in the u. S. Are worth. We found out, what 77 trillion, thats what a rebounding stock market will help do for you this year. As a whole, Household Wealth in america has hit an alltime high. Increased 1. 9 trillion. Whats amazing about this number is that 1. 5 trillion of the 1. 9 trillion was in Financial Assets. Then when you consider that the top 10 of americans owned 80 of the Financial Assets in this stocks top 10 of households in the country own 80 of the stocks. Correct. And top 10 own more half Financial Assets. Not that this was the intention of the fed or washington, but this has had a redistributive effect where the top has gained from the higher increase in Financial Assets versus houses. Houses also gained. But lets stay with the market for one second. Michael, how many of these are your clients . I think probably all of my clients would qualify. Whats been the average equity aloelocationallocation, 50 . Over 50 , certainly. Thats the norm for most of my clients. Going back to bobs point, that was the intention. They had to swell and get some growth somewhere in the economy. Thats what the Federal Reserve had to do. They got it where they could get it which is creating this kind of a problem of a plutonomy where you have wealth in very few hands. More distribution is better for the economy. This is why this remark about 2014, larry cantor just said this a few minutes ago, he said if any year is going to be the year the u. S. Economy could outperform it might be 2014. I think we should say, governor that it almost has to be 2014. We need to see that priming of the purpose, whatever you want to call it really broaden out to disposable income gains. I think thats true. I think bernanke has done an incredible job when you see whats happening in europe to have the chairman of the fed, very fortuitous. I dont begrudge the fact we picked up on the wrong people that didnt need it and got the money people will say, the wrong people. Well the people who didnt need it got the money. Right. Because i think what he was trying to do is avoid what happened in japan, which is an inflationary crisis. The problem now is challenge, how do you figure how do you get the rest of the 90 . Its much tougher problem than people think because the real problem is housing. If you look at the Housing Market, the same people that owned the Housing Market have not come back and a whole lot less people in houses if the president came to you today and said governor i think i can do one policy thing to try and make this economy better for everyone in 2014. If i could only do one . If i could only do one, it would be . I think at this point i would raise the minimum wage significantly. I know a lot of people on wall street get nervous because they think theyre going to price labor. Labor has already been priced in a very different way. Essentially the collapse not the collapse. Thats a little dramatic. The substantial downgrading of unions have lowered wages. Bottom 20 has not the recession didnt help that. No, it hurt. Labor is not the force it was. So, if you want to give people a decent working wage, youre going to have to and minimum wage is nothing like what labor was getting but have you to have some kind of minimum wage. I want to get lindseys voice in here because were hurting on a couple things im sure you have a view on. Is minimum wage moving at the right place . On the surface, obviously, the easiest argument to standard of living for low skilled worker is to increase the minimum wage. That type of policy does the exact opposite. When you start to increase the minimum wage artificially what the market would otherwise price as appropriate minimum wage businesses are forced to squeeze out employees because employers are unable to support or afford that current level of employment. So, what we actually see i hear you. Let me just say the argument if you broaden out that point, not from an employers point of view but Society Point of view if we have people that cant put together a living on 7 an hour who, you recall then need government transfer payments, and this is where well talk to someone who has a proposal to raise the minimum wage in california for this reason there is going to be a sort of Taxpayer Burden anyway. So, what about from that point of view . If we look at whats happened over the past decade and a half the minimum wage was raised to over 4 in 1996 and weve had five subsequent increases since. Low skilled unemployment has risen from 16 to over 25 . Clearly, the minimum wage in these types of recurring policies are not fixing the situation. Were going to get more into the minimum wage. I want to bring in fast moneys brian kelly. I hope i can ask you off the bat, what happened with twitter today . You know this is one of those stocks that is just all momentum. 40 seemed to be support for this. Everyone guy adami talked about it last week where he said, everyone thinks its going lower so it must be going higher. Thats exactly what happened here. I still think it goes higher. We closed for people who cant see the chart, its up 9 . 