trading days of the year. >> we'll see what happens. the dow is up 21 right now. >> warren buffet telling cnbc this morning he doubled his holdings in apple this year. is it too late to follow his lead? we'll debate it. after the bell, who will president trump pick to sit on the fed board. jim grant will tell us exclusively. some people in the past have suggested maybe mr. grant would make a fine fed governor. >> fun take on the subject. looking forward to it. let's start with the news out of washington today. eamon javers back at the white house and ylan mui is at our washington bureau. eamon, a surprise appearance at the press briefing. >> reporter: yeah, that's right, bill. we had a surprise visitor. it was mick mulvaney. he said the president is going to coming up with massive spending cuts in his budget which will roll out in the next month or so. the spending cuts we see, even though he's not detailing them specifically now, will seem awfully familiar to those of us who followed the president over the past year or so on the campaign trail. all of his speeches, statements and comments. that's where they're looking to take inspiration for the spe spending cuts. here's what he said. >> when you see the reductions you'll be able to tie back to a speech the president said. we are taking his words and turning them into policies and dollars. so we will be spending less over seas and spending more back home. >> reporter: take a look at the hard numbers in terms of what mick mulvaney said. on defense spending they're looking at a target of $603 billion. that's a $54 billion increase in defense spending. no specifics on what they're going to spend that 54 billion on. similarly with non-defense they're targeting a $462 billion target and a savings, that is a cut of $54 billion there on the non-defense side. again, no specifics on what exactly they're going to cut. i just want to give you some perspective on this. some numbers came out from taxpayers which were helpful. trump's goal is to cut $54 billion in non-defense spending. the previous state department budget was $38 billion. the previous epa spending was $8 billion. even if you eliminated the state department and the epa, two things that have been targets of president trump's criticism over the years, you still wouldn't get to that $54 billion figure. it seems politically impossible. they're going to have to go through after each of these departments and agency. >> eamon, i didn't see mick mulvaney's remarks. what did he say this would do to the deficit in general. >> reporter: there were interesting questions for sean spicer about the deficit. he was asked specifically if this budget that the president is going to propose is going to include hundreds of billions of dollars in deficits as we've seen in past years. what he said here is ultimately they're going to try to hold to the baseline by having the $54 billion cut and $54 billion increase on the defense side. they're going to try to keep deficits about where they were. that means deficit spending will be a feature of the trump administration going forward. >> all right. boy, i'm having deja vu all over again. we're equating what mr. trump has done with ronald regan. he did the big increase in military spending. we'll see how that plays out. >> i'm thinking about it through the lens of the dollar, too. is it going up, is it going down? today it's actually right about flat at 101. eamon, thank you. president trump also meeting with state governors this morning. ylan mui has that story. >> hi, kel. governors are on capitol hill. this comes after they had discussions with president trump at the white house and at the top of their agenda was obamacare. there is deep conditions within the republican party on the way forward, a repeal and potential replacement. one of those governors who has some concern is brian sandoval of nevada. he has said he's worried that the lack of federal fund are for obamacare could cause some constituents in his state to lose their coverage. here's what he said. >> for me, that's an issue of over 300,000 lives in the state of nevada and i -- you know, what i heard today made me feel good in terms of the ability for those that have coverage, that they'll be able to keep it. we're going to have an ongoing conversation with secretary price and with the administration and with the congress. this is -- it's still a work in progress. >> reporter: governor sandoval said that he felt that flexibility and partnership were some of the key words that came out of his meeting with president trump earlier today. he is, of course, a republican governor who has expanded medicaid in his state but obamacare was not the only issue on the table. also important this morning was infrastructure. i spoke with governor john hickenlooper, a democrat later on this afternoon. what he told me is he's worried the president's infrastructure package wouldn't go far enough. we've heard donald trump talk about the importance of public/private partnerships but the governor told me he felt federal funding would also be needed to ensure that all the infrastructure projects that need to be addressed in his state would, indeed, get financed. now president trump hinting today that he would make a big infrastructure announcement in his speech before congress tomorrow so all eyes will move over to the president once we get that information tomorrow. >> a lot of expectations for that speech tomorrow night. that's for sure. >> thank you, ylan. berkshire hathaway chair and ceo appeared on "squawk box" for three hours earlier today giving us his thoughts on the market and whether or not investors should invest in stocks which are sitting at all-time highs. >> the important thing is that you've got the wonderful assets out there to own them and which ones do you own? if you save money, you can buy bonds, you can buy a farm, you can buy an apartment house or you can buy a part of american business and if you buy a ten-year bond now, you're paying over 40 times earnings for something whose earnings can't grow and, you know, you compare that to buying equities, good businesses, i don't think there's any comparison. we are not in a bubble territory or anything of the sort. now if interest rates were 7 or 8%, then these prices would look exceptionally high but you have to measure -- you measure everything against interest rates basically and interest rates act like a -- like gravity on valuations. >> he never ages, does he? he's a man in his 80s who still buys green bananas. good for him. let's get to our "closing bell" exchange. muhammad alarian, jonathan korpina and our own rick santelli checking in from the cme in chicago. john, here we are. looks like if we close right now it will be 12 consecutive up days for the dow in record territory. hasn't happened since january of 1987 so going back 30 years. what do you make of this rally? and none of these -- very few have been 1% moves. they've all been singles that the market has hit. >> right. here we are again, bill. there's no real fanfare behind this. you would think there would be a lot of excitement, a lot of investors waiting to open up the papers in the morning and be excited about what they see. it doesn't seem like there's this enthusiasm. that leads me to believe that people don't fully believe in this. they want to partake in it, they want to be part of it but they don't believe it will last forever. some trends lack participation. volumes have been down dramatically. >> which sort of plays into warren buffet's argument that this market is still cheap, huh? >> if you look at it from that point of view, and i'm not going to disagree with mr. buffet. there is participation that has come down. that means that people are willing to at some point get back involved in this market. just a question of when and how. if the market continues to trend higher, you can sit on auto pilot and look at your statements increase every single day but at some point i think the apprehension of this upward movement is going to come into play. i would think that we have some sort of pull back. i'm not sure what that catalyst is going to be. we've had no real major negative headlines that have derailed this market. you can, like i said, just sit back and watch it go higher and higher. >> muhammad, what do you think of the level of interest rates particularly after buffet said this morning that he thought it would be insane for investors to buy 30 year bonds. >> i think he's right. i think interest rates have been manipulated. i think it's interesting today, you may want to comment on that, the market is starting to realize that there is a higher probability of a march hike than there was just last week. i think more generally you have foundation but not conviction. you have foundation that we are having more reflation, that there are better policies on the way and that interest rates have been well behaved. you don't have conviction, and that's why this rally hasn't been embraced as much as it should have been given how impressive it's been. >> yeah, rick. to that point that muhammad made there. the fed funds futures as you know up to 33% now. probability of a rate hike in march. 71% of a rate hike in june. what do you make of that? >> well, you know, i think percentage is a dicey game. i think it's a good thing. i think the market ought to wake up to the notion that the fed can hold their hand so long, and i know there's this very strange relationship between what the market expects and how the fed ultimately deals with that, but, boy, this game's got to end at some point. i think, you know, policy's one of the big problems. everything that muhammad said i agree with, but when it comes to higher rates, i think that the clock is ticking and it's whether the raeins are going to be turned over freely. the reverse of globalism has already occurred politically, wherever you look, whether it's in the u.k., united states, france, much of europe. that's already occurred. what hasn't occurred is the reverse of globalization on central bank policy and they better wake up. by the way, i agree with a lot of what warren buffet said. we haven't had any substantial trade over 4% since 2007. 5% since 2001. 