weekend. however, they've reiterated, this is for subscribers only and they will not be releasing any information. that's all we've got right now. >> so they're confirming that the sales are week? >> no, they're not. they're saying the findings are based on a point of sale data in 17 countries during the launch weekend and they won't be giving anymore data. >> thanks, bob. we'll track the data from apple. thanks for watching "power lunch." "closing bell" starts right now. hi, everybody. welcome to the "closing bell" on this friday. i'm kelly evans at the new york stock exchange. >> kind of an eventful friday at the end of a busy week. i'm mike santoli in for bill griffeth. stocks breaking their three-day winning streak today. energy's the biggest loser with oil prices down 4% right now. and apple selling off late in the afternoon, which is weighing on the dow, not to mention the nasdaq. >> and twitter is surging on david faber's report, the company is moving closer to a

sale. and salesforce and google have both expressed interest in buying. and investors are looking ahead to monday's presidential debate as the next political event that could shake up markets. >> and the fund manager once called the manager of the decade, fairhome's bruce berkowitz. we have an interview about his investments in fannie mae and freddie mac and his take on a potential trump presidency. that's all coming up. let's begin with the potential, impact of monday's debate on stocks. deirdre bosa has some details for for us. >> stay out of the markets after clinton and trump face off on monday. going back to the 1980s, presidential debates have not been good for stock gains and beginning around 2000, that trend became even more pronounced. take the blue chip dow industrials. just twice did that index see positive returns one week after a debate. it was in 2000 when al gore and george w. bush took each other on for the third time as

presidential candidates and in 2004 when bush and kerry faced off for the first time. but aside from that, in the other ten instances, that's more than 80% of the time, it was all downhill, and losses averaged nearly 2%. the broader s&p 500 index largely has followed that pattern. as for 2008, and this is important, because, yes, the debates were in the midst of the financial crisis, so the losses were more pronounced. but it was also such a distinctly different year in terms of presidential elections, that is, of course, when obama and mccain were the nominees. so there's the data behind debates and markets. the why, of course, is up for speculation. perhaps as presidential contests have become, perhaps, more publicly heated and the media coverage greater, volatility has gone up, too. but whatever the reason, guys, the weak after-debates has been historically bad time to be long. and that could be something to keep in mind for monday. back over to you. >> all right, deirdre, thanks

very for setting that scene. let's bring in dan clifton from strategic research parents. and i know you also take a look at the past several cycles exactly how the markets react on the day -- not the week -- but the day after these debates. and outside of 2008, we were talking about a slight upside bias? >> that's right. you usually see on average, since 1992, the s&p is up 0.8% the day after. mike, i really believe this is about sectors. when you look at 2012 men mitt romney beat barack obama in that first debate, you had coal stocks up 13%. you had hospital stocks down 13%. so the market had to reprice because it looked like maybe romney could beat obama in the election. and so the broader market is important, but what investors will really be looking at on tuesday morning is is there a change in expectations and how does that impact the following sectors? >> energy seems to be certain to be one sector that is mentioned.

anything else that would say is a top five in terms of sectors likely to be mentioned? >> let me start off by saying biotech has more at stake in this election than any other sector. so if you see some sort of big change on monday night and it looks like clinton's going to win, that would put pressure on biotech and vice versa if trump wins. on the other hand, watch the infrastructure stocks. those infrastructure stocks have been selling off since august 15th, relative to the s&p 500, that is completely in line with hillary's probability declining as the chance of her winning. if you see some debate where she does really well and her probability is going to go up, you'll probably see a rally in infrastructure stocks. i'd also watch defense names and financials. look at what happened this week with wells fargo and the attacks that are going on. if you could get a good move by trmp, you could see a little bit of rally in financials. >> dan, outside of the sectors, are investors just going to be listening for some kind of zingers or some kind of knockout

punch or something else that recolors how the home stretch of this campaign will go? >> that's an excellent question. we've gone back and watched tall debates over the past four to five cycles and it's very rare you get a clear winners. i referenced 2012, 2000, there have been those kind of really clear moments, but in most of the debates, it's very subtle. it reinforces the bias. and what this election's about is hillary's health strong enough for her to be president. this gives her a great opportunity like reagan in '84 to say, i am healthy, and get rid of those concerns. on the other hand, trump has to say, i have the demeanor to be president. you can trust me with the keys to being in control of the government. both have big challenges, and i think that's what investors are going to be looking for. it's going to be more subtle than a big knockout punch, based on historic debates. >> do you guys have a big tv screen and popcorn there, dan? if you're watchi ining all the previous debates from all previous cycles.

. >> we're anticipating 100 million people will be watching on monday night. usually you get somewhere between 40 to 60 million people. and we'll probably have the least-watched monday night football game in history, as we go from monday night football to what i would call wwf wrestling, clinton versus trump. >> this is like a different kind of super bowl. in fact, disney, people were talking about how it could be a blow to them. >> i was saying earlier, imagine if monday night football were still on abc, as opposed to espn. would they carry -- >> i wonder if it's going to be 100. 50 million or so? >> the super bowl is slightly over 100 million, from what i read. you're getting super bowl-level viewership here. >> no problem, lester, or donald, or hillary. >> thank you so much. >> thank you, kelly. >> all right, be sure -- be sure to watch cnbc's special coverage of the debate monday night at 9:00 p.m. eastern time. >> and now let's introducing our "closing bell" exchange. joining us today, we have jeff reeves, art cashin from ubs, and

rick santelli joining us from the cme. welcome, everybody. and arthur, glad to have you with us over there at post nine. what are the driving forces here in today's market? >> i'm amazed at the gullibility of the people in the crude trading pits. this idea of a freeze and a cooperative production cut has been around on and off and they seem to go for it every time. and today, when saudi arabia comes out and says it -- cooperation is unlikely, you wind up losing nearly $2 in crude. and that's been pretty much the driving force behind today and what's been going on. plus, that little dip in apple that you guys were talking about. >> you know, rick, you've been talking about it all week, that there's this gravitational pull in terms of the ten-year treasury yield, back towards that 1.6 level. it seems like we're leaking back there, as well. is that where you think we're going to sit? it seems like a very similar

spot a lot of these asset markets are in right now. >> oh, absolutely. i think any viewers, just get a chart that includes august and circle all the august prices. whether it's the s&ps, whether it's bonds, ten-year notes closed in the 150s every single day but one. so, yes, i completely think that's what's going on, mike. and just as evidence of that, look at how strange the curve has acted. so we know that they may do something in december, but i think the imaginative example that art cashin gave, that was so sage regarding crude, probably should be aimed what many believe the fed activity may be in the future, the same dynamic. two years were virtually unchanged on the week, only down two basis points. the tens were down eight, hover right above that 160. the long end was down 11. so everything's making a beeline, topaz the meetings never happened. that was caused by stan fisher on cnbc the day before jackson hole on the 26th never happened,

