that should be an interesting meeting. >> we do not know how president trump feels about the border adjustment pact. >> i was worried -- luckily my dreams came true. >> you're welcome, brian. thanks for watching power lunch. welcome to the closing bell, everybody, i'm kelly evans at the new york stock exchange. >> stocks on track for another record close today, that's as fed chief janet yellin testifies on capitol hill, and our new treasury secretary makes a surprise appearance. i should say your new treasury secretary. more on what he said coming up. >> who said telecom stocks are boring. another shot fired. we'll have the details for you coming up. >> gm shares hoping they'll be able to sell their european business. >> in honor of the 25th

anniversary of wayne's world, we're looking at wilt's world today. he has three big stories shaking up the financial sector for us. >> that wasn't actually my idea. >> i love them. and i applaud them. >> we'll have more on this shortly. let's start with all the action in washington, that you. steve liesman is covering yellin's testimony many. >> not wilt's world down here, it's definitely trump's world in washington, d.c., we just saw the president signing a bill, let's start with that, there's a lot to bring you up to speed on today. the president signing this bill that sean spicer viewed as a dodd/frank regulatory overreach, said it was costing businesses simply too much money. reformers, though, view this as an anti-corruption measure around the world. in any case, the sec regulation here has been repealed. we heard from the president during that bill signing. here's what he had to say.

>> we're bringing back jobs big league, we're bringing them back at the plant level, the mine level. the energy jobs are coming back, and you see what's going on with the stock market. they know we know what we're doing. it's going up in record flips. >> you see the president commenting on stock market action. that is rare from a president. we also got a chance to hear from the new secretary of the treasury, steve mnuchin who came to the briefing room, to talk about new sanctions that are being imposed in terms of venezuela. he also talked about the possibility of russia sanctions. >> our current sanctions programs are in place, and i would say sanctions are an important dool we will continue to look at for various different countries. the existing policies are in place. >> no indication from the white house or the secretary of the treasury that they're going to make any changes at all to sanctions on russia, that's so

important in the wake of the resignation yesterday of the national security adviser michael flynn over his conversations with the russian ambassador. and then, of course, some more news at the white house, retail ceo's will be coming here to the white house. we're told that some of the ceo's to expect are the leaders from auto zone, tractor supply, joanne fabric, craft stores, target, best buy, gap and jcpenney. a big list of retail ceos coming here to the white house as well. >> thank you. steve, stay there for a moment, as well, we have breaking news on the floor here, it has to do with the anthem/cigna merger taking another twist. bertha coombs has details. >> cigna has filed suit against anthem saying it's terminating its merger agreement. anthem says it's unilaterally extended that agreement in april 30th. it says in response today, that cigna does not have the right to

unilaterally terminate this agreement. cigna is suing anthem, not just for the $1.85 billion breakup fee that's involved in this merger agreement, but also some $13 billion in damages as well, both companies have been at odds from the very beginning. since they talk about the this merger, and throughout the trial where they were both rejected on their $54 billion deal. they were at odds as well. in fact, the judge talking about the fact that cisco, the testimony from executives from cisco, often contradicted anthem's points about the merger, it was not unexpected that this could wind up in court where both sides are fighting one another over that breakup fee. but cisco -- cigna rather wants more than just the $1.85 billion. saying it's looking for $13

billion in damages. definitely a messy breakup, very different from this morning, when we saw aetna and humana mutually agree to dissolve their agreement, and aetna will pay the $1 billion breakup fee there, which for humana, amounts to 630 million after taxes. humana will be updating their 2017 guidance after the closing bell, back to you. >> thank you. we can see shares of cigna fluctuating here they're going to expand their buy back program to $3.7 billion, so that helped bolster the shares, they also dipped negative briefly a moment ago. kind of a fight waging here. >> let's switch focus back to steve liesman, who has the highlights from janet yellin's capital. >> janet yellin in testimony today ever so slightly raising the market's view of a chance of

a rate hike in march. she said the fed was close to its inflation and employment goals. her words not enough to convince the market it's even a 25% chance for a quarter point hike. >> precisely when we would take an action whether it's march or may or june. i think -- i know people are focused on that, i can't tell you exactly -- >> they are. they are. >> which meeting would be, i would say that every meeting is live. >> the chance of a rate hike hit only 18% today. yellin maintained her stance that it's way too early to say how economic policies for the trump administration are going to change the fed's rate or economic outlook. jpmorgan saying the comments probably not hawkish enough to make the march meeting likely over goldman. they raised their probability from 15 to 20%, to say, for the committee to move, we would like to see better than expected data in the coming weeks.

yellin added she agrees with the core principles of reforming dodd flank that president trump listed in its executive order. she also agreed with senator elizabeth warren that data didn't show much impact on lending or bank profits. my take was listening to the senate, at least the questions from the gop senators that they did not express a huge appetite for overall drastic reform of dodd frank. more of a reform or amendment of it. >> steve, thank you. steve glees man there, monitoring that event. we're going to have former fed governor larry lindsay speaking with us in a few minutes. we'll discuss yellin's testimony with him, and talk about why he thinks the economy really is sick. that's coming up in a moment. joining our closing bell exchange today. we have david sourby with us.

and rick santelli in chicago. david, so what do you make of yellin's remarks today. >> probably the right medicine, that the fed needs to raise interest rates and inflation rates are 2%. unemployment rate is closer to full employment, and the fed has been in monetary overdrive for the last several years and they need to be mindful of keeping inflation rates low, at 2% inflation, that's good for stocks. simply put, when inflation goes to 3 1/2% or higher, it becomes very problematic for stocks. >> rick, we've seen reaction in the bull markets today to that slightly hawkish tone, quite a marks move for example in the 10 year since the lows have lost, i think we ran 2.34%. are we breaking out on the upside today with the extra move? >> i think there's been a bias to the upside, but you're exactly correct.