6%, 2000. it was 22 plus years ago we had 7%. so when he's talking about 7 or 8%, believe me, if we get there, i have a feeling considering everything going on around us, it will probably be for so much growth that maybe the equity markets won't mind. >> muhammad, meanwhile you used an interesting word. you said manipulated lower on the level of interest rates. what do you think is going on here? >> no, i think that the fed starting from 2010 realized that in order to buy time for the politician, they needed to promote the asset cham. they needed to get people to take more risk to push action prices up in the hope that as people feel wealthier they'll spend more and they got stuck in that mode. i think the key call right now is will the fed become more strategic and less tactical. i think it takes one data point to make that happen, and that's wage growth. if they see good wage growth, then they will start leading the market rather than just following the market. so keep an eye on the jobs report and the wage number. >> and, in fact, muhammad, you think the bond market underestimates the idea that the fed could raise rates in march, yes? >> yeah. i said it last week when the probabilities were about 30%, that i think 50 to 60 is a better number. today it's up to 52%. so i think the market is waking up to the fact that there was actually a higher probability of a rate hike. now it's not conclusive why because of that wage number so keep an eye on a week on friday. that's going to be important in determining what the fed does the next week. >> jonathan, the interesting thing is one of two things could happen here. either enough people come back into the labor force, that's the ideal, it keeps pressure lower on wages, or they don't. maybe wages move up. it's not actually a great sign. it means a bunch of people out of the labor market with no chance of getting back in. >> we've always had this disconnect in numbers when we're looking at unemployment number and wages and income and earning. you have to kind of strip it down and see where the help and growth is there. to get back to what muhammad was saying before on the fed. we've seen this reason. we've seen this catalyst. it's important for the fed to make a move, to make a strategic move. we've waited 12 months before another interest rate hike between 2016 and 2017 and for the fed to make a move in a short period of time i think would be very telling and something that our economy and our investors want to see. >> by the way, i scanned the statistic when our staff sent it out, but i believe they said it was goldman sachs that's been leading the trading higher during this 12-day rally. jonathan, is that the kind of stock you'd want to buy or would you want to buy one of the laggards here? >> if you're looking at the financials on a whole, they clearly have some upward potential there. when you're discussing interest rates and talking about the swing in regulation coming back towards the middle a little bit more, i think that sector is something that has not been attractive to investors but will clearly come back into play. >> if you look at the cost of ensuring against a morgan stanley default, it is down big time. we're not anywhere near 2006 levels yet. rick, a final comment to you again going back to this job number. in a way, if we start to get wage growth before everybody comes back in the labor force, that's the worst thing, right? you want everybody coming back in even if that extends the low wage period for a while? >> i think with trump in, that latter has a much higher probability to curve. i still think this conversation borders on the ridiculous considering what year it is, how many years after the crisis and the fact that overnight rates are 62 1/2 and we've talked about one number changing something. we've seen this song and dance before. janet yellen and company, rates are too low considering everything going on in the u.s. economy, period. >> all right. >> very good. i guess rick won't be -- well, i don't know. maybe rick would be kshd for fed governorship under president trump. >> i think so. >> it would certainly make for an interesting fmoc meeting. thank you, guys. appreciate your thoughts. 45 minutes to go today. dow is up 24 points. all the averages are a little bit higher. s&p up 3, nasdaq up a quarter percent and russell up. >> warren buffet telling cnbc that berkshire hathaway more than doubled its position in apple since the end of last year. two apple watchers will debate whether investors should follow mr. buffet's lead. that's coming up. the wharton's school jeremy siegel says it appears 22k thanks to the president. plus jim grant, he'll weigh in on the potential impact of trump's possible picks filling the fed. speaking of which, you're watching cnbc first in business worldwide. [vo] quickbooks introduces jeanette and her new mobile wedding business. at first, getting paid was tough... until she got quickbooks. now she sends invoices, sees when they've been viewed and-ta-dah-paid twice as fast for free. visit quickbooks-dot-com. won't 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 won't have to worry about replacing your car because you'll get the full value back including depreciation. and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance. welcome back. watching the dow today. it's the laggard of all the major averages. the russell is leading the way at 1400. the dow is only higher by 1700 points. you can see some of the leaders including caterpillar and chevron, bank of america. >> we only need a gain of .01. >> we saw what happened on be friday. we were in the red all day until the closing bell. >> we thought it was la la land and it was moonlight. >> walmart is one of the laggards. bottom right of the screen in the dow. that's despite the news that the retail giant won a dismissal of a lawsuit. they said they concealed bribery. the shares are down 1%. billionaire investor warren buffet revealing that berkshire hathaway has more than doubled its holdings in apple since year end. here's what he had to say about the potential valuation of the company. >> it will be a trillion dollar company. it only has to go up 40% from where it is now so, i mean, i don't think you'd buy it if you thought it was going to peak at 800 billion. >> well, or they could, joe, have -- >> buy back stocks. >> buy back stocks. >> buy back. >> so they could -- yeah, you could have a lot fewer shares outstanding at some time and still do very well on a per share basis. they brought in about 4% of the company last year. they've been pretty aggressive on that. my guess is they have about 5 1/4 billion shares. my guess is ten years from now they'll have substantially fewer. >> what would you put a bet on? which company goes to a trillion dollars first, apple or berkshire hathaway. >> i'd bet on apple because they have a shorter position. if tim wants to swap an even up i have an 800 number for him. >> you want to go there now? all right. speaker ryan is outside the white house right now. let's listen in very quickly. >> we're very excited that they are actually giving us these numbers this early in the process so we can move forward with processing our budgets. >> time to go? all right. >> you talked about the need for a settlement reform in the past. the president has made clear he doesn't want to touch that. are you comfortable with a budget that doesn't do that? >> replacing and repealing obamacare is entitlement reform. >> an opportunity for this president for bipartisan relationship? >> yeah, i think so. we haven't seen much of it in the senate yet but i'm hopeful the fever is about to break. we'll confirm the secretary of commerce today with a bipartisan vote and i hope we'll begin to move in the direction of getting back to some semblance of normalcy. thank you. >> thank you. >> did the president say he would embrace your plan -- >> majority leader mcconnell, speaker ryan heading to the white house on budget day as they unveil some of the highlights of the trump budget the day before the quasi state of the union. >> as we like to call it. you can hear paul ryan trying to address entitlement reform which he has pushed for hasn't been addressed. re repealing/replacing entitlement is a win. >> back to a bull. michael jaffrey is over weight and ben dunbar works for ross gerber. condolences. his firm is long apple but it did lower its position in the stock. good to see you both. ben, what do you think when you hear a guy like warren buffet say he doubled his position in apple in december. >> yeah, it's definitely hard to argue with warren, but the things with apple. we love apple and we've owned it for a while, but the story was a growth story. the reality is now it's a value play and that's why warren buffet's invested. you know, when we look five years, ten years down the line we don't see apple as good of an opportunity as it was because the heart of any technology company is innovation and what type of innovation have we seen with apple in the past five years? >> but, ben, you make it sound like transitioning from a growth to a value company is a bad thing when, in fact, if you look at the value of berkshire's holdings now relative to when they bought them, a lot of these things have increased several times over. so, sure, it's a quote, unquote value stock but why doesn't that mean it can't be a good performer? >> basically when we're looking at a 700 bld v$700 billion valut will take longer to get there or have a substantial return. we like apple but it's not to the level we liked before. we're not going to get as much growth as we hoped for. >> right. so, mike, do you take comfort from being on the same side as warren buffet? here's a guy when he buys a stock he puts it in a time capsule and doesn't look at it for a long time. he's very patient waiting for a stock to realize its value. are you that patient? >> we are that patient. i would tend to agree with mr. buffet here. if you look at the next year, there's a lot of catalysts for apple. you have the significant potential for the up side and you have the services business that's higher margin, growing dramatically faster and the company expects it to double over the next four years and then layer on top of that the potential for repatriation of over $200 billion worth of off shore cash which could drive significant share repurchase that mr. buffet was describing so i would concede to bend that the company spent over $25 billion in r&d over the last three years and investors are going to want to be looking for some innovation but at the same time there's a lot of catalysts over the next few months. >> and, mike, that said, is it possible apple shares can be twice as valuable with a company that's half its current size? >> well, it's hard to say. i think, you know, as i said and as mr. buffet said, the share count is probably going to be quite a bit lower. we do expect the valuation of apple to continue to grow. we do think there's going to be future innovation. i wouldn't be surprised if the stock takes a little bit of a breather after the iphone launches. oftentimes after the huge upgrade we see sell on the news around the time the product launches. we think you want to stay long and strong apple. >> thanks, guys. mike olsen, ben dunbar, good to see you both. >> heading to the close. 