but i'm sure we'll get to do it all again in about six weeks. >> or next week, jeff. we hear from chair yellin, i think, with a bunch of other fed speakers. is that where you're focused or monday night's debate? or are you able to tune it out? >> i think you have to tune it out. i don't know who was surprised the fed didn't move on rates. i certainly wasn't. they talk a big talk, but ultimately, nothing ever happens. so i don't know who really was surprised by this. so i think it's important to kind of realize, that is all there is. so personally what i'm looking at is where the money is flowing. earlier in the year, we saw those low-volatility plays get into favor. now, i don't think investors have incredible risk appetite, but those risker assets, amazon is up against new highs, i think you just kind of follow the spots where the opportunities are and buy and large, we're pretty much same as it every was, just find your spots to

slip a few jabs in when you can. this is all there is. >> you mentioned one of those spots being those low-volatility stocks, the dividend yield plays and things like that. but the other side has been these very big growth companies, often tech companies that have reashe reasserted a lead. is that some place you would want to chase at this point? >> yeah, again, you've got to pick your spots. i like facebook. i think facebook is a good longtime play longtime play. twitter is a dog. buyout or no buyout. the rumors don't interest me. i know it's crazy to look for profits in tech companies, but whatever. i think you do have to do your research. there's no easy money market. there's never easy money in the market, but here you have to be discerning. i don't think you can follow trends as easily. you have to do your work and see where there are opportunities. there are some opportunities in value if you look around. i don't mind gm right now. i think it's a little oversold.

but you need to look into the fundamental of individual companies like that -- >> but, jeff, jeff, you're right. every company -- jeff, you're right. every company has a macro story. every company is a canoe in the ocean. but the level of the tide is controlled by central banks and it affects all of them as we. and i think that's the dynamic that we have to be cognizant of, as well. >> on that point, we're about to sail into earnings season. what do you expect as we start to hear from the companies themselves? >> unfortunately, i think we may see an extension of this earnings recession that we've seen quarter after quarter. you know, just the idea that money's chief enough, they buy back their own stock and keep the p/e ratios credible. plus, we've had no capital expenditures. i think we'll be heading into a dry spell. i think you'll see earnings slip a little bit this quarter. >> thanks, guys, for joining us

here. art, jeff, and our rick santelli. monday is the first presidential debate. today i sat down with bruce berkowitz to discuss his investments and get his take on the presidential race. >> come november, are you voting for donald trump? >> why'd you ask me this. i'm going to be in such trouble with so many of my friends. so here's how i'm looking at it. and i can't believe i'm telling you this. i'm not looking at the candidates, okay? i'm looking a to the people that will be doing the major work for the candidates. so i'm taking away the pertinents of the presidents and treating them as the chairwomanpeople for the pr. but i'm looking at the people who do the hard work. reforming financial systems, welfare benefits. and when i make that comparison, between who's goung to be working thon side and who's

going to be working on that side for the president, right now i'm picking the people that donald trump is picking to do the heavy lifting for the country. and that's -- and i'm -- you know, that can change. but i want to see who's going to be in charge of the treasury. i've had a lot of difficulty with the last administration. >> so when people say they want to sell stocks or u.s. assets because trump could win, you're doing the opposite? you think that could be a better outcome? >> i give the country much more credit than that. the country is much stronger than any one president or any one candidate can destroy the country. they can delay us, they can advance us, but we have a system of checks and balances. we have a congress. we have a judicial system. we have the executive branch. they always don't agree. some people like the idea they don't agree. but in terms of some common sense moves that no one's talking about, and what i think

they will do, there are aspects, i like them, donald trump's people. and i think they will be more helpful to the working class. because at the end of the day, the key and everybody that's wealthy knows this, without a vibrant working class, we're all dead. our children are in trouble. without -- this country is in serious trouble without a vibrant working class. and we have to do whatever it takes to have that vibrant working class. education systems, the ability to learn the right skills today. so there's a lot to be done. >> again, that's fairhome capital's bruce berkowitz. >> it's interesting, considering there's been so much talk about this administration in waiting, people who have been in government before, may or may not go along with a president trump, if he were elected. he still says, that side's going to initiate the kind of policies

he would be in favor of. >> and i don't know if i should call him a republican, but this is somebody who's free markets, low taxes, move to florida for that reason, part of the exodus kind of guy. and his hesitance in coming out in support of the administration, not necessarily the person of donald trump, was really fascinating. we'll have much more from that discussion. and you can catch the entire interview right now at cn cnbc.com/pro. we have about 45 minutes in the session still to go and the dow is down almost 100 points today, about half a president. apple weighing on that index. the s&p down 9, the nasdaq down 26. >> twitter is spiking on news that the social media company is being closer to being sold. our very own david faber broke that news this morning and he'll join us after the break with the latest developments.

welcome back. we have these markets under pressure today with the dow dropping about 100 points after a rally on the back of a fed decision. down to 104 right now. the s&p down about 9, the

nasdaq, 28. amazon is hitting all-time highs after closing above $800 a share for the first time yesterday. the company went public back in may of 1997 at $18 a share. adjusted for three subsequent stock splits, that would be equivalent to $1.50 per share, so not a bad return during that period of time. the company's current equity cap puts it around $550 billion. makes it one of the most profitable companies. >> twitter flying high on news it may get a formal bid for some tech suitors david fabe broke the story and joins us here. >> we can tell you what we told people around 9:00. twitter has received expressions of interest from a number of technology companies who are considering whether to make aed by for the social media company. and twitter's board of directors have encouraged that interest, according to people familiar with the situation. no sale is imminent. and while twitter may receive a formal bid shortly, it has thus

far engaged in conversations with potential suitors who are examining the possibility of a deal and twitter's willingness to engage on that possibility, which does seem to be high. those suitors are believed to be sales force and google. that's among other names. while there is no assurance a deal is going to materialize, one person close to the conversation said they've been picking up momentum and we couldn't see a deal before the end of this year. salesforce has declined to comment. twitter and google have not responded to our request for comme comment, but this morning, salesforce's chief digital evangelist wrote the following. why twitter? while twitter could be an attractive asset to -- that's actually not quite what we were looking for. there it is! thank you, guys. personal learning network, best realtime, context rich news, democratize intelligence and a great place to promote others.

an hour later, he did try to, at least, not backtrack, but the timing may have look a little odd pip tweeted my person views regarding twitter numerous times over the past couple of years. i simply love twitter. that park cracks me up. salesforce has shown a willingness to lever up its balance sheet for a large acquisition. having been an aggressive bidder for linkedin, twitter has been struggling to generate topline growth. just last night, the stock was downgraded by rbc's mark mahaney, whose survey of advertisers indicated the service still not really gaining traction with that important constituency. those concerns and others that include a large amount of stock-based combination of the company, though, do not seem enough to depotential suitors who are said to be interested as much in the data that twitter generates as its place as a significant social media company. as to valuation, what price would twitter be looking for?