2017's range is 230 to 260, we did hold the lower band. which means my opinion will probably gravitate toward the upper band, but remember, 244 was what we said last year, we're not much above it, i do see higher rates, i don't see them in a quick fashion. and as far as janet yellin this is what happens when we have a fed chair who is less rules based and more intuitive. i'm not saying whether it's right or wrong, but rules based, we would have investors and the fed on the same page. right now it's meeting to meeting, they can tell us they're going to potentially tighten three times, at the end of the day, the aren't market moved is because that's the relevant relationship that's been conditioned between the federal reserve and the markets. >> steve, you've been bullish on this market since the election, and continuing to say has room to run. we're now 28 points away from 20,500, halfway already to 21 k. so do you kind of continue to

look at things as behaving in the necessary fashion for the changes at foot here? or is this all getting ahead of itself? >> i guess there's a couple sides to that question, let's take it from last thursday, i good guess, where president trump made the comments that he was going to have a phenomenal tax plan in the next two to three weeks. the market interpreted that as they should have, very bullish, and the market ran. it was along with that, that we had another gop congressman talk about the border tax. he backed off and said he didn't like it, i guess there's two sides to that question, maybe if that doesn't get done, leaves the runway for the stocks to go higher from where we are now. technically, though, in the s&p 50023345 is your resistance level, we're at 2334 right now. that could be a minor resistance level if it overcomes that. you need to get on this bandwagon, again, if you're on it, you need to add, if you're

not on it, you need to get on it, and use that as your support levels, the market, it's about rotation, not about valuation, you can't get your hands around valuation in this marketplace, just understand the market participants are underweight. financials, materials and industrials. that's why the market marches higher. >> it hasn't been, how long have you seen -- do you think it's overvalued right now? >> if you mean cashflow, the market could go higher, it's certainly been much higher than last year. nevertheless, can you still find very solid companies that are generated above average free cashflow, where i think the valuation still allows thing carpet to compound over the next 7 to 8 years. >> i guess my point is, there are people who say this market

is overvalued. and that's why it should be told. there are sectors and spaces that are overbought and they continue to move higher. that is my point, that it doesn't just have to be those hidden values that you see that are still viable. the market as a whole can still run higher in an over bought condition and overvalued condition. >> thanks for leading the charge again at the moment. would you be long financials. >> i think they deserve a place in the portfolio, and, for example, you look at the filings, and names that i think continue to do well that lagged a little bit last year, you look at the filings, we even these two stocks that aren't quite on the banking side, but leveraged to the economy, and to the capital markets that offer value to the investor. >> thank you, everybody. for joining us this hour. david sourby. we have about 45 minutes to go until the market close.

the s&p up 6, the transports are down 34 today, the nasdaq green arrows across the board. >> general motors rising on hopes it will be able to sell its european opal business. and aig express groups and fossil are among the companies to report earnings. we will break down the numbers as soon as they're out. and aig's ceo speaks to those exclusively. stay tuned to all of that. dear predictable, there's no other way to say 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

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welcome back, after record highs yesterday across all major averages, we continue to move higher today. the dow is just shy of 20,500, that's halfway between 20 and 21,000. a big move here in the recent sessions. that's a third of a% gain for the dow. the nasdaq lagging a bit. we're talking about closing highs if we stay at these levels. >> the financials are dragging things higher today as opposes to broader market rallies. you have jpmorgan up, bank of

america leading the charge, all the kbanks are up 3% today. general motors is also up on the hopes that the auto giants european opal division is on the selling block. phil lebeau has more. >> i think there were some people who said really? gm's been in europe for 90 years. take a look at the numbers and you will see why they're looking at this option and engaged with talks with the psa group. essentially comes down to this, general motors 12% of its sales are in europe, but they've been losing money there for a long time. the company has lost $15 billion since the year 2000 in europe. last year the company lost more than 2$257 million. in a statement today, general motors confirmed it is in discussions with the psa group, saying, they confirmed they are exploring numerous strategic

initiatives. including a potential acquisition of opel by psa. these are the folks who make peugot. if you take a look at gm, they have lost money every single year going back to the year 2000 in europe, not just a little bit of money, a lot of money, what they're thinking about doing is saying, look, why do we keep throwing good money after bad money? lop it off. in the meantime, we build on our strength in the u.s. and in china. take a look at shares of general motors versus the s&p 500, we're going back to the gmipo guys. look at that, no comparison at all. this has been essentially dead money since the ipo. i remember the day when we reported on the floor of the stock exchange, there was no shortage of people who said, at a minimum, you would see general motors go to 55, $60 within a year, i think it's gotten over $40 a couple times, that's why

they're saying let's build on our strengths and look toward our strengths and get rid of the weakness and that would be europe. >> wolf was about to buy an opel car, right? >> well. it's quite a turnaround for poachers as well. to be in a position to buy the rest of this unit is a turnaround for them? >> in much better shape than it was a few years ago, now they're to the point where they're saying, how can we grow, how can we become even more efficient as an automaker, if you look at the european market, if they were to make this deal, they would jump past renault to be the second largest automaker in europe. obviously volkswagen is the largest. a far different story than what we saw from this company five or six years ago, when they were on death's doorstep. >> thank you so much for that. tomato, tomattomato.

>> i don't even try. i'll let you say it. >> phil lebeau for us. minutes to go before the closing bell, we have a third of 1% of gains, dow us up 63 points. very much financials leading the charge. rates, utilities and other bond proxies are disappointing. >> t-mobil's ceo says he's humored by talk his company may be acquired. former fed governor national economic counsel director larry lindsay tells us why he thinks the economy is really sick and what we should do to fix it.

a look at the markets, we're set for another set of four record closes for all of these indexes, there's momentum behind them. there's been six positive sessions in a row for the s&p and nasdaq, and four in a row including today for the dow. less of a broad rally, though, yesterday we had 10 out of 11 seconders higher, today it's around three, depending on what the latest moves are. banks certainly pulling all of the indexes higher and leading the charge. >> in the meantime, the mobil wars are getting higher. verizon surprised everyone by offering unlimited mobil data for $80 a month.

t-mobile upping the anti-by including high definition video streaming on its one plan. that's effective this friday, in response to verizon's move. john leather calls verizon's unlimited data move unprecedented. he addressed movers as well, that his company is a takeover target. >> nobody's talking to anybody, dish needs to do something, sprint needs to do something, comcast needs to do something, and they all bring our name up. we can either do something or continue to grow every year and come back and talk about it. >> t-mobile reported better than expected quarterly earnings this more than. sprint interestingly is higher by 3%. verizon is down nearly 1%, it's also weaker yesterday. >> it's interesting how quickly these companies have gone back to what is, i suppose the equilibrium. for so long, investors pull away from these all you can eat data

bundles, already one of them goes back to it. >> and you'll recall that the merger between t-mobile and sprint was called off by regulators. you've seen since an incredibly competitive landscape that you'd have to argue has been good for the consumer. so the question about what happened with t-mobile from here, whether the trump administration is more friendly, whether anyone makes a bid, you know what, this has worked out pretty well for the consumer. >> and it's worked out well for the share prices. the problem is, when we hit capacity and people are streaming too much, too quickly, you start to get issues for the stock prices in terms of overall capacity and consumers are experiencing, it's like a short term benefit, i'm sure most long term investors are going to be pretty annoyed about this. >> verizon already has capacity challenges, it's offering this at the same time needing to look for ways to bolster that in order to fend off its competitors. verizon is the only one of the major four lowered today. >> just minutes left to go for

the close. a third of a% of gains, record highs expected as things stand for all four of those indexes. the dow up 63 points. the high profile merger is off with a federal judge blocking the deal, coming up, we'll look at what's in store for both companies. >> in honor of the 25th anniversary of the comedy classic wayne's world, we'll be going to wilt's world. he'll be taking an excellent look at some big banking news. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere.

