agree, and what would the fed need to do if anything, to boost trend inflation if it has fallen and related to that you've said you expect the inflation softness to prove transitory how firm is your current expectation that the slowdown will remain transitory and what implications would of that for monetary policy if it is not >> so the term trend inflation usually they're a variety of statistical techniques that can be used to extract a trend from a series exactly what that means is in some sense a statistical thing and there are methodologies that would show some modest decline in recent years in the trend afterall, we have had a number of years in which inflation has been low, as i said and answer to an earlier question, i think

if you go back to say 2013 and consider the -- until this year, the reasons why inflation was low are not hard to understand it's a combination of slack in the labor market, declines in energy prices and strong dollar that pulled down import price inflation. so, what's important in determining inflation going forward is inflation expectations by some -- by many of professional forecasters those have been rock solid we do also look at household expectations which have come down some. market-based measures of inflation compensation as we mentioned in the statement, they have declined, and they have been snabl recent months, but

they have declined to levels that are low by historical standards. that might suggest that inflation expectations have come down, but, when can't get at clear read, there are risk built in to inflation compensation that make it impossible to extract directly with inflation expectations are so, you know, there is a miss this year. i can't say i can easily point to a sufficient set of factors that explain this year why inflation has been as low. i've mentioned a few things, but frankly the low inflation is more broad-based than just idiosyncratic things the fact that inflation is unyou believely low this year does not mean that that is going to

continue remember in january or february, it was running at a 12-point basis at around 1.9% and we looked at the close to two now, we've had several months of data that have meaningfully pulled that down. and what we need to do is figure out whether or not the factors that have lowered inflation are likely to prove persistent or they're likely to prove transitory and that's what we're going to try to be determining on the basis of incoming data and you asked me about the policy implications, of course, if we determined or view changed and instead of thinking that the factors holding inflation down were transitory, we came to the view that they would be persistent it would require an alteration in monetary policy to move inflation back up to 2% and we would be committed to making

that adjustment. >> markets seem to be pricing in still at a shallower act than the fed does in the sep. and i wonder what do you think that markets might be missing here and sort of what's your conviction about, you know, that your view was the correct one on the gradual, the pace that gradual means which seems to be a little bit faster than what markets are pricing. >> i'm not really going to try to explain what market participants are thinking. i think all of us market and paths have come down, not in the last couple of quarters, but over the last several years, there's been a growing recognition that the so-called

neutral interest rate consistent with the economy operating at maximum employment that that rate seems to have come down and most of the economic papers and research bearing on this topic suggest that it's quite low. market -- sep, the fomc participants, you can see by their estimates of the longer run normal rate of interest, it is this time it came down from the median came down from 3% to 2.75%. so that shows that even in the long run, momc participants in light of incoming data are adjusting their views. i would say they still believe that in real terms that neutral rate will be rising somewhat

over the next few years. with a 2% inflation rate that long range estimate in real terms managed the 75 basis points which is higher than the zero or slightly positive rates now. so that's one factor that explains the path in the sep market participants may have lower estimates or believe that a low neutral rate may be more persistent let me emphasize that, as i said before, there's nothing set in stone about the policy paths that you see in the summary of projections. there's a great deal of uncertainty around them. not only is there disagreement, there's also uncertainty and momc participants have been revising their views over time, and they will continue to do so. i'd also point out, a couple of

technical reasons why it's difficult to compare what you see in the sep and market employ paths. one is that fomc participants are writing down what they think is the most, most likely or moal outcome for rates. but, of course, there are downside risks and the mean rate, if they're asked to write that down would take account of waiting all possible outcomes and like we would be lower than what participants are writing down as their most likely outcome. in addition, in markets, many economists have suggested that there are term people are ya that can effect moving from the so-called market employed path to a view for what the future

federal fund rate path is. and if those term people are ya are negative as many economists think they likely are, there's a little bit less difference between what you see in the fomc plot and the marketing plot. >> chair yellen, your term expires in february, have you had a chance to meet with or discuss your situation with president trump yet? and if so, what were your impressions of him and what he's looking for from the federal reserve? >> so, i have said that i intend to serve out my term as chair in that i'm really not going to comment on my intentions beyond that i will say that i have not had a further meeting with president trump. i met with him early in my term, and i've not a further meeting

with him >> adam shapiro, fox business. a month ago you delivered in a speech in wyoming in which a balance of research says have substantially boosted resilience without limiting credit availability or economic growth. two-part question based on that quote. first, what message do you want congress and president trump to hear from that statement that the fed has followed to help bring us to full employment there have been people who haven't benefitted, for instance, 52 stock 48%, don't. they have not participated in the gains housing prices, the median house 39 million americans spend more than 30% housing. who would you say to those people about fed policies and the impact they've had on their lives? >> okay.

so you asked me what was the for my speech. and i would say it's that we've put in place since the financial crisis a set of core reforms that have strengthened the financial system and in my personal view, it's important that remain in place and those core reforms are more capital, higher quality capital more lijdty, especially in systemically important banking institutions stress testing and resolution plans. and those four prongs of improvements and banking supervision have really strengthened the financial system and made it more resilient. and i believe they should say in place. but, i also tried to emphasize, and believe that they have

contributed to growth and availability of credit i've also tried to emphasize that all regulators should be attentive to undue regulatory burden and look for bays to try to scale that back. and this is especially true after years in which we have implemented a large number of complex regulations. and we have been committed to doing that i would point out particularly community banks that are laboring under significant regulatory burden. we have been looking for ways to scale back burdens run in the gripper process where we've listened to concerns among community banks and are looking for ways, for example, to simplify capital standards and reduce burdens, and that's, that's very important. more generally, we want to

tailor, we want to and we would like to see congress as well we could do things to appropriately tailor regulations to the risk posed by different kinds of banking organizations there are some things that dong could also do to help, help that process and we have made some concrete suggestions and then some of the regulations that we have put in place with other regulators since the crisis, like the volka rule are really quite complex and we're working, we believe we should and we're working with other regulators to try to see if we can find ways while carrying out what dodd frank intended that banking organizations not be involved in proprietary trading, and nevertheless, the implementation can be less complex.

so, that was -- that was my main message, your second question asked about what impact the fed has had on income distribution because of the fact that stocks and homes can be disproportionately we were faced with a hugely session that took an enormous toll in terms of deprive i depriving and disproportionately lower income people who were less advantaged in the labor mashlt found themselves without work we had a 10% unemployment rate and our congressional mandate is maximum employment and price stability. so, we set monetary policy not with the view toward affecting the distribution of income, but toward pursuing those congressional mandated goals and i am pleased to see the

unemployment rate and every other measure that i know of improvement over these years and that is hugely important to the economic well being, not at the top end of the wealth and income distribution, but, to the bottom end of the income distribution and we have seen this year needing an income in real terms rise significantly with gains throughout the income distribution >> associated press. ma da chair, the next month with the departure of vice chair fisher, the fed's going lose it's quorum. the fed board, do you have contention -- is that going to present operational challenges for you. do you have contingency plans.

