Transcripts For CNBC Closing Bell 20151008

That were set just when those minutes came out. You were watching the yield on the ten year as well. It looked like people were anticipating, oh, this is going to suggest theyre going to be soon. So the yields moved higher and then, bam, they fall off a cliff right after the minutes come out and now they are back to where they were before. Market cant decide. As that dollar moved lower oil moved to a high we havent seen since july. The euro at a two week high against the dollar, all kinds of movements and benchmarks set today. Netflix announce ago 1 price hike for some customers and those customers may not be happy about it but investors are happy about it because the stock around around midday on that news. More details coming up. And we havent forgotten about the big story out of washington today, House Majority leader Kevin Mccarthy dropping out of the race for speaker. Now who could take that job . John boehner is going to have to stay there until somebody is elected. Who better to talk about this than yeah, weve got larry kudlow and barney frank, both sides of the aisle stepping in to give us their reaction and predictions. Lets ged to the fed minutes released an hour ago, Steve Liesman is in washington for that story. That infamous september meeting, steve. Yeah, and do you know what, bill, it seemed like maybe it wasnt as close a call as some members afterwards described it. The fed members were clearly spooked at that fomc meeting by Global International developments in the markets and the potential effects of a slow down in china and other emerging markets on inflation. They said those inflation pressures they saw as transitory but some man gunman to worry that maybe they will stick around. Ultimately what they said is they said many expected the rate hike conditions would be met later this year and they saw growth continuing at a moderate space. The time for tightening was near but more appropriate to wait. Just a couple things on labor slack. The labor slack was seen as being substantially reduced or eliminated but some saw continued low wages as a sign of labor slack. On the markets there was a big discussion of how much was the Federal Reserve swayed by markets. They said not so much. They said the market movements were not seen having, quote, a significant bearing on policy and they were only seen as having a smaller transitory effects on the economy. The reason why they said they were watching markets was because the potential effect on the economy. Whats important about these minutes is that they come before for a meeting before those weak labor markets. If it wasnt that close before the weak labor report, i think its a little bit further away now. Thats why i think you get the dovish reaction from the equities today. Win look at the expectations in the market, steve, afterwards, still 7 of those economists surveyed think that the next fed meeting is maybe when they are going to raise rates, maybe 39 say december, but more than half say we are going to wait until 2016 before there is a fed rate hike. Yeah, you do see those forecasts being pushed into 2016. Look, it could turn around, we have a couple more labor reports before the end of the year, if those labor reports are strong, and clearly the fed is focused on whats happening with wages, if those wages start to turn around and you could see the market anticipate a rate mic hike. The fed would like to hike rates. The answer is a resounding no from the september meeting, maybe capital no after the labor report, but that could change. The data is just not there snoot jobless claims that looked very good this morning. I know its a hypothetical, but do you think if we havent seen the slow down in china that they would have raised rates in september . Oh, almost certainly, but, bill, thats a world from, i dont know, maybe when you started at fnn and i was at the wall street journal when the world wasnt quite so global, but this is the way the world acts now, china depends on the u. S. , the u. S. Depends on china, you cannot and no central bank right now makes policy in a vacuum. Guys, these are good questions and i will be able to ask some of these tomorrow to new york fed president bill dudley, we have an exclusive interview with him live on squawk alley at 11 00 a. M. Bill, if you have any other ideas email me. You got it. Do you see what he did there . He segued into that tease. He got to that promo and dismissed us at the same time. No. Oh, yes, we love blaming it on the producer. I love that, too. I do all the time. Thanks, steve. Good stuff. So much to talk about in our Closing Bell Exchange with the dow now up 127 points, michael guy yesterday from the inflation rotation fund, ben willis from princeton securities and Rick Santelli still celebrating the cubbees blanking of the pirates last night. Ben willis, like yesterday, this market not afraid to turn on a dime on whatever the latest news s what do you make of todays trade . I still believe that the overall trend is to the upside and will remain that way until the end of the year. Any sort of downward pressure will be a buying opportunity, the downward pressure weve been seeing a coming from buyer strikes, if you will, but what weve noticed is buyers continue to step into the market to buy stocks that have been sold off since august, trying to find value plays, there are parcels of the market that continue to outperform. Energy is the big obvious one today with oil moving on all kinds of rumors out of the middle east and russia and who is firing rockets at who, but as a group for investing you still have the benefits of oil and the materials sector as that pressure may be done with, but the down side risk, biotechs still do not look good, the ibb continues to be under pressure. Right. It continues to be if not a market of stocks, a market of sectors rather than overall stock we would be remiss not to mention that russia does admit it did fire some cruise missiles into syria to try to shore up what theyre seeing as the weakening of the assad regime. Also weve seen another leg up for the s p. Its now on track for the best week of the year for the s p. Rick santelli, when you look at the stock market charts today, intra day they tell one story, they go straight up. Explain to me, though, the ten year yield which i dont understand. Going into the fed minutes people thought, oh, we are going to hear that they were close and so they were selling treasuries, yields are rising. All the news comes out no. Hold on. Steve liesman says they werent close ten year falls and now theyre selling treasurifrestre over again. Whats going on . Well, first of all, i think the out go traders gave you a good glimpse into how the programming world viewed the initial coding of todays minutes and that was of course all rates fell initially. Stock market had volatility. All you pointed out. But i think the real issue is more of the long end. Were looking at two week high yields sitting at 211 in tens, 294 in 30s. Its purely a steep trade getting long and short end or unwinding some of the other flattening trades but i also think there is a sidebar in the wall street journal that theres many governments, whether japan or china for a varieties of reasons that may be on liquidation mode in the long end and i think theres also a thinness, a liquidity issue we pointed out many times. Yes, i think its curve implications. Lets not lose sight of the fact that the dollar index is not off nearly enough to make me think that the catalyst was only the fed and i do think that in the end that the problems in the long end of the market are going to be a lot more of a buyers shutdown, which is exactly kind of the issues we had maybe a week ago or two weeks ago in stocks, especially at these letters levels and the complexion of the curve. Michael, you have been among those who in the last week or so have been calling for a melt up in the equity market. Since last fridays low the dow is up a little over a thousand points right now, is this what you had in mind . Is there something to else to come and whats the catalyst . I think youre set up for some kind of reflags naer move higher because just because youre seeing some of that play out when you look at the emerging market currencies, oil trying to stabilize, even r maybe even push higher. In 2011 after the crash you had a pretty sizable move after that. I suspect you probably have a similar setup this fall, but the caveat is its probably going to be led by emerging markets. Everyone still talking about negatively in em, but if you look at whats happened the last two weeks whats led u. S. Markets higher has been broader emerging market stocks and i think that trend is much more likely to hold than this continuous sideways and jerkiness that the u. S. Market has been showing for the past six, seven months. All right. Got to go. Thank you all for your thoughts on todays Market Action. Appreciate it. So the ones red hot initial Public Offerings market like, you know, et cetera ee, fit bit, shake shack, thats now losing its luster. Kayla tausche has that story. Its a tough day for those companies that you just mentioned. For stock specific reasons, for ipos its safe to say this has been an ugly years. Companies going public are on average down 3 and the majority of new ipos are trading below where they priced those ipos. Like etsy. 88 on day one, its now down 54 year to date. Box, for instance, down 47 this year, axivant down 56 and party city is down 17 . But its really across the board, the lousy performances made investors wary of buying into companies with unproven track records and its also made companies shy to go public. Take a look at the number of ipos and amount of money raised this year and you will see they are both sharply lower. Half the deals scheduled for last week got scrapped and this week at least one has been canceled out of the 11 on tap. Another was delayed and then it was actually cut in half. The ceo of that company, cpi card, telling cnbc this morning, quote, due to heightened volatility in the markets cpis, ipo did not price as close to the offer as