Transcripts For CNBC Closing Bell 20170614

Level thats needed to provide for new entrants in the labor market, we do have a strengthening economy. With policy accommodative all youre doing in raising rates is removing a bit of accommodation heading toward a neutral pace. And i see that is appropriate. Were not moving so aggressively as to put a break on continued improvement in the labor market. But i think that thats a prudent move to move in a gradual way with unemployment now. And not only the Unemployment Rate, but i think any indicator of labor Market Performance and tightness that you could look at whether its household perceptions of the availability of jobs, difficulty that firms report in hiring workers, the rate at which workers are quitting their jobs, the rate of job openings all of these indicators do signal a tight labor market. Now, with inflation below 2 , i think its appropriate that the labor market be that tight but on the other hand, i think we want to avoid the risk. We want to keep the expansion on sustainable path and avoid the risk that at some point we need we find ourselves in a situation where weve done nothing and then need to raise the funds rate so rapidly that we risk a recession. So moving to some extent in a timely way to remove accommodation with a Strong Economy and continued labor market strength, the committee believes is an appropriate management of risks. But we are attentive to the fact that inflation is running below our 2 objective that we face that situation now for a long time and its really quite essential that we put in place policies that will succeed in moving inflation back to our 2 objective and its a symmetric objective so thats a risk that we face as well the committee believes we have conditions in place for inflation to move up but thats also a risk and those things point, i think, to a gradual pace of reducing accommodation. Hi. Nancy marshall from market place. Recently a group of economists sent the fed a letter earlier this month disagreeing with your 2 inflation target and saying they would like the economy to run a bit hotter they dont think the labor market is so tight you say youre committed to the 2 target. But what do you say to them . So its a time that we adopted the 2 target. It was back in 2012. We had a thorough discussion of the factors that should determine what our inflation objective should be. And, you know, i believe that was a well thought out decision. Now, at the moment, we are highly focused on trying to achieve our 2 objective and we recognize the fact that inflation has been running below. And its essential for us to move inflation back to that objective. Now, weve learned a lot in the meantime and assessments of the level of the neutral likely level currently and Going Forward of the neutral federal funds rate have changed and are quite a bit lower than they stood in 2012 or earlier years. And that means the economy has the potential where policy could be constrained by the zero lower bound more frequently than the time we adopted our 2 objective. So its that recognition that causes people to think we might be better off with a higher inflation objective. This is one of our most critical decisions and one were attentive to evidence and outside thinking its one that we will be reconsidering at some future time and its important for our decisions to be informed by a wide range of views and research which is ongoing inside and outside the fed. But a reconsideration of that objective needs to take count not only of benefits of a higher in potential benefits of a higher inflation target, but also the potential costs that could be associated with it. It needs to be a balanced assessment but i would say that this is one of the most important questions facing Monetary Policy around the world in the future. And we very much look forward to seeing research by economists that will help inform our future decisions on this. Thank you don lee with the l. A. Times. The feds projections continue to show the longer run federal funds rate at 3 the markets are expecting 2 how big of a concern is that gap in your mind what are the reasons for the disconnect and, you know, what are the implications and real risk for the economy . So let me first say its not straightforward to determine exactly what expectations are embodied in market prices because theyre a term premia that affect these rates. And they may not really be as low as one would infer from a straight read. That said, in part, expectations reflect estimates of what the neutral federal funds rate is and how its likely to evolve over time. And views have changed about that over time and there is a good deal of uncertainty about it so weve recently put out charts that try to show what the range of uncertainty is around our path for the federal funds rate especially as one goes further out. Theres a good deal of uncertainty. And that reflects like all the shocks that can affect the evolution of the economy and also the fact were quite uncertain ourselves about what the likely evolution will be of the neutral federal funds rate so we do try to write that down and provide the public with information about our current expectations and the median now stands at around 3 . But we have uncertainty about that many of my colleagues and i think the current neutral level is lower than that and as i said in my opening statement, the fed funds rate path reflects an expectation that that neutral rate will be moving up some in future years but that remains uncertain i think thats something that Market Participants are trying to assess and we will be as well [ inaudible question ] the difference in the gap between the expectation and what the feds projections are for longer run federal funds rate . Our expectations are a little changed. I mean, the projections we released today are essentially identical to those and i think the market is aware of the views of participants and is assessing evidence itself to inform their own views and its important that the market take an independent look. And that we get to understand and see how Market Participants are interpreting evidence on the evolution of the economy so its not an unhealthy thing to have such a gap and as i said, our own views are not set in stone but are likely to evolve as well over time. Associated press. Back in 2013 when you the fed first raised the possibility of trimming its bond purchases, it created a bit of turbulence. The taper tantrum caused you to reassess your communication of that process this trimming of the bond holdings, the Financial Markets seemed to be taking that in a better way if down the road, though, you see that there is more of an adverse reaction, are you planning to make any changes perhaps change the caps to 30 billion and the 20 billion caps how do you assess how youll handle that Going Forward . So we have indicated for quite some time i guess since our 2014 normalization princi l principa principals, that we wanted to reduce our Balance Sheet in a gradual and predictable way. And we have tried systematically how we would do that is our plans have evolved and todays announcement is another step in providing further details about how we plan to proceed so that when this plan does go into effect, no one is taken by surprise and Market Participants understand how this will work i think that we, the plan is one that is consciously intended to avoid creating market strains and to allow the market to adjust to a very gradual and predictable plan my hope and expectation is that when we decide to go forward with this plan, that there will be very little reaction to it. That its clear how we intend to proceed. And that this is something that will just run quietly in the background, though, for a number of years leading to a reduction in the size of our Balance Sheet and in the outstanding stock of reserves and that its something that the committee will not be considering from time to time. We think this is a workable plan and it will as one of my colleagues described it, itll be like watching paint dry that this will just be something that runs quietly in the background so thats my expectation and our intention. Of course if it turns out that there is a surprise and a substantial reaction, that is something we would have to take into account in deciding on the appropriate stance of policy Michael Mckee from Bloomberg Television and radio i want to get your reaction. The treasury secretary and others have suggested that dodd frank regulation and the way its been applied have restricted credit growth in the economy. Banks are not making loans they otherwise would. And that has slowed growth do you agree with that and if you get a new vice chair of supervision who wanted to ease up on regulation, would you go along with that . Also i wanted to ask you, its been reported the president has congratulated you on being a low interest person. Would you agree with that characterization of your philosophy well, with respect to the impact of Credit Conditions and Bank Regulation on slow growth, ive previously in testifying indicated that i dont think that our regulations have played on Important Role at least broadly speaking in impeding credit growth and the growth of the economy. And ive pointed in the past to a number of statistics suggesting that credit Growth Continues to be healthy. Including among Smaller Community banks that are most concerned with Regulatory Burden i think when banks are undercapitalized and weak, that impedes credit growth. And when banks are strong, theyre in a much better position to lend so thats been a view that identiive stated previously. Now, in terms of regulation, the treasury recently issued on monday a detailed report and thats quite a complicated document with lots of recommendations in it. I havent had a chance to review it thoroughly, so i dont want to comment on too many details but i would say it underscores the importance of capital liquidity, stress testing, and resolution planning in having a safe and sound Banking System which are views that i and my colleagues have long espoused. Regulatory burden when its possible to ease it and a good deal of the treasury report is focused on Regulatory Burden thats something that all regulators should be looking