he will be confirmation will be approved and your discussions with the administration have they given you any assurances that the pace of a nomination is going to pick up soon? >> so first let me say that i will greatly miss vice chair fisher he's made enormous contributions to the fomc and to the broader work of the federal reserve. and i have really enjoye working with him and appreciated his wise council it is conceivable you will be down to three governs, i have full confidence that even if that happens, carry out our compliment of responsibilities there's every action that we are allowed to take under the federal reserve act can be taken even if we were a board of

three, of three. although, we will have to abide as we always do by the restrictions that are part of the government and the sunshine act. i would welcome full compliment of colleagues, we have a lot of work to do distribute to over more people, but perhaps more important than that, i think it's very important to have a board range as we deliberate on policy actions i've had very good interactions with randy, hope he will be confirmed. i look forward to working with him and you know, i hope the administration will make other nominations to fill our slots. >> heather long from the "washington post." as you know, congress is considering a major tax reform

package. do you or any of the committee members have concerns if that package does not end up being deficit neutral and ends up adding to the debt would that be problematic for the economy? >> look, that's something that's a matter for congress and the white house. you know, i've put forward about fiscal policy that i would reiterate that one of the problems that the american economy suffers from many other kmis around the globe is slow productivity i think it would be desirable if a fiscal package had the potential in it to create incentives that would raise productivity growth and we do face in terms of longer term deficits as the population ages

an unsustainable debt path that will require i believe some adjustments to fiscal policy and i hope congress will keep that in mind, but beyond a few core principles, it's really i don't to want weigh in on details. >> nancy marshall, when you testified before congress last july, you said that you might be prepared to take enforcement actions against wells fargo if it proved to be appropriate. do you think it's appropriate and what actions could you take? >> so, let me say that i consider the behavior of wells fargo towards it's customers to have been egregious and unacceptable we take our supervision responsibilities at company very seriously, and we, we are

attempting to understand what the root causes of those problems are and to address them and we -- i'm not able to discuss confidential supervisory information and not yet able to tell you what actions we may take, but i do want to say we're committed to necessary and appropriate to make sure that the right set of controls are in place in that organization >> give me any kind of a timeline we're working very hard on it. >> hi, thank you david harrison with dow jones. i'd like to follow-up on the balance sheet question if i may. what specifically would it take for you to reverse the decision to wind down the balance sheets and under what conditions would you consider sort of adding to

the balance sheet again, and separately, as a follow-up to that, looking more broadly, how do you think history will judge the effectiveness of your asset purchases and the conditions under which that policy should be used? >> so starting with the last part of the question, i mean, my own judgment based on my experience and the economic research that has tried to estimate the effectiveness of our balance sheet actions starting in 2008 and has also looked at the similar balance sheet actions in other parts of the world, including the euro area is that these actions were successful in making financial conditions more accommodative. and i believe in stimulating a

faster recovery than we otherwise would have had a recent fed working paper estimated that the full set of balance sheet actions that we took during the crisis may have lowered long-term interest rates by about 100 basis points. there's -- obviously there are different estimates around of what difference it made, but i would say that it's effect of -- it will be up to future policy makers to decide in the event of a severe downturn whether they think it's appropriate to again resort to balance sheet, to adding, adding assets to a balance sheet. i would, i would say that if a economists are correct that we're living in a world where

the level of neutral interest rates, not only in the united states, but around the world is likely to be low in the future due to slow productivity growth and demographics, now, we don't know that that view will bear out to be correct, but it is a view that many people adhere to when there is evidence of it then future policy makers will be faced with the question of in the event of a severe downturn, where they're not able to provide as much stimulus as they would ideally like by cutting overnight interest rates, what other actions are available to them and during the crisis, we bought longer term assets and used forward guidance and for my own part, i would want to keep those things in the tool kit as

being available. it'll be up to future policy makers to decide how to rank those or whether or not there might be other options that are available to them, but i don't think this issue will go away although perhaps it's only, well, you know, this could well be a decision that future policy makers will have to face in the event of the economic shot you asked me what would it take for us to resume reinvestment and i can't really say much more than we said in the guidance that we provided which is that if there is a material detier ration in the economic outlook and we thought we might be faced with a situation where we would need to substantially cut the federal funds rate and could be

limited by the so-called lower band it is that type of determination that our committee is saying would might leave us to resume reinvestment so that's our committee has been unanimous and affirming this statement of intentions so i think that's where our kmoe stands so that is a somewhat high bar to resume reinvestments and that's why an answering previous questions, i'd say well you know there's some small negative shock, our first tool, our most important and reliable tool will be the federal funds rate, but if there is a significant shock that's a material detier ration to the outlook, we would consider resuming reinvestment

>> hi chair yellen, with politico you've been on the financial stability for a few years now, and i was wondering if you had any thoughts on whether the designation process versus financial institutions should be changed or improved in any way and, somewhat separate, but related question, the situation with equifax, i was wondering if there was anything related to that that might raise systemic issues that they might need to discuss. >> so, you asked first about the designation process. so during the time that i've been on the f stock, only one firm was several firms before i participated metlife was designated during the time that i was there and i've seen how the designation process works.

i do think designation was important, we saw during the financial crisis that systemically important nonbanking organizations in the aig. that they're distressed broad, systemic consequences the u.s. economy. and having the ability to designate firms when the f stock makes the determination that their disstress or failure could have systemic repercussions, i believe that's an important -- that's an important policy cool for f stock to have available. now, it's not meant to be a one way street in the sense that a

firm that's designated, the procedures require annual reviews. firms may change their business models or just have a conduct their business and we should welcome the designation firms if their business model is changed in a way that leads us to believe that their failure distress would no longer be systemically important and those are decisions that we make every year so unsatisfied with that process capital dramatically changed it business model and was the designated and, you know, i believe it's a process that works. i know the treasury is looking at this and may make recommendations and if they do, to consider them as part of the f stock process, but i think it's been important and basically working.

you asked about equifax and of course that is a very serious data breach. we would really urge consumers now to be very careful in monitoring their credit reports and financial situation and through our supervision, we're working with the banks that we supervise to make sure that they take appropriate actions with respect to their business processes in light of the fact that there could be breaches or fraudulent transactions. receive they might use for their example and credit determination could be contaminated by bad data and more generally, it points to the importance of strong cyber security controls and attention to cyber security risks which we

do see is the most significant risks to the financial sector and we're very focussed in our banking supervision in making sure that banks have appropriate controls in place and the equifax breach i think i liked the importance of that >> michael mckey from bloomberg television and radio we've talked a lot today about what you're going to do and what you may do, but not necessarily about why. with four rate increases behind you, financial conditions are looser than before you began, and i wonder if that bothers you overstimulating the economy. if you feel inflation could break out more quickly than we have seen. or if you feel there's a financial stability question because stocks, bonds, and real estate are all so expensive. how would you explain what the fed is doing, why the fed is doing it to the american people.

>> first of all let me say that the decisions we have made this year about rates and today about our balance sheet are ones we've taken because we feel the u.s. economy is performing well we are working down our balance sheet because we feel that's a stimulus that in some sense is no longer needed so the basic message here is u.s. economic performance has been good. the labor market has strengthened substantially every measure for the labor market whether it's the narrow unemployment rate, the broader unemployment rate, the number of people working in part-time jobs who want full-time work, the level of job openings, the quick rate, the difficulty that firms your facing in hiring workers,

the level of confidence we see in surveys about the labor market, all of that is pointing to vast and continuing improvement in the labor market. and we see sufficient strength in the economy in terms of spending that growth with it's ups and downs, but nevertheless is strong enough, looks to be strong enough in the medium term to support ongoing improvement in the labor market and all of that is good and i think that the american people should feel the steps we're taking to normalize monetary policy are ones that we feel are well justified given the very substantial progress we've seen in the economy. now, inflation is running below where we want it to be and we've talked about that a lot during this last hour

this past year, it's not clear what the reasons is are, i think it's not been mysterious in the past, but one way or another, we have had four or five years in which inflation's running below 2% objective and we're also committed to achieving that so, the monetary policy path that we follow and the paths that my colleagues are writing down in our projections is ones they think will be appropriate given economic conditions are ones that we think are necessary to move inflation back to 2% and to maintain a strong, labor market on the sustainable basis. and in making these judgments about the path of policy, we have to balance various risks. one risk is that if we tighten