originally planned. They were going to try it again. They did price today but is this priced it 10 a share, the previous range was 16 to 18 a share. They only raised 150 million, guys, which is a lot of money but its half of what they originally expected. That is how much theyre having to take their expectations down here. Let me ask you this the lousy performance of these ipos that weve been itemizing here, do you think thats a result of macro Market Conditions or was it simply that these companies were oversold to investors . Well, bill, i think there are a couple things, first of aushlgs the irony is rich that were talking about the first few quarters of the year as a, quote unquote, good ipo market. That what means is it led these companies to price it very high valuation toss sell a lot of stock and to do so with largely unproven track records. A lot of those companies are not profitable, i lot of those Biotech Companies dont even have late stage drugs so when you get to a softer market like we are in now, of course, those are the first things that people start to sechlt those are the names are momentum comes out. Interestingly some of the deals that are going to be pricing now even though they will be below expectations, perhaps there is a little bit more room for upside, a little bit more opportunity for these companies. That is if they can convince investors to buy this newly issued stock. There are two big deals next week, those will be a very big test for the market snieb deed. Yeah. Kayla, thank you. Look at the markets. Weve got 47 minutes left in the trading session here and we continue to set highs for the session right now, the dow up 140 points and no, the s p is now the best performer of the three major averages up almost now it is up. 9 . Netflix raising the price of its most popular plan, we will find out what the company says about why its making the move next. Symptom market loves that. Also a maed House Majority leader Kevin Mccarthy drops out of the race. Barney frank and larry kudlow, two washington veterans will weigh in on todays capitol hill stunner. Stay tuned. I asked my dentist if an electric toothbrush was going to clean better than a manual . He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque and rotates to sweep it away. And oralb delivers a clinically proven superior clean versus sonicare diamondclean. My mouth feels super clean. Oralb know youre getting a superior clean. Im never going back to a manual brush. Im a senior Field Technician for pg e here in san jose. Pg e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. Raising a family here in the city of san jose has been a wonderful experience. My oldest son now works for pg e. When i do get a chance, an opportunity to work with him, its always a pleasure. I love my job and i care about the work i do. I know how hard our crews work for our customers. I want them to know that they do have a safe and reliable system. Together, were building a better california. The buying continues. The dow now up 162 points, the highs for the session right now, same thing for the s p and the nasdaq. And its broad, huh . Every sector is up. I dont know if this constitutes a melt up but a pretty good rally. Look at the ten sectors inside the s p 500 index. Energy is leading the way, wti hit 50 a barrel First Time Since july 22nd this day. Whats the laggard, was that healthcare . I think it is healthcare, that is among the lag guards. Financials as well is the penultimate laggard. Netflix shares rebounding on news that the worlds larging Video Streaming Company is rising the price of its most popular plan. Netflix is rising the price of its main plan by 1 per month for new subscribers starting on november 11th. Its to pay for more tv shows and movies and netflix originals. Now it will cost 9. 99 per month for two simultaneous streams. Netflixs most basic plan are l. Remain 7. 99 for one standard deaf stream. Shares have popped on this news with the company guiding for more than 69 million customers around the world by the Third Quarter. Even this small price hike for even a small group of lgts users could significantly impact netflixs revenue over time as it continues to grow. Now, the company has been adding users faster than wall street has expected, which has bolstered its stock over the past several years. About a year and a half ago netflix did raise its prices here in the u. S. For new customers by 1 per month and that had no negative impact on user growth. The company also hiked prices in europe for those european subscribers by one euro back in august. We will have to see if it has any commentary on whether or not that impacted its growth overseas as well. Michelle, back over to you. So that would explain, julia, why we see the rise in the stock price today, clearly investors are not worried that they are going to lose potential customers or customers at all based on this price hike if they were able to absorb the last one. They call this pricing power. Exactly. Yeah, pricing power, really no concern. If anything this just shows that netflix is going to continue to invest in original content and they feel very confident in their ability to add new customers even for a dollar more a month. All right. Thanks, julia. Shes in halfmoon bay, california. She is not in scotland, she is at a conference in halfmoon bay, california. Lucky julia, once again. 40 minutes before the closing bell, the Dow Jones Industrial average is sharply higher, we have rallied since those fed minutes and we are now up 157 pointsthis is the high of the session, the intra day start chart is going to look impressive, s p higher by a full percent. It really kicked in after the fed minutes came out at 2 00 eastern time today, shares of dominoes pizza posting their biggest decline in more than two years. We will find out whats sending the pizza chain into the doghouse it says here. Also ahead, barney frank and larry kudlow will weigh in on House Majority leader Kevin Mccarthy pulling out the race to become the next speaker. What next . When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. All right. Were pretty close to the session highs at this point, up 147 points for the Dow Jones Industrial average, a gain of. 8 , almost. 9 . Really took off after the fed minutes came out and they looked a love more dovish than people expected so therefore a lot lower expectations for fed rate hike anytime soon. Wti had crossed above 50 bucks, now its below that, 1. 82 was the gain today, gain of 4 . Still more midable in terms of percentages. Some of the movers, dominoes pizza falling the most we have seen in more than two years after the pizza chain posted disappointing earnings, was hurt by the strong dollar. Dominoes has 7,000 locations overseas compared to the 5100 here in the u. S. , the ceo will be on mad money with jim cramer tonight. Biomed realty trust has jumped on heavy volume after black stone said it was buying the landlord for 23. 75 a share, mall cash, that deal valued at 8 billion and adds to the private equity firms massive real estate holdings. Just a short time ago the leading candidate for speaker of the house, Kevin Mccarthy dropped out of the running. Seems no one wants this job right now. There are plenty of people who want t we will see who can get t joining us to talk about this latest move we have barney frank, do we need to produce him, of course the former long time democratic representative from massachusetts, ran the House Financial Services committee and larry kudlow our senior contributor here at cnbc. Boy, i dont know who to start with here. Larry, what do you think . It just seems that the Republican Party is in disarray, the various factions are warring. Its great fun to watch, isnt it . As Thomas Jefferson said from time to time you need a revolution. So mccarthy dropped out. I think he might have had the votes but it would have been too close. It wouldnt have been a very good election for him. And now, look, i just give you my own opinion, i dont know how this thing is going to work out, nobody seems to know. The gop has got to come together around what i call a Leadership Coalition that has moderate conservatives and more conservatives in the same boat. Theres two names that im going to pluck out of the hat and dont hold me to this, but just to have some fun. Peter ross couple, a really smart guy, former deputy whip from outside chicago, i think he would make a great speak, and jim jorpd an, he needs to be inside that leadership, too. Then they would have a coalition because they have got to get through budget issues and tax issues and debt ceiling issues. They have work to do. Larry do, those guys agree . Do they agree on anything . No. Nobody agrees. Nobody agrees. Thats the problem, right, barney frank . Barney, you know how all this works, you know the inner workings of the house what, do you think happened here . I dont know. I will tell you what i think might happen and if i were there i would be proposing this. That the democrats go to one of the republican conservatives, not mod rats, but not one of the Freedom Caucus, not one of the people on the far right of the party and say, here is the deal, we will give you the votes to be speaker if you agree to bring the following things up for a vote. We are not asking you to support them. We ask you to put them on the floor and then lets see what a majority wants to do. Short of that i dont see how they resolve t here is the problem, this is not the usual question of personalities in washington. Too often the analysis acts as if the members of congress are autonomous beings. What the republicans are suffering from now in both the president ial process and in the house is the product of all this rhetoric that the government is no good, the government does more harm than it helps. You have an underappreciation of the need for governance. I think john boehner was, in fact, thrown out because he was he was convicted of conspiracy to commit government and here is the issue. When boehner said a very interesting thing, i dont want to put my members to a tough vote. Here is the problem, voting for a speaker who will be