to do we strongly believe in the importance of tailoring our regulation to the size and complexity of institutions of finding ways of relieving burdens for community banks. We have had a number of initiatives already in that direction looking for ways, for example, to simplify requirements for community banks. And well continue in that sense in those areas share the views in the treasury support. So there are a number of thinking where there are probably some areas they are likely to have differences but quite a number of areas where well likely be able to and already are taking actions that are consistent with those recommendations. And the characterization of you as a low Interest Rate person well, i have felt that its been appropriate for Interest Rates to remain low for a very long time. We are in the process of as the economy strengthens, normalizing Interest Rates but weve had a lot of years in which Interest Rates have been low. I thought it was necessary to support the economy at that time and was strongly in favor of those policies thank you karen with market news international. Today you guys outlined the details of the plans when you begin to end reinvestments but you stopped short of saying when it would be implemented only saying this year. And adding that depended on how the economy evolved. Can you tell us why you decided not to go ahead with it today . Are there certain conditions youre looking for then as a second question, do you think that the you could raise rates and begin implementation of the plan at the same time . Thank you. So we have tried as meticulously as we can to provide advanced warning to markets about how we would go about doing it so Market Participants can prepare and todays announcement is another step in that process so we certainly wanted to get this information out before we actually undertake the beginning of this plan and as the statement says, we made no definite decision on the timing of the plan. But the timing o of initiating the plan but if the economy evolves in line with our expectations which, you know, we will be watching, always are, we could put this into effect relatively soon you asked about whether or not we would do that or raise rates at this same meeting i would say weve made no decision about that. And it really hinges on the outcome and our assess of conditions hi. Politico you mentioned the treasury report i just wanted to ask, how much weight do you give those recommendations in considering, you know, potential regulatory changes moving forward and also as it relates to the volcker rule, you said in the past it might be a good idea to reduce the burden on community banks. But it also talks about Trading Assets and liabilities above a certain level. And i was wondering if you think that thats an idea thats worth exploring. So we have previously suggested exempting community banks, smaller banks, entirely from the rule. And a number of my colleagues have spoken about the volcker rule implementation of it is complex. Im certainly open to looking at ways to to reduce Regulatory Burden in that area. The report endorses a restriction on propri teetary trading. So it injects a portion of the volcker rule but on implementation, its true that the rules were impartly reflecting the way the legislation is written were necessarily complex. We do have some ideas for how we might simplify the rule. Certainly its something its something were quite open to looking at [ inaudible question ] i mean, treasury has a set out a list of objectives for regulation that im sympathetic to ways to reduce the regulatory kbu burden when it can be done without sacrificing safety and soundness or creating systemic risks. Thats something that all regulators should coming back and looking at where weve created burdens in ways in which we can simplify to reduce, that is while we may not agree on every detail, certainly suggestions made there are ones we will Pay Attention to mike derby from news wires. In light of the plans to trim the Balance Sheet later this year, what have you learned about qe as a tool for Monetary Policy when they were launched it wasnt something you had engaged in that scale before a lot of fears that it was going to create hyperinflation that hasnt come to pass so in light of qe potentially is a tool for the future. It might come back again what have you learned about how it works in the economy . Where do you see it affect things what are the Lessons Learned of the experience thanks. Thats a great question. Economists have done a great deal of work trying to evaluate. It has worked in it put some downward pressure on longer term Interest Rates socalled term premiums embedded in longer term Interest Rates. And its something thats difficult to pin down. But it has caused quite the contrary that was not my expectation, but i do remember when people were afraid that that would happen. Even with a large Balance Sheet we retain the ability to move the fed funds rate and set it as appropriate for the needs of the economy. So i think we have learned that where ive said we want the fed funds rate and move in Interest Rates. Thats our goto number one main policy tool. But if we were to hit the lower bound and constrained in our use of that tool, certainly Forward Guidance of the type that weve provided, i believe based on the evidence of how they worked what to remain part of our tool kit and we have said in the bullets we released today on our Balance Sheet that in episode of extreme weakness in the future, those are things we would consider Going Forward. Is 4. 5 trillion a limit to how high you want to push the Balance Sheet or could you see it higher if you needed it to . Weve had no discussion of that issue our focus is on getting it back to a more normal size. The use of qe in the United States relative to the size of our economy is not as high as its been in other countries that have employed it. Thats something we havent seriously discussed. Patrick with cnn. Its Workforce Development week at the white house and you highlighted several job training successful job Training Programs in your speech in march the president s budget has a 40 cut to job Training Programs whats your response even though they expect to expand apprenticeship programs and do you believe job Training Programs and apprenticeships are needed to help fix the job gap in the economy im not going to comment on the president s budget and these programs can be undertaken at many Different Levels ive seen many nonprofits and states and local authorities put in place, programs that look to me to be successful. I think we have a tight labor market and one where employers have jobs where theyre finding difficulty identifying workers with the appropriate skills in my own discussions with businesses what i hear more of and this is something i think is a great aspect of a tight labor market larger firms are spending more on training and trying to given that they cant hire workers with the ideal skills are training people to fill jobs that they have available what i hear from ceos of smaller firms is that they dont have the ability to launch such programs they would like to participate to see such programs launched. And have jobs people could fill if they receive the appropriate training so i do think that this is an important area and especially given the pressures that have existed for a long time downward pressure on wages and Job Opportunities especially for those with less skills, i think that this is something that deserves priority and with that, janet yellen wrapping up her press conference after the fed decided to raise rates by a quarter point or at least in that range. By the way, a thats the third consecutive quarter weve had a raise. Its been interesting to watch this ripple through Financial Markets. As mike has mentioned in the past, the first knee jerk reaction, not always the right one. A little bit of that is playing out today. You see the Dow Jones Industrial average now positive by about 15 points the s p is lower by six. And the nasdaq is down substantially right now. Nearly 1 lower when we were looking a moment ago there you can see the major averages also in the nasdaq declined 4e points coming a bit off those lows. How about the dollar how about the 10year . Those are two ways to see the sbrerpgs of these remarks. This morning we were as lows a 26 and change. Touched a low of 2. 1 . Back up to about 2. 15 an interesting side bar to all this was the home builder index which hit a high after the feds decision but has moderated it since. Weve got a bunch of people around to bat around what exactly has happened here today and what it does mean. Diane swonk is here. Weve got the steves weve got rick santelli. Diane, let me go first to you for the significance of todays rate hike. The significance of the Balance Sheet and where you think this leaves us. Well, i think its really interesting that the fed stuck to its guns on the hikes i think the market was expecting a more dovish view from the fed. Even though the fed acknowledged that inflation is below target, how the chair really went through and saw that as a transitory phenomena related to cell phone pricesgoing down, the unlimited data were getting, and a onetime drop in Prescription Drug prices i think thats very important. Clearly she sees this as a transitory event there are clearly people who disagree perhaps even some board of governors. Had some issues on that. I think another really important point was that last comment by chair yellen you really see how she was a veteran of the 90s as the labor market tightens, you see training workers thats something she welcomes. The other side of the issue is where were at today so those people who cant get a Community College to train workers cant hire those workers. Lets bring Steve Leisman into the conversation here steve, you were there in the room you asked the chair about her future job intentions out there. What was your big takeaway here . My big takeaway is your big takeaway look at the tick there did the market go a leg down when i asked if she was going to stay on. You look at the tick as we listen to the quote. Heres what yellen said. What ive said about my own situation is that i fully intend to serve out my term as chair which