policy too quickly, we may find out that although we don't think this now, that the inflation for short fall is something that's going to be persistent and if we tighten too quickly, we could undermine inflation performance leave it to a lower level inflation expectations could fall and that could become engrained and that would be dangerous. so that's a reason to be cautious about raising interest rates when inflation is as low as it is but on the other hand, we have a strong labor market and a low unemployment rate and although the gains are not quite as strong this year as it was in 2016 still african and too much here which is quite a bit above the pace of making 100 to 120,000

that would be consistent with stable unemployment rate against the manner that we expect. so if we don't do anything to move policy accommodation and the labor market tightens and just continues to tighten as you mentioned, arguably with the conditions overall haven't tightened that much. the economy could overheat, inflation could rise more quickly in a buffer objective, that's something that could occur with a lag and that would force us later on to tighten policy more rapidly could be ideal. there were risks on both sides of the objectives and most of my colleagues have concluded that a gradual path of rate increases

while constantly watching incoming data being open to revising our views on the outlook. and revising our expectations about policy is the best way to manage that set of risks >> fed chair janet yellen concluding her news conference after the announcement earlier if you haven't heard yet that the fed has anticipated leaving interest rates unchanged and they begin the process of unwinding the feds historic $4 trillion balance sheet next month. >> i mean look, whether or not there were any big surprises, this is a significant meeting. we've been waiting for more clarity -- >> a pivot >> absolutely. yes, they've started the tightening process now it's going to be picking up some steam >> if there's a headline market move, that has taken us now the

yield at 145 took us to a level we haven't seen. the dollar index has risen the bank stocks are going up >> when you talk about the highest yield. that takes us to precrisis levels, almost ten years, interestingly enough it's happening on the shorter end and the longer end is not moving quite the same way >> we welcome you to closing bell then you knew that already let's get to our panel we have a full house today to comment on all of this mark zandy is with us today. we have peter vokbar from the lindsey group. susan ox is here with us at post nine, rick santelli is at the cme. and steve leishman, you raced out of the room there. you're already ready to go here. and i'll start with you. no disrespect to the fed chair, but that was an especially wonky news conference i thought.

susan disagrees with me. what'd you think >> just fine well, i think the takeaway from this, what i'm sort of surprised about is the certainty with which yellen is forecasting policy third rate hike looks like it's on the table and the extent to which the economy in the chair's opinion, the hurricanes notwithstanding seem able to take or withstand that hike. which i know was wonky, i am telling you i'm sure the trader and investor guys wanted to know that question. is there any sensitivity to the balance sheet reduction plan to income dag that to incoming to changes in the deficit outlook. she really said no essentially the fed fund rate is the way she's going to, the foc is going to respond to economic developments and the reduction in the balance sheet is essentially on auto

pilot. >> all right, peter, are they going to hike rates in december after all of this? is the market believing this fed? >> i think it honestly depends on where the s&p 500 is. i think if the market handles the beginning of quantitative tightening in a rather smooth fashion, then they're definitely raising rates in december. that said, even if we have a modest pullback in stocks, i still think they're raising rates in december. yellen basically finished the press conference talking up the labor market and giving a variety of stats on the tightness and that's what they are focussed on. they want to continue to normalize this interest rate environment they put us in i don't think much is going to stop them. >> susan, you have two pages full of notes there, we were joking during the news conference when i said this was an especially wonky news conference, but you said you've been riveted by who this whole thing. >> i wasn't kidding. i found is fascinating one is the point that steve mentioned, excellent question about how are they planning to use this as a tool and they're

really not so they're really not -- they're going to keep this on auto pilot, and i think that's an important point for the markets to understand. so don't be looking to this for indications of how they're feeling about the economy. the second point, five times in the course of an hour, she said, they don't really understand what's going on with inflation to me, that is profound to hear from a fed chair >> let me ask you about that so the one interpretation of it, kind of what she was saying at the end there, the inflation short fall may not be permanent, we don't to want tighten quickly, that would be dangerous. you could almost listen and say oh, you know, they're going to be cautious, they're going to be dovish is that the message or you're saying they're almost putting that aside and looking at other variables from here? >> i think it may be looking at other variables. i think when you're looking at the markets and looking for points of uncertainty. this is like a meta level of uncertainty in that the economy is not functioning the way we expect in the past we could attribute to low energy prices, but now,

we don't really know and then shep went on to say, we're assuming or we believe that it's not -- these are transitory things. this is not going to be permanent. they don't know. to have a fed chair say that times it's a mystery >> that is like a loud ringing bell. >> what's so magical about that 2% inflation rate they've been targeting forever then >> well, that's their inflation target that's what they're trying to get inflation expectations nailed to. and you know, inflation expectations are critical. they don't want expectations to fall below 2% or rise too far at 2% then it becomes difficult to manage and they've worked really hard to get expectations at 2%. they've -- it took a number of decades to actually get there. now they've achieved it, they want to preserve it because it makes the conduct of monetary so

much easier. now they could change the target in fact there's been a lot of discussion about whether 2% is the right level, maybe it should be a little bit higher, and that's a reasonable discussion, but once you nail down what your target is, you want expectations to get there that makes the conduct of policy so much easier >> all right, but rick, how about a reality check? everything from markets and where rates are at this very moment, where the dollar's been to whether the futures are on the same page as the fed >> i'm not sure. i don't know how anybody could look at the notion she doesn't have a gps on inflation is profound when they've been trying to pull every string on this puppet to get it to go higher for ten years with no success and on the balance sheet is a tool. she's exactly right. see the fed shouldn't be doing a lot of things they're doing. sbhont buying mortgages. they have no mandate to buy mortgage securities.

but we never talked about that, if they started treating the balance sheet as a tool, my guess is somebody'd pay a whole lot more attention to the ability of them to own that hammer so, i think it's very smart on their part to down play this and put it on automatic pilot. ill still contend they want to get that balance sheet down only to bring it up again some time in the future. once a tool, always a tool >> yeah. i was just going to say, our fed's balance sheet seems innocent relative to japan and europe, yeah they have mortgages because we have a mortgage crisis >> so that kills too is more guilty or less guilty of one that kills 20. >> i can understand how we got here it's not like the other central banks that seem to own their country's entire stock market. >> yeah, no -- >> the quantitative easing, the qe, the bond buying was incredibly effective, right. i mean it brought down long-term interest rates, mortgage rates when we absolutely positively needed it. in supporting the economy. i mean, it helped get -- >> zandy, ten years, 2% economy.

>> ten years later, rick doesn't give an inch on that, move on. >> what is a counterfactual. >> move on, i'm not going to make his point, but the idea that the fed didn't have a mandate to buy mortgages or bonds is a little bit beyond credulous. >> they can buy any government back security. the mortgage securities they bought and the mortgage debt they bout was fanmy may and freddie mack that is concerning. >> as the fed starts to run off the balance sheet, is there a risk that now that product's going to be more expensive it's going to be less liquid is there going to be a negative impact here? we all talk about them being on autopilot, but this is still a significant move they're making. >> well, after the previous qes ended, interest rates actually went down and when they were buying treasuries, interest rates went up. so it did exactly the exact

opposite i want to make one point here. bern i can about seven years ago was asked are you monetizing the debt he said no, what we're doing is temporary or here we are almost ten years in to something called temporary. and that's one of the reason why is they're going monetization of the debt is the last place the fed wants to be in if the japanese to want go there, okay, that's their thing, but i don't think that monetization of a debt should be a permanent facility here. and i think the fed is trying to walk away from that as well. >> susan, i want to give ewe chance -- or answer rick's comment about the gps. >> the point was not the fact of it but the admission of it and it's different it's one thing to know another thing. what i was going to say just so the last point, the pace of the change sheer also important. we have to remember that they are doing this in a painfully slow manner, this is like raking your line one leaf at the same time you know, it would take you years to get all of those leaves off the lawn

