that a gradual path of rate increases remains appropriate, even with most -- almost all participants now factoring in their assessment of the impact of the tax, the tax policy you know, it is projected that the tax cut package will lead to additions to the national debt and boost by the end of the horizon, the debt to gdp ratio, and i will say -- and this is nothing new, this is something i've been saying far long time, i am personally concerned about the u.s. debt situation. it's not that the debt to gdp ratio in the -- at the moment, is extraordinarily worrisomely high, but, it's also not very

low. and it's projected as the population continues to age in the baby boomers retire that that ratio will continue to rise in an unsustainable fashion. so, the addition to the debt taking what is already a significant problem and making it worse is -- it is of concern to me, and i think it does suggest that in some future downturn, which could occur just for whatever reason, the amount of fiscal space that would exist for fiscal policy to play an active role -- it will be limited, it may well be limited. >> sam fleming with the financial times. couple of longer term questions, first of all, midway through the year, hot weather inflation targets might need to be raised. obviously been a lot more debate

and have had systems since then about this it may not be an imminent issue, it may be something the feds may be discussing over the coming years. some sort of change to the inflation target second of all, the amount of stimulus tools that the fed may have at its expo sal are fairly limited. one of the incoming governors, marvin goodfriend talked about the merits of negative interest rates. i wondered whether you see that as potential at least in theory for the fed to consider, should it run out of other options thanks >> so, right now, the fomc is not discussing or considering it's inflation target. we do see inflation as likely moving up to target over the next couple of years, and i would say you said our stimulus tools are limited. i would want to emphasize that if there were a negative shock to the economy, we do have some

scope to cut the fed's fund rate and there are other tools available, ones that we've used previously forward guidance in asset purchases. so i think we're not out -- i wouldn't say that we're out of ammuniti ammunition, but certainly it's been recognized and i've emphasized myself that in the longer run, we may be and we'll have to see how this works out, but we may be in low interest rate environments where it could prove useful to have additional scope to conduct monetary policy and in that context, i think additional research, the academic economists or others are thinking hard about what more could be done, and i think these are matters that are certainly worthy of further study. [ inaudible question ] >> so, i mean, on that, i would

say we have -- that's not something that we have studied inside the fed to any considerable extent. and haven't seriously thought about using ourselves during this last downturn and recovery. we have watched what's happened in other countries, i think that's worthwhile. and i would say, it's an area that academics may have interest in in the future and is worthy of some study, but, it hasn't been part of the fed's agenda. >> hi, chair yellen. with politico. i wanted to ask you quickly on the regulatory side, in your testimony to congress recently, you spoke positively about the senate bank regulatory reform bill, and i was wondering if there are, beyond that bill, if there are tweaks to dodd frank

that you think might still be beneficial and then, somewhat related, governor powell recently said that there are currently no u.s. banks that are too big to fail and i was wondering, do you agree with that assessment >> well, i mean, you know, i think -- i'm not familiar with every detail of the bill, but i think the bill does address a wide range of issues that, you know, we've highlighted in the past as being ones where perhaps additional flexibility to tailor our supervisory requirements would be worthwhile. so i don't have additional things on the congressional list sorry, and what -- the other thing. right. too big to fail. so, you know, we continue to work seriously on resolution and the resolution plans, living

wills, and the structure of systemic firms to ensure that it would be possible to resolve a firm under the bankruptcy code would be the top choice of methods or alternatively under the order of liquidation authority. and i think it's fair to say that over time, we have learned more ourselves and more clearly detailed our expectations for the firms that file living wills. and the firms themselves have made considerable progress in, you know, changing what they do, whether it's adopting financial contracts that would facilitate al resolution rather than disorderly unwinding of contracts, making sure that they're appropriately dealing with shared services so key

services will be able to continue governess arrangements, legal entity structures. the firms have all made progress in adapting to our expectations of what would enable a successful resolution. so, i think it's an ongoing process and i believe we've made substantial progress >> to deliver a significant stimulus and it will be on the demand side. you expect growth to be faster you expect unemployment to be lower, and yet, somehow, inflation is going to remain at 2% for the foreseeable future. could you describe what has changed about your economic assessment so that everything has changed except inflation

>> well, you know, the projections that we're showing you today, many factors went into that fiscal policy being one of the number of different factors. and, you know, you're looking at 16 participants who have made adjustments to their economic outlook for a whole variety of reasons, including in some cases rethinking the fundamentals that went into their original forecast so there have been modifications in different directions by different participants so it's -- i would caution you about the dangers of looking at the median and acting like that is one individual who is made a change to their forecast that's a leap that isn't quite

justified, but look, generally, you see modestly faster growth over the next couple of years. which is consistent and i said, i think for most participants reflects partly an impact from taxes stimulating consumer investment spending. but it's not a gigantic increase in growth that since relative to september. you do see a lower path for unemployment, but remember that inflation is also been running low on a persistent basis and the committee does have a concern about inflation and wants to see it moving up. and on balance, you see only modest changes, slight revisions to the path for the fed funds rate, you might think, well, shouldn't i see more

well, okay, growth's a little stronger the unemployment rate runs a little bit lower that would perhaps push in the direction of slightly tighter monetary policy, but, again, count the balancing that is that inflation has run lower than we expect and, you know, it could take a longer period of a very strong labor market in order to achieve the inflation objective. >> yahoo finance william dudley of the new york fed said that the fed is exploring the idea of potentially having it's on digital currency what use to you see that it could have for the fed and do you see the potential of a currency that might be considered legal tender? so i want to distinguish carefully between digital currencies and crytocurrency

there is a discussion going on among central bankers about the potential merits of adopting a central bank itself, adopting a digital currency and there might even be a central banker or two around the globe that might go in that direction. but, i really want to caution that this is not something the federal reserve is seriously considering. at this stage. it is something that central banks are looking at to see if

there could be benefits from doing it >> chair yellen before i ask this question, thanks for the stewardship in the economy and some of the harder hit parts of my own family. >> thank you your tenure, we've seen six federal reserve presidents appointed one was a woman and five were men. i would like to know how that comports with your commitment to skbre gender diversity and second, i want to know if appointing presidents needs to be more transparent and accountable. recently the richmond fed board took 11 months and they came up with a candidate who was another fed board member so i'm wondering what you would say to critics that say that looks like cronyism and if you think this could be a more open

process. these are votes on national monitory policy. >> so i would agree with you that these are important appointments under the federal reserve act, the non-banking directors of the reserve banks have responsibility for conducting a search. and the board of governors has to sign off on the candidates with me very clear and we monitor ongoing searches very carefully to make sure that absolutely every effort is made to create a pool that is diverse and that there be a national, national search and that every attempt should be made to create a diverse pool at the end of the day we cannot guarantee that the outcomes of these searches will result in an increase in diversity.

i mean, i've been very pleased to see that there's been some success in that regard but we have signed off on the individuals who were appointed and have meld the view that these are individuals who work -- who were qualified to serve in these positions i would hope to see greater diversity. it has been a challenge to achieve that well, i think the process has become more open and number of the recent searches there has been outreach, public outreach, information on websites, acceptance of potential names and nominees and those have gotten careful consideration there has been -- there have been meetings in some cases with community groups to try to

enlarge the pool and get suggestions, and i think that's appropriate and i think it has moved in the direction you're suggesting >> i'm wondering if you have any advice for incoming chair powell >> well, my colleague i've had the pleasure of working with him now for many years and he's somebody who understands the federal reserve very well and shares it's values and as i mentioned in my opening statement he is committed to the mission of the fed to it's independence and to it's acting in a non-partisan, non-political way. he is somebody who has participated in the fomc now for many years to the best of my

knowledge. i don't believe he's ever dissented. i think there is strong consensus in the committee for the gradual approach that we've been pursuing and governor powell has been part of that consensus. so, i feel he's very well positioned and very knowledgeable of all the ins and outs of everything that the fed does in supervision and the payment system has played an active role there and in monitory policy and i have confidence that he is very capable of steering the federal reserve in the years ahead >> as long as everyone gets a turn this is american banker.