35 minutes left in the trading session here. the dow still on track to close with its 12 consecutive gain and 12th consecutive record highs. something we haven't seen since early 1987. meantime, the cnbc i.q. index more than doubled its index. we'll look at stocks that have been added and subtracted next. warden finance professor jeremy siegel sees the dow hitting 22,000. he'll give us his time frame. and closely followed jim grant will weigh in on president trump and how his picks for top positions at the fed could affect interest rates and the markets. that's still to come on the "closing bell." surcomputersrsun? that means you can te a universe of data - in your case literally - and turn it into medical discoveries, diagnostic breakthroughs... ...proof that black holes collapse into one singularity. i don't know what that is. but yes. invation runs on supercomputers... ...and supercomputers run on intel. you are super art. and super busy. ♪ ooh! ufo! false alarm, eyela! hey gary, what connting our brains, i'm so we can share our amazing trading knowledge. that's a great idea, but why don't you just gto thinkorswim's chat rooms ere you can share strategies, eas, eveactual trades with market professionals and thousands of other traders? i know. your brain told my brain before you tol face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. ly at td ameritrade. welcome back. take a look at shares of tesla lower by 4.5%. goldman sachs downgraded the stocks to sell from neutral and trimmed its price target to 185. tesla around 245 right now. goldman says it's concerned tesla's model 3 production may be delayed. citing worries tesla could sell stock to raise money. the cnbc iq 100 index hand dilly beat the s&p 500. dominic chu joins us to show us the rebalancing and why certain stocks have been added and some removed. >> bill, kelly, this is a rules based methodology put together with our partners at mcam global. what they've done is taken a look at the universal stocks, russell 1,000 index, a broader measure, and takes a look at which companies have been able to monetize, squeeze the most money, revenues out of their intellectual properties. if you look at that they take their proprietary algorithmic screening process and look at the publicly available documents to see what kinds of intellectual property they have and figure out the weightings based upon who's monetizing it better than everybody else on a relative basis. this time around every year ten go out, ten come in. the new in crowd goes from everybody like ncr, micron, boeing, all the way to companies like target and garmon and citigroup. target making strides in cyber security space in response to what happened over the past few years with regard to data breaches. who has been at least removed temporarily for now. names like coca-cola enterprises, eriksson, arconic, the former alcoa. among those that have been moved out of the index for now. we'll see if they can come back later on down the line. one more interesting thing, guys. the number one rated stock, the number one weighted overall in the index is microsoft of all companies here, and the reason why, the folks at mcam have taken a look at all of microsoft's filings and they have determined that many of their newer patents have focused a lot more on virtual reality like you're seeing there, augmented reality, and some of those applications that you're seeing there could have commercial uses, aviation uses and possibly military ones as well. of course, they're making some real strides in the cloud computing space and services space as well. guys, as we talk about these types of companies, it's not necessarily that they're innovation leaders or laggards, it's how much can they make off of the intellectual property and that's why the 100 is a way to look at the properties. if you want to look at the methodology go to cnbc.com/iq100. all of the methodology and stocks are there on our website. >> we'll do. one more, by the way, very quickly. they're celebrating here at the new york stock exchange the 60th anniversary of the creation of the s&p 500 today. >> there you go. >> which is pretty young. >> that is pretty young. >> 60 years isn't that long of a time. >> listen to you. >> look at how much money is invested in the s&p 500 now. >> exactly. >> only 60 years old. >> huge. >> iq 180. time for a cnbc news update. let's get to sue herera. >> hi, kelly and bill. here's what's happening at this hour, everybody. crews are cleaning up a jewish cemetery in philadelphia after vandals knocked over hundreds of head stones this past weekend. the city's mayor saying this kind of behavior cannot be toll her rat ler rated. meanwhile, new york governor andrew cuomo ordering an investigation today into bomb threats targeting jewish community centers across the state. it's part of a wave of bomb threats affecting jewish centers across the country. it may be unseasonably warm in the northeast but iceland just got an historic snowfall. 20 inches fell there this weekend. that's the biggest february snowstorm ever in that country. and call it tim tebow's second act. the former denver broncos and new york jets arriving at spring training for the new york mets. tebow who had signed a minor league contract took part in a news conference. once he gets comfortable at the plate mets manager says he will promote him to the majors. story we'll be following for you. that's the news update, guys, back down to you. >> good for him. >> yeah. absolutely. >> sue, welcome back. >> thanks, you, too. >> i'll see you later. we're doing "nightly business report". >> look forward to it. >> see you later. what have we got, little over 30 minutes left in the trading session here with the dow up 21 points. coming up, we'll discuss dow 22,000 with the wharton's school jeremy siegel and jim grant weighs in on trump's possible picks for top positions at the fed and how they could affect the economy and the markets. stay with us. rokerage fees. fees? what did you have in mind? i don't know. $6.95 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 we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water. about 24 minutes left in the trading session. the dow still up 22 points. 12th day in a row for a gain. on the floor, what do you think of that? >> just amazing. people keep continuously betting against the market and say it's almost like going at the roulette wheel. betting black, betting black, betting black. >> it will hit eventually. >> it never happens with this market. it's constantly green and people are shocked over it. and they're waiting for it to act normal. >> but it's only incremental gains. we haven't had any big rallies. so what's the next catalyst? we have earnings out of the way. fed's not for a few weeks. in the meantime we have a president's speech tomorrow night. it's not officially the state of the union. >> sure. >> jobs number on friday. what are you looking for? >> so you named a couple of things that in ordinary times would have the ability to rally the market or to knock the legs out from underneath this market rally but the market is really myopic on a couple of things. tax reform, deregulation, the infrastructure plan. we don't have any details on any. >> right. right. >> so you talked about the -- when he speaks before the joint session tomorrow. do we need specifics? everyone tells you we need specifics for the market to rally even further. i say i counter that with i don't want any specifics. if the market has a specific thing to really focus on, maybe we have come too far too fast. maybe the rotation has got a little ahead of itself. and maybe it becomes a sell the news event versus a buy the rumor event. >> let it live in la la land a little longer. >> i'm happy with the way it is. a lot of investors are happy with more money in their portfolio. >> kelly? >> thank you guys. cbs chairman is speaking at morgan stanley's tech media. let's go down to julia boorstin. she has highlights. >> hey, kelly. they're saying it's for the best that sherry redstone decided not to recombine cbs and viacom. now he's on the hunt for more acquisitions. >> we'd like to look for more opportunities. more opportunities to build our existing businesses. our balance sheet is in great shape. right now so going forward we would like to get more scale. >> moonves also pointed to a number of new sources for growth, china where cbs is selling its shows, digital as well as channel inclusion in nu skinny bundles. moonves weighed in on the oscars where he witnessed the announcement of the wrong best picture. >> it's as big a screwup as i've ever seen. you know, as i said, all they have to do is give this guy an envelope and it says best picture and they didn't do that. so i'd be pretty annoyed. >> moonves says people will talk about these awards for a century. that didn't help ratings which were at a nine year low. guys. >> go ahead. >> yeah. >> as usual, we're sort of disagreeing here. i'm the big company guy. i grew up in los angeles. oscar a big deal. for you you're looking at the numbers. a nine year low is significant. >> i was looking at the fact that i don't care. i didn't watch. >> yeah. >> and, you know, so apparently i wasn't the only one. i mean, look, i just feel like there's so much politics. we are just talking about this with facebook. i congratulate the super bowl for being able to pull that off. interestingly enough, i wasn't going to watch that. i didn't watch it. i had to read about it the next day. so, you know -- >> having said that, then i get at what you're saying. i get what you're saying. literally half the country is going to be upset by whoever says what, but, julia, 32.9 million is still nothing to sneeze at in terms of viewership. >> it's still nothing to sneeze at. other than the super bowl still the biggest television event of the year for a very different audience. it tends to skew female and there's tend to be debate how it can bring in a younger audience. they expanded from five to ten. you can have up to ten nominees for best picture. you know, that doesn't mean that we've seen more mainstream movies necessarily included. we've seen some very big hits in the past such as "avitar" and "titanic." this year the best picture winner was a movie that not that many people saw so it will be interesting to see in the future if the academy picks more popular films for that top spot. >> right. by the way, i know you were there with hubby. lovely gown again this year. >> thanks. >> looked stunning. >> it was a very exciting night and certainly -- >> i want to see a picture. >> -- a very big surprise. it was a lot of fun. >> send it over, julia. i want to see. >> it's on facebook. >> that's the problem. >> that would be social media which you don't do. >> thank you, julia. 20 minutes to go. 20 minutes to go. dow is up 20 points. the s&p is still about 3. the russell up 11. >> netflix ceo lee hastings delivering the keynote address in barcelona. we'll go live to the conference for highlights coming up. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence. welcome back. we're keeping an eye on shares of aig. issuing a response to a wall street journal report that the board is considering whether to blame and possibly fire ceo peter hancock in the wake of lackluster fourth quarter earnings. remember, their stock was down huge after that. driven by a larger than expected $5.6 billion boost to claims, reserves or charge in other words. the company telling cnbc aig's board of directors and management team have agreed on a clearly defined transformation plan for the company. they're all on board with the current program including management. hancock addressed that $5.6 billion number when we spoke to him on earnings day earlier this month. here's a listen chblts t. >> the news of the quarter is the prior development we announced on our reserves. you need to look at that with the announcement we made three weeks ago of the reinsurance transaction we did with berkshire hathaway. that basically off set a large part of that reserve strengthening. going forward we're sharing the risk with berkshire on this historical set of underwriting decisions that go back decades basically the last 40 years. so while a very large number even for a company of aig's size, the 5.6 is off set by the very substantial reinsurance transaction with berkshire hathaway where we have an offsetting gain of 2.6. i think this is a manageable adjustment to our reserves and radically reduces the uncertainty around the book value of the company and gives us more secure earnings going forward. >> another way to think about this is the company is trying to be less leveraged, so to speak, to the market. you know, to make it a steadier, more boring, more predictable company. that is not exactly what's happened. >> it sounds to me like he figured they were hedged but somebody disagrees. >> not only that, they've had pressure on them in the past from carl icahn. maybe it was einhorn. no, john paulsen as well. once you have this kind of performance and these kinds of reports, you wonder if it opens them up to some kind of activist pressure which they have had in the recent past. >> mr. hancock has been in the office since the fall of 2014 after the untimely passing. >> not long at all. netflix off session lows here. the video streaming giant ceo reed hastings delivered the keynote address at the mobile world congress. jon fortt is on the scene for us in barcelona. good evening, john. >> reporter: yeah, good evening is right, bill. it's 9:45 here. reed hastings and netflix aren't names you would typically associate with mobile just a few years ago, but that's changing pretty rapidly especially as in the flex and the whole industry moves further into broadband and wireless. hastings talked here about how the internet has been about finding niche audiences and finding things and gathering them together. netflix has certainly been able to do that, especially as it has expanded internationally. he said it's a goal to make buffering a thing of the past as they work on streaming technology. he also talked about why netflix recently enabled downloading. take a listen. >> we're big believers in streaming and the internet, but sometimes you're out of range or on a subway, you're, you know, somewhere where either mobile band width is very expensive and so downloading is great. >> reporter: he also talked about why he has been working on technology within netflix. he's got engineers working on codex that makes it possible to stream high video with not much band bit. he's working on getting it down to 200 kill low bits. that will allow people in a lot of places where those plans are expensive to get data, allow them to stream netflix as well. and international growth, of course, is where the future is for that company, guys. back to you. >> jon fortt with a tough barcelona assignment for us. jon, good to see you as always. >> i imagine it's 9:45 p.m. >> touche, touche. >> time for dinner. come on. we know how it works there. >> we'll let you go. thank you, jon. ten minutes to go. dow's up 12 now. s&p, nasdaq and russell are all in the green today. u.s. banks lisa copp tell us why she thinks tech stocks have more room to run. dallas federal reserve president rob kaplan will join "squawk box" in a cnbc exclusive interview at 7:00 eastern time. you don't want to miss that coming up. about eight minutes left in the trading session with the dow up 11 points. joining us lisa copp from u.s. bank wealth management and peter bookvar, cnbc contributor from the lindsey group. i am told the jobs number will be out next week, not the end of this week. lisa copp, what do you make of the rally we've seen here. this will be the 12th consecutive down day. we all know. it's setting a bar pretty high for the economy. do you think it can meet that high bar? >> we do have some concerns that there's a little bit of frothiness in the market. overall we're still sang begin. there are a couple of indicators. some of the macro indicators were quite positive. on the bottom of basis you're seeing companies come in with pretty good earning reports. on balance revenues are meeting expectations and earnings are beating. >> peter, we've got the big address by the president and a fed meeting coming up. how are the two going to address the markets? >> i can't think of a more boring way to start the night by watching a state of a union address. >> even with president trump? >> that's with everybody. we have to watch tomorrow night. we need to hear what he has to say about tax reform. i think the rubber is meeting the road in terms of we want to see details of how he's going to pull off the cut in corporate tax rates and what kind of offsets we want to see. as bill said before, the bar is extraordinarily high. i think the interesting thing on the rate side is that today for the first time the march or the april contract is pricing at a 50% chance that the fed is going to raise rates in march. we think they're going to raise rates in march. the market is finally coming around i think to that possibility and i think those are the two things that are most important for the markets here within the next two weeks. >> all right, guys. thank you very much. the reason i'm going just a few seconds early is, peter, thank you. lisa, thank you very much. you can cue the art cashin snazzy animation because art just told us that the market on close orders show an imbalance to the sell side of $800 million going to the close. >> order up. >> maybe puts into jeopardy the -- look at that. he's the man. >> we were up like 20 or 30 points a moment ago. we're only up on 11 on the dow. it's dropping. >> it will be a squeaker. we love art cashin and cashin at the close. we have six minutes left. we'll come back with the closing countdown. after the bell, wharton professor jeremy siegel sees the dow at 22,000. and jim grant tells us how the markets could fare under a trump fed. you're watching cnbc, first in business worldwide. is instinct. they're experts in things you haven't heard of - researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team. with e*trade's powerful trading tools, right at your fingertips, you have access to in-depth analysis, level 2 data, and a team of experienced aders ready to help you if you need it. ♪ ♪ it's like having the power of a trading floor, wherever you are. ♪ ♪ it's your trade. e*trade ♪ ♪ coming up on the two minute mark here. we'll see. friday, remember that. it was down, what, 10, 20 points, the dow was, and then squeaked out a gain in the last 30 seconds. we're up 16 right now. let's take you back to february 9th and the beginning of this rally. this would be 12 days in a row that the industrial average has seen gains the first time we've seen that since the early days of 1987. does it mean anything? who knows, but it's a fun thing to watch and behold. the dollar index had a bit of a comeback. back in the 101 range here and expectations for a rate increase by the fed also rising today. you heard the april futures are now up to 52%. the march futures are at 33% right now. come through. come through if you have to. and then the yield on the ten year looked up just a little bit, bob pasani, as we head towards the close. >> rising slowly for a rate increase there. and, in fact, robert cap lynn today when asked when we are talking about rate hikes, sooner rather than later means in the near future. there's another fed commentator. remember, yellen speaks on friday about the state of the economy. this goes into the blackout period. saturday starts this blackout period wherefore essentially two saturdays they don't say anything before the fed meeting on march 14th and 15th. so friday is going to be yellen's last chance to comment on the state of the economy. unfortunately there's no jobs report. usually there is on the first part of the month. >> that will be next week. >> can the week after we'll get it on the 10th instead of the 3rd. this is it. mr. trump starts talking about what his infrastructure plan might want to be. tax plan maybe. and yellen gets to possibly respond to that in some way. that's what we talk about setting up a potential little conflict here between the fed and the president. >> all right. looks like we've got it. 12 consecutive up days with records for the dow. the dow up about 14 points. they're celebrating the 60th anniversary of the s&p 500 today. happy anniversary. >> hower silverblat our old friend. >> stay with us. see you, kel. thank you, bill. welcome to the "closing bell", everybody. i'm kelly evans. the ridiculous rally continues. the dow is up 16 points on the bell for its 12th straight record close. again, we haven't seen a stretch like this since 1987 when in the opening 13 trading sessions of the year the dow managed to post consecutive highs. we're one day shy of that goal. if you were to call it a goal. today the dow adding as mentioned only 16 points. it was the worst performer of all the major averages but that is enough to continue the streak, keep it alive. 20,837 is the level there. the s&p 500 for its part by the way also closing at a record high by about two points over its prior record. 2369 and changes the closing level is the broad index. nasdaq about four points shy of its record, 5861. still there with a quarter point percent gain. russell 2000, the best performer up nearly 1%. its high water mark is 1410. we did not quite get there today. there are at least three vacancies expected on the fed's board of governors this year. coming up, jim grant of grant's interest rate observer telling us how donald trump can reshape the fed and what that can mean for the future of monetary policy. joining me is dennis berman from the wall street journal along with wharton school professor jeremy siegel. great to have you both with us. dennis, what do you make of this record run? >> did you call it ridiculous, kelly? >> yes. used the word on friday, had to. when it popped into the green like that on the close. >> well, these sort of streaks are a bit arbitrary but they catch our attention for a reason, because they mean something emotionally and quite technically. if we look at the valuation right now of the dow and the s&p, everyone will tell you it's up and it's too high. maybe jeremy has a different view. i think he might be a little more sanguin on it. at least as it is right now there are some supporting conditions for what's taking place in the market. i think tomorrow is a big day because of that speech, kelly. if trump can really showcase -- >> yeah. >> -- some of the economic progress he's been talking about and put some real concrete examples to it then i think the market will support that. should that fall short i think all attention is really going to be there tomorrow night. >> we'll come back to that. by the way, some individual companies trading at record highs included costco, berkshire's b shares of course and then a real mixed bag of industrial companies. danaher, waste management. jeremy, with every passing day that we hit these records it is a different group of stocks that are doing so. do you think we're on our way to 22,000 for the dow, is that right? >> i think 22,000 is what's justified if we get the republican part of the trump agenda, and that is lower corporate taxes and lower regulation. i mean, that -- you know, my -- my feeling is that should give you 20% altogether. you know, we've had 10% since he's been elected. another 10%. but what can we say? wow. i wouldn't call it ridiculous though but, you know, i shake my head. 30 years ago i was still at wharton teaching it and i do remember that run, but this is really -- this is really unreal. i think honestly we should expect a pause and maybe a bit of a consolidation as we say for the next run. >> sure. >> i think what's really important if it's going to run is the five days before the fed meeting on march 15th because we actually -- if i'm right, we have the labor -- february labor market report on march 10th and then we have the two inflation reports on exactly the two days of the fed meeting, the ppi and the cbi. those were the two things that disturbed the market and, you know, put on the table again a march increase which had pretty well been factored out before. i think those three data points will really dictate what the fed is going to do on its march 15th meeting, which is important. >> yeah. you know, meantime, dennis, on a slightly different note but this plays into the larger discussion about the market, you know, jpmorgan was talking about how a lot of this has been retail investors getting invested and doing so in stocks and bonds which helps explain why the price of both are rising. they're talking about how everybody getting into passive funds is increasing, the influence those funds are having on the market. it's even increasing the amount of trading happening on the closing bell. so, you know, that's the kind of shift that's underway. it's not necessarily a great rotation from stocks into bonds, it's actually people getting from cash into assets, period. >> well, few important things about that, kelly. of course, the time when they should have gotten invested was 2009, march 2009. to do it now is of course a bit of a time of maturity for the market as you might say. passive funds, of course, have their attraction. overall the individual investment from individuals in the market i think is at its lowest level in quite some time. so there might be a blip for this current duration but overall people are not getting actively invested. they are -- they're choosing to sit it out. >> jeremy, if they're starting to, does that mean that this -- this whole thing, the rally, you know, the overall idea that people are going to start investing in the stock market again, does that give us a couple more years here even after this long run we've been on? >> you know, i'm not sure the big surge at the end is all individual investors. i think -- i tend to agree. i think participation in the disbelief are rampant. i actually was -- had dinner last night with someone who was a trump supporter and, you know, was thrilled. i said, are you still in? he said, no, i cash out. even i thought it was going too high. so i think everyone -- all these traders are making bets with each other. oh, wow. how big is our string going to be? and fighting to put orders in at the close to buy us one way or the other. you know, we haven't had those streaks of course quite with the s&p and as you mentioned small stocks. they're still a positive feature. i think there's going to be a pause in consolidation but, goodness, you know -- >> that's not much of a call at this point. yeah. >> take that -- take that and think about it with a grain of salt. >> let's get to more -- hold those thoughts. let's remind people some of what warren buffet had to say. joining becky on "squawk box." one of the topics covered was kraft hines takeover of unilever. take a listen. >> there isn't any backup deal. i mean, there was a -- that was the only one that certainly i seriously thought about that made sense. will there be another deal with kraft heinz? maybe. frankly, the prices in that deal make it very, very tough to make an intelligent deal. >> he also said unilever was attractive for its size, not necessarily true of the other companies in that market. warren buffet spoke about the debate which we were mentioning over active and passive investing and which option most people would be better off with. >> the beauty of it is you're going to do wonderful with american industry. you don't have to be an expert. i mentioned the past, if i die, i told my wife that, i have 90% of her and the trustee to have 90% of it in an index fund. it will do better on balance than if they go to professionals. >> because? >> because the professionals don't know how to -- after fees they don't know how to get a better result. the amount of money people have wasted on getting investment advice is just ridiculous in this country. >> $100 billion he said wealthy investors have lost. he hit on one topic that surrounds a lot of investors which is the impact politics has had on the market. >> last year at our annual meeting, you know, tvs clear i was for hillary, but i got asked the question about the market based on who got elected, and that does not -- and i said, ameri america's going to do fine in terms of economically under either candidate as president. people who mix their politics up with their investment activities, i don't think that makes sense. >> all right. so, dennis, let me bring you back in here. there was a lot this morning. sometimes when you listen to warren buffet you get the sense that most investors aren't thinking about big enough. people talking about when the selloff is coming, quibbling about the multiple on the market. having that big picture view of what might be happening, why stocks are a better investment than bonds. maybe the treasury should issue 50 or 100 year bonds. be crazy to be a buyer of them. >> warren is always, you know, in a convenient place of having been at the right place in american history. you have to give credit to his investing savvy. i must say though that his alliance with 3g -- >> hang on. i can't just let that slide. >> go ahead. go ahead. i'll turn it over to jeremy. professor siegel, do you think that the performance of the u.s. stock market during warren buffet's life will prove out to be an anomaly? >> oh, no. what i found is about 6.5% after inflation is the long one and overall major sub periods after world war ii, before world war ii, civil war, even going back to 1800. now saying that, i think because of valuations when we are a little bit rich, and we're a little bit rich because interest rates are low and they're not going to go very much higher, so we're locked in a low interest rate equilibrium, we're also i think locked in higher than average p.e. ratio equilibrium, which will lead to a lower return on stocks in the long run. i'm picking 5 to 5.5 after inflation. >> okay. >> if the fed meets its 2% target that's going to be 7 to 7.5. i think most people would be satisfied. let me also say -- >> yeah. >> -- warren buffet's point that 90% of americans would be better in an index fund is as old as the hills. he's been preaching that for 30 years. he's never deviated from it and he said why. that is -- that is very, very important information that he believes. >> yes. >> he doesn't believe you get an edge by being in smart beta. i actually do think you can do a little bit better in a smart beta world, but that is mostly an indexed world. >> maybe you can take his next bet over long bets.oregg, professor. >> that is what warren has believed all of his life. >> and has practiced what he preached. dennis, i'll give you the last word. >> to your point, the economic question does become a political question, look, if we're going back to the 1800s and the civil war, the difference then and the difference now is the economic growth and population growth for the country, and franklin for the world at large. so the question is can buffet or the buffet successor sustain that? i think it does become more difficult simply because of the broader economic questions. that has become the political question is how we get back to that growth. trump has his plan. maybe it will work, maybe it won't. >> got to get productivity up so we'll let you go and get back to it. dennis berman. >> i'm going back to work. thank you, kelly. price line earnings, outlooks get back to susan li. >> 13 straight quarters of beats from price line. let's take you through the number in the quarter. price line earnings eps beating 1421 adjusted in the quarter. that came out ahead of analyst's estimates. beating $2.35 billion is what they made in gross bookings as you know with a lot of these travel companies, bookings is the key. they far exceeded even the top of the range. they had guided for the quarter. so they put in 15.11 billion versus estimates looking at 14.5 billion. analysts have been racheting up the estimates going into the earnings. you knew there were bullish signs for the stock and company up 30%. back to you. >> remarkable performance through price line. the shares are only up 1.5% on the news. as mentioned, done so well. susan, thank you. big bottom line beat there. president trump meeting with ceos from top health insurers and republican leaders in congress. we have the highlights and what could eventually be in their plans. fixing up the fed. coming up, jim grant tells us who he thinks trump will name to the central bank's board and what that will say to the future of interest rates. you're watching cnbc, first in business worldwide. uh, yeah. it's over, larry. what is? the whole wheelie thing. what do you mean? i just got this baby to get around the plant floor. right, but now ge technology monitors every machine. yeah, it brings massive amounts of information right to you. so you don't need that. well, it makes me look young and uh..."with it." time to move on. oh i'll move on... right into the future. ...backwards. you're going backwards. the future's all around us! not just on your little tablet, my friend. whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. president trump vowing his upcoming budget will spend big on the military and cut funding to nondefense programs. eamon javers has the latest. >> reporter: hi, kelly. no better way to tell what a president values than where he wants to spend the money. the president today announcing that he wants to have a $54 billion increase in defense spending and a $54 billion decrease in non-defense discretionary spending. here's how he described his priorities earlier today. >> my first budget will be submitted to the congress next month. this budget will be a public safety and national security budget, very much based on those two with plenty of other things but very strong. and it will include an historic increase in defense spending to rebuild the depleted military of the united states of america at a time we most need it. >> reporter: safety and security, kelly. those are the by words that are going to be the key to the president's message to a joint session of congress. other people have used that opportunity to do a laundry list of specific policy proposals. don't expect the president to talk that way tomorrow before congress. more overall on safety and security in his overall priorities to the nation. in terms of the specifics, we might not get the details until the president releases what's called the budget blueprint and then ultimately the specific line item cuts might not come before the summer, kelly. >> eamon, thank you. now the affordable care act was on the agenda today. he met with health insurance ceos and speaker ryan and mitch mcconnell. here's what speaker ryan had to say after meeting with the president. >> we're going to be rolling out our plan soon. that's the legislative mandate. obamacare is collapsing under its own weight. obamacare to quote a head of an insurance company is in a death spiral. this is a rescue mission. we have to step in and prevent obamacare from getting worse, from collapsing and we will replace it with a law that's better, that's more durable, that lowers cost and improves access. we're not going to sit in the government and force people to buy something that they don't want to buy. that's what a patient centered health care system does. that's one of the reasons we must repeal and replace obamacare. >> joining us are ylan mui, john goodman and president of the goodman institute and alex azar, former deputy secretary of health and human services. all right. we have some big shots here. john, let me begin with you and what paul ryan had to say, which is he called this a rescue mission for obamacare. you can see the poll numbers shifting in support of obamacare for the first time. the gop has its work cut out to get everybody on board. nancy pelosi says they're not but i imagine she would say that. is there going to be a plan in the next couple of weeks to totally repeal and replace this thing? >> they're in big trouble because so many republicans on the house, including paul ryan, want to repeal all the revenue for obamacare. that's a trillion dollars of obamacare taxes over ten years. once you get rid of all of that money you don't have any money left to insure the uninsured. what the ryan folks then want to do is have their own republican version of a cadillac tax. i don't think that will sell very well in the house because almost every republican, lots of democrats are against cadillac tax. >> alex, that was one of the big problems obamacare and then didn't happen. now it's going to be introduced. how do they pay for it and how much is it going to cost? >> well, you know, the remarkable thing here is obamacare is failing completely on its own terms. nobody impacted it from the outside. it's on its own terms and what's happening now is we all actually have a consensus that we agree on both sides of the aisle that we want people to have more insurance and we want people to have affordable access to insurance and there's a role for government in subsidizing access to that insurance. and what i think the republicans are going to do now is try to come up with alternative methods, including state-based insurance vehicles, repairing and reusing the individual insurance market and fixing some of the expansions into medicaid to create those vehicles. now they're going to pull down the taxes and that's going to reduce the amount of money available for some of those subsidies and they're going to have to look at the medicaid expansions for the future, but that's what's going to be the tough choices going forward. it's going to be medicaid. what do you do with the states and what do you do on how much subsidy you have left there for the individuals into the individual insurance market. >> so, ylan, what are you hearing in terms of possible other solutions or ways to come at this? >> some of the principles that we've been hearing house republicans talk about is a shift from income subsidies to age-based tax credits that would be monthly and would be refundable. so that is one tip that we're hearing. the other thing we're hearing is moving away from the -- sorry, moving toward block grants for the states or moving towards potentially per capita caps on state funding for those states that have expanded medicaid. however, there's been a lot of buzz about this report that came out from avalier mckenzie that was presented to governors in a closed door session. that estimated that these proposals could reduce spending by 1.5 trillion over the next decade. states are saying that could mean that they face a budget short fall that they're going to be on the hook for making up that money and still taking care of their constituents who don't have health insurance coverage. >> and it would increase the number of uninsured potentially. john, this all sounds mind boggling and the clock is ticking and there are a lot of investors that are hoping that something happens with obamacare because apparently that has to be first in line before they can do a tax plan. is there any way to come at this in a clean, simple, more direct way than everything that's been described and laid out? >> yes. the biggest mistake they're making is the same mistake obamacare makes in spending all of their money in the individual market. the individual market has become dysfunctional. it's going into a death spiral. as opposed to that, they ought to make that tax credit available over in the group market where the premiums are lower and the coverage is better. if they would do that, they could show significant gains before the next election. if they don't do that, they're going to be in trouble in the next election. >> alex, you mentioned the medicaid issue. if that funding goes away, i don't even -- i don't see how that funding could go away at this point, right? >> no. that funding is not going to be completely away. you won't get even republican governors on board to support that. the non-expansion republican governors are saying, all right, i held the line. i need to get some of this money now for my state and my people. there is going to be a compromise on medicaid. it's not going to go away. if i could say on john's point -- >> yeah, real quick. >> why are we going to mess with the group insurance market? obamacare took out the individual market. we've got to fix that for people right now. the group market's functioning. we've got some changes. the speaker's talking about capping the tax exclusion on that, but otherwise that market's working. let's not mess up that one also. >> yeah. >> in that vein, john, we have to go. i was going to ask you what are the odds that this health care plan is announced, put into place, whatever it is, within the next six weeks let's call it and they're then moving on to taxes? >> i think speaker boehner's probably right. they'll never get it done. >> period? >> period. >> you want to rebut that, alex? >> there will be a piece of legislation that passes this year that is called the repeal of obamacare. i don't know what's going to be in the substance of it, but there will be a piece of legislation that says that. >> kelly, president trump said that's coming in march along with tax plan. >> that's true. that's true. there's a lot at stake for this speech he will be giving tomorrow night. i'll listen for more detail. thank you all. very much appreciate it. >> thank you. activist investors used to be focused on replacing board members. now they're taking aim at ceos directly. up next, a look at why no ceo is safe in the age of activism. later california director john chiang has a move to overturn rules on private sector citizens. stay with us. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it helps pick up some of what medicare doesn't pay. and could save you in out-of-pocket medical costs. to me, relationships matter. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. so don't wait. call now and request this free decision guide to help you better understand medicare... and which aarp medicare supplement plan might be best for you. there's a wide range to choose from. we love to travel - and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare supplement insurance plans help cover what medicare doesn't pay. and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. welcome back. legendary investor warren buffet sitting down with cnbc's becky quick for a wide ranging interview. at one point he took aim at the 2 and 20 fee system. >> 2 and 20 is going to make a lot of people rich and it's going to make very few investors rich. it's actually kind of -- you know, if borders on obscene. you don't get better because you charge a lot. i mean, that does not make you a better judge of securities or anything like that. and so the good salespeople overwhelmingly are the ones that attract the money rather than the very few who are extraordinary at managing money. >> meanwhile, many hedge fund managers ramping up their investor activism not only trying to get seats on boards but replacing ceos. leslie picker is here. >> hi, kelly. ceos better watch their backs. firing and hiring ceos has become an increasingly popular tactic among investors. some arrive on the scene with their own replacement ready. take paul hallal. he partnered with hunter harrison known for turning around several railroads. he took a stake at csx and sought to install harrison. soon after csx's ceo announced he was stepping down. they are in negotiations over the pay and board composition. perhaps the biggest fight now is at arconic. elliott management has been increasing its stake and trying to aum shinrikyo klaus klein felled. then there are the perfectly partnered retirees. the ceo stepped down. three directors are put on the board. one is going to help lead the search process. starboard value disclosed its stake in tribune media as the ceo was on his way out. many expect starboard will have a say in who gets the top job. those who watch the activism space say this tactic is related to the run up we've seen in the markets with record highs by the day, including this one. traditional activist plays like breakups and buy backs have less up side. >> reminds me of private equity where you often get a group of investors who have a group of ceos they like. maybe it's no different on the public side if you find good managers and say we're going to skip a step. >> that's a really good point, kelly. we're seeing a convergence between the activism space and private equities space. they're taking measures. like at csx, for example, where paul hallal has an intention to run this thing for five years. this is his only project for five whole years and so that to me looks a lot more like private equity than someone who's trading the markets every day. >> maybe they can avoid the debt for these companies. >> yes, exactly. >> that would be helpful. thank you. >> leslie picker. it's time for a cnbc news update. let's get to sue herera. >> takata pleading guilty to fraud in connection with the airbag scandal. the japanese auto parts maker also agreeing to pay $1 billion for a scheme to conceal a deadly defect in millions of its airbag inflators. a detroit federal judge accepting the plea today. takata still faces dozens of consumer and state lawsuits that could run into the millions of dollars. vice president mike pence asking the indiana supreme court to let him keep some e-mails private. these e-mails were sent to him when he was the state's governor. carnival celebrations resuming in rio de janeiro just a day after 20 people were injured, three seriously. the injuries happened when a float went off course and pinned revelers against the wall. everybody may be talking about it but abc reporting that last night's oscars were the least viewed broadcast in almost a decade. it averaged 32.9 million viewers, the fewest amount since 2008. the ratings come after an epic error at the ceremony. the accounting firm p.w.c. revealed the incorrect winner for best picture. that's the news update at this hour. i'll send it back downtown to you, kelly. >> sue, thank you. >> sure. >> sue herera. up next talking the future about the fed with jim grant. we'll see who he wants president trump to put on the fed board. california wants to offer a state retirement plan for houseworkers. the state treasurer reacts in an exclusive interview. stay with us. miles per hour.eling over 200 to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 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 we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. welcome back. we have some breaking news out of spacex. morgan brennan has the news. >> elon musk is planning on sending two people on a trip around the moon late next year. this will be a private mission involving private individuals, not nasa astronauts, who have already made deposits to ensure they will be on this trip. founder and ceo elon musk telling me and other reporters a short while ago, this will be a week long mission, the first of many. it will cost a little bit more than what a crude mission to the international space station will be. it will use the falcon heavy rocket which is scheduled to make its maiden launch this summer. hasn't been tested yet. private missions like this one could become a bigger driver of revenue. at least one or two of these trips per year comprising up to 10 to 20% of revenue. this will long term drive costs down for government missions as well. this announcement coming days after a privately held space upstart's dragon capsule successfully rendezvoused with the space station. that was used to send men to the moon and that same launch pad is where this mission will launch from as well. so, again, spacex announcing it has plans to send two people around the moon next year. back over to you. >> morgan, why not land on the moon? >> i think that's going to take a bit more time, a bit more planning and a lot more technology. this is the first of what could be a much bigger -- much bigger business for spacex and that essentially being space tourism. >> yeah. i expect they'll be on it as soon as they can be. thank you so much, morgan brennan. got a view on space, jim? president trump has been -- >> why not land on the moon? >> i imagine it's logistically complicated, these rockets and things they're doing. jim grant is with me. president trump has been a long-time critic of the fed. with dan turullo's resignation there are three empty seats to be filled on that board. you have come with some suggestions. >> well, yeah. i mean, there are three empty places and we have two goldman sachs operatives the top of the trump administration. gary cohn and steve mnuchin and one might ask why. is this not a namm mow louse. this is meant to be a populist regime. two people believe ever so much in the excellence of one thing just as they are. one doesn't get to the top of goldman sachs -- >> i've heard gary cohn be critical of the economy. what does that mean that president trump will do with the vacancies? >> what i would like him to do is appoint my friends. these are people who question the status quo. lou laraman should be there as well. what i think is going to happen is he is going to appoint place holders of some kind, jobs worth. good substantial, corporate academic citizens who believe in the efficacy of things as they are which, however, kelly, we should not believe in. >> do you believe there's going to be rate hikes? i raise this because let me show people. jim has actually put together a glimpse into trump's tweets in 2017, what they might look like. >> these are not fake tweets, these are intercept of tweets about -- prospectively about to be tweeted. >> to the trump people on the board, better gudays ahead. this might be a favorite. jackson hole, they haven't got any and then continues on, including saying yellen getting another term in fed chair. so my point to you is why do you have trump tweeting hypothetically about rate hikes? >> well, because the fed may feel incumbent, may feel incumbent on the fed to do something about what may be a quickening economy, what props will be the need for higher short term money market rates. donald trump is first and foremost a real estate man or first and foremost even before that, kelly, he's a man who has never known in his adult life any limits, right? this is a man who kind of does what he wants, has done what he wants. is he going to sit still for a succession of rate rise that might imperil all sacred asset classes of commercial real estate? i think when push comes to shove that the administration will lean towards easy money, will accept the regime of floating exchange rates, fiat currencies, semisocialized banking and of socialized credit risks. >> i've heard many other people start to say this, that they think the likelihood is pretty high that the president reappoints janet yellen because he wants somebody who's fundamentally kind of dovish. so your point is you think that's how it will play out but not how you want it to play out? >> i'm all for rolling back the institutions of money and banking. i want -- i want to reinstitute capitalism in banking. i want the people who take risks to bear those risks. i want the dollar to be defined as something substantial at the weight of gold. and i would like exchange rates to be fixed so to stop all fiddling by governments. these things i think are time tested. at least to me they pass the test of moral efficacy as well as technical efficacy. i don't think that they are in the line of sight of the president. >> let me ask you about a related issue because this all comes back to bear on the economy on how the job market does, on how the consumer is and we've also been seeing an increase in delinquencies, defaults on auto loans. >> oh, yes. >> we know the proportion of subprimal auto loans is so high. what does that tell you about what's happening? >> the difficulty surfacing in automotive credit are a no, ma'am ma louse because the economy has created jobs. prime loans are increasingly in arrears. the percentage of loans in arrears in the fourth quarter was the highest since the last quarter of 2009, which you wouldn't have thunk. >> would you be avoiding the auto sector and the auto financers. >> i think that the auto sector is in for much skinnier margins because there is a humongous amount of leased vehicles. the j.d. power index fell in january by i think 6.6% year over year, so i think the cumulation of these problems, credit deterioration, falling used car prices, increasing supply of inventory, weighing on car prices and is leading to greater and greater sales incentives which are margin crushers. >> takes you back to the bad old days of 2005. that's all before rates get potentially hiked. jim, have to leave it there. thank you. >> keyou're welcome. >> jim grant. california is one of eight states working on launching a state-run retirement savings program. there's a battle brewing over that. california state treasurer joins us next to discuss. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can ta my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade hi, i'm frank. i take movantik for oic, opioid-induced constipation. had a bad back injury, my doctor prescribed opioids which helped with the chronic pain, but backed me up big-time. tried prunes, laxatives, still constipated... had to talk to my doctor. she said, "how long you been holding this in?" (laughs) that was my movantik moment. my doctor told me that movantik is specifically designed for oic and can help you go more often. don't take movantik if you have a bowel blockage or a history of them. movantik may cause serious side effects, including symptoms of opioid withdrawal, and tears in the stomach or intestine. tell your doctor about any side effects and about medicines you take. movantik may interact with them causing side effects. why hold it in? have your movantik moment. talk to your doctor about opioid-induced constipation. if you can't afford your medication, astrazeneca may be able to help. it's league night!? 'saved money on motorcycle insurance with geico! goin' up the country. bowl without me. frank.' i'm going to get nachos. snack bar's closed. gah! ah, ah ah. ♪ ♪ i'm goin' up the country, baby don't you wanna go? ♪ ♪ i'm goin' up the country, baby don't you wanna go? ♪ geico motorcycle, great rates for great rides. welcome back. the state of california and seven other states have recently found themselves in a battle over state-run retirement plans. the issues are special investment accounts run by states. the obama administration passed laws that don't invest a percentage of workers money into the accounts. republicans are fighting back. house of republicans are fighting back. john chung is the state treasurer of california. welcome back. >> good afternoon, kelly. so how much money is at stake here? >> so it depends on how much people save, but in california we have 7.5 million workers who go on a daily basis and work but there's no employer-provided retirement program. barring any action by the federal government, we thought it's imperfeative that californ and other states step up and come up with a new, creative plan to help people put some money aside for their golden years. >> let me ask you something. so if my employer doesn't offer me a retirement plan, can't i just open a retirement account and put money into it? why does the state need to get involved? >> you can, but most people don't. there's a lot of products out there. there's great confusion. so one of the things we wanted to do, this is a plan where people can be nearly automatically enrolled. in addition they can opt out of the plan if they don't want to participate so there's no compulsion to participate in the program. if there's some type of near automatic plan the participation rates by individuals increases dramatical dramatically. we wanted to make sure people knew they had this choice so we could not have people not protect themselves for future years and go onto the state's social safety net. >> so if my employer offers a plan, sometimes hopefully they also offer me a match. if i put in $5,000, they put in $5,000. it's a great way to kick start your savings. if i put $5,000 into my california savings, does the state match that? does the state financially get involved? >> no, the state's not involved. one of the things we wanted to do is work with the private sector employers, the california chamber of commerce and other business organizations. we didn't want to trigger erisa responsibility. that's why we went to the department of labor to get a safe harbor rule to make sure employers in the state of california were not subject to any type of fiduciary responsibility or legal liability. if you match that particular plan, then you are subject to liability. but if the employers want to have their own plan, we want to encourage that. we are doing this because a lot of employers don't have the financial wherewithal to do so. >> yeah. last question because we realize that all of this is possibly at stake. where are you steering these assets? do you guys pick the kinds of accounts they're going into? how much choice does the saver have? >> i'm sorry, could you repeat that please? >> does the state pick out the kinds of accounts, the kinds of investments that this money goes into or is that choice left to the saver? >> so for the first three years because we wanted to make sure that we preserved capital they would go into treasuries. after that we would give them a menu of options but a limited menu of options. what the research has indicated is there's too many choices out there so people get confused and that's in part one of the reasons that they don't invest. too much detail. it's overwhelming. a lot of people don't have a financial background. we wanted to make it easier. >> we understand a lot of states have done this as well. final question. is the entire program under threat now because of what's happening at the house? >> it makes it much more challenging. we are doing this in response to the california chamber of commerce request. to have the national chamber to set that back and not have consistency between the state and local creates greater confusion and problems. we want to go forward and i know other leaders from different jurisdictions want to go forward because we recognize this as a looming crisis in california and the united states of america. >> all right. john chiung, thank you. well, some consumer brands including costco and pepsi. how that earnings structure is confusing investors, next. and are stocks really still cheap? black rock's investment strategist weighs in. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow - today at esd.ny.gov or keeping a hotel's guests cuttinconnected.i to 35,000 fans... businesses count on communication, and communication counts on centurylink. each company has an odd fiscal calendar structure. here with the details on how it is impacting investors. >> quarter one earnings tomorrow. if you're not careful, you might think it's taken a huge dive. but it is fourth quarter with a uphe wou er jumbo super size. and auto zone is not the only one this strange fiscal calendar. we found three companies who do the same thing including seven of the s&p 500 and almost all of they will sell food in some fashion. even marriott was one of them. most companies we talked with could not explain this strange today endarr. the only theory that made sense is in the food business, you have labor costs and if you're tracking weekly but you also need to track months with the same number of weekends. you can't do that with even size quarters. so by grouping them in a four-week chunk, that works better by cost comparison. most started off fairly small. by the time they got bigger, it was not worth to it challenge their accounting. so be care whful when read go t earnings. >> they like having the four-week blocks. it is like they need to do five of them. >> they have 13 four-weeks. >> advance auto parts is one of them. but auto zone used to be part of a grocery store so that's where you get them doing it. and they're competing. marriott started as a root beer stand. then it became a restaurant, then a hoetel. >> if you're doing apples to apples, it doesn't make much of a difference. >> a lot of them have inertia. >> it doesn't, from an investors' opponent of view, it makes it harder to compare each quarter to another quarter. >> not forward businesses though. >> warren buffett has strict rules when it comes to communication. if you're looking for advice on how the handle your social media accounts, look no farther than warren buffett. >> there are two things i was told in life many. years bag turned out to be terrific advice. one is to praise by name and criticize by category. somebody told me that 40 years ago. and tom murphy said, warren, you can always tell somebody to go to hell tomorrow. your first impulse is not necessarily your best course of action. >> is that why you don't tweet or e-mail is t? >> well, probably just not good at it. if you have a delay system on every tweet or e-mail, i don't think a lot of them would go out. it is really a mistake to give an enassistant reaction. people will tweet and send e-mails. the one e-mail i send in my life, i'll end up in federal court. >> he said it was about microsoft but it was his dig on omaha football that he felt worse about. we've had some earnings come in from price lion, hertz. here's the board for you. price lien is downer 3.5%. then when you see here, the 12th record close since 1987. i said it was 13 record closes. no, no. it was 12. we have now tied that. it is a long story. thank you for tuning many. "fast money" starts now. er tonight on "fast," goldman sachs says tesla could tank more than 25% in six months and called the company hype. plus, a stunning bet on apple. and it has even the bears throwing in the towel. and later, our own bitcoin bug.

Related Keywords

New York , United States , Japan , Nevada , Philadelphia , Pennsylvania , Washington , China , California , Indiana , Denver , Colorado , Barcelona , Comunidad Autonoma De Cataluna , Spain , Jackson Hole , Iceland , Rio De Janeiro , Estado Do Rio , Brazil , Jewish Cemetery , Illinois , Wharton School , Texas , Utica , Dallas , Capitol Hill , District Of Columbia , France , Chicago , Rochester , Americans , Japanese , American , Ameri America , John Hickenlooper , Nancy Pelosi , John Chung , Kraft Hines , Berkshire Hathaway , Sean Spicer , Mick Mulvaney , Andrew Cuomo , Ben Dunbar , Alex Azar , Susan Li , Janet Yellen , Lee Hastings , Kelly Evans , Tim Tebow , Rick Santelli , Michael Jaffrey , Cnbc Becky , Aum Shinrikyo Klaus Klein , Paul Ryan , Dominic Chu , Ronald Regan , Lisa Copp , Warren Buffett , Sherry Redstone , Peter Hancock , Morgan Brennan , Los Angeles , Muhammad Alarian , Mike Olsen , Julia Boorstin , Tom Murphy , John Chiang , Kraft Heinz , Carl Icahn , Ross Gerber , Dennis Berman , Mitch Mcconnell , Gary Cohn , John Goodman , Jeremy Siegel , Reed Hastings , Brian Sandoval ,