what's it going to do? >> one leaf at a time. >> who was trying to jump in there before we go >> everybody >> one quick thing. >> kelly because -- >> go ahead, mark. >> mark first, go ahead. >> i was just going to say, if quantitative easing lowered we're winding down and qe fades away, interest rates will rise that's exactly what should happen >> last word >> i was just going add, i don't understand the feds of the plan. there's a bit of human being reduce it shouldn't be altered no matter what i think that's a problem i also think it's a bit like when i want to start the car, i'm going to go to using the emergency brake which is cutting rates rather than a series of possibilities like gently taking his foot off the gas pedal or pushing on the regular brake which is the possibility of tweaking that balance sheet reduction plan i think peter is right they want to get out of the idea of monetizing deficits, but i think

that they shouldn't have a plan on autopilot they don't know what's going to happen >> somewhere some day, i hope somebody piles all the analogies to monetary policy we hear over the years and puts -- >> it's the best we can do >> that's it thanks, guys >> thanks, appreciate it very much your comments. mark zandy, susan ox, rick santelli, and steve leishman and we move on, only 14 minutes left in the trading day. the dow is positive again. so this would be the 42nd by my account -- >> record close. >> record close of the year. s&p is holding negative and we have kinds of things going on on the credit markets latest plan to repeal and replace obamacare. that's gaining transaction in the senate and it would send states money in block grants so that they could decide thousand spend on health care. coming up, we'll explain exactly how that would work. and whether it would really be help fix some of the obamacare issues right now >> google is reportedly close to

acquiring htc. already builds googles pixel phone. why they might be getting back into the phone business. remember, just years after dumping motorola stay with us for your heart...

your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. 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. all right. this is interesting. like yesterday, art carbon just stopped by and said that the market on close orders show an imbalance to the buy side of $11.4 billion. just the opposite of yesterday >> he said up to be 60 >> should be up 60, but if it's not, he said we've seen some pairing off. there could be selling pressure coming in as well. we'll see. >> just like we saw yesterday. >> exactly. >> there's just a couple minutes left to go let's talk about how the market is reacting to the news fed

conference it just finished a couple minutes ago. >> with us now, bob landri, chief investment officer and apparently recently elected president of surge 986 llc i've never mentioned that before. >> i have all the votes. now the equity market is coming back here. everything else was predictable. yields going up, dollar index going up, all the things that would be reflective of the reduction of the fed balance sheet. what do you make of the resilience in the equity market here though? >> it's not a surprise i don't think anybody was taken back except the projections. that's another story in terms of the rate increase is going out over the next two years which seems pretty aggressive without the same kind of performance from gdp. they're living in a fantasy

world or not doing their homework >> interestingly bob, rate sensitive areas like the fact that two years moving up to where it is, but we saw them ripping higher earlier than year then come to a screeching halt, what do you make of it >> to steve's point, those rate forecast so if the fed does get aggressive into next year. the one thing that concerns me is if they don't respond in kind and continues to stay flat and they're jacking up short term rates, we get an inversion of the yield curve which is a classic signal >> i would remind everybody though, when we entered this year, the fed was telling us we'd have many more rate increases this year than we've had. >> true. i think what will also play into this is the growth outlook so what happens in washington will be important. do we get a robust tax package out of washington that can boost growth in 2018 and beyond? and perhaps lift the ten year

yield in the future. >> yeah, same kind of question, bank, you know, regionals versus the money centered banks how do you think this whole dynamic is going to work it's way out? >> thank god for diversification, huh i mean, i sold my banks half way through the year just so i'd have exposure. that's been a godsend in recent days going forward, you want to be where the money's going. regardless of monetary policy, although it'll be somewhat aggressive you want to be in defense stocks this is where money has to go. there's no if's and's or but's about that >> you're a high altitude kind of guy one of our previous guests he's of the opinion that the fed give and take. and when it was giving, the equity market is doing what it was doing since 2009

you can't keep going up in the equity market if they're going to start reducing the rates. are you kind of rethinking your strategy in this market here >> we've been of the mindset that u.s. stocks are pretty fully valued here. emerging market equities we think that u.s. stocks as long as the economy continues to grow at this modest two, 2.5% gdp growth rate. clearly given the run that stocks have had in 2009, i think there are better opportunities elsewhere. >> and real quickly, sergeant, we've seen oils on the move higher today marathon, anything you'd add there in context of the fed decision or just a separate issue? >> not no context, but you have a big oe pex going on this friday typically you can play that from a long side. so i would suggest to anyone who's trading the space.

if you're long himself you might to want lighten up by friday these are still good prices in the energy space let's just shave it a little >> like with the banks. >> thank you, guys >> thank you for joining us. we'll come back with the closing countdown here in just a moment. after that, we're going to go to puerto rico to get a report on how badly hurricane maria is getting the island. where the storm is headed next you're watching cnbc first in business worldwide the greatest population shift in human history is happening before our eyes. sixty to seventy million people are moving to cities every year. at pgim, we help investors see the implications

of long-term mega trends, like the prime-time of urban expansion, pin-pointing opportunities to capture alpha in real estate, infrastructure, and emerging markets. partner with pgim, the global investment management businesses of prudential. people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there

means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. what they want out of life. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise ♪ i'm living that yacht life, life, life ♪ ♪ top speed fifty knots life on the caribbean seas ♪ ♪ it's a champagne and models potpourri ♪

♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany ♪ watch this don't get mad (bell mnemonic) get e*trade and get invested just inside the two minute mark as we wind things down for this wednesday on a fed day. the fed keeping rates unchanged. but they are going to start reducing the balance sheet next month. so what that did is that pushed rates up today and the biggest move we saw was in the two year note it hit 145 for a time which is the first time we've seen that level since november 2008. almost nine years since we've been at that level banks, they love higher rates,

banks went up, kbe, bank etf up one and a quarter percent as we head toward the close today. brokers were also higher today the dollar index moved up as well not a huge amount, but up less than 1% now is at 9246 first time we've seen that since early august i think -- early september. i think september 4th was the number here. bob, here we go again, i talked about the symmetry yesterday, the dow versus the vick's. that would be the 42nd record close for the dow this year. >> and the vix is now below ten again for the 42nd time this year crazy. >> agenda yellen once again got away, rates up higher. >> slightly hawkage statements to the extent that they're reducing the balance sheet and they're not taking the december rate hike off the table, but you'll notice the s&p didn't move the end of the day essentially where we were prior

to 2:00. at least the stock market doesn't believe the fed has made any big policy mistakes. may differ, but the this market is saying to far, they're doing exactly what they said and the market is not surprised. >> all right thank you, bob so records for the dow and the s&p again, see what happens tomorrow sometimes a delayed reaction in the markets, but we'll stay tune in regard tomorrow meantime, stay tuned for the second hour of the closing bell with kelly evans, see you tomorrow, kell thank you, bill. welcome to the closing bell, everybody. i'm kelly evans, recovery today on wall street after the federal reserve outlined plans this afternoon to shrink the balance sheet and hinted again at a rate hike in december and three more next year. look at this dow, it's up 39 points, that's roughly where we were before that decision came out and pushed markets lower so new record close of 22,410. we have steadily marched through some key levelings i guess every