sort of related question to what nancy was asking, there've been some reservations among some democratic senators recently during governor powell's confirmation hearing and during the mark-up of the relief bill about the approach towards regulation that the new leadership appears to be adopting do you have any similar reservations about the new leadership's ability to deregulate in a way that deep keeps an eye towards the stability of the financial situation and sort of the advances that have come federal post-crisis regulation >> so i would say that all of my colleagues on the board have expressed a strong commitment to keep in place the core reforms that have produced a stronger financial system, and i'm considering their stronger

capital particularly for the most systemic institutions higher quality kbal, stronger liquidity requirements, rigorous stress testing program and resolution planning that will make it more possible to resolve the firm that encounters significant distress so i have heard broad-based commitment to those things and i think they are the core of the reforms we have put in place i think all of us agree that it is appropriate to tailor regulatory requirements in all of those areas and others to the systemic footprint affirms we've done a lot to do that and i think there is more that could be done and in some areas, it would require legislation in order to do that, but i believe

all of my colleagues and i are in agreement on that and we're all focussed on community banks and want to find ways to relieve burdens. so in those important ways, i do think that all of my colleagues are in the same place with respect to their priorities. >> are there any important differences between your policies and your vision on regulatory -- >> so i have not seen anything emerge at this point that i would describe as a significant difference >> hi, howard snyder with reuters. so, you mentioned in response to steve's question that asset valuations you didn't think were on the high priority risk list right now. i'm wondering what do you think is on that risk list and more broadly. what have you left undone? you've gotten high marks for bringing the economy back twards

it's goals, but are there things that are going to nag you in february and say really, i wish i'd seen this to completion? we're not doing negative interest rates, we're not doing inflation framework, what's at your top of -- what's at the top of the to do list that you are not getting to see to break the ground here? >> so you asked about the risk list there are always risks that affect the outlook, we tend to focus in our own evaluation on economic risks and we've characterized them as balanced and i think they are balanced. i can always give you a list of, you know, potential troubles, international developments that could result in downside economic risks, but look, at the moment, the u.s. economy is performing well. the growth that we're seeing, it's not based on, for example,

an unsustainable build-up of debt as we had in the run-up to the financial crisis the global economy is doing well, we're in a synchronized expansion, this is the first time in many years that we've seen this. inflation around the world is generally low. so, i think the risks are balanced and there's less to lose sleep about now than has been true for quite some time. so i feel good about the economic -- the economic outlook. i feel, you know, good that the labor market is in a very much stronger place than it was eight years ago. we created 17 million jobs we've got a good, strong labor market and very low unemployment rate and i think that's been

tremendously important to the well being of american households and workers and i feel very pleased when i hear anecdotes from firms that tell me they're having a hard time finding workers and they talk about given that they're taking on people with skills that don't quite match what they want, but they're training them and, you know, giving them the training that they need in order to be able to fill jobs. i think that's development that is a natural one that occurs in a strong labor market that tends to build human capital and worker skills and that that's a strong positive. as i mentioned, i think the financial system is on much sounder footing and we have done a great deal to put in place

greater capital liquidity and so forth that make it less crisis-prone and that man an important objective. what's on my undone list, you ask, we have a 2% semitic inflation objective and for a number of years now inflation has been running under 2% and i consider it an important priority to make sure that inflation doesn't chronically undershoot our 2% objective, and i want to see it move up to 2% so, most of my colleagues and i do believe that it's being held down by transitory factors, but there's work undone there in the sense we need to see it move up in line with our objective >> thank you, chair yellen

>> what do you think will be the drivers of inflation over the next couple of years and how long will the committee go with low unemployment, low inflation before you rethink monetary policy this gradual reacts, thanks. >> so young i think for a number of years, so we've had an undershoot of inflation for a number of years, absolutely recognize that i think until this year, undershoot was understandable. first we had a good deal of slack in the labor market. then we had plummeting oil prices and beginning in mid2014 there was a marked appreciation in the dollar. and those three factors held down inflation for a number of years. now, in 2016, core inflation

came very close to 2%. we seem to be on a path of inflation moving up and this year beginning in march, there seemed to be a sequence of negative surprises some reflect one-time factors that were easily identifiable like a marked decline in quality adjusted cell phone plans. there may be other factors that are not some easy to name, but we would judge note inflation doesn't always follow exactly there are areas and many factors that effect it beyond the key influences of labor markets slack, exchange rates and import prices and oil prices. those are three big ones, but there are other factors that affect inflation too and our

judgment at this point is that transitory factors that are unrelated to the border mac coeconomic outlook are holding inflation down but i have tried to be straightforward in saying that could end up being something that is more ingrained and turns out to be permanent. it's very important to watch it. and if necessary, rethink what's the determining inflation, a possibility is that the longer run sustainable rate of unemployment is -- it's been coming down estimates in the committee have come down it's conceivable that they need to come down even more it's not my judgment that inflation expectations have slipped, but that also remains a possibility that needs to be monitored. so, there are, you know -- there

could be a rethink of inflation, i think it's important to watch inflation outcomes carefully and if we don't see inflation moving in the manner that the committee anticipates to alter policy so that we do achieve ur 2% objective, but, at the moment, most of my colleagues and i believe we are on track to achieve it >> hi chair yellen, los angeles times, i'm wondering, you mentioned this is your last news conference what are your plan kbhs you step down from the fed? are you going to remain in washington go back to berkeley. and also i'm curious if you have any disappointment that you're not going to be continuing in this job as some of your predecessors have done >> so, on my plans, i don't have anything definite for you. i guess i have o men berkeley

and i would say my spouse is on the faculty. he's a professor at georgetown, and would like to stay in his job and we expect to maintain washington as our base, but i don't have any definite plans. let's see, and you asked me if i'm disappointed let me just say that i have served in senior positions in the federal reserve now for quite a long time. i became president in san francisco in 2004, and i have participated in the fomc since that time as president, as vice chair, and as chair. and it's been an immensely rewarding experience for me. i feel very positive about what we've been able to accomplish.

and feel tremendous, you know, loyalty to the institution so, i did make the judgment that this is the right time for me to leave, but, i feel i have served in senior positions at the fed for a long time and it's really been an honor and a privilege for me to have had a chance to do so. >> adam shapiro. glad to hear you're staying on the east coast curious i wanted to follow up to the bitcoin questions, because you've lived through what we all experienced in 2007, 2008, and should the fed take a more active role in trying to identify who some of the counterparty and what the exposure is with bitcoin as a potential threat to financial stability? it just -- the best minds of the fed can sometimes miss these kinds of threats your predecessor mr. bern i can said in '07 that the contagion

would not affect the housing market or the economy. so are we underestimating the potential threat from bitcoin as it runs up in value? >> well, i certainly agree that it's important for the fed to attempt to understand -- emerging risks to financial stability. and to be looking not just in the banking system, but outside of it for developments that could pose financial risks and we are doing that, and i would say one of the changes during my tenure is we devoted, decided in the aftermath of the crisis that we needed to devote considerable resources to financial stability, to monitor for emerging threats and now, we have at the board a full-blown division of financial stability

that's involved in doing that. now, when you ask about bitcoin, i still see the financial stability risks from it as limited. often risk threatening financial stability arise when there's exposure of the banking system to flux chew waiting asset valuations, and i really don't see any significant exposure of our core financial institutions to threats from bitcoin, if it's value would fluctuate, i don't see a threat to our core financial institutions indoubtedly there are individuals who could lose a lot of money if bitcoin were to fall in price, but i really don't see that as creating a full blown