ends in early february i have not had conversations with the president about future plans. And i do very much hope, i know they have been working hard to identify appropriate nominees for the open slots and i do very much hope that there will be nominations in the not so distance future. She was more definitive than i thought she would be now, whether or not how important that is to the market, i dont know they have not nominated anyone for the open three spots so its a question of whether or not what may be a last minute kind of thing. I dont know how the market would react that way have you had a chance to look at the tick there it was definitely about the it went down from there, lets put it that way. In your followup, she again resisted the opportunity to suggest that she was interested in pursuing a second term. My other takeaway go ahead. Real quick, my other takeaway reiterating what diane said, sticking to its guns they see inflation coming back to their 2 objective. I expected a little bit more softening in the statement i didnt get it. Calling this a hawkish hike we had so much discussion about the dovish hikes in the past if thats the case, you know, talk a little bit about what the nasdaqs reaction is here telling you, grasso. First of all, mike was right in saying its usually the opposite of the first reaction you see. So when steve says the market ticked off, it did it was the tape readers. No human can react that fast. Thats not what im saying. No, im not saying go ahead. Finish your statement. The answer to the question. Thats something the market can trade right away, not the statement itself. No, no, no. Its the answer to the question is what i was talking about. So when you see its very difficult to hit a button that quickly. And then the market usually recovers back from there so the bigger question that they need to look at is rotation. Do we still buy those nasdaq names . S p, russell, you have a couple of things that are index weighted where you should buy the winners. But then you have the personal wadings of these funds do they buy the outperformers or underperformers i think they go with the underperformers. Let me bring dorothy in here. You spent time with the miami branch of the fed in the past. Do you think of this idea that nows the time for them to draw down the Balance Sheet it doesnt look like they were hugely thats something that could feed through and maybe hurt the consumer but again, the home builder index responded quite positively to these announcements what do you make of all this they have been talking about it since 2014. Its not like its a surprise. And this was an opportunity to get it out there, get it on the table, at a time theres no drama going on and she says her goal is it would be as important as watching paint dry and i think probably thats exactly what happened. They got it out there. There was not a major reaction no reason to think that there should be an overreaction to it. Does that mean that actually theres been a much more significant day from the fed ziet the sleepiness. Were all used to this maybe theyre a little bit more untether untethered is this a different stance from the fed . To me, i pretty much toned out and dont think i learned much on anything except on the balance. I was really impressed by that information. And when we talk about by anything janet yellen did except they moved up on the notion they may implement balance reduction. Most of it had already occurred and it was because of the data this morning everybody of course is gravitating towards cpi. Retail sales was no prize package either both headline numbers were negative its hard to get a gps on this but after having said all of that, i really do think it is a huge plus and definitely a bit hawkish they are going to start with a certain amount and theyre going to raise it. I think thats a wonderful idea. And the less distortions and management of longterm rates, the more they can forecast rick. Can i yeah, go on i know steve wants to talk, i just wanted to add something go ahead, steve. I just want to ask rick a quick question rick, over the past two years heres the right play. The fed said its going to be hawkish things and then going against it and betting on the dovish outcome has been the right play i feel after what they did today and what was said today that thats a wrong bet now if the fed is saying to hike another, theyre going to do it. And theyve been flipping sides here which what has worked the past two years. There wasnt a human being on the planet that didnt think they were going to raise today its not just today its not a question of whether were going to get another raise. On that score, shes going to have to deal with the markets that arent all that enthused about it that is yet to be discerned. Thats where i think the market may be wrong. Ki just jump in yes one of the things steve made the point on when he asked her about whether or not shed stay on and she talked about getting those positions filled, we dont have nominees yet, but we do have a list of very high potential nominees from the administration now and they are all more hawkish. And the fact she said lets get them in, lets get it done quickly. I think that also was an affirmation that theyre not worried about whos coming on. So i do have a strong idea of who the administration is now sort of decided will be nominated at least for two of the three seats if not the three seats. And they all are more hawkish. And she welcomed that. I think thats a subtle but important issue as well. I mean, of course she wants to be politically correct and doesnt want to ruffle feathers or criticize the administration. It is a subtle but important point as well. And Steve Leisman, to the point about the idea maybe the market has to rethink that idea of just kind of betting that the fed is going to back down off this hawkish stance, i wonder if it could be tied together to chair yellens resistance to extrapolate her tenure in other words, does she want to make sure things are well underway in the time in eight months where she may no longer be the chair get the Balance Sheet rolling off the rest of it for sure. The Balance Sheet today was more aggressive than i thought they would be i didnt expect to get a plan today. I expected one to come in the next coming months remember, it was only a few months ago that people thought it was a june 18, july story of the Balance Sheet. Thats why it was hawkish i agree. But also, hey, guys, can i run one more thought i want to hear what yellen said about inflation. This is also hawkish with employment near its max numb sustainable level and the labor market continuing to strengthen, the Committee Still expects inflation to move up and stabilize around 2 over the next couple of years nonetheless, in light of the the committee is monitoring inflation developments closely i really think the fed is less data dependent now. Thats the policy right now to get those rates up and to kind of ignore some of this data. So steve grasso, if theyre less data dependent now and the market doesnt hang so much on the jobs report the first of every month, what are we hanging on i think you kept pointing to housing stocks and i believe the overarching the thing everyone could agree upon is the Unemployment Rate is going to stay low. You need a job to buy a house. Were in a housing recovery. And usually they happen in a rising rate environment. It seems like a triple threat. I am long the housing names, but that seems to be the way the market is interpreting them. But the whole argument, steve steve, this whole argument, both steves, you know, i just have a tough time buying into it. You know, the economy one of the reporters asked a wonderful question yet things like 2 arbitrary target hasnt changed. Growth is nowhere near where it needs to be. Janet yellen really does need to do the review she hinted at. That this target needs to be changed. This isnt the economy we once had. And theres bottle necks in here and my opinion, due to a lot of policy errors. Not necessarily all of our feds. That has to be addressed dorothy, what would you add to that . Well, im not expecting theres going to be a total shakeup in terms of the targets. I think where she was guiding us we still believe that thats the right place to be. The same with the normalization, what theyre doing with the Balance Sheet. As lets stay the course we need to get back to a more normalized situation and we dont want any surprises. So im not expecting any dramatic shakeup in terms of the targets. Rick, can i tell you whats changed . Whats changed is markets. The fact that the fed can do exactly thats where your inflation went, steve. Say what it said earlier about the Balance Sheet and you have such a muted reaction in markets means the fed is taking advantage of the opportunity in the markets to normalize opportunities it did not have earlier. Whatever the reason with that, things have changed since the election what opportunity . The dollar is a great opportunity. The economy is selffeeding now. Its stronger. To crawl back in normalcy the economy isnt acting with el yes, actually todays retail sales rick were stronger when you dealt with the lower inflation numbers. No, i know. Yeah right. If you have a good enough show you can always find a nugget of gold if you dig fast enough. Were going to go close to the 2 economy its a 2 economy without the support without the support of the fed without that additional support. And i think that is really whats remarkable. Weve had three rate hikes and now theyre trying to hurry up and get out of dodge. Against a backdrop of an easing financial conditions for consumers. Refinancings went up but numerous times today she said of course if the economy cooperates, just another way to say data dependent well see how those conditions respond after the wake of this thank you, everybody, for joining us great debate today thats diane swonk, dorothy weaver, steve grasso, rick santelli, and Steve Leisman. Lets get over to Bertha Coombs pretty dramatic we saw that reversal yesterday as tech stocks rebounded from the twoday selloff. Take a look at the 100 intraday. Its sell the usual suspects thats where you saw the sharpest decline weve come off of the lows right now. But were still seeing a big drag from the big names. Apple, facebook, amazon, and microsoft. Thats the biggest drag here on the nasdaq were seeing a few sectors buck the trend. Also getting sold off hard today, tesla however has managed to buck the trend and stay above water after hitting an alltime high today were seeing a bit of green when it comes to bioteches. Once again, its sell the big tech overall today yeah, for sure. Thank you, bertha. We have 15 minutes to go to the close now. With the dow positive and most of the other indexes averages lagging, the russell down 0. 