100 points 22410 is the new high. sooep up a point and a half to 2508 the nasdaq is lower today. shedding a couple of points there. 6466 we had decliners for western digital among a few other nasdaq firm firms adobe was after a big day yesterday. and the russell 2,000 up about a third of 1%. the russ sl gradually trying to go back up to it's closing high of 1450 which it reached in late july shares of apple were falling today on reports that lots of the iphone series three watch have issues with connectivity. the company has acknowledged a problem, says it is working on a fix, but with all the negative reviews, too little, too late? we're going to have more coming up apple down 1.5% today. joining me on the panel to zutsz all of this.

bigging moves in the bond market to the upside especially on the short side of things what do you make of it all >> increment blily were just marginally more hawkish than anticipated. and i think the determination of the fed to get toward something more normal and potentially raise rates in december, definitely told the markets they have one eye on financial market conditions and she took many opportunities, she declined many opportunities to make a bold stapt about that in the press conference, however, it's clear they just to want get on with things and they're not going to consider the balance sheet something that's going to waiver along with their mood about the economy. and i think this is a market well prepared for that and the fed is no long aeromajor swing factor s&p up one on a day when --

>> how can you say that, michael? >> unwinding the balance sheet, that tells you this market is not shakeable. >> that this which is probably music to the fed's ears by wait. >> that all sounds good. i think what was interesting to my ear what she was saying was about inflation. saying that the short fall is not cyclical she just laid that right out there what was fighting words for me because i see definitely we're an inflation cycle downward we don't fully understand why. >> so if you're right, that would mean the fed should sit, wait for that to document back before they do anything. if she's right, they can ignore it and go full steam ahead. >> they're hoping it's right which it hasn't been since the crisis so it's probably still wrong we're probably right because the future inflation gauge really tagged this. the way i would reconcile what we're seeing with what michael just said is they need to get it done they have to get it done they want to really click to the mission accomplished idea,

better do it sooner rather than later. >> there's always a risky prospect dennis, eshd also emphasize that while we're laying out the sales, the balance sheet has been shrinking, declining as a percentage relative to gdp you know, as we like to call the tightening, the tightening in general is well under way. how significant are today's developments >> well, i think they made significant points it is significant because the fed is signaling because as i heard him we are going to do it. i have to say, kelly, if you're not going to do it now at a time when all three majors are at their all-time high or near it when the dollar is weaker when you're going to cycle over into 2018 when we start doing ten year retrospectives about the financial crisis

>> may trying to do something on health and maybe something on tax, is that more important than these fed moves or does it kind of exactly counterbalance them or how do you read thing kps. >> i would in general go with the fed being a little bit more important. i think people are expecting tax reform to come and that's going to lower rates which is going to be good. i fundamentally think the fed is important. the one thing i would emphasize is it's inflation driving rates. not the other way around and what people shouldn't think that the federal reserve banks around the world are helpless in determining what's going to happen to inflation. when federal reserve banks, central banks want more inflation, they can make it happen eventually >> you sound like bern i can

this is like bern i can in 2003 all over again saying there's never a problem, we can always make it happen charlie, i'm not sure we're really seeing the fruits of that the market certainly doesn't believe it or they think the fed isn't serious about actually going after that goal. >> we got a tick up last numbers that came out were a little bit stronger you're absolutely right. it's taken longer for this to happen than anybody thought. when you have central banks around the world who want to make something happen. more inflation, they can do it because fundamentally, inflation is about money it's about the value of money. and if you print more of this stuff, that stuff becomes worth less and that's what's going to happen. >> but isn't that -- >> eventually. >> eventually, right >> the word is eventually. i mean, we've been waiting five years. so this, this all started -- really since the crisis we've been on emergency mode here, and as soon as, you know, as soon as they put a target out there, 2% pcu inflation, boom, it went underneath that was in 2012 -- >> but are you basically saying they're at risk of kind --

>> already turned down >> at the very moment that it's actually possible or what do you think is the problem here? >> so in 2015 they wanted to normalize. they got one off in december they ran right into inflation cycle going down, growth cycle going down 2016 -- >> energy price zplps in 2016, the other way, inflation is going up, they get off three, might be four here and we start to normalize, but inflation is already turned down. i would disagree very much respectfully with the chairman >> michael, does it matter if she's -- and this is -- >> she said it mattered. >> she's sort of saying it matters but the inflation short fall may be permanent, she did warn if you tighten too quickly, you could become ingrained and that could be dangerous. we talk a lot about technological reason why is it might be low and maybe it's a blessing as long as you've got some wage growth it's a really tricky one >> i think the subtext of all of that is yes there's this big large, gray area out there that we are occupying right now with

regard to why there isn't more inflation. the difference between 1.25 and 1.5 federal punds rate between now and three months from now is not going to swing out of that gray area. why not do it? i think everything she said set the ground work for oh by the way, noisy economic data in the third quarter, ignore it >> wait a minute, jackie is joining us. >> shares of amd, advanced microdevices jumping 5% just before the market closed source telling cnbc that tesla is working with amd to develop it's own ai chip for self-driving cars. so this will likely reduce tesla's reliance on invidia. more than 15 employees involved in the process, they did not immediately respond to requests for comment. but take a look at the jump in those shares, kelly. >> yeah, jack kip, thank you amd said about 4.5%. i was looking to see if there was the equal and opposite reaction for them.

>> foot in yet anyway. >> little bit weeker, maybe, this is a good place to just remind that adobe was one of the worst performers in the nasdaq apple was down, and then the s&p, this is unrelated except in earnings saying general mills was down like 6% today consumer packaged goods is down 8% this year even kraft heinz which is supposed to be the wonder child is at an 18 month low. >> what the market hates and is very weary sf anything where the consumer has to decide to spend money. that ib cluds packaged goods, not retail >> it's a great opportunity. we know it's large share all does tesla go with that? i guess it is. but, hey, if you're worried about them sort of somehow having a negative effect we have to remember, this is still a market

on a secular basis, this market is going to grow means frankly the overall market is going to grow which is probably net a positive actually not the other way around >> of course this week, we had them remember, they had that deal that they made a big deal about. >> exactly is intel the name that's being left out of this discussion right now? we know they bought it and famously this flair-up over the crash that killed josh brown a year or so ago >> yeah. i'm going to stay to my guns here i think in general the market is overrating the affect of driverless cars and all of this technology in general there's too much hype, not too late. so i would not be buying these names on this. >> i'll offer you the ultra cynical view which is tesla loves to be in the news with amazing new futuristic stuff, especially when a competitor just had one. >> they've had downgrades this year as well you a tesla guy, drive one >> if i can.

not too much in the city, but definitely interested. it's all exciting all the gadgets. >> look, as long as they keep selling chips to mind. >> keep inflation down forever >> exactly we'll keep an eye and up about 5% just before we go, sort of closing we circle back to the discussion, is there anything that, you know, we've talked about where is inflation is there anything that some of the fiscal plans can do to maybe get us to those goal posts we haven't hit on this cycle? >> i wish, i wish, i wish the answer was yes, i just don't see it and even if something does come out of washington there's a cycle on growth and inflation. and the cycle on growth as we were saying earlier is about as good as it gets right here that could also be problems for policy, monetary policy or other things down the road i saw they were more optimistic on the outlook, that'll be challenging. >> and finally charlie, what are your favorite play us in the market right now >> to buy the stocks left behind

to the big move in the indexes, and blackstone, all in partnership with passive index funds -- >> even with toys r us >> even with toys r us, absolutely it's in one fund you're right, they've written that down to zero already. that'll have no impact it's going to restructure and become a ccorpp and it's going perform well. >> thank you guys for joining us busy day today >> thank you. >> now let's get to the latest on the hurricane maria making land fall in puerto rico earlier today. apparently power is out across the island, wtvj meteorologist has the latest on where it's headed next, steve >> well the storm at 1:00 a.m. had 175 mile per hour land fall at 6:15 a.m. with winds of 155 and now down to 115. to think about that, the storm is one-third less strong than it was what, 15 hours ago, and yet it is still a major category 3