financial stability risk >> bloomberg television and radio, i suppose i should be asking you a value victory question since it's the last question, i don't think you can top what you've already said couple of clean-up questions here, president trump, while you were speaking just said that he thinks his tax plan will produce 4% growth. do you think that is possible? second, do you think that there is any fed blame or complicity in the flattening of the yield curve and are you worried that there might be some sort of policy mistake built into that that could slow the economy? and the last question, which is a bit of a value victory, everybody on wall street wanted to ask you for four years since this is your last press conference, can you tell us which dot is yours >> well, i can answer the last question first, the answer is no, i've never been willing to reveal which dot is mine and i'm not, i'm not going to change that now

so, you know, my assessment and i think most participants' assessments as i said of the impact of the tax policy on growth has been informed by work by the joint taxation and other analysts and everyone recognizes that there's uncertainty about what the economic effects would be and i wouldn't want to rule anything out it is challenging to achieve growth at the levels that you mentioned. look, if the package were to stimulate growth of that magnitude, let me just say again, the federal reserve would welcome that if it's a favorable supply side developments that would be compatible with the attainment of our employment and inflation

objectives that's something that would be very, very welcomed, but it would be challenging to achieve numbers like that. let's see, i think you also then asked me about the yield curve and -- i mean there is much discussion about yield curve inversions and whether or not a flattening yield curve could signal a recession is that the brunt of your question so this is something we have discussed and looked at. the yield curve has flattened some, the flattening yield curve mainly reflects higher short term rates the yield curve is not currently inverted and i would say that the current slope is well within it's historical range. now there is a strong correlation historically between

yield curve inversions and recessions let me emphasize it's not correlation. i think there are good reasons to think that the relationship between the slope of the yield curve and the business cycle may have changed and one reason for that is that long-term interest rates generally embody two factors and the second piece is a so-called term premium that often reflects things like inflation, inflation risks typically it's been positive so when the yield curve has inverted historically, it meant that short term rates were well above average expected short

rates over the longer run. that's what it means and typically that means that monetary policy is restrictive, sometimes quite restrictive. and some of those recessions were situations in which the fed was consciously tightening monetary policy because inflation was high and trying to slow the economy well, right now, the term premium is estimated to be quite low close to zero. and that means that structurally in this can be true going forward that the yield curve is likely to be flatter than it's been in the past so it could more easily invert if the fed were to even move to a slightly restrictive policy stance you could see an inversion with a zero turn premium.

the fact the premium is low and the yield curve is generally flatter is an important factor to consider. now, i think it's also important to realize that market participants are not expressing heightened concern about the decline of the term premium and when asked directly about the odds of recession, they see it as low and i would concur with that judgment. >> thanks very much. >> and that's janet yellen, chair wochlt delivering her last press conference before her tenure ends at the beginning of february to make way for president trump's appointee jerome powell to replace her a number of questions she took all of them touching on legacy and questions about, you know, students she might inspire to get in the field we're focussed on the market reaction welcome to the closing bell by the way, everybody

interesting to look at the dow up 127, that's little bit higher than where we were in fed statement came out around 2:00 p.m. otherwise, not a ton of movement, check out the dollar, there's a little bit more of an outsized reaction moving lower, yields moving lower as well if they were looking to see whether they would maybe be looking for four rate hikes next year for example, it looks like they're keeping it more to three and that explains the market reaction we're seeing. >> the dollar interestingly as you pointed to highlighting the only real asset class that did move like that near the highs of the day with the dow. on the list of potential risks that she's assessing so that's sort of an encouraging thing for traders. some slighter more clear passes on bitcoin not really moving the bitcoin

price. >> and probably my favorite little question at the end nerdy one been but she was asked if she could reveal which dot in the fed projections was hers >> and it shows how nerdy we are. got a loud laugh here. let's discuss further. joining our closing bell exchange today i'll start with you, we started the day 2.42% on the ten year. we've slipped significantly, why? >> well, i think the inflation dated this morning was one of the reasons, the core, but year over year core, at 14.7 was a bit surprising i think that was part of it that i think generally speaking we found resistance right below the unchanged level a year, 244, 245, we've stopped in the low 240s several times i think this downdraft we've seen in rates after janet yellen may be short lived

do you realize we have let me think, one, two, three, four, five -- we have eight fed meetings tomorrow, central bank meetings only five are important. the rest are small countries mexico are the ones that you probably should pay attention to, and i think that rates are going to be label the stubborn until we get through tomorrow, but it is crunch time. if you're looking for rates to close under price and overyield where they closed last year, i would think that tomorrow is your last day for hope, otherwise, we're going to see things slip way -- dollar index is giving ewe tell here. dropping two-thirds of a percent. little bit over a week, that is significant to pay attention to. >> kenny, what about you what are you watching here either in terms what have you just heard or the market reaction >> two things. what we just heard, we didn't hear anything more than what we expected i think maybe the rate, the number of rate hikes might have been a little bit of a surprise to some people i think three or four was where

we are, i think three now like you said, tends to be where it's going to show. but, i'm interested in the way the market has reacted and hasn't reacted, and that tells you that investors are very comfortable with what they expected or to say and what she did say, she didn't surprise anybody, and i think, you know, that clearly the market continues to get some boost here from what's going on in d.c. in terms of the tax package there's still not clarity with that, and i think we're in the by the room, sell the trade mentality on that tax package. >> and steve leishman is joining us too, he just got out of the conference you asked her about bitcoin. the yield curve, pressed by people saying if growth is so good and the job market looks the way it is. who cares if your inflation target isn't at 2% >> there was also -- there was that comment, kelly, but the notion of a little bit of contraction in there rate, they raised their growth forecast by a not small amount, 0.4% up to 2.5% and changed their rate outlook and didn't change their

inflation outlook much that was significant she was fairly upbeat on the potential of the tax cut bill in terms of the ability to at least modestly increase growth, modestly increase productivity so a little bit more favorable than i heard her in the past as it becomes lost, she feels more free to speak about or closer. but also as you said, talked about the market, i asked her about valuations, they were not flashing red or even orange at this point when i think of stock market valuations. here's bitcoin is. >> it is a highly speculative asset. and the fed doesn't really play any role, any regulatory role with respect to bitcoin other than assuring that banking organizations that we do supervise are attentive that they're appropriately managing any interactions they have with

participates in that market and appropriately monitoring anti-money laundering bank secrecy act, you know, responsibilities that they have. >> so, kelly, while i went out last night and heard a bunch of 20 something musician talking about bitcoin, and just made a sale and made $200, it's a apparently not big enough right now to be on the fed's radar when it comes to issues of payment or financial risk. >> steve, i only made $200, he must be joins aggressively >> it was a quick thing he did he's a drummer and i was at a bar where i was playing music and i was talking to one of the muse sigss, these guys were outside all talking about bitcoin, that to me is the worst sign of all. when the 20 something guys are out there talking about it, it's really a sign of a speculative fwoubl me.

