Transcripts For CNBC Closing Bell 20150123 : comparemela.com

here. that ipo pricing at $14 last night. but right now you cannot get it for that price because you can see there it's up to almost 24 bucks on the session. a huge move day one for the cloud company despite vocal skeptics. >> they're questioning their profitability. this feels like the debates we were having back in the '90s during the dotcom boom. i'm not saying that's the case here, but off booming ipo with people wonder wrg is the money right now. another bombshell from the president's tax plan. president obama wants to challenge college -- change i should say college savings plans known as 529s so the gains would be taxed as regular income. right now they are taxed-free as you know as long as the money is used for a child's college education. the president says these plans only help rich people not the middle class and we will put it to the test coming up on today's "closing bell." >> this was all part of the state of the union. making free community college. we have heard jeb bush and others say it is hypocritical to do that while taxes 529s. here is where we stand. down triple digits on the session. the dow is off 93 points. the s&p is giving up about 8 or nearly half a percent there as well. the nasdaq interestingly is managing to stay in the green but only by about five points at the moment. >> let's talk about -- we have a lot of things to get to in the closing bell exchange. joining us mark madison, peter anderson from congress wealth management. steven parker. michael jones from riverfront investment group and our own rick santelli joining us as well. michael jones, you are long europe right now. were you long before the ecb move this week or in anticipation of it or why would you like european equities? >> we have been long europe for a while. long the exporters and short the currency, and obviously with the quantitative easing move that the ecb did yesterday, that trade has come ripe in a really big way. the great thing about it is when you're long the exporters, you're long the companies that automatically get an earnings boost when the euro goes down. you're also long the best companies in the european markets because these are the ones that can compete on a global scale and that means they're very efficiently run and well managed. >> peter anderson, are you guys buying europe? >> well you know we've always been somewhat exposed to europe but right now we're still waiting to see how that plays out, kelly. there's still a lot of things i'm kind of disappointed january started the way it did. i'm still kind of puzzled about the u.s. consumer too. i thought i was very disappointed in the december sales report. i'm hoping that it's going to be revised upward because, you know, kelly, it just doesn't make sense to me. with the low fuel prices and the consumer sentiment, one would have thought that we would start seeing that playing out in the numbers, but let's hope that we'll see it through january and february too. >> steven parker you like japan. that's where you're putting some international money to work right now, right? >> we actually think, first of all, we saw what draghi did yesterday. the bank of japan has been on this trade for a while. they continue to be the most aggressive central bank in the world. a couple things markets aren't as focused on. they're a huge oil importer. they will get a huge boost from the fall in oil prices. the japanese corporate sector has been one of the strongest in the world over the last couple years. japanese companies have grown earnings 80% over the last two years. multiples have come down over that time period. they're more focused on profitability, more focused on shareholder return and they're cheaper than the u.s. and even europe. >> makes for an interesting discussion about buying the places where all of this quantitative easing has contributed to lower currency prices and what not, but i want to go back peter andersen, your point about the u.s. consumer is interesting. we got that disappointing december retail sales report but look at starbucks today. i can't -- it's up like 6% and this after an incredit you believe run. what do you make of it? are they taking share from everybody or is the consumer in better shape than we think? >> look at u.p.s. and mcdonald's? we're getting mixed signals, and i think that's what's so frustrating. by now i think we would have thought all those names, kelly, would have been performing well and surprising us on the upside. >> even mcdonald's call i'm surprised on the upside in the u.s. >> they did but i'm sticking with the fact that all of these companies should be unilaterally moving up. jcpenney did okay last december. but as i said we're not seeing it across the board, and the math seems to work out, you know, as a stimulus for the low gas prices. we know consumers are not banking that cash. so where are they going? just to starbucks? i don't think. >> mark madsen what do you think of the u.s. market right now? we're all focusing for obvious reasons on international investing whether it's europe or japan right now but what about the good old u.s. ofa a? are we still in value territory? >> only 49% of the world's capitalization are in the united states. there's more opportunities global than here. what a lot of investors are doing is making the mistake of chasing the s&p 500 because it was one of the number one performing asset categories. you need to diversify globally. we're in over 46 countries and that includes not only europe but asia and emerging markets. everybody is running away from emerging markets right now because they've been down. you have to buy the thing that's down. that's emerging markets and rebalance your portfolio. >> wow. that's a you have to -- listen mark, you want to get into emerging markets when you have commodities -- look at oil again. there was no bounce. when the u.s. dollar is depreciating and everything else overseas is less valuable. >> what you have to do to be a successful long term investor is force yourself to do the things people aren't willing to do. if you wait for the naverrative to go your way, then you're going the wrong way. rebalance, force yourself to buy the thing that's low. you don't get to know the future and how it's going to come back. eventually it does. >> rick santelli i have to keep recalibrating my feelings on u.s. tresh risasuries on the long side. i was praying to get upset when they went below on the 2.5 on the 30-year. we're well below those now and we're all sitting around going let's talk about oil, let's talk about europe or japan. what about these low treasury yields here? >> and they are low, but, you know, just to give you a couple of glimpses as to why maybe it's more prudent not to have huge bias for lower rates at least for the next two or three weeks. first of all, we're virtually unchanged. down a couple basis points for the week on 10s. down nine basis points on bunds. we're seeing the difference between the two widen. lately when this happens, be a little careful. it means our treasuries most likely are going to disengage a little bit. maybe yields float a bit higher. remember there's three big driving forces. the relative value trade with european low yields. after what draghi did, this could be under review. the second issue is it's the only hedge against soft equities. and since we have europe doingq e, there may be less soft equities. and the third category, of course, is lower economic horse power and even though the panel may not agree, i think that's the one turnstile out of the three that is still functioning. so you might see rates float up a bit but, remember we're down 36 basis points on the year up until the 23rd of last year we were off about 28 basis points. it's amazing how similar the first seven weeks of last year and this year continue to be from the vantage point of interest rates. >> that's so true. michael jones, just go back to the point about will the u.s. consumer ultimately benefit. you like some consumer plays we're going to talk about next hour. it has to do with sneakers. >> absolutely. we think footlocker is one of the best valued names in the space. we also -- i mean, it's easy to get caught up in the government data. it's all backward looking. it debtsgets revised significantly. the sentiment data is the more real time measure of what's happening. we look at ever corps isi that does a great survey of retailers. the week over week changes from the couple weeks before christmas to the couple weeks after christmas, the strongest they have seen in 20 years. that makes nor sense.more sense. >> you think they're going to be buying sneakers. >> you're taking it to restaurants and you're going to be buying that high end sneaker you might have thought was out of your price range when you had to fill your gas at 50 bucks. >> stephen, you make a good case for japan because of the lower energy costs right now. are you ready to buy energy itself at this point? >> so for some of our opportunistic clients we think there's a trade short term in the energy stocks. sentiment has gotten really really negative -- >> we all expect it to go to $30. >> it's amazing how quickly that's just become consensus. that's a big leg down from here. so i think we have to get ready for longer term lower energy prices but when sentiment gets that extreme, if you're willing to take a little bit of risk in portfolios and for the right types of clients we've been buying some energy stocks. >> if i could add onto that, there is a baby that's been thrown out with the bath water. mlps have traded down as hard as energy, but the storage and transportation, that's the mlps, they're still showing double digit earnings gains where as the rest of the energy space has been wiped out. if you want to step in and buy something in energy the mlps are a safe place to start scaling in. >> we have a lot of supply that's for sure. gentlemen, thank you all. appreciate it. have a good weekend. >> tgif. >> 50 minutes to go into the close. the dow sunday pressure off 90 points. oil was lower again today as we were just discussing. nasdaq is trying to buck the trend. it's up 0.2%. >> the s&p and the dow struggling to stay positive for this new year so far. when we come back morgan stanley's chief equity strategist will tell us if he's still bullish on u.s. stocks even after this shaky start we have had this year so far. wait until you hear how adam is playing the collapse in oil and the euro as well. that's coming up with adam parker. also happening today, box, there it is hitting a home run on the first day of trade after pricing last night at $14 a share. it's well above that now. trading up about $10 or 70%. pros will shed some light on where they think the cloud storage company goes from here when we continue on "the closing bell." recently, a 1954 mercedes-benz grand prix race car made history when it sold for a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. and to think this one actually has a surround-sound stereo. the 2015 cla. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. i've been called a control freak... i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees. and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. where they think the cloud sexy. go national. go like a pro. down day. kind of a mixed day. let's face it the technology sector is doing okay so nasdaq is higher but the s&p and dow is lower. of the ten sectors, two are positive. what a volatile week for the utilities. wednesday they hit an all-time high. yesterday they were the biggest loser, and now the biggest gainer. up 4%. >> on the dow, ge is the strongest performer. i don't know the last time we could say that. it's almost 1.5%. dom chu is keeping an eye on the stocks that are hot and not so much. >> u.p.s. is plummeting. hit hard after forecasting fourth quarter earnings below expectations. rival fed ex fell on that use as well in sympathy forcing it to reaffirm its guidance for the year. kimberly clark moving lower as well. the personal consumer products maker gave a disappointing outlook for 2015. those shares down by 6%. lululemon rose after jpmorgan upgraded the fitness apparel apparelmaker to overweight from neutral. and we're going to end with go pro gaining ground after signing an agreement with the national hockey league that will allow fans to watch hockey from a players' perspective. kelly, bill the nhl and go pro looking to make things more exciting for hockey fans around america. >> that's fascinating. shares up 7%. stocks generally trying to post gains this week but it's been a wild start to the year. my next guest says there's a lot of pessimism still out there that could create an opportunity for investors. >> let's bring in adam parker chief u.s. equity strategist at morgan stanley. happy new year. >> happy new year to you, too. >> so first of all what do you make of this stutter step that we've had at the beginning of the year here? does it feel like it is bottoming pattern or a topping pattern or what do you see here? >> look i'm pullish. i think the market is only a couple percent below its all-time high. to me what matters is earnings and we think earnings will go 6% to 7% on an operating basis this year. you have over a 2% net buyback on top of that and then you also have almost a 2% dividend yield. so sort of an 11% total return base case. if you're bearish, you must believe earnings are going to decline and i don't think that's the right way to position the portfolio. >> but we have seen estimates revised lower in terms of earnings. most notably in energy but even just generally speaking. so if that continues to happen for whatever reason strong dollar, et cetera, you can't overlook the effect that must be having on the market and maybe stretching the valuation a little bit here. >> so let me give you some details on this because, you know, there is a pattern where the sell side and management teams' expectations for earnings can be too optimistic. there's been 39 years there's been a place where analysts have posted estimates sell side. it started in 1976 and through 2014, 39 years. in 33 of those years the january bottom up best miss were too high. all six yerpars they were too low were recession years. what i think is interesting right now is that the 2015 earnings, it could be the first time in 40 years where we're not one year off the recession and the january numbers are achievable and the reason is they've come down so sharply from $134 down to about $125 now, $9 down in the last nine or ten weeks. so the expect tabss are i think pretty achievable for this year. only for 6% growth. so i think there's upside because nobody has raised the numbers. in fact, in so sector out of the ten sectors are estimates up. only down. so i think there's an asymmetry guys where if you're an energy analyst, you had to cut your numbers. if you're a consumer analyst you didn't have to raise them. i feel pretty good about numbers. >> i see you like consumer discretionary. you're not alone in that one. i get that play but energy. you like that. where is the earnings growth going to come from in that sector? >> sure. so look i think here you have three reasons to own the stocks. one, they're cyclical. all seven times they have underperformed by this much in the last 40 years. subsequently outperformed six months later. i feel like sentiment is that things are going to get worse. in fact, i think sentiment is more negative at $45, $50 brent than it was at $100. that doesn't make sense to me. two, you have to be anticipatory. you have to buy the stocks two to three months before the earnings revisions bottom. that's been the historical pattern. by the time oil rises, you have missed a big chunk of the return. three is the valuation. these stocks are cheap on price to book cheap to ebitda. those were the two most effective metrics for predicting. i want to buy cyclical stocks. that's my case for getting this in there. >> what's your price target for the s&p. >> around 11% upside in line with what i told you is our earnings growth plus the buyback plus the dividend yield. >> and a the dividend yield, this is one where there's sort of half the street is split thinking it could go lower because of energy. the other half thinks maybe there's some areas that might increase it. if investors are more interested in the yield at this point, where would you direct them? >> challenge is expensive sectors are ones where dividend yields are high. utilities is the most expense tiff sector. what you have to do is do individual security selection where you feel safe about it. one thing i can tell from you the quantitative perspective is dividend yield level is overvalued over history and dividend growth isn't. i'm focusing on stuff 2%, 3% -- >> before we let you go what areas -- i know you can't get too specific but who has room to grow their dividend do you think? >> there's a number of ideas you've have where payout ratios are below 50%. payout ratios are very low versus history. i think there's ample room for kchs companies to take them up, consumers, health care select technology, financials. there's actually a number of ideas there. >> adam good to see you. thank you. appreciate your thoughts. >> have a great weekend, be well. >> he's the second guest we've had in the last 15 minutes who says the sentiment on oil is so bearish they're willing to step in at this point. >> i know but -- >> i know. >> my stomach is in knots every time i hear it. >> we're going to move on as she unknotted her stomach. 40 minutes left in the trading session here. the dow down 94 points near the lows of the session with the s&p down 7. nasdaq though is trading higher. >> it is those energy names weighing on the dow and on the s&p. exxon certainly feeling the heat today although ge had a little bit better numbers in its energy division than expected and the shares are up accordingly. up next currency wars how to make sure you're not losing here. you will stay with us to find out more as central banks ratchet up those printing presses. ing for pain? 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>> it's exciting when you get volatility. look, in history the euro has gone as low as in the 80s to the dollar. that was back in 2000 and that's less than parity which is currently the bet du jour that the euro will fall all the way down to 1 versus the dollar. we haven't seen that since back if 2002. it's moving there pretty quickly thanks to mario draghi's price year. listen to what george soros said about it from davos. >> the sheer size of the massive injection and the duration and so on will have undoubtedly an effect. it will also have of course a lot of affect on international currency markets. if i were still active in the business, i could see some fairly substantial moves coming. >> those substantial moves are here. the euro is down more than 3% against the dollar just since the announcement from the ecb yesterday. it's down more than 17% versus the dollar over the last seven months. and on the flip side the u.s. seems to be og with a strong dollar for now with the treasury secretary saying he's sticking to the u.s. policy of a strong dollar. >> a strong dollar all of my predecessors have joined me in saying it's a good thing. if it's the result of a strong economy, it's good for the u.s. it's good for the world. what we've also said is that when -- if there are policy that is are unfair where there are interventions designed to gain unfair advantage, that's a different story. we have been very clear in multilateral and bilateral settings that that's not acceptable. >> the problem here with this move is the speed and whether that could be destabilizing for companies, for economies, for commodities. already emerging markets central bankers are fighting back in the form of all sorts of surprise moves like interest rate cuts and no question american companies that do business overseas are cringing by the day looking at this move. >> yeah. the earnings have been fascinating on that front. sara, stay there if you would. >> okay. >> joining us now with their take on all of this jack mcintire, bond portfolio manager at brandywine global. do you see parity for the dollar/rur