hurricane. there are still warnings out for puerto rico even though the worst damage from the wind was done about 6:00 to 10:00 a.m we still have storm surge. we still have rain, we still have flooding and we still have hurricane-forced winds up next, dominican republic will get grazed by the storm. there is a hurricane warning there and the turks and caicos could see massive, historic storm surge even if the eye doesn't go over the islands. and then it is up to the north and that brings us to this, where will maria go next we've got four things we're going to be watching next week two two areas of high pressure, jose still spinning away, and maria coming up. now a lot of pieces have to move around just right, but we can tell you this, our latest computer model suggests this storm wants to go toward cape hath ris, north carolina, whether or not it makes direct land fall, if you're watching from florida to boston, heavy surf for the next seven days if you're watching north carolina to boston, get ready if you don't gate direct hit, this storm will be just offshore and

it could be a hurricane, of course, we'll talk more about that in the coming days for now we can tell you there is still a hurricane warning for puerto rico, parts of the dominican republic, turks and caicos and the southeastern bahamas back to you. >> all right steve, thank you for now. now down to puerto rico itself where gabe gutierrez brings us the latest on the destruction, the power outages, and the damage there, dave >> hi kelly, good afternoon, we're starting to see the winds die down here as well as the rain, but what we are starting to see now is the aftermath. look at the destruction here you can see plenty of damage here. this isn't even the worse of it, just came from another neighborhood where we saw homes obliterated, roofs ripped off and residents still in shock major concern here though is the flooding that is something that has authorities in puerto rico have feared this massive storm surge that was expected now, is spreading throughout the island

and several communities are underwater throughout san juan earlier san juan's mayor has said that half of the city was flooded. we were just around and walked around here and saw plenty of downed power lines and really it was difficult to get around. now more than 10,000 people in puerto rico had stayed in the emergency shelters authorities had hoped that the number was much higher than that and so now the question is how many people heeded those warnings to evacuate, search and rescue teams are getting ready to go certain communities right now now that the storm has passed but again, kelly, scene of utter destruction here in san juan, when we went to other neighborhoods and other parts of this island. we saw roofs blown off and neighborhoods flooded, the question will be, how long will this recovery take authorities here fear that some areas could be without power for four to six months back to you, kelly >> oh my gosh, we hope it's not that gabe thank you very much gabe gutierrez

one more time that's the crime making it's way through the gop caucus as it tries to repeal and replace obamacare next we'll break down the proposal to give block grants to the state and what it means for insurers and consumers alphabet is close to buying htc just three years after google sold motorola we'll try to figure out the mobile phone strategy and to want hear from you you can contact the show via twitter, facebook, or send an e-mail you're watching cnbc, first in business worldwide

what are the ingredients of a life well lived? is it the places you go? the things you own? or the people that fill it with meaning? for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life.

welcome back, politico investigating health and human services secretary thomas price over his travel choices. kayla is here to explain >> the department of health and human services is on the defensive after politico reports the secretary chartered private jets to travel to events in maine, new hampshire, and philadelphia last week the decision bucks the trend of secretary price's predecessors who all flew commercial at a much lower expense. it also diverges from price's cost cutting efforts at hhs and also his previously held views on private travel. in august 2009, when congress

was seeking $550 million in new private jets a year after the financial crisis, here's then congressman pris on cnbc >> wing we made it halfway where we ought to and cut it from eight to four. this is just another example of fiscal ir responsibility run amuck in congress right now. >> hhs tells cnbc quote when he was in congress, he did not take private or chartered jets at all. now he does when his scheduling team decides on a case by case basis what is the most effective way to get him from place to place. yates chalks it up to long days and greater demands on time especially amid hurricane relief efforts, kelly, this is a question that administration officials are increasingly having to answer so we'll see what happens from here back to you. >> kayla, thank you so much. >> meantime the backbone of the

senate's graham cassidy bill to repeal and replace obamacare is the fund to the states broken down how that system works and how it would change if this bill becomes law, john. >> kelly, secretary price, president trump, republican lead verse sidetracked talks on a bipartisan basis to shore up obama care after the failure of the earlier repeal attempts. now they're trying one more time with what they call graham cassidy named after the two sponsors they have a september 30th deadline to do it under the expedited rules that let them do it with only republican votes, it would take the money that goes to subsidize obamacare and medicaid, shift that into a block grant, it's less money, but the states get more flexibility, but it creates interesting and very vivid choices between the states first of all, the only states that gain money are states that did not expand medicaid. that's because the medicaid expansion goes back into the pot for all states sop there are 16 of those states

that come out ahead according to the health care consulting firm, and there are 27 republican senators representing those states, none of them have signalled opposition on the other hand, all the rest of the states would get less money by 2026, there are 25 republican senators from those states republicans need 23 of them. it looks like they have lost rand paul and susan collins. the question is whether people like lisa murkowski, john mccain decide to go ahead and vote for it, even though their states would come out behind financially. now finally, let's look at the two leading libertarian conservative republicans in the senate, rand paul and ted cruz they were on pursuing libertarian votes 2016, rand paul's state kentucky would get $5 billion less than 2026. he's a no. ted cruz, his state, texas, would get $35 billion more in 2026, he's a yes all politics is local, guys.

>> yay and it comes a at price john thank you very much joining us now is dr. james. he is ceo of the american million association. doctor, thanks for joining us. >> glad to be here >> so, are you supporting any provision -- the general approach of this block grant type of billor against entirely >> yeah, let me unpack that a bit by first pointing out that the amas overarching goal is to improve the health of the nation and recognizing we are in a discussion in the last year about health reform. we stated very clearly many of our objectives and those objectives included the people that were currently insured would not lose their insurance. that health system reforms would

exist and the individual market would be stabilized. and i have to say the graham cassidy bill or amendment really violates almost all of these principles and that is why we're concerned because we're very concerned with the nation's health >> so you represent physicians, is there an element of self-interest here because anything that would undermine the sadness of the insured or the resources available is obviously bad for doctors. >> well, we look around to see who's with us. and what we see is essentially all stake holders. we see the american hospital association, but we also see patient groups aarp, the american cancer society, the american heart association. so i think all stake holders that are focussed on our nation's health are together on this >> i'm wondering if nothing were to happen and we leave obamacare intact the way that it is, not knowing of course what may happen with csr payments going forward and that sort of thing

i mean, how does it look what are the prospects for physicians in the years ahead under the current law? >> well, our hope would be there would be bipartisan conversations that would incrementally and repeatedly improve the current state. you know, stabling the individual market, for example there are lots of improvements that can be made what we have to realize that we're dealing with about a sixth of the economy, the health economy would be the largest, the fifth largest nation if it were a nation on the face of the earth, and to shift everything really radically rather than incrementally, thoughtfully, and most importantly, bipartisanly is probably a big mistake. >> i think we have learned that. thank you for joining us, doctor >> happy to. well this is no joke, stand up comic kathy griffin finds herself now in the middle of a bizarre story involving the ceo

of kb homes. it's part of the fast take next. and alphabet may not be content with just placing it's android operating system in as it is reportedly eyesing htc we're going to dive into the phone strategy ahead

welcome back it's time now for today's fast take and we begin with facebook -- we

begin with facebook actually we're going to get to today's fast take right after this bear with me let's start with facebook announcing changes to it's ad targeting policies today julia what's going on here >> well, kelly, facebook's coo just posted an update in response to the revelation last week that jew hater and other terms appeared in ad-targeted options. facebook now saying it is clarifying and tightening enforcements to content cannot be used in target ads. it is adding more human review and oversight to the automated process and creating a program to encourage people using facebook to report potential abuses of ads. sanberg writing in her facebook post announcing this, we hope the changes will prevent abuses like this going forward. if we discover unintended consequences in the future, we will be unrelenting and identifying and fixing them as quickly as possible. not any significant movement in

facebook's shares after haurs on this news, it's flat back over to you >> all right julia, thank you very much and now it's time for our fast take today we begin with news that amazon is in talks with middle market benefit managers according to a analyst, ultimately this could be amazon in the business of mail order drugs, those may pay cash for the prescriptions, should the big distributors be concerned? >> down today. they would be in the direct line smaller efforts were more targeted, not necessarily taking over big corporate plans, but it's been that one area. if amazon's mission is always to look at areas where there's a lot of margin, there's a lot of inefficiency, and a very large market this would be one of them it's not necessarily an easy trick though as everyone has said >> it's going to be deny, deny, deny -- >> well, and even to execute it from amazon's point of view. you really need -- >> states you have to deal with.

