Transcripts For CNBC Closing Bell 20150123

Here. That ipo pricing at 14 last night. But right now you cannot get it for that price because you can see there its up to almost 24 bucks on the session. A huge move day one for the Cloud Company despite vocal skeptics. Theyre questioning their profitability. This feels like the debates we were having back in the 90s during the dotcom boom. Im not saying thats the case here, but off booming ipo with people wonder wrg is the money right now. Another bombshell from the president s tax plan. President obama wants to challenge College Change i should say College Savings plans known as 529s so the gains would be taxed as regular income. Right now they are taxedfree as you know as long as the money is used for a childs college education. The president says these plans only help rich people not the middle class and we will put it to the test coming up on todays closing bell. This was all part of the state of the union. Making Free Community college. We have heard jeb bush and others say it is hypocritical to do that while taxes 529s. Here is where we stand. Down triple digits on the session. The dow is off 93 points. The s p is giving up about 8 or nearly half a percent there as well. The nasdaq interestingly is managing to stay in the green but only by about five points at the moment. Lets talk about we have a lot of things to get to in the closing bell exchange. Joining us mark madison, Peter Anderson from Congress Wealth management. Steven parker. Michael jones from Riverfront Investment Group and our own Rick Santelli joining us as well. Michael jones, you are long europe right now. Were you long before the ecb move this week or in anticipation of it or why would you like european equities . We have been long europe for a while. Long the exporters and short the currency, and obviously with the quantitative easing move that the ecb did yesterday, that trade has come ripe in a really big way. The great thing about it is when youre long the exporters, youre long the companies that automatically get an earnings boost when the euro goes down. Youre also long the best companies in the european markets because these are the ones that can compete on a global scale and that means theyre very efficiently run and well managed. Peter anderson, are you guys buying europe . Well you know weve always been somewhat exposed to europe but right now were still waiting to see how that plays out, kelly. Theres still a lot of things im kind of disappointed january started the way it did. Im still kind of puzzled about the u. S. Consumer too. I thought i was very disappointed in the december sales report. Im hoping that its going to be revised upward because, you know, kelly, it just doesnt make sense to me. With the low fuel prices and the consumer sentiment, one would have thought that we would start seeing that playing out in the numbers, but lets hope that well see it through january and february too. Steven parker you like japan. Thats where youre putting some International Money to work right now, right . We actually think, first of all, we saw what draghi did yesterday. The bank of japan has been on this trade for a while. They continue to be the most Aggressive Central Bank in the world. A couple things markets arent as focused on. Theyre a huge oil importer. They will get a huge boost from the fall in oil prices. The Japanese Corporate sector has been one of the strongest in the world over the last couple years. Japanese companies have grown earnings 80 over the last two years. Multiples have come down over that time period. Theyre more focused on profitability, more focused on shareholder return and theyre cheaper than the u. S. And even europe. Makes for an interesting discussion about buying the places where all of this quantitative easing has contributed to lower currency prices and what not, but i want to go back peter andersen, your point about the u. S. Consumer is interesting. We got that disappointing december retail sales report but look at starbucks today. I cant its up like 6 and this after an incredit you believe run. What do you make of it . Are they taking share from everybody or is the consumer in better shape than we think . Look at u. P. S. And mcdonalds . Were getting mixed signals, and i think thats whats so frustrating. By now i think we would have thought all those names, kelly, would have been performing well and surprising us on the upside. Even mcdonalds call im surprised on the upside in the u. S. They did but im sticking with the fact that all of these companies should be unilaterally moving up. Jcpenney did okay last december. But as i said were not seeing it across the board, and the math seems to work out, you know, as a stimulus for the low gas prices. We know consumers are not banking that cash. So where are they going . Just to starbucks . I dont think. Mark madsen what do you think of the u. S. Market right now . Were all focusing for obvious reasons on International Investing whether its europe or japan right now but what about the good old u. S. Ofa a . Are we still in value territory . Only 49 of the worlds capitalization are in the United States. Theres more opportunities global than here. What a lot of investors are doing is making the mistake of chasing the s p 500 because it was one of the number one performing asset categories. You need to diversify globally. Were in over 46 countries and that includes not only europe but asia and emerging markets. Everybody is running away from emerging markets right now because theyve been down. You have to buy the thing thats down. Thats emerging markets and rebalance your portfolio. Wow. Thats a you have to listen mark, you want to get into emerging markets when you have commodities look at oil again. There was no bounce. When the u. S. Dollar is depreciating and Everything Else overseas is less valuable. What you have to do to be a successful long Term Investor is force yourself to do the things people arent willing to do. If you wait for the naverrative to go your way, then youre going the wrong way. Rebalance, force yourself to buy the thing thats low. You dont get to know the future and how its going to come back. Eventually it does. Rick santelli i have to keep recalibrating my feelings on u. S. Tresh risasuries on the long side. I was praying to get upset when they went below on the 2. 5 on the 30year. Were well below those now and were all sitting around going lets talk about oil, lets talk about europe or japan. What about these low treasury yields here . And they are low, but, you know, just to give you a couple of glimpses as to why maybe its more prudent not to have huge bias for lower rates at least for the next two or three weeks. First of all, were virtually unchanged. Down a couple basis points for the week on 10s. Down nine basis points on bunds. Were seeing the difference between the two widen. Lately when this happens, be a little careful. It means our treasuries most likely are going to disengage a little bit. Maybe yields float a bit higher. Remember theres three big driving forces. The relative value trade with european low yields. After what draghi did, this could be under review. The second issue is its the only hedge against soft equities. And since we have europe doingq e, there may be less soft equities. And the third category, of course, is lower economic horse power and even though the panel may not agree, i think thats the one turnstile out of the three that is still functioning. So you might see rates float up a bit but, remember were down 36 basis points on the year up until the 23rd of last year we were off about 28 basis points. Its amazing how similar the first seven weeks of last year and this year continue to be from the Vantage Point of Interest Rates. Thats so true. Michael jones, just go back to the point about will the u. S. Consumer ultimately benefit. You like some consumer plays were going to talk about next hour. It has to do with sneakers. Absolutely. We think footlocker is one of the best valued names in the space. We also i mean, its easy to get caught up in the government data. Its all backward looking. It debtsgets revised significantly. The sentiment data is the more real time measure of whats happening. We look at ever corps isi that does a great survey of retailers. The week over week changes from the couple weeks before christmas to the couple weeks after christmas, the strongest they have seen in 20 years. That makes nor sense. More sense. You think theyre going to be buying sneakers. Youre taking it to restaurants and youre going to be buying that high end sneaker you might have thought was out of your price range when you had to fill your gas at 50 bucks. Stephen, you make a good case for japan because of the Lower Energy Costs right now. Are you ready to buy energy itself at this point . So for some of our opportunistic clients we think theres a trade short term in the energy stocks. Sentiment has gotten really really negative we all expect it to go to 30. Its amazing how quickly thats just become consensus. Thats a big leg down from here. So i think we have to get ready for longer term Lower Energy Prices but when sentiment gets that extreme, if youre willing to take a little bit of risk in portfolios and for the right types of clients weve been buying some energy stocks. If i could add onto that, there is a baby thats been thrown out with the bath water. Mlps have traded down as hard as energy, but the storage and transportation, thats the mlps, theyre still showing double digit earnings gains where as the rest of the energy space has been wiped out. If you want to step in and buy something in energy the mlps are a safe place to start scaling in. We have a lot of supply thats for sure. Gentlemen, thank you all. Appreciate it. Have a good weekend. Tgif. 50 minutes to go into the close. The dow sunday pressure off 90 points. Oil was lower again today as we were just discussing. Nasdaq is trying to buck the trend. Its up 0. 2 . The s p and the dow struggling to stay positive for this new year so far. When we come back Morgan Stanleys chief equity strategist will tell us if hes still bullish on u. S. Stocks even after this shaky start we have had this year so far. Wait until you hear how adam is playing the collapse in oil and the euro as well. Thats coming up with adam parker. Also happening today, box, there it is hitting a home run on the first day of trade after pricing last night at 14 a share. Its well above that now. Trading up about 10 or 70 . Pros will shed some light on where they think the Cloud Storage company goes from here when we continue on the closing bell. Recently, a 1954 mercedesbenz grand prix race car made history when it sold for a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2015 cla. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Ive been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Where they think the cloud sexy. Go national. Go like a pro. Down day. Kind of a mixed day. Lets face it the Technology Sector is doing okay so nasdaq is higher but the s p and dow is lower. Of the ten sectors, two are positive. What a volatile week for the utilities. Wednesday they hit an alltime high. Yesterday they were the biggest loser, and now the biggest gainer. Up 4 . On the dow, ge is the strongest performer. I dont know the last time we could say that. Its almost 1. 5 . Dom chu is keeping an eye on the stocks that are hot and not so much. U. P. S. Is plummeting. Hit hard after forecasting Fourth Quarter earnings below expectations. Rival fed ex fell on that use as well in sympathy forcing it to reaffirm its guidance for the year. Kimberly clark moving lower as well. The personal Consumer Products maker gave a disappointing outlook for 2015. Those shares down by 6 . Lululemon rose after jpmorgan upgraded the fitness apparel apparelmaker to overweight from neutral. And were going to end with go pro gaining ground after signing an agreement with the National Hockey league that will allow fans to watch hockey from a players perspective. Kelly, bill the nhl and go pro looking to make things more exciting for hockey fans around america. Thats fascinating. Shares up 7 . Stocks generally trying to post gains this week but its been a wild start to the year. My next guest says theres a lot of pessimism still out there that could create an opportunity for investors. Lets bring in adam parker chief u. S. Equity strategist at morgan stanley. Happy new year. Happy new year to you, too. So first of all what do you make of this stutter step that weve had at the beginning of the year here . Does it feel like it is bottoming pattern or a topping pattern or what do you see here . Look im pullish. I think the market is only a couple percent below its alltime high. To me what matters is earnings and we think earnings will go 6 to 7 on an operating basis this year. You have over a 2 net buyback on top of that and then you also have almost a 2 dividend yield. So sort of an 11 total return base case. If youre bearish, you must believe earnings are going to decline and i dont think thats the right way to position the portfolio. But we have seen estimates revised lower in terms of earnings. Most notably in energy but even just generally speaking. So if that continues to happen for whatever reason strong dollar, et cetera, you cant overlook the effect that must be having on the market and maybe stretching the valuation a little bit here. So let me give you some details on this because, you know, there is a pattern where the sell side and management teams expectations for earnings can be too optimistic. Theres been 39 years theres been a place where analysts have posted estimates sell side. It started in 1976 and through 2014, 39 years. In 33 of those years the january bottom up best miss were too high. All six yerpars they were too low were recession years. What i think is interesting right now is that the 2015 earnings, it could be the first time in 40 years where were not one year off the recession and the january numbers are achievable and the reason is theyve come down so sharply from 134 down to about 125 now, 9 down in the last nine or ten weeks. So the expect tabss are i think pretty achievable for this year. Only for 6 growth. So i think theres upside because nobody has raised the numbers. In fact, in so sector out of the ten sectors are estimates up. Only down. So i think theres an asymmetry guys where if youre an energy analyst, you had to cut your numbers. If youre a consumer analyst you didnt have to raise them. I feel pretty good about numbers. I see you like Consumer Discretionary. Youre not alone in that one. I get that play but energy. You like that. Where is the Earnings Growth going to come from in that sector . Sure. So look i think here you have three reasons to own the stocks. One, theyre cyclical. All seven times they have underperformed by this much in the last 40 years. Subsequently outperformed six months later. I feel like sentiment is that things are going to get worse. In fact, i think sentiment is more negative at 45, 50 brent than it was at 100. That doesnt make sense to me. Two, you have to be anticipatory. You have to buy the stocks two to three months before the earnings revisions bottom. Thats been the historical pattern. By the time oil rises, you have missed a big chunk of the return. Three is the valuation. These stocks are cheap on price to book cheap to ebitda. Those were the two most effective metrics for predicting. I want to buy cyclical stocks. Thats my case for getting this in there. Whats your price target for the s p. Around 11 upside in line with what i told you is our Earnings Growth plus the buyback plus the dividend yield. And a the dividend yield, this is one where theres sort of half the street is split thinking it could go lower because of energy. The other half thinks maybe theres some areas that might increase it. If investors are more interested in the yield at this point, where would you direct them . Challenge is expensive sectors are ones where dividend yields are high. Utilities is the most expense tiff sector. What you have to do is do individual security selection where you feel safe about it. One thing i can tell from you the quantitative perspective is dividend yield level is overvalued over history and Dividend Growth isnt. Im focusing on stuff 2 , 3 before we let you go what areas i know you cant get too specific but who has room to grow their dividend do you think . Theres a number of ideas youve have where payout ratios are below 50 . Payout ratios are very low versus history. I think theres ample room for kchs companies to take them up, consumers, Health Care Select technology, financials. Theres actually a number of ideas there. Adam good to see you. Thank you. Appreciate your thoughts. Have a great weekend, be well. Hes the second guest weve had in the last 15 minutes who says the sentiment on oil is so bearish theyre willing to step in at this point. I know but i know. My stomach is in knots every time i hear it. Were going to move on as she unknotted her stomach. 40 minutes left in the trading session here. The dow down 94 points near the lows of the session with the s p down 7. Nasdaq though is trading higher. It is those energy names weighing on the dow and on the s p. Exxon certainly feeling the heat today although ge had a little bit better numbers in its Energy Division than expected and the shares are up accordingly. Up next currency wars how to make sure youre not losing here. You will stay with us to find out more as Central Banks ratchet up those printing presses. Ing for pain . I have bayer aspirin. Im not having a heart attack, its my back. I mean bayer back body. It works great for pain. Bayer back body provides effective relief for your tough pain. Better . Yeah. Thanks for the tip take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. If youre running a business legalzoom has your back. Over the last 10 years weve helped over one million Business Owners get started. Visit us today for legal help you can count on to start and run your business. Legalzoom. Legal help is here. Welcome back. Looking to close out another choppy week with an eye as to whether it will be another triple digit day. That has been the trend so far this year bill as you pointed out a number of times. Today its a name like ge outperforming and energy names under pressure. Nasdaq helped by tech stocks is outperforming. The euro getting hammered again, hiing an 11year low. Got down to 1. 11 at one point. Now 1. 12 and change. We have sara eisen on board. You kind of love this stuff, dont you . Its exciting when you get volatility. Look, in history the euro has gone as low as in the 80s to the dollar. That was back in 2000 and thats less than parity which is currently the bet du jour that the euro will fall all the way down to 1 versus the dollar. We havent seen that since back if 2002. Its moving there pretty quickly thanks to Mario Draghis price year. Listen to what george soros said about it from davos. The sheer size of the massive injection and the duration and so on will have undoubtedly an effect. It will also have of course a lot of affect on International Currency markets. If i were still active in the business, i could see some fairly substantial moves coming. Those substantial moves are here. The euro is down more than 3 against the dollar just since the announcement from the ecb yesterday. Its down more than 17 versus the dollar over the last seven months. And on the flip side the u. S. Seems to be og with a strong dollar for now with the treasury secretary saying hes sticking to the u. S. Policy of a strong dollar. A strong dollar all of my predecessors have joined me in saying its a good thing. If its the result of a strong economy, its good for the u. S. Its good for the world. What weve also said is that when if there are policy that is are unfair where there are interventions designed to gain unfair advantage, thats a different story. We have been very clear in multilateral and bilateral settings that thats not acceptable. The problem here with this move is the speed and whether that could be destabilizing for companies, for economies, for commodities. Already emerging markets central bankers are fighting back in the form of all sorts of surprise moves like Interest Rate cuts and no question American Companies that do business overseas are cringing by the day looking at this move. Yeah. The earnings have been fascinating on that front. Sara, stay there if you would. Okay. Joining us now with their take on all of this jack mcintire, bond Portfolio Manager at brandywine global. Do you see parity for the dollar rur row . Dollar euro . We think the euro will continue to go down. The problems are not going away. You have the u. S. Doing better and europe behind. That will put downward pressure on the euro. We see parity by the end of next year. If that happens what does it mean for investors in the u. S. . Im a little nervous because everybody is talking about parity and were actually in that camp if not even lower. So i think what it means is why is the ecb driving down the euro and how are they doing that . Theyre pushing capital outside of the eurozone. That capital is looking at u. S. Treasuries. The tenyear is roughly around 1. 