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and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance. welcome back, markets are rallying and set for another record high for the broad indexes. all four of those indexes, about a third of a percent of gains for the dow. another individual record for apple, which hilt an interday share price high, as you can see at the moment is up 1.2%. trading at 134.92. apple would have to touch above 147.41 to set a new market cap record. kelly? we have a news alert.

lesl leslie? >> tiger global sells 3.6 million shares, worth about 408 million dollars. i'm sure he's looking at that news and thinking, whew. that comes after the stock hit a record high, however, we're seeing tiger global add to its tech positions, including a new stake in facebook and more than 2 million shares in microsoft, worth more than $232. the firm also increased stakes in alphabet, amazon and jb.com. these stakes stand in contrast to some of the broader tech selling we're seeing among the firms we're reporting today. including omega and more capitol. tiger took a massive stake in fee at chrysler, worth $481 million. these positions are as of december 31st and may have changed since then. back to you guys. less than a half hour to go

in this session. you're looking like so many at the financials today. >> the sector has risen to the highest level since 2008 a really big move, it's interesting to look at the charts and really put this into perspective. we're getting this jump start again at a time when the market is very overbought. you look at the weekly charge, you can see this range here. the group has just exceeded the highs of this. it's a flag pattern. in general, it's constructive in an interim basis. for those expecting the markets to fall. this sector represents almost 15% of the s&p 500. >> what's most important? bond yields, economic data? what janet yellin said? >> yes, it is bond yeel yields. we look at the curve, treasuries moving up, and financials continue to work well in that

environment. we stalled a little bit. my thinking is, the xlf should get up to near 25 in the spring. any pull back we see in the market should prove short lived. given that financials should be very sound. it looks like they could move higher over the next two to three months. >> mark? time now for an update with sue herera. >> thanks so much. here's what's happening this hour, everybody. after more than 38 years, a new york man has been convicted of murdering 6-year-old etan patz. he kidnapped patz in 1979. that case shaped parenting and law enforcement practices. japanese electronics toshiba says its chairman is resigning, in order to take responsibility for problems that will result in a $3.6 billion loss in its nuclear business. he will stay on as a toshiba executive. restoration hardware

recalling 2700 dining tables after elevate d blood led level. charles oakley's lifetime ban didn't last very long. he and james dolan met with adam silver and charlotte hornet's owner michael jordan, they did that on monday. both dolan and oakley were apologetic about the scuffle oakley got into with msg security last week. oakley said he wants a public apology from dolan. the story is not over yet, guys. back to you. >> good for adam silver for getting them together. thank you sue. >> sure. >> in order of today being the 25th anniversary of wayne's world, we want to bring you wilt's world, you know who is here with a few stories from the banking sector fp. >> good executive to focus a new theme on three banking stories.

let's start with credits suisse. a swiss bank announcing it plans to lay off up to 6,500 jobs. shares ending up about 2% today. and it was up as much as 3 1/2% earlier in trade, because its capital position was better than expected. the fourth quarter was strong. january had continued that way. >> their future seems so much more exciting with this music playing. >> it does. >> big repositioning for credit suisse. >> yes, one thing that was simm la with deutche bank's numbers. the capital was boosted. that shows a difference from u.s. banks, getting ready to deploy capital more. that's europe versus u.s. difference deutche bank was still suffering in q4. that's why the shares jumped a

little bit. >> we have part two. >> according to reuters, goldman sachs junior bankers are worrying about the threat of technology to their jobs. goldman has hired programmers to help eliminate the need for trading jobs. now there are experts working to devote technology to help make the units more productive. this team of programmers has doubled in size since 2014. the automation could make some of their jobs expendable. >> they're looking for different ways of soliciting? this is a network that depends on personal relationships that have been formed over sometimes decades or generates. the idea is, can data techniques -- can algorithms, these things turn up business in a way that relationships don't. >> the bank would frame this as saying, we're not using this to replace human jobs, we're doing it to enhance jobs. this is going to take away the burdens from workers, allow them

to do more of those relationships. the truth is somewhere in between. but in defense of the way the banks spin it with investment banking. it's much harder to replace those workers. >> they said -- >> retail bankers. >> i think you can replace bank tellers, that's different. investment banking is slightly higher. >> i still wonder what it's going to mean in practice. is it -- how this all shakes out, if anybody would know how to marry the technology with the personal relationships, it is goldman. but we'll see. >> a big area of investment certainly. a final part of wilkes world we've seen investors encouraged by trump's policies. the so-called trump bump has given renewed interest due to the prospects of more growth and lighter regulations. the fdic, which has eased its rules is currently weighing six applicants for bank jobs across

five different states. take a look at the number of applications over the years, you can see how after the financial crisis, the number of applicants plummeted and is now ticking up for the first time in years. >> i remember years ago, alan greenspan said it is a great time to start a bank, but very few people were taking him up on it, even relative to that showing. and this it just completely -- i mean, the interests completely evaporated. the other interesting thing would be, not only are they starting new banks, would they allow for the deal making of existing ones. >> i think the likes of the big banks ceo's, have said there's been too much bank regulation, that's been highlighting, not just by the number of new bank openings plummeting, but the total number of banks at the end of 2017. the fdic oversaw 8,500 banks. by the end of 2016 it was under

6,000. this is a change in direction. it's a small start. but it is a difference. >> good, interesting question, going-forward, are they physical banks or live banks that can do so much of that these days. that was fun. do we have to wait 25 years to do it again? >> i hope not. i hope we can do it again tomorrow. i'm glad to see there's a wilt's world. dow is up 69points. we continue moving higher here. the s&p 500 up 7, the nasdaq up 13. all of these are new records as long as they're positive today. president george w. bush's economic adviser larry lindsey. we'll discuss results with aig peter hancock, that's one not to miss. don't go anywhere, we're back in a couple minutes. before our ey.