>> relationships with medical practices, all of that stuff >> yeah, they've done a lot. they could probably anything one out. next, shocking rant by kbo homes. also the partner of comedian kathy griffin. listen >> hey randy, go [ bleep ] yourself seriously? you call on my grandkids at 9:00 you're not even the [ bleep ] owner. you're stuck with a [ bleep ] bald [ bleep ] who donald trump kind of put the heat on. now you're calling the cops? [ bleep ] you and [ bleep ] kathy. you're not our [ bleep ] neighbor, you're a [ bleep ] >> okay. even with the bleeps, it's pretty bad it was all over a noise complaint the neighbors had filed against the kbc. michael, question to you on this for the relevance here is what should the company do about this especially when you had suze tweeting you want to buy a home from this man? beyond disgusting. >> the company, there was a

statement, they were sheshlly, some contrition on the ceo's part risk to the brand is representative of the tweet. which is look, this guy is going to be on some level the face of the brand. >> but is his job on the line? >> you know, a lot of people have been apining on what a fireable so was for people who say public things. i don't know if this qualifies on that level. it's obviously been kind of a weird back and forth dispute because even the company's statement tried to point out that there's provocation >> this is all going to depend on what the social media response is like >> what kind of life it has after this >> finally we reported on fedex taking an earnings hit yesterday back in june at it's european express business but on the call, the company's cio said about that quote this was not an ordinary cyber attack it was the result of a nation state targeting ukraine and the companies that do business there. read between the lines nation state targeting ukraine sound like russia. this is a $300 million earnings hit. should there be more

ramifications for russia is this an issue between the two countries? >> you wonder if this would rise to the top of the list of issues we had with russia if in fact we're going to take that kind of a stance i'm trying to think of the other implications is there kind of a chilling effect on anybody wanting to make an ak we wigs in the company that does a lot of business there >> or that happens -- >> or the insurance policies somehow to try to get coverage for these hostile attacks in different regions. >> certainly, it took the street by surprise. you see the commentators today writing it off an an issue >> we're talking about sort of -- like cyber warfare effectively. and $300 million this feels to me like it's something everyone kind of wants to ignore and make it go away, but thap shouldn't we have a news alert on blue apron's rival, plated. jackie delaware ank lis brings us that. >> meal kit provider plated. deal terms haven't been disclosed. as these have become more

popular, they're making cooking at home more easier and there's more attention paided to the companies. plated is now going to get exposure to albertson's 35 million customers as well. they are private, but blue apron showing a little appetite for these deals, kell. >> i see what you did there, jack kib, thank you very much. just going to look up the market cap of blue apron. it's not been disclosed, i wonder what they are paying for. looks like the cap is something in the range of let's see -- >> if they paid for more than a billion for plated >> plated is probably not as big and i think that, you know, the lessen and takeaway might be create a start-up that can be told solid to a mature company that is really the game here >> we've seen in other sectors too by the way interesting stuff. i've tried plated. time now for a cnbc news update with sue herrara >> speaking at the bill and palestinian da foundation event,

former president obama called republican efforts to repeal the affordable care act frustrating and lacking in common sense. >> when i see people trying to undo that hard one progress for the 50th or 60th time, with bills that would reduce coverage or roll back protections for older americans or people with preexisting conditions, it is aggravating. desperate search is under way to a school that collapsed after tuesday's earthquake firefighters, police officers, and volunteers have pulled at least 25 bodies from the school mostly children. 30 more are unaccounted for. the death toll stands at 225 and we're getting the first aerial pictures of the small caribbean island of dmin ka. it shows total destruction after hurricane maria barrelled through. large swaths of the island suffered heavy damage with roofs

missing, debris scattered about. at least seven people were killed on that island. >> back download to you. >> thank you very much sue herrara. rumors are swirling that google could be eyeing the smart phone business after buying and selling motorola less than three years ago, why would the tech giant try manufacturing phones again that's next. people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. what they want out of life. steve, other than making me move stuff, i'm here at the td ameritrade trader offices. what are you working on?

let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at td ameritrade. not rebalancing your portfolio. pursuing your passion, not reacting to market downturns. focused on what you love, not how your money will last through retirement. let us help you with those decisions, and get on with your life. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

welcome back shares of htc were suspended on the taiwan stock exchange on rumors that google wants to bite company which reportedly could happen today no comment from both this after google bought and quickly sold motorola back in 2013 then there was the google nexsus phone and the two phones set to launch in a month. not to mention, it's android operating system powers just about every other phone not called an iphone today what is google's phone strategy? joining us now is andrew martin. he's executive editor and max wolf guys with, thank you both for joining us and andrew and is it to take on apple, what do you

think? >> i think the big thing is that google partners with htc to make the original pixels released this time last year. from that perspective it makes sense. if you're going to continue that partnership and it looks like they're already building one of the upcoming pixel like you said, might as well keep that going. and it might not be that much more expensive to take over htc's manufacturing. >> why do they need to buy it outright >> partial to the idea when they were back googles their alphabet they didn't buy into the hardware business, either they wanted the technology, obviously didn't go that well for them because they sold it for about 75% below the purchase price but they did keep those patents. i think in this case, really looking to have -- they want to have a pace car and control the hardware, software synergy

android has huge market share, a lot of folks are experimenting with their own skins and versions of android in there and those don't necessarily highlight google products. i think you need to keep in mind that google wants to highlight google products and pushing other people to do that under threat is exactly the kind of thing that regulators particularly in europe have started to take notice of. looks like they can capitalize on the smarter trends and also do well to remember that first and foremost, google does things to make money on advertising because it's an advertising company. >> yeah, andrew, to that point, i wonder if there's any advantage, always seems when it comes to google you have to ask, does it help them acquire more data do they have more touch points, would owning the hardware or having that role in the hardware in terms of data collection in terms of lectures? >> part of it i think the larger part is your point that, you know, by controlling the software directly from the start by making and releasing your own phone that just says google on

the back it means they can control the whole thing. push out software updates whenever they want they can determine exactly which apps are preloaded and services are hooked up. they have an additional stream with the project carrier that they run their own cell phone provider in the u.s. as well and this is the type of thing that they want to do to be completely vertically integrated, but we can't forget there's also a second part of this which is is just looks good for google's brand and if for android as a brand to have a top end device that people generally really like. i think in the last 12 months they didn't sell a ton of pixels, but they look great for google as a brand. >> all right we'll see if they can further crack the hardware part of this market which has been tougher. guys, thank you both android martin and max wolf looking at what their strategy might be jamie diamond naming new payment systems as the disrupter he's most worried about he made those remarks. paypal's chief operating officer weighs in on diamond's concerns and talks about the latest