49. 24. High when it went public was just over 50 on that day. Was it this just a twitterspecific story or are we seeing halo effect for social media . Twitter itself everyone was expecting it to do a facebook, take a nose dive. I think thats why youre seeing this outpaced move here in twitter. In terms of social media in general, the winners are the ones that allow their users to monetize their experience. So Something Like a linkedin. People can monetize the use of that. Facebook up 2 . Yelp up almost 1 . Today specifically the Natural Resource sector f you look at whats going on in china, better news there. When you look at markets at alltime highs, where do you want to be . Underperformers. Materials in telecom, for the first time in a long time were the leaders of the market. I want to turn this back around. Lindsey, if were talking about some of these sectors where high dif densd, people are nervous about the fed and rates moving higher, is that a move where all of a sudden they have to worry where were going significantly higher, dragging on expectations as to what they can expect from Dividend Income . I think the fact were seeing market little changed is the market is still trying to digest what fridays nonfarm payroll report meant. It was stronger, beating consensus expectations but not Strong Enough to force the feds hand at the upcoming fmoc meeting. Its likely we see accommodative policy well through the yellen takeover of the chairmanship in march. While theres growing concern seal see ratsz rise to the moon is really unrealistic at this point. If you take the improvement in the labor market juxtaposed to underlying fundamentals a Consumer Sector that continues to lose momentum and threedecade low in the participation rate. Its unlikely we see any upward movement in rates soon. I think we have to look basically we have a positive trend. Numbers are getting a little better which i find encouraging. Yes, i look at the disparity between you three and you six, which in im sorry, jargon. Unemployment rate who has parttime workers not by choice and those who havent looked for a job in the past year. That is a much larger number. Still theyre all Unemployment Rate on all those are creeping lower. That trends positive. I take that as encouraging. Whether or not that moves the tenyear before the fend fed sfwendz intends it to remains an open question. Lindsey, stay with us. Brian, we can kauch on fast money at 5 p. M. Coming up, a Battle Royale in the works. Banks in one corner and regulators trying to rein in risky bets on the volcker rule. Plus, hot bikes hot stock, apparently. Polaris industry ceo will speak with us exclusively about what heating up the bike makers stock. Youre looking at a live shot of the motorcycle. The Company Stock up 60 this year. Whats in its plans to keep racing higher . Well ask the ceo coming up on the closing bell. [ male announcer ] if we could see energy. What would we see . The billions of gallons of fuel that get us to work. Wed see all the electricity flowing through the devices that connect us and teach us. Wed see that almost 100 of medical plastics are made from oil and natural gas. And an industry that supports almost 10 million american jobs. Life takes energy. And no one applies more technology to produce American Energy and refine it more efficiently than exxonmobil. Because using energy responsibly has never been more important. Energy lives here. Welcome back. The rally might have been small but the s p 500 still building on fridays begin. Dominic chu rounding up the big movers. Lets talk about pvh, down more than 4 in the after hours trade. The textile and apparel maker reported earnings and rev rove news that beat expectations. Full guidance came in a little light, helping to push the stock down. The ceo says the current Holiday Season will be very competitive and theyll spend a lot on promotions. Twitter share seeing a big pop. They hit the highest level since the ipo days soaring more than 9 . Investors liked some advertising tools. Abercrombie fitch fell after announcing contract extension of ceo. They put out a scathing report. Lets talk about food. Ruby tuesday shares jumped 10 . Reportedly hiring Goldman Sachs to explore strategic options, maybe a possible buyout according to debt wire. Kraft foods, bank raised price target to 60 bucks a share. Maybe a little more room to run there. Thank you. Now, five federal agencieses will vote tomorrow on a new rule intended to prevent risky trading by banks, namely trading with their own money, opposed to customer funds, known as volcker rule and required by dodd frank legislation that grew out of the financial crisis. Financial policy advocate at Public Citizen saying banks using their own money is gambling with funds ultimately guaranteed by taxpayers. Mark Founding