row? dollar/euro? >> we think the euro will continue to go down. the problems are not going away. you have the u.s. doing better and europe behind. that will put downward pressure on the euro. we see parity by the end of next year. >> if that happens what does it mean for investors in the u.s.? >> i'm a little nervous because everybody is talking about parity and we're actually in that camp if not even lower. so i think what it means is why is the ecb driving down the euro and how are they doing that? they're pushing capital outside of the eurozone. that capital is looking at u.s. treasuries. the ten-year is roughly around 1.80. that compares to german bunds about 36 basis points. there's great value when you look at that spread so capital is leaving europe it's leaving japan, driving down treasury yields. ultimately that's going to be a net positive for the u.s. economy because i think it will flow through and have a positive impact on housing at some point in 2015. it's going to be beneficial from the economy, from interest rate standpoint, the strong dollar might slow a little bit of the economy, the external part. >> jack i realize we have distortions and dislocations because of the central bank intervention but how much longer can the dollar rise and interest rates in this country remain as low as they are? >> you know it's probably going to last longer than what most people transport. when you have model that is try to come up with fair values for interest rates and currencies, in this kind of environment they don't work. you know the reason again, for everybody wanting weaker currencies is to get growth. the u.s. has benefited from weaker currency for over a decade. exports from gone from 9% to 13%. that's pretty meaningful. so europe wants that japan wants that. >> torsten, something you have said in client meetings people say if people are buying for example, treasuries and the yield curve is inverting, no big deal. you're like wait a minute that's not usually a good sign for the u.s. economy. do you expect flatter yield serves from the u.s. and europe? >> the complicated thing is the textbook and the federal reserve is telling us things are getting better and therefore rates should continue to go up. on the other hand we have so much liquidity and money that's been printed from thee cb and that's pushing rates down. are the fed folks right when the fomc says things are getting better and they will hike by the middle of the year or is all this liquidity making it difficult paradoxically created by themselves making it difficult to tighten financial conditions once inflation starts to come around? >> we know you live and breathe the currency markets. torsten told us he thinks parity by the end of next year but jack see it is going maybe a little lower. what kind of numbers are you hearing from analysts about what the euro could do against the dollar down the road? >> parity is very popular right now. to give you a sense, stratists istegists are having to revise their calls. morgan stanley lowered it to 105. just to give you a sense of the magnitude and the speed of this move. the problem is it's a very crowded and popular trade. and, yes sometimes that makes sense as jeffrey gurndndlach has said and sometimes that works. but when you have such a crowded trade in the currency market anything that disrupts it you could see it snap the other way big time. so there's a warning. >> all right. jack torsten, good to see you. sara as always thank you. see you later. so we're convinced now that oil is going to $30 a barrel and we are convinced on euro/dollar parity. >> e-mailing with some traders saying the most crowded are short the oureuro, short the yen, could probably add short oil. half an hour to go in the trading session this week. more red than green on the dow and that red exxon, the biggest decliner today down almost 2%. also p & g joining the fray. dupont under pressure. on the flip side you have outperformance thanks so some earnings fromg e and ibm. coming up saudi king abdullah's death fueled an immediate rise in crude prices. west texas fell since then. the new monarch is expected to stay the course on oil production. we'll talk with the pros on where oil price goss from here when we come back after this. there will still be pain. it comes when your insurance company says they'll only pay three-quarters of what it takes to replace it. what are you supposed to do, drive three-quarters of a car? 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>> i expect actually that when all is said and done we'll see that the new king and the current oil minister actually orchestrated the decision to hold production at its current levels which precipitated some of this dive. there's a very different perspective that's emerging in riyadh and they recognize that this is a full-blown market share competition. u.s. production clearly is on the one hand as a principal target but so is russia and the competition over who is actually going to be controlling this exploding asian market. both of those are essentially untested and saudi arabia doesn't quite know where the triggers are yet which means for the foreseeable future i don't think this policy is going to change. >> a lot of people also speculating, and i understand at this point it's just speculation, about what kind of political instability saudi arabia might be facing going forward. what kind of potential is there for this country which we have relied on for so long with regard to all the policies you're talking about to begin a period of much increased instability? >> well, i think the instability remains to be seen. what king salman has done rather quickly, he has set up the move forward in terms of who is going to actually succeed whom. the current crown prince is now the heir apparent. he's probably the last of the sons who will be occupying the throne. the real test will come when the last of the original family has died and we're actually moving into the next generation. i think that's several years away however. >> okay. very quickly, we have to go here, but a lot of feeling that maybe the u.s. production becomes the new swing producer. do you agree? i see you already nodding your head, but what does that do to saudi policy. will it matter if they think about cutting production down the road? >> well, controlling 40% of the world's oil doesn't buy what it used to and that's essentially where opec is and it's declining. remember something, bill. 86% of the recoverable unconventional oil reserves throughout the world are not located in north america. so what's occurring here in the united states is going to be replicated in various regions throughout the world. opec is in for a you have to future. >> they have oil reserves and fx reserves. a lot of people say that buys them time. bring you back obviously to talk more about it but kent moors this afternoon on big moves abroad. we have 20 minutes to go. >> yes we do and holding at the lows of the day with the dow down 109 points. we'll stay on this weakness into the close. >> cloud storage company box is meanwhile blasting through the roof on its first day of trade here at the nyse. we'll discuss the company's outlook for profits and the increasingly crowded cloud space. >> and later, president obama you may not have heard at this point wants to reduce tax breaks on those 529 college savings plans that are so popular but would this end up hurting a larger swath of the middle class than the president thinks? you cannot afford to miss an important discussion on that coming up on "the closing bell." welcome back. well, the dow may be down today but there was a high profile ipo that came to market here at the new york stock exchange that did very well. that would be box. this is glen he's the specialist who made the market got it open this morning. in fact, glen was the specialist on twitter as well the day it opened. so he's doing pretty well. but box sharply higher in today's trade. this is a cloud data storage company that caters mainly to businesses. the ipo delayed a couple times, finally came to market today. they sold 12.5 million shares at $14 and look what it did. now at $23.83. a gain of 70%. a lot of questions though and some skeptics on this kelly, about it's profitability and its future because of all the stiff competition out there, right? >> exactly right. let's get more on this ipo and actually on the long term future of bock as an investment. we're joined by brian hamilton the chairman of sage works and edmund lee the managing editor of rico. the companies ed, let's start with you. box, does it make as much sense at $24 as it did at $14 for investors? >> they actually had to wait a while to come back on the ipo because the markets weren't so great last time they made an attempt at it or were looking at it. you know the market it's interesting. they clearly like it a lot. i think for box it was a good day, but at the same time you got to realize they probably left a little bit of money on the table. they could have priced it slightly higher but, of course its investors are clearly happy with the new valuation. >> brian, you're along the skrepmongskeptics. >> i'm in the wrong business. they lost $121 million for the first nine months on the same amount of revenue their negative net margin is 79%. what's happening here is the market is very good so they are reaping the benefits of this. they are also in a very competitive space, so i just don't see it. here is the thing, guys. this is a venture or a p.e. play. it's not a legitimate financial investment in my opinion. in other words, people are getting into this thing because the market is going up but really it's a venture play. if you look at the financials from any sper tech pifperspective. >> aaron levy was on the network. he says we're in the enterprise space, we work with big companies to help employees access their data. what is wrong with that as a business model long term? >> there's nothing long with that as a business model long term. they're in essentially a commodity place that barriers to entry are really low. you will see a lot more entrants coming into