suntrust's robert peck may have read this. while twitter could be an attractive asset to several companies, the current evalsituation is encompassing some premiums. that was prior to the movie up today, or at least con comment with it. now the question is, where would the price be given? >> the stock up today. the market is clearly given credence to the idea twitter cease in play and salesforce down 6%. you would have to think the premium would be above today's trading price? zpli always try in my reporting to figure that out. it's always difficult to, when you're in the earlier stages and a deal's not imminent. the closer you get, the more price talk becomes solidified around a certain number. yobt know. it was my expectations based on previous conversations i had previous to reporting it that it

would a premium from the stock price yesterday. 20 times 2017 ebitda gets you to a number conveniently enough of 26, which is exactly what twitter went public, right there, i remember it, about three years ago. >> a bit of a face saver. but is this the about the board meeting? in other words, was there a sense that it's now really up for sale as opposed to the myriad rumors bandied about -- >> if you want to say it's now truly up for sale, ids say that's the case. it doesn't mean it's going to result in a deal. and frirt that board meeting, it was an important one, perhaps a change in direction, where those directors or at least a majority of them made it clear that they believe, guinn the lack of topline growth of the company, it was important to explore potentially if there were expressions of interest. in fact, there have been, so that's where we stand right now. >> it's interesting, you mentioned salesforce having been a bidder for linkedin.

and when linkedin was sold to microso microsoft, it almost reconciled what is linkedin for real. it's a business tool, something to be integrate there had. twitter has had the same thing. what exactly is twitter or what's its best? you might need an acquisition to kind of clarify. >> it does seem that there may be some value there that is not necessarily justified by the valuation and that's where it could get intersection. you even have to include, well, microsoft bought linkedin, maybe they would see value there as well. the name of potential suitors is quite large. i only included the two, because those are the two i know. >> are there any that you'd feel comfortable talking about that may exist in the media space in terms of people looking at twitter? >> there's no shortage. you could say disney, if you want to go down that road or even our parent company. and i don't know, but once you get to this point, it's not uncommon for many companies to at least take a look and consider it.

but if you base it on typical metrics that you buy a media company on, that's a pretty high valuation right now and that could potentially be a -- well, let's call it, at least not accretive to earnings. david, thanks very much. >> sure thing. >> have to watch monday morning no see if there's anything more on this. 35 minutes before the bell, indexes still solidlied y in th red. the nasdaq and s&p 500 both down in the vicinity of half a percent right now. up next, noted contrarian value investor bruce berkowitz speaks to us exclusively about his investment in fannie mae and freddie mac. and facebook says it has fixed an error in how it calculated video ad metrics. whether the social media giant holds too much pricing power in the online ad world, when we come back. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms

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welcome back. goldman sachs lower today. the financial giant is reportedly cutting about 300 of its investment banking jobs in asia, excluding japan. the move is in response to a slowdown in the region, according to reuters. morgan stanley, meanwhile, lower. also today, the federal reserve is proposing a new rule that would require banks to put up much more capital. the proposal would cut the banks' risks posed by physical commodities and addresses criticism that banks have an unfair advantage in metal and

energy assets. >> what's that line about the barn door and the horse -- >> yeah, you wouldn't think this is necessarily the biggest business for them at the moment anymore. >> it was at one time. >> value investor bruce berkowitz has a unique take on the housing market. he owns preferred share in both fannie mae and freddie mac. here's what he had to say about the fate and future of these keys cons of the nation's housing finance system. >> i'm a preferred stockholder in fannie mae and freddie mac. so i have a contract with fannie and freddie. my point is the companies should honor their contracts. if you paid one preferred shareholder, you should pay all preferred shareholders. i'm not arrogant enough to say that i know the exact way in which fannie mae or freddie mac should proceed in the future with their sponsorship of government. they're a utility in many ways, and they should be looked at the way you would look at a gas company, a regulated utility.

they should make a reasonable but not expensive return. they should be used for political purpose. so, our only point on fannie or freddie is, we're investors. you can decide what you want to do but when a company goes back to profitability and has paid off their major investor, you have to treat everyone fairly. you can't pick and choose who gets paid, who doesn't get paid. this is a country of law. >> some of these lawsuits have come up, yourself or other investors, who have that same point of view about the shares. and the courts have said, look, these were created in '08, it's the financial crisis, basically a ward of the government. it doesn't seem like it's moving. these are huge positions. >> we're just saying, show the documents, we can quickly find out who's right or wrong and we can move on. it takes a long time to do that, but we're getting there.

in the court of appeals, the d.c. court of appeals, we are waiting for a three-judge panel to decide whether or not the previous decision made was right or wrong. we have not even had a chance to argue anything in court. but when you look at the companies, they're the lowest-cost producer. they had the best results during the crisis. they help more people. they are the only two companies that kept working during the crisis. and lost money on purpose so the mortgage markets would continue to run. this can be resolved very simply, very quickly. we're just asking for exactly what happened to aig. the today's result in aig, we want the same. we want to be treated like any other owner of any of the other financial institutions. it's really just as simple as that. >> bruce berkowitz explaining it

pretty calmly there, but this is a hotly contested issue and has been for many years. >> it shows amazing stamina for fund managers who get in and out of stuff. this is the eighth year of fighting this out, this tough battle with the government. >> and i asked him how long he was willing to stay with it. they feel like this is just the beginning, they haven't even got,en a hearing with the government. and he was combing through aig's financials and saw that it was going to make money and return that money to the taxpayer, way before most people really came around to that view. but in this case, likening that to fannie and freddie as an outcome is something that -- you can see why he'd want to. >> you can see why he'd want to. there's much more from that interview with bruce berkowitz in the next hour of the show and the full interview right now on cnbc.com/pro. time now for a cnbc news update with sue herrera. >> hi, mike, hi, kelly. here's what's happening at this hour. the white house says it's not certain that president obama would sign a budget bill

unveiled by mitch mcconnell. spokesman josh earnest says the president is disappointed the bill does not include money to help flint, michigan. the bill does provide more than $1 million to battle the zika virus and $500 million for flood relief for louisiana. democratic vice presidential candidate tim kaine campaigning in houston this morning. he said his running mate is at her best when the bright light are on. >> if you've watched lick luc over the years, what you note, when the spotlights are at its brightest and the pressure at its most intense, that's when she brings the a-plus game. and i think she'll do very, very well explaining these contrasting visions. >> space-x says a breach in its rocket heliuming system may have caused the devastating explosion three weeks ago at cape ka na canaver canaveral.

the rocket was explode in the september 1st explosion. i'll see you back in an hour. kelly, mike, back to you. >> sue, thanks very much. less than a half hour left before the bell. we're down 138 at the lows. all the major indexes, though, solidly in the red, being led lower by energy. and a leading trader is going to tell us what he's watching into the close on this final session of the week coming up next. and does facebook have too much power in the online ad world and enough transparency? two experts will weigh in, coming up.