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so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. look at the dow now, it's up 75 points. every time we check it seems to move up a few more points. janet yellin was on capitol hill

speaking about the economy. you can see how it went from being red on the open to green she spoke about how march won't be ruled out, it's a live meeting so to speak. people getting their heads around the idea that rate willing will be raised more than once this year. >> there's a much less broad rally today. we're seeing gains for all three of those major indexes. the facts are dragging up all of the sectors, all of those indexes today, it's not as broad a sector rally across the board. the flip side of that, the home builders and rates are lower today. janet yellin was on the hill describing the economy in mostly positive terms. she was asked if any proposal is being raised. causing any alarm bells for her. >> some of the policies that are being discussed might well raise deficits and in that context, they may also have impacts on

economic growth. and the economy's growth potential. it's not a simple matter to evaluate, i do think it's worth pointing out that fiscal sustainability has been a longstanding problem. >> our next guest says the economy is really sick, and he's setting his hopes on one of those fiscal policies. the house republican plan for tax reform. >> joining us now, larry lindsay, president and ceo of the lindsay group. very good afternoon to you. thank you very much for joining us 37. >> my pleasure. >> let's talk about janet yellin today, and what you made of her comments. it seems to me you're critical of the fed in terms of the fact that it is tailoring its response more to what the market wants to hear. than the fundamental issues it

should be addressing? >> i think it's probably intentional. remember what qe was all about, it was all about propping up asset prices, create a wealth effect in order to get the economy going. now, the effect of that was probably -- why don't we say mixed. but the result is, we're stuck with very high asset prices, deliberately. and not such a fast growing economy. we have to switchgears, we have to pivot to a different strategy. that's why i think moving away from an emphasis on monetary policy, and toward an emphasis on fiscal policy and on regulatory policy is really the best way to go. >> if the house plan were adopted, why do you think that would leave growth in 2018, 2019 and beyond? >> so what this plan is going to

do is it move the capacity, the economy out rather quickly, and then the question is, getting demand to take us to that new frontier, i estimate probably four years or so of 3 1/2% growth on average. because the expansion in industrial capacity will be so large as well as productivity increases. >> remember, the aren't current economy is so poor, is that we've had a collapse in both capital formation and productivity growth. and the way the tax bill is structured, it tackles both those problems. it creates literally the best environment for capital formation we've ever had since we've had an income tax, and it also encourages small busine business -- i think we can easily get back to the long term historic average of 3.1% growth.

and we incentives that are better than the historic average, i think 3 1/2 is more likely. >> especially if that were over a period of four years, that would be remarkable. what happens if certain pieces of it -- if they get jettisoned, and the deficit does increase resolve? >> i think we're going to have to see how they carve it up, i think the reason you want to have that border adjustment tax in there, you need it, to pay for some of the investment incenti incentives, it would be hard to have as pro growth a bill, unless you had the border adjustment profession in there. it covers about 2 thirds of the corporate taxes that's a hard thing to replace. >> how hard is it to actually deliver, when do you expect this

policy to be delivered and implemented under the trump administration? when would be a cutoff time for when you start to worry that it hasn't arrived yet? >> the founding fathers set up the country to make it hard to do anything, and i guess we've done a good job of proving them right on that score. frankly, i think once the president comes out with a plan he promised he would have in two or three weeks, which he promised a week ago. i think the white house is constrained, it's very hard to come up with a tax plan in two weeks, when you're going from a standing start. therefore, i think the house bill is the natural place for them to start. it's been thoroughly vetted. it's been scored by people on the outside, and so i think the president is going to come up with something that has its own new answer changes, but i think the core is going to be the house bill. and if you have the house

leadership which is firmly behind the bill, and the president behind something similar, i think the bill could move very quickly. you know, the point of senators is to complain at this point. because they're trying to build up their ability to make modifications that suit their needs. but i wouldn't take the hard opposition yet as necessarily a roadblock. >> a quick question for you last night, china's producer price index increased 7% on the year. what does it mean for the u.s., for markets, for growth, for the fed, that this is now -- that inflation, if you would agree, appears to be emanating from china? >> it's interesting, we've piled up this giant bonfire of liquidity in the form of central bank balance sheets. china's taken the lead as well, as have we, as has europe, as has japan. and trying to get a fire

lighted, but no one ever lit a torch to it, lit a match to it. i think now we're starting to see, with tax reform, with restructuring in china, we're starting to see the match getting lit, i think we have to watch that very, very closely. i think that janet yellin and her colleagues really are probably going to have to move in march otherwise, they're going to be very far behind the curve. we have a risk of global inflation unless we start containing it now. >> thank you for joining us, larry lindsey. just 10 minutes before the close of the bell. the dow a little higher now, all four indexes you're looking at set for all time closes. >> apple promises they will deliver something different with their video streaming

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welcome back, 3.50 to buy on the bill today. they're taking another leg up, the dow is up 82 points.

transports are still negative by the way, all the major averages are higher. >> joining us now. ernesto ramos. phil, let's start with you, we have banks leading the charge again today bank of america up 3%. you like financials only in the long term, not the short term, are they overheating in the short term? >> i think so. you have to be careful here. >> banks make money on cash balances. we've come really far really fast, whether you want to call it the trump trade, the idea of banking regulations turning around or less taxes. that's come -- we've come real far real fast. here, we take a little built of profit, take a little opportunity to evaluate. in the long term, if regulations come back, dodd frank changes, and we get real earnings from cash balances, the earnings

sector looks great again. >> you like the insurance companies, talk us through that? >> it's a simple argument really. these guys have a lot of deposits, short term paper. it's a simple argument, coupled with the fact that they're trading at low valuations. one of our favorite companies ever under 10 times earnings as far as we're concerned, that's a pretty easy dual to make. >> apple hit another record high. >> again, apple is one of those companies which are also cheap, printing at 50 times earnings, it's really all tech, because their main business now is to sell hardware in the form of iphones, and macs and so on. the rest of the business, pretty

much comes for free. it generates a dividend and 50 times earnings, it's a pretty good buy here. >> thanks very much. i'm afraid we're going to have to leave it there. thanks to you both. coming up, we'll be right back with the closing countdown. >> after the bell earnings, we'll breakdown the numbers with peter hancock, you're watching cnbc first in business worldwide. to oililan ok plgeies- nfd-and habal ce 2men at ieed tn att d siarnfy.mto st difuu

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welcome back to closing bell, we opened slightly in the red at 9:30 a.m. eastern time. we are set for record closes on all four of the major indexes. yields are up 2.5%, that's led to more trades. most of all benefiting from that spike in yields that we've seen today. bank of america, top of the pack of the big six, it's up about 2 1/2, 3%. it's the most geared of the big 6 to interest rates and it's performing well off the back of that. it's all banks, not just bank of america. every bank of every size at all, is hitting multiyear highs today, and it's leading the percentage gains. the rest of the market modest in terms of the gains, we've seen a few big tech games.

apple's -- really the new high list is the financials. your previous guests had it right. i don't know how much more there is there, the markets anticipating we're going to go higher, there's nothing on the horizon that worries people, particularly. but four things out there that i think will delay the rally. delay or watering down the whole issue of tax reform. reductions in profit expectations. the market is expecting big big things many some people, 15 to 20% this year. trade wars, that will do it, the final thing is,ed fed hiking. you saw the stock market, nothing -- yellin's trying to put march on the table. bonds react a little bit. stock market doesn't care. >> we've had a little momentum with these record highs recently. six positive sessions in it a row. less broad today, it's really financials that are hiding a weakness. >> considering all the major indexes, it's surprising how few of the stocks -- this tells you

the markets are the major index s -- the biggest names apple and cisco. >> there's the bell, record all time highs for all four major indexes. ringing the bell is aratez pharmaceutical. >> thank you, welcome to the closing bell, everybody. i'm kelly evans, here's how we're finishing up the session on wall street. it looks like green arrows across the board. the dow up 89 points, that's pretty much a session high today. look at this, 501 we're now halfway already from 20 to 21. a gain of nearly half a% today. financials pacing the way, we'll have more on that in a moment. the s&p 500 adding about 9 points to 23.37.