Partner at lopressi group saying things are overburdened by regulation. Thank you for being here. Thank you, kelly. Mark i want to start with you. Do you think its likely were starting to hear signs lawyers will challenge volcker rule basically the second the ink is dry on it this week. Thats certainly what were hearing from washington right now. There are three basic legal challenges mounted to the rule. One of which, most interestingly in my opinion is that it contradicts a lot of what dodd frank was intended to do and i actually agree with that. Can you explain that . What do you mean contradicts . One thing dodd frank was intended to do broadly speaking, was to increase market transparency, was to have the government get a better handle on macro factors and things that move markets like High Frequency trading. While the volcker rule has yet to go into effect, the banks have by and large seen a max exodus of proprietary trading desk as way from the heavily regulated bank world into the more thinly regulateded or some might argue less effectively regulated, more opaque world of independents proprietary trading. I think that has had the absolute opposite effect of what was intended by dodd frank. Its a fascinating point, right . If you clamp down on one place, this is like whackamole where it pops up somewhere else and does that undermine the original intent of the regulation . Section 619 of dodd frank is remove the subsidy with highrisk gambling. With fdic insured deposits. Thats the intent. Banks make 44 million a year by doing that and forprofit will take place outside government regulated money. The rule as its currently expected to be implemented, goes far more is far more overreaching. What market where the line gets drawn. We understand customer money shouldnt be used for gambling and speculation. Certainly the mf global and other unfortunate incidents like that have taught us that lesson. Mark your first point is the problem is that it contradicts dodd frank but you acknowledged barths point that no it doesnt because it moves it to someplace that doesnt imply that taxpayer guarantee is legitimate. Whats the concern here . We have to make sure we understand kelly, is that as it relates to customer money, theres no question that the provisions of the volcker rule are appropriate. It should not go so far to restrict the banks activity with the banks own money. Its a critical distinction. First of all, mf global has nothing to do with this. Let me be clear for viewers. This is an important point that eventually could trip up the whole thing. To what extent if youre trying to clamp down on banks making a risky bet with ultimately taxpayer money are you ever going to really be able to know whether, say, Something Like a quote unquote, hedge in jpmorgans London Office turns out to be much more than a hedge . Theres a simple thing can you do with the jpmorgan case. You could ask what the cdxix was hedging. In fact, that simple question was asked by an investigator and jpmorgan said, wellbeing actually, we dont have a thing. It was not a hedge. Jpmorgan lets look at context. Biggest company on the planet. 1. 3 trillion in deposits 108 billion in loans with balance they were gambling. Chief Investment Officer using the london desk making bets. Before the london whale fiasco they made money, on the bankruptcy of american airlines. How far weve come that thats somehow a profitable thing. To the point, if this legislation has to stamp out the kind of activity you know its meant to without going too far, do you think weve struck the right balance here . Whoa will strike the right balance when we get banks back to doing boring things like making loans. We did better when fdic banks were final point to you, marc. You know i know bart has gone on record suggesting we should go back to glass steagall. I would say thats really preposterous. Were in a different world today. Banks need to be able to engage in proprietary trading with their own capacity. What well see as a result sthf rule f its implemented, is Significant Impact to Bank Earnings and a direct exact on main street sgi dont main. I dont think american policy is maximized to i think we have policy to serve main street. I appreciate maybe banks Goldman Sachs isnt going to make as much money or jpmorgan wont make as much money but what serves main street not wall street. I dont disagree. I think youll see an impact as it relates to main streets cost of borrowing as banks earnings go down and banks are unable to properly hedge on proprietary basis the other side of the trend when they lend. They shouldnt be trading. They should be lending. Jpmorgan should use that excess 300 billion in sdpofrts and make loans not bets. Guys its look at least its been illuminated as far as im concerned. I dont know if that will keep the challenges from taking place as we continue to see that rule finalized this week but well watch and see what happens. Thank you for your points of view on that this afternoon. Appreciate it. Thank you, kelly. Coming up trouble in ukraine. Up next protesters toppleing a statue of vladimir lenin. Well have more details on the explosive situation there. What it could mean for emerging market investments. Were aig. And were here. 