80. That compares to german bunds about 36 basis points. Theres great value when you look at that spread so capital is leaving europe its leaving japan, driving down treasury yields. Ultimately thats going to be a net positive for the u. S. Economy because i think it will flow through and have a positive impact on housing at some point in 2015. Its going to be beneficial from the economy, from Interest Rate standpoint, the strong dollar might slow a little bit of the economy, the external part. Jack i realize we have distortions and dislocations because of the Central Bank Intervention but how much longer can the dollar rise and Interest Rates in this country remain as low as they are . You know its probably going to last longer than what most people transport. When you have model that is try to come up with fair values for Interest Rates and currencies, in this kind of environment they dont work. You know the reason again, for everybody wanting weaker currencies is to get growth. The u. S. Has benefited from weaker currency for over a decade. Exports from gone from 9 to 13 . Thats pretty meaningful. So europe wants that japan wants that. Torsten, something you have said in client meetings people say if people are buying for example, treasuries and the yield curve is inverting, no big deal. Youre like wait a minute thats not usually a good sign for the u. S. Economy. Do you expect flatter yield serves from the u. S. And europe . The complicated thing is the textbook and the Federal Reserve is telling us things are Getting Better and therefore rates should continue to go up. On the other hand we have so much liquidity and money thats been printed from thee cb and thats pushing rates down. Are the fed folks right when the fomc says things are Getting Better and they will hike by the middle of the year or is all this liquidity making it difficult paradoxically created by themselves making it difficult to tighten financial conditions once inflation starts to come around . We know you live and breathe the currency markets. Torsten told us he thinks parity by the end of next year but jack see it is going maybe a little lower. What kind of numbers are you hearing from analysts about what the euro could do against the dollar down the road . Parity is very popular right now. To give you a sense, stratists istegists are having to revise their calls. Morgan stanley lowered it to 105. Just to give you a sense of the magnitude and the speed of this move. The problem is its a very crowded and popular trade. And, yes sometimes that makes sense as jeffrey gurndndlach has said and sometimes that works. But when you have such a crowded trade in the currency market anything that disrupts it you could see it snap the other way big time. So theres a warning. All right. Jack torsten, good to see you. Sara as always thank you. See you later. So were convinced now that oil is going to 30 a barrel and we are convinced on euro dollar parity. Emailing with some traders saying the most crowded are short the oureuro, short the yen, could probably add short oil. Half an hour to go in the trading session this week. More red than green on the dow and that red exxon, the biggest decliner today down almost 2 . Also p g joining the fray. Dupont under pressure. On the flip side you have outperformance thanks so some earnings fromg e and ibm. Coming up saudi King Abdullahs death fueled an immediate rise in crude prices. West texas fell since then. The new monarch is expected to stay the course on oil production. Well talk with the pros on where oil price goss from here when we come back after this. There will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had a Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. And for drivers with accident forgivness,rates wont go up due to your first accident. Learn more by calling switch to Liberty Mutual and you can save up to 423. For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. 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Again today after Oil Prices Spiked last night on news of saudi King Abdullahs death, under some pressure taking the market down with them. Jackie deangelis though brent crude has been holding onto its gains. Thats right. Good afternoon. After the market popped initially thinking that there could be uncertainty on this but then digesting it and realizing that there would be continuity we saw brent crude come off the highs of the session and wti turned into negative territory setting at 45. 59 on the day. Its still really a supply and demand story here. Of course, record Global Supply right now and demand is still falling off the page. But having said that prince all alwaleed gave us a sense of where it was going. I think well never see the price of oil again at 100. Never see it again at 100. Well see what happens. But john was on the air earlier. He was saying he does think we go higher from here but we test that 30 range before that happens by the end of the year. So well be watching. Back to you. Jackie, thanks very much. Third time now oil going to 30. Weve heard that again here. Thats true. Lets talk more as well about how the death of saudis King Abdullah might impact that nations policy and the price of oil for everybody Going Forward. Joining us is kent morris Editor Energy advantage and director of the Energy Policy Research Group at duquesne university. Good to see you. Welcome back. Hi bill. We know King Abdullah was a moderate. He was a strong ally of the United States. He was willing to be a swing producer. What do we know about king salman. Do you expect a big change in poile policy from saudi arabia Going Forward . I expect actually that when all is said and done well see that the new king and the current oil minister actually orchestrated the decision to hold production at its current levels which precipitated some of this dive. Theres a very different perspective thats emerging in riyadh and they recognize that this is a fullblown market share competition. U. S. Production clearly is on the one hand as a principal target but so is russia and the competition over who is actually going to be controlling this exploding asian market. Both of those are essentially untested and saudi arabia doesnt quite know where the triggers are yet which means for the foreseeable future i dont think this policy is going to change. A lot of people also speculating, and i understand at this point its just speculation, about what kind of political instability saudi arabia might be facing Going Forward. What kind of potential is there for this country which we have relied on for so long with regard to all the policies youre talking about to begin a period of much increased instability . Well, i think the instability remains to be seen. What king salman has done rather quickly, he has set up the move forward in terms of who is going to actually succeed whom. The current crown prince is now the heir apparent. Hes probably the last of the sons who will be occupying the throne. The real test will come when the last of the original family has died and were actually moving into the next generation. I think thats several years away however. Okay. Very quickly, we have to go here, but a lot of feeling that maybe the u. S. Production becomes the new swing producer. Do you agree . I see you already nodding your head, but what does that do to saudi policy. Will it matter if they think about cutting production down the road . Well, controlling 40 of the worlds oil doesnt buy what it used to and thats essentially where opec is and its declining. Remember something, bill. 86 of the recoverable Unconventional Oil reserves throughout the world are not located in north america. So whats occurring here in the United States is going to be replicated in various regions throughout the world. Opec is in for a you have to future. They have oil reserves and fx reserves. A lot of people say that buys them time. Bring you back obviously to talk more about it but kent moors this afternoon on big moves abroad. We have 20 minutes to go. Yes we do and holding at the lows of the day with the dow down 109 points. Well stay on this weakness into the close. Cloud Storage Company box is meanwhile blasting through the roof on its first day of trade here at the nyse. Well discuss the companys outlook for profits and the increasingly crowded cloud space. And later, president obama you may not have heard at this point wants to reduce tax breaks on those 529 College Savings plans that are so popular but would this end up hurting a larger swath of the middle class than the president thinks . You cannot afford to miss an important discussion on that coming up on the closing bell. Welcome back. Well, the dow may be down today but there was a high profile ipo that came to market here at the New York Stock Exchange that did very well. That would be box. This is glen hes the specialist who made the market got it open this morning. In fact, glen was the specialist on twitter as well the day it opened. So hes doing pretty well. But box sharply higher in todays trade. This is a cloud data Storage Company that caters mainly to businesses. The ipo delayed a couple times, finally came to market today. They sold 12. 5 million shares at 14 and look what it did. Now at 23. 