it a lot more competition. what that's going to signal sooner rather than late ser that consolidation is much more likely in this space. it's a growing area though. it's be a important area. it's important for a lot of businesses in terms of how they operate these days but again it's like competition it's going to be consolidation and it's unclear who is going to win out on that. >> ed is -- go ahead, sorry. >> kelly just mentioned aaron levy, the founder. kind of a quirky guy, young guy. thought to be another mark zuckerberg. a visionary of sorts. wouldn't you invest in him? this is a way you can invest in whatever his ideas are. >> are we investing in the packaging and the charisma in which case i'm in big trouble running a tech company, but here is the thing, guys. you have to look at the actual performance and ed is exactly right. they have small competitors like microsoft. they'll see a lot more competition. they are losing the same amount of money as they have in revenue. so this is very typical of this bull market. it keeps happening and, you know, i know i keep singing the same song but at some point investors will look at what is this company doing? we're not investing in just a person. we're investing in a business enterprise. >> we have to go but, ed, last word. can they flip the switch? >> it's good for the tech sector overall. tim cook tweeted congrats to aaron levie. they're looking at how it will benefit their companies long term. >> that's a point. thank you, brian and ed. 13 minutes to go to the bell. the dow is at the lows of the session. >> and kelly, art cashin just signaled me $300 million to sell going into the close. i think we're already seeing that right now. that's for sure. we're up 127 points. the s&p is off 10. the nasdaq is still staying positive though. anything could happen in the final moments of trade. we'll get you the closing countdown when we come back. later former arkansas governor mike huckabee will be joining us. tons to discuss with him including that possible run in 2016 and what he would do to amp up the economy. sti tuned. they're coming. what do i do? you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably. we call that predictable. thrillingly predictable. we got about ten minutes left in the trading session here down 123, just off the lows of the session as we mentioned. art cashin this is kind of old news now but you mentioned $300 million of stock to sell into the close. the s&p down 10 the nasdaq holding onto a 7 point gain. >> joining us david darst here on this friday with michael jones we've brought back from riverfront investment group. michael jones, a simple question for you. why the heck would anybody buy a swiss bond for example out to a four-year basis yielding minus 1%? i truly don't understand it? is it the price appreciation? what's going on? >> this is the big story that no one is talking about. the swiss have done a game changer by taking interest rates so negative that it's actually going to be passed on to bank depositors. no one has dared to do that in the past because for the obvious reason if people lose money on their deposits, they're afraid there will be a run on the banking system. if the swiss can dare to take rates negative then anybody can take rates negative because no one is more dependent on ranking than they are. so that means that the door is open for kuroda in japan, for draghi to take rates negative -- >> i i understand why they're doing it but why are investors giving their money away? >> they're afraid of deflation. if they feel like prices are dropping, interest rates are negative but may be less negative than prices are falling, this is not a safe place, i'm losing less but the powerful thing is that they can always take rates more negative to get ahead of deflation. this is a game changer in fighting deflation. it's actually better for stocks than bonds. >> part of that deflationary story is oil. kelly and i this hour just have heard three different examples of people saying that we're too bearish on oil right now. we're all -- the consensus is we're going to $30 a barrel. is it time to buy oil and oil related stocks? >> i think you can start nibbling at oil. one of the big debates is real estate investment trusts versus master limited partnerships. two years ago mlps did so well and reits did poorly. last year reits did very well 27%, and mlps were down a little bit. i think for good ones one thing that people aren't aware of, they're going to all start coming to market and issuing stock, the mlps. let that drive them down more then start to buy the mlps. secondly, small cap versus global gorillas. go for some small cap. and the final one is europe and japan versus the emerging markets. we like europe and japan right now. select emerging markets but go with europe and japan. >> i love you both have brought up master limited partnerships. it's one of the places people fled because they aren't sure about the cash generation going forward, they aren't sure about the payouts. what i hear from you both is perhaps they're worth a look. >> just think, they're both from nashville. that may have something to do with it. >> now i think you're onto it. >> good to see you both. have a great weekend. appreciate it very much. heading lower still as we head to the closing countdown with the dow down 132 points. >> coming up after the bell, are u.s. consumers about to go on a spending spree? 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whose analysis is accurate? how do you make sense of it all? a simple unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. coming up on the three minute mark. let's let the charts tell the story for the week and a volatile week it was. this is the dow over the last five trading sessions. here was thursday's powerful rally after the european central bank implemented orb a-- or announced its quantitative easing plan. we're down 144 points but for the week a gain of almost 1%. let's look at a couple other charts here. the dollar/euro exchange rate the euro just continues to plummet, especially after the ecb announcement yesterday. we're now at a multiyear low. the euro versus the dollar. we were at $1.11 and change. for the week the euro against the dollar is down almost 5%. last one, oil, this is wti, u.s. oil, down another 1.8% today. even with that minor rally last night following the death of king abdullah, but for the week with us down to $45.48. wti crude is down 6% bob pisani. >> now, that worries me a lot, but i'll tell you a little bit of cheer here. guess what's up today? oil and gas exploration stocks. two weeks ago if oil would have been dropping -- we did. we saw this movie. it dropped two weeks ago and oil and exploration stocks went right down. today mostly they're up and for the week they're actually up. here is something weird. oil and gas stocks up on the week and airline stocks up on the week on those good numbers they've been reporting because, of course, fuel costs are lower. they're taking their hedges off. >> we heard a few analysts early in the hour saying how sentiment was so negative on energy related stocks maybe it was time to buy. maybe some people were taking it to heart. i'm >> i'm going to the etf conference on monday. they've seen tremendous efforts to buy the bottom. so far it hasn't been particularly successful. the only thing we know history, oil has only been down 50% five times in the last 30 years and six months later it's been up every single time. so a lot of people are passing those charts around saying that's the historical pattern. i'm going to buy on that and other people are saying we haven't seen the supply issue like we have seen with the u.s. crude situation. there's a lot of fighting going on about whether this is right or not. >> quickly, consumer discretionary has been strong but yet we're not seeing the evidence of the consumer. theoretically on paper if oil continues lower, that's a benefit to the consumer but where are they putting that money? >> we should be seeing a little more in the retail ertion and we're not. that was the big mystery last month. i think if they decided to save and hold that money, that's $20 a week or $30 a week. i'm fine with that. they'll spend it eventually. we'll get builders on monday br horton will be reporting on monday and the tech numbers have been decent at least the commentary. microsoft also will be after the close. >> thank you, bob, very much. have a good weekend. down 140-plus on the industrial average to close out a very volatile week. but stay tuned. a lot more to come now on the second hour of "the closing bell" with kelly evans and company. have a good weekend, kel. >> thank you, bill. welcome to "the closing bell," everybody. i'm kelly evans. what a week it's been on wall street. a lot of selling pressure in the final hour. here is how we're finishing up the session. the dow going out at the lows down 142 points really weighed down by the energy name. we'll look it see if exxon hit a minus 2% -- actually 1.7%. that's where the underperformance is coming from. the s&p is off half a percent. the nasdaq managed to stay positive. bolstered by better performance across the tech space. let's get to it with today's friday closing panel. joining me now jim le camp from ubs. evan newmark and cnbc's very own steve liesman. great to have you here. for more on the markets, jim levin that will and "fast money" trader steve grasso will join us off the floor in a second. jim, i will start with you. a rocky start to january. we've gone out on the lows of the session today. >> we started off rocky last year as well. the market didn't bottom out until the first week of february, we had an up year. we said this was going to be a more volatile year. it's about the currencies in the central banks. we knew there would be a lot of moves but look at all the moves in january. the swiss national bank canada russia, now the european central bank. it's a currency war and they're all in full bloom and that helps the dollar but it means a lot more uncertainty. there's been a lot of surprises. we think interest rates remain low and ultimately