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. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. Hi honey, did you get the toaster cozy . Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. 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. Welcome back with breaking news on General Motors. Steve liesman with details back at headquarters. Its over. Treasurys investment in General Motors is done. They have renouncing the sale of their last shares of General Motors. Something that began under the t. A. R. P. Program. Part of that controversial auto bailout. And the final tallying is the taxpayers have recouped 39 billion of a 49 billion investment. Total for the t. A. R. P. Is a 4 32 billion return on 421 billion invested. Theyre announcing, kelly, the final sale of gm stock that was held by the Treasury Department as a result of the 49 billion bailout. And walking away with a 10 billion loss. Of course the treasury secretary touting 370,000 auto jobs saved as a result of the bailout. Stay there. Just to run the numbers, sounds like a 10 billion loss on the gm investment specifically but more broadly, steve, youre telling me that this is about 11 billion gain on the t. A. R. P. Party foal yoe . Yes. Actually 10. 9 billion. I know you like to be precise. Thats interest. Gm shares are up 0. 4 this hour. This wasnt necessarily a huge surprise. There was rumor of the treasury moving to get rid of the rest of its holding toward the end of the year. When youre up there much more gm or the market more broadly, now is the time to do it. 10 billion within range. My question s why didnt they just hold on until next year until they could tell the taxpayer we made a profit on this . Were in the black rather than taking a loss. On the other hand, i wonder whether this is a Little Signal that treasury thinks were at a market peak. Theres an overhang too. Canadians have a huge piece they havent gotten rid of. They have to think you want to be first. Yeah. That may be depending on what you think is going to happen to the car industry. Dont think anybody thinks the government should be in speculation of the car industry business. Were splitting hairs hang on. The treasury has said it was not going to be in the market timing business. And laid out a pretty regular schedule for selling it. Thats one thing that treasuries in all administrations, selling bonds or stocks or anything theyre involved is not gaming the market. I think thats why they sold these right here. We ought to be singing the hallelujah core russhorus. This is fabulous for every american listening. The government stepped in. Bailed out huge industry. On top of the banks and everything else. They ended up with a product, who would have bet on that when they were going through it and they saved us. I mean really, they got us through one of the deepest recessions if not could have been one of the worst depressions weve ever had. This is government actually stepping in and being effective. This is terrific. Some would say ford didnt have a bailout and doing just fine. Much worse dent position. Lindsey . This is still a 10 billion loss on the taxpayers back. The government sloughs that off and says we saved 390,000 manufacturing jobs. The government is not in the business of save organize creating jobs. Thats a private sector industry. Thats the disconnect we continue to see with this administration. Continuing to move and take over larger amounts of the free market which is very discerning as we go forward. Something im going to agree with michael on. I think the left and right are wrong about the t. A. R. P. Nobody likes to bail out banks and free enterprise. The truth is we dont do the t. A. R. P. , were not sitting here today. Because half of the people in this room are broke. We just cant do that. I want to come in between michael and lindsey on this. You know very much what governor dean said. Nobodys proud of this. You dont want to say, hallelujah, the government came in because nobody wanted that to happen. They came in they were able to save jobs, do it at minimal cost. You should be reasonably proud of how the treasury managed the t. A. R. P. With a slight profit. It could have been a slight loss. What you want to make sure year in a situation, key to policy Going Forward, where youre not in these situations. Where the government doesnt have to come in but then lindsey, go ahead. How about you say that again. Keep the government from perpetuateing this Going Forward . How do we control the government from not backstopping every time theres the public was not happy about this. Clearly, Public Opinion did not have much influence in