83. A gain of 70 . A lot of questions though and some skeptics on this kelly, about its profitability and its future because of all the stiff competition out there, right . Exactly right. Lets get more on this ipo and actually on the long term future of bock as an investment. Were joined by Brian Hamilton the chairman of sage works and edmund lee the managing editor of rico. The companies ed, lets start with you. Box, does it make as much sense at 24 as it did at 14 for investors . They actually had to wait a while to come back on the ipo because the markets werent so great last time they made an attempt at it or were looking at it. You know the market its interesting. They clearly like it a lot. I think for box it was a good day, but at the same time you got to realize they probably left a little bit of money on the table. They could have priced it slightly higher but, of course its investors are clearly happy with the new valuation. Brian, youre along the skrepmongskeptics. Im in the wrong business. They lost 121 million for the first nine months on the same amount of revenue their negative net margin is 79 . Whats happening here is the market is very good so they are reaping the benefits of this. They are also in a very competitive space, so i just dont see it. Here is the thing, guys. This is a venture or a p. E. Play. Its not a legitimate Financial Investment in my opinion. In other words, people are getting into this thing because the market is going up but really its a venture play. If you look at the financials from any sper tech pifperspective. Aaron levy was on the network. He says were in the enterprise space, we work with Big Companies to help employees access their data. What is wrong with that as a Business Model long term . Theres nothing long with that as a Business Model long term. Theyre in essentially a commodity place that barriers to entry are really low. You will see a lot more entrants coming into it a lot more competition. What thats going to signal sooner rather than late ser that consolidation is much more likely in this space. Its a growing area though. Its be a important area. Its important for a lot of businesses in terms of how they operate these days but again its like competition its going to be consolidation and its unclear who is going to win out on that. Ed is go ahead, sorry. Kelly just mentioned aaron levy, the founder. Kind of a quirky guy, young guy. Thought to be another mark zuckerberg. A visionary of sorts. Wouldnt you invest in him . This is a way you can invest in whatever his ideas are. Are we investing in the packaging and the charisma in which case im in big trouble running a tech company, but here is the thing, guys. You have to look at the actual performance and ed is exactly right. They have small competitors like microsoft. Theyll see a lot more competition. They are losing the same amount of money as they have in revenue. So this is very typical of this bull market. It keeps happening and, you know, i know i keep singing the same song but at some point investors will look at what is this company doing . Were not investing in just a person. Were investing in a business enterprise. We have to go but, ed, last word. Can they flip the switch . Its good for the tech sector overall. Tim cook tweeted congrats to aaron levie. Theyre looking at how it will benefit their companies long term. Thats a point. Thank you, brian and ed. 13 minutes to go to the bell. The dow is at the lows of the session. And kelly, art cashin just signaled me 300 million to sell going into the close. I think were already seeing that right now. Thats for sure. Were up 127 points. The s p is off 10. The nasdaq is still staying positive though. Anything could happen in the final moments of trade. Well get you the closing countdown when we come back. Later former Arkansas Governor Mike Huckabee will be joining us. Tons to discuss with him including that possible run in 2016 and what he would do to amp up the economy. Sti tuned. Theyre coming. What do i do . You need to catch the 4 10 huh . The Equipment Tracking system will get you to the loading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. We got about ten minutes left in the trading session here down 123, just off the lows of the session as we mentioned. Art cashin this is kind of old news now but you mentioned 300 million of stock to sell into the close. The s p down 10 the nasdaq holding onto a 7 point gain. Joining us david darst here on this friday with Michael Jones weve brought back from Riverfront Investment Group. Michael jones, a simple question for you. Why the heck would anybody buy a swiss bond for example out to a fouryear basis yielding minus 1 . I truly dont understand it . Is it the price appreciation . Whats going on . This is the big story that no one is talking about. The swiss have done a game changer by taking Interest Rates so negative that its actually going to be passed on to bank depositors. No one has dared to do that in the past because for the obvious reason if people lose money on their deposits, theyre afraid there will be a run on the banking system. If the swiss can dare to take rates negative then anybody can take rates negative because no one is more dependent on ranking than they are. So that means that the door is open for kuroda in japan, for draghi to take rates negative i i understand why theyre doing it but why are investors giving their money away . Theyre afraid of deflation. If they feel like prices are dropping, Interest Rates are negative but may be less negative than prices are falling, this is not a safe place, im losing less but the powerful thing is that they can always take rates more negative to get ahead of deflation. This is a game changer in fighting deflation. Its actually better for stocks than bonds. Part of that deflationary story is oil. Kelly and i this hour just have heard three different examples of people saying that were too bearish on oil right now. Were all the consensus is were going to 30 a barrel. Is it time to buy oil and oil related stocks . I think you can start nibbling at oil. One of the big debates is Real Estate Investment trusts versus Master Limited partnerships. Two years ago mlps did so well and reits did poorly. Last year reits did very well 27 , and mlps were down a little bit. I think for good ones one thing that people arent aware of, theyre going to all start coming to market and issuing stock, the mlps. Let that drive them down more then start to buy the mlps. Secondly, small cap versus global gorillas. Go for some small cap. And the final one is europe and japan versus the emerging markets. We like europe and japan right now. Select emerging markets but go with europe and japan. I love you both have brought up Master Limited partnerships. Its one of the places people fled because they arent sure about the cash generation Going Forward, they arent sure about the payouts. What i hear from you both is perhaps theyre worth a look. Just think, theyre both from nashville. That may have something to do with it. Now i think youre onto it. Good to see you both. Have a great weekend. Appreciate it very much. Heading lower still as we head to the closing countdown with the dow down 132 points. Coming up after the bell, are u. S. Consumers about to go on a spending spree . That would turn the market around. Find out who is saying that coming up. Keep it right here. Youre watching cnbc first in business worldwide. You can find a new frontier. Theres nothing stopping you and a lot helping you. Technology thats with you always. This is our promise. Its never been better to wander because wherever you go, youll find us doing everything we can, so you can. You just got a big bump in miles. So this is a great opportunity for an upgrade. 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Here was thursdays powerful rally after the European Central bank implemented orb a or announced its quantitative easing plan. Were down 144 points but for the week a gain of almost 1 . Lets look at a couple other charts here. The Dollar Euro Exchange rate the euro just continues to plummet, especially after the ecb announcement yesterday. Were now at a multiyear low. The euro versus the dollar. We were at 1. 11 and change. For the week the euro against the dollar is down almost 5 . Last one, oil, this is wti, u. S. Oil, down another 1. 8 today. Even with that minor rally last night following the death of King Abdullah, but for the week with us down to 45. 48. Wti crude is down 6 bob pisani. Now, that worries me a lot, but ill tell you a little bit of cheer here. Guess whats up today . Oil and Gas Exploration stocks. Two weeks ago if oil would have been dropping we did. We saw this movie. It dropped two weeks ago and oil and exploration stocks went right down. Today mostly theyre up and for the week theyre actually up. Here is something weird. Oil and gas stocks up on the week and Airline Stocks up on the week on those good numbers theyve been reporting because, of course, fuel costs are lower. Theyre taking their hedges off. We heard a few analysts early in the hour saying how sentiment was so negative on Energy Related stocks maybe it was time to buy. Maybe some people were taking it to heart. Im im going to the etf conference on monday. Theyve seen tremendous efforts to buy the bottom. So far it hasnt been particularly successful. The only thing we know history, oil has only been down 50 five times in the last 30 years and six months later its been up every single time. So a lot of people are passing those charts around saying thats the historical pattern. Im going to buy on that and other people are saying we havent seen the supply issue like we have seen with the u. S. Crude situation. Theres a lot of fighting going on about whether this is right or not. Quickly, Consumer Discretionary has been strong but yet were not seeing the evidence of the consumer. Theoretically on paper if Oil Continues lower, thats a benefit to the consumer but where are they putting that money . We should be seeing a little more in the retail ertion and were not. That was the big mystery last month. I think if they decided to save and hold that money, thats 20 a week or 30 a week. Im fine with that. Theyll spend it eventually. Well get builders on monday br horton will be reporting on monday and the tech numbers have been decent at least the commentary. Microsoft also will be after the close. Thank you, bob, very much. Have a good weekend. Down 140plus on the industrial average to close out a very volatile week. But stay tuned. A lot more to come now on the second hour of the closing bell with kelly evans and company. Have a good weekend, kel. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans. What a week its been on wall street. A lot of selling pressure in the final hour. Here is how were finishing up the session. The dow going out at the lows down 142 points really weighed down by the energy name. Well look it see if exxon hit a minus 2 actually 1. 