stocks will kind of zig zach their way higher this year. >> the question anymore is whether interest rates will stay positive. if you add to that not only the central banks jim talked about but denmark, peru. i think you mentioned canada surprise rate cut. the bank of korea. >> i come in every day and i want to know what it has to do with me. it's a great week to be a central banking reporter. reallying interesting things going on around the world. what happened most interesting this week was not what happened wednesday but what happened tuesday. what happened tuesday, they leaked what was going to happen and it was less than they actually ended up doing. that told me the european central bank understands and cares about markets, and using markets as a transmission mechanism for policy in a way -- is this a sign of progress? >> in a way the u.s. central bank has understood for a long time. i think it's a step forward by europe that's very interesting. the market took it well. draghi orchestrated this as best he could and i think it has a chance of succeeding. >> i'm going to go on the exact opposite side. >> not partially opposite. >> in the following sense. i agree with what steve is saying, but i disagree that that's a good thing. i think it's a bad thing. the central banks are supposed to be leading, not following. you don't -- the central bank should not be doing things to make the markets happy. the central bank should be doing things because they think -- >> you are -- >> that central bank dollar has been jaw boning the markets for the last six months. finally they do something -- >> i didn't say happy. i said to use the market as -- >> hang on a second. let's see what jim thinks about all of this as well. to sort of separate the issues the market responds for one and secondly whether this is something that frankly we should be encouraged by. >> well i think we should be encouraged but let's go back to jim's comments of the number of moves that central banks have made. it's not just the number of moves that they've made but how starkly different they've been. just to take two glaring examples the u.s. federal reserve has ended quantitative easing just before the ecb starts quantitative easing. and that in turn is a reflection of the polar pop sits of the economic situation in the u.s. and europe. as to the volatility in the markets, that's to be expected and we expected it as well as jim with regards to the markets everyday deciding which one they believe, european economic statistics or u.s. >> so jim, what are you buying here then? >> well i think really you can buy across the board with the exception of some of the things that did really well in 2014, so some of those tech names, for instance, you know the facebooks of the world. i think you really can buy across the board because this is a self-correcting phenomenon. the lows that we're seeing in the euro will help the european economic position to become more competitive in a global market. u.s. demand is picking up so that exports to the u.s. can pick up as well and europe will climb out of its hole. >> i just want to bring steve grasso into the conversation now. against this backdrop today's price action especially going out on the lows not all that ern couraging. >> not encouraging at all. what you want to look at is that 50-day moving average. 2046 in the s&p cash. a lot of these other gentlemen are talking about macro bigger picture stuff. you want to know how the trade is going to set up from here. is it going to be the euro weakness dollar strength? will you continue to see money flow out of u.s. equities and into european markets. >> steve, aren't you seeing the 150 day moving average still provide support on the s&p 500 and isn't that what most traders are looking at? >> the 150, you always do that smoothing mechanism as carter worth looks to call it. for me though i think if we could see a breakdown in the markets, that would upset the most amount of people at any one given point. >> that's true. by the way, the price action on oil, i'm curious what you all make of that as well. the fact we went out at the lowest since march 2009. the fact exxon was down 2% and it's supposed to be the port in the energy storm. >> here is the story, the way to think about it. you're in a desert there's ten people and nine bottles of water. what's the price of a bottle of water. add two bottles of water. right now that's the market we have right now. there will be no bottom until supply is brought in line with demand and that's going to take some time. >> so buy the bottlers. >> i would buy the bottle of water, perhaps something stronger if you are long oil. >> kelly, i think we should try if we can step back not think about what the market is going to do over the next two or three days but stepping back and looking at the bigger picture. the problem i see is rates have gotten so low that the volatility is bound to increase. you saw just yesterday when the ecb made their announcement the volatility in treasury yields it was crazy. it went off the map. the reason for that is because when rates are so low around the world, you kind of asking for trouble just as most people who are investing in the swiss franc was when the swiss franc peg blew up. my point is this you either believe that the world is in a deflationary spiral and that the u.s. is part of that deflationary spiral and if you believe that then all you should do is buy fixed income instruments in the u.s. and sit and wait. >> we have a different experience. it's called 2004 to 2007. the funny thing about this movie is we've all seen it play out before. the economy picks up momentum. we're adding jobs and the fed is hiking rates, but the long end of the treasury curve doesn't really move. there's this conundrum and it seems to be an aggravated version. >> is the fact that utilities have continued to outperform, is that the hybrid stock to buy or the sector to buy because that's what's perplexed me is that a bet going forward? is that a safety bet? they both can't go up at the same time. >> it's both. but i think the biggest surprise from the next central bank is going to be the u.s. central bank when they don't raise rates. in fact, if you look at the inflation forward futures, they're at lower levels than when we eased in the past. if you were looking at what ben bernanke looked at, the fed would be easing now and right now we have the highest interest rates -- >> you heard what janet yellen called that. >> i don't see how this is a good thing, okay? >> can we go back to oil? >> i don't see how people think the u.s. cannot raise interest rates by 25 basis points how that is possibly a good thing -- >> the test though is should they raise interest rates and why they would. i'm increasingly in the camp that thinks they put it off from the summer because there's just no underlying reason to do it. if you have essentially under -- inflation expectations are going down. >> unless they want to leave themselves some room to lower in the future. >> 25 basis points isn't going to help you. >> jim paint us the more positive story. evan said tell us how they of this is good news but you seem to think it is. >> there's one thing i want to go back to which is the price of oil and it factors into good news. the collapse from $100 to $65 certainly had to do with steve's concept of too much supply versus demand but the collapse from $65 down to $45 has a smell of something else behind it. we all have to know that there were leveraged players this summer who got caught on the wrong side of the oil trade and that there are margin clerks out there who have been unwinding their position without a care for where the price is. once that gets done and once the bodies are exposed, i think you see oil move back up to a clearing price in the mid $60. >> what about copper or iron ore. i could understand if it was a story about an oil revolution but it seems tosh about commodities at large collapsing. skroop with copper and iron, that's been years in a making. that's not a sudden collapse like oil. that has a lot to do with china, the stockpiling and easing of demand there, but those price declines in iron ore and copper have gone on at least three years. you look at a company like cliffs that has been hammered like this. that's not something all of a sudden we woke up six months ago and said there's a recession afoot. that's a long-term trend. >> we have to go but real quick i would like you to quickly give a sense of if the dollar keeps appreciating and that's kind of what's behind all of this does that still mean you buy stocks? does that have other -- do you keep buying utilities? >> of course you buy stocks. >> what do you do in that environment? >> what's going on now is you have the stock market adjusting to earnings expectations that are coming down because of the strong dollar. you see it in ibm. you see it in the pharmaceuticals, anything with a global tilt to it has strong dollar effects but now that's being priced in and you can grow from here as long as the dollar doesn't climb precipitously from here. >> but the issue is isn't europe on sale? relative to the prices you would have paid in july certainly relative to european exporters. now, i don't think the market has missed that fact. i think that's out there, i think that's behind one of the things that's happened with equities, but you could see bigger things that haven't come to the fore that would be in the works if you would think about a world which you were at parity or even at these levels bigger mergers. >> you will want to hedge the euro. >> you hedge it but certainly there are big companies that think that given whatever the trade restrictions and government restrictions that there are plays that make sense at the following currency exchange rate that didn't make sense before the world changed in july. >> we will pick it back up. it's an interesting idea. thank you. jim, thank you for joining us this afternoon. steve grasso appreciate it. have a great weekend. >> thank you. >> stick around and catch steve on "fast money" at 5:00. they'll be asking one top analyst what