the governments intervention in t. A. R. P. There is a lot of influence, lindsey. Can you find it in the people who do not have jobs any longer who were in congress that voted for t. A. R. P. The public has spoken in a big way in that regard, lindsey. I believe both current law in dodd frank and what happened to these people who were elected officials who are no longer elected will play a big role in stopping the next bailout. Michael . I agree with lindsey. We dont want government in this role, period. But when we do have a very real situation that looks like too big to fail across banks and other industries we go through what we went through, the result really wasnt that bad. I dont think goth should be in this role and i dont think weve done anything to fix it. The banks are bigger other things are bigger. Well have to do it again if we get there again. Theyre trying to write legislation to keep the fed from being able to exercise thats right, kelly. Does it make sense . Theres also more capital, michael. Yes. A lot more regulation for better or worse. I would think given the capitalratios of some of these banks were away from a t. A. R. P. Like situation although history after the fact is not that encouraging. Well leave it there. Steve liesman, theyve for bringing that news to us. Well keep eyes on gm shares as government has divested the rest of its stake, 10 billion loss. Up next polaris ceo speakinging ex ing speakinging, what will take his stock higher. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. [ male announcer ] heres a question for you 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. [ male announcer ] for every late night every weekend worked every idea sold. You deserve a cadillac, the Fastest Growing fullline luxury brand in the United States. Including the all new 2014 cadillac cts motor trends 2014 car of the year. Now during our seasons best event, get the best offers of the season on our Award Winning products, like the 2014 ats and srx. Welcome back. The Holiday Season is revving up and this company is seeing big toys for big boys paying off. They made they say that. Polaris is up big and betting on the revival of the indian motorcycle. Joining me for a twist on the american classic, ceo, scott wine. Thank you for being here. What are we looking at . Indian chief, mid price. We launched three at sturgis. Riders of indian founded stur gus a long time ago. Indian is one of the oldest motorcycle brands in the u. S. Our International Viewers may not be aware. It was founded in 1908 in springfield, massachusetts. For the first 50 years or so it was the Indian Harley wars for a long long time. Indian took a few decades off and were giving its rightful place back in the heart of the motorcycle world. Thats a charitable way of putting it. I love the fact you managed to bring back the manufacturing and the bikes in a much more much less expensive way, i should say here. How did you manage to do that to get a bike that used to retail for 30 grand under 20 grand . Weaver been in motorcycle with victory brand. Wonderful bikes, continuing to get rave reviews and the quality is excellent. We built a great engineering team, great supply team Operational Team and we took that learning and built an all new indian motorcycle. The style points continuing to give back to heritage of the original bikes. We were just talking as well about General Motors which had to be bailed out by the u. S. Taxpayer five years ago. Five years ago was around the time you were coming into the company. I mean how opportunistic were you then and how much convincing did it take for people to stick with you stick to the turnaround plan and get to where we are today . I remember being here in march and our stock was at 2k9 9 and today we closed at alltime high. It was because we had so many great people to fight through that recession. We didnt get any government bailouts but we took a lot of cost out of our company and put a lot of savings back into innovation. We consider ourselves an innovation company. We put 4 of revenues back into r d every year consistently. Lately a lot has gone to indian motorcycle. Youre in minneapolis . Medina 20 minutes outside of downtown. Im curious, when people talk about and weve heard strategists talking about this all day, the u. S. Manufacturing renaissance. I wonder if a company like yours is part of what theyre talking about. Where are these things made, assembled and walk us through the supply chain. Sure. First of all, theyre designed right in medina where we have headquarters, a wonderful design team. Engineering work is sdondone in wyoming, minnesota. Minnesota has a thing about naming towns after statements. We have 600 engineers there. Engines are built in osceola, wisconsin, and bikes are assembled in sprirt lake, ohio. This is an example of great work they do. Any trends youre gleaning from this Holiday Season . Surprising strength around the brand itself. Whether