for raising the debt limit as part of a deal and a budget deal is a problem for a lot of republicans who are going to face primary opposition. This is the problem in both the president ial and in the house. Namely that there is such a large number of republican primary voters who really reject what you need to do to govern, but i dont see how they get out of it and to be honest i think this is going to now become an election issue in 2016. That fund amountlism. Larry, do you think the Republican Voters reject what is needed to govern . No, i dont think its so much governing, its a matter of philosophy. Its a matter of principle. I think barney makes a good point about the governance issue, but, look, youve got whats in front of them . Right here in front of them theyve got to get a budget done, continuing resolution, december 11th, that includes a dit ceiling. That also includes a debate about the spending caps, the socalled sequester. So the party is somewhat divided. In the recent past only 90 republicans have shoet voted for these budget deals, the deals have carried because of democrats and john boehner got into a lot of trouble over that. So they are going to have to figure out what it is they want. And let me put Something Else on the table. The economy is slipping, the last couple of months the jobs reports have been lousy, the ism reports have been lousy, im not predicting recession but its slipping. For heavens sake why doesnt paul ryan in the house and orrin hatch in the senate put together a substantial Corporate Tax cut, get it through and by reconciliation which needs only 51 votes pass it to save the economy . The Republican Party is supposed to be in favor of growth and spending control and lower tax rates but they are not getting it done in washington for the grass roots are furious. I can see the wheels turning, bernie. I want to respond. I agree with much of what larry says though i disagree with his prescription to some extent. Here is the point, im not the one who says its the republican primary voter it was john boehner. People missed when john boehner resigned he said, i dont want to run for speaker again or have a challenge and make my members take a tough vote. Why was it a tough vote . Its a tough vote because republican conservatives were going in saying, john, i love you, i work with you, but if i vote for new a public roll call i will get a primary opponent. I understand there is a philosophy, but here is the deal. Yes, its legitimate to fights for your philosophy but in the american system the separation of powers, staggered elections. You have to understand that you fight as hard as you can for something you want but at some point you have to compromise. You have people in the Republican Party who have got primary voters believing that thats a bad thing, thats why they are going to have a hard time resolving this. Barney, you said earlier if you were still in the house or your suggestion to the democrats in the house would be to go to a moderate republican and offer a deal not a moderate, a conservative. You cant ignore the Freedom Caucus these days. Well, you do co they are swaying a lot of votes right now. Thats what the democrats would do. Im not talk being somebody on the left of the Republican Party, they are an endangered species anyway, im talking about the conservatives, john boehner type who you would go to them and say, okay, look, we will vote for you for speaker, we know you will disagree with us substantively on all these issues, we ask you to put it to the house, let house majorities decide what happens to the budget examination, what happens to the xm bank, there goes larry again, what happens to the debt limit and you dont demand do you know what, larry let me finish. It reminds me of harry read when he didnt want to bring noig vote in the senate. Its on the other side now. You dont demand that he vote with you, but you say, we will give you the votes, you stick with your conservative convictions but let the house decide. So, yes, i think thats a doable deal. Thats one path, i acknowledge that, but i think the greater reality inside the Republican Party is that theyve been passing budgets . Recent years with 90, 91 republicans. Right now they have close to 250 250 so you can see there is a gigantic split in the party. All right. That split is going to have to be second riled. How . One way or another. This leadership battle may not be the end game. I get that. Correct. My proposal im being very modest about this. They need to have a Leadership Coalition that has the moderate conservatives and the Freedom Caucus conservatives. Thats why im putting up two names. It doesnt work that way. Peter rosscum and jim hold on a second, barney. Now, we may disagree, barney and i are going to disagree with priorities, i want to get a Corporate Tax reform on the table and repeal obamacare. I think the leadership has to focus on that stuff. Theyre dodging the tough bullets right now. Larry, here is your problem, two problems. First of all, you are not going to repeal the program of a president that is just reelected. Were governed by the last three. But secondly and more important putting a conservative and more extreme conservative together it doesnt work. You get two names together but you still have to have decisions. The legislative process is not amenable to that kind of compromise. I think you have this serious problem that the republicans the more conservative ones face a problem because if they keep this up theyre going to help the democrats win and the question is whether they think it is better off to do the best they can now, go forward and not and maybe i hope they dont because they wont be in better shape this year. I think the issue is youre not going to get your problems through obama, i get that, i agree with that, but the Republican Party has got to tell the electorate what they stand for, what are they beliefs and what is their larry, just quickly. They have done a guys, we have to go. I want to agree, yes, you tell them that, but you dont shut the government down if it doesnt win. Look, i dont want to mess with the debt ceiling. Barney frank and larry kudlow, they agree at the very end. We had planned to talk with them both about Hillary Clintons proposal to tax High Frequency trading. Thats so 12 hours ago. We needed to talk about the situation with the Republican Party and the house right now. By the way, be sure to catch the next republican debate, it will be right here on cnbc, its your money, your vote, the candidates will debate their economic plans. It happens october 28th, mark your calendar, coverage starts right here on cnbc at 5 00 p. M. Eastern time. Looking forward to that. Time for a cnbc news update with sue herrera. Sue. Hi, michelle. Here is whats happening at this hour. Nbc news reporting that cruise missiles fired by russia from war ships in the cass mean sea at targets in syria have crashed in a rural area of iran. It is unclear exactly where those missiles landed or whether there are any casualties. Police in sacramento say they are looking for two asian men in the stabbing of Spencer Stone who helped thwart a terrorist attack. Stone who was stabbed multiple times near a bar in that city is in stable condition. Opposition politicians releasing tear gas to pro protest a brokered agreement with the government of serbia. Before releasing the tear gas they blew whistles and shouted as the cove voe assembly stride to adopt those proposals. Paul prudhomme who became one of the First American restaurant chefs to achieve worldwide fame died today. He became prominent after opening k pauls louisiana kitchen in new Orleans French quarter. He was 75. Its so fantastic. Right, bill . Love it. Its really wonderful. Rip paul prudhomme. Thank you, sue, very much. Those cruise missiles that were fired by russia, thats another reason oil presumably moved higher today. Crossing above 50 at one point. But we are heading to the close with the dow up 120, off the highs set about 15 minutes ago. Weve got 25 minutes left in the trading session here back above 17,000. First time since august 20th. You are full of the stats today, arent you . I know. Anything could happen in the final half hour run to the closing bell. Lets see if we get even more rally in this rally. A leading trader will tell us what hes watching next. Important than your health. Or the freedom to choose what doctor you want to see. So if you have medicare parts a and b, consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, these let you choose any doctor who accepts medicare patients. Youre not stuck in a network, because there arent any. Plus, these plans help cover some of the part b medical expenses medicare doesnt pay. So why wait . Call now to request your free decision guide and find the aarp Medicare Supplement plan that works for you. Like all Medicare Supplement plans, youll be able to stay with the doctor or specialist you trust, or look for someone new as long as they accept medicare patients. But unlike other plans, these are the only ones of their kind endorsed by aarp. Rates are competitive. So call today. And learn more about choosing the doctors youd like to see. Go long. 22 minutes before the closing bell. I wish i had a rich uncle like dan grasso, fast money trader. We are back to the stock market loving an easy fed, the fed minutes come out, way more dovish than anybody expected. Whats odd is we started off at this level back around that original meeting where they didnt raise and they slammed them. It was extremely bearish. We thought the market wants the fed to raise rates. Exactly. We trade down to 1870ish in the s p, which is basically where we were for that bad nfp number and they rally them back. It just goes to show you they dont know what they want snoot market. The market always knows what it wants, the participants thinks that the market wants higher rates. It doesnt. We did get back to that 2020 level, they sold them right off of there. I think you still have to wait a little bit. Im sorry staying it. I feel like im sorry staying the bearishness just a bit, but to me it doesnt feel like the market