he thinks about jack ma's fearless outlook for alibaba in china despite sluggish growth. coming up here, the northeast racing towards what could be a snowy messy weekend. kelly cass has the latest on the forecast. >> good afternoon. we are dealing with a mess already in the southern appalachians. reports of freezing rain and ice in asheville, north carolina, so the vencentral and southern appalachians being impacted. this whole system will head into the northeast and rapidly intensify over the waters of the atlantic. we're talking more than 45 million people being impacted and some of you are going to see a mix of rain and snow. we don't have that cold high to the north that will keep it all snow even for the big cities along the coast. we're thinking the interior sections of the northeast. north and west of new york north and west of philadelphia. north and west of boston. that is where most of the snow is going to be heaviest and is going to accumulate greater as we head into late saturday night. we're still going to be dealing with that snow from boston to cape cod toward down east maine where we have winter storm warnings in effect. that means at least 6 inches of snow accumulating there. you can see in the darker shade of purple where we are indicating some heavier snowfall. as i mentioned, away from the big cities we're thinking i-95 we're going to maybe start off as rain in places like philly and new york, go over to a mix of rain and snow and then back over to snow in places like new york and philly. a lot of wind involved with this as well. you can see out towards long island we're mainly going about 3 to 5 inches of snow. if you are flying say out of kennedy airport tomorrow, check ahead. there could be some delays but as you head north and west of the city in the purple that is where we're indicating at least five to eight inches of snow. same thing for boston. we're thinking mostly accumulating snow will be to the north and west of the city itself. kelly, back to you. >> all right. kelly, thank you. and be safe out there, everybody, please. december retail sales disappointing wall street. my next guest says the continuing decline in energy prices is about to fuel a major consumer spending spree. that story straight ahead. also president obama proposing tax and college savings accounts currently tax-free. he says they don't help the middle class, only the rich people. is that true and what are the impacts of all of these proposals? we'll take a closer look coming up. people. people. stocks ended on their lows of the session today but was it enough to erase gains for the week. bob pisani, what can you tell us? >> we had a four-day week so it was a little on the short side but we are down one day, i think it was today. look at the s&p 500. we were nice on tuesday and nice on wednesday nice on thursday, and this was the only down day. major indices for the week did very well but there was some real discrepancies. the s&p had a good week, nasdaq tech had a good week. see the dow lagging. american express and mcdonald's had a poor week. mcdonald's disappointing on its commentary. as for the big winner it's a weird group. the airlines had great numbers because the fouluel helped them out. when was the last time oil and gas ex flor ration was one of the big leaders? it's been months. it happened this week and today despite the fact that oil settled at the lowest estest estest level since march 2009. as for the laggards, you want to see what currency wars are doing? weak euro strong dollar it means cheap exports from europe. it means cheap steel coming to the united states. it means price wars with european steel producers. you know what this means to the stock market for steel? look, now you see what's going on. this is very instructive when people say, oh who cares about currency issues and how it affects the stock market. there is how it affects the stock market. kelly, have a good weekend. >> bob, you, too. look for much more from bob's reporting here about etfs. i could go on. much more on cnbc.com. a report making the rounds says consumer confidence is rising and behind a rising consumer sentiment typically comes a boom in consumer spending. is a spending spree on the horizon now that energy prices are so low? joining our panel is kathy jones. welcome back. >> thank you. >> are we about to dare i say it again, see yet another u.s. real consumer spending spree here? >> we should see a pickup later in the year. so typically there's a lag of about six to seven months before energy prices fall gasoline prices fall. you see some pickup in consumer spending but keep in mind the real driver is wage growth and that has been flat and so you get some benefit from falling gasoline, home heating oil prices, but we really need the income growth to pick up. >> if the estimate is somewhere between $750 to $1,000 the average american family would benefit from lower gas prices where does that money go? do people just save it or do they put it somewhere? >> that's the big question right? we have had a higher propensity in the last couple years for people to save their money rather than to spend it and particularly in the lower and middle income sectors where wage growth hasn't picked up but we're seeing revolving credit usage continues to be slow. it's growing 3.5%. that's way below the historic average. so we think some of that will go into that reduction which is savings and some will go into spending. >> the refi boom is kind of slowing down right? the longer you are at ultra low interest rates, people that were going to refi have done it and you're not going to see that atm at work anymore. >> i think those days are gone. we had that -- >> you say those days are gone. i'm curious, has not the price of a 30-year mortgage gone down at least -- >> i agree with you on that. we're at another level here. >> i don't know how the banks are responding whether they're really cutting rates aggressively. but, you know, if the 30-year bond gets down to 2% you know, are you talking about a 309--year mortgage at 3%? >> could you see mortgage rates get a lot lower if we drop another 80 basis points or so in the 30-year but i think the question is if you look at housing, it hasn't been the driving in this recovery it has been in the past. first time home buyers have been largely absent from the market because the qualifying for a mortgage is so much more difficult. you have to have more down payment, more income have more security. so, again, it's not the driver it once was. >> this goes back to the point about consumer spending because you know the last cycle a lot of consumer spending was driven by buying houses and furnishing them. >> it was the atm of the early -- >> and it was also a necessity. >> what kathy is suggesting is there's room for housing to contribute. we wanted housing to not be a negative. i was going to pick up on something kathy said earlier. you know what the most important data point is next week the most important event of next week. it's not the fed. it's not the gdp report on friday though those are all important. it's the employment cost index. >> oh yes. great point. >> nothing will be more consequential -- >> explain to people why. wages aren't just in the december jobs report. >> there's another component that comes out of gdp and the december number declined quite a surprise. >> capacity utilization turned down. >> there's something the eci on friday for the fourth quarter that will come out that will show a different story. >> maybe wages are better. >> and that will play directly into what kathy is talking about because a one-time hit to gasoline, that's all good and great and maybe it's used to pay down debt. people will spend what's in their paycheck what they can rely upon next week. >> absolutely. people spend their income more or less a little bit on average. so if your income is growing, you're going to spend more. if your income isn't growing and particularly if you don't think it's going to grow there's a behavioral aspect. a one-time blip is great but it won't cause you to spend permanently at a higher rate. >> simply since you're the fixed income strategist are you predicating higher interest rates this year on more consumer spending? >> no, we're not. we think the global drivers of interest rates are stronger than what we'll see. >> what's the number for the ten-year for next year? are you long 1.80 here? >> we have been in the lower for longer camp for years. we think it's actually rates are a little bit lower than they ought to be if you have a fair value model but that's accounted for by the global situation. >> kartthy, hope springs eternal. thank you for being here. president obama says he wants to give the middle class a tax cut. why does he now want to start then taxing college savings plans which a lot of middle class americans rely on to pay for higher education? also ahead, we'll hear from former and possibly future presidential candidate mike huckabee on that tax proposal and who knows, maybe jay z and beyonce as well. stay tuned. when you run a business, you can't settle for slow. that's why i always choose the fastest intern. the fastest printer. the fastest lunch. turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? 