its tshirts and jackets or anybody that can get their hands on the bikes. Were trying to ramp up production right now. Quite honestly were not going as fast as our consumers would like. Youre running into supply constraints. Why . We are. Mostly because were so dedicated to ensuring the highest possible quality for our bikes. And you talked about american manufacturing. One of the benefits of making things here in america is that we can ensure the quality every time before they go out to our dealers. Im sure theres an easy way to test that around the parking lot as well. Ive given it as much testing as i possibly can. Minus 8 in minneapolis. Chilly for motorcycle riding. Ill take this for a spin after my next engagement. Im not going anywhere near this bike. Too much kim and kanye lately. Thank you for coming in. Well be back after a quick break. Plenty more closing bell stlat ahead. So i c an reach ally bank 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Bank. Your money needs an ally. [ 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. My customers can shop around. But it doesnt usually work that way with health care. With unitedhealthcare, i get information on quality rated doctors, Treatment Options and cost estimates so we can make Better Health decisions. Thats health in numbers. Unitedhealthcare. Welcome back. Lots of action on cnbc. Com to kick things off this week. What stories are the must reads . Managing editor allen joins us. You know whats hot on the site right now . Jay z. We have this great feature right now. Talking about, you know, how all the mega sports agents kind of dissing a little bit when he took over for robinson cano. But he had the last laugh. He got that deal with the mariners. We took a look at it the money terms. Jay z is announcing his presence in that field with authority. Our readers are eating it up at the rate of over 100 a minute. The next up and this one you know how everybody accuses, oh, you put up the doom sxm gloom headlines. Thats how you get readers. We have a good news story thats a solid number two on the website right now. And its Household Net Worth is at an alltime high. Since they started keeping numbers on it from 1945. People love to read good things happening to them. We were talking to robert about that. Im glad its that kind of story and not as soon as we start to see the website lighting up with stories about how the market will go down to 20,000, thats when everyone will get worried. Maybe so. Speaking of warnings our third story on the hot list right now, art cashin did an interview earlier on air talking about one warning sign that might cause outright selling. We put it up. He has a huge following on our website. People are diving into. He warns watch the tenyear rate going over 3. 0 . I was going to say, dont tell us. If they want to know why, they have to click through. Thank you so much for that one. Really appreciate it. Its not easy to find a businessman who thinks the minimum wage should be raised to 12 an hour and harder to find one thats conservative republican and thinks the increase will be good for the economy and taxpayers. We find him. Well explain his views next. Ing opportunities tdd 18886486021 just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you tdd 18886486021 out there. In here. Tdd 18886486021 out there, tdd 18886486021 there are stocks on the move. Tdd 18886486021 in here, streetsmart edge has tdd 18886486021 chart pattern recognition tdd 18886486021 which shows you which ones are bullish or bearish. Tdd 18886486021 now, earn 300 commissionfree online trades. Tdd 18886486021 call 18886486021 tdd 18886486021 or go to schwab. Com trading to learn how. Tdd 18886486021 our trading specialists can tdd 18886486021 help you set up your platform. Tdd 18886486021 because when your tools look the way you want tdd 18886486021 and work the way you think, you can trade at your best. Tdd 18886486021 get it all with no trade minimum. Tdd 18886486021 and only 8. 95 a trade. Tdd 18886486021 open an account and earn 300 commissionfree online trades. Tdd 18886486021 call 18886486021 to learn more. Tdd 18886486021 so you can take charge tdd 18886486021 of your trading. Welcome back. Our next guest made millions in Silicon Valley and launching an initiative to raise minimum wage in california to 12 an hour. By the way he happens to be a conservative republican. Here to make his case is chairman of the higher wages alliance. This goes beyond a single ballot initiative. Ron, welcome. Great to be here. Why do you feel so strongly about raising the minimum wage . I think its very important for the country for a lot of reasons. Obviously would lift millions out of poverty and would put 150 billion a year more into the consumer economy. Those workers would spend their extra dollars and that would help to revive our economy. Ron, last week we had the ceo or one of the executives from white castle on the program and he