7 . Thats where the underperformance is coming from. The s p is off half a percent. The nasdaq managed to stay positive. Bolstered by better performance across the tech space. Lets get to it with todays friday closing panel. Joining me now jim le camp from ubs. Evan newmark and cnbcs very own steve liesman. Great to have you here. For more on the markets, jim levin that will and fast money trader steve grasso will join us off the floor in a second. Jim, i will start with you. A rocky start to january. Weve gone out on the lows of the session today. We started off rocky last year as well. The market didnt bottom out until the first week of february, we had an up year. We said this was going to be a more volatile year. Its about the currencies in the Central Banks. We knew there would be a lot of moves but look at all the moves in january. The Swiss National bank canada russia, now the European Central bank. Its a currency war and theyre all in full bloom and that helps the dollar but it means a lot more uncertainty. Theres been a lot of surprises. We think Interest Rates remain low and ultimately stocks will kind of zig zach their way higher this year. The question anymore is whether Interest Rates will stay positive. If you add to that not only the Central Banks jim talked about but denmark, peru. I think you mentioned canada surprise rate cut. The bank of korea. I come in every day and i want to know what it has to do with me. Its a great week to be a central banking reporter. Reallying interesting things going on around the world. What happened most interesting this week was not what happened wednesday but what happened tuesday. What happened tuesday, they leaked what was going to happen and it was less than they actually ended up doing. That told me the European Central bank understands and cares about markets, and using markets as a transmission mechanism for policy in a way is this a sign of progress . In a way the u. S. Central bank has understood for a long time. I think its a step forward by europe thats very interesting. The market took it well. Draghi orchestrated this as best he could and i think it has a chance of succeeding. Im going to go on the exact opposite side. Not partially opposite. In the following sense. I agree with what steve is saying, but i disagree that thats a good thing. I think its a bad thing. The Central Banks are supposed to be leading, not following. You dont the central bank should not be doing things to make the markets happy. The central bank should be doing things because they think you are that Central Bank Dollar has been jaw boning the markets for the last six months. Finally they do something i didnt say happy. I said to use the market as hang on a second. Lets see what jim thinks about all of this as well. To sort of separate the issues the market responds for one and secondly whether this is something that frankly we should be encouraged by. Well i think we should be encouraged but lets go back to jims comments of the number of moves that Central Banks have made. Its not just the number of moves that theyve made but how starkly different theyve been. Just to take two glaring examples the u. S. Federal reserve has ended quantitative easing just before the ecb starts quantitative easing. And that in turn is a reflection of the polar pop sits of the Economic Situation in the u. S. And europe. As to the volatility in the markets, thats to be expected and we expected it as well as jim with regards to the markets everyday deciding which one they believe, European Economic statistics or u. S. So jim, what are you buying here then . Well i think really you can buy across the board with the exception of some of the things that did really well in 2014, so some of those tech names, for instance, you know the facebooks of the world. I think you really can buy across the board because this is a selfcorrecting phenomenon. The lows that were seeing in the euro will help the European Economic position to become more competitive in a global market. U. S. Demand is picking up so that exports to the u. S. Can pick up as well and europe will climb out of its hole. I just want to bring steve grasso into the conversation now. Against this backdrop todays price action especially going out on the lows not all that ern couraging. Not encouraging at all. What you want to look at is that 50Day Moving Average. 2046 in the s p cash. A lot of these other gentlemen are talking about macro Bigger Picture stuff. You want to know how the trade is going to set up from here. Is it going to be the Euro Weakness Dollar Strength . Will you continue to see money flow out of u. S. Equities and into european markets. Steve, arent you seeing the 150 Day Moving Average still provide support on the s p 500 and isnt that what most traders are looking at . The 150, you always do that smoothing mechanism as carter worth looks to call it. For me though i think if we could see a breakdown in the markets, that would upset the most amount of people at any one given point. Thats true. By the way, the price action on oil, im curious what you all make of that as well. The fact we went out at the lowest since march 2009. The fact exxon was down 2 and its supposed to be the port in the energy storm. Here is the story, the way to think about it. Youre in a desert theres ten people and nine bottles of water. Whats the price of a bottle of water. Add two bottles of water. Right now thats the market we have right now. There will be no bottom until supply is brought in line with demand and thats going to take some time. So buy the bottlers. I would buy the bottle of water, perhaps something stronger if you are long oil. Kelly, i think we should try if we can step back not think about what the market is going to do over the next two or three days but stepping back and looking at the Bigger Picture. The problem i see is rates have gotten so low that the volatility is bound to increase. You saw just yesterday when the ecb made their announcement the volatility in treasury yields it was crazy. It went off the map. The reason for that is because when rates are so low around the world, you kind of asking for trouble just as most people who are investing in the swiss franc was when the swiss franc peg blew up. My point is this you either believe that the world is in a deflationary spiral and that the u. S. Is part of that deflationary spiral and if you believe that then all you should do is buy fixed income instruments in the u. S. And sit and wait. We have a different experience. Its called 2004 to 2007. The funny thing about this movie is weve all seen it play out before. The economy picks up momentum. Were adding jobs and the fed is hiking rates, but the long end of the Treasury Curve doesnt really move. Theres this conundrum and it seems to be an aggravated version. Is the fact that utilities have continued to outperform, is that the hybrid stock to buy or the sector to buy because thats whats perplexed me is that a bet Going Forward . Is that a safety bet . They both cant go up at the same time. Its both. But i think the Biggest Surprise from the next central bank is going to be the u. S. Central bank when they dont raise rates. In fact, if you look at the inflation forward futures, theyre at lower levels than when we eased in the past. If you were looking at what ben bernanke looked at, the fed would be easing now and right now we have the highest Interest Rates you heard what janet yellen called that. I dont see how this is a good thing, okay . Can we go back to oil . I dont see how people think the u. S. Cannot raise Interest Rates by 25 basis points how that is possibly a good thing the test though is should they raise Interest Rates and why they would. Im increasingly in the camp that thinks they put it off from the summer because theres just no underlying reason to do it. If you have essentially under Inflation Expectations are going down. Unless they want to leave themselves some room to lower in the future. 25 basis points isnt going to help you. Jim paint us the more positive story. Evan said tell us how they of this is good news but you seem to think it is. Theres one thing i want to go back to which is the price of oil and it factors into good news. The collapse from 100 to 65 certainly had to do with steves concept of too much supply versus demand but the collapse from 65 down to 45 has a smell of Something Else behind it. We all have to know that there were leveraged players this summer who got caught on the wrong side of the oil trade and that there are margin clerks out there who have been unwinding their position without a care for where the price is. Once that gets done and once the bodies are exposed, i think you see oil move back up to a clearing price in the mid 60. What about copper or iron ore. I could understand if it was a story about an Oil Revolution but it seems tosh about commodities at large collapsing. Skroop with copper and iron, thats been years in a making. Thats not a sudden collapse like oil. That has a lot to do with china, the stockpiling and easing of demand there, but those price declines in iron ore and copper have gone on at least three years. You look at a company like cliffs that has been hammered like this. Thats not something all of a sudden we woke up six months ago and said theres a recession afoot. Thats a longterm trend. We have to go but real quick i would like you to quickly give a sense of if the dollar keeps appreciating and thats kind of whats behind all of this does that still mean you buy stocks . Does that have other do you keep buying utilities . Of course you buy stocks. What do you do in that environment . Whats going on now is you have the stock market adjusting to earnings expectations that are coming down because of the strong dollar. You see it in ibm. You see it in the pharmaceuticals, anything with a global tilt to it has strong dollar effects but now thats being priced in and you can grow from here as long as the dollar doesnt climb precipitously from here. But the issue is isnt europe on sale . Relative to the prices you would have paid in july certainly relative to european exporters. Now, i dont think the market has missed that fact. I think thats out there, i think thats behind one of the things thats happened with equities, but you could see bigger things that havent come to the fore that would be in the works if you would think about a world which you were at parity or even at these levels bigger mergers. You will want to hedge the euro. You hedge it but certainly there are Big Companies that think that given whatever the trade restrictions and government restrictions that there are plays that make sense at the following currency Exchange Rate that didnt make sense before the world changed in july. We will pick it back up. Its an interesting idea. Thank you. Jim, thank you for