75 and s p down 0. 25 those defensive Stocks Holding up the dow at least for now. As well as Goldman Sachs interestingly enough coming up, aigs chief Investment Officer will speak to us about their investment portfolios plus financials have lagged the s p since President Trump took office. Thats still to come on closing bell. Welcome back heres a look at some movers as we head to the close oil hitting its lowest level in five weeks drop coming after a disappointing report on crude oil and gasoline stockpiles. Energy stocks also falling on that news. Alexion pharmaceuticals hiring biogens executive officer as its cfo. Paul clancy will join alexion in july and finally h r block trading at levels not seen since last march. They Beat Estimates reporting their first profit in three years. And announced a dividend hike. Shares up nearly 8 . And theres 500 million to sell market on close so modest supply coming in a few minute there is. Lets get back to todays fed move said they will start trimming the Balance Sheet this year. Joining us more is grabriela santos thanks both of you for being here interesting tone to markets here both kind of softer data to tighten things up as the year goes on. Little bit of a defensive tone to markets does it change the picture for you . Actually, i was a little bit surprised at how optimistic janet yellen sounded during the press conference this is the most optimistic ive heard her on growth, on the labor market, willing to look through some of that recent weakness so i think were very much on track for the continuation of three rate hikes a year and Balance Sheet normalization even beginning september. So that optimism, just to follow up, is good if the market agrees with it if the market thinks its substantiated. Is there a mismatch there . I do think it is justified. I think perhaps they were overly cautious and concerned in the last two years theyre feeling a little bit more comfortable that the theyre much more resilient. Scott, if youre optimistic, does that mean you sell bonds here or how do you expect all this to work its way through fixed income certainly i think thats the critical question that were all wrangling with i can tell you in the context of our own core plus bond, our perspective continues to be our duration and sensitivity rates on the short side. We do think the adage of dont fight the fed holds steady but the big question is what do you do for the rest of your capital . We continue to think the backdrop that the fed communicated today is consistent with investing in u. S. Particularly invest grade Corporate Bonds. We continue to see that the u. S. Interest rate differential is very strong. We see that theres a lot of flow coming into the u. S. Assets i think the fed is very well aware of that. And that theyre going to consistently be on the side of strong liquidity and a strong function market. And the message is orderly with the rates exuding the confidence from the central bank that the market demands gabriela, weve been waiting, perhaps, for some kind of a handoff within the stock market. But from some growth sectors toward value, today youre not really seeing that although its a little bit noisy right now. Is that something you think the fed moved today and the rhetoric positions the market for or are we still more of the same in reality, we are a bit surprised. How poorly financials have done or lagged behind so far this year this could be something thats changing later in the year and thats really thinking that we have reason to be very optimistic about financial earnings right . If we think about the potential for steepening of the curve which we continue to believe, the fact that credit volumes are picking up and the fact that financials provide a nice income stream as well in terms of dividends and buybacks there could be a handoff, there could be a switch the second half of the year. At the same time, scott, i was thinking about, you know, your case for buying Investment Grade corporates is there any evidence that were not going to see those continue to perform well. If this is a strong environment. I guess the flip side of that is, you know, to the treasury side gabriela was just referencing, why is it the case that longer term rates are necessarily going to move up what if they dont well, this certainly is a strong case to remain stable if you look in the bond market for the cues we have of Interest Rates, one thing we continue to look at it is not only the markets Inflation Expectations from the inflation links Security Market or tips which effectively tells you the fed before todays bad print was going to stay below its target for awhile were also looking at things like the premium one thing we continue to see with that is that additional compensation youre getting for holding longer duration assets has been negative. Which is suggesting to some theres some complacency in the bond market. To us what its underpinning is that structural dichotomy or battle thats been going on between, you know, the feds statements that this is all transient and that inflation is likely to accelerate versus what the markets been saying which there are some structural things here hindering it. We look at this being a gdp story thats consistent with what the fed is saying that we do expect modest growth. We think that Investment Grade Corporate Bonds perform well theres a lot of historical evidence of that we dont really see a pressing point for a regime change in Interest Rates at this point we think the bond market is going to hold fairly steady through this cycle all right more steady. Thats what weve seen for awhile now scott and gabriela, appreciate it up next, were going to have the closing countdown. Then after the bell were going to talk to the chief Investment Officer of aig on how today will impact the curve and what it means. Youre watching cnbc, first in business worldwide [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Its not just a car, work sfx its your daily retreat. The es and es hybrid. Lease the 2017 es 350 for 329 a month for 36 months. Experience amazing at your lexus dealer. Bit more than two minutes to go before the close. Markets still digesting what is being described as a hawkish Interest Rate by the fed janet yellen saying they are on course to begin the winddown of the feds Balance Sheet potentially later this year assuming data comes along. Perhaps accelerated the process of getting in that direction stock markets have traded heavy all day on this news werent prepared for the exact tone yellen struck today however, we are not looking at big losses the nasdaq did actually start to underperform in the last hour and a half, two hours or so. But it seems as if the markets still trying to short out. It makes sense that high names would underperform a bit the fed is continuing to raise rates when inflation is trending a little bit below what theyre wanting to do. The Economic Data is choppy. Then they move forward a lot of information on changing the Balance Sheet. Thats i think a bit of a surprise a lot of people thought theyd get those details later on to a certain extent, doing that creates a more hawkish tone overall. I think that was largely what was going on im not sure we should interpret this too much for this but its important that the hightech names did move on that realization. Slightly more hawkish. Even though the Overall Economic commentary itself was not more hawkish. Exactly so far yellen decided not to look at todays data and say we have to adjust downward our expectations for what were going to accomplish at the fed the question remain if the market is going to proceed that way in the next six to eight months and whether or not she can pull off that neat trick of unwinding the balance. Theyre going to have to unwind close to 3. 5 trillion some people think they may get down to 2. 5 trillion, but who knows. If they go back there, its a neat trick for her to unwind this without causing volatility. And 600 billion by next year well see. Bob, thank you very much ringing the bell here at the New York Stock Exchange is cellcom lets go back to kelly for the second hour of the closing bell. Thank you, michael welcome to the closing bell everybody. Im kelly evans. Heres how were finishing up on wall street. This after janet yellen just said the fed is going to start trimming its Balance Sheet as early as this year and provide detail about the amounts and the pace of that tightening which will increase the Interest Rate hike announced today by even more as it works its way through the system heres the response to that decline. Although were off the lows, the s p dropping just about 2. 5 points the nasdaq dropping less than 0. 