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welcome back, donald trump getting a big new endorsement. john harwood has the details. >> kelly, it's usually not news when a republican senator endorses a republican presidential candidate, but it is knew that senator ted cruz of texas has now endorsed donald trump. remember, they ran against each other in the prarps. at the end of that process, ted cruz talked about donald trump as an utterly amoral pathological liar and then went to the republican convention and pointedly declined to endorse him in front of a national television audience. today he has said after months of prayer and searching his own

conscience, he has decided because of threat of a hillary clinton presidency, which is so distasteful to him, that he is endorsing and going to vote for donald trump. urged other republicans to do the same. now, he may have also been consulting some of his poll numbers, because ted cruz faces re-election in texas in 2018. there has been talking of a republican primary challenge. he got a tremendous amount of backlash there trump supporters for not endorsing him at the convention. and of course, ted cruz may run for president some day. very interesting choice he has made today. >> i wonder if it reflects trump's own poll numbers which have perked up a little bit. john, thank you. >> we have about 25 minutes left. the dow down about 100 point here is with peter costa of empire executions. how are we set up going into the last week of the quarter, actually? we're pretty much in the center of the range, if you look at the s&p 500. >> and it's, that way.

we've been wavering back and forth for the last three or four weeks. there's absolutely no direction. granted, we've made a few new high zones, especially on the nasdaq, but if you take apple out of that, it's still range bound. so going into the end of the quarter, for me, i think that things are getting tired. i think the market's getting tired. when you see new highs that are very, very small fractional new highs, it tells you things are weakening. >> after the fed decision this week, a couple of mechanical up days. on the other hand, are we being supported by this yield story. you have treasury yields back down around 1.6, the dividend stocks start to work again, and all of a sudden, we have a bit of a firewall. >> but you've always got to be a little afraid when your dividend stocks are supporting the market. that's usually the location of last resort for safety. and i think if you start seeing

people put more money into something that's going to get that media, the rest of the market will not hold up. it will catch up and start falling off a little bit. >> all right. we're tired and waiting for the end of the quarter and the weekend, kelly. >> all right, guys, appreciate it. 20 minutes to go here keeping an eye on these marks into the weekend. dow is down about 106, s&p down about 10. the vix a little bit higher, the small caps down about ten points. and facebook with another medium misstep. raising questions about its transparency and if the social giant is just too big. that debate right after this.

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welcome back. we still have markets under some pressure here. dow down 110. s&p 500 down about half a percent. nasdaq down a similar amount. weighing on all three of those indexes is apple. biggest loser on the dow today. under a little bit of selling pressure. some reports out there, gfk, a research firm, has confirmed they have a report for clients. it's said to have said that the iphone 7 initial weekend sales were disappointing. big year over year declines versus the iphone 6 sales last year. if you remember, just last week, we actually had a big rally in apple, as some of the wireless carriers had optimistic things

to say about initial salethrough of the iphone 7. conflicting reports, but people taking some short-term prut products at least in apple. and facebook under fire for reportedly overestimating average viewing times for videos on its platform for the past two years. does the company new more oversight? >> guys, thank you very much for joining us. john, what is the case for even considering facebook to have too much power over the digital advertising market? i mean, this is a vast market, even though facebook is big and, of course, it's -- these are very being advertisers, big marketing companies that are the customers. >> so here's the key. you can't just look at facebook on the advertising side of the market. because from that perspective, they don't look that big. the key is they also sell a product to users, and that's

where the problem lies, i would argue. >> explain that a little bit more, john. >> sure. so users pay something to use facebook, even though their slogan is it's free and always will be, we pay with our attention to attention and advertisers and surrendering our personal information. and when a company like facebook merges with somebody like instagram, it may look like a drop in the bucket on the advertising side, but to users, that's a big deal. >> right. >> so andrew, i guess the question that we're posing here is, a, does facebook have too much of the market? b, is it not transparent enough? and c, does it need regulation? what do you think? >> well, i think it's important to learn some lessons from histo history. i remember vividly 15 years ago, the department of justice, announced they were going to break up the monopoly of microsoft. you had the operating system and microsoft office. and it never happened, they

never smashed the company apart, but that was the pin that burst the bubble of the first dotcom meltdown. my own company that i founded was going through a $50 million financing and an ipo. all that got pulled when there was this uncertainty of what was happening with microsoft. so i think we should be very kauf careful to not trigger another economic downturn over this. >> even if it were to have some pretty serious effects on downside, that shouldn't necessarily dictate whether the government decides if something is anti-competitive or not, right? >> sure, sure. >> well, i would bring that up that it's serious. it's serious. even the signals that come you have it. i think -- look, i think google and facebook are fantastic companies. make so much money that their founders can afford to be enlightened people and attempt to do the right thing. so i think both facebook and

google are doing what they can to make sure they're not misleading the advertisers that are their partners. and i kind of like thele laissez-faire free market if you don't want to advertise on facebook or google, there are plenty of other websites that you can try at. >> what were you going to say, john? >> i would say that we should frame this debate in modern terms. nowadays, no serious anti-trust enforcer is going to call for the breaking up of facebook. that's too drastic a remedy. i think a more modest approach would be to look at the next merge their comes along. suppose facebook tries to buy twitter. that should be a red flag to regulators and may be they should block that sort of acquisition. i don't think that would have a serious effect in the market, not in the same way that calling to break up facebook would have. >> and this just to reiterate, is based on the idea that the public that uses facebook is

locked in, and is therefore sort of selling its attention to a sole buyer called facebook? >> absolutely right. facebook is a network and exhibits very strong network effects. the more people that are on facebook, the more valuable it gets, and the harder it gets for anybody to stop using facebook. >> well, some of us have found a way. guys, thanks for joining us. john newman and andrew romans. >> we have the dow and s&p pretty much down out of the gate pressured by oil. the dow down just about 19 points off of its lows for the day. >> there's no waiting for david darst, market acronym of the week, really, it's all about waiting, but he'll spell it out, next.

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smallest of the cad dillac dealers. there are 925 dealers nationwide. these are offering a buyout, and that buyout could be as much as $195,000. what the company is basically saying to these dealers is we have certain standards we're going to be pushing in the future as we try to raise the level of competitiveness for the brand as we come up with other models. if you're not comfortable with that, we're going to transition away from the cadillac brand. this is not like they're saying to 40 dealer 0400 dealers, look never sell gm again. only six of these are only cadillac dealers. if they wish to shift away from cadillac they have chevy, buick, whatever it may be. this is cadillac trying to raise the level of the brand especially with its dealerships. guys, back to you. >> phil, we have to tighten up the distribution of that luxury marquis brand.

a down day in the markets, but we normally say without delay we'll bring you david darst. >> first time in 30 years. there's only been three times in 30 years there's been three desentdid he -- descents. the e is earnings. after these kind of poor numbers, manufacturing, early economic indicators. the earnings right now is minus 2% for the third quarter, which will start soon. that will be the driver of the mak market, the third quarter interest rates. and low volatility and high

evaluations, which is not necessarily a great stabilizer for the market. a is algeria. we have this meeting next week, monday through wednesday, the 26th through the 28th of september where russia and saudi arabia has already signed an agreement to cooperate. iran, the last meeting in december of opec, iran was only producing about 2.3 million barrels a day. they're already up to 3.6 and 3.8. the y is the yen is too strong and the dollar is too weak. we'd like the dollar a little stronger. sensitive stocks have been helped by low outlook for the fed rate rises and the dollar has sold off 7 cents of 1% on wednesday alone after the meeting and 1/10 yesterday. >> one of these times you'll

have to tell us how you remember all this. david darst. let's get to sue with breaking news. sue? >> this concerns wells fargo, kelly. wells fargo board has tapped the law firm, sterling and shirley, to advise on potential investigation matters and potential clawbacks. this follows the scandal that wells fargo is in right now in the wake of fake accounts. we should note that the head of community banking has chosen to retire at the end of the year, and she has a very large executive compensation package. shirley and sterling's lawyers, randall mundenheim will be advising the board on clawbacks, and also mundenheim advised the board on the london incident of those big trading deals they had. back to you guys.