joining us this afternoon. Steve grasso appreciate it. Have a great weekend. Thank you. Stick around and catch steve on fast money at 5 00. Theyll be asking one top analyst what he thinks about jack mas fearless outlook for alibaba in china despite sluggish growth. Coming up here, the northeast racing towards what could be a snowy messy weekend. Kelly cass has the latest on the forecast. Good afternoon. We are dealing with a mess already in the southern appalachians. Reports of freezing rain and ice in asheville, north carolina, so the vencentral and southern appalachians being impacted. This whole system will head into the northeast and rapidly intensify over the waters of the atlantic. Were talking more than 45 Million People being impacted and some of you are going to see a mix of rain and snow. We dont have that cold high to the north that will keep it all snow even for the big cities along the coast. Were thinking the interior sections of the northeast. North and west of new york north and west of philadelphia. North and west of boston. That is where most of the snow is going to be heaviest and is going to accumulate greater as we head into late saturday night. Were still going to be dealing with that snow from boston to cape cod toward down east maine where we have winter storm warnings in effect. That means at least 6 inches of snow accumulating there. You can see in the darker shade of purple where we are indicating some heavier snowfall. As i mentioned, away from the big cities were thinking i95 were going to maybe start off as rain in places like philly and new york, go over to a mix of rain and snow and then back over to snow in places like new york and philly. A lot of wind involved with this as well. You can see out towards long island were mainly going about 3 to 5 inches of snow. If you are flying say out of Kennedy Airport tomorrow, check ahead. There could be some delays but as you head north and west of the city in the purple that is where were indicating at least five to eight inches of snow. Same thing for boston. Were thinking mostly accumulating snow will be to the north and west of the city itself. Kelly, back to you. All right. Kelly, thank you. And be safe out there, everybody, please. December retail sales disappointing wall street. My next guest says the continuing decline in Energy Prices is about to fuel a major Consumer Spending spree. That story straight ahead. Also president obama proposing tax and College Savings accounts currently taxfree. He says they dont help the middle class, only the rich people. Is that true and what are the impacts of all of these proposals . Well take a closer look coming up. People. People. Stocks ended on their lows of the session today but was it enough to erase gains for the week. Bob pisani, what can you tell us . We had a fourday week so it was a little on the short side but we are down one day, i think it was today. Look at the s p 500. We were nice on tuesday and nice on wednesday nice on thursday, and this was the only down day. Major indices for the week did very well but there was some real discrepancies. The s p had a good week, nasdaq tech had a good week. See the dow lagging. American express and mcdonalds had a poor week. Mcdonalds disappointing on its commentary. As for the big winner its a weird group. The airlines had great numbers because the fouluel helped them out. When was the last time oil and gas ex flor ration was one of the big leaders . Its been months. It happened this week and today despite the fact that oil settled at the lowest estest estest level since march 2009. As for the laggards, you want to see what currency wars are doing . Weak euro strong dollar it means cheap exports from europe. It means cheap steel coming to the United States. It means price wars with european steel producers. You know what this means to the stock market for steel . Look, now you see whats going on. This is very instructive when people say, oh who cares about currency issues and how it affects the stock market. There is how it affects the stock market. Kelly, have a good weekend. Bob, you, too. Look for much more from bobs reporting here about etfs. I could go on. Much more on cnbc. Com. A report making the rounds says Consumer Confidence is rising and behind a Rising Consumer sentiment typically comes a boom in Consumer Spending. Is a spending spree on the horizon now that Energy Prices are so low . Joining our panel is kathy jones. Welcome back. Thank you. Are we about to dare i say it again, see yet another u. S. Real Consumer Spending spree here . We should see a pickup later in the year. So typically theres a lag of about six to seven months before Energy Prices fall gasoline prices fall. You see some pickup in Consumer Spending but keep in mind the real driver is wage growth and that has been flat and so you get some benefit from falling gasoline, Home Heating Oil prices, but we really need the Income Growth to pick up. If the estimate is somewhere between 750 to 1,000 the average American Family would benefit from lower gas prices where does that money go . Do people just save it or do they put it somewhere . Thats the big question right . We have had a higher propensity in the last couple years for people to save their money rather than to spend it and particularly in the lower and middle income sectors where wage growth hasnt picked up but were seeing revolving credit usage continues to be slow. Its growing 3. 5 . Thats way below the historic average. So we think some of that will go into that reduction which is savings and some will go into spending. The refi boom is kind of slowing down right . The longer you are at ultra low Interest Rates, people that were going to refi have done it and youre not going to see that atm at work anymore. I think those days are gone. We had that you say those days are gone. Im curious, has not the price of a 30year mortgage gone down at least i agree with you on that. Were at another level here. I dont know how the banks are responding whether theyre really cutting rates aggressively. But, you know, if the 30year bond gets down to 2 you know, are you talking about a 309year mortgage at 3 . Could you see Mortgage Rates get a lot lower if we drop another 80 basis points or so in the 30year but i think the question is if you look at housing, it hasnt been the driving in this recovery it has been in the past. First time home buyers have been largely absent from the market because the qualifying for a mortgage is so much more difficult. You have to have more down payment, more income have more security. So, again, its not the driver it once was. This goes back to the point about Consumer Spending because you know the last cycle a lot of Consumer Spending was driven by buying houses and furnishing them. It was the atm of the early and it was also a necessity. What kathy is suggesting is theres room for housing to contribute. We wanted housing to not be a negative. I was going to pick up on something kathy said earlier. You know what the most important data point is next week the most important event of next week. Its not the fed. Its not the gdp report on friday though those are all important. Its the employment cost index. Oh yes. Great point. Nothing will be more consequential explain to people why. Wages arent just in the december jobs report. Theres another component that comes out of gdp and the december number declined quite a surprise. Capacity utilization turned down. Theres something the eci on friday for the Fourth Quarter that will come out that will show a different story. Maybe wages are better. And that will play directly into what kathy is talking about because a onetime hit to gasoline, thats all good and great and maybe its used to pay down debt. People will spend whats in their paycheck what they can rely upon next week. Absolutely. People spend their income more or less a little bit on average. So if your income is growing, youre going to spend more. If your income isnt growing and particularly if you dont think its going to grow theres a behavioral aspect. A onetime blip is great but it wont cause you to spend permanently at a higher rate. Simply since youre the fixed income strategist are you predicating higher Interest Rates this year on more Consumer Spending . No, were not. We think the global drivers of Interest Rates are stronger than what well see. Whats the number for the tenyear for next year . Are you long 1. 80 here . We have been in the lower for longer camp for years. We think its actually rates are a little bit lower than they ought to be if you have a fair value model but thats accounted for by the global situation. Kartthy, hope springs eternal. Thank you for being here. President obama says he wants to give the middle class a tax cut. Why does he now want to start then taxing College Savings plans which a lot of middle class americans rely on to pay for Higher Education . Also ahead, well hear from former and possibly future president ial candidate Mike Huckabee on that tax proposal and who knows, maybe jay z and beyonce as well. Stay tuned. When you run a business, you cant settle for slow. Thats why i always choose the fastest intern. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast business and get the fastest wifi with the most coverage. Comcast business. Built for business. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. President obama pushing for a middle class tax cut during his state of the union speech this week, but today its another tax proposal thats causing quite a stir. John harwood joins us with the details. If you want to redistribute income you got to take away to give benefits to new people. So here is redistribution obamastyle as it comes to Higher Education. First of all, he would eliminate the tax deductibility of Capital Gains when you withdraw money from a 529 college plan. The president argues that 70 of the money in those plans is held by people who earn more than 200,000 a year. His idea of the middle class is in the second part part two of redistribution obama had beenstyle. He would expand the American Opportunity tax credit 2,500 per student for families up to 180,000 in income and josh ernst aid the second part is the key to doing the first part. The reforms the president has proposed for the 529 program are reforms that he would consider only in the context of the other education reform that is he put forward, and when you consider that entire package of reforms, the tax cut that were looking at for middle class families is 50 billion. But kelly, part of the controversy depends on how you define middle class. Certainly there are people who make more than 200,000 a year who think of themselves as middle class but the administrations target is at a lower income level. Fortunately for the people in the higher income level, theyve got a little more political influence so this proposal is not likely to pass. John, real quickly s that 200k for individuals or families . For families family earnings over 200,000. Thanks very much this afternoon. John harwood from washington. For more reaction joining us is Jared Bernstein a senior fellow at the senior of Budget Priority and he supports the president s plan. Jared is here with the rest of the panel. Listen, do you have a 529 College Savings plan . Absolutely absolutely. And i was going to use myself as an example because, yes, i have a 529. Yes, i enjoy those taxfree benefits and they have absolutely no influence on whether my kids will go to college because theyre going to go to college either way. And that is exactly what the president s plan is trying to target and i suspect the members of the panel might say exactly the same thing. Yes, we would love to have some free goodies through the tax code but we dont need theyre giving you some funny looks right now. Exactly. How about the exact opposite thing . Hold on a second. Hold on a second. So what we need to do is close a highly inefficient tax credit here, Tax Deduction i should say, and increase a credit that will be much more beneficial to families who really need the help in getting their kids to college. I have news for you, theres families that need that help that dont live here and they dont live in washington. They live all over america and theyre going to get it. If you think a family that makes 200,000 that has two kids in college is wealthy, you dont know america. Well actually people are struggling to put their kids through school. Private school costs are very, very high. Let me ask you since you know america so well. Its a dumb policy. Explain hang on. Jared, go ahead. What percent of americans earn incomes above 200,000 . It doesnt matter. Its not that much money. You dont know the answer. You dont know the answer and i will tell you the answer. Because i talk to people that make 200,000 every day and they are not wealthy. So lets actually bring some facts into the conversation. 90 of american households have incomes below 200,000. Lets be clear about this. Those families will continue to benefit from tax code preferential savings programs like 529 because, by the way, your contributions will continue to be tax free. The withdrawals wont be. Jared and the credits that the white house is expanding will hope those families as well. I will just ask a Bigger Picture question is this is like tinkering on the margins, isnt it . There are much bigger tax issues, both the corporate level and individual level, so what is this really about . Why is president obama launching this . Because in the scheme of things this is peanuts, isnt it . Can i just add before jared answers, steve here, i just want to say, this strikes me as enormously stupid politics. If you have no chance of getting something through, why propose something that is going to do nothing but piss people off for no reason because its one thing to mess with a rich persons or a wealthier persons or a middle class persons whatever you want to call it their own income but you start messing with their kids, that really gets them angry. First of all, lets talk about whats messing and what isnt. The first comment is actually more jermaine because the savings from this 529 part everybody is freaking out about is 1 billion over ten years. At the same time the administration is increasing their contribution to their College Access programs by 50 billion. So by a factor of 50 to 1, theyre actually increasing the amount of money available to middle class families sending kids to college all the way up to around 200k. Now, to get to steves point, and this is partly the other question as well look we have to think put the politics aside because steve asked a very good question on that. We have to go. We have to think about fiscal responsibility. We cannot afford wasteful tax program that subsidizes spending people would do anyway. Its just surprising that this would i dont know jump to the pop of the priority list given the relatively small amounts in terms of the budget that were talking about. But also just given the fact that hes proposing to spend so much more than hes taking away here. 50 to 1. Okay. Jared kind of undercuts your fiscal responsibility argument. No no. Just a little bit. Hes raising far more than that through his tax plan. His tax plan why does he have to worry about the it doesnt his tax plan actually does more than deficit neutrality. Whats the point of doing the 529 all right. This is circular at this point. You have to look at the full package. All right. Well take a look. Were still trying to help people pay for college. Jared bernstein, thank you for being here. Appreciate it this afternoon. 2016 president ial field is starting to take shape. Is former candidate Mike Huckabee about to be a future one. Well ask him that and a lot more coming up next. And this may look like a typical sneaker store, but its actually the worlds first ever sneaker pawnshop and it is the brainchild of a 16yearold who will join us later on the closing bell. Stay tuned. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. President obamas state of the union theme was a fullcourt press for the government to help the middle class. So is the middle class the battleground as the 2016 president ial race starts to shape up. Republican talking Points Center around tax reforms and tax cuts. No one better to speak about this and lot more than the man who might be in the mix himself, former Arkansas Governor Mike Huckabee author of the book goode, guns grits, and gavravy. Want to begin on this whole idea of tax cuts. We were having this suggestion about some of the tax changes the president is proposing. Do you think the gop can wing the swing voter out there with a message of tax cuts . Is that going to sell . If the president continues to want to tax people who have saved money for their kids and grand kids education, i think it will win the vote with anybody with iq above broccoli. Youre referring to the 529 savings plan. Do you have one of these . I started putting some in for my grand kids. The thought that youre going to punish people for being responsible and trying to help their kids get an education and in the same speech he turns around and says but i want to give free college to people who didnt save any money. Thats what makes this irrational. Its bad enough to say lets tax something we ought to want more of which is education funds that some parent or grandparent is going to pay for but then to turn around and say in addition to making it harder for working people to put aside money for their kids were going to turn around and redistribute free money to people who didnt save anything. But this gets into territory which i expect will be familiar ground for the next couple years. If 200,000 and up is the threshold, isnt that wealthy . Do we really care if people lose a little bit of save sntioningssavings . We we do care. They may have made great sacrifices. Its none of the governments stinking business unless it was illegally obtain and then its a federal crime. Otherwise its not the governments business if it was honestly earned the priorities that an individual wants to use their money for ought to be the people who earned it. So lets just say Mike Huckabee is president in 2091620916. I like the sound of that. I would love to see the fair tax. I wish we could rid ourselves of the irs. I think its a criminal enterprise. Criminal . When they use their power to separate their investigations to people who agree with them and those who dont, to target the viewpoints of people who they do not care for, that is criminal. I cant get away with that kind of thing and the irs is the one stop shop where they can create an investigation conduct it they can discover whatever they wish to discover. They can come to a conclusion and then punish you. All in one shop. Nowhere else in the american jurisprudence system is that possible. They also oversee obamacare. Would you repeal that . I would like to. It did not fix what it was intended to fix which is making Health Care Accessible and affordable. Its making it unaccessible and unaffordageble unaffordable. In your south which you care so much about and you talk about health and some of the difficult Living Standards of living situations of people down there. Isnt ultimately forcing health ib surers to expand coverage to millions in that area one of the best possible outcome . Better outcome is to make insurance available by creating a plan where the individual has some skin in the game. You will never improve the system if people who arent people feel plenty of skin in the game because everybodys premiums are going up to pay for this. They have the entire 14 layers of skin in the game now just to pay the premiums. Here is the point, why should people have to pay for elements of their Health Coverage they dont want and cant afford . Shouldnt they be able to shop and say it feels like thats what were evolving for. A system that lets you pick a cadillac or a bronze or basic plan. There are so many fundamentals built in. I am a 59yearold man, do i really need maternity benefits . Lord i hope not. Were forced to put things into the coverage we may not want need, or can afford. You pull a lot of punches in the book. You punch everything from reality tv the index itself reads like a cultural codecks of the moment. Youre pretty strident on everything from beyonce to the kardashians to the real world to just the crude and dumbing down culture you see everywhere around us. I take your point. I think a lot of people do. But its funny this is all coming from the same guy who excoriates the nancy state. You sound a little bit like the mean nanny in this book. Theres a big difference between recognizing some cultural cultural divides between the People Living in the bubbles of new york washington and hollywood and those living in the flyover country. No one wants to be the national scold. I dont want to be that either but i dont want the government dictating exactly how