the nasdaq up a third of a%, to 57.82. the russell 2,000 picking up a few points. we have a few earnings reports on deck this hour. meg terrell will bring us results from express fit as soon as those around. a couple barometers there for us. cnbc's senior market columnist is here with me on set today. charlie from aerial investments. an unbelievable story about the strength of the stock markets, no matter what you seem to throw their way. >> it's definitely impressive, it's at that point in the rally, where you have to give credit to the persist ens of it, it's been resilient, we've had this pattern of afternoon buying, quiet strength throughout the afternoon, big investors don't feel exposed enough to stocks

based on what they've seen coming and the performance they've had so far. i do think you're at that point where you start to quibble about some of the imperfections of the rally under the surface, today was mostly about banks got banks and financials higher, you got transports down. split between up stocks and down stocks. it seems you're at a stage in this rally where you've already come a long way, it doesn't take much to stall it out for a while. it's valentine's day. is your love for the financials rekindled? >> no, we thought financials were very attractive a year ago, and six months ago, and the fact of the matter is, a lot of them have gotten to the point where they're trading right around our sense for fair value. we don't think they're key any more, and we like to invest in things that are key. it is the case that these stocks

are not nearly as cheap on a fundamental basis as they were a year ago. >> it's not about valuation, it's about rotation. if that's the case, do you think people have to chase financials because they've been on their own? >> we look at the markets today, we see they're pretty expensive by historical measures, whether it's market gdp or replacement value. we're operating in this hope market that will run for a while. the call ratios are high, institute cash is very low, so all of those make us a little bit concerned at this point in time. think maybe we ought to be taking a little bit off the table enjoying some of the gains we already have. >> let's go to meg terrell. >> q4 earnings coming in just ahead of estimates, 1.88

adjusted eps, versus an average. company also giving q1 2017 guidance of 1.30 to 1.34 in adjusted earnings per share, everyone is going to be listening on this company's call for any commentary on drug pricing. they've been pulled into this conversation, they'll be looking for any color on the rebate. and they're increasingly under fire here. that call taking place tomorrow morning. express scripts down about 2.4. >> a lot of people trying to figure out what happens if we're in more of a deflationary environment for drug prices these days. >> the market really doesn't like the flux around the business model itself, there's a lot more intention on this

relatively obscure pipeline of how drugs get priced from the consumer to the hmo's and back to the pharmaceutical companies. it's been a -- this was a 93 dollar stock a year and a half ago, it's down below 70. >> you were speaking about broadly the market and whether it was -- you're seeing signs of fraud. you have a couple picks, they include vonnage, big lots and aarons. >> the big theme we see, there's going to be a transition more and more into small cap stock, we had a nice move in the fourth quarter, it's been slow going so far this year, they're cheaper, they have better earnings, they haven't started out before, we think the next 2 to 3 years is going to be small cap area. they're all relatively cheap, our research shows they have really good earnings, some cases they can be buying back shares.

each of those things is a good stake in the ground as we go throughout 2017. >> we're going to be getting a lot of 13f filings this hour, to figure out how hedge funds are allocating their money, at least toward year end. >> where do you find value in this market? >> well, i have to push back on that a little bit. the small cap indexes are at very high levels particularly the financial value benchmarks. no, i think i'd push back on that, one thing about some of these indexes, they own a lot of financials, so when money comes into these etf's and indexes, those indexes buy up more of the same, and so they pushed up financial stocks to again in our opinion at least bear value. >> one of the big events today was janet yellin during her testimony on capitol hill, signaling the fed could hike rates as early as next month.

is it a done deal yet? >> not quite. day one there, kelly. hold on, after yellin's testimony, on the hill, here's what we know. first, a rate hike in march is possible but the market didn't view her words probable. yellin is on board with some reform of dodd/frank. made clear she doesn't see the economic devastation that president trump does. and yellin isn't changing her forecast until she sees the whites of the trump policy's eyes, she warned about potential deficit impacts. >> some of the policies that are being discussed might well raise deficits and in that context, they may have impacts on economic growth and the economy's growth potential. it's not a simple matter to evaluate, but i do think it's worth pointing out that fiscal

sustainability has been a longstanding problem. >> the market increased the chance of a rate hike by only a few percentage points. now stands below half. the economic data, beginning with inflation tomorrow and retail sales, through the february jobs board. could move those probabilities up, goldman sachs saying the data has to be better than expected. you know that day one has day two on it. if yellin feels like, she could do a redirect tomorrow if she feels the market didn't get her message. >> significant data out of china overnight. it's not necessarily just about what's happening in this country. the change we're seeing when we spoke to the fed's last hour. let's take a listen. >> i think that janet yellin and her colleagues are going to have to move in march. because otherwise they're going

to be very far behind the curve. we have a risk of global inflation unless we start containing it now. >> wow! >> yeah, steve, do you want to -- >> i would say that's not the conventional wisdom. the general idea is the risk of somewhat higher inflation, we're still running about 1 1/2, 1.6% year over year i know the cpi is up 2 1/2%. runaway global inflation is not the considered opinion i think you're going to have the energy boost to inflation is going to start to come off in the month ahead. not quite sure what the very smart larry lindsey is talking about. >> do you have an embedded view on what's going to happen with inflation? >> no, that's the point. inflation is not booked into people's expectations, and a lot of the data is showing it's starting to tick up.

the data that came out today is up.6. you have countries around the world basically competing to devalue their currencies, which is inflationary. we have the u.s. tightening the labor market and higher minimum wage laws. this is the risk that is not baked into the conventional wisdom. >> we have a 4.7% month on month increase in oil prices, a big chunk of that showing up in transportation and warehousing cost increases. i don't think there's a chance that's going to happen again. the idea of betting on inflation as an investor proposition, i would -- based on the fed being behind the curb, i would submit over the last eight years has not been probable. >> that's true, inflation has not existed the last eight years, you look at the data and positive inflation, all those things are starting to combine right now. and i think markets rights now are underestimating that risk. >> what would you say? >> with a month out to the next meeting, all the respect to

larry lindsey. the fed's not going to have to do anything. we're still in this zone where you can be to some degree patient and watchful, maybe if there's blowout numbers, you start to say yeah, let's do it in march. i don't think it's a matter of being compelled. >> thanks for joining us, charlie, appreciate it as well. another record setting day here on wall street, we're waiting for the earnings from aig which will be out any minute now. instant analysis of those results as soon as they're release. and we'll speak exclusively to ceo peter hancock. find out which companies are lining up to fight the border tax proposal when we come back. m