>> obviously wells fargo trying to show some responsiveness to criticism on the senate floor this week about those big paybacks. >> we'll see what comes of it. >> absolutely. thank you, sue. we'll be right back with closing countto countdown. >> just three days away from the big debate between hillary clinton and donald trump. both have issued tax plans. we're going to look at what's missing in taxland. that's coming up. you're watching cnbc, first in business worldwide.

the market is selling off in a few minutes here. we have sagging toward the lows here. >> toward the end of the day, this happened several times this week, starts strong and ends toward the lows of the day. we had a little bit of excitement middle of the day on apple. apple's volume was below normal until about 1:20 eastern time. there was some report by a company called gfk that apple's iphone 7 sales might be weaker than anticipated. we contacted the company. they did say the findings are based on a point of sale data in 17 countries during the launch weekend, but they would not confirm what the contents of this report was. so we can't confirm exactly what the market actually says. >> record volume, 20% up. >> finally people are asking me

about the debates on monday. the bix for the debates is not the bix, it's the pace eso, ands still on the elevated side. >> thank you, bob, very much. appreciate it. ringing the bell here today at the new york stock exchange, we have the executives of step up. thanks, mike, welcome to "the closing bell," everybody. i'm kelly evans. a dow session today on wall street. dow dropping 128 points at the bell. it was the worst performer today reflecting in part the weight of apple, which was the worst performer on the dow the last time we checked. on some reports about weak iphone sales that couldn't be verified from a private report

which wasn't made public. perhaps won't be. the s&p dropping 12 points, and the nasdaq dropping 33 point to 5305. snapping a winning sneak, as you see there. amazon stock crossing the $800 threshold yesterday. we'll find out if this rally still has room to run. commentator marcus santoli returning r returnin returning. it's been a long day for you, sir. tim seymour is also here. welcome one and all. this has been a tough session in particular on energy, but what do you think is really going on? >> besides energy, it still was a little bit soft. it looked like even before the crude market sold off, the rest of it was about to take a rest. three days up.

it seemed like really kind of a rogue by the numbers rally the last couple days after the fed rally. made sense this point of uncertainty was eliminated, but it seems like we're back where we were. people reaching for the yield dividend, at the same time going after these very large growth stock winners, and is going into the last week of the quarter, it's unclear to me what pushes it along, though we did have more fed speak today. unfortunately, i don't think we'll be able to tune that out for very long. >> we have a bunch of fed speak, susan. my favorite might be stanley fisher who is supposed to speak next tuesday on the subject why study economics? we also hear from janet yellen on thursday -- wednesday and thursday, it looks like. the 28th and 29th. yes, that's next week. that's when she'll be in the house, so we have that to look forward to. >> there is a lot going on. we also heard the european prime ministers are meeting and they're starting to acknowledge they're not going to get that tran

transpacific partnership through, that it will not happen in the obama administration. the gloom in the eu is just building and there are no rays of sunshine right now. >> meanwhile, they are realizing maybe it looks better with the brexit. i think the s&p closed up higher than we usually see at 5 or 6%. >> i think the new issue market is something pretty interesting. if we're looking at this as some kind of barometer for the economy, i'm not ready to make that extrapolation. but i'll say this. i mean, the fed this week basically told you that they are going to be at the switch, and if two weeks ago today, when eric rosengrand put markets on their ear because it was a culmination of a lot of fed speak and sent a message that this could not only be a fed hiblg b-- hike, but a constant,

policy error is really the worry now. i think the argument all along was there would abe major blowup in the markets. i think that also has some limitations with what you can do with that. >> cboe is trading at like 27 times multiple. nasdaq is about five times. they've always been at extremely high levels. what do you think there in terms of consolidation? >> you should be able to see some pricing power, but in an industry where there has been complete price confession, and i think ultimately you get down to a place where is 27 times worth it, and i think probably not. when we get to where a lot of stocks are trading in this marketplace, that's what it comes down to, and i think that's a tough thing for investors in a market where there is not only a lot of noise but time certain when you should

be investing in those names. >> the exchanges, if you look at cme and others as well, is they're being viewed as a lot of platform data network type companies. obviously they're not like visa and mastercard but they have similar dynamics where it's all through-put business. >> we're sort of speculating about potential buyers of twitter all day, but it's valuable in its own platform. >> whether it's $13 billion worth, which is what the company is now valued at, is unclear, but i do think people are going to try to discover what it is at the core of twitter besides the service appeal that might be valuable. >> and there are battleground financials to get to. investors bruce berkowitz has big hopes for the bank of america. i spoke to brian moynihan and

the tech issues going forward. >> that was just in my opinion, it was just a matter of time. many of my investments, it's not an if it's going to happen, but it's a when. and i can't tell when. and it has taken longer than i expected for the financials to recover, but they've been tripping all over themselves and they're being disintermediate bid higher companidisintermedia by higher companies. there's still a big trust factor when you go to a bank, a financial institution. do you feel you're wrong, there are remedies. in the newer concepts, it's not so clear to me. >> you mentioned there are some things they should have done or companies they should have purchased. what would be an example of that? are you talking square? >> square or pay pal. they should have known all of that. >> is there still time? are they still attractive? >> the banks still have a level of consumer trust. on the one hand is consumer

outrage about what happened across the financial spectrum during the last crisis. but on the other hand, your best shot to get a fair deal will be through a traditional bank. and that bank -- that should be an ecosystem that allows the bank to expand its products and to sort of do a better job of democratizing the whole process. >> just to put a point on it, should bank of america buy paypal? would that make sense to culminate what you're talking about? >> bank of america in a way is already paypal. visa is a paypal, mastercard, american express is a paypal. they could have been out there, they could have been doing it, and they should. i mean, they're going to be the -- the banks are going to be much more like technology companies over time.

>> one more question about the core financials, if you will, and that is wells fargo. it sold off and people are wondering if it's going to rerate to a much lower price because of this investigation into the cross-selling. much like you saw value back in the day when they had questions surrounding the future of the franchise, do you see value? >> i see value for bank of america, and that's why i was a big investor in bank of america rather than wells. wells did not get anywhere near as tarnished as the other banks, and they were able to keep a lot of their high-earning business. i thought it was harder for wells to progress forward than it would be for bank of america given where their relative positions were at the time in which i made the investment. we thought wells fargo was going out of business where people thought bank of america was a few days from going out of business, and goldman and so on. it's not right.