said it would result in less workers. What do you say to him . I dont think thats necessarily correct. If the wages go up everywhere in the industry all of the Different Companies can simply raise their prices to cover the cost. Mcdonalds could raise their prices by a dime or nickel for cheese burger and that would be enough to cover the wages. Some will say, from an economy wide point of view youre moving money around. So, consumers will have to pay higher prices then and theyll suffer as a result of that. Maybe not in the same way, but to a degree. You know theres got to be an element of truth to that. There is but higher prices were talking about are very small. Wall walmart could raise wages of minimum to 12 an hour and all it would take is walmart to raise their prices by 1 one time. It would cost the average consumer an extra 12 a year. Again, put hundreds of millions of dollars more into the u. S. Economy and many of those dollars would go to walmart. I want to bring in the panel. Lindsey, first to you. Im curious on the economics and politics of this whats wrong the proposal ron unz is laying out . Again, its very simple economics. If the cost of labor increases, businesses will move away from that expensive input. Theyll move away from hiring new employees. Again, going back to the point of they just have to raise their prices 1 . An increase in prices as weve learned in econ 101 leads to a lower demand for those goods. So its a very simple negative impact on the economy when we talk about raising the minimum wage. We can be very clear this is not about economics. This is about politics. Politicians love the idea of a policy where they can point out a very discernible, positive impact for a very small interest group. So if the president signs an increase in this in this minimum wage creabe surrounded by a very few individuals that did see salary increase. We wont see the lineup of individuals that lost their job as a result of that increase. Lindsey,ly say, and youre probably familiar with this, if you look at the research both sides of the economic aisle so to speak, its sflit. Even those who find harm the harm doesnt seem to be massive harm. You know, its really hard to point to any one study or you know comparative example from one region that wants to raise minimum wage and the other and find it had terrible harmful, negative fallout. Thats true. The studies out there, they are temp mental based on the assumptions they include in that model. Youre right. There is research very much split supporting and not supporting that increase. Whats very clear is when we go out to the Small Business sector and talk to these individuals about raising the minimum wage as we saw in the feds most recent beige book california industry insiders saying they were very concerned about the impending increase in californias minimum wage. They were going to sister to lay off employees as a result. I think thats as clear as any Research Report we could find. Michael . Well, i think that you talking about the elasticity of pricing model. Were talking about the pricing of labor. We havent seen any real gains in wages that have been all that significant going back to about 1997 adjusted for inflation. Were at about those levels now. Maybe theres some room in that wage model. 12 seems excessive to me. It would be one way, and im not an advocate. I agree with lindsey, by and large. Getting more money to a greater portion of the population that in fact, are going to spend it. You look at people who make 35,000, 40,000 a year, that gets spent. California is already going to raise the minimum to 10 from 8, is that right . Yes, but thats not until 2019. The minimum wage of california at that time will be below minimum wage today adjusted for cost of living. Ron, you come from the tech workers in Silicon Valley make the minimum wage or less. You mentioned this would be money coming out of the pockets of those who dont shop at walmart going into the pocks of those who do. The costs are very small. Walmart raises their price by 1 . The average walmart shopper pays an extra 12 per year while 150 billion of Consumer Spending money goes to the families. Many of those dollars end up at walmart. Why dont we find a way to increase productivity. Lets get the governor in here. Theres another piece of this. The simple economics, this is not simple economics. Im horrified to be agreeing with ron, but glad to have you on board. Minimum wage makes for strange bedfellows. Here is the other piece. Capitalism is a great system and its worked really well for us. The problem is like every other system, unless you can be sure that everybody can participate you start to tear it apart. If that goes on people will believe that they can work as hard as they want and never get ahead. You have got to be sure that people at the bottom are treated fairly enough. The question is what is the best way to getting to that outcome . There are lots of