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welcome back, today was not another quiet day in washington, and tomorrow promises to be no less busy. benjamin netanyahu is heading to washington, d.c.. more on the president's agenda. courtney reagan is covering this border tax spike for us. >> the preparations have already begun for the benjamin netanyahu

visit here at the white house tomorrow. and all expectations are, we have a friendly meeting, we have a president here who campaigned of accusing the other side of not being friendly enough. and you have benjamin netanyahu who really had a difficult relationship with the obama administration, and now with this new president really seeing an opportunity here for a bit of a reset with israeli/u.s. relations. he talked about his expectations before leaving earlier this week. here's what he had to say. >> the alliance between israel and america has always been extremely strong. it's about to get stronger. president trump and i see eye to eye on the dangers emanating from the region. >> kelly, we know those conversations will grin tonight,

netanyahu scheduled to have dinner with rex tillerson, the new secretary of state over at the state department just this evening. kelly, back to you. >> thank you. also headed to washington, d.c., tomorrow are some of the nation's biggest retailers. >> it's surprising to me it's taken this long for retailers to meet with president trump. the leaders of target, best buy, gap inc., jcpenney, auto zone, tractor supply are heading to washington to explain just how harmful the border adjustment tax will be to their business and to american consumers, the group will meet with kevin brady, chairman of the house weighs and means committee. after noon to express their concern. retailers are in favor of part of the gop tax reform, the lower corporate tax rate, but the border adjustment tax part is

one of the most frightening policies retailers faced in a very long time. many retail ceo's, don't believe the dollar will equally and immediately offset the adverse financial impact of a border adjustment tax. the border attacks will cripple industry products leaving them no choice but to increase prices consumers pay by as much as 20%. target ceo brian cornell was in d.c. last month to speak to lawmakers about the border adjustment tax. we just don't know exactly the context of those conversations. >> stay with us. they've been delayed in getting to the white house, we're very clear now in making their case to the public and the president about why this is bad. that's why it's so interesting to ask larry lindsay last hour, what happens if this doesn't stay in the plan, the tax play, he said could boost growth so much. here's what he said could happen if it comes out. >> i think the reason you want

to have that border adjustment tax, you almost need it is, it's a pay for for some of the investment incentives, i think it would be hard to have as pro growth a bill unless you also had the border adjustment provision in there it covers about two thirds of the corporate taxes, that's a hard thing to replace. you almost need it, he says. you. >> need it because the republicans that control congress have decided you need it. they've decided this has to look like it's paid for on paper. as a parliamentary tactic, they need it in there. as a matter of principle and philosophy, they want it in there, because they think it's going to broaden out the tax base, i think you're not building the tax code from scratch, you're causing disruption if you introduce it now, that's what these industry folks are going to argue. >> i was going to say, this border adjustment tax is something we've been talking about a lot. remember, i wanted to try to make this clear, that this is part of that gop proposed plan.

this is not necessarily what president trump wants, we don't really know exactly what he wants, i assume that's what the retail sales are going to want to understand more of tomorrow. he's said it's complicated. this is not necessarily the same thing as a border tax. so the border and adjustability tax is something that is a revenue raiser, this is not something from my understanding that the republicans want as a replacement, to get goods to be manufactured in the united states, if that happens, then you lose that revenue raising ability. >> they'll be making their case tomorrow. congressman brady will join us on closing bell tomorrow at 4:00 p.m. be sure not to miss that. aig earnings are out. let's get to morgan with that. >> aig reporting after tax operating income per share, a loss of $2.72 per share. it's unclear if that compares with the 1.18 gain that analysts

were expecting. the insurance giant taking a $4.6 billion reserve charge. this is tied to the long tail commercial lines, factoring into the $10 billion retroactive reassurance. that's a deal that back dates to take effect january 2016. aig absorbing the charge in q4 results, but does say 2.4 billion will be covered under this reassurance agreement. and should according to this release, generate a pretax gain of roughly 2.6 billion in the current quarter. in terms of metrics, return on equity normalized, 4.8%. pretax operating income. that was a loss of 5.02 billion. premiums in that unit, 3.7 billion. in consumer unit, pretax operating income there was 969 million versus estimates of a billion, but aig saying it returned $15.1 billion to

shareholders, for full year 2016. part of that two year plan that unveiled last year to return $29 billion to stockholders. the board authorizing an increase to the share repurchase program as well. ceo peter hancock saying the comprehensive adverse reserve development significantly reduces the risk in some of the most volatile lines and aig responded definitively to material impacting the overall u.s. casualty of markets. going-forward, he expects to improve results, strong improvement in the business mix. nonetheless, you take a look at shares of aig in after hours trade right now, they are down about 1, 1 1/2%. kelly, back over to you. >> morgan, thank you. they spiked a little lower, mike. again, when you get hid lines this far off with a consensus -- >> it's noisy, there was definitely some doubt, not a lot

of precision about what that reserve is going to be. if that's going to be it, maybe it's okay, we may be a little bigger. >> we're going to have more with the ceo coming up here, peter hancock will join us, and walk-through more of these results. another massive health care merger called off. aetna and humana calling it quits. how that could impact both these companies and other health mergers. will video be the key to setting apple apart in the music industry. in an increasingly competitive business. a top apple executive thinks so. he'll tell you why coming up.

welcome back, humana just releasing its guidance, so shares were lower after calling off their merger today. >> let's call this one the mutual uncoupling. humana and aetna agreeing to stop their merger. humana is raising its outlook for 2017, issuing the outlook above consensus, it expects to earn between $10.80 and $11 a share for the full year, the estimate was for about 10.80 a share. the company also announcing it's going to authorize a buy back for the first quarter of this year, $1.5 billion an accelerated share repurchase

through the rest of the year. boosting its dividend by about 40 cents a share. the company says it's going to be exiting the exchanges in 2018 the initial numbers it's seeing from its enrollees in the 11 states where it's offering plans now continue to show that the risk will continue to be negative. as a result, the company is making the determination right now that it is not going to be on the exchanges at all in 2018 for individual commercial plans. of course, humana is very much a big medicare player, and that is where its strength is, and that's where it expect the to continue to see growth. the interesting thing is just hours after humana and aetna called it off amicably, cigna is suing its erstwhile merger partner anthem to break up.