>> you can catch the entire interview right now on cnbc.com/pro. what's interesting, susan, another way to read what he is saying is it's not tarnishing to look at it at the current valuation. >> i think the wells crisis is going to continue to go on for several more weeks or months, at least. we also know from regulators that they're going to be looking at cross-selling practices across the financial industry, so this is no longer an issue just with wells fargo, other banks are starting to wonder what's happening with our sales practices, and am i sure it's as buttoned up as i hope it is. i thought his comment about banks tripping over themselves was interesting. i thought it was a nice euphimism because it talks about strategic considerations and then these scandal considerations. banks are very large and very heavily regulated. they're not nimble players. it's not their own doing, but

did has been a very different environment for them, partly of their own making, to move forward. >> perhaps bank of america would have already bought paypal or something like that. >> exactly. also when you have these big institutions that are constrained in terms of how they can grow, maybe that is why wells fargo said, look, here's something we can actually do and try to generate some kind of growth through these a impressive sales practices. the investing equation, wells fargo still has a big premium. it doesn't have enough value to be partners with one of the big banks. >> perhaps it would take one to catalog these things, but if they bought one of these thin companies, does that dilute at least from the perspective of the company being acquired? >> i think the types of companies you're talking about

in a paypal where this is a major, major acquisition, i think, is significant. there has been a very difficult environment for these guys to do proper acquisitions or creative acquisitions. by historical standards, they're pretty cheap with balance sheets that never looked so good. aside from loan loss provisions and other things that are more accounting tricks, they actually haven't made any money for the last four or five years. i think relative value in the financial sector is how you should play it, but i still think there is an enormous amount of leverage. therefore, i think you should find the best players and possibly be playing them against the weaker hands. >> we'll hear more monday night, susan, where i'm sure it will be brought up --

>> this story is easier to follow, and i think this is an intense air focus. >> interestingly, if you remember what we said at the senate hearings for wells fargo, this is a number that actually united both parties. who knows, maybe the next day miley is going to lost that -- it interesting to hear bruce berkowitz's comments where he did express concern for the -- the type of people mr. trump would draw from, he would have to rework them to do what he would like. >> we're going to talk about this on "fast money" and i think there are different parts of looking at what a trump economy would look like as well as

hillary clinton's. whether these are stimulus trad trades. >> tim seymour, be sure to stick around to see more "fast money" at 5:00. we'll see whether. amazon's shares hit a new high. we'll tell you whether this is a good stock or whether you should get out now. donald trump and hillary clinton will go head to head for the first time on monday. and we'll have full coverage of monday's debate on cnbc. you are watching first in business worldwide. or stop to find a bathroom?

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amazon at an all time high today. the recent move has brought its market cap up to $381 billion, making it the largest company by market cap in the u.s.

is the amazon rally over? let's ask the owner of amazon and jack moore from the street who is bearish for a little stock brawl here. since it's already at lofty levels, make a case for buying it here. >> kelly, if you're going to invest in amazon for the next three months, there is probably a case made to hold off on it because the stocks made a nice run. the highest stock for amazon, we're far from reaching those. in the next year and a half, the stock probably sees a thousand dollars. you look at this, this is a 22-year-old company, it's not a new story, but they're still growing revenues by 30%. they're growing active users by 20%, which is unbelievable for a company like twitter who can't achieve those types of numbers. their third party units are are growing by over 43% a year, which is really a realization by the rest of retail that eventually all retail in one way or another is going to be flowing through amazon. this is a company that's

reinvented the marketplace. i think if you're a long-term investor, it may not be the best time today, but any kind of pullback, you immediate to be an investor in this stock. >> you're saying it's going to a thousand, that's a $200 discount. jack, where do you think it's going? >> i have to give robert credit. i think last time we brauwled, t was at 700, and he was right. i will give that shoutout. it's getting to a point where i really think it's a pivot point in the company's trajectory. in the past they were able to grow for 20 years and reinvest everything towards their growth, so they didn't have a profit. now that they have a profit margin, albeit small, the argument to the up side is that they can drive some levers, pull some cost and be able to drive a higher profit margin and therefore grow some profits. on the down side, they're not reinvesting in their business and those are investments that have been able to support their sales growth.

so i think that if you stop reinvesting at the same levels that they have and you start having a more profitable model, then it's going to be a company that is going to be growing at a slower rate on the top line. >> okay. >> taking over all of retail -- >> robert is shaking his head. >> go ahead, robert. >> the problem is, kelly, it's the same story that i've been hearing for the last 18 years about the stock. and when you look at it, they have 300 million active users. but you look at the market share of those users. i don't think they've scratched the surface on those 300 million. it's a big world. look at companies like india, for example, where flip cart has been dominating over there. they're just getting going over there. if you look at prime international growth rates, they're skyrocketing. it's a big world out there beyond the united states where they're expanding to. we're talking about retail. we haven't even talked about what they're doing with aws.

there is still a long way to go, a lot of market share. i just encourage people not to listen to this story, because i've been listening for 18 years and they find a way to hold tremendous shareholder value. >> i get that, robert. you heard it almost 20 years. it will be 20 years in 1997 that they went public. but the stock went down to 500, so i guess there's better or worse times to be buying more of this stuff. >> that's true, and like i said at the beginning, the last time i was on here, the stock was at 670, which is four months ago. we're here in october, which is better than i expected. what i'm saying is you need to take a long-term view like amazon is taking, and that's how they continue to dominate the marketplace, because sports authority, radio shack, those aren't the first. they're just the beginning many are going to go lay waste to, and if you take that long-term

perspective, i can't say today is the day to buy it. >> they're not laying waste to costco. google is offering a cheaper shouting on the crowd level. if there is a 400 billion mark, it has to prove to itself it's reinvesting. it's now a profitable structure to the shareholders. >> we appreciate your disclosure. after it goes 100 one way or another, we'll have you back. thank you for battling it out on amazon. about half a million accounts were hacked on yahoo. we'll tell you how that hack ranks in relation it to other hacked businesses. why he says investing may come back to haunt investors,

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ok, so we drowned the fire...o keep a company's success uncompyep.ted - stirred it... mm-hmm. drowned it again... mm-hmm. and now just feel if it's cold. yeah. cool. [camera shutter clicks] [whistling a tune] smokey just gave me a bear hug. i know. i already posted it. we're drowning in information.

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. at least half a billion accounts were hacked on yahoo. how does it compare to other hackings we've seen? >> yahoo's hacking of over 500 million accounts makes it the biggest breach ever. but if you look, you'll see the top five like myspace, linkedin and ebay.

a few years ago, the breaches were almost by accident, like an employee losing their laptop. now, of course, it's not the reason for breaches. here's one scary thing about the numbers. many times a company will first report a small number, like linkedin saying only 6 million accounts were hacked, and then they offer a more accurate estimate, over half a million. yahoo's was 200 million, then it became 500 million. they started researching on the black market and they saw 200 million was actually the underestimated number. the other thing that's scary is these hacks happened two years ago, but we only found out about them now. so what you really wonder and what you should be concerned about, what's being hacked right now that we're going to find out about in 2018? >> not only that, how material is it to verizon which is buying yahoo for nearly $500 billion.

if you say the cost per breach is $220 million, add it up and that's more than the sale price for the company. it's a huge number, actually, but this could be a big -- >> i don't know how you arrive at that cost per breach p per he'per he' per user. but i do think it's interesting you have this huge number. this has been going on for a long time. you can look at the black market and see what that has been for sale, but we don't know what the other theft has been in any respect. >> we're also hearing -- i'm sorry. we're also hearing this is an out-of-state sponsor. they're moving to the part that was for sale but we're actually seeing it's the russians. >> the price is very cheap in the black market. let's say 100 million accounts, they're on sale for about $2,000 for the whole thing. it's not like they're bringing in that much money to sell the information. there is clearly other reasons they want to get all these accounts. >> so one of my former

colleagues still in the government who works on these issues said to me in the past, we're already fighting world war 3, it's just in sicyberspace. >> think how frequently we're seeing giant numbers we weren't seeing a few years ago. so that's really the scary thing. what's happening today that we don't know about. >> it used to be if that was a breach, that was one thing. >> because they weren't in the cloud. the breach happened because you left your computer at starbuck's and somebody grabbed it. but everything isn't on -- we're seeing this responsible for a lot of things. >> again, thaet part of t-- tha of the information and that's part of the numbers. ted cruz endorsing donald trump for president.