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[ male announcer ] your love for trading never stops. so open an account with schwab. and when a market move affects, say a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪ president obama pushing for a middle class tax cut during his state of the union speech this week, but today it's another tax proposal that's causing quite a stir. john harwood joins us with the details. >> if you want to redistribute income you got to take away to give benefits to new people. so here is redistribution obama-style as it comes to higher education. first of all, he would eliminate the tax deductibility of capital gains when you withdraw money from a 529 college plan. the president argues that 70% of the money in those plans is held by people who earn more than $200,000 a year. his idea of the middle class is in the second part part two of redistribution obama had beenstyle. he would expand the american opportunity tax credit $2,500 per student for families up to $180,000 in income and josh ernst aid the second part is the key to doing the first part. >> the reforms the president has proposed for the 529 program are reforms that he would consider only in the context of the other education reform that is he put forward, and when you consider that entire package of reforms, the tax cut that we're looking at for middle class families is $50 billion. >> but kelly, part of the controversy depends on how you define middle class. certainly there are people who make more than $200,000 a year who think of themselves as middle class but the administration's target is at a lower income level. fortunately for the people in the higher income level, they've got a little more political influence so this proposal is not likely to pass. >> john, real quickly s that 200k for individuals or families? >> for families family earnings over $200,000. >> thanks very much this afternoon. john harwood from washington. for more reaction joining us is jared bernstein a senior fellow at the senior of budget priority and he supports the president's plan. jared is here with the rest of the panel. listen, do you have a 529 college savings plan? >> absolutely absolutely. and i was going to use myself as an example because, yes, i have a 529. yes, i enjoy those tax-free benefits and they have absolutely no influence on whether my kids will go to college because they're going to go to college either way. and that is exactly what the president's plan is trying to target and i suspect the members of the panel might say exactly the same thing. yes, we would love to have some free goodies through the tax code but we don't need -- >> they're giving you some funny looks right now. >> exactly. >> how about the exact opposite thing? >> hold on a second. hold on a second. so what we need to do is close a highly inefficient tax credit here, tax deduction i should say, and increase a credit that will be much more beneficial to families who really need the help in getting their kids to college. >> i have news for you, there's families that need that help that don't live here and they don't live in washington. they live all over america -- >> and they're going to get it. if you think a family that makes $200,000 that has two kids in college is wealthy, you don't know america. >> well actually -- >> people are struggling to put their kids through school. private school costs are very, very high. >> let me ask you since you know america so well. >> it's a dumb policy. >> explain -- >> hang on. jared, go ahead. >> what percent of americans earn incomes above $200,000? >> it doesn't matter. it's not that much money. >> you don't know the answer. you don't know the answer and i will tell you the answer. >> because i talk to people that make $200,000 every day and they are not wealthy. >> so let's actually bring some facts into the conversation. 90% of american households have incomes below $200,000. let's be clear about this. those families will continue to benefit from tax code preferential savings programs like 529 because, by the way, your contributions will continue to be tax free. the withdrawals won't be. >> jared -- >> and the credits that the white house is expanding will hope those families as well. >> i will just ask a bigger picture question is this is like tinkering on the margins, isn't it? there are much bigger tax issues, both the corporate level and individual level, so what is this really about? why is president obama launching this? because in the scheme of things this is peanuts, isn't it? >> can i just add before jared answers, steve here, i just want to say, this strikes me as enormously stupid politics. if you have no chance of getting something through, why propose something that is going to do nothing but piss people off for no reason because it's one thing to mess with a rich person's or a wealthier person's or a middle class person's whatever you want to call it their own income but you start messing with their kids, that really gets them angry. >> first of all, let's talk about what's messing and what isn't. the first comment is actually more jermaine because the savings from this 529 part everybody is freaking out about is $1 billion over ten years. at the same time the administration is increasing their contribution to their college access programs by $50 billion. so by a factor of 50 to 1, they're actually increasing the amount of money available to middle class families sending kids to college all the way up to around 200k. now, to get to steve's point, and this is partly the other question as well look we have to think -- put the politics aside because steve asked a very good question on that. >> we have to go. >> we have to think about fiscal responsibility. we cannot afford wasteful tax program that subsidizes spending people would do anyway. >> it's just surprising that this would -- i don't know -- jump to the pop of the priority list given the relatively small amounts in terms of the budget that we're talking about. >> but also just given the fact that he's proposing to spend so much more than he's taking away here. 50 to 1. >> okay. jared -- >> kind of undercuts your fiscal responsibility argument. >> no no. >> just a little bit. >> he's raising far more than that through his tax plan. his tax plan -- >> why does he have to worry about the -- >> it doesn't -- >> his tax plan actually does more than deficit neutrality. >> what's the point of doing the 529 -- all right. this is circular at this point. >> you have to look at the full package. >> all right. we'll take a look. we're still trying to help people pay for college. jared bernstein, thank you for being here. appreciate it this afternoon. 2016 presidential field is starting to take shape. is former candidate mike huckabee about to be a future one. we'll ask him that and a lot more coming up next. and this may look like a typical sneaker store, but it's actually the world's first ever sneaker pawnshop and it is the brainchild of a 16-year-old who will join us later on "the closing bell." stay tuned. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. president obama's state of the union theme was a full-court press for the government to help the middle class. so is the middle class the battleground as the 2016 presidential race starts to shape up. republican talking points center around tax reforms and tax cuts. no one better to speak about this and lot more than the man who might be in the mix himself, former arkansas governor mike huckabee author of the book goode, guns grits, and gavravy. want to begin on this whole idea of tax cuts. we were having this suggestion about some of the tax changes the president is proposing. do you think the gop can wing the swing voter out there with a message of tax cuts? is that going to sell? >> if the president continues to want to tax people who have saved money for their kids and grand kids' education, i think it will win the vote with anybody with iq above broccoli. >> you're referring to the 529 savings plan. do you have one of these? >> i started putting some in for my grand kids. the thought that you're going to punish people for being responsible and trying to help their kids get an education and in the same speech he turns around and says but i want to give free college to people who didn't save any money. that's what makes this irrational. it's bad enough to say let's tax something we ought to want more of which is education funds that some parent or grandparent is going to pay for but then to turn around and say in addition to making it harder for working people to put aside money for their kids we're going to turn around and redistribute free money to people who didn't save anything. >> but this gets into territory which i expect will be familiar ground for the next couple years. if $200,000 and up is the threshold, isn't that wealthy? do we really care if people lose a little bit of save sntioningssavings? >> we we do care. they may have made great sacrifices. it's none of the government's stinking business unless it was illegally obtain and then it's a federal crime. otherwise it's not the government's business if it was honestly earned the priorities that an individual wants to use their money for ought to be the people who earned it. >> so let's just say mike huckabee is president in 2091620916. >> >> i like the sound of that. i would love to see the fair tax. i wish we could rid ourselves of the irs. i think it's a criminal enterprise. >> criminal? >> when they use their power to separate their investigations to people who agree with them and those who don't, to target the viewpoints of people who they do not care for, that is criminal. i can't get away with that kind of thing and the irs is the one stop shop where they can create an investigation conduct it they can discover whatever they wish to discover. they can come to a conclusion and then punish you. all in one shop. nowhere else in the american jurisprudence system is that possible. >> they also oversee obamacare. >> would you repeal that? >> i would like to. it did not fix what it was intended to fix which is making health care accessible and affordable. it's making it unaccessible and unaffordageble unaffordable. >> in your south which you care so much about and you talk about health and some of the difficult living -- standards of living situations of people down there. isn't ultimately forcing health ib surers to expand coverage to millions in that area one of the best possible outcome? >> better outcome is to make insurance available by creating a plan where the individual has some skin in the game. you will never improve the system if people who aren't -- >> people feel plenty of skin in the game because everybody's premiums are going up to pay for this. >> they have the entire 14 layers of skin in the game now just to pay the premiums. here is the point, why should people have to pay for elements of their health coverage they don't want and can't afford? shouldn't they be able to shop and say -- >> it