>> michelle, i want to ask you about those comments that steve pointed to about the tax reform bill specific quote was it could lead to a modest lift to gdp growth in the coming years as steve said, that was a positive term, but said personally, she is concerned about debt to gdp levels >> she is. she's trying to weigh both sides by knowing that it could create some short term boost to the economy, and she even mentioned as steve said, some of these longer term issues, the fact that you can create some supply side effects that are positive, boost the capital stock, maybe even lead to productivity growth, potential growth, although, it's interesting that officials did not pencil that in you can see that they did revise up the trajectory of growth, but they did not change for long-term gdp growth, if they are incorporating stimulus, they do not anticipate it's going to change long run estimates. then as you suggest of course chair yellen talked about some of the concerns around the stainability of the debt which is obviously an issue for

the longer term, but something that she's cautioning the policy makers should be taking into account today as well. >> kristina, when you look at the probably the biggest mover again is just to go back to the u.s. dollar here so while a lot of -- as we said, stocks kind shall have rugging this off, a lot of people still wondering how this exactly sets us up for 2018, the weak dollar, doesn't that, does that bode well for the market? i mean, how long do you think it can persist here how do you think that sets us up for next year? >> well, i certainly think the weak dollar could persist far while, but we have to recognize that much of this is moot. because the class of 2017 fomc is coming to an end and we're going to have a new class, the class of 2018 and that fomc could be decidedly different, decidedly more hawkish

so in monitory policy discussions, there's a potential that he could defer to others on the fomc, particularly the vice chair. so that appointment carries more weight and we don't know what that is yet. and then we also have members who will presumably be on next year like marvin goodfriend. again, someone whose been a critic of qe, someone who has been an advocate for more rules based monetary policy. so, we could see a very different fed in 2018. >> yeah. >> omar, this fed rate hike day should be a good day for banks as we look at the s&p right now, financial's the worst performing sector down about a percent. why do you think that is and of course, janet yellen did also mention the shape of the yield curve towards the end of the conference saying too many hikes could lead it even to invert

>> yeah, well, you know, what just happened with the fed was already priced into the market in a lot of what we have served in the performance after the conference it's really just a confirmation that the market, the equity market is in a risk on environment, you know, the chair yellen clearly confirmed that her legacy will go as somebody that maintains stability and fuelled a lot of sentimenting to the market i would actually add also that a lot of the activity related to the yield curve is also related to what happened with other central banks and not necessarily that reflection of the economy in the u.s i think what we will have to tomorrow will probably give us a little more indications on what the ecb plans may be, and that may change very quickly in terms of, you know, how the yield curve actually shapes and it is obviously better for the banks >> hey kelly >> yeah, real quickly. last word, steve >> there's something i didn't have a change to talk about, there is change in the language

on the job market. yellen talked about it during the press conference i wonder if the fed is getting close to drawing a line in the sand when it comes to the strengthening jobs market. they change from their supporting strong labor market initiatives to what was supporting further strengthening in the labor market. i think the fed has had just about enough of when it comes to the strength of this labor market and trat jekt ri of unemployment, and i feel like we're on the verge, and kbron where this language came from, of maybe the fed goes a little bit stronger if the labor market were to strengthen from here i think they're okay with the current level and the current trajectory of policy, i think if we go to another level and strengthening of the jobs market that may precipitate further action >> we'll see, interesting set-up for next year. thank you for joining us, did i get everybody? thank you so much for joining us to react to what we just heard >> let's focus to other breaking

news this hour president trump speaking on tax reform and eamon has more for us. >> reporter: for those remarks came within the last hour here at the white house the president speaking in the grand foyer at the white house giving some remarks, but taking the opportunity to bring up a number of what he called regular american families to talk about how the tax cut bill would impact their lives and what they think they would use the savings for. the president very much putting this financial sales pitch in the context of american prosperity, the american dream, and the ability of families to pass along a better income and better lifestyle to their children but take a listen to this one moment kind of interesting, the president seemed like he almost didn't to want jinx himself in terms of talking about how close they are to getting the bill passed here's the president >> as a candidate, i promise we would pass a massive tax cut for the every day working american families who are the backbone and the heartbeat of our country.

now we're just days away, i hope, i hope, you know what that means, right from keeping that promise -- >> reporter: that comment the president made earlier today when talking to orin hatch he was giving out accolades to the senators and the representatives for their work on the tax bill, but then said wait, we don't have the bill passed we've got therein before gotten close before and it hasn't happened. the president very much on his mind today weariness that the bill might not come together republicans do have the votes up in the united states senate. there's a bunch of notes counting going on. there are one or two wavering senators it does seem they do have the votes not wanting to jinx things here at the white house, back to you. >> perhaps urgency after doug jones victory in alabama last night. thank you. we have a market flash on the banks here leslie picker has more leslie >> hey kelly, i wanted to draw your attention to some announcements in the wake of

fed's decision to raise interest rates bay quarter of a percent they have each increased their prime lending rates to 4.5% from 4.25%, it is effective immediately while citi is effective tomorrow back over to you guys. >> thank you very much for that, leslie it's going to be interesting to watch these going forward for the bank so far, there hasn't been much passing on of the rate hikes which has been encouraging for the banks. it gets harder for them -- >> encouraging because they don't want to. for their shared prices. >> no, no, no, but it will be always harder as you get later in the rate cycle not to pass on the depositors it increases next year as it has this year. anyway, switching back to the fed decision and press conference we've just been listening to, outgoing federal reserve wrap ugh her final news conference moments ago following the fed's decision to raise rates to 1.5% from 1.25%

that's the range >> joining us with thoughts is richard fisher former dallas fed president. thank you for joining us by the way, why do they still have the range can't they get rid of the range and pick a number? >> well, it's actually a corridor between what you pay on excess reserves and the way the repo works the point is, they're moving rates gradual upward i don't view this as relative to whether we've reached it or not. to me, this is a risk management exercise and i think the chair powell made it clear they want to move to a neutral rate of 2.5% that'd be three or four moves after the move today they want to pair back their balance sheet and as he mentioned in the 2.5 to $3 trillion from 4.5 trillion now i think the reason they want to do this is they're late in the cycle. chair yellen just pointed out, there's a reasonable expectation that tax reform, plus the kind

of regulatory changes we've seen in terms of implementation will bush it out. at some point, they want to mitigate it a downturn they're able to cut rates at that point, having stored some up, that'll be good. and if that isn't sufficient, they can rebuild the balance sheet because what we did when i was at the fed and over the last few years, is establish the principle of using the balance sheet which was not an operating principle of the fed so to me, this is very good risk management i think she's done a brilliant job in setting this up, starting the exit building up acorns in the tree to use later on if they need them and i don't expect jay powell to change things very much. >> richard, steve -- >> i thought it was a great value addict ri by the way, performance by janet there's no drama to janet. she has a very even keel i give her a total a plus mrs. for what she's doing on her

stewardship. >> and she wouldn't tell us which dot was hers, richard, and in terms of the point steve mentioned earlier, we have a big upgrade to gdp growth, but don't have the accompanying upgrade to inflation and to number of hikes. to what extent does that worry you that that gdp upgrade is a temporary one and not a particularly robust one? >> no, i think there are two things steve also, he was correct to naengs, but i had didn't mention their estimate of where unemployment's going is improving. in other words, closer to the 3.9% range one would think all things being equal that would lead to more inflationary pressure, but they do have this fixuation with the temporary forces that are holding back inflation, we do have the ramp-up of that as we had globalization come in in the middle part of the beginning of the century. so, i can understand their reluctance to mark up inflation, if we do have a surprise next year, i think it's going to be that inflation will be above 2%

and a little bit higher than people expect, not out of control, but i think that could be why, you know, we may be surprise the next year, but we'll have to see. but there is a contradiction their and steve was correct. >> richard, thank you for your time today appreciate you joining us. >> thanks so much. bye bye. >> richard fisher is the former president of the dallas fed. up next, we're coming right back with the closing countdown. >> after the bell, more reaction to the news conference you just heard from janet yellen when we speak to jeff guocnlk, we'll get his live take. stay with us