he said he would endorse the nominee. while he has disagreements with him, hillary clinton is an unacceptable alternative. operation dirty dope breaking up a heroin smuggling ring. target dropping its testing for mini shopping carts for little kids in select stores. this follows negative feedback from its customers who complained of bruised ankles and the difficulty of managing their children after not wanting to purchase all of the items in their carts. trust me, i've been there. it's not easy. the seattle mariners, meanwhile, have bkd up. this after he sent a pair of controversial clestes, and president obama pathetic. before suggesting that those involved with blm, quote, be locked behind bars like animals,

end quote. kelly, back to you. >> thank you, sue, and have a great weekend. >> you, too. monday marks the first presidential debate between hillary clinton and donald trump. with hillary clinton taking the lead in we'll explain why that will hardly impact government revenues, when "closing bell" comes back. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade.

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welcome back. here's how we finished on wall street. the dow jumping 131 points, apple specifically weighing in on its performance. s&p down 37 points and nasdaq down 65. hillary clinton wants to raise the real estate tax. it may not raise as much revenue thinks. >> the so-called death tax may be dying on it os own. clinton wanting to add 40% of estate tax over $5.45 million.

her plan would impose 50% tax on estates more than 10 million, 55% on estates over 50 million and 65% over estates of $500 million. she said it would add a billion of revenue over the next decade, but state tax collections have actually been collapsing. they've fallen by more than a third from 2006 to 16.4 billion. the main reason is the exemption. it used to be 2 million in 2006, now it's 5.5 million. of course, the rate was also higher back then, but the bigger reason is it's now very easy to avoid. we have all these new trust structures and estate planning rules that help move more around the tax. and a lot of them are giving to charity which allows a deduction now. it will be much more symbolic,

kelly, than it is actual economics. back to you. >> shocking. thank you so much, robert frank. the estate tax only one of the topics that could come up on monday. when we'll finally get to see the presidential nominees going head to head on these issues. will we learn something new? will there be fireworks? joining me for the headlines, booth school of business and a clinton supporter. welcome to you both. so, larry, do you have a sense from the trump campaign here as to which kind of version we might see monday night, and how much is it going to emphasize these policy issues? >> my theory about this whole debate -- in fact, my theory about the whole election is it's going to be based on the economy, jobs, wages, taxes and so forth. the biggest distinctions, the biggest contrasts between the two candidates, in my view, mrs. clinton doesn't have an economic

recovery or prosperity plan. she has a recession plan. she wants to raise taxes on wealthy people, on businesses, on capital gains, now, again, out of states. trump, on the other hand, wants to lower tax rates, particularly a dramatic cut in the business tax which will boost prosperity, increase wages in jobs. that's such a major contrast. i don't know how you can go before the public, and say, i'm going to raise taxes because i don't like rich people. i think that's trump's strongest suit, kelly. i know austin is going to disagree, but if he delivers it in a moderate, calm manner, okay -- let me add moderate, calm and respectful manner, just the way i address austin goldsby, then i think trump is going to carry the day. >> mr. goldsby?

>> larry and i are friends. we've always had a difference of opinion where the growth comes from. i think it comes from the brain power and skills of our work force that we have to invest in, and yes, it comes from cutting tax rates. i look around the world and i say, well, if corporate rates are the magic elixir, where is the magic? i don't think the beanstalk beans are going to get us the economy rip roaring, and the language of one policy for more than 10 minutes, sometimes at the end of 10 sentences. by the end of his paragraph, if

this becomes a glitter of ideals. if we start poking the sides, even in the slight way of trump proposed, it. it would set us on a path that is extremely detrimental to the country. a poll just came out. the majority of americans believe that under a donald trump presidency that he would either detonate a nuclear weapon or default on the u.s. debt. and a risk like that is the last thing the market needs. >> they're about even in the polls. look, the average is valuable. i have to give marcus respect for this turkmanistan. i never would have come up with

that. i like his new program, yes, i do. but yes, community colleges, trade school, that sort of thing would be fabulous. as trump has said, for blacks and minorities and other minorities, let's have school choice, she's against school choice, she's against charters. that's where trump has an advantage but i want to come back to this tax story. you're going to tell me you're a smart guy, you have an extended teaching position at the university of chicago. so. of us want to. but now you're going to tell folks that raising taxes across the board is going to get. >> a, the tax increases are not across the board.

if that was the only element of the plan, i would agree with you. that in itself is not the growth strategy. the point is to use the money that you raise to make investments before you grow. when you look at donald trump's plan, which is the budget that is going to add 6, and operating on a philosophy, which is, if we cut taxes enough for the highest americans and the biggest proportions that that will cut out. >> i don't know how we're looking at the crisis -- >> we didn't do that. >> we have to significance and nature of it before we go here? >> the trump campaign has been talking to ted cruz.

i'm glad he came around, i think he's a good man, and i think he was very strong on the campaign trail the last month or so. but i have to let my friend austin hear it a little bit. clinton wants to raise taxes on upper end people. trump's business tax rate for large and small companies. the ssc is going to get it. there will be 2 billion in numbers if those numbers are right. >> have a great weekend and be sure to. coming up, investors may be f e

flee. we're visit an entrepreneur building an empire in the sneaker business. we're back in a moment. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet?

here's what he said on passive versus active investing. >> with index age, it's

generally a good idea. the idea is that an index represents the country, and as the country grows, the index grows. you do well, it's low cost, it's low friction, and that should work and that should work for most people. but it still assumes a bunch of things. it assumes that the index investor has long-term patience. it's not going to be spooked. it assumes that when you buy the index that it's fairly valued. there is an extreme valuation that -- you know, when you bought the index and before the technology crash, like '90s, early 2000, it took you 12-plus years to recover from an index because the technology was so heavily weighted in the index. so that's another issue you have to watch out for. and it also assumes a more normal interest rate environment. as interest rates eventually go up -- when, who knows, i thought

this would have happened five years ago, so again my timing is less than perfect -- but it's a gravitational pull on all assets. so as we started the conversation about banks and how banks may have -- that interest rate increase will be less of a poll on the banks because it will be helpful to them on their margins, i think it is helpful to be not correlated with the index because the index will be affected in general by interest rates. i think you would be better off trying to find or invest in companies if you can that will be less affected by rising interest rates and less affected by the movements in the index. because after all, if everybody -- it's usually what happens, good ideas are taken tie larger extreme. home ownership is great, but it went to home ownership is great for everyone even if you don't have a living. this is indexation is great, but it's going to get to this

illogical extreme where people will say i don't have any fiduciary responsibility to invest in an index, everybody will be affected the same way. it doesn't matter that maybe i don't know too much about the 500 companies within the index and i just have to keep my fingers crossed. it's a sort of dumb-down easy way that should work most of the time but you know will badly fail at some point. >> and again, you can catch that entire interview on cnbc.com/pro. again, we've had a lot of this debate lately because so much of the industry which hasn't yet made the move was starting to move into pure indexing. >> it is, and i thought his was a nuance take on it which said, look, there's virtual indexing. it's not either/or. you can actually own passive indexes for your core or have them to diversify. the way berkowitz invests, it's

deeply understood with something that looks like a higher index. >> and it comes off being morning star's fund manager of the decade to trailing the index badly in the last couple years, susan. we mentioned that before, but fannie and freddie obviously confidential, sears in its various spinoffs, the battles with david einhorn. he's saying you stick with this approach and it should work in the long term. but the investors who have pulled their money out are looking for just an indexing strategy. >> i think logical be a shakeout of major funds. the really good premium names were seeing money flowing into brookhartd. the big players are getting the

money and you're saying, are you really getting any value versus being an index? >> hindsight is everything in this business. most six-year-olds get to wear sneakers. now the fast food giant has a plan to get kids eating breakfast, too. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. [rock music playing]