advances in the payment space right after this

throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise

peer to peer payment systems are gaining traction among consumers. some wonder what it could mean for the future of banks. jamie diamond, listen. >> the place that i worry the most about disruption, not worried, but we should always do is payments. there's a lot of things on payments that very smart people, they still use the banking

system, but you can find a way they're going to try to not use the banking system and take trips around the world and people do a good job of serving clients not using banks anymore. right now most of the payments at the end of the day, either use a debit card or credit card or ach payment to use money. banks are doing a certification, moving the money, aml, bsa, and terrible if they lose all of that and never got paid for it >> well our peer to peer systems the new generation of banking. joining us is bill ready thank you for joining us again >> thanks for having me on >> what do you make of mr. diamond's remarks about your industry >> well, i think, you know, a lot of what he says resinates that, you know, consumers have really moved to mobile as a primary computing dwis dwoos i that's creating. growth and opportunity isn't always evenly distributed. i think as that happens, there's a lot of opportunity as well as a lot of angst and this is why

one of the things is we've done 20 new partnerships over the last 18 months to be an enabler of digital commerce and access to the digital economy including chase and citi and wells fargo because we're giving access to great digital experiences. >> i thought it was interesting, kind of what he was saying was we do all of this back end stuff and we're not getting paid for it are they going to start to push this and what does that mean if that cost and ships it out to you guys >> well, we've actually, you know, we had a, you know, industry, industry-leading deal with visa and mastercard last year, and we've done deals with chase, citi, wells fargo and financial institutions we bring business to banks we're a great partner to financial institutions and in year's past, places where there may have been tensions, part what have we worked without visa and mastercard as well as the number of the largest financial institutions is how we work

together in a way that a rising tide is many ships there's a tremendous amount of growth and as was mentioned, we're generally working with banking partners to enable those. what you see happening now is banks are actually, you know, advertising to their customers to go add their card into pay l paypal, link to paypal because they know pay paul is one of the largest sources of growth in digital and digitals where all the growth, the physical world retail is really struggling right now. all the growth is in digital and over $350 billion in volume last year we're now opening that up as well as merchants, retailers, and many others. >> as it comes to investors in your company is obviously on the process of monetizing that payment platform what does that look like in terms of trying to garner revenue off of that platform and what's the trajectory in terms

of how, how rich that opportunity is >> well, you know, the really interesting analog is paypal started out as a p 2 p pay only business and expanded from p to p only then with many, many other merchants and really we're following the same path. what makes them unique is the social aspect of them. but, the monetization path is quite proven in taking a p to p solution to merchants and retailers and monetizing when merchants and retailers pay for that payment acceptance. and great thing that we have and this is part of why i joined paypal as ceo of the brain tree that was paypaul as an amazing net work of merchants. we're starting to light up those merchants ability to accept as a payment solution william sonoma announced recently -- starting next year -- >> before we let you go. i want to favor analysts, tom

brown banking guy, convinced this is going to be a killer all they have to do is throw their weight behind it and they have several million people signed up. what are you doing to defend yourselves >> it's interesting, when we started with them six years agoe >> people would ask us six years ago, where are you doing p to p, every bank has had it since the late '90s, it's a solved issue the thing that made venmo was the social aspect. there's a massive amount of payments that still happen via cash the digitization of that, there will be multiple winners, it's not a one winner kind of scenario p to p has been around for a long time, there will continue to be a lot of that. in the face of that, venmo has an experience that resonates strongly with millennials and has great affinity for its users

even as others help to educate consumers that the digitization of cash is something that is rapidly moving forward, and there's a multiple alternatives. >> bill, you could give larry kudlow a run for his money i'm going to make a panel, you and larry, and we'll see who gets the last word in. it's a complex issue, thanks for joining us bill ready is the coo at paypal. "the wall street journal" called it unlilereab coming up, what the latest reviews for apple's watch could mean for the giant's bottom line (bell ringing)

[car tires screech] [bell rings]

live-streat the airport.e sport binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv on every screen is awesome. the xfinity stream app. all your tv at home. the most on demand your entire dvr. top networks. and live sports on the go. included with xfinity tv. xfinity, the future of awesome. apple's shares falling

today, down 1.5% as new reviews on the watch are in, with the company acknowledging it's got a cellular connectivity issue. we'll talk about what should be done to remedy that situation. dad: molly! trash! ( ♪ ) whoo! ( ♪ ) mom: hey, molly? it's time to go! (bell ringing) class, let's turn to page 136, recessive traits skip generations. who would like to read? ( ♪ ) molly: i reprogrammed the robots to do the inspection. it's running much faster now.

see? it's amazing, molly. thank you. ( ♪ ) thank you. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and. ♪ ♪ adapt supply chains based on trends, tweets and storms. and make adjustments on the fly. ♪ ♪ the ibm cloud. the cloud for enterprise. yours. the cloud for enterprise. being the incredibly busy man that i am, i've asked chase sapphire reserve cardmembers to scout the world to find my next vacation.

elton, what are you up to? i'm having breakfast in uganda. uganda be kidding me, elton! it's a... it's a joke. james, we're going to look for gorillas! hang on, what? that's a real silverback gorilla. look at it! no, don't look at it. shhhhh stay. okay. i'm freaking out! sapphire reserve, from chase. make more of what's yours.

welcome back the reviews are in and it's a mixed bag for apple's latest version of their watch, series 3. it will let you ditch the iphone but not all reviewers agree. the verge says it's unreliable it's the lte, which promises an untethered experience to the iphone apple says it's looking so into a fix. verge reviewer lauren goode joins us now you have one of these watches, lauren >> i do, i'm wearing it now, actually >> where is your cellphone, nearby or out of reach >> well, it's hard to say right now. it's down the hall here in the makeup room at cnbc. so i would say at this point it's probably still within reach. >> okay. i'm wondering if there was a way for you to tell how well -- if anybody wants to test it out, how well you think the mobile

connectivity works >> i've definitely had issues with the watch, not just around connectivity but other issues as well in fact this is the second review unit i got from apple the first had to be replaced, i was having issues with siri on that one siri is supposed to audibly talk back to you on the series 3 watch and that wasn't working. so i got a second one. i noticed when i go from being within range of my phone to trying to go out for a walk or go somewhere else without my phone or without having cell service through the phone, the watch stutters sometimes it works but sometimes it also doesn't. >> so what does that leave you with, lauren in terms of the utility of the watch and just the general functionality of it, it seems apple is still kind of going through different iterations of this, trying to get the compact technology right >> i mean, one of the things i think that's worth noting is that the bug or the problem that apple has acknowledged may have to do with something known as a

captive portal or an unauthenticated wi-fi network. you might happen to be walking by somewhere it seems like it should have been defaulting to wi-fi and then wouldn't work that ability to walk away from the phone and have confidence that you're going to get a phone call or send a text message, it doesn't always work, so that benefit isn't really there >> all right lauren, thank you for joining us, good to get your review. >> thanks for having me. >> lauren goode from the verge i really want this but it's got to work. >> it seemed to weigh on apple's stock. everything apple does outside the iphone is a little bit of a

bonus. i'm not tempted on the watch, even if it worked, i don't think i'm going to go there. >> i could go on a run, at the coffee shop. >> this is 50 years old and still does what it's supposed to do >> and no headaches with that one. anything for tomorrow? >> no. digesti digestion, flat markets. >> see you tomorrow. thanks for joining us on "closing bell. "fast money" starts right now. "fast money" starts right now, live from the nasdaq markets overlooking new york city's time square i'm melissa lee. tonight on "fast," you just heard it, apple shares tanking as poor reviews of the watch and after tests of the iphone 8, you too might be hitting the sell button plus kevin o'leary of "shark tank" fame strikin