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the original place to invest online. industrials are up there as well look at the bottoms, financials should be good for the banks, but they have outperformed and included today they were one of the best performing sectors just had another look as well at the dollar index near the lows on that, yes, we got a hike, but

perhaps not a as many as people thought. significantly down 0.7% >> here it is, the lull we had this is trat addition run-up into a fed meeting particularly when there's a press conference going on. we went up right after the fed and with good reason they did everything the market wanted them to do. most importantly they're expecting free rate hikes. that's what the market's expecting next year. they affirm that then they said inflation would be below 2% market friendly and they upped the economic forecast little it's no surprise it went up. traditionally you get a sell-off after the fed comes out. and that's exactly what we're seeing here today. so i wouldn't put too much into this i want to know bitcoin futures had a dip below. we had trading fall dropped about 10%. there you see on wednesday, given the run-up that we've seen, i don't think this is much of anything, but the spread between the cash and the futures is very narrow now and that's a good sign this is a good development overall. >> important note to hear from

him, we wouldn't expect it to be bullish. clearly there were slightly negative comments. to what she said about the market levels. it's not a major risk factor she's focussed on. there goes the bell for the day ringing and the nasdaq darling ingredients. dow's up 88 points slipped a little bit in the last five minutes of the session that's it for the first half kelly's got the second thank you, welcome to the closing bell everybody, interesting action on the bell here today dow much off the highs of the session, it's up 86 points right now to 24590 now that is good for a record close here, but the dow's outperforming the other averages with the exception of the russell. s&p turned lower on the bell shed just about a point there. 2663 for the broad market after the fed decision just two hours

ago in the press conference since then 6875, it's about 40 points off the closing high from the end of november and the russell 2,000 is the strongest performer today of the major averages, small caps up more than half a percent, as it looked like we had moves on tax reform close to getting that deal done. we'll have much more on all of these markets in just a one moment double line capitals will join scott wapner in an exclusive interview to weigh in and on janet yellen's final news conference as fed chair today. joining me now, cnbc's senior markets commentator, michael here on set with me, jim bianca checking in from chicago, i think. kevin o'leary, chairman of oh shares etfs, where in the world is kevin today >> kevin is in toronto today. >> he's in toronto i never know when with you, kevin, thanks for joining us stocks moving on janet yellen's final news conference.

raising rating and leading the dow by the way wx we saw from the blue chips was caterpillar having a strong day today, ibm was the laggard over on the s&p century link was the top gainer while fox trailed behind michael, where do we stand >> a lot of as expected stuff today, we had the gentle rally for most of the day, gave up most after the fed the fed was an as expected, and then the question for the markets is obviously the last conference from janet yellen, what is the value in meaning of 2018 projections if you're going to have that turnover at the top? >> because there's also turnover amongst the voting members >> the whole committee >> there are two today who wish they had kept rates steady >> yes, there's a camp that says look, there's not much to do when inflation is where it is. obviously that's the source of much debate, and that i think chair yellen has managed to kind of, i guess, kind of give an

airing to that debate as to whetherthere's a structural reason inflation is where it is. they said they were going to raise it four times, they raised it once. we had abig lift with the fed to see which way 2018 breaks >> kevin quickly to you. from this rate hike decision today, market response is set up in 2018.

rates have continued low and the thing about the fed is it doesn't matter until one day it matters and i think today might be a time when people start to contemplate four fed hikes next year a full 1% rise, that's going to have some head twoinds equities. i think that came into the psyche of investors today for the first time in a long time. i think i had hair last time i was worried about the fed. >> all right let's talk about some of the other major news out of washington today, the gop house and senate leaders reaching a tentative tax deal which sources say would include a 21% corporate tax rate and no corporate amt. jpmorgan jamie diamond weighing in on this earlier today >> on the corporate side, if the benefit is not going to be like immediate, okay, you do have the reduction taxes, companies will retain mar capital and start to use that over time you'll compete away the advantage, some will raise wages, some will buy companies, some may do dividends and

buyback. don't act like that's a bad thing. gets recirculated in the american system, probably a trillion dollars will comeback from overseas. cumulatively over time, that will accelerate growth in the american economy and more competitive economy. and so i think it simply needs to be done >> will this tax reform bill result in more jobs? >> yeah. ultimately you're going to have a lot more capital retained and reinvested here. >> maybe for the russell today, does that explain the die verges to you >> a little bit, yeah. i think it's another thing that's kind of coming in the zone what have we were expecting. i think that if the tax package kind of has these elements that are being handicapped. it's enough to move the chains on the bull market that's the way i think about it. as long as everything else remains okay it's not in itself to say wow, 20181 going to be this huge, accelerating economy and a huge wind fall for investors, yeah, there is more money in location and mostly to the benefit of people, you know, who own businesses and company and

stocks >> added to that >> yeah, 2004 we had a tax repatriation back then too, and it was almost no impact on the economy. i think we are going to overstate what this tax bill's going to be. i refer this as a tax rearrangement, there's not a lot of tax cutting, there's some cutting of taxes some places and poor people that make, you know, some money in new jersey have to pay over 100%, minimal rate, they did as of money, i'm sure that's changed right now, but in the end, it's probably better that we did this because we're kind of -- we're rearranging incentives, and this is hardly a major tax cut that's going to make the economy boom like people think >> with the fed raising rates for the third time this year which happened a couple hours ago. let's get out to scott who is in los angeles joined by jeff for some reaction to all of these moves, scott >> kelly, thank you so much. it's a real treat for viewers today. remember we spent time with jeffrey of double long capital into the fed station and the

yellen news conference, and now we get the bond king's reaction on the way out so jeffrey, good to see you again. stocks went up, bond yields fell are you surprised at what happened after the statement and the newsroom >> well, i think the surprise was the strength in the bond market being substantially greater than the strength in the stock market really in the post fed thing, and i think the reason is that the market was thinking -- maybe in the back of the fed's mind would be a change in the dots to four hikes next year and they didn't do that and even more powerful is that was done against a backdrop of upgrading gdp growth so what they're basically -- the bond market seems to be taking sideways look, they're not only not going to raise them four times, they've upgraded gdp growth and still didn't go to four dots for next year and in the press conference you hear chair yellen say, well, you know, there might be a little bump to the economy. which probably isn't even factored into their 2.4 gdp. what the bond market is hearing

even if the economy accelerates or hangs in there at the level that it's found, a little bit higher level in the last few quarters, they're not going to hike more aggressively and that's why the short end is happy and the the five year is happy because they were kind of putting a little bit of insurance on the yield level as of yesterday that that fourth dot might appear. >> when we spoke earlier, you said there was support for rates 359%, the ten year, you need to rethink that now by virtue of what you saw coming out? >> this is a daily kind of reaction what i meant about 3%, i believe that the chinese central bank will -- is interested in keeping treasury rates low so the u.s. economy remains at least not a head wind for the global economy. and i have a suspicion that if we get to 3%, you might see increased foreign buying not for investment purposes, but for economic management purposes >> two dissenters, are you surprised by that? what does it mean? >> neil, he's the low dot. the thing about the dots that are really funny is they give us

the median dot when you look at digs perngs of dots, it's comical, neil that was down at about one and a quarter or is % type of a dot for even 2019 year end, and there's other people up at 4%. i know that jay powell's coming in and he's been somewhat critical of the dot scheme because it's anonymous and he was made statements, he was going to try to reach a consensus dot which, good luck, chair powell, but a it's going to be hard to get this disperngs of dots that's about 300 basis points high to low, somehow converging on the median dot but the no surprise there. the other ones a little bit of a surprise >> you upgrade your growth forecast it's improved for the same reason that the bond yields retreated today. it's that the economy can get

the fed is willing to let the economy grow label the faster and not talking about accelerating the dots, at least not for 2018 that has to be a positive for those that are looking for higher growth and yet may have been worried that the fed would take that on by accelerating the rate hikes that doesn't appear to be happening. >> the chair was asked about the flattening yield curve in which she said the current slope is well within the historical average. you've said to pay attention to the flattening curve >> i know what the historical average is, twos to tens over a 40 year time period. historical is 95 basis points, so, i guess i'll cover a little slack. we're at 55 or something i guess that's in the context of the historical average, but typically when the curve starts flattening this aggressively, and this kind of linear fashion, it usually doesn't slow down, so i do think at 50 basis points through that, that's when we're going start flashing yellow on the sign from the yield curve, right now, it's in the 50s, so

it's not too far away, but it's still flashing green to us for no recession for the next six to nine months. >> and finally on stocks, you said that valuations are high just because they're higher doesn't mean they're overvalued. >> i suppose that -- i suppose that's true. well, i see what you're saying, contradictory, but she's saying, i think, is not danger zone. >> stock evaluations are high, but they can stay high, i take a little bit of issue with that because one of the reasons pe's got high with zero anymore we're at 2%. we've got three month at one and a half higher interest rates are going to start biting into the pe being too high because it's the low, the zero interest rates for the justification for an elevated pe. >> all right thanks again for coming on with us thanks again for having us kelly, i'll send it back to you. that was again our exclusive today here at double line in los angeles. >> yeah, and our thanks to you both great stuff all day.