feels like that's what we're evolving for. a system that lets you pick a cadillac or a bronze or basic plan. >> there are so many fundamentals built in. i am a 59-year-old man, do i really need maternity benefits? lord i hope not. we're forced to put things into the coverage we may not want need, or can afford. >> you pull a lot of punches in the book. you punch everything from reality tv -- the index itself reads like a cultural co-decks of the moment. you're pretty strident on everything from beyonce to the kardashians to the real world to just the crude and dumbing down culture you see everywhere around us. i take your point. i think a lot of people do. but it's funny this is all coming from the same guy who excoriates the nancy state. you sound a little bit like the mean nanny in this book. >> there's a big difference between recognizing some cultural cultural divides between the people living in the bubbles of new york washington and hollywood and those living in the flyover country. no one wants to be the national scold. i don't want to be that either but i don't want the government dictating exactly how i have to live my life. i think the government has a role and responsibility to create an atmosphere for us in terms of incentivizeing good habits, perhaps even educating us, making us aware, but the one thing you never effectively do to an american is tell him what he absolutely will do because americans love freedom enough we'll just bow up and say i'll do everything but that. i think it's a matter of let's change cultural norgesms we need to but let's do it in the way we have changed other norms whether it's litter seat belts, drunk driving. all of those are cultural changes but it wasn't because the government first told us what we couldn't do. it was because we became more aware of what we should do. >> i have to ask, if it's a mitt romney as the forerunner of the gop, makes it through the primary, becomes the guy in contention, do you as a baptist, as representing a lot of the faithful across this country, if you will, have any problem with a mormon president? >> of course not. i went on campaign diligently for him in 2012 and i would do it again. be clear even my own qualifications for president have nothing to do with my being an evangelical or a baptist. it has to do with i was a successful and effective governor for 10 1/2 years in the bluest state in america when i governed. that's what -- >> so you're running? >> well i'm put it this way. i'm leaning that way and i sure didn't leave my job at the fox news network just because i wanted saturdays off. >> it's good to have you on cnbc. >> thanks. >> are we part of the reality tv problem, mike? >> this isn't reality tv. this is wall street. there's nothing real. >> nothing real about that. >> no i'm kidding. got to have a little fun with you. it's friday. >> thank you for being here. >> governor of arkansas for 11 years, mike huckabee. coming up a story hot off the grill about how mcdonald's will chop several items from its menu. that's next. later we'll introduce to you a teenager who turned his sneaker collection worth $30,000 in the world's first sneaker pawnshop. you won't want to miss this incredible entrepreneur. this story coming up when "the closing bell" continues. imple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today. tumult in the middle east with the change in leadership in saudi arabia and yemen had traders blocking to cnbc.com. >> we did what we usually do when you have a big story like this, we grouped together all the guest that is have been on cnbc talking about king abdullah's death and the fekeffects of that, grouped it into one big story and that's the story they've loved all day long. over 50,000 people checking out that one. now, we also put up a story, one of our reporters, katy little who follows mcdonald's very closely got cued into what they're cutting off their menu as they simplify their menu. bye-bye bacon quarterback pounder and finally you were talking to governor mike huckabee about god, guns grits and gravy. we have the guns. we have a slide show of the hottest guns from the gun show in las vegas. there's some wild looking numbers in there. people are checking that out. >> i think i'll stick with the grits and gravy. thank you. have a great weekend. >> it's common for teenagers to use social media these days. my next guest is a 16-year-old using social immediate to build the first ever sneakers pawnshop. he plans to release his own high end shoe line. this incredible story up next. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. you're driving along, having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? 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>> do i understand you are launching your own sneaker line? >> i am and customizing sneakers for the last two years. that's something i am very interested in. >> you are 16 years old. >> i'm 16 years old z. >> my son is 15. i want chase to give him a job. >> he can be one of my investors. >> he doesn't have any money. that's why he needs to work for you. >> there is a little generation gap going on in here. in my opinion, the idea of selling or buying used sneakers is kind of crazy, except the other day when my son came down and told me he had sold a pair of sneakers that i bought him for $100 for $300. this is no big deal for you. >> the sneakers come out at retail but they end up going for a lot more. they end up selling out. it is like the stock market down here. you can trade stocks just like you can trade sneakers. you can sell shares just like you can sell sneakers. >> if there is a shortage of hot inventory, how do you you get your hands on the hot inventory? >> i can't really tell you that. you just -- like we know our sneakers and we go out and get them. say we get the sneaker. it is right there in our hands. people usually come to us. we buy sneakers and sell sneakers. >> what's your demographic? when i was growing up, everybody said you you have to play golf. i am still playing basketball. are people like me buying these sneakers as well? >> everybody, whether they play golf basketball lacrosse or football. >> just to collect or to play in. >> they buy them to collect. a lot of people buy them to collect. they sit in the closet for years. a lot of people wear them. my father plays basketball. i want to be a businessman. >> what's hot right now? >> what's hot right now is mostly jordans and adidas. a adidas are nice but jordans are more collectibles. >> the power of instagram driving their business. when we were at their store, froi and chase were posting pictures and within minutes, the post is ringing off the hook and people want to come and see what they have got on their shelves. that's one interesting point. >> instagram is driving your traffic within minutes. what's your handle? how many followers do you have? >> we don't have that many followers. we are building up our instagram and online business. we post all the sneakers we get in the stores. we post the latest deals and the latest stuff with the sales. we post them up. everybody goes crazy. >> does nike and adidas make very small lots? do they basically create the demand? >> with 7 billion people in the world, 3 billion on one sneakers and they are only making $500,000. of course everybody is going to go crazy. >> last question and we have to go. >> two issues. one is are they helping you in terms of creating small lots so there is this aftermarket? are they leaving money on the table at nike that they should be charging more for the sneakers? >> nope. nobody would buy the sneakers if they do that. we are the resellers. a regular person would not pay $200, $300 for a pair. they will come to us and pay if they haven't got their hands ton. >> this is also fascinating. truly. i love this story. good luck to you. we might have to keep the sneakers and give them a try. thanks so much. hold on to your quarterly statements if you thought this was a big week for earnings you haven't seen anything yet. what to expect from apple and google? some final thoughts when we come right back. why do we do it? why do we spend every waking moment, thinking about people? 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>> i'm not going to be looking at earnings. i'm going to be looking at deflate gate and rooting for my patriots. the world has enough haters out there. we need more lovers in this world. >> there is a fed meeting, the gdp report on friday. the eci. durable goods. i wouldn't pay so much attention to these earnings. look at the broader economy story. make your investments off of that. i'm just joking around. >> the deflating spiral. come on we have the super bowl. >> at least they didn't get robbed like my cowboys. >> if i'm an investor and looking for dividend income or the best sector to be what would you tell me? >> technology is a very good sector industrial and consumer discretionary. >> i like that consumption story we had. it is a delayed story. >> now, we know foot locker and the sneaker places. >> investors basically have to ask themselves one question which is, is the u.s. economy growing and will it be okay in the future? >> thank you, everybody, for being here on this friday. i really appreciate it. "fast money" is coming up in just a few seconds. >> melissa lee, what's on tap? >> for the past few years, linked in has been a performer. one analyst on the sidelines for practically the whole time. now, he is saying it is a strong buy. why now and what does he see ahead for the stock? >> straight over to you guys. thanks a lot. "fast "fast money" starts right now. i'm melissa lee. tim see more steve grasso brian kelly and guy adami. the tech heavy nasdaq eking out a gain helping stocks post their first weekly gain of the year. next week earnings from apple ali baba apple and google. rallying more than 5% this week ahead of their reports. how will next week's earnings change the game for technology? how do the rallies going into the earnings guy, change the setup for the trade? >> obviously, apple, i am going to be focused on

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