i have to live my life. I think the government has a role and responsibility to create an atmosphere for us in terms of incentivizeing good habits, perhaps even educating us, making us aware, but the one thing you never effectively do to an american is tell him what he absolutely will do because americans love freedom enough well just bow up and say ill do everything but that. I think its a matter of lets change cultural norgesms we need to but lets do it in the way we have changed other norms whether its litter seat belts, drunk driving. All of those are cultural changes but it wasnt because the government first told us what we couldnt do. It was because we became more aware of what we should do. I have to ask, if its a mitt romney as the forerunner of the gop, makes it through the primary, becomes the guy in contention, do you as a baptist, as representing a lot of the faithful across this country, if you will, have any problem with a mormon president . Of course not. I went on campaign diligently for him in 2012 and i would do it again. Be clear even my own qualifications for president have nothing to do with my being an evangelical or a baptist. It has to do with i was a successful and effective governor for 10 1 2 years in the bluest state in america when i governed. Thats what so youre running . Well im put it this way. Im leaning that way and i sure didnt leave my job at the Fox News Network just because i wanted saturdays off. Its good to have you on cnbc. Thanks. Are we part of the reality tv problem, mike . This isnt reality tv. This is wall street. Theres nothing real. Nothing real about that. No im kidding. Got to have a little fun with you. Its friday. Thank you for being here. Governor of arkansas for 11 years, Mike Huckabee. Coming up a story hot off the grill about how mcdonalds will chop several items from its menu. Thats next. Later well introduce to you a teenager who turned his sneaker collection worth 30,000 in the worlds first sneaker pawnshop. You wont want to miss this incredible entrepreneur. This story coming up when the closing bell continues. Imple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Tumult in the middle east with the change in leadership in saudi arabia and yemen had traders blocking to cnbc. Com. We did what we usually do when you have a big story like this, we grouped together all the guest that is have been on cnbc talking about King Abdullahs death and the fekeffects of that, grouped it into one big story and thats the story theyve loved all day long. Over 50,000 people checking out that one. Now, we also put up a story, one of our reporters, katy little who follows mcdonalds very closely got cued into what theyre cutting off their menu as they simplify their menu. Byebye bacon quarterback pounder and finally you were talking to governor Mike Huckabee about god, guns grits and gravy. We have the guns. We have a slide show of the hottest guns from the gun show in las vegas. Theres some wild looking numbers in there. People are checking that out. I think ill stick with the grits and gravy. Thank you. Have a great weekend. Its common for teenagers to use social media these days. My next guest is a 16yearold using social immediate to build the first ever sneakers pawnshop. He plans to release his own high end shoe line. This incredible story up next. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Youre driving along, having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. How about living the American Dream . Thats what one teenager in harlem is doing after opening the worlds first ever sneaker pawnshop pawnshop. Kate rogers has this story. Sneaker collecting was one considered a fringe trend but believe me when i say the industry is booming. Wee caught up with the teenager who is cashing in on teenager thats cashing in on the business that is supposed to hit 4. 7 billion this year. Like a lot of teenagers, chase reed likes to collect cool clothes and shoes. At 14 30,000 worth after basketball sneakers. Last year he sold his entire collection to open up the greatest first sneaker pawn shop. It was hard to let go of the collection. They are 14 years old, 200 pair of sneakers. Now, you have to go back to zero. It was like this is not really fair. Thats what i was looking at it until i got older. Im like all right. It was really worth it. It was part of becoming a young man and a business entrepreneur. His dad, troy also his business partner, said the store posts sneakers on instagram and receives hundreds of customers and calls daily. The markup on these sneakers is anywhere from 100 800 . With idols like gill gates, steve jobs and jayz. He has big plans for the future hoping to open up other stores. I will end up selling it rather than collecting it. Im a businessman now. Kelly is saying they are looking for private investors help them keep up with demand. Back over to you. Good stuff, kate. Sti right there as well. Chase reed joins all of us here. You are going to be up there . Do i understand you are launching your own sneaker line . I am and customizing sneakers for the last two years. Thats something i am very interested in. You are 16 years old. Im 16 years old z. My son is 15. I want chase to give him a job. He can be one of my investors. He doesnt have any money. Thats why he needs to work for you. There is a little generation gap going on in here. In my opinion, the idea of selling or buying used sneakers is kind of crazy, except the other day when my son came down and told me he had sold a pair of sneakers that i bought him for 100 for 300. This is no big deal for you. The sneakers come out at retail but they end up going for a lot more. They end up selling out. It is like the stock market down here. You can trade stocks just like you can trade sneakers. You can sell shares just like you can sell sneakers. If there is a shortage of hot inventory, how do you you get your hands on the hot inventory . I cant really tell you that. You just like we know our sneakers and we go out and get them. Say we get the sneaker. It is right there in our hands. People usually come to us. We buy sneakers and sell sneakers. Whats your demographic . When i was growing up, everybody said you you have to play golf. I am still playing basketball. Are people like me buying these sneakers as well . Everybody, whether they play golf basketball lacrosse or football. Just to collect or to play in. They buy them to collect. A lot of people buy them to collect. They sit in the closet for years. A lot of people wear them. My father plays basketball. I want to be a businessman. Whats hot right now . Whats hot right now is mostly jordans and adidas. A adidas are nice but jordans are more collectibles. The power of instagram driving their business. When we were at their store, froi and chase were posting pictures and within minutes, the post is ringing off the hook and people want to come and see what they have got on their shelves. Thats one interesting point. Instagram is driving your traffic within minutes. Whats your handle . How many followers do you have . We dont have that many followers. We are building up our instagram and online business. We post all the sneakers we get in the stores. We post the latest deals and the latest stuff with the sales. We post them up. Everybody goes crazy. Does nike and adidas make very small lots . Do they basically create the demand . With 7 billion people in the world, 3 billion on one sneakers and they are only making 500,000. Of course everybody is going to go crazy. Last question and we have to go. Two issues. One is are they helping you in terms of creating small lots so there is this aftermarket . Are they leaving money on the table at nike that they should be charging more for the sneakers . Nope. Nobody would buy the sneakers if they do that. We are the resellers. A regular person would not pay 200, 300 for a pair. They will come to us and pay if they havent got their hands ton. This is also fascinating. Truly. I love this story. Good luck to you. We might have to keep the sneakers and give them a try. Thanks so much. Hold on to your quarterly statements if you thought this was a big week for earnings you havent seen anything yet. What to expect from apple and google . Some final thoughts when we come right back. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with efficiency . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. Tdd 18003452550 [ male announcer ] your love for trading never stops tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 so when a market move affects one of your positions, tdd 18003452550 schwab can help you decide what to do. 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Im not going to be looking at earnings. Im going to be looking at deflate gate and rooting for my patriots. The world has enough haters out there. We need more lovers in this world. There is a fed meeting, the gdp report on friday. The eci. Durable goods. I wouldnt pay so much attention to these earnings. Look at the broader economy story. Make your investments off of that. Im just joking around. The deflating spiral. Come on we have the super bowl. At least they didnt get robbed like my cowboys. If im an investor and looking for Dividend Income or the best sector to be what would you tell me . Technology is a very good Sector Industrial and Consumer Discretionary. I like that consumption story we had. It is a delayed story. Now, we know foot locker and the sneaker places. Investors basically have to ask themselves one question which is, is the u. S. Economy growing and will it be okay in the future . Thank you, everybody, for being here on this friday. I really appreciate it. Fast money is coming up in just a few seconds. Melissa lee, whats on tap . For the past few years, linked in has been a performer. One analyst on the sidelines for practically the whole time. Now, he is saying it is a strong buy. Why now and what does he see ahead for the stock . Straight over to you guys. Thanks a lot. Fast fast money starts right now. Im melissa lee. Tim see more Steve Grasso Brian Kelly and guy adami. The tech heavy nasdaq eking out a gain helping stocks post their first weekly gain of the year. Next week earnings from apple ali baba apple and google. Rallying more than 5 this week ahead of their reports. How will next weeks earnings change the game for technology . How do the rallies going into the earnings guy, change the setup for the trade . Obviously, apple, i am going to be focused on