wants to shoot to break through that 2134 level, the all time s p. I think the market wants to take a little bit of a stutter step back, just have china back online, lets take a look in a week or so. All right. Steve grasso. He is not your uncle, but you wish. You will see him on fast money later. Bill. Thank you. Janice capitals bill gross is suing his former employer pimco for 200 million in damages a little over a year after he was thrown out. Brian sullivan who has frequently interviewed gross lately joins us to talk about this intriguing lawsuit. Brian, when you get the words like kabal in this suit it is pointing to a conspiracy theory. It really is. The lawsuit is long and reads like a thriller. It is not filled about w. A lot of legalese, its here is what happened and it lays out exactly what bill gross is alleging led to his ouster and it slams mohammed larianne, it slams andrew balls executive at pim co essentially blaming him for leaking news of gross impending departure because they found that he called the financial times. This is the kind of stuff you are reading in this lawsuit. The legal basis is simple, breach of contract. Theyre saying they had a contract to share profits from the bonus pool that bill gross alleges he was terminated, did he not quit and therefore he is owed a portion of that bonus pool which by the way is probably a couple hundred dress million dollars. Thats about 80 million a quarter is what he says he was owed for last year, bill. Right. So what i found intriguing when i read through this is the comparison of the investing styles, bill gross thinks he is like a bonds and burgers guys, mohammed is cheesecake factory, loves to invest in many things comparing it to the size of the menu there, real difference in investing approach is clearly one of the core issues. That was part of the problem. They used cheesecake factory. Mohammed wanted to turn pimco into bonds, commodities, whatever. Gross said all we need a bonds. They took a knock at him said he did well at harvard, everybody was doing well that year, he fought with Lawrence Sommers then president of harvard which led him to come back to pimco, a grew of executives effectively i guess i will use the term ganged newspaper a conspiracy to oust him, he got terminated and is suing. He was the founder of the firm. He is obviously not happy. Pimco told you they havent seen the complaint and we should they said it has no merits. Gross attorney told you if he wins any money he gets will go to charity. This is not about the money. No, not at all. Its stuck in his crawl. He made a lot of money while he was there. Thanks, brian. 18 minutes left in the trading session here. Come off the highs, the dow still, though, a healthy gain of 110 points right now. Coming up next, the volkswagen emissions scandal impacting consumers here but concerns mount over what it can do to the european economy. The president of the euro group thats the top finance minister in europe will share his thoughts next. Volkswagen emissions scandal volkswagen america ceo michael horn trudged up to capitol hill today to face questions on the volkswagen emissions scandal. That was a tough hearing today. Outside the imf meeting today the president of the euro group was express whag the scandal could mean to the whole european economy. Our colleague Geoff Cutmore joins us from peer u where those meetings are taking place right now. Jeff. Hi, good to see you guys. It was a fascinating conversation and a first on with mr. Bloom who heads up the powerful euro group in the european commission. His face is familiar to many who watched him steer the greek crisis to where it is at this point. He had strong words as far as vw is concerned. One of his key concerns and worries is that the volkswagen scandal should escalate and have an impact on europes largest economy, germany and on the eurozone as a whole. I put to him that there was a risk of contagion that european products around the world will not be looked upon kindly as a result of whats happened at volkswagen. He expressed his flus operation about this issue. Lets listen to what he said. I dont think its been a european problem, it is very much a volkswagen problem and they should sort it out and if other companies have done the same they should bloody well sort it out also but lets not make it a very broad issue. Well, very Strong Language there from mr. Bloem. I we on to ask him what he thought should happen in terms of fines levied by u. S. Regulators on volkswagen. He said its appropriate that those who have done wrong should be punished, but ultimately the size of the fine should be appropriate and should not lead to the end of volkswagen as a viable business. Back to you. Good to see you, jeff. 12 minutes into the before the closing bell. The Dow Jones Industrial average still deep in positive territory, up 136 points, we had been up even more than that, but still decent gains since those fed minutes came out 2 00 this afternoon. Still looking for art cashin. Yesterday it was 300 million to still and we still melted up on the close. Buying the dip is alive obviously and well. That according to our next guest robert luna, he will join us with a few tips, stocks he is looking at to buy right now. After this. Welcome back. A couple of stocks were watching, poly come and my Tell Networks up sharply. Elliott management acquiring stakes of more than 6 in those videoconferencing equipment providers. Elliott management urging both of them to merge. We should know poly come ceo was scheduled to be on our program but he chose to cancel our interview this morning after the disclosure of all of this. Come back anytime, wed love to talk to you. We are heading to the close now, nine minutes left with the dow up 130 points. We have a guest on who says that stock picking could actually be indexing in the next phase of the bull market. With us is robert luna. Is that true in a late stage of a bull market if we are still in one . I think so, michelle. Up to this point investors have been rewarded for outweighting momentum, high multiple stocks and it hasnt made a lot of sense to dig and tried to find value. After weve seen this big direction correction, some of the stocks that are beaten up, the deep discounted stocks, if you look at the russell today its up. 7 Small Cap Value is now leading by a score of two to one. It would appear this rally is resulting from something related to the fed. Welgt minutes out that show a very dovish stance, it didnt look like they were close to raising rates in september and the market is off again. Guz that reflect what you are inclined to buy . Are you going to go for those more inclined to benefit from lower interest rates, for example . Not necessarily, bill. This is a situation where im not really surprised to see the stock rally. We work with the average american who saves all their life in their 401 k , Small Business owners getting ready to sell their position and they have come to a position where they need a portfolio thats their source of income and when you look at interest rates, treasuries, for example, paying 2 , stocks are really the only game in town. So in terms of buying on the dip, every time you see this pull back investors are going to continue to step in because there is really no other place in town. When i hear the end of the bull market as a money manager i still have to create a rate of run foreign my client. Until someone can show me a better place an he can wilts were going to continue to dig. Were doing individual stock picking this year. The s p 500 wasnt cheap, but if you dig down deep there is a lot of companies that are isolated away from the globe of whats going on there and creating value for shareholders. Companies we like look amtrust financial, thats a Company Started back in 98 as a workers comp discounted values in market trade, theyre growing 15 , 20 year over year, no one is talk about the company but a lot of value for shareholders. Also likes europe which next time on we will discuss. Robert luna. Coming up next, we are coming right back with the closing count down. A few charts to show you what happened today. Crazy volatility again. After the bell, earnings season gets started with the parades led by alcoa, we will get the break down from ceo Klaus Kleinfeld at the top of the hour. Stay tuned. Here at Td Ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. All right. Weve got about two and a half minutes left in the trading session here. If you waited until 2 00, then you got all the action. Thats when things started to happen, when the fed minutes for the september meeting came out right here, we got what is typical a stutter step market trying to figure out what it all meant and then it was off to the races. We were up about 160 something at the peak there, now up 135 on the Dow Jones Industrial average. Oil also very volatile day, it touched 50 at one time, First Time Since july, right there before pulling back just a little bit, up about 4 at 49. 72. The tenyear yield all over the map as well, going down after the minutes came out and then moving back higher again. We are at 2. 10 at the moment. And the dollar index, also very volatile. After the minutes came out down it goes with what appears to be dovish, but then it came back again. We are down to 9530 right now. Mary thompson is with me. You made an interesting comment, look at the transports. With oil as strong as it is right now, the transports are supposed to go the other direction but they were buying them as well today. They were buying them. It was the railroads really which were leading there. Whats interesting to note is we are pretty much right back where we started from. We will have closes we havent seen since august in the markets and what happened today as we saw a rotation, basically risk on came in after the fed minutes, we saw yields rise, bond prices fall and gold come off as well. Yesterday we had 300 million to sell going into the close and we still powered higher, today it was 100 million, not as much and art cashin was telling me its probably going to be a nonevent, we are Still Holding on to good gains. After the bell we will get alcoas earnings. It was the Economic Data beforehand. One of the reasons people are interpreting the feds comments as being dovish is because of the weak data afterwards, the ism, jobs numbers sorks expectations maybe they will keep rates, you know, on hold a little longer. What could change this . Maybe some reguidance or insights from corporate america. This one will be very interesting. We enjoy talking to Klaus Kleinfeld but this will be his first interview since they announced the split up of the company into two pieces. Stay tuned for that and the earnings from alcoa coming up right now on the second hour of the closing bell. Welcome to the closing bell, im Michelle Carusocabrera in today for kelly evans, Bill Griffeth will join me in just a moment. Here is how were finishing the day on this newsy day on wall street. Dow jones industrial average higher by 139 points,. 