5 . After it was briefly down 1 the russell 2000 down. Perhaps some rotation going on from teches into the financials as well. Coming up, aig chief Investment Officer Doug Dachille weighs in. And joining me here on the panel, cnbcs michael santoli. Courtney gibson is here. And jim bianco michael, so, we should put up the intraday charts here to talk about what just happened they had the announcement at 2 00 they are raising rates and then we had the press Conference Begin at 2 30 it was during that press conference that the markets reaction pivoted actually more from a dovish to a more a hawkish response yes i think it was a matter of janet yellen, she didnt take the opportunity of looking at this pullback in inflation readings and perhaps a slowdown in the economy and the poor retail sales. She didnt look at any of that and say thats going to cause any kind of reassessment of what we were trying to do here. With getting another rate increase into the books this year whether you believe them or not, she didnt strike that tone. Its not just that they said theyre going to raise Interest Rates. Its not just she said theyre going to start declining the Balance Sheet. Its the way she talked about inflation and about the economy during that press conference, right . She was trying to minimize the fact that inflation has not gotten up to its 2 target on the other hand, she was asked about whether the fed has to be concerned about asset bubbles and things getting too overheated she also didnt say yes were targeting financial conditions it wasnt as though she was looking to beat back the markets. But on a net takeaway basis, left people with the idea, perhaps, that the fed really is kind of resolute at this point and Gabriela Santos said its the most optimistic shes ever heard janet yellen that causes markets to decline causes people to tighten up a bit. But okay, its a fundamentally positive message, right . The question is can we handle this rhetoric at this point . Absolutely. I think what shes been is consistent shes data dependent i actually liked the fact that she took away some of that rhetoric around inflation and the issues because thats what everyones been talking about all day are the issues with inflation. And ultimately what did she say . She said lets think about this for a second its because drug prices are gone down and cell phone bills have gone down when your bill goes down, i dont know what you do i go out and shop. I go out and spend when you think about that and the fact the consumer drives gdp, i think she pushed some of those naysayers aside. If you heard sprints announcement its going to offer unlimited wireless plans for a year some of the numbers people say they do is stream a lot more video. They dont go out and sho. But if youre streaming netflix, its going to go up if youre on your phone on amazon, youre shopping. Retail online up 10 come on. So explain to us why people were jumping out of tech into financials and if theyre doing that because they think rates are going up across the curve, are they correct in that mr. Bianco jimbo can you hear me well try him in a second. Ill address that to you, courtney are they right to jump into financials then . You should be in financials regardless its not a rate hike issue i dont think the curve is going to steepen its flattening now a bit. Im not quite sure rates are the reason to be in banks or financials more broadly. You should still be in them. Financial deregulation, maybe. The fact theyve gotten incredibly efficient the things theyre doing away from your traditional rate hike dependent items show that you should be in the large banks in addition to some of the boutique banks that are out there and other alternative Asset Managers that are in financial managers its an interesting point jim, i think you can hear me now. Now were playing out the telecom ads. What do you make about the announcement you thought was most significant from janet yellen today yeah, i think the most significant thing is her talk around Inflation Inflation has come down and the fed has been resolute. I think those things are going to meet in the middle. I think the feds almost done raising rates. Theres maybe one more rate hike left you think theyre done . Well, theyre not done. Theyre done with one phase. And that is rate hikes then theyre going to pivot to reducing the Balance Sheet the reduction of the Balance Sheet is another version of raising rates. The feds already told us if they reduce by 500 billion, thats the equivalent of two rate hikes maybe theyre going to start reducing the Balance Sheet thats going to have the same effect 37 theyre going to go very slow. Its going to go about one raut hike a year. Its going to be the equivalent of another rate hike youre not going to get a whole lot of aggressiveness out of this saying if you sort of go out from what they said theyre going to do in terms of shrinking the portfolio, it means that youve got 325 billion of tapering next year which is equivalent to a quarter point rate hike. Lets bring in Steve Leisman we havent even talked, you know, this about the personnel changes. I also think that im not seeing what jim is talking about. I hate to have an argument with my friend jim here but why not. What im seeing is they announce this Balance Sheet plan, announce theyll put it on autopilot. They want it to be as boring as paint drying but theyre still forecasting the three rate hikes now, i guess im being naive taking them at their word. But that would forecast essentially the three rate hikes plus the Balance Sheet reduction next year. Not an either or yeah. I think you are being a little naive taking them at their word. I have also seen a lot of fed people saying they need to see what the effect of the Balance Sheet is going to be alone so they got to stop the rate hikes, do the Balance Sheet. Otherwise if they do both at the same time and they dont get a desired outcome, is it because theyre raising rates . Is it because theyre doing the Balance Sheet . So this is going to be very tricky i called you my friend. You called me naive. But thats okay, jim no worries i want to go on from there i think somethings changed a bit and thats this. The fed hiking in the face of the lower inflation rates tells me they want to go somewhere and do something that i think is somewhat disconnected from the data and theyre not quite as data dependent i thought the market had it right for the prior two years. I think the fed may have it right for the next year or so. I will also say that fed officials have said that the effect of and the markets are bhaiing better steve, if youre right about that, i imagine the market will come around to that i was going to bring courtney in if its true thats going higher, what does that mean for the market in different sectors . This market right now has been rallying in spite of the fact that we know that rate hikes are coming down the pike, right . Right now we are fundamentally driven in this market. So if you think about all the things that could be potentially playing in favor, i dont see the stock market peeling back anymore. I think we still rally until theened of the year. I absolutely agree with steve. Call me naive at the end of the day, but i think the fed does go this year. That will cause the fact they want to happen in the market place. And theyre going to see some interesting dynamidynamic. Well call it the flattening. Because i want to know, jim, what do you think is going to happen here . Is that going to be a flattening of the yield curve are you reliving part of the 2007 period now . Yeah, i do think it will be a flattening of the yield curve. I think rates will stay at these levels if not go down. Youre right 2004 funds rate was 1 the 10year at 5. 5 . As we sit here at 2. 13 on the 10year yield, youre not going to see them go up a lot. Then the fed would probably get more aggressive too. Theyll stay here jim, dont you think the way the markets reacted is a feter in the feds cap in the following way. Today the fed announced a quarter point rate hike. Said it was on track to do another quarter next year. It reduced a balance Reduction Program that could be as much as 600 billion a year. And yet if i look at them now, the dow is up 40 points or so. Just one question for you do they want easier financial conditions as they start to raise to start tightening. Janet sidestepped that question. She did they dont want a big booming stock market in the face of rate hikes. I dont think they want consistency i think they want consistency at the end of the day theyve absolutely been going back and forth around this slow and steady growth. I think the fed is fine with 2 although we want this massive increase here and there. I think that slow, steady, and consistent growth is what they want to prevent bubbles, give you some level of consistency. I think thats what theyre doing here. Last word, steve. The Main Objective, first of all, korcourtney can come back y time she wants, i want to point that out thank you the Main Objective and jim too. The Main Objective is for the fed to claw back as much normalcy as it can and do so in a way that is least disruptive to markets i dont think, jim, it is yet and may well be soon, it is yet in the position of wanting to tighten financial restrictions i dont think its there yet. Good discussion everybody i agree with that very perceptive, steve thank you for joining us. See, flattering gets you everywhere coming up, aigs chief Investment Officer tells us how the latest hike will impact the Insurance Industry and their investments. Plus the International Energy Agency Looking a at oil. Theres crude under 45 a barrel today for wti. More of the impact on Energy Stocks still to come on the closing bell. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Wont replace the full value of your totaled new car. The guy says you picked the wrong Insurance Plan. No, i picked the wrong insurance company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. [ laughing ] oh. This guy, the mansion and the cars. This is the best . I dont like it. Gru, villainy is in your blood. [ evil laughter ] [ minions shouting ] look at us, two brothers pulling a heist. [ upbeat music ] [ gasps ] im gonna be empaled [ chuckles ] im okay. [ exhales ] despicable me 3. Rated pg. Welcome back five people included congressman Steve Scalise were shot in virginia this morning during practice for a Charity Baseball game our Kayla Tausche is there with the latest details kayla . Reporter well, kelly, kids are walking home from School Riding their bike home from school in this residential area and finding full city blocks are cordoned off by this caution tape that you see behind me. Nearly nine hours after a gunman opened fire on this baseball field where republican lawmakers were practicing. Fbi agents, the Forensic Team have been sweeping up the evidence on this field that were left by the players and by the gunman we are waiting word on exactly what they have found and the developments in this case. Just a few moments ago, the congressional sports for Charity Organization held a bipartisan press Conference Announcing that the game for charity that the congressmen were practices for will go on scheduled tomorrow night. They acknowledge that the lawmakers cared deeply about this game and democrat mike doyle spoke about specifically where the Democratic Team was when they learned about what had happened to the republican lawmakers here at this field this morning when we heard this news, we were practicing at our field and we can only imagine what our friends were going through at that moment. And we felt kind of helpless to help them. We went into our dugout and huddled up and just started saying prayers for them that theyd be okay and that nobody would be hurt seriously. Were not going to let incidents like this change our way of life or our daily routines. Were going to go ahead and play the ball game. Reporter we are still awaiting the status of the victims that were hurt in the shooting this morning. We did see a tweet from medstar hospital here in washington about congressman Steve Scalise who was among those wounded today. The tweet from the hospital saying, representative scalise was critically injured and remains in Critical Condition. The other patient that is that hospital is in good condition. The New York Times profiled the alleged gunman James Hodgkinson of belleville, illinois who friends say went by tom or tommy. And a friend said to the New York Times, i guess he was tired of the politics. Family members said he had been living in the Virginia Area for several weeks. He had come down here originally to protest and taken to working out each day at the ymca that is next to this baseball field. And a Law Enforcement official telling the New York Times that the suspect was armed with a rifle and a handgun. That suspect as the president announced today is now dead. He died at a hospital here in washington and were awaiting any details we can get from the police as they continue their investigation with the fbi were showing another photo there of the killer and appears to have been a sign he was holding at a rally might have been by himself this was we were just showing on air. Kayla, i wanted to mention mike doyle also reportedly said he invited the whole republican team, the Democratic Club for dinner tonight ahead of tomorrows game. Might we expect some further displays of bipartisanship reporter well, the acknowledgment today, kelly, is while there has been an immense show of bipartisanship, that in recent times has been rare in this town. Bridging across the aisles and representative doyle did say in that press conference that it shouldnt have to take violence to bridge that gap its very reassuring to see that support in the wake of a tragedy like this. Today that Global Oil Glut does keep getting worse. Well have more on what it means for prices and Energy Stocks plus australia is trying to style itself as the saudi arabia of solar now the biggest threat to this booming industry down under might be a red hot real estate sector we have those details coming up. Whos the new guy . They call him the whisperer. The whisperer . Why do they call him the whisperer . He talks to planes. He talks to planes. Watch this. Hey watson, whats avionics telling you . Maintenance records and performance data suggest replacing capacitor c4. Not bad. Whats with the coffee maker . Sorry. We are not on speaking terms. Parts a and b and want more coverage, guess what . You could apply for a Medicare Supplement Insurance Plan whenever you want. No enrollment window. No waiting to apply. That means now may be a great time to shop for an aarp Medicare Supplement Insurance Plan, insured by unitedhealthcare insurance company. Medicare doesnt cover everything. And like all standardized Medicare Supplement Insurance Plans, these help cover some of what medicare doesnt pay. So dont wait. Call now to request your free decision guide. It could help you find the aarp Medicare Supplement plan that works for you. These types of plans have no networks, so you get to choose any doctor who accepts medicare patients. Rates are competitive, and theyre the only plans of their kind endorsed by aarp. Remember these plans let you apply all year round. So call today. Because nows the perfect time to learn more. Go long. Welcome back some earnings this afternoon from jbill circuit. Leslie has the numbers shares are up about 5 in afterhours today after posting preliminary Third Quarter results. Heres what it showed. It beat eps estimates reporting about 31 cents a share on adjusted eps versus 29 Cents Per Share estimates. And reporting 4. 49 billion versus 4. 40 billion estimates they said Electronics Manufacturing services did well in the quarter and the ceo said they expect to deliver the best Fourth Quarter in the companys history in terms of core operating income wow leslie, thank you. Mike, we know this has been a hot space recently it has been a hot space a lot of different sectors its not just semis or narrow. It seems like its a chronically cheap stock because it is fairly basic. Like outsourcing your manufacturing facilities looks like trends are pretty good this is the jabil two guys named jay and bill who started it thats how i know how to pronounce it oil falling today after the International Energy agency said the global glut will continue this year. Jackie has more. Good afternoon, kelly thats exactly right most analysts on wall street had modeled in some kind of rebalance scenario for oil this year where supply would shrink, demand would rise and an equilibrium would be reached most u. S. Producers would still be making money and the volatility would stop. That is key. The iea says the supply glut will march on. U. S. Producers are taking advantage of opecs efforts to bring output down. But not all players are cooperating now due to the length of that cut with that extension. There was the hope also there would be some seasonal summer demand here in the United States that would eat into some of the oil and storage. But even thats not panning out right now. Weeker demand blamed largely on the weather. Meanwhile, confirmed these theories to draw on crude oil less than 2 million. Thats small this time of year and a more than 2 million build in gas doesnt show theyre today was particularly telling a break under 45 which was a technically significant level. Suggesting that there could be more pain ahead. Analysts said 42 isnt out of the question at this point the average for a gallon of gas, about a nickel lower than this time last year 2. 32. Kelly . Im surprised i havent gotten a Bill Griffith update out there during this travels. Well see if its dropping in front of his eyes. Thank you. We have a news alert on the airline. Phil lebeau joins us by phone to tell us. Every month the d. O. T. Releases how many complaints are lodged against the Airline Industry and this afternoon we have the latest report involving april complaints and it was a huge surge in the number of customer complaints. Jumping 70 . 70 percent compared with april of 2016. A huge spike also compared to march. Remember, in april you had several highprofile incidents involving poor Customer Service, really atrocious Customer Service including a United Airlines passenger being dragged off a plane. You had an american Airlines Passenger with a baby and a stroller who was in an altercation with a flight attendant. Who was accidentally hit with a stroller it really put a focus on Customer Service and thats probably what sparked this huge surge in complaints. Having said that, take a look at the Airline Stock since april 9th when the united incident happened they continue to move higher so while there is a black eye for the industry in terms of Customer Service, investors continue to rotate into the Airline Stocks kelly . Yeah. Some people even Getting Better service as theyre trying to make up for it in the aftermath. Phil, thank you very much. Our phil lebeau there. Now the fed is raising Interest Rates for the first time this year up next aig cio joins us to discuss. Plus financials have been on fire since the end of may. Reclaiming a spot in the s p 500. Those details still to comon t csi bl. Helongel e helongel e for years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Welcome back we largely saw declines here on the close on wall street the s p dropped 2. 5 points the dow did manage a 46point gain a lot of this on the feds decision to raise Interest Rates and begin running off its Balance Sheet. Also janet yellen struck a pretty upbeat tone during per press conference how about yields they did tick up a bit theres the 10year 2. 13 . Remains extremely low. So what impact is all of this having on the insurance sector joining us now in an exclusive is Doug Dachille, chief Investment Officer for aig welcome to you thank you what did you immediately do or think after the feds decision today well, to me the rate wasnt the important part of the story. To me i went right to what they were planning to exit the portfolio. I look at it as are they going to do their Monetary Policy in lifo or fifo are they going to undo the things they did last opposed to undo the things they did first sell the long bonds or short bonds . What they did as part of quantitative easing into the yield curve, once you lower rates youre at zero then they did this operation twist. I remember from years back now. Operation twist was their way of basically flattening the yield curve to get more effect out of by buying long end yields because they couldnt do anything to the front end. Whats interesting inthe way theyre unwinding it is theyre not doing it to undo operation twist. So theyre basically letting the portfolio run down as a result all the longterm maturity securities are staying in their investment portfolio. As a result, theres only one thing that can really happen on the way they propose to unwind yield curves flatten or invert theres no other way so the only way that could be different is as if the treasure issues new securities, they lengthen the maturities. Great point people have said they should do that but theres probably resistance one of the ways i would have proposed would be to unwind the portfolio in proportion to the way the treasury is issuing. The natural way for the fed to exit its portfolio is through the treasury auctions off securities why not as the treasury auctions a 10year note, throw in some extra ones to get rid of them to stabilize the issuance if they do