appreciate it. jeff sitting down with scott wapner there mike, again, i mean -- it's funny trying to put all the puzzle pieces together. >> yeah. >> of what all -- and it reminds me again of the discussion we had yesterday where, you know, you could argue that the stock market is overvalued or no it's not. you could argue that bond yields are way out of whack historically or maybe -- i mean, it doesn't all totally square here >> no, we don't exactly know exactly whether the historical patterns are playing out as we've come to learn them or if there's something unusual about that cycle look, you know, jeff -- just talking about yes, 55 basis points is now the spread between twos and tens. is 55 basis points today when the two years at 1.8, the same message when it was 55 in the last cycle so all of these things are kind of, you know, unclear as to what they are going to mean >> expresses a percentage. >> bull markets that have run this long, they get to 20 times earnings we got to 20 times earnings. so a lot of these things are

tough to necessarily know why they're happening. >> jim, what's your reaction >> you know, as far as the yield curve goes, i'm reminded of the joke about window washer fell and as he passed the third floor said so far's see so good. and yellen is saying so far so good, look at the slope. it's interesting the last question she had another a presser was about the yield curve. it could very well be the first question powell will get in march if this slope of the curve flattening continues over the next 90 days that the curve could get very flat. that's what i think could very well happen when it comes to the curve and that could pose a problem for the fed because it does signal a possibly policy error that they're being too tight. >> kevin, meantime, you were talking about the prospect that they might actually do for next year for example, and jeff gunlock said well maybe they're pushing back against that and only doing three and threat run a little do you feel the same way or, that's one of the interesting divides this market has right

now. >> let me push back, let me push back a little bit on jeff's pe being eaten into by higher rates. let's just stay focussed on once in a lifetime event that's about to occur you have a manufacturing company, california, it's being taxed in the high 30s, and in a matter of days, it's tax rate goes from 36 to 39 down to 21. it's not trading at a 20 pe anymore, it's trading at a 14 pe so i'd argue the market is not overvalued if it's true adding 15 to 20% more cash to an american-based company with all of it's revenues in the u.s. which is why i personally think that these small cap midcap narcotic and russell moved again today in that this fashion is the place to be in 2018 because it's not trading at 20 pe, it's not a crazy multiple we have a once in a lifetime gift from our president which adds 20% more cash flow to many american companies. that's amazing >> okay.

>> that's why it's not overvalued >> guys, thank you kevin, jim, joining us today and again the dow going out at a record high here while the s&p was negative there was another one of those prump making a last pitch for tax reform what the final tax bill is in congress is looking like and especially now that it may or especially how it will impact your investments i should say. plus, noted tech fund dan miles is here to discuss the investment a company he bought in october as a way to play the success of the iphone and contact the show and share your thoughts with us. you have twitter, facebook, e-mail, you're watching cnbc first in business worlid dwe. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. their leadership is instinctive. with a clear advantage.

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kelly, the tax bill's conference committee is meeting right now in the room behind me, but the reality here is that that deal was hashed out before this meeting even started. and the center piece is a 21% corporate rate and four people now telling me that rate would take effect in 2018, not delayed to 2019 as would have occurred under the senate version of the

tax bill multiple sources tell me that the corporate alternative minimum tax, that is out of the final version of the bill. the house had originally also on the state and local tax deduction, one person telling me that cap would still be at $10,000, now you could use did for property taxes, income taxes, or sales taxes and that is consistent with some other news reports that are out ther and previously, that deduction had been applicable only to property taxes delay in vote until the winner of that election doug jones can take his seat and democrats are also furious that they have not seen final texts of this legislation. republicans say it will not be made public until friday, that is when they plan to release the final text of this will legislation and senator orin

hatch who is chairman of the finance committee and one of the key negotiators in all of this kelly, he did say they believe they have the votes to get this passed next week, back over to you. >> real quickly, it sounds like the corporate amt is no more, but what about on the individual side >> we are still trying to pin that down though, but the wall street journal is saying that the individual amt does survive in some form >> all right thank you. appreciate it very much. tracking this all for us joining us to discuss it a little more is caroline harris who is an executive director at the chamber of commerce and ben salisbury at b. riley, welcome to you both. ben, let me begin with you so, it is interesting that they're going to lower the top rate, but they're still going to leave the individual amt in there, how does this shake out for as it shapes up? >> well, so, i mean, the individual amt is designed to make sure that certain types of

income or earners and especially with a lot of inherited end up paying some form of tax. so that should be sort of more or less as it always has been. i don't see a lot of big change there. >> wait a minute, there's a ton of complaints about the individual amt because it's never been inflation adjusted, sucks people who are professional lawyers, doctors, and that income sweet spot, about 300 to $600,000 who would be affected by this. it seems like something that should be addressed if they're going to reform the code, right? >> i had an opinion of that one way or the other except as it relates to my personal amt, but from a market perspective -- >> so you're paying it, do you have a lot of inherited wealth my point is simply that, look, how this goes over with the public is a big deal because it's not pulling that well mitch mcconnell said once you sigh what's in it, you'll like it the republicans are probably already facing a wave election based upon what happened in alabama last night

that's why i'm asked what you think the affect of this will be >> i think the amt is going to affect a relatively small number of swing voters, your bigger point is important, right, how this plays with the general public is going to be decisive, you have to remember, the republicans are absolutely convinced that especially with the fund dstz raising base, passing some bill they can call tax reform is essential to their reflections, precondition to reflection secondarily, the overall concept here, the vast majority of the republicans in congress buy into is the current u.s. tax code disadvantages domestic employers, and to sort of reassert u.s. competitiveness, they need to address that. how they do it, the details of that, you know, that's a specific question, but the idea, the article of faith is that improving the competitiveness of the tax code will please donors and improve rank and file incomes. >> caroline, you must be pleased, sounds like there's no

corporate amt. >> we are pleased to be sitting here potential lay week away from pro-growth reform and lower rates, a globally consistent territorial system and no corporate amt. >> and carlin, i mean, no corporate amt, yes to a territorial system and really as we look at it, not a whole lot in the way of loophole closing of other ways. >> i think we've always lobbied for members and concerns and that was getting that rate down, getting to that internationally competitive in the 20s we're talking about 21 on the corporate side reduced through on the pass through side obviously the territorial system again is huge and we worked in that space to make sure the anti-abuse rules are minimally invasive on businesses

and obviously the devil's in the details, the details wes see so far, we like >> what do you think will be most powerful? is that we're going to have expensing immediately next year, would it have been more powerful if the corporate cut itself was delayed a year how do you think people react to interest deductibility there's levers here in terms of incentives for businesses. >> it's positive to see the rate reduction up front, that was very important to us we're pleased to see that. i think we're pleased to see the full expensing, we're pleased to see that territorial system. i keep saying it, we are now moving to a system that looks more like our competitors and capital is going to go where it's welcome and welcomes carpet jamie diamond hit on that before when you had him on. >> thank you both for joining us >> thank you >> caroline harris, betty, looking at the effects of the tax bill as we know it this afternoon anyway

shares are rallying. dan niles is in both of those names. his reaction to the news and how empty pacts the way he's playing the space. find out how higher rates could impact the lending market when we speak to lending tree still to come here on the closing bell [ keyboard clacking ]

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down in the aftermarket on earnings they missed estimates reporting nine cents versus 11 cents that was estimated on the revenue side, they did beat reporting quarterly revenue of $469 million versus 467 million that was estimated and on the comp side, they were down only .7%er have us being down .1 which is what analysts were expecting now i think one of the main reasons why you're seeing such a huge drop off there in the stock price is because of very weak, q4 revenue and eps guidance, now, you should keep in mind that this is only a $400 million market cap stock, you can expect the volatility we're seeing in the aftermarket trading, clearly not an earnings report that investors are impressed with, kelly. >> wow, leslie, thank you, and mike again, this should be a name benefitting from -- look at home depot, lost, anybody in that space, but they're down by almost half this year.