9 , s p higher by 17 points, the nasdaq higher than 19 points. Lets discuss more about the fed minutes. Cnbc contributor stephanie link. This market said today it loves the dovish fed, the fed minutes come out and we are off to the races. Its dovish commentary from the fed, slow creep back in oil but not getting out of control, its the dollar kind of taking a breather. We had a couple of good earnings along the way, pepsi, last week accent tour, thats going to be the focus Going Forward. All these things together people are breathe ago sigh of relief. The biggest call this week has been the shift into energy, industrials, materials. The lag guards, theyre buy in value, selling growth. It will be interesting to see if this continues through earnings. What do you do with biotech, then, or healthcare . We had a guest here yesterday who said biotech really is very undervalued based on what theyre earning relative to what their price is right now. Certainly. There are pockets of biotech that are very cheap and very amtrak testify. I would say youve got to wait until earnings and you have to see how the reaction is towards earnings. Right. The reaction will tell you everything. If they report good numbers and these stocks go down and yet the energy patch they miss numbers and they go up, thats going to tell you a lot about where this direction is going. We saw the jobs report on friday and it was stinky to use the brady bunch term. Technical term. The stock market sold off and we said now the market is back to caring about the economy, then we see the feds say they are so worried about the economy maybe they dont raise for a while. What does the market want . I think the market wants the fed to be consistent and we cant have so many differing opinions coming out on a daily basis. I think if theyre data dependent we want them to be data dependent. I dont think anything i read in the fed minutes was a panic about the economy, it was not a reacceleration of the economy but we are somewhere in this goldilocks time frame. The market has been expecting 13 cents from alcoa, but its clear what will be more important is to get some comments from Klaus Kleinfeld, we will be talking about the ceo about whats going on overseas especially because thats kfc, yum brands they gave us a bad number, a few other companies have let us know china is slowing down. It will be very important to hear not only what alcoa has to say about the Global Economy by the other industrials as well. We will get a bunch next week, we have a great line up next week in terms of earnings. With alcoa to your point its more about what he says about the macro and also within the various different subsegments that theyre involved. R. Hold on one second, stephanie. The numbers are out. It looks like were getting 7 cents should i go to Morgan Brennan on this . It looks like a big miss here, yes . Yeah, so its a miss on top the top and bottom lines, alcoa reporting an adjusted 7 Cents Per Share analysts consensus had been for 13 cents a share. Revenue of 5. 5. Billion that also missed street estimates of 5. 65 billion. I will give you some of the bright spots and then the drag. Engineered products and solutions record revenue 1. 4 billion, saer space revenue up 39 year over year, global world products automotive revenue up 133 . Best aluminum profitability year to date since 2007. Those are the bright spots in this report. The drag was commodities prices with Aluminum Prices down 27 year to day, that was a drag on primary metals or the smelting operations for alcoa reporting negative 59 million in profitability for the quarter. Alcoa reporting 6 cents a share that missed street estimates, also a miss versus what the street was looking for. Shares of alcoa down 3 right now in after hours. Back over to you. Morgan, thank you very much. Well, here we go, were joined in a cnbc exclusive by the chairman and ceo still of the combined entity known as alcoa, Klaus Kleinfeld and also with us our friend and colleague mad moneys jim cramer. Clause, if there ever was a good example of why you are splitting this company up it is this report, engineered products record gains, thats where your profitability was and commodities which is the other half of the equation is what was the big drag for you. Thats exactly right. And if you look at whats been going on in the economy you see its a lot of volatility thats in there. From Commodity Prices to currencies to worries over china, emerging economies interest rates. If you look at that and reflect it to our quarter i think you see quite a bit of resilience in there. You just said it we have announced last week that we are separating the upstream company and the Value Company and we are able to do that because we have in the last year done a lot of work which will make the upstream part much more competitive so that it can stand on its own. I haired morgan say also correctly pointing out there are bright spots also on the upstream side, for instance, the aluminum business having the best year to date since 2007 and thats also wonderful thing that we see in there. And then the value at basis good growth from aerospace, we Just Announced this week two Major Contract wins each one over a billion, one from lockheed, one from airbus, one in titanium by the way which we just added to our portfolio recently, its actually the First Quarter where we have rti in our numbers. All in all we have made the competitive more competitive, more resilient and in this light i think we need to folk ugs on those things that we have in our own control and thats what were doing. We cant control the factors unfortunately that we all have to deal with out in the economy. Mr. Kleinfeld, its michelle. Good to have you on. When i looked at the tenyear chart of alcoa today i totally could understand your frustration. Many stocks have recovered from 2009 but alcoa because of being so pinned the price of aluminum really hasnt been able to move. That being said, moves like you are making when do you a big split up like this, sometimes they inevitably mark the bottom. When you guys were going through what must have been a tough decision in the boardroom did you ever think, wow, if we do this maybe, you know a year or two from now actually commodities are back again and booming and it was a mistake to do or no . Look, michelle, this is not about the shortterm. This is about a longer term strategy. Weve been working on making both of those entities, the upstream as well as the value at stronger and giving it scale, more competitive and giving it scale so that they can stand on its own. Both as you pointed out have very, very different investment pieces also and we are giving our investors an opportunity to basically future in vest in those two. One the upstream is very much focused on commodities and coming down on the cost of which weve done in the past and this has five basis, box i had, aluminum na, energy essence, smelting and caster in there so those are the five pal lars that it stands on. The value add business has a different characteristic, growth innovation in attractive markets, aerospace, automotive, commercial transportation so very different profiles. This is not short term optimization, this is longterm well thought through and well i mean, put in place strategy that weve been working on for quite a while with all the things we have been doing. Jim here, one of the things that i think is interesting about this particular quarter is there is so much that happened that was good in the higher value added part of the company, but i want to hear three reasons why i actually want to own the upstream because i think that i listen to what michelle said, the upstream seems to be a bargain if you think that what you put through this quarter is going to yield a different looking company a year from now. Well, look, mine, the upstream what most people dont understand, the upstream doesnt just stand on aluminum, it stands on five basis, there is the boxit ebusiness and china doesnt have enough boxite, they are importing 40 to 60 of their boxite, thats god to be in there alumina, we invented the pricing index now, 70 is priced, coupled from the aluminum, and we have the largest and lowest cost position in. There are Energy Assets that can flex flee be leased to sell it as we do with 70 ore use as we do with 30 to produce stuff. There is a cast house system which caters to our customers and then aluminum in there. Aluminum we will worked hard to come down on the cost curve, we are now in the second quarter. If you are interested in those basis, i think its really a very, very good investment. All right, clauklaus, since w you last you won this incredibly big contract with Lockheed Martin and would you have won those contracts if not for the acquisitions. What we won here is 1. 