that now, well know where they got the idea we were talking about buying long bonds which is the opposite of what you think people might do youre saying no, no, no and we saw this last cycle we saw flattening play out the whole way. When that started to happen, all sorts of crazy ways of Getting Better run started to take place. You go back to 2005 and chairman greenspans testimony to congress, it was a great conundrum. What was the great conundrum he kept raising shortterm rates and the longterm rates didnt move and he was incredibly frustrated by that because he didnt think he was getting the slowing effects of his rate policies and therefore he was going to have to do more in the front end of the curve sounds familiar whats interesting about this fed is this fed has a completely different tool they own billions of long bonds and securities so they have greater ability to modulate so if they wanted they could sell all of that up towards 3 i would argue that if they sold more of the long end of the yield curve, they could do more in the short end one of the worst things for Financial Service companies besides credit eventsis, you know, a pancake flat yield curve. Its hard to make money when youre blending money in five years and youre borrowing overnight at the same rate. What will aig do if thats the same environment were now heading into thats going to create all kinds of challenges. And thats where people have to start getting creative about their investments. And you have to resist that temptation and the normal frustration that you have when youre not making money on what is normally a relatively safe way to make money which is the shape of the yield curve have we gotten to a point where you think some recklessness has come into the market not yet . I really dont think so the other thing you have to realize is theres some natural demand for long end maturity treasuries among all the pension plans. So the worst thing you can do is actually have that inversion of the yield curve. Thats going to further exacerbate the liabilities of all the corporate and government pension plans. I was just going to ask about that if thats the case, it seems to me were going to have a replay of the last cycle all over again. A pension fund who thinks its going to somehow make 6 or 7 and cant do it in hedge funds, what are the credit products out there or the Creative Strategies theyre going to be pitched that will help them get to that kind of bogey which is desperately need snd. Unfortunately there is no Creative Strategy for the pension plans. Theres only one strategy. Its called make contributions to your plan and stop making Unrealistic Expectations so that you dont have to make those contributions. That means tax hikes. Massive tax hikes. Tax hikes the question becomes is can you deliver those benefits and part of the problem with the benefits is, you know, they basically gave those benefits as a way to save money when the people were active so they basically, you know, shifted the expense to the back end. And i dont think anybody expected the longevity assumptions that weve now got now we have robust benefits. And People Living even longer. Which again, is a natural trend to make expected returns on assets go down even many for its a difficult environment. I feel like im going to cry whats where hows this all going to its probably going to end in another crisis down the road in which the benefits will be cut based on here and there where theres already been that precedence set somewhat further tax hikes. So going back to what you do in your environment i would say, you know, theres one you know, look. Economics follows demographics and you cant avoid the demographics the demographics of the United States and the world in general, there used to be a population pyramid. So it was very nice. You had a small top of the older people and a very nice flat bottom and that was because we were in an Agricultural Society where you produced your workers. You needed to have six children to go out and farm now you dont have that. Now you have People Living longer, people having less children because they dont need them to farm for them. And they are much more expensiv expensive. Now the population pyramid is looking like the Liberty Freedom tower. Its getting flat and tall when i think about that, the reality is technology will be the solution there so the way to fill out that bottom of the pyramid robots . And Technological Solutions in the sold days, we used to have four active workers for every one retiree. Now its going to two. But you dont need more than two, potentially, because youve got Technological Solutions that will come to play and provide the services that your grandchildren used to provide. Again, i dont know how you do your job. I mean, to have to make those kinds of matching decisions in this environment is if this is where its all heading you know, the biggest challenge you have is the joint event. That we write a lot of business that has longevity and also as people live longer, the need to have longer and longer duration assets grows the liabilities extend and we have got to find more and more assets hence is why longterm rates will keep going down doug, fascinating thank you for joining us thank you. Doug dachille from aig. Lets go to sue herrera. She has the latest on two separate shootings for us today. Indeed i do, kelly. We begin with the shooting of a u. S. Congressman in alexandria, virginia the House Majority whip steve a scalise was shot at a baseball practice just outside of washington he remains in Critical Condition after undergoing surgery and just in a few moments ago, dramatic video taken by a bystander records the moments that the shooting began. [ gunshots ] the shooter identified as 66yearold James Hodgkinson had an assault rifle, a handgun, and a lot of ammunition. He was apprehended and later died of his wounds House Speaker paul ryan addressing Congress Calling for unity. We are united we are united in our shock we are united in our anguish an attack on one of us is an attack on all of us. And there was another shooting at a sprawling u. P. S. W warehouse and Customer Service center in San Francisco. Three people plus this shooter have died. The shooter killed himself two other people were wounded. The shooting not related to terrorism. That is the latest from washington and San Francisco kelly, back to you awful awful, awful sue, thank you our sue herrera. Coming up, well hear from two congressmen. One who was at the shooting at alexandria today another at a field nearby. U wcheiacun yoreating cnbc, first in business worldwide s a and b and want more coverage, guess what . You could apply for a Medicare Supplement Insurance Plan whenever you want. No enrollment window. No waiting to apply. That means now may be a great time to shop for an aarp Medicare Supplement Insurance Plan, insured by unitedhealthcare insurance company. Medicare doesnt cover everything. And like all standardized Medicare Supplement Insurance Plans, these help cover some of what medicare doesnt pay. So dont wait. Call now to request your free decision guide. It could help you find the aarp Medicare Supplement plan that works for you. These types of plans have no networks, so you get to choose any doctor who accepts medicare patients. Rates are competitive, and theyre the only plans of their kind endorsed by aarp. Remember these plans let you apply all year round. So call today. Because nows the perfect time to learn more. Go long. Welcome back weve been reporting all day on the shootingalexandria, virginit left House Majority whip Steve Scalise and four others hospitalized joining usnow is congressman jack bergman hofs on the field along with democratic congressman jared huff man howh was at a different field thank you for having us you saw the shooter, is that right . What are your thoughts as we continue to learn more about the individual today well, i didnt see the shooter until after he was down. He was hiding behind the third base dugout. I was over by the batting cage waiting my turn so i didnt see him until after all the shooting was complete and he was under the secure arms of the capitol police. And at that point, you were able to give some description of the gentleman we learned much more about congressman huffman, you were at a similar baseball practice for the democratics a few miles away i was we had our own 7 00 a. M. Practice we were about halfway through when our coach visibly upset by a message he just received called us in, shut down the practice at that point we began to pray for our republican colleagues. That was our first thought and congressman huffman, you know, what are your thoughts on Going Forward with this baseball game tomorrow evening . And will there be any changes as a result well, im glad to hear they have decided to go forward with it because this is an event that brings us together and builds bipartisanship and camaraderie also raises a lot of money for charity. So its an event we all feel great about. And i think well have an Important Message to send as we stand together not necessarily as democrats and republicans but as members of one team tomorrow night in a spirit of unity. Will you guys, congressman bergman, be playing as republicans and democrats still . I think there was some suggestion earlier that perhaps those teams would be changed do you think you could get the Boston Red Sox and the new york yankees to switch teams together to play but they could play a friendly game. They can play a friendly game where theyll help each other up when they slide in and theyll congratulate each other on a job well done. Thats what well do tomorrow night. Because so many kids in the metro d. C. Area count on the moneys raised here plus probably over 600,000 tomorrow to help them out. So this game is going to go on it will send the right message across the world congressman huffman, whenever you have one of these attacks, one of these events, theres a little bit of a struggle to determine whether its entirely sort of a oneoff, deranged individual or symptomatic of something larger as an outgrowth of the larger environment. Is there anything you would obvious thats worth taking away we should always learn from these events statement the politics