cigna filing a lawsuit saying anthem should pay it $1.85 billion, a termination fee that's part of a merger agreement, and in addition it wants $13 billion in damages that it says its shareholders have lost out in premium as this deal has dragged through. cigna effectively saying this deal is never going to be consummated after a federal judge ruled against it. cigna does not have the right under the agreement to terminate their merger these two companies were at odds, kind of the bigger sons, even from their courtship to years ago, it looks like this agreement is going to terminate with even more contentiousness. back to you. >> i'm just wonder writing this leaves the landscape for these insurers. there couldn't be more uncertainty. we didn't know what was going to

happen with obama care. maybe we've gotten through some of that now? >> we have. you have four of these big companies that have spent a long time that have tried to consummate -- it's the usual process after its dissolved. one of the companies saying, we're going to raise our dividend. we're going to do buy back and nurse your wouldn'ts a little bit. it makes sense, it also shows you, they rushed into it, kind of thinking they knew what the rules of the game were going to be. now that we know the rules, it does make sense to step back and figure out what's next. >> thank you. let's get to a news alert on berkshire hathaway now. >> thanks so much. we are digging into the filing of berkshire hathaway. really interesting stuff going on here. first with apple, he's added 42 million shares in his position of apple. that's more than tripling his position. we're not sure if that is buffet himself or one of his deputies. either way, it's a huge vote of confidence from berkshire hathaway.

we saw big adds to the airline holdings. berkshire more than doubled its position in american airlines. in delta, he added 54 million shares and added 24 million shares to united. some new positions as well, he also increased or added a position of 8 million shares to monsanto, which, of course, signed a deal to be acquired by buyer in october. that deal is still pending, he took a stake in sirius xm as well. the company adding 166 million shares. these are as of the end of the year. we're still digging into the numbers a bit more and we'll get back to you soon. >> sold out of walmart, sold down from verizon, leslie, thank you. >> there's a lot happening here, the sirius position is interesting. >> it's a company that's in the

drama. there's some clustering there with in billionaire value investors, i wouldn't be surprised to see them in the same place. in terms of the overall turnover, i feel like prices changed a lot. when prass change a lot, you have a lot of things that get revalued in a hurry. it's logical you may see some portfolios. >> also increased holdings in bank of new york melon. we're not done yet. breaking news, procter & gamble, david favor, what's happen something. >> yeah, this morning -- or this afternoon now, we can tell you that p&g has a large shareholder in the form of trient management stock now. it should be hitting momentarily, if it hasn't already. showing what is a small stake for trian led by nelson peltz and edgarden in procter & gamble. what i can tell you is, that was as of december 31st. and in fact, since then, they've built a position that sources

tell me is roughly 3 $1/2 billion making it a sizable position for trien. and a very large shareholder of p&g's many potentially it would seem setting up what might be an activist play for trian. interestingly, sources have indicated to me over the previous days and weeks that there had not yet been an approach made by trian to procter & gamble to discuss their new position. they typically have a very long -- what they call a white paper about all the different things, they would like to see a company they take a large stake in do, it's not clear they have introduced that to trian. the 3 $1/2 billion stake is a large one for that company. what specifically they're going to be asking is not clear at this point. and it's likely they have yet to

actually sit down with p&g. we don't know it trian has been active and taken on proxy fights, such as the one against dupont where they tried to unseat its ceo and get on the board of directors. nelson peltz has a board membership. they've stood back and been what i call confirm tory capital for some companies, including general electric. when they came out along with that company with a large stake and a white paper, but came out together. and affirmed a lot of the strategy that was then undertaken by the ceo. we'll see how this goes, it's interesting to note that this is a very large position for them. by the way, a lot of people have been speculating on this, ever since i sat down with nelson peltz in early degeneration, i think we may have the tape from that time when he at least told people that they were working on

something big. >> we do have a new position. we started buying about two weeks ago. we can't announce it now. we bought quite a bit of stock, we have quite a bit more to buy. and i hope that we will be able to talk in confidence with management and the board. >> and there you have it. again, unclear that they have actually had those conversations apparently the stock may have moved away from them for a bit of time. taking them longer to amass the position than they would have liked. and they are outed as a result of the 13-f which comes out and shows that position. and when you're talking about trian you're not talking about a lot of stocks that they own. it's easy to quickly see what the name is, that they had a relatively small position in at the end of the year, but a far larger one now, back to you. >> if you'll stay there for one minute, i'm wondering what are their plans for p&g. >> it's interesting, given that

p&g is experienced with an activist investor, bill was in there, kind of on some level got some satisfaction, had the ceo replaced, but the stock as i look back is roughly where it was back in 2013 when bill ahman exited. >> you're right, he followed trian into mondolese, remember, and now we have trian following pershing square. they're not in there any longer, ahman. potential activism. i don't know, the new ceo has not been a place for that long, of course, taking over when they got the old guy for a period of time once again. it's always been about growth there, and being able to get margins up and investing appropriately in r&d. capital return is certainly part of trian's playbook. operating well from their perspective, in terms of how

you're using capital. we'll have to wait and get a little bit more of an articulated strategy from trian. as you heard nelson say, they do like to approach the company, talk to them first before deciding whether they're going to be allies or enemies. >> p&g shares are up 2 1/2% on this news day. thanks david. apple has started producing original video, does the company have its eyes on becoming the next netflix or even buying it? aig ceo peter hancock joins us exclusively to break down the insurance giant's latest earn g earnings. we're back in a moment. ve i'veermaperomony ve

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another record setting day on wall street. the dow closed up 20,500 today. the rest look forward to new highs there much let's send it over to dominick for an earnings alert. >> this one's going to be pretty rough. we're talking about fossil group, which just reopened for trading not too long ago, down

about 15% on half a million shares of volume, this after the company reports earnings that missed expectations 1.03 versus 1.18 estimates. sails coming in light. $959 million. versus a $977 million estimate. comparable sales down 7%. and also guidance for the full year, 2017 between $1 and 1.70 a share. lackluster guidance, a miss on earnings, a miss on sales, a miss on comparable store sales, that's why you have a stock that's down about 15% in the after market. down 12% year to date, down 30% over the last 12 months. >> i think ouch is the only word mere. what is the size of this company -- >> another chain retailer, this after hours move will take it below a billion dollars in value.