1 billion contract for all of the titanium mild products that go into the most advanced aircraft that exist the joint strike fighter. Right. So we wouldnt have had that. We wouldnt have been able to make that offering if we wouldnt have brought rti into us, acquired rti. When we acquired rti we said this is very strongly about complimenting our value chain. We had some stuff in titanium and rti is specialized on titanium. These two things come together and you see customers appreciate it and keep in mind we only closed on the 23rd of july. So its in this quarter. Right . On top of it we have quite a number of other parts, mechanical parts also that the alcoa did before, before that on the joint strike and a lot of the titanium that will be supplied will be used in some of our facilities to get further processed like forged or machined or cast. Claus before we let you go, and you and jim will be doing your interview in a little bit here, were trying to get a sense of how china is doing for a lot of different companies, clearly the fed is focused like a laser beam on that, thats the reason they didnt raise rates in september. In your view from your standpoint how is the chinese economy doing right now as it pertains to your business . Well, i would portray this as certain a little bit of a cooling down. Imf came out the other day with their prognosis on china and therapy difficult ago 6 f 67. 8 growth rate for this year. I think we have to put this in perspective. They have still growing, i think the chinese would say they grew at a high rate now they are turning to a need yum right rate. Imf predicts next year 6. 23 growth in china. We see demand for aluminum worldwide is going to grow 6. 5 . Right. We also see that we are going from a slight surplus into a deficit thats at least what we are expecting for next year. We also see that there is really no export from chinese primary metals into the west. The has relatively come down and come at this point in time seemed to have come to a slow down mr. Kleinfeld, if i could ask you a followup on china. It says you have lowered your Production Growth for automotive Production Growth, you thought it was going to be up 5 to 8 for 2015 now you think its 1 to 2 and that heavy duty trucks and trailer production is going to be down 22 to 24 . You thought it was going to be down 14 to 16 . So it looks like you are seeing some impact there. No thats absolutely correct and you will hear me in the investor call elaborating on this. Thats exactly right. Weve pretty much on almost all segments lowered the numbers on china, but also imf has lowered the numbers. You have to put it in perspective its not falling off a cliff. For us as alcoa what is really important that in the value add businesses the markets that are more critical for us are the developed markets like the u. S. And europe and there i think we even feel like a breath of optimism going through the u. S. If you look at the Consumer Confidence numbers in the u. S. Klaus kleinfeld always good to talk with you, thank you and we will let you and jim go. Jim, thanks, you guys will be continuing your conversation very critical time for one of the real corporate icons, alcoa. Klaus kleinfeld will be with jim on mad money tonight at 6 00 p. M. Eastern time. Always kicks off the earnings season. Its underway now. A political stunner on capitol hill today, Majority Leader Kevin Mccarthy dropping out of the house speakers race this afternoon. Who is the new favorite to replace john boehner . We have two republicans with two different very takes which is very symptomatic of what is going on in the house. Are you worried about a Technology Bubble . One investor says investors needs to chig out. Ll out. My name is mark amann. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. A surprise in washington today, House Majority leader Kevin Mccarthy dropping out of the speaker race. Joining us now with his reaction is congressman david brat,s republican from virginia and a member of the conservative Freedom Caucus which did not support leader mccarthy. Good to have you here. Welcome, sir. Tell us what happened today and why. Yeah, well, the surprise to everyone in the conference, i cant answer the why question, a lot of new names are being floated already, we have two candidates still in and a few more folks will be adding their names to the hopper. Youre happy about this, right . My concern is the conference was making great progress in terms of getting rules, we are moving toward a bottom up procedure to include all members and get back to regular order instead of having these budget blowups at the end right before christmas every year that youve gotten used torques we want a budget process that ends in april or may so we dont have all these budget blowups with the planned parenthood chaos and all of the debt ceiling drama we are going to have right before you go into christmas. All this work should have been done through regular order and wall street would be a lot happier if we did our work in regular order. The conference was on a good trajectory but the speaker put this vote a little too early today and i think if we would get better rules in place the country would be in better shape. I guess you saw Kevin Mccarthy as boehner 2. 0. The question now is, i mean, clearly the Freedom Caucus is having an impact. You went after john boehner answered stepped down. You never made it easy for Kevin Mccarthy now he is pulling back. So who possibly can get enough votes to be the next speaker here . Does it have to be somebody from the caucus itself or is there a i hate to use the word compromise candidate. Sure. Who do you think could be the next speaker here . Im glad you asked the question, its a false narrative of 30 or 40 people and bringing down a speaker, thats clearly a false narrative. That couldnt possibly be true. Last week we had 153 conservative republicans vote against the budget of the United States. Thats the number that can cause some change up here. Right . When you dont have regular order and youve got a bad budget bill, 153, the majority of the republicans voted no. Thats whats causing the big changes up here. Okay. Would it be paul ryan has said no way. Yeah. Would it be a paul ryan, jeff hensarling, jim jordan your leader in the caucus . Exactly. We are a nation of laws not of men or personalities. Everyone in d. C. Cares about the horse race and all this drama that sells newspapers. Instead you should pay a anyone to who will sign the basic principles of getting back to regular order, not being vindictive members members who dont vote the way they want. Who filts this bill . Who is that . Who has those criterion . Yeah. I have ten, you can go to facebook and web page, jim jordan and our group have criterion. The whole conference is in favor of those criterion of work frg the bottom up, Kevin Mccarthy pledged to work on the same prirnls. The press likes to sell this, there is this big war going on. There is no war . No. I dont call it a war. No one in our group is calling anyone names or spreading any of this nonsense. The press loves that. If you get to good process you will find a good outcome. Okay. Congressman brat, thank you. We know there is a vote coming up we have to let you go and thank you for your time. Thanks for having me on. David brat, the republican from virginia who is a member of the Freedom Caucus there and, you know im chuckling. To watch this all unfold, i get their frustration, the budgeting process has become just an absurdity over the years and we never actually get one done. Its ridiculous. But who do you blame, right . What is the problem in that regard . When everybody nobody is talking to themselves or talking at each other and past each other. Its another form of uncertainty. Do we really need this on top of Everything Everything else we have going on . The point theyre making is that if everybody goes along to get along you just keep doing what youve been doing for all these years or historically even under george w. Bush it meant passing bigger and bigger and bigger budgets which they dont believe in. Youre wondering what were doing here stalking. Were leading up to something because we have another congressman coming up but we need to get him in position with the same microphone. Okay. Now we can bring him on, he is charl dent, republican from pennsylvania who was a mccarthy supporter. So we welcome you, lets ask you the same thing we asked congressman brat. What happened today and why did Kevin Mccarthy step down. It was clear that he had a majority of the votes to become the speaker. What was unclear was whether or not he had 218 votes. I dont believe he had 218 republican votes today. The concern was if we went on to the house floor that Kevin Mccarthy would not secure 218 votes and would be embarrassed. I think thats a big part of the reason he withdrew his nomination today. Charles brat kevin brat just told us there is no war inside the Republican Party right now, that the press has got it all wrong there is no disarray. What do you see when your lead candidate for speaker steps down after the speaker has to step down saying that there is just too much angst going on in the house stlchlt a problem in the Republican Party now or not . Yes, there is a battle going on for the soul of the Republican Party. Did i hear my colleague a few moments ago saying that 151 members were the true conservatives. The truth is those 150 some members voted to shut the government down, it was the 91 of us who voted to keep the government funded who did the right thing. I would argue that there were over 218 members last week in the republican conference who supported keeping the government open but only 91 voted for t there is a lot of hope, yes, and vote no that goegs on around here and thats got to stop. I think that is also contributing to these problems when members dont share that affirmative sense of governance. We need more members who understand their responsibilities. We cant let the government into g. Into default and let it shut down. Is there somebody who can bridge this gap, who can corral this group at this point . If paul ryan stepped forward he would get the 218 republican votes but he is not interested. Look, we are going to have a big discussion about this, tom coal who is a friend of mine, he is probably mad that i said his name on national tv. We had a picture of him so you wouldnt be the first. I dont think tom is interested but there are a lot of folks out there. In order to pass any meaningful legislation in in congress we need to