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energy efficiency projects to save energy every month. if you're part of the fabric of the community, you've got to ensure that you do things right, environment included. learn how you can save at pge.com/save together, we're building a better california. welcome back. the resale shoe industry is booming, according to research from mpd group, the annual market value for resold sneakers is between, get this, $200 million to $500 million.

and there is a 16-year-old sneaker mogul trying to earn his piece of that pie. it's benjamin kicks, who started selling sneakers in the fourth grade, and now has his own business doing so. he's down here with some of the sneakers. welcome. >> hi. >> you started this at 9 years old, basically? >> that was one when my mom got my first sneaker and i wore it to school and everyone was like, wow, those are so dope. i wanted to buy a pair and then i got into the hobby of sneakers. and i just didn't have the money to afford them, because my parents didn't want to fund the hobby. >> yeah, they're really expensive, hundreds of dollars a pair. >> so i decided to resell them in order to fund my hobby and then i made a business out of it. >> mike? >> how do you decide what is going to be the shoe that's going to sell well? so, in other words, you're actually trying to pick the winners before everybody knows that they're the hot thing? >> yes and no. some of them are simple. like the kanye west adidas. these didn't come out yet. >> which are those? >> these.

>> the orange kanye west adid as? >> yes. they're selling before they come out for 1500, $1600. so everybody just knows it's going to sell. it's like -- it's kanye west. >> but how buy them if they're not out yet? you mean -- >> just a plug. >> he's plugged in, kelly. >> i don't know how it works. i don't understand. susan? >> so how do you have the money oh -- you're buying in bulk. where do you get the capital to buy these shoes? >> that's the thing. it took a while. because i only wanted -- i never made a business out of it until later on when i saw you could make a lot of money with it. and i started buying in bulk. and then just reselling on my website. and then i got the money. >> so nonprofit -- didn't take out a loan -- >> no, no. >> wow. >> how do you manage this -- is there software, accounting involved? how does that work? >> yeah, well, i have three employees and then like the website guy that is it everything. >> how old are they? >> a lot older. >> the people who are buying from you, i mean, are most of

them also collectors? are they also going into resale themselves or do they wear them? >> resellers probably don't buy from me. but collectors, people that can't get the shoe early. >> yeah. >> have your parents tried to discourage this or are they fostering? >> at first of -- >> they're here, by the way. >> at first my dad -- i bought a shoe for $800. and he was like, oh, like, you're out of your mind. you're going to lose so much money. and i wore it and then sold it for more. but he's like, oh, so just one more crazy person bought it, you know? but then i just started going and now they, you know -- my mom was always with it. but my dad was kind of like -- >> he's come around? >> yeah. >> how do you think about reselling them? how do you think about setting the price for the resale? >> like on this sneaker, not a lot of people have it. and quantities and sizes nobody else has and it's before the release date so it's kind of like -- i set the price but

market sets the price. they come out for $200, but no one is going to get them for $200. so people are going to pay 900, $1,000 when they come out. or they can get them from me for $1300 before the release date. >> can you give us a sense how profitable this is? and whatever terms you feel comfortable. or give us an example for maybe one shoe or something. >> okay. like, this shoe. when it came out, people were buying it for 6, $700. now it's like a minimum, 2,000 it is shoe. >> wow. >> so on these, the profit margins -- minimum, like, 40%. minimum. if you don't buy it for retail. if you pay the $200, you're -- like 1,000% profit margin. >> you still going to college? >> yeah. >> i'm sure dad is making sure of that. but benjamin, congratulations on all of your success. >> thank you. >> we'll be watching. i need to upgrade my speakers. making me feel very insecure about it. we have a market flash on smith & wesson.

seema mody. >> shares under pressure right now on news that the gun maker partner have been notified by the u.s. army that its modular handgun system, also known as mhs, has not been selected to advance to the next phase of competition. keep in mind, the mhs program was not included in smith & wesson's financial guidance, but we're still looking at shares of smith & wesson down more than 2.5% here. in extended trade. kelly? >> all right. seema, thank you. seema mody. mcdonald's offers all-day breakfast and now testing for its smallest customers. will the breakfast happy meal be a hit? that's next.

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welcome back. mcdonald's is gearing up to test breakfast happy meals starting this monday. the kid focus meals will be available at 73 restaurants in the tulsa, oklahoma area. and if successful, could roll out nationally next year. mcdonald's stock up about 15% since first rolling out all-day breakfast in october of last year, trading around 117. do we want the tulsans to make it go national? >> i don't see why not. it's interesting to me, mcdonald's -- they're going to be anniversarying this nichive,

right? october is when they started it. maybe they have to try some other things to move things along. it's been so successful. it's kind of not a difficult leap, i think, to kind of package it up in a happy meal. breakfast for dinner is relatively popular in my house. although usually it's a diner. >> you don't put it in a cardboard box with a smiley face. >> it's the toy. >> that's the issue. logistically, i think having kids eat this in the morning would be really hard. because if you're on your way to work and the kids are dropping off at school, with the breakfast they're going to eat, it's logistically doesn't make sense. but if it's breakfast for lunch or dinner, definitely very popular, that to me makes more sense. >> hard to get your kid eating real lunch and dinner food if the option is always pancakes? >> it might. although it's mostly the mcgriddle sandwiches. that's the main -- >> do you have to prove you're buying one for a kid? >> i don't think you've ever had to prove that. especially at a drive-in. what are you going to do? >> i don't think we have enough meals any more, with all of the

different components. there is something nice about it all coming together. like a lunch box back in school. >> you like it just in the little box? >> having a cookie with lunch. that's what i'm saying. mike and susan, thank you both for joining us here on "closing bell." that does it for us. have a great weekend, everybody. "fast money" begins now. >> "fast money" for our friday starts right now. live from the nasdaq market site over new york city's times square. i'm mel lee. tonight on "fast," twitter having its best day since it went public after we broke the news the social giant is in play. will a bidding war ensue? we'll it tell you how to profit. and three days away from the all-important first presidential debate. so what might come for clinton that could spook the markets. and later one of our traders says there is one dow component setting up for next week. we start off with the story of the day. apple shares falling nearly 2% on