dicht ways. Teen and low skilled employees. There are lots of ways to do it but everybody can agree the best way to do it is a job. As Ronald Reagan said the best support, the best Welfare Program is a job and he was right. We have got the earned income tax credit. We have got to make work pay. There are many of your colleagues who will say even though it doesnt sound as nice they like the earned income tax credit. Its less its a different kind of potentially more precise tool. What about Something Like that as an answer here . Heres the problem. What it does is force the government, force the taxpayer to pick up the cost of the businesses that dont want to pay their employees. We have Small Businesses that pay low wages, they are privatizing the benefits. But they are sociallizing the cost of the rest of society. A 12 an hour minimum wage would save tens of billions of dollars. Michael . But you still have that group of smaller employers who are going calculate the cost of the extra Hourly Earnings and say im only going hire one and a half people im going to reduce to part time. Im not going to spend more money out of my poblgtcket. And i think it does put pressure on the low end of jobs. Final word . I think 12 an hour is not high enough to see that effect. All right. I hate to leave it there. But thank you so much. One way to find out. Great discussion. Really appreciate you coming to join us. We will continue to follow this very important theme as well. Seems enhancements to advertisement has sparked ideas that they will grow into valuation. Coming up neck we will be showing you what we have been talking about. Tweets of the day coming up next. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottradeproud to be ranked best overall client experience. In a world thats changing faster than ever we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through we say lets get to work. Because the future belongs to those who challenge the present. Thrusters at 30 i cant get her to warp. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. Welcome back. Always keep an eye on twitter. Here are some of the discussion points of the day that we have been following. The economics make passive index investment the only way to stop making Money Managers rich. Whether to be active or passive its hard to argue with this. Long short traders saying by the time i have fully morphed into a growth investor, the markets have crashed. That is a sad face. I think a lot of people feel this way. They are worried that they will be won over by the market. A lot of the wealthy who we have talked about have really benefitted from this market are really nervous right now. At least they benefitted. What about everyone who has not participated . They are not putting more money in the markets. They are neutral to bearish and that is a tough sign going into neck year. What are you cracking up about . Other tweets that were not going to talk about. Talking about abovety. Im on the board of a pubically traded company. Whats your company . Im not going to tell you. The reason i dont do it is i think this is an investment philosophy we ought to figure out how to go back to. If you do your job over time your stock price is going to go up. And so a lot of the concerns of the tweeter are that this is all about short term. If you think youre going to be a growth investor in the short term youre playing the market and youre going to be lucky. There is an element of buffet here youre betting on the future of america. Is now the okay to do that . The market seems to have the best of both worlds. Unlimited fed printed dollars and thats what you continue to expect to see with the fed erring on the side of caution. And still allow the market as you said to reflect the stronger growth in the american economy. So right now the market is really poised to grapple from the best of both sides. We were talking about your clients to start off the hour. Are you increasing their equity allocation . No. Its time to go back. Check your allocations. Its hard to reduce your equity allocation because thats what has been pulling the train. We have had a great year. You might want to keep that fixed income short and in spite of all of the tweets im not an economist. Thank you so much for joining us. Governor dean lindsey and robert frank, appreciate the time that all of you have spent with us. Fast money coming up. Melissa, whats going on with bitcoin . One thing you need to know. In four days bitcoin dropped 44 . Doesnt sound like a store of value to me. Well ask him. Great show. Fast money starts right now. Live from the Nasdaq Market site in new york city times square this is request fast money. We have got some breaking news at this hour. The u. S. Treasury selling its remaining stake in General Motors. Phil has the very latest. This ends more than three years of the federal government having a stake in General Motors. Remember they had more than 500