always assemble a Bipartisan Coalition just like we did last week on the cr, debt dreelg ceiling, budgets agreement, et cetera. It could be is that we may have to assemble a Bipartisan Coalition to select the next speaker. We had barney frank on last hour and he brought up an interesting scenario. If he were still in the house he would be a part of a group of democrats who would come to some of you guys and say we will vote to your candidate but youve got to give us a few things here. What role if any would the democrats play . Is there a bipartisan candidate that can become a speaker as a result . I think clearly there are. I mentioned tom coal, mike simpson would be number. No question about it, but if we the republicans cant come up with 218 votes for our own candidate by necessity there will have to be some kind of accommodation cooperation with the democrats to make it happen and im sure the democrats will have some issues they would want ad dressed and certain demands to be sure. Thank you so much. We know you have this vote coming up so we are going to let you go. Appreciate your time. Thank you. Charles dent of pennsylvania. Lets get reaction from john harwood. You heard them both, john, what do you think . Congressman brat is wrong in saying that this is all about bottom up leadership practices. Its about bottom line and as congressman dent said, the issue is can you get a caucus and members of a caucus to agree to govern, which inevitably in our system requires compromise. There is a group of people, including the members of the Freedom Caucus, who are not willing to do that. They are disconnected from the reality of the limits to their power and they make unrealistic demands on the speaker. We saw congressman dent say earlier in the day i didnt hear if he said it exactly in it segment we have to have members stop making demands that cannot be met by the leadership. When youve got a democratic president , a divided senate where you require an overwhelming majority to get things done a faction of the House Republican majority cant get everything they want and thats the simple reality and some of these people dont recognize that. What did you think of Barney Franks suggestion which is you bring in not somebody from the Freedom Caucus, somebody who is conservative but not to the far right and that person agrees that he or she is going to bring certain things to the floor and provide a vote on it and maybe that would he is swaj them . In theory that could work. For example, congressman dent mentioned tom coal from oklahoma. Tom coal you would get a ton of democrats who would be willing to make that deal and make tom coal the speaker, but for the very reason that they would be willing to do that you have republicans who would rebel against it. Its very difficult given our level of polarization to see anybody stepping forward and making on the republican side a bipartisan deal without triggering an enormous backlash. You cant rule it out because this is a caucus that is in melt down but i think thats not the like least outcome. John, what is the likely outcome and whats the time frame Going Forward . I think the likely outcome that john boehner is going to stay speaker a while longer. He said he is going to serve until they get a successor. Who knows when that is going to be. I talked today to one former boehner aid who said looks like he is not going to be able to hit the golf course for a while. I think he is going to be there for a while. I agree with one of the Previous Congress men who said paul ryan could get the votes. John boehner apparently has been working on him today to try to get him drafted into this race. He doesnt want to be there. So i think its going to be difficult. Peter roskam is one possibility from illinois, he is in the leadership now. John, you are going to be very, very busy. We have a mess, yes. Thanks, john. Appreciate it. What a day. Yeah. We are not finished. Gap out with its september same store Sales Results, we have Courtney Reagan stepping in with those numbers. So for gap its total same store Sales Results for september down 1 that is in line with expectations, Banana Republic the weakest link, their store sales down 10 . Old navy up 4 for september, the main name sake gap brand is flat. Its margin rate for the Third Quarter will be similar to the second kwrtd and the company also announcing marissa web will no longer be the creative director, will become the creative adviser and that role of creative director for Banana Republic will remain unfilled, similar to what happened at the gap when rebecca bag left that creative role and it became unfilled. Back to you. What do you think of the down shares . Just a really stuff, tough story. You have macro challenges, management changes, competition. This is just when you have an l brands that put up a 9 comp and these guys with a minus 1 comp it tells you that they dont have the right product mix. We are all operating in the same world. Absolutely, but there are winners and losers. Those that have the product and if you have the product the consumer is willing to buy that product. They dont have the product. You see that in the retail world so particularly. Absolutely. Absolutely. And i am sure that old navy had a 5 comp let me look at that ba nan that republic was down sharply. Im sure they had to give stuff away. We are all going to get good sales. The head of Facebook Messenger tells us how he is planning to tells the services massive popularity into profits. Right after this. Its called the code mobile conference, it focuses on how technology is changing cars, wearables, payments and its underway there. We saw it earlier, lovely halfmoon bay, california. Julia boresen joins us from that conference with a special guest. Thanks, bill. Im joined by david mark us, he is vp of messaging at facebook. Thank you for talking to us today. Facebook messenger has 700 million monthly active users. How are you going to make money off of that . First we need to make sure that we build the best messaging experience in the world and we have made a lot of progress in the last 12 months, built tools to naibl people to express themselves better and businesses to start communicating with their customers inside of messenger. As we develop more ways for people to interact with businesses im sure we will find a Good Business model. Your background is in payments you came from paypal. Does this mean you will be charging people to use the service . No. You will not charge people to use the service. No. Facebook will always be free . Yes. What about advertising . The point is that i come from a payments and commerce background for sure, but like i think that what facebook has been really good at in past couple of years and has demonstrated value on is helping small and Large Businesses grow their business. By building really good advertising tools and we believe that if we can build a great experience between businesses and people inside of messenger we will find good ways to monetize that that dont into commercial for consumers because it is a messaging app and private and we have to make sure that it feels personal and private. You launched partnerships with every lane and zoo lily to help them communicate through consumers through the app a couple months ago. How is that going . Its going very well. We are going to expand and let more businesses come on the platform. And the experience is amazing. If you think about mobile commerce and the experiences that people have on mobile with brands, right now those experiences have been built for the web and not for mobile. So what if the web didnt exist, what would mobile experiences look like and if you rewind time from the beginning of Time Commerce was very conversational. So can we build a platform that enables businesses to do that . Are you going to charge the business businesses . We dont want if we ever enable purchases to happen we are not going to charge for purchases or for transactions or payments. If we build payments capabilities inside of messenger its only to remove a little bit of the friction from the experience, but then im sure that if we find ways to open valuable threads for businesses and people we will find ways to build a business model. Which means advertising . Some form of advertising that shouldnt feel like advertising for users. Okay. I have to ask you about your assistant that you are working on the Virtual Assistant called m. Tell me about how the first tests are going and what the future is for that business. We are learning a lot and as you know m is really an interesting take on how to train Artificial Intelligence with real trainers, people who are actually helping dai instance learn how to respond to queries and fulfill stuff. All of the ai assistants out there are mainly used for information retrieval and m is really unique because it can actually perform tasks on your behalf, it can book flights and restaurants, arrange things and weve seen all kinds of interesting queries being fulfilled on m. Right now its the early days but we are learning a lot and hopefully we can scale the service soon. There is still a lot of work to be done. How soon until everyone will have it. A while. There is a lot of work to be done. I would like to get in on one of those early tests. Unfortunately we are out of town. David marcus, we will stay tuned on all the different ways you might make money off of those 700 million users. Back over to you. I would join new that one, too, julia. Time for a cnbc news update with sue herrera. Sue. Here is whats happening at this hour. South carolinas governor nikki haley is urging thousands of people in low lying areas near the coast to evacuate. This happens before floodwaters are making their way to the ocean, they have the potential to flood some places for up to two more weeks. Areas in danger include georgetown, jamestown and paulys island. Bill gross suing pimco for 200 million claiming he was wrongly ousted by executives who wanted his share of the bonus pool. He left pimco in december of 2014. Pimco said the lawsuit has no merit. Sony says it will cut prices of its play station 4 by 50 bucks starting tomorrow. The game will sell for 349. 