>> it's not really home immaterial improvement, it's a fall between the cracks type of franchise. the stocks got caught up in the huge retail rebound, it was up 40% in the last month. it's a low price stock of a small market cap company gets swung around pretty violently. >> up 7.7 now it's down 20d after hours. time farl news update, and let's get over to sue herrara, hi sue. >> hello kelly, hello everyone deputy attorney general rod rosenstein discussing the russian investigation on capitol hill house judiciary committee member jared nadleer asking him whether special counsel robert mueller should still lead that investigation. >> have you seen good cause to fire special counsel mueller >> no. >> thank you if you were ordered today fire mr. mueller, what would you do >> as i've explained previously, i would follow the regulation, if there were good cause, i would act if there were no good cause, i would not. >> and you've seen no good cause so far >> correct

>> donald trump jr. back on capitol hill undergoing another round of closed door testimony in the investigation into russian campaign interference. he departed his hotel this morning for an appearance before the intelligence committee and the los angeles angels confirming that recently signed japanese pitching and hitting star ohtani received an enjex in october. the team saying it's still satisfied with the results of his physical and they are happy to have him on the team. that's the news update this hour, kelly, back to you >> thank you, sue. mike, is that a big deal >> it could be a big deal. i mean if it obviously -- >> what does that mean what's the problem with his -- in his elbow, what does that mean >> it's a ugliment in his elbow, wear and tear. >> so to dull the pain, you think? >> swelling. pain >> wow mike -- >> healing. >> yeah. okay you know, the yankees -- >> japanese pitcher, but i don't know in his situation, but they throw an enormous number of

innings at a young age it's not like the u.s. >> i'm watching this one closely and the rest of the world too. let's turn our attention back to the markets, s&p was negative on the bell by the way the dow was caterpillar today. and that was a record close for the dow. russell, the best performer, it was up half a percent in percentage terms here's some of your other big stories in the rapid recap >> stunning result in alabama last night, democrats narrowed the republicans margin in the senate from 52 to 51 in one of the most conservative states in the country. >> one of my corporate bond traders pulled up something called cryto kitties it's a picture of a cat and each picture is unique and apparently somebody bought one for $100,000 and flip it for $400,000 i mean, this is the kind of nutty stuff. >> now hearing from two sources that the minimum tax will not

will not be included in the final version of the bill. >> i think it makes a small bullish about the u.s. >> does it >> three things, tax, regulation, infrastructure, spending, that takes a long time to get going >> the raising interest rates by one quarter point by the new range of one and a quarter to 1.5% >> bitcoin plays a very small role in the payment system it is a highly speculative asset and the fed doesn't really play any role, any regulatory role with respect to bitcoin. >> and shares soring 22% today after apple announced nearly $400 million investment. josh lipton has the details from allen, texas, josh >> president trump was actually speaking today about repatriation and jobs and yet,

she specifically called out apple, but apple was actually involved in a jobs announcement today saying that it's going to award them $390 million and you saw the stock move sharply higher on that news. this is part of apple's $1 billion advance manufacturing fund, they make what are called chips which help to power a range of apple features and technologies including face id and emoji and ar kit, now as a result, they are going to build out a new plant in sherman, texas, and it's going to hire 500 people including engineers and technicians, jeff williams, apple's coo tells me that his company could invest in even more high-tech american firms that this $1 billion is not a hard ceiling >> they are at the heart of some of the most advanced technology that apple produces, and they are used in a wide range of applications across industries, but when we were working on

iphone 10, we realize we needed a much more advanced thing and we needed way more capacity. if you take the entire worldwide capacity and realized we needed ten times that amount. so we worked with them and a couple of other companies to put that in place and now we need even more and so, that's why we're here >> now, they say this award really shows that apple is doubling down on ar specifically and that by locking in this market he says it's going to make it even harder for apple's rivals to compete, kelly, back to you >> all right, josh, thank you very much. josh lipton. our next guest owns shares and is very bullish on apple's investment in that company also down 17% in the last two weeks and about 3% today on the back of that news. dan niles recently called them the hot stock for 2018, he's on the phone to discuss today's moves, dan, welcome. >> thanks, thanks for being on

>> we immediately thought of you because we had just talked about your big call, it was down much more at the beginning of the day than at the end. why do you think that is >> well, investors use that at home, i got it, they are going to take this market from momentum going forward and then i think this will investor started to see through this, they understood the reason apple had to invest in them is because, you know, they're having all kinds of problems producing these vixel for apple. if you look at the fourth quarter, our estimation is momentum will do about 150 million or so in revenues going to apple for these waivers and finisar maybe 20 million at most and so, you know, i think the problem is if you have a knee jerk reaction, your first thing is oh my god, i have to sell momentum as you have investors thinking through this, that's what he said the stock continue to climb and i think the important thing is what you heard from that clip from apple this market is going to be ten

times bigger in five years relative to today. so, the market for 3d sensing and consumer devices like smart phones maybe about a half a billion dollars in 2017, five years from now, that'll be over 5 billion and that's just in smart phones you throw in cars and industrial robotics, and that market's probably closer to 7 billion by 2017 and as you heard in that prior clip from apple itself, there's just not enough capacity in the world for this stuff right now. and so, you need more and that's why they did this investment so i feel better about momentum today than i did on monday when i put out the column for cnbc. >> dan, what does is it say this sort of type capacity situation these bottlenecks about the general apple food chain as they look to next generations of products is it a genuine challenge across the board for them to kind of acquire at their scale what they need i mean, it's a totally different area but they did make the acquisition of shazam, something folded into other products as

well. >> yeah, no, this isn't a problem across the food chain, you have to remember this 3d sensing that the vixel's are involved in, that's the vertical cavity, that's a new technology in the iphone 10 so for other things like application processors or rf chips, you know, those suppliers have been in the market far long, lock time since apple introduced the iphone. that's not the issue this is a brand new feature that's helping with augmented reality that's ramping up and, you know, when you're adding something that hasn't existed before and you've got a one and a half billion unit market for smart phones and apple's the leading, you know, supplier in terms of, you know, best of breed, that creates the problems, and that's really what you're seeing. in that -- >> they are the new pixels how does this set apple itself up, do you think >> well, i think it sets apple up really well because what it's

doing is -- so now they've sorted of locked in, we don't know what the terms of the agreement are, obviously apple didn't get $390 million out of the goodness of their heart. so i'm sure they're locking in a lot of that capacity, so, other venders, other smart phone venders like the chinese will be introducing their own augmented reality features on their phones and that'll -- you're going to see that in 2018 you have the to remember, it's over 80% of the market for smart phones it's just we've spent all this time talking about apple and i think, you know -- so somebody like them, they're going to benefit because they can supply to anybody, they don't have an exclusive relationship with apple. >> anyone else >> there are some other venders that they're trying to get ramped up, but right now nobody is ramping so i think over time, you will see a few others where involved in some. i'm going to avoid commenting right now, but, if you look at overseas for example, companies like iqe that do the lasers are

manufactured on, that stock's up 320% for the year. one semiconductor which is the founding for the lasers, that stock's up 244% this year. and so, when you look at the u.s. companies like them which is up 30% or finisar down 22% even with this move, you're going see some catch-up and the valuations trading 13 times earnings are even with this move, i think i've got at about 19 or so that's stale lot less than the 25 to 35 multipling you see on some of these companies overseas >> thank you so much really appreciate it dan niles giving us all the info on vixels which i am quickly becoming familiar with on the back of this -- >> cavity something zblb something or other thank you so much. again, dan niles from alpha one capital partners t-mobile is making a deal to enter the tv business. our takeaway on this fast-changing industry right after this nobody's putting their money into equities.