the guidance range for this year is $1 to 1.70. you have that wide of range, you have no grasp of where the bottom is, they're going on a minus 5% top line last year, minus 8% the year before, clearly the categories are having trouble and they're not finding their way out of it. >> tough session for fossil. time for a cnbc news update. >> here's what's happening at this hour, the half brother of kim jong-un has been killed in malays malaysia. south korean tv reporting he was injected with poison at koala lamb pure's airport this morning. protesters are urging burr to have a heart when it comes to health care and not gut what is currently in place. severe weather hitting several areas across southeast texas this morning, the storm flattened homes, uprooted trees

and knocked out power in the houston area. one woman said that destruction basically was over in a matter of seconds. and eight years ago, coca-cola introduced its design your own vending machines. now the company has created its first products from all the data that those machines gathered. it appears people demanded sprite cherry, along with sprite cherry zero will be hitting shelves nationwide soon. that's the news update this hour. kelly, back to you. >> we'll see if warren buffett likes it, sue. >> yes, absolutely. >> shares of apple closing at another all-time high today, the company has been making a push into video streaming content. they'll be launching a tv show called planet of the apps. >> everybody wants me to come up here and basically say, hey,

we're going to do the same thing netflix is and we're going to be just as big or whatever. four years from now, i don't know where we're going to be in relation to this like i said, we're trying to do some different things. how fast it grows and where it grows to remains to be seen. >> let's bring in that man who interviewed eddie q last night. peter, apple's content plans are they a media company now? >> they look like a media content to me. to me it looks like a start, it's probably a toe in the water, like you said, they have two tv shows coming out. asked over and over if they want to make bigger steps. he said as clearly as an apple executive can say, they don't want to do that, at least not right now. they want to do unique cultural

stuff if they wanted to do what everyone else is doing, it would make sense for them to buy a studio. >> i looked at the relative size. they bought netflix, it would be 5% of apple's current revenue, and 4% of apple's profits, clearly on a financial basis that wouldn't be a big move, it would be very expensive, the funny thing is, everyone looks at netflix and says, the barriers to entry aren't that high. in theory, apple could do something similar even if it was in a slower or more targeted way. >> the one thing that netflix has that a lot of other people don't have is direct customer connections, in their case, 50 million people in the u.s. apple can say we have that as well, through itunes, they have direct connections, credit card numbers for tens of millions of customers. if you're apple you can say, if netflix has these connections of customers, we have that, we can buy and license content if we want to go there. can he do it without having to

buy netflix. >> what are the costs of doing all this, peter? >> for apple right now, deminimous. i think less than what they're spending on their private planes around the world to do these deals. i imagine they will take bigger swings as they get their sea legs. making a reality tv show is not very expensive. car pool karaoke is not too expensive. asked if they would do game of tloenz. yes, that's a couple hundred million. >> drop in the bucket for them. >> up next, aig ceo peter hancock to break down the company's earnings at this hour.

welcome back, shares of aig falling nearly 4% after the company reported fourth quarter results earlier this hour. let's get to peter hancock who joins us. welcome. >> hi, kelly, how are you? >> we're good, like everybody, looking through the numbers here, it looks like there was a big gain and charge related to this berkshire transaction, can you tell us more about that? >> the news of the quarter today is the prior development that we announced on our reserves. you immediate to look at that

together with the announcement we made three weeks ago of the reassurance transaction we did with berkshire hathaway. which offset a large part of that strengthening, we're really sharing the risk with berkshire on this historical set of underwriting decisions that go back decades, basically, the last 40 years. while a very large number, even for a company of aig's size, the 5.6 is offset by this very substantial reassurance transaction, we have an offsetting gain of 2.6, i think this is a manageable adjustment to our reserves, and radically reduces the uncertainty around the book value of the company, and gives us more secure earnings going-forward. >> and the volatility we've seen there too. a lot of this reduces your exposure to u.s. casualty. what's happened there, why is it so volatile, roughly speaking why is it a pretty poor business. >> they cover a lot of different things. it's one of the largest if not

the largest commercial insurance companies in the united states. we reflect what's going on in this set of risks in the u.s. economy. it ranges everywhere from workers compensation to commercial auto, trucking, to medical malpractice, all of which have been affected by significant upticks in terms of trends. we've had a lot more accidents that are a lot more severe. jury awards have been increased, and so taken together, we've had to strengthen our reserves against future claims for our clients. we have in the meantime reduced our reliance on this business. 10 years ago, we were doing 15 billion in revenue in in this business. today it's down to 3 billion. we've been reducing it, and quite dramatically over the last 18 months as we realize these trends were going the wrong way. so put in the context of a more balanced set of lines of business, with our multiline clients, we think that the quality of earnings going-forward will get a lot more stable.

>> the quality of earnings will be a lot more stable. you do these transactions, square that piece of the business away. does it free up capital? is it able to do anything more in terms of better pricing? >> it means we have less capitol tied up in our history, and mor capital to deploy going forward. if you look at the last year, we made a tremendous amount of progress in returning the capital. we returned more than we promised. about $13 billion to shareholders. we were able to reduce our cost base which gives us more capital flexibility going forward to invest in growth as well as returning more to our shareholders as promised in the year to come. >> so speaking of the business lines going forward, it might be less volatile and part of your business increasingly. what are some of the ways you'll look to the market and say this is where we want to be as opposed to where we come from in. >> we think of our business around clients.

on average we have half a dozen with us. they typically have as much as ten years with our clients. these long term relationships. late in the financial lines, we're doing highly engineered property in ways that bring our engineering talent to improve safety and the construction. we are also the leader in cyber insurance. had our clients care very much about it. so this is trying to anticipate future needs. and you're still trying to do those things like reducing expenses. you mentioned a huge amount of capital that has been returned. when we talk about risks, we've been talking a lot about low interest rates. that's turned around lately and we've seen the benefit. do you see a one to one change in your earnings potential? the returns on equity? >> it is a culmination of the

absolute level of rates. the shape of the curve and the level of spreads. the three factors for sure. the environment is a bit better today than a few months ago and that's true of the longer lines in the casualty business. last year we were top line on fixeder annuities and interest annuities. we're quite optimistic the outlook will be good. we had a major turn around in our personal insurance. that's a business with much more sustain sxabl stable earnings potential going forward. >> a microcosm of the economy. thank you so much for going forward. >> the ceo of aig. just comments on the outlook for

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welcome back. apple's cfo was just making comments for growth. >> so apple's cfo at of goldman sachs talking about the services business. a focus for investors, fast growing high margins. here's what he had to say. >> all the business is doing very well and we've been growing at 20%. the reason why we've given this out, it will send a message to the apple community.

this is a business that on a stand alone basis, obviously, it will be even bigger. >> now, he also taught trump donomics. he is a man of cash repatriation. he said that would give the company in his words, flexibility regarding capital return. not a fan of the border adjustment tax. he said it is hard to imagine how that tax would be good for the american economy or the american consumer. >> thank you. what is the context around these commen comments? the timing and the making of it at the moment? >> well, he's here. this is a technology conference. there were a few different tech economics. oracle was here, google'ses diane green was here. he is on stage and taking questions on a range of

subjects. he was asked about trump-onomics. tim cook when i last spoke to him, all for cash repatriation. >> thank you. josh will thlipton. that does it for "closing bell" today. "fast money" begins right now. >> "fast money" started right now. new york city's times square. tonight on "fast," one group of stocks are signalling there could be trouble ahead for trump's tax plan. plus, warren buffett just added a boat load the his portfolio. but there was another group of stocks as well. we will have those names. plus, shares of proctor and gamble surging.