99 which is the same price as xbox one. Talk about traffic jams, take a loo at that, yes, thats real. Thats beijing. Thousands of vehicles were bumper to bumper at the end of the countrys National Holiday as people tried to return to the city to go back to work. Chinas booming economy has meant more cars on the road well ahead of the countrys ability to build more highways. That particular highway has 50 lanes. Wow. Holy cow. Days of traffic. I thought the turnpike was bad on labor day. Nothing compared to that. They are going to have to camp in those cars. Next time people are complaining about the traffic coming back on labor day, it could be worse like in china. You could be in china coming back. Thats how it works. Up next, the ceo of mt. Sinai Health System explains how skyrocketing drug prices are impacting doctors and patients health. Our huge valuations for Tech Startups like uber or airbnb a sign of another tech bubble . A top venture capitalist weighs in on that coming up on closing bell. Stay tuned. As you know there has been an outcry recently about exorbitantly high drug prices, one company turing raise that had cancer drug from 13 to 750 but has since promised to cut the price. The issue also found its way into president ial politics with pharma and biotech stocks tumbling after Hillary Clinton in a tweet promised a crack down on what she called price gouging. Joining us to discuss drug pricing is dr. Kenneth davis president of mount sinai hospit hospital. Great to be here. Do you know what i find so frustrating about these discussions is americans about the only ones who pay for r d, germany and japan tell the pharmaceutical companies we will decide what the prices r we will give our people cheap drugs. I understand low Income Countries wanting cheaper drugs, but why do germans and japanese get the right to have cheap drugs and only americans can pay for r d . You put your finger on a rhetorical question. The 35 leading economies in the world pay half of what the u. S. Pays for in drugs. Of course that means that the u. S. Has to be the market or the companies to recover their r d costs. What we should be doing is making this a part of our trade agreement pact and putting pharmaceuticals at the top so we the United States our citizens dont have to pay for all of this. There is another point that is underlying your question and that has to do the value with which those countries place access to healthcare and healthcare as a right versus what we do. Those values really are a little bit different over there. They cant afford right off the bat 100,000 drugs. Neither can we but thats why god created health insurance. They wouldnt be 100,000 if all those other 35 developed countries were contributing to the cost. They wouldnt be 100,000 hopefully. Hopefully. You cant be that sure when turing does what it does on a generic drug. Is it realistic to move away from fee for service medication and more to population management . Is it realistic to expect in our lifetime that that could ever happen. Im slowly at will. The country cant afford 18 of gdp being for healthcare. We have to find more efficient ways to provide healthcare. There are so many inefficiencies in our system it begs for coordination. That coordination doesnt happen unless there is an incentive for providers to provide that care coordination. They will do that if they are taking care of a whole population. They wont do that if every time they do something they get paid snoot other issue is profit motive. Drug companies go where the money is going to be, where the it will have the greatest impact. Alzheimers is a perfect example, its a hot area because it can be very profitable because Great Strides are being made in that area, right . When you dont have the market possibilities they dont go after that. Thats right. Alzheimers is worth talking about. I wish what you said was totally true. But the problem in alzheimers is that weve learned so much about this disease now that we now know that 25 years before you get symptoms youre getting brain changes. That means we are probably going to have to start treating for people for 25 years before they are symptomatic. That means that the Clinical Trials to show efficacy are going to take so long that there wont be patent life left on drugs that go through that whole hurdle. So what is happening is quite the opposite. A lot of companies are saying, oh, my god, the hurdles here are unbelievable, the science here is so complicated and i dont know that theres going to be a return because im not going to have patent protection. The profit motive is what draws a company to a drug. And profit motive is not always what is best for the countrys interest in public health. We need drugs in diabetes and alzheimers. We have to find a way to make sure that companies will get a return on investment for those kind of drugs. Doctor, great having you here. We appreciate it. Ken davis. Of mount sinai joe worries about a Technology Bubble have been mounting but a top venture capitalist says Everyone Needs to chill out. He joins us next. Youre watching cnbc. We are first in business worldwide. Stocks that recently came public have been getting hit again today. Is this sign of a Technology Bubble bursting he asks . Johnny chen is president of the q ball capital. Did you think there was a bubble in these unicorns or private companies valued at more than a billion . Now that we see the ipo market falling apart does that mean it is over. I was one of three people to take my First Company trying to take it public march 28th, 20,000. Right at the peek of the dotcom perfect timing. A lot of personal experience here. I dont know first i would say its not exactly the same type of bubble. I would say its a boom, its certainly an inflated market but fundamentally different than 2000. You look at p ratios, how companies are staying longer public before they go public a fundamentally different time than the 19992000 era. Can you trust the e at these companies. Back in 2000 you had 14 of companies that were filing to go public with with any earnings at all. Revenues at a level only about 7 million to 10 mchlt today they are more mature, wait about seven, ten years and 20 , 25 with real earnings. Mark cubans point its a different kind of bubble. The private mooshgts crowd funding is another bubble built about to burst. Im certain there will be a correction point in there the Technology Sector is not different from any other Technology Sector. Its about having great people and a superior business model. Eventually you come back not betting on the quantity of growth but the quality of growth. What we are going to see is a shift back to a balance between those things. We were just showing age of the unicorns, all these private Companies Worth more than 1 billion. Uber at the top. All the investors in these companies, are they watching what happened with the ipo market over the last couple of weeks thinking, shoot, we missed our window . Are they sweating bullets . Are they thinking back march 2000, oh, no . I joke in my firm instead of looking for a unicorn we are in search of sea turtles. They can live a long life, have predictability in them. I dont think you can general rise across all the unicorns. In general, if i had to make the general statement. During this boom period you will have people trying to value capture. Youre in a period of Risk Transfer and trying to capture as much of that control premium on a sale or ipo. In general, its much better and more sane market than in 2000. Do you get a sense managements are more mature and understanding of the process . You would like to thing so. One thing, they had longer to go public. 7. 1 to 10ish odd years before they go public. They have more time to mature. I learned a new phrase i love today, value capture. And sea turtles. Yes. Michelle loves tomatoes. Yes. We talked about r d and tomatoes. I wish i had that conversation. Good to see you. You can unripen a tomato. This is thesis. Well recap todays Market Action and look ahead to tomorrow. Tune into the closing bell tomorrow. South Carolina Republican senator Lindsey Graham will join us in an exclusive interview. Dont miss it. The dow finishing the day on wall street higher. Had a good rally of 138 points, putting us back above 17,000. S p was up 17. Nasdaq up 19. Even biotech came back. The tenyear yield moved higher today. It was all over the map. Down after the fed minutes came out. Then it moved higher again. We are at 2. 10 . Alcoa reported results after the bell which means earnings season is now officially under way. Well count you down to the Conference Call coming up in a moment. Be sure to consititution into mad money tonight. Jim will talk to Patrick Doyle about the companys disappointing earnings. It starts 6 00 p. M. Eastern time. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. 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Lower than 4 . They had a tough couple of years. What happened with earnings today probably speaks exactly to why they want to split up the company. Exactly. The commodities part of the business really was very bad. The engineering was a record for them. Not a surprise. They had a doubledigit rally from the lows. Expectations headed into print on the high side. What he is talking about globally was not a surprise in terms of auto production in china. Lets see how this trades. Does this portend for the rest of the earnings season or a commodities story . I think its a commodity story. Is it value versus growth . Is it really the cyclicals laggards that are going to continue to lead . Dont forget about the tomatoes. Its a long story. Appreciate it, stephanie. Fast money with alcoas Conference Call is next. Live from the Nasdaq Market site overlooking times square, im melissa lee. Netflixs biggest bull got more bullish on the name. Its not just todays price hike. Hell be here to explain. Ibm popping on fresh rumors with activists involvement. Who could it be and what could it mean for the stock . Later, dont look now but one maligned fast food stock made a 52week