technology that could be causing concern. we got the details. >> this is the sixth most expensive piece of artwork sold at auction. the amount of money is called, quote, mind blowing, $110 million and change. we'll tell you -- all right, i just told you how much it cost. well, we'll tell you the exact number of, but it will also tell you about the guy who shelled out the money. what a character. that's coming pup. >> sure is. hordesing nation. americans have nearly $2 trillion in checking accounts. the highest in the u.s. history. is this a warning sign for the consumer, perhaps? >> i don't think people realize it's -- you know, retiring -- everybody's saving, and it's the accum -- anyway, we'll get into it. the market rally today. stocks now seeing the biggest gains of the month, and just really picked up steam throughout the session. closing bell exchange, finding out more about it. gran it investment advisers, and kevin and next to him is john, and our own rick santelli. john, what gives? i mean, this morning, futures were up 30, 40 points, now up 175. >> you know, this market has no memory. what we went through on wednesday was quite unique, but we did talk about is they are going to be following through, how do investors react and how does the market react? interesting to see the rally yesterday, got strong at the end of the day, and continued into today. i think investors are shrugging off news out there. saw it before. go back, six, eight months, negative headlines ignored kwigly. a lot going on next week, normal economic data, trump budget coming out, president trump traveling overseas, we have fomc, opec, g7, a lot over the long holiday weekend. >> tim, what's the market action this week telling you about how much, what the market's been doing has to do with washington, was the market ignoring washington before, wednesday a test of that, and we came back for it? how do you put it together? >> well, for us, as value investors, it's november most of the time, it was not washington. it was tax reform, about repatriation of kumpb currency. it was earnings. now we're getting back to the point where it seems to be going on the whim of washington. longer term investors look at earnings. >> yeah, well, you got vix looking back to those in a second, kevin, but the story has been how low interest rates have been, and, i mean, there's not much more to say about it than it keeps persisting despite evidence to the contrary. what do you think's going on? >> a recipient of the fair trade that finally got in the equity market, lasts or stays there to be determined, but bond inves r investors and traders are skeptical of everything, inflation, growth, the fed, washington. that's why we have not moved from the initial point post-election to the beginning of the year from a 260 to a 225 where we are today. it's waiting for something to happen. in absence of that, a lot of money going into munis this week. if you don't get tax reform, it's increased and for the opposite reason people put money in treasury. the stock market is watching this happen, but as always, ready to act when and if necessary. >> rick, you've been focusing tightly this week on the moves in the dollar. new lows today. the dollar index on the several month lows. what do you think is the main message to be drawing from the action at fx? >> that's a complicated question. truly. i had discussions with many. just consider, mike, we're down close to 2% for the week. we're down just under 5% for the year. we're hovering at levels not seen since november, and even if you look at all the action prior to that in november '16 low, there's a loft volatility in the price structure between, you know, 94 and 97. this could be even wilder as time goes on. conclusions? makes it very hard for bond investors to think yields are holding here and go back up with such a spongy dollar, and if you look at general economic activity, i agree with kelly, you know, sometimes it's hard to explain why rates are down here and equities aren't, but i do caution, you know, we were around 177, 180 before the election, even know at 225, that's a sizable, a bit of spread between where we were in early november. at the end of the day, i think the dollar index really is more about what's going on in other areas of the globe that are continues to do central banking sends in my opinion and how it turns out, just consider how everybody loves europe. you know, despite the fact that mario draghi's exit is the size of pinhole, no idea how to get the elephant through it, but the aspects of the market are hard to put in a proper place in the puzzle considering global general economic activity. >> fair enough. tim, you know, you mentioned earlier, you guys have a value approach, and yet looking at the picks here, and they are technology. it's not like you're down there with the big box retailers, so explain where you see opportunities in this market. >> well, i think if you look at tech, tech is usually relative gain. when you buy technology stocks, you may not buy them when they are cheap to the market but cheap to technology, and i think that anything that shows secular growth right now is rewarded where things that are in secular decline like a retailer are punished badly. there's probably opportunity building into different sectors in the market, but there's inexpensive take stocks out there. >> right, apple, microsoft, oracle are the examples. so microsoft, you think -- they are a loved stock already. apple, we know, that's cheap, but does well. why oracle? >> well, i think oracle's probably caught in the middle where microsoft had a nice runup getting up towards the higher end of, you know, valuations, where oracle is still trading at a mid-teens multiple and accelerating to the cloud. they have high business and secular growth in the business. it's an unloved old technology stock we like to pay attention to. >> mark, you hear what was said about oracle last night? >> well, mark said a lot about oracle for a very long time. we ignore the daily misgivings of formal oracle employees, and focus on the brand they have been building and what to do in the future. >> john, you know, the way the market's set up, right, bounded by the march 1st high of the early week highs, but technology's been the clear standout, so it's uneven and selective in terms of what works and what doesn't in the last couple months. tech is overheated. parts of the market is overheated. we wait for the economy to get the cyclical stocks working. >> clearly, that happens. see that in tech and financials too, right? talking about interest rate hikes and tax reform, and the financials have all been kind of swept up with that. i think we're going to see that continual movement to the upside, but it's a question of, can we breakthrough some of the highs, and do we stay there? >> by the way, kevin, since you mentioned it, this move you're talking about into municipal bonds is interesting. how much do you think people are discounting the prospect of tax reform out of the administration? >> started to grow a lot. flows this week were about twice what the average has been for the year, so, you know, starting to hedge that move, and munis are a good buy in most of the year, no matter what the tax brackets are. they are enhanced if there is no tax reform in 2017 or even into 2018. >> yeah, so just basically, it's just a call about the rest of the year initially, right? >> we're crossing the point it's 2018's business pretty soon. you know, the administration's got a month or two to try to get this done. >> sure. >> gentlemen, thank you all. have a great weekend. >> thank you. >> thank you. >> thank you. >> basketball too. we have more breaking news from the white house here. eamon? >> reporter: kelly, many dramatic late afternoon news here from the "washington post" and "new york times" within the last few minutes, posting news stories getting attention here in washington, d.c. i can't independently verify this reporting, but let me tell you what both newspapers are saying at this hour. the "washington post" posted a story that the law enforcement investigation into possible coordination between russia and the trump campaign has identified a current white house official as a significant person of interest." washington post" said this shows the probe is reaching into the highest levels of government and citing people familiar with the matter saying the senior white house adviser under scrutiny by investigators is someone close to the president according to the people who would not give any further details about the identity of that official. meanwhile, a separate story here from the "new york times," pulling that up to read as well, reporting that the president talked to the russians about exactly what his views of director comey, fbi director comey. the president said fbi director comey was a nut job, according to a transcript of the conversation or a summary of the report obtained. they said president trump told russian officials in the oval office this month that firing fbi james comey relieved great pressure on him. he said, i just fired the head of the fbi. he was crazy. a real nut job. according to a document obtained by the "new york times" or read to the "new york times" by an official. i face pressure because of russia is taking off, adding, i'm not under investigation. both of those stories will attract a lot of attention here in washington, d.c. and here in the white house as soon as i get off the air. i'll get a comment from them on both stories. separately, another development this afternoon as we can confirm, that the white house is confirming that the nominee for deputy treasury secretary is removing himself from that position. that was something that we've been waiting for, that nominee no longer going to take the position citing family concerns. it's unclear where the white house turns at this point for a number of two over at the treasury department. all of this happening just after the president has already left the white house for an enormous road trip around the world, going to saudi arabia, landing in several hours. this is a multi-stop trip. a lot of high stakes diplomacy. there you see the president and first lady shaking hands with the vice president mike pence on the way off the south lawn here this afternoon. a lot at stake