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launch a future product that t-mobile says will be a quote, total replacement for satellite tv shares of at&t dropped on this news this afternoon. michael, what do you think t-mobile has up it's sleeve and is that share price reaction just fine? >> i don't know about the reaction there's a lot of other stuff going on in terms of the cable and satellite space. i do think, look, they want to obviously have an offering here that's a little more comprehensive, sort of a directv now which at&t has it definitely sort of on the upper end of this sort of skinny bundle market, right, people who still want to pay, you know, at least right now. the layer three service is not cheap. it's at the higher end, internet based and they rent space. it's a little bit of a different twist. and maybe people think it's seeming like hey, we're going to challenge if you don't buy us. that's another kind of tactical thing. >> they're certainly putting traditional tv on notice next big news out of alabama, not that news target bought shipped for $550 million.

target says this will allow them to offer same-day delivery on items starting next year you'll need a $99 ship subscription and can continue to do business deals with others? >> it's a good sign that target is willing to, you know, do a deal of this size, half a billion dollars, just to sort of maybe flush out it's capabilities in this area. i do think there's a question longer term as to whether you're going to have all of these people running around target stores in a sense competing with shoppers who are there to get their own stuff. i don't think it's a problem right now, but people have made that, made that concern known that, you know, look, these aren't warehouses, and if you're going to be using your retail stores mostly as fulfillment centers season that going to be suboptimal >> as you know, very much love the amazon prime seamless experience and for target to think, okay, i want something from target, but i'm going to ship to create my account and they're going to hand that will relationship, you know, i'd to want see them in practice to see if they can rival this >> i agree with that, at the same time, the costco's adding stuff to it's bundle

right, for it's membership giving you video streams video >> i'm thinking about christmas presents finally deals -- details on the disney fox deal courtesy of our david favor today. sounds like a $60 billion dpeel that's the value they're giving movie and tv assets and fox shareholders will hold 25% of the new disney now why then was 21%st century fox one of the worst today >> give back since david reported there were talks in this direction fox's stock is up 24, 25% before today. clearly there was a little bit of chewing up of what the value was going to be. it was an enterprise value number, there's a little play, we don't know exact how much debt will be place on the those assets as they go over to ginz if the deal happens. it's more of a matter of people trying to do the math and maybe not be unpleasantly surprised if somehow tomorrow there's no deal >> we'll see if we get an announcement, now it if we don't, it's a surprise shares were higher after releasing guidance for next year the stock soaring more than 200% in the past year we're going to talk to the ceo

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the federal reserve raised interest rates bay quarter percentage today the ceo joins us in an exclusive interview to talk about how

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welcome back the fed did it, they hiked rates by another quarter percentage point today. how will that impact the loan business joining us is lending tree's ceo, doug lebda. welcome, sir >> thanks for having me. >> stocks are on a tear. >> yes >> what's the correlation between that and rising interest rates, if any? >> you're having a major secular shift from offline to online we're only facilitating 2% of the loans in the u.s. and we've seen that go up to 6 or 8% over the next two years >> the mere fact that the fed is raising rates, is that going to make people go online to check

rates? >> we call it the flywheel effect basically what we say is that lenders, first off, as they get better and more efficient, our monetization goes up that enables us to go market demonstrate the consumer savings which enables lenders to buy more leads from us >> do you have a window on the lender activity or aggressiveness of lenders? >> we do we can see all the lenders' pricing side by side and save the consumer thousands of dollars. we're seeing lenders put lower prices on lending tree than on their own sites. >> wow, so it's like the expedia effect >> exactly right >> providers are getting upset with expedia and now we see them move the other way is that a risk for you guys? >> not really, when we advertise we bring in everybody in the u.s. population, then we let lenders slice and dice the market any way they want >> do they get to share that data >> yes we have full data transparency

between us then we help them improve their conversion rates and improve their performance, so we let them save a lot of money as well >> the increase in consumer default rates on credit lately, it's kind of surprising, with the economy as strong as it is, before there's any signs of a job slowdown, for some of the major card companies, it's approaching 5% >> it is >> are we tapped out your stock's performance suggests we've just too far in the consumer credit space. >> i don't think we have at all. our credit card business is our fastest growing business and also one of our smallest ones but it's growing very rapidly. we focus on higher end credits we have very good performance with our lernnders and we love u leads. >> what does that look like in terms of the origin point of that search? somebody goes out there and says -- >> so we advertise and say, come to lending tree, search for credit cards, and you enter in your criteria, we match you up with multiple credit card providers and let you make the

best choice for you. >> what concerns do you have for 2018 >> biggest concern for us is just internal execution and complacency. we just need to just keep the hammer down and keep performing exceptionally well >> all right we'll let you go try to do that. thanks for joining us. >> thank you very much, thanks for having me. >> doug lebda is the ceo of lending tree delta is about to put in a big order for airbus, those details next ♪ (music plays throughout) ♪ ♪ ♪ ♪ ♪

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delta airlines is holding its investor day tomorrow. the second largest airline is poised to make an announcement, maybe a surprising one phil lebeau is here. >> it's for 100 airbus a-321 neo-s. think of this as the competitor to the 737 this is a huge order the value, book value over $12 billion. we should also state that airlines never pay the book value, the list price. they always have a substantial discount and there's probably going to be some options that are going to go along with this the announcement will come tomorrow before the investor day meeting. and it will be an interesting

meeting, because, you know, there's also going to be some questions about what's happening with the c series build by bombardier, which is now partnered with airbus on the c series we know what's going on with boeing saying to the u.s. government, hey, slap a tariff on these things. >> right, and delta was very unhappy about that because it was getting a great deal i know it's not like u.s. airlines only buy from u.s. manufacturers, but how big a deal is this announcement with airbus, and is it in retaliation? >> i don't know if it's in retaliation. the a-321 neo- is a great aircraft for airbus, this is further inroads into north america for them and they've got to feel good about how they've been able to position the company relative to this, relative to the c series i'm interested to see what happens at the investor day tomorrow >> for delta, phil, is this kind

of a routine freshening up of the fleet or does it represent a bigger capacity edition over time >> look, we'll see capacity seats added, routes added over time but not a huge increase in capacity, nothing out of the ordinary it's not like they're going to jump 5, 6, 7%. you're going to see that in the years to come simply because there's so much demand, worldwide demand is up 7% this next year in terms of people who want to fly. so all of the airlines are adding capacity. >> quickly, boeing had a monster day yesterday, the buyback, the dividend >> yes >> does this represent a significant blow to them, a turning point? >> i wouldn't call it a significa significant blow that people would say, oh, my god, i'm going to take money off the table on boeing that's not the case at all there aren't a lot of huge orders that come around every year there is a significant number, but you want to get as many of those as possible. 100 aircraft is a huge order and it's one of the big ones of the year >> we're glad to have the news

now. phil lebeau, thank you so much tune in to "closing bell" tomorrow, jim chanos will join me, we'll be at the yale ceo summit here in new york city, don't miss it. michael, thank you as always have a great long weekend too. "fast money" begins right now. fast money starts right now. live from the nasdaq market site overlooking new york city's times square i'm melissa lee. tonight on "fast," it is a crypto crash, well, kind of. bitcoin sinking 10% today, tripping the breakers on the futures and trying to come back from those lows. if you're worried about your crypto investment, we'll be tracking the price throughout the hour terry duffy, chairman and ceo of the cme will join us as his exchange gets ready to launch bitcoin futures trading this weekend. he'll tell us how big this