descend on these events pretty quickly and my hope is that we can all resist that at least for awhile. Because the one thing we all agree on is theres an overheated political environment in this country. And i think jack and i and many of our colleagues would like to do our part to try to set a better tone. Are there any examples of that, grcongressman bergman . I know there might have been an effort to get everybody together for dinner tonight something more come from that . We didnt wait for an event like this to happen as the freshman class, both democrats and republicans. Three weeks after we were sworn in in january, we coauthored a letter, a commitment to civility that as the freshman class both democrat and republican, we believe that we can be better and need to do better and we as freshmen have decided to set the example. I also wanted to ask you both about security you know, how you feel now having congressman bergman being directly involved in todays shooting does it make you want more security either for yourself or for when you all get together Going Forward . Well, again, life is a matter of perspective i was an Airline Pilot here for 20some years. All along crews changed in a minute we have to realize that there is a new security threat. Both at home and abroad and a combination thereof. So its a conversation that we have to have as a nation everybody has skin in this game and everybodys in this together its up to us now to figure out what does that mean. Congressman huffman, same question to you. Especially, you know, we saw the response from Gabrielle Giffords sharing her thoughts and prayers after having been shot herself several years back i think we need to continue having a conversation in this country about gun violence, terrorism, the other threats that we face at the Community Level and our national security. But i think the common denominator that were focused on today is the hatred and the overheated Political Climate that may have contributed, appears to have contributed to this event today. Certainly contributed to an event where a zealot with a knife hurt people on a train a few weeks back and we could see more of these types of incidents so i think all of us need to really think about the fact that politics should never inflame us to the point of violence gentlemen, we thank you both for joining us this afternoon. Good to see you. Thank you and good luck to both of you at the game tomorrow were rooting for both sides in the matchup. The red sox and the yankees. Thats congressman Jared Huffman and jack bergman thank you very much. The ceo of whole foods has some choice words for Janet Partners we have those details next coming up on fast money today, umthis doubling down on e trp trade. Hell make his case at 5 00. And i had all these points from my chase ink card. So i bought ingredients, utensils, even made custom donut cutters. Wow all with points. Thats how i created the ripple the doughnut in a doughnut in a doughnut. Suddenly its everywhere. I mean, it really took off. What will you create with your points . Learn more about the ink business preferred card. Livestreat the airport. E sport, with your points . Binge dvrd shows, while painting your toes. On demand laughs, during long bubble baths. Tv on every screen is awesome. The allnew Xfinity Stream app. All your tv at home. The most on demand, your entire dvr, top networks, and live sports on the go. Included with xfinity tv. Xfinity the future of awesome. Welcome back time for fast take today, first up is tough talk from whole foods john macky they are saying they are quote trying to destroy my reputation and calling them greedye i think ill censor that what do you think look, i think this basically epip mizes the conflict here between lawsuit of whole foods the founder and john mackey himself. There is a tremendous gap between those world views. You dont disrespect the guy who 37 years ago founded a vegetarian supermarket should be running a 12 million company. Most of the investors think he has been pre occupied with his time and efforts and lots of things outside the company. We will see if john wants big changes at whole foods he has been a little resis and the to that. Next, its 1977, you have 100 bucks and a choice lit get you a share of index or a share of berkshire hathaway, heres how they explained it to mike its going up to 100 peak down back to 100 in may of 77 at the same time a stock got there for the first fund, though berkshire hathaway, that was the big one. Way before the split thats a 250,000 stock. That was 100 all parody with the s p 500. 250. Thousand. Dollars per share. Per share. Apples to apples, berkshires been to 250,000 t. S p has done well, people are buying the wrong index its amazing i think one of the real things for me here is it shows that the out performance of berkshire was mostly in 1980s and into the mid90s. A lot of people think of warren buffet being active since the 19 victims think it was in the primordial days, mid20ing century. Actually, no, it was about multiple expansions and getting the great brand fames. He started the s p in may of 1977. That bull talk is on cnbc pro . By the way, if i had 500 in 1977, i would have bought 50 packs of baseball. Next i love this story out of australia. Its trying to style itself, homeowners with solar panels are suing to block high rises from going up and blocking their sun. Which makes me wonder as we move to a solar powered world, sun rite its very interesting, you have these controversies and theyve mostly been about aesthetics i remember when they were going to put up the Time Warner Center in new york t. Concern was it was going to cast a shadow over central park that was to be unfortunate, not depriving somebody of the energy that powers their home. Right. Sort of fascinating you would think there would be enough sun to go around in saudi arabia. Or australia. Finally today, Marissa Meyer told the london conference she is looking forward to goingment going back to gmail because shes always faster using a tool i designed myself. Burn is what i say, she didnt tweet us she is continuing to use the excellent yahoo mail, michael, which, okay. So there will be multiple ways to reach her, if you need to i do think it was very, look, she was always a google person who they tried to transform into yahoo. She then tried to walk it balk and kind of say, look, i want to see how much gmail has changed okay. No. But i dont think anybody inside or out would sayah hoo mail is perfectly the equivalent product. Its certainly goting better. I feel gmail now can use some improvements maybe she can go back. I think the messaging space is so huge because email remains a tremendous frustration for anybody. Thats true. Its a is up pspostory of p supposetory stuff. The end of may the run helped the sectoclm e y otn the s p 500. Well have those details next. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Say carl, we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Whole come back this caught our eye, kbw out with a note previewing, reviewing i should say the sector competition of the s p 500. Financials are once again the second biggest sector in the index. They overtook health care, which had overtaken them may 30th. Financials are 14. 2 of the s p 500. Health care is 14 they have been buying back financials havent done that well, this year. Granted they did a little in the last month or. So what was their behavior today . They lung in there okay i think what you would really look at and at least notice is that they hung in there today despite the fact that we were all talking about a flattening yield curve. They werent getting help from Interest Rates insurance up half a percent and basically a flat day for the market nonbank financials are doing well, acid managers, investment banks. It seems as if, i dont know if the stocks are telling you rates wont go that much lower or perhaps the upbeat outlook for dividend increases and all the rest of it. I think the calculation up this week. Without a doubt if peoples heads. Its been under the surface in terms of the news cycle certainly, it delivers a lot of what theyre hoping for in relief on that front were coming into the key part of the year a. Lot of talk about how well citigroup we saw the difference between citi and goldman. Citi has been aamazing stock, its been the poster child for that relief and after the stress test because they have the most inert capital on the books. Few asked me, if this was kelly ongoing, yes, few said to me, where do financials rank for the s p . I would have said third, maybe fourth even. Im surprised theyre number two. Of course, technology is 30 , by far the biggest keep in mind, they split the financials, real estate used to be a part of the financials. They would be bigger its about 2 or 3 in real estate right now. Thats such a huge portion. You talk about ever since the crisis, its a different environment. They peaked out i think almost well over 20 of the index in 06ish you dont go back there, necessarily. There has been all the attention has been focused on how big the tech sector has come by the way, tomorrow, i personally will be interested in the result, all the competition coming, amazon, all the rest of it, it feels like food deflation, heavily promotional. All that story they dont have a great read on the consumer broadly speaking. Its another data point were all on deflation watch. We kick back. Its horrible, the results of stock trading. Maybe there was a grocery wave there, well see thank you very much for everything that does it for requests closing bell today, fast money begins right now. Fast money starts right now live from the nasdaq markets site overlooking new york city times square, im mellissa lee t. Traders are tim seymour, dan nathan and guy adami check out these new tenyear yields falling to the lowest level since the day after the election that decision process 2 00 p. M. Eastern take a look at the subpoena 500s speaking of yellen, claiming back into the close ending the day a couple of points lower the dow soaring at 2 00 p. M. And making rapid news throughout the afternoon before a bit of the surprising rally into the close, ending the di at a record high it all got under way when traders learn the fed