for the president. they were hoping for a reset, both in terms of domestic politics and international affairs on this trip, but as these two headlines i brought to you from the "washington post" "new york times" demonstrate the news flow here in washington not likely to slow down as the president travels overseas, kelly. >> seems most significant would be who this administration official is they are probing because so far, you know, trump administration or those defending it have been able to say, look, they were low level people, people who might have been formally involved with the campaign who seem like they are, you know, most, you know, most under investigation here for what ties they might have had. this would bring it closer to the president, right? >> yeah, that's right. the trump camp so far dismissing people mentioned as mere hangers on, people who are formally employed, paul maniford had not worked for the president since last year. others were people the president never even met. if this is, in fact, an accurate piece of reporting, thsuggests someone here at the white house attracted the attention of investigators, ratcheting up the stakes here very much for the white house as they move forward that someone inside the building would be under investigation. there would be an enormous effort, as you could imagine, on behalf of the white house to see who the person is, what they need to do and steps to take in order to respond to that. >> yeah. the market just went limp here. >> for sure. mod rating gains on the reports. thank you very much for updating us there. >> you bet. >> the trump administration's budget proposal, meanwhile, due out next week. ylan looks at what would be included. >> mike, the administration is trying to focus on the domestic agenda here. omb director inspected the final budget this morning. television printed and bound today. it's expected to look like the skinny version coming out in march. the defense spending got a $54 billion boost under the outline, but the education department, state department, and epa, just a few of the agencies suffering major cuts. what's not cut? medicare and security. on the campaign trail, president trump promised to keep them safe, but there's still a lot of speculation over whether mandatory spending programs like food stamps are on the chopping block instead. we're expecting to see something on infrastructure in the budget. the white house wants to use $200 billion in federal funds to help leverage that trillion dollar investment that trump keeps talking about. we also may see ivanka trump's fingerprints on the proposal. the budget included six weeks of paid family leave for fathers and mothers, a signature issue. the budget will not be released until tuesday, but democrats are already drawing the battle lines. they are fine with more money for the military as long as everything else gets more money too. representative, a key democratic lawmaker, said if the skinny budget is the guide, her party will not come to the table. guys, she even used the s-word, which is "shutdown," back to you. >> maybe it's their turn, but the president, himself, deployed it too. thank you, ylan. heading into the close, 45 minutes to go, dow up 142 spo t points. s&p up 16. nasdaq up 4, and russell up nine. americans horde a record amount of cash in the checking accounts. the economist who said this could be a problem coming up. this painting worth $19,000 back in 1984. and yesterday, it sold for a whole lot more. tell you just how much, and profile the internet billionaire who bought it next. you're watching cnbc, first in business worldwide. it's all yours. wow! record time. ♪ at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. ♪ get ready, because we're helping leading companies lead with digital. a japanese internet billionaire makes history in the american art world. robert? >> mike, he's the talk of the global art world today, and his name is yusaku. he paid $110.5 million for this painting that's a record for an american artist. maezawa posed on instagram with the trophy and said he was struck with so much excitement and gratitude for my love of art. now, he set the previous record for this piece last year for $57 million. who is maezawa? a 41-year-old e-commerce billionaire finding japan's biggest online fashion mall. he was a singer in an indy rock band, skipped college, and followed his american girlfriend at the time to california where he immersed himself in american music and art and fell in love with this work. his band called switch style, released three big albums in japan, and on the side, he sold vinyl records by mail, then on liez, giving rise to the new company called start today, and that company launched zozo town, listed on the stock exchange in tokyo, owning 39% of the company, so total net worth is $3.6 billion. he could still buy a lot more paintings. interesting philosophy, he imposed a six hour workday at the company to give employees more family time. he has three kids with two women, never married, but he's famous for dating models and actresses, known for his humor and twitter handle, if i can say it, guys, is you suck 2020. >> is that a presidential reference? who knows, right? >> yeah. look, he's a rock singer, and, i wouldn't say accidently, but stumbled on line world and just loved art. what's great is that both these paintings along with the other famous american artists are put in a museum in his hometown, so everyone will get to see these paintings, but -- >> colorful guy. >> who wouldn't want to miss out on the experience of seeing these wonderful -- >> i would gather you won't be visiting the prefecture. >> tif the guy loves it, i respect it. he can do what he wants. >> is he single handedly setting the market now? this market? if he was not there to bid, does it go anything close to this? a resans in the art? >> good question. the answer is yes. with this painting, two billionaires bid up the price, but there were 19 paintings sold in total over the last week for a total of $200 million. many of those, including the one you saw steve cohen sold, went for $10 million more than the estimate, and maezawa did not bid on those. so he could be setting the top of the market, but he's the new warhol. it's a deep market. he's now the number one selling american artist throughout this year. >> robert, we wanted to show you work from, perhaps, the next budding up and coming american artist. we're talking, you know, probably tens of millions, what do you think this is worth? >> emma. that's the famous emma swirl painting, or is it called unicorn puke or something, i think is what that was called. >> it's multimedia for one thing, and maybe we have to wait 40 or 30 years to see. >> this is a submission by our producer's daughter. >> it's beautiful. >> i find it beautiful. >> it's peaceful. >> yes, exactly. >> that works more in a kids room than the other pieces, definitely. >> that's right. >> oh, robert, thank you very much. >> thank you, guys. >> appreciate it. 40 minutes left before the bell. you have a good rally, off the highs, dow 133, 50 points less than a half hour ago. why wall street needs to pay attention to the presidential election. extending voting again over there in iran. >> and up next, athleisure on the ropes. what's tripping up a sneaker retailer, coming up. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. welcome to holiday inn! ♪ ♪ whether for big meetings or little getaways, there are always smiles ahead at holiday inn. i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪ 35 minutes before the bell. we have the markets continues to come back from that wednesday selloff, up more than half a percent on the major indexes, s&p 500 nine points away from where p finished last week. a round trip over five days, autodesk, meantime, best perf m performer in the s&p. upgraded stock and raised price target today on the heels of a design software's company revenue beat and smaller than expected quarterly loss after the close last night. >> nearly 15%. the broad markets rallying, but look at footlocker, not only having a horrible day, but week. down 16% today, and i thought i read it's down about -- let me get this right -- yeah, down 21% this week. >> yeah. >> i mean, not a lot of data for that, but disappointing report for sneakers, hurt by a stronger dollar and delayed tax refunds preventing u.s. consumers spending earlier in the year. we talked about this theme before. this is an incredible reaction for something that, if it's the the case, should be moved into the following period. >> right. the fact you say march and april were better, nobody is caring about that. they are blaming the stronger dollar, it's not that much stronger. >> right. >> so it was not -- on that category, it was not that wide of a miss, but human reaction. >> retailers under huge pressure, and missing by a little bit and don't have a good excuse, it seems like they take that out. and, also, people talk about not really a lot of buzzy new releasing. category in a period now where -- >> woah, woah, woah, what about the lonzo big baller brands? these are a $3 billion market. >> the fact we know one shoe people are waiting for -- >> under armour down 50% this year. extraordinary. let's go to sue for a news jap date. >> guys, here's is what is happening this hour, everyone. u.s. defense officials say north korean missile launch last weekend was a success indicating a significant advancement in pyongyang's ballistic missile program. after a 490-mile flight, the vehicle successfully reenters the atmosphere without burning up. fox news canal fired bob beckel, cohost of the prime time program, "the five" issuing a statement saying he was terminated for making an insensitive remark to an african-american employee. he left fox in 2015, but returned in 2017 after a stint at cnn. and last hour, we inadvertently ran the wrong video of the robert e. lee statue removed in new orleans. crews removed the last of the four confederate monument in new orleans this afternoon. it sat atop a 60 foot ped pedanstool. kentucky winner, always dreaming, working out before tomorrow's stakes, heading into the race as the odds on favorite. the race is broadcast on nbc beginning at 3:00 p.m. eastern time tomorrow afternoon. that's the news update this hour. mike, back downtown to you. >> sue, thank you very much. in the last half hour of trading, on the floor here, alan, trading at the highs coming into 3:00, backed off, got reports about kind of a new front in the investigations, with regard to russia and the president. is this what we are doing here? just swinging around the headlines? >> we'll be swinging around for four years, i think, this white house and congress and senate. i mean, it's just a constant volatility. >> yeah. >> one thing for sure for you, volatility's ahead of us, i believe. >> on the other hand, a quick snapback after a quick drop wednesday. is that showing you there's a sturdy bid under the market, or, you know, that there was really nothing to react to on wednesday in the first place? >> yeah, good point, mike. that was all politics, reactions, tax cuts, regulations, that is a problem, but the market's strong. we just finished a good earnings season, very strong. jobless numbers, lowest in years. so overall, the market's doing well. the vix back up in double digits. we were single digits there for a while. overall, technicals are strong for the market, and it's a good sign. >> and question is, we had this ceiling on the market, seems like it for two, three months right now. what might it take getting out of earnings season to get beyond that? >> you know, the fed is coming up next month in a few weeks, see what happens there, we want to see a rate cut, you know, that'll did -- >> rate cut or hike? >> hike, rather. that's good positive news for the market, but, you know, i don't know. to get this thing really going after such a strong earnings season, a lot depends on washington. >> and the bond yields? they are not really telling you that the economy's skriting? >> that's it. that's it. >> yeah. >> we're stuck here. >> stuck. alan, thank you. >> thanks, mike. >> appreciate it. kelly? >> thank you, both. 30 minutes here, as you said, dow up 137 points, a nice rally, see what the s&p, up 15, nasdaq higher, russell up 7. coming up, one moment, actually, let's get back to washington where, as they surfaced more breaking news. eamon, what's happening? >> reporter: kelly, two statements from the white house, releasing statements from sean spicer, on air force 1 right now flying to saudi arabia, but we gave you headlines that the "new york times" and "washington post" put out moments ago. this is the statement that corresponds with each of the stories. the "new york times" story said that they have been read a description of the president's remarks to the russian officials in the meeting at the oval office with them in which he called allegedly fbi director james comey a nut job saying he relieved some of the pressure of the russia investigation by firing comey. here's what the white house is saying about that story. they say the president has always emphasized the importance of making deals with russia as it relates to syria, ukraine, defeating isis, and other key rs for the benefit and safety of the american people. by grand standing and politicizing the investigation into russia's actions, james comey created unnecessary pressure on our ain't to engage and negotiate with russia. the investigation would have always continued and, obviously, the termination of com would not have ended it. once again, the real story is that our national security has been undermined by the leaking of private and highly classified conversations. now to the "washington post" story, which also posted within the past half hour or so, the "washington post" saying the investigation into russia has reached an unnamed white house official, here's what the white house said about that. they said, as the president stated bmp ed before, a thoroug investigation states there's no collusion between the campaign and foreign entities. there's a double-barrelled news afternoon releasing statements now on both of the stories, which are going to get a lot of attention here in washington, d.c. and around the country, kelly, back over to you. >> the stories effectively came out at the same time. anything to read into that? >> reporter: that's a good question. other than that the "washington post" and "new york times" are in a heated battle here, i don't know what else you read into it. it's also difficult for the white house to just -- the physical timie ining of it in t sense they are in the air now flying. they thought they'd have peace to watch a movie. that's not happening, obviously. back here, it can be in contact with them as they need to be, and there is a skeleton crew here at the white house that is responding to this right now. they are just giving us the statements moments ago. as logistics here are difficult, but manageable for the white house. >> eamon, the statement that the white house gave in response to, i guess the "new york times" story suggests a slightly different wrinkle explaining why it was sensible for the president to dismiss comey, right? he says, look, we would have a harder time negotiating with russia on other matters. that represent a fresh twist? >> reporter: yeah, definitely. go back and give you that part of the statement again, saying by grand standing and politic e politicizing the actions, james comey created unnecessary pressure on our ability to engage and negotiate with russia. they seem to be, in that sense, explaining why the president would have said he was under pressure in terms of russia, in terms of the investigation, when he spoke to the russians. note here that nothing in this statement from the white house denies the "new york times" account, denies the verbatim quotes of the president, that that are present in the "new york times" story, but saying that comey's actions previously were untentble and saying the real story here is that someone leaked this highly sensitive information. those transcripts of conversations between a president and foreign leaders inside the oval office are among the most secret documents you can get in terms of national security of the united states, and the president needs to be able to negotiate freely with those officials when they come to washington, and he needs to be able to talk about military, diplomatic issues of the highest sensitivity, and those transcripts are forms for the white house to have a record of it, but now someone is putting them out to the "new york times" having this white house concerned. >> oh, it's shocking. i mean, i don't know what else you could do if you're the administration. he mentioned exas abrasion about the leaks, but i don't know, do you take person by person? how do you figure out what happens? these are people closest to him, right? >> reporter: conventional wisdom in washington, the more you pressure staff, the more leakers you create because the more misery you create for the staff. it becomes a leak investigation that becomes double reenforcing thing for the leaking you're trying to stop. it's very, very tricky. the question is, do they have any indication of who might have reviewed those transcripts? a very small circle. the initial reporting on this was that once the president had spoken to the russians, they limited the transcript se circulation to a narrower group than usual. the pool of people seeing this and call the "new york times" and read it to them would be smaller than usual if that reporting, in fact, holds up. presumably, they go to each of the people to ask them, but presumably, those people might deny it. >> all right. that's the latest for now, but, you know, feels like the evening is young at this point. >> reporter: that's right. another big news day in washington. >> absolutely, very much. eamon at the white house. by the way, this has taken a little out of the markets, dow with a gain of 12 had 4, coming up, why the wealthiest in the country have a tough time collecting more money than it spends. up next, how cash horders nationwide could be holing back the economy. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. >> welcome back, in cased you missed it, i sat down with brian moynihan yesterday, and we talk about the health of the consumer. >> consumers spend 5% more more than than last year for the first, you know, four and a half months of the year. the consumer's healthy. overall, 3%, that means cash out of the system, so writing checks and everything. this is not signal. this is almost a trillion dollars of spending, and it's, you know, billions of transactions. >> so mr. moynihan said the consumer is spending money, but still new data suggests otherwise. met services out with a report that shows the amount of cash americans hold in checking accounts reach ed a record high of nearly $2 trillion. the average is around $600 to $800 billion. >> this is a bad sign for the economy, then? joining us now is mike, good to see you. i guess i start by sighing, are there explanations for why checking accounts might now represent a bigger piece of the pie? structural going on? how consumers behave? interest rates so low in vasavis accounts, what's the zero interest checking, anything like that, investigated those things? >> we have, mike, and i think there's several factors. the biggest is uncertainty. the consumers who have cash just view it as being very uncertain, and this goes all the way back to when the great recession started. they have still in that great recession. other factors would be low interest rates. they have no place to put it, and we've seen cash come out of retail cds and go into checking accounts. >> yeah. >> but this is an enormous swing, enormous swing from what we've seen. >> ironically, mike, i was going to say this flood of cash is keeping deposit rates low, right? i think we heard mr. moynihan or others suggest in the last couple days, you know, when there's no competition for the consumer dollar, you don't have to give more for their money. what ends there? at what point does this change? is there going to be a big shift when people take this money back out of the checking thaccounts,r is this the new normal. >> it's not the new normal, kelly, i think what will move this from a whole variety of different factors that we look at is basically salary and wage increases. once the consumer starts seeing that, possibly the tax reform will have an effect on it too. i think they will start moving at that time, but they are ready to move. we see this in a variety of ways we try to take a look at this behavior, but the consumer for the most part who has some extra dollars is not spending it. >> huh. >> mike, this comes in a week when we did see finally consumer debt balances go up above precrisis levels, which you really would have expected to have happened awhile back. is the overall consumer balance sheet healthy? too conservative to fuel more growth? how do you assess it? >> i think if you lump all the consumers together, mike, the balance sheet is kind of healthy, is what i would say overall. but i don't think you really can do that. you have to take one set of consumers that are basically living paycheck to paycheck and then another set. federal reserve just came out with some data this week on their households and about 60% of the consumers have some excess cash. 40% do not. it's the 60% that are really driving, i think, the retail side purchases and services, that aspect. the other side of this with regards to the debt is that 40%, and the people who really cannot even meet a $400 emergency is what one of the fed numbers said. we have seen that from some other studies that we have done and also others have done. so it's really kind of two groups of consumers when you look at this in total. >> yeah. that's so true. caught our attention, mike. appreciate the data, coming on to talk about it, the hording of cash is not a story i expected do see in the headlines. thank you, mike. is 15 minutes to go, indexes up. the sector that could make big moves on wall street once the budget is released next week. plus, up next, the presidential election that could rock energy markets worldwide. we'll tell you. 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. 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[ 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. the results of iran's presidential election today could reverbuate across the the world, and financial markets else. >> kelly, as the iranians head to the polls, the president and nuclear deal may be in trouble. seeking a second term, championed the nuclear deal with world leaders, landmark pact remove theed sanctions on iran in exchange for limiting the country's uranium enrichment program. as a result, iran's oil output is up by a million barrels a day, and international oil producers like key and shell look to build out the country's infrastructure. this could all change if opposition candidate raisi wins. the critic of the deal saying it's not helped iran's economy. while iran returned to growth, the country still suffers from stubbornly high unemployment. further complicating matters? president trump's visit to saudi arabia and israel, two countries viewing iran as an enemy. they say iran will likely be a topic zeused between the leaders, harsh rhetoric exchange between the heads could intensify pressure on the current nuclear deal, potentially threaten iran's role in the oil market, tightening global supply, and that's why analysts say oil prices could be higher. kelly, that's why investors are watching the election so closely. >> i was surprised at the lift in crude today, back around $50 a barrel. >> yeah, two big events, not just iran deal, but opec as well. >> absolutely, thank you. headquarters, 12 minutes to go, and that lift in oil helping or part of the lift in the markets broadly heading into the amp close. could infrastructure play see a boost after the white house releases the budget next week? debating that when we come back. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage. ♪ andit's not just a car,rade it's your daily treat.. ♪ go ahead, spoil yourself. the es and es hybrid. experience amazing. welcome back. as we mentioned, president trump's 2018 budget is set to be released next week, and it's expected to include $200 billion in infrastructure investment. >> so do the president's goals for infrastructure make it a buy for investors? joining us now to debate that are two gentlemen, and thank you for being with us. peter, starting with you, $200 billion over ten years from the federal government. that's what we are hearing. leverage with private partnerships into a trillion dollars over ten years. is that enough to go around for investors to get excited about in. >> you knowings it's follow-upny to talk about $200 billion as a small number, but the reality is, it is a small number. the infrastructure piece is interesting. you got a couple components of infrastructure. i think this administration thinks about infrastructure in the crumbling infrastructure buzz word phrase, backward looking infrastructure. its bridges, its tunnels, its transportation infrastructure. that's essentially brick and mortar historical. it's important, but from a true investor perspective, i'm interested in forward looking infrastructure. i think the question about what the electronic grid's going to look what, what alternative energy grid looks like. investors are interested in that direction. last thing to add, michael and kelly, infrastructure is one of the principle areas where economic investment necessarily intertwines with governmental policy and politics, and that always creates risky outcomes for genuine investors. they were disappointed by the partisanship. i worry about any good economic outcomes coming out of the budget argument over infrastructure. >> and you're the optimistic guy. doug, why are you more bearish on infrastructure in general? >> right. >> well, it's interesting. i certainly feel similarly to peter in terms of what the benefits of infrastructure are, but we are very concerned. we are concerned that, you know, the flynn debacle pushed infrastructure back of the pack, so it's behind tax reform and trade cuts and behind health care, and we really don't see much bipartisan efforts, even though spending money is something that both parties can agree on. >> and, peter, i guess even if, perhaps, it's not some huge fiscal push out of washington of new money into the area, what does that say about the fact we actually somehow have to find a way to build more stuff anyway, maybe cyclely, parts of the sec that that are attractive in their own merits? >> well, there are. i agree with doug on the collapse of partisanship in washington. if the public policy component of infrastructure investment fails, and my gut is, it will, i believe to the extent there are economic opportunities available on projects, the private sector will take care of it. investment finds a way to solid returns where there is a demand, and there's a demand for infrastructure reconstruction, and i believe there's opportunities for innovation on the forward looking infrastructure on the electronic grid on alternative energy, on a number of things, actually, some of our managers in the ill-liquid space, especially in the secondary equity markets are looking at real assets and energy, and i think there will be opportunities there. we are just not going to wait around for the government to argue with itself about it. >> well, that sounds good for everybody. peter, doug -- >> i hope so. >> thank you, both, for joining us. we look forward to the fruits of your efforts there, peter. >> right. when we come back, the cl e closing countdown for you. >> flipping to the after the bell discussion, larry kudlow oon what he thinks destroys the wealthiest state in the country, at least for now. you're watching cnbc, first in business worldwide. 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. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars. about two minutes until the bell. finishing up a real yo-yo of a week. the s&p 500 and made an all-time high tuesday and dumped by 1.8% or so across the board on more intensifying d.c. dpeers getting the attention of the markets. s&p 500 now ri bounded for two days, within ten points of where it finished last week. the volatility index, the vix, spiked ten to above 16 wednesday, and now it's giving the majority of that spike back, and it's trading a little bit about 12. much more normal calm levels. it seems as if the market has its feet back under it, but dom on the floor, we did get just to keep it exciting, some afternoon reports about the russia investigations, just a little bit of the upside taken away. >> 30 points call it on the dow. still up 134 points, back the vast bulk lost on wednesday. we're going to finish fractionally lower if things hold the way they are right now. the one thing we have not -- i mean, we talk about it quite a bit, though, we know about tech stocks in the financials, the role they played. energy is one of the better performers this week as well. >> yep. >> crude oil hits the $50 marker for the first time in around three weeks. so a big deal on that front. takes up energy stocks with it, and just look at the sector overall. you saw this week ask -- >> more rotation. >> yeah. and recounts, i mean, it's going to an interesting tug-of-war. >> interesting week, down a little bit on the week, but better than 48 hours ago. dom, thank you. ringing the bell for the nasdaq, is research alliance, and the big board, the new york stock exchange itself, celebrating 2th year since its founding. second hour of "closing bell" with kelly evans. >> welcome, everybody, i'm kelly eviden evans. this is how we finished off the week, what a week, what an afternoon it's been with revelations and stories from washington pushing us here, but we did come off that dip, the dow closing e ining 140 points, 16 there, no record highs here today, recovering from the big loss earlier this week. gapes at two-thirds of a percent for the s&p and dow, half a percent for the nasdaq and russell. nasdaq at 6083, and russell up six points at 1367. talking about the markets and how big tax hikes on the rich and wealthiest states lead to a fiscal crisis. more to say about that, but joining us today, michael santoli, and evan newmark, a private investor. does that mean you tell us what you do? >> i don't know what you mean. >> and danny hughs from divine as set management. a good rally. more news from washington, but it was not enough to push us. >> it was not enough. seemed like yesterday the question was, okay, is there a downside follow through from the wednesday selloff? do we have to worry about bracing for, you know, another bout of volatility, and i think when that did not happen yesterday, the bond market really never kind of panicked anymore, and, today, it was more about, okay, i guess that means we're not going to hear that much. you know, it's interesting because in the morning you heard, well, d.c. quiets down, the president on the road for a week. maybe just pay attention to things like the fed minutes next week and all that. seems that the market was not prepared to price in that much more political drama. not necessary at this point. >> evan -- >> kelly? >> we know this is now -- this is a very difficult market, and it's either extremely difficult or extremely simple. it's extremely difficult if you have to figure out what's going to happen in washington, and it's extremely simple if you decide to ignore it and just say, you know, full steam ahead. >> what i'm doing with my own money as a private investor is, look, i'm not doing anything. you know, i've not seen, you know, there's still a fundamental disconnect in the market between the bond market and the equity market. the bond market, which yields came in quite a bit on wednesday, but the equity market bounced back. the bond market did not do anything since it reached its low yields for the week. the bond market is saying, you know what? you're not getting strong economic growth. the only reason why the equity market went up today because jim came out and started making some noise about more qe. >> more on that in a second. >> put a muzzle on that guy for a period of time. i just think until you see the bond market, the commodity markets and equity markets looking at the same set of economic data and reading it the sa same way, you're not getting a breakout in the markets. >> since you mentioned, james made comments about qe. the sto stops make it higher? let's bring in steve leisman because was he serious? >> i think he said what he said. i don't think it's the direction of policy. i think mark had it right, it's not really an issue right now in terms of quantitative easing. the question really is the market debating right now that whether or not that third rate hike happens. you saw a slight decline in the probability for a june rate hike. it was at 85, ticked down to 70 -- sorry, 60% or so when the market fell this week. ticked back up to 70% today and yesterday. and then you have under 50% for that september rate hike, kelly. e don't think quantitative easing is the question. the third rate hike, and as you know, kelly, one more thing, that maybe thinking the third hike does not happen because fed does balance sheet reduction. >> okay, so, dan any, how much do you attribute the remarks from james bull. >> narrator: -- bullard to the rally? do they want to see more easing? >> i don't think so. i tend to think the big down trend we had this week had a lot to do with trump, and it had a lot to do with the concern on investors' part that if he is not able to lead the republicans in any kind of roll back from a regulatory perspective and some incentives from the tax perspecti perspective, what do we have in the market being up here? that had a huge impact. >> danny? >> yes? >> it's interesting. what you said is absolutely true in the currency markets. absolutely true in the bond market. it does not appear to be true in the stock market. if you lock at what's happened, you had a round trip on the q10 spread, below where it was when donald trump was elected. you had a round trip on the dxy, the dollar index, which is below where it was when donald trump was elected, but no round trip on the stock market, which is -- there you go. there's that two tenths, 96 basis points. was as much as 135 basis points. >> but i'm hearing from our investors, both institutional and high net worth, is a big concern what gets done in waurnz, and generally speaking, steve, you know, what we don't like to see is any kind of involvement from washington in the stock market. >> that's the next point. >> no, i get it. i get it. >> like gridlock. the big concern was, oh, gosh, this could have an impact. i think -- and i do think there's been a lot of value investors out there waiting on the sidelines with a lot of cash, and that cash, i think, came to surface the past couple days. we have not gone round trip yet, but see what happens this weekend going around the world. >> let's home we don't go round trip. >> michael? >> fewer stark disagreements in the different markets. obviously, it's true the bond market is not excited about growth, but we had a 2% economy for years now, and the stock market, based on corporate cash flows and companies that, by the way, try to make money for investors. the bond market is not kind of trying to get bond prices lower or higher. the currency markets are not either. i think what happens is in a slow growth environment, what do you do? no imagination, buy amazon. >> secular growth stories, yeah. >> that's working. that's what a high liquidity, low growth economy gets you. it's not happy days because the markets look capped at the old highs right now. >> i like that. >> ha-ha, hang on -- >> leisman, i can't give the floor back to you because you'll call me by a third different name in the last two week, and my mother will be out of her mind. >> what were you going to say, evan newmark? >> no, no. i was just going to say until you break out of the pattern, until you see something happening somewhere else than in the -- what we just talked about, you're going to be stuck in the very narrow range, i think, in the equity markets going forward. >> it's not been problematic. >> it has not. since february, it's gone nowhere. >> we've got back to the highs. >> yeah. it's been pretty much, pretty much in a narrow channel, narrow band since february. one of the things i think is most interesting that happened this year is that the european indexes in dollar terms are up 16%. >> that's right. >> and -- >> everybody loves europe. >> the s&p -- >> i'm not saying -- just saying it's one thing that's different than previous years. >> yeah. >> in previous years, you saw the bond market behave this way, the u.s. equity market behave this way. this is the first year you saw europe behave differently. >> you have actually real amazing follow through with profits. etf -- first quarter of growth, up about 16.5% for the first quarter in s&p 500 epf growth. that's tremendous. that feeds everything that the analysts said at 9% previously coming into the quarter. >> yeah. >> so that is -- you know, it -- it has to tell you that we're on the right track, and i do think that that's the fundamental -- and not to say that the market should be where it is, but it's a fundamental feeling that investors look towards the horizon and things are actually turning around. >> steve, that's why i was, in a way, puzzled, i did not see the bullard comments until later in the day when the rally looked for an explanation, maybe more about opec, what they may or may not do, there we have it, but the fed talking about normalization, and the gdp numbers weak, but the job market couldn't be stronger, right? >> that's true, but think about what the fed said, kelly. they provided decent investment advice to people. they decided early on when the president was elected not to start to price in the prospects of the policies he was going to put in place, and that's turned out to be a pretty goods decision at least when it comes to thinking about investing in the bond market for sure. maybe not when it comes to stocks, but what i was going to say earlier to what evan said and what mike was saying was this idea that the stocks have the growing earnings beneath them. bonds have this notion of sort of regime change, towards higher growth and higher inflation the president was going to bring in. i think that idea is going away, this idea that, you know, if i had a dollar for everybody who called the end of the bond bull market, i would be a rich man right now. a lot of people called that. i just don't think they think that anymore. >> we almost have to go, but michael, quick point, watching general electric today, why? >> the industrials were a leadership group today, and ge up more than 2%. probably the most washed out name because there's not a lot of sponsorship on wall street, but looking for clues of the market rotating to the losers, pick those up, that's the pattern. >> what are you making up these days? the last time i heard from you was picking up the cheap energy stuff last year. >> that was the last thing i've really done, and my view on this, for what it is, if the equity market is going to go higher, it has to go higher because commodities and oil -- i know -- santoli has another view -- >> economy, 2008, oil $100. >> all i say to you is that the market right now, right, is taking its cue -- it's not going to go higher because amazon's going to put on another 100 points. i mean, it might, but if it does, we're in trouble. >> what do you do? >> energy actually did contribute pretty dramatically to earnings, about 4.2% in this last quarter, and it was great to see some of the names come back up. we have been very long energy. we've been long some of the software names like palo alto, that got crushed because of their earnings, but that name, and i do own it, comes back, and, you know, we're being pickers and picking at the bottom. there's a lot of things trashed. retail was trashed, macy's has a great -- >> making a macy's? >> i have bought macy's because of the yield, and i think that it will probably come back a little bit. it's a shoeshl fshort term for . >> that's a limb. >> it is a limb. >> that's okay. >> we leave it there. president trump departing on the first overseas visit as president. can that trip and release of the budget next week turn around a rough period for his presidency? later, larry kudlow weighs in, and connecticut may be the wealthiest state in the nation, but it may now be tapped out on taxing the rich to raise money. more coming up on "closing bell," you're watching cnbc, first in business worldwide. wha? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and. did you know slow internet can actually hold your business back? say goodbye to slow downloads, slow backups, slow everything. comcast business offers blazing fast and reliable internet that's over 6 times faster than slow internet from the phone company. say hello to internet speeds up to 250 mbps. and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. john harwood, can you round things up for us? >> as the president leaves for the overseas trip, we had publication of two unhelpful stories for the trump administration, and that's putting it mildly. first of all, the "new york times" came out with a story quoting government officials as having taken notes in the meeting that president trump had with russian officials in the oval office, quoting him as having told them, i fired the fbi director, he was crazy, a real nut job, i face great pressure because of russia, that pressure is now off. the second story in the "washington post" indicates that, in fact, the pressure is not now off. the story in the post says that the fbi led investigation of james comey, excuse me, of trump's campaign and russia, has now targeted one official currently serving in the west wing. so both of those things are very concerning to the white house. they have put out white house responses, which are in the case of the "new york times" story, not a denial, but saying the pressure trump referred to was the pressure impeding the united states from negotiating with the russians on things like isis and syria on the post story, the white house press secretary sean spicer simply said we're confident that when the probe is done, it will show that there was no collusion. but this is a -- but this is indicating white house troubles follow president trump as he goes to saudi arabia and on to israel and then to italy from there for the g7 guys. >> market dipped on the headlines too, guys. john harwood there. the celebration -- oh, remember this celebration after the white house passed the bill to replace obamacare. well, now we're hearing there's a chance the house may have to vote on that bill all over again. let's get to ylan to explain why. ylan? >> kelly, it's all about how much the bill would cost. the republicans are trying to use a strategy called reconciliation to cast their politically charged bill without support of democrats. they need 50 votes in the senate plus the vice president, but in order to do that, the legislation cannot add to the deficit, and, actually, for in bill, the bar is a little bit higher than that. it has to reduce the deficit by $2 billion. now, that -- that was not a problem for the original version of the bill. congressional budget official estimated it would have reduced the federal deficit by $337 billion over the next decade. remember, republicans made changes to the bill to get both conservatives and moderates on board. it now allows states to opt out of providing benefits and allocates an extra $8 billion to help people with preexisting conditions of cove roj. the house passed that bill before the cbo could estimate how changes affect the cost. one analysis for sender of responsible budget said it either saves $5 billion or costs $265 billion. the house is not sent the bill to the senate yet, and if it does not have the muster that the cbo, they may rework it and vote again. find out when the cbo releases the score wednesday, and house speaker paul ryan addresses conservative talk show today, calling it a technical nonissue. back to you. >> and to that point, ylan, quickly, what do you think the odds are of another vote? 10% sn hi 10%? higher than that? >> all hinges on the score, kelly. >> yeah. >> the score comes through, they won't have to rework it to move health care forward. >> thank you. larry's agitated. health care's only one of the items on tap next week. budget due for release tuesday, and trump left for the first international visit in europe and middle east. so, will all of this help put the pfocus on the economic agenda? larry kudlow is here at post nine. >> i think ylan's reporting is right, absolutely right. the chances of going through anoth another vote is very, very small. congressional staff tells me whatever happens they believe they have $200 billion cushion. there's not going to be a problem and probably not rescored if it is by a tiny amount. but i want to say this. the house has its bill, and what folks are forgetting a little bit, the senate is moving nicely towards its own bill. there is a working group headedly lama alexander and ted cruz, includes the chairman of the regulatory committee. they are moving nicely resolving differences between moderates and conservatives. >> do they have the reigns of the presidency? even just talking about this feels like we ignore the elephant in the room of the entire question surrounding tump trump's tenure and the leaks from the meeting with the russians. >> i understand. >> that's extraordinary. what does that tell you about the people closest to him, and what's happening inside that white house? are people seriously trying to get him thrown out and get pence put in? hard to wrap your head around. >> hard to give motives. they were right, it was not helpful at this particular po t moment, but there was another view, pay attention to this. the appointment of the special counsel, mueller, a tough guy, he'll shut down the leaks, okay? he will. second of all, the investigation is going to go on for months. that gives everybody breathing room from the front page headlines. they can do their job. ryan said again today we can walk and chew gum at the same time. he's right. there's a legislative track going on -- >> what about tax -- >> now, taxes -- >> moving along? >> this is my favorite. we are making better progress than we think. i think health care is passed reconciliation, at least by the august recess, if not sooner. kevin brady held the first hearings, continuing next week until memorial daybreak. this is good. second, they will then hold a markup meeting, a markup, by the way, democrats and republicans and see what they got on taxes. i don't think they get bipartisan, but could be wrong. they mark it up. >> yep. >> that will take maybe a month, maybe five weeks? okay. and i think the key is for the house to get a bill. they don't have a bill, right? >> yeah. >> call it hr1, the most important thing, cutting taxes for prosperity. they need an hr1 on the floor to be pass. can that be done before august break? there's a shot. if not, it'll come soon after and the senate will catch up to that, so i'm -- i just hear -- >> i know, but, look -- >> it's not about trump. right now it's about the legislative board. >> that's fair. >> that's the key point. >> i totally -- >> jump to wild conclusions, but -- >> we're -- >> come back. >> stay right there. we have to talk about taxes in your home state. >> thank you. >> jcpenney shares higher, near an all-time low after weak first quarter earnings. struggling retailer exploring a new source of revenue. details comie ining up. every kid has one of these, a fidget spinner, these days. there's one retailer in particular catching out the most from the fad. tell you about it next. things are headed. mfort ine because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future. will you be ready when the moment turns romantic? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis. and get medical help right away. ♪ ♪ welcome to holiday inn! ♪ ♪ thank you! ♪ ♪ wait, i have something for you! ♪ ♪ making every stay a special stay. holiday inn, smiles ahead. whether for big meetings or little getaways, member always save more at holidayinn.com welcome back, time for today's fast take, apple's tipping troubles in china. the company disabled tipping in other apps, some get a 30% cut on that, but apple rather than losing a cut of the market share, not high to begin with, mike. >> yeah. it seems like a little bit of a petty change. it's funny because now wall street's in love with the -- >> nice pun, by the way. >> apple's in love, i mean, wall street's in love with the idea of apple of a service company, but does not seem like the right maneuver. i don't know how much it's public issues. >> far more powerful than apple because it's more important people use the most ubiquitous necessary -- what use for payments, and it -- that's platform agnostics. you don't need an iphone to use it. iphone makes it harder, use something else. >> two points that are important. one, the consumers, but more so, the chinese regulators. if they don't like it, they tell apple. apple has to change it. simple as that. i don't think -- in the u.s. you get away with something like that with the regulators, but in china, it's not going to fly. >> up next, john is planning to start a hedge fund and tailored to take advantage of the chaos of the trump era, according to the "new york times," would you invest? >> you know, i don't know that the world needs another hedge funds. i don't know that the world needs another hedge fund run by a 70-year-old guy out of the game a little while. it's showing you, though, if you have the angle, know the right people, you get a niche fund perhaps off the ground. >> this is a guy who when he left goldman, he had $200 million in stock, more than that, actually, raising $150 million fund? you know, he's the sky masterson of wall street, from guys and dolls. he goes around and goes, luck be my lady tonight and raise money that way. >> watch the etf for it, call it k-a-o-s. the wall street journal ahead of the type column as they inform the world today. steven -- you know, just heard on the street, you know, that's sticking around, but this particular -- and i just hope it was not my fault. >> well, i think -- what, five, six other onlines that have graced that column in society. interesting. i find is fascinating, really, the response -- >> there you go. >> that's -- >> who -- >> just for you. >> boy, boy, i remember those days. short hair. >> scary. scary times. >> come on. that's a nice look. >> what i found amusing, everyone took the news of the demise of the column that somehow or another signalled stock picks, quote-on-quote was dead. >> right. >> it's a strep, but shows the appetite for someone trying to handicap -- >> single fault. >> one stock moves. tough. >> what do you read? >> i don't, you know, to me, i have views on the commodities in wall street, but what happens to wall street, it's already happening, you know eight-fold on "wall street journal". it's hard to write something in a newspaper that has relevance in this day and age as things are done -- even though you did an amazing and wonderful job dr. >> yeah, yeah. >> even you could not have saved it from the ashes. >> i'm not skrus sjust saying t because i'm an alum, but it's analys analysis. >> exactly. >> when dan writes about tech and becoming a consumer, whatever it is, i understand the companies better, and i value that. i don't know -- i don't see why that's going anywhere. ? thousands of people do that every second. >> that is where you add value. sin thesing a point of view. >> resurrect it just for you. zwlnch >> a winner from the fidget spinner craze. parents are saying, please, take it off the screen. anyway, the winner may be discount retailer five below key banks, 2-4% boost thanks to the craze. talking about he gets a couple shipments a day, a hundred each, retail for $5. the question is, is this something -- should you buy -- >> no. no. the -- >> there -- >> remember we talked about the pet rock? you don't still remember what the pet rock was? >> just saying -- >> pet rock of today. >> five below. >> pet rock. larry had a pet rock. >> the stock has held up better than most, and i believe enough in the market's ability to figure out what's a fad and what's repeatable merchandising skill. >> right. >> they probably -- >> even when this goes away. >> my nephew from vermont was in new york a couple weeks ago. >> yeah. >> he had one of those. i almost strangled him after a while. i mean, i love him to death, but he wouldn't let go of that thing. that's -- i think -- it was a pet rock moment for me. >> banned in schools. >> look up a pet rock. >> i will. five below has to move on to the next thing. this plays itself out. time nor a news update with sue. >> thank you so much. this is what's happening at this hour, everybody. pentagon news conference, defense secretary jim mattis said any military solution to the north krcrisis would have grave consequences. >> if this goes to a military solution, it's tragic on an unbelievable scale, and so our effort is to work with the u.n., work with china, work with ja n japan, work with south korea to try to find a way out. >> a man charged with slamming his speeding car into the pedestrians in times square on thursday killing one and injuring 22 more said he wanted to, quote, kill them all and police should have shot him to stop him. that's according to a prosecutor. richard rajas did not enter a plea in the court hearing today. he's held without bail. and the death of a plumber prompted a recall of 6300 lek electric ranges due to shock and lek try cushion hazards involving free standing electric ranges in black and stainless steel. there's been one death reported. that's the news update this hour. back to you. >> yikes, thank you. have a great weekend. >> you too. connecticut governor dan malloy raised taxes on the rich twice to fix the financial troubles, but now he doesn't think raising them anymore can help. up next, why the nation's wealthiest state can't go back to that well again. why it's having trouble paying its bills. stay with us. ow usagives me the peace of mind and the security just like the marines did. at one point, i did change to a different company with car insurance, and i was not happwith the customer service. we have switched bacover and we feel like we're back home now. at youeel liroh us you're a part ofhe famil i love that i can pass the membership to my chiren, and that they can be protected. we're the williams famil and we're usaamembers f. cato talk about your insurance needs. anything worth pursuing rd work and plange, at baird, we approach your wstragy the same way to create financial an built to last 'll listen. 'll talk. we'll an. fr generation to genatio baird. ♪ to err is human. to anticipate is lexus.. perience the lexus rx with advanced safety standard. welcome back, strong session today, dow closed higher by 141 points. zch up 16 to 2381. nasdaq up 28. the russell's up six points today. closing out the week as mike mentioned earlier, back where we started from after all that drama. connecticut may be america's richest state, but tax troubles lead to major fiscal problems. leslie picker has the details, leslie? >> kelly, part of the problem is that the rich are not as rich as they used to be. the wealthy in connecticut are an outsized share of the state's tax burden, 350 families made up 12% of the connecticut's tax revenue as recently as 2014. by comparison, the 725,000 households in the lowest income brackets compromised 3%. much of the state east wealthy population comes from the hedge fund industry. in recent years, funds shuttered, under performing, and moving out of connecticut, which has not helped the state's budget. estimates of connecticut's tax income from the top 100 wealthiest people declined by about 45% in 2016 from the prior year. that's according to the department of revenue services. these high earners are expected to produce about 200 million dollars less in tax revenue over that period. that's about half of the income tax short fall that connecticut is projecting for the fiscal year. meanwhile, the state has been throwing millions of dollars in financing to hedge funds like bridgewater and aqr to keep them in the state, kelly? >> not a formula for success, leslie, thank you. still with us, larry kudlow, also joining the conversation, democratic state rep josh elliot of connecticut. we thank you for being here as well, but, larry, beginning with you. how bleak a situation is it. >> bleak, bleak, bleak as you can get. by the way, the principle cause, i mean, leslie was right about this, rich people, the economy's not growing in connecticut. it's in a recession. whatever estimates you make, like the national economy. >> because people play the state or what? >> people are playing the state. businesses are leaving the state. ge was the tip of the iceberg. most important. no one wants to move back to connecticut. the individual income taxes are high. the property taxes are 49th out of 50th high. the corporate taxes are 45th out of 50th high. there's a cap gains tax on top of the corporate tax. there's an inheritance tax pushing people out of the state. the more they tax, the slower it gets. timely, here's the irony of ironies. back in the early '90s, a republican governor, then independent, i don't know if he ever got to be a democrat, passed the first state income tax, that was low. the state went nuts, went nuts. the next year, he and the legislature passed a state constitutional balanced budget. that was in 1992, if my memory serves me. so that's -- >> how long have you lived there? >> how many years ago is 1992? >> 25. >> 2 pennsylvania. >> oh, my god. >> i was doing the same thing. >> by the way, we're getting old. i'm getting old. >> i know. listen to this. the state constitutional balance budget has never been used. >> in that 25 years? >> not once. >> all right. >> that is extraordinary. >> mr. elliot, join the conversation. we laid out the problem clearly, and the state desperately needs revenue. what's the solution as you see it? >> well, i just want to clarify one thing. people are leaving, but it's not the wealthy. look at -- since 2010, it's the people making $100,000 or more. we have more filers. people making $75,000 or less that leave the state because as mr. kudlow said, the property tax rate is so high. from my per special circumstancetive, what's happens is there's an equity problem. if you make $75,000 or less, you pay, at minimum, 15% of the income tax to state and local government, but if you make $165,000 or more, you pay 8%, and if you're the top 1% in the state, you pay 5%. to me, this san -- >> josh -- >> josh, let me -- josh, let my raise a point, by the way, your point about the middle income is exactly right. it's a terrific point. here's another point to raise. connecticut, business taxes and regulations are so burdensome, you cannot start, you cannot forward to start a brand new business startup. looking with the rates, wherever i went, it was, in fact, a small owner -- you're right, nobody wants to start a business in connecticut because of the tax and regulations -- >> josh, how you lower the property tax for connecticut and lower some of the business taxes and so forth when the state desperately needs revenue? >> well, first of all, in terms of opening up a business, i opened one three years ago. i want to say that regulations are in place for a very specific reason. it protects consumers, protects the environment, protects the -- yeah, so i think the idea regulations are overburdensome is totally incorrect. a point that if income tax was really affecting the inflow and outflow of millionaires, we are at a 6.99% for the wealthy. new jersey is 8.97. if it was true income tax rates are ships people in and out -- >> it's not the income. >> josh, simple question, though, what is your recipe to fix this if the state needs revenue and you're references property taxes are too high, are you suggesting that they raise income taxes further? >> well, two big solutions, and then a selection of other solutions. one, we need massive property tax reform. a rate of 11 and hartford with a rate of 75. tax the wealthy more. 7%, microphone that at 9%. >> every time, with all respect, josh, every time -- >> if you don't -- >> every time you raise taxes, the economy slumps, the revenues don't come in, and now you got a $5 billion budget deficit. here's the key, he's right. the income tax is relatively medium in the united states. and the bone crusher, josh, hang on, the bone crusher is the burden of business taxes and business regulations, the tax foundation ranks the business, tax, connecticut has had 45th out of 50. >> all right. josh -- >> there lies the problem. >> if we're talking, you can't. you get the last word uninterrupt e-sbrumpted, then we have to go. >> thank you. i just want to say if income tax ruled the day, look at florksz, no. 31, look at konconnecticut, high taxes, wealthy people here, number one per capita income. we've gone from fourth most to second most millionaires per capita, doing fine with the wealthy people. we have to ensure we are taking care of middle class. >> it's not the income tax. it's the business tax and regulation, darn it! you're 45th out of 50 states. >> you can still run for governor. you can still run. >> who taking over? >> these conversations make me think. >> josh, maybe he'll be your opponent. josh elliot there, mr. larry kudlow, future governor. >> thank you, appreciate it. >> thank you very much. president trump set to unveil the first budget proposal next week, this time, now talking about the federal government's deficit, but can his goal slash the nation's debt and be accomplished without touching medicare and social security? up next, hear from former president george w. bush's chief of staff, and jcpenney sales plunge in the latest earnings, and now they may have a new set of customers to turn things around. we'll tell you coming up. you totanobody's hurnd new car. it comes when your insurance bcompansays they'll only y. three-quarters of what it teso replace it. atre you supposed to do? drive the-quarters of a car? now ou had liberty mutual new r replacemen™, you'd get your whole car back. i guess they don't want u driving around on three wheels. art. th liberty mutual new car replacement, we'll replace the full value of your car. liberty standsityou™. liberty mutual insurance. welcome to holiday inn! ♪ whether for big meetings or little getaways, the are always smiles ead at holiday inn. what's critical thinking like? 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(cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley welcome back, president trump's first budget will be released next week. one of washington's most experienced public operatives says the budget has the wrong priorities when it comes to slashing the nation's debt. john harwood joins us with the details, hi, again, john. >> kelly, this is the flip side of the conversation you were just having with your two guests before about connecticut. talking about the revenue side. this is the spending side, and josh bolton, the head of the business round table, not only is a former white house chief of staff, but former budget director, and he says that the priorities sketch of the out so far by the trump administration to cut domestic spending, but leave medicare and social security untouched will not get the job done. >> assistance is less than 1% of the budget, so you're not going to solve any budget problems by, you know, reducing the number of antiage drugs we're able to district around the world. >> do you think that president trump realizes those facts? >> he may. he may. you know, his -- mulvaney is a very talented and, i think, in many ways inspired choice to be the budget director, and he had a tough job. he had to figure out how in their first budget to try to affect what was, in many republics, campaign rhetoric, about increasing defense spending, which is necessary, while reducing other spending. he department have the leeway in this budget, any ware, to go to where the real budget problem is, which is in entitles. >> he, as the president, sworn not to do that. >> right. i think eventually they are going to have to get around, if they are serious about fiscal restraint, fiscal responsibility, we have to get around to a serious conversation about how to restrain the unsustainable growth in medicare and medicaid, social security, all of our entitlement programs. >> now, this is our hope, kelly, expressed by many top aids including mulvaney about the budget priorities. if you want to be encouraged that it's possible he will flip on those issues and go after the entitlement programs, and look at medicaid in the american health care act, which the republicans have been pushing, there are deep cuts in medicaid that paul ryan put in there to try to achieve some entitlement reform and president trump went along. >> right. so, john, isn't that the point, rei social security and medicare need to be fixed, but opportunity help to blow up medicaid at the same time? >> well, all of those programs need attention, and the -- with medicaid, medicaid is not in the deficit reduction currently. the savings are used to finance in large part the tax cuts that are in the american health care act, so it's really kind of a different question, and if you're looking to long term budget, debt and deficit reduction not slot into tax cuts, clearly, you just can't get it out of the domestic discretionary side of the budget. >> i know. long standing. >> just to touch on what john said. i work with josh years ago at goldman sachs in the '90s , and people like josh remind me of the first george bush and reagan administration, the kind of adults that largely absent in the current trump white house, and the reason why they are absent from the current trump white house is for the very reason that josh talked about because the things that really they should be focused on, they have no real interest on focusing on. >> for the time being. john, thank you very much. customers have been fleeing jcpenney's stores, but the struggling retailer has a new customer. that's next. on "fast money," a top technician sees trouble in the charts for one big dow stock. he'll give us the name coming up. ay this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪ >> welcome back. j.c. penney is hoping hotel stores will turn things around. they are offering business-to-business hospitality. courtney reagan, the interesting thing about this, i don't know, i don't know where to start. on the one hand, it seems like a no-brainer. >> right. >> on the other hand, if they're selling things at wholesale, then why do they need to be involved at all? >> we don't know for sure they're tell e selling it totally at wholesale. what j.c. menny says what they can tell the hotel for already buying in bulk or really large volumes, home textiles, sheets, for instance, on j.c. penny.com. once they started to figure that out, they realize this is a statement of a business that is coming to them already. let's make it more official. by the way, let them know we can give them mattresses, appliances, if there is a short term hotel stay, for example. you need microwaves will. it is actually an interesting idea. certainly a departure from serving consumers directly. because this is more business to business to be sure. >> right. >> i know, i love it in the sense that i don't know if you guys as well, amazon, a launch web services, hey, we don't need this extra computer power. we'll let other people use it. people are already using j.c. penny for this, why not go maxon that? >> elsewhere in retail, lowes just bought a maintenance supply company for half a billion worth which basically supplies apartment buildings. it's a similar kind of thing, we have the buying poe power the exposeer why if it's using big data, maybe it's a good thing, a whole new category not viewed as such. >> i view it as an act of desperation rather than opportunistic. they're trying to come up with ways to stop margin compression. but it's relentless, that is the truth about distribution in the internet age is there is the role of the middleman in any, it's getting squeezed and squeezed and squeezed. >> courtney, i'm surprised people are going to j.c. penny.com in the first place. are their prices more competitive than say amazon? >> it all depends on the category, j.c. penny has a number of private or exclusive levels. you can only get them at j.c. penny, they're a high-low retailer. mean, that's the resaleer with frequent sales. in some case, yes, you can get very good deals. i will say, this is how j.c. penny came about selling appliances in the first place because of some of the data that began no gather when they were going to j.c. penney.com and searching for appliances but did not offer. so they looked at that data, remember, he came from home depot and said, hey, we should take advantage of this. it's silly we don't offer it. >> i love it. >> i hate all these businesses, i think they're. >> oh, brad if you owned a hotel, you'd feel different. >> they, are it's happening so fast. that's the crazy thing. it's happening real fast. >> courtney, thank you very much. powerful entries in the food delivery service, taking a big bite out of shares today. we'll tell you who when we come back. listen up, heart disease.) you too, unnecessary er visits. and hey, unmanaged depression, don't get too comfortable. we're talking to you, cost inefficiencies and data without insights. and fragmented care- stop getting in the way of patient recovery and pay attention. every single one of you is on our list. for those who won't rest until the world is healthier, neither will we. optum. how well gets done. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? their leadership is instinctive. 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. >> welcome back. facebook is getting into the delivery game. they are rolling out food options to select users today. >> that means you can order food directly from the facebook app, instead of going to grubhub, grubhub is down 3% initially on the news. facebook is serous about this, do they have that much of a remote? >> grubhub would say it's a relationship with the actual restaurant. they're there providing a service. >> i thought it was antagonistic. i don't know, i get the vibe around new york. >> new york is not america. i learned that a long time ago. they already have restaurants geared towards delivery. if you are a restaurant out in the middle of the country, they say, hey, we can make you an online delivery play. >> that's a much more of an opportunity. >> i can tell you what, do it, guys, we have a picture. >> you have a pet ok. >> this is 1975. >> sometime in the mid-'70s, i don't know what year it is. by the way, this was much bigger than that thing is called. >> the fidget spinner. >> can i give a shout out to a huge fan of yours in the hospital for a heart procedure? steve wallace. >> i am delighted to hear it. not that he's in the hospital. >> >> did he have a pet rock? >> i don't think he ever bought a pet rock. >> by the way, the pet rocks are smooth the head scares me. >> guy, thank you very much, mark, you, too, michael, santelli. >> that does it for "closing bell. >> "fast money" starts right now at a rally in full force. we have the dow soaring tripping digits climbing back from what was the worst day for stocks. what that initial hit, wall street questions circulated by the future of the trump administration. the markets are ending nearly flat there week, so could anything stop this rally and if you are putting fresh